[House Report 108-375]
[From the U.S. Government Publishing Office]



108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    108-375

======================================================================



 
                       ENERGY POLICY ACT OF 2003

                                _______
                                

   November 18 (legislative day, November 17), 2003.--Ordered to be 
                                printed

                                _______
                                

 Mr. Tauzin, from the committee of conference, submitted the following

                           CONFERENCE REPORT

                         [To accompany H.R. 6]

      The committee of conference on the disagreeing votes of 
the two Houses on the amendment of the Senate to the bill (H.R. 
6), to enhance energy conservation and research and 
development, to provide for security and diversity in the 
energy supply for the American people, and for other purposes, 
having met, after full and free conference, have agreed to 
recommend and do recommend to their respective Houses as 
follows:
      That the House recede from its disagreement to the 
amendment of the Senate and agree to the same with an amendment 
as follows:
      In lieu of the matter proposed to be inserted by the 
Senate amendment, insert the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Energy 
Policy Act of 2003''.
    (b) Table of Contents.--The table of contents for this Act 
is as follows:

                       TITLE I--ENERGY EFFICIENCY

                      Subtitle A--Federal Programs

Sec. 101. Energy and water saving measures in congressional buildings.
Sec. 102. Energy management requirements.
Sec. 103. Energy use measurement and accountability.
Sec. 104. Procurement of energy efficient products.
Sec. 105. Energy savings performance contracts.
Sec. 106. Energy savings performance contracts pilot program for 
          nonbuilding applications.
Sec. 107. Voluntary commitments to reduce industrial energy intensity.
Sec. 108. Advanced Building Efficiency Testbed.
Sec. 109. Federal building performance standards.
Sec. 110. Increased use of recovered mineral component in federally 
          funded projects involving procurement of cement or concrete.

            Subtitle B--Energy Assistance and State Programs

Sec. 121. Low Income Home Energy Assistance Program.
Sec. 122. Weatherization assistance.
Sec. 123. State energy programs.
Sec. 124. Energy efficient appliance rebate programs.
Sec. 125. Energy efficient public buildings.
Sec. 126. Low income community energy efficiency pilot program.

                  Subtitle C--Energy Efficient Products

Sec. 131. Energy Star program.
Sec. 132. HVAC maintenance consumer education program.
Sec. 133. Energy conservation standards for additional products.
Sec. 134. Energy labeling.

                       Subtitle D--Public Housing

Sec. 141. Capacity building for energy-efficient, affordable housing.
Sec. 142. Increase of CDBG public services cap for energy conservation 
          and efficiency activities.
Sec. 143. FHA mortgage insurance incentives for energy efficient 
          housing.
Sec. 144. Public Housing Capital Fund.
Sec. 145. Grants for energy-conserving improvements for assisted 
          housing.
Sec. 146. North American Development Bank.
Sec. 147. Energy-efficient appliances.
Sec. 148. Energy efficiency standards.
Sec. 149. Energy strategy for HUD.

                       TITLE II--RENEWABLE ENERGY

                     Subtitle A--General Provisions

Sec. 201. Assessment of renewable energy resources.
Sec. 202. Renewable energy production incentive.
Sec. 203. Federal purchase requirement.
Sec. 204. Insular areas energy security.
Sec. 205. Use of photovoltaic energy in public buildings.
Sec. 206. Grants to improve the commercial value of forest biomass for 
          electric energy, useful heat, transportation fuels, petroleum-
          based product substitutes, and other commercial purposes.
Sec. 207. Biobased products.

                      Subtitle B--Geothermal Energy

Sec. 211. Short title.
Sec. 212. Competitive lease sale requirements.
Sec. 213. Direct use.
Sec. 214. Royalties and near-term production incentives.
Sec. 215. Geothermal leasing and permitting on Federal lands.
Sec. 216. Review and report to Congress.
Sec. 217. Reimbursement for costs of NEPA analyses, documentation, and 
          studies.
Sec. 218. Assessment of geothermal energy potential.
Sec. 219. Cooperative or unit plans.
Sec. 220. Royalty on byproducts.
Sec. 221. Repeal of authorities of Secretary to readjust terms, 
          conditions, rentals, and royalties.
Sec. 222. Crediting of rental toward royalty.
Sec. 223. Lease duration and work commitment requirements.
Sec. 224. Advanced royalties required for suspension of production.
Sec. 225. Annual rental.
Sec. 226. Leasing and permitting on Federal lands withdrawn for military 
          purposes.
Sec. 227. Technical amendments.

                        Subtitle C--Hydroelectric

                     Part I--Alternative Conditions

Sec. 231. Alternative conditions and fishways.

                     Part II--Additional Hydropower

Sec. 241. Hydroelectric production incentives.
Sec. 242. Hydroelectric efficiency improvement.
Sec. 243. Small hydroelectric power projects.
Sec. 244. Increased hydroelectric generation at existing Federal 
          facilities.
Sec. 245. Shift of project loads to off-peak periods.
Sec. 246. Corps of Engineers hydropower operation and maintenance 
          funding.
Sec. 247. Limitation on certain charges assessed to the Flint Creek 
          Project, Montana.
Sec. 248. Reinstatement and transfer.

                         TITLE III--OIL AND GAS

           Subtitle A--Petroleum Reserve and Home Heating Oil

Sec. 301. Permanent authority to operate the Strategic Petroleum Reserve 
          and other energy programs.
Sec. 302. National Oilheat Research Alliance.

                    Subtitle B--Production Incentives

Sec. 311. Definition of Secretary.
Sec. 312. Program on oil and gas royalties in-kind.
Sec. 313. Marginal property production incentives.
Sec. 314. Incentives for natural gas production from deep wells in the 
          shallow waters of the Gulf of Mexico.
Sec. 315. Royalty relief for deep water production.
Sec. 316. Alaska offshore royalty suspension.
Sec. 317. Oil and gas leasing in the National Petroleum Reserve in 
          Alaska.
Sec. 318. Orphaned, abandoned, or idled wells on Federal land.
Sec. 319. Combined hydrocarbon leasing.
Sec. 320. Liquified natural gas.
Sec. 321. Alternate energy-related uses on the Outer Continental Shelf.
Sec. 322. Preservation of geological and geophysical data.
Sec. 323. Oil and gas lease acreage limitations.
Sec. 324. Assessment of dependence of State of Hawaii on oil.
Sec. 325. Deadline for decision on appeals of consistency determination 
          under the Coastal Zone Management Act of 1972.
Sec. 326. Reimbursement for costs of NEPA analyses, documentation, and 
          studies.
Sec. 327. Hydraulic fracturing.
Sec. 328. Oil and gas exploration and production defined.
Sec. 329. Outer Continental Shelf provisions.
Sec. 330. Appeals relating to pipeline construction or offshore mineral 
          development projects.
Sec. 331. Bilateral international oil supply agreements.
Sec. 332. Natural gas market reform.
Sec. 333. Natural gas market transparency.

                   Subtitle C--Access to Federal Land

Sec. 341. Office of Federal Energy Project Coordination.
Sec. 342. Federal onshore oil and gas leasing and permitting practices.
Sec. 343. Management of Federal oil and gas leasing programs.
Sec. 344. Consultation regarding oil and gas leasing on public land.
Sec. 345. Estimates of oil and gas resources underlying onshore Federal 
          land.
Sec. 346. Compliance with Executive Order 13211; actions concerning 
          regulations that significantly affect energy supply, 
          distribution, or use.
Sec. 347. Pilot project to improve Federal permit coordination.
Sec. 348. Deadline for consideration of applications for permits.
Sec. 349. Clarification of fair market rental value determinations for 
          public land and Forest Service rights-of-way.
Sec. 350. Energy facility rights-of-way and corridors on Federal land.
Sec. 351. Consultation regarding energy rights-of-way on public land.
Sec. 352. Renewable energy on Federal land.
Sec. 353. Electricity transmission line right-of-way, Cleveland National 
          Forest and adjacent public land, California.
Sec. 354. Sense of Congress regarding development of minerals under 
          Padre Island National Seashore.
Sec. 355. Encouraging prohibition of off-shore drilling in the Great 
          Lakes.
Sec. 356. Finger Lakes National Forest withdrawal.
Sec. 357. Study on lease exchanges in the Rocky Mountain Front.
Sec. 358. Federal coalbed methane regulation.
Sec. 359. Livingston Parish mineral rights transfer.

                 Subtitle D--Alaska Natural Gas Pipeline

Sec. 371. Short title.
Sec. 372. Definitions.
Sec. 373. Issuance of certificate of public convenience and necessity.
Sec. 374. Environmental reviews.
Sec. 375. Pipeline expansion.
Sec. 376. Federal Coordinator.
Sec. 377. Judicial review.
Sec. 378. State jurisdiction over in-State delivery of natural gas.
Sec. 379. Study of alternative means of construction.
Sec. 380. Clarification of ANGTA status and authorities.
Sec. 381. Sense of Congress concerning use of steel manufactured in 
          North America negotiation of a project labor agreement.
Sec. 382. Sense of Congress and study concerning participation by small 
          business concerns.
Sec. 383. Alaska pipeline construction training program.
Sec. 384. Sense of Congress concerning natural gas demand.
Sec. 385. Sense of Congress concerning Alaskan ownership.
Sec. 386. Loan guarantees.

                             TITLE IV--COAL

                 Subtitle A--Clean Coal Power Initiative

Sec. 401. Authorization of appropriations.
Sec. 402. Project criteria.
Sec. 403. Report.
Sec. 404. Clean coal Centers of Excellence.

                    Subtitle B--Clean Power Projects

Sec. 411. Coal technology loan.
Sec. 412. Coal gasification.
Sec. 413. Integrated gasification combined cycle technology.
Sec. 414. Petroleum coke gasification.
Sec. 415. Integrated coal/renewable energy system.
Sec. 416. Electron scrubbing demonstration.

                     Subtitle C--Federal Coal Leases

Sec. 421. Repeal of the 160-acre limitation for coal leases.
Sec. 422. Mining plans.
Sec. 423. Payment of advance royalties under coal leases.
Sec. 424. Elimination of deadline for submission of coal lease operation 
          and reclamation plan.
Sec. 425. Amendment relating to financial assurances with respect to 
          bonus bids.
Sec. 426. Inventory requirement.
Sec. 427. Application of amendments.

                  Subtitle D--Coal and Related Programs

Sec. 441. Clean air coal program.

                         TITLE V--INDIAN ENERGY

Sec. 501. Short title.
Sec. 502. Office of Indian Energy Policy and Programs.
Sec. 503. Indian energy.
Sec. 504. Four Corners transmission line project.
Sec. 505. Energy efficiency in federally assisted housing.
Sec. 506. Consultation with Indian tribes.

                        TITLE VI--NUCLEAR MATTERS

                Subtitle A--Price-Anderson Act Amendments

Sec. 601. Short title.
Sec. 602. Extension of indemnification authority.
Sec. 603. Maximum assessment.
Sec. 604. Department of Energy liability limit.
Sec. 605. Incidents outside the United States.
Sec. 606. Reports.
Sec. 607. Inflation adjustment.
Sec. 608. Treatment of modular reactors.
Sec. 609. Applicability.
Sec. 610. Prohibition on assumption by United States Government of 
          liability for certain foreign incidents.
Sec. 611. Civil penalties.

                   Subtitle B--General Nuclear Matters

Sec. 621. Licenses.
Sec. 622. NRC training program.
Sec. 623. Cost recovery from Government agencies.
Sec. 624. Elimination of pension offset.
Sec. 625. Antitrust review.
Sec. 626. Decommissioning.
Sec. 627. Limitation on legal fee reimbursement.
Sec. 628. Decommissioning pilot program.
Sec. 629. Report on feasibility of developing commercial nuclear energy 
          generation facilities at existing Department of Energy sites.
Sec. 630. Uranium sales.
Sec. 631. Cooperative research and development and special demonstration 
          projects for the uranium mining industry.
Sec. 632. Whistleblower protection.
Sec. 633. Medical isotope production.
Sec. 634. Fernald byproduct material.
Sec. 635. Safe disposal of greater-than-class C radioactive waste.
Sec. 636. Prohibition on nuclear exports to countries that sponsor 
          terrorism.
Sec. 637. Uranium enrichment facilities.
Sec. 638. National uranium stockpile.

       Subtitle C--Advanced Reactor Hydrogen Cogeneration Project

Sec. 651. Project establishment.
Sec. 652. Project definition.
Sec. 653. Project management.
Sec. 654. Project requirements.
Sec. 655. Authorization of appropriations.

                      Subtitle D--Nuclear Security

Sec. 661. Nuclear facility threats.
Sec. 662. Fingerprinting for criminal history record checks.
Sec. 663. Use of firearms by security personnel of licensees and 
          certificate holders of the Commission.
Sec. 664. Unauthorized introduction of dangerous weapons.
Sec. 665. Sabotage of nuclear facilities or fuel.
Sec. 666. Secure transfer of nuclear materials.
Sec. 667. Department of Homeland Security consultation.
Sec. 668. Authorization of appropriations.

                      TITLE VII--VEHICLES AND FUELS

                      Subtitle A--Existing Programs

Sec. 701. Use of alternative fuels by dual-fueled vehicles.
Sec. 702. Neighborhood electric vehicles.
Sec. 703. Credits for medium and heavy duty dedicated vehicles.
Sec. 704. Incremental cost allocation.
Sec. 705. Alternative compliance and flexibility.
Sec. 706. Review of Energy Policy Act of 1992 programs.
Sec. 707. Report concerning compliance with alternative fueled vehicle 
          purchasing requirements.

   Subtitle B--Hybrid Vehicles, Advanced Vehicles, and Fuel Cell Buses

                         Part 1--Hybrid Vehicles

Sec. 711. Hybrid vehicles.

                        Part 2--Advanced Vehicles

Sec. 721. Definitions.
Sec. 722. Pilot program.
Sec. 723. Reports to Congress.
Sec. 724. Authorization of appropriations.

                         Part 3--Fuel Cell Buses

Sec. 731. Fuel cell transit bus demonstration.

                     Subtitle C--Clean School Buses

Sec. 741. Definitions.
Sec. 742. Program for replacement of certain school buses with clean 
          school buses.
Sec. 743. Diesel retrofit program.
Sec. 744. Fuel cell school buses.

                        Subtitle D--Miscellaneous

Sec. 751. Railroad efficiency.
Sec. 752. Mobile emission reductions trading and crediting.
Sec. 753. Aviation fuel conservation and emissions.
Sec. 754. Diesel fueled vehicles.
Sec. 755. Conserve by bicycling program.
Sec. 756. Reduction of engine idling of heavy-duty vehicles.
Sec. 757. Biodiesel engine testing program.
Sec. 758. High occupancy vehicle exception.

                    Subtitle E--Automobile Efficiency

Sec. 771. Authorization of appropriations for implementation and 
          enforcement of fuel economy standards.
Sec. 772. Revised considerations for decisions on maximum feasible 
          average fuel economy.
Sec. 773. Extension of maximum fuel economy increase for alternative 
          fueled vehicles.
Sec. 774. Study of feasibility and effects of reducing use of fuel for 
          automobiles.

                          TITLE VIII--HYDROGEN

Sec. 801. Definitions.
Sec. 802. Plan.
Sec. 803. Programs.
Sec. 804. Interagency task force.
Sec. 805. Advisory Committee.
Sec. 806. External review.
Sec. 807. Miscellaneous provisions.
Sec. 808. Savings clause.
Sec. 809. Authorization of appropriations.

                   TITLE IX--RESEARCH AND DEVELOPMENT

Sec. 901. Goals.
Sec. 902. Definitions.

                      Subtitle A--Energy Efficiency

Sec. 904. Energy efficiency.
Sec. 905. Next Generation Lighting Initiative.
Sec. 906. National Building Performance Initiative.
Sec. 907. Secondary electric vehicle battery use program.
Sec. 908. Energy Efficiency Science Initiative.
Sec. 909. Electric motor control technology.
Sec. 910. Advanced Energy Technology Transfer Centers.

       Subtitle B--Distributed Energy and Electric Energy Systems

Sec. 911. Distributed energy and electric energy systems.
Sec. 912. Hybrid distributed power systems.
Sec. 913. High power density industry program.
Sec. 914. Micro-cogeneration energy technology.
Sec. 915. Distributed energy technology demonstration program.
Sec. 916. Reciprocating power.

                      Subtitle C--Renewable Energy

Sec. 918. Renewable energy.
Sec. 919. Bioenergy programs.
Sec. 920. Concentrating solar power research and development program.
Sec. 921. Miscellaneous projects.
Sec. 922. Renewable energy in public buildings.
Sec. 923. Study of marine renewable energy options.

                       Subtitle D--Nuclear Energy

Sec. 924. Nuclear energy.
Sec. 925. Nuclear energy research and development programs.
Sec. 926. Advanced fuel cycle initiative.
Sec. 927. University nuclear science and engineering support.
Sec. 928. Security of reactor designs.
Sec. 929. Alternatives to industrial radioactive sources.
Sec. 930. Geological isolation of spent fuel.

                        Subtitle E--Fossil Energy

                        Part I--Research Programs

Sec. 931. Fossil energy.
Sec. 932. Oil and gas research programs.
Sec. 933. Technology transfer.
Sec. 934. Research and development for coal mining technologies.
Sec. 935. Coal and related technologies program.
Sec. 936. Complex well technology testing facility.
Sec. 937. Fischer-Tropsch diesel fuel loan guarantee program.

   Part II--Ultra-deepwater and Unconventional Natural Gas and Other 
                           Petroleum Resources

Sec. 941. Program authority.
Sec. 942. Ultra-deepwater program.
Sec. 943. Unconventional natural gas and other petroleum resources 
          program.
Sec. 944. Additional requirements for awards.
Sec. 945. Advisory Committees.
Sec. 946. Limits on participation.
Sec. 947. Sunset.
Sec. 948. Definitions.
Sec. 949. Funding.

                           Subtitle F--Science

Sec. 951. Science.
Sec. 952. United States participation in ITER.
Sec. 953. Plan for fusion energy sciences program.
Sec. 954. Spallation Neutron Source.
Sec. 955. Support for science and energy facilities and infrastructure.
Sec. 956. Catalysis research and development program.
Sec. 957. Nanoscale science and engineering research, development, 
          demonstration, and commercial application.
Sec. 958. Advanced scientific computing for energy missions.
Sec. 959. Genomes to Life program.
Sec. 960. Fission and fusion energy materials research program.
Sec. 961. Energy-Water Supply Program.
Sec. 962. Nitrogen fixation.

                   Subtitle G--Energy and Environment

Sec. 964. United States-Mexico energy technology cooperation.
Sec. 965. Western Hemisphere energy cooperation.
Sec. 966. Waste reduction and use of alternatives.
Sec. 967. Report on fuel cell test center.
Sec. 968. Arctic Engineering Research Center.
Sec. 969. Barrow Geophysical Research Facility.
Sec. 970. Western Michigan demonstration project.

                         Subtitle H--Management

Sec. 971. Availability of funds.
Sec. 972. Cost sharing.
Sec. 973. Merit review of proposals.
Sec. 974. External technical review of departmental programs.
Sec. 975. Improved coordination of technology transfer activities.
Sec. 976. Federal laboratory educational partners.
Sec. 977. Interagency cooperation.
Sec. 978. Technology infrastructure program.
Sec. 979. Reprogramming.
Sec. 980. Construction with other laws.
Sec. 981. Report on research and development program evaluation 
          methodologies.
Sec. 982. Department of Energy Science and Technology Scholarship 
          Program.
Sec. 983. Report on equal employment opportunity practices.
Sec. 984. Small business advocacy and assistance.
Sec. 985. Report on mobility of scientific and technical personnel.
Sec. 986. National Academy of Sciences report.
Sec. 987. Outreach.
Sec. 988. Competitive award of management contracts.
Sec. 989. Educational programs in science and mathematics.

                TITLE X--DEPARTMENT OF ENERGY MANAGEMENT

Sec. 1001. Additional Assistant Secretary position.
Sec. 1002. Other transactions authority.

                    TITLE XI--PERSONNEL AND TRAINING

Sec. 1101. Training guidelines for electric energy industry personnel.
Sec. 1102. Improved access to energy-related scientific and technical 
          careers.
Sec. 1103. National Power Plant Operations Technology and Education 
          Center.
Sec. 1104. International energy training.

                         TITLE XII--ELECTRICITY

Sec. 1201. Short title.

                    Subtitle A--Reliability Standards

Sec. 1211. Electric reliability standards.

          Subtitle B--Transmission Infrastructure Modernization

Sec. 1221. Siting of interstate electric transmission facilities.
Sec. 1222. Third-party finance.
Sec. 1223. Transmission system monitoring.
Sec. 1224. Advanced transmission technologies.
Sec. 1225. Electric transmission and distribution programs.
Sec. 1226. Advanced Power System Technology Incentive Program.
Sec. 1227. Office of Electric Transmission and Distribution.

             Subtitle C--Transmission Operation Improvements

Sec. 1231. Open nondiscriminatory access.
Sec. 1232. Sense of the Congress on Regional Transmission Organizations.
Sec. 1233. Regional Transmission Organization applications progress 
          report.
Sec. 1234. Federal utility participation in Regional Transmission 
          Organizations.
Sec. 1235. Standard market design.
Sec. 1236. Native load service obligation.
Sec. 1237. Study on the benefits of economic dispatch.

                  Subtitle D--Transmission Rate Reform

Sec. 1241. Transmission infrastructure investment.
Sec. 1242. Voluntary transmission pricing plans.

                     Subtitle E--Amendments to PURPA

Sec. 1251. Net metering and additional standards.
Sec. 1252. Smart metering.
Sec. 1253. Cogeneration and small power production purchase and sale 
          requirements.

                       Subtitle F--Repeal of PUHCA

Sec. 1261. Short title.
Sec. 1262. Definitions.
Sec. 1263. Repeal of the Public Utility Holding Company Act of 1935.
Sec. 1264. Federal access to books and records.
Sec. 1265. State access to books and records.
Sec. 1266. Exemption authority.
Sec. 1267. Affiliate transactions.
Sec. 1268. Applicability.
Sec. 1269. Effect on other regulations.
Sec. 1270. Enforcement.
Sec. 1271. Savings provisions.
Sec. 1272. Implementation.
Sec. 1273. Transfer of resources.
Sec. 1274. Effective date.
Sec. 1275. Service allocation.
Sec. 1276. Authorization of appropriations.
Sec. 1277. Conforming amendments to the Federal Power Act.

  Subtitle G--Market Transparency, Enforcement, and Consumer Protection

Sec. 1281. Market transparency rules.
Sec. 1282. Market manipulation.
Sec. 1283. Enforcement.
Sec. 1284. Refund effective date.
Sec. 1285. Refund authority.
Sec. 1286. Sanctity of contract.
Sec. 1287. Consumer privacy and unfair trade practices.

                        Subtitle H--Merger Reform

Sec. 1291. Merger review reform and accountability.
Sec. 1292. Electric utility mergers.

                         Subtitle I--Definitions

Sec. 1295. Definitions.

             Subtitle J--Technical and Conforming Amendments

Sec. 1297. Conforming amendments.

                    TITLE XIII--ENERGY TAX INCENTIVES

Sec. 1300. Short title; amendment of 1986 code.

                        Subtitle A--Conservation

                Part I--Residential and Business Property

Sec. 1301. Credit for residential energy efficient property.
Sec. 1302. Extension and expansion of credit for electricity produced 
          from certain renewable resources.
Sec. 1303. Credit for business installation of qualified fuel cells.
Sec. 1304. Credit for energy efficiency improvements to existing homes.
Sec. 1305. Credit for construction of new energy efficient homes.
Sec. 1306. Energy credit for combined heat and power system property.
Sec. 1307. Credit for energy efficient appliances.
Sec. 1308. Energy efficient commercial buildings deduction.
Sec. 1309. Three-year applicable recovery period for depreciation of 
          qualified energy management devices.
Sec. 1310. Credit for production from advanced nuclear power facilities.

              Part II--Fuels and Alternative Motor Vehicles

Sec. 1311. Repeal of 4.3-cent motor fuel excise taxes on railroads and 
          inland waterway transportation which remain in general fund.
Sec. 1312. Reduced motor fuel excise tax on certain mixtures of diesel 
          fuel.
Sec. 1313. Small ethanol producer credit.
Sec. 1314. Incentives for biodiesel.
Sec. 1315. Alcohol fuel and biodiesel mixtures excise tax credit.
Sec. 1316. Nonapplication of export exemption to delivery of fuel to 
          motor vehicles removed from United States.
Sec. 1317. Repeal of phaseouts for qualified electric vehicle credit and 
          deduction for clean fuel-vehicles.
Sec. 1318. Alternative motor vehicle credit.
Sec. 1319. Modifications of deduction for certain refueling property.

                         Subtitle B--Reliability

Sec. 1321. Natural gas gathering lines treated as 7-year property.
Sec. 1322. Natural gas distribution lines treated as 15-year property.
Sec. 1323. Electric transmission property treated as 15-year property.
Sec. 1324. Expensing of capital costs incurred in complying with 
          Environmental Protection Agency sulfur regulations.
Sec. 1325. Credit for production of low sulfur diesel fuel.
Sec. 1326. Determination of small refiner exception to oil depletion 
          deduction.
Sec. 1327. Sales or dispositions to implement Federal Energy Regulatory 
          Commission or State electric restructuring policy.
Sec. 1328. Modifications to special rules for nuclear decommissioning 
          costs.
Sec. 1329. Treatment of certain income of cooperatives.
Sec. 1330. Arbitrage rules not to apply to prepayments for natural gas.

                         Subtitle C--Production

                     Part I--Oil and Gas Provisions

Sec. 1341. Oil and gas from marginal wells.
Sec. 1342. Temporary suspension of limitation based on 65 percent of 
          taxable income and extension of suspension of taxable income 
          limit with respect to marginal production.
Sec. 1343. Amortization of delay rental payments.
Sec. 1344. Amortization of geological and geophysical expenditures.
Sec. 1345. Extension and modification of credit for producing fuel from 
          a nonconventional source.

               Part II--Alternative Minimum Tax Provisions

Sec. 1346. New nonrefundable personal credits allowed against regular 
          and minimum taxes.
Sec. 1347. Business related energy credits allowed against regular and 
          minimum tax.
Sec. 1348. Temporary repeal of alternative minimum tax preference for 
          intangible drilling costs.

                     Part III--Clean Coal Incentives

Sec. 1351. Credit for clean coal technology units.
Sec. 1352. Expansion of amortization for certain pollution control 
          facilities.
Sec. 1353. 5-year recovery period for eligible integrated gasification 
          combined cycle technology unit eligible for credit.

               Part IV--High Volume Natural Gas Provisions

Sec. 1355. High volume natural gas pipe treated as 7-year property.
Sec. 1356. Extension of enhanced oil recovery credit to high volume 
          natural gas facilities.

                    Subtitle D--Additional Provisions

Sec. 1361. Extension of accelerated depreciation benefit for energy-
          related businesses on Indian reservations.
Sec. 1362. Payment of dividends on stock of cooperatives without 
          reducing patronage dividends.
Sec. 1363. Distributions from publicly traded partnerships treated as 
          qualifying income of regulated investment companies.
Sec. 1364. Ceiling fans.
Sec. 1365. Certain steam generators, and certain reactor vessel heads, 
          used in nuclear facilities.
Sec. 1366. Brownfields demonstration program for qualified green 
          building and sustainable design projects.

                        TITLE XIV--MISCELLANEOUS

          Subtitle A--Rural and Remote Electricity Construction

Sec. 1401. Denali Commission programs.
Sec. 1402. Rural and remote community assistance.

                      Subtitle B--Coastal Programs

Sec. 1411. Royalty payments under leases under the Outer Continental 
          Shelf Lands Act.
Sec. 1412. Domestic offshore energy reinvestment.

 Subtitle C--Reforms to the Board of Directors of the Tennessee Valley 
                                Authority

Sec. 1431. Change in composition, operation, and duties of the board of 
          directors of the Tennessee Valley Authority.
Sec. 1432. Change in manner of appointment of staff.
Sec. 1433. Conforming amendments.
Sec. 1434. Appointments; effective date; transition.

                      Subtitle D--Other Provisions

Sec. 1441. Continuation of transmission security order.
Sec. 1442. Review of agency determinations.
Sec. 1443. Attainment dates for downwind ozone nonattainment areas.
Sec. 1444. Energy production incentives.
Sec. 1445. Use of granular mine tailings.

                    TITLE XV--ETHANOL AND MOTOR FUELS

                     Subtitle A--General Provisions

Sec. 1501. Renewable content of motor vehicle fuel.
Sec. 1502. Fuels safe harbor.
Sec. 1503. Findings and MTBE transition assistance.
Sec. 1504. Use of MTBE.
Sec. 1505. National Academy of Sciences review and presidential 
          determination.
Sec. 1506. Elimination of oxygen content requirement for reformulated 
          gasoline.
Sec. 1507. Analyses of motor vehicle fuel changes.
Sec. 1508. Data collection.
Sec. 1509. Reducing the proliferation of State fuel controls.
Sec. 1510. Fuel system requirements harmonization study.
Sec. 1511. Commercial byproducts from municipal solid waste and 
          cellulosic biomass loan guarantee program.
Sec. 1512. Resource center.
Sec. 1513. Cellulosic biomass and waste-derived ethanol conversion 
          assistance.
Sec. 1514. Blending of compliant reformulated gasolines.

             Subtitle B--Underground Storage Tank Compliance

Sec. 1521. Short title.
Sec. 1522. Leaking underground storage tanks.
Sec. 1523. Inspection of underground storage tanks.
Sec. 1524. Operator training.
Sec. 1525. Remediation from oxygenated fuel additives.
Sec. 1526. Release prevention, compliance, and enforcement.
Sec. 1527. Delivery prohibition.
Sec. 1528. Federal facilities.
Sec. 1529. Tanks on tribal lands.
Sec. 1530. Future release containment technology.
Sec. 1531. Authorization of appropriations.
Sec. 1532. Conforming amendments.
Sec. 1533. Technical amendments.

                           TITLE XVI--STUDIES

Sec. 1601. Study on inventory of petroleum and natural gas storage.
Sec. 1602. Natural gas supply shortage report.
Sec. 1603. Split-estate Federal oil and gas leasing and development 
          practices.
Sec. 1604. Resolution of Federal resource development conflicts in the 
          Powder River Basin.
Sec. 1605. Study of energy efficiency standards.
Sec. 1606. Telecommuting study.
Sec. 1607. LIHEAP report.
Sec. 1608. Oil bypass filtration technology.
Sec. 1609. Total integrated thermal systems.
Sec. 1610. University collaboration.
Sec. 1611. Reliability and consumer protection assessment.

                       TITLE I--ENERGY EFFICIENCY

                      Subtitle A--Federal Programs

SEC. 101. ENERGY AND WATER SAVING MEASURES IN CONGRESSIONAL BUILDINGS.

    (a) In General.--Part 3 of title V of the National Energy 
Conservation Policy Act (42 U.S.C. 8251 et seq.) is amended by 
adding at the end the following:

``SEC. 552. ENERGY AND WATER SAVINGS MEASURES IN CONGRESSIONAL 
                    BUILDINGS.

    ``(a) In General.--The Architect of the Capitol--
            ``(1) shall develop, update, and implement a cost-
        effective energy conservation and management plan 
        (referred to in this section as the `plan') for all 
        facilities administered by Congress (referred to in 
        this section as `congressional buildings') to meet the 
        energy performance requirements for Federal buildings 
        established under section 543(a)(1); and
            ``(2) shall submit the plan to Congress, not later 
        than 180 days after the date of enactment of this 
        section.
    ``(b) Plan Requirements.--The plan shall include--
            ``(1) a description of the life cycle cost analysis 
        used to determine the cost-effectiveness of proposed 
        energy efficiency projects;
            ``(2) a schedule of energy surveys to ensure 
        complete surveys of all congressional buildings every 5 
        years to determine the cost and payback period of 
        energy and water conservation measures;
            ``(3) a strategy for installation of life cycle 
        cost-effective energy and water conservation measures;
            ``(4) the results of a study of the costs and 
        benefits of installation of submetering in 
        congressional buildings; and
            ``(5) information packages and `how-to' guides for 
        each Member and employing authority of Congress that 
        detail simple, cost-effective methods to save energy 
        and taxpayer dollars in the workplace.
    ``(c) Annual Report.--The Architect of the Capitol shall 
submit to Congress annually a report on congressional energy 
management and conservation programs required under this 
section that describes in detail--
            ``(1) energy expenditures and savings estimates for 
        each facility;
            ``(2) energy management and conservation projects; 
        and
            ``(3) future priorities to ensure compliance with 
        this section.''.
    (b) Table of Contents Amendment.--The table of contents of 
the National Energy Conservation Policy Act is amended by 
adding at the end of the items relating to part 3 of title V 
the following new item:

``Sec. 552. Energy and water savings measures in congressional 
          buildings.''.

    (c) Repeal.--Section 310 of the Legislative Branch 
Appropriations Act, 1999 (2 U.S.C. 1815), is repealed.
    (d) Energy Infrastructure.--The Architect of the Capitol, 
building on the Master Plan Study completed in July 2000, shall 
commission a study to evaluate the energy infrastructure of the 
Capital Complex to determine how the infrastructure could be 
augmented to become more energy efficient, using unconventional 
and renewable energy resources, in a way that would enable the 
Complex to have reliable utility service in the event of power 
fluctuations, shortages, or outages.
    (e) Authorization of Appropriations.--There are authorized 
to be appropriated to the Architect of the Capitol to carry out 
subsection (d), $2,000,000 for each of fiscal years 2004 
through 2008.

SEC. 102. ENERGY MANAGEMENT REQUIREMENTS.

    (a) Energy Reduction Goals.--
            (1) Amendment.--Section 543(a)(1) of the National 
        Energy Conservation Policy Act (42 U.S.C. 8253(a)(1)) 
        is amended by striking ``its Federal buildings so 
        that'' and all that follows through the end and 
        inserting ``the Federal buildings of the agency 
        (including each industrial or laboratory facility) so 
        that the energy consumption per gross square foot of 
        the Federal buildings of the agency in fiscal years 
        2004 through 2013 is reduced, as compared with the 
        energy consumption per gross square foot of the Federal 
        buildings of the agency in fiscal year 2001, by the 
        percentage specified in the following table:

  ``Fiscal Year                                     Percentage reduction
        2004..................................................        2 
        2005..................................................        4 
        2006..................................................        6 
        2007..................................................        8 
        2008..................................................       10 
        2009..................................................       12 
        2010..................................................       14 
        2011..................................................       16 
        2012..................................................       18 
        2013..................................................    20.''.

            (2) Reporting baseline.--The energy reduction goals 
        and baseline established in paragraph (1) of section 
        543(a) of the National Energy Conservation Policy Act 
        (42 U.S.C. 8253(a)(1)), as amended by this subsection, 
        supersede all previous goals and baselines under such 
        paragraph, and related reporting requirements.
    (b) Review and Revision of Energy Performance 
Requirement.--Section 543(a) of the National Energy 
Conservation Policy Act (42 U.S.C. 8253(a)) is further amended 
by adding at the end the following:
    ``(3) Not later than December 31, 2012, the Secretary shall 
review the results of the implementation of the energy 
performance requirement established under paragraph (1) and 
submit to Congress recommendations concerning energy 
performance requirements for fiscal years 2014 through 2023.''.
    (c) Exclusions.--Section 543(c)(1) of the National Energy 
Conservation Policy Act (42 U.S.C. 8253(c)(1)) is amended by 
striking ``An agency may exclude'' and all that follows through 
the end and inserting ``(A) An agency may exclude, from the 
energy performance requirement for a fiscal year established 
under subsection (a) and the energy management requirement 
established under subsection (b), any Federal building or 
collection of Federal buildings, if the head of the agency 
finds that--
            ``(i) compliance with those requirements would be 
        impracticable;
            ``(ii) the agency has completed and submitted all 
        federally required energy management reports;
            ``(iii) the agency has achieved compliance with the 
        energy efficiency requirements of this Act, the Energy 
        Policy Act of 1992, Executive orders, and other Federal 
        law; and
            ``(iv) the agency has implemented all practicable, 
        life cycle cost-effective projects with respect to the 
        Federal building or collection of Federal buildings to 
        be excluded.
    ``(B) A finding of impracticability under subparagraph 
(A)(i) shall be based on--
            ``(i) the energy intensiveness of activities 
        carried out in the Federal building or collection of 
        Federal buildings; or
            ``(ii) the fact that the Federal building or 
        collection of Federal buildings is used in the 
        performance of a national security function.''.
    (d) Review by Secretary.--Section 543(c)(2) of the National 
Energy Conservation Policy Act (42 U.S.C. 8253(c)(2)) is 
amended--
            (1) by striking ``impracticability standards'' and 
        inserting ``standards for exclusion'';
            (2) by striking ``a finding of impracticability'' 
        and inserting ``the exclusion''; and
            (3) by striking ``energy consumption requirements'' 
        and inserting ``requirements of subsections (a) and 
        (b)(1)''.
    (e) Criteria.--Section 543(c) of the National Energy 
Conservation Policy Act (42 U.S.C. 8253(c)) is further amended 
by adding at the end the following:
    ``(3) Not later than 180 days after the date of enactment 
of this paragraph, the Secretary shall issue guidelines that 
establish criteria for exclusions under paragraph (1).''.
    (f) Retention of Energy and Water Savings.--Section 546 of 
the National Energy Conservation Policy Act (42 U.S.C. 8256) is 
amended by adding at the end the following new subsection:
    ``(e) Retention of Energy and Water Savings.--An agency may 
retain any funds appropriated to that agency for energy 
expenditures, water expenditures, or wastewater treatment 
expenditures, at buildings subject to the requirements of 
section 543(a) and (b), that are not made because of energy 
savings or water savings. Except as otherwise provided by law, 
such funds may be used only for energy efficiency, water 
conservation, or unconventional and renewable energy resources 
projects.''.
    (g) Reports.--Section 548(b) of the National Energy 
Conservation Policy Act (42 U.S.C. 8258(b)) is amended--
            (1) in the subsection heading, by inserting ``the 
        President and'' before ``Congress''; and
            (2) by inserting ``President and'' before 
        ``Congress''.
    (h) Conforming Amendment.--Section 550(d) of the National 
Energy Conservation Policy Act (42 U.S.C. 8258b(d)) is amended 
in the second sentence by striking ``the 20 percent reduction 
goal established under section 543(a) of the National Energy 
Conservation Policy Act (42 U.S.C. 8253(a)).'' and inserting 
``each of the energy reduction goals established under section 
543(a).''.

SEC. 103. ENERGY USE MEASUREMENT AND ACCOUNTABILITY.

    Section 543 of the National Energy Conservation Policy Act 
(42 U.S.C. 8253  is further amended by adding at the end the 
following:
    ``(e) Metering of Energy Use.--
            ``(1) Deadline.--By October 1, 2010, in accordance 
        with guidelines established by the Secretary under 
        paragraph (2), all Federal buildings shall, for the 
        purposes of efficient use of energy and reduction in 
        the cost of electricity used in such buildings, be 
        metered or submetered. Each agency shall use, to the 
        maximum extent practicable, advanced meters or advanced 
        metering devices that provide data at least daily and 
        that measure at least hourly consumption of electricity 
        in the Federal buildings of the agency. Such data shall 
        be incorporated into existing Federal energy tracking 
        systems and made available to Federal facility energy 
        managers.
            ``(2) Guidelines.--
                    ``(A) In general.--Not later than 180 days 
                after the date of enactment of this subsection, 
                the Secretary, in consultation with the 
                Department of Defense, the General Services 
                Administration, representatives from the 
                metering industry, utility industry, energy 
                services industry, energy efficiency industry, 
                energy efficiency advocacy organizations, 
                national laboratories, universities, and 
                Federal facility energy managers, shall 
                establish guidelines for agencies to carry out 
                paragraph (1).
                    ``(B) Requirements for guidelines.--The 
                guidelines shall--
                            ``(i) take into consideration--
                                    ``(I) the cost of metering 
                                and submetering and the reduced 
                                cost of operation and 
                                maintenance expected to result 
                                from metering and submetering;
                                    ``(II) the extent to which 
                                metering and submetering are 
                                expected to result in increased 
                                potential for energy 
                                management, increased potential 
                                for energy savings and energy 
                                efficiency improvement, and 
                                cost and energy savings due to 
                                utility contract aggregation; 
                                and
                                    ``(III) the measurement and 
                                verification protocols of the 
                                Department of Energy;
                            ``(ii) include recommendations 
                        concerning the amount of funds and the 
                        number of trained personnel necessary 
                        to gather and use the metering 
                        information to track and reduce energy 
                        use;
                            ``(iii) establish priorities for 
                        types and locations of buildings to be 
                        metered and submetered based on cost-
                        effectiveness and a schedule of 1 or 
                        more dates, not later than 1 year after 
                        the date of issuance of the guidelines, 
                        on which the requirements specified in 
                        paragraph (1) shall take effect; and
                            ``(iv) establish exclusions from 
                        the requirements specified in paragraph 
                        (1) based on the de minimis quantity of 
                        energy use of a Federal building, 
                        industrial process, or structure.
            ``(3) Plan.--Not later than 6 months after the date 
        guidelines are established under paragraph (2), in a 
        report submitted by the agency under section 548(a), 
        each agency shall submit to the Secretary a plan 
        describing how the agency will implement the 
        requirements of paragraph (1), including (A) how the 
        agency will designate personnel primarily responsible 
        for achieving the requirements and (B) demonstration by 
        the agency, complete with documentation, of any finding 
        that advanced meters or advanced metering devices, as 
        defined in paragraph (1), are not practicable.''.

SEC. 104. PROCUREMENT OF ENERGY EFFICIENT PRODUCTS.

    (a) Requirements.--Part 3 of title V of the National Energy 
Conservation Policy Act (42 U.S.C. 8251 et seq.), as amended by 
section 101, is amended by adding at the end the following:

``SEC. 553. FEDERAL PROCUREMENT OF ENERGY EFFICIENT PRODUCTS.

    ``(a) Definitions.--In this section:
            ``(1) Energy star product.--The term `Energy Star 
        product' means a product that is rated for energy 
        efficiency under an Energy Star program.
            ``(2) Energy star program.--The term `Energy Star 
        program' means the program established by section 324A 
        of the Energy Policy and Conservation Act.
            ``(3) Executive agency.--The term `executive 
        agency' has the meaning given the term in section 4 of 
        the Office of Federal Procurement Policy Act (41 U.S.C. 
        403).
            ``(4) FEMP designated product.--The term `FEMP 
        designated product' means a product that is designated 
        under the Federal Energy Management Program of the 
        Department of Energy as being among the highest 25 
        percent of equivalent products for energy efficiency.
    ``(b) Procurement of Energy Efficient Products.--
            ``(1) Requirement.--To meet the requirements of an 
        executive agency for an energy consuming product, the 
        head of the executive agency shall, except as provided 
        in paragraph (2), procure--
                    ``(A) an Energy Star product; or
                    ``(B) a FEMP designated product.
            ``(2) Exceptions.--The head of an executive agency 
        is not required to procure an Energy Star product or 
        FEMP designated product under paragraph (1) if the head 
        of the executive agency finds in writing that--
                    ``(A) an Energy Star product or FEMP 
                designated product is not cost-effective over 
                the life of the product taking energy cost 
                savings into account; or
                    ``(B) no Energy Star product or FEMP 
                designated product is reasonably available that 
                meets the functional requirements of the 
                executive agency.
            ``(3) Procurement planning.--The head of an 
        executive agency shall incorporate into the 
        specifications for all procurements involving energy 
        consuming products and systems, including guide 
        specifications, project specifications, and 
        construction, renovation, and services contracts that 
        include provision of energy consuming products and 
        systems, and into the factors for the evaluation of 
        offers received for the procurement, criteria for 
        energy efficiency that are consistent with the criteria 
        used for rating Energy Star products and for rating 
        FEMP designated products.
    ``(c) Listing of Energy Efficient Products in Federal 
Catalogs.--Energy Star products and FEMP designated products 
shall be clearly identified and prominently displayed in any 
inventory or listing of products by the General Services 
Administration or the Defense Logistics Agency. The General 
Services Administration or the Defense Logistics Agency shall 
supply only Energy Star products or FEMP designated products 
for all product categories covered by the Energy Star program 
or the Federal Energy Management Program, except in cases where 
the agency ordering a product specifies in writing that no 
Energy Star product or FEMP designated product is available to 
meet the buyer's functional requirements, or that no Energy 
Star product or FEMP designated product is cost-effective for 
the intended application over the life of the product, taking 
energy cost savings into account.
    ``(d) Specific Products.--(1) In the case of electric 
motors of 1 to 500 horsepower, agencies shall select only 
premium efficient motors that meet a standard designated by the 
Secretary. The Secretary shall designate such a standard not 
later than 120 days after the date of the enactment of this 
section, after considering the recommendations of associated 
electric motor manufacturers and energy efficiency groups.
    ``(2) All Federal agencies are encouraged to take actions 
to maximize the efficiency of air conditioning and 
refrigeration equipment, including appropriate cleaning and 
maintenance, including the use of any system treatment or 
additive that will reduce the electricity consumed by air 
conditioning and refrigeration equipment. Any such treatment or 
additive must be--
            ``(A) determined by the Secretary to be effective 
        in increasing the efficiency of air conditioning and 
        refrigeration equipment without having an adverse 
        impact on air conditioning performance (including 
        cooling capacity) or equipment useful life;
            ``(B) determined by the Administrator of the 
        Environmental Protection Agency to be environmentally 
        safe; and
            ``(C) shown to increase seasonal energy efficiency 
        ratio (SEER) or energy efficiency ratio (EER) when 
        tested by the National Institute of Standards and 
        Technology according to Department of Energy test 
        procedures without causing any adverse impact on the 
        system, system components, the refrigerant or 
        lubricant, or other materials in the system.

Results of testing described in subparagraph (C) shall be 
published in the Federal Register for public review and 
comment. For purposes of this section, a hardware device or 
primary refrigerant shall not be considered an additive.
    ``(e) Regulations.--Not later than 180 days after the date 
of the enactment of this section, the Secretary shall issue 
guidelines to carry out this section.''.
    (b) Conforming Amendment.--The table of contents of the 
National Energy Conservation Policy Act is further amended by 
inserting after the item relating to section 552 the following 
new item:

``Sec. 553. Federal procurement of energy efficient products.''.

SEC. 105. ENERGY SAVINGS PERFORMANCE CONTRACTS.

    (a) Permanent Extension.--Effective September 30, 2003, 
section 801(c) of the National Energy Conservation Policy Act 
(42 U.S.C. 8287(c)) is repealed.
    (b) Payment of Costs.--Section 802 of the National Energy 
Conservation Policy Act (42 U.S.C. 8287a) is amended by 
inserting ``, water, or wastewater treatment'' after ``payment 
of energy''.
    (c) Energy Savings.--Section 804(2) of the National Energy 
Conservation Policy Act (42 U.S.C. 8287c(2)) is amended to read 
as follows:
            ``(2) The term `energy savings' means a reduction 
        in the cost of energy, water, or wastewater treatment, 
        from a base cost established through a methodology set 
        forth in the contract, used in an existing federally 
        owned building or buildings or other federally owned 
        facilities as a result of--
                    ``(A) the lease or purchase of operating 
                equipment, improvements, altered operation and 
                maintenance, or technical services;
                    ``(B) the increased efficient use of 
                existing energy sources by cogeneration or heat 
                recovery, excluding any cogeneration process 
                for other than a federally owned building or 
                buildings or other federally owned facilities; 
                or
                    ``(C) the increased efficient use of 
                existing water sources in either interior or 
                exterior applications.''.
    (d) Energy Savings Contract.--Section 804(3) of the 
National Energy Conservation Policy Act (42 U.S.C. 8287c(3)) is 
amended to read as follows:
            ``(3) The terms `energy savings contract' and 
        `energy savings performance contract' mean a contract 
        that provides for the performance of services for the 
        design, acquisition, installation, testing, and, where 
        appropriate, operation, maintenance, and repair, of an 
        identified energy or water conservation measure or 
        series of measures at 1 or more locations. Such 
        contracts shall, with respect to an agency facility 
        that is a public building (as such term is defined in 
        section 3301 of title 40, United States Code), be in 
        compliance with the prospectus requirements and 
        procedures of section 3307 of title 40, United States 
        Code.''.
    (e) Energy or Water Conservation Measure.--Section 804(4) 
of the National Energy Conservation Policy Act (42 U.S.C. 
8287c(4)) is amended to read as follows:
            ``(4) The term `energy or water conservation 
        measure' means--
                    ``(A) an energy conservation measure, as 
                defined in section 551; or
                    ``(B) a water conservation measure that 
                improves the efficiency of water use, is life-
                cycle cost-effective,and involves water 
conservation, water recycling or reuse, more efficient treatment of 
wastewater or stormwater, improvements in operation or maintenance 
efficiencies, retrofit activities, or other related activities, not at 
a Federal hydroelectric facility.''.
    (f) Review.--Not later than 180 days after the date of the 
enactment of this Act, the Secretary of Energy shall complete a 
review of the Energy Savings Performance Contract program to 
identify statutory, regulatory, and administrative obstacles 
that prevent Federal agencies from fully utilizing the program. 
In addition, this review shall identify all areas for 
increasing program flexibility and effectiveness, including 
audit and measurement verification requirements, accounting for 
energy use in determining savings, contracting requirements, 
including the identification of additional qualified 
contractors, and energy efficiency services covered. The 
Secretary shall report these findings to Congress and shall 
implement identified administrative and regulatory changes to 
increase program flexibility and effectiveness to the extent 
that such changes are consistent with statutory authority.
    (g) Extension of Authority.--Any energy savings performance 
contract entered into under section 801 of the National Energy 
Conservation Policy Act (42 U.S.C. 8287) after October 1, 2003, 
and before the date of enactment of this Act, shall be deemed 
to have been entered into pursuant to such section 801 as 
amended by subsection (a) of this section.

SEC. 106. ENERGY SAVINGS PERFORMANCE CONTRACTS PILOT PROGRAM FOR 
                    NONBUILDING APPLICATIONS.

    (a) In General.--The Secretary of Defense and the heads of 
other interested Federal agencies are authorized to enter into 
up to 10 energy savings performance contracts using procedures, 
established under subsection (b), based on the procedures under 
title VIII of the National Energy Conservation Policy Act (42 
U.S.C. 8287 et seq.), for the purpose of achieving energy or 
water savings, secondary savings, and benefits incidental to 
those purposes, in nonbuilding applications. The payments to be 
made by the Federal Government under such contracts shall not 
exceed a total of $200,000,000 for all such contracts combined.
    (b) Procedures.--The Secretary of Energy, in consultation 
with the Administrator of General Services and the Secretary of 
Defense, shall establish procedures based on the procedures 
under title VIII of the National Energy Conservation Policy Act 
(42 U.S.C. 8287 et seq.), for implementing this section.
    (c) Definitions.--In this section:
            (1) Nonbuilding application.--The term 
        ``nonbuilding application'' means--
                    (A) any class of vehicles, devices, or 
                equipment that are transportable under their 
                own power by land, sea, or air that consume 
                energy from any fuel source for the purpose of 
                such transportability, or to maintain a 
                controlled environment within such vehicle, 
                device, or equipment; or
                    (B) any Federally owned equipment used to 
                generate electricity or transport water.
            (2) Secondary savings.--The term ``secondary 
        savings'' means additional energy or cost savings that 
        are a direct consequence of the energy or water savings 
        that result from the financing and implementation of 
        the energy savings performance contract, including, but 
        not limited to, energy or cost savings that result from 
        a reduction in the need for fuel delivery and 
        logistical support, or the increased efficiency in the 
        production of electricity.
    (d) Report.--Not later than 3 years after the date of 
enactment of this section, the Secretary of Energy shall report 
to Congress on the progress and results of the projects funded 
pursuant to this section. Such report shall include a 
description of projects undertaken; the energy, water, and cost 
savings, secondary savings, and other benefits that resulted 
from such projects; and recommendations on whether the pilot 
program should be extended, expanded, or authorized permanently 
as a part of the program authorized under title VIII of the 
National Energy Conservation Policy Act (42 U.S.C. 8287 et 
seq.).

SEC. 107. VOLUNTARY COMMITMENTS TO REDUCE INDUSTRIAL ENERGY INTENSITY.

    (a) Voluntary Agreements.--The Secretary of Energy is 
authorized to enter into voluntary agreements with 1 or more 
persons in industrial sectors that consume significant amounts 
of primary energy per unit of physical output to reduce the 
energy intensity of their production activities by a 
significant amount relative to improvements in each sector in 
recent years.
    (b) Recognition.--The Secretary of Energy, in cooperation 
with the Administrator of the Environmental Protection Agency 
and other appropriate Federal agencies, shall recognize and 
publicize the achievements of participants in voluntary 
agreements under this section.
    (c) Definition.--In this section, the term ``energy 
intensity'' means the primary energy consumed per unit of 
physical output in an industrial process.

SEC. 108. ADVANCED BUILDING EFFICIENCY TESTBED.

    (a) Establishment.--The Secretary of Energy, in 
consultation with the Administrator of General Services, shall 
establish an Advanced Building Efficiency Testbed program for 
the development, testing, and demonstration of advanced 
engineering systems, components, and materials to enable 
innovations in building technologies. The program shall 
evaluate efficiency concepts for government and industry 
buildings, and demonstrate the ability of next generation 
buildings to support individual and organizational productivity 
and health (including by improving indoor air quality) as well 
as flexibility and technological change to improve 
environmental sustainability. Such program shall complement and 
not duplicate existing national programs.
    (b) Participants.--The program established under subsection 
(a) shall be led by a university with the ability to combine 
the expertise from numerous academic fields including, at a 
minimum, intelligent workplaces and advanced building systems 
and engineering, electrical and computer engineering, computer 
science, architecture, urban design, and environmental and 
mechanical engineering. Such university shall partner with 
other universities and entities who have established programs 
and the capability of advancing innovative building efficiency 
technologies.
    (c) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary of Energy to carry out this 
section $6,000,000 for each of the fiscal years 2004 through 
2006, to remain available until expended. For any fiscal year 
in which funds are expended under this section, the Secretary 
shall provide \1/3\ of the total amount to the lead university 
described in subsection (b), and provide the remaining \2/3\ to 
the other participants referred to in subsection (b) on an 
equal basis.

SEC. 109. FEDERAL BUILDING PERFORMANCE STANDARDS.

    Section 305(a) of the Energy Conservation and Production 
Act (42 U.S.C. 6834(a)) is amended--
            (1) in paragraph (2)(A), by striking ``CABO Model 
        Energy Code, 1992'' and inserting ``the 2003 
        International Energy Conservation Code''; and
            (2) by adding at the end the following:
    ``(3) Revised federal building energy efficiency 
performance standards.--
            ``(A) In general.--Not later than 1 year after the 
        date of enactment of this paragraph, the Secretary of 
        Energy shall establish, by rule, revised Federal 
        building energy efficiency performance standards that 
        require that--
                    ``(i) if life-cycle cost-effective, for new 
                Federal buildings--
                            ``(I) such buildings be designed so 
                        as to achieve energy consumption levels 
                        at least 30 percent below those of the 
                        version current as of the date of 
                        enactment of this paragraph of 
theASHRAE Standard or the International Energy Conservation Code, as 
appropriate; and
                            ``(II) sustainable design 
                        principles are applied to the siting, 
                        design, and construction of all new and 
                        replacement buildings; and
                    ``(ii) where water is used to achieve 
                energy efficiency, water conservation 
                technologies shall be applied to the extent 
                they are life-cycle cost effective.
            ``(B) Additional revisions.--Not later than 1 year 
        after the date of approval of each subsequent revision 
        of the ASHRAE Standard or the International Energy 
        Conservation Code, as appropriate, the Secretary of 
        Energy shall determine, based on the cost-effectiveness 
        of the requirements under the amendments, whether the 
        revised standards established under this paragraph 
        should be updated to reflect the amendments.
            ``(C) Statement on compliance of new buildings.--In 
        the budget request of the Federal agency for each 
        fiscal year and each report submitted by the Federal 
        agency under section 548(a) of the National Energy 
        Conservation Policy Act (42 U.S.C. 8258(a)), the head 
        of each Federal agency shall include--
                    ``(i) a list of all new Federal buildings 
                owned, operated, or controlled by the Federal 
                agency; and
                    ``(ii) a statement concerning whether the 
                Federal buildings meet or exceed the revised 
                standards established under this paragraph.''.

SEC. 110. INCREASED USE OF RECOVERED MINERAL COMPONENT IN FEDERALLY 
                    FUNDED PROJECTS INVOLVING PROCUREMENT OF CEMENT OR 
                    CONCRETE.

    (a) Amendment.--Subtitle F of the Solid Waste Disposal Act 
(42 U.S.C. 6961 et seq.) is amended by adding at the end the 
following new section:

  ``INCREASED USE OF RECOVERED MINERAL COMPONENT IN FEDERALLY FUNDED 
          PROJECTS INVOLVING PROCUREMENT OF CEMENT OR CONCRETE

    ``Sec. 6005. (a) Definitions.--In this section:
            ``(1) Agency head.--The term `agency head' means--
                    ``(A) the Secretary of Transportation; and
                    ``(B) the head of each other Federal agency 
                that on a regular basis procures, or provides 
                Federal funds to pay or assist in paying the 
                cost of procuring, material for cement or 
                concrete projects.
            ``(2) Cement or concrete project.--The term `cement 
        or concrete project' means a project for the 
        construction or maintenance of a highway or other 
        transportation facility or a Federal, State, or local 
        government building or other public facility that--
                    ``(A) involves the procurement of cement or 
                concrete; and
                    ``(B) is carried out in whole or in part 
                using Federal funds.
            ``(3) Recovered mineral component.--The term 
        `recovered mineral component' means--
                    ``(A) ground granulated blast furnace slag;
                    ``(B) coal combustion fly ash; and
                    ``(C) any other waste material or byproduct 
                recovered or diverted from solid waste that the 
                Administrator, in consultation with an agency 
                head, determines should be treated as recovered 
                mineral component under this section for use in 
                cement or concrete projects paid for, in whole 
                or in part, by the agency head.
    ``(b) Implementation of Requirements.--
            ``(1) In general.--Not later than 1 year after the 
        date of enactment of this section, the Administrator 
        and each agency head shall take such actions as are 
        necessary to implement fully all procurement 
        requirements and incentives in effect as of the date of 
        enactment of this section (including guidelines under 
        section 6002) that provide for the use of cement and 
        concrete incorporating recovered mineral component in 
        cement or concrete projects.
            ``(2) Priority.--In carrying out paragraph (1) an 
        agency head shall give priority to achieving greater 
        use of recovered mineral component in cement or 
        concrete projects for which recovered mineral 
        components historically have not been used or have been 
        used only minimally.
            ``(3) Conformance.--The Administrator and each 
        agency head shall carry out this subsection in 
        accordance with section 6002.
    ``(c) Full Implementation Study.--
            ``(1) In general.--The Administrator, in 
        cooperation with the Secretary of Transportation and 
        the Secretary of Energy, shall conduct a study to 
        determine the extent to which current procurement 
        requirements, when fully implemented in accordance with 
        subsection (b), may realize energy savings and 
        environmental benefits attainable with substitution of 
        recovered mineral component in cement used in cement or 
        concrete projects.
            ``(2) Matters to be addressed.--The study shall--
                    ``(A) quantify the extent to which 
                recovered mineral components are being 
                substituted for Portland cement, particularly 
                as a result of current procurement 
                requirements, and the energy savings and 
                environmental benefits associated with that 
                substitution;
                    ``(B) identify all barriers in procurement 
                requirements to greater realization of energy 
                savings and environmental benefits, including 
                barriers resulting from exceptions from current 
                law; and
                    ``(C)(i) identify potential mechanisms to 
                achieve greater substitution of recovered 
                mineral component in types of cement or 
                concrete projects for which recovered mineral 
                components historically have not been used or 
                have been used only minimally;
                    ``(ii) evaluate the feasibility of 
                establishing guidelines or standards for 
                optimized substitution rates of recovered 
                mineral component in those cement or concrete 
                projects; and
                    ``(iii) identify any potential 
                environmental or economic effects that may 
                result from greater substitution of recovered 
                mineral component in those cement or concrete 
                projects.
            ``(3) Report.--Not later than 30 months after the 
        date of enactment of this section, the Administrator 
        shall submit to Congress a report on the study.
    ``(d) Additional Procurement Requirements.--Unless the 
study conducted under subsection (c) identifies any effects or 
other problems described in subsection (c)(2)(C)(iii) that 
warrant further review or delay, the Administrator and each 
agency head shall, not later than 1 year after the release of 
the report in accordance with subsection (c)(3), take 
additional actions authorized under this Act to establish 
procurement requirements and incentives that provide for the 
use of cement and concrete with increased substitution of 
recovered mineral component in the construction and maintenance 
of cement or concrete projects, so as to--
            ``(1) realize more fully the energy savings and 
        environmental benefits associated with increased 
        substitution; and
            ``(2) eliminate barriers identified under 
        subsection (c).
    ``(e) Effect of Section.--Nothing in this section affects 
the requirements of section 6002 (including the guidelines and 
specifications for implementing those requirements).''.
    (b) Table of Contents Amendment.--The table of contents of 
the Solid Waste Disposal Act is amended by adding after the 
item relating to section 6004 the following new item:

``Sec. 6005. Increased use of recovered mineral component in federally 
          funded projects involving procurement of cement or 
          concrete.''.

            Subtitle B--Energy Assistance and State Programs

SEC. 121. LOW INCOME HOME ENERGY ASSISTANCE PROGRAM.

    Section 2602(b) of the Low-Income Home Energy Assistance 
Act of 1981 (42 U.S.C. 8621(b)) is amended by striking ``and 
$2,000,000,000 for each of fiscal years 2002 through 2004'' and 
inserting ``$2,000,000,000 for fiscal years 2002 and 2003, and 
$3,400,000,000 for each of fiscal years 2004 through 2006''.

SEC. 122. WEATHERIZATION ASSISTANCE.

    Section 422 of the Energy Conservation and Production Act 
(42 U.S.C. 6872) is amended by striking ``for fiscal years 1999 
through 2003 such sums as may be necessary'' and inserting 
``$325,000,000 for fiscal year 2004, $400,000,000 for fiscal 
year 2005, and $500,000,000 for fiscal year 2006''.

SEC. 123. STATE ENERGY PROGRAMS.

    (a) State Energy Conservation Plans.--Section 362 of the 
Energy Policy and Conservation Act (42 U.S.C. 6322) is amended 
by inserting at the end the following new subsection:
    ``(g) The Secretary shall, at least once every 3 years, 
invite the Governor of each State to review and, if necessary, 
revise the energy conservation plan of such State submitted 
under subsection (b) or (e). Such reviews should consider the 
energy conservation plans of other States within the region, 
and identify opportunities and actions carried out in pursuit 
of common energy conservation goals.''.
    (b) State Energy Efficiency Goals.--Section 364 of the 
Energy Policy and Conservation Act (42 U.S.C. 6324) is amended 
to read as follows:

                    ``STATE ENERGY EFFICIENCY GOALS

    ``Sec. 364. Each State energy conservation plan with 
respect to which assistance is made available under this part 
on or after the date of enactment of the Energy Policy Act of 
2003 shall contain a goal, consisting of an improvement of 25 
percent or more in the efficiency of use of energy in the State 
concerned in calendar year 2010 as compared to calendar year 
1990, and may contain interim goals.''.
    (c) Authorization of Appropriations.--Section 365(f) of the 
Energy Policy and Conservation Act (42 U.S.C. 6325(f)) is 
amended by striking ``for fiscal years 1999 through 2003 such 
sums as may be necessary'' and inserting ``$100,000,000 for 
each of the fiscal years 2004 and 2005 and $125,000,000 for 
fiscal year 2006''.

SEC. 124. ENERGY EFFICIENT APPLIANCE REBATE PROGRAMS.

    (a) Definitions.--In this section:
            (1) Eligible state.--The term ``eligible State'' 
        means a State that meets the requirements of subsection 
        (b).
            (2) Energy star program.--The term ``Energy Star 
        program'' means the program established by section 324A 
        of the Energy Policy and Conservation Act.
            (3) Residential energy star product.--The term 
        ``residential Energy Star product'' means a product for 
        a residence that is rated for energy efficiency under 
        the Energy Star program.
            (4) Secretary.--The term ``Secretary'' means the 
        Secretary of Energy.
            (5) State energy office.--The term ``State energy 
        office'' means 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).
            (6) State program.--The term ``State program'' 
        means a State energy efficient appliance rebate program 
        described in subsection (b)(1).
    (b) Eligible States.--A State shall be eligible to receive 
an allocation under subsection (c) if the State--
            (1) establishes (or has established) a State energy 
        efficient appliance rebate program to provide rebates 
        to residential consumers for the purchase of 
        residential Energy Star products to replace used 
        appliances of the same type;
            (2) submits an application for the allocation at 
        such time, in such form, and containing such 
        information as the Secretary may require; and
            (3) provides assurances satisfactory to the 
        Secretary that the State will use the allocation to 
        supplement, but not supplant, funds made available to 
        carry out the State program.
    (c) Amount of Allocations.--
            (1) In general.--Subject to paragraph (2), for each 
        fiscal year, the Secretary shall allocate to the State 
        energy office of each eligible State to carry out 
        subsection (d) an amount equal to the product obtained 
        by multiplying the amount made available under 
        subsection (f) for the fiscal year by the ratio that 
        the population of the State in the most recent calendar 
        year for which data are available bears to the total 
        population of all eligible States in that calendar 
        year.
            (2) Minimum allocations.--For each fiscal year, the 
        amounts allocated under this subsection shall be 
        adjusted proportionately so that no eligible State is 
        allocated a sum that is less than an amount determined 
        by the Secretary.
    (d) Use of Allocated Funds.--The allocation to a State 
energy office under subsection (c) may be used to pay up to 50 
percent of the cost of establishing and carrying out a State 
program.
    (e) Issuance of Rebates.--Rebates may be provided to 
residential consumers that meet the requirements of the State 
program. The amount of a rebate shall be determined by the 
State energy office, taking into consideration--
            (1) the amount of the allocation to the State 
        energy office under subsection (c);
            (2) the amount of any Federal or State tax 
        incentive available for the purchase of the residential 
        Energy Star product; and
            (3) the difference between the cost of the 
        residential Energy Star product and the cost of an 
        appliance that is not a residential Energy Star 
        product, but is of the same type as, and is the nearest 
        capacity, performance, and other relevant 
        characteristics (as determined by the State energy 
        office) to, the residential Energy Star product.
    (f) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary to carry out this section 
$50,000,000 for each of the fiscal years 2004 through 2008.

SEC. 125. ENERGY EFFICIENT PUBLIC BUILDINGS.

    (a) Grants.--The Secretary of Energy may make 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), or, if no such agency 
exists, a State agency designated by the Governor of the State, 
to assist units of local government in the State in improving 
the energy efficiency of public buildings and facilities--
            (1) through construction of new energy efficient 
        public buildings that use at least 30 percent less 
        energy than a comparable public building constructed in 
        compliance with standards prescribed in the most recent 
        version of the International Energy Conservation Code, 
        or a similar State code intended to achieve 
        substantially equivalent efficiency levels; or
            (2) through renovation of existing public buildings 
        to achieve reductions in energy use of at least 30 
        percent as compared to the baseline energy use in such 
        buildings prior to renovation, assuming a 3-year, 
        weather-normalized average for calculating such 
        baseline.
    (b) Administration.--State energy offices receiving grants 
under this section shall--
            (1) maintain such records and evidence of 
        compliance as the Secretary may require; and
            (2) develop and distribute information and 
        materials and conduct programs to provide technical 
        services and assistance to encourage planning, 
        financing, and design of energy efficient public 
        buildings by units of local government.
    (c) Authorization of Appropriations.--For the purposes of 
this section, there are authorized to be appropriated to the 
Secretary of Energy $30,000,000 for each of fiscal years 2004 
through 2008. Not more than 10 percent of appropriated funds 
shall be used for administration.

SEC. 126. LOW INCOME COMMUNITY ENERGY EFFICIENCY PILOT PROGRAM.

    (a) Grants.--The Secretary of Energy is authorized to make 
grants to units of local government, private, non-profit 
community development organizations, and Indian tribe economic 
development entities to improve energy efficiency; identify and 
develop alternative, renewable, and distributed energy 
supplies; and increase energy conservation in low income rural 
and urban communities.
    (b) Purpose of Grants.--The Secretary may make grants on a 
competitive basis for--
            (1) investments that develop alternative, 
        renewable, and distributed energy supplies;
            (2) energy efficiency projects and energy 
        conservation programs;
            (3) studies and other activities that improve 
        energy efficiency in low income rural and urban 
        communities;
            (4) planning and development assistance for 
        increasing the energy efficiency of buildings and 
        facilities; and
            (5) technical and financial assistance to local 
        government and private entities on developing new 
        renewable and distributed sources of power or combined 
        heat and power generation.
    (c) Definition.--For purposes of this section, the term 
``Indian tribe'' means any Indian tribe, band, nation, or other 
organized group or community, including any Alaskan Native 
village or regional or village corporation as defined in or 
established pursuant to the Alaska Native Claims Settlement Act 
(43 U.S.C. 1601 et seq.), that is recognized as eligible for 
thespecial programs and services provided by the United States 
to Indians because of their status as Indians.
    (d) Authorization of Appropriations.--For the purposes of 
this section there are authorized to be appropriated to the 
Secretary of Energy $20,000,000 for each of fiscal years 2004 
through 2006.

                 Subtitle C--Energy Efficient Products

SEC. 131. ENERGY STAR PROGRAM.

    (a) Amendment.--The Energy Policy and Conservation Act (42 
U.S.C. 6201 et seq.) is amended by inserting the following 
after section 324:

``SEC. 324A. ENERGY STAR PROGRAM.

    ``There is established at the Department of Energy and the 
Environmental Protection Agency a voluntary program to identify 
and promote energy-efficient products and buildings in order to 
reduce energy consumption, improve energy security, and reduce 
pollution through voluntary labeling of or other forms of 
communication about products and buildings that meet the 
highest energy efficiency standards. Responsibilities under the 
program shall be divided between the Department of Energy and 
the Environmental Protection Agency consistent with the terms 
of agreements between the 2 agencies. The Administrator and the 
Secretary shall--
            ``(1) promote Energy Star compliant technologies as 
        the preferred technologies in the marketplace for 
        achieving energy efficiency and to reduce pollution;
            ``(2) work to enhance public awareness of the 
        Energy Star label, including special outreach to small 
        businesses;
            ``(3) preserve the integrity of the Energy Star 
        label;
            ``(4) solicit comments from interested parties 
        prior to establishing or revising an Energy Star 
        product category, specification, or criterion (or 
        effective dates for any of the foregoing);
            ``(5) upon adoption of a new or revised product 
        category, specification, or criterion, provide 
        reasonable notice to interested parties of any changes 
        (including effective dates) in product categories, 
        specifications, or criteria along with an explanation 
        of such changes and, where appropriate, responses to 
        comments submitted by interested parties; and
            ``(6) provide appropriate lead time (which shall be 
        9 months, unless the Agency or Department determines 
        otherwise) prior to the effective date for a new or a 
        significant revision to a product category, 
        specification, or criterion, taking into account the 
        timing requirements of the manufacturing, product 
        marketing, and distribution process for the specific 
        product addressed.''.
    (b) Table of Contents Amendment.--The table of contents of 
the Energy Policy and Conservation Act is amended by inserting 
after the item relating to section 324 the following new item:

``Sec. 324A. Energy Star program.''.

SEC. 132. HVAC MAINTENANCE CONSUMER EDUCATION PROGRAM.

    Section 337 of the Energy Policy and Conservation Act (42 
U.S.C. 6307) is amended by adding at the end the following:
    ``(c) HVAC Maintenance.--For the purpose of ensuring that 
installed air conditioning and heating systems operate at their 
maximum rated efficiency levels, the Secretary shall, not later 
than 180 days after the date of enactment of this subsection, 
carry out a program to educate homeowners and small business 
owners concerning the energy savings resulting from properly 
conducted maintenance of air conditioning, heating, and 
ventilating systems. The Secretary shall carry out the program 
in a cost-shared manner in cooperation with the Administrator 
of the Environmental Protection Agency and such other entities 
as the Secretary considers appropriate, including industry 
trade associations, industry members, and energy efficiency 
organizations.
    ``(d) Small Business Education and Assistance.--The 
Administrator of the Small Business Administration, in 
consultation with the Secretary of Energy and the Administrator 
of the Environmental Protection Agency, shall develop and 
coordinate a Government-wide program, building on the existing 
Energy Star for Small Business Program, to assist small 
businesses to become more energy efficient, understand the cost 
savings obtainable through efficiencies, and identify financing 
options for energy efficiency upgrades. The Secretary and the 
Administrator of the Small Business Administration shall make 
the program information available directly to small businesses 
and through other Federal agencies, including the Federal 
Emergency Management Program and the Department of 
Agriculture.''.

SEC. 133. ENERGY CONSERVATION STANDARDS FOR ADDITIONAL PRODUCTS.

    (a) Definitions.--Section 321 of the Energy Policy and 
Conservation Act (42 U.S.C. 6291) is amended--
            (1) in paragraph (30)(S), by striking the period 
        and adding at the end the following: ``but does not 
        include any lamp specifically designed to be used for 
        special purpose applications and that is unlikely to be 
        used in general purpose applications such as those 
        described in subparagraph (D), and also does not 
        include any lamp not described in subparagraph (D) that 
        is excluded by the Secretary, by rule, because the lamp 
        is designed for special applications and is unlikely to 
        be used in general purpose applications.''; and
            (2) by adding at the end the following:
            ``(32) The term `battery charger' means a device 
        that charges batteries for consumer products and 
        includes battery chargers embedded in other consumer 
        products.
            ``(33) The term `commercial refrigerators, 
        freezers, and refrigerator-freezers' means 
        refrigerators, freezers, or refrigerator-freezers 
        that--
                    ``(A) are not consumer products regulated 
                under this Act; and
                    ``(B) incorporate most components involved 
                in the vapor-compression cycle and the 
                refrigerated compartment in a single package.
            ``(34) The term `external power supply' means an 
        external power supply circuit that is used to convert 
        household electric current into either DC current or 
        lower-voltage AC current to operate a consumer product.
            ``(35) The term `illuminated exit sign' means a 
        sign that--
                    ``(A) is designed to be permanently fixed 
                in place to identify an exit; and
                    ``(B) consists of an electrically powered 
                integral light source that illuminates the 
                legend `EXIT' and any directional indicators 
                and provides contrast between the legend, any 
                directional indicators, and the background.
            ``(36)(A) Except as provided in subparagraph (B), 
        the term `distribution transformer' means a transformer 
        that--
                    ``(i) has an input voltage of 34.5 
                kilovolts or less;
                    ``(ii) has an output voltage of 600 volts 
                or less; and
                    ``(iii) is rated for operation at a 
                frequency of 60 Hertz.
            ``(B) The term `distribution transformer' does not 
        include--
                    ``(i) transformers with multiple voltage 
                taps, with the highest voltage tap equaling at 
                least 20 percent more than the lowest voltage 
                tap;
                    ``(ii) transformers, such as those commonly 
                known as drive transformers, rectifier 
                transformers, auto-transformers, 
                Uninterruptible Power System transformers, 
                impedance transformers, harmonic transformers, 
                regulating transformers, sealed and 
                nonventilating transformers, machine tool 
                transformers, welding transformers, grounding 
                transformers, or testingtransformers, that are 
designed to be used in a special purpose application and are unlikely 
to be used in general purpose applications; or
                    ``(iii) any transformer not listed in 
                clause (ii) that is excluded by the Secretary 
                by rule because--
                            ``(I) the transformer is designed 
                        for a special application;
                            ``(II) the transformer is unlikely 
                        to be used in general purpose 
                        applications; and
                            ``(III) the application of 
                        standards to the transformer would not 
                        result in significant energy savings.
            ``(37) The term `low-voltage dry-type distribution 
        transformer' means a distribution transformer that--
                    ``(A) has an input voltage of 600 volts or 
                less;
                    ``(B) is air-cooled; and
                    ``(C) does not use oil as a coolant.
            ``(38) The term `standby mode' means the lowest 
        power consumption mode that--
                    ``(A) cannot be switched off or influenced 
                by the user; and
                    ``(B) may persist for an indefinite time 
                when an appliance is connected to the main 
                electricity supply and used in accordance with 
                the manufacturer's instructions,
        as defined on an individual product basis by the 
        Secretary.
            ``(39) The term `torchiere' means a portable 
        electric lamp with a reflector bowl that directs light 
        upward so as to give indirect illumination.
            ``(40) The term `traffic signal module' means a 
        standard 8-inch (200mm) or 12-inch (300mm) traffic 
        signal indication, consisting of a light source, a 
        lens, and all other parts necessary for operation, that 
        communicates movement messages to drivers through red, 
        amber, and green colors.
            ``(41) The term `transformer' means a device 
        consisting of 2 or more coils of insulated wire that 
        transfers alternating current by electromagnetic 
        induction from 1 coil to another to change the original 
        voltage or current value.
            ``(42) The term `unit heater' means a self-
        contained fan-type heater designed to be installed 
        within the heated space, except that such term does not 
        include a warm air furnace.''.
    (b) Test Procedures.--Section 323 of the Energy Policy and 
Conservation Act (42 U.S.C. 6293) is amended--
            (1) in subsection (b), by adding at the end the 
        following:
            ``(9) Test procedures for illuminated exit signs 
        shall be based on the test method used under Version 
        2.0 of the Energy Star program of the Environmental 
        Protection Agency for illuminated exit signs.
            ``(10) Test procedures for distribution 
        transformers and low voltage dry-type distribution 
        transformers shall be based on the `Standard Test 
        Method for Measuring the Energy Consumption of 
        Distribution Transformers' prescribed by the National 
        Electrical Manufacturers Association (NEMA TP 2-1998). 
        The Secretary may review and revise this test 
        procedure. For purposes of section 346(a), this test 
        procedure shall be deemed to be testing requirements 
        prescribed by the Secretary under section 346(a)(1) for 
        distribution transformers for which the Secretary makes 
        a determination that energy conservation standards 
        would be technologically feasible and economically 
        justified, and would result in significant energy 
        savings.
            ``(11) Test procedures for traffic signal modules 
        shall be based on the test method used under the Energy 
        Star program of the Environmental Protection Agency for 
        traffic signal modules, as in effect on the date of 
        enactment of this paragraph.
            ``(12) Test procedures for medium base compact 
        fluorescent lamps shall be based on the test methods 
        used under the August 9, 2001, version of the Energy 
        Star program of the Environmental Protection Agency and 
        Department of Energy for compact fluorescent lamps. 
        Covered products shall meet all test requirements for 
        regulated parameters in section 325(bb). However, 
        covered products may be marketed prior to completion of 
        lamp life and lumen maintenance at 40 percent of rated 
        life testing provided manufacturers document 
        engineering predictions and analysis that support 
        expected attainment of lumen maintenance at 40 percent 
        rated life and lamp life time.''; and
            (2) by adding at the end the following:
    ``(f) Additional Consumer and Commercial Products.--The 
Secretary shall, not later than 24 months after the date of 
enactment of this subsection, prescribe testing requirements 
for suspended ceiling fans, refrigerated bottled or canned 
beverage vending machines, and commercial refrigerators, 
freezers, and refrigerator-freezers. Such testing requirements 
shall be based on existing test procedures used in industry to 
the extent practical and reasonable. In the case of suspended 
ceiling fans, such test procedures shall include efficiency at 
both maximum output and at an output no more than 50 percent of 
the maximum output.''.
    (c) New Standards.--Section 325 of the Energy Policy and 
Conservation Act (42 U.S.C. 6295) is amended by adding at the 
end the following:
    ``(u) Battery Charger and External Power Supply Electric 
Energy Consumption.--
            ``(1) Initial rulemaking.--(A) The Secretary shall, 
        within 18 months after the date of enactment of this 
        subsection, prescribe by notice and comment, 
        definitions and test procedures for the power use of 
        battery chargers and external power supplies. In 
        establishing these test procedures, the Secretary shall 
        consider, among other factors, existing definitions and 
        test procedures used for measuring energy consumption 
        in standby mode and other modes and assess the current 
        and projected future market for battery chargers and 
        external power supplies. This assessment shall include 
        estimates of the significance of potential energy 
        savings from technical improvements to these products 
        and suggested product classes for standards. Prior to 
        the end of this time period, the Secretary shall hold a 
        scoping workshop to discuss and receive comments on 
        plans for developing energy conservation standards for 
        energy use for these products.
            ``(B) The Secretary shall, within 3 years after the 
        date of enactment of this subsection, issue a final 
        rule that determines whether energy conservation 
        standards shall be issued for battery chargers and 
        external power supplies or classes thereof. For each 
        product class, any such standards shall be set at the 
        lowest level of energy use that--
                    ``(i) meets the criteria and procedures of 
                subsections (o), (p), (q), (r), (s), and (t); 
                and
                    ``(ii) will result in significant overall 
                annual energy savings, considering both standby 
                mode and other operating modes.
            ``(2) Review of standby energy use in covered 
        products.--In determining pursuant to section 323 
        whether test procedures and energy conservation 
        standards pursuant to this section should be revised, 
        the Secretary shall consider, for covered products that 
        are major sources of standby mode energy consumption, 
        whether to incorporate standby mode into such test 
        procedures and energy conservation standards, taking 
        into account, among other relevant factors, standby 
        mode power consumption compared to overall product 
        energy consumption.
            ``(3) Rulemaking.--The Secretary shall not propose 
        a standard under this section unless the Secretary has 
        issued applicable test procedures for each product 
        pursuant to section 323.
            ``(4) Effective date.--Any standard issued under 
        this subsection shall be applicable to products 
        manufactured or imported 3 years after the date of 
        issuance.
            ``(5) Voluntary programs.--The Secretary and the 
        Administrator shall collaborate and develop programs, 
        including programs pursuant to section 324A (relating 
        to Energy Star Programs) and other voluntary industry 
        agreements or codes of conduct, that are designed to 
        reduce standby mode energy use.
    ``(v) Suspended Ceiling Fans, Vending Machines, and 
Commercial Refrigerators, Freezers, and Refrigerator-
Freezers.--The Secretary shall not later than 36 months after 
the date on which testing requirements are prescribed by the 
Secretary pursuant to section 323(f), prescribe, by rule, 
energy conservation standards for suspended ceiling fans, 
refrigerated bottled or canned beverage vending machines, and 
commercial refrigerators, freezers, and refrigerator-freezers. 
In establishing standards under this subsection, the Secretary 
shall use the criteria and procedures contained in subsections 
(o) and (p). Any standard prescribed under this subsection 
shall apply to products manufactured 3 years after the date of 
publication of a final rule establishing such standard.
    ``(w) Illuminated Exit Signs.--Illuminated exit signs 
manufactured on or after January 1, 2005, shall meet the 
Version 2.0 Energy Star Program performance requirements for 
illuminated exit signs prescribed by the Environmental 
Protection Agency.
    ``(x) Torchieres.--Torchieres manufactured on or after 
January 1, 2005--
            ``(1) shall consume not more than 190 watts of 
        power; and
            ``(2) shall not be capable of operating with lamps 
        that total more than 190 watts.
    ``(y) Low Voltage Dry-Type Distribution Transformers.--The 
efficiency of low voltage dry-type distribution transformers 
manufactured on or after January 1, 2005, shall be the Class I 
Efficiency Levels for distribution transformers specified in 
Table 4-2 of the `Guide for Determining Energy Efficiency for 
Distribution Transformers' published by the National Electrical 
Manufacturers Association (NEMA TP-1-2002).
    ``(z) Traffic Signal Modules.--Traffic signal modules 
manufactured on or after January 1, 2006, shall meet the 
performance requirements used under the Energy Star program of 
the Environmental Protection Agency for traffic signals, as in 
effect on the date of enactment of this subsection, and shall 
be installed with compatible, electrically connected signal 
control interface devices and conflict monitoring systems.
    ``(aa) Unit Heaters.--Unit heaters manufactured on or after 
the date that is 3 years after the date of enactment of this 
subsection shall be equipped with an intermittent ignition 
device and shall have either power venting or an automatic flue 
damper.
    ``(bb) Medium Base Compact Fluorescent Lamps.--Bare lamp 
and covered lamp (no reflector) medium base compact fluorescent 
lamps manufactured on or after January 1, 2005, shall meet the 
following requirements prescribed by the August 9, 2001, 
version of the Energy Star Program Requirements for Compact 
Fluorescent Lamps, Energy Star Eligibility Criteria, Energy-
Efficiency Specification issued by the Environmental Protection 
Agency and Department of Energy: minimum initial efficacy; 
lumen maintenance at 1000 hours; lumen maintenance at 40 
percent of rated life; rapid cycle stress test; and lamp life. 
The Secretary may, by rule, establish requirements for color 
quality (CRI); power factor; operating frequency; and maximum 
allowable start time based on the requirements prescribed by 
the August 9, 2001, version of the Energy Star Program 
Requirements for Compact Fluorescent Lamps. The Secretary may, 
by rule, revise these requirements or establish other 
requirements considering energy savings, cost effectiveness, 
and consumer satisfaction.
    ``(cc) Effective Date.--Section 327 shall apply--
            ``(1) to products for which standards are to be 
        established under subsections (u) and (v) on the date 
        on which a final rule is issued by the Department of 
        Energy, except that any State or local standards 
        prescribed or enacted for any such product prior to the 
        date on which such final rule is issued shall not be 
        preempted until the standard established under 
        subsection (u) or (v) for that product takes effect; 
        and
            ``(2) to products for which standards are 
        established under subsections (w) through (bb) on the 
        date of enactment of those subsections, except that any 
        State or local standards prescribed or enacted prior to 
        the date of enactment of those subsections shall not be 
        preempted until the standards established under 
        subsections (w) through (bb) take effect.''.
    (d) Residential Furnace Fans.--Section 325(f)(3) of the 
Energy Policy and Conservation Act (42 U.S.C. 6295(f)(3)) is 
amended by adding the following new subparagraph at the end:
    ``(D) Notwithstanding any provision of this Act, the 
Secretary may consider, and prescribe, if the requirements of 
subsection (o) of this section are met, energy efficiency or 
energy use standards for electricity used for purposes of 
circulating air through duct work.''.

SEC. 134. ENERGY LABELING.

    (a) Rulemaking on Effectiveness of Consumer Product 
Labeling.--Section 324(a)(2) of the Energy Policy and 
Conservation Act (42 U.S.C. 6294(a)(2)) is amended by adding at 
the end the following:
    ``(F) Not later than 3 months after the date of enactment 
of this subparagraph, the Commission shall initiate a 
rulemaking to consider the effectiveness of the current 
consumer products labeling program in assisting consumers in 
making purchasing decisions and improving energy efficiency and 
to consider changes to the labeling rules that would improve 
the effectiveness of consumer product labels. Such rulemaking 
shall be completed not later than 2 years after the date of 
enactment of this subparagraph.''.
    (b) Rulemaking on Labeling for Additional Products.--
Section 324(a) of the Energy Policy and Conservation Act (42 
U.S.C. 6294(a)) is further amended by adding at the end the 
following:
    ``(5) The Secretary or the Commission, as appropriate, may, 
for covered products referred to in subsections (u) through 
(aa) of section 325, prescribe, by rule, pursuant to this 
section, labeling requirements for such products after a test 
procedure has been set pursuant to section 323. In the case of 
products to which TP-1 standards under section 325(y) apply, 
labeling requirements shall be based on the `Standard for the 
Labeling of Distribution Transformer Efficiency' prescribed by 
the National Electrical Manufacturers Association (NEMA TP-3) 
as in effect upon the date of enactment of this paragraph.''.

                       Subtitle D--Public Housing

SEC. 141. CAPACITY BUILDING FOR ENERGY-EFFICIENT, AFFORDABLE HOUSING.

    Section 4(b) of the HUD Demonstration Act of 1993 (42 
U.S.C. 9816 note) is amended--
            (1) in paragraph (1), by inserting before the 
        semicolon at the end the following: ``, including 
        capabilities regarding the provision of energy 
        efficient, affordable housing and residential energy 
        conservation measures''; and
            (2) in paragraph (2), by inserting before the 
        semicolon the following: ``, including such activities 
        relating to the provision of energy efficient, 
        affordable housing and residential energy conservation 
        measures that benefit low-income families''.

SEC. 142. INCREASE OF CDBG PUBLIC SERVICES CAP FOR ENERGY CONSERVATION 
                    AND EFFICIENCY ACTIVITIES.

    Section 105(a)(8) of the Housing and Community Development 
Act of 1974 (42 U.S.C. 5305(a)(8)) is amended--
            (1) by inserting ``or efficiency'' after ``energy 
        conservation'';
            (2) by striking ``, and except that'' and inserting 
        ``; except that''; and
            (3) by inserting before the semicolon at the end 
        the following: ``; and except that each percentage 
        limitation under this paragraph on the amount of 
        assistance provided under this title that may be used 
        for the provision of public services is hereby 
        increased by 10 percent, but such percentage increase 
        may be used only for the provision of public services 
        concerning energy conservation or efficiency''.

SEC. 143. FHA MORTGAGE INSURANCE INCENTIVES FOR ENERGY EFFICIENT 
                    HOUSING.

    (a) Single Family Housing Mortgage Insurance.--Section 
203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2)) is 
amended, in the first undesignated paragraph beginning after 
subparagraph (B)(ii)(IV) (relating to solar energy systems), by 
striking ``20 percent'' and inserting ``30 percent''.
    (b) Multifamily Housing Mortgage Insurance.--Section 207(c) 
of the National Housing Act (12 U.S.C. 1713(c)) is amended, in 
the last undesignated paragraph beginning after paragraph (3) 
(relating to solar energy systems and residential energy 
conservation measures), by striking ``20 percent'' and 
inserting ``30 percent''.
    (c) Cooperative Housing Mortgage Insurance.--Section 213(p) 
of the National Housing Act (12 U.S.C. 1715e(p)) is amended by 
striking ``20 per centum'' and inserting ``30 percent''.
    (d) Rehabilitation and Neighborhood Conservation Housing 
Mortgage Insurance.--Section 220(d)(3)(B)(iii)(IV) of the 
National Housing Act (12 U.S.C. 1715k(d)(3)(B)(iii)(IV)) is 
amended--
            (1) by striking ``with respect to rehabilitation 
        projects involving not more than five family units,''; 
        and
            (2) by striking ``20 per centum'' and inserting 
        ``30 percent''.
    (e) Low-Income Multifamily Housing Mortgage Insurance.--
Section 221(k) of the National Housing Act (12 U.S.C. 1715l(k)) 
is amended by striking ``20 per centum'' and inserting ``30 
percent''.
    (f) Elderly Housing Mortgage Insurance.--Section 
231(c)(2)(C) of the National Housing Act (12 U.S.C. 
1715v(c)(2)(C)) is amended by striking ``20 per centum'' and 
inserting ``30 percent''.
    (g) Condominium Housing Mortgage Insurance.--Section 234(j) 
of the National Housing Act (12 U.S.C. 1715y(j)) is amended by 
striking ``20 per centum'' and inserting ``30 percent''.

SEC. 144. PUBLIC HOUSING CAPITAL FUND.

    Section 9 of the United States Housing Act of 1937 (42 
U.S.C. 1437g) is amended--
            (1) in subsection (d)(1)--
                    (A) in subparagraph (I), by striking 
                ``and'' at the end;
                    (B) in subparagraph (J), by striking the 
                period at the end and inserting a semicolon; 
                and
                    (C) by adding at the end the following new 
                subparagraphs:
                    ``(K) improvement of energy and water-use 
                efficiency by installing fixtures and fittings 
                that conform to the American Society of 
                Mechanical Engineers/American National 
                Standards Institute standards A112.19.2-1998 
                and A112.18.1-2000, or any revision thereto, 
                applicable at the time of installation, and by 
                increasing energy efficiency and water 
                conservation by such other means as the 
                Secretary determines are appropriate; and
                    ``(L) integrated utility management and 
                capital planning to maximize energy 
                conservation and efficiency measures.''; and
            (2) in subsection (e)(2)(C)--
                    (A) by striking ``The'' and inserting the 
                following:
                            ``(i) In general.--The''; and
                    (B) by adding at the end the following:
                            ``(ii) Third party contracts.--
                        Contracts described in clause (i) may 
                        include contracts for equipment 
                        conversions to less costly utility 
                        sources, projects with resident-paid 
                        utilities, and adjustments to frozen 
                        base year consumption, including 
                        systems repaired to meet applicable 
                        building and safety codes and 
                        adjustments for occupancy rates 
                        increased by rehabilitation.
                            ``(iii) Term of contract.--The 
                        total term of a contract described in 
                        clause (i) shall not exceed 20 years to 
                        allow longer payback periods for 
                        retrofits, including windows, heating 
                        system replacements, wall insulation, 
                        site-based generation, advanced energy 
                        savings technologies, including 
                        renewable energy generation, and other 
                        such retrofits.''.

SEC. 145. GRANTS FOR ENERGY-CONSERVING IMPROVEMENTS FOR ASSISTED 
                    HOUSING.

    Section 251(b)(1) of the National Energy Conservation 
Policy Act (42 U.S.C. 8231(1)) is amended--
            (1) by striking ``financed with loans'' and 
        inserting ``assisted'';
            (2) by inserting after ``1959,'' the following: 
        ``which are eligible multifamily housing projects (as 
        such term is defined in section 512 of the Multifamily 
        Assisted Housing Reform and Affordability Act of 1997 
        (42 U.S.C. 1437f note)) and are subject to mortgage 
        restructuring and rental assistance sufficiency plans 
        under such Act,''; and
            (3) by inserting after the period at the end of the 
        first sentence the following new sentence: ``Such 
        improvements may also include the installation of 
        energy and water conserving fixtures and fittings that 
        conform to the American Society of Mechanical 
        Engineers/American National Standards Institute 
        standards A112.19.2-1998 and A112.18.1-2000, or any 
        revision thereto, applicable at the time of 
        installation.''.

SEC. 146. NORTH AMERICAN DEVELOPMENT BANK.

    Part 2 of subtitle D of title V of the North American Free 
Trade Agreement Implementation Act (22 U.S.C. 290m-290m-3) is 
amended by adding at the end the following:

``SEC. 545. SUPPORT FOR CERTAIN ENERGY POLICIES.

    ``Consistent with the focus of the Bank's Charter on 
environmental infrastructure projects, the Board members 
representing the United States should use their voice and vote 
to encourage the Bank to finance projects related to clean and 
efficient energy, including energy conservation, that prevent, 
control, or reduce environmental pollutants or contaminants.''.

SEC. 147. ENERGY-EFFICIENT APPLIANCES.

    In purchasing appliances, a public housing agency shall 
purchase energy-efficient appliances that are Energy Star 
products or FEMP-designated products, as such terms are defined 
in section 553 of the National Energy Conservation Policy Act 
(as amended by this title), unless the purchase of energy-
efficient appliances is not cost-effective to the agency.

SEC. 148. ENERGY EFFICIENCY STANDARDS.

    Section 109 of the Cranston-Gonzalez National Affordable 
Housing Act (42 U.S.C. 12709) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) by striking ``1 year after the 
                        date of the enactment of the Energy 
                        Policy Act of 1992'' and inserting 
                        ``September 30, 2004'';
                            (ii) in subparagraph (A), by 
                        striking ``and'' at the end;
                            (iii) in subparagraph (B), by 
                        striking the period at the end and 
                        inserting ``; and''; and
                            (iv) by adding at the end the 
                        following:
                    ``(C) rehabilitation and new construction 
                of public and assisted housing funded by HOPE 
                VI revitalization grants under section 24 of 
                the United States Housing Act of 1937 (42 
                U.S.C. 1437v), where such standards are 
                determined to be cost effective by the 
                Secretary of Housing and Urban Development.''; 
                and
                    (B) in paragraph (2), by striking ``Council 
                of American'' and all that follows through 
                ``90.1-1989')'' and inserting ``2003 
                International Energy Conservation Code'';
            (2) in subsection (b)--
                    (A) by striking ``within 1 year after the 
                date of the enactment of the Energy Policy Act 
                of 1992'' and inserting ``by September 30, 
                2004''; and
                    (B) by striking ``CABO'' and all that 
                follows through ``1989'' and inserting ``the 
                2003 International Energy Conservation Code''; 
                and
            (3) in subsection (c)--
                    (A) in the heading, by striking ``Model 
                Energy Code'' and inserting ``The International 
                Energy Conservation Code''; and
                    (B) by striking ``CABO'' and all that 
                follows through ``1989'' and inserting ``the 
                2003 International Energy Conservation Code''.

SEC. 149. ENERGY STRATEGY FOR HUD.

    The Secretary of Housing and Urban Development shall 
develop and implement an integrated strategy to reduce utility 
expenses through cost-effective energy conservation and 
efficiency measures and energy efficient design and 
construction of public and assisted housing. The energy 
strategy shall include the development of energy reduction 
goals and incentives for public housing agencies. The Secretary 
shall submit a report to Congress, not later than 1 year after 
the date of the enactment of this Act, on the energy strategy 
and the actions taken by the Department of Housing and Urban 
Development to monitor the energy usage of public housing 
agencies and shall submit an update every 2 years thereafter on 
progress in implementing the strategy.

                       TITLE II--RENEWABLE ENERGY

                     Subtitle A--General Provisions

SEC. 201. ASSESSMENT OF RENEWABLE ENERGY RESOURCES.

    (a) Resource Assessment.--Not later than 6 months after the 
date of enactment of this Act, and each year thereafter, the 
Secretary of Energy shall review the available assessments of 
renewable energy resources within the United States, including 
solar, wind, biomass, ocean (tidal, wave, current, and 
thermal), geothermal, and hydroelectric energy resources, and 
undertake new assessments as necessary, taking into account 
changes in market conditions, available technologies, and other 
relevant factors.
    (b) Contents of Reports.--Not later than 1 year after the 
date of enactment of this Act, and each year thereafter, the 
Secretary shall publish a report based on the assessment under 
subsection (a). The report shall contain--
            (1) a detailed inventory describing the available 
        amount and characteristics of the renewable energy 
        resources; and
            (2) such other information as the Secretary 
        believes would be useful in developing such renewable 
        energy resources, including descriptions of surrounding 
        terrain, population and load centers, nearby energy 
        infrastructure, location of energy and water resources, 
        and available estimates of the costs needed to develop 
        each resource, together with an identification of any 
        barriers to providing adequate transmission for remote 
        sources of renewable energy resources to current and 
        emerging markets, recommendations for removing or 
        addressing such barriers, and ways to provide access to 
        the grid that do not unfairly disadvantage renewable or 
        other energy producers.
    (c) Authorization of Appropriations.--For the purposes of 
this section, there are authorized to be appropriated to the 
Secretary of Energy $10,000,000 for each of fiscal years 2004 
through 2008.

SEC. 202. RENEWABLE ENERGY PRODUCTION INCENTIVE.

    (a) Incentive Payments.--Section 1212(a) of the Energy 
Policy Act of 1992 (42 U.S.C. 13317(a)) is amended by striking 
``and which satisfies'' and all that follows through 
``Secretary shall establish.'' and inserting ``. If there are 
insufficient appropriations to make full payments for electric 
production from all qualified renewable energy facilities in 
any given year, the Secretary shall assign 60 percent of 
appropriated funds for that year to facilities that use solar, 
wind, geothermal, or closed-loop (dedicated energy crops) 
biomass technologies to generate electricity, and assign the 
remaining 40 percent to other projects. The Secretary may, 
after transmitting to Congress an explanation of the reasons 
therefor, alter the percentage requirements of the preceding 
sentence.''.
    (b) Qualified Renewable Energy Facility.--Section 1212(b) 
of the Energy Policy Act of 1992 (42 U.S.C. 13317(b)) is 
amended--
            (1) by striking ``a State or any political'' and 
        all that follows through ``nonprofit electrical 
        cooperative'' and inserting ``a not-for-profit electric 
        cooperative, a public utility described in section 115 
        of the Internal Revenue Code of 1986, a State, 
        Commonwealth, territory, or possession of the United 
        States or the District of Columbia, or a political 
        subdivision thereof, or an Indian tribal government or 
        subdivision thereof,''; and
            (2) by inserting ``landfill gas,'' after ``wind, 
        biomass,''.
    (c) Eligibility Window.--Section 1212(c) of the Energy 
Policy Act of 1992 (42 U.S.C. 13317(c)) is amended by striking 
``during the 10-fiscal year period beginning with the first 
full fiscal year occurring after the enactment of this 
section'' and inserting ``after October 1, 2003, and before 
October 1, 2013''.
    (d) Amount of Payment.--Section 1212(e)(1) of the Energy 
Policy Act of 1992 (42 U.S.C. 13317(e)(1)) is amended by 
inserting ``landfill gas,'' after ``wind, biomass,''.
    (e) Sunset.--Section 1212(f) of the Energy Policy Act of 
1992 (42 U.S.C. 13317(f)) is amended by striking ``the 
expiration of'' and all that follows through ``of this 
section'' and inserting ``September 30, 2023''.
    (f) Authorization of Appropriations.--Section 1212(g) of 
the Energy Policy Act of 1992 (42 U.S.C. 13317(g)) is amended 
to read as follows:
    ``(g) Authorization of Appropriations.--
            ``(1) In general.--Subject to paragraph (2), there 
        are authorized to be appropriated such sums as may be 
        necessary to carry out this section for fiscal years 
        2003 through 2023.
            ``(2) Availability of funds.--Funds made available 
        under paragraph (1) shall remain available until 
        expended.''.

SEC. 203. FEDERAL PURCHASE REQUIREMENT.

    (a) Requirement.--The President, acting through the 
Secretary of Energy, shall seek to ensure that, to the extent 
economically feasible and technically practicable, of the total 
amount of electric energy the Federal Government consumes 
during any fiscal year, the following amounts shall be 
renewable energy:
            (1) Not less than 3 percent in fiscal years 2005 
        through 2007.
            (2) Not less than 5 percent in fiscal years 2008 
        through 2010.
            (3) Not less than 7.5 percent in fiscal year 2011 
        and each fiscal year thereafter.
    (b) Definitions.--In this section:
            (1) Biomass.--The term ``biomass'' means any solid, 
        nonhazardous, cellulosic material that is derived 
        from--
                    (A) any of the following forest-related 
                resources: mill residues, precommercial 
                thinnings, slash, and brush, or nonmerchantable 
                material;
                    (B) solid wood waste materials, including 
                waste pallets, crates, dunnage, manufacturing 
                and construction wood wastes (other than 
                pressure-treated, chemically-treated, or 
                painted wood wastes), and landscape or right-
                of-way tree trimmings, but not including 
                municipal solid waste (garbage), gas derived 
                from the biodegradation of solid waste, or 
                paper that is commonly recycled;
                    (C) agriculture wastes, including orchard 
                tree crops, vineyard, grain, legumes, sugar, 
                and other crop by-products or residues, and 
                livestock waste nutrients; or
                    (D) a plant that is grown exclusively as a 
                fuel for the production of electricity.
            (2) Renewable energy.--The term ``renewable 
        energy'' means electric energy generated from solar, 
        wind, biomass, landfill gas, geothermal, municipal 
        solid waste, or new hydroelectric generation capacity 
        achieved from increased efficiency or additions of new 
        capacity at an existing hydroelectric project.
    (c) Calculation.--For purposes of determining compliance 
with the requirement of this section, the amount of renewable 
energy shall be doubled if--
            (1) the renewable energy is produced and used on-
        site at a Federal facility;
            (2) the renewable energy is produced on Federal 
        lands and used at a Federal facility; or
            (3) the renewable energy is produced on Indian land 
        as defined in title XXVI of the Energy Policy Act of 
        1992 (25 U.S.C. 3501 et. seq.) and used at a Federal 
        facility.
    (d) Report.--Not later than April 15, 2005, and every 2 
years thereafter, the Secretary of Energy shall provide a 
report to Congress on the progress of the Federal Government in 
meeting the goals established by this section.

SEC. 204. INSULAR AREAS ENERGY SECURITY.

    Section 604 of the Act entitled ``An Act to authorize 
appropriations for certain insular areas of the United States, 
andfor other purposes'', approved December 24, 1980 (48 U.S.C. 
1492), is amended--
            (1) in subsection (a)(4) by striking the period and 
        inserting a semicolon;
            (2) by adding at the end of subsection (a) the 
        following new paragraphs:
            ``(5) electric power transmission and distribution 
        lines in insular areas are inadequate to withstand 
        damage caused by the hurricanes and typhoons which 
        frequently occur in insular areas and such damage often 
        costs millions of dollars to repair; and
            ``(6) the refinement of renewable energy 
        technologies since the publication of the 1982 
        Territorial Energy Assessment prepared pursuant to 
        subsection (c) reveals the need to reassess the state 
        of energy production, consumption, infrastructure, 
        reliance on imported energy, opportunities for energy 
        conservation and increased energy efficiency, and 
        indigenous sources in regard to the insular areas.'';
            (3) by amending subsection (e) to read as follows:
    ``(e)(1) The Secretary of the Interior, in consultation 
with the Secretary of Energy and the head of government of each 
insular area, shall update the plans required under subsection 
(c) by--
            ``(A) updating the contents required by subsection 
        (c);
            ``(B) drafting long-term energy plans for such 
        insular areas with the objective of reducing, to the 
        extent feasible, their reliance on energy imports by 
        the year 2010, increasing energy conservation and 
        energy efficiency, and maximizing, to the extent 
        feasible, use of indigenous energy sources; and
            ``(C) drafting long-term energy transmission line 
        plans for such insular areas with the objective that 
        the maximum percentage feasible of electric power 
        transmission and distribution lines in each insular 
        area be protected from damage caused by hurricanes and 
        typhoons.
    ``(2) Not later than December 31, 2005, the Secretary of 
the Interior shall submit to Congress the updated plans for 
each insular area required by this subsection.''; and
            (4) by amending subsection (g)(4) to read as 
        follows:
            ``(4) Power line grants for insular areas.--
                    ``(A) In general.--The Secretary of the 
                Interior is authorized to make grants to 
                governments of insular areas of the United 
                States to carry out eligible projects to 
                protect electric power transmission and 
                distribution lines in such insular areas from 
                damage caused by hurricanes and typhoons.
                    ``(B) Eligible projects.--The Secretary may 
                award grants under subparagraph (A) only to 
                governments of insular areas of the United 
                States that submit written project plans to the 
                Secretary for projects that meet the following 
                criteria:
                            ``(i) The project is designed to 
                        protect electric power transmission and 
                        distribution lines located in 1 or more 
                        of the insular areas of the United 
                        States from damage caused by hurricanes 
                        and typhoons.
                            ``(ii) The project is likely to 
                        substantially reduce the risk of future 
                        damage, hardship, loss, or suffering.
                            ``(iii) The project addresses 1 or 
                        more problems that have been repetitive 
                        or that pose a significant risk to 
                        public health and safety.
                            ``(iv) The project is not likely to 
                        cost more than the value of the 
                        reduction in direct damage and other 
                        negative impacts that the project is 
                        designed to prevent or mitigate. The 
                        cost benefit analysis required by this 
                        criterion shall be computed on a net 
                        present value basis.
                            ``(v) The project design has taken 
                        into consideration long-term changes to 
                        the areas and persons it is designed to 
                        protect and has manageable future 
                        maintenance and modification 
                        requirements.
                            ``(vi) The project plan includes an 
                        analysis of a range of options to 
                        address the problem it is designed to 
                        prevent or mitigate and a justification 
                        for the selection of the project in 
                        light of that analysis.
                            ``(vii) The applicant has 
                        demonstrated to the Secretary that the 
                        matching funds required by subparagraph 
                        (D) are available.
                    ``(C) Priority.--When making grants under 
                this paragraph, the Secretary shall give 
                priority to grants for projects which are 
                likely to--
                            ``(i) have the greatest impact on 
                        reducing future disaster losses; and
                            ``(ii) best conform with plans that 
                        have been approved by the Federal 
                        Government or the government of the 
                        insular area where the project is to be 
                        carried out for development or hazard 
                        mitigation for that insular area.
                    ``(D) Matching requirement.--The Federal 
                share of the cost for a project for which a 
                grant is provided under this paragraph shall 
                not exceed 75 percent of the total cost of that 
                project. The non-Federal share of the cost may 
                be provided in the form of cash or services.
                    ``(E) Treatment of funds for certain 
                purposes.--Grants provided under this paragraph 
                shall not be considered as income, a resource, 
                or a duplicative program when determining 
                eligibility or benefit levels for Federal major 
                disaster and emergency assistance.
                    ``(F) Authorization of appropriations.--
                There are authorized to be appropriated to 
                carry out this paragraph $5,000,000 for each 
                fiscal year beginning after the date of the 
                enactment of this paragraph.''.

SEC. 205. USE OF PHOTOVOLTAIC ENERGY IN PUBLIC BUILDINGS.

    (a) In General.--Subchapter VI of chapter 31 of title 40, 
United States Code, is amended by adding at the end the 
following:

``Sec. 3177. Use of photovoltaic energy in public buildings

    ``(a) Photovoltaic Energy Commercialization Program.--
            ``(1) In general.--The Administrator of General 
        Services may establish a photovoltaic energy 
        commercialization program for the procurement and 
        installation of photovoltaic solar electric systems for 
        electric production in new and existing public 
        buildings.
            ``(2) Purposes.--The purposes of the program shall 
        be to accomplish the following:
                    ``(A) To accelerate the growth of a 
                commercially viable photovoltaic industry to 
                make this energy system available to the 
                general public as an option which can reduce 
                the national consumption of fossil fuel.
                    ``(B) To reduce the fossil fuel consumption 
                and costs of the Federal Government.
                    ``(C) To attain the goal of installing 
                solar energy systems in 20,000 Federal 
                buildings by 2010, as contained in the Federal 
                Government's Million Solar Roof Initiative of 
                1997.
                    ``(D) To stimulate the general use within 
                the Federal Government of life-cycle costing 
                and innovative procurement methods.
                    ``(E) To develop program performance data 
                to support policy decisions on future incentive 
                programs with respect to energy.
            ``(3) Acquisition of photovoltaic solar electric 
        systems.--
                    ``(A) In general.--The program shall 
                provide for the acquisition of photovoltaic 
                solar electric systems and associated storage 
                capability for use in public buildings.
                    ``(B) Acquisition levels.--The acquisition 
                of photovoltaic electric systems shall be at a 
                level substantial enough to allow use of low-
                cost production techniques with at least 150 
                megawatts (peak) cumulative acquired during the 
                5 years of the program.
            ``(4) Administration.--The Administrator shall 
        administer the program and shall--
                    ``(A) issue such rules and regulations as 
                may be appropriate to monitor and assess the 
                performance and operation of photovoltaic solar 
                electric systems installed pursuant to this 
                subsection;
                    ``(B) develop innovative procurement 
                strategies for the acquisition of such systems; 
                and
                    ``(C) transmit to Congress an annual report 
                on the results of the program.
    ``(b) Photovoltaic Systems Evaluation Program.--
            ``(1) In general.--Not later than 60 days after the 
        date of enactment of this section, the Administrator, 
        in consultation with the Secretary of Energy, shall 
        establish a photovoltaic solar energy systems 
        evaluation program to evaluate such photovoltaic solar 
        energy systems as are required in public buildings.
            ``(2) Program Requirement.--In evaluating 
        photovoltaic solar energy systems under the program, 
        the Administrator shall ensure that such systems 
        reflect the most advanced technology.
    ``(c) Authorization of Appropriations.--
            ``(1) Photovoltaic energy commercialization 
        program.--There are authorized to be appropriated to 
        carry out subsection (a) $50,000,000 for each of fiscal 
        years 2004 through 2008. Such sums shall remain 
        available until expended.
            ``(2) Photovoltaic systems evaluation program.--
        There are authorized to be appropriated to carry out 
        subsection (b) $10,000,000 for each of fiscal years 
        2004 through 2008. Such sums shall remain available 
        until expended.''.
    (b) Conforming Amendment.--The section analysis for such 
chapter is amended by inserting after the item relating to 
section 3176 the following:

``3177. Use of photovoltaic energy in public buildings.''.

SEC. 206. GRANTS TO IMPROVE THE COMMERCIAL VALUE OF FOREST BIOMASS FOR 
                    ELECTRIC ENERGY, USEFUL HEAT, TRANSPORTATION FUELS, 
                    PETROLEUM-BASED PRODUCT SUBSTITUTES, AND OTHER 
                    COMMERCIAL PURPOSES.

    (a) Findings.--Congress finds the following:
            (1) Thousands of communities in the United States, 
        many located near Federal lands, are at risk to 
        wildfire. Approximately 190,000,000 acres of land 
        managed by the Secretary of Agriculture and the 
        Secretary of the Interior are at risk of catastrophic 
        fire in the near future. The accumulation of heavy 
        forest fuel loads continues to increase as a result of 
        disease, insect infestations, and drought, further 
        raising the risk of fire each year.
            (2) In addition, more than 70,000,000 acres across 
        all land ownerships are at risk to higher than normal 
        mortality over the next 15 years from insect 
        infestation and disease. High levels of tree mortality 
        from insects and disease result in increased fire risk, 
        loss of old growth, degraded watershed conditions, and 
        changes in species diversity and productivity, as well 
        as diminished fish and wildlife habitat and decreased 
        timber values.
            (3) Preventive treatments such as removing fuel 
        loading, ladder fuels, and hazard trees, planting 
        proper species mix and restoring and protecting early 
        successional habitat, and other specific restoration 
        treatments designed to reduce the susceptibility of 
        forest land, woodland, and rangeland to insect 
        outbreaks, disease, and catastrophic fire present the 
        greatest opportunity for long-term forest health by 
        creating a mosaic of species-mix and age distribution. 
        Such prevention treatments are widely acknowledged to 
        be more successful and cost effective than suppression 
        treatments in the case of insects, disease, and fire.
            (4) The byproducts of preventive treatment (wood, 
        brush, thinnings, chips, slash, and other hazardous 
        fuels) removed from forest lands, woodlands and 
        rangelands represent an abundant supply of biomass for 
        biomass-to-energy facilities and raw material for 
        business. There are currently few markets for the 
        extraordinary volumes of byproducts being generated as 
        a result of the necessary large-scale preventive 
        treatment activities.
            (5) The United States should--
                    (A) promote economic and entrepreneurial 
                opportunities in using byproducts removed 
                through preventive treatment activities related 
                to hazardous fuels reduction, disease, and 
                insect infestation; and
                    (B) develop and expand markets for 
                traditionally underused wood and biomass as an 
                outlet for byproducts of preventive treatment 
                activities.
    (b) Definitions.--In this section:
            (1) Biomass.--The term ``biomass'' means trees and 
        woody plants, including limbs, tops, needles, and other 
        woody parts, and byproducts of preventive treatment, 
        such as wood, brush, thinnings, chips, and slash, that 
        are removed--
                    (A) to reduce hazardous fuels; or
                    (B) to reduce the risk of or to contain 
                disease or insect infestation.
            (2) Indian tribe.--The term ``Indian tribe'' has 
        the meaning given the term in section 4(e) of the 
        Indian Self-Determination and Education Assistance Act 
        (25 U.S.C. 450b(e)).
            (3) Person.--The term ``person'' includes--
                    (A) an individual;
                    (B) a community (as determined by the 
                Secretary concerned);
                    (C) an Indian tribe;
                    (D) a small business, micro-business, or a 
                corporation that is incorporated in the United 
                States; and
                    (E) a nonprofit organization.
            (4) Preferred community.--The term ``preferred 
        community'' means--
                    (A) any town, township, municipality, or 
                other similar unit of local government (as 
                determined by the Secretary concerned) that--
                            (i) has a population of not more 
                        than 50,000 individuals; and
                            (ii) the Secretary concerned, in 
                        the sole discretion of the Secretary 
                        concerned, determines contains or is 
                        located near land, the condition of 
                        which is at significant risk of 
                        catastrophic wildfire, disease, or 
                        insect infestation or which suffers 
                        from disease or insect infestation; or
                    (B) any county that--
                            (i) is not contained within a 
                        metropolitan statistical area; and
                            (ii) the Secretary concerned, in 
                        the sole discretion of the Secretary 
                        concerned, determines contains or is 
                        located near land, the condition of 
                        which is at significant risk of 
                        catastrophic wildfire, disease, or 
                        insect infestation or which suffers 
                        from disease or insect infestation.
            (5) Secretary concerned.--The term ``Secretary 
        concerned'' means--
                    (A) the Secretary of Agriculture with 
                respect to National Forest System lands; and
                    (B) the Secretary of the Interior with 
                respect to Federal lands under the jurisdiction 
                of the Secretary of the Interior and Indian 
                lands.
    (c) Biomass Commercial Use Grant Program.--
            (1) In general.--The Secretary concerned may make 
        grants to any person that owns or operates a facility 
        that uses biomass as a raw material to produce electric 
        energy, sensible heat, transportation fuels, or 
        substitutes for petroleum-based products to offset the 
        costs incurred to purchase biomass for use by such 
        facility.
            (2) Grant amounts.--A grant under this subsection 
        may not exceed $20 per green ton of biomass delivered.
            (3) Monitoring of grant recipient activities.--As a 
        condition of a grant under this subsection, the grant 
        recipient shall keep such records as the Secretary 
        concerned may require to fully and correctly disclose 
        the use of the grant funds and all transactions 
        involved in the purchase of biomass. Upon notice by a 
        representative of the Secretary concerned, the grant 
        recipient shall afford the representative reasonable 
        access to the facility that purchases or uses biomass 
        and an opportunity to examine the inventory and records 
        of the facility.
    (d) Improved Biomass Use Grant Program.--
            (1) In general.--The Secretary concerned may make 
        grants to persons to offset the cost of projects to 
        develop or research opportunities to improve the use 
        of, or add value to, biomass. In making such grants, 
        the Secretary concerned shall give preference to 
        persons in preferred communities.
            (2) Selection.--The Secretary concerned shall 
        select a grant recipient under paragraph (1) after 
        giving consideration to the anticipated public benefits 
        of the project, including the potential to develop 
        thermal or electric energy resources or affordable 
        energy, opportunities for the creation or expansion of 
        small businesses and micro-businesses, and the 
        potential for new job creation.
            (3) Grant amount.--A grant under this subsection 
        may not exceed $500,000.
    (e) Authorization of Appropriations.--There are authorized 
to be appropriated $50,000,000 for each of the fiscal years 
2004 through 2014 to carry out this section.
    (f) Report.--Not later than October 1, 2010, the Secretary 
of Agriculture, in consultation with the Secretary of the 
Interior, shall submit to the Committee on Energy and Natural 
Resources and the Committee on Agriculture, Nutrition, and 
Forestry of the Senate and the Committee on Resources, the 
Committee on Energy and Commerce, and the Committee on 
Agriculture of the House of Representatives a report describing 
the results of the grant programs authorized by this section. 
The report shall include the following:
            (1) An identification of the size, type, and the 
        use of biomass by persons that receive grants under 
        this section.
            (2) The distance between the land from which the 
        biomass was removed and the facility that used the 
        biomass.
            (3) The economic impacts, particularly new job 
        creation, resulting from the grants to and operation of 
        the eligible operations.

SEC. 207. BIOBASED PRODUCTS.

    Section 9002(c)(1) of the Farm Security and Rural 
Investment Act of 2002 (7 U.S.C. 8102(c)(1)) is amended by 
inserting ``or such items that comply with the regulations 
issued under section 103 of Public Law 100-556 (42 U.S.C. 
6914b-1)'' after ``practicable''.

                     Subtitle B--Geothermal Energy

SEC. 211. SHORT TITLE.

    This subtitle may be cited as the ``John Rishel Geothermal 
Steam Act Amendments of 2003''.

SEC. 212. COMPETITIVE LEASE SALE REQUIREMENTS.

    Section 4 of the Geothermal Steam Act of 1970 (30 U.S.C. 
1003) is amended to read as follows:

``SEC. 4. LEASING PROCEDURES.

    ``(a) Nominations.--The Secretary shall accept nominations 
of lands to be leased at any time from qualified companies and 
individuals under this Act.
    ``(b) Competitive Lease Sale Required.--The Secretary shall 
hold a competitive lease sale at least once every 2 years for 
lands in a State which has nominations pending under subsection 
(a) if such lands are otherwise available for leasing.
    ``(c) Noncompetitive Leasing.--The Secretary shall make 
available for a period of 2 years for noncompetitive leasing 
any tract for which a competitive lease sale is held, but for 
which the Secretary does not receive any bids in a competitive 
lease sale.
    ``(d) Leases Sold As a Block.--If information is available 
to the Secretary indicating a geothermal resource that could be 
produced as 1 unit can reasonably be expected to underlie more 
than 1 parcel to be offered in a competitive lease sale, the 
parcels for such a resource may be offered for bidding as a 
block in the competitive lease sale.
    ``(e) Pending Lease Applications on April 1, 2003.--It 
shall be a priority for the Secretary of the Interior, and for 
the Secretary of Agriculture with respect to National Forest 
Systems lands, to ensure timely completion of administrative 
actions necessary to process applications for geothermal 
leasing pending on April 1, 2003. Such an application, and any 
lease issued pursuant to such an application--
            ``(1) except as provided in paragraph (2), shall be 
        subject to this section as in effect on April 1, 2003; 
        or
            ``(2) at the election of the applicant, shall be 
        subject to this section as in effect on the effective 
        date of this paragraph.''.

SEC. 213. DIRECT USE.

    (a) Fees for Direct Use.--Section 5 of the Geothermal Steam 
Act of 1970 (30 U.S.C. 1004) is amended--
            (1) in paragraph (c) by redesignating subparagraphs 
        (1) and (2) as subparagraphs (A) and (B);
            (2) by redesignating paragraphs (a) through (d) in 
        order as paragraphs (1) through (4);
            (3) by inserting ``(a) In General.--'' after ``Sec. 
        5.''; and
            (4) by adding at the end the following:
    ``(b) Direct Use.--Notwithstanding subsection (a)(1), with 
respect to the direct use of geothermal resources for purposes 
other than the commercial generation of electricity, the 
Secretary of the Interior shall establish a schedule of fees 
and collect fees pursuant to such a schedule in lieu of 
royalties based upon the total amount of the geothermal 
resources used. The schedule of fees shall ensure that there is 
a fair return to the public for the use of a geothermal 
resource based upon comparable fees charged for direct use of 
geothermal resources by States or private persons. For direct 
use by a State or local government for public purposes there 
shall be no royalty and the fee charged shall be nominal. 
Leases in existence on the date of enactment of the Energy 
Policy Act of 2003 shall be modified in order to reflect the 
provisions of this subsection.''.
    (b) Leasing for Direct Use.--Section 4 of the Geothermal 
Steam Act of 1970 (30 U.S.C. 1003) is further amended by adding 
at the end the following:
    ``(f) Leasing for Direct Use of Geothermal Resources.--
Lands leased under this Act exclusively for direct use of 
geothermal resources shall be leased to any qualified applicant 
who first applies for such a lease under regulations issued by 
the Secretary, if--
            ``(1) the Secretary publishes a notice of the lands 
        proposed for leasing 60 days before the date of the 
        issuance of the lease; and
            ``(2) the Secretary does not receive in the 60-day 
        period beginning on the date of such publication any 
        nomination to include the lands concerned in the next 
        competitive lease sale.
    ``(g) Area Subject to Lease for Direct Use.--A geothermal 
lease for the direct use of geothermal resources shall embrace 
not more than the amount of acreage determined by the Secretary 
to be reasonably necessary for such proposed utilization.''.
    (c) Existing Leases With a Direct Use Facility.--
            (1) Application to convert.--Any lessee under a 
        lease under the Geothermal Steam Act of 1970 that was 
        issued before the date of the enactment of this Act may 
        apply to the Secretary of the Interior, by not later 
        than 18 months after the date of the enactment of this 
        Act, to convert such lease to a lease for direct 
        utilization of geothermal resources in accordance with 
        the amendments made by this section.
            (2) Conversion.--The Secretary shall approve such 
        an application and convert such a lease to a lease in 
        accordance with the amendments by not later than 180 
        days after receipt of such application, unless the 
        Secretary determines that the applicant is not a 
        qualified applicant with respect to the lease.
            (3) Application of new lease terms.--The amendment 
        made by subsection (a)(4) shall apply with respect to 
        payments under a lease converted under this subsection 
        that are due and owing to the United States on or after 
        July 16, 2003.

SEC. 214. ROYALTIES AND NEAR-TERM PRODUCTION INCENTIVES.

    (a) Royalty.--Section 5 of the Geothermal Steam Act of 1970 
(30 U.S.C. 1004) is further amended--
            (1) in subsection (a) by striking paragraph (1) and 
        inserting the following:
            ``(1) a royalty on electricity produced using 
        geothermal steam and associated geothermal resources, 
        other than direct use of geothermal resources, that 
        shall be--
                    ``(A) not less than 1 percent and not more 
                than 2.5 percent of the gross proceeds from the 
                sale of electricity produced from such 
                resources during the first 10 years of 
                production under the lease; and
                    ``(B) not less than 2 and not more than 5 
                percent of the gross proceeds from the sale of 
                electricity produced from such resources during 
                each year after such 10-year period;''; and
            (2) by adding at the end the following:
    ``(c) Final Regulation Establishing Royalty Rates.--In 
issuing any final regulation establishing royalty rates under 
this section, the Secretary shall seek--
            ``(1) to provide lessees a simplified 
        administrative system;
            ``(2) to encourage new development; and
            ``(3) to achieve the same long-term level of 
        royalty revenues to States and counties as the 
        regulation in effect on the date of enactment of this 
        subsection.
    ``(d) Credits for In-Kind Payments of Electricity.--The 
Secretary may provide to a lessee a credit against royalties 
owed under this Act, in an amount equal to the value of 
electricity provided under contract to a State or county 
government that is entitled to a portion of such royalties 
under section 20 of this Act, section 35 of the Mineral Leasing 
Act (30 U.S.C. 191), or section 6 of the Mineral Leasing Act 
for Acquired Lands (30 U.S.C. 355), if--
            ``(1) the Secretary has approved in advance the 
        contract between the lessee and the State or county 
        government for such in-kind payments;
            ``(2) the contract establishes a specific 
        methodology to determine the value of such credits; and
            ``(3) the maximum credit will be equal to the 
        royalty value owed to the State or county that is a 
        party to the contract and the electricity received will 
        serve as the royalty payment from the Federal 
        Government to that entity.''.
    (b) Disposal of Moneys From Sales, Bonuses, Royalties, and 
Rentals.--Section 20 of the Geothermal Steam Act of 1970 (30 
U.S.C. 1019) is amended to read as follows:

``SEC. 20. DISPOSAL OF MONEYS FROM SALES, BONUSES, RENTALS, AND 
                    ROYALTIES.

    ``(a) In General.--Except with respect to lands in the 
State of Alaska, all monies received by the United States from 
sales, bonuses, rentals, and royalties under this Act shall be 
paid into the Treasury of the United States. Of amounts 
deposited under this subsection, subject to the provisions of 
section 35 of the Mineral Leasing Act (30 U.S.C. 191(b)) and 
section 5(a)(2) of this Act--
            ``(1) 50 percent shall be paid to the State within 
        the boundaries of which the leased lands or geothermal 
        resources are or were located; and
            ``(2) 25 percent shall be paid to the County within 
        the boundaries of which the leased lands or geothermal 
        resources are or were located.
    ``(b) Use of Payments.--Amounts paid to a State or county 
under subsection (a) shall be used consistent with the terms of 
section 35 of the Mineral Leasing Act (30 U.S.C. 191).''.
    (c) Near-Term Production Incentive for Existing Leases.--
            (1) In general.--Notwithstanding section 5(a) of 
        the Geothermal Steam Act of 1970, the royalty required 
        to be paid shall be 50 percent of the amount of the 
        royalty otherwise required, on any lease issued before 
        the date of enactment of this Act that does not convert 
        to new royalty terms under subsection (e)--
                    (A) with respect to commercial production 
                of energy from a facility that begins such 
                production in the 6-year period beginning on 
                the date of the enactment of this Act; or
                    (B) on qualified expansion geothermal 
                energy.
            (2) 4-year application.--Paragraph (1) applies only 
        to new commercial production of energy from a facility 
        in the first 4 years of such production.
    (d) Definition of Qualified Expansion Geothermal Energy.--
In this section, the term ``qualified expansion geothermal 
energy'' means geothermal energy produced from a generation 
facility for which--
            (1) the production is increased by more than 10 
        percent as a result of expansion of the facility 
        carried out in the 6-year period beginning on the date 
        of the enactment of this Act; and
            (2) such production increase is greater than 10 
        percent of the average production by the facility 
        during the 5-year period preceding the expansion of the 
        facility.
    (e) Royalty Under Existing Leases.--
            (1) In general.--Any lessee under a lease issued 
        under the Geothermal Steam Act of 1970 before the date 
        of the enactment of this Act may modify the terms of 
        the lease relating to payment of royalties to comply 
        with the amendment made by subsection (a), by applying 
        to the Secretary of the Interior by not later than 18 
        months after the date of the enactment of this Act.
            (2) Application of modification.--Such modification 
        shall apply to any use of geothermal steam and any 
        associated geothermal resources to which the amendment 
        applies that occurs after the date of that application.
            (3) Consultation.--The Secretary--
                    (A) shall consult with the State and local 
                governments affected by any proposed changes in 
                lease royalty terms under this subsection; and
                    (B) may establish a gross proceeds 
                percentage within the range specified in the 
                amendment made by subsection (a)(1) and with 
                the concurrence of the lessee and the State.

SEC. 215. GEOTHERMAL LEASING AND PERMITTING ON FEDERAL LANDS.

    (a) In General.--Not later than 180 days after the date of 
the enactment of this section, the Secretary of the Interior 
and the Secretary of Agriculture shall enter into and submit to 
Congress a memorandum of understanding in accordance with this 
section regarding leasing and permitting for geothermal 
development of public lands and National Forest System lands 
under their respective jurisdictions.
    (b) Lease and Permit Applications.--The memorandum of 
understanding shall--
            (1) identify areas with geothermal potential on 
        lands included in the National Forest System and, when 
        necessary, require review of management plans to 
        consider leasing under the Geothermal Steam Act of 1970 
        (30 U.S.C. 1001 et seq.) as a land use; and
            (2) establish an administrative procedure for 
        processing geothermal lease applications, including 
        lines of authority, steps in application processing, 
        and time limits for application procession.
    (c) Data Retrieval System.--The memorandum of understanding 
shall establish a joint data retrieval system that is capable 
of tracking lease and permit applications and providing to the 
applicant information as to their status within the Departments 
of the Interior and Agriculture, including an estimate of the 
time required for administrative action.

SEC. 216. REVIEW AND REPORT TO CONGRESS.

    The Secretary of the Interior shall promptly review and 
report to Congress not later than 3 years after the date of the 
enactment of this Act regarding the status of all withdrawals 
from leasing under the Geothermal Steam Act of 1970 (30 U.S.C. 
1001 et seq.) of Federal lands, specifying for each such area 
whether the basis for such withdrawal still applies.

SEC. 217. REIMBURSEMENT FOR COSTS OF NEPA ANALYSES, DOCUMENTATION, AND 
                    STUDIES.

    (a) In General.--The Geothermal Steam Act of 1970 (30 
U.S.C. 1001 et seq.) is amended by adding at the end the 
following:

``SEC. 30. REIMBURSEMENT FOR COSTS OF CERTAIN ANALYSES, DOCUMENTATION, 
                    AND STUDIES.

    ``(a) In General.--The Secretary of the Interior may 
reimburse a person that is a lessee, operator, operating rights 
owner, or applicant for any lease under this Act for reasonable 
amounts paid by the person for preparation for the Secretary by 
a contractor or other person selected by the Secretary of any 
project-level analysis, documentation, or related study 
required pursuant to the National Environmental Policy Act of 
1969 (42 U.S.C. 4321 et seq.) with respect to the lease.
    ``(b) Conditions.--The Secretary may provide reimbursement 
under subsection (a) only if--
            ``(1) adequate funding to enable the Secretary to 
        timely prepare the analysis, documentation, or related 
        study is not appropriated;
            ``(2) the person paid the costs voluntarily;
            ``(3) the person maintains records of its costs in 
        accordance with regulations issued by the Secretary;
            ``(4) the reimbursement is in the form of a 
        reduction in the Federal share of the royalty required 
        to be paid for the lease for which the analysis, 
        documentation, or related study is conducted, and is 
        agreed to by the Secretary and the person reimbursed 
        prior to commencing the analysis, documentation, or 
        related study; and
            ``(5) the agreement required under paragraph (4) 
        contains provisions--
                    ``(A) reducing royalties owed on lease 
                production based on market prices;
                    ``(B) stipulating an automatic termination 
                of the royalty reduction upon recovery of 
                documented costs; and
                    ``(C) providing a process by which the 
                lessee may seek reimbursement for circumstances 
                in which production from the specified lease is 
                not possible.''.
    (b) Application.--The amendment made by this section shall 
apply with respect to an analysis, documentation, or a related 
study conducted on or after the date of enactment of this Act 
for any lease entered into before, on, or after the date of 
enactment of this Act.
    (c) Deadline for Regulations.--The Secretary shall issue 
regulations implementing the amendment made by this section by 
not later than 1 year after the date of enactment of this Act.

SEC. 218. ASSESSMENT OF GEOTHERMAL ENERGY POTENTIAL.

    The Secretary of Interior, acting through the Director of 
the United States Geological Survey and in cooperation with the 
States, shall update the 1978 Assessment of Geothermal 
Resources, and submit that updated assessment to Congress--
            (1) not later than 3 years after the date of 
        enactment of this Act; and
            (2) thereafter as the availability of data and 
        developments in technology warrant.

SEC. 219. COOPERATIVE OR UNIT PLANS.

    Section 18 of the Geothermal Steam Act of 1970 (30 U.S.C. 
1017) is amended to read as follows:

``SEC. 18. UNIT AND COMMUNITIZATION AGREEMENTS.

    ``(a) Adoption of Units by Lessees.--
            ``(1) In general.--For the purpose of more properly 
        conserving the natural resources of any geothermal 
        reservoir, field, or like area, or any part thereof 
        (whether or not any part of the geothermal field, or 
        like area, is then subject to any Unit Agreement 
        (cooperative plan of development or operation)), 
        lessees thereof and their representatives may unite 
        with each other, or jointly or separately with others, 
        in collectively adopting and operating under a Unit 
        Agreement for such field, or like area, or any part 
        thereof including direct use resources, if determined 
        and certified by the Secretary to be necessary or 
        advisable in the public interest. A majority interest 
        of owners of any single lease shall have the authority 
        to commit that lease to a Unit Agreement. The Secretary 
        of the Interior mayalso initiate the formation of a 
Unit Agreement if in the public interest.
            ``(2) Modification of lease requirements by 
        secretary.--The Secretary may, in the discretion of the 
        Secretary, and with the consent of the holders of 
        leases involved, establish, alter, change, or revoke 
        rates of operations (including drilling, operations, 
        production, and other requirements) of such leases and 
        make conditions with reference to such leases, with the 
        consent of the lessees, in connection with the creation 
        and operation of any such Unit Agreement as the 
        Secretary may deem necessary or proper to secure the 
        proper protection of the public interest. Leases with 
        unlike lease terms or royalty rates do not need to be 
        modified to be in the same unit.
    ``(b) Requirement of Plans Under New Leases.--The 
Secretary--
            ``(1) may provide that geothermal leases issued 
        under this Act shall contain a provision requiring the 
        lessee to operate under such a reasonable Unit 
        Agreement; and
            ``(2) may prescribe such an Agreement under which 
        such lessee shall operate, which shall adequately 
        protect the rights of all parties in interest, 
        including the United States.
    ``(c) Modification of Rate of Prospecting, Development, and 
Production.--The Secretary may require that any Agreement 
authorized by this section that applies to lands owned by the 
United States contain a provision under which authority is 
vested in the Secretary, or any person, committee, or State or 
Federal officer or agency as may be designated in the Agreement 
to alter or modify from time to time the rate of prospecting 
and development and the quantity and rate of production under 
such an Agreement.
    ``(d) Exclusion From Determination of Holding or Control.--
Any lands that are subject to any Agreement approved or 
prescribed by the Secretary under this section shall not be 
considered in determining holdings or control under any 
provision of this Act.
    ``(e) Pooling of Certain Lands.--If separate tracts of 
lands cannot be independently developed and operated to use 
geothermal steam and associated geothermal resources pursuant 
to any section of this Act--
            ``(1) such lands, or a portion thereof, may be 
        pooled with other lands, whether or not owned by the 
        United States, for purposes of development and 
        operation under a Communitization Agreement providing 
        for an apportionment of production or royalties among 
        the separate tracts of land comprising the production 
        unit, if such pooling is determined by the Secretary to 
        be in the public interest; and
            ``(2) operation or production pursuant to such an 
        Agreement shall be treated as operation or production 
        with respect to each tract of land that is subject to 
        the agreement.
    ``(f) Unit Agreement Review.--No more than 5 years after 
approval of any cooperative or Unit Agreement and at least 
every 5 years thereafter, the Secretary shall review each such 
Agreement and, after notice and opportunity for comment, 
eliminate from inclusion in such Agreement any lands that the 
Secretary determines are not reasonably necessary for Unit 
operations under the Agreement. Such elimination shall be based 
on scientific evidence, and shall occur only if it is 
determined by the Secretary to be for the purpose of conserving 
and properly managing the geothermal resource. Any land so 
eliminated shall be eligible for an extension under subsection 
(g) of section 6 if it meets the requirements for such an 
extension.
    ``(g) Drilling or Development Contracts.-- The Secretary 
may, on such conditions as the Secretary may prescribe, approve 
drilling or development contracts made by 1 or more lessees of 
geothermal leases, with 1 or more persons, associations, or 
corporations if, in the discretion of the Secretary, the 
conservation of natural resources or the public convenience or 
necessity may require or the interests of the United States may 
be best served thereby. All leases operated under such approved 
drilling or development contracts, and interests thereunder, 
shall be excepted in determining holdings or control under 
section 7.
    ``(h) Coordination With State Governments.--The Secretary 
shall coordinate unitization and pooling activities with the 
appropriate State agencies and shall ensure that State leases 
included in any unitization or pooling arrangement are treated 
equally with Federal leases.''.

SEC. 220. ROYALTY ON BYPRODUCTS.

    Section 5 of the Geothermal Steam Act of 1970 (30 U.S.C. 
1004) is further amended in subsection (a) by striking 
paragraph (2) and inserting the following:
            ``(2) a royalty on any byproduct that is a mineral 
        named in the first section of the Mineral Leasing Act 
        (30 U.S.C. 181), and that is derived from production 
        under the lease, at the rate of the royalty that 
        applies under that Act to production of such mineral 
        under a lease under that Act;''.

SEC. 221. REPEAL OF AUTHORITIES OF SECRETARY TO READJUST TERMS, 
                    CONDITIONS, RENTALS, AND ROYALTIES.

    Section 8 of the Geothermal Steam Act of 1970 (30 U.S.C. 
1007) is amended by repealing subsection (b), and by 
redesignating subsection (c) as subsection (b).

SEC. 222. CREDITING OF RENTAL TOWARD ROYALTY.

    Section 5 of the Geothermal Steam Act of 1970 (30 U.S.C. 
1004) is further amended--
            (1) in subsection (a)(2) by inserting ``and'' after 
        the semicolon at the end;
            (2) in subsection (a)(3) by striking ``; and'' and 
        inserting a period;
            (3) by striking paragraph (4) of subsection (a); 
        and
            (4) by adding at the end the following:
    ``(e) Crediting of Rental Toward Royalty.--Any annual 
rental under this section that is paid with respect to a lease 
before the first day of the year for which the annual rental is 
owed shall be credited to the amount of royalty that is 
required to be paid under the lease for that year.''.

SEC. 223. LEASE DURATION AND WORK COMMITMENT REQUIREMENTS.

    Section 6 of the Geothermal Steam Act of 1970 (30 U.S.C. 
1005) is amended--
            (1) by striking so much as precedes subsection (c), 
        and striking subsections (e), (g), (h), (i), and (j);
            (2) by redesignating subsections (c), (d), and (f) 
        in order as subsections (g), (h), and (i); and
            (3) by inserting before subsection (g), as so 
        redesignated, the following:

``SEC. 6. LEASE TERM AND WORK COMMITMENT REQUIREMENTS.

    ``(a) In General.--
            ``(1) Primary term.--A geothermal lease shall be 
        for a primary term of 10 years.
            ``(2) Initial extension.--The Secretary shall 
        extend the primary term of a geothermal lease for 5 
        years if, for each year after the fifth year of the 
        lease--
                    ``(A) the Secretary determined under 
                subsection (c) that the lessee satisfied the 
                work commitment requirements that applied to 
                the lease for that year; or
                    ``(B) the lessee paid in accordance with 
                subsection (d) the value of any work that was 
                not completed in accordance with those 
                requirements.
            ``(3) Additional extension.--The Secretary shall 
        extend the primary term of a geothermal lease (after an 
        initial extension under paragraph (2)) for an 
        additional 5 years if, for each year of the initial 
        extension under paragraph (2), the Secretary determined 
        under subsection (c) that the lessee satisfied the work 
        commitment requirements that applied to the lease for 
        that year.
    ``(b) Requirement to Satisfy Annual Work Commitment 
Requirement.--
            ``(1) In general.--The lessee for a geothermal 
        lease shall, for each year after the fifth year of the 
        lease, satisfy work commitment requirements prescribed 
        by the Secretary that apply to the lease for that year.
            ``(2) Prescription of work commitment 
        requirements.--The Secretary shall issue regulations 
        prescribing minimum equivalent dollar value work 
        commitment requirements for geothermal leases, that--
                    ``(A) require that a lessee, in each year 
                after the fifth year of the primary term of a 
                geothermal lease, diligently work to achieve 
                commercial production or utilization of steam 
                under the lease;
                    ``(B) require that in each year to which 
                work commitment requirements under the 
                regulations apply, the lessee shall 
                significantly reduce the amount of work that 
                remains to be done to achieve such production 
                or utilization;
                    ``(C) describe specific work that must be 
                completed by a lessee by the end of each year 
                to which the work commitment requirements apply 
                and factors, such as force majeure events, that 
                suspend or modify the work commitment 
                obligation;
                    ``(D) carry forward and apply to work 
                commitment requirements for a year, work 
                completed in any year in the preceding 3-year 
                period that was in excess of the work required 
                to be performed in that preceding year;
                    ``(E) establish transition rules for leases 
                issued before the date of the enactment of this 
                subsection, including terms under which a lease 
                that is near the end of its term on the date of 
                enactment of this subsection may be extended 
                for up to 2 years--
                            ``(i) to allow achievement of 
                        production under the lease; or
                            ``(ii) to allow the lease to be 
                        included in a producing unit; and
                    ``(F) establish an annual payment that, at 
                the option of the lessee, may be exercised in 
                lieu of meeting any work requirement for a 
                limited number of years that the Secretary 
                determines will not impair achieving diligent 
                development of the geothermal resource.
            ``(3) Termination of application of requirements.--
        Work commitment requirements prescribed under this 
        subsection shall not apply to a geothermal lease after 
        the date on which geothermal steam is produced or 
        utilized under the lease in commercial quantities.
    ``(c) Determination of Whether Requirements Satisfied.--The 
Secretary shall, by not later than 90 days after the end of 
each year for which work commitment requirements under 
subsection (b) apply to a geothermal lease--
            ``(1) determine whether the lessee has satisfied 
        the requirements that apply for that year;
            ``(2) notify the lessee of that determination; and
            ``(3) in the case of a notification that the lessee 
        did not satisfy work commitment requirements for the 
        year, include in the notification--
                    ``(A) a description of the specific work 
                that was not completed by the lessee in 
                accordance with the requirements; and
                    ``(B) the amount of the dollar value of 
                such work that was not completed, reduced by 
                the amount of expenditures made for work 
                completed in a prior year that is carried 
                forward pursuant to subsection (b)(2)(D).
    ``(d) Payment of Value of Uncompleted Work.--
            ``(1) In general.--If the Secretary notifies a 
        lessee that the lessee failed to satisfy work 
        commitment requirements under subsection (b), the 
        lessee shall pay to the Secretary, by not later than 
        the end of the 60-day period beginning on the date of 
        the notification, the dollar value of work that was not 
        completed by the lessee, in the amount stated in the 
        notification (as reduced under subsection (c)(3)(B)).
            ``(2) Failure to pay value of uncompleted work.--If 
        a lessee fails to pay such amount to the Secretary 
        before the end of that period, the lease shall 
        terminate upon the expiration of the period.
    ``(e) Continuation After Commercial Production or 
Utilization.--If geothermal steam is produced or utilized in 
commercial quantities within the primary term of the lease 
under subsection (a) (including any extension of the lease 
under subsection (a)), such lease shall continue until the date 
on which geothermal steam is no longer produced or utilized in 
commercial quantities.
    ``(f) Conversion of Geothermal Lease to Mineral Lease.--The 
lessee under a lease that has produced geothermal steam for 
electrical generation, has been determined by the Secretary to 
be incapable of any further commercial production or 
utilization of geothermal steam, and that is producing any 
valuable byproduct in payable quantities may, within 6 months 
after such determination--
            ``(1) convert the lease to a mineral lease under 
        the Mineral Leasing Act (30 U.S.C. 181 et seq.) or 
        under the Mineral Leasing Act for Acquired Lands (30 
        U.S.C. 351 et seq.), if the lands that are subject to 
        the lease can be leased under that Act for the 
        production of such byproduct; or
            ``(2) convert the lease to a mining claim under the 
        general mining laws, if the byproduct is a locatable 
        mineral.''.

SEC. 224. ADVANCED ROYALTIES REQUIRED FOR SUSPENSION OF PRODUCTION.

    Section 5 of the Geothermal Steam Act of 1970 (30 U.S.C. 
1004) is further amended by adding at the end the following:
    ``(f) Advanced Royalties Required for Suspension of 
Production.--
            ``(1) Continuation of lease following cessation of 
        production.--If, at any time after commercial 
        production under a lease is achieved, production ceases 
        for any cause the lease shall remain in full force and 
        effect--
                    ``(A) during the 1-year period beginning on 
                the date production ceases; and
                    ``(B) after such period if, and so long as, 
                the lessee commences and continues diligently 
                and in good faith until such production is 
                resumed the steps, operations, or procedures 
                necessary to cause a resumption of such 
                production.
            ``(2) If production of heat or energy under a 
        geothermal lease is suspended after the date of any 
        such production for which royalty is required under 
        subsection (a) and the terms of paragraph (1) are not 
        met, the Secretary shall require the lessee, until the 
        end of such suspension, to pay royalty in advance at 
        the monthly pro-rata rate of the average annual rate at 
        which such royalty was paid each year in the 5-year-
        period preceding the date of suspension.
            ``(3) Paragraph (2) shall not apply if the 
        suspension is required or otherwise caused by the 
        Secretary, the Secretary of a military department, a 
        State or local government, or a force majeure.''.

SEC. 225. ANNUAL RENTAL.

    (a) Annual Rental Rate.--Section 5 of the Geothermal Steam 
Act of 1970 (30 U.S.C. 1004) is further amended in subsection 
(a) in paragraph (3) by striking ``$1 per acre or fraction 
thereof for each year of the lease'' and all that follows 
through the end of the paragraph and inserting ``$1 per acre or 
fraction thereof for each year of the lease through the tenth 
year in the case of a lease awarded in a noncompetitive lease 
sale; or $2 per acre or fraction thereof for the first year, $3 
per acre or fraction thereof for each of the second through 
tenth years, in the case of a lease awarded in a 
competitivelease sale; and $5 per acre or fraction thereof for each 
year after the 10th year thereof for all leases.''.
    (b) Termination of Lease for Failure to Pay Rental.--
Section 5 of the Geothermal Steam Act of 1970 (30 U.S.C. 1004) 
is further amended by adding at the end the following:
    ``(g) Termination of Lease for Failure to Pay Rental.---
            ``(1) In general.--The Secretary shall terminate 
        any lease with respect to which rental is not paid in 
        accordance with this Act and the terms of the lease 
        under which the rental is required, upon the expiration 
        of the 45-day period beginning on the date of the 
        failure to pay such rental.
            ``(2) Notification.--The Secretary shall promptly 
        notify a lessee that has not paid rental required under 
        the lease that the lease will be terminated at the end 
        of the period referred to in paragraph (1).
            ``(3) Reinstatement.--A lease that would otherwise 
        terminate under paragraph (1) shall not terminate under 
        that paragraph if the lessee pays to the Secretary, 
        before the end of the period referred to in paragraph 
        (1), the amount of rental due plus a late fee equal to 
        10 percent of such amount.''.

SEC. 226. LEASING AND PERMITTING ON FEDERAL LANDS WITHDRAWN FOR 
                    MILITARY PURPOSES.

    Not later than 2 years after the date of enactment of this 
Act, the Secretary of the Interior and the Secretary of 
Defense, in consultation with each military service and with 
interested States, counties, representatives of the geothermal 
industry, and other persons, shall submit to Congress a joint 
report concerning leasing and permitting activities for 
geothermal energy on Federal lands withdrawn for military 
purposes. Such report shall include the following:
            (1) A description of the Military Geothermal 
        Program, including any differences between it and the 
        non-Military Geothermal Program, including required 
        security procedures, and operational considerations, 
        and discussions as to the differences, and why they are 
        important. Further, the report shall describe revenues 
        or energy provided to the Department of Defense and its 
        facilities, royalty structures, where applicable, and 
        any revenue sharing with States and counties or other 
        benefits between--
                    (A) the implementation of the Geothermal 
                Steam Act of 1970 (30 U.S.C 1001 et seq.) and 
                other applicable Federal law by the Secretary 
                of the Interior; and
                    (B) the administration of geothermal 
                leasing under section 2689 of title 10, United 
                States Code, by the Secretary of Defense.
            (2) If appropriate, a description of the current 
        methods and procedures used to ensure interagency 
        coordination, where needed, in developing renewable 
        energy sources on Federal lands withdrawn for military 
        purposes, and an identification of any new procedures 
        that might be required in the future for the 
        improvement of interagency coordination to ensure 
        efficient processing and administration of leases or 
        contracts for geothermal energy on Federal lands 
        withdrawn for military purposes, consistent with the 
        defense purposes of such withdrawals.
            (3) Recommendations for any legislative or 
        administrative actions that might better achieve 
        increased geothermal production, including a common 
        royalty structure, leasing procedures, or other changes 
        that increase production, offset military operation 
        costs, or enhance the Federal agencies' ability to 
        develop geothermal resources.
Except as provided in this section, nothing in this subtitle 
shall affect the legal status of the Department of the Interior 
and the Department of the Defense with respect to each other 
regarding geothermal leasing and development until such status 
is changed by law.

SEC. 227. TECHNICAL AMENDMENTS.

    The Geothermal Steam Act of 1970 (30 U.S.C. 1001 et seq.) 
is further amended as follows:
            (1) By striking ``geothermal steam and associated 
        geothermal resources'' each place it appears and 
        inserting ``geothermal resources''.
            (2) Section 2(e) (30 U.S.C. 1001(e)) is amended to 
        read as follows:
            ``(e) `direct use' means utilization of geothermal 
        resources for commercial, residential, agricultural, 
        public facilities, or other energy needs other than the 
        commercial production of electricity; and''.
            (3) Section 21 (30 U.S.C. 1020) is amended by 
        striking ``(a) Within one hundred'' and all that 
        follows through ``(b) Geothermal'' and inserting 
        ``Geothermal''.
            (4) The first section (30 U.S.C. 1001 note) is 
        amended by striking ``That this'' and inserting the 
        following:

``SECTION 1. SHORT TITLE.

    ``This''.
            (5) Section 2 (30 U.S.C. 1001) is amended by 
        striking ``Sec. 2. As'' and inserting the following:

``SEC. 2. DEFINITIONS.

    ``As''.
            (6) Section 3 (30 U.S.C. 1002) is amended by 
        striking ``Sec. 3. Subject'' and inserting the 
        following:

``SEC. 3 . LANDS SUBJECT TO GEOTHERMAL LEASING.

    ``Subject''.
            (7) Section 5 (30 U.S.C. 1004) is further amended 
        by striking ``Sec. 5.'', and by inserting immediately 
        before and above subsection (a) the following:

``SEC. 5. RENTS AND ROYALTIES.''.

            (8) Section 7 (30 U.S.C. 1006) is amended by 
        striking ``Sec. 7. A geothermal'' and inserting the 
        following:

``SEC. 7. ACREAGE OF GEOTHERMAL LEASE.

    ``A geothermal''.
            (9) Section 8 (30 U.S.C. 1007) is amended by 
        striking ``Sec. 8. (a) The'' and inserting the 
        following:

``SEC. 8. READJUSTMENT OF LEASE TERMS AND CONDITIONS.

    ``(a) The''.
            (10) Section 9 (30 U.S.C. 1008) is amended by 
        striking ``Sec. 9. If'' and inserting the following:

``SEC. 9. BYPRODUCTS.

    ``If''.
            (11) Section 10 (30 U.S.C. 1009) is amended by 
        striking ``Sec. 10. The'' and inserting the following:

``SEC. 10. RELINQUISHMENT OF GEOTHERMAL RIGHTS.

    ``The''.
            (12) Section 11 (30 U.S.C. 1010) is amended by 
        striking ``Sec. 11. The'' and inserting the following:

``SEC. 11. SUSPENSION OF OPERATIONS AND PRODUCTION.

    ``The''.
            (13) Section 12 (30 U.S.C. 1011) is amended by 
        striking ``Sec. 12. Leases'' and inserting the 
        following:

``SEC. 12. TERMINATION OF LEASES.

    ``Leases''.
            (14) Section 13 (30 U.S.C. 1012) is amended by 
        striking ``Sec. 13. The'' and inserting the following:

``SEC. 13. WAIVER, SUSPENSION, OR REDUCTION OF RENTAL OR ROYALTY.

    ``The''.
            (15) Section 14 (30 U.S.C. 1013) is amended by 
        striking ``Sec. 14. Subject'' and inserting the 
        following:

``SEC. 14. SURFACE LAND USE.

    ``Subject''.
            (16) Section 15 (30 U.S.C. 1014) is amended by 
        striking ``Sec. 15. (a) Geothermal'' and inserting the 
        following:

``SEC. 15. LANDS SUBJECT TO GEOTHERMAL LEASING.

    ``(a) Geothermal''.
            (17) Section 16 (30 U.S.C. 1015) is amended by 
        striking ``Sec. 16. Leases'' and inserting the 
        following:

``SEC. 16. REQUIREMENT FOR LESSEES.

    ``Leases''.
            (18) Section 17 (30 U.S.C. 1016) is amended by 
        striking ``Sec. 17. Administration'' and inserting the 
        following:

``SEC. 17. ADMINISTRATION.

    ``Administration''.
            (19) Section 19 (30 U.S.C. 1018) is amended by 
        striking ``Sec. 19. Upon'' and inserting the following:

``SEC. 19. DATA FROM FEDERAL AGENCIES.

    ``Upon''.
            (20) Section 21 (30 U.S.C. 1020) is further amended 
        by striking ``Sec. 21.'', and by inserting immediately 
        before and above the remainder of that section the 
        following:

``SEC. 21. PUBLICATION IN FEDERAL REGISTER; RESERVATION OF MINERAL 
                    RIGHTS.''.

            (21) Section 22 (30 U.S.C. 1021) is amended by 
        striking ``Sec. 22. Nothing'' and inserting the 
        following:

``SEC. 22. FEDERAL EXEMPTION FROM STATE WATER LAWS.

    ``Nothing''.
            (22) Section 23 (30 U.S.C. 1022) is amended by 
        striking ``Sec. 23. (a) All'' and inserting the 
        following:

``SEC. 23. PREVENTION OF WASTE; EXCLUSIVITY.

    ``(a) All''.
            (23) Section 24 (30 U.S.C. 1023) is amended by 
        striking ``Sec. 24. The'' and inserting the following:

``SEC. 24. RULES AND REGULATIONS.

    ``The''.
            (24) Section 25 (30 U.S.C. 1024) is amended by 
        striking ``Sec. 25. As'' and inserting the following:

``SEC. 25. INCLUSION OF GEOTHERMAL LEASING UNDER CERTAIN OTHER LAWS.

    ``As''.
            (25) Section 26 is amended by striking ``Sec. 26. 
        The'' and inserting the following:

``SEC. 26. AMENDMENT.

    ``The''.
            (26) Section 27 (30 U.S.C. 1025) is amended by 
        striking ``Sec. 27. The'' and inserting the following:

``SEC. 27. FEDERAL RESERVATION OF CERTAIN MINERAL RIGHTS.

    ``The''.
            (27) Section 28 (30 U.S.C. 1026) is amended by 
        striking ``Sec. 28. (a)(1) The'' and inserting the 
        following:

``SEC. 28. SIGNIFICANT THERMAL FEATURES.

    ``(a)(1) The''.
            (28) Section 29 (30 U.S.C. 1027) is amended by 
        striking ``Sec. 29. The'' and inserting the following:

``SEC. 29. LAND SUBJECT TO PROHIBITION ON LEASING.

    ``The''.

                       Subtitle C--Hydroelectric

                     PART I--ALTERNATIVE CONDITIONS

SEC. 231. ALTERNATIVE CONDITIONS AND FISHWAYS.

    (a) Federal Reservations.--Section 4(e) of the Federal 
Power Act (16 U.S.C. 797(e)) is amended by inserting after 
``adequate protection and utilization of such reservation.'' at 
the end of the first proviso the following: ``The license 
applicant shall be entitled to a determination on the record, 
after opportunity for an expedited agency trial-type hearing of 
any disputed issues of material fact, with respect to such 
conditions. Such hearing may be conducted in accordance with 
procedures established by agency regulation in consultation 
with the Federal Energy Regulatory Commission.''.
    (b) Fishways.--Section 18 of the Federal Power Act (16 
U.S.C. 811) is amended by inserting after ``and such fishways 
as may be prescribed by the Secretary of Commerce.'' the 
following: ``The license applicant shall be entitled to a 
determination on the record, after opportunity for an expedited 
agency trial-type hearing of any disputed issues of material 
fact, with respect to such fishways. Such hearing may be 
conducted in accordance with procedures established by agency 
regulation in consultation with the Federal Energy Regulatory 
Commission.''.
    (c) Alternative Conditions and Prescriptions.--Part I of 
the Federal Power Act (16 U.S.C. 791a et seq.) is amended by 
adding the following new section at the end thereof:

``SEC. 33. ALTERNATIVE CONDITIONS AND PRESCRIPTIONS.

    ``(a) Alternative Conditions.--(1) Whenever any person 
applies for a license for any project works within any 
reservation of the United States, and the Secretary of the 
department under whose supervision such reservation falls 
(referred to in this subsection as `the Secretary') deems a 
condition to such license to be necessary under the first 
proviso of section 4(e), the license applicant may propose an 
alternative condition.
    ``(2) Notwithstanding the first proviso of section 4(e), 
the Secretary shall accept the proposed alternative condition 
referred to in paragraph (1), and the Commission shall include 
in the license such alternative condition, if the Secretary 
determines, based on substantial evidence provided by the 
license applicant or otherwise available to the Secretary, that 
such alternative condition--
            ``(A) provides for the adequate protection and 
        utilization of the reservation; and
            ``(B) will either--
                    ``(i) cost less to implement; or
                    ``(ii) result in improved operation of the 
                project works for electricity production,

        as compared to the condition initially deemed necessary 
        by the Secretary.
    ``(3) The Secretary shall submit into the public record of 
the Commission proceeding with any condition under section 4(e) 
or alternative condition it accepts under this section, a 
written statement explaining the basis for such condition, and 
reason for not accepting any alternative condition under this 
section. The written statement must demonstrate that the 
Secretary gave equal consideration to the effects of the 
condition adopted and alternatives not accepted on energy 
supply, distribution, cost, and use; flood control; navigation; 
water supply; and air quality (in addition to the preservation 
of other aspects of environmental quality); based on such 
information as may be available to the Secretary, including 
information voluntarily provided in a timely manner by the 
applicant and others. The Secretary shall also submit, together 
with the aforementioned written statement, all studies, data, 
and other factual information available to the Secretary and 
relevant to the Secretary's decision.
    ``(4) Nothing in this section shall prohibit other 
interested parties from proposing alternative conditions.
    ``(5) If the Secretary does not accept an applicant's 
alternative condition under this section, and the Commission 
finds that the Secretary's condition would be inconsistent with 
the purposes of this part, or other applicable law, the 
Commission may refer the dispute to the Commission's Dispute 
Resolution Service. The Dispute Resolution Service shall 
consult with the Secretary and the Commission and issue a non-
binding advisory within 90 days. The Secretary may accept the 
Dispute Resolution Service advisory unless the Secretary finds 
that the recommendation will not provide for the adequate 
protection and utilization of the reservation. The Secretary 
shall submit the advisory and the Secretary's final written 
determination into the record of the Commission's proceeding.
    ``(b) Alternative Prescriptions.--(1) Whenever the 
Secretary of the Interior or the Secretary of Commerce 
prescribes a fishway under section 18, the license applicant or 
licensee may propose an alternative to such prescription to 
construct, maintain, or operate a fishway.
    ``(2) Notwithstanding section 18, the Secretary of the 
Interior or the Secretary of Commerce, as appropriate, shall 
accept and prescribe, and the Commission shall require, the 
proposed alternative referred to in paragraph (1), if the 
Secretary of the appropriate department determines, based on 
substantial evidence provided by the licensee or otherwise 
available to the Secretary, that such alternative--
            ``(A) will be no less protective than the fishway 
        initially prescribed by the Secretary; and
            ``(B) will either--
                    ``(i) cost less to implement; or
                    ``(ii) result in improved operation of the 
                project works for electricity production,
        as compared to the fishway initially deemed necessary 
        by the Secretary.
    ``(3) The Secretary concerned shall submit into the public 
record of the Commission proceeding with any prescription under 
section 18 or alternative prescription it accepts under this 
section, a written statement explaining the basis for such 
prescription, and reason for not accepting any alternative 
prescription under this section. The written statement must 
demonstrate that the Secretary gave equal consideration to the 
effects of the condition adopted and alternatives not accepted 
on energy supply, distribution, cost, and use; flood control; 
navigation; water supply; and air quality (in addition to the 
preservation of other aspects of environmental quality); based 
on such information as may be available to the Secretary, 
including information voluntarily provided in a timely manner 
by the applicant and others. The Secretary shall also submit, 
together with the aforementioned written statement, all 
studies, data, and other factual information available to the 
Secretary and relevant to the Secretary's decision.
    ``(4) Nothing in this section shall prohibit other 
interested parties from proposing alternative prescriptions.
    ``(5) If the Secretary concerned does not accept an 
applicant's alternative prescription under this section, and 
the Commission finds that the Secretary's prescription would be 
inconsistent with the purposes of this part, or other 
applicable law, the Commission may refer the dispute to the 
Commission's Dispute Resolution Service. The Dispute Resolution 
Service shall consult with the Secretary and the Commission and 
issue a non-binding advisory within 90 days. The Secretary may 
accept the Dispute Resolution Service advisory unless the 
Secretary finds that the recommendation will be less protective 
than the fishway initially prescribed by the Secretary. The 
Secretary shall submit the advisory and the Secretary's final 
written determination into the record of the Commission's 
proceeding.''.

                     PART II--ADDITIONAL HYDROPOWER

SEC. 241. HYDROELECTRIC PRODUCTION INCENTIVES.

    (a) Incentive Payments.--For electric energy generated and 
sold by a qualified hydroelectric facility during the incentive 
period, the Secretary of Energy (referred to in this section as 
the ``Secretary'') shall make, subject to the availability of 
appropriations, incentive payments to the owner or operator of 
such facility. The amount of such payment made to any such 
owner or operator shall be as determined under subsection (e) 
of this section. Payments under this section may only be made 
upon receipt by the Secretary of an incentive payment 
application which establishes that the applicant is eligible to 
receive such payment and which satisfies such other 
requirements as the Secretary deems necessary. Such application 
shall be in such form, and shall be submitted at such time, as 
the Secretary shall establish.
    (b) Definitions.--For purposes of this section:
            (1) Qualified hydroelectric facility.--The term 
        ``qualified hydroelectric facility'' means a turbine or 
        other generating device owned or solely operated by a 
        non-Federal entity which generates hydroelectric energy 
        for sale and which is added to an existing dam or 
        conduit.
            (2) Existing dam or conduit.--The term ``existing 
        dam or conduit'' means any dam or conduit the 
        construction of which was completed before the date of 
        the enactment of this section and which does not 
        require any construction or enlargement of impoundment 
        or diversion structures (other than repair or 
        reconstruction) in connection with the installation of 
        a turbine or other generating device.
            (3) Conduit.--The term ``conduit'' has the same 
        meaning as when used in section 30(a)(2) of the Federal 
        Power Act (16 U.S.C. 823a(a)(2)).
The terms defined in this subsection shall apply without regard 
to the hydroelectric kilowatt capacity of the facility 
concerned, without regard to whether the facility uses a dam 
owned by a governmental or nongovernmental entity, and without 
regard to whether the facility begins operation on or after the 
date of the enactment of this section.
    (c) Eligibility Window.--Payments may be made under this 
section only for electric energy generated from a qualified 
hydroelectric facility which begins operation during the period 
of 10 fiscal years beginning with the first full fiscal year 
occurring after the date of enactment of this subtitle.
    (d) Incentive Period.--A qualified hydroelectric facility 
may receive payments under this section for a period of 10 
fiscal years (referred to in this section as the ``incentive 
period''). Such period shall begin with the fiscal year in 
which electric energy generated from the facility is first 
eligible for such payments.
    (e) Amount of Payment.--
            (1) In general.--Payments made by the Secretary 
        under this section to the owner or operator of a 
        qualified hydroelectric facility shall be based on the 
        number of kilowatt hours of hydroelectric energy 
        generated by the facility during the incentive period. 
        For any such facility, the amount of such payment shall 
        be 1.8 cents per kilowatt hour (adjusted as provided in 
        paragraph (2)), subject to the availability of 
        appropriations under subsection (g), except that no 
        facility may receive more than $750,000 in 1 calendar 
        year.
            (2) Adjustments.--The amount of the payment made to 
        any person under this section as provided in paragraph 
        (1) shall be adjusted for inflation for each fiscal 
        year beginning after calendar year 2003 in the same 
        manner as provided in the provisions of section 
        29(d)(2)(B) of the Internal Revenue Code of 1986, 
        except that in applying such provisions the calendar 
        year 2003 shall be substituted for calendar year 1979.
    (f) Sunset.--No payment may be made under this section to 
any qualified hydroelectric facility after the expiration of 
the period of 20 fiscal years beginning with the first full 
fiscal year occurring after the date of enactment of this 
subtitle, and no payment may be made under this section to any 
such facility after a payment has been made with respect to 
such facility for a period of 10 fiscal years.
    (g) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary to carry out the purposes 
of this section $10,000,000 for each of the fiscal years 2004 
through 2013.

SEC. 242. HYDROELECTRIC EFFICIENCY IMPROVEMENT.

    (a) Incentive Payments.--The Secretary of Energy shall make 
incentive payments to the owners or operators of hydroelectric 
facilities at existing dams to be used to make capital 
improvements in the facilities that are directly related to 
improving the efficiency of such facilities by at least 3 
percent.
    (b) Limitations.--Incentive payments under this section 
shall not exceed 10 percent of the costs of the capital 
improvement concerned and not more than 1 payment may be made 
with respect to improvements at a single facility. No payment 
in excess of $750,000 may be made with respect to improvements 
at a single facility.
    (c) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out this section not more than 
$10,000,000 for each of the fiscal years 2004 through 2013.

SEC. 243. SMALL HYDROELECTRIC POWER PROJECTS.

    Section 408(a)(6) of the Public Utility Regulatory Policies 
Act of 1978 (16 U.S.C. 2708(a)(6)) is amended by striking 
``April 20, 1977'' and inserting ``March 4, 2003''.

SEC. 244. INCREASED HYDROELECTRIC GENERATION AT EXISTING FEDERAL 
                    FACILITIES.

    (a) In General.--The Secretary of the Interior and the 
Secretary of Energy, in consultation with the Secretary of the 
Army, shall jointly conduct a study of the potential for 
increasing electric power production capability at federally 
owned or operated water regulation, storage, and conveyance 
facilities.
    (b) Content.--The study under this section shall include 
identification and description in detail of each facility that 
is capable, with or without modification, of producing 
additional hydroelectric power, including estimation of the 
existing potential for the facility to generate hydroelectric 
power.
    (c) Report.--The Secretaries shall submit to the Committees 
on Energy and Commerce, Resources, and Transportation and 
Infrastructure of the House of Representatives and the 
Committee on Energy and Natural Resources of the Senate a 
report on the findings, conclusions, and recommendations of the 
study under this section by not later than 18 months after the 
date of the enactment of this Act. The report shall include 
each of the following:
            (1) The identifications, descriptions, and 
        estimations referred to in subsection (b).
            (2) A description of activities currently conducted 
        or considered, or that could be considered, to produce 
        additional hydroelectric power from each identified 
        facility.
            (3) A summary of prior actions taken by the 
        Secretaries to produce additional hydroelectric power 
        from each identified facility.
            (4) The costs to install, upgrade, or modify 
        equipment or take other actions to produce additional 
        hydroelectric power from each identified facility and 
        the level of Federal power customer involvement in the 
        determination of such costs.
            (5) The benefits that would be achieved by such 
        installation, upgrade, modification, or other action, 
        including quantified estimates of any additional energy 
        or capacity from each facility identified under 
        subsection (b).
            (6) A description of actions that are planned, 
        underway, or might reasonably be considered to increase 
        hydroelectric power production by replacing turbine 
        runners, by performing generator upgrades or rewinds, 
        or construction of pumped storage facilities.
            (7) The impact of increased hydroelectric power 
        production on irrigation, fish, wildlife, Indian 
        tribes, river health, water quality, navigation, 
        recreation, fishing, and flood control.
            (8) Any additional recommendations to increase 
        hydroelectric power production from, and reduce costs 
        and improve efficiency at, federally owned or operated 
        water regulation, storage, and conveyance facilities.

SEC. 245. SHIFT OF PROJECT LOADS TO OFF-PEAK PERIODS.

    (a) In General.--The Secretary of the Interior shall--
            (1) review electric power consumption by Bureau of 
        Reclamation facilities for water pumping purposes; and
            (2) make such adjustments in such pumping as 
        possible to minimize the amount of electric power 
        consumed for such pumping during periods of peak 
        electric power consumption, including by performing as 
        much of such pumping as possible during off-peak hours 
        at night.
    (b) Consent of Affected Irrigation Customers Required.--The 
Secretary may not under this section make any adjustment in 
pumping at a facility without the consent of each person that 
has contracted with the United States for delivery of water 
from the facility for use for irrigation and that would be 
affected by such adjustment.
    (c) Existing Obligations Not Affected.--This section shall 
not be construed to affect any existing obligation of the 
Secretary to provide electric power, water, or other benefits 
from Bureau of Reclamation facilities, including recreational 
releases.

SEC. 246. CORPS OF ENGINEERS HYDROPOWER OPERATION AND MAINTENANCE 
                    FUNDING.

    (a) In General.--Notwithstanding the last sentence of 
section 5 of the Act of December 22, 1944 (commonly known as 
the ``Flood Control Act of 1944'') (58 Stat. 890, chapter 665; 
16 U.S.C. 825s), the 11th paragraph under the heading ``office 
of the secretary'' in title I of the Act of October 12, 1949 
(63 Stat. 767, chapter 680; 16 U.S.C. 825s-1), the matter under 
the heading ``continuing fund, southeastern power 
administration'' in title I of the Act of August 31, 1951 (65 
Stat. 249, chapter 375; 16 U.S.C. 825s-2), section 3302 of 
title 31, United States Code, or any other law, and without 
further appropriation or fiscal year limitation, for fiscal 
year 2004, the Administrator of the Southeastern Power 
Administration, the Administrator of the Southwestern Power 
Administration, and the Administrator of the Western Area Power 
Administration may credit to the Secretary of the Army 
(referred to in this section as the ``Secretary''), receipts, 
in an amount determined under subsection (c), from the sale of 
power and related services.
    (b) Use of Funds.--
            (1) In general.--The Secretary--
                    (A) shall, except as provided in paragraph 
                (2), use the amounts credited under subsection 
                (a) to fund only the Corps of Engineers annual 
                operation and maintenance activities that are 
                allocated exclusively to the power function and 
                assigned to the respective power marketing 
                administration and respective project system as 
                applicable for repayment; and
                    (B) shall not use the amounts for any costs 
                allocated to non-power functions of Corps of 
                Engineer operations.
            (2) Exception.--The Secretary may use amounts 
        credited by the Southwestern Power Administration under 
        subsection (a) for capital and nonrecurring costs.
    (c) Amount.--The amount of the receipts credited under 
subsection (a) shall be equal to such amount as--
            (1) the Secretary of the Army requests; and
            (2) the appropriate Administrator, in consultation 
        with the power customers of the Administrator's power 
        marketing administration, determines to be appropriate 
        to apply to the costs referred to in subsection (b).
    (d) Applicable Law.--The amounts credited under subsection 
(a) are exempt from sequestration under the Balanced Budget and 
Emergency Deficit Control Act of 1985 (2 U.S.C. 901 et seq.).

SEC. 247. LIMITATION ON CERTAIN CHARGES ASSESSED TO THE FLINT CREEK 
                    PROJECT, MONTANA.

    Notwithstanding section 10(e)(1) of the Federal Power Act 
(16 U.S.C. 803(e)(1)) or any other provision of Federal law 
providing for the payment to the United States of charges for 
the use of Federal land for the purposes of operating and 
maintaining a hydroelectric development licensed by the Federal 
Energy Regulatory Commission (referred to in this section as 
the ``Commission''), any political subdivision of the State of 
Montana that holds a license for Commission Project No. 1473 in 
Granite and Deer Lodge Counties, Montana, shall be required to 
pay to the United States for the use of that land for each year 
during which the political subdivision continues to hold the 
license for the project, the lesser of--
            (1) $25,000; or
            (2) such annual charge as the Commission or any 
        other department or agency of the Federal Government 
        may assess.

SEC. 248. REINSTATEMENT AND TRANSFER.

    (a) Reinstatement and Transfer of Federal License for 
Project Numbered 2696.--Notwithstanding section 8 of the 
Federal Power Act (16 U.S.C. 801) or any other provision of 
such Act, the Federal Energy Regulatory Commission shall 
reinstate the license for Project No. 2696 and transfer the 
license, without delay or the institution of any proceedings, 
to the Town of Stuyvesant, New York, holder of Federal Energy 
Regulatory Commission Preliminary Permit No. 11787, within 30 
days after the date of enactment of this Act.
    (b) Hydroelectric Incentives.--Project No. 2696 shall be 
entitled to the full benefit of any Federal legislation that 
promotes hydroelectric development that is enacted within 2 
years either before or after the date of enactment of this Act.
    (c) Project Development and Financing.--The Federal Energy 
Regulatory Commission shall permit the Town of Stuyvesant to 
add as a colicensee any private or public entity or entities to 
the reinstated license at any time, notwithstanding the 
issuance of a preliminary permit to the Town of Stuyvesant and 
any consideration of municipal preference. The town shall be 
entitled, to the extent that funds are available or shall be 
made available, to receive loans under sections 402 and 403 of 
the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 
2702 and 2703), or similar programs, for the reimbursement of 
feasibility studies or development costs, or both, incurred 
since January 1, 2001, through and including December 31, 2006. 
All power produced by the project shall be deemed incremental 
hydropower for purpose of qualifying for any energy credit or 
similar benefits.

                         TITLE III--OIL AND GAS

           Subtitle A--Petroleum Reserve and Home Heating Oil

SEC. 301. PERMANENT AUTHORITY TO OPERATE THE STRATEGIC PETROLEUM 
                    RESERVE AND OTHER ENERGY PROGRAMS.

    (a) Amendment to Title I of the Energy Policy and 
Conservation Act.--Title I of the Energy Policy and 
Conservation Act (42 U.S.C. 6211 et seq.) is amended--
            (1) by striking section 166 (42 U.S.C. 6246) and 
        inserting the following:

                   ``AUTHORIZATION OF APPROPRIATIONS

    ``Sec. 166. There are authorized to be appropriated to the 
Secretary such sums as may be necessary to carry out this part 
and part D, to remain available until expended.'';
            (2) by striking section 186 (42 U.S.C. 6250e); and
            (3) by striking part E (42 U.S.C. 6251; relating to 
        the expiration of title I of the Act).
    (b) Amendment to Title II of the Energy Policy and 
Conservation Act.--Title II of the Energy Policy and 
Conservation Act (42 U.S.C. 6271 et seq.) is amended--
            (1) by inserting before section 273 (42 U.S.C. 
        6283) the following:

          ``Part C--Summer Fill and Fuel Budgeting Programs'';

            (2) by striking section 273(e) (42 U.S.C. 6283(e); 
        relating to the expiration of summer fill and fuel 
        budgeting programs); and
            (3) by striking part D (42 U.S.C. 6285; relating to 
        the expiration of title II of the Act).
    (c) Technical Amendments.--The table of contents for the 
Energy Policy and Conservation Act is amended--
            (1) by inserting after the items relating to part C 
        of title I the following:

              ``Part D--Northeast Home Heating Oil Reserve

``Sec. 181. Establishment.
``Sec. 182. Authority.
``Sec. 183. Conditions for release; plan.
``Sec. 184. Northeast Home Heating Oil Reserve Account.
``Sec. 185. Exemptions.'';
            (2) by amending the items relating to part C of 
        title II to read as follows:

            ``Part C--Summer Fill and Fuel Budgeting Programs

``Sec. 273. Summer fill and fuel budgeting programs.'';
    and
            (3) by striking the items relating to part D of 
        title II.
    (d) Amendment to the Energy Policy and Conservation Act.--
Section 183(b)(1) of the Energy Policy and Conservation Act (42 
U.S.C. 6250(b)(1)) is amended by striking all after 
``increases'' through to ``mid-October through March'' and 
inserting ``by more than 60 percent over its 5-year rolling 
average for the months of mid-October through March (considered 
as a heating season average)''.
    (e) Fill Strategic Petroleum Reserve to Capacity.--The 
Secretary of Energy shall, as expeditiously as practicable, 
acquire petroleum in amounts sufficient to fill the Strategic 
Petroleum Reserve to the 1,000,000,000 barrel capacity 
authorized under section 154(a) of the Energy Policy and 
Conservation Act (42 U.S.C. 6234(a)), consistent with the 
provisions of sections 159 and 160 of such Act (42 U.S.C. 6239, 
6240).

SEC. 302. NATIONAL OILHEAT RESEARCH ALLIANCE.

    Section 713 of the Energy Act of 2000 (42 U.S.C. 6201 note) 
is amended by striking ``4'' and inserting ``9''.

                   Subtitle B--Production Incentives

SEC. 311. DEFINITION OF SECRETARY.

    In this subtitle, the term ``Secretary'' means the 
Secretary of the Interior.

SEC. 312. PROGRAM ON OIL AND GAS ROYALTIES IN-KIND.

    (a) Applicability of Section.--Notwithstanding any other 
provision of law, this section applies to all royalty in-kind 
accepted by the Secretary on or after the date of enactment of 
this Act under any Federal oil or gas lease or permit under 
section 36 of the Mineral Leasing Act (30 U.S.C. 192), section 
27 of the Outer Continental Shelf Lands Act (43 U.S.C. 1353), 
or any other Federal law governing leasing of Federal land for 
oil and gas development.
    (b) Terms and Conditions.--All royalty accruing to the 
United States shall, on the demand of the Secretary, be paid in 
oil or gas. If the Secretary makes such a demand, the following 
provisions apply to such payment:
            (1) Satisfaction of royalty obligation.--Delivery 
        by, or on behalf of, the lessee of the royalty amount 
        and quality due under the lease satisfies the lessee's 
        royalty obligation for the amount delivered, except 
        that transportation and processing reimbursements paid 
        to, or deductions claimed by, the lessee shall be 
        subject to review and audit.
            (2) Marketable condition.--
                    (A) In general.--Royalty production shall 
                be placed in marketable condition by the lessee 
                at no cost to the United States.
                    (B) Definition of marketable condition.--In 
                this paragraph, the term ``in marketable 
                condition'' means sufficiently free from 
                impurities and otherwise in a condition that 
                the royalty production will be accepted by a 
                purchaser under a sales contract typical of the 
                field or area in which the royalty production 
                was produced.
            (3) Disposition by the secretary.--The Secretary 
        may--
                    (A) sell or otherwise dispose of any 
                royalty production taken in-kind (other than 
                oil or gas transferred under section 27(a)(3) 
                of the Outer Continental Shelf Lands Act (43 
                U.S.C. 1353(a)(3)) for not less than the market 
                price; and
                    (B) transport or process (or both) any 
                royalty production taken in-kind.
            (4) Retention by the secretary.--The Secretary may, 
        notwithstanding section 3302 of title 31, United States 
        Code, retain and use a portion of the revenues from the 
        sale of oil and gas taken in-kind that otherwise would 
        be deposited to miscellaneous receipts, without regard 
        to fiscal year limitation, or may use oil or gas 
        received as royalty taken in-kind (in this paragraph 
        referred to as ``royalty production'') to pay the cost 
        of--
                    (A) transporting the royalty production;
                    (B) processing the royalty production;
                    (C) disposing of the royalty production; or
                    (D) any combination of transporting, 
                processing, and disposing of the royalty 
                production.
            (5) Limitation.--
                    (A) In general.--Except as provided in 
                subparagraph (B), the Secretary may not use 
                revenues from the sale of oil and gas taken in-
                kind to pay for personnel, travel, or other 
                administrative costs of the Federal Government.
                    (B) Exception.--Notwithstanding 
                subparagraph (A), the Secretary may use a 
                portion of the revenues from the sale of oil 
                taken in-kind, without fiscal year limitation, 
                to pay transportation costs, salaries, and 
                other administrative costs directly related to 
                filling the Strategic Petroleum Reserve.
    (c) Reimbursement of Cost.--If the lessee, pursuant to an 
agreement with the United States or as provided in the lease, 
processes the royalty gas or delivers the royalty oil or gas at 
a point not on or adjacent to the lease area, the Secretary 
shall--
            (1) reimburse the lessee for the reasonable costs 
        of transportation (not including gathering) from the 
        lease to the point of delivery or for processing costs; 
        or
            (2) allow the lessee to deduct the transportation 
        or processing costs in reporting and paying royalties 
        in-value for other Federal oil and gas leases.
    (d) Benefit to the United States Required.--The Secretary 
may receive oil or gas royalties in-kind only if theSecretary 
determines that receiving royalties in-kind provides benefits to the 
United States that are greater than or equal to the benefits that are 
likely to have been received had royalties been taken in-value.
    (e) Reports.--
            (1) In general.--Not later than September 30, 2005, 
        the Secretary shall submit to Congress a report that 
        addresses--
                    (A) actions taken to develop businesses 
                processes and automated systems to fully 
                support the royalty-in-kind capability to be 
                used in tandem with the royalty-in-value 
                approach in managing Federal oil and gas 
                revenue; and
                    (B) future royalty-in-kind businesses 
                operation plans and objectives.
            (2) Reports on oil or gas royalties taken in-
        kind.--For each of fiscal years 2004 through 2013 in 
        which the United States takes oil or gas royalties in-
        kind from production in any State or from the outer 
        Continental Shelf, excluding royalties taken in-kind 
        and sold to refineries under subsection (h), the 
        Secretary shall submit to Congress a report that 
        describes--
                    (A) the methodology or methodologies used 
                by the Secretary to determine compliance with 
                subsection (d), including the performance 
                standard for comparing amounts received by the 
                United States derived from royalties in-kind to 
                amounts likely to have been received had 
                royalties been taken in-value;
                    (B) an explanation of the evaluation that 
                led the Secretary to take royalties in-kind 
                from a lease or group of leases, including the 
                expected revenue effect of taking royalties in-
                kind;
                    (C) actual amounts received by the United 
                States derived from taking royalties in-kind 
                and costs and savings incurred by the United 
                States associated with taking royalties in-
                kind, including, but not limited to, 
                administrative savings and any new or increased 
                administrative costs; and
                    (D) an evaluation of other relevant public 
                benefits or detriments associated with taking 
                royalties in-kind.
    (f) Deduction of Expenses.--
            (1) In general.--Before making payments under 
        section 35 of the Mineral Leasing Act (30 U.S.C. 191) 
        or section 8(g) of the Outer Continental Shelf Lands 
        Act (43 U.S.C. 1337(g)) of revenues derived from the 
        sale of royalty production taken in-kind from a lease, 
        the Secretary shall deduct amounts paid or deducted 
        under subsections (b)(4) and (c) and deposit the amount 
        of the deductions in the miscellaneous receipts of the 
        United States Treasury.
            (2) Accounting for deductions.--When the Secretary 
        allows the lessee to deduct transportation or 
        processing costs under subsection (c), the Secretary 
        may not reduce any payments to recipients of revenues 
        derived from any other Federal oil and gas lease as a 
        consequence of that deduction.
    (g) Consultation with States.--The Secretary--
            (1) shall consult with a State before conducting a 
        royalty in-kind program under this subtitle within the 
        State, and may delegate management of any portion of 
        the Federal royalty in-kind program to the State except 
        as otherwise prohibited by Federal law; and
            (2) shall consult annually with any State from 
        which Federal oil or gas royalty is being taken in-kind 
        to ensure, to the maximum extent practicable, that the 
        royalty in-kind program provides revenues to the State 
        greater than or equal to those likely to have been 
        received had royalties been taken in-value.
    (h) Small Refineries.--
            (1) Preference.--If the Secretary finds that 
        sufficient supplies of crude oil are not available in 
        the open market to refineries that do not have their 
        own source of supply for crude oil, the Secretary may 
        grant preference to such refineries in the sale of any 
        royalty oil accruing or reserved to the United States 
        under Federal oil and gas leases issued under any 
        mineral leasing law, for processing or use in such 
        refineries at private sale at not less than the market 
        price.
            (2) Proration among refineries in production 
        area.--In disposing of oil under this subsection, the 
        Secretary of Energy may, at the discretion of the 
        Secretary, prorate the oil among refineries described 
        in paragraph (1) in the area in which the oil is 
        produced.
    (i) Disposition to Federal Agencies.--
            (1) Onshore royalty.--Any royalty oil or gas taken 
        by the Secretary in-kind from onshore oil and gas 
        leases may be sold at not less than the market price to 
        any Federal agency.
            (2) Offshore royalty.--Any royalty oil or gas taken 
        in-kind from a Federal oil or gas lease on the outer 
        Continental Shelf may be disposed of only under section 
        27 of the Outer Continental Shelf Lands Act (43 U.S.C. 
        1353).
    (j) Federal Low-income Energy Assistance Programs.--
            (1) Preference.--In disposing of royalty oil or gas 
        taken in-kind under this section, the Secretary may 
        grant a preference to any person, including any Federal 
        or State agency, for the purpose of providing 
        additional resources to any Federal low-income energy 
        assistance program.
            (2) Report.--Not later than 3 years after the date 
        of enactment of this Act, the Secretary shall transmit 
        a report to Congress, assessing the effectiveness of 
        granting preferences specified in paragraph (1) and 
        providing a specific recommendation on the continuation 
        of authority to grant preferences.

SEC. 313. MARGINAL PROPERTY PRODUCTION INCENTIVES.

    (a) Definition of Marginal Property.--Until such time as 
the Secretary issues regulations under subsection (e) that 
prescribe a different definition, in this section the term 
``marginal property'' means an onshore unit, communitization 
agreement, or lease not within a unit or communitization 
agreement, that produces on average the combined equivalent of 
less than 15 barrels of oil per well per day or 90 million 
British thermal units of gas per well per day calculated based 
on the average over the 3 most recent production months, 
including only wells that produce on more than half of the days 
during those 3 production months.
    (b) Conditions for Reduction of Royalty Rate.--Until such 
time as the Secretary issues regulations under subsection (e) 
that prescribe different thresholds or standards, the Secretary 
shall reduce the royalty rate on--
            (1) oil production from marginal properties as 
        prescribed in subsection (c) when the spot price of 
        West Texas Intermediate crude oil at Cushing, Oklahoma, 
        is, on average, less than $15 per barrel for 90 
        consecutive trading days; and
            (2) gas production from marginal properties as 
        prescribed in subsection (c) when the spot price of 
        natural gas delivered at Henry Hub, Louisiana, is, on 
        average, less than $2.00 per million British thermal 
        units for 90 consecutive trading days.
    (c) Reduced Royalty Rate.--
            (1) In general.--When a marginal property meets the 
        conditions specified in subsection (b), the royalty 
        rate shall be the lesser of--
                    (A) 5 percent; or
                    (B) the applicable rate under any other 
                statutory or regulatory royalty relief 
                provision that applies to the affected 
                production.
            (2) Period of effectiveness.--The reduced royalty 
        rate under this subsection shall be effective beginning 
        on the first day of the production month following the 
        date on which the applicable condition specified in 
        subsection (b) is met.
    (d) Termination of Reduced Royalty Rate.--A royalty rate 
prescribed in subsection (d)(1)(A) shall terminate--
            (1) with respect to oil production from a marginal 
        property, on the first day of the production month 
        following the date on which--
                    (A) the spot price of West Texas 
                Intermediate crude oil at Cushing, Oklahoma, on 
                average, exceeds $15 per barrel for 90 
                consecutive trading days; or
                    (B) the property no longer qualifies as a 
                marginal property; and
            (2) with respect to gas production from a marginal 
        property, on the first day of the production month 
        following the date on which--
                    (A) the spot price of natural gas delivered 
                at Henry Hub, Louisiana, on average, exceeds 
                $2.00 per million British thermal units for 90 
                consecutive trading days; or
                    (B) the property no longer qualifies as a 
                marginal property.
    (e) Regulations Prescribing Different Relief.--
            (1) Discretionary regulations.--The Secretary may 
        by regulation prescribe different parameters, 
        standards, and requirements for, and a different degree 
        or extent of, royalty relief for marginal properties in 
        lieu of those prescribed in subsections (a) through 
        (d).
            (2) Mandatory regulations.--Not later than 18 
        months after the date of enactment of this Act, the 
        Secretary shall by regulation--
                    (A) prescribe standards and requirements 
                for, and the extent of royalty relief for, 
                marginal properties for oil and gas leases on 
                the outer Continental Shelf; and
                    (B) define what constitutes a marginal 
                property on the outer Continental Shelf for 
                purposes of this section.
            (3) Considerations.--In promulgating regulations 
        under this subsection, the Secretary may consider--
                    (A) oil and gas prices and market trends;
                    (B) production costs;
                    (C) abandonment costs;
                    (D) Federal and State tax provisions and 
                the effects of those provisions on production 
                economics;
                    (E) other royalty relief programs;
                    (F) regional differences in average 
                wellhead prices;
                    (G) national energy security issues; and
                    (H) other relevant matters.
    (f) Savings Provision.--Nothing in this section prevents a 
lessee from receiving royalty relief or a royalty reduction 
pursuant to any other law (including a regulation) that 
provides more relief than the amounts provided by this section.

SEC. 314. INCENTIVES FOR NATURAL GAS PRODUCTION FROM DEEP WELLS IN THE 
                    SHALLOW WATERS OF THE GULF OF MEXICO.

    (a) Royalty Incentive Regulations.--The Secretary shall 
publish a final regulation to complete the rulemaking begun by 
the Notice of Proposed Rulemaking entitled ``Relief or 
Reduction in Royalty Rates--Deep Gas Provisions'', published in 
the Federal Register on March 26, 2003 (Federal Register, 
volume 68, number 58, 14868-14886).
    (b) Royalty Incentive Regulations for Ultra Deep Gas 
Wells.--
            (1) In general.--Not later than 180 days after the 
        date of enactment of this Act, in addition to any other 
        regulations that may provide royalty incentives for 
        natural gas produced from deep wells on oil and gas 
        leases issued pursuant to the Outer Continental Shelf 
        Lands Act (43 U.S.C. 1331 et seq.), the Secretary shall 
        issue regulations, in accordance with the regulations 
        published pursuant to subsection (a), granting royalty 
        relief suspension volumes of not less than 
        35,000,000,000 cubic feet with respect to the 
        production of natural gas from ultra deep wells on 
        leases issued before January 1, 2001, in shallow waters 
        less than 200 meters deep located in the Gulf of Mexico 
        wholly west of 87 degrees, 30 minutes West longitude. 
        Regulations issued under this subsection shall be 
        retroactive to the date that the Notice of Proposed 
        Rulemaking is published in the Federal Register.
            (2) Definition of ultra deep well.--In this 
        subsection, the term ``ultra deep well'' means a well 
        drilled with a perforated interval, the top of which is 
        at least 20,000 feet true vertical depth below the 
        datum at mean sea level.

SEC. 315. ROYALTY RELIEF FOR DEEP WATER PRODUCTION.

    (a) In General.--For all tracts located in water depths of 
greater than 400 meters in the Western and Central Planning 
Area of the Gulf of Mexico, including the portion of the 
Eastern Planning Area of the Gulf of Mexico encompassing whole 
lease blocks lying west of 87 degrees, 30 minutes West 
longitude, any oil or gas lease sale under the Outer 
Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) occurring 
within 5 years after the date of enactment of this Act shall 
use the bidding system authorized in section 8(a)(1)(H) of the 
Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(1)(H)), 
except that the suspension of royalties shall be set at a 
volume of not less than--
            (1) 5,000,000 barrels of oil equivalent for each 
        lease in water depths of 400 to 800 meters;
            (2) 9,000,000 barrels of oil equivalent for each 
        lease in water depths of 800 to 1,600 meters; and
            (3) 12,000,000 barrels of oil equivalent for each 
        lease in water depths greater than 1,600 meters.
    (b) Limitation.--The Secretary may place limitations on the 
suspension of royalty relief granted based on market price.

SEC. 316. ALASKA OFFSHORE ROYALTY SUSPENSION.

    Section 8(a)(3)(B) of the Outer Continental Shelf Lands Act 
(43 U.S.C. 1337(a)(3)(B)) is amended by inserting ``and in the 
Planning Areas offshore Alaska'' after ``West longitude''.

SEC. 317. OIL AND GAS LEASING IN THE NATIONAL PETROLEUM RESERVE IN 
                    ALASKA.

    (a) Transfer of Authority.--
            (1) Redesignation.--The Naval Petroleum Reserves 
        Production Act of 1976 (42 U.S.C. 6501 et seq.) is 
        amended by redesignating section 107 (42 U.S.C. 6507) 
        as section 108.
            (2) Transfer.--The matter under the heading 
        ``exploration of national petroleum reserve in alaska'' 
        under the heading ``ENERGY AND MINERALS'' of title I of 
        Public Law 96-514 (42 U.S.C. 6508) is--
                    (A) transferred to the Naval Petroleum 
                Reserves Production Act of 1976 (42 U.S.C. 6501 
                et seq.);
                    (B) redesignated as section 107 of that 
                Act; and
                    (C) moved so as to appear after section 106 
                of that Act (42 U.S.C. 6506).
    (b) Competitive Leasing.--Section 107 of the Naval 
Petroleum Reserves Production Act of 1976 (as amended by 
subsection (a) of this section) is amended--
            (1) by striking the heading and all that follows 
        through ``Provided, That (1) activities'' and inserting 
        the following:

``SEC. 107. COMPETITIVE LEASING OF OIL AND GAS.

    ``(a) In General.--Notwithstanding any other provision of 
law and pursuant to regulations issued by the Secretary, the 
Secretary shall conduct an expeditious program of competitive 
leasing of oil and gas in the National Petroleum Reserve in 
Alaska (referred to in this section as the `Reserve').
    ``(b) Mitigation of Adverse Effects.--Activities'';
            (2) by striking ``Alaska (the Reserve); (2) the'' 
        and inserting ``Alaska.
    ``(c) Land Use Planning; BLM Wilderness Study.--The'';
            (3) by striking ``Reserve; (3) the'' and inserting 
        ``Reserve.
    ``(d) First Lease Sale.--The'';
            (4) by striking ``4332); (4) the'' and inserting 
        ``4321 et seq.).
    ``(e) Withdrawals.--The'';
            (5) by striking ``herein; (5) bidding'' and 
        inserting ``under this section.
    ``(f) Bidding Systems.--Bidding'';
            (6) by striking ``629); (6) lease'' and inserting 
        ``629).
    ``(g) Geological Structures.--Lease'';
            (7) by striking ``structures; (7) the'' and 
        inserting ``structures.
    ``(h) Size of Lease Tracts.--The'';
            (8) by striking ``Secretary; (8)'' and all that 
        follows through ``Drilling, production,'' and inserting 
        ``Secretary.
    ``(i) Terms.--
            ``(1) In general.--Each lease shall be--
                    ``(A) issued for an initial period of not 
                more than 10 years; and
                    ``(B) renewed for successive 10-year terms 
                if--
                            ``(i) oil or gas is produced from 
                        the lease in paying quantities;
                            ``(ii) oil or gas is capable of 
                        being produced in paying quantities; or
                            ``(iii) drilling or reworking 
                        operations, as approved by the 
                        Secretary, are conducted on the leased 
                        land.
            ``(2) Renewal of nonproducing leases.--The 
        Secretary shall renew for an additional 10-year term a 
        lease that does not meet the requirements of paragraph 
        (1)(B) if the lessee submits to the Secretary an 
        application for renewal not later than 60 days before 
        the expiration of the primary lease and--
                    ``(A) the lessee certifies, and the 
                Secretary agrees, that hydrocarbon resources 
                were discovered on 1 or more wells drilled on 
                the leased land in such quantities that a 
                prudent operator would hold the lease for 
                potential future development;
                    ``(B) the lessee--
                            ``(i) pays the Secretary a renewal 
                        fee of $100 per acre of leased land; 
                        and
                            ``(ii) provides evidence, and the 
                        Secretary agrees that, the lessee has 
                        diligently pursued exploration that 
                        warrants continuation with the intent 
                        of continued exploration or future 
                        development of the leased land; or
                    ``(C) all or part of the lease--
                            ``(i) is part of a unit agreement 
                        covering a lease described in 
                        subparagraph (A) or (B); and
                            ``(ii) has not been previously 
                        contracted out of the unit.
            ``(3) Applicability.--This subsection applies to a 
        lease that--
                    ``(A) is entered into before, on, or after 
                the date of enactment of the Energy Policy Act 
                of 2003; and
                    ``(B) is effective on or after the date of 
                enactment of that Act.
    ``(j) Unit Agreements.--
            ``(1) In general.--For the purpose of conservation 
        of the natural resources of all or part of any oil or 
        gas pool, field, reservoir, or like area, lessees 
        (including representatives) of the pool, field, 
        reservoir, or like area may unite with each other, or 
        jointly or separately with others, in collectively 
        adopting and operating under a unit agreement for all 
        or part of the pool, field, reservoir, or like area 
        (whether or not any other part of the oil or gas pool, 
        field, reservoir, or like area is already subject to 
        any cooperative or unit plan of development or 
        operation), if the Secretary determines the action to 
        be necessary or advisable in the public interest.
            ``(2) Participation by state of alaska.--The 
        Secretary shall ensure that the State of Alaska is 
        provided the opportunity for active participation 
        concerning creation and management of units formed or 
        expanded under this subsection that include acreage in 
        which the State of Alaska has an interest in the 
        mineral estate.
            ``(3) Participation by regional corporations.--The 
        Secretary shall ensure that any Regional Corporation 
        (as defined in section 3 of the Alaska Native Claims 
        Settlement Act (43 U.S.C. 1602)) is provided the 
        opportunity for active participation concerning 
        creation and management of units that include acreage 
        in which the Regional Corporation has an interest in 
        the mineral estate.
            ``(4) Production allocation methodology.--The 
        Secretary may use a production allocation methodology 
        for each participating area within a unit created for 
        land in the Reserve, State of Alaska land, or Regional 
        Corporation land shall, when appropriate, be based on 
        the characteristics of each specific oil or gas pool, 
        field, reservoir, or like area to take into account 
        reservoir heterogeneity and a real variation in 
        reservoir producibility across diverse leasehold 
        interests.
            ``(5) Benefit of operations.--Drilling, 
        production,'';
            (9) by striking ``When separate'' and inserting the 
        following:
            ``(6) Pooling.--If separate'';
            (10) by inserting ``(in consultation with the 
        owners of the other land)'' after ``determined by the 
        Secretary of the Interior'';
            (11) by striking ``thereto; (10) to'' and all that 
        follows through ``the terms provided therein'' and 
        inserting ``to the agreement.
    ``(k) Exploration Incentives.--
            ``(1) In general.--
                    ``(A) Waiver, suspension, or reduction.--To 
                encourage the greatest ultimate recovery of oil 
                or gas or in the interest of conservation, the 
                Secretary may waive, suspend, or reduce the 
                rental fees or minimum royalty, or reduce the 
                royalty on an entire leasehold (including on 
                any lease operated pursuant to a unit 
                agreement), if (after consultation with the 
                State of Alaska and the North Slope Borough of 
                Alaska and the concurrence of any Regional 
                Corporation for leases that include lands 
                available for acquisition by the Regional 
                Corporation under the provisions of section 
                1431(o) of the Alaska National Interest Lands 
                Conservation Act (16 U.S.C. 3101 et seq.)) the 
                Secretary determines that the waiver, 
                suspension, or reduction is in the public 
                interest.
                    ``(B) Applicability.--This paragraph 
                applies to a lease that--
                            ``(i) is entered into before, on, 
                        or after the date of enactment of the 
                        Energy Policy Act of 2003; and
                            ``(ii) is effective on or after the 
                        date of enactment of that Act.'';
            (12) by striking ``The Secretary is authorized to'' 
        and inserting the following:
            ``(2) Suspension of operations and production.--The 
        Secretary may'';
            (13) by striking ``In the event'' and inserting the 
        following:
            ``(3) Suspension of payments.--If'';
            (14) by striking ``thereto; and (11) all'' and 
        inserting ``to the lease.
    ``(l) Receipts.--All'';
            (15) by redesignating clauses (A), (B), and (C) as 
        clauses (1), (2), and (3), respectively;
            (16) by striking ``Any agency'' and inserting the 
        following:
    ``(m) Explorations.--Any agency'';
            (17) by striking ``Any action'' and inserting the 
        following:
    ``(n) Environmental Impact Statements.--
            ``(1) Judicial review.--Any action'';
            (18) by striking ``The detailed'' and inserting the 
        following:
            ``(2) Initial lease sales.--The detailed'';
            (19) by striking ``of the Naval Petroleum Reserves 
        Production Act of 1976 (90 Stat. 304; 42 U.S.C. 
        6504)''; and
            (20) by adding at the end the following:
    ``(o) Waiver of Administration for Conveyed Lands.--
Notwithstanding section 14(g) of the Alaska Native Claims 
Settlement Act (43 U.S.C. 1613(g)) or any other provision of 
law--
            ``(1) the Secretary of the Interior shall waive 
        administration of any oil and gas lease insofar as such 
        lease covers any land in the National Petroleum Reserve 
        in Alaska in which the subsurface estate is conveyed to 
        the Arctic Slope Regional Corporation; and
            ``(2) if any such conveyance of such subsurface 
        estate does not cover all the land embraced within any 
        such oil and gas lease--
                    ``(A) the person who owns the subsurface 
                estate in any particular portion of the land 
                covered by such lease shall be entitled to all 
                of the revenues reserved under such lease as to 
                such portion, including, without limitation, 
                all the royalty payable with respect to oil or 
                gas produced from or allocated to such 
                particular portion of the land covered by such 
                lease; and
                    ``(B) the Secretary of the Interior shall 
                segregate such lease into 2 leases, 1 of which 
                shall cover only the subsurface estate conveyed 
                to the Arctic Slope Regional Corporation, and 
                operations, production, or other circumstances 
                (other than payment of rentals or royalties) 
                that satisfy obligations of the lessee under, 
                or maintain, either of the segregated leases 
                shall likewise satisfy obligations of the 
                lessee under, or maintain, the other segregated 
                lease to the same extent as if such segregated 
                leases remained a part of the original 
                unsegregated lease.''.

SEC. 318. ORPHANED, ABANDONED, OR IDLED WELLS ON FEDERAL LAND.

    (a) In General.--The Secretary, in cooperation with the 
Secretary of Agriculture, shall establish a program not later 
than 1 year after the date of enactment of this Act to 
remediate, reclaim, and close orphaned, abandoned, or idled oil 
and gas wells located on land administered by the land 
management agencies within the Department of the Interior and 
the Department of Agriculture.
    (b) Activities.--The program under subsection (a) shall--
            (1) include a means of ranking orphaned, abandoned, 
        or idled wells sites for priority in remediation, 
        reclamation, and closure, based on public health and 
        safety, potential environmental harm, and other land 
        use priorities;
            (2) provide for identification and recovery of the 
        costs of remediation, reclamation, and closure from 
        persons or other entities currently providing a bond or 
        other financial assurance required under State or 
        Federal law for an oil or gas well that is orphaned, 
        abandoned, or idled; and
            (3) provide for recovery from the persons or 
        entities identified under paragraph (2), or their 
        sureties or guarantors, of the costs of remediation, 
        reclamation, and closure of such wells.
    (c) Cooperation and Consultations.--In carrying out the 
program under subsection (a), the Secretary shall--
            (1) work cooperatively with the Secretary of 
        Agriculture and the States within which Federal land is 
        located; and
            (2) consult with the Secretary of Energy and the 
        Interstate Oil and Gas Compact Commission.
    (d) Plan.--Not later than 1 year after the date of 
enactment of this Act, the Secretary, in cooperation with the 
Secretary of Agriculture, shall submit to Congress a plan for 
carrying out the program under subsection (a).
    (e) Idled Well.--For the purposes of this section, a well 
is idled if--
            (1) the well has been nonoperational for at least 7 
        years; and
            (2) there is no anticipated beneficial use for the 
        well.
    (f) Technical Assistance Program for Non-Federal Land.--
            (1) In general.--The Secretary of Energy shall 
        establish a program to provide technical and financial 
        assistance to oil and gas producing States to 
        facilitate State efforts over a 10-year period to 
        ensure a practical and economical remedy for 
        environmental problems caused by orphaned or abandoned 
        oil and gas exploration or production well sites on 
        State or private land.
            (2) Assistance.--The Secretary of Energy shall work 
        with the States, through the Interstate Oil and Gas 
        Compact Commission, to assist the States in quantifying 
        and mitigating environmental risks of onshore orphaned 
        or abandoned oil or gas wells on State and private 
        land.
            (3) Activities.--The program under paragraph (1) 
        shall include--
                    (A) mechanisms to facilitate 
                identification, if feasible, of the persons 
                currently providing a bond or other form of 
                financial assurance required under State or 
                Federal law for an oil or gas well that is 
                orphaned or abandoned;
                    (B) criteria for ranking orphaned or 
                abandoned well sites based on factors such as 
                public health and safety, potential 
                environmental harm, and other land use 
                priorities;
                    (C) information and training programs on 
                best practices for remediation of different 
                types of sites; and
                    (D) funding of State mitigation efforts on 
                a cost-shared basis.
    (g) Federal Reimbursement for Orphaned Well Reclamation 
Pilot Program.--
            (1) Reimbursement for remediating, reclaiming, and 
        closing wells on land subject to a new lease.--The 
        Secretary shall carry out a pilot program under which, 
        in issuing a new oil and gas lease on federally owned 
        land on which 1 or more orphaned wells are located, the 
        Secretary--
                    (A) may require, but not as a condition of 
                the lease, that the lessee remediate, reclaim, 
                and close in accordance with standards 
                established by the Secretary, all orphaned 
                wells on the land leased; and
                    (B) shall develop a program to reimburse a 
                lessee, through a royalty credit against the 
                Federal share of royalties owed or other means, 
                for the reasonable actual costs of remediating, 
                reclaiming, and closing the orphaned well 
                pursuant to that requirement.
            (2) Reimbursement for reclaiming orphaned wells on 
        other land.--In carrying out this subsection, the 
        Secretary--
                    (A) may authorize any lessee under an oil 
                and gas lease on federally owned land to 
                reclaim in accordance with the Secretary's 
                standards--
                            (i) an orphaned well on unleased 
                        federally owned land; or
                            (ii) an orphaned well located on an 
                        existing lease on federally owned land 
                        for the reclamation of which the lessee 
                        is not legally responsible; and
                    (B) shall develop a program to provide 
                reimbursement of 115 percent of the reasonable 
                actual costs of remediating, reclaiming, and 
                closing the orphaned well, through credits 
                against the Federal share of royalties or other 
                means.
            (3) Effect of remediation, reclamation, or closure 
        of well pursuant to an approved remediation plan.--
                    (A) Definition of remediating party.--In 
                this paragraph the term ``remediating party'' 
                means a person who remediates, reclaims, or 
                closes an abandoned, orphaned, or idled well 
                pursuant to this subsection.
                    (B) General rule.--A remediating party who 
                remediates, reclaims, or closes an abandoned, 
                orphaned, or idled well in accordance with a 
                detailed written remediation plan approved by 
                the Secretary under this subsection, shall be 
                immune from civil liability under Federal 
                environmental laws, for--
                            (i) pre-existing environmental 
                        conditions at or associated with the 
                        well, unless the remediating party owns 
                        or operates, in the past owned or 
                        operated, or is related to a person 
                        that owns or operates or in the past 
                        owned or operated, the well or the land 
                        on which the well is located; or
                            (ii) any remaining releases of 
                        pollutants from the well during or 
                        after completion of the remediation, 
                        reclamation, or closure of the well, 
                        unless the remediating party causes 
                        increased pollution as a result of 
                        activities that are not in accordance 
                        with the approved remediation plan.
                    (C) Limitations.--Nothing in this section 
                shall limit in any way the liability of a 
                remediating party for injury, damage, or 
                pollution resulting from the remediating 
                party's acts or omissions that are not in 
                accordance with the approved remediation plan, 
                are reckless or willful, constitute gross 
                negligence or wanton misconduct, or are 
                unlawful.
            (4) Regulations.--The Secretary may issue such 
        regulations as are appropriate to carry out this 
        subsection.
    (h) Authorization of Appropriations.--
            (1) In general.--There are authorized to be 
        appropriated to carry out this section $25,000,000 for 
        each of fiscal years 2005 through 2009.
            (2) Use.--Of the amounts authorized under paragraph 
        (1), $5,000,000 are authorized for each fiscal year for 
        activities under subsection (f).

SEC. 319. COMBINED HYDROCARBON LEASING.

    (a) Special Provisions Regarding Leasing.--Section 17(b)(2) 
of the Mineral Leasing Act (30 U.S.C. 226(b)(2)) is amended--
            (1) by inserting ``(A)'' after ``(2)''; and
            (2) by adding at the end the following:
    ``(B) For any area that contains any combination of tar 
sand and oil or gas (or both), the Secretary may issue under 
this Act, separately--
            ``(i) a lease for exploration for and extraction of 
        tar sand; and
            ``(ii) a lease for exploration for and development 
        of oil and gas.
    ``(C) A lease issued for tar sand shall be issued using the 
same bidding process, annual rental, and posting period as a 
lease issued for oil and gas, except that the minimum 
acceptable bid required for a lease issued for tar sand shall 
be $2 per acre.
    ``(D) The Secretary may waive, suspend, or alter any 
requirement under section 26 that a permittee under a permit 
authorizing prospecting for tar sand must exercise due 
diligence, to promote any resource covered by a combined 
hydrocarbon lease.''.
    (b) Conforming Amendment.--Section 17(b)(1)(B) of the 
Mineral Leasing Act (30 U.S.C. 226(b)(1)(B)) is amended in the 
second sentence by inserting ``, subject to paragraph (2)(B),'' 
after ``Secretary''.
    (c) Regulations.--Not later than 45 days after the date of 
enactment of this Act, the Secretary shall issue final 
regulations to implement this section.

SEC. 320. LIQUIFIED NATURAL GAS.

    Section 3 of the Natural Gas Act (15 U.S.C. 717b) is 
amended by adding at the end the following:
    ``(d) Limitation on Commission Authority.--If an applicant 
under this section proposes to construct or expand a liquified 
natural gas terminal either onshore or in State waters for the 
purpose of importing liquified natural gas into the United 
States, the Commission shall not deny or condition the 
application solely on the basis that the applicant proposes to 
utilize the terminal exclusively or partially for gas that the 
applicant or any affiliate thereof will supply thereto. In all 
other respects, subsection (a) shall remain applicable to any 
such proposal.''.

SEC. 321. ALTERNATE ENERGY-RELATED USES ON THE OUTER CONTINENTAL SHELF.

    (a) Amendment to Outer Continental Shelf Lands Act.--
Section 8 of the Outer Continental Shelf Lands Act (43 U.S.C. 
1337) is amended by adding at the end the following:
    ``(p) Leases, Easements, or Rights-Of-Way for Energy and 
Related Purposes.--
            ``(1) In General.--The Secretary, in consultation 
        with the Secretary of the Department in which the Coast 
        Guard is operating and other relevant departments and 
        agencies of the Federal Government, may grant a lease, 
        easement, or right-of-way on the outer Continental 
        Shelf for activities not otherwise authorized in this 
        Act, the Deepwater Port Act of 1974 (33 U.S.C. 1501 et 
        seq.), or the Ocean Thermal Energy Conversion Act of 
        1980 (42 U.S.C. 9101 et seq.), or other applicable law, 
        if those activities--
                    ``(A) support exploration, development, 
                production, transportation, or storage of oil, 
                natural gas, or other minerals;
                    ``(B) produce or support production, 
                transportation, or transmission of energy from 
                sources other than oil and gas; or
                    ``(C) use, for energy-related or marine-
                related purposes, facilities currently or 
                previously used for activities authorized under 
                this Act.
            ``(2) Payments.--The Secretary shall establish 
        reasonable forms of payments for any easement or right-
        of-way granted under this subsection. Such payments 
        shall not be assessed on the basis of throughput or 
        production. The Secretary may establish fees, rentals, 
        bonus, or other payments by rule or by agreement with 
        the party to which the lease, easement, or right-of-way 
        is granted.
            ``(3) Consultation.--Before exercising authority 
        under this subsection, the Secretary shall consult with 
        the Secretary of Defense and other appropriate agencies 
        concerning issues related to national security and 
        navigational obstruction.
            ``(4) Competitive or noncompetitive basis.--
                    ``(A) In general.--The Secretary may issue 
                a lease, easement, or right-of-way for energy 
                and related purposes as described in paragraph 
                (1) on a competitive or noncompetitive basis.
                    ``(B) Considerations.--In determining 
                whether a lease, easement, or right-of-way 
                shall be granted competitively or 
                noncompetitively, the Secretary shall consider 
                such factors as--
                            ``(i) prevention of waste and 
                        conservation of natural resources;
                            ``(ii) the economic viability of an 
                        energy project;
                            ``(iii) protection of the 
                        environment;
                            ``(iv) the national interest and 
                        national security;
                            ``(v) human safety;
                            ``(vi) protection of correlative 
                        rights; and
                            ``(vii) potential return for the 
                        lease, easement, or right-of-way.
            ``(5) Regulations.--Not later than 270 days after 
        the date of enactment of the Energy Policy Act of 2003, 
        the Secretary, in consultation with the Secretary of 
        the Department in which the Coast Guard is operating 
        and other relevant agencies of the Federal Government 
        and affected States, shall issue any necessary 
        regulations to ensure safety, protection of the 
        environment, prevention of waste, and conservation of 
        the natural resources of the outer Continental Shelf, 
        protection of national security interests, and 
        protection of correlative rights in the outer 
        Continental Shelf.
            ``(6) Security.--The Secretary shall require the 
        holder of a lease, easement, or right-of-way granted 
        under this subsection to furnish a surety bond or other 
        form of security, as prescribed by the Secretary, and 
        to comply with such other requirements as the Secretary 
        considers necessary to protect the interests of the 
        United States.
            ``(7) Effect of subsection.--Nothing in this 
        subsection displaces, supersedes, limits, or modifies 
        the jurisdiction, responsibility, or authority of any 
        Federal or State agency under any other Federal law.
            ``(8) Applicability.--This subsection does not 
        apply to any area on the outer Continental Shelf 
        designated as a National Marine Sanctuary.''.
    (b) Conforming Amendment.--Section 8 of the Outer 
Continental Shelf Lands Act (43 U.S.C. 1337) is amended by 
striking the section heading and inserting the following: 
``Leases, Easements, and Rights-of-Way on the Outer Continental 
Shelf.--''.
    (c) Savings Provision.--Nothing in the amendment made by 
subsection (a) requires, with respect to any project--
            (1) for which offshore test facilities have been 
        constructed before the date of enactment of this Act; 
        or
            (2) for which a request for proposals has been 
        issued by a public authority,
any resubmittal of documents previously submitted or any 
reauthorization of actions previously authorized.

SEC. 322. PRESERVATION OF GEOLOGICAL AND GEOPHYSICAL DATA.

    (a) Short Title.--This section may be cited as the 
``National Geological and Geophysical Data Preservation Program 
Act of 2003''.
    (b) Program.--The Secretary shall carry out a National 
Geological and Geophysical Data Preservation Program in 
accordance with this section--
            (1) to archive geologic, geophysical, and 
        engineering data, maps, well logs, and samples;
            (2) to provide a national catalog of such archival 
        material; and
            (3) to provide technical and financial assistance 
        related to the archival material.
    (c) Plan.--Not later than 1 year after the date of 
enactment of this Act, the Secretary shall submit to Congress a 
plan for the implementation of the Program.
    (d) Data Archive System.--
            (1) Establishment.--The Secretary shall establish, 
        as a component of the Program, a data archive system to 
        provide for the storage, preservation, and archiving of 
        subsurface, surface, geological, geophysical, and 
        engineering data and samples. The Secretary, in 
        consultation with the Advisory Committee, shall develop 
        guidelines relating to the data archive system, 
        including the types of data and samples to be 
        preserved.
            (2) System components.--The system shall be 
        comprised of State agencies that elect to be part of 
        the system and agencies within the Department of the 
        Interior that maintain geological and geophysical data 
        and samples that are designated by the Secretary in 
        accordance with this subsection. The Program shall 
        provide for the storage of data and samples through 
        data repositories operated by such agencies.
            (3) Limitation of designation.--The Secretary may 
        not designate a State agency as a component of the data 
        archive system unless that agency is the agency that 
        acts as the geological survey in the State.
            (4) Data from federal land.--The data archive 
        system shall provide for the archiving of relevant 
        subsurface data and samples obtained from Federal 
        land--
                    (A) in the most appropriate repository 
                designated under paragraph (2), with preference 
                being given to archiving data in the State in 
                which the data were collected; and
                    (B) consistent with all applicable law and 
                requirements relating to confidentiality and 
                proprietary data.
    (e) National Catalog.--
            (1) In general.--As soon as practicable after the 
        date of enactment of this Act, the Secretary shall 
        develop and maintain, as a component of the Program, a 
        national catalog that identifies--
                    (A) data and samples available in the data 
                archive system established under subsection 
                (d);
                    (B) the repository for particular material 
                in the system; and
                    (C) the means of accessing the material.
            (2) Availability.--The Secretary shall make the 
        national catalog accessible to the public on the site 
        of the Survey on the Internet, consistent with all 
        applicable requirements related to confidentiality and 
        proprietary data.
    (f) Advisory Committee.--
            (1) In general.--The Advisory Committee shall 
        advise the Secretary on planning and implementation of 
        the Program.
            (2) New duties.--In addition to its duties under 
        the National Geologic Mapping Act of 1992 (43 U.S.C. 
        31a et seq.), the Advisory Committee shall perform the 
        following duties:
                    (A) Advise the Secretary on developing 
                guidelines and procedures for providing 
                assistance for facilities under subsection 
                (g)(1).
                    (B) Review and critique the draft 
                implementation plan prepared by the Secretary 
                under subsection (c).
                    (C) Identify useful studies of data 
                archived under the Program that will advance 
                understanding of the Nation's energy and 
                mineral resources, geologic hazards, and 
                engineering geology.
                    (D) Review the progress of the Program in 
                archiving significant data and preventing the 
                loss of such data, and the scientific progress 
                of the studies funded under the Program.
                    (E) Include in the annual report to the 
                Secretary required under section 5(b)(3) of the 
                National Geologic Mapping Act of 1992 (43 
                U.S.C. 31d(b)(3)) an evaluation of the progress 
                of the Program toward fulfilling the purposes 
                of the Program under subsection (b).
    (g) Financial Assistance.--
            (1) Archive facilities.--Subject to the 
        availability of appropriations, the Secretary shall 
        provide financial assistance to a State agency that is 
        designated under subsection (d)(2) for providing 
        facilities to archive energy material.
            (2) Studies.--Subject to the availability of 
        appropriations, the Secretary shall provide financial 
        assistance to any State agency designated under 
        subsection (d)(2) for studies and technical assistance 
        activities that enhance understanding, interpretation, 
        and use of materials archived in the data archive 
        system established under subsection (d).
            (3) Federal share.--The Federal share of the cost 
        of an activity carried out with assistance under this 
        subsection shall be not more than 50 percent of the 
        total cost of the activity.
            (4) Private contributions.--The Secretary shall 
        apply to the non-Federal share of the cost of an 
        activity carried out with assistance under this 
        subsection the value of private contributions of 
        property and services used for that activity.
    (h) Report.--The Secretary shall include in each report 
under section 8 of the National Geologic Mapping Act of 1992 
(43 U.S.C. 31g)--
            (1) a description of the status of the Program;
            (2) an evaluation of the progress achieved in 
        developing the Program during the period covered by the 
        report; and
            (3) any recommendations for legislative or other 
        action the Secretary considers necessary and 
        appropriate to fulfill the purposes of the Program 
        under subsection (b).
    (i) Maintenance of State Effort.--It is the intent of 
Congress that the States not use this section as an opportunity 
to reduce State resources applied to the activities that are 
the subject of the Program.
    (j) Definitions.--In this section:
            (1) Advisory committee.--The term ``Advisory 
        Committee'' means the advisory committee established 
        under section 5 of the National Geologic Mapping Act of 
        1992 (43 U.S.C. 31d).
            (2) Program.--The term ``Program'' means the 
        National Geological and Geophysical Data Preservation 
        Program carried out under this section.
            (3) Secretary.--The term ``Secretary'' means the 
        Secretary of the Interior, acting through the Director 
        of the United States Geological Survey.
            (4) Survey.--The term ``Survey'' means the United 
        States Geological Survey.
    (k) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out this section $30,000,000 for 
each of fiscal years 2004 through 2008.

SEC. 323. OIL AND GAS LEASE ACREAGE LIMITATIONS.

    Section 27(d)(1) of the Mineral Leasing Act (30 U.S.C. 
184(d)(1)) is amended by inserting after ``acreage held in 
special tar sand areas'' the following: ``, and acreage under 
any lease any portion of which has been committed to a 
federally approved unit or cooperative plan or communitization 
agreement or for which royalty (including compensatory royalty 
or royalty in-kind) was paid in the preceding calendar year,''.

SEC. 324. ASSESSMENT OF DEPENDENCE OF STATE OF HAWAII ON OIL.

    (a) Assessment.--The Secretary of Energy shall assess the 
economic implication of the dependence of the State of Hawaii 
on oil as the principal source of energy for the State, 
including--
            (1) the short- and long-term prospects for crude 
        oil supply disruption and price volatility and 
        potential impacts on the economy of Hawaii;
            (2) the economic relationship between oil-fired 
        generation of electricity from residual fuel and 
        refined petroleum products consumed for ground, marine, 
        and air transportation;
            (3) the technical and economic feasibility of 
        increasing the contribution of renewable energy 
        resources for generation of electricity, on an island-
        by-island basis, including--
                    (A) siting and facility configuration;
                    (B) environmental, operational, and safety 
                considerations;
                    (C) the availability of technology;
                    (D) effects on the utility system including 
                reliability;
                    (E) infrastructure and transport 
                requirements;
                    (F) community support; and
                    (G) other factors affecting the economic 
                impact of such an increase and any effect on 
                the economic relationship described in 
                paragraph (2);
            (4) the technical and economic feasibility of using 
        liquified natural gas to displace residual fuel oil for 
        electric generation, including neighbor island 
        opportunities, and the effect of the displacement on 
        the economic relationship described in paragraph (2), 
        including--
                    (A) the availability of supply;
                    (B) siting and facility configuration for 
                onshore and offshore liquified natural gas 
                receiving terminals;
                    (C) the factors described in subparagraphs 
                (B) through (F) of paragraph (3); and
                    (D) other economic factors;
            (5) the technical and economic feasibility of using 
        renewable energy sources (including hydrogen) for 
        ground, marine, and air transportation energy 
        applications to displace the use of refined petroleum 
        products, on an island-by-island basis, and the 
        economic impact of the displacement on the relationship 
        described in (2); and
            (6) an island-by-island approach to--
                    (A) the development of hydrogen from 
                renewable resources; and
                    (B) the application of hydrogen to the 
                energy needs of Hawaii
    (b) Contracting Authority.--The Secretary of Energy may 
carry out the assessment under subsection (a) directly or, in 
whole or in part, through 1 or more contracts with qualified 
public or private entities.
    (c) Report.--Not later than 300 days after the date of 
enactment of this Act, the Secretary of Energy shall prepare, 
in consultation with agencies of the State of Hawaii and other 
stakeholders, as appropriate, and submit to Congress, a report 
detailing the findings, conclusions, and recommendations 
resulting from the assessment.
    (d) Authorization of Appropriations.--There are authorized 
to be appropriated such sums as are necessary to carry out this 
section.

SEC. 325. DEADLINE FOR DECISION ON APPEALS OF CONSISTENCY DETERMINATION 
                    UNDER THE COASTAL ZONE MANAGEMENT ACT OF 1972.

    (a) In General.--Section 319 of the Coastal Zone Management 
Act of 1972 (16 U.S.C. 1465) is amended to read as follows:

                       ``APPEALS TO THE SECRETARY

    ``Sec. 319. (a) Notice.--The Secretary shall publish an 
initial notice in the Federal Register not later than 30 days 
after the date of the filing of any appeal to the Secretary of 
a consistency determination under section 307.
    ``(b) Closure of Record.--
            ``(1) In general.--Not later than the end of the 
        120-day period beginning on the date of publication of 
        an initial notice under subsection (a), the Secretary 
        shall receive no more filings on the appeal and the 
        administrative record regarding the appeal shall be 
        closed.
            ``(2) Notice.--Upon the closure of the 
        administrative record, the Secretary shall immediately 
        publish a notice that the administrative record has 
        been closed.
    ``(c) Deadline for Decision.--The Secretary shall issue a 
decision in any appeal filed under section 307 not later than 
120 days after the closure of the administrative record.
    ``(d) Application.--This section applies to appeals 
initiated by the Secretary and appeals filed by an 
applicant.''.
    (b) Application.--
            (1) In general.--Except as provided in paragraph 
        (2), the amendment made by subsection (a) shall apply 
        with respect to any appeal initiated or filed before, 
        on, or after the date of enactment of this Act.
            (2) Limitation.--Subsection (a) of section 319 of 
        the Coastal Zone Management Act of 1972 (as amended by 
        subsection (a)) shall not apply with respect to an 
        appeal initiated or filed before the date of enactment 
        of this Act.
    (c) Closure of Record for Appeal Filed Before Date of 
Enactment.--Notwithstanding section 319(b)(1) of the Coastal 
Zone Management Act of 1972 (as amended by this section), in 
the case of an appeal of a consistency determination under 
section 307 of that Act initiated or filed before the date of 
enactment of this Act, the Secretary of Commerce shall receive 
no more filings on the appeal and the administrative record 
regarding the appeal shall be closed not later than 120 days 
after the date of enactment of this Act.

SEC. 326. REIMBURSEMENT FOR COSTS OF NEPA ANALYSES, DOCUMENTATION, AND 
                    STUDIES.

    (a) In General.--The Mineral Leasing Act is amended by 
inserting after section 37 (30 U.S.C. 193) the following:

   ``REIMBURSEMENT FOR COSTS OF CERTAIN ANALYSES, DOCUMENTATION, AND 
                                STUDIES

    ``Sec. 38. (a) In General.--The Secretary of the Interior 
may reimburse a person that is a lessee, operator, operating 
rights owner, or applicant for any lease under this Act for 
reasonable amounts paid by the person for preparation for the 
Secretary by a contractor or other person selected by the 
Secretary of any project-level analysis, documentation, or 
related study required pursuant to the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321 et seq.) with respect to the 
lease.
    ``(b) Conditions.--The Secretary may provide reimbursement 
under subsection (a) only if--
            ``(1) adequate funding to enable the Secretary to 
        timely prepare the analysis, documentation, or related 
        study is not appropriated;
            ``(2) the person paid the costs voluntarily;
            ``(3) the person maintains records of its costs in 
        accordance with regulations issued by the Secretary;
            ``(4) the reimbursement is in the form of a 
        reduction in the Federal share of the royalty required 
        to be paid for the lease for which the analysis, 
        documentation, or related study is conducted, and is 
        agreed to by the Secretary and the person reimbursed 
        prior to commencing the analysis, documentation, or 
        related study; and
            ``(5) the agreement required under paragraph (4) 
        contains provisions--
                    ``(A) reducing royalties owed on lease 
                production based on market prices;
                    ``(B) stipulating an automatic termination 
                of the royalty reduction upon recovery of 
                documented costs; and
                    ``(C) providing a process by which the 
                lessee may seek reimbursement for circumstances 
                in which production from the specified lease is 
                not possible.''.
    (b) Application.--The amendment made by this section shall 
apply with respect to an analysis, documentation, or a related 
study conducted on or after the date of enactment of this Act 
for any lease entered into before, on, or after the date of 
enactment of this Act.
    (c) Deadline for Regulations.--The Secretary shall issue 
regulations implementing the amendment made by this section by 
not later than 1 year after the date of enactment of this Act.

SEC. 327. HYDRAULIC FRACTURING.

    Paragraph (1) of section 1421(d) of the Safe Drinking Water 
Act (42 U.S.C. 300h(d)) is amended to read as follows:
            ``(1) Underground injection.--The term `underground 
        injection'--
                    ``(A) means the subsurface emplacement of 
                fluids by well injection; and
                    ``(B) excludes--
                            ``(i) the underground injection of 
                        natural gas for purposes of storage; 
                        and
                            ``(ii) the underground injection of 
                        fluids or propping agents pursuant to 
                        hydraulic fracturing operations related 
                        to oil or gas production activities.''.

SEC. 328. OIL AND GAS EXPLORATION AND PRODUCTION DEFINED.

    Section 502 of the Federal Water Pollution Control Act (33 
U.S.C. 1362) is amended by adding at the end the following:
            ``(24) Oil and gas exploration and production.--The 
        term `oil and gas exploration, production, processing, 
        or treatment operations or transmission facilities' 
        means all field activities or operations associated 
        with exploration, production, processing, or treatment 
        operations, or transmission facilities, including 
        activities necessary to prepare a site for drilling and 
        for the movement and placement of drilling equipment, 
        whether or not such field activities or operations may 
        be considered to be construction activities.''.

SEC. 329. OUTER CONTINENTAL SHELF PROVISIONS.

    (a) Storage on the Outer Continental Shelf.--Section 
5(a)(5) of the Outer Continental Shelf Lands Act (43 U.S.C. 
1334(a)(5)) is amended by inserting ``from any source'' after 
``oil and gas''.
    (b) Deepwater Projects.--Section 6 of the Deepwater Port 
Act of 1974 (33 U.S.C. 1505) is amended by adding at the end 
the following:
    ``(d) Reliance on Activities of Other Agencies.--In 
fulfilling the requirements of section 5(f)--
            ``(1) to the extent that other Federal agencies 
        have prepared environmental impact statements, are 
        conducting studies, or are monitoring the affected 
        human, marine, or coastal environment, the Secretary 
        may use the information derived from those activities 
        in lieu of directly conducting such activities; and
            ``(2) the Secretary may use information obtained 
        from any State or local government or from any 
        person.''.
    (c) Natural Gas Defined.--Section 3(13) of the Deepwater 
Port Act of 1974 (33 U.S.C. 1502(13)) is amended to read as 
follows:
            ``(13) natural gas means--
                    ``(A) natural gas unmixed; or
                    ``(B) any mixture of natural or artificial 
                gas, including compressed or liquefied natural 
                gas, natural gas liquids, liquefied petroleum 
                gas, and condensate recovered from natural 
                gas;''.

SEC. 330. APPEALS RELATING TO PIPELINE CONSTRUCTION OR OFFSHORE MINERAL 
                    DEVELOPMENT PROJECTS.

    (a) Agency of Record, Pipeline Construction Projects.--Any 
Federal administrative agency proceeding that is an appeal or 
review under section 319 of the Coastal Zone Management Act of 
1972 (16 U.S.C. 1465), as amended by this Act, related to 
Federal authority for an interstate natural gas pipeline 
construction project, including construction of natural gas 
storage and liquefied natural gas facilities, shall use as its 
exclusive record for all purposes the record compiled by the 
Federal Energy Regulatory Commission pursuant to the 
Commission's proceeding under sections 3 and 7 of the Natural 
Gas Act (15 U.S.C. 717b, 717f).
    (b) Sense of Congress.--It is the sense of Congress that 
all Federal and State agencies with jurisdiction over 
interstate natural gas pipeline construction activities should 
coordinate their proceedings within the timeframes established 
by the Federal Energy Regulatory Commission when the Commission 
is acting under sections 3 and 7 of the Natural Gas Act (15 
U.S.C. 717b, 717f) to determine whether a certificate of public 
convenience and necessity should be issued for a proposed 
interstate natural gas pipeline.
    (c) Agency of Record, Offshore Mineral Development 
Projects.--Any Federal administrative agency proceeding that is 
an appeal or review under section 319 of the Coastal Zone 
Management Act of 1972 (16 U.S.C. 1465), as amended by this 
Act, related to Federal authority for the permitting, approval, 
or other authorization of energy projects, including projects 
to explore, develop, or produce mineral resources in or 
underlying the outer Continental Shelf shall use as its 
exclusive record for all purposes (except for the filing of 
pleadings) the record compiled by the relevant Federal 
permitting agency.

SEC. 331. BILATERAL INTERNATIONAL OIL SUPPLY AGREEMENTS.

    (a) In General.--Notwithstanding any other provision of 
law, the President may export oil to, or secure oil for, any 
country pursuant to a bilateral international oil supply 
agreement entered into by the United States with the country 
before June 25, 1979, or to any country pursuant to the 
International Emergency Oil Sharing Plan of the International 
Energy Agency.
    (b) Memorandum of Agreement.--The following agreements are 
deemed to have entered into force by operation of law and are 
deemed to have no termination date:
            (1) The agreement entitled ``Agreement amending and 
        extending the memorandum of agreement of June 22, 
        1979'', entered into force November 13, 1994 (TIAS 
        12580).
            (2) The agreement entitled ``Agreement amending the 
        contingency implementing arrangements of October 17, 
        1980'', entered into force June 27, 1995 (TIAS 12670).

SEC. 332. NATURAL GAS MARKET REFORM.

    (a) Clarification of Existing CFTC Authority.--
            (1) False reporting.--Section 9(a)(2) of the 
        Commodity Exchange Act (7 U.S.C. 13(a)(2)) is amended 
        by striking ``false or misleading or knowingly 
        inaccurate reports'' and inserting ``knowingly false or 
        knowingly misleading or knowingly inaccurate reports''.
            (2) Commission Administrative and Civil 
        Authority.--Section 9 of the Commodity Exchange Act (7 
        U.S.C. 13) is amended by redesignating subsection (f) 
        as subsection (e), and adding:
    ``(f) Commission Administrative and Civil Authority.--The 
Commission may bring administrative or civil actions as 
provided in this Act against any person for a violation of any 
provision of this section including, but not limited to, false 
reporting under subsection (a)(2).''.
            (3) Effect of amendments.--The amendments made by 
        paragraphs (1) and (2) restate, without substantive 
        change, existing burden of proof provisions and 
        existing Commission civil enforcement authority, 
        respectively. These clarifying changes do not alter any 
        existing burden of proof or grant any new statutory 
        authority. The provisions of this section, as restated 
        herein, continue to apply to any action pending on or 
        commenced after the date of enactment of this Act for 
        any act, omission, or violation occurring before, on, 
        or after, such date of enactment.
    (b) Fraud Authority.--Section 4b of the Commodity Exchange 
Act (7 U.S.C. 6b) is amended--
            (1) by redesignating subsections (b) and (c) as 
        subsections (c) and (d), respectively; and
            (2) by striking subsection (a) and inserting the 
        following:
    ``(a) It shall be unlawful--
            ``(1) for any person, in or in connection with any 
        order to make, or the making of, any contract of sale 
        of any commodity for future delivery or in interstate 
        commerce, that is made, or to be made, on or subject to 
        the rules of a designated contract market, for or on 
        behalf of any other person; or
            ``(2) for any person, in or in connection with any 
        order to make, or the making of, any contract of sale 
        of any commodity for future delivery, or other 
        agreement, contract, or transaction subject to section 
        5a(g) (1) and (2) of this Act, that is made, or to be 
        made, for or on behalf of, or with, any other person, 
        other than on or subject to the rules of a designated 
        contract market--
                    ``(A) to cheat or defraud or attempt to 
                cheat or defraud such other person;
                    ``(B) willfully to make or cause to be made 
                to such other person any false report or 
                statement or willfully to enter or cause to be 
                entered for such other person any false record;
                    ``(C) willfully to deceive or attempt to 
                deceive such other person by any means 
                whatsoever in regard to any order or contract 
                or the disposition or execution of any order or 
                contract, or in regard to any act of agency 
                performed, with respect to any order or 
                contract for or, in the case of subsection 
                (a)(2), with such other person; or
                    ``(D)(i) to bucket an order if such order 
                is either represented by such person as an 
                order to be executed, or required to be 
                executed, on or subject to the rules of a 
                designated contract market; or
                    ``(ii) to fill an order by offset against 
                the order or orders of any other person, or 
                willfully and knowingly and without the prior 
                consent of such other person to become the 
                buyer in respect to any selling order of such 
                other person, or become the seller in respect 
                to any buying order of such other person, if 
                such order is either represented by such person 
                as an order to be executed, or required to be 
                executed, on or subject to the rules of a 
                designated contract market.
    ``(b) Subsection (a)(2) shall not obligate any person, in 
connection with a transaction in a contract of sale of a 
commodity for future delivery, or other agreement, contract or 
transaction subject to section 5a(g) (1) and (2) of this Act, 
with another person, to disclose to such other person nonpublic 
information that may be material to the market price of such 
commodity or transaction, except as necessary to make any 
statement made to such other person in connection with such 
transaction, not misleading in any material respect.''.
    (c) Jurisdiction of the CFTC.--The Natural Gas Act (15 
U.S.C. 717 et seq.) is amended by adding at the end:

``SEC. 26. JURISDICTION.

    ``This Act shall not affect the exclusive jurisdiction of 
the Commodity Futures Trading Commission with respect to 
accounts, agreements, contracts, or transactions in commodities 
under the Commodity Exchange Act (7 U.S.C. 1 et seq.). Any 
request for information by the Commission to a designated 
contract market, registered derivatives transaction execution 
facility, board of trade, exchange, or market involving 
accounts, agreements, contracts, or transactions in commodities 
(including natural gas, electricity, and other energy 
commodities) within the exclusive jurisdiction of the Commodity 
Futures Trading Commission shall be directed to the Commodity 
Futures Trading Commission, which shall cooperate in responding 
to any information request by the Commission.''.
    (d) Increased Penalties.--Section 21 of the Natural Gas Act 
(15 U.S.C. 717t) is amended--
            (1) in subsection (a)--
                    (A) by striking ``$5,000'' and inserting 
                ``$1,000,000''; and
                    (B) by striking ``two years'' and inserting 
                ``5 years''; and
            (2) in subsection (b), by striking ``$500'' and 
        inserting ``$50,000''.

SEC. 333. NATURAL GAS MARKET TRANSPARENCY.

    The Natural Gas Act (15 U.S.C 717 et seq.) is amended--
            (1) by redesignating section 24 as section 25; and
            (2) by inserting after section 23 the following:

``SEC. 24. NATURAL GAS MARKET TRANSPARENCY.

    ``(a) Authorization.--(1) Not later than 180 days after the 
date of enactment of the Energy Policy Act of 2003, the Federal 
Energy Regulatory Commission shall issue rules directing all 
entities subject to the Commission's jurisdiction as provided 
under this Act to timely report information about the 
availability and prices of natural gas sold at wholesale in 
interstate commerce to the Commission and price publishers.
    ``(2) The Commission shall evaluate the data for adequate 
price transparency and accuracy.
    ``(3) Rules issued under this subsection requiring the 
reporting of information to the Commission that may become 
publicly available shall be limited to aggregate data and 
transaction-specific data that are otherwise required by the 
Commission to be made public.
    ``(4) In exercising its authority under this section, the 
Commission shall not--
            ``(A) compete with, or displace from the market 
        place, any price publisher; or
            ``(B) regulate price publishers or impose any 
        requirements on the publication of information.
    ``(b) Timely Enforcement.--No person shall be subject to 
any penalty under this section with respect to a violation 
occurring more than 3 years before the date on which the 
Federal Energy Regulatory Commission seeks to assess a penalty.
    ``(c) Limitation on Commission Authority.--(1) The 
Commission shall not condition access to interstate pipeline 
transportation upon the reporting requirements authorized under 
this section.
    ``(2) Natural gas sales by a producer that are attributable 
to volumes of natural gas produced by such producer shall not 
be subject to the rules issued pursuant to this section.
    ``(3) The Commission shall not require natural gas 
producers, processors, or users who have a de minimis market 
presence to participate in the reporting requirements provided 
in this section.''.

                   Subtitle C--Access to Federal Land

SEC. 341. OFFICE OF FEDERAL ENERGY PROJECT COORDINATION.

    (a) Establishment.--The President shall establish the 
Office of Federal Energy Project Coordination (referred to in 
this section as the ``Office'') within the Executive Office of 
the President in the same manner and with the same mission as 
the White House Energy Projects Task Force established by 
Executive Order No. 13212 (42 U.S.C. 13201 note).
    (b) Staffing.--The Office shall be staffed by functional 
experts from relevant Federal agencies on a nonreimbursable 
basis to carry out the mission of the Office.
    (c) Report.--The Office shall transmit an annual report to 
Congress that describes the activities put in place to 
coordinate and expedite Federal decisions on energy projects. 
The report shall list accomplishments in improving the Federal 
decisionmaking process and shall include any additional 
recommendations or systemic changes needed to establish a more 
effective and efficient Federal permitting process.

SEC. 342. FEDERAL ONSHORE OIL AND GAS LEASING AND PERMITTING PRACTICES.

    (a) Review of Onshore Oil and Gas Leasing Practices.--
            (1) In general.--The Secretary of the Interior, in 
        consultation with the Secretary of Agriculture with 
        respect to National Forest System lands under the 
        jurisdiction of the Department of Agriculture, shall 
        perform an internal review of current Federal onshore 
        oil and gas leasing and permitting practices.
            (2) Inclusions.--The review shall include the 
        process for--
                    (A) accepting or rejecting offers to lease;
                    (B) administrative appeals of decisions or 
                orders of officers or employees of the Bureau 
                of Land Management with respect to a Federal 
                oil or gas lease;
                    (C) considering surface use plans of 
                operation, including the timeframes in which 
                the plans are considered, and any 
                recommendations for improving and expediting 
                the process; and
                    (D) identifying stipulations to address 
                site-specific concerns and conditions, 
                including those stipulations relating to the 
                environment and resource use conflicts.
    (b) Report.--Not later than 180 days after the date of 
enactment of this Act, the Secretary of the Interior and the 
Secretary of Agriculture shall transmit a report to Congress 
that describes--
            (1) actions taken under section 3 of Executive 
        Order No. 13212 (42 U.S.C. 13201 note); and
            (2) actions taken or any plans to improve the 
        Federal onshore oil and gas leasing program.

SEC. 343. MANAGEMENT OF FEDERAL OIL AND GAS LEASING PROGRAMS.

    (a) Timely Action on Leases and Permits.--To ensure timely 
action on oil and gas leases and applications for permits to 
drill on land otherwise available for leasing, the Secretary of 
the Interior (in this section referred to as the ``Secretary'') 
shall--
            (1) ensure expeditious compliance with section 
        102(2)(C) of the National Environmental Policy Act of 
        1969 (42 U.S.C. 4332(2)(C));
            (2) improve consultation and coordination with the 
        States and the public; and
            (3) improve the collection, storage, and retrieval 
        of information relating to the leasing activities.
    (b) Best Management Practices.--
            (1) In general.--Not later than 18 months after the 
        date of enactment of this Act, the Secretary shall 
        develop and implement best management practices to--
                    (A) improve the administration of the 
                onshore oil and gas leasing program under the 
                Mineral Leasing Act (30 U.S.C. 181 et seq.); 
                and
                    (B) ensure timely action on oil and gas 
                leases and applications for permits to drill on 
                lands otherwise available for leasing.
            (2) Considerations.--In developing the best 
        management practices under paragraph (1), the Secretary 
        shall consider any recommendations from the review 
        under section 342.
            (3) Regulations.--Not later than 180 days after the 
        development of best management practices under 
        paragraph (1), the Secretary shall publish, for public 
        comment, proposed regulations that set forth specific 
        timeframes for processing leases and applications in 
        accordance with the practices, including deadlines 
        for--
                    (A) approving or disapproving resource 
                management plans and related documents, lease 
                applications, and surface use plans; and
                    (B) related administrative appeals.
    (c) Improved Enforcement.--The Secretary shall improve 
inspection and enforcement of oil and gas activities, including 
enforcement of terms and conditions in permits to drill.
    (d) Authorization of Appropriations.--In addition to 
amounts authorized to be appropriated to carry out section 17 
of the Mineral Leasing Act (30 U.S.C. 226), there are 
authorized to be appropriated to the Secretary for each of 
fiscal years 2004 through 2007--
            (1) $40,000,000 to carry out subsections (a) and 
        (b); and
            (2) $20,000,000 to carry out subsection (c).

SEC. 344. CONSULTATION REGARDING OIL AND GAS LEASING ON PUBLIC LAND.

    (a) In General.--Not later than 180 days after the date of 
enactment of this Act, the Secretary of the Interior and the 
Secretary of Agriculture shall enter into a memorandum of 
understanding regarding oil and gas leasing on--
            (1) public lands under the jurisdiction of the 
        Secretary of the Interior; and
            (2) National Forest System lands under the 
        jurisdiction of the Secretary of Agriculture.
    (b) Contents.--The memorandum of understanding shall 
include provisions that--
            (1) establish administrative procedures and lines 
        of authority that ensure timely processing of oil and 
        gas lease applications, surface use plans of operation, 
        and applications for permits to drill, including steps 
        for processing surface use plans and applications for 
        permits to drill consistent with the timelines 
        established by the amendment made by section 348;
            (2) eliminate duplication of effort by providing 
        for coordination of planning and environmental 
        compliance efforts; and
            (3) ensure that lease stipulations are--
                    (A) applied consistently;
                    (B) coordinated between agencies; and
                    (C) only as restrictive as necessary to 
                protect the resource for which the stipulations 
                are applied.
    (c) Data Retrieval System.--
            (1) In general.--Not later than 1 year after the 
        date of enactment of this Act, the Secretary of the 
        Interior and the Secretary of Agriculture shall 
        establish a joint data retrieval system that is capable 
        of--
                    (A) tracking applications and formal 
                requests made in accordance with procedures of 
                the Federal onshore oil and gas leasing 
                program; and
                    (B) providing information regarding the 
                status of the applications and requests within 
                the Department of the Interior and the 
                Department of Agriculture.
            (2) Resource mapping.--Not later than 2 years after 
        the date of enactment of this Act, the Secretary of the 
        Interior and the Secretary of Agriculture shall 
        establish a joint Geographic Information System mapping 
        system for use in--
                    (A) tracking surface resource values to aid 
                in resource management; and
                    (B) processing surface use plans of 
                operation and applications for permits to 
                drill.

SEC. 345. ESTIMATES OF OIL AND GAS RESOURCES UNDERLYING ONSHORE FEDERAL 
                    LAND.

    (a) Assessment.--Section 604 of the Energy Act of 2000 (42 
U.S.C. 6217) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) by striking ``reserve''; and
                            (ii) by striking ``and'' after the 
                        semicolon; and
                    (B) by striking paragraph (2) and inserting 
                the following:
            ``(2) the extent and nature of any restrictions or 
        impediments to the development of the resources, 
        including--
                    ``(A) impediments to the timely granting of 
                leases;
                    ``(B) post-lease restrictions, impediments, 
                or delays on development for conditions of 
                approval, applications for permits to drill, or 
                processing of environmental permits; and
                    ``(C) permits or restrictions associated 
                with transporting the resources for entry into 
                commerce; and
            ``(3) the quantity of resources not produced or 
        introduced into commerce because of the 
        restrictions.'';
            (2) in subsection (b)--
                    (A) by striking ``reserve'' and inserting 
                ``resource''; and
                    (B) by striking ``publically'' and 
                inserting ``publicly''; and
            (3) by striking subsection (d) and inserting the 
        following:
    ``(d) Assessments.--Using the inventory, the Secretary of 
Energy shall make periodic assessments of economically 
recoverable resources accounting for a range of parameters such 
as current costs, commodity prices, technology, and 
regulations.''.
    (b) Methodology.--The Secretary of the Interior shall use 
the same assessment methodology across all geological 
provinces, areas, and regions in preparing and issuing national 
geological assessments to ensure accurate comparisons of 
geological resources.

SEC. 346. COMPLIANCE WITH EXECUTIVE ORDER 13211; ACTIONS CONCERNING 
                    REGULATIONS THAT SIGNIFICANTLY AFFECT ENERGY 
                    SUPPLY, DISTRIBUTION, OR USE.

    (a) Requirement.--The head of each Federal agency shall 
require that before the Federal agency takes any action that 
could have a significant adverse effect on the supply of 
domestic energy resources from Federal public land, the Federal 
agency taking the action shall comply with Executive Order No. 
13211 (42 U.S.C. 13201 note).
    (b) Guidance.--Not later than 180 days after the date of 
enactment of this Act, the Secretary of Energy shall publish 
guidance for purposes of this section describing what 
constitutes a significant adverse effect on the supply of 
domestic energy resources under Executive Order No. 13211 (42 
U.S.C. 13201 note).
    (c) Memorandum of Understanding.--The Secretary of the 
Interior and the Secretary of Agriculture shall include in the 
memorandum of understanding under section 344 provisions for 
implementing subsection (a) of this section.

SEC. 347. PILOT PROJECT TO IMPROVE FEDERAL PERMIT COORDINATION.

    (a) Establishment.--The Secretary of the Interior (in this 
section referred to as the ``Secretary'') shall establish a 
Federal Permit Streamlining Pilot Project (in this section 
referred to as the ``Pilot Project'').
    (b) Memorandum of Understanding.--
            (1) In general.--Not later than 90 days after the 
        date of enactment of this Act, the Secretary shall 
        enter into a memorandum of understanding with the 
        Secretary of Agriculture, the Administrator of the 
        Environmental Protection Agency, and the Chief of 
        Engineers of the Army Corps of Engineers for purposes 
        of this section.
            (2) State participation.--The Secretary may request 
        that the Governors of Wyoming, Montana, Colorado, Utah, 
        and New Mexico be signatories to the memorandum of 
        understanding.
    (c) Designation of Qualified Staff.--
            (1) In general.--Not later than 30 days after the 
        date of the signing of the memorandum of understanding 
        under subsection (b), all Federal signatory parties 
        shall assign to each of the field offices identified in 
        subsection (d), on a nonreimbursable basis, an employee 
        who has expertise in the regulatory issues relating to 
        the office in which the employee is employed, 
        including, as applicable, particular expertise in--
                    (A) the consultations and the preparation 
                of biological opinions under section 7 of the 
                Endangered Species Act of 1973 (16 U.S.C. 
                1536);
                    (B) permits under section 404 of Federal 
                Water Pollution Control Act (33 U.S.C. 1344);
                    (C) regulatory matters under the Clean Air 
                Act (42 U.S.C. 7401 et seq.);
                    (D) planning under the National Forest 
                Management Act of 1976 (16 U.S.C. 472a et 
                seq.); and
                    (E) the preparation of analyses under the 
                National Environmental Policy Act of 1969 (42 
                U.S.C. 4321 et seq.).
            (2) Duties.--Each employee assigned under paragraph 
        (1) shall--
                    (A) not later than 90 days after the date 
                of assignment, report to the Bureau of Land 
                Management Field Managers in the office to 
                which the employee is assigned;
                    (B) be responsible for all issues relating 
                to the jurisdiction of the home office or 
                agency of the employee; and
                    (C) participate as part of the team of 
                personnel working on proposed energy projects, 
                planning, and environmental analyses.
    (d) Field Offices.--The following Bureau of Land Management 
Field Offices shall serve as the Pilot Project offices:
            (1) Rawlins, Wyoming.
            (2) Buffalo, Wyoming.
            (3) Miles City, Montana
            (4) Farmington, New Mexico.
            (5) Carlsbad, New Mexico.
            (6) Glenwood Springs, Colorado.
            (7) Vernal, Utah.
    (e) Reports.--Not later than 3 years after the date of 
enactment of this Act, the Secretary shall transmit to Congress 
a report that--
            (1) outlines the results of the Pilot Project to 
        date; and
            (2) makes a recommendation to the President 
        regarding whether the Pilot Project should be 
        implemented throughout the United States.
    (f) Additional Personnel.--The Secretary shall assign to 
each field office identified in subsection (d) any additional 
personnel that are necessary to ensure the effective 
implementation of--
            (1) the Pilot Project; and
            (2) other programs administered by the field 
        offices, including inspection and enforcement relating 
        to energy development on Federal land, in accordance 
        with the multiple use mandate of the Federal Land 
        Policy and Management Act of 1976 (43 U.S.C. 1701 et 
        seq).
    (g) Savings Provision.--Nothing in this section affects--
            (1) the operation of any Federal or State law; or
            (2) any delegation of authority made by the head of 
        a Federal agency whose employees are participating in 
        the Pilot Project.

SEC. 348. DEADLINE FOR CONSIDERATION OF APPLICATIONS FOR PERMITS.

    Section 17 of the Mineral Leasing Act (30 U.S.C. 226) is 
amended by adding at the end the following:
    ``(p) Deadlines for Consideration of Applications for 
Permits.--
            ``(1) In general.--Not later than 10 days after the 
        date on which the Secretary receives an application for 
        any permit to drill, the Secretary shall--
                    ``(A) notify the applicant that the 
                application is complete; or
                    ``(B) notify the applicant that information 
                is missing and specify any information that is 
                required to be submitted for the application to 
                be complete.
            ``(2) Issuance or deferral.--Not later than 30 days 
        after the applicant for a permit has submitted a 
        complete application, the Secretary shall--
                    ``(A) issue the permit; or
                    ``(B)(i) defer decision on the permit; and
                    ``(ii) provide to the applicant a notice 
                that specifies any steps that the applicant 
                could take for the permit to be issued.
            ``(3) Requirements for deferred applications.--
                    ``(A) In general.--If the Secretary 
                provides notice under paragraph (2)(B)(ii), the 
                applicant shall have a period of 2 years from 
                the date of receipt of the notice in which to 
                complete all requirements specified by the 
                Secretary, including providing information 
                needed for compliance with the National 
                Environmental Policy Act of 1969 (42 U.S.C. 
                4321 et seq.).
                    ``(B) Issuance of decision on permit.--If 
                the applicant completes the requirements within 
                the period specified in subparagraph (A), the 
                Secretary shall issue a decision on the permit 
                not later than 10 days after the date of 
                completion of the requirements described in 
                subparagraph (A).
                    ``(C) Denial of permit.--If the applicant 
                does not complete the requirements within the 
                period specified in subparagraph (A), the 
                Secretary shall deny the permit.
    ``(q) Report.--On a quarterly basis, each field office of 
the Bureau of Land Management and the Forest Service shall 
transmit to the Secretary of the Interior or the Secretary of 
Agriculture, respectively, a report that--
            ``(1) specifies the number of applications for 
        permits to drill received by the field office in the 
        period covered by the report; and
            ``(2) describes how each of the applications was 
        disposed of by the field office.''.

SEC. 349. CLARIFICATION OF FAIR MARKET RENTAL VALUE DETERMINATIONS FOR 
                    PUBLIC LAND AND FOREST SERVICE RIGHTS-OF-WAY.

    (a) Linear Rights-Of-Way Under Federal Land Policy and 
Management Act of 1976.--Section 504 of the Federal Land Policy 
and Management Act of 1976 (43 U.S.C. 1764) is amended by 
adding at the end the following:
    ``(k) Determination of Fair Market Value of Linear Rights-
Of-Way.--
            ``(1) In general.--Effective beginning on the date 
        of the issuance of the rules required by paragraph (2), 
        for purposes of subsection (g), the Secretary concerned 
        shall determine the fair market value for the use of 
        land encumbered by a linear right-of-way granted, 
        issued, or renewed under this title using the valuation 
        method described in paragraphs (2), (3), and (4).
            ``(2) Revisions.--Not later than 1 year after the 
        date of enactment of this subsection--
                    ``(A) the Secretary of the Interior shall 
                amend section 2803.1-2 of title 43, Code of 
                Federal Regulations, as in effect on the date 
                of enactment of this subsection, to revise the 
                per acre rental fee zone value schedule by 
                State, county, and type of linear right-of-way 
                use to reflect current values of land in each 
                zone; and
                    ``(B) the Secretary of Agriculture shall 
                make the same revision for linear rights-of-way 
                granted, issued, or renewed under this title on 
                National Forest System land.
            ``(3) Updates.--The Secretary concerned shall 
        annually update the schedule revised under paragraph 
        (2) by multiplying the current year's rental per acre 
        by the annual change, second quarter to second quarter 
        (June 30 to June 30) in the Gross National Product 
        Implicit Price Deflator Index published in the Survey 
        of Current Business of the Department of Commerce, 
        Bureau of Economic Analysis.
            ``(4) Review.--If the cumulative change in the 
        index referred to in paragraph (3) exceeds 30 percent, 
        or the change in the 3-year average of the 1-year 
        Treasury interest rate used to determine per acre 
        rental fee zone values exceeds plus or minus 50 
        percent, the Secretary concerned shall conduct a review 
        of the zones and rental per acre figures to determine 
        whether the value of Federal land has differed 
        sufficiently from the index referred to in paragraph 
        (3) to warrant a revision in the base zones and rental 
        per acre figures. If, as a result of the review, the 
        Secretary concerned determines that such a revision is 
        warranted, the Secretary concerned shall revise the 
        base zones and rental per acre figures accordingly. Any 
        revision of base zones and rental per acre figure shall 
        only affect lease rental rates at inception or 
        renewal.''.
    (b) Rights-Of-Way Under Mineral Leasing Act.--Section 28(l) 
of the Mineral Leasing Act (30 U.S.C. 185(l)) is amended by 
inserting before the period at the end the following: ``using 
the valuation method described in section 2803.1-2 of title 43, 
Code of Federal Regulations, as revised in accordance with 
section 504(k) of the Federal Land Policy and Management Act of 
1976 (43 U.S.C. 1764(k))''.

SEC. 350. ENERGY FACILITY RIGHTS-OF-WAY AND CORRIDORS ON FEDERAL LAND.

    (a) Report to Congress.--
            (1) In general.--Not later than 1 year after the 
        date of enactment of this Act, the Secretary of 
        Agriculture and the Secretary of the Interior, in 
        consultation with the Secretary of Commerce, the 
        Secretary of Defense, the Secretary of Energy, and the 
        Federal Energy Regulatory Commission, shall submit to 
        Congress a joint report--
                    (A) that addresses--
                            (i) the location of existing 
                        rights-of-way and designated and de 
                        facto corridors for oil and gas 
                        pipelines and electric transmission and 
                        distribution facilities on Federal 
                        land; and
                            (ii) opportunities for additional 
                        oil and gas pipeline and electric 
                        transmission capacity within those 
                        rights-of-way and corridors; and
                    (B) that includes a plan for making 
                available, on request, to the appropriate 
                Federal, State, and local agencies, tribal 
                governments, and other persons involved in the 
                siting of oil and gas pipelines and electricity 
                transmission facilities Geographic Information 
                System-based information regarding the location 
                of the existing rights-of-way and corridors and 
                any planned rights-of-way and corridors.
            (2) Consultations and considerations.--In preparing 
        the report, the Secretary of the Interior and the 
        Secretary of Agriculture shall consult with--
                    (A) other agencies of Federal, State, 
                tribal, or local units of government, as 
                appropriate;
                    (B) persons involved in the siting of oil 
                and gas pipelines and electric transmission 
                facilities; and
                    (C) other interested members of the public.
            (3) Limitation.--The Secretary of the Interior and 
        the Secretary of Agriculture shall limit the 
        distribution of the report and Geographic Information 
        System-based information referred to in paragraph (1) 
        as necessary for national and infrastructure security 
        reasons, if either Secretary determines that the 
        information may be withheld from public disclosure 
        under a national security or other exception under 
        section 552(b) of title 5, United States Code.
    (b) Corridor Designations.--
            (1) 11 contiguous western states.--Not later than 2 
        years after the date of enactment of this Act, the 
        Secretary of Agriculture, the Secretary of Commerce, 
        the Secretary of Defense, the Secretary of Energy, and 
        the Secretary of the Interior, in consultation with the 
        Federal Energy Regulatory Commission and the affected 
        utility industries, shall jointly--
                    (A) designate, under title V of the Federal 
                Land Policy and Management Act of 1976 (43 
                U.S.C. 1761 et seq.) and other applicable 
                Federal laws, corridors for oil and gas 
                pipelines and electricity transmission and 
                facilities on Federal land in the eleven 
                contiguous Western States (as defined in 
                section 103 of the Federal Land Policy and 
                Management Act of 1976 (43 U.S.C. 1702));
                    (B) perform any environmental reviews that 
                may be required to complete the designations of 
                corridors for the facilities on Federal land in 
                the eleven contiguous Western States; and
                    (C) incorporate the designated corridors 
                into--
                            (i) the relevant departmental and 
                        agency land use and resource management 
                        plans; or
                            (ii) equivalent plans.
            (2) Other states.--Not later than 4 years after the 
        date of enactment of this Act, the Secretary of 
        Agriculture, the Secretary of Commerce, the Secretary 
        of Defense, the Secretary of Energy, and the Secretary 
        of the Interior, in consultation with the Federal 
        Energy Regulatory Commission and the affected utility 
        industries, shall jointly--
                    (A) identify corridors for oil and gas 
                pipelines and electricity transmission and 
                distribution facilities on Federal land in the 
                States other than those described in paragraph 
                (1); and
                    (B) schedule prompt action to identify, 
                designate, and incorporate the corridors into 
                the land use plan.
            (3) Ongoing responsibilities.--After completing the 
        requirements under paragraphs (1) and (2), the 
        Secretary of Agriculture, the Secretary of Commerce, 
        the Secretary of Defense, the Secretary of Energy, and 
        the Secretary of the Interior, with respect to lands 
        under their respective jurisdictions, in consultation 
        with the Federal Energy Regulatory Commission and the 
        affected utility industries, shall establish procedures 
        that--
                    (A) ensure that additional corridors for 
                oil and gas pipelines and electricity 
                transmission and distribution facilities on 
                Federal land are promptly identified and 
                designated; and
                    (B) expedite applications to construct or 
                modify oil and gas pipelines and electricity 
                transmission and distribution facilities within 
                the corridors, taking into account prior 
                analyses and environmental reviews undertaken 
                during the designation of corridors.
    (c) Considerations.--In carrying out this section, the 
Secretaries shall take into account the need for upgraded and 
new electricity transmission and distribution facilities to--
            (1) improve reliability;
            (2) relieve congestion; and
            (3) enhance the capability of the national grid to 
        deliver electricity.
    (d) Definition of Corridor.--
            (1) In general.--In this section and title V of the 
        Federal Land Policy and Management Act of 1976 (43 
        U.S.C. 1761 et seq.), the term ``corridor'' means--
                    (A) a linear strip of land--
                            (i) with a width determined with 
                        consideration given to technological, 
                        environmental, and topographical 
                        factors; and
                            (ii) that contains, or may in the 
                        future contain, 1 or more utility, 
                        communication, or transportation 
                        facilities;
                    (B) a land use designation that is 
                established--
                            (i) by law;
                            (ii) by Secretarial Order;
                            (iii) through the land use planning 
                        process; or
                            (iv) by other management decision; 
                        and
                    (C) a designation made for the purpose of 
                establishing the preferred location of 
                compatible linear facilities and land uses.
            (2) Specifications of corridor.--On designation of 
        a corridor under this section, the centerline, width, 
        and compatible uses of a corridor shall be specified.

SEC. 351. CONSULTATION REGARDING ENERGY RIGHTS-OF-WAY ON PUBLIC LAND.

    (a) Memorandum of Understanding.--
            (1) In general.--Not later than 6 months after the 
        date of enactment of this Act, the Secretary of Energy, 
        in consultation with the Secretary of the Interior, the 
        Secretary of Agriculture, and the Secretary of Defense 
        with respect to lands under their respective 
        jurisdictions, shall enter into a memorandum of 
        understanding to coordinate all applicable Federal 
        authorizations and environmental reviews relating to a 
        proposed or existing utility facility. To the maximum 
        extent practicable under applicable law, the Secretary 
        of Energy shall, to ensure timely review and permit 
        decisions, coordinate such authorizations and reviews 
        with any Indian tribes, multi-State entities, and State 
        agencies that are responsible for conducting any 
        separate permitting and environmental reviews of the 
        affected utility facility.
            (2) Contents.--The memorandum of understanding 
        shall include provisions that--
                    (A) establish--
                            (i) a unified right-of-way 
                        application form; and
                            (ii) an administrative procedure 
                        for processing right-of-way 
                        applications, including lines of 
                        authority, steps in application 
                        processing, and timeframes for 
                        application processing;
                    (B) provide for coordination of planning 
                relating to the granting of the rights-of-way;
                    (C) provide for an agreement among the 
                affected Federal agencies to prepare a single 
                environmental review document to be used as the 
                basis for all Federal authorization decisions; 
                and
                    (D) provide for coordination of use of 
                right-of-way stipulations to achieve 
                consistency.
    (b) Natural Gas Pipelines.--
            (1) In general.--With respect to permitting 
        activities for interstate natural gas pipelines, the 
        May 2002 document entitled ``Interagency Agreement On 
        Early Coordination Of Required Environmental And 
        Historic Preservation Reviews Conducted In Conjunction 
        With The Issuance Of Authorizations To Construct And 
        Operate Interstate Natural Gas Pipelines Certificated 
        By The Federal Energy Regulatory Commission'' shall 
        constitute compliance with subsection (a).
            (2) Report.--
                    (A) In general.--Not later than 1 year 
                after the date of enactment of this Act, and 
                every 2 years thereafter, agencies that are 
                signatories to the document referred to in 
                paragraph (1) shall transmit to Congress a 
                report on how the agencies under the 
                jurisdiction of the Secretaries are 
                incorporating and implementing the provisions 
                of the document referred to in paragraph (1).
                    (B) Contents.--The report shall address--
                            (i) efforts to implement the 
                        provisions of the document referred to 
                        in paragraph (1);
                            (ii) whether the efforts have had a 
                        streamlining effect;
                            (iii) further improvements to the 
                        permitting process of the agency; and
                            (iv) recommendations for inclusion 
                        of State and tribal governments in a 
                        coordinated permitting process.
    (c) Definition of Utility Facility.--In this section, the 
term ``utility facility'' means any privately, publicly, or 
cooperatively owned line, facility, or system--
            (1) for the transportation of--
                    (A) oil, natural gas, synthetic liquid 
                fuel, or gaseous fuel;
                    (B) any refined product produced from oil, 
                natural gas, synthetic liquid fuel, or gaseous 
                fuel; or
                    (C) products in support of the production 
                of material referred to in subparagraph (A) or 
                (B);
            (2) for storage and terminal facilities in 
        connection with the production of material referred to 
        in paragraph (1); or
            (3) for the generation, transmission, and 
        distribution of electric energy.

SEC. 352. RENEWABLE ENERGY ON FEDERAL LAND.

    (a) Report.--
            (1) In general.--Not later than 24 months after the 
        date of enactment of this Act, the Secretary of the 
        Interior, in cooperation with the Secretary of 
        Agriculture, shall develop and transmit to Congress a 
        report that includes recommendations on opportunities 
        to develop renewable energy on--
                    (A) public lands under the jurisdiction of 
                the Secretary of the Interior; and
                    (B) National Forest System lands under the 
                jurisdiction of the Secretary of Agriculture.
            (2) Contents.--The report shall include--
                    (A) 5-year plans developed by the Secretary 
                of the Interior and the Secretary of 
                Agriculture, respectively, for encouraging the 
                development of renewable energy consistent with 
                applicable law and management plans;
                    (B) an analysis of--
                            (i) the use of rights-of-way, 
                        leases, or other methods to develop 
                        renewable energy on such lands;
                            (ii) the anticipated benefits of 
                        grants, loans, tax credits, or other 
                        provisions to promote renewable energy 
                        development on such lands; and
                            (iii) any issues that the Secretary 
                        of the Interior or the Secretary of 
                        Agriculture have encountered in 
                        managing renewable energy projects on 
                        such lands, believe are likely to arise 
                        in relation to the development of 
                        renewable energy on such lands;
                    (C) a list, developed in consultation with 
                the Secretary of Energy and the Secretary of 
                Defense, of lands under the jurisdiction of the 
                Department of Energy or the Department of 
                Defense that would be suitable for development 
                for renewable energy, and any recommended 
                statutory and regulatory mechanisms for such 
                development; and
                    (D) any recommendations relating to the 
                issues addressed in the report.
    (b) National Academy of Sciences Study.--
            (1) In general.--Not later than 90 days after the 
        date of enactment of this Act, the Secretary of the 
        Interior shall contract with the National Academy of 
        Sciences to--
                    (A) study the potential for the development 
                of wind, solar, and ocean energy (including 
                tidal, wave, and thermal energy) on the outer 
                Continental Shelf;
                    (B) assess existing Federal authorities for 
                the development of such resources; and
                    (C) recommend statutory and regulatory 
                mechanisms for such development.
            (2) Transmittal.--The results of the study shall be 
        transmitted to Congress not later than 2 years after 
        the date of enactment of this Act.
    (c) Generation Capacity of Electricity From Renewable 
Energy Resources on Public Land.--The Secretary of the Interior 
shall, not later than 10 years after the date of enactment of 
this Act, seek to approve renewable energy projects located (or 
to be located) on public lands with a generation capacity of at 
least 10,000 megawatts of electricity.

SEC. 353. ELECTRICITY TRANSMISSION LINE RIGHT-OF-WAY, CLEVELAND 
                    NATIONAL FOREST AND ADJACENT PUBLIC LAND, 
                    CALIFORNIA.

    (a) Issuance.--
            (1) In general.--Not later than 60 days after the 
        completion of the environmental reviews under 
        subsection (c), the Secretary of the Interior and the 
        Secretary of Agriculture shall issue all necessary 
        grants, easements, permits, plan amendments, and other 
        approvals to allow for the siting and construction of a 
        high-voltage electricity transmission line right-of-way 
        running approximately north to south through the 
        Trabuco Ranger District of the Cleveland National 
        Forest in the State of California and adjacent lands 
        under the jurisdiction of the Bureau of Land Management 
        and the Forest Service.
            (2) Inclusions.--The right-of-way approvals under 
        paragraph (1) shall provide all necessary Federal 
        authorization from the Secretary of the Interior and 
        the Secretary of Agriculture for the routing, 
        construction, operation, and maintenance of a 500-
        kilovolt transmission line capable of meeting the long-
        term electricity transmission needs of the region 
        between the existing Valley-Serrano transmission line 
        to the north and the Telega-Escondido transmission line 
        to the south, and for connecting to future generating 
        capacity that may be developed in the region.
    (b) Protection of Wilderness Areas.--The Secretary of the 
Interior and the Secretary of Agriculture shall not allow any 
portion of a transmission line right-of-way corridor identified 
in subsection (a) to enter any identified wilderness area in 
existence as of the date of enactment of this Act.
    (c) Environmental and Administrative Reviews.--
            (1) Department of interior or local agency.--The 
        Secretary of the Interior, acting through the Director 
        of the Bureau of Land Management, shall be the lead 
        Federal agency with overall responsibility to ensure 
        completion of required environmental and other reviews 
        of the approvals to be issued under subsection (a).
            (2) National forest system land.--For the portions 
        of the corridor on National Forest System lands, the 
        Secretary of Agriculture shall complete all required 
        environmental reviews and administrative actions in 
        coordination with the Secretary of the Interior.
            (3) Expeditious completion.--The reviews required 
        for issuance of the approvals under subsection (a) 
        shall be completed not later than 1 year after the date 
        of the enactment of this Act.
    (d) Other Terms and Conditions.--The transmission line 
right-of-way shall be subject to such terms and conditions as 
the Secretary of the Interior and the Secretary of Agriculture 
consider necessary, based on the environmental reviews under 
subsection (c), to protect the value of historic, cultural, and 
natural resources under the jurisdiction of the Secretary of 
the Interior or the Secretary of Agriculture.
    (e) Preference Among Proposals.--The Secretary of the 
Interior and the Secretary of Agriculture shall give a 
preference to any application or preapplication proposal for a 
transmission line right-of-way referred to in subsection (a) 
that was submitted before December 31, 2002, over all other 
applications and proposals for the same or a similar right-of-
way submitted on or after that date.

SEC. 354. SENSE OF CONGRESS REGARDING DEVELOPMENT OF MINERALS UNDER 
                    PADRE ISLAND NATIONAL SEASHORE.

    (a) Findings.--Congress finds the following:
            (1) Pursuant to Public Law 87-712 (16 U.S.C. 459d 
        et seq.; popularly known as the ``Federal Enabling 
        Act'') and various deeds and actions under that Act, 
        the United States is the owner of only the surface 
        estate of certain lands constituting the Padre Island 
        National Seashore.
            (2) Ownership of the oil, gas, and other minerals 
        in the subsurface estate of the lands constituting the 
        Padre Island National Seashore was never acquired by 
        the United States, and ownership of those interests is 
        held by the State of Texas and private parties.
            (3) Public Law 87-712 (16 U.S.C. 459d et seq.)--
                    (A) expressly contemplated that the United 
                States would recognize the ownership and future 
                development of the oil, gas, and other minerals 
                in the subsurface estate of the lands 
                constituting the Padre Island National Seashore 
                by the owners and their mineral lessees; and
                    (B) recognized that approval of the State 
                of Texas was required to create Padre Island 
                National Seashore.
            (4) Approval was given for the creation of Padre 
        Island National Seashore by the State of Texas through 
        Tex. Rev. Civ. Stat. Ann. Art. 6077(t) (Vernon 1970), 
        which expressly recognized that development of the oil, 
        gas, and other minerals in the subsurface of the lands 
        constituting Padre Island National Seashore would be 
        conducted with full rights of ingress and egress under 
        the laws of the State of Texas.
    (b) Sense of Congress.--It is the sense of Congress that 
with regard to Federal law, any regulation of the development 
of oil, gas, or other minerals in the subsurface of the lands 
constituting Padre Island National Seashore should be made as 
if those lands retained the status that the lands had on 
September 27, 1962.

SEC. 355. ENCOURAGING PROHIBITION OF OFF-SHORE DRILLING IN THE GREAT 
                    LAKES.

    Congress encourages--
            (1) the States of Illinois, Michigan, New York, 
        Pennsylvania, and Wisconsin to continue to prohibit 
        offshore drilling in the Great Lakes for oil and gas; 
        and
            (2) the States of Indiana, Minnesota, and Ohio to 
        enact a prohibition of such drilling.

SEC. 356. FINGER LAKES NATIONAL FOREST WITHDRAWAL.

    All Federal land within the boundary of Finger Lakes 
National Forest in the State of New York is withdrawn from--
            (1) all forms of entry, appropriation, or disposal 
        under the public land laws; and
            (2) disposition under all laws relating to oil and 
        gas leasing.

SEC. 357. STUDY ON LEASE EXCHANGES IN THE ROCKY MOUNTAIN FRONT.

    (a) Definitions.--For the purposes of this section:
            (1) Badger-two medicine area.--The term ``Badger-
        Two Medicine Area'' means the Forest Service land 
        located in--
                    (A) T. 31 N., R. 12-13 W.;
                    (B) T. 30 N., R. 11-13 W.;
                    (C) T. 29 N., R. 10-16 W.; and
                    (D) T. 28 N., R. 10-14 W.
            (2) Blackleaf area.--The term ``Blackleaf Area'' 
        means the Federal land owned by the Forest Service and 
        Bureau of Land Management that is located in--
                    (A) T. 27 N., R. 9 W.;
                    (B) T. 26 N., R. 9-10 W.;
                    (C) T. 25 N., R. 8-10 W.; and
                    (D) T. 24 N., R. 8-9 W.
            (3) Eligible lessee.--The term ``eligible lessee'' 
        means a lessee under a nonproducing lease.
            (4) Nonproducing lease.--The term ``nonproducing 
        lease'' means a Federal oil or gas lease--
                    (A) that is in existence and in good 
                standing on the date of enactment of this Act; 
                and
                    (B) that is located in the Badger-Two 
                Medicine Area or the Blackleaf Area.
            (5) Secretary.--The term ``Secretary'' means the 
        Secretary of the Interior.
            (6) State.--The term ``State'' means the State of 
        Montana.
    (b) Evaluation.--
            (1) In general.--The Secretary, in consultation 
        with the Governor of the State, and the eligible 
        lessees, shall evaluate opportunities for domestic oil 
        and gas production through the exchange of the 
        nonproducing leases.
            (2) Requirements.--In carrying out the evaluation 
        under subsection (a), the Secretary shall--
                    (A) consider opportunities for domestic 
                production of oil and gas through--
                            (i) the exchange of the 
                        nonproducing leases for oil and gas 
                        lease tracts of comparable value in the 
                        State; and
                            (ii) the issuance of bidding, 
                        royalty, or rental credits for Federal 
                        oil and gas leases in the State in 
                        exchange for the cancellation of the 
                        nonproducing leases;
                    (B) consider any other appropriate means to 
                exchange, or provide compensation for the 
                cancellation of, nonproducing leases, subject 
                to the consent of the eligible lessees;
                    (C) consider the views of any interested 
                persons, including the State;
                    (D) determine the level of interest of the 
                eligible lessees in exchanging the nonproducing 
                leases;
                    (E) assess the economic impact on the 
                lessees and the State of lease exchange, lease 
                cancellation, and final judicial or 
                administrative decisions related to the 
                nonproducing leases; and
                    (F) provide recommendations on--
                            (i) whether to pursue an exchange 
                        of the nonproducing leases;
                            (ii) any changes in laws (including 
                        regulations) that are necessary for the 
                        Secretary to carry out the exchange; 
                        and
                            (iii) any other appropriate means 
                        to exchange or provide compensation for 
                        the cancellation of a nonproducing 
                        lease, subject to the consent of the 
                        eligible lessee.
    (c) Valuation of Nonproducing Leases.--For the purpose of 
the evaluation under subsection (a), the value of a 
nonproducing lease shall be an amount equal to the difference 
between--
            (1) the sum of--
                    (A) the amount paid by the eligible lessee 
                for the nonproducing lease;
                    (B) any direct expenditures made by the 
                eligible lessee before the transmittal of the 
                report in subsection (c) associated with the 
                exploration and development of the nonproducing 
                lease; and
                    (C) interest on any amounts under 
                subparagraphs (A) and (B) during the period 
                beginning on the date on which the amount was 
                paid and ending on the date on which credits 
                are issued under subsection (b)(2)(A)(ii); and
            (2) the sum of the revenues from the nonproducing 
        lease.
    (d) Report to Congress.--Not later than 2 years after the 
date of the enactment of this Act, the Secretary shall initiate 
the evaluation in subsection (b) and transmit to Congress a 
report on the evaluation.

SEC. 358. FEDERAL COALBED METHANE REGULATION.

    Any State currently on the list of Affected States 
established under section 1339(b) of the Energy Policy Act of 
1992 (42 U.S.C. 13368(b)) shall be removed from the list if, 
not later than 3 years after the date of enactment of this Act, 
the State takes, or prior to the date of enactment has taken, 
any of the actions required for removal from the list under 
such section 1339(b).

SEC. 359. LIVINGSTON PARISH MINERAL RIGHTS TRANSFER.

    (a) Amendments.--Section 102 of Public Law 102-562 (106 
Stat. 4234) is amended--
            (1) by striking ``(a) In General.--
            (2) by striking ``and subject to the reservation in 
        subsection (b),''; and
            (3) by striking subsection (b).
    (b) Implementation of Amendment.--The Secretary of the 
Interior shall execute the legal instruments necessary to 
effectuate the amendment made by subsection (a)(3).

                Subtitle D--Alaska Natural Gas Pipeline

SEC. 371. SHORT TITLE.

    This subtitle may be cited as the ``Alaska Natural Gas 
Pipeline Act''.

SEC. 372. DEFINITIONS.

    In this subtitle:
            (1) Alaska natural gas.--The term ``Alaska natural 
        gas'' means natural gas derived from the area of the 
        State of Alaska lying north of 64 degrees north 
        latitude.
            (2) Alaska natural gas transportation project.--The 
        term ``Alaska natural gas transportation project'' 
        means any natural gas pipeline system that carries 
        Alaska natural gas to the border between Alaska and 
        Canada (including related facilities subject to the 
        jurisdiction of the Commission) that is authorized 
        under--
                    (A) the Alaska Natural Gas Transportation 
                Act of 1976 (15 U.S.C. 719 et seq.); or
                    (B) section 373.
            (3) Alaska natural gas transportation system.--The 
        term ``Alaska natural gas transportation system'' means 
        the Alaska natural gas transportation project 
        authorized under the Alaska Natural Gas Transportation 
        Act of 1976 (15 U.S.C. 719 et seq.) and designated and 
        described in section 2 of the President's decision.
            (4) Commission.--The term ``Commission'' means the 
        Federal Energy Regulatory Commission.
            (5) Federal coordinator.--The term ``Federal 
        Coordinator'' means the head of the Office of the 
        Federal Coordinator for Alaska Natural Gas 
        Transportation Projects established by section 376(a).
            (6) President's decision.--The term ``President's 
        decision'' means the decision and report to Congress on 
        the Alaska natural gas transportation system--
                    (A) issued by the President on September 
                22, 1977, in accordance with section 7 of the 
                Alaska Natural Gas Transportation Act of 1976 
                (15 U.S.C. 719e); and
                    (B) approved by Public Law 95-158 (15 
                U.S.C. 719f note; 91 Stat. 1268).
            (7) Secretary.--The term ``Secretary'' means the 
        Secretary of Energy.
            (8) State.--The term ``State'' means the State of 
        Alaska.

SEC. 373. ISSUANCE OF CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY.

    (a) Authority of the Commission.--Notwithstanding the 
Alaska Natural Gas Transportation Act of 1976 (15 U.S.C. 719 et 
seq.), the Commission may, in accordance with section 7(c) of 
the Natural Gas Act (15 U.S.C. 717f(c)), consider and act on an 
application for the issuance of a certificate of public 
convenience and necessity authorizing the construction and 
operation of an Alaska natural gas transportation project other 
than the Alaska natural gas transportation system.
    (b) Issuance of Certificate.--
            (1) In general.--The Commission shall issue a 
        certificate of public convenience and necessity 
        authorizing the construction and operation of an Alaska 
        natural gas transportation project under this section 
        if the applicant has satisfied the requirements of 
        section 7(e) of the Natural Gas Act (15 U.S.C. 
        717f(e)).
            (2) Considerations.--In considering an application 
        under this section, the Commission shall presume that--
                    (A) a public need exists to construct and 
                operate the proposed Alaska natural gas 
                transportation project; and
                    (B) sufficient downstream capacity will 
                exist to transport the Alaska natural gas 
                moving through the project to markets in the 
                contiguous United States.
    (c) Expedited Approval Process.--Not later than 60 days 
after the date of issuance of the final environmental impact 
statement under section 374 for an Alaska natural gas 
transportation project, the Commission shall issue a final 
order granting or denying any application for a certificate of 
public convenience and necessity for the project under section 
7(c) of the Natural Gas Act (15 U.S.C. 717f(c)) and this 
section.
    (d) Prohibition of Certain Pipeline Route.--No license, 
permit, lease, right-of-way, authorization, or other approval 
required under Federal law for the construction of any pipeline 
to transport natural gas from land within the Prudhoe Bay oil 
and gas lease area may be granted for any pipeline that follows 
a route that--
            (1) traverses land beneath navigable waters (as 
        defined in section 2 of the Submerged Lands Act (43 
        U.S.C. 1301)) beneath, or the adjacent shoreline of, 
        the Beaufort Sea; and
            (2) enters Canada at any point north of 68 degrees 
        north latitude.
    (e) Open Season.--
            (1) In general.--Not later than 120 days after the 
        date of enactment of this Act, the Commission shall 
        issue regulations governing the conduct of open seasons 
        for Alaska natural gas transportation projects 
        (including procedures for the allocation of capacity).
            (2) Regulations.--The regulations referred to in 
        paragraph (1) shall--
                    (A) include the criteria for and timing of 
                any open seasons;
                    (B) promote competition in the exploration, 
                development, and production of Alaska natural 
                gas; and
                    (C) for any open season for capacity 
                exceeding the initial capacity, provide the 
                opportunity for the transportation of natural 
                gas other than from the Prudhoe Bay and Point 
                Thomson units.
            (3) Applicability.--Except in a case in which an 
        expansion is ordered in accordance with section 375, 
        initial or expansion capacity on any Alaska natural gas 
        transportation project shall be allocated in accordance 
        with procedures to be established by the Commission in 
        regulations issued under paragraph (1).
    (f) Projects in the Contiguous United States.--
            (1) In general.--An application for additional or 
        expanded pipeline facilities that may be required to 
        transport Alaska natural gas from Canada to markets in 
        the contiguous United States may be made in accordance 
        with the Natural Gas Act (15 U.S.C. 717a et seq.).
            (2) Expansion.--To the extent that a pipeline 
        facility described in paragraph (1) includes the 
        expansion of any facility constructed in accordance 
        with the Alaska Natural Gas Transportation Act of 1976 
        (15 U.S.C. 719 et seq.), that Act shall continue to 
        apply.
    (g) Study of In-State Needs.--The holder of the certificate 
of public convenience and necessity issued, modified, or 
amended by the Commission for an Alaska natural gas 
transportation project shall demonstrate that the holder has 
conducted a study of Alaska in-State needs, including tie-in 
points along the Alaska natural gas transportation project for 
in-State access.
    (h) Alaska Royalty Gas.--
            (1) In general.--Except as provided in paragraph 
        (2), the Commission, on a request by the State and 
        after a hearing, may provide for reasonable access to 
        the Alaska natural gas transportation project by the 
        State (or State designee) for the transportation of 
        royalty gas of the State for the purpose of meeting 
        local consumption needs within the State.
            (2) Exception.--The rates of shippers of subscribed 
        capacity on an Alaska natural gas transportation 
        project described in paragraph (1), as in effect as of 
        the date on which access under that paragraph is 
        granted, shall not be increased as a result of such 
        access.
    (i) Regulations.--The Commission may issue such regulations 
as are necessary to carry out this section.

SEC. 374. ENVIRONMENTAL REVIEWS.

    (a) Compliance With NEPA.--The issuance of a certificate of 
public convenience and necessity authorizing the construction 
and operation of any Alaska natural gas transportation project 
under section 373 shall be treated as a major Federal action 
significantly affecting the quality of the human environment 
within the meaning of section 102(2)(C) of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)).
    (b) Designation of Lead Agency.--
            (1) In general.--The Commission--
                    (A) shall be the lead agency for purposes 
                of complying with the National Environmental 
                Policy Act of 1969 (42 U.S.C. 4321 et seq.); 
                and
                    (B) shall be responsible for preparing the 
                environmental impact statement required by 
                section 102(2)(c) of that Act (42 U.S.C. 
                4332(2)(c)) with respect to an Alaska natural 
                gas transportation project under section 373.
            (2) Consolidation of statements.--In carrying out 
        paragraph (1), the Commission shall prepare a single 
        environmental impact statement, which shall consolidate 
        the environmental reviews of all Federal agencies 
        considering any aspect of the Alaska natural gas 
        transportation project covered by the environmental 
        impact statement.
    (c) Other Agencies.--
            (1) In general.--Each Federal agency considering an 
        aspect of the construction and operation of an Alaska 
        natural gas transportation project under section 373 
        shall--
                    (A) cooperate with the Commission; and
                    (B) comply with deadlines established by 
                the Commission in the preparation of the 
                environmental impact statement under this 
                section.
            (2) Satisfaction of nepa requirements.--The 
        environmental impact statement prepared under this 
        section shall be adopted by each Federal agency 
        described in paragraph (1) in satisfaction of the 
        responsibilities of the Federal agency under section 
        102(2)(C) of the National Environmental Policy Act of 
        1969 (42 U.S.C. 4332(2)(C)) with respect to the Alaska 
        natural gas transportation project covered by the 
        environmental impact statement.
    (d) Expedited Process.--The Commission shall--
            (1) not later than 1 year after the Commission 
        determines that the application under section 373 with 
        respect to an Alaska natural gas transportation project 
        is complete, issue a draft environmental impact 
        statement under this section; and
            (2) not later than 180 days after the date of 
        issuance of the draft environmental impact statement, 
        issue a final environmental impact statement, unless 
        the Commission for good cause determines that 
        additional time is needed.

SEC. 375. PIPELINE EXPANSION.

    (a) Authority.--With respect to any Alaska natural gas 
transportation project, on a request by 1 or more persons and 
after giving notice and an opportunity for a hearing, the 
Commission may order the expansion of the Alaska natural gas 
project if the Commission determines that such an expansion is 
required by the present and future public convenience and 
necessity.
    (b) Responsibilities of Commission.--Before ordering an 
expansion under subsection (a), the Commission shall--
            (1) approve or establish rates for the expansion 
        service that are designed to ensure the recovery, on an 
        incremental or rolled-in basis, of the cost associated 
        with the expansion (including a reasonable rate of 
        return on investment);
            (2) ensure that the rates do not require existing 
        shippers on the Alaska natural gas transportation 
        project to subsidize expansion shippers;
            (3) find that a proposed shipper will comply with, 
        and the proposed expansion and the expansion of service 
        will be undertaken and implemented based on, terms and 
        conditions consistent with the tariff of the Alaska 
        natural gas transportation project in effect as of the 
        date of the expansion;
            (4) find that the proposed facilities will not 
        adversely affect the financial or economic viability of 
        the Alaska natural gas transportation project;
            (5) find that the proposed facilities will not 
        adversely affect the overall operations of the Alaska 
        natural gas transportation project;
            (6) find that the proposed facilities will not 
        diminish the contract rights of existing shippers to 
        previously subscribed certificated capacity;
            (7) ensure that all necessary environmental reviews 
        have been completed; and
            (8) find that adequate downstream facilities exist 
        or are expected to exist to deliver incremental Alaska 
        natural gas to market.
    (c) Requirement for a Firm Transportation Agreement.--Any 
order of the Commission issued in accordance with this section 
shall be void unless the person requesting the order executes a 
firm transportation agreement with the Alaska natural gas 
transportation project within such reasonable period of time as 
the order may specify.
    (d) Limitation.--Nothing in this section expands or 
otherwise affects any authority of the Commission with respect 
to any natural gas pipeline located outside the State.
    (e) Regulations.--The Commission may issue such regulations 
as are necessary to carry out this section.

SEC. 376. FEDERAL COORDINATOR.

    (a) Establishment.--There is established, as an independent 
office in the executive branch, the Office of the Federal 
Coordinator for Alaska Natural Gas Transportation Projects.
    (b) Federal Coordinator.--
            (1) Appointment.--The Office shall be headed by a 
        Federal Coordinator for Alaska Natural Gas 
        Transportation Projects, who shall be appointed by the 
        President, by and with the advice and consent of the 
        Senate, to serve a term to last until 1 year following 
        the completion of the project referred to in section 
        373.
            (2) Compensation.--The Federal Coordinator shall be 
        compensated at the rate prescribed for level III of the 
        Executive Schedule (5 U.S.C. 5314).
    (c) Duties.--The Federal Coordinator shall be responsible 
for--
            (1) coordinating the expeditious discharge of all 
        activities by Federal agencies with respect to an 
        Alaska natural gas transportation project; and
            (2) ensuring the compliance of Federal agencies 
        with the provisions of this subtitle.
    (d) Reviews and Actions of Other Federal Agencies.--
            (1) Expedited reviews and actions.--All reviews 
        conducted and actions taken by any Federal agency 
        relating to an Alaska natural gas transportation 
        project authorized under this section shall be 
        expedited, in a manner consistent with completion of 
        the necessary reviews and approvals by the deadlines 
        under this subtitle.
            (2) Prohibition of certain terms and conditions.--
        No Federal agency may include in any certificate, 
        right-of-way, permit, lease, or other authorization 
        issued to an Alaska natural gas transportation project 
        any term or condition that may be permitted, but is not 
        required, by any applicable law if the Federal 
        Coordinator determines that the term or condition would 
        prevent or impair in any significant respect the 
        expeditious construction and operation, or an 
        expansion, of the Alaska natural gas transportation 
        project.
            (3) Prohibition of certain actions.--Unless 
        required by law, no Federal agency shall add to, amend, 
        or abrogate any certificate, right-of-way, permit, 
        lease, or other authorization issued to an Alaska 
        natural gas transportation project if the Federal 
        Coordinator determines that the action would prevent or 
        impair in any significant respect the expeditious 
        construction and operation, or an expansion, of the 
        Alaska natural gas transportation project.
            (4) Limitation.--The Federal Coordinator shall not 
        have authority to--
                    (A) override--
                            (i) the implementation or 
                        enforcement of regulations issued by 
                        the Commission under section 373; or
                            (ii) an order by the Commission to 
                        expand the project under section 375; 
                        or
                    (B) impose any terms, conditions, or 
                requirements in addition to those imposed by 
                the Commission or any agency with respect to 
                construction and operation, or an expansion of, 
                the project.
    (e) State Coordination.--
            (1) In general.--The Federal Coordinator and the 
        State shall enter into a joint surveillance and 
        monitoring agreement similar to the agreement in effect 
        during construction of the Trans-Alaska Pipeline, to be 
        approved by the President and the Governor of the 
        State, for the purpose of monitoring the construction 
        of the Alaska natural gas transportation project.
            (2) Primary responsibility.--With respect to an 
        Alaska natural gas transportation project--
                    (A) the Federal Government shall have 
                primary surveillance and monitoring 
                responsibility in areas where the Alaska 
                natural gas transportation project crosses 
                Federal land or private land; and
                    (B) the State government shall have primary 
                surveillance and monitoring responsibility in 
                areas where the Alaska natural gas 
                transportation project crosses State land.
    (f) Transfer of Federal Inspector Functions and 
Authority.--On appointment of the Federal Coordinator by the 
President, all of the functions and authority of the Office of 
Federal Inspector of Construction for the Alaska Natural Gas 
Transportation System vested in the Secretary under section 
3012(b) of the Energy Policy Act of 1992 (15 U.S.C. 719e note; 
Public Law 102-486), including all functions and authority 
described and enumerated in the Reorganization Plan No. 1 of 
1979 (44 Fed. Reg. 33663), Executive Order No. 12142 of June 
21, 1979 (44 Fed. Reg. 36927), and section 5 of the President's 
decision, shall be transferred to the Federal Coordinator.
    (g) Temporary Authority.--The functions, authorities, 
duties, and responsibilities of the Federal Coordinator shall 
be vested in the Secretary until the later of the appointment 
of the Federal Coordinator by the President, or 18 months after 
the date of enactment of this Act.

SEC. 377. JUDICIAL REVIEW.

    (a) Exclusive Jurisdiction.--Except for review by the 
Supreme Court on writ of certiorari, the United States Court of 
Appeals for the District of Columbia Circuit shall have 
original and exclusive jurisdiction to determine--
            (1) the validity of any final order or action 
        (including a failure to act) of any Federal agency or 
        officer under this subtitle;
            (2) the constitutionality of any provision of this 
        subtitle, or any decision made or action taken under 
        this subtitle; or
            (3) the adequacy of any environmental impact 
        statement prepared under the National Environmental 
        Policy Act of 1969 (42 U.S.C. 4321 et seq.) with 
        respect to any action under this subtitle.
    (b) Deadline for Filing Claim.--A claim arising under this 
subtitle may be brought not later than 60 days after the date 
of the decision or action giving rise to the claim.
    (c) Expedited Consideration.--The United States Court of 
Appeals for the District of Columbia Circuit shall set any 
action brought under subsection (a) for expedited 
consideration, taking into account the national interest of 
enhancing national energy security by providing access to the 
significant gas reserves in Alaska needed to meet the 
anticipated demand for natural gas.
    (d) Amendment of the Alaska Natural Gas Transportation Act 
of 1976.--Section 10(c) of the Alaska Natural Gas 
Transportation Act of 1976 (15 U.S.C. 719h) is amended--
            (1) by striking ``(c)(1) A claim'' and inserting 
        the following:
    ``(c) Jurisdiction.--
            ``(1) Special courts.--
                    ``(A) In general.--A claim'';
            (2) by striking ``Such court shall have'' and 
        inserting the following:
                    ``(B) Exclusive jurisdiction.--The Special 
                Court shall have'';
            (3) by inserting after paragraph (1) the following:
            ``(2) Expedited consideration.--The Special Court 
        shall set any action brought under this section for 
        expedited consideration, taking into account the 
        national interest described in section 2.''; and
            (4) in paragraph (3), by striking ``(3) The 
        enactment'' and inserting the following:
            ``(3) Environmental impact statements.--The 
        enactment''.

SEC. 378. STATE JURISDICTION OVER IN-STATE DELIVERY OF NATURAL GAS.

    (a) Local Distribution.--Any facility receiving natural gas 
from an Alaska natural gas transportation project for delivery 
to consumers within the State--
            (1) shall be deemed to be a local distribution 
        facility within the meaning of section 1(b) of the 
        Natural Gas Act (15 U.S.C. 717(b)); and
            (2) shall not be subject to the jurisdiction of the 
        Commission.
    (b) Additional Pipelines.--Except as provided in section 
373(d), nothing in this subtitle shall preclude or otherwise 
affect a future natural gas pipeline that may be constructed to 
deliver natural gas to Fairbanks, Anchorage, Matanuska-Susitna 
Valley, or the Kenai peninsula or Valdez or any other site in 
the State for consumption within or distribution outside the 
State.
    (c) Rate Coordination.--
            (1) In general.--In accordance with the Natural Gas 
        Act (15 U.S.C. 717a et seq.), the Commission shall 
        establish rates for the transportation of natural gas 
        on any Alaska natural gas transportation project.
            (2) Consultation.--In carrying out paragraph (1), 
        the Commission, in accordance with section 17(b) of the 
        Natural Gas Act (15 U.S.C. 717p(b)), shall consult with 
        the State regarding rates (including rate settlements) 
        applicable to natural gas transported on and delivered 
        from the Alaska natural gas transportation project for 
        use within the State.

SEC. 379. STUDY OF ALTERNATIVE MEANS OF CONSTRUCTION.

    (a) Requirement of Study.--If no application for the 
issuance of a certificate or amended certificate of public 
convenience and necessity authorizing the construction and 
operation of an Alaska natural gas transportation project has 
been filed with the Commission by the date that is 18 months 
after the date of enactment of this Act, the Secretary shall 
conduct a study of alternative approaches to the construction 
and operation of such an Alaska natural gas transportation 
project.
    (b) Scope of Study.--The study under subsection (a) shall 
take into consideration the feasibility of--
            (1) establishing a Federal Government corporation 
        to construct an Alaska natural gas transportation 
        project; and
            (2) securing alternative means of providing Federal 
        financing and ownership (including alternative 
        combinations of Government and private corporate 
        ownership) of the Alaska natural gas transportation 
        project.
    (c) Consultation.--In conducting the study under subsection 
(a), the Secretary shall consult with the Secretary of the 
Treasury and the Secretary of the Army (acting through the 
Chief of Engineers).
    (d) Report.--On completion of any study under subsection 
(a), the Secretary shall submit to Congress a report that 
describes--
            (1) the results of the study; and
            (2) any recommendations of the Secretary (including 
        proposals for legislation to implement the 
        recommendations).

SEC. 380. CLARIFICATION OF ANGTA STATUS AND AUTHORITIES.

    (a) Savings Clause.--Nothing in this subtitle affects--
            (1) any decision, certificate, permit, right-of-
        way, lease, or other authorization issued under section 
        9 of the Alaska Natural Gas Transportation Act of 1976 
        (15 U.S.C. 719g); or
            (2) any Presidential finding or waiver issued in 
        accordance with that Act.
    (b) Clarification of Authority to Amend Terms and 
Conditions to Meet Current Project Requirements.--Any Federal 
agency responsible for granting or issuing any certificate, 
permit, right-of-way, lease, or other authorization under 
section 9 of the Alaska Natural Gas Transportation Act of 1976 
(15 U.S.C. 719g) may add to, amend, or rescind any term or 
condition included in the certificate, permit, right-of-way, 
lease, or other authorization to meet current project 
requirements (including the physical design, facilities, and 
tariff specifications), if the addition, amendment, or 
rescission--
            (1) would not compel any change in the basic nature 
        and general route of the Alaska natural gas 
        transportation system as designated and described in 
        section 2 of the President's decision; or
            (2) would not otherwise prevent or impair in any 
        significant respect the expeditious construction and 
        initial operation of the Alaska natural gas 
        transportation system.
    (c) Updated Environmental Reviews.--The Secretary shall 
require the sponsor of the Alaska natural gas transportation 
system to submit such updated environmental data, reports, 
permits, and impact analyses as the Secretary determines are 
necessary to develop detailed terms, conditions, and compliance 
plans required by section 5 of the President's decision.

SEC. 381. SENSE OF CONGRESS CONCERNING USE OF STEEL MANUFACTURED IN 
                    NORTH AMERICA NEGOTIATION OF A PROJECT LABOR 
                    AGREEMENT.

    It is the sense of Congress that--
            (1) an Alaska natural gas transportation project 
        would provide significant economic benefits to the 
        United States and Canada; and
            (2) to maximize those benefits, the sponsors of the 
        Alaska natural gas transportation project should make 
        every effort to--
                    (A) use steel that is manufactured in North 
                America; and
                    (B) negotiate a project labor agreement to 
                expedite construction of the pipeline.

SEC. 382. SENSE OF CONGRESS AND STUDY CONCERNING PARTICIPATION BY SMALL 
                    BUSINESS CONCERNS.

    (a) Definition of Small Business Concern.--In this section, 
the term ``small business concern'' has the meaning given the 
term in section 3(a) of the Small Business Act (15 U.S.C. 
632(a)).
    (b) Sense of Congress.--It is the sense of Congress that--
            (1) an Alaska natural gas transportation project 
        would provide significant economic benefits to the 
        United States and Canada; and
            (2) to maximize those benefits, the sponsors of the 
        Alaska natural gas transportation project should 
        maximize the participation of small business concerns 
        in contracts and subcontracts awarded in carrying out 
        the project.
    (c) Study.--
            (1) In general.--The Comptroller General of the 
        United States shall conduct a study to determine the 
        extent to which small business concerns participate in 
        the construction of oil and gas pipelines in the United 
        States.
            (2) Report.--Not later than 1 year after the date 
        of enactment of this Act, the Comptroller General shall 
        submit to Congress a report that describes results of 
        the study under paragraph (1).
            (3) Updates.--The Comptroller General shall--
                    (A) update the study at least once every 5 
                years until construction of an Alaska natural 
                gas transportation project is completed; and
                    (B) on completion of each update, submit to 
                Congress a report containing the results of the 
                update.

SEC. 383. ALASKA PIPELINE CONSTRUCTION TRAINING PROGRAM.

    (a) Program.--
            (1) Establishment.--The Secretary of Labor (in this 
        section referred to as the ``Secretary'') shall make 
        grants to the Alaska Workforce Investment Board--
                    (A) to recruit and train adult and 
                dislocated workers in Alaska, including Alaska 
                Natives, in the skills required to construct 
                and operate an Alaska gas pipeline system; and
                    (B) for the design and construction of a 
                training facility to be located in Fairbanks, 
                Alaska, to support an Alaska gas pipeline 
                training program.
            (2) Coordination with existing programs.--The 
        training program established with the grants authorized 
        under paragraph (1) shall be consistent with the vision 
        and goals set forth in the State of Alaska Unified 
        Plan, as developed pursuant to the Workforce Investment 
        Act of 1998 (29 U.S.C. 2801 et seq.).
    (b) Requirements for Grants.--The Secretary shall make a 
grant under subsection (a) only if--
            (1) the Governor of the State of Alaska requests 
        the grant funds and certifies in writing to the 
        Secretary that there is a reasonable expectation that 
        the construction of the Alaska natural gas pipeline 
        system will commence by the date that is 2 years after 
        the date of the certification; and
            (2) the Secretary of Energy concurs in writing to 
        the Secretary with the certification made under 
        paragraph (1) after considering--
                    (A) the status of necessary Federal and 
                State permits;
                    (B) the availability of financing for the 
                Alaska natural gas pipeline project; and
                    (C) other relevant factors.
    (c) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary to carry out this section 
$20,000,000. Not more than 15 percent of the funds may be used 
for the facility described in subsection (a)(1)(B).

SEC. 384. SENSE OF CONGRESS CONCERNING NATURAL GAS DEMAND.

    It is the sense of Congress that--
            (1) North American demand for natural gas will 
        increase dramatically over the course of the next 
        several decades;
            (2) both the Alaska Natural Gas Pipeline and the 
        Mackenzie Delta Natural Gas project in Canada will be 
        necessary to help meet the increased demand for natural 
        gas in North America;
            (3) Federal and State officials should work 
        together with officials in Canada to ensure both 
        projects can move forward in a mutually beneficial 
        fashion;
            (4) Federal and State officials should acknowledge 
        that the smaller scope, fewer permitting requirements, 
        and lower cost of the Mackenzie Delta project means it 
        will most likely be completed before the Alaska Natural 
        Gas Pipeline;
            (5) natural gas production in the 48 contiguous 
        States and Canada will not be able to meet all domestic 
        demand in the coming decades; and
            (6) as a result, natural gas delivered from Alaskan 
        North Slope will not displace or reduce the commercial 
        viability of Canadian natural gas produced from the 
        Mackenzie Delta or production from the 48 contiguous 
        States.

SEC. 385. SENSE OF CONGRESS CONCERNING ALASKAN OWNERSHIP.

    It is the sense of Congress that--
            (1) Alaska Native Regional Corporations, companies 
        owned and operated by Alaskans, and individual Alaskans 
        should have the opportunity to own shares of the Alaska 
        natural gas pipeline in a way that promotes economic 
        development for the State; and
            (2) to facilitate economic development in the 
        State, all project sponsors should negotiate in good 
        faith with any willing Alaskan person that desires to 
        be involved in the project.

SEC. 386. LOAN GUARANTEES.

    (a) Authority.--(1) The Secretary may enter into agreements 
with 1 or more holders of a certificate of public convenience 
and necessity issued under section 373(b) of this Act or 
section 9 of the Alaska Natural Gas Transportation Act of 1976 
(15 U.S.C. 719g) to issue Federal guarantee instruments with 
respect to loans and other debt obligations for a qualified 
infrastructure project.
    (2) Subject to the requirements of this section, the 
Secretary may also enter into agreements with 1 or more owners 
of the Canadian portion of a qualified infrastructure project 
to issue Federal guarantee instruments with respect to loans 
and other debt obligations for a qualified infrastructure 
project as though such owner were a holder described in 
paragraph (1).
    (3) The authority of the Secretary to issue Federal 
guarantee instruments under this section for a qualified 
infrastructure project shall expire on the date that is 2 years 
after the date on which the final certificate of public 
convenience and necessity (including any Canadian certificates 
of public convenience and necessity) is issued for the project. 
A final certificate shall be considered to have been issued 
when all certificates of public convenience and necessity have 
been issued that are required for the initial transportation of 
commercially economic quantities of natural gas from Alaska to 
the continental United States.
    (b) Conditions.--(1) The Secretary may issue a Federal 
guarantee instrument for a qualified infrastructure project 
only after a certificate of public convenience and necessity 
under section 373(b) of this Act or an amended certificate 
under section 9 of the Alaska Natural Gas Transportation Act of 
1976 (15 U.S.C. 719g) has been issued for the project.
    (2) The Secretary may issue a Federal guarantee instrument 
under this section for a qualified infrastructure project only 
if the loan or other debt obligation guaranteed by the 
instrument has been issued by an eligible lender.
    (3) The Secretary shall not require as a condition of 
issuing a Federal guarantee instrument under this section any 
contractual commitment or other form of credit support of the 
sponsors (other than equity contribution commitments and 
completion guarantees), or any throughput or other guarantee 
from prospective shippers greater than such guarantees as shall 
be required by the project owners.
    (c) Limitations on Amounts.--(1) The amount of loans and 
other debt obligations guaranteed under this section for a 
qualified infrastructure project shall not exceed 80 percent of 
the total capital costs of the project, including interest 
during construction.
    (2) The principal amount of loans and other debt 
obligations guaranteed under this section shall not exceed, in 
the aggregate, $18,000,000,000, which amount shall be indexed 
for United States dollar inflation from the date of enactment 
of this Act, as measured by the Consumer Price Index.
    (d) Loan Terms and Fees.--(1) The Secretary may issue 
Federal guarantee instruments under this section that take into 
account repayment profiles and grace periods justified by 
project cash flows and project-specific considerations. The 
term of any loan guaranteed under this section shall not exceed 
30 years.
    (2) An eligible lender may assess and collect from the 
borrower such other fees and costs associated with the 
application and origination of the loan or other debt 
obligation as are reasonable and customary for a project 
finance transaction in the oil and gas sector.
    (e) Regulations.--The Secretary may issue regulations to 
carry out this section.
    (f) Authorization of Appropriations.--There are authorized 
to be appropriated such sums as may be necessary to cover the 
cost of loan guarantees under this section, as defined by 
section 502(5) of the Federal Credit Reform Act of 1990 (2 
U.S.C. 661a(5)). Such sums shall remain available until 
expended.
    (g) Definitions.--In this section, the following 
definitions apply:
            (1) The term ``Consumer Price Index'' means the 
        Consumer Price Index for all-urban consumers, United 
        States city average, as published by the Bureau of 
        Labor Statistics, or if such index shall cease to be 
        published, any successor index or reasonable substitute 
        thereof.
            (2) The term ``eligible lender'' means any non-
        Federal qualified institutional buyer (as defined by 
        section 230.144A(a) of title 17, Code of Federal 
        Regulations (or any successor regulation), known as 
        Rule 144A(a) of the Securities and Exchange Commission 
        and issued under the Securities Act of 1933), 
        including--
                    (A) a qualified retirement plan (as defined 
                in section 4974(c) of the Internal Revenue Code 
                of 1986 (26 U.S.C. 4974(c)) that is a qualified 
                institutional buyer; and
                    (B) a governmental plan (as defined in 
                section 414(d) of the Internal Revenue Code of 
                1986 (26 U.S.C. 414(d)) that is a qualified 
                institutional buyer.
            (3) The term ``Federal guarantee instrument'' means 
        any guarantee or other pledge by the Secretary to 
        pledge the full faith and credit of the United States 
        to pay all of the principal and interest on any loan or 
        other debt obligation entered into by a holder of a 
        certificate of public convenience and necessity.
            (4) The term ``qualified infrastructure project'' 
        means an Alaskan natural gas transportation project 
        consisting of the design, engineering, finance, 
        construction, and completion of pipelines and related 
        transportation and production systems (including gas 
        treatment plants), and appurtenances thereto, that are 
        used to transport natural gas from the Alaska North 
        Slope to the continental United States.

                             TITLE IV--COAL

                Subtitle A--Clean Coal Power Initiative

SEC. 401. AUTHORIZATION OF APPROPRIATIONS.

    (a) Clean Coal Power Initiative.--There are authorized to 
be appropriated to the Secretary of Energy (referred to in this 
title as the ``Secretary'') to carry out the activities 
authorized by this subtitle $200,000,000 for each of fiscal 
years 2004 through 2012, to remain available until expended.
    (b) Report.--The Secretary shall submit to Congress the 
report required by this subsection not later than March 31, 
2005. The report shall include, with respect to subsection (a), 
a 10-year plan containing--
            (1) a detailed assessment of whether the aggregate 
        funding levels provided under subsection (a) are the 
        appropriate funding levels for that program;
            (2) a detailed description of how proposals will be 
        solicited and evaluated, including a list of all 
        activities expected to be undertaken;
            (3) a detailed list of technical milestones for 
        each coal and related technology that will be pursued; 
        and
            (4) a detailed description of how the program will 
        avoid problems enumerated in General Accounting Office 
        reports on the Clean Coal Technology Program, including 
        problems that have resulted in unspent funds and 
        projects that failed either financially or 
        scientifically.

SEC. 402. PROJECT CRITERIA.

    (a) In General.--The Secretary shall not provide funding 
under this subtitle for any project that does not advance 
efficiency, environmental performance, and cost competitiveness 
well beyond the level of technologies that are in commercial 
service or have been demonstrated on a scale that the Secretary 
determines is sufficient to demonstrate that commercial service 
is viable as of the date of enactment of this Act.
    (b) Technical Criteria for Clean Coal Power Initiative.--
            (1) Gasification projects.--
                    (A) In general.--In allocating the funds 
                made available under section 401(a), the 
                Secretary shall ensure that at least 60 percent 
                of the funds are used only for projects on 
                coal-based gasification technologies, including 
                gasification combined cycle, gasification fuel 
                cells, gasification coproduction, and hybrid 
                gasification/combustion.
                    (B) Technical milestones.--The Secretary 
                shall periodically set technical milestones 
                specifying the emission and thermal efficiency 
                levels that coal gasification projects under 
                this subtitle shall be designed, and reasonably 
                expected, to achieve. The technical milestones 
                shall become more restrictive during the life 
                of the program. The Secretary shall set the 
                periodic milestones so as to achieve by 2020 
                coal gasification projects able--
                            (i) to remove 99 percent of sulfur 
                        dioxide;
                            (ii) to emit not more than .05 lbs 
                        of NOX per million Btu;
                            (iii) to achieve substantial 
                        reductions in mercury emissions; and
                            (iv) to achieve a thermal 
                        efficiency of--
                                    (I) 60 percent for coal of 
                                more than 9,000 Btu;
                                    (II) 59 percent for coal of 
                                7,000 to 9,000 Btu; and
                                    (III) 50 percent for coal 
                                of less than 7,000 Btu.
            (2) Other projects.--The Secretary shall 
        periodically set technical milestones and ensure that 
        up to 40 percent of the funds appropriated pursuant to 
        section 401(a) are used for projects not described in 
        paragraph (1). The milestones shall specify the 
        emission and thermal efficiency levels that projects 
        funded under this paragraph shall be designed to and 
        reasonably expected to achieve. The technical 
        milestones shall become more restrictive during the 
        life of the program. The Secretary shall set the 
        periodic milestones so as to achieve by 2010 projects 
        able--
                    (A) to remove 97 percent of sulfur dioxide;
                    (B) to emit no more than .08 lbs of 
                NOX per million Btu;
                    (C) to achieve substantial reductions in 
                mercury emissions; and
                    (D) to achieve a thermal efficiency of--
                            (i) 45 percent for coal of more 
                        than 9,000 Btu;
                            (ii) 44 percent for coal of 7,000 
                        to 9,000 Btu; and
                            (iii) 40 percent for coal of less 
                        than 7,000 Btu.
            (3) Consultation.--Before setting the technical 
        milestones under paragraphs (1)(B) and (2), the 
        Secretary shall consult with the Administrator of the 
        Environmental Protection Agency and interested 
        entities, including coal producers, industries using 
        coal, organizations to promote coal or advanced coal 
        technologies, environmental organizations, and 
        organizations representing workers.
            (4) Existing units.--In the case of projects at 
        units in existence on the date of enactment of this 
        Act, in lieu of the thermal efficiency requirements set 
        forth in paragraph (1)(B)(iv) and (2)(D), the 
        milestones shall be designed to achieve an overall 
        thermal design efficiency improvement, compared to the 
        efficiency of the unit as operated, of not less than--
                    (A) 7 percent for coal of more than 9,000 
                Btu;
                    (B) 6 percent for coal of 7,000 to 9,000 
                Btu; or
                    (C) 4 percent for coal of less than 7,000 
                Btu.
            (5) Permitted uses.--In carrying out this subtitle, 
        the Secretary may fund projects that include, as part 
        of the project, the separation and capture of carbon 
        dioxide.
    (c) Financial Criteria.--The Secretary shall not provide a 
funding award under this subtitle unless the recipient 
documents to the satisfaction of the Secretary that--
            (1) the award recipient is financially viable 
        without the receipt of additional Federal funding;
            (2) the recipient will provide sufficient 
        information to the Secretary to enable the Secretary to 
        ensure that the award funds are spent efficiently and 
        effectively; and
            (3) a market exists for the technology being 
        demonstrated or applied, as evidenced by statements of 
        interest in writing from potential purchasers of the 
        technology.
    (d) Financial Assistance.--The Secretary shall provide 
financial assistance to projects that meet the requirements of 
subsections (a), (b), and (c) and are likely to--
            (1) achieve overall cost reductions in the 
        utilization of coal to generate useful forms of energy;
            (2) improve the competitiveness of coal among 
        various forms of energy in order to maintain a 
        diversity of fuel choices in the United States to meet 
        electricity generation requirements; and
            (3) demonstrate methods and equipment that are 
        applicable to 25 percent of the electricity generating 
        facilities, using various types of coal, that use coal 
        as the primary feedstock as of the date of enactment of 
        this Act.
    (e) Federal Share.--The Federal share of the cost of a coal 
or related technology project funded by the Secretary under 
this subtitle shall not exceed 50 percent.
    (f) Applicability.--No technology, or level of emission 
reduction, shall be treated as adequately demonstrated for 
purposes of section 111 of the Clean Air Act (42 U.S.C. 7411), 
achievable for purposes of section 169 of that Act (42 U.S.C. 
7479), or achievable in practice for purposes of section 171 of 
that Act (42 U.S.C. 7501) solely by reason of the use of such 
technology, or the achievement of such emission reduction, by 1 
or more facilities receiving assistance under this subtitle.

SEC. 403. REPORT.

    Not later than 1 year after the date of enactment of this 
Act, and once every 2 years thereafter through 2012, the 
Secretary, in consultation with other appropriate Federal 
agencies, shall submit to Congress a report describing--
            (1) the technical milestones set forth in section 
        402 and how those milestones ensure progress toward 
        meeting the requirements of subsections (b)(1)(B) and 
        (b)(2) of section 402; and
            (2) the status of projects funded under this 
        subtitle.

SEC. 404. CLEAN COAL CENTERS OF EXCELLENCE.

    As part of the program authorized in section 401, the 
Secretary shall award competitive, merit-based grants to 
universities for the establishment of Centers of Excellence for 
Energy Systems of the Future. The Secretary shall provide 
grants to universities that show the greatest potential for 
advancing new clean coal technologies.

                    Subtitle B--Clean Power Projects

SEC. 411. COAL TECHNOLOGY LOAN.

    There are authorized to be appropriated to the Secretary 
$125,000,000 to provide a loan to the owner of the experimental 
plant constructed under United States Department of Energy 
cooperative agreement number DE-FC-22-91PC90544 on such terms 
and conditions as the Secretary determines, including interest 
rates and upfront payments.

SEC. 412. COAL GASIFICATION.

    The Secretary is authorized to provide loan guarantees for 
a project to produce energy from a plant using integrated 
gasification combined cycle technology of at least 400 
megawatts in capacity that produces power at competitive rates 
in deregulated energy generation markets and that does not 
receive any subsidy (direct or indirect) from ratepayers.

SEC. 413. INTEGRATED GASIFICATION COMBINED CYCLE TECHNOLOGY.

    The Secretary is authorized to provide loan guarantees for 
a project to produce energy from a plant using integrated 
gasification combined cycle technology located in a taconite-
producing region of the United States that is entitled under 
the law of the State in which the plant is located to enter 
into a long-term contract approved by a State Public Utility 
Commission to sell at least 450 megawatts of output to a 
utility.

SEC. 414. PETROLEUM COKE GASIFICATION.

    The Secretary is authorized to provide loan guarantees for 
at least 1 petroleum coke gasification polygeneration project.

SEC. 415. INTEGRATED COAL/RENEWABLE ENERGY SYSTEM.

    The Secretary is authorized, subject to the availability of 
appropriations, to provide loan guarantees for a project to 
produce energy from coal of less than 7,000 btu/lb using 
appropriate advanced integrated gasification combined cycle 
technology, including repowering of existing facilities, that 
is combined with wind and other renewable sources, minimizes 
and offers the potential to sequester carbon dioxide emissions, 
and provides a ready source of hydrogen for near-site fuel cell 
demonstrations. The facility may be built in stages, combined 
output shall be at least 200 megawatts at successively more 
competitive rates, and the facility shall be located in the 
Upper Great Plains. Section 402(b) technical criteria apply, 
and the Federal cost share shall not exceed 50 percent. The 
loan guarantees provided under this section do not preclude the 
facility from receiving an allocation for investment tax 
credits under section 48A of the Internal Revenue Code of 1986. 
Utilizing this investment tax credit does not prohibit the use 
of other Clean Coal Program funding.

SEC. 416. ELECTRON SCRUBBING DEMONSTRATION.

    The Secretary shall use $5,000,000 from amounts 
appropriated to initiate, through the Chicago Operations 
Office, a project to demonstrate the viability of high-energy 
electron scrubbing technology on commercial-scale electrical 
generation using high-sulfur coal.

                    Subtitle C--Federal Coal Leases

SEC. 421. REPEAL OF THE 160-ACRE LIMITATION FOR COAL LEASES.

    Section 3 of the Mineral Leasing Act (30 U.S.C. 203) is 
amended--
            (1) in the first sentence--
                    (A) by striking ``Any person'' and 
                inserting ``(a) Any person'';
                    (B) by inserting a comma after ``may''; and
                    (C) by striking ``upon'' and all that 
                follows through the period and inserting the 
                following: ``upon a finding by the Secretary 
                that the lease--
            ``(1) would be in the interest of the United 
        States;
            ``(2) would not displace a competitive interest in 
        the land; and
            ``(3) would not include land or deposits that can 
        be developed as part of another potential or existing 
        operation;
secure modifications of the original coal lease by including 
additional coal land or coal deposits contiguous or cornering 
to those embraced in the lease, but in no event shall the total 
area added by any modifications to an existing coal lease 
exceed 1,280 acres, or add acreage larger than the acreage in 
the original lease.'';
            (2) in the second sentence, by striking ``The 
        Secretary'' and inserting the following:
    ``(b) The Secretary''; and
            (3) in the third sentence, by striking ``The 
        minimum'' and inserting the following:
    ``(c) The minimum''.

SEC. 422. MINING PLANS.

    Section 2(d)(2) of the Mineral Leasing Act (30 U.S.C. 
202a(2)) is amended--
            (1) by inserting ``(A)'' after ``(2)''; and
            (2) by adding at the end the following:
    ``(B) The Secretary may establish a period of more than 40 
years if the Secretary determines that the longer period--
            ``(i) will ensure the maximum economic recovery of 
        a coal deposit; or
            ``(ii) the longer period is in the interest of the 
        orderly, efficient, or economic development of a coal 
        resource.''.

SEC. 423. PAYMENT OF ADVANCE ROYALTIES UNDER COAL LEASES.

    Section 7(b) of the Mineral Leasing Act (30 U.S.C. 207(b)) 
is amended to read as follows:
    ``(b)(1) Each lease shall be subjected to the condition of 
diligent development and continued operation of the mine or 
mines, except in a case in which operations under the lease are 
interrupted by strikes, the elements, or casualties not 
attributable to the lessee.
    ``(2)(A) The Secretary of the Interior may suspend the 
condition of continued operation upon the payment of advance 
royalties, if the Secretary determines that the public interest 
will be served by the suspension.
    ``(B) Advance royalties required under subparagraph (A) 
shall be computed based on--
            ``(i) the average price for coal sold in the spot 
        market from the same region during the last month of 
        each applicable continued operation year; or
            ``(ii) by using other methods established by the 
        Secretary of the Interior to capture the commercial 
        value of coal,
and based on commercial quantities, as defined by regulation by 
the Secretary of the Interior.
    ``(C) The aggregate number of years during the initial and 
any extended term of any lease for which advance royalties may 
be accepted in lieu of the condition of continued operation 
shall not exceed 20.
    ``(3) The amount of any production royalty paid for any 
year shall be reduced (but not below 0) by the amount of any 
advance royalties paid under the lease, to the extent that the 
advance royalties have not been used to reduce production 
royalties for a prior year.
    ``(4) The Secretary may, upon 6 months' notice to a lessee, 
cease to accept advance royalties in lieu of the requirement of 
continued operation.
    ``(5) Nothing in this subsection affects the requirement 
contained in the second sentence of subsection (a) relating to 
commencement of production at the end of 10 years.''.

SEC. 424. ELIMINATION OF DEADLINE FOR SUBMISSION OF COAL LEASE 
                    OPERATION AND RECLAMATION PLAN.

    Section 7(c) of the Mineral Leasing Act (30 U.S.C. 207(c)) 
is amended in the first sentence by striking ``and not later 
than three years after a lease is issued,''.

SEC. 425. AMENDMENT RELATING TO FINANCIAL ASSURANCES WITH RESPECT TO 
                    BONUS BIDS.

    Section 2(a) of the Mineral Leasing Act (30 U.S.C. 201(a)) 
is amended by adding at the end the following:
    ``(4)(A) The Secretary shall not require a surety bond or 
any other financial assurance to guarantee payment of deferred 
bonus bid installments with respect to any coal lease issued on 
a cash bonus bid to a lessee or successor in interest having a 
history of a timely payment of noncontested coal royalties and 
advanced coal royalties in lieu of production (where 
applicable) and bonus bid installment payments.
    ``(B) The Secretary may waive any requirement that a lessee 
provide a surety bond or other financial assurance for a coal 
lease issued before the date of the enactment of the Energy 
Policy Act of 2003 only if the Secretary determines that the 
lessee has a history of making timely payments referred to in 
subparagraph (A).
    ``(5) Notwithstanding any other provision of law, if the 
lessee under a coal lease fails to pay any installment of a 
deferred cash bonus bid within 10 days after the Secretary 
provides written notice that payment of the installment is past 
due--
            ``(A) the lease shall automatically terminate; and
            ``(B) any bonus payments already made to the United 
        States with respect to the lease shall not be returned 
        to the lessee or credited in any future lease sale.''.

SEC. 426. INVENTORY REQUIREMENT.

    (a) Review of Assessments.--
            (1) In general.--The Secretary of the Interior, in 
        consultation with the Secretary of Agriculture and the 
        Secretary, shall review coal assessments and other 
        available data to identify--
                    (A) public lands, other than National Park 
                lands, with coal resources;
                    (B) the extent and nature of any 
                restrictions or impediments to the development 
                of coal resources on public lands identified 
                under subparagraph (A); and
                    (C) with respect to areas of such lands for 
                which sufficient data exists, resources of 
                compliant coal and supercompliant coal.
            (2) Definitions.--In this subsection:
                    (A) Compliant coal.--The term ``compliant 
                coal'' means coal that contains not less than 
                1.0 and not more than 1.2 pounds of sulfur 
                dioxide per million Btu.
                    (B) Supercompliant coal.--The term 
                ``supercompliant coal'' means coal that 
                contains less than 1.0 pounds of sulfur dioxide 
                per million Btu.
    (b) Completion and Updating of the Inventory.--The 
Secretary of the Interior--
            (1) shall complete the inventory under subsection 
        (a)(1) by not later than 2 years after the date of the 
        enactment of this Act; and
            (2) shall update the inventory as the availability 
        of data and developments in technology warrant.
    (c) Report.--The Secretary of the Interior shall submit to 
Congress, and make publicly available--
            (1) a report containing the inventory under this 
        section by not later than 2 years after the effective 
        date of this section; and
            (2) each update of that inventory.

SEC. 427. APPLICATION OF AMENDMENTS.

    The amendments made by this subtitle apply--
            (1) with respect to any coal lease issued on or 
        after the date of enactment of this Act; and
            (2) with respect to any coal lease issued before 
        the date of enactment of this Act, upon the earlier 
        of--
                    (A) the date of readjustment of the lease 
                as provided for by section 7(a) of the Mineral 
                Leasing Act (30 U.S.C. 207(a)); or
                    (B) the date the lessee requests such 
                application.

                 Subtitle D--Coal and Related Programs

SEC. 441. CLEAN AIR COAL PROGRAM.

    (a) Amendment.--The Energy Policy Act of 1992 is amended by 
adding the following new title at the end thereof:

                  ``TITLE XXXI--CLEAN AIR COAL PROGRAM

``SEC. 3101. FINDINGS; PURPOSES; DEFINITIONS.

    ``(a) Findings.--The Congress finds that--
            ``(1) new environmental regulations present 
        additional challenges for coal-fired electrical 
        generation in the private marketplace; and
            ``(2) the Department of Energy, in cooperation with 
        industry, has already fully developed and 
        commercialized several new clean-coal technologies that 
        will allow the clean use of coal.
    ``(b) Purposes.--The purposes of this title are to--
            ``(1) promote national energy policy and energy 
        security, diversity, and economic competitiveness 
        benefits that result from the increased use of coal;
            ``(2) mitigate financial risks, reduce the cost, 
        and increase the marketplace acceptance of the new 
        clean coal technologies; and
            ``(3) advance the deployment of pollution control 
        equipment to meet the current and future obligations of 
        coal-fired generation units regulated under the Clean 
        Air Act (42 U.S.C. 7402 and following).

``SEC. 3102. AUTHORIZATION OF PROGRAM.

    ``The Secretary shall carry out a program to facilitate 
production and generation of coal-based power and the 
installation of pollution control equipment.

``SEC. 3103. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) Pollution Control Projects.--There are authorized to 
be appropriated to the Secretary $300,000,000 for fiscal year 
2005, $100,000,000 for fiscal year 2006, $40,000,000 for fiscal 
year 2007, $30,000,000 for fiscal year 2008, and $30,000,000 
for fiscal year 2009, to remain available until expended, for 
carrying out the program for pollution control projects, which 
may include--
            ``(1) pollution control equipment and processes for 
        the control of mercury air emissions;
            ``(2) pollution control equipment and processes for 
        the control of nitrogen dioxide air emissions or sulfur 
        dioxide emissions;
            ``(3) pollution control equipment and processes for 
        the mitigation or collection of more than one 
        pollutant;
            ``(4) advanced combustion technology for the 
        control of at least two pollutants, including mercury, 
        particulate matter, nitrogen oxides, and sulfur 
        dioxide, which may also be designed to improve the 
        energy efficiency of the unit; and
            ``(5) advanced pollution control equipment and 
        processes designed to allow use of the waste byproducts 
        or other byproducts of the equipment or an electrical 
        generation unit designed to allow the use of 
        byproducts.
Funds appropriated under this subsection which are not awarded 
before fiscal year 2011 may be applied to projects under 
subsection (b), in addition to amounts authorized under 
subsection (b).
    ``(b) Generation Projects.--There are authorized to be 
appropriated to the Secretary $150,000,000 for fiscal year 
2006, $250,000,000 for each of the fiscal years 2007 through 
2011, and $100,000,000 for fiscal year 2012, to remain 
available until expended, for generation projects and air 
pollution control projects. Such projects may include--
            ``(1) coal-based electrical generation equipment 
        and processes, including gasification combined cycle or 
        other coal-based generation equipment and processes;
            ``(2) associated environmental control equipment, 
        that will be cost-effective and that is designed to 
        meet anticipated regulatory requirements;
            ``(3) coal-based electrical generation equipment 
        and processes, including gasification fuel cells, 
        gasification coproduction, and hybrid gasification/
        combustion projects; and
            ``(4) advanced coal-based electrical generation 
        equipment and processes, including oxidation combustion 
        techniques, ultra-supercritical boilers, and chemical 
        looping, which the Secretary determines will be cost-
        effective and could substantially contribute to meeting 
        anticipated environmental or energy needs.
    ``(c) Limitation.--Funds placed at risk during any fiscal 
year for Federal loans or loan guarantees pursuant to this 
title may not exceed 30 percent of the total funds obligated 
under this title.

``SEC. 3104. AIR POLLUTION CONTROL PROJECT CRITERIA.

    ``The Secretary shall pursuant to authorizations contained 
in section 3103 provide funding for air pollution control 
projects designed to facilitate compliance with Federal and 
State environmental regulations, including any regulation that 
may be established with respect to mercury.

``SEC. 3105. CRITERIA FOR GENERATION PROJECTS.

    ``(a) Criteria.--The Secretary shall establish criteria on 
which selection of individual projects described in section 
3103(b) should be based. The Secretary may modify the criteria 
as appropriate to reflect improvements in equipment, except 
that the criteria shall not be modified to be less stringent. 
These selection criteria shall include--
            ``(1) prioritization of projects whose installation 
        is likely to result in significant air quality 
        improvements in nonattainment air quality areas;
            ``(2) prioritization of projects that result in the 
        repowering or replacement of older, less efficient 
        units;
            ``(3) documented broad interest in the procurement 
        of the equipment and utilization of the processes used 
        in the projects by electrical generator owners or 
        operators;
            ``(4) equipment and processes beginning in 2005 
        through 2010 that are projected to achieve an thermal 
        efficiency of--
                    ``(A) 40 percent for coal of more than 
                9,000 Btu per pound based on higher heating 
                values;
                    ``(B) 38 percent for coal of 7,000 to 9,000 
                Btu per pound based on higher heating values; 
                and
                    ``(C) 36 percent for coal of less than 
                7,000 Btu per pound based on higher heating 
                values,

        except that energy used for coproduction or 
        cogeneration shall not be counted in calculating the 
        thermal efficiency under this paragraph; and
            ``(5) equipment and processes beginning in 2011 and 
        2012 that are projected to achieve an thermal 
        efficiency of--
                    ``(A) 45 percent for coal of more than 
                9,000 Btu per pound based on higher heating 
                values;
                    ``(B) 44 percent for coal of 7,000 to 9,000 
                Btu per pound based on higher heating values; 
                and
                    ``(C) 40 percent for coal of less than 
                7,000 Btu per pound based on higher heating 
                values,

        except that energy used for coproduction or 
        cogeneration shall not be counted in calculating the 
        thermal efficiency under this paragraph.
    ``(b) Selection.--(1) In selecting the projects, up to 25 
percent of the projects selected may be either coproduction or 
cogeneration or other gasification projects, but at least 25 
percent of the projects shall be for the sole purpose of 
electrical generation, and priority should be given to 
equipment and projects less than 600 MW to foster and promote 
standard designs.
    ``(2) The Secretary shall give priority to projects that 
have been developed and demonstrated that are not yet cost 
competitive, and for coal energy generation projects that 
advance efficiency, environmental performance, or cost 
competitiveness significantly beyond the level of pollution 
control equipment that is in operation on a full scale.

``SEC. 3106. FINANCIAL CRITERIA.

    ``(a) In General.--The Secretary shall only provide 
financial assistance to projects that meet the requirements of 
sections 3103 and 3104 and are likely to--
            ``(1) achieve overall cost reductions in the 
        utilization of coal to generate useful forms of energy; 
        and
            ``(2) improve the competitiveness of coal in order 
        to maintain a diversity of domestic fuel choices in the 
        United States to meet electricity generation 
        requirements.
    ``(b) Conditions.--The Secretary shall not provide a 
funding award under this title unless--
            ``(1) the award recipient is financially viable 
        without the receipt of additional Federal funding; and
            ``(2) the recipient provides sufficient information 
        to the Secretary for the Secretary to ensure that the 
        award funds are spent efficiently and effectively.
    ``(c) Equal Access.--The Secretary shall, to the extent 
practical, utilize cooperative agreement, loan guarantee, and 
direct Federal loan mechanisms designed to ensure that all 
electrical generation owners have equal access to these 
technology deployment incentives. The Secretary shall develop 
and direct a competitive solicitation process for the selection 
of technologies and projects under this title.

``SEC. 3107. FEDERAL SHARE.

    ``The Federal share of the cost of a coal or related 
technology project funded by the Secretary under this title 
shall not exceed 50 percent. For purposes of this title, 
Federal funding includes only appropriated funds.

``SEC. 3108. APPLICABILITY.

    ``No technology, or level of emission reduction, shall be 
treated as adequately demonstrated for purposes of section 111 
of the Clean Air Act (42 U.S.C. 7411), achievable for purposes 
of section 169 of the Clean Air Act (42 U.S.C. 7479), or 
achievable in practice for purposes of section 171 of the Clean 
Air Act (42 U.S.C. 7501) solely by reason of the use of such 
technology, or the achievement of such emission reduction, by 
one or more facilities receiving assistance under this 
title.''.
    (b) Table of Contents Amendment.--The table of contents of 
the Energy Policy Act of 1992 is amended by adding at the end 
the following:

                  ``TITLE XXXI--CLEAN AIR COAL PROGRAM

``Sec. 3101. Findings; purposes; definitions.
``Sec. 3102. Authorization of program.
``Sec. 3103. Authorization of appropriations.
``Sec. 3104. Air pollution control project criteria.
``Sec. 3105. Criteria for generation projects.
``Sec. 3106. Financial criteria.
``Sec. 3107. Federal share.
``Sec. 3108. Applicability.''.

                         TITLE V--INDIAN ENERGY

SEC. 501. SHORT TITLE.

    This title may be cited as the ``Indian Tribal Energy 
Development and Self-Determination Act of 2003''.

SEC. 502. OFFICE OF INDIAN ENERGY POLICY AND PROGRAMS.

    (a) In General.--Title II of the Department of Energy 
Organization Act (42 U.S.C. 7131 et seq.) is amended by adding 
at the end the following:

             ``OFFICE OF INDIAN ENERGY POLICY AND PROGRAMS

    ``Sec. 217. (a) Establishment.--There is established within 
the Department an Office of Indian Energy Policy and Programs 
(referred to in this section as the `Office'). The Office shall 
be headed by a Director, who shall be appointed by the 
Secretary and compensated at a rate equal to that of level IV 
of the Executive Schedule under section 5315 of title 5, United 
States Code.
    ``(b) Duties of Director.--The Director, in accordance with 
Federal policies promoting Indian self-determination and the 
purposes of this Act, shall provide, direct, foster, 
coordinate, and implement energy planning, education, 
management, conservation, and delivery programs of the 
Department that--
            ``(1) promote Indian tribal energy development, 
        efficiency, and use;
            ``(2) reduce or stabilize energy costs;
            ``(3) enhance and strengthen Indian tribal energy 
        and economic infrastructure relating to natural 
        resource development and electrification; and
            ``(4) bring electrical power and service to Indian 
        land and the homes of tribal members located on Indian 
        lands or acquired, constructed, or improved (in whole 
        or in part) with Federal funds.''.
    (b) Conforming Amendments.--
            (1) The table of contents of the Department of 
        Energy Organization Act (42 U.S.C. prec. 7101) is 
        amended--
                    (A) in the item relating to section 209, by 
                striking ``Section'' and inserting ``Sec.''; 
                and
                    (B) by striking the items relating to 
                sections 213 through 216 and inserting the 
                following:

  ``Sec. 213. Establishment of policy for National Nuclear Security 
          Administration.
  ``Sec. 214. Establishment of security, counterintelligence, and 
          intelligence policies.
  ``Sec. 215. Office of Counterintelligence.
  ``Sec. 216. Office of Intelligence.
  ``Sec. 217. Office of Indian Energy Policy and Programs.''.

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

SEC. 503. INDIAN ENERGY.

    (a) In General.--Title XXVI of the Energy Policy Act of 
1992 (25 U.S.C. 3501 et seq.) is amended to read as follows:

                      ``TITLE XXVI--INDIAN ENERGY

``SEC. 2601. DEFINITIONS.

    ``For purposes of this title:
            ``(1) The term `Director' means the Director of the 
        Office of Indian Energy Policy and Programs, Department 
        of Energy.
            ``(2) The term `Indian land' means--
                    ``(A) any land located within the 
                boundaries of an Indian reservation, pueblo, or 
                rancheria;
                    ``(B) any land not located within the 
                boundaries of an Indian reservation, pueblo, or 
                rancheria, the title to which is held--
                            ``(i) in trust by the United States 
                        for the benefit of an Indian tribe or 
                        an individual Indian;
                            ``(ii) by an Indian tribe or an 
                        individual Indian, subject to 
                        restriction against alienation under 
                        laws of the United States; or
                            ``(iii) by a dependent Indian 
                        community; and
                    ``(C) land that is owned by an Indian tribe 
                and was conveyed by the United States to a 
                Native Corporation pursuant to the Alaska 
                Native Claims Settlement Act (43 U.S.C. 1601 et 
                seq.), or that was conveyed by the United 
                States to a Native Corporation in exchange for 
                such land.
            ``(3) The term `Indian reservation' includes--
                    ``(A) an Indian reservation in existence in 
                any State or States as of the date of enactment 
                of this paragraph;
                    ``(B) a public domain Indian allotment; and
                    ``(C) a dependent Indian community located 
                within the borders of the United States, 
                regardless of whether the community is 
                located--
                            ``(i) on original or acquired 
                        territory of the community; or
                            ``(ii) within or outside the 
                        boundaries of any particular State.
            ``(4) The term `Indian tribe' has the meaning given 
        the term in section 4 of the Indian Self-Determination 
        and Education Assistance Act (25 U.S.C. 450b), except 
        that the term `Indian tribe', for the purpose of 
        paragraph (11) and sections 2603(b)(3) and 2604, shall 
        not include any Native Corporation.
            ``(5) The term `integration of energy resources' 
        means any project or activity that promotes the 
        location and operation of a facility (including any 
        pipeline, gathering system, transportation system or 
        facility, or electric transmission or distribution 
        facility) on or near Indian land to process, refine, 
        generate electricity from, or otherwise develop energy 
        resources on, Indian land.
            ``(6) The term `Native Corporation' has the meaning 
        given the term in section 3 of the Alaska Native Claims 
        Settlement Act (43 U.S.C. 1602).
            ``(7) The term `organization' means a partnership, 
        joint venture, limited liability company, or other 
        unincorporated association or entity that is 
        established to develop Indian energy resources.
            ``(8) The term `Program' means the Indian energy 
        resource development program established under section 
        2602(a).
            ``(9) The term `Secretary' means the Secretary of 
        the Interior.
            ``(10) The term `tribal energy resource development 
        organization' means an organization of 2 or more 
        entities, at least 1 of which is an Indian tribe, that 
        has the written consent of the governing bodies of all 
        Indian tribes participating in the organization to 
        apply for a grant, loan, or other assistance authorized 
        by section 2602.
            ``(11) The term `tribal land' means any land or 
        interests in land owned by any Indian tribe, title to 
        which is held in trust by the United States or which is 
        subject to a restriction against alienation under laws 
        of the United States.

``SEC. 2602. INDIAN TRIBAL ENERGY RESOURCE DEVELOPMENT.

    ``(a) Department of the Interior Program.--
            ``(1) To assist Indian tribes in the development of 
        energy resources and further the goal of Indian self-
        determination, the Secretary shall establish and 
        implement an Indian energy resource development program 
        to assist consenting Indian tribes and tribal energy 
        resource development organizations in achieving the 
        purposes of this title.
            ``(2) In carrying out the Program, the Secretary 
        shall--
                    ``(A) provide development grants to Indian 
                tribes and tribal energy resource development 
                organizations for use in developing or 
                obtaining the managerial and technical capacity 
                needed to develop energy resources on Indian 
                land, and to properly account for resulting 
                energy production and revenues;
                    ``(B) provide grants to Indian tribes and 
                tribal energy resource development 
                organizations for use in carrying out projects 
                to promote the integration of energy resources, 
                and to process, use, or develop those energy 
                resources, on Indian land; and
                    ``(C) provide low-interest loans to Indian 
                tribes and tribal energy resource development 
                organizations for use in the promotion of 
                energy resource development on Indian land and 
                integration of energy resources.
            ``(3) There are authorized to be appropriated to 
        carry out this subsection such sums as are necessary 
        for each of fiscal years 2004 through 2014.
    ``(b) Department of Energy Indian Energy Education Planning 
and Management Assistance Program.--
            ``(1) The Director shall establish programs to 
        assist consenting Indian tribes in meeting energy 
        education, research and development, planning, and 
        management needs.
            ``(2) In carrying out this subsection, the Director 
        may provide grants, on a competitive basis, to an 
        Indian tribe or tribal energy resource development 
        organization for use in carrying out--
                    ``(A) energy, energy efficiency, and energy 
                conservation programs;
                    ``(B) studies and other activities 
                supporting tribal acquisitions of energy 
                supplies, services, and facilities;
                    ``(C) planning, construction, development, 
                operation, maintenance, and improvement of 
                tribal electrical generation, transmission, and 
                distribution facilities located on Indian land; 
                and
                    ``(D) development, construction, and 
                interconnection of electric power transmission 
                facilities located on Indian land with other 
                electric transmission facilities.
            ``(3)(A) The Director may develop, in consultation 
        with Indian tribes, a formula for providing grants 
        under this subsection.
            ``(B) In providing a grant under this subsection, 
        the Director shall give priority to an application 
        received from an Indian tribe with inadequate electric 
        service (as determined by the Director).
            ``(4) The Secretary of Energy may issue such 
        regulations as necessary to carry out this subsection.
            ``(5) There are authorized to be appropriated to 
        carry out this subsection $20,000,000 for each of 
        fiscal years 2004 through 2014.
    ``(c) Department of Energy Loan Guarantee Program.--
            ``(1) Subject to paragraph (3), the Secretary of 
        Energy may provide loan guarantees (as defined in 
        section 502 of the Federal Credit Reform Act of 1990 (2 
        U.S.C. 661a)) for not more than 90 percent of the 
        unpaid principal and interest due on any loan made to 
        any Indian tribe for energy development.
            ``(2) A loan guarantee under this subsection shall 
        be made by--
                    ``(A) a financial institution subject to 
                examination by the Secretary of Energy; or
                    ``(B) an Indian tribe, from funds of the 
                Indian tribe.
            ``(3) The aggregate outstanding amount guaranteed 
        by the Secretary of Energy at any time under this 
        subsection shall not exceed $2,000,000,000.
            ``(4) The Secretary of Energy may issue such 
        regulations as the Secretary of Energy determines are 
        necessary to carry out this subsection.
            ``(5) There are authorized to be appropriated such 
        sums as are necessary to carry out this subsection, to 
        remain available until expended.
            ``(6) Not later than 1 year from the date of 
        enactment of this section, the Secretary of Energy 
        shall report to Congress on the financing requirements 
        of Indian tribes for energy development on Indian land.
    ``(d) Federal Agencies-Indian Energy Preference.--
            ``(1) In purchasing electricity or any other energy 
        product or byproduct, a Federal agency or department 
        may give preference to an energy and resource 
        production enterprise, partnership, consortium, 
        corporation, or other type of business organization the 
        majority of the interest in which is owned and 
        controlled by 1 or more Indian tribes.
            ``(2) In carrying out this subsection, a Federal 
        agency or department shall not--
                    ``(A) pay more than the prevailing market 
                price for an energy product or byproduct; or
                    ``(B) obtain less than prevailing market 
                terms and conditions.

``SEC. 2603. INDIAN TRIBAL ENERGY RESOURCE REGULATION.

    ``(a) Grants.--The Secretary may provide to Indian tribes, 
on an annual basis, grants for use in accordance with 
subsection (b).
    ``(b) Use of Funds.--Funds from a grant provided under this 
section may be used--
            ``(1) by an Indian tribe for the development of a 
        tribal energy resource inventory or tribal energy 
        resource on Indian land;
            ``(2) by an Indian tribe for the development of a 
        feasibility study or other report necessary to the 
        development of energy resources on Indian land;
            ``(3) by an Indian tribe (other than an Indian 
        Tribe in Alaska except the Metlakatla Indian Community) 
        for the development and enforcement of tribal laws 
        (including regulations) relating to tribal energy 
        resource development and the development of technical 
        infrastructure to protect the environment under 
        applicable law; or
            ``(4) by a Native Corporation for the development 
        and implementation of corporate policies and the 
        development of technical infrastructure to protect the 
        environment under applicable law; and
            ``(5) by an Indian tribe for the training of 
        employees that--
                    ``(A) are engaged in the development of 
                energy resources on Indian land; or
                    ``(B) are responsible for protecting the 
                environment.
    ``(c) Other Assistance.--In carrying out the obligations of 
the United States under this title, the Secretary shall ensure, 
to the maximum extent practicable and to the extent of 
available resources, that upon the request of an Indian tribe, 
the Indian tribe shall have available scientific and technical 
information and expertise, for use in the Indian tribe's 
regulation, development, and management of energy resources on 
Indian land. The Secretary may fulfill this responsibility 
either directly, through the use of Federal officials, or 
indirectly, by providing financial assistance to the Indian 
tribe to secure independent assistance.

``SEC. 2604. LEASES, BUSINESS AGREEMENTS, AND RIGHTS-OF-WAY INVOLVING 
                    ENERGY DEVELOPMENT OR TRANSMISSION.

    ``(a) Leases and Business Agreements.--Subject to the 
provisions of this section--
            ``(1) an Indian tribe may, at its discretion, enter 
        into a lease or business agreement for the purpose of 
        energy resource development on tribal land, including a 
        lease or business agreement for--
                    ``(A) exploration for, extraction of, 
                processing of, or other development of the 
                Indian tribe's energy mineral resources located 
                on tribal land; and
                    ``(B) construction or operation of an 
                electric generation, transmission, or 
                distribution facility located on tribal land or 
                a facility to process or refine energy 
                resources developed on tribal land; and
            ``(2) such lease or business agreement described in 
        paragraph (1) shall not require the approval of the 
        Secretary under section 2103 of the Revised Statutes 
        (25 U.S.C. 81) or any other provision of law, if--
                    ``(A) the lease or business agreement is 
                executed pursuant to a tribal energy resource 
                agreement approved by the Secretary under 
                subsection (e);
                    ``(B) the term of the lease or business 
                agreement does not exceed--
                            ``(i) 30 years; or
                            ``(ii) in the case of a lease for 
                        the production of oil resources, gas 
                        resources, or both, 10 years and as 
                        long thereafter as oil or gas is 
                        produced in paying quantities; and
                    ``(C) the Indian tribe has entered into a 
                tribal energy resource agreement with the 
                Secretary, as described in subsection (e), 
                relating to the development of energy resources 
                on tribal land (including the periodic review 
                and evaluation of the activities of the Indian 
                tribe under the agreement, to be conducted 
                pursuant to the provisions required by 
                subsection (e)(2)(D)(i)).
    ``(b) Rights-of-Way for Pipelines or Electric Transmission 
or Distribution Lines.--An Indian tribe may grant a right-of-
way over tribal land for a pipeline or an electric transmission 
or distribution line without approval by the Secretary if--
            ``(1) the right-of-way is executed in accordance 
        with a tribal energy resource agreement approved by the 
        Secretary under subsection (e);
            ``(2) the term of the right-of-way does not exceed 
        30 years;
            ``(3) the pipeline or electric transmission or 
        distribution line serves--
                    ``(A) an electric generation, transmission, 
                or distribution facility located on tribal 
                land; or
                    ``(B) a facility located on tribal land 
                that processes or refines energy resources 
                developed on tribal land; and
            ``(4) the Indian tribe has entered into a tribal 
        energy resource agreement with the Secretary, as 
        described in subsection (e), relating to the 
        development of energy resources on tribal land 
        (including the periodic review and evaluation of the 
        Indian tribe's activities under such agreement 
        described in subparagraphs (D) and (E) of subsection 
        (e)(2)).
    ``(c) Renewals.--A lease or business agreement entered into 
or a right-of-way granted by an Indian tribe under this section 
may be renewed at the discretion of the Indian tribe in 
accordance with this section.
    ``(d) Validity.--No lease, business agreement, or right-of-
way relating to the development of tribal energy resources 
pursuant to the provisions of this section shall be valid 
unless the lease, business agreement, or right-of-way is 
authorized by the provisions of a tribal energy resource 
agreement approved by the Secretary under subsection (e)(2).
    ``(e) Tribal Energy Resource Agreements.--
            ``(1) On issuance of regulations under paragraph 
        (8), an Indian tribe may submit to the Secretary for 
        approval a tribal energy resource agreement governing 
        leases, business agreements, and rights-of-way under 
        this section.
            ``(2)(A) Not later than 180 days after the date on 
        which the Secretary receives a tribal energy resource 
        agreement submitted by an Indian tribe under paragraph 
        (1), or not later than 60 days after the Secretary 
        receives a revised tribal energy resource agreement 
        submitted by an Indian tribe under paragraph (4)(C), 
        (or such later date as may be agreed to by the 
        Secretary and the Indian tribe), the Secretary shall 
        approve or disapprove the tribal energy resource 
        agreement.
            ``(B) The Secretary shall approve a tribal energy 
        resource agreement submitted under paragraph (1) if--
                    ``(i) the Secretary determines that the 
                Indian tribe has demonstrated that the Indian 
                tribe has sufficient capacity to regulate the 
                development of energy resources of the Indian 
                tribe;
                    ``(ii) the tribal energy resource agreement 
                includes provisions required under subparagraph 
                (D); and
                    ``(iii) the tribal energy resource 
                agreement includes provisions that, with 
                respect to a lease, business agreement, or 
                right-of-way under this section--
                            ``(I) ensure the acquisition of 
                        necessary information from the 
                        applicant for the lease, business 
                        agreement, or right-of-way;
                            ``(II) address the term of the 
                        lease or business agreement or the term 
                        of conveyance of the right-of-way;
                            ``(III) address amendments and 
                        renewals;
                            ``(IV) address the economic return 
                        to the Indian tribe under leases, 
                        business agreements, and rights-of-way;
                            ``(V) address technical or other 
                        relevant requirements;
                            ``(VI) establish requirements for 
                        environmental review in accordance with 
                        subparagraph (C);
                            ``(VII) ensure compliance with all 
                        applicable environmental laws;
                            ``(VIII) identify final approval 
                        authority;
                            ``(IX) provide for public 
                        notification of final approvals;
                            ``(X) establish a process for 
                        consultation with any affected States 
                        concerning off-reservation impacts, if 
                        any, identified pursuant to the 
                        provisions required under subparagraph 
                        (C)(i);
                            ``(XI) describe the remedies for 
                        breach of the lease, business 
                        agreement, or right-of-way;
                            ``(XII) require each lease, 
                        business agreement, and right-of-way to 
                        include a statement that, in the event 
                        that any of its provisions violates an 
                        express term or requirement set forth 
                        in the tribal energy resource agreement 
                        pursuant to which it was executed--
                                    ``(aa) such provision shall 
                                be null and void; and
                                    ``(bb) if the Secretary 
                                determines such provision to be 
                                material, the Secretary shall 
                                have the authority to suspend 
                                or rescind the lease, business 
                                agreement, or right-of-way or 
                                take other appropriate action 
                                that the Secretary determines 
                                to be in the best interest of 
                                the Indian tribe;
                            ``(XIII) require each lease, 
                        business agreement, and right-of-way to 
                        provide that it will become effective 
                        on the date on which a copy of the 
                        executed lease, business agreement, or 
                        right-of-way is delivered to the 
                        Secretary in accordance with 
                        regulations adopted pursuant to this 
                        subsection; and
                            ``(XIV) include citations to tribal 
                        laws, regulations, or procedures, if 
                        any, that set out tribal remedies that 
                        must be exhausted before a petition may 
                        be submitted to the Secretary pursuant 
                        to paragraph (7)(B).
            ``(C) Tribal energy resource agreements submitted 
        under paragraph (1) shall establish, and include 
        provisions to ensure compliance with, an environmental 
        review process that, with respect to a lease, business 
        agreement, or right-of-way under this section, provides 
        for--
                    ``(i) the identification and evaluation of 
                all significant environmental impacts (as 
                compared with a no-action alternative), 
                including effects on cultural resources;
                    ``(ii) the identification of proposed 
                mitigation;
                    ``(iii) a process for ensuring that the 
                public is informed of and has an opportunity to 
                comment on the environmental impacts of the 
                proposed action before tribal approval of the 
                lease, business agreement, or right-of-way; and
                    ``(iv) sufficient administrative support 
                and technical capability to carry out the 
                environmental review process.
            ``(D) A tribal energy resource agreement negotiated 
        between the Secretary and an Indian tribe in accordance 
        with this subsection shall include--
                    ``(i) provisions requiring the Secretary to 
                conduct a periodic review and evaluation to 
                monitor the performance of the Indian tribe's 
                activities associated with the development of 
                energy resources under the tribal energy 
                resource agreement; and
                    ``(ii) when such review and evaluation 
                result in a finding by the Secretary of 
                imminent jeopardy to a physical trust asset 
                arising from a violation of the tribal energy 
                resource agreement or applicable Federal laws, 
                provisions authorizing the Secretary to take 
                appropriate actions determined by the Secretary 
                to be necessary to protect such asset, which 
                actions may include reassumption of 
                responsibility for activities associated with 
                the development of energy resources on tribal 
                land until the violation and conditions that 
                gave rise to such jeopardy have been corrected.
            ``(E) The periodic review and evaluation described 
        in subparagraph (D) shall be conducted on an annual 
        basis, except that, after the third such annual review 
        and evaluation, the Secretary and the Indian tribe may 
        mutually agree to amend the tribal energy resource 
        agreement to authorize the review and evaluation 
        required by subparagraph (D) to be conducted once every 
        2 years.
            ``(3) The Secretary shall provide notice and 
        opportunity for public comment on tribal energy 
        resource agreements submitted for approval under 
        paragraph (1). The Secretary's review of a tribal 
        energy resource agreement under the National 
        Environmental Policy Act of 1969 (42 U.S.C. 4321 et 
        seq.) shall be limited to the direct effects of that 
        approval.
            ``(4) If the Secretary disapproves a tribal energy 
        resource agreement submitted by an Indian tribe under 
        paragraph (1), the Secretary shall, not later than 10 
        days after the date of disapproval--
                    ``(A) notify the Indian tribe in writing of 
                the basis for the disapproval;
                    ``(B) identify what changes or other 
                actions are required to address the concerns of 
                the Secretary; and
                    ``(C) provide the Indian tribe with an 
                opportunity to revise and resubmit the tribal 
                energy resource agreement.
            ``(5) If an Indian tribe executes a lease or 
        business agreement or grants a right-of-way in 
        accordance with a tribal energy resource agreement 
        approved under this subsection, the Indian tribe shall, 
        in accordance with the process and requirements set 
        forth in the Secretary's regulations adopted pursuant 
        to paragraph (8), provide to the Secretary--
                    ``(A) a copy of the lease, business 
                agreement, or right-of-way document (including 
                all amendments to and renewals of the 
                document); and
                    ``(B) in the case of a tribal energy 
                resource agreement or a lease, business 
                agreement, or right-of-way that permits 
                payments to be made directly to the Indian 
                tribe, information and documentation of those 
                payments sufficient to enable the Secretary to 
                discharge the trust responsibility of the 
                United States to enforce the terms of, and 
                protect the Indian tribe's rights under, the 
                lease, business agreement, or right-of-way.
            ``(6)(A) For purposes of the activities to be 
        undertaken by the Secretary pursuant to this section, 
        the Secretary shall--
                    ``(i) carry out such activities in a manner 
                consistent with the trust responsibility of the 
                United States relating to mineral and other 
                trust resources; and
                    ``(ii) act in good faith and in the best 
                interests of the Indian tribes.
            ``(B) Subject to the provisions of subsections 
        (a)(2), (b), and (c) waiving the requirement of 
        Secretarial approval of leases, business agreements, 
        and rights-of-way executed pursuant to tribal energy 
        resource agreements approved under this section, and 
        the provisions of subparagraph (D), nothing in this 
        section shall absolve the United States from any 
        responsibility to Indians or Indian tribes, including, 
        but not limited to, those which derive from the trust 
        relationship or from any treaties, statutes, and other 
        laws of the United States, Executive Orders, or 
        agreements between the United States and any Indian 
        tribe.
            ``(C) The Secretary shall continue to have a trust 
        obligation to ensure that the rights and interests of 
        an Indian tribe are protected in the event that--
                    ``(i) any other party to any such lease, 
                business agreement, or right-of-way violates 
                any applicable provision of Federal law or the 
                terms of any lease, business agreement, or 
                right-of-way under this section; or
                    ``(ii) any provision in such lease, 
                business agreement, or right-of-way violates 
                any express provision or requirement set forth 
                in the tribal energy resource agreement 
                pursuant to which the lease, business 
                agreement, or right-of-way was executed.
            ``(D) Notwithstanding subparagraph (B), the United 
        States shall not be liable to any party (including any 
        Indian tribe) for any of the negotiated terms of, or 
        any losses resulting from the negotiated terms of, a 
        lease, business agreement, or right-of-way executed 
        pursuant to and in accordance with a tribal energy 
        resource agreement approved by the Secretary under 
        paragraph (2). For the purpose of this subparagraph, 
        the term `negotiated terms' means any terms or 
        provisions that are negotiated by an Indian tribe and 
        any other party or parties to a lease, business 
        agreement, or right-of-way entered into pursuant to an 
        approved tribal energy resource agreement.
            ``(7)(A) In this paragraph, the term `interested 
        party' means any person or entity the interests of 
        which have sustained or will sustain a significant 
        adverse environmental impact as a result of the failure 
        of an Indian tribe to comply with a tribal energy 
        resource agreement of the Indian tribe approved by the 
        Secretary under paragraph (2).
            ``(B) After exhaustion of tribal remedies, and in 
        accordance with the process and requirements set forth 
        in regulations adopted by the Secretary pursuant to 
        paragraph (8), an interested party may submit to the 
        Secretary a petition to review compliance of an Indian 
        tribe with a tribal energy resource agreement of the 
        Indian tribe approved by the Secretary under paragraph 
        (2).
            ``(C)(i) Not later than 120 days after the date on 
        which the Secretary receives a petition under 
        subparagraph (B), the Secretary shall determine whether 
        the Indian tribe is not in compliance with the tribal 
        energy resource agreement, as alleged in the petition.
            ``(ii) The Secretary may adopt procedures under 
        paragraph (8) authorizing an extension of time, not to 
        exceed 120 days, for making the determination under 
        clause (i) in any case in which the Secretary 
        determines that additional time is necessary to 
        evaluate the allegations of the petition.
            ``(iii) Subject to subparagraph (D), if the 
        Secretary determines that the Indian tribe is not in 
        compliance with the tribal energy resource agreement as 
        alleged in the petition, the Secretary shall take such 
        action as is necessary to ensure compliance with the 
        provisions of the tribal energy resource agreement, 
        which action may include--
                    ``(I) temporarily suspending some or all 
                activities under a lease, business agreement, 
                or right-of-way under this section until the 
                Indian tribe or such activities are in 
                compliance with the provisions of the approved 
                tribal energy resource agreement; or
                    ``(II) rescinding approval of all or part 
                of the tribal energy resource agreement, and if 
                all of such agreement is rescinded, reassuming 
                the responsibility for approval of any future 
                leases, business agreements, or rights-of-way 
                described in subsections (a) and (b).
            ``(D) Prior to seeking to ensure compliance with 
        the provisions of the tribal energy resource agreement 
        of an Indian tribe under subparagraph (C)(iii), the 
        Secretary shall--
                    ``(i) make a written determination that 
                describes the manner in which the tribal energy 
                resource agreement has been violated;
                    ``(ii) provide the Indian tribe with a 
                written notice of the violations together with 
                the written determination; and
                    ``(iii) before taking any action described 
                in subparagraph (C)(iii) or seeking any other 
                remedy, provide the Indian tribe with a hearing 
                and a reasonable opportunity to attain 
                compliance with the tribal energy resource 
                agreement.
            ``(E) An Indian tribe described in subparagraph (D) 
        shall retain all rights to appeal as provided in 
        regulations issued by the Secretary.
            ``(8) Not later than 1 year after the date of 
        enactment of the Indian Tribal Energy Development and 
        Self-Determination Act of 2003, the Secretary shall 
        issue regulations that implement the provisions of this 
        subsection, including--
                    ``(A) criteria to be used in determining 
                the capacity of an Indian tribe described in 
                paragraph (2)(B)(i), including the experience 
                of the Indian tribe in managing natural 
                resources and financial and administrative 
                resources available for use by the Indian tribe 
                in implementing the approved tribal energy 
                resource agreement of the Indian tribe;
                    ``(B) a process and requirements in 
                accordance with which an Indian tribe may--
                            ``(i) voluntarily rescind a tribal 
                        energy resource agreement approved by 
                        the Secretary under this subsection; 
                        and
                            ``(ii) return to the Secretary the 
                        responsibility to approve any future 
                        leases, business agreements, and 
                        rights-of-way described in this 
                        subsection;
                    ``(C) provisions setting forth the scope 
                of, and procedures for, the periodic review and 
                evaluation described in subparagraphs (D) and 
                (E) of paragraph (2), including provisions for 
                review of transactions, reports, site 
                inspections, and any other review activities 
                the Secretary determines to be appropriate; and
                    ``(D) provisions defining final agency 
                actions after exhaustion of administrative 
                appeals from determinations of the Secretary 
                under paragraph (7).
    ``(f) No Effect on Other Law.--Nothing in this section 
affects the application of--
            ``(1) any Federal environment law;
            ``(2) the Surface Mining Control and Reclamation 
        Act of 1977 (30 U.S.C. 1201 et seq.); or
            ``(3) except as otherwise provided in this title, 
        the Indian Mineral Development Act of 1982 (25 U.S.C. 
        2101 et seq.) and the National Environmental Policy Act 
        of 1969 (42 U.S.C. 4321 et seq.).
    ``(g) Authorization of Appropriations.--There are 
authorized to be appropriated to the Secretary such sums as are 
necessary for each of fiscal years 2004 through 2014 to 
implement the provisions of this section and to make grants or 
provide other appropriate assistance to Indian tribes to assist 
the Indian tribes in developing and implementing tribal energy 
resource agreements in accordance with the provisions of this 
section.

``SEC. 2605. INDIAN MINERAL DEVELOPMENT REVIEW.

    ``(a) In General.--The Secretary shall conduct a review of 
all activities being conducted under the Indian Mineral 
Development Act of 1982 (25 U.S.C. 2101 et seq.) as of that 
date.
    ``(b) Report.--Not later than 1 year after the date of 
enactment of the Indian Tribal Energy Development and Self-
Determination Act of 2003, the Secretary shall submit to 
Congress a report that includes--
            ``(1) the results of the review;
            ``(2) recommendations to ensure that Indian tribes 
        have the opportunity to develop Indian energy 
        resources; and
            ``(3) an analysis of the barriers to the 
        development of energy resources on Indian land 
        (including legal, fiscal, market, and other barriers), 
        along with recommendations for the removal of those 
        barriers.

``SEC. 2606. FEDERAL POWER MARKETING ADMINISTRATIONS.

    ``(a) Definitions.--In this section:
            ``(1) The term ``Administrator'' means the 
        Administrator of the Bonneville Power Administration 
        and the Administrator of the Western Area Power 
        Administration.
            ``(2) The term ``power marketing administration'' 
        means--
                    ``(A) the Bonneville Power Administration;
                    ``(B) the Western Area Power 
                Administration; and
                    ``(C) any other power administration the 
                power allocation of which is used by or for the 
                benefit of an Indian tribe located in the 
                service area of the administration.
    ``(b) Encouragement of Indian Tribal Energy Development.--
Each Administrator shall encourage Indian tribal energy 
development by taking such actions as are appropriate, 
including administration of programs of the Bonneville Power 
Administration and the Western Area Power Administration, in 
accordance with this section.
    ``(c) Action by the Administrator.--In carrying out this 
section, and in accordance with existing law--
            ``(1) each Administrator shall consider the unique 
        relationship that exists between the United States and 
        Indian tribes;
            ``(2) power allocations from the Western Area Power 
        Administration to Indian tribes may be used to meet 
        firming and reserve needs of Indian-owned energy 
        projects on Indian land;
            ``(3) the Administrator of the Western Area Power 
        Administration may purchase non-federally generated 
        power from Indian tribes to meet the firming and 
        reserve requirements of the Western Area Power 
        Administration; and
            ``(4) each Administrator shall not pay more than 
        the prevailing market price for an energy product nor 
        obtain less than prevailing market terms and 
        conditions.
    ``(d) Assistance for Transmission System Use.--(1) An 
Administrator may provide technical assistance to Indian tribes 
seeking to use the high-voltage transmission system for 
delivery of electric power.
    ``(2) The costs of technical assistance provided under 
paragraph (1) shall be funded by the Secretary of Energy using 
nonreimbursable funds appropriated for that purpose, or by the 
applicable Indian tribes.
    ``(e) Power Allocation Study.--Not later than 2 years after 
the date of enactment of the Indian Tribal Energy Development 
and Self-Determination Act of 2003, the Secretary of Energy 
shall submit to Congress a report that--
            ``(1) describes the use by Indian tribes of Federal 
        power allocations of the Western Area Power 
        Administration (or power sold by the Southwestern Power 
        Administration) and the Bonneville Power Administration 
        to or for the benefit of Indian tribes in service areas 
        of those administrations; and
            ``(2) identifies--
                    ``(A) the quantity of power allocated to, 
                or used for the benefit of, Indian tribes by 
                the Western Area Power Administration;
                    ``(B) the quantity of power sold to Indian 
                tribes by other power marketing 
                administrations; and
                    ``(C) barriers that impede tribal access to 
                and use of Federal power, including an 
                assessment of opportunities to remove those 
                barriers and improve the ability of power 
                marketing administrations to deliver Federal 
                power.
    ``(f) Authorization of Appropriations.--There are 
authorized to be appropriated to carry out this section 
$750,000, which shall remain available until expended and shall 
not be reimbursable.

``SEC. 2607. WIND AND HYDROPOWER FEASIBILITY STUDY.

    ``(a) Study.--The Secretary of Energy, in coordination with 
the Secretary of the Army and the Secretary, shall conduct a 
study of the cost and feasibility of developing a demonstration 
project that would use wind energy generated by Indian tribes 
and hydropower generated by the Army Corps of Engineers on the 
Missouri River to supply firming power to the Western Area 
Power Administration.
    ``(b) Scope of Study.--The study shall--
            ``(1) determine the feasibility of the blending of 
        wind energy and hydropower generated from the Missouri 
        River dams operated by the Army Corps of Engineers;
            ``(2) review historical and projected requirements 
        for firming power and the patterns of availability and 
        use of firming power;
            ``(3) assess the wind energy resource potential on 
        tribal land and projected cost savings through a blend 
        of wind and hydropower over a 30-year period;
            ``(4) determine seasonal capacity needs and 
        associated transmission upgrades for integration of 
        tribal wind generation; and
            ``(5) include an independent tribal engineer as a 
        study team member.
    ``(c) Report.--Not later than 1 year after the date of 
enactment of the Energy Policy Act of 2003, the Secretary and 
Secretary of the Army shall submit to Congress a report that 
describes the results of the study, including--
            ``(1) an analysis of the potential energy cost or 
        benefits to the customers of the Western Area Power 
        Administration through the use of combined wind and 
        hydropower;
            ``(2) an evaluation of whether a combined wind and 
        hydropower system can reduce reservoir fluctuation, 
        enhance efficient and reliable energy production, and 
        provide Missouri River management flexibility;
            ``(3) recommendations for a demonstration project 
        that could be carried out by the Western Area Power 
        Administration in partnership with an Indian tribal 
        government or tribal energy resource development 
        organization to demonstrate the feasibility and 
        potential of using wind energy produced on Indian land 
        to supply firming energy to the Western Area Power 
        Administration or any other Federal power marketing 
        agency; and
            ``(4) an identification of--
                    ``(A) the economic and environmental costs 
                or benefits to be realized through such a 
                Federal-tribal partnership; and
                    ``(B) the manner in which such a 
                partnership could contribute to the energy 
                security of the United States.
    ``(d) Funding.--
            ``(1) Authorization of appropriations.--There are 
        authorized to be appropriated to carry out this section 
        $500,000, to remain available until expended.
    ``(2) Nonreimbursability.--Costs incurred by the Secretary 
in carrying out this section shall be nonreimbursable.''.
    (b) Conforming Amendments.--The table of contents for the 
Energy Policy Act of 1992 is amended by striking the items 
relating to title XXVI and inserting the following:

  ``Sec. 2601. Definitions.
  ``Sec. 2602. Indian tribal energy resource development.
  ``Sec. 2603. Indian tribal energy resource regulation.
  ``Sec. 2604. Leases, business agreements, and rights-of-way involving 
          energy development or transmission.
  ``Sec. 2605. Indian mineral development review.
  ``Sec. 2606. Federal Power Marketing Administrations.
  ``Sec. 2607. Wind and hydropower feasibility study.''.

SEC. 504. FOUR CORNERS TRANSMISSION LINE PROJECT.

    The Dine Power Authority, an enterprise of the Navajo 
Nation, shall be eligible to receive grants and other 
assistance as authorized by section 217 of the Department of 
Energy Organization Act, as added by section 502 of this title, 
and section 2602 of the Energy Policy Act of 1992, as amended 
by this title, for activities associated with the development 
of a transmission line from the Four Corners Area to southern 
Nevada, including related power generation opportunities.

SEC. 505. ENERGY EFFICIENCY IN FEDERALLY ASSISTED HOUSING.

    (a) In General.--The Secretary of Housing and Urban 
Development shall promote energy conservation in housing that 
is located on Indian land and assisted with Federal resources 
through--
            (1) the use of energy-efficient technologies and 
        innovations (including the procurement of energy-
        efficient refrigerators and other appliances);
            (2) the promotion of shared savings contracts; and
            (3) the use and implementation of such other 
        similar technologies and innovations as the Secretary 
        of Housing and Urban Development considers to be 
        appropriate.
    (b) Amendment.--Section 202(2) of the Native American 
Housing and Self-Determination Act of 1996 (25 U.S.C. 4132(2)) 
is amended by inserting ``improvement to achieve greater energy 
efficiency,'' after ``planning,''.

SEC. 506. CONSULTATION WITH INDIAN TRIBES.

    In carrying out this title and the amendments made by this 
title, the Secretary of Energy and the Secretary shall, as 
appropriate and to the maximum extent practicable, involve and 
consult with Indian tribes in a manner that is consistent with 
the Federal trust and the government-to-government 
relationships between Indian tribes and the United States.

                       TITLE VI--NUCLEAR MATTERS

               Subtitle A--Price-Anderson Act Amendments

SEC. 601. SHORT TITLE.

    This subtitle may be cited as the ``Price-Anderson 
Amendments Act of 2003''.

SEC. 602. EXTENSION OF INDEMNIFICATION AUTHORITY.

    (a) Indemnification of Nuclear Regulatory Commission 
Licensees.--Section 170 c. of the Atomic Energy Act of 1954 (42 
U.S.C. 2210(c)) is amended--
            (1) in the subsection heading, by striking 
        ``Licenses'' and inserting ``Licensees''; and
            (2) by striking ``December 31, 2003'' each place it 
        appears and inserting ``December 31, 2023''.
    (b) Indemnification of Department of Energy Contractors.--
Section 170 d.(1)(A) of the Atomic Energy Act of 1954 (42 
U.S.C. 2210(d)(1)(A)) is amended by striking ``December 31, 
2004'' and inserting ``December 31, 2023''.
    (c) Indemnification of Nonprofit Educational 
Institutions.--Section 170 k. of the Atomic Energy Act of 1954 
(42 U.S.C. 2210(k)) is amended by striking ``August 1, 2002'' 
each place it appears and inserting ``December 31, 2023''.

SEC. 603. MAXIMUM ASSESSMENT.

    Section 170 of the Atomic Energy Act of 1954 (42 U.S.C. 
2210) is amended--
            (1) in the second proviso of the third sentence of 
        subsection b.(1)--
                    (A) by striking ``$63,000,000'' and 
                inserting ``$95,800,000''; and
                    (B) by striking ``$10,000,000 in any 1 
                year'' and inserting ``$15,000,000 in any 1 
                year (subject to adjustment for inflation under 
                subsection t.)''; and
            (2) in subsection t.(1)--
                    (A) by inserting ``total and annual'' after 
                ``amount of the maximum'';
                    (B) by striking ``the date of the enactment 
                of the Price-Anderson Amendments Act of 1988'' 
                and inserting ``August 20, 2003''; and
                    (C) in subparagraph (A), by striking ``such 
                date of enactment'' and inserting ``August 20, 
                2003''.

SEC. 604. DEPARTMENT OF ENERGY LIABILITY LIMIT.

    (a) Indemnification of Department of Energy Contractors.--
Section 170 d. of the Atomic Energy Act of 1954 (42 U.S.C. 
2210(d)) is amended by striking paragraph (2) and inserting the 
following:
    ``(2) In an agreement of indemnification entered into under 
paragraph (1), the Secretary--
            ``(A) may require the contractor to provide and 
        maintain financial protection of such a type and in 
        such amounts as the Secretary shall determine to be 
        appropriate to cover public liability arising out of or 
        in connection with the contractual activity; and
            ``(B) shall indemnify the persons indemnified 
        against such liability above the amount of the 
        financial protection required, in the amount of 
        $10,000,000,000 (subject to adjustment for inflation 
        under subsection t.), in the aggregate, for all persons 
        indemnified in connection with the contract and for 
        each nuclear incident, including such legal costs of 
        the contractor as are approved by the Secretary.''.
    (b) Contract Amendments.--Section 170 d. of the Atomic 
Energy Act of 1954 (42 U.S.C. 2210(d)) is further amended by 
striking paragraph (3) and inserting the following--
    ``(3) All agreements of indemnification under which the 
Department of Energy (or its predecessor agencies) may be 
required to indemnify any person under this section shall be 
deemed to be amended, on the date of enactment of the Price-
Anderson Amendments Act of 2003, to reflect the amount of 
indemnity for public liability and any applicable financial 
protection required of the contractor under this subsection.''.
    (c) Liability Limit.--Section 170 e.(1)(B) of the Atomic 
Energy Act of 1954 (42 U.S.C. 2210(e)(1)(B)) is amended--
            (1) by striking ``the maximum amount of financial 
        protection required under subsection b. or''; and
            (2) by striking ``paragraph (3) of subsection d., 
        whichever amount is more'' and inserting ``paragraph 
        (2) of subsection d.''.

SEC. 605. INCIDENTS OUTSIDE THE UNITED STATES.

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

SEC. 606. REPORTS.

    Section 170 p. of the Atomic Energy Act of 1954 (42 U.S.C. 
2210(p)) is amended by striking ``August 1, 1998'' and 
inserting ``December 31, 2019''.

SEC. 607. INFLATION ADJUSTMENT.

    Section 170 t. of the Atomic Energy Act of 1954 (42 U.S.C. 
2210(t)) is amended--
            (1) by redesignating paragraph (2) as paragraph 
        (3); and
            (2) by inserting after paragraph (1) the following:
    ``(2) The Secretary shall adjust the amount of 
indemnification provided under an agreement of indemnification 
under subsection d. not less than once during each 5-year 
period following July 1, 2003, in accordance with the aggregate 
percentage change in the Consumer Price Index since--
            ``(A) that date, in the case of the first 
        adjustment under this paragraph; or
            ``(B) the previous adjustment under this 
        paragraph.''.

SEC. 608. TREATMENT OF MODULAR REACTORS.

    Section 170 b. of the Atomic Energy Act of 1954 (42 U.S.C. 
2210(b)) is amended by adding at the end the following:
    ``(5)(A) For purposes of this section only, the Commission 
shall consider a combination of facilities described in 
subparagraph (B) to be a single facility having a rated 
capacity of 100,000 electrical kilowatts or more.
    ``(B) A combination of facilities referred to in 
subparagraph (A) is 2 or more facilities located at a single 
site, each of which has a rated capacity of 100,000 electrical 
kilowatts or more but not more than 300,000 electrical 
kilowatts, with a combined rated capacity of not more than 
1,300,000 electrical kilowatts.''.

SEC. 609. APPLICABILITY.

    The amendments made by sections 603, 604, and 605 do not 
apply to a nuclear incident that occurs before the date of the 
enactment of this Act.

SEC. 610. PROHIBITION ON ASSUMPTION BY UNITED STATES GOVERNMENT OF 
                    LIABILITY FOR CERTAIN FOREIGN INCIDENTS.

    Section 170 of the Atomic Energy Act of 1954 (42 U.S.C. 
2210) is amended by adding at the end the following new 
subsection:
    ``u. Prohibition on Assumption of Liability for Certain 
Foreign Incidents.--Notwithstanding this section or any other 
provision of law, no officer of the United States or of any 
department, agency, or instrumentality of the United States 
Government may enter into any contract or other arrangement, or 
into any amendment or modification of a contract or other 
arrangement, the purpose or effect of which would be to 
directly or indirectly impose liability on the United States 
Government, or any department, agency, or instrumentality of 
the United States Government, or to otherwise directly or 
indirectly require an indemnity by the United States 
Government, for nuclear incidents occurring in connection with 
the design, construction, or operation of a production facility 
or utilization facility in any country whose government has 
been identified by the Secretary of State as engaged in state 
sponsorship of terrorist activities (specifically including any 
country the government of which, as of September 11, 2001, had 
been determined by the Secretary of State under section 620A(a) 
of the Foreign Assistance Act of 1961 (22 U.S.C. 2371(a)), 
section 6(j)(1) of the Export Administration Act of 1979 (50 
U.S.C. App. 2405(j)(1)), or section 40(d) of the Arms Export 
Control Act (22 U.S.C. 2780(d)) to have repeatedly provided 
support for acts of international terrorism). This subsection 
shall not apply to nuclear incidents occurring as a result of 
missions, carried out under the direction of the Secretary of 
Energy, the Secretary of Defense, or the Secretary of State, 
that are necessary to safely secure, store, transport, or 
remove nuclear materials for nuclear safety or nonproliferation 
purposes.''.

SEC. 611. CIVIL PENALTIES.

    (a) Repeal of Automatic Remission.--Section 234A b.(2) of 
the Atomic Energy Act of 1954 (42 U.S.C. 2282a(b)(2)) is 
amended by striking the last sentence.
    (b) Limitation for Not-for-Profit Institutions.--Subsection 
d. of section 234A of the Atomic Energy Act of 1954 (42 U.S.C. 
2282a(d)) is amended to read as follows:
    ``d.(1) Notwithstanding subsection a., in the case of any 
not-for-profit contractor, subcontractor, or supplier, the 
total amount of civil penalties paid under subsection a. may 
not exceed the total amount of fees paid within any 1-year 
period (as determined by the Secretary) under the contract 
under which the violation occurs.
    ``(2) For purposes of this section, the term ``not-for-
profit'' means that no part of the net earnings of the 
contractor, subcontractor, or supplier inures to the benefit of 
any natural person or for-profit artificial person.''.
    (c) Effective Date.--The amendments made by this section 
shall not apply to any violation of the Atomic Energy Act of 
1954 (42 U.S.C. 2011 et seq.) occurring under a contract 
entered into before the date of enactment of this section.

                  Subtitle B--General Nuclear Matters

SEC. 621. LICENSES.

    Section 103 c. of the Atomic Energy Act of 1954 (42 U.S.C. 
2133(c)) is amended by inserting ``from the authorization to 
commence operations'' after ``forty years''.

SEC. 622. NRC TRAINING PROGRAM.

    (a) In General.--In order to maintain the human resource 
investment and infrastructure of the United States in the 
nuclear sciences, health physics, and engineering fields, in 
accordance with the statutory authorities of the Nuclear 
Regulatory Commission relating to the civilian nuclear energy 
program, the Nuclear Regulatory Commission shall carry out a 
training and fellowship program to address shortages of 
individuals with critical nuclear safety regulatory skills.
    (b) Authorization of Appropriations.--
            (1) In general.--There are authorized to be 
        appropriated to the Nuclear Regulatory Commission to 
        carry out this section $1,000,000 for each of fiscal 
        years 2004 through 2008.
            (2) Availability.--Funds made available under 
        paragraph (1) shall remain available until expended.

SEC. 623. COST RECOVERY FROM GOVERNMENT AGENCIES.

    Section 161 w. of the Atomic Energy Act of 1954 (42 U.S.C. 
2201(w)) is amended--
            (1) by striking ``for or is issued'' and all that 
        follows through ``1702'' and inserting ``to the 
        Commission for, or is issued by the Commission, a 
        license or certificate'';
            (2) by striking ``483a'' and inserting ``9701''; 
        and
            (3) by striking ``, of applicants for, or holders 
        of, such licenses or certificates''.

SEC. 624. ELIMINATION OF PENSION OFFSET.

    Section 161 of the Atomic Energy Act of 1954 (42 U.S.C. 
2201) is amended by adding at the end the following:
    ``y. Exempt from the application of sections 8344 and 8468 
of title 5, United States Code, an annuitant who was formerly 
an employee of the Commission who is hired by the Commission as 
a consultant, if the Commission finds that the annuitant has a 
skill that is critical to the performance of the duties of the 
Commission.''.

SEC. 625. ANTITRUST REVIEW.

    Section 105 c. of the Atomic Energy Act of 1954 (42 U.S.C. 
2135(c)) is amended by adding at the end the following:
    ``(9) Applicability.--This subsection does not apply to an 
application for a license to construct or operate a utilization 
facility or production facility under section 103 or 104 b. 
that is filed on or after the date of enactment of this 
paragraph.''.

SEC. 626. DECOMMISSIONING.

    Section 161 i. of the Atomic Energy Act of 1954 (42 U.S.C. 
2201(i)) is amended--
            (1) by striking ``and (3)'' and inserting ``(3)''; 
        and
            (2) by inserting before the semicolon at the end 
        the following: ``, and (4) to ensure that sufficient 
        funds will be available for the decommissioning of any 
        production or utilization facility licensed under 
        section 103 or 104 b., including standards and 
        restrictions governing the control, maintenance, use, 
        and disbursement by any former licensee under this Act 
        that has control over any fund for the decommissioning 
        of the facility''.

SEC. 627. LIMITATION ON LEGAL FEE REIMBURSEMENT.

    The Department of Energy shall not, except as required 
under a contract entered into before the date of enactment of 
this Act, reimburse any contractor or subcontractor of the 
Department for any legal fees or expenses incurred with respect 
to a complaint subsequent to--
            (1) an adverse determination on the merits with 
        respect to such complaint against the contractor or 
        subcontractor by the Director of the Department of 
        Energy's Office of Hearings and Appeals pursuant to 
        part 708 of title 10, Code of Federal Regulations, or 
        by a Department of Labor Administrative Law Judge 
        pursuant to section 211 of the Energy Reorganization 
        Act of 1974 (42 U.S.C. 5851); or
            (2) an adverse final judgment by any State or 
        Federal court with respect to such complaint against 
        the contractor or subcontractor for wrongful 
        termination or retaliation due to the making of 
        disclosures protected under chapter 12 of title 5, 
        United States Code, section 211 of the Energy 
        Reorganization Act of 1974 (42 U.S.C. 5851), or any 
        comparable State law,
unless the adverse determination or final judgment is reversed 
upon further administrative or judicial review.

SEC. 628. DECOMMISSIONING PILOT PROGRAM.

    (a) Pilot Program.--The Secretary of Energy shall establish 
a decommissioning pilot program to decommission and 
decontaminate the sodium-cooled fast breeder experimental test-
site reactor located in northwest Arkansas in accordance with 
the decommissioning activities contained in the August 31, 
1998, Department of Energy report on the reactor.
    (b) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary of Energy to carry out this 
section $16,000,000.

SEC. 629. REPORT ON FEASIBILITY OF DEVELOPING COMMERCIAL NUCLEAR ENERGY 
                    GENERATION FACILITIES AT EXISTING DEPARTMENT OF 
                    ENERGY SITES.

    Not later than 1 year after the date of the enactment of 
this Act, the Secretary of Energy shall submit to Congress a 
report on the feasibility of developing commercial nuclear 
energy generation facilities at Department of Energy sites in 
existence on the date of enactment of this Act.

SEC. 630. URANIUM SALES.

    (a) Sales, Transfers, and Services.--Section 3112 of the 
USEC Privatization Act (42 U.S.C. 2297h-10) is amended by 
striking subsections (d), (e), and (f) and inserting the 
following:
    ``(3) The Secretary may transfer to the Corporation, 
notwithstanding subsections (b)(2) and (d), natural uranium in 
amounts sufficient to fulfill the Department of Energy's 
commitments under Article 4(B) of the Agreement between the 
Department and the Corporation dated June 17, 2002.
    ``(d) Inventory Sales.--(1) In addition to the transfers 
and sales authorized under subsections (b) and (c) and under 
paragraph (5) of this subsection, the United States Government 
may transfer or sell uranium in any form subject to paragraphs 
(2), (3), and (4).
    ``(2) Except as provided in subsections (b) and (c) and 
paragraph (5) of this subsection, no sale or transfer of 
uranium shall be made under this subsection by the United 
States Government unless--
            ``(A) the President determines that the material is 
        not necessary for national security needs and the sale 
        or transfer has no adverse impact on implementation of 
        existing government-to-government agreements;
            ``(B) the price paid to the appropriate Federal 
        agency, if the transaction is a sale, will not be less 
        than the fair market value of the material; and
            ``(C) the sale or transfer to commercial nuclear 
        power end users is made pursuant to a contract of at 
        least 3 years' duration.
    ``(3) Except as provided in paragraph (5), the United 
States Government shall not make any transfer or sale of 
uranium in any form under this subsection that would cause the 
total amount of uranium transferred or sold pursuant to this 
subsection that is delivered for consumption by commercial 
nuclear power end users to exceed--
            ``(A) 3,000,000 pounds of 
        U3O8 equivalent in fiscal year 
        2004, 2005, 2006, 2007, 2008, or 2009;
            ``(B) 5,000,000 pounds of 
        U3O8 equivalent in fiscal year 
        2010 or 2011;
            ``(C) 7,000,000 pounds of 
        U3O8 equivalent in fiscal year 
        2012; and
            ``(D) 10,000,000 pounds of 
        U3O8 equivalent in fiscal year 
        2013 or any fiscal year thereafter.
    ``(4) Except for sales or transfers under paragraph (5), 
for the purposes of this subsection, the recovery of uranium 
from uranium bearing materials transferred or sold by the 
United States Government to the domestic uranium industry shall 
be the preferred method of making uranium available. The 
recovered uranium shall be counted against the annual maximum 
deliveries set forth in this section, when such uranium is sold 
to end users.
    ``(5) The United States Government may make the following 
sales and transfers:
            ``(A) Sales or transfers to a Federal agency if the 
        material is transferred for the use of the receiving 
        agency without any resale or transfer to another entity 
        and the material does not meet commercial 
        specifications.
            ``(B) Sales or transfers to any person for national 
        security purposes, as determined by the Secretary.
            ``(C) Sales or transfers to any State or local 
        agency or nonprofit, charitable, or educational 
        institution for use other than the generation of 
        electricity for commercial use.
            ``(D) Sales or transfers to the Department of 
        Energy research reactor sales program.
            ``(E) Sales or transfers, at fair market value, for 
        emergency purposes in the event of a disruption in 
        supply to commercial nuclear power end users in the 
        United States.
            ``(F) Sales or transfers, at fair market value, for 
        use in a commercial reactor in the United States with 
        nonstandard fuel requirements.
            ``(G) Sales or transfers provided for under law for 
        use by the Tennessee Valley Authority in relation to 
        the Department of Energy's highly enriched uranium or 
        tritium programs.
    ``(6) For purposes of this subsection, the term ``United 
States Government'' does not include the Tennessee Valley 
Authority.
    ``(e) Savings Provision.--Nothing in this subchapter 
modifies the terms of the Russian HEU Agreement.
    ``(f) Services.--Notwithstanding any other provision of 
this section, if the Secretary determines that the Corporation 
has failed, or may fail, to perform any obligation under the 
Agreement between the Department of Energy and the Corporation 
dated June 17, 2002, and as amended thereafter, which failure 
could result in termination of the Agreement, the Secretary 
shall notify Congress, in such a manner that affords Congress 
an opportunity to comment, prior to a determination by the 
Secretary whether termination, waiver, or modification of the 
Agreement is required. The Secretary is authorized to take such 
action as he determines necessary under the Agreement to 
terminate, waive, or modify provisions of the Agreement to 
achieve its purposes.''.
    (b) Report.--Not later than 3 years after the date of 
enactment of this Act, the Secretary of Energy shall report to 
Congress on the implementation of this section. The report 
shall include a discussion of available excess uranium 
inventories; all sales or transfers made by the United States 
Government; the impact of such sales or transfers on the 
domestic uranium industry, the spot market uranium price, and 
the national security interests of the United States; and any 
steps taken to remediate any adverse impacts of such sales or 
transfers.

SEC. 631. COOPERATIVE RESEARCH AND DEVELOPMENT AND SPECIAL 
                    DEMONSTRATION PROJECTS FOR THE URANIUM MINING 
                    INDUSTRY.

    (a) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary of Energy $10,000,000 for 
each of fiscal years 2004, 2005, and 2006 for--
            (1) cooperative, cost-shared agreements between the 
        Department of Energy and domestic uranium producers to 
        identify, test, and develop improved in situ leaching 
        mining technologies, including low-cost environmental 
        restoration technologies that may be applied to sites 
        after completion of in situ leaching operations; and
            (2) funding for competitively selected 
        demonstration projects with domestic uranium producers 
        relating to--
                    (A) enhanced production with minimal 
                environmental impacts;
                    (B) restoration of well fields; and
                    (C) decommissioning and decontamination 
                activities.
    (b) Domestic Uranium Producer.--For purposes of this 
section, the term ``domestic uranium producer'' has the meaning 
given that term in section 1018(4) of the Energy Policy Act of 
1992 (42 U.S.C. 2296b-7(4)), except that the term shall not 
include any producer that has not produced uranium from 
domestic reserves on or after July 30, 1998.
    (c) Limitation.--No activities funded under this section 
may be carried out in the State of New Mexico.

SEC. 632. WHISTLEBLOWER PROTECTION.

    (a) Definition of Employer.--Section 211(a)(2) of the 
Energy Reorganization Act of 1974 (42 U.S.C. 5851(a)(2)) is 
amended--
            (1) in subparagraph (C), by striking ``and'' at the 
        end;
            (2) in subparagraph (D), by striking the period at 
        the end and inserting ``; and'' and
            (3) by adding at the end the following:
                    ``(E) a contractor or subcontractor of the 
                Commission.''.-
    (b) De Novo Review.--Subsection (b) of such section 211 is 
amended by adding at the end the following new paragraph:
            ``(4) If the Secretary has not issued a final 
        decision within 540 days after the filing of a 
        complaint under paragraph (1), and there is no showing 
        that such delay is due to the bad faith of the person 
        seeking relief under this paragraph, such person may 
        bring an action at law or equity for de novo review in 
        the appropriate district court of the United States, 
        which shall have jurisdiction over such an action 
        without regard to the amount in controversy.''.

SEC. 633. MEDICAL ISOTOPE PRODUCTION.

    Section 134 of the Atomic Energy Act of 1954 (42 U.S.C. 
2160d) is amended--
            (1) in subsection a., by striking ``a. The 
        Commission'' and inserting ``a. In General.--Except as 
        provided in subsection b., the Commission'';
            (2) by redesignating subsection b. as subsection 
        c.; and
            (3) by inserting after subsection a. the following:
    ``b. Medical Isotope Production.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Highly enriched uranium.--The term 
                `highly enriched uranium' means uranium 
                enriched to include concentration of U-235 
                above 20 percent.
                    ``(B) Medical isotope.--The term `medical 
                isotope' includes Molybdenum 99, Iodine 131, 
                Xenon 133, and other radioactive materials used 
                to produce a radiopharmaceutical for 
                diagnostic, therapeutic procedures or for 
                research and development.
                    ``(C) Radiopharmaceutical.--The term 
                `radiopharmaceutical' means a radioactive 
                isotope that--
                            ``(i) contains byproduct material 
                        combined with chemical or biological 
                        material; and
                            ``(ii) is designed to accumulate 
                        temporarily in a part of the body for 
                        therapeutic purposes or for enabling 
                        the production of a useful image for 
                        use in a diagnosis of a medical 
                        condition.
                    ``(D) Recipient country.--The term 
                `recipient country' means Canada, Belgium, 
                France, Germany, and the Netherlands.
            ``(2) Licenses.--The Commission may issue a license 
        authorizing the export (including shipment to and use 
        at intermediate and ultimate consignees specified in 
        the license) to a recipient country of highly enriched 
        uranium for medical isotope production if, in addition 
        to any other requirements of this Act (except 
        subsection a.), the Commission determines that--
                    ``(A) a recipient country that supplies an 
                assurance letter to the United States 
                Government in connection with the consideration 
                by the Commission of the export license 
                application has informed the United States 
                Government that any intermediate consignees and 
                the ultimate consignee specified in the 
                application are required to use the highly 
                enriched uranium solely to produce medical 
                isotopes; and
                    ``(B) the highly enriched uranium for 
                medical isotope production will be irradiated 
                only in a reactor in a recipient country that--
                            ``(i) uses an alternative nuclear 
                        reactor fuel; or
                            ``(ii) is the subject of an 
                        agreement with the United States 
                        Government to convert to an alternative 
                        nuclear reactor fuel when alternative 
                        nuclear reactor fuel can be used in the 
                        reactor.
            ``(3) Review of physical protection requirements.--
                    ``(A) In general.--The Commission shall 
                review the adequacy of physical protection 
                requirements that, as of the date of an 
                application under paragraph (2), are applicable 
                to the transportation and storage of highly 
                enriched uranium for medical isotope production 
                or control of residual material after 
                irradiation and extraction of medical isotopes.
                    ``(B) Imposition of additional 
                requirements.--If the Commission determines 
                that additional physical protection 
                requirements are necessary (including a limit 
                on the quantity of highly enriched uranium that 
                may be contained in a single shipment), the 
                Commission shall impose such requirements as 
                license conditions or through other appropriate 
                means.
            ``(4) First report to congress.--
                    ``(A) NAS study.--The Secretary shall enter 
                into an arrangement with the National Academy 
                of Sciences to conduct a study to determine--
                            ``(i) the feasibility of procuring 
                        supplies of medical isotopes from 
                        commercial sources that do not use 
                        highly enriched uranium;
                            ``(ii) the current and projected 
                        demand and availability of medical 
                        isotopes in regular current domestic 
                        use;
                            ``(iii) the progress that is being 
                        made by the Department of Energy and 
                        others to eliminate all use of highly 
                        enriched uranium in reactor fuel, 
                        reactor targets, and medical isotope 
                        production facilities; and
                            ``(iv) the potential cost 
                        differential in medical isotope 
                        production in the reactors and target 
                        processing facilities if the products 
                        were derived from production systems 
                        that do not involve fuels and targets 
                        with highly enriched uranium.
                    ``(B) Feasibility.--For the purpose of this 
                subsection, the use of low enriched uranium to 
                produce medical isotopes shall be determined to 
                be feasible if--
                            ``(i) low enriched uranium targets 
                        have been developed and demonstrated 
                        for use in the reactors and target 
                        processing facilities that produce 
                        significant quantities of medical 
                        isotopes to serve United States needs 
                        for such isotopes;
                            ``(ii) sufficient quantities of 
                        medical isotopes are available from low 
                        enriched uranium targets and fuel to 
                        meet United States domestic needs; and
                            ``(iii) the average anticipated 
                        total cost increase from production of 
                        medical isotopes in such facilities 
                        without use of highly enriched uranium 
                        is less than 10 percent.
                    ``(C) Report by the secretary.--Not later 
                than 5 years after the date of enactment of the 
                Energy Policy Act of 2003, the Secretary shall 
                submit to Congress a report that--
                            ``(i) contains the findings of the 
                        National Academy of Sciences made in 
                        the study under subparagraph (A); and
                            ``(ii) discloses the existence of 
                        any commitments from commercial 
                        producers to provide domestic 
                        requirements for medical isotopes 
                        without use of highly enriched uranium 
                        consistent with the feasibility 
                        criteria described in subparagraph (B) 
                        not later than the date that is 4 years 
                        after the date of submission of the 
                        report.
            ``(5) Second report to congress.--If the study of 
        the National Academy of Sciences determines under 
        paragraph (4)(A)(i) that the procurement of supplies of 
        medical isotopes from commercial sources that do not 
        use highly enriched uranium is feasible, but the 
        Secretary is unable to report the existence of 
        commitments under paragraph (4)(C)(ii), not later than 
        the date that is 6 years after the date of enactment of 
        the Energy Policy Act of 2003, the Secretary shall 
        submit to Congress a report that describes options for 
        developing domestic supplies of medical isotopes in 
        quantities that are adequate to meet domestic demand 
        without the use of highly enriched uranium consistent 
        with the cost increase described in paragraph 
        (4)(B)(iii).
            ``(6) Certification.--At such time as commercial 
        facilities that do not use highly enriched uranium are 
        capable of meeting domestic requirements for medical 
        isotopes, within the cost increase described in 
        paragraph (4)(B)(iii) and without impairing the 
        reliable supply of medical isotopes for domestic 
        utilization, the Secretary shall submit to Congress a 
        certification to that effect.
            ``(7) Sunset provision.--After the Secretary 
        submits a certification under paragraph (6), the 
        Commission shall, by rule, terminate its review of 
        export license applications under this subsection.''.

SEC. 634. FERNALD BYPRODUCT MATERIAL.

    Notwithstanding any other law, the material in the concrete 
silos at the Fernald uranium processing facility managed on the 
date of enactment of this Act by the Department of Energy shall 
be considered byproduct material (as defined by section 11 
e.(2) of the Atomic Energy Act of 1954 (42 U.S.C. 2014(e)(2))). 
The Department of Energy may dispose of the material in a 
facility regulated by the Nuclear Regulatory Commission or by 
an Agreement State. If the Department of Energy disposes of the 
material in such a facility, the Nuclear Regulatory Commission 
or the Agreement State shall regulate the material as byproduct 
material under that Act. This material shall remain subject to 
the jurisdiction of the Department of Energy until it is 
received at a commercial, Nuclear Regulatory Commission-
licensed, or Agreement State-licensed facility, at which time 
the material shall be subject to the health and safety 
requirements of the Nuclear Regulatory Commission or the 
Agreement State with jurisdiction over the disposal site.

SEC. 635. SAFE DISPOSAL OF GREATER-THAN-CLASS C RADIOACTIVE WASTE.

    (a) Designation of Responsibility.--The Secretary of Energy 
shall designate an Office within the Department of Energy to 
have the responsibility for activities needed to develop a new, 
or use an existing, facility for safely disposing of all low-
level radioactive waste with concentrations of radionuclides 
that exceed the limits established by the Nuclear Regulatory 
Commission for Class C radioactive waste (referred to in this 
section as ``GTCC waste'').
    (b) Comprehensive Plan.--The Secretary of Energy shall 
develop a comprehensive plan for permanent disposal of GTCC 
waste which includes plans for a disposal facility. This plan 
shall be transmitted to Congress in a series of reports, 
including the following:
            (1) Report on short-term plan.--Not later than 180 
        days after the date of enactment of this Act, the 
        Secretary of Energy shall submit to Congress a plan 
        describing the Secretary's operational strategy for 
        continued recovery and storage of GTCC waste until a 
        permanent disposal facility is available.
            (2) Update of 1987 report.--
                    (A) In general.--Not later than 1 year 
                after the date of enactment of this Act, the 
                Secretary of Energy shall submit to Congress an 
                update of the Secretary's February 1987 report 
                submitted to Congress that made comprehensive 
                recommendations for the disposal of GTCC waste.
                    (B) Contents.--The update under this 
                paragraph shall contain--
                            (i) a detailed description and 
                        identification of the GTCC waste that 
                        is to be disposed;
                            (ii) a description of current 
                        domestic and international programs, 
                        both Federal and commercial, for 
                        management and disposition of GTCC 
                        waste;
                            (iii) an identification of the 
                        Federal and private options and costs 
                        for the safe disposal of GTCC waste;
                            (iv) an identification of the 
                        options for ensuring that, wherever 
                        possible, generators and users of GTCC 
                        waste bear all reasonable costs of 
                        waste disposal;
                            (v) an identification of any new 
                        statutory authority required for 
                        disposal of GTCC waste; and
                            (vi) in coordination with the 
                        Environmental Protection Agency and the 
                        Nuclear Regulatory Commission, an 
                        identification of any new regulatory 
                        guidance needed for the disposal of 
                        GTCC waste.
            (3) Report on cost and schedule for completion of 
        environmental impact statement and record of 
        decision.--Not later than 180 days after the date of 
        submission of the update required under paragraph (2), 
        the Secretary of Energy shall submit to Congress a 
        report containing an estimate of the cost and schedule 
        to complete a draft and final environmental impact 
        statement and to issue a record of decision for a 
        permanent disposal facility, utilizing either a new or 
        existing facility, for GTCC waste.

SEC. 636. PROHIBITION ON NUCLEAR EXPORTS TO COUNTRIES THAT SPONSOR 
                    TERRORISM.

    (a) In General.--Section 129 of the Atomic Energy Act of 
1954 (42 U.S.C. 2158) is amended--
            (1) by inserting ``a.'' before ``No nuclear 
        materials and equipment''; and
            (2) by adding at the end the following new 
        subsection:
    ``b.(1) Notwithstanding any other provision of law, 
including specifically section 121 of this Act, and except as 
provided in paragraphs (2) and (3), no nuclear materials and 
equipment or sensitive nuclear technology, including items and 
assistance authorized by section 57 b. of this Act and 
regulated under part 810 of title 10, Code of Federal 
Regulations, and nuclear-related items on the Commerce Control 
List maintained under part 774 of title 15 of the Code of 
Federal Regulations, shall be exported or reexported, or 
transferred or retransferred whether directly or indirectly, 
and no Federal agency shall issue any license, approval, or 
authorization for the export or reexport, or transfer, or 
retransfer, whether directly or indirectly, of these items or 
assistance (as defined in this paragraph) to any country whose 
government has been identified by the Secretary of State as 
engaged in state sponsorship of terrorist activities 
(specifically including any country the government of which has 
been determined by the Secretary of State under section 620A(a) 
of the Foreign Assistance Act of 1961 (22 U.S.C. 2371(a)), 
section 6(j)(1) of the Export Administration Act of 1979 (50 
U.S.C. App. 2405(j)(1)), or section 40(d) of the Arms Export 
Control Act (22 U.S.C. 2780(d)) to have repeatedly provided 
support for acts of international terrorism).
    ``(2) This subsection shall not apply to exports, 
reexports, transfers, or retransfers of radiation monitoring 
technologies, surveillance equipment, seals, cameras, tamper-
indication devices, nuclear detectors, monitoring systems, or 
equipment necessary to safely store, transport, or remove 
hazardous materials, whether such items, services, or 
information are regulated by the Department of Energy, the 
Department of Commerce, or the Nuclear Regulatory Commission, 
except to the extent that such technologies, equipment, seals, 
cameras, devices, detectors, or systems are available for use 
in the design or construction of nuclear reactors or nuclear 
weapons.
    ``(3) The President may waive the application of paragraph 
(1) to a country if the President determines and certifies to 
Congress that the waiver will not result in any increased risk 
that the country receiving the waiver will acquire nuclear 
weapons, nuclear reactors, or any materials or components of 
nuclear weapons and--
            ``(A) the government of such country has not within 
        the preceding 12-month period willfully aided or 
        abetted the international proliferation of nuclear 
        explosive devices to individuals or groups or willfully 
        aided and abetted an individual or groups in acquiring 
        unsafeguarded nuclear materials;
            ``(B) in the judgment of the President, the 
        government of such country has provided adequate, 
        verifiable assurances that it will cease its support 
        for acts of international terrorism;
            ``(C) the waiver of that paragraph is in the vital 
        national security interest of the United States; or
            ``(D) such a waiver is essential to prevent or 
        respond to a serious radiological hazard in the country 
        receiving the waiver that may or does threaten public 
        health and safety.''.
    (b) Applicability To Exports Approved for Transfer but Not 
Transferred.--Subsection b. of section 129 of Atomic Energy Act 
of 1954, as added by subsection (a) of this section, shall 
apply with respect to exports that have been approved for 
transfer as of the date of the enactment of this Act but have 
not yet been transferred as of that date.

SEC. 637. URANIUM ENRICHMENT FACILITIES.

    (a) Nuclear Regulatory Commission Review of Applications.--
            (1) In general.--In order to facilitate a timely 
        review and approval of an application in a proceeding 
        for a license for the construction and operation of a 
        uranium enrichment facility under sections 53 and 63 of 
        the Atomic Energy Act of 1954 (42 U.S.C. 2073, 2093) 
        (referred to in this subsection as a ``covered 
        proceeding''), the Nuclear Regulatory Commission shall, 
        not later than 30 days after the receipt of the 
        application, establish, by order, the schedule for the 
        conduct of any hearing that may be requested by any 
        person whose interest may be affected by the covered 
        proceeding.
            (2) Final agency decision.--The schedule shall 
        provide that a final decision by the Commission on the 
        application shall be made not later than the date that 
        is 2 years after the date of submission of the 
        application by the applicant.
            (3) Compliance with schedule.--
                    (A) In general.--The Commission shall 
                establish a process to assess compliance with 
                the schedule established under paragraph (1) on 
                an ongoing basis during the course of the 
                review of the application, including ensuring 
                compliance with schedules and milestones that 
                are established for the conduct of any covered 
                proceeding by the Atomic Safety and Licensing 
                Board.
                    (B) Report.--The Commission shall submit to 
                Congress on a bimonthly basis a report 
                describing the status of compliance with the 
                schedule established under paragraph (1), 
                including a description of the status of 
                actions required to be completed pursuant to 
                the schedule by officers and employees of--
                            (i) the Commission in undertaking 
                        the safety and environmental review of 
                        applications; and
                            (ii) the Atomic Safety and 
                        Licensing Board in the conduct of any 
                        covered proceeding.
            (4) Environmental review.--
                    (A) In general.--In evaluating an 
                application under the National Environmental 
                Policy Act of 1969 (42 U.S.C. 4321 et seq.) for 
                licensing of a facility in a covered 
                proceeding, the Commission shall limit the 
                consideration of need to whether the licensing 
                of the facility would advance the national 
                interest of encouraging in the United States--
                            (i) additional secure, reliable 
                        uranium enrichment capacity;
                            (ii) diverse supplies and suppliers 
                        of uranium enrichment capacity; and
                            (iii) the deployment of advanced 
                        centrifuge enrichment technology.
                    (B) Comment.--In carrying out subparagraph 
                (A), the Commission shall consider and solicit 
                the views of other affected Federal agencies.
                    (C) Atomic safety and licensing board.--
                            (i) In general.--Except as provided 
                        in clause (ii), in any covered 
                        proceeding, the Commission shall allow 
                        the litigation and resolution by the 
                        Atomic Safety and Licensing Board of 
                        issues arising under the National 
                        Environmental Policy Act of 1969 (42 
                        U.S.C. 4321 et seq.), on the basis of 
                        information submitted by the applicant 
                        in its environmental report, prior to 
                        publication of any required 
                        environmental impact statement.
                            (ii) Exceptions.--On the 
                        publication of any required 
                        environmental impact statement, issues 
                        may be proffered for resolution by the 
                        Atomic Safety and Licensing Board only 
                        if information or conclusions in the 
                        environmental impact statement differ 
                        significantly from the information or 
                        conclusions in the environmental report 
                        submitted by the applicant.
                    (D) Environmental justice.--In a covered 
                proceeding, the Commission shall apply the 
                criteria in Appendix C of the final report 
                entitled ``Environmental Review Guidance for 
                Licensing Actions Associated with NMSS 
                Programs'' (NUREG-1748), published in August 
                2003, in any required review of environmental 
                justice.
            (5) Low-level waste.--In any covered proceeding, 
        the Commission shall--
                    (A) deem the obligation of the Secretary of 
                Energy pursuant to section 3113 of the USEC 
                Privitization Act (42 U.S.C. 2297 h-11) to 
                constitute a plausible strategy with regard to 
                the disposition of depleted uranium generated 
                by such facility; and
                    (B) treat any residual material that 
                remains following the extraction of any usable 
                resource value from depleted uranium as low-
                level radioactive waste under part 61 of title 
                10, Code of Federal Regulations.
            (6) Adjudicatory hearing on licensing of uranium 
        enrichment facilities.--Section 193(b) of the Atomic 
        Energy Act of 1954 (42 U.S.C. 2243(b)) is amended by 
        striking paragraph (2) and inserting the following:
            ``(2) Timing.--On the issuance of a final decision 
        on the application by the Atomic Safety and Licensing 
        Board, the Commission shall issue and make immediately 
        effective any license for the construction and 
        operation of a uranium enrichment facility under 
        sections 53 and 63, on a determination by the 
        Commission that the issuance of the license would not 
        cause irreparable injury to the public health and 
        safety or the common defense and security, 
        notwithstanding the pendency before the Commission of 
        any appeal or petition for review of any decision of 
        the Atomic Safety and Licensing Board.''.
    (b) Department of Energy Responsibilities.--
            (1) In general.--Not later than 180 days after a 
        request is made to the Secretary of Energy by an 
        applicant for or recipient of a license for a uranium 
        enrichment facility under section 53, 63, or 193 of the 
        Atomic Energy Act of 1954 (42 U.S.C. 2073, 2093, 2243), 
        the Secretary shall enter into a memorandum of 
        agreement with the applicant or licensee that provides 
        a schedule for the transfer to the Secretary, not later 
        than 5 years after the generation of any depleted 
        uranium hexafluoride, of title and possession of the 
        depleted uranium hexafluoride to be generated by the 
        applicant or licensee.
            (2) Cost.--
                    (A) In general.--Subject to subparagraphs 
                (B) and (C), the memorandum of agreement shall 
                specify the cost to be assessed by the 
                Secretary for the transfer to the Secretary of 
                the depleted uranium hexafluoride.
                    (B) Nondiscriminatory basis.--The cost 
                shall be determined by the Secretary on a 
                nondiscriminatory basis.
                    (C) Cost.--Taking into account the physical 
                and chemical characteristics of such depleted 
                uranium hexafluoride, the cost shall not exceed 
                the cost assessed by the Secretary for the 
                acceptance of depleted uranium hexafluoride 
                under--
                            (i) the memorandum of agreement 
                        between the United States Department of 
                        Energy and the United States Enrichment 
                        Corporation Relating to Depleted 
                        Uranium, dated June 30, 1998; and
                            (ii) the Agreement Between the U.S. 
                        Department of Energy and USEC Inc., 
                        dated June 17, 2002.

SEC. 638. NATIONAL URANIUM STOCKPILE.

    (a) Stockpile Creation.--The Secretary of Energy may create 
a national low-enriched uranium stockpile with the goals to--
            (1) enhance national energy security; and
            (2) reduce global proliferation threats.
    (b) Source of Material.--The Secretary shall obtain 
material for the stockpile from--
            (1) material derived from blend-down of Russian 
        highly enriched uranium derived from weapons materials; 
        and
            (2) domestically mined and enriched uranium.
    (c) Limitation on Sales or Transfers.--Sales or transfer of 
materials in the stockpile shall occur pursuant to section 3112 
of the USEC Privitization Act (42 U.S.C. 2297h-10), as amended 
by section 630 of this Act.

       Subtitle C--Advanced Reactor Hydrogen Cogeneration Project

SEC. 651. PROJECT ESTABLISHMENT.

    The Secretary of Energy (in this subtitle referred to as 
the ``Secretary'') is directed to establish an Advanced Reactor 
Hydrogen Cogeneration Project.

SEC. 652. PROJECT DEFINITION.

    The project shall consist of the research, development, 
design, construction, and operation of a hydrogen production 
cogeneration research facility that, relative to the current 
commercial reactors, enhances safety features, reduces waste 
production, enhances thermal efficiencies, increases 
proliferation resistance, and has the potential for improved 
economics and physical security in reactor siting. This 
facility shall be constructed so as to enable research and 
development on advanced reactors of the type selected and on 
alternative approaches for reactor-based production of 
hydrogen.

SEC. 653. PROJECT MANAGEMENT.

    (a) Management.--The project shall be managed within the 
Department by the Office of Nuclear Energy, Science, and 
Technology.
    (b) Lead Laboratory.--The lead laboratory for the project, 
providing the site for the reactor construction, shall be the 
Idaho National Engineering and Environmental Laboratory (in 
this subtitle referred to as ``INEEL'').
    (c) Steering Committee.--The Secretary shall establish a 
national steering committee with membership from the national 
laboratories, universities, and industry to provide advice to 
the Secretary and the Director of the Office of Nuclear Energy, 
Science, and Technology on technical and program management 
aspects of the project.
    (d) Collaboration.--Project activities shall be conducted 
at INEEL, other national laboratories, universities, domestic 
industry, and international partners.

SEC. 654. PROJECT REQUIREMENTS.

    (a) Research and Development.--
            (1) In general.--The project shall include 
        planning, research and development, design, and 
        construction of an advanced, next-generation, nuclear 
        energy system suitable for enabling further research 
        and development on advanced reactor technologies and 
        alternative approaches for reactor-based generation of 
        hydrogen.
            (2) Reactor test capabilities at ineel.--The 
        project shall utilize, where appropriate, extensive 
        reactor test capabilities resident at INEEL.
            (3) Alternatives.--The project shall be designed to 
        explore technical, environmental, and economic 
        feasibility of alternative approaches for reactor-based 
        hydrogen production.
            (4) Industrial lead.--The industrial lead for the 
        project shall be a company incorporated in the United 
        States.
    (b) International Collaboration.--
            (1) In general.--The Secretary shall seek 
        international cooperation, participation, and financial 
        contribution in this project.
            (2) Assistance from international partners.--The 
        Secretary may contract for assistance from specialists 
        or facilities from member countries of the Generation 
        IV International Forum, the Russian Federation, or 
        other international partners where such specialists or 
        facilities provide access to cost-effective and 
        relevant skills or test capabilities.
            (3) Generation iv international forum.--
        International activities shall be coordinated with the 
        Generation IV International Forum.
            (4) Generation iv nuclear energy systems program.--
        The Secretary may combine this project with the 
        Generation IV Nuclear Energy Systems Program.
    (c) Demonstration.--The overall project, which may involve 
demonstration of selected project objectives in a partner 
nation, must demonstrate both electricity and hydrogen 
production and may provide flexibility, where technically and 
economically feasible in the design and construction, to enable 
tests of alternative reactor core and cooling configurations.
    (d) Partnerships.--The Secretary shall establish cost-
shared partnerships with domestic industry or international 
participants for the research, development, design, 
construction, and operation of the research facility, and 
preference in determining the final project structure shall be 
given to an overall project which retains United States 
leadership while maximizing cost sharing opportunities and 
minimizing Federal funding responsibilities.
    (e) Target Date.--The Secretary shall select technologies 
and develop the project to provide initial testing of either 
hydrogen production or electricity generation by 2010, or 
provide a report to Congress explaining why this date is not 
feasible.
    (f) Waiver of Construction Timelines.--The Secretary is 
authorized to conduct the Advanced Reactor Hydrogen 
Cogeneration Project without the constraints of DOE Order 
413.3, relating to program and project management for the 
acquisition of capital assets, as necessary to meet the 
specified operational date.
    (g) Competition.--The Secretary may fund up to 2 teams for 
up to 1 year to develop detailed proposals for competitive 
evaluation and selection of a single proposal and concept for 
further progress. The Secretary shall define the format of the 
competitive evaluation of proposals.
    (h) Use of Facilities.--Research facilities in industry, 
national laboratories, or universities either within the United 
States or with cooperating international partners may be used 
to develop the enabling technologies for the research facility. 
Utilization of domestic university-based facilities shall be 
encouraged to provide educational opportunities for student 
development.
    (i) Role of Nuclear Regulatory Commission.--
            (1) In general.--The Nuclear Regulatory Commission 
        shall have licensing and regulatory authority for any 
        reactor authorized under this subtitle, pursuant to 
        section 202 of the Energy Reorganization Act of 1974 
        (42 U.S.C. 5842).
            (2) Risk-based criteria.--The Secretary shall seek 
        active participation of the Nuclear Regulatory 
        Commission throughout the project to develop risk-based 
        criteria for any future commercial development of a 
        similar reactor architecture.
    (j) Report--The Secretary shall develop and transmit to 
Congress a comprehensive project plan not later than April 30, 
2004. The project plan shall be updated annually with each 
annual budget submission.

SEC. 655. AUTHORIZATION OF APPROPRIATIONS.

    (a) Research, Development, and Design Programs.--The 
following sums are authorized to be appropriated to the 
Secretary for all activities under this subtitle except for 
construction activities described in subsection (b):
            (1) For fiscal year 2004, $35,000,000.
            (2) For each of fiscal years 2005 through 2008, 
        $150,000,000.
            (3) For fiscal years beyond 2008, such sums as are 
        necessary.
    (b) Construction.--There are authorized to be appropriated 
to the Secretary for all project-related construction 
activities, to be available until expended, $500,000,000.

                      Subtitle D--Nuclear Security

SEC. 661. NUCLEAR FACILITY THREATS.

    (a) Study.--The President, in consultation with the Nuclear 
Regulatory Commission (referred to in this subtitle as the 
``Commission'') and other appropriate Federal, State, and local 
agencies and private entities, shall conduct a study to 
identify the types of threats that pose an appreciable risk to 
the security of the various classes of facilities licensed by 
the Commission under the Atomic Energy Act of 1954 (42 U.S.C. 
2011 et seq.). Such study shall take into account, but not be 
limited to--
            (1) the events of September 11, 2001;
            (2) an assessment of physical, cyber, biochemical, 
        and other terrorist threats;
            (3) the potential for attack on facilities by 
        multiple coordinated teams of a large number of 
        individuals;
            (4) the potential for assistance in an attack from 
        several persons employed at the facility;
            (5) the potential for suicide attacks;
            (6) the potential for water-based and air-based 
        threats;
            (7) the potential use of explosive devices of 
        considerable size and other modern weaponry;
            (8) the potential for attacks by persons with a 
        sophisticated knowledge of facility operations;
            (9) the potential for fires, especially fires of 
        long duration;
            (10) the potential for attacks on spent fuel 
        shipments by multiple coordinated teams of a large 
        number of individuals;
            (11) the adequacy of planning to protect the public 
        health and safety at and around nuclear facilities, as 
        appropriate, in the event of a terrorist attack against 
        a nuclear facility; and
            (12) the potential for theft and diversion of 
        nuclear materials from such facilities.
    (b) Summary and Classification Report.--Not later than 180 
days after the date of the enactment of this Act, the President 
shall transmit to Congress and the Commission a report--
            (1) summarizing the types of threats identified 
        under subsection (a); and
            (2) classifying each type of threat identified 
        under subsection (a), in accordance with existing laws 
        and regulations, as either--
                    (A) involving attacks and destructive acts, 
                including sabotage, directed against the 
                facility by an enemy of the United States, 
                whether a foreign government or other person, 
                or otherwise falling under the responsibilities 
                of the Federal Government; or
                    (B) involving the type of risks that 
                Commission licensees should be responsible for 
                guarding against.
    (c) Federal Action Report.--Not later than 90 days after 
the date on which a report is transmitted under subsection (b), 
the President shall transmit to Congress a report on actions 
taken, or to be taken, to address the types of threats 
identified under subsection (b)(2)(A), including identification 
of the Federal, State, and local agencies responsible for 
carrying out the obligations and authorities of the United 
States. Such report may include a classified annex, as 
appropriate.
    (d) Regulations.--Not later than 180 days after the date on 
which a report is transmitted under subsection (b), the 
Commission may revise, by rule, the design basis threats issued 
before the date of enactment of this section as the Commission 
considers appropriate based on the summary and classification 
report.
    (e) Physical Security Program.--The Commission shall 
establish an operational safeguards response evaluation program 
that ensures that the physical protection capability and 
operational safeguards response for sensitive nuclear 
facilities, as determined by the Commission consistent with the 
protection of public health and the common defense and 
security, shall be tested periodically through Commission 
approved or designed, observed, and evaluated force-on-force 
exercises to determine whether the ability to defeat the design 
basis threat is being maintained. For purposes of this 
subsection, the term ``sensitive nuclear facilities'' includes 
at a minimum commercial nuclear power plants and category I 
fuel cycle facilities.
    (f) Control of Information.--Notwithstanding any other 
provision of law, the Commission may undertake any rulemaking 
under this subtitle in a manner that will fully protect 
safeguards and classified national security information.
    (g) Federal Security Coordinators.--
            (1) Regional offices.--Not later than 18 months 
        after the date of enactment of this Act, the Commission 
        shall assign a Federal security coordinator, under the 
        employment of the Commission, to each region of the 
        Commission.
            (2) Responsibilities.--The Federal security 
        coordinator shall be responsible for--
                    (A) communicating with the Commission and 
                other Federal, State, and local authorities 
                concerning threats, including threats against 
                such classes of facilities as the Commission 
                determines to be appropriate;
                    (B) ensuring that such classes of 
                facilities as the Commission determines to be 
                appropriate maintain security consistent with 
                the security plan in accordance with the 
                appropriate threat level; and
                    (C) assisting in the coordination of 
                security measures among the private security 
                forces at such classes of facilities as the 
                Commission determines to be appropriate and 
                Federal, State, and local authorities, as 
                appropriate.
    (h) Training Program.--The President shall establish a 
program to provide technical assistance and training to Federal 
agencies, the National Guard, and State and local law 
enforcement and emergency response agencies in responding to 
threats against a designated nuclear facility.

SEC. 662. FINGERPRINTING FOR CRIMINAL HISTORY RECORD CHECKS.

    (a) In General.--Subsection a. of section 149 of the Atomic 
Energy Act of 1954 (42 U.S.C. 2169(a)) is amended--
            (1) by striking ``a. The Nuclear'' and all that 
        follows through ``section 147.'' and inserting the 
        following:
    ``a. In General.--
            ``(1) Requirements.--
                    ``(A) In general.-- The Commission shall 
                require each individual or entity--
                            ``(i) that is licensed or certified 
                        to engage in an activity subject to 
                        regulation by the Commission;
                            ``(ii) that has filed an 
                        application for a license or 
                        certificate to engage in an activity 
                        subject to regulation by the 
                        Commission; or
                            ``(iii) that has notified the 
                        Commission, in writing, of an intent to 
                        file an application for licensing, 
                        certification, permitting, or approval 
                        of a product or activity subject to 
                        regulation by the Commission,
                to fingerprint each individual described in 
                subparagraph (B) before the individual is 
                permitted unescorted access or access, 
                whichever is applicable, as described in 
                subparagraph (B).
                    ``(B) Individuals required to be 
                fingerprinted.--The Commission shall require to 
                be fingerprinted each individual who--
                            ``(i) is permitted unescorted 
                        access to--
                                    ``(I) a utilization 
                                facility; or
                                    ``(II) radioactive material 
                                or other property subject to 
                                regulation by the Commission 
                                that the Commission determines 
                                to be of such significance to 
                                the public health and safety or 
                                the common defense and security 
                                as to warrant fingerprinting 
                                and background checks; or
                            ``(ii) is permitted access to 
                        safeguards information under section 
                        147.'';
            (2) by striking ``All fingerprints obtained by a 
        licensee or applicant as required in the preceding 
        sentence'' and inserting the following:
            ``(2) Submission to the attorney general.--All 
        fingerprints obtained by an individual or entity as 
        required in paragraph (1)'';
            (3) by striking ``The costs of any identification 
        and records check conducted pursuant to the preceding 
        sentence shall be paid by the licensee or applicant.'' 
        and inserting the following:
            ``(3) Costs.--The costs of any identification and 
        records check conducted pursuant to paragraph (1) shall 
        be paid by the individual or entity required to conduct 
        the fingerprinting under paragraph (1)(A).''; and
            (4) by striking ``Notwithstanding any other 
        provision of law, the Attorney General may provide all 
        the results of the search to the Commission, and, in 
        accordance with regulations prescribed under this 
        section, the Commission may provide such results to 
        licensee or applicant submitting such fingerprints.'' 
        and inserting the following:
            ``(4) Provision to individual or entity required to 
        conduct fingerprinting.--Notwithstanding any other 
        provision of law, the Attorney General may provide all 
        the results of the search to the Commission, and, in 
        accordance with regulations prescribed under this 
        section, the Commission may provide such results to the 
        individual or entity required to conduct the 
        fingerprinting under paragraph (1)(A).''.
    (b) Administration.--Subsection c. of section 149 of the 
Atomic Energy Act of 1954 (42 U.S.C. 2169(c)) is amended--
            (1) by striking ``, subject to public notice and 
        comment, regulations--'' and inserting ``requirements--
        ''; and
            (2) by striking, in paragraph (2)(B), ``unescorted 
        access to the facility of a licensee or applicant'' and 
        inserting ``unescorted access to a utilization 
        facility, radioactive material, or other property 
        described in subsection a.(1)(B)''.
    (c) Biometric Methods.--Subsection d. of section 149 of the 
Atomic Energy Act of 1954 (42 U.S.C. 2169(d)) is redesignated 
as subsection e., and the following is inserted after 
subsection c.:
    ``d. Use of Other Biometric Methods.--The Commission may 
satisfy any requirement for a person to conduct fingerprinting 
under this section using any other biometric method for 
identification approved for use by the Attorney General, after 
the Commission has approved the alternative method by rule.''.

SEC. 663. USE OF FIREARMS BY SECURITY PERSONNEL OF LICENSEES AND 
                    CERTIFICATE HOLDERS OF THE COMMISSION.

    Section 161 of the Atomic Energy Act of 1954 (42 U.S.C. 
2201) is amended by adding at the end the following subsection:
            ``(z)(1) notwithstanding section 922(o), (v), and 
        (w) of title 18, United States Code, or any similar 
        provision of any State law or any similar rule or 
        regulation of a State or any political subdivision of a 
        State prohibiting the transfer or possession of a 
        handgun, a rifle or shotgun, a short-barreled shotgun, 
        a short-barreled rifle, a machinegun, a semiautomatic 
        assault weapon, ammunition for the foregoing, or a 
        large capacity ammunition feeding device, authorize 
        security personnel of licensees and certificate holders 
        of the Commission (including employees of contractors 
        of licensees and certificate holders) to receive, 
        possess, transport, import, and use 1 or more of those 
        weapons, ammunition, or devices, if the Commission 
        determines that--
                    ``(A) such authorization is necessary to 
                the discharge of the security personnel's 
                official duties; and
                    ``(B) the security personnel--
                            ``(i) are not otherwise prohibited 
                        from possessing or receiving a firearm 
                        under Federal or State laws pertaining 
                        to possession of firearms by certain 
                        categories of persons;
                            ``(ii) have successfully completed 
                        requirements established through 
                        guidelines implementing this subsection 
                        for training in use of firearms and 
                        tactical maneuvers;
                            ``(iii) are engaged in the 
                        protection of--
                                    ``(I) facilities owned or 
                                operated by a Commission 
                                licensee or certificate holder 
                                that are designated by the 
                                Commission; or
                                    ``(II) radioactive material 
                                or other property owned or 
                                possessed by a person that is a 
                                licensee or certificate holder 
                                of the Commission, or that is 
                                being transported to or from a 
                                facility owned or operated by 
                                such a licensee or certificate 
                                holder, and that has been 
                                determined by the Commission to 
                                be of significance to the 
                                common defense and security or 
                                public health and safety; and
                            ``(iv) are discharging their 
                        official duties.
            ``(2) Such receipt, possession, transportation, 
        importation, or use shall be subject to--
                    ``(A) chapter 44 of title 18, United States 
                Code, except for section 922(a)(4), (o), (v), 
                and (w);
                    ``(B) chapter 53 of title 26, United States 
                Code, except for section 5844; and
                    ``(C) a background check by the Attorney 
                General, based on fingerprints and including a 
                check of the system established under section 
                103(b) of the Brady Handgun Violence Prevention 
                Act (18 U.S.C. 922 note) to determine whether 
                the person applying for the authority is 
                prohibited from possessing or receiving a 
                firearm under Federal or State law.
            ``(3) This subsection shall become effective upon 
        the issuance of guidelines by the Commission, with the 
        approval of the Attorney General, to govern the 
        implementation of this subsection.
            ``(4) In this subsection, the terms ``handgun'', 
        ``rifle'', ``shotgun'', ``firearm'', ``ammunition'', 
        ``machinegun'', ``semiautomatic assault weapon'', 
        ``large capacity ammunition feeding device'', ``short-
        barreled shotgun'', and ``short-barreled rifle'' shall 
        have the meanings given those terms in section 921(a) 
        of title 18, United States Code.''.

SEC. 664. UNAUTHORIZED INTRODUCTION OF DANGEROUS WEAPONS.

    Section 229 a. of the Atomic Energy Act of 1954 (42 U.S.C. 
2278a(a)) is amended in the first sentence by inserting ``or 
subject to the licensing authority of the Commission or to 
certification by the Commission under this Act or any other 
Act'' before the period at the end.

SEC. 665. SABOTAGE OF NUCLEAR FACILITIES OR FUEL.

    (a) In General.--Section 236 a. of the Atomic Energy Act of 
1954 (42 U.S.C. 2284(a)) is amended--
            (1) in paragraph (2), by striking ``storage 
        facility'' and inserting ``storage, treatment, or 
        disposal facility'';
            (2) in paragraph (3)--
                    (A) by striking ``such a utilization 
                facility'' and inserting ``a utilization 
                facility licensed under this Act''; and
                    (B) by striking ``or'' at the end;
            (3) in paragraph (4)--
                    (A) by striking ``facility licensed'' and 
                inserting ``, uranium conversion, or nuclear 
                fuel fabrication facility licensed or 
                certified''; and
                    (B) by striking the comma at the end and 
                inserting a semicolon; and
            (4) by inserting after paragraph (4) the following:
            ``(5) any production, utilization, waste storage, 
        waste treatment, waste disposal, uranium enrichment, 
        uranium conversion, or nuclear fuel fabrication 
        facility subject to licensing or certification under 
        this Act during construction of the facility, if the 
        destruction or damage caused or attempted to be caused 
        could adversely affect public health and safety during 
        the operation of the facility;
            ``(6) any primary facility or backup facility from 
        which a radiological emergency preparedness alert and 
        warning system is activated; or
            ``(7) any radioactive material or other property 
        subject to regulation by the Nuclear Regulatory 
        Commission that, before the date of the offense, the 
        Nuclear Regulatory Commission determines, by order or 
        regulation published in the Federal Register, is of 
        significance to the public health and safety or to 
        common defense and security,''.
    (b) Penalties.--Section 236 of the Atomic Energy Act of 
1954 (42 U.S.C. 2284) is amended by striking ``$10,000 or 
imprisoned for not more than 20 years, or both, and, if death 
results to any person, shall be imprisoned for any term of 
years or for life'' both places it appears and inserting 
``$1,000,000 or imprisoned for up to life without parole''.

SEC. 666. SECURE TRANSFER OF NUCLEAR MATERIALS.

    (a) Amendment.--Chapter 14 of the Atomic Energy Act of 1954 
(42 U.S.C. 2201-2210b) is amended by adding at the end the 
following new section:

``SEC. 170C. SECURE TRANSFER OF NUCLEAR MATERIALS.

    ``a. The Nuclear Regulatory Commission shall establish a 
system to ensure that materials described in subsection b., 
when transferred or received in the United States by any party 
pursuant to an import or export license issued pursuant to this 
Act, are accompanied by a manifest describing the type and 
amount of materials being transferred or received. Each 
individual receiving or accompanying the transfer of such 
materials shall be subject to a security background check 
conducted by appropriate Federal entities.
    ``b. Except as otherwise provided by the Commission by 
regulation, the materials referred to in subsection a. are 
byproduct materials, source materials, special nuclear 
materials, high-level radioactive waste, spent nuclear fuel, 
transuranic waste, and low-level radioactive waste (as defined 
in section 2(16) of the Nuclear Waste Policy Act of 1982 (42 
U.S.C. 10101(16))).''.
    (b) Regulations.--Not later than 1 year after the date of 
the enactment of this Act, and from time to time thereafter as 
it considers necessary, the Nuclear Regulatory Commission shall 
issue regulations identifying radioactive materials or classes 
of individuals that, consistent with the protection of public 
health and safety and the common defense and security, are 
appropriate exceptions to the requirements of section 170C of 
the Atomic Energy Act of 1954, as added by subsection (a) of 
this section.
    (c) Effective Date.--The amendment made by subsection (a) 
shall take effect upon the issuance of regulations under 
subsection (b), except that the background check requirement 
shall become effective on a date established by the Commission.
    (d) Effect on Other Law.--Nothing in this section or the 
amendment made by this section shall waive, modify, or affect 
the application of chapter 51 of title 49, United States Code, 
part A of subtitle V of title 49, United States Code, part B of 
subtitle VI of title 49, United States Code, and title 23, 
United States Code.
    (e) Table of Sections Amendment.--The table of sections for 
chapter 14 of the Atomic Energy Act of 1954 is amended by 
adding at the end the following new item:

``Sec. 170C. Secure transfer of nuclear materials.''.

SEC. 667. DEPARTMENT OF HOMELAND SECURITY CONSULTATION.

    Before issuing a license for a utilization facility, the 
Nuclear Regulatory Commission shall consult with the Department 
of Homeland Security concerning the potential vulnerabilities 
of the location of the proposed facility to terrorist attack.

SEC. 668. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There are authorized to be appropriated 
such sums as are necessary to carry out this subtitle and the 
amendments made by this subtitle.
    (b) Aggregate Amount of Charges.--Section 6101(c)(2)(A) of 
the Omnibus Budget Reconciliation Act of 1990 (42 U.S.C. 
2214(c)(2)(A)) is amended--
            (1) in clause (i), by striking ``and'' at the end;
            (2) in clause (ii), by striking the period at the 
        end and inserting ``; and'' and
            (3) by adding at the end the following:
                            ``(iii) amounts appropriated to the 
                        Commission for homeland security 
                        activities of the Commission for the 
                        fiscal year, except for the costs of 
                        fingerprinting and background checks 
                        required by section 149 of the Atomic 
                        Energy Act of 1954 (42 U.S.C. 2169) and 
                        the costs of conducting security 
                        inspections.''.

                     TITLE VII--VEHICLES AND FUELS

                     Subtitle A--Existing Programs

SEC. 701. USE OF ALTERNATIVE FUELS BY DUAL-FUELED VEHICLES.

    Section 400AA(a)(3)(E) of the Energy Policy and 
Conservation Act (42 U.S.C. 6374(a)(3)(E)) is amended to read 
as follows:
    ``(E)(i) Dual fueled vehicles acquired pursuant to this 
section shall be operated on alternative fuels unless the 
Secretary determines that an agency qualifies for a waiver of 
such requirement for vehicles operated by the agency in a 
particular geographic area in which--
            ``(I) the alternative fuel otherwise required to be 
        used in the vehicle is not reasonably available to 
        retail purchasers of the fuel, as certified to the 
        Secretary by the head of the agency; or
            ``(II) the cost of the alternative fuel otherwise 
        required to be used in the vehicle is unreasonably more 
        expensive compared to gasoline, as certified to the 
        Secretary by the head of the agency.
    ``(ii) The Secretary shall monitor compliance with this 
subparagraph by all such fleets and shall report annually to 
Congress on the extent to which the requirements of this 
subparagraph are being achieved. The report shall include 
information on annual reductions achieved from the use of 
petroleum-based fuels and the problems, if any, encountered in 
acquiring alternative fuels.''.

SEC. 702. NEIGHBORHOOD ELECTRIC VEHICLES.

    (a) Amendments.--Section 301 of the Energy Policy Act of 
1992 (42 U.S.C. 13211) is amended--
            (1) in paragraph (3), by striking ``or a dual 
        fueled vehicle'' and inserting ``, a dual fueled 
        vehicle, or a neighborhood electric vehicle'';
            (2) in paragraph (13), by striking ``and'' at the 
        end;
            (3) in paragraph (14), by striking the period at 
        the end and inserting ``; and''; and
            (4) by adding at the end the following:
            ``(15) the term `neighborhood electric vehicle' 
        means a motor vehicle that--
                    ``(A) meets the definition of a low-speed 
                vehicle (as defined in part 571 of title 49, 
                Code of Federal Regulations);
                    ``(B) meets the definition of a zero-
                emission vehicle (as defined in section 
                86.1702-99 of title 40, Code of Federal 
                Regulations);
                    ``(C) meets the requirements of Federal 
                Motor Vehicle Safety Standard No. 500; and
                    ``(D) has a maximum speed of not greater 
                than 25 miles per hour.''.
    (b) Credits.--Notwithstanding section 508 of the Energy 
Policy Act of 1992 (42 U.S.C. 13258) or any other provision of 
law, a neighborhood electric vehicle shall not be allocated 
credit as more than 1 vehicle for purposes of determining 
compliance with any requirement under title III or title V of 
such Act.

SEC. 703. CREDITS FOR MEDIUM AND HEAVY DUTY DEDICATED VEHICLES.

    Section 508 of the Energy Policy Act of 1992 (42 U.S.C. 
13258) is amended by adding at the end the following:
    ``(e) Credit for Purchase of Medium and Heavy Duty 
Dedicated Vehicles.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Heavy duty dedicated vehicle.--The 
                term `heavy duty dedicated vehicle' means a 
                dedicated vehicle that has a gross vehicle 
                weight rating of more than 14,000 pounds.
                    ``(B) Medium duty dedicated vehicle.--The 
                term `medium duty dedicated vehicle' means a 
                dedicated vehicle that has a gross vehicle 
                weight rating of more than 8,500 pounds but not 
                more than 14,000 pounds.
            ``(2) Credits for medium duty vehicles.--The 
        Secretary shall issue 2 full credits to a fleet or 
        covered person under this title, if the fleet or 
        covered person acquires a medium duty dedicated 
        vehicle.
            ``(3) Credits for heavy duty vehicles.--The 
        Secretary shall issue 3 full credits to a fleet or 
        covered person under this title, if the fleet or 
        covered person acquires a heavy duty dedicated vehicle.
            ``(4) Use of credits.--At the request of a fleet or 
        covered person allocated a credit under this 
        subsection, the Secretary shall, for the year in which 
        the acquisition of the dedicated vehicle is made, treat 
        that credit as the acquisition of 1 alternative fueled 
        vehicle that the fleet or covered person is required to 
        acquire under this title.''.

SEC. 704. INCREMENTAL COST ALLOCATION.

    Section 303(c) of the Energy Policy Act of 1992 (42 U.S.C. 
13212(c)) is amended by striking ``may'' and inserting 
``shall''.

SEC. 705. ALTERNATIVE COMPLIANCE AND FLEXIBILITY.

    (a) Alternative Compliance.--
            (1) In general.--Title V of the Energy Policy Act 
        of 1992 (42 U.S.C. 13251 et seq.) is amended--
                    (A) by redesignating section 514 as section 
                515; and
                    (B) by inserting after section 513 the 
                following:

``SEC. 514. ALTERNATIVE COMPLIANCE.

    ``(a) Application for Waiver.--Any covered person subject 
to section 501 and any State subject to section 507(o) may 
petition the Secretary for a waiver of the applicable 
requirements of section 501 or 507(o).
    ``(b) Grant of Waiver.--The Secretary may grant a waiver of 
the requirements of section 501 or 507(o) upon a showing that 
the fleet owned, operated, leased, or otherwise controlled by 
the State or covered person--
            ``(1) will achieve a reduction in its annual 
        consumption of petroleum fuels equal to the reduction 
        in consumption ofpetroleum that would result from 100 
percent compliance with fuel use requirements in section 501, or, for 
entities covered under section 507(o), a reduction equal to the covered 
State entity's consumption of alternative fuels if all its alternative 
fuel vehicles given credit under section 508 were to use alternative 
fuel 100 percent of the time; and
            ``(2) is in compliance with all applicable vehicle 
        emission standards established by the Administrator 
        under the Clean Air Act (42 U.S.C. 7401 et seq.).
    ``(c) Revocation of Waiver.--The Secretary shall revoke any 
waiver granted under this section if the State or covered 
person fails to comply with subsection (b).''.
            (2) Table of contents amendment.--The table of 
        contents of the Energy Policy Act of 1992 (42 U.S.C. 
        prec. 13201) is amended by striking the item relating 
        to section 514 and inserting the following:

``Sec. 514. Alternative compliance.
``Sec. 515. Authorization of appropriations.''.

    (b) Credits.--Section 508 of the Energy Policy Act of 1992 
(42 U.S.C. 13258) (as amended by section 703) is amended--
            (1) by redesignating subsections (b) through (e) as 
        subsections (c) through (f), respectively;
            (2) by striking subsection (a) and inserting the 
        following:
    ``(a) In General.--The Secretary shall allocate a credit to 
a fleet or covered person that is required to acquire an 
alternative fueled vehicle under this title, if that fleet or 
person acquires an alternative fueled vehicle--
            ``(1) in excess of the number that fleet or person 
        is required to acquire under this title;
            ``(2) before the date on which that fleet or person 
        is required to acquire an alternative fueled vehicle 
        under this title; or
            ``(3) that is eligible to receive credit under 
        subsection (b).
    ``(b) Maximum Available Power.--The Secretary shall 
allocate credit to a fleet under subsection (a)(3) for the 
acquisition by the fleet of a hybrid vehicle as follows:
            ``(1) For a hybrid vehicle with at least 4 percent 
        but less than 10 percent maximum available power, the 
        Secretary shall allocate 25 percent of 1 credit.
            ``(2) For a hybrid vehicle with at least 10 percent 
        but less than 20 percent maximum available power, the 
        Secretary shall allocate 50 percent of 1 credit.
            ``(3) For a hybrid vehicle with at least 20 percent 
        but less than 30 percent maximum available power, the 
        Secretary shall allocate 75 percent of 1 credit.
            ``(4) For a hybrid vehicle with 30 percent or more 
        maximum available power, the Secretary shall allocate 1 
        credit.''; and
            (3) by adding at the end the following:
    ``(g) Credit for Investment in Alternative Fuel 
Infrastructure.--
            ``(1) Definition of qualifying infrastructure.--In 
        this subsection, the term `qualifying infrastructure' 
        means--
                    ``(A) equipment required to refuel or 
                recharge alternative fueled vehicles;
                    ``(B) facilities or equipment required to 
                maintain, repair, or operate alternative fueled 
                vehicles; and
                    ``(C) such other activities as the 
                Secretary considers to constitute an 
                appropriate expenditure in support of the 
                operation, maintenance, or further widespread 
                adoption of or utilization of alternative 
                fueled vehicles.
            ``(2) Issuance of credits.--The Secretary shall 
        issue a credit to a fleet or covered person under this 
        title for investment in qualifying infrastructure if 
        the qualifying infrastructure is open to the general 
        public during regular business hours.
            ``(3) Amount.--For the purpose of credits under 
        this subsection--
                    ``(A) 1 credit shall be equal to a minimum 
                investment of $25,000 in cash or equivalent 
                expenditure, as determined by the Secretary; 
                and
                    ``(B) except in the case of a Federal or 
                State fleet, no part of the investment may be 
                provided by Federal or State funds.
            ``(4) Use of credits.--At the request of a fleet or 
        covered person allocated a credit under this 
        subsection, the Secretary shall, for the year in which 
        the investment is made, treat that credit as the 
        acquisition of 1 alternative fueled vehicle that the 
        fleet or covered person is required to acquire under 
        this title.
    ``(h) Definition of Maximum Available Power.--In this 
section, the term `maximum available power' means the quotient 
obtained by dividing--
            ``(1) the maximum power available from the energy 
        storage device of a hybrid vehicle, during a standard 
        10-second pulse power or equivalent test; by
            ``(2) the sum of--
                    ``(A) the maximum power described in 
                subparagraph (A); and
                    ``(B) the net power of the internal 
                combustion or heat engine, as determined in 
                accordance with standards established by the 
                Society of Automobile Engineers.''.
    (c) Lease Condensate Fuels.--Section 301 of the Energy 
Policy Act of 1992 (42 U.S.C. 13211) (as amended by section 
702) is amended--
            (1) in paragraph (2), by inserting ``mixtures 
        containing 50 percent or more by volume of lease 
        condensate or fuels extracted from lease condensate;'' 
        after ``liquefied petroleum gas;'';
            (2) in paragraph (14)--
                    (A) by inserting ``mixtures containing 50 
                percent or more by volume of lease condensate 
                or fuels extracted from lease condensate,'' 
                after ``liquefied petroleum gas,''; and
                    (B) by striking ``and'' at the end;
            (3) in paragraph (15), by striking the period at 
        the end and inserting ``; and''; and
            (4) by adding at the end the following:
            ``(16) the term `lease condensate' means a mixture, 
        primarily of pentanes and heavier hydrocarbons, that is 
        recovered as a liquid from natural gas in lease 
        separation facilities.''.
    (d) Lease Condensate Use Credits.--
            (1) In general.--Title III of the Energy Policy Act 
        of 1992 (42 U.S.C. 13211 et seq.) is amended by adding 
        at the end the following:

``SEC. 313. LEASE CONDENSATE USE CREDITS.

    ``(a) In General.--Subject to subsection (d), the Secretary 
shall allocate 1 credit under this section to a fleet or 
covered person for each qualifying volume of the lease 
condensate component of fuel containing at least 50 percent 
lease condensate, or fuels extracted from lease condensate, 
after the date of enactment of this section for use by the 
fleet or covered person in vehicles owned or operated by the 
fleet or covered person that weigh more than 8,500 pounds gross 
vehicle weight rating.
    ``(b) Requirements.--A credit allocated under this 
section--
            ``(1) shall be subject to the same exceptions, 
        authority, documentation, and use of credits that are 
        specified for qualifying volumes of biodiesel in 
        section 312; and
            ``(2) shall not be considered a credit under 
        section 508.
    ``(c) Regulation.--
            ``(1) In general.--Subject to subsection (d), not 
        later than January 1, 2004, after the collection of 
        appropriate information and data that consider usage 
        options,uses in other industries, products, or 
processes, potential volume capacities, costs, air emissions, and fuel 
efficiencies, the Secretary shall issue a regulation establishing 
requirements and procedures for the implementation of this section.
            ``(2) Qualifying volume.--The regulation shall 
        include a determination of an appropriate qualifying 
        volume for lease condensate, except that in no case 
        shall the Secretary determine that the qualifying 
        volume for lease condensate is less than 1,125 gallons.
    ``(d) Applicability.--This section applies unless the 
Secretary finds that the use of lease condensate as an 
alternative fuel would adversely affect public health or safety 
or ambient air quality or the environment.''.
            (2) Table of contents amendment.--The table of 
        contents of the Energy Policy Act of 1992 (42 U.S.C. 
        prec. 13201) is amended by adding at the end of the 
        items relating to title III the following:

``Sec. 313. Lease condensate use credits.''.

    (e) Emergency Exemption.--Section 301 of the Energy Policy 
Act of 1992 (42 U.S.C. 13211) (as amended by section 702 and 
this section) is amended in paragraph (9)(E) by inserting 
before the semicolon at the end ``, including vehicles directly 
used in the emergency repair of transmission lines and in the 
restoration of electricity service following power outages, as 
determined by the Secretary''.

SEC. 706. REVIEW OF ENERGY POLICY ACT OF 1992 PROGRAMS.

    (a) In General.--Not later than 180 days after the date of 
enactment of this section, the Secretary of Energy shall 
complete a study to determine the effect that titles III, IV, 
and V of the Energy Policy Act of 1992 (42 U.S.C. 13211 et 
seq.) have had on--
            (1) the development of alternative fueled vehicle 
        technology;
            (2) the availability of that technology in the 
        market; and
            (3) the cost of alternative fueled vehicles.
    (b) Topics.--As part of the study under subsection (a), the 
Secretary shall specifically identify--
            (1) the number of alternative fueled vehicles 
        acquired by fleets or covered persons required to 
        acquire alternative fueled vehicles;
            (2) the quantity, by type, of alternative fuel 
        actually used in alternative fueled vehicles acquired 
        by fleets or covered persons;
            (3) the quantity of petroleum displaced by the use 
        of alternative fuels in alternative fueled vehicles 
        acquired by fleets or covered persons;
            (4) the direct and indirect costs of compliance 
        with requirements under titles III, IV, and V of the 
        Energy Policy Act of 1992 (42 U.S.C. 13211 et seq.), 
        including--
                    (A) vehicle acquisition requirements 
                imposed on fleets or covered persons;
                    (B) administrative and recordkeeping 
                expenses;
                    (C) fuel and fuel infrastructure costs;
                    (D) associated training and employee 
                expenses; and
                    (E) any other factors or expenses the 
                Secretary determines to be necessary to compile 
                reliable estimates of the overall costs and 
                benefits of complying with programs under those 
                titles for fleets, covered persons, and the 
                national economy;
            (5) the existence of obstacles preventing 
        compliance with vehicle acquisition requirements and 
        increased use of alternative fuel in alternative fueled 
        vehicles acquired by fleets or covered persons; and
            (6) the projected impact of amendments to the 
        Energy Policy Act of 1992 made by this title.
    (c) Report.--Upon completion of the study under this 
section, the Secretary shall submit to Congress a report that 
describes the results of the study and includes any 
recommendations of the Secretary for legislative or 
administrative changes concerning the alternative fueled 
vehicle requirements under titles III, IV and V of the Energy 
Policy Act of 1992 (42 U.S.C. 13211 et seq.).

SEC. 707. REPORT CONCERNING COMPLIANCE WITH ALTERNATIVE FUELED VEHICLE 
                    PURCHASING REQUIREMENTS.

    Section 310(b)(1) of the Energy Policy Act of 1992 (42 
U.S.C. 13218(b)(1)) is amended by striking ``1 year after the 
date of enactment of this subsection'' and inserting ``February 
15, 2004''.

  Subtitle B--Hybrid Vehicles, Advanced Vehicles, and Fuel Cell Buses

                        PART 1--HYBRID VEHICLES

SEC. 711. HYBRID VEHICLES.

    The Secretary of Energy shall accelerate efforts directed 
toward the improvement of batteries and other rechargeable 
energy storage systems, power electronics, hybrid systems 
integration, and other technologies for use in hybrid vehicles.

                       PART 2--ADVANCED VEHICLES

SEC. 721. DEFINITIONS.

    In this part:
            (1) Alternative fueled vehicle.--
                    (A) In general.--The term ``alternative 
                fueled vehicle'' means a vehicle propelled 
                solely on an alternative fuel (as defined in 
                section 301 of the Energy Policy Act of 1992 
                (42 U.S.C. 13211)).
                    (B) Exclusion.--The term ``alternative 
                fueled vehicle'' does not include a vehicle 
                that the Secretary determines, by regulation, 
                does not yield substantial environmental 
                benefits over a vehicle operating solely on 
                gasoline or diesel derived from fossil fuels.
            (2) Fuel cell vehicle.--The term ``fuel cell 
        vehicle'' means a vehicle propelled by an electric 
        motor powered by a fuel cell system that converts 
        chemical energy into electricity by combining oxygen 
        (from air) with hydrogen fuel that is stored on the 
        vehicle or is produced onboard by reformation of a 
        hydrocarbon fuel. Such fuel cell system may or may not 
        include the use of auxiliary energy storage systems to 
        enhance vehicle performance.
            (3) Hybrid vehicle.--The term ``hybrid vehicle'' 
        means a medium or heavy duty vehicle propelled by an 
        internal combustion engine or heat engine using any 
        combustible fuel and an onboard rechargeable energy 
        storage device.
            (4) Neighborhood electric vehicle.--The term 
        ``neighborhood electric vehicle'' means a motor vehicle 
        that--
                    (A) meets the definition of a low-speed 
                vehicle (as defined in part 571 of title 49, 
                Code of Federal Regulations);
                    (B) meets the definition of a zero-emission 
                vehicle (as defined in section 86.1702-99 of 
                title 40, Code of Federal Regulations);
                    (C) meets the requirements of Federal Motor 
                Vehicle Safety Standard No. 500; and
                    (D) has a maximum speed of not greater than 
                25 miles per hour.
            (5) Pilot program.--The term ``pilot program'' 
        means the competitive grant program established under 
        section 722.
            (6) Secretary.--The term ``Secretary'' means the 
        Secretary of Energy.
            (7) Ultra-low sulfur diesel vehicle.--The term 
        ``ultra-low sulfur diesel vehicle'' means a vehicle 
        manufactured in any of model years 2003 through 2006 
        powered by a heavy-duty diesel engine that--
                    (A) is fueled by diesel fuel that contains 
                sulfur at not more than 15 parts per million; 
                and
                    (B) emits not more than the lesser of--
                            (i) for vehicles manufactured in--
                                    (I) model year 2003, 3.0 
                                grams per brake horsepower-hour 
                                of oxides of nitrogen and .01 
                                grams per brake horsepower-hour 
                                of particulate matter; and
                                    (II) model years 2004 
                                through 2006, 2.5 grams per 
                                brake horsepower-hour of 
                                nonmethane hydrocarbons and 
                                oxides of nitrogen and .01 
                                grams per brake horsepower-hour 
                                of particulate matter; or
                            (ii) the quantity of emissions of 
                        nonmethane hydrocarbons, oxides of 
                        nitrogen, and particulate matter of the 
                        best-performing technology of ultra-low 
                        sulfur diesel vehicles of the same 
                        class and application that are 
                        commercially available.

SEC. 722. PILOT PROGRAM.

    (a) Establishment.--The Secretary, in consultation with the 
Secretary of Transportation, shall establish a competitive 
grant pilot program, to be administered through the Clean 
Cities Program of the Department of Energy, to provide not more 
than 15 geographically dispersed project grants to State 
governments, local governments, or metropolitan transportation 
authorities to carry out a project or projects for the purposes 
described in subsection (b).
    (b) Grant Purposes.--A grant under this section may be used 
for the following purposes:
            (1) The acquisition of alternative fueled vehicles 
        or fuel cell vehicles, including--
                    (A) passenger vehicles (including 
                neighborhood electric vehicles); and
                    (B) motorized 2-wheel bicycles, scooters, 
                or other vehicles for use by law enforcement 
                personnel or other State or local government or 
                metropolitan transportation authority 
                employees.
            (2) The acquisition of alternative fueled vehicles, 
        hybrid vehicles, or fuel cell vehicles, including--
                    (A) buses used for public transportation or 
                transportation to and from schools;
                    (B) delivery vehicles for goods or 
                services; and
                    (C) ground support vehicles at public 
                airports (including vehicles to carry baggage 
                or push or pull airplanes toward or away from 
                terminal gates).
            (3) The acquisition of ultra-low sulfur diesel 
        vehicles.
            (4) Installation or acquisition of infrastructure 
        necessary to directly support an alternative fueled 
        vehicle, fuel cell vehicle, or hybrid vehicle project 
        funded by the grant, including fueling and other 
        support equipment.
            (5) Operation and maintenance of vehicles, 
        infrastructure, and equipment acquired as part of a 
        project funded by the grant.
    (c) Applications.--
            (1) Requirements.--
                    (A) In general.--The Secretary shall issue 
                requirements for applying for grants under the 
                pilot program.
                    (B) Minimum requirements.--At a minimum, 
                the Secretary shall require that an application 
                for a grant--
                            (i) be submitted by the head of a 
                        State or local government or a 
                        metropolitan transportation authority, 
                        or any combination thereof, and a 
                        registered participant in the Clean 
                        Cities Program of the Department of 
                        Energy; and
                            (ii) include--
                                    (I) a description of the 
                                project proposed in the 
                                application, including how the 
                                project meets the requirements 
                                of this part;
                                    (II) an estimate of the 
                                ridership or degree of use of 
                                the project;
                                    (III) an estimate of the 
                                air pollution emissions reduced 
                                and fossil fuel displaced as a 
                                result of the project, and a 
                                plan to collect and disseminate 
                                environmental data, related to 
                                the project to be funded under 
                                the grant, over the life of the 
                                project;
                                    (IV) a description of how 
                                the project will be sustainable 
                                without Federal assistance 
                                after the completion of the 
                                term of the grant;
                                    (V) a complete description 
                                of the costs of the project, 
                                including acquisition, 
                                construction, operation, and 
                                maintenance costs over the 
                                expected life of the project;
                                    (VI) a description of which 
                                costs of the project will be 
                                supported by Federal assistance 
                                under this part; and
                                    (VII) documentation to the 
                                satisfaction of the Secretary 
                                that diesel fuel containing 
                                sulfur at not more than 15 
                                parts per million is available 
                                for carrying out the project, 
                                and a commitment by the 
                                applicant to use such fuel in 
                                carrying out the project.
            (2) Partners.--An applicant under paragraph (1) may 
        carry out a project under the pilot program in 
        partnership with public and private entities.
    (d) Selection Criteria.--In evaluating applications under 
the pilot program, the Secretary shall--
            (1) consider each applicant's previous experience 
        with similar projects; and
            (2) give priority consideration to applications 
        that--
                    (A) are most likely to maximize protection 
                of the environment;
                    (B) demonstrate the greatest commitment on 
                the part of the applicant to ensure funding for 
                the proposed project and the greatest 
                likelihood that the project will be maintained 
                or expanded after Federal assistance under this 
                part is completed; and
                    (C) exceed the minimum requirements of 
                subsection (c)(1)(B)(ii).
    (e) Pilot Project Requirements.--
            (1) Maximum amount.--The Secretary shall not 
        provide more than $20,000,000 in Federal assistance 
        under the pilot program to any applicant.
            (2) Cost sharing.--The Secretary shall not provide 
        more than 50 percent of the cost, incurred during the 
        period of the grant, of any project under the pilot 
        program.
            (3) Maximum period of grants.--The Secretary shall 
        not fund any applicant under the pilot program for more 
        than 5 years.
            (4) Deployment and distribution.--The Secretary 
        shall seek to the maximum extent practicable to ensure 
        a broad geographic distribution of project sites.
            (5) Transfer of information and knowledge.--The 
        Secretary shall establish mechanisms to ensure that the 
        information and knowledge gained by participants in the 
        pilot program are transferred among the pilot program 
        participants and to other interested parties, including 
        other applicants that submitted applications.
    (f) Schedule.--
            (1) Publication.--Not later than 90 days after the 
        date of enactment of this Act, the Secretary shall 
        publish in the Federal Register, Commerce Business 
        Daily, and elsewhere as appropriate, a request for 
        applications to undertake projects under the pilot 
        program. Applications shall be due not later than 180 
        days after the date of publication of the notice.
            (2) Selection.--Not later than 180 days after the 
        date by which applications for grants are due, the 
        Secretary shall select by competitive, peer reviewed 
        proposal, all applications for projects to be awarded a 
        grant under the pilot program.
    (g) Limit on Funding.--The Secretary shall provide not less 
than 20 nor more than 25 percent of the grant funding made 
available under this section for the acquisition of ultra-low 
sulfur diesel vehicles.

SEC. 723. REPORTS TO CONGRESS.

    (a) Initial Report.--Not later than 60 days after the date 
on which grants are awarded under this part, the Secretary 
shall submit to Congress a report containing--
            (1) an identification of the grant recipients and a 
        description of the projects to be funded;
            (2) an identification of other applicants that 
        submitted applications for the pilot program; and
            (3) a description of the mechanisms used by the 
        Secretary to ensure that the information and knowledge 
        gained by participants in the pilot program are 
        transferred among the pilot program participants and to 
        other interested parties, including other applicants 
        that submitted applications.
    (b) Evaluation.--Not later than 3 years after the date of 
enactment of this Act, and annually thereafter until the pilot 
program ends, the Secretary shall submit to Congress a report 
containing an evaluation of the effectiveness of the pilot 
program, including--
            (1) an assessment of the benefits to the 
        environment derived from the projects included in the 
        pilot program; and
            (2) an estimate of the potential benefits to the 
        environment to be derived from widespread application 
        of alternative fueled vehicles and ultra-low sulfur 
        diesel vehicles.

SEC. 724. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to the Secretary to 
carry out this part $200,000,000, to remain available until 
expended.

                        PART 3--FUEL CELL BUSES

SEC. 731. FUEL CELL TRANSIT BUS DEMONSTRATION.

    (a) In General.--The Secretary of Energy, in consultation 
with the Secretary of Transportation, shall establish a transit 
bus demonstration program to make competitive, merit-based 
awards for 5-year projects to demonstrate not more than 25 fuel 
cell transit buses (and necessary infrastructure) in 5 
geographically dispersed localities.
    (b) Preference.--In selecting projects under this section, 
the Secretary of Energy shall give preference to projects that 
are most likely to mitigate congestion and improve air quality.
    (c) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary of Energy to carry out this 
section $10,000,000 for each of fiscal years 2004 through 2008.

                     Subtitle C--Clean School Buses

SEC. 741. DEFINITIONS.

    In this subtitle:
            (1) Administrator.--The term ``Administrator'' 
        means the Administrator of the Environmental Protection 
        Agency.
            (2) Alternative fuel.--The term ``alternative 
        fuel'' means liquefied natural gas, compressed natural 
        gas, liquefied petroleum gas, hydrogen, propane, or 
        methanol or ethanol at no less than 85 percent by 
        volume.
            (3) Alternative fuel school bus.--The term 
        ``alternative fuel school bus'' means a school bus that 
        meets all of the requirements of this subtitle and is 
        operated solely on an alternative fuel.
            (4) Emissions control retrofit technology.--The 
        term ``emissions control retrofit technology'' means a 
        particulate filter or other emissions control equipment 
        that is verified or certified by the Administrator or 
        the California Air Resources Board as an effective 
        emission reduction technology when installed on an 
        existing school bus.
            (5) Idling.--The term ``idling'' means operating an 
        engine while remaining stationary for more than 
        approximately 15 minutes, except that the term does not 
        apply to routine stoppages associated with traffic 
        movement or congestion.
            (6) Secretary.--The term ``Secretary'' means the 
        Secretary of Energy.
            (7) Ultra-low sulfur diesel fuel.--The term 
        ``ultra-low sulfur diesel fuel'' means diesel fuel that 
        contains sulfur at not more than 15 parts per million.
            (8) Ultra-low sulfur diesel fuel school bus.--The 
        term ``ultra-low sulfur diesel fuel school bus'' means 
        a school bus that meets all of the requirements of this 
        subtitle and is operated solely on ultra-low sulfur 
        diesel fuel.

SEC. 742. PROGRAM FOR REPLACEMENT OF CERTAIN SCHOOL BUSES WITH CLEAN 
                    SCHOOL BUSES.

    (a) Establishment.--The Administrator, in consultation with 
the Secretary and other appropriate Federal departments and 
agencies, shall establish a program for awarding grants on a 
competitive basis to eligible entities for the replacement of 
existing school buses manufactured before model year 1991 with 
alternative fuel school buses and ultra-low sulfur diesel fuel 
school buses.
    (b) Requirements.--
            (1) In general.--Not later than 90 days after the 
        date of enactment of this Act, the Administrator shall 
        establish and publish in the Federal Register grant 
        requirements on eligibility for assistance, and on 
        implementation of the program established under 
        subsection (a), including instructions for the 
        submission of grant applications and certification 
        requirements to ensure compliance with this subtitle.
            (2) Application deadlines.--The requirements 
        established under paragraph (1) shall require 
        submission of grant applications not later than--
                    (A) in the case of the first year of 
                program implementation, the date that is 180 
                days after the publication of the requirements 
                in the Federal Register; and
                    (B) in the case of each subsequent year, 
                June 1 of the year.
    (c) Eligible Recipients.--A grant shall be awarded under 
this section only--
            (1) to 1 or more local or State governmental 
        entities responsible for providing school bus service 
        to 1 or more public school systems or responsible for 
        the purchase of school buses;
            (2) to 1 or more contracting entities that provide 
        school bus service to 1 or more public school systems, 
        if the grant application is submitted jointly with the 
        1 or more school systems to be served by the buses, 
        except that the application may provide that buses 
        purchased using funds awarded shall be owned, operated, 
        and maintained exclusively by the 1 or more contracting 
        entities; or
            (3) to a nonprofit school transportation 
        association representing private contracting entities, 
        if the association has notified and received approval 
        from the 1 or more school systems to be served by the 
        buses.
    (d) Award Deadlines.--
            (1) In general.--Subject to paragraph (2), the 
        Administrator shall award a grant made to a qualified 
        applicant for a fiscal year--
                    (A) in the case of the first fiscal year of 
                program implementation, not later than the date 
                that is 90 days after the application deadline 
                established under subsection (b)(2); and
                    (B) in the case of each subsequent fiscal 
                year, not later than August 1 of the fiscal 
                year.
            (2) Insufficient number of qualified grant 
        applications.--If the Administrator does not receive a 
        sufficient number of qualified grant applications to 
        meet the requirements of subsection (i)(1) for a fiscal 
        year, the Administrator shall award a grant made to a 
        qualified applicant under subsection (i)(2) not later 
        than September 30 of the fiscal year.
    (e) Types of Grants.--
            (1) In general.--A grant under this section shall 
        be used for the replacement of school buses 
        manufactured before model year 1991 with alternative 
        fuel school buses and ultra-low sulfur diesel fuel 
        school buses.
            (2) No economic benefit.--Other than the receipt of 
        the grant, a recipient of a grant under this section 
        may not receive any economic benefit in connection with 
        the receipt of the grant.
            (3) Priority of grant applications.--The 
        Administrator shall give priority to applicants that 
        propose to replace school buses manufactured before 
        model year 1977.
    (f) Conditions of Grant.--A grant provided under this 
section shall include the following conditions:
            (1) School bus fleet.--All buses acquired with 
        funds provided under the grant shall be operated as 
        part of the school bus fleet for which the grant was 
        made for a minimum of 5 years.
            (2) Use of funds.--Funds provided under the grant 
        may only be used--
                    (A) to pay the cost, except as provided in 
                paragraph (3), of new alternative fuel school 
                buses or ultra-low sulfur diesel fuel school 
                buses, including State taxes and contract fees 
                associated with the acquisition of such buses; 
                and
                    (B) to provide--
                            (i) up to 20 percent of the price 
                        of the alternative fuel school buses 
                        acquired, for necessary alternative 
                        fuel infrastructure if the 
                        infrastructure will only be available 
                        to the grant recipient; and
                            (ii) up to 25 percent of the price 
                        of the alternative fuel school buses 
                        acquired, for necessary alternative 
                        fuel infrastructure if the 
                        infrastructure will be available to the 
                        grant recipient and to other bus 
                        fleets.
            (3) Grant recipient funds.--The grant recipient 
        shall be required to provide at least--
                    (A) in the case of a grant recipient 
                described in paragraph (1) or (3) of subsection 
                (c), the lesser of--
                            (i) an amount equal to 15 percent 
                        of the total cost of each bus received; 
                        or
                            (ii) $15,000 per bus; and
                    (B) in the case of a grant recipient 
                described in subsection (c)(2), the lesser of--
                            (i) an amount equal to 20 percent 
                        of the total cost of each bus received; 
                        or
                            (ii) $20,000 per bus.
            (4) Ultra-low sulfur diesel fuel.--In the case of a 
        grant recipient receiving a grant for ultra-low sulfur 
        diesel fuel school buses, the grant recipient shall be 
        required to provide documentation to the satisfaction 
        of the Administrator that diesel fuel containing sulfur 
        at not more than 15 parts per million is available for 
        carrying out the purposes of the grant, and a 
        commitment by the applicant to use such fuel in 
        carrying out the purposes of the grant.
            (5) Timing.--All alternative fuel school buses, 
        ultra-low sulfur diesel fuel school buses, or 
        alternative fuel infrastructure acquired under a grant 
        awarded under this section shall be purchased and 
        placed in service as soon as practicable.
    (g) Buses.--
            (1) In general.--Except as provided in paragraph 
        (2), funding under a grant made under this section for 
        the acquisition of new alternative fuel school buses or 
        ultra-low sulfur diesel fuel school buses shall only be 
        used to acquire school buses--
                    (A) with a gross vehicle weight of greater 
                than 14,000 pounds;
                    (B) that are powered by a heavy duty 
                engine;
                    (C) in the case of alternative fuel school 
                buses manufactured in model years 2004 through 
                2006, that emit not more than 1.8 grams per 
                brake horsepower-hour of nonmethane 
                hydrocarbons and oxides of nitrogen and .01 
                grams per brake horsepower-hour of particulate 
                matter; and
                    (D) in the case of ultra-low sulfur diesel 
                fuel school buses manufactured in model years 
                2004 through 2006, that emit not more than 2.5 
                grams per brake horsepower-hour of nonmethane 
                hydrocarbons and oxides of nitrogen and .01 
                grams per brake horsepower-hour of particulate 
                matter.
            (2) Limitations.--A bus shall not be acquired under 
        this section that emits nonmethane hydrocarbons, oxides 
        of nitrogen, or particulate matter at a rate greater 
        than the best performing technology of the same class 
        of ultra-low sulfur diesel fuel school buses 
        commercially available at the time the grant is made.
    (h) Deployment and Distribution.--The Administrator shall--
            (1) seek, to the maximum extent practicable, to 
        achieve nationwide deployment of alternative fuel 
        school buses and ultra-low sulfur diesel fuel school 
        buses through the program under this section; and
            (2) ensure a broad geographic distribution of grant 
        awards, with a goal of no State receiving more than 10 
        percent of the grant funding made available under this 
        section for a fiscal year.
    (i) Allocation of Funds.--
            (1) In general.--Subject to paragraph (2), of the 
        amount of grant funding made available to carry out 
        this section for any fiscal year, the Administrator 
        shall use--
                    (A) 70 percent for the acquisition of 
                alternative fuel school buses or supporting 
                infrastructure; and
                    (B) 30 percent for the acquisition of 
                ultra-low sulfur diesel fuel school buses.
            (2) Insufficient number of qualified grant 
        applications.--After the first fiscal year in which 
        this program is in effect, if the Administrator does 
        not receive a sufficient number of qualified grant 
        applications to meet the requirements of subparagraph 
        (A) or (B) of paragraph (1) for a fiscal year, 
        effective beginning on August 1 of thefiscal year, the 
Administrator shall make the remaining funds available to other 
qualified grant applicants under this section.
    (j) Reduction of School Bus Idling.--Each local educational 
agency (as defined in section 9101 of the Elementary and 
Secondary Education Act of 1965 (20 U.S.C. 7801)) that receives 
Federal funds under the Elementary and Secondary Education Act 
of 1965 (20 U.S.C. 6301 et seq.) is encouraged to develop a 
policy, consistent with the health, safety, and welfare of 
students and the proper operation and maintenance of school 
buses, to reduce the incidence of unnecessary school bus idling 
at schools when picking up and unloading students.
    (k) Annual Report.--
            (1) In general.--Not later than January 31 of each 
        year, the Administrator shall transmit to Congress a 
        report evaluating implementation of the programs under 
        this section and section 743.
            (2) Components.--The reports shall include a 
        description of--
                    (A) the total number of grant applications 
                received;
                    (B) the number and types of alternative 
                fuel school buses, ultra-low sulfur diesel fuel 
                school buses, and retrofitted buses requested 
                in grant applications;
                    (C) grants awarded and the criteria used to 
                select the grant recipients;
                    (D) certified engine emission levels of all 
                buses purchased or retrofitted under the 
                programs under this section and section 743;
                    (E) an evaluation of the in-use emission 
                level of buses purchased or retrofitted under 
                the programs under this section and section 
                743; and
                    (F) any other information the Administrator 
                considers appropriate.
    (l) Authorization of Appropriations.--There are authorized 
to be appropriated to the Administrator to carry out this 
section, to remain available until expended--
            (1) $45,000,000 for fiscal year 2005;
            (2) $65,000,000 for fiscal year 2006;
            (3) $90,000,000 for fiscal year 2007; and
            (4) such sums as are necessary for each of fiscal 
        years 2008 and 2009.

SEC. 743. DIESEL RETROFIT PROGRAM.

    (a) Establishment.--The Administrator, in consultation with 
the Secretary, shall establish a program for awarding grants on 
a competitive basis to entities for the installation of 
retrofit technologies for diesel school buses.
    (b) Eligible Recipients.--A grant shall be awarded under 
this section only--
            (1) to a local or State governmental entity 
        responsible for providing school bus service to 1 or 
        more public school systems;
            (2) to 1 or more contracting entities that provide 
        school bus service to 1 or more public school systems, 
        if the grant application is submitted jointly with the 
        1 or more school systems that the buses will serve, 
        except that the application may provide that buses 
        purchased using funds awarded shall be owned, operated, 
        and maintained exclusively by the 1 or more contracting 
        entities; or
            (3) to a nonprofit school transportation 
        association representing private contracting entities, 
        if the association has notified and received approval 
        from the 1 or more school systems to be served by the 
        buses.
    (c) Awards.--
            (1) In general.--The Administrator shall seek, to 
        the maximum extent practicable, to ensure a broad 
        geographic distribution of grants under this section.
            (2) Preferences.--In making awards of grants under 
        this section, the Administrator shall give preference 
        to proposals that--
                    (A) will achieve the greatest reductions in 
                emissions of nonmethane hydrocarbons, oxides of 
                nitrogen, or particulate matter per proposal or 
                per bus; or
                    (B) involve the use of emissions control 
                retrofit technology on diesel school buses that 
                operate solely on ultra-low sulfur diesel fuel.
    (d) Conditions of Grant.--A grant shall be provided under 
this section on the conditions that--
            (1) buses on which retrofit emissions-control 
        technology are to be demonstrated--
                    (A) will operate on ultra-low sulfur diesel 
                fuel where such fuel is reasonably available or 
                required for sale by State or local law or 
                regulation;
                    (B) were manufactured in model year 1991 or 
                later; and
                    (C) will be used for the transportation of 
                school children to and from school for a 
                minimum of 5 years;
            (2) grant funds will be used for the purchase of 
        emission control retrofit technology, including State 
        taxes and contract fees; and
            (3) grant recipients will provide at least 15 
        percent of the total cost of the retrofit, including 
        the purchase of emission control retrofit technology 
        and all necessary labor for installation of the 
        retrofit.
    (e) Verification.--Not later than 90 days after the date of 
enactment of this Act, the Administrator shall publish in the 
Federal Register procedures to verify--
            (1) the retrofit emissions-control technology to be 
        demonstrated;
            (2) that buses powered by ultra-low sulfur diesel 
        fuel on which retrofit emissions-control technology are 
        to be demonstrated will operate on diesel fuel 
        containing not more than 15 parts per million of 
        sulfur; and
            (3) that grants are administered in accordance with 
        this section.
    (f) Authorization of Appropriations.--There are authorized 
to be appropriated to the Administrator to carry out this 
section, to remain available until expended--
            (1) $20,000,000 for fiscal year 2005;
            (2) $35,000,000 for fiscal year 2006;
            (3) $45,000,000 for fiscal year 2007; and
            (4) such sums as are necessary for each of fiscal 
        years 2008 and 2009.

SEC. 744. FUEL CELL SCHOOL BUSES.

    (a) Establishment.--The Secretary shall establish a program 
for entering into cooperative agreements--
            (1) with private sector fuel cell bus developers 
        for the development of fuel cell-powered school buses; 
        and
            (2) subsequently, with not less than 2 units of 
        local government using natural gas-powered school buses 
        and such private sector fuel cell bus developers to 
        demonstrate the use of fuel cell-powered school buses.
    (b) Cost Sharing.--The non-Federal contribution for 
activities funded under this section shall be not less than--
            (1) 20 percent for fuel infrastructure development 
        activities; and
            (2) 50 percent for demonstration activities and for 
        development activities not described in paragraph (1).
    (c) Reports to Congress.--Not later than 3 years after the 
date of enactment of this Act, the Secretary shall transmit to 
Congress a report that--
            (1) evaluates the process of converting natural gas 
        infrastructure to accommodate fuel cell-powered school 
        buses; and
            (2) assesses the results of the development and 
        demonstration program under this section.
    (d) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary to carry out this section 
$25,000,000 for the period of fiscal years 2004 through 2006.

                       Subtitle D--Miscellaneous

SEC. 751. RAILROAD EFFICIENCY.

    (a) Establishment.--The Secretary of Energy shall, in 
cooperation with the Secretary of Transportation and the 
Administrator of the Environmental Protection Agency, establish 
a cost-shared, public-private research partnership involving 
the Federal Government, railroad carriers, locomotive 
manufacturers and equipment suppliers, and the Association of 
American Railroads, to develop and demonstrate railroad 
locomotive technologies that increase fuel economy, reduce 
emissions, and lower costs of operation.
    (b) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary of Energy to carry out this 
section--
            (1) $25,000,000 for fiscal year 2005;
            (2) $35,000,000 for fiscal year 2006; and
            (3) $50,000,000 for fiscal year 2007.

SEC. 752. MOBILE EMISSION REDUCTIONS TRADING AND CREDITING.

    (a) In General.--Not later than 180 days after the date of 
enactment of this Act, the Administrator of the Environmental 
Protection Agency shall submit to Congress a report on the 
experience of the Administrator with the trading of mobile 
source emission reduction credits for use by owners and 
operators of stationary source emission sources to meet 
emission offset requirements within a nonattainment area.
    (b) Contents.--The report shall describe--
            (1) projects approved by the Administrator that 
        include the trading of mobile source emission reduction 
        credits for use by stationary sources in complying with 
        offset requirements, including a description of--
                    (A) project and stationary sources 
                location;
                    (B) volumes of emissions offset and traded;
                    (C) the sources of mobile emission 
                reduction credits; and
                    (D) if available, the cost of the credits;
            (2) the significant issues identified by the 
        Administrator in consideration and approval of trading 
        in the projects;
            (3) the requirements for monitoring and assessing 
        the air quality benefits of any approved project;
            (4) the statutory authority on which the 
        Administrator has based approval of the projects;
            (5) an evaluation of how the resolution of issues 
        in approved projects could be used in other projects; 
        and
            (6) any other issues that the Administrator 
        considers relevant to the trading and generation of 
        mobile source emission reduction credits for use by 
        stationary sources or for other purposes.

SEC. 753. AVIATION FUEL CONSERVATION AND EMISSIONS.

    (a) In General.--Not later than 60 days after the date of 
enactment of this Act, the Administrator of the Federal 
Aviation Administration and the Administrator of the 
Environmental Protection Agency shall jointly initiate a study 
to identify--
            (1) the impact of aircraft emissions on air quality 
        in nonattainment areas; and
            (2) ways to promote fuel conservation measures for 
        aviation to--
                    (A) enhance fuel efficiency; and
                    (B) reduce emissions.
    (b) Focus.--The study under subsection (a) shall focus on 
how air traffic management inefficiencies, such as aircraft 
idling at airports, result in unnecessary fuel burn and air 
emissions.
    (c) Report.--Not later than 1 year after the date of the 
initiation of the study under subsection (a), the Administrator 
of the Federal Aviation Administration and the Administrator of 
the Environmental Protection Agency shall jointly submit to the 
Committee on Energy and Commerce and the Committee on 
Transportation and Infrastructure of the House of 
Representatives and the Committee on Environment and Public 
Works and the Committee on Commerce, Science, and 
Transportation of the Senate a report that--
            (1) describes the results of the study; and
            (2) includes any recommendations on ways in which 
        unnecessary fuel use and emissions affecting air 
        quality may be reduced--
                    (A) without adversely affecting safety and 
                security and increasing individual aircraft 
                noise; and
                    (B) while taking into account all aircraft 
                emissions and the impact of the emissions on 
                human health.

SEC. 754. DIESEL FUELED VEHICLES.

    (a) Definition of Tier 2 Emission Standards.--In this 
section, the term ``tier 2 emission standards'' means the motor 
vehicle emission standards that apply to passenger cars, light 
trucks, and larger passenger vehicles manufactured after the 
2003 model year, as issued on February 10, 2000, by the 
Administrator of the Environmental Protection Agency under 
sections 202 and 211 of the Clean Air Act (42 U.S.C. 7521, 
7545).
    (b) Diesel Combustion and After-Treatment Technologies.--
The Secretary of Energy shall accelerate efforts to improve 
diesel combustion and after-treatment technologies for use in 
diesel fueled motor vehicles.
    (c) Goals.--The Secretary shall carry out subsection (b) 
with a view toward achieving the following goals:
            (1) Developing and demonstrating diesel 
        technologies that, not later than 2010, meet the 
        following standards:
                    (A) Tier 2 emission standards.
                    (B) The heavy-duty emissions standards of 
                2007 that are applicable to heavy-duty vehicles 
                under regulations issued by the Administrator 
                of the Environmental Protection Agency as of 
                the date of enactment of this Act.
            (2) Developing the next generation of low-emission, 
        high-efficiency diesel engine technologies, including 
        homogeneous charge compression ignition technology.

SEC. 755. CONSERVE BY BICYCLING PROGRAM.

    (a) Definitions.--In this section:
            (1) Program.--The term ``program'' means the 
        Conserve by Bicycling Program established by subsection 
        (b).
            (2) Secretary.--The term ``Secretary'' means the 
        Secretary of Transportation.
    (b) Establishment.--There is established within the 
Department of Transportation a program to be known as the 
``Conserve by Bicycling Program''.
    (c) Projects.--
            (1) In general.--In carrying out the program, the 
        Secretary shall establish not more than 10 pilot 
        projects that are--
                    (A) dispersed geographically throughout the 
                United States; and
                    (B) designed to conserve energy resources 
                by encouraging the use of bicycles in place of 
                motor vehicles.
            (2) Requirements.--A pilot project described in 
        paragraph (1) shall--
                    (A) use education and marketing to convert 
                motor vehicle trips to bicycle trips;
                    (B) document project results and energy 
                savings (in estimated units of energy 
                conserved);
                    (C) facilitate partnerships among 
                interested parties in at least 2 of the fields 
                of--
                            (i) transportation;
                            (ii) law enforcement;
                            (iii) education;
                            (iv) public health;
                            (v) environment; and
                            (vi) energy;
                    (D) maximize bicycle facility investments;
                    (E) demonstrate methods that may be used in 
                other regions of the United States; and
                    (F) facilitate the continuation of ongoing 
                programs that are sustained by local resources.
            (3) Cost sharing.--At least 20 percent of the cost 
        of each pilot project described in paragraph (1) shall 
        be provided from State or local sources.
    (d) Energy and Bicycling Research Study.--
            (1) In general.--Not later than 2 years after the 
        date of enactment of this Act, the Secretary shall 
        enter into a contract with the National Academy of 
        Sciences for, and the National Academy of Sciences 
        shall conduct and submit to Congress a report on, a 
        study on the feasibility of converting motor vehicle 
        trips to bicycle trips.
            (2) Components.--The study shall--
                    (A) document the results or progress of the 
                pilot projects under subsection (c);
                    (B) determine the type and duration of 
                motor vehicle trips that people in the United 
                States may feasibly make by bicycle, taking 
                into consideration factors such as--
                            (i) weather;
                            (ii) land use and traffic patterns;
                            (iii) the carrying capacity of 
                        bicycles; and
                            (iv) bicycle infrastructure;
                    (C) determine any energy savings that would 
                result from the conversion of motor vehicle 
                trips to bicycle trips;
                    (D) include a cost-benefit analysis of 
                bicycle infrastructure investments; and
                    (E) include a description of any factors 
                that would encourage more motor vehicle trips 
                to be replaced with bicycle trips.
    (e) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary to carry out thissection 
$6,200,000, to remain available until expended, of which--
            (1) $5,150,000 shall be used to carry out pilot 
        projects described in subsection (c);
            (2) $300,000 shall be used by the Secretary to 
        coordinate, publicize, and disseminate the results of 
        the program; and
            (3) $750,000 shall be used to carry out subsection 
        (d).

SEC. 756. REDUCTION OF ENGINE IDLING OF HEAVY-DUTY VEHICLES.

    (a) Definitions.--In this section:
            (1) Administrator.--The term ``Administrator'' 
        means the Administrator of the Environmental Protection 
        Agency.
            (2) Advanced truck stop electrification system.--
        The term ``advanced truck stop electrification system'' 
        means a stationary system that delivers heat, air 
        conditioning, electricity, and communications, and is 
        capable of providing verifiable and auditable evidence 
        of use of those services, to a heavy-duty vehicle and 
        any occupants of the heavy-duty vehicle without relying 
        on components mounted onboard the heavy-duty vehicle 
        for delivery of those services.
            (3) Auxiliary power unit.--The term ``auxiliary 
        power unit'' means an integrated system that--
                    (A) provides heat, air conditioning, engine 
                warming, and electricity to the factory-
                installed components on a heavy-duty vehicle as 
                if the main drive engine of the heavy-duty 
                vehicle were running; and
                    (B) is certified by the Administrator under 
                part 89 of title 40, Code of Federal 
                Regulations (or any successor regulation), as 
                meeting applicable emission standards.
            (4) Heavy-duty vehicle.--The term ``heavy-duty 
        vehicle'' means a vehicle that--
                    (A) has a gross vehicle weight rating 
                greater than 12,500 pounds; and
                    (B) is powered by a diesel engine.
            (5) Idle reduction technology.--The term ``idle 
        reduction technology'' means an advanced truck stop 
        electrification system, auxiliary power unit, or other 
        device or system of devices that--
                    (A) is used to reduce long-duration idling 
                of a heavy-duty vehicle; and
                    (B) allows for the main drive engine or 
                auxiliary refrigeration engine of a heavy-duty 
                vehicle to be shut down.
            (6) Long-duration idling.--
                    (A) In general.--The term ``long-duration 
                idling'' means the operation of a main drive 
                engine or auxiliary refrigeration engine of a 
                heavy-duty vehicle, for a period greater than 
                15 consecutive minutes, at a time at which the 
                main drive engine is not engaged in gear.
                    (B) Exclusions.--The term ``long-duration 
                idling'' does not include the operation of a 
                main drive engine or auxiliary refrigeration 
                engine of a heavy-duty vehicle during a routine 
                stoppage associated with traffic movement or 
                congestion.
    (b) Idle Reduction Technology Benefits, Programs, and 
Studies.--
            (1) In general.--Not later than 90 days after the 
        date of enactment of this Act, the Administrator 
        shall--
                    (A)(i) commence a review of the mobile 
                source air emission models of the Environmental 
                Protection Agency used under the Clean Air Act 
                (42 U.S.C. 7401 et seq.) to determine whether 
                the models accurately reflect the emissions 
                resulting from long-duration idling of heavy-
                duty vehicles and other vehicles and engines; 
                and
                    (ii) update those models as the 
                Administrator determines to be appropriate; and
                    (B)(i) commence a review of the emission 
                reductions achieved by the use of idle 
                reduction technology; and
                    (ii) complete such revisions of the 
                regulations and guidance of the Environmental 
                Protection Agency as the Administrator 
                determines to be appropriate.
            (2) Deadline for completion.--Not later than 180 
        days after the date of enactment of this Act, the 
        Administrator shall--
                    (A) complete the reviews under 
                subparagraphs (A)(i) and (B)(i) of paragraph 
                (1); and
                    (B) prepare and make publicly available 1 
                or more reports on the results of the reviews.
            (3) Discretionary inclusions.--The reviews under 
        subparagraphs (A)(i) and (B)(i) of paragraph (1) and 
        the reports under paragraph (2)(B) may address the 
        potential fuel savings resulting from use of idle 
        reduction technology.
            (4) Idle reduction deployment program.--
                    (A) Establishment.--
                            (i) In general.--Not later than 90 
                        days after the date of enactment of 
                        this Act, the Administrator, in 
                        consultation with the Secretary of 
                        Transportation, shall establish a 
                        program to support deployment of idle 
                        reduction technology.
                            (ii) Priority.--The Administrator 
                        shall give priority to the deployment 
                        of idle reduction technology based on 
                        beneficial effects on air quality and 
                        ability to lessen the emission of 
                        criteria air pollutants.
                    (B) Funding.--
                            (i) Authorization of 
                        appropriations.--There are authorized 
                        to be appropriated to the Administrator 
                        to carry out subparagraph (A) 
                        $19,500,000 for fiscal year 2004, 
                        $30,000,000 for fiscal year 2005, and 
                        $45,000,000 for fiscal year 2006.
                            (ii) Cost sharing.--Subject to 
                        clause (iii), the Administrator shall 
                        require at least 50 percent of the 
                        costs directly and specifically related 
                        to any project under this section to be 
                        provided from non-Federal sources.
                            (iii) Necessary and appropriate 
                        reductions.--The Administrator may 
                        reduce the non-Federal requirement 
                        under clause (ii) if the Administrator 
                        determines that the reduction is 
                        necessary and appropriate to meet the 
                        objectives of this section.
            (5) Idling location study.--
                    (A) In general.--Not later than 90 days 
                after the date of enactment of this Act, the 
                Administrator, in consultation with the 
                Secretary of Transportation, shall commence a 
                study to analyze all locations at which heavy-
                duty vehicles stop for long-duration idling, 
                including--
                            (i) truck stops;
                            (ii) rest areas;
                            (iii) border crossings;
                            (iv) ports;
                            (v) transfer facilities; and
                            (vi) private terminals.
                    (B) Deadline for completion.--Not later 
                than 180 days after the date of enactment of 
                this Act, the Administrator shall--
                            (i) complete the study under 
                        subparagraph (A); and
                            (ii) prepare and make publicly 
                        available 1 or more reports of the 
                        results of the study.
    (c) Vehicle Weight Exemption.--Section 127(a) of title 23, 
United States Code, is amended--
            (1) by designating the first through eleventh 
        sentences as paragraphs (1) through (11), respectively; 
        and
            (2) by adding at the end the following:
            ``(12) Heavy duty vehicles.--
                    ``(A) In general.--Subject to subparagraphs 
                (B) and (C), in order to promote reduction of 
                fuel use and emissions because of engine 
                idling, the maximum gross vehicle weight limit 
                and the axle weight limit for any heavy-duty 
                vehicle equipped with an idle reduction 
                technology shall be increased by a quantity 
                necessary to compensate for the additional 
                weight of the idle reduction system.
                    ``(B) Maximum weight increase.--The weight 
                increase under subparagraph (A) shall be not 
                greater than 250 pounds.
                    ``(C) Proof.--On request by a regulatory 
                agency or law enforcement agency, the vehicle 
                operator shall provide proof (through 
                demonstration or certification) that--
                            ``(i) the idle reduction technology 
                        is fully functional at all times; and
                            ``(ii) the 250-pound gross weight 
                        increase is not used for any purpose 
                        other than the use of idle reduction 
                        technology described in subparagraph 
                        (A).''.

SEC. 757. BIODIESEL ENGINE TESTING PROGRAM.

    (a) In General.--Not later that 180 days after the date of 
enactment of this Act, the Secretary shall initiate a 
partnership with diesel engine, diesel fuel injection system, 
and diesel vehicle manufacturers and diesel and biodiesel fuel 
providers, to include biodiesel testing in advanced diesel 
engine and fuel system technology.
    (b) Scope.--The program shall provide for testing to 
determine the impact of biodiesel from different sources on 
current and future emission control technologies, with emphasis 
on--
            (1) the impact of biodiesel on emissions warranty, 
        in-use liability, and antitampering provisions;
            (2) the impact of long-term use of biodiesel on 
        engine operations;
            (3) the options for optimizing these technologies 
        for both emissions and performance when switching 
        between biodiesel and diesel fuel; and
            (4) the impact of using biodiesel in these fueling 
        systems and engines when used as a blend with 2006 
        Environmental Protection Agency-mandated diesel fuel 
        containing a maximum of 15-parts-per-million sulfur 
        content.
    (c) Report.--Not later than 2 years after the date of 
enactment of this Act, the Secretary shall provide an interim 
report to Congress on the findings of the program, including a 
comprehensive analysis of impacts from biodiesel on engine 
operation for both existing and expected future diesel 
technologies, and recommendations for ensuring optimal 
emissions reductions and engine performance with biodiesel.
    (d) Authorization of Appropriations.--There are authorized 
to be appropriated $5,000,000 for each of fiscal years 2004 
through 2008 to carry out this section.
    (e) Definition.--For purposes of this section, the term 
``biodiesel'' means a diesel fuel substitute produced from 
nonpetroleum renewable resources that meets the registration 
requirements for fuels and fuel additives established by the 
Environmental Protection Agency under section 211 of the Clean 
Air Act (42 U.S.C. 7545) and that meets the American Society 
for Testing and Materials D6751-02a Standard Specification for 
Biodiesel Fuel (B100) Blend Stock for Distillate Fuels.

SEC. 758. HIGH OCCUPANCY VEHICLE EXCEPTION.

    Notwithstanding section 102(a) of title 23, United States 
Code, a State may permit a vehicle with fewer than 2 occupants 
to operate in high occupancy vehicle lanes if the vehicle--
            (1) is a dedicated vehicle (as defined in section 
        301 of the Energy Policy Act of 1992 (42 U.S.C. 
        13211)); or
            (2) is a hybrid vehicle (as defined by the State 
        for the purpose of this section).

                   Subtitle E--Automobile Efficiency

SEC. 771. AUTHORIZATION OF APPROPRIATIONS FOR IMPLEMENTATION AND 
                    ENFORCEMENT OF FUEL ECONOMY STANDARDS.

    In addition to any other funds authorized by law, there are 
authorized to be appropriated to the National Highway Traffic 
Safety Administration to carry out its obligations with respect 
to average fuel economy standards $2,000,000 for each of fiscal 
years 2004 through 2008.

SEC. 772. REVISED CONSIDERATIONS FOR DECISIONS ON MAXIMUM FEASIBLE 
                    AVERAGE FUEL ECONOMY.

    Section 32902(f) of title 49, United States Code, is 
amended to read as follows:
    ``(f) Considerations for Decisions on Maximum Feasible 
Average Fuel Economy.--When deciding maximum feasible average 
fuel economy under this section, the Secretary of 
Transportation shall consider the following matters:
            ``(1) Technological feasibility.
            ``(2) Economic practicability.
            ``(3) The effect of other motor vehicle standards 
        of the Government on fuel economy.
            ``(4) The need of the United States to conserve 
        energy.
            ``(5) The effects of fuel economy standards on 
        passenger automobiles, nonpassenger automobiles, and 
        occupant safety.
            ``(6) The effects of compliance with average fuel 
        economy standards on levels of automobile industry 
        employment in the United States.''.

SEC. 773. EXTENSION OF MAXIMUM FUEL ECONOMY INCREASE FOR ALTERNATIVE 
                    FUELED VEHICLES.

    (a) Manufacturing Incentives.--Section 32905 of title 49, 
United States Code, is amended--
            (1) in each of subsections (b) and (d), by striking 
        ``1993-2004'' and inserting ``1993-2008'';
            (2) in subsection (f), by striking ``2001'' and 
        inserting ``2005''; and
            (3) in subsection (f)(1), by striking ``2004'' and 
        inserting ``2008''.
    (b) Maximum Fuel Economy Increase.--Subsection (a)(1) of 
section 32906 of title 49, United States Code, is amended--
            (1) in subparagraph (A), by striking ``the model 
        years 1993-2004'' and inserting ``model years 1993-
        2008''; and
            (2) in subparagraph (B), by striking ``the model 
        years 2005-2008'' and inserting ``model years 2009-
        2012''.

SEC. 774. STUDY OF FEASIBILITY AND EFFECTS OF REDUCING USE OF FUEL FOR 
                    AUTOMOBILES.

    (a) In General.--Not later than 30 days after the date of 
the enactment of this Act, the Administrator of the National 
Highway Traffic Safety Administration shall initiate a study of 
the feasibility and effects of reducing by model year 2012, by 
a significant percentage, the amount of fuel consumed by 
automobiles.
    (b) Subjects of Study.--The study under this section shall 
include--
            (1) examination of, and recommendation of 
        alternatives to, the policy under current Federal law 
        of establishing average fuel economy standards for 
        automobiles and requiring each automobile manufacturer 
        to comply with average fuel economy standards that 
        apply to the automobiles it manufactures;
            (2) examination of how automobile manufacturers 
        could contribute toward achieving the reduction 
        referred to in subsection (a);
            (3) examination of the potential of fuel cell 
        technology in motor vehicles in order to determine the 
        extent to which such technology may contribute to 
        achieving the reduction referred to in subsection (a); 
        and
            (4) examination of the effects of the reduction 
        referred to in subsection (a) on--
                    (A) gasoline supplies;
                    (B) the automobile industry, including 
                sales of automobiles manufactured in the United 
                States;
                    (C) motor vehicle safety; and
                    (D) air quality.
    (c) Report.--The Administrator shall submit to Congress a 
report on the findings, conclusion, and recommendations of the 
study under this section by not later than 1 year after the 
date of the enactment of this Act.

                          TITLE VIII--HYDROGEN

SEC. 801. DEFINITIONS.

    In this title:
            (1) Advisory committee.--The term ``Advisory 
        Committee'' means the Hydrogen Technical and Fuel Cell 
        Advisory Committee established under section 805.
            (2) Department.--The term ``Department'' means the 
        Department of Energy.
            (3) Fuel cell.--The term ``fuel cell'' means a 
        device that directly converts the chemical energy of a 
        fuel and an oxidant into electricity by an 
        electrochemical process taking place at separate 
        electrodes in the device.
            (4) Infrastructure.--The term ``infrastructure'' 
        means the equipment, systems, or facilities used to 
        produce, distribute, deliver, or store hydrogen.
            (5) Light duty vehicle.--The term ``light duty 
        vehicle'' means a car or truck classified by the 
        Department of Transportation as a Class I or IIA 
        vehicle.
            (6) Secretary.--The term ``Secretary'' means the 
        Secretary of Energy.

SEC. 802. PLAN.

    Not later than 6 months after the date of enactment of this 
Act, the Secretary shall transmit to Congress a coordinated 
plan for the programs described in this title and any other 
programs of the Department that are directly related to fuel 
cells or hydrogen. The plan shall describe, at a minimum--
            (1) the agenda for the next 5 years for the 
        programs authorized under this title, including the 
        agenda for each activity enumerated in section 803(a);
            (2) the types of entities that will carry out the 
        activities under this title and what role each entity 
        is expected to play;
            (3) the milestones that will be used to evaluate 
        the programs for the next 5 years;
            (4) the most significant technical and nontechnical 
        hurdles that stand in the way of achieving the goals 
        described in section 803(b), and how the programs will 
        address those hurdles; and
            (5) the policy assumptions that are implicit in the 
        plan, including any assumptions that would affect the 
        sources of hydrogen or the marketability of hydrogen-
        related products.

SEC. 803. PROGRAMS.

    (a) Activities.--The Secretary, in partnership with the 
private sector, shall conduct programs to address--
            (1) production of hydrogen from diverse energy 
        sources, including--
                    (A) fossil fuels, which may include carbon 
                capture and sequestration;
                    (B) hydrogen-carrier fuels (including 
                ethanol and methanol);
                    (C) renewable energy resources, including 
                biomass; and
                    (D) nuclear energy;
            (2) use of hydrogen for commercial, industrial, and 
        residential electric power generation;
            (3) safe delivery of hydrogen or hydrogen-carrier 
        fuels, including--
                    (A) transmission by pipeline and other 
                distribution methods; and
                    (B) convenient and economic refueling of 
                vehicles either at central refueling stations 
                or through distributed on-site generation;
            (4) advanced vehicle technologies, including--
                    (A) engine and emission control systems;
                    (B) energy storage, electric propulsion, 
                and hybrid systems;
                    (C) automotive materials; and
                    (D) other advanced vehicle technologies;
            (5) storage of hydrogen or hydrogen-carrier fuels, 
        including development of materials for safe and 
        economic storage in gaseous, liquid, or solid form at 
        refueling facilities and onboard vehicles;
            (6) development of safe, durable, affordable, and 
        efficient fuel cells, including fuel-flexible fuel cell 
        power systems, improved manufacturing processes, high-
        temperature membranes, cost-effective fuel processing 
        for natural gas, fuel cell stack and system 
        reliability, low temperature operation, and cold start 
        capability;
            (7) development, after consultation with the 
        private sector, of necessary codes and standards 
        (including international codes and standards and 
        voluntary consensus standards adopted in accordance 
        with OMB Circular A-119) and safety practices for the 
        production, distribution, storage, and use of hydrogen, 
        hydrogen-carrier fuels, and related products; and
            (8) a public education program to develop improved 
        knowledge and acceptability of hydrogen-based systems.
    (b) Program Goals.--
            (1) Vehicles.--For vehicles, the goals of the 
        program are--
                    (A) to enable a commitment by automakers no 
                later than year 2015 to offer safe, affordable, 
                and technically viable hydrogen fuel cell 
                vehicles in the mass consumer market; and
                    (B) to enable production, delivery, and 
                acceptance by consumers of model year 2020 
                hydrogen fuel cell and other hydrogen-powered 
                vehicles that will have--
                            (i) a range of at least 300 miles;
                            (ii) improved performance and ease 
                        of driving;
                            (iii) safety and performance 
                        comparable to vehicle technologies in 
                        the market; and
                            (iv) when compared to light duty 
                        vehicles in model year 2003--
                                    (I) fuel economy that is 
                                substantially higher;
                                    (II) substantially lower 
                                emissions of air pollutants; 
                                and
                                    (III) equivalent or 
                                improved vehicle fuel system 
                                crash integrity and occupant 
                                protection.
            (2) Hydrogen energy and energy infrastructure.--For 
        hydrogen energy and energy infrastructure, the goals of 
        the program are to enable a commitment not later than 
        2015 that will lead to infrastructure by 2020 that will 
        provide--
                    (A) safe and convenient refueling;
                    (B) improved overall efficiency;
                    (C) widespread availability of hydrogen 
                from domestic energy sources through--
                            (i) production, with consideration 
                        of emissions levels;
                            (ii) delivery, including 
                        transmission by pipeline and other 
                        distribution methods for hydrogen; and
                            (iii) storage, including storage in 
                        surface transportation vehicles;
                    (D) hydrogen for fuel cells, internal 
                combustion engines, and other energy conversion 
                devices for portable, stationary, and 
                transportation applications; and
                    (E) other technologies consistent with the 
                Department's plan.
            (3) Fuel cells.--The goals for fuel cells and their 
        portable, stationary, and transportation applications 
        are to enable--
                    (A) safe, economical, and environmentally 
                sound hydrogen fuel cells;
                    (B) fuel cells for light duty and other 
                vehicles; and
                    (C) other technologies consistent with the 
                Department's plan.
    (c) Demonstration.--In carrying out the programs under this 
section, the Secretary shall fund a limited number of 
demonstration projects, consistent with a determination of the 
maturity, cost-effectiveness, and environmental impacts 
oftechnologies supporting each project. In selecting projects under 
this subsection, the Secretary shall, to the extent practicable and in 
the public interest, select projects that--
            (1) involve using hydrogen and related products at 
        existing facilities or installations, such as existing 
        office buildings, military bases, vehicle fleet 
        centers, transit bus authorities, or units of the 
        National Park System;
            (2) depend on reliable power from hydrogen to carry 
        out essential activities;-
            (3) lead to the replication of hydrogen 
        technologies and draw such technologies into the 
        marketplace;
            (4) include vehicle, portable, and stationary 
        demonstrations of fuel cell and hydrogen-based energy 
        technologies;
            (5) address the interdependency of demand for 
        hydrogen fuel cell applications and hydrogen fuel 
        infrastructure;
            (6) raise awareness of hydrogen technology among 
        the public;
            (7) facilitate identification of an optimum 
        technology among competing alternatives;
            (8) address distributed generation using renewable 
        sources; and
            (9) address applications specific to rural or 
        remote locations, including isolated villages and 
        islands, the National Park System, and tribal entities.
The Secretary shall give preference to projects which address 
multiple elements contained in paragraphs (1) through (9).
    (d) Deployment.--In carrying out the programs under this 
section, the Secretary shall, in partnership with the private 
sector, conduct activities to facilitate the deployment of 
hydrogen energy and energy infrastructure, fuel cells, and 
advanced vehicle technologies.
    (e) Funding.--
            (1) In general.--The Secretary shall carry out the 
        programs under this section using a competitive, merit-
        based review process and consistent with the generally 
        applicable Federal laws and regulations governing 
        awards of financial assistance, contracts, or other 
        agreements.
            (2) Research centers.--Activities under this 
        section may be carried out by funding nationally 
        recognized university-based or Federal laboratory 
        research centers.
    (f) Cost Sharing.--
            (1) Research and development.--Except as otherwise 
        provided in this title, for research and development 
        programs carried out under this title the Secretary 
        shall require a commitment from non-Federal sources of 
        at least 20 percent of the cost of the project. The 
        Secretary may reduce or eliminate the non-Federal 
        requirement under this paragraph if the Secretary 
        determines that the research and development is of a 
        basic or fundamental nature or involves technical 
        analyses or educational activities.
            (2) Demonstration and commercial application.--
        Except as otherwise provided in this title, the 
        Secretary shall require at least 50 percent of the 
        costs directly and specifically related to any 
        demonstration or commercial application project under 
        this title to be provided from non-Federal sources. The 
        Secretary may reduce the non-Federal requirement under 
        this paragraph if the Secretary determines that the 
        reduction is necessary and appropriate considering the 
        technological risks involved in the project and is 
        necessary to meet the objectives of this title.
            (3) Calculation of amount.--In calculating the 
        amount of the non-Federal commitment under paragraph 
        (1) or (2), the Secretary may include personnel, 
        services, equipment, and other resources.
            (4) Size of non-federal share.--The Secretary may 
        consider the size of the non-Federal share in selecting 
        projects.
    (g) Disclosure.--Section 623 of the Energy Policy Act of 
1992 (42 U.S.C. 13293) relating to the protection of 
information shall apply to projects carried out through grants, 
cooperative agreements, or contracts under this title.

SEC. 804. INTERAGENCY TASK FORCE.

    (a) Establishment.--Not later than 120 days after the date 
of enactment of this Act, the President shall establish an 
interagency task force chaired by the Secretary with 
representatives from each of the following:
            (1) The Office of Science and Technology Policy 
        within the Executive Office of the President.
            (2) The Department of Transportation.
            (3) The Department of Defense.
            (4) The Department of Commerce (including the 
        National Institute of Standards and Technology).
            (5) The Department of State.
            (6) The Environmental Protection Agency.
            (7) The National Aeronautics and Space 
        Administration.
            (8) Other Federal agencies as the Secretary 
        determines appropriate.
    (b) Duties.--
            (1) Planning.--The interagency task force shall 
        work toward--
                    (A) a safe, economical, and environmentally 
                sound fuel infrastructure for hydrogen and 
                hydrogen-carrier fuels, including an 
                infrastructure that supports buses and other 
                fleet transportation;
                    (B) fuel cells in government and other 
                applications, including portable, stationary, 
                and transportation applications;
                    (C) distributed power generation, including 
                the generation of combined heat, power, and 
                clean fuels including hydrogen;
                    (D) uniform hydrogen codes, standards, and 
                safety protocols; and
                    (E) vehicle hydrogen fuel system integrity 
                safety performance.
            (2) Activities.--The interagency task force may 
        organize workshops and conferences, may issue 
        publications, and may create databases to carry out its 
        duties. The interagency task force shall--
                    (A) foster the exchange of generic, 
                nonproprietary information and technology among 
                industry, academia, and government;
                    (B) develop and maintain an inventory and 
                assessment of hydrogen, fuel cells, and other 
                advanced technologies, including the commercial 
                capability of each technology for the economic 
                and environmentally safe production, 
                distribution, delivery, storage, and use of 
                hydrogen;
                    (C) integrate technical and other 
                information made available as a result of the 
                programs and activities under this title;
                    (D) promote the marketplace introduction of 
                infrastructure for hydrogen fuel vehicles; and
                    (E) conduct an education program to provide 
                hydrogen and fuel cell information to potential 
                end-users.
    (c) Agency Cooperation.--The heads of all agencies, 
including those whose agencies are not represented on the 
interagency task force, shall cooperate with and furnish 
information to the interagency task force, the Advisory 
Committee, and the Department.

SEC. 805. ADVISORY COMMITTEE.

    (a) Establishment.--The Hydrogen Technical and Fuel Cell 
Advisory Committee is established to advise the Secretary on 
the programs and activities under this title.
    (b) Membership.--
            (1) Members.--The Advisory Committee shall be 
        comprised of not fewer than 12 nor more than 25 
        members. The members shall be appointed by the 
        Secretary to represent domestic industry, academia, 
        professional societies, government agencies, Federal 
        laboratories, previous advisory panels, and financial, 
        environmental, and other appropriate organizations 
        based on the Department's assessment of the technical 
        and other qualifications of committee members and the 
        needs of the Advisory Committee.
            (2) Terms.--The term of a member of the Advisory 
        Committee shall not be more than 3 years. The Secretary 
        may appoint members of the Advisory Committee in a 
        manner that allows the terms of the members serving at 
        any time to expire at spaced intervals so as to ensure 
        continuity in the functioning of the Advisory 
        Committee. A member of the Advisory Committee whose 
        term is expiring may be reappointed.
            (3) Chairperson.--The Advisory Committee shall have 
        a chairperson, who is elected by the members from among 
        their number.
    (c) Review.--The Advisory Committee shall review and make 
recommendations to the Secretary on--
            (1) the implementation of programs and activities 
        under this title;
            (2) the safety, economical, and environmental 
        consequences of technologies for the production, 
        distribution, delivery, storage, or use of hydrogen 
        energy and fuel cells; and
            (3) the plan under section 802.
    (d) Response.--
            (1) Consideration of recommendations.--The 
        Secretary shall consider, but need not adopt, any 
        recommendations of the Advisory Committee under 
        subsection (c).
    (2) Biennial report.--The Secretary shall transmit a 
biennial report to Congress describing any recommendations made 
by the Advisory Committee since the previous report. The report 
shall include a description of how the Secretary has 
implemented or plans to implement the recommendations, or an 
explanation of the reasons that a recommendation will not be 
implemented. The report shall be transmitted along with the 
President's budget proposal.
    (e) Support.--The Secretary shall provide resources 
necessary in the judgment of the Secretary for the Advisory 
Committee to carry out its responsibilities under this title.

SEC. 806. EXTERNAL REVIEW.

    (a) Plan.--The Secretary shall enter into an arrangement 
with the National Academy of Sciences to review the plan 
prepared under section 802, which shall be completed not later 
than 6 months after the Academy receives the plan. Not later 
than 45 days after receiving the review, the Secretary shall 
transmit the review to Congress along with a plan to implement 
the review's recommendations or an explanation of the reasons 
that a recommendation will not be implemented.
    (b) Additional review.--The Secretary shall enter into an 
arrangement with the National Academy of Sciences under which 
the Academy will review the programs under section 803 during 
the fourth year following the date of enactment of this Act. 
The Academy's review shall include the research priorities and 
technical milestones, and evaluate the progress toward 
achieving them. The review shall be completed not later than 5 
years after the date of enactment of this Act. Not later than 
45 days after receiving the review, the Secretary shall 
transmit the review to Congress along with a plan to implement 
the review's recommendations or an explanation for the reasons 
that a recommendation will not be implemented.

SEC. 807. MISCELLANEOUS PROVISIONS.

    (a) Representation.--The Secretary may represent the United 
States interests with respect to activities and programs under 
this title, in coordination with the Department of 
Transportation, the National Institute of Standards and 
Technology, and other relevant Federal agencies, before 
governments and nongovernmental organizations including--
            (1) other Federal, State, regional, and local 
        governments and their representatives;
            (2) industry and its representatives, including 
        members of the energy and transportation industries; 
        and
            (3) in consultation with the Department of State, 
        foreign governments and their representatives including 
        international organizations.
    (b) Regulatory Authority.--Nothing in this title shall be 
construed to alter the regulatory authority of the Department.

SEC. 808. SAVINGS CLAUSE.

    Nothing in this title shall be construed to affect the 
authority of the Secretary of Transportation that may exist 
prior to the date of enactment of this Act with respect to--
            (1) research into, and regulation of, hydrogen-
        powered vehicles fuel systems integrity, standards, and 
        safety under subtitle VI of title 49, United States 
        Code;
            (2) regulation of hazardous materials 
        transportation under chapter 51 of title 49, United 
        States Code;
            (3) regulation of pipeline safety under chapter 601 
        of title 49, United States Code;
            (4) encouragement and promotion of research, 
        development, and deployment activities relating to 
        advanced vehicle technologies under section 5506 of 
        title 49, United States Code;
            (5) regulation of motor vehicle safety under 
        chapter 301 of title 49, United States Code;
            (6) automobile fuel economy under chapter 329 of 
        title 49, United States Code; or
            (7) representation of the interests of the United 
        States with respect to the activities and programs 
        under the authority of title 49, United States Code.

SEC. 809. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to the Secretary to 
carry out this title, in addition to any amounts made available 
for these purposes under other Acts--
            (1) $273,500,000 for fiscal year 2004;
            (2) $375,000,000 for fiscal year 2005;
            (3) $450,000,000 for fiscal year 2006;
            (4) $500,000,000 for fiscal year 2007; and
            (5) $550,000,000 for fiscal year 2008.

                   TITLE IX--RESEARCH AND DEVELOPMENT

SEC. 901. GOALS.

    (a) In General.--The Secretary shall conduct a balanced set 
of programs of energy research, development, demonstration, and 
commercial application to support Federal energy policy and 
programs by the Department. Such programs shall be focused on--
            (1) increasing the efficiency of all energy 
        intensive sectors through conservation and improved 
        technologies;
            (2) promoting diversity of energy supply;
            (3) decreasing the Nation's dependence on foreign 
        energy supplies;
            (4) improving United States energy security; and
            (5) decreasing the environmental impact of energy-
        related activities.
    (b) Goals.--The Secretary shall publish measurable 5-year 
cost and performance-based goals with each annual budget 
submission in at least the following areas:
            (1) Energy efficiency for buildings, energy-
        consuming industries, and vehicles.
            (2) Electric energy generation (including 
        distributed generation), transmission, and storage.
            (3) Renewable energy technologies including wind 
        power, photovoltaics, solar thermal systems, geothermal 
        energy, hydrogen-fueled systems, biomass-based systems, 
        biofuels, and hydropower.
            (4) Fossil energy including power generation, 
        onshore and offshore oil and gas resource recovery, and 
        transportation.
            (5) Nuclear energy including programs for existing 
        and advanced reactors and education of future 
        specialists.
    (c) Public Comment.--The Secretary shall provide mechanisms 
for input on the annually published goals from industry, 
university, and other public sources.
    (d) Effect of Goals.--
            (1) No new authority or requirement.--Nothing in 
        subsection (a) or the annually published goals shall--
                    (A) create any new--
                            (i) authority for any Federal 
                        agency; or
                            (ii) requirement for any other 
                        person;
                    (B) be used by a Federal agency to support 
                the establishment of regulatory standards or 
                regulatory requirements; or
                    (C) alter the authority of the Secretary to 
                make grants or other awards.
            (2) No limitation.--Nothing in this subsection 
        shall be construed to limit the authority of the 
        Secretary to impose conditions on grants or other 
        awards based on the goals in subsection (a) or any 
        subsequent modification thereto.

SEC. 902. DEFINITIONS.

    For purposes of this title:
            (1) Department.--The term ``Department'' means the 
        Department of Energy.
            (2) Departmental mission.--The term ``departmental 
        mission'' means any of the functions vested in the 
        Secretary of Energy by the Department of Energy 
        Organization Act (42 U.S.C. 7101 et seq.) or other law.
            (3) Institution of higher education.--The term 
        ``institution of higher education'' has the meaning 
        given that term in section 101(a) of the Higher 
        Education Act of 1965 (20 U.S.C. 1001(a)).
            (4) National laboratory.--The term ``National 
        Laboratory'' means any of the following laboratories 
        owned by the Department:
                    (A) Ames Laboratory.
                    (B) Argonne National Laboratory.
                    (C) Brookhaven National Laboratory.
                    (D) Fermi National Accelerator Laboratory.
                    (E) Idaho National Engineering and 
                Environmental Laboratory.
                    (F) Lawrence Berkeley National Laboratory.
                    (G) Lawrence Livermore National Laboratory.
                    (H) Los Alamos National Laboratory.
                    (I) National Energy Technology Laboratory.
                    (J) National Renewable Energy Laboratory.
                    (K) Oak Ridge National Laboratory.
                    (L) Pacific Northwest National Laboratory.
                    (M) Princeton Plasma Physics Laboratory.
                    (N) Sandia National Laboratories.
                    (O) Stanford Linear Accelerator Center.
                    (P) Thomas Jefferson National Accelerator 
                Facility.
            (5) Nonmilitary energy laboratory.--The term 
        ``nonmilitary energy laboratory'' means the 
        laboratories listed in paragraph (4), except for those 
        listed in subparagraphs (G), (H), and (N).
            (6) Secretary.--The term ``Secretary'' means the 
        Secretary of Energy.
            (7) Single-purpose research facility.--The term 
        ``single-purpose research facility'' means any of the 
        primarily single-purpose entities owned by the 
        Department or any other organization of the Department 
        designated by the Secretary.

                     Subtitle A--Energy Efficiency

SEC. 904. ENERGY EFFICIENCY.

    (a) In General.--The following sums are authorized to be 
appropriated to the Secretary for energy efficiency and 
conservation research, development, demonstration, and 
commercial application activities, including activities 
authorized under this subtitle:
            (1) For fiscal year 2004, $616,000,000.
            (2) For fiscal year 2005, $695,000,000.
            (3) For fiscal year 2006, $772,000,000.
            (4) For fiscal year 2007, $865,000,000.
            (5) For fiscal year 2008, $920,000,000.
    (b) Allocations.--From amounts authorized under subsection 
(a), the following sums are authorized:
            (1) For activities under section 905--
                    (A) for fiscal year 2004, $20,000,000;
                    (B) for fiscal year 2005, $30,000,000;
                    (C) for fiscal year 2006, $50,000,000;
                    (D) for fiscal year 2007, $50,000,000; and
                    (E) for fiscal year 2008, $50,000,000.
            (2) For activities under section 907--
                    (A) for fiscal year 2004, $4,000,000; and
                    (B) for each of fiscal years 2005 through 
                2008, $7,000,000.
            (3) For activities under section 908--
                    (A) for fiscal year 2004, $20,000,000;
                    (B) for fiscal year 2005, $25,000,000;
                    (C) for fiscal year 2006, $30,000,000;
                    (D) for fiscal year 2007, $35,000,000; and
                    (E) for fiscal year 2008, $40,000,000.
            (4) For activities under section 909, $2,000,000 
        for each of fiscal years 2005 through 2008.
    (c) Extended Authorization.--There are authorized to be 
appropriated to the Secretary for activities under section 905, 
$50,000,000 for each of fiscal years 2009 through 2013.
    (d) Limitation on Use of Funds.--None of the funds 
authorized to be appropriated under this section may be used 
for--
            (1) the issuance and implementation of energy 
        efficiency regulations;
            (2) the Weatherization Assistance Program under 
        part A of title IV of the Energy Conservation and 
        Production Act (42 U.S.C. 6861 et seq.);
            (3) the State Energy Program under part D of title 
        III of the Energy Policy and Conservation Act (42 
        U.S.C. 6321 et seq.); or
            (4) the Federal Energy Management Program under 
        part 3 of title V of the National Energy Conservation 
        Policy Act (42 U.S.C. 8251 et seq.).

SEC. 905. NEXT GENERATION LIGHTING INITIATIVE.

    (a) In General.--The Secretary shall carry out a Next 
Generation Lighting Initiative in accordance with this section 
to support research, development, demonstration, and commercial 
application activities related to advanced solid-state lighting 
technologies based on white light emitting diodes.
    (b) Objectives.--The objectives of the initiative shall be 
to develop advanced solid-state organic and inorganic lighting 
technologies based on white light emitting diodes that, 
compared to incandescent and fluorescent lighting technologies, 
are longer lasting; more energy-efficient; and cost-
competitive, and have less environmental impact.
    (c) Industry Alliance.--The Secretary shall, not later than 
3 months after the date of enactment of this section, 
competitively select an Industry Alliance to represent 
participants that are private, for-profit firms which, as a 
group, are broadly representative of United States solid state 
lighting research, development, infrastructure, and 
manufacturing expertise as a whole.
    (d) Research.--
            (1) In general.--The Secretary shall carry out the 
        research activities of the Next Generation Lighting 
        Initiative through competitively awarded grants to 
        researchers, including Industry Alliance participants, 
        National Laboratories, and institutions of higher 
        education.
            (2) Assistance from the industry alliance.--The 
        Secretary shall annually solicit from the Industry 
        Alliance--
                    (A) comments to identify solid-state 
                lighting technology needs;
                    (B) assessment of the progress of the 
                Initiative's research activities; and
                    (C) assistance in annually updating solid-
                state lighting technology roadmaps.
            (3) Availability of information and roadmaps.--The 
        information and roadmaps under paragraph (2) shall be 
        available to the public and public response shall be 
        solicited by the Secretary.
    (e) Development, Demonstration, and Commercial 
Application.--The Secretary shall carry out a development, 
demonstration, and commercial application program for the Next 
Generation Lighting Initiative through competitively selected 
awards. The Secretary may give preference to participants of 
the Industry Alliance selected pursuant to subsection (c).
    (f) Intellectual Property.--The Secretary may require, in 
accordance with the authorities provided in section 202(a)(ii) 
of title 35, United States Code, section 152 of the Atomic 
Energy Act of 1954 (42 U.S.C. 2182), and section 9 of the 
Federal Nonnuclear Energy Research and Development Act of 1974 
(42 U.S.C. 5908), that--
            (1) for any new invention resulting from activities 
        under subsection (d)--
                    (A) the Industry Alliance members that are 
                active participants in research, development, 
                and demonstration activities related to the 
                advanced solid-state lighting technologies that 
                are the subject of this section shall be 
                granted first option to negotiate with the 
                invention owner nonexclusive licenses and 
                royalties for uses of the invention related to 
                solid-state lighting on terms that are 
                reasonable under the circumstances; and
                    (B)(i) for 1 year after a United States 
                patent is issued for the invention, the patent 
                holder shall not negotiate any license or 
                royalty with any entity that is not a 
                participant in the Industry Alliance described 
                in subparagraph (A); and
                    (ii) during the year described in clause 
                (i), the invention owner shall negotiate 
                nonexclusive licenses and royalties in good 
                faith with any interested participant in the 
                Industry Alliance described in subparagraph 
                (A); and
            (2) such other terms as the Secretary determines 
        are required to promote accelerated commercialization 
        of inventions made under the Initiative.
    (g) National Academy Review.--The Secretary shall enter 
into an arrangement with the National Academy of Sciences to 
conduct periodic reviews of the Next Generation Lighting 
Initiative. The Academy shall review the research priorities, 
technical milestones, and plans for technology transfer and 
progress towards achieving them. The Secretary shall consider 
the results of such reviews in evaluating the information 
obtained under subsection (d)(2).
    (h) Definitions.--As used in this section:
            (1) Advanced solid-state lighting.--The term 
        ``advanced solid-state lighting'' means a 
        semiconducting device package and delivery system that 
        produces white light using externally applied voltage.
            (2) Research.--The term ``research'' includes 
        research on the technologies, materials, and 
        manufacturing processes required for white light 
        emitting diodes.
            (3) Industry alliance.--The term ``Industry 
        Alliance'' means an entity selected by the Secretary 
        under subsection (c).
            (4) White light emitting diode.--The term ``white 
        light emitting diode'' means a semiconducting package, 
        utilizing either organic or inorganic materials, that 
        produces white light using externally applied voltage.

SEC. 906. NATIONAL BUILDING PERFORMANCE INITIATIVE.

    (a) Interagency Group.--Not later than 90 days after the 
date of enactment of this Act, the Director of the Office of 
Science and Technology Policy shall establish an interagency 
group to develop, in coordination with the advisory committee 
established under subsection (e), a National Building 
Performance Initiative (in this section referred to as the 
``Initiative''). The interagency group shall be co-chaired by 
appropriate officials of the Department and the Department of 
Commerce, who shall jointly arrange for the provision of 
necessary administrative support to the group.
    (b) Integration of Efforts.--The Initiative, working with 
the National Institute of Building Sciences, shall integrate 
Federal, State, and voluntary private sector efforts to reduce 
the costs of construction, operation, maintenance, and 
renovation of commercial, industrial, institutional, and 
residential buildings.
    (c) Plan.--Not later than 1 year after the date of 
enactment of this Act, the interagency group shall submit to 
Congress a plan for carrying out the appropriate Federal role 
in the Initiative. The plan shall include--
            (1) research, development, demonstration, and 
        commercial application of systems and materials for new 
        construction and retrofit relating to the building 
        envelope and building system components; and
            (2) the collection, analysis, and dissemination of 
        research results and other pertinent information on 
        enhancing building performance to industry, government 
        entities, and the public.
    (d) Department of Energy Role.--Within the Federal portion 
of the Initiative, the Department shall be the lead agency for 
all aspects of building performance related to use and 
conservation of energy.
    (e) Advisory Committee.--
            (1) Establishment.--The Secretary, in consultation 
        with the Secretary of Commerce and the Director of the 
        Office of Science and Technology Policy, shall 
        establish an advisory committee to--
                    (A) analyze and provide recommendations on 
                potential private sector roles and 
                participation in the Initiative; and
                    (B) review and provide recommendations on 
                the plan described in subsection (c).
            (2) Membership.--Membership of the advisory 
        committee shall include representatives with a broad 
        range of appropriate expertise, including expertise 
        in--
                    (A) building research and technology;
                    (B) architecture, engineering, and building 
                materials and systems; and
                    (C) the residential, commercial, and 
                industrial sectors of the construction 
                industry.
    (f) Construction.--Nothing in this section provides any 
Federal agency with new authority to regulate building 
performance.

SEC. 907. SECONDARY ELECTRIC VEHICLE BATTERY USE PROGRAM.

    (a) Definitions.--For purposes of this section:
            (1) Associated equipment.--The term ``associated 
        equipment'' means equipment located where the batteries 
        will be used that is necessary to enable the use of the 
        energy stored in the batteries.
            (2) Battery.--The term `battery'' means an energy 
        storage device that previously has been used to provide 
        motive power in a vehicle powered in whole or in part 
        by electricity.
    (b) Program.--The Secretary shall establish and conduct a 
research, development, demonstration, and commercial 
application program for the secondary use of batteries if the 
Secretary finds that there are sufficient numbers of such 
batteries to support the program. The program shall be--
            (1) designed to demonstrate the use of batteries in 
        secondary applications, including utility and 
        commercial power storage and power quality;
            (2) structured to evaluate the performance, 
        including useful service life and costs, of such 
        batteries in field operations, and the necessary 
        supporting infrastructure, including reuse and disposal 
        of batteries; and
            (3) coordinated with ongoing secondary battery use 
        programs at the National Laboratories and in industry.
    (c) Solicitation.--Not later than 180 days after the date 
of enactment of this Act, if the Secretary finds under 
subsection (b) that there are sufficient numbers of batteries 
to support the program, the Secretary shall solicit proposals 
to demonstrate the secondary use of batteries and associated 
equipment and supporting infrastructure in geographic locations 
throughout the United States. The Secretary may make additional 
solicitations for proposals if the Secretary determines that 
such solicitations are necessary to carry out this section.
    (d) Selection of Proposals.--
            (1) In general.--The Secretary shall, not later 
        than 90 days after the closing date established by the 
        Secretary for receipt of proposals under subsection 
        (c), select up to 5 proposals which may receive 
        financial assistance under this section, subject to the 
        availability of appropriations.
            (2) Diversity; environmental effect.--In selecting 
        proposals, the Secretary shall consider diversity of 
        battery type, geographic and climatic diversity, and 
        life-cycle environmental effects of the approaches.
            (3) Limitation.--No 1 project selected under this 
        section shall receive more than 25 percent of the funds 
        authorized for the program under this section.
            (4) Optimization of federal resources.--The 
        Secretary shall consider the extent of involvement of 
        State or local government and other persons in each 
        demonstration project to optimize use of Federal 
        resources.
            (5) Other criteria.--The Secretary may consider 
        such other criteria as the Secretary considers 
        appropriate.
    (e) Conditions.--The Secretary shall require that--
            (1) relevant information be provided to the 
        Department, the users of the batteries, the proposers, 
        and the battery manufacturers;
            (2) the proposer provide at least 50 percent of the 
        costs associated with the proposal; and
            (3) the proposer provide to the Secretary such 
        information regarding the disposal of the batteries as 
        the Secretary may require to ensure that the proposer 
        disposes of the batteries in accordance with applicable 
        law.

SEC. 908. ENERGY EFFICIENCY SCIENCE INITIATIVE.

    (a) Establishment.--The Secretary shall establish an Energy 
Efficiency Science Initiative to be managed by the Assistant 
Secretary in the Department with responsibility for energy 
conservation under section 203(a)(9) of the Department of 
Energy Organization Act (42 U.S.C. 7133(a)(9)), in consultation 
with the Director of the Office of Science, for grants to be 
competitively awarded and subject to peer review for research 
relating to energy efficiency.
    (b) Report.--The Secretary shall submit to Congress, along 
with the President's annual budget request under section 
1105(a) of title 31, United States Code, a report on the 
activities of the Energy Efficiency Science Initiative, 
including a description of the process used to award the funds 
and an explanation of how the research relates to energy 
efficiency.

SEC. 909. ELECTRIC MOTOR CONTROL TECHNOLOGY.

    The Secretary shall conduct a research, development, 
demonstration, and commercial application program on advanced 
control devices to improve the energy efficiency of electric 
motors used in heating, ventilation, air conditioning, and 
comparable systems.

SEC. 910. ADVANCED ENERGY TECHNOLOGY TRANSFER CENTERS.

    (a) Grants.--Not later than 18 months after the date of 
enactment of this Act, the Secretary shall make grants to 
nonprofit institutions, State and local governments, or 
universities (or consortia thereof), to establish a 
geographically dispersed network of Advanced Energy Technology 
Transfer Centers, to be located in areas the Secretary 
determines have the greatest need of the services of such 
Centers.
    (b) Activities.--
            (1) In general.--Each Center shall operate a 
        program to encourage demonstration and commercial 
        application of advanced energy methods and technologies 
        through education and outreach to building and 
        industrial professionals, and to other individuals and 
        organizations with an interest in efficient energy use.
            (2) Advisory panel.--Each Center shall establish an 
        advisory panel to advise the Center on how best to 
        accomplish the activities under paragraph (1).
    (c) Application.--A person seeking a grant under this 
section shall submit to the Secretary an application in such 
form and containing such information as the Secretary may 
require. The Secretary may award a grant under this section to 
an entity already in existence if the entity is otherwise 
eligible under this section.
    (d) Selection Criteria.--The Secretary shall award grants 
under this section on the basis of the following criteria, at a 
minimum:
            (1) The ability of the applicant to carry out the 
        activities in subsection (b).
            (2) The extent to which the applicant will 
        coordinate the activities of the Center with other 
        entities, such as State and local governments, 
        utilities, and educational and research institutions.
    (e) Matching Funds.--The Secretary shall require a non-
Federal matching requirement of at least 50 percent of the 
costs of establishing and operating each Center.
    (f) Advisory Committee.--The Secretary shall establish an 
advisory committee to advise the Secretary on the establishment 
of Centers under this section. The advisory committee shall be 
composed of individuals with expertise in the area of advanced 
energy methods and technologies, including at least 1 
representative from--
            (1) State or local energy offices;
            (2) energy professionals;
            (3) trade or professional associations;
            (4) architects, engineers, or construction 
        professionals;
            (5) manufacturers;
            (6) the research community; and
            (7) nonprofit energy or environmental 
        organizations.
    (g) Definitions.--For purposes of this section:
            (1) Advanced energy methods and technologies.--The 
        term ``advanced energy methods and technologies'' means 
        all methods and technologies that promote energy 
        efficiency and conservation, including distributed 
        generation technologies, and life-cycle analysis of 
        energy use.
            (2) Center.--The term ``Center'' means an Advanced 
        Energy Technology Transfer Center established pursuant 
        to this section.
            (3) Distributed generation.--The term ``distributed 
        generation'' means an electric power generation 
        facility that is designed to serve retail electric 
        consumers at or near the facility site.

       Subtitle B--Distributed Energy and Electric Energy Systems

SEC. 911. DISTRIBUTED ENERGY AND ELECTRIC ENERGY SYSTEMS.

    (a) In General.--The following sums are authorized to be 
appropriated to the Secretary for distributed energy and 
electric energy systems activities, including activities 
authorized under this subtitle:
            (1) For fiscal year 2004, $190,000,000.
            (2) For fiscal year 2005, $200,000,000.
            (3) For fiscal year 2006, $220,000,000.
            (4) For fiscal year 2007, $240,000,000.
            (5) For fiscal year 2008, $260,000,000.
    (b) Micro-Cogeneration Energy Technology.--From amounts 
authorized under subsection (a), $20,000,000 for each of fiscal 
years 2004 and 2005 is authorized for activities under section 
914.

SEC. 912. HYBRID DISTRIBUTED POWER SYSTEMS.

    (a) Requirement.--Not later than 1 year after the date of 
enactment of this Act, the Secretary shall develop and transmit 
to Congress a strategy for a comprehensive research, 
development, demonstration, and commercial application program 
to develop hybrid distributed power systems that combine--
            (1) 1 or more renewable electric power generation 
        technologies of 10 megawatts or less located near the 
        site of electric energy use; and
            (2) nonintermittent electric power generation 
        technologies suitable for use in a distributed power 
        system.
    (b) Contents.--The strategy shall--
            (1) identify the needs best met with such hybrid 
        distributed power systems and the technological 
        barriers to the use of such systems;
            (2) provide for the development of methods to 
        design, test, integrate into systems, and operate such 
        hybrid distributed power systems;
            (3) include, as appropriate, research, development, 
        demonstration, and commercial application on related 
        technologies needed for the adoption of such hybrid 
        distributed power systems, including energy storage 
        devices and environmental control technologies;
            (4) include research, development, demonstration, 
        and commercial application of interconnection 
        technologies for communications and controls of 
        distributed generation architectures, particularly 
        technologies promoting real-time response to power 
        market information and physical conditions on the 
        electrical grid; and
            (5) describe how activities under the strategy will 
        be integrated with other research, development, 
        demonstration, and commercial application activities 
        supported by the Department related to electric power 
        technologies.

SEC. 913. HIGH POWER DENSITY INDUSTRY PROGRAM.

    The Secretary shall establish a comprehensive research, 
development, demonstration, and commercial application program 
to improve energy efficiency of high power density facilities, 
including data centers, server farms, and telecommunications 
facilities. Such program shall consider technologies that 
provide significant improvement in thermal controls, metering, 
load management, peak load reduction, or the efficient cooling 
of electronics.

SEC. 914. MICRO-COGENERATION ENERGY TECHNOLOGY.

    The Secretary shall make competitive, merit-based grants to 
consortia for the development of micro-cogeneration energy 
technology. The consortia shall explore--
            (1) the use of small-scale combined heat and power 
        in residential heating appliances; and
            (2) the use of excess power to operate other 
        appliances within the residence and supply excess 
        generated power to the power grid.

SEC. 915. DISTRIBUTED ENERGY TECHNOLOGY DEMONSTRATION PROGRAM.

    The Secretary, within the sums authorized under section 
911(a), may provide financial assistance to coordinating 
consortia of interdisciplinary participants for demonstrations 
designed to accelerate the utilization of distributed energy 
technologies, such as fuel cells, microturbines, reciprocating 
engines, thermally activated technologies, and combined heat 
and power systems, in highly energy intensive commercial 
applications.

SEC. 916. RECIPROCATING POWER.

    The Secretary shall conduct a research, development, and 
demonstration program regarding fuel system optimization and 
emissions reduction after-treatment technologies for industrial 
reciprocating engines. Such after-treatment technologies shall 
use processes that reduce emissions by recirculating exhaust 
gases and shall be designed to be retrofitted to any new or 
existing diesel or natural gas engine used for power 
generation, peaking power generation, combined heat and power, 
or compression.

                      Subtitle C--Renewable Energy

SEC. 918. RENEWABLE ENERGY.

    (a) In General.--The following sums are authorized to be 
appropriated to the Secretary for renewable energy research, 
development, demonstration, and commercial application 
activities, including activities authorized under this 
subtitle:
            (1) For fiscal year 2004, $480,000,000.
            (2) For fiscal year 2005, $550,000,000.
            (3) For fiscal year 2006, $610,000,000.
            (4) For fiscal year 2007, $659,000,000.
            (5) For fiscal year 2008, $710,000,000.
    (b) Bioenergy.--From the amounts authorized under 
subsection (a), the following sums are authorized to be 
appropriated to carry out section 919:
            (1) For fiscal year 2004, $135,425,000.
            (2) For fiscal year 2005, $155,600,000.
            (3) For fiscal year 2006, $167,650,000.
            (4) For fiscal year 2007, $180,000,000.
            (5) For fiscal year 2008, $192,000,000.
    (c) Concentrating Solar Power.--From amounts authorized 
under subsection (a), the following sums are authorized to be 
appropriated to carry out section 920:
            (1) For fiscal year 2004, $20,000,000.
            (2) For fiscal year 2005, $40,000,000.
            (3) For each of fiscal years 2006, 2007 and 2008, 
        $50,000,000.
    (d) Public Buildings.--From the amounts authorized under 
subsection (a), $30,000,000 for each of the fiscal years 2004 
through 2008 are authorized to be appropriated to carry out 
section 922.
    (e) Limits on Use of Funds.--
            (1) No funds for renewable support and 
        implementation.--None of the funds authorized to be 
        appropriated under this section may be used for 
        Renewable Support and Implementation.
            (2) Grants.--Of the funds authorized under 
        subsection (b), not less than $5,000,000 for each 
        fiscal year shall be made available for grants to 
        Historically Black Colleges and Universities, Tribal 
        Colleges, and Hispanic-Serving Institutions.
            (3) Regional field verification program.--Of the 
        funds authorized under subsection (a), not less than 
        $4,000,000 for each fiscal year shall be made available 
        for the Regional Field Verification Program of the 
        Department.
            (4) Off-stream pumped storage hydropower.--Of the 
        funds authorized under subsection (a), such sums as may 
        be necessary shall be made available for demonstration 
        projects of off-stream pumped storage hydropower.
    (f) Consultation.--In carrying out this subtitle, the 
Secretary, in consultation with the Secretary of Agriculture, 
shall demonstrate the use of advanced wind power technology, 
including combined use with coal gasification; biomass; 
geothermal energy systems; and other renewable energy 
technologies to assist in delivering electricity to rural and 
remote locations.

SEC. 919. BIOENERGY PROGRAMS.

    (a) Definitions.--For the purposes of this section:
            (1) The term ``agricultural byproducts'' includes 
        waste products, including poultry fat and poultry 
        waste.
            (2) The term ``cellulosic biomass'' means any 
        portion of a crop containing lignocellulose or 
        hemicellulose, including barley grain, grapeseed, 
        forest thinnings, rice bran, rice hulls, rice straw, 
        soybean matter, and sugarcane bagasse, or any crop 
        grown specifically for the purpose of producing 
        cellulosic feedstocks.
    (b) Program.--The Secretary shall conduct a program of 
research, development, demonstration, and commercial 
application for bioenergy, including--
            (1) biopower energy systems;
            (2) biofuels;
            (3) bio-based products;
            (4) integrated biorefineries that may produce 
        biopower, biofuels, and bio-based products;
            (5) cross-cutting research and development in 
        feedstocks and enzymes; and
            (6) economic analysis.
    (c) Biofuels and Bio-Based Products.--The goals of the 
biofuels and bio-based products programs shall be to develop, 
in partnership with industry--
            (1) advanced biochemical and thermochemical 
        conversion technologies capable of making biofuels that 
        are price-competitive with gasoline or diesel in either 
        internal combustion engines or fuel cell-powered 
        vehicles, and bio-based products from a variety of 
        feedstocks, including grains, cellulosic biomass, and 
        other agricultural byproducts; and
            (2) advanced biotechnology processes capable of 
        making biofuels and bio-based products with emphasis on 
        development of biorefinery technologies using enzyme-
        based processing systems.

SEC. 920. CONCENTRATING SOLAR POWER RESEARCH AND DEVELOPMENT PROGRAM.

    (a) In General.--The Secretary shall conduct a program of 
research and development to evaluate the potential of 
concentrating solar power for hydrogen production, including 
cogeneration approaches for both hydrogen and electricity. Such 
program shall take advantage of existing facilities to the 
extent possible and shall include--
            (1) development of optimized technologies that are 
        common to both electricity and hydrogen production;
            (2) evaluation of thermochemical cycles for 
        hydrogen production at the temperatures attainable with 
        concentrating solar power;
            (3) evaluation of materials issues for the 
        thermochemical cycles described in paragraph (2);
            (4) system architectures and economics studies; and
            (5) coordination with activities in the Advanced 
        Reactor Hydrogen Cogeneration Project on high 
        temperature materials, thermochemical cycles, and 
        economic issues.
    (b) Assessment.--In carrying out the program under this 
section, the Secretary shall--
            (1) assess conflicting guidance on the economic 
        potential of concentrating solar power for electricity 
        production received from the National Research Council 
        report entitled ``Renewable Power Pathways: A Review of 
        the U.S. Department of Energy's Renewable Energy 
        Programs'' in 2000 and subsequent Department-funded 
        reviews of that report; and
            (2) provide an assessment of the potential impact 
        of the technology before, or concurrent with, 
        submission of the fiscal year 2006 budget.
    (c) Report.--Not later than 5 years after the date of 
enactment of this Act, the Secretary shall provide a report to 
Congress on the economic and technical potential for 
electricity or hydrogen production, with or without 
cogeneration, with concentrating solar power, including the 
economic and technical feasibility of potential construction of 
a pilot demonstration facility suitable for commercial 
production of electricity or hydrogen from concentrating solar 
power.

SEC. 921. MISCELLANEOUS PROJECTS.

    The Secretary may conduct research, development, 
demonstration, and commercial application programs for--
            (1) ocean energy, including wave energy; and
            (2) the combined use of renewable energy 
        technologies with one another and with other energy 
        technologies, including the combined use of wind power 
        and coal gasification technologies.

SEC. 922. RENEWABLE ENERGY IN PUBLIC BUILDINGS.

    (a) Demonstration and Technology Transfer Program.--The 
Secretary shall establish a program for the demonstration of 
innovative technologies for solar and other renewable energy 
sources in buildings owned or operated by a State or local 
government, and for the dissemination of information resulting 
from such demonstration to interested parties.
    (b) Limit on Federal Funding.--The Secretary shall provide 
under this section no more than 40 percent of the incremental 
costs of the solar or other renewable energy source project 
funded.
    (c) Requirement.--As part of the application for awards 
under this section, the Secretary shall require all 
applicants--
            (1) to demonstrate a continuing commitment to the 
        use of solar and other renewable energy sources in 
        buildings they own or operate; and
            (2) to state how they expect any award to further 
        their transition to the significant use of renewable 
        energy.

SEC. 923. STUDY OF MARINE RENEWABLE ENERGY OPTIONS.

    (a) In General.--The Secretary shall enter into an 
arrangement with the National Academy of Sciences to conduct a 
study on--
            (1) the feasibility of various methods of renewable 
        generation of energy from the ocean, including energy 
        from waves, tides, currents, and thermal gradients; and
            (2) the research, development, demonstration, and 
        commercial application activities required to make 
        marine renewable energy generation competitive with 
        other forms of electricity generation.
    (b) Transmittal.--Not later than 1 year after the date of 
enactment of this Act, the Secretary shall transmit the study 
to Congress along with the Secretary's recommendations for 
implementing the results of the study.

                       Subtitle D--Nuclear Energy

SEC. 924. NUCLEAR ENERGY.

    (a) Core Programs.--The following sums are authorized to be 
appropriated to the Secretary for nuclear energy research, 
development, demonstration, and commercial application 
activities, including activities authorized under this 
subtitle, other than those described in subsection (b):
            (1) For fiscal year 2004, $273,000,000.
            (2) For fiscal year 2005, $355,000,000.
            (3) For fiscal year 2006, $430,000,000.
            (4) For fiscal year 2007, $455,000,000.
            (5) For fiscal year 2008, $545,000,000.
    (b) Nuclear Infrastructure Support.--The following sums are 
authorized to be appropriated to the Secretary for activities 
under section 925(e):
            (1) For fiscal year 2004, $125,000,000.
            (2) For fiscal year 2005, $130,000,000.
            (3) For fiscal year 2006, $135,000,000.
            (4) For fiscal year 2007, $140,000,000.
            (5) For fiscal year 2008, $145,000,000.
    (c) Allocations.--From amounts authorized under subsection 
(a), the following sums are authorized:
            (1) For activities under section 926--
                    (A) for fiscal year 2004, $140,000,000;
                    (B) for fiscal year 2005, $145,000,000;
                    (C) for fiscal year 2006, $150,000,000;
                    (D) for fiscal year 2007, $155,000,000; and
                    (E) for fiscal year 2008, $275,000,000.
            (2) For activities under section 927--
                    (A) for fiscal year 2004, $35,200,000;
                    (B) for fiscal year 2005, $44,350,000;
                    (C) for fiscal year 2006, $49,200,000;
                    (D) for fiscal year 2007, $54,950,000; and
                    (E) for fiscal year 2008, $60,000,000.
            (3) For activities under section 929, for each of 
        fiscal years 2004 through 2008, $6,000,000.
    (d) Limitation on Use of Funds.--None of the funds 
authorized under this section may be used for decommissioning 
the Fast Flux Test Facility.

SEC. 925. NUCLEAR ENERGY RESEARCH AND DEVELOPMENT PROGRAMS.

    (a) Nuclear Energy Research Initiative.--The Secretary 
shall carry out a Nuclear Energy Research Initiative for 
research and development related to nuclear energy.
    (b) Nuclear Energy Plant Optimization Program.--The 
Secretary shall carry out a Nuclear Energy Plant Optimization 
Program to support research and development activities 
addressing reliability, availability, productivity, component 
aging, safety, and security of existing nuclear power plants.
    (c) Nuclear Power 2010 Program.--The Secretary shall carry 
out a Nuclear Power 2010 Program, consistent with 
recommendations in the October 2001 report entitled ``A Roadmap 
to Deploy New Nuclear Power Plants in the United States by 
2010'' issued by the Nuclear Energy Research Advisory Committee 
of the Department. Whatever type of reactor is chosen for the 
hydrogen cogeneration project under subtitle C of title VI, 
that type shall not be addressed in the Program under this 
section. The Program shall include--
            (1) support for first-of-a-kind engineering design 
        and certification expenses of advanced nuclear power 
        plant designs, which offer improved safety and 
        economics over current conventional plants and the 
        promise of near-term to medium-term commercial 
        deployment;
            (2) action by the Secretary to encourage domestic 
        power companies to install new nuclear plant capacity 
        as soon as possible;
            (3) utilization of the expertise and capabilities 
        of industry, universities, and National Laboratories in 
        evaluation of advanced nuclear fuel cycles and fuels 
        testing;
            (4) consideration of proliferation-resistant 
        passively-safe, small reactors suitable for long-term 
        electricity production without refueling and suitable 
        for use in remote installations;
            (5) participation of international collaborators in 
        research, development, design, and deployment efforts 
        as appropriate and consistent with United States 
        interests in nonproliferation of nuclear weapons;
            (6) encouragement for university and industry 
        participation; and
            (7) selection of projects such as to strengthen the 
        competitive position of the domestic nuclear power 
        industrial infrastructure.
    (d) Generation IV Nuclear Energy Systems Initiative.--The 
Secretary shall carry out a Generation IV Nuclear Energy 
Systems Initiative to develop an overall technology plan and to 
support research and development necessary to make an informed 
technical decision about the most promising candidates for 
eventual commercial application. The Initiative shall examine 
advanced proliferation-resistant and passively safe reactor 
designs, including designs that--
            (1) are economically competitive with other 
        electric power generation plants;
            (2) have higher efficiency, lower cost, and 
        improved safety compared to reactors in operation on 
        the date of enactment of this Act;
            (3) use fuels that are proliferation-resistant and 
        have substantially reduced production of high-level 
        waste per unit of output; and
            (4) use improved instrumentation.
    (e) Nuclear Infrastructure Support.--The Secretary shall 
develop and implement a strategy for the facilities of the 
Office of Nuclear Energy, Science, and Technology and shall 
transmit a report containing the strategy along with the 
President's budget request to Congress for fiscal year 2006.

SEC. 926. ADVANCED FUEL CYCLE INITIATIVE.

    (a) In General.--The Secretary, through the Director of the 
Office of Nuclear Energy, Science, and Technology, shall 
conduct an advanced fuel recycling technology research and 
development program to evaluate proliferation-resistant fuel 
recycling and transmutation technologies that minimize 
environmental or public health and safety impacts as an 
alternative to aqueous reprocessing technologies deployed as of 
the date of enactment of this Act in support of evaluation of 
alternative national strategies for spent nuclear fuel and the 
Generation IV advanced reactor concepts, subject to annual 
review by the Secretary's Nuclear Energy Research Advisory 
Committee or other independent entity, as appropriate. 
Opportunities to enhance progress of the program through 
international cooperation should be sought.
    (b) Reports.--The Secretary shall report on the activities 
of the advanced fuel recycling technology research and 
development program as part of the Department's annual budget 
submission.

SEC. 927. UNIVERSITY NUCLEAR SCIENCE AND ENGINEERING SUPPORT.

    (a) Establishment.--The Secretary shall support a program 
to invest in human resources and infrastructure in the nuclear 
sciences and engineering and related fields (including health 
physics and nuclear and radiochemistry), consistent with 
departmental missions related to civilian nuclear research and 
development.
    (b) Duties.--In carrying out the program under this 
section, the Secretary shall establish fellowship and faculty 
assistance programs, as well as provide support for fundamental 
research and encourage collaborative research among industry, 
National Laboratories, and universities through the Nuclear 
Energy Research Initiative. The Secretary is encouraged to 
support activities addressing the entire fuel cycle through 
involvement of both the Office of Nuclear Energy, Science, and 
Technology and the Office of Civilian Radioactive Waste 
Management. The Secretary shall support communication and 
outreach related to nuclear science, engineering, and nuclear 
waste management, consistent with interests of the United 
States in nonproliferation of nuclear weapons capabilities.
    (c) Strengthening University Research and Training Reactors 
and Associated Infrastructure.--Activities under this section 
may include--
            (1) converting research and training reactors 
        currently using high-enrichment fuels to low-enrichment 
        fuels, upgrading operational instrumentation, and 
        sharing of reactors among institutions of higher 
        education;
            (2) providing technical assistance, in 
        collaboration with the United States nuclear industry, 
        in relicensing and upgrading research and training 
        reactors as part of a student training program; and
            (3) providing funding, through the Innovations in 
        Nuclear Infrastructure and Education Program, for 
        reactor improvements as part of a focused effort that 
        emphasizes research, training, and education.
    (d) University National Laboratory Interactions.--The 
Secretary shall develop sabbatical fellowship and visiting 
scientist programs to encourage sharing of personnel between 
National Laboratories and universities.
    (e) Operating and Maintenance Costs.--Funding for a 
research project provided under this section may be used to 
offset a portion of the operating and maintenance costs of a 
research and training reactor at an institution of higher 
education used in the research project.

SEC. 928. SECURITY OF REACTOR DESIGNS.

    The Secretary, through the Director of the Office of 
Nuclear Energy, Science, and Technology, shall conduct a 
research and development program on cost-effective technologies 
for increasing the safety of reactor designs from natural 
phenomena and the security of reactor designs from deliberate 
attacks.

SEC. 929. ALTERNATIVES TO INDUSTRIAL RADIOACTIVE SOURCES.

    (a) Study.--The Secretary shall conduct a study and provide 
a report to Congress not later than August 1, 2004. The study 
shall--
            (1) survey industrial applications of large 
        radioactive sources, including well-logging sources;
            (2) review current domestic and international 
        Department, Department of Defense, Department of State, 
        and commercial programs to manage and dispose of 
        radioactive sources;
            (3) discuss disposal options and practices for 
        currently deployed or future sources and, if 
        deficiencies are noted in existing disposal options or 
        practices for either deployed or future sources, 
        recommend options to remedy deficiencies; and
            (4) develop a program plan for research and 
        development to develop alternatives to large industrial 
        sources that reduce safety, environmental, or 
        proliferation risks to either workers using the sources 
        or the public.
    (b) Program.--The Secretary shall establish a research and 
development program to implement the program plan developed 
under subsection (a)(4). The program shall include miniaturized 
particle accelerators for well-logging or other industrial 
applications and portable accelerators for production of short-
lived radioactive materials at an industrial site.

SEC. 930. GEOLOGICAL ISOLATION OF SPENT FUEL.

    The Secretary shall conduct a study to determine the 
feasibility of deep borehole disposal of spent nuclear fuel and 
high-level radioactive waste. The study shall emphasize 
geological, chemical, and hydrological characterization of, and 
design of engineered structures for, deep borehole 
environments. Not later than 1 year after the date of enactment 
of this Act, the Secretary shall transmit the study to 
Congress.

                       Subtitle E--Fossil Energy

                       PART I--RESEARCH PROGRAMS

SEC. 931. FOSSIL ENERGY.

    (a) In General.--The following sums are authorized to be 
appropriated to the Secretary for fossil energy research, 
development, demonstration, and commercial application 
activities, including activities authorized under this part:
            (1) For fiscal year 2004, $530,000,000.
            (2) For fiscal year 2005, $556,000,000.
            (3) For fiscal year 2006, $583,000,000.
            (4) For fiscal year 2007, $611,000,000.
            (5) For fiscal year 2008, $626,000,000.
    (b) Allocations.--From amounts authorized under subsection 
(a), the following sums are authorized:
            (1) For activities under section 932(b)(2), 
        $28,000,000 for each of the fiscal years 2004 through 
        2008.
            (2) For activities under section 934--
                    (A) for fiscal year 2004, $12,000,000;
                    (B) for fiscal year 2005, $15,000,000; and
                    (C) for each of fiscal years 2006 through 
                2008, $20,000,000.
            (3) For activities under section 935--
                    (A) for fiscal year 2004, $259,000,000;
                    (B) for fiscal year 2005, $272,000,000;
                    (C) for fiscal year 2006, $285,000,000;
                    (D) for fiscal year 2007, $298,000,000; and
                    (E) for fiscal year 2008, $308,000,000.
            (4) For the Office of Arctic Energy under section 
        3197 of the Floyd D. Spence National Defense 
        Authorization Act for Fiscal Year 2001 (42 U.S.C. 
        7144d), $25,000,000 for each of fiscal years 2004 
        through 2008.
            (5) For activities under section 933, $4,000,000 
        for fiscal year 2004 and $2,000,000 for each of fiscal 
        years 2005 through 2008.
    (c) Extended Authorization.--There are authorized to be 
appropriated to the Secretary for the Office of Arctic Energy 
under section 3197 of the Floyd D. Spence National Defense 
Authorization Act for Fiscal Year 2001 (42 U.S.C. 7144d), 
$25,000,000 for each of fiscal years 2009 through 2012.
    (d) Limits on Use of Funds.--
            (1) No funds for certain programs.--None of the 
        funds authorized under this section may be used for 
        Fossil Energy Environmental Restoration or Import/
        Export Authorization.
            (2) Institutions of higher education.--Of the funds 
        authorized under subsection (b)(2), not less than 20 
        percent of the funds appropriated for each fiscal year 
        shall be dedicated to research and development carried 
        out at institutions of higher education.

SEC. 932. OIL AND GAS RESEARCH PROGRAMS.

    (a) Oil and Gas Research.--The Secretary shall conduct a 
program of research, development, demonstration, and commercial 
application on oil and gas, including--
            (1) exploration and production;
            (2) gas hydrates;
            (3) reservoir life and extension;
            (4) transportation and distribution infrastructure;
            (5) ultraclean fuels;
            (6) heavy oil and oil shale;
            (7) related environmental research; and
            (8) compressed natural gas marine transport.
    (b) Fuel Cells.--
            (1) In general.--The Secretary shall conduct a 
        program of research, development, demonstration, and 
        commercial application on fuel cells for low-cost, 
        high-efficiency, fuel-flexible, modular power systems.
            (2) Improved manufacturing production and 
        processes.--The demonstrations under paragraph (1) 
        shall include fuel cell technology for commercial, 
        residential, and transportation applications, and 
        distributed generation systems, utilizing improved 
        manufacturing production and processes.
    (c) Natural Gas and Oil Deposits Report.--Not later than 2 
years after the date of enactment of this Act, and every 2 
years thereafter, the Secretary of the Interior, in 
consultation with other appropriate Federal agencies, shall 
transmit a report to Congress of the latest estimates of 
natural gas and oil reserves, reserves growth, and undiscovered 
resources in Federal and State waters off the coast of 
Louisiana and Texas.
    (d) Integrated Clean Power and Energy Research.--
            (1) National center or consortium of excellence.--
        The Secretary shall establish a national center or 
        consortium of excellence in clean energy and power 
        generation, utilizing the resources of the existing 
        Clean Power and Energy Research Consortium, to address 
        the Nation's critical dependence on energy and the need 
        to reduce emissions.
            (2) Program.--The center or consortium shall 
        conduct a program of research, development, 
        demonstration, and commercial application on 
        integrating the following focus areas:
                    (A) Efficiency and reliability of gas 
                turbines for power generation.
                    (B) Reduction in emissions from power 
                generation.
                    (C) Promotion of energy conservation 
                issues.
                    (D) Effectively utilizing alternative fuels 
                and renewable energy.
                    (E) Development of advanced materials 
                technology for oil and gas exploration and 
                utilization in harsh environments.
                    (F) Education on energy and power 
                generation issues.

SEC. 933. TECHNOLOGY TRANSFER.

    The Secretary shall establish a competitive program to 
award a contract to a nonprofit entity for the purpose of 
transferring technologies developed with public funds. The 
entity selected under this section shall have experience in 
offshore oil and gas technology research management, in the 
transfer of technologies developed with public funds to the 
offshore and maritime industry, and in management of an 
offshore and maritime industry consortium. The program 
consortium selected under section 942 shall not be eligible for 
selection under this section. When appropriate, the Secretary 
shall consider utilizing the entity selected under this section 
when implementing the activities authorized by section 975.

SEC. 934. RESEARCH AND DEVELOPMENT FOR COAL MINING TECHNOLOGIES.

    (a) Establishment.--The Secretary shall carry out a program 
of research and development on coal mining technologies. The 
Secretary shall cooperate with appropriate Federal agencies, 
coal producers, trade associations, equipment manufacturers, 
institutions of higher education with mining engineering 
departments, and other relevant entities.
    (b) Program.--The research and development activities 
carried out under this section shall--
            (1) be guided by the mining research and 
        development priorities identified by the Mining 
        Industry of the Future Program and in the 
        recommendations from relevant reports of the National 
        Academy of Sciences on mining technologies;
            (2) include activities exploring minimization of 
        contaminants in mined coal that contribute to 
        environmental concerns including development and 
        demonstration of electromagnetic wave imaging ahead of 
        mining operations;
            (3) develop and demonstrate electromagnetic wave 
        imaging and radar techniques for horizontal drilling in 
        coal beds in order to increase methane recovery 
        efficiency, prevent spoilage of domestic coal reserves, 
        and minimize water disposal associated with methane 
        extraction; and
            (4) expand mining research capabilities at 
        institutions of higher education.

SEC. 935. COAL AND RELATED TECHNOLOGIES PROGRAM.

    (a) In General.--In addition to the programs authorized 
under title IV, the Secretary shall conduct a program of 
technology research, development, demonstration, and commercial 
application for coal and power systems, including programs 
tofacilitate production and generation of coal-based power through--
            (1) innovations for existing plants;
            (2) integrated gasification combined cycle;
            (3) advanced combustion systems;
            (4) turbines for synthesis gas derived from coal;
            (5) carbon capture and sequestration research and 
        development;
            (6) coal-derived transportation fuels and 
        chemicals;
            (7) solid fuels and feedstocks;
            (8) advanced coal-related research;
            (9) advanced separation technologies; and
            (10) a joint project for permeability enhancement 
        in coals for natural gas production and carbon dioxide 
        sequestration.
    (b) Cost and Performance Goals.--In carrying out programs 
authorized by this section, the Secretary shall identify cost 
and performance goals for coal-based technologies that would 
permit the continued cost-competitive use of coal for 
electricity generation, as chemical feedstocks, and as 
transportation fuel in 2007, 2015, and the years after 2020. In 
establishing such cost and performance goals, the Secretary 
shall--
            (1) consider activities and studies undertaken to 
        date by industry in cooperation with the Department in 
        support of such assessment;
            (2) consult with interested entities, including 
        coal producers, industries using coal, organizations to 
        promote coal and advanced coal technologies, 
        environmental organizations, and organizations 
        representing workers;
            (3) not later than 120 days after the date of 
        enactment of this Act, publish in the Federal Register 
        proposed draft cost and performance goals for public 
        comments; and
            (4) not later than 180 days after the date of 
        enactment of this Act and every 4 years thereafter, 
        submit to Congress a report describing final cost and 
        performance goals for such technologies that includes a 
        list of technical milestones as well as an explanation 
        of how programs authorized in this section will not 
        duplicate the activities authorized under the Clean 
        Coal Power Initiative authorized under subtitle A of 
        title IV.

SEC. 936. COMPLEX WELL TECHNOLOGY TESTING FACILITY.

    The Secretary, in coordination with industry leaders in 
extended research drilling technology, shall establish a 
Complex Well Technology Testing Facility at the Rocky Mountain 
Oilfield Testing Center to increase the range of extended 
drilling technologies.

SEC. 937. FISCHER-TROPSCH DIESEL FUEL LOAN GUARANTEE PROGRAM.

    (a) Definition of Fischer-Tropsch Diesel Fuel.--In this 
section, the term ``Fischer-Tropsch diesel fuel'' means diesel 
fuel that--
            (1) contains less than 10 parts per million sulfur; 
        and
            (2) is produced through the Fischer-Tropsch 
        liquification process from coal or waste from coal that 
        was mined in the United States.
    (b) Loan Guarantees.--
            (1) Establishment of program.--The Secretary of 
        Energy shall establish a program to provide guarantees 
        of loans by private lending institutions for the 
        construction of facilities for the production of 
        Fischer-Tropsch diesel fuel and commercial byproducts 
        of that production.
            (2) Requirements.--The Secretary may provide a loan 
        guarantee under paragraph (1) if--
                    (A) without a loan guarantee, credit is not 
                available to the applicant under reasonable 
                terms or conditions sufficient to finance the 
                construction of a facility described in 
                paragraph (1);
                    (B) the prospective earning power of the 
                applicant and the character and value of the 
                security pledged provide a reasonable assurance 
                of repayment of the loan to be guaranteed in 
                accordance with the terms of the loan; and
                    (C) the loan bears interest at a rate 
                determined by the Secretary to be reasonable, 
                taking into account the current average yield 
                on outstanding obligations of the United States 
                with remaining periods of maturity comparable 
                to the maturity of the loan.
            (3) Criteria.--In selecting recipients of loan 
        guarantees from among applicants, the Secretary shall 
        give preference to proposals that--
                    (A) meet all Federal and State permitting 
                requirements;
                    (B) are most likely to be successful; and
                    (C) are located in local markets that have 
                the greatest need for the facility because of--
                            (i) the availability of domestic 
                        coal or coal waste for conversion; or
                            (ii) a projected high level of 
                        demand for Fischer-Tropsch diesel fuel 
                        or other commercial byproducts of the 
                        facility.
            (4) Maturity.--A loan guaranteed under paragraph 
        (1) shall have a maturity of not more than 25 years.
            (5) Terms and conditions.--The loan agreement for a 
        loan guaranteed under paragraph (1) shall provide that 
        no provision of the loan may be amended or waived 
        without the consent of the Secretary.
            (6) Guarantee fee.--A recipient of a loan guarantee 
        under paragraph (1) shall pay the Secretary an amount 
        to be determined by the Secretary to be sufficient to 
        cover the administrative costs of the Secretary 
        relating to the loan guarantee.
            (7) Full faith and credit.--
                    (A) In general.--The full faith and credit 
                of the United States is pledged to payment of 
                loan guarantees made under this section.
                    (B) Conclusive evidence.--Any loan 
                guarantee made by the Secretary under this 
                section shall be conclusive evidence of the 
                eligibility of the loan for the guarantee with 
                respect to principal and interest.
                    (C) Validity.--The validity of a loan 
                guarantee shall be incontestable in the hands 
                of a holder of the guaranteed loan.
            (8) Reports.--Until each guaranteed loan under this 
        section is repaid in full, the Secretary shall annually 
        submit to Congress a report on the activities of the 
        Secretary under this section.
            (9) Authorization of appropriations.--There are 
        authorized to be appropriated such sums as are 
        necessary to carry out this section.
            (10) Termination of authority.--The authority of 
        the Secretary to issue a new loan guarantee under 
        paragraph (1) terminates on the date that is 5 years 
        after the date of enactment of this Act.

   PART II--ULTRA-DEEPWATER AND UNCONVENTIONAL NATURAL GAS AND OTHER 
                          PETROLEUM RESOURCES

SEC. 941. PROGRAM AUTHORITY.

    (a) In General.--The Secretary shall carry out a program 
under this part of research, development, demonstration, and 
commercial application of technologies for ultra-deepwater and 
unconventional natural gas and other petroleum resource 
exploration and production, including addressing the technology 
challenges for small producers, safe operations, and 
environmental mitigation (including reduction of greenhouse gas 
emissions and sequestration of carbon).
    (b) Program Elements.--The program under this part shall 
address the following areas, including improving safety and 
minimizing environmental impacts of activities within each 
area:
            (1) Ultra-deepwater technology, including drilling 
        to formations in the Outer Continental Shelf to depths 
        greater than 15,000 feet.
            (2) Ultra-deepwater architecture.
            (3) Unconventional natural gas and other petroleum 
        resource exploration and production technology, 
        including the technology challenges of small producers.
    (c) Limitation on Location of Field Activities.--Field 
activities under the program under this part shall be carried 
out only--
            (1) in--
                    (A) areas in the territorial waters of the 
                United States not under any Outer Continental 
                Shelf moratorium as of September 30, 2002;
                    (B) areas onshore in the United States on 
                public land administered by the Secretary of 
                the Interior available for oil and gas leasing, 
                where consistent with applicable law and land 
                use plans; and
                    (C) areas onshore in the United States on 
                State or private land, subject to applicable 
                law; and
            (2) with the approval of the appropriate Federal or 
        State land management agency or private land owner.
    (d) Research at National Energy Technology Laboratory.--The 
Secretary, through the National Energy Technology Laboratory, 
shall carry out research complementary to research under 
subsection (b).
    (e) Consultation With Secretary of the Interior.--In 
carrying out this part, the Secretary shall consult regularly 
with the Secretary of the Interior.

SEC. 942. ULTRA-DEEPWATER PROGRAM.

    (a) In general.--The Secretary shall carry out the 
activities under section 941(a), to maximize the use of the 
ultra-deepwater natural gas and other petroleum resources of 
the United States by increasing the supply of such resources, 
through reducing the cost and increasing the efficiency of 
exploration for and production of such resources, while 
improving safety and minimizing environmental impacts.
    (b) Role of the Secretary.--The Secretary shall have 
ultimate responsibility for, and oversight of, all aspects of 
the program under this section.
    (c) Role of the Program Consortium.--
            (1) In general.--The Secretary may contract with a 
        consortium to--
                    (A) manage awards pursuant to subsection 
                (f)(4);
                    (B) make recommendations to the Secretary 
                for project solicitations;
                    (C) disburse funds awarded under subsection 
                (f) as directed by the Secretary in accordance 
                with the annual plan under subsection (e); and
                    (D) carry out other activities assigned to 
                the program consortium by this section.
            (2) Limitation.--The Secretary may not assign any 
        activities to the program consortium except as 
        specifically authorized under this section.
            (3) Conflict of interest.--
                    (A) Procedures.--The Secretary shall 
                establish procedures--
                            (i) to ensure that each board 
                        member, officer, or employee of the 
                        program consortium who is in a 
                        decision-making capacity under 
                        subsection (f)(3) or (4) shall disclose 
                        to the Secretary any financial 
                        interests in, or financial 
                        relationships with, applicants for or 
                        recipients of awards under this 
                        section, including those of his or her 
                        spouse or minor child, unless such 
                        relationships or interests would be 
                        considered to be remote or 
                        inconsequential; and
                            (ii) to require any board member, 
                        officer, or employee with a financial 
                        relationship or interest disclosed 
                        under clause (i) to recuse himself or 
                        herself from any review under 
                        subsection (f)(3) or oversight under 
                        subsection (f)(4) with respect to such 
                        applicant or recipient.
                    (B) Failure to comply.--The Secretary may 
                disqualify an application or revoke an award 
                under this section if a board member, officer, 
                or employee has failed to comply with 
                procedures required under subparagraph (A)(ii).
    (d) Selection of the Program Consortium.--
            (1) In general.--The Secretary shall select the 
        program consortium through an open, competitive 
        process.
            (2) Members.--The program consortium may include 
        corporations, trade associations, institutions of 
        higher education, National Laboratories, or other 
        research institutions. After submitting a proposal 
        under paragraph (4), the program consortium may not add 
        members without the consent of the Secretary.
            (3) Tax status.--The program consortium shall be an 
        entity that is exempt from tax under section 501(c)(3) 
        of the Internal Revenue Code of 1986.
            (4) Schedule.--Not later than 180 days after the 
        date of enactment of this Act, the Secretary shall 
        solicit proposals from eligible consortia to perform 
        the duties in subsection (c)(1), which shall be 
        submitted not later than 360 days after the date of 
        enactment of this Act. The Secretary shall select the 
        program consortium not later than 18 months after such 
        date of enactment.
            (5) Application.--Applicants shall submit a 
        proposal including such information as the Secretary 
        may require. At a minimum, each proposal shall--
                    (A) list all members of the consortium;
                    (B) fully describe the structure of the 
                consortium, including any provisions relating 
                to intellectual property; and
                    (C) describe how the applicant would carry 
                out the activities of the program consortium 
                under this section.
            (6) Eligibility.--To be eligible to be selected as 
        the program consortium, an applicant must be an entity 
        whose members collectively have demonstrated 
        capabilities in planning and managing research, 
        development, demonstration, and commercial application 
        programs in natural gas or other petroleum exploration 
        or production.
            (7) Criterion.--The Secretary shall consider the 
        amount of the fee an applicant proposes to receive 
        under subsection (g) in selecting a consortium under 
        this section.
    (e) Annual Plan.--
            (1) In general.--The program under this section 
        shall be carried out pursuant to an annual plan 
        prepared by the Secretary in accordance with paragraph 
        (2).
            (2) Development.--
                    (A) Solicitation of recommendations.--
                Before drafting an annual plan under this 
                subsection, the Secretary shall solicit 
                specific written recommendations from the 
                program consortium for each element to be 
                addressed in the plan, including those 
                described in paragraph (4). The Secretary may 
                request that the program consortium submit its 
                recommendations in the form of a draft annual 
                plan.
                    (B) Submission of recommendations; other 
                comment.--The Secretary shall submit the 
                recommendations of the program consortium under 
                subparagraph (A) to the Ultra-Deepwater 
                Advisory Committee established under section 
                945(a) for review, and such Advisory Committee 
                shall provide to the Secretary written comments 
                by a date determined by the Secretary. The 
                Secretary may also solicit comments from any 
                other experts.
                    (C) Consultation.--The Secretary shall 
                consult regularly with the program consortium 
                throughout the preparation of the annual plan.
            (3) Publication.--The Secretary shall transmit to 
        Congress and publish in the Federal Register the 
annualplan, along with any written comments received under paragraph 
(2)(A) and (B).
            (4) Contents.--The annual plan shall describe the 
        ongoing and prospective activities of the program under 
        this section and shall include--
                    (A) a list of any solicitations for awards 
                that the Secretary plans to issue to carry out 
                research, development, demonstration, or 
                commercial application activities, including 
                the topics for such work, who would be eligible 
                to apply, selection criteria, and the duration 
                of awards; and
                    (B) a description of the activities 
                expected of the program consortium to carry out 
                subsection (f)(4).
            (5) Estimates of increased royalty receipts.--The 
        Secretary, in consultation with the Secretary of the 
        Interior, shall provide an annual report to Congress 
        with the President's budget on the estimated cumulative 
        increase in Federal royalty receipts (if any) resulting 
        from the implementation of this part. The initial 
        report under this paragraph shall be submitted in the 
        first President's budget following the completion of 
        the first annual plan required under this subsection.
    (f) Awards.--
            (1) In general.--The Secretary shall make awards to 
        carry out research, development, demonstration, and 
        commercial application activities under the program 
        under this section. The program consortium shall not be 
        eligible to receive such awards, but members of the 
        program consortium may receive such awards.
            (2) Proposals.--The Secretary shall solicit 
        proposals for awards under this subsection in such 
        manner and at such time as the Secretary may prescribe, 
        in consultation with the program consortium.
            (3) Review.--The Secretary shall make awards under 
        this subsection through a competitive process, which 
        shall include a review by individuals selected by the 
        Secretary. Such individuals shall include, for each 
        application, Federal officials, the program consortium, 
        and non-Federal experts who are not board members, 
        officers, or employees of the program consortium or of 
        a member of the program consortium.
            (4) Oversight.--
                    (A) In general.--The program consortium 
                shall oversee the implementation of awards 
                under this subsection, consistent with the 
                annual plan under subsection (e), including 
                disbursing funds and monitoring activities 
                carried out under such awards for compliance 
                with the terms and conditions of the awards.
                    (B) Effect.--Nothing in subparagraph (A) 
                shall limit the authority or responsibility of 
                the Secretary to oversee awards, or limit the 
                authority of the Secretary to review or revoke 
                awards.
                    (C) Provision of information.--The 
                Secretary shall provide to the program 
                consortium the information necessary for the 
                program consortium to carry out its 
                responsibilities under this paragraph.
    (g) Administrative Costs.--
            (1) In general.--To compensate the program 
        consortium for carrying out its activities under this 
        section, the Secretary shall provide to the program 
        consortium funds sufficient to administer the program. 
        This compensation may include a management fee 
        consistent with Department of Energy contracting 
        practices and procedures.
            (2) Advance.--The Secretary shall advance funds to 
        the program consortium upon selection of the 
        consortium, which shall be deducted from amounts to be 
        provided under paragraph (1).
    (h) Audit.--The Secretary shall retain an independent, 
commercial auditor to determine the extent to which funds 
provided to the program consortium, and funds provided under 
awards made under subsection (f), have been expended in a 
manner consistent with the purposes and requirements of this 
part. The auditor shall transmit a report annually to the 
Secretary, who shall transmit the report to Congress, along 
with a plan to remedy any deficiencies cited in the report.

SEC. 943. UNCONVENTIONAL NATURAL GAS AND OTHER PETROLEUM RESOURCES 
                    PROGRAM.

    (a) In General.--The Secretary shall carry out activities 
under subsection 941(b)(3), to maximize the use of the onshore 
unconventional natural gas and other petroleum resources of the 
United States, by increasing the supply of such resources, 
through reducing the cost and increasing the efficiency of 
exploration for and production of such resources, while 
improving safety and minimizing environmental impacts.
    (b) Awards.--
            (1) In general.--The Secretary shall carry out this 
        section through awards to research consortia made 
        through an open, competitive process. As a condition of 
        award of funds, qualified research consortia shall--
                    (A) demonstrate capability and experience 
                in unconventional onshore natural gas or other 
                petroleum research and development;
                    (B) provide a research plan that 
                demonstrates how additional natural gas or oil 
                production will be achieved; and
                    (C) at the request of the Secretary, 
                provide technical advice to the Secretary for 
                the purposes of developing the annual plan 
                required under subsection (e).
            (2) Production potential.--The Secretary shall seek 
        to ensure that the number and types of awards made 
        under this subsection have reasonable potential to lead 
        to additional oil and natural gas production on Federal 
        lands.
            (3) Schedule.--To carry out this subsection, not 
        later than 180 days after the date of enactment of this 
        Act, the Secretary shall solicit proposals from 
        research consortia, which shall be submitted not later 
        than 360 days after the date of enactment of this Act. 
        The Secretary shall select the first group of research 
        consortia to receive awards under this subsection not 
        later than 18 months after such date of enactment.
    (c) Audit.--The Secretary shall retain an independent, 
commercial auditor to determine the extent to which funds 
provided under awards made under this section have been 
expended in a manner consistent with the purposes and 
requirements of this part. The auditor shall transmit a report 
annually to the Secretary, who shall transmit the report to 
Congress, along with a plan to remedy any deficiencies cited in 
the report.
    (d) Focus Areas for Awards.--
            (1) Unconventional resources.--Awards from 
        allocations under section 949(d)(2) shall focus on 
        areas including advanced coalbed methane, deep 
        drilling, natural gas production from tight sands, 
        natural gas production from gas shales, stranded gas, 
        innovative exploration and production techniques, 
        enhanced recovery techniques, and environmental 
        mitigation of unconventional natural gas and other 
        petroleum resources exploration and production.
            (2) Small producers.--Awards from allocations under 
        section 949(d)(3) shall be made to consortia consisting 
        of small producers or organized primarily for the 
        benefit of small producers, and shall focus on areas 
        including complex geology involving rapid changes in 
        the type and quality of the oil and gas reservoirs 
        across the reservoir; low reservoir pressure; 
        unconventional natural gas reservoirs in coalbeds, deep 
        reservoirs, tight sands, or shales; and unconventional 
        oil reservoirs in tar sands and oil shales.
    (e) Annual Plan.--
            (1) In general.--The program under this section 
        shall be carried out pursuant to an annual plan 
        prepared by the Secretary in accordance with paragraph 
        (2).
            (2) Development.--
                    (A) Written recommendations.--Before 
                drafting an annual plan under this subsection, 
                the Secretary shall solicit specific written 
                recommendations from the research consortia 
                receiving awards under subsection (b) and the 
                Unconventional Resources Technology Advisory 
                Committee for each element to be addressed in 
                the plan, including those described in 
                subparagraph (D).
                    (B) Consultation.--The Secretary shall 
                consult regularly with the research consortia 
                throughout the preparation of the annual plan.
                    (C) Publication.--The Secretary shall 
                transmit to Congress and publish in the Federal 
                Register the annual plan, along with any 
                written comments received under subparagraph 
                (A).
                    (D) Contents.--The annual plan shall 
                describe the ongoing and prospective activities 
                under this section and shall include a list of 
                any solicitations for awards that the Secretary 
                plans to issue to carry out research, 
                development, demonstration, or commercial 
                application activities, including the topics 
                for such work, who would be eligible to apply, 
                selection criteria, and the duration of awards.
            (3) Estimates of increased royalty receipts.--The 
        Secretary, in consultation with the Secretary of the 
        Interior, shall provide an annual report to Congress 
        with the President's budget on the estimated cumulative 
        increase in Federal royalty receipts (if any) resulting 
        from the implementation of this part. The initial 
        report under this paragraph shall be submitted in the 
        first President's budget following the completion of 
        the first annual plan required under this subsection.
    (f) Activities by the United States Geological Survey.--The 
Secretary of the Interior, through the United States Geological 
Survey, shall, where appropriate, carry out programs of long-
term research to complement the programs under this section.

SEC. 944. ADDITIONAL REQUIREMENTS FOR AWARDS.

    (a) Demonstration Projects.--An application for an award 
under this part for a demonstration project shall describe with 
specificity the intended commercial use of the technology to be 
demonstrated.
    (b) Flexibility in Locating Demonstration Projects.--
Subject to the limitation in section 941(c), a demonstration 
project under this part relating to an ultra-deepwater 
technology or an ultra-deepwater architecture may be conducted 
in deepwater depths.
    (c) Intellectual Property Agreements.--If an award under 
this part is made to a consortium (other than the program 
consortium), the consortium shall provide to the Secretary a 
signed contract agreed to by all members of the consortium 
describing the rights of each member to intellectual property 
used or developed under the award.
    (d) Technology Transfer.--2.5 percent of the amount of each 
award made under this part shall be designated for technology 
transfer and outreach activities under this title.
    (e) Cost Sharing Reduction for Independent Producers.--In 
applying the cost sharing requirements under section 972 to an 
award under this part the Secretary may reduce or eliminate the 
non-Federal requirement if the Secretary determines that the 
reduction is necessary and appropriate considering the 
technological risks involved in the project.

SEC. 945. ADVISORY COMMITTEES.

    (a) Ultra-Deepwater Advisory Committee.--
            (1) Establishment.--Not later than 270 days after 
        the date of enactment of this Act, the Secretary shall 
        establish an advisory committee to be known as the 
        Ultra-Deepwater Advisory Committee.
            (2) Membership.--The advisory committee under this 
        subsection shall be composed of members appointed by 
        the Secretary including--
                    (A) individuals with extensive research 
                experience or operational knowledge of offshore 
                natural gas and other petroleum exploration and 
                production;
                    (B) individuals broadly representative of 
                the affected interests in ultra-deepwater 
                natural gas and other petroleum production, 
                including interests in environmental protection 
                and safe operations;
                    (C) no individuals who are Federal 
                employees; and
                    (D) no individuals who are board members, 
                officers, or employees of the program 
                consortium.
            (3) Duties.--The advisory committee under this 
        subsection shall--
                    (A) advise the Secretary on the development 
                and implementation of programs under this part 
                related to ultra-deepwater natural gas and 
                other petroleum resources; and
                    (B) carry out section 942(e)(2)(B).
            (4) Compensation.--A member of the advisory 
        committee under this subsection shall serve without 
        compensation but shall receive travel expenses in 
        accordance with applicable provisions under subchapter 
        I of chapter 57 of title 5, United States Code.
    (b) Unconventional Resources Technology Advisory 
Committee.--
            (1) Establishment.--Not later than 270 days after 
        the date of enactment of this Act, the Secretary shall 
        establish an advisory committee to be known as the 
        Unconventional Resources Technology Advisory Committee.
            (2) Membership.--The advisory committee under this 
        subsection shall be composed of members appointed by 
        the Secretary including--
                    (A) a majority of members who are employees 
                or representatives of independent producers of 
                natural gas and other petroleum, including 
                small producers;
                    (B) individuals with extensive research 
                experience or operational knowledge of 
                unconventional natural gas and other petroleum 
                resource exploration and production;
                    (C) individuals broadly representative of 
                the affected interests in unconventional 
                natural gas and other petroleum resource 
                exploration and production, including interests 
                in environmental protection and safe 
                operations; and
                    (D) no individuals who are Federal 
                employees.
            (3) Duties.--The advisory committee under this 
        subsection shall advise the Secretary on the 
        development and implementation of activities under this 
        part related to unconventional natural gas and other 
        petroleum resources.
            (4) Compensation.--A member of the advisory 
        committee under this subsection shall serve without 
        compensation but shall receive travel expenses in 
        accordance with applicable provisions under subchapter 
        I of chapter 57 of title 5, United States Code.
    (c) Prohibition.--No advisory committee established under 
this section shall make recommendations on funding awards to 
particular consortia or other entities, or for specific 
projects.

SEC. 946. LIMITS ON PARTICIPATION.

    An entity shall be eligible to receive an award under this 
part only if the Secretary finds--
            (1) that the entity's participation in the program 
        under this part would be in the economic interest of 
        the United States; and
            (2) that either--
                    (A) the entity is a United States-owned 
                entity organized under the laws of the United 
                States; or
                    (B) the entity is organized under the laws 
                of the United States and has a parent entity 
                organized under the laws of a country that 
                affords--
                            (i) to United States-owned entities 
                        opportunities, comparable to those 
                        afforded to any other entity, to 
                        participate in any cooperative research 
                        venture similar to those authorized 
                        under this part;
                            (ii) to United States-owned 
                        entities local investment opportunities 
                        comparable to those afforded to any 
                        other entity; and
                            (iii) adequate and effective 
                        protection for the intellectual 
                        property rights of United States-owned 
                        entities.

SEC. 947. SUNSET.

    The authority provided by this part shall terminate on 
September 30, 2011.

SEC. 948. DEFINITIONS.

    In this part:
            (1) Deepwater.--The term ``deepwater'' means a 
        water depth that is greater than 200 but less than 
        1,500 meters.
            (2) Independent producer of oil or gas.--
                    (A) In general.--The term ``independent 
                producer of oil or gas'' means any person that 
                produces oil or gas other than a person to whom 
                subsection (c) of section 613A of the Internal 
                Revenue Code of 1986 does not apply by reason 
                of paragraph (2) (relating to certain 
                retailers) or paragraph (4) (relating to 
                certain refiners) of section 613A(d) of such 
                Code.
                    (B) Rules for applying paragraphs (2) and 
                (4) of section 613a(d).--For purposes of 
                subparagraph (A), paragraphs (2) and (4) of 
                section 613A(d) of the Internal Revenue Code of 
                1986 shall be applied by substituting 
                ``calendar year'' for ``taxable year'' each 
                place it appears in such paragraphs.
            (3) Program consortium.--The term ``program 
        consortium'' means the consortium selected under 
        section 942(d).
            (4) Remote or inconsequential.--The term ``remote 
        or inconsequential'' has the meaning given that term in 
        regulations issued by the Office of Government Ethics 
        under section 208(b)(2) of title 18, United States 
        Code.
            (5) Small producer.--The term ``small producer'' 
        means an entity organized under the laws of the United 
        States with production levels of less than 1,000 
        barrels per day of oil equivalent.
            (6) Ultra-deepwater.--The term ``ultra-deepwater'' 
        means a water depth that is equal to or greater than 
        1,500 meters.
            (7) Ultra-deepwater architecture.--The term 
        ``ultra-deepwater architecture'' means the integration 
        of technologies for the exploration for, or production 
        of, natural gas or other petroleum resources located at 
        ultra-deepwater depths.
            (8) Ultra-deepwater technology.--The term ``ultra-
        deepwater technology'' means a discrete technology that 
        is specially suited to address 1 or more challenges 
        associated with the exploration for, or production of, 
        natural gas or other petroleum resources located at 
        ultra-deepwater depths.
            (9) Unconventional natural gas and other petroleum 
        resource.--The term ``unconventional natural gas and 
        other petroleum resource'' means natural gas and other 
        petroleum resource located onshore in an economically 
        inaccessible geological formation, including resources 
        of small producers.

SEC. 949. FUNDING.

    (a) In General.--
            (1) Oil and gas lease income.--For each of fiscal 
        years 2004 through 2013, from any Federal royalties, 
        rents, and bonuses derived from Federal onshore and 
        offshore oil and gas leases issued under the Outer 
        Continental Shelf Lands Act and the Mineral Leasing Act 
        which are deposited in the Treasury, and after 
        distribution of any such funds as described in 
        subsection (c), $150,000,000 shall be deposited into 
        the Ultra-Deepwater and Unconventional Natural Gas and 
        Other Petroleum Research Fund (in this section referred 
        to as the Fund). For purposes of this section, the term 
        ``royalties'' excludes proceeds from the sale of 
        royalty production taken in kind and royalty production 
        that is transferred under section 27(a)(3) of the Outer 
        Continental Shelf Lands Act (43 U.S.C. 1353(a)(3)).
            (2) Authorization of appropriations.--In addition 
        to amounts described in paragraph (1), there are 
        authorized to be appropriated to the Secretary, to be 
        deposited in the Fund, $50,000,000 for each of the 
        fiscal years 2004 through 2013, to remain available 
        until expended.
    (b) Obligational Authority.--Monies in the Fund shall be 
available to the Secretary for obligation under this part 
without fiscal year limitation, to remain available until 
expended.
    (c) Prior Distributions.--The distributions described in 
subsection (a) are those required by law--
                    (A) to States and to the Reclamation Fund 
                under the Mineral Leasing Act (30 U.S.C. 
                191(a)); and
                    (B) to other funds receiving monies from 
                Federal oil and gas leasing programs, 
                including--
                            (i) any recipients pursuant to 
                        section 8(g) of the Outer Continental 
                        Shelf Lands Act (43 U.S.C. 1337(g));
                            (ii) the Land and Water 
                        Conservation Fund, pursuant to section 
                        2(c) of the Land and Water Conservation 
                        Fund Act of 1965 (16 U.S.C. 4601-5(c));
                            (iii) the Historic Preservation 
                        Fund, pursuant to section 108 of the 
                        National Historic Preservation Act (16 
                        U.S.C. 470h); and
                            (iv) the Secure Energy Reinvestment 
                        Fund.
    (d) Allocation.--Amounts obligated from the Fund under this 
section in each fiscal year shall be allocated as follows:
            (1) 50 percent shall be for activities under 
        section 942.
            (2) 35 percent shall be for activities under 
        section 943(d)(1).
            (3) 10 percent shall be for activities under 
        section 943(d)(2).
            (4) 5 percent shall be for research under section 
        941(d).
    (e) Fund.--There is hereby established in the Treasury of 
the United States a separate fund to be known as the ``Ultra-
Deepwater and Unconventional Natural Gas and Other Petroleum 
Research Fund''.

                          Subtitle F--Science

SEC. 951. SCIENCE.

    (a) In General.--The following sums are authorized to be 
appropriated to the Secretary for research, development, 
demonstration, and commercial application activities of the 
Office of Science, including activities authorized under this 
subtitle, including the amounts authorized under the amendment 
made by section 958(c)(2)(C), and including basic energy 
sciences, advanced scientific computing research, biological 
and environmental research, fusion energy sciences, high energy 
physics, nuclear physics, and research analysis and 
infrastructure support:
            (1) For fiscal year 2004, $3,785,000,000.
            (2) For fiscal year 2005, $4,153,000,000.
            (3) For fiscal year 2006, $4,618,000,000.
            (4) For fiscal year 2007, $5,310,000,000.
            (5) For fiscal year 2008, $5,800,000,000.
    (b) Allocations.--From amounts authorized under subsection 
(a), the following sums are authorized:
            (1) For activities of the Fusion Energy Sciences 
        Program, including activities under sections 952 and 
        953--
                    (A) for fiscal year 2004, $335,000,000;
                    (B) for fiscal year 2005, $349,000,000;
                    (C) for fiscal year 2006, $362,000,000;
                    (D) for fiscal year 2007, $377,000,000; and
                    (E) for fiscal year 2008, $393,000,000.
            (2) For the Spallation Neutron Source--
                    (A) for construction in fiscal year 2004, 
                $124,600,000;
                    (B) for construction in fiscal year 2005, 
                $79,800,000;
                    (C) for completion of construction in 
                fiscal year 2006, $41,100,000; and
                    (D) for other project costs (including 
                research and development necessary to complete 
                the project, preoperations costs, and capital 
                equipment related to construction), 
                $103,279,000 for the period encompassing fiscal 
                years 2003 through 2006, to remain available 
                until expended through September 30, 2006.
            (3) For Catalysis Research activities under section 
        956--
                    (A) for fiscal year 2004, $33,000,000;
                    (B) for fiscal year 2005, $35,000,000;
                    (C) for fiscal year 2006, $36,500,000;
                    (D) for fiscal year 2007, $38,200,000; and
                    (E) for fiscal year 2008, $40,100,000.
            (4) For Nanoscale Science and Engineering Research 
        activities under section 957--
                    (A) for fiscal year 2004, $270,000,000;
                    (B) for fiscal year 2005, $292,000,000;
                    (C) for fiscal year 2006, $322,000,000;
                    (D) for fiscal year 2007, $355,000,000; and
                    (E) for fiscal year 2008, $390,000,000.
            (5) For activities under section 957(c), from the 
        amounts authorized under paragraph (4) of this 
        subsection--
                    (A) for fiscal year 2004, $135,000,000;
                    (B) for fiscal year 2005, $150,000,000;
                    (C) for fiscal year 2006, $120,000,000;
                    (D) for fiscal year 2007, $100,000,000; and
                    (E) for fiscal year 2008, $125,000,000.
            (6) For activities in the Genomes to Life Program 
        under section 959--
                    (A) for fiscal year 2004, $100,000,000; and
                    (B) for fiscal years 2005 through 2008, 
                such sums as may be necessary.
            (7) For activities in the Energy-Water Supply 
        Program under section 961, $30,000,000 for each of 
        fiscal years 2004 through 2008.
    (c) ITER Construction.--In addition to the funds authorized 
under subsection (b)(1), such sums as may be necessary for 
costs associated with ITER construction, consistent with 
limitations under section 952.

SEC. 952. UNITED STATES PARTICIPATION IN ITER.

    (a) In General.--The United States may participate in ITER 
in accordance with the provisions of this section.
    (b) Agreement.--
            (1) In general.--The Secretary is authorized to 
        negotiate an agreement for United States participation 
        in ITER.
            (2) Contents.--Any agreement for United States 
        participation in ITER shall, at a minimum--
                    (A) clearly define the United States 
                financial contribution to construction and 
                operating costs;
                    (B) ensure that the share of ITER's high-
                technology components manufactured in the 
                United States is at least proportionate to the 
                United States financial contribution to ITER;
                    (C) ensure that the United States will not 
                be financially responsible for cost overruns in 
                components manufactured in other ITER 
                participating countries;
                    (D) guarantee the United States full access 
                to all data generated by ITER;
                    (E) enable United States researchers to 
                propose and carry out an equitable share of the 
                experiments at ITER;
                    (F) provide the United States with a role 
                in all collective decisionmaking related to 
                ITER; and
                    (G) describe the process for discontinuing 
                or decommissioning ITER and any United States 
                role in those processes.
    (c) Plan.--The Secretary, in consultation with the Fusion 
Energy Sciences Advisory Committee, shall develop a plan for 
the participation of United States scientists in ITER that 
shall include the United States research agenda for ITER, 
methods to evaluate whether ITER is promoting progress toward 
making fusion a reliable and affordable source of power, and a 
description of how work at ITER will relate to other elements 
of the United States fusion program. The Secretary shall 
request a review of the plan by the National Academy of 
Sciences.
    (d) Limitation.--No funds shall be expended for the 
construction of ITER until the Secretary has transmitted to 
Congress--
            (1) the agreement negotiated pursuant to subsection 
        (b) and 120 days have elapsed since that transmission;
            (2) a report describing the management structure of 
        ITER and providing a fixed dollar estimate of the cost 
        of United States participation in the construction of 
        ITER, and 120 days have elapsed since that 
        transmission;
            (3) a report describing how United States 
        participation in ITER will be funded without reducing 
        funding for other programs in the Office of Science, 
        including other fusion programs, and 60 days have 
        elapsed since that transmission; and
            (4) the plan required by subsection (c) (but not 
        the National Academy of Sciences review of that plan), 
        and 60 days have elapsed since that transmission.
    (e) Alternative to ITER.--If at any time during the 
negotiations on ITER, the Secretary determines that 
construction and operation of ITER is unlikely or infeasible, 
the Secretary shall send to Congress, as part of the budget 
request for the following year, a plan for implementing the 
domestic burning plasma experiment known as FIRE, including 
costs and schedules for such a plan. The Secretary shall refine 
such plan in full consultation with the Fusion Energy Sciences 
Advisory Committee and shall also transmit such plan to the 
National Academy of Sciences for review.
    (f) Definitions.--In this section and sections 951(b)(1) 
and (c):
            (1) Construction.--The term ``construction'' means 
        the physical construction of the ITER facility, and the 
        physical construction, purchase, or manufacture of 
        equipment or components that are specifically designed 
        for the ITER facility, but does not mean the design of 
        the facility, equipment, or components.
            (2) FIRE.--The term ``FIRE'' means the Fusion 
        Ignition Research Experiment, the fusion research 
        experiment for which design work has been supported by 
        the Department as a possible alternative burning plasma 
        experiment in the event that ITER fails to move 
        forward.
            (3) ITER.--The term ``ITER'' means the 
        international burning plasma fusion research project in 
        which the President announced United States 
        participation on January 30, 2003.

SEC. 953. PLAN FOR FUSION ENERGY SCIENCES PROGRAM.

    (a) Declaration of Policy.--It shall be the policy of the 
United States to conduct research, development, demonstration, 
and commercial application to provide for the scientific, 
engineering, and commercial infrastructure necessary to ensure 
that the United States is competitive with other nations in 
providing fusion energy for its own needs and the needs of 
other nations, including by demonstrating electric power or 
hydrogen production for the United States energy grid utilizing 
fusion energy at the earliest date possible.
    (b) Planning.--
            (1) In general.--Not later than 180 days after the 
        date of enactment of this Act, the Secretary shall 
        present to Congress a plan, with proposed cost 
        estimates, budgets, and potential international 
        partners, for the implementation of the policy 
        described in subsection (a). The plan shall ensure 
        that--
                    (A) existing fusion research facilities are 
                more fully utilized;
                    (B) fusion science, technology, theory, 
                advanced computation, modeling, and simulation 
                are strengthened;
                    (C) new magnetic and inertial fusion 
                research facilities are selected based on 
                scientific innovation, cost effectiveness, and 
                their potential to advance the goal of 
                practical fusion energy at the earliest date 
                possible, and those that are selected are 
                funded at a cost-effective rate;
                    (D) communication of scientific results and 
                methods between the fusion energy science 
                community and the broader scientific and 
                technology communities is improved;
                    (E) inertial confinement fusion facilities 
                are utilized to the extent practicable for the 
                purpose of inertial fusion energy research and 
                development; and
                    (F) attractive alternative inertial and 
                magnetic fusion energy approaches are more 
                fully explored.
            (2) Costs and schedules.--Such plan shall also 
        address the status of and, to the degree possible, 
        costs and schedules for--
                    (A) in coordination with the program under 
                section 960, the design and implementation of 
                international or national facilities for the 
                testing of fusion materials; and
                    (B) the design and implementation of 
                international or national facilities for the 
                testing and development of key fusion 
                technologies.

SEC. 954. SPALLATION NEUTRON SOURCE.

    (a) Definition.--For the purposes of this section, the term 
``Spallation Neutron Source'' means Department Project 99-E-
334, Oak Ridge National Laboratory, Oak Ridge, Tennessee.
    (b) Report.--The Secretary shall report on the Spallation 
Neutron Source as part of the Department's annual budget 
submission, including a description of the achievement of 
milestones, a comparison of actual costs to estimated costs, 
and any changes in estimated project costs or schedule.
    (c) Limitations.--The total amount obligated by the 
Department, including prior year appropriations, for the 
Spallation Neutron Source shall not exceed--
            (1) $1,192,700,000 for costs of construction;
            (2) $219,000,000 for other project costs; and
            (3) $1,411,700,000 for total project cost.

SEC. 955. SUPPORT FOR SCIENCE AND ENERGY FACILITIES AND INFRASTRUCTURE.

    (a) Facility and Infrastructure Policy.--The Secretary 
shall develop and implement a strategy for facilities and 
infrastructure supported primarily from the Office of Science, 
the Office of Energy Efficiency and Renewable Energy, the 
Office of Fossil Energy, or the Office of Nuclear Energy, 
Science, and Technology Programs at all National Laboratories 
and single-purpose research facilities. Such strategy shall 
provide cost-effective means for--
            (1) maintaining existing facilities and 
        infrastructure, as needed;
            (2) closing unneeded facilities;
            (3) making facility modifications; and
            (4) building new facilities.
    (b) Report.--
            (1) In general.--The Secretary shall prepare and 
        transmit, along with the President's budget request to 
        Congress for fiscal year 2006, a report containing the 
        strategy developed under subsection (a).
            (2) Contents.--For each National Laboratory and 
        single-purpose research facility, for the facilities 
        primarily used for science and energy research, such 
        report shall contain--
                    (A) the current priority list of proposed 
                facilities and infrastructure projects, 
                including cost and schedule requirements;
                    (B) a current 10-year plan that 
                demonstrates the reconfiguration of its 
                facilities and infrastructure to meet its 
                missions and to address its long-term 
                operational costs and return on investment;
                    (C) the total current budget for all 
                facilities and infrastructure funding; and
                    (D) the current status of each facility and 
                infrastructure project compared to the original 
                baseline cost, schedule, and scope.

SEC. 956. CATALYSIS RESEARCH AND DEVELOPMENT PROGRAM.

    (a) Establishment.--The Secretary, through the Office of 
Science, shall support a program of research and development in 
catalysis science consistent with the Department's statutory 
authorities related to research and development. The program 
shall include efforts to--
            (1) enable catalyst design using combinations of 
        experimental and mechanistic methodologies coupled with 
        computational modeling of catalytic reactions at the 
        molecular level;
            (2) develop techniques for high throughput 
        synthesis, assay, and characterization at nanometer and 
        subnanometer scales in situ under actual operating 
        conditions;
            (3) synthesize catalysts with specific site 
        architectures;
            (4) conduct research on the use of precious metals 
        for catalysis; and
            (5) translate molecular understanding to the design 
        of catalytic compounds.
    (b) Duties of the Office of Science.--In carrying out the 
program under this section, the Director of the Office of 
Science shall--
            (1) support both individual investigators and 
        multidisciplinary teams of investigators to pioneer new 
        approaches in catalytic design;
            (2) develop, plan, construct, acquire, share, or 
        operate special equipment or facilities for the use of 
        investigators in collaboration with national user 
        facilities such as nanoscience and engineering centers;
            (3) support technology transfer activities to 
        benefit industry and other users of catalysis science 
        and engineering; and
            (4) coordinate research and development activities 
        with industry and other Federal agencies.
    (c) Triennial Assessment.--The National Academy of Sciences 
shall review the catalysis program every 3 years to report on 
gains made in the fundamental science of catalysis and its 
progress towards developing new fuels for energy production and 
material fabrication processes.

SEC. 957. NANOSCALE SCIENCE AND ENGINEERING RESEARCH, DEVELOPMENT, 
                    DEMONSTRATION, AND COMMERCIAL APPLICATION.

    (a) Establishment.--The Secretary, acting through the 
Office of Science, shall support a program of research, 
development, demonstration, and commercial application in 
nanoscience and nanoengineering. The program shall include 
efforts to further the understanding of the chemistry, physics, 
materials science, and engineering of phenomena on the scale of 
nanometers and to apply that knowledge to the Department's 
mission areas.
    (b) Duties of the Office of Science.--In carrying out the 
program under this section, the Office of Science shall--
            (1) support both individual investigators and teams 
        of investigators, including multidisciplinary teams;
            (2) carry out activities under subsection (c);
            (3) support technology transfer activities to 
        benefit industry and other users of nanoscience and 
        nanoengineering;
            (4) coordinate research and development activities 
        with other Department programs, industry, and other 
        Federal agencies;
            (5) ensure that societal and ethical concerns will 
        be addressed as the technology is developed by--
                    (A) establishing a research program to 
                identify societal and ethical concerns related 
                to nanotechnology, and ensuring that the 
                results of such research are widely 
                disseminated; and
                    (B) integrating, insofar as possible, 
                research on societal and ethical concerns with 
                nanotechnology research and development; and
            (6) ensure that the potential of nanotechnology to 
        produce or facilitate the production of clean, 
        inexpensive energy is realized by supporting 
        nanotechnology energy applications research and 
        development.
    (c) Nanoscience and Nanoengineering Research Centers and 
Major Instrumentation.--
            (1) In general.--The Secretary shall carry out 
        projects to develop, plan, construct, acquire, operate, 
        or support special equipment, instrumentation, or 
        facilities for investigators conducting research and 
        development in nanoscience and nanoengineering.
            (2) Activities.--Projects under paragraph (1) may 
        include the measurement of properties at the scale of 
        nanometers, manipulation at such scales, and the 
        integration of technologies based on nanoscience or 
        nanoengineering into bulk materials or other 
        technologies.
            (3) Facilities.--Facilities under paragraph (1) may 
        include electron microcharacterization facilities, 
        microlithography facilities, scanning probe facilities, 
        and related instrumentation.
            (4) Collaborations.--The Secretary shall encourage 
        collaborations among Department programs, institutions 
        of higher education, laboratories, and industry at 
        facilities under this subsection.

SEC. 958. ADVANCED SCIENTIFIC COMPUTING FOR ENERGY MISSIONS.

    (a) In General.--The Secretary, acting through the Office 
of Science, shall support a program to advance the Nation's 
computing capability across a diverse set of grand challenge, 
computationally based, science problems related to departmental 
missions.
    (b) Duties of the Office of Science.--In carrying out the 
program under this section, the Office of Science shall--
            (1) advance basic science through computation by 
        developing software to solve grand challenge science 
        problems on new generations of computing platforms in 
        collaboration with other Department program offices;
            (2) enhance the foundations for scientific 
        computing by developing the basic mathematical and 
        computing systems software needed to take full 
        advantage of the computing capabilities of computers 
        with peak speeds of 100 teraflops or more, some of 
        which may be unique to the scientific problem of 
        interest;
            (3) enhance national collaboratory and networking 
        capabilities by developing software to integrate 
        geographically separated researchers into effective 
        research teams and to facilitate access to and movement 
        and analysis of large (petabyte) data sets;
            (4) develop and maintain a robust scientific 
        computing hardware infrastructure to ensure that the 
        computing resources needed to address departmental 
        missions are available; and
            (5) explore new computing approaches and 
        technologies that promise to advance scientific 
        computing, including developments in quantum computing.
    (c) High-Performance Computing Act of 1991 Amendments.--The 
High-Performance Computing Act of 1991 is amended--
            (1) in section 4 (15 U.S.C. 5503)--
                    (A) in paragraph (3) by striking ``means'' 
                and inserting ``and networking and information 
                technology mean'', and by striking ``(including 
                vector supercomputers and large scale parallel 
                systems)''; and
                    (B) in paragraph (4), by striking ``packet 
                switched''; and
            (2) in section 203 (15 U.S.C. 5523)--
                    (A) in subsection (a), by striking all 
                after ``As part of the'' and inserting 
                ``Networking and Information Technology 
                Research and Development Program, the Secretary 
                of Energy shall conduct basic and applied 
                research in networking and information 
                technology, with emphasis on supporting 
                fundamental research in the physical sciences 
                and engineering, and energy applications; 
                providing supercomputer access and advanced 
                communication capabilities and facilities to 
                scientific researchers; and developing tools 
                for distributed scientific collaboration.'';
                    (B) in subsection (b), by striking 
                ``Program'' and inserting ``Networking and 
                Information Technology Research and Development 
                Program''; and
                    (C) by amending subsection (e) to read as 
                follows:
    ``(e) Authorization of Appropriations.--There are 
authorized to be appropriated to the Secretary of Energy to 
carry out the Networking and Information Technology Research 
and Development Program such sums as may be necessary for 
fiscal years 2004 through 2008.''.
    (d) Coordination.--The Secretary shall ensure that the 
program under this section is integrated and consistent with--
            (1) the Advanced Simulation and Computing Program, 
        formerly known as the Accelerated Strategic 
ComputingInitiative, of the National Nuclear Security Administration; 
and
            (2) other national efforts related to advanced 
        scientific computing for science and engineering.
    (e) Report.--
            (1) In general.--Before undertaking any new 
        initiative to develop any new advanced architecture for 
        high-speed computing, the Secretary, through the 
        Director of the Office of Science, shall transmit a 
        report to Congress describing--
                    (A) the expected duration and cost of the 
                initiative;
                    (B) the technical milestones the initiative 
                is designed to achieve;
                    (C) how institutions of higher education 
                and private firms will participate in the 
                initiative; and
                    (D) why the goals of the initiative could 
                not be achieved through existing programs.
            (2) Limitation.--No funds may be expended on any 
        initiative described in paragraph (1) until 30 days 
        after the report required by that paragraph is 
        transmitted to Congress.

SEC. 959. GENOMES TO LIFE PROGRAM.

    (a) Program.--
            (1) Establishment.--The Secretary shall establish a 
        research, development, and demonstration program in 
        genetics, protein science, and computational biology to 
        support the energy, national security, and 
        environmental mission of the Department.
            (2) Grants.--The program shall support individual 
        investigators and multidisciplinary teams of 
        investigators through competitive, merit-reviewed 
        grants.
            (3) Consultation.--In carrying out the program, the 
        Secretary shall consult with other Federal agencies 
        that conduct genetic and protein research.
    (b) Goals.--The program shall have the goal of developing 
technologies and methods based on the biological functions of 
genomes, microbes, and plants that--
            (1) can facilitate the production of fuels, 
        including hydrogen;
            (2) convert carbon dioxide to organic carbon;
            (3) improve national security and combat terrorism;
            (4) detoxify soils and water at Department 
        facilities contaminated with heavy metals and 
        radiological materials; and
            (5) address other Department missions as identified 
        by the Secretary.
    (c) Plan.--
            (1) Development of plan.--Not later than 1 year 
        after the date of enactment of this Act, the Secretary 
        shall prepare and transmit to Congress a research plan 
        describing how the program authorized pursuant to this 
        section will be undertaken to accomplish the program 
        goals established in subsection (b).
            (2) Review of plan.--The Secretary shall contract 
        with the National Academy of Sciences to review the 
        research plan developed under this subsection. The 
        Secretary shall transmit the review to Congress not 
        later than 18 months after transmittal of the research 
        plan under paragraph (1), along with the Secretary's 
        response to the recommendations contained in the 
        review.
    (d) Genomes to Life User Facilities and Ancillary 
Equipment.--
            (1) In general.--Within the funds authorized to be 
        appropriated pursuant to this Act, the amounts 
        specified under section 951(b)(6) shall, subject to 
        appropriations, be available for projects to develop, 
        plan, construct, acquire, or operate special equipment, 
        instrumentation, or facilities for investigators 
        conducting research, development, demonstration, and 
        commercial application in systems biology and 
        proteomics and associated biological disciplines.
            (2) Facilities.--Facilities under paragraph (1) may 
        include facilities, equipment, or instrumentation for--
                    (A) the production and characterization of 
                proteins;
                    (B) whole proteome analysis;
                    (C) characterization and imaging of 
                molecular machines; and
                    (D) analysis and modeling of cellular 
                systems.
            (3) Collaborations.--The Secretary shall encourage 
        collaborations among universities, laboratories, and 
        industry at facilities under this subsection. All 
        facilities under this subsection shall have a specific 
        mission of technology transfer to other institutions.
    (e) Prohibition on Biomedical and Human Cell and Human 
Subject Research.--
            (1) No biomedical research.--In carrying out the 
        program under this section, the Secretary shall not 
        conduct biomedical research.
            (2) Limitations.--Nothing in this section shall 
        authorize the Secretary to conduct any research or 
        demonstrations--
                    (A) on human cells or human subjects; or
                    (B) designed to have direct application 
                with respect to human cells or human subjects.

SEC. 960. FISSION AND FUSION ENERGY MATERIALS RESEARCH PROGRAM.

    In the President's fiscal year 2006 budget request, the 
Secretary shall establish a research and development program on 
material science issues presented by advanced fission reactors 
and the Department's fusion energy program. The program shall 
develop a catalog of material properties required for these 
applications, develop theoretical models for materials 
possessing the required properties, benchmark models against 
existing data, and develop a roadmap to guide further research 
and development in this area.

SEC. 961. ENERGY-WATER SUPPLY PROGRAM.

    (a) Establishment.--There is established within the 
Department the Energy-Water Supply Program, to study energy-
related and certain other issues associated with the supply of 
drinking water and operation of community water systems and to 
study water supply issues related to energy.
    (b) Definitions.--For the purposes of this section:
            (1) Administrator.--The term ``Administrator'' 
        means the Administrator of the Environmental Protection 
        Agency.
            (2) Agency.--The term ``Agency'' means the 
        Environmental Protection Agency.
            (3) Foundation.--The term ``Foundation'' means the 
        American Water Works Association Research Foundation.
            (4) Indian tribe.--The term ``Indian tribe'' has 
        the meaning given the term in section 4 of the Indian 
        Self-Determination and Education Assistance Act (25 
        U.S.C. 450b).
            (5) Program.--The term ``Program'' means the 
        Energy-Water Supply Program established by this 
        section.
    (c) Program Areas.--The Program shall develop methods, 
means, procedures, equipment, and improved technologies 
relating to--
            (1) the arsenic removal program under subsection 
        (d);
            (2) the desalination program under subsection (e); 
        and
            (3) the water and energy sustainability program 
        under subsection (f).
    (d) Arsenic Removal Program.--
            (1) In general.--As soon as practicable after the 
        date of enactment of this Act, the Secretary, in 
        coordination with the Administrator and in partnership 
        with the Foundation, shall utilize the facilities, 
        institutions, and relationships established in the 
        Consolidated Appropriations Resolution, 2003 as 
        described in Senate Report 107-220 to carry out a 
        research program to provide innovative methods and 
        means for removal of arsenic.
            (2) Required evaluations.--The program shall, to 
        the maximum extent practicable, evaluate the means of--
                    (A) reducing energy costs incurred in using 
                arsenic removal technologies;
                    (B) minimizing materials, operating, and 
                maintenance costs; and
                    (C) minimizing any quantities of waste 
                (especially hazardous waste) that result from 
                use of arsenic removal technologies.
            (3) Peer review.--Where applicable and reasonably 
        available, projects undertaken under this subsection 
        shall be peer-reviewed.
            (4) Community water systems.--In carrying out the 
        program under this subsection, the Secretary, in 
        coordination with the Administrator, shall--
                    (A) select projects involving a 
                geographically and hydrologically diverse group 
                of community water systems (as defined in 
                section 1003 of the Public Health Service Act 
                (42 U.S.C. 300)) and water chemistries, that 
                have experienced technical or economic 
                difficulties in providing drinking water with 
                levels of arsenic at 10 parts-per-billion or 
                lower, which projects shall be designed to 
                develop innovative methods and means to deliver 
                drinking water that contains less than 10 parts 
                per billion of arsenic; and
                    (B) provide not less than 40 percent of all 
                funds spent pursuant to this subsection to 
                address the needs of, and in collaboration 
                with, rural communities or Indian tribes.
            (5) Cost effectiveness.--The Foundation shall 
        create methods for determining cost effectiveness of 
        arsenic removal technologies used in the program.
            (6) Education, training, and technology.--The 
        Foundation shall include education, training, and 
        technology transfer as part of the program.
            (7) Coordination.--The Secretary shall consult with 
        the Administrator to ensure that all activities 
        conducted under the program are coordinated with the 
        Agency and do not duplicate other programs in the 
        Agency and other Federal agencies, State programs, and 
        academia.
            (8) Reports.--Not later than 1 year after the date 
        of commencement of the program under this subsection, 
        and once every year thereafter, the Secretary shall 
        submit to the Committee on Energy and Commerce of the 
        House of Representatives and the Committee on 
        Environment and Public Works and the Committee on 
        Energy and Natural Resources of the Senate a report on 
        the results of the program under this subsection.
    (e) Desalination Program.--
            (1) In general.--The Secretary, in cooperation with 
        the Commissioner of Reclamation of the Department of 
        the Interior, shall carry out a program to conduct 
        research and develop methods and means for desalination 
        in accordance with the desalination technology progress 
        plan developed under title II of the Energy and Water 
        Development Appropriations Act, 2002 (115 Stat. 498), 
        and described in Senate Report 107-39 under the heading 
        ``water and related resources'' in the ``Bureau of 
        Reclamation'' section.
            (2) Requirements.--The desalination program shall--
                    (A) use the resources of the Department and 
                the Department of the Interior that were 
                involved in the development of the 2003 
                National Desalination and Water Purification 
                Technology Roadmap for next-generation 
                desalination technology;
                    (B) focus on technologies that are 
                appropriate for use in desalinating brackish 
                groundwater, drinking water, wastewater and 
                other saline water supplies, or disposal of 
                residual brine or salt; and
                    (C) consider the use of renewable energy 
                sources.
            (3) Construction projects.--Funds made available to 
        carry out this subsection may be used for construction 
        projects, including completion of the National 
        Desalination Research Center for brackish groundwater 
        and ongoing operational costs of this facility.
            (4) Steering committee.--The Secretary and the 
        Commissioner of Reclamation of the Department of the 
        Interior shall jointly establish a steering committee 
        for activities conducted under this subsection. The 
        steering committee shall be jointly chaired by 1 
        representative from the program and 1 representative 
        from the Bureau of Reclamation.
    (f) Water and Energy Sustainability Program.--
            (1) In general.--The Secretary shall develop a 
        program to identify methods, means, procedures, 
        equipment, and improved technologies necessary to 
        ensure that sufficient quantities of water are 
        available to meet energy needs and sufficient energy is 
        available to meet water needs.
            (2) Assessments.--In order to acquire information 
        and avoid duplication, the Secretary shall work in 
        collaboration with the Secretary of the Interior, the 
        Army Corps of Engineers, the Administrator, the 
        Secretary of Commerce, the Secretary of Defense, 
        relevant State agencies, nongovernmental organizations, 
        and academia, to assess--
                    (A) future water resources needed to 
                support energy development and production 
                within the United States including water used 
                for hydropower, and production of, or 
                electricity generation by, hydrogen, biomass, 
                fossil fuels, and nuclear fuel;
                    (B) future energy resources needed to 
                support water purification and wastewater 
                treatment, including desalination and water 
                conveyance;
                    (C) use of impaired and nontraditional 
                water supplies for energy production other than 
                oil and gas extraction;
                    (D) technology and programs for improving 
                water use efficiency; and
                    (E) technologies to reduce water use in 
                energy development and production.
            (3) Roadmap; tools.--The Secretary shall--
                    (A) develop a program plan and technology 
                development roadmap for the Water and Energy 
                Sustainability Program to identify scientific 
                and technical requirements and activities that 
                are required to support planning for energy 
                sustainability under current and potential 
                future conditions of water availability, use of 
                impaired water for energy production and other 
                uses, and reduction of water use in energy 
                development and production;
                    (B) develop tools for national and local 
                energy and water sustainability planning, 
                including numerical models, decision analysis 
                tools, economic analysis tools, databases, and 
                planning methodologies and strategies;
                    (C) implement at least 3 planning projects 
                involving energy development or production that 
                use the tools described in subparagraph (B) and 
                assess the viability of those tools at the 
                scale of river basins with at least 1 
                demonstration involving an international 
                border; and
                    (D) transfer those tools to other Federal 
                agencies, State agencies, nonprofit 
                organizations, industry, and academia.
            (4) Report.--Not later than 1 year after the date 
        of enactment of this Act, the Secretary shall submit to 
        Congress a report on the Water and Energy 
        Sustainability Program that--
                    (A) includes the results of the assessment 
                under paragraph (2) and the program plan and 
                technology development roadmap; and
                    (B) identifies policy, legal, and 
                institutional issues related to water and 
                energy sustainability.

SEC. 962. NITROGEN FIXATION.

    The Secretary, acting through the Office of Science, shall 
support a program of research, development, demonstration, and 
commercial application on biological nitrogen fixation, 
including plant genomics research relevant to the development 
of commercial crop varieties with enhanced nitrogen fixation 
efficiency and ability.

                   Subtitle G--Energy and Environment

SEC. 964. UNITED STATES-MEXICO ENERGY TECHNOLOGY COOPERATION.

    (a) Program.--The Secretary shall establish a research, 
development, demonstration, and commercial application program 
to be carried out in collaboration with entities in Mexico and 
the United States to promote energy efficient, environmentally 
sound economic development along the United States-Mexico 
border that minimizes public health risks from industrial 
activities in the border region.
    (b) Program Management.--The program under subsection (a) 
shall be managed by the Department of Energy Carlsbad 
Environmental Management Field Office.
    (c) Technology Transfer.--In carrying out projects and 
activities under this section, the Secretary shall assess the 
applicability of technology developed under the Environmental 
Management Science Program of the Department.
    (d) Intellectual Property.--In carrying out this section, 
the Secretary shall comply with the requirements of any 
agreement entered into between the United States and Mexico 
regarding intellectual property protection.
    (e) Authorization of Appropriations.--The following sums 
are authorized to be appropriated to the Secretary to carry out 
activities under this section:
            (1) For each of fiscal years 2004 and 2005, 
        $5,000,000.
            (2) For each of fiscal years 2006, 2007, and 2008, 
        $6,000,000.

SEC. 965. WESTERN HEMISPHERE ENERGY COOPERATION.

    (a) Program.--The Secretary shall carry out a program to 
promote cooperation on energy issues with Western Hemisphere 
countries.
    (b) Activities.--Under the program, the Secretary shall 
fund activities to work with Western Hemisphere countries to--
            (1) assist the countries in formulating and 
        adopting changes in economic policies and other 
        policies to--
                    (A) increase the production of energy 
                supplies; and
                    (B) improve energy efficiency; and
            (2) assist in the development and transfer of 
        energy supply and efficiency technologies that would 
        have a beneficial impact on world energy markets.
    (c) University Participation.--To the extent practicable, 
the Secretary shall carry out the program under this section 
with the participation of universities so as to take advantage 
of the acceptance of universities by Western Hemisphere 
countries as sources of unbiased technical and policy expertise 
when assisting the Secretary in--
            (1) evaluating new technologies;
            (2) resolving technical issues;
            (3) working with those countries in the development 
        of new policies; and
            (4) training policymakers, particularly in the case 
        of universities that involve the participation of 
        minority students, such as Hispanic-serving 
        institutions and Historically Black Colleges and 
        Universities.
    (d) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out this section--
            (1) $8,000,000 for fiscal year 2004;
            (2) $10,000,000 for fiscal year 2005;
            (3) $13,000,000 for fiscal year 2006;
            (4) $16,000,000 for fiscal year 2007; and
            (5) $19,000,000 for fiscal year 2008.

SEC. 966. WASTE REDUCTION AND USE OF ALTERNATIVES.

    (a) Grant Authority.--The Secretary may make a single grant 
to a qualified institution to examine and develop the 
feasibility of burning post-consumer carpet in cement kilns as 
an alternative energy source. The purposes of the grant shall 
include determining--
            (1) how post-consumer carpet can be burned without 
        disrupting kiln operations;
            (2) the extent to which overall kiln emissions may 
        be reduced;
            (3) the emissions of air pollutants and other 
        relevant environmental impacts; and
            (4) how this process provides benefits to both 
        cement kiln operations and carpet suppliers.
    (b) Qualified Institution.--For the purposes of subsection 
(a), a qualified institution is a research-intensive 
institution of higher education with demonstrated expertise in 
the fields of fiber recycling and logistical modeling of carpet 
waste collection and preparation.
    (c) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary for carrying out this 
section $500,000.

SEC. 967. REPORT ON FUEL CELL TEST CENTER.

    (a) Report.--Not later than 1 year after the date of 
enactment of this Act, the Secretary shall transmit to Congress 
a report on the results of a study of the establishment of a 
test center for next-generation fuel cells at an institution of 
higher education that has available a continuous source of 
hydrogen and access to the electric transmission grid. Such 
report shall include a conceptual design for such test center 
and a projection of the costs of establishing the test center.
    (b) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary for carrying out this 
section $500,000.

SEC. 968. ARCTIC ENGINEERING RESEARCH CENTER.

    (a) In General.--The Secretary of Energy (referred to in 
this section as the ``Secretary'') in consultation with the 
Secretary of Transportation and the United States Arctic 
Research Commission shall provide annual grants to a university 
located adjacent to the Arctic Energy Office of the Department 
of Energy, to establish and operate a university research 
center to be headquartered in Fairbanks and to be known as the 
``Arctic Engineering Research Center'' (referred to in this 
section as the ``Center'').
    (b) Purpose.--The purpose of the Center shall be to conduct 
research on, and develop improved methods of, construction and 
use of materials to improve the overall performance of roads, 
bridges, residential, commercial, and industrial structures, 
and other infrastructure in the Arctic region, with an emphasis 
on developing--
            (1) new construction techniques for roads, bridges, 
        rail, and related transportation infrastructure and 
        residential, commercial, and industrial infrastructure 
        that are capable of withstanding the Arctic environment 
        and using limited energy resources as efficiently as 
        possible;
            (2) technologies and procedures for increasing 
        road, bridge, rail, and related transportation 
        infrastructure and residential, commercial, and 
        industrial infrastructure safety, reliability, and 
        integrity in the Arctic region;
            (3) new materials and improving the performance and 
        energy efficiency of existing materials for the 
        construction of roads, bridges, rail, and related 
        transportation infrastructure and residential, 
        commercial, and industrial infrastructure in the Arctic 
        region; and
            (4) recommendations for new local, regional, and 
        State permitting and building codes to ensure 
        transportation and building safety and efficient energy 
        use when constructing, using, and occupying such 
        infrastructure in the Arctic region.
    (c) Objectives.--The Center shall carry out--
            (1) basic and applied research in the subjects 
        described in subsection (b), the products of which 
        shall be judged by peers or other experts in the field 
        to advance the body of knowledge in road, bridge, rail, 
        and infrastructure engineering in the Arctic region; 
        and
            (2) an ongoing program of technology transfer that 
        makes research results available to potential users in 
        a form that can be implemented.
    (d) Amount of Grant.--For each of fiscal years 2004 through 
2009, the Secretary shall provide a grant in the amount of 
$3,000,000 to the institution specified in subsection (a) to 
carry out this section.
    (e) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out this section $3,000,000 for 
each of fiscal years 2004 through 2009.

SEC. 969. BARROW GEOPHYSICAL RESEARCH FACILITY.

    (a) Establishment.--The Secretary of Commerce, in 
consultation with the Secretaries of Energy and the Interior, 
the Director of the National Science Foundation, and the 
Administrator of the Environmental Protection Agency, shall 
establish a joint research facility in Barrow, Alaska, to be 
known as the ``Barrow Geophysical Research Facility'', to 
support scientific research activities in the Arctic.
    (b) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretaries of Commerce, Energy, and 
the Interior, the Director of the National Science Foundation, 
and the Administrator of the Environmental Protection Agency 
for the planning, design, construction, and support of the 
Barrow Geophysical Research Facility $61,000,000.

SEC. 970. WESTERN MICHIGAN DEMONSTRATION PROJECT.

    The Administrator of the Environmental Protection Agency, 
in consultation with the State of Michigan and affected local 
officials, shall conduct a demonstration project to address the 
effect of transported ozone and ozone precursors in 
Southwestern Michigan. The demonstration program shall address 
projected nonattainment areas in Southwestern Michigan that 
include counties with design values for ozone of less than .095 
based on years 2000 to 2002 or the most current 3-year period 
of air quality data. The Administrator shall assess any 
difficulties such areas may experience in meeting the 8-hour 
national ambient air quality standard for ozone due to the 
effect of transported ozone or ozone precursors into the areas. 
The Administrator shall work with State and local officials to 
determine the extent of ozone and ozone precursor transport, to 
assess alternatives to achieve compliance with the 8-hour 
standard apart from local controls, and to determine the 
timeframe in which such compliance could take place. The 
Administrator shall complete this demonstration project no 
later than 2 years after the date of enactment of this section 
and shall not impose any requirement or sanction that might 
otherwise apply during the pendency of the demonstration 
project.

                         Subtitle H--Management

SEC. 971. AVAILABILITY OF FUNDS.

    Funds authorized to be appropriated to the Department under 
this title shall remain available until expended.

SEC. 972. COST SHARING.

    (a) Research and Development.--Except as otherwise provided 
in this title, for research and development programs carried 
out under this title the Secretary shall require a commitment 
from non-Federal sources of at least 20 percent of the cost of 
the project. The Secretary may reduce or eliminate the non-
Federal requirement under this subsection if the Secretary 
determines that the research and development is of a basic or 
fundamental nature or involves technical analyses or 
educational activities.
    (b) Demonstration and Commercial Application.--Except as 
otherwise provided in this title, the Secretary shall require 
at least 50 percent of the costs directly and specifically 
related to any demonstration or commercial application project 
under this title to be provided from non-Federal sources. The 
Secretary may reduce the non-Federal requirement under this 
subsection if the Secretary determines that the reduction is 
necessary and appropriate considering the technological risks 
involved in the project and is necessary to meet the objectives 
of this title.
    (c) Calculation of Amount.--In calculating the amount of 
the non-Federal commitment under subsection (a) or (b), the 
Secretary may include personnel, services, equipment, and other 
resources.
    (d) Size of Non-Federal Share.--The Secretary may consider 
the size of the non-Federal share in selecting projects.

SEC. 973. MERIT REVIEW OF PROPOSALS.

    Awards of funds authorized under this title shall be made 
only after an impartial review of the scientific and technical 
merit of the proposals for such awards has been carried out by 
or for the Department.

SEC. 974. EXTERNAL TECHNICAL REVIEW OF DEPARTMENTAL PROGRAMS.

    (a) National Energy Research and Development Advisory 
Boards.--
            (1) In general.--The Secretary shall establish 1 or 
        more advisory boards to review Department research, 
        development, demonstration, and commercial application 
        programs in energy efficiency, renewable energy, 
        nuclear energy, and fossil energy.
            (2) Existing advisory boards.--The Secretary may 
        designate an existing advisory board within the 
        Department to fulfill the responsibilities of an 
        advisory board under this subsection, and may enter 
        into appropriate arrangements with the National Academy 
        of Sciences to establish such an advisory board.
    (b) Office of Science Advisory Committees.--
            (1) Utilization of existing committees.--The 
        Secretary shall continue to use the scientific program 
        advisory committees chartered under the Federal 
        Advisory Committee Act (5 U.S.C. App.) by the Office of 
        Science to oversee research and development programs 
        under that Office.
            (2) Science advisory committee.--
                    (A) Establishment.--There shall be in the 
                Office of Science a Science Advisory Committee 
                that includes the chairs of each of the 
                advisory committees described in paragraph (1).
                    (B) Responsibilities.--The Science Advisory 
                Committee shall--
                            (i) serve as the science advisor to 
                        the Director of the Office of Science;
                            (ii) advise the Director with 
                        respect to the well-being and 
                        management of the National Laboratories 
                        and single-purpose research facilities;
                            (iii) advise the Director with 
                        respect to education and workforce 
                        training activities required for 
                        effective short-term and long-term 
                        basic and applied research activities 
                        of the Office of Science; and
                            (iv) advise the Director with 
                        respect to the well being of the 
                        university research programs supported 
                        by the Office of Science.
    (c) Membership.--Each advisory board under this section 
shall consist of persons with appropriate expertise 
representing a diverse range of interests.
    (d) Meetings and Purposes.--Each advisory board under this 
section shall meet at least semiannually to review and advise 
on the progress made by the respective research, development, 
demonstration, and commercial application program or programs. 
The advisory board shall also review the measurable cost and 
performance-based goals for such programs as established under 
section 901(b), and the progress on meeting such goals.
    (e) Periodic Reviews and Assessments.--The Secretary shall 
enter into appropriate arrangements with the National Academy 
of Sciences to conduct periodic reviews and assessments of the 
programs authorized by this title, the measurable cost and 
performance-based goals for such programs as established under 
section 901(b), if any, and the progress on meeting such goals. 
Such reviews and assessments shall be conducted every 5 years, 
or more often as the Secretary considers necessary, and the 
Secretary shall transmit to Congress reports containing the 
results of all such reviews and assessments.

SEC. 975. IMPROVED COORDINATION OF TECHNOLOGY TRANSFER ACTIVITIES.

    (a) Technology Transfer Coordinator.--The Secretary shall 
designate a Technology Transfer Coordinator to perform 
oversight of and policy development for technology transfer 
activities at the Department. The Technology Transfer 
Coordinator shall--
            (1) coordinate the activities of the Technology 
        Transfer Working Group;
            (2) oversee the expenditure of funds allocated to 
        the Technology Transfer Working Group; and
            (3) coordinate with each technology partnership 
        ombudsman appointed under section 11 of the Technology 
        Transfer Commercialization Act of 2000 (42 U.S.C. 
        7261c).
    (b) Technology Transfer Working Group.--The Secretary shall 
establish a Technology Transfer Working Group, which shall 
consist of representatives of the National Laboratories and 
single-purpose research facilities, to--
            (1) coordinate technology transfer activities 
        occurring at National Laboratories and single-purpose 
        research facilities;
            (2) exchange information about technology transfer 
        practices, including alternative approaches to 
        resolution of disputes involving intellectual property 
        rights and other technology transfer matters; and
            (3) develop and disseminate to the public and 
        prospective technology partners information about 
        opportunities and procedures for technology transfer 
        with the Department, including those related to 
        alternative approaches to resolution of disputes 
        involving intellectual property rights and other 
        technology transfer matters.
    (c) Technology Transfer Responsibility.--Nothing in this 
section shall affect the technology transfer responsibilities 
of Federal employees under the Stevenson-Wydler Technology 
Innovation Act of 1980 (15 U.S.C. 3701 et seq.).

SEC. 976. FEDERAL LABORATORY EDUCATIONAL PARTNERS.

    (a) Distribution of Royalties Received by Federal 
Agencies.--Section 14(a)(1)(B)(v) of the Stevenson-Wydler 
Technology Innovation Act of 1980 (15 U.S.C. 
3710c(a)(1)(B)(v)), is amended to read as follows:
                    ``(v) for scientific research and 
                development and for educational assistance and 
                other purposes consistent with the missions and 
                objectives of the agency and the laboratory.''.
    (b) Cooperative Research and Development Agreements.--
Section 12(b)(5)(C) of the Stevenson-Wydler Technology 
Innovation Act of 1980 (15 U.S.C. 3710a(b)(5)(C)) is amended to 
read as follows:
            ``(C) for scientific research and development and 
        for educational assistance consistent with the missions 
        and objectives of the agency and the laboratory.''.

SEC. 977. INTERAGENCY COOPERATION.

    The Secretary shall enter into discussions with the 
Administrator of the National Aeronautics and Space 
Administration with the goal of reaching an interagency working 
agreement between the 2 agencies that would make the National 
Aeronautics and Space Administration's expertise in energy, 
gained from its existing and planned programs, more readily 
available to the relevant research, development, demonstration, 
and commercial applications programs of the Department. 
Technologies to be discussed should include the National 
Aeronautics and Space Administration's modeling, research, 
development, testing, and evaluation of new energy 
technologies, including solar, wind, fuel cells, and hydrogen 
storage and distribution.

SEC. 978. TECHNOLOGY INFRASTRUCTURE PROGRAM.

    (a) Establishment.--The Secretary shall establish a 
Technology Infrastructure Program in accordance with this 
section.
    (b) Purpose.--The purpose of the Technology Infrastructure 
Program shall be to improve the ability of National 
Laboratories and single-purpose research facilities to support 
departmental missions by--
            (1) stimulating the development of technology 
        clusters that can support departmental missions at the 
        National Laboratories or single-purpose research 
        facilities;
            (2) improving the ability of National Laboratories 
        and single-purpose research facilities to leverage and 
        benefit from commercial research, technology, products, 
        processes, and services; and
            (3) encouraging the exchange of scientific and 
        technological expertise between National Laboratories 
        or single-purpose research facilities and entities that 
        can support departmental missions at the National 
        Laboratories or single-purpose research facilities, 
        such as institutions of higher education; technology-
        related business concerns; nonprofit institutions; and 
        agencies of State, tribal, or local governments.
    (c) Projects.--The Secretary shall authorize the Director 
of each National Laboratory or single-purpose research facility 
to implement the Technology Infrastructure Program at such 
National Laboratory or facility through projects that meet the 
requirements of subsections (d) and (e).
    (d) Program Requirements.--Each project funded under this 
section shall meet the following requirements:
            (1) Each project shall include at least 1 of each 
        of the following entities: A business; an institution 
        of higher education; a nonprofit institution; and an 
        agency of a State, local, or tribal government.
            (2) Not less than 50 percent of the costs of each 
        project funded under this section shall be provided 
        from non-Federal sources. The calculation of costs paid 
        by the non-Federal sources to a project shall include 
        cash, personnel, services, equipment, and other 
        resources expended on the project after start of the 
        project. Independent research and development expenses 
        of Government contractors that qualify for 
        reimbursement under section 31.205-18(e) of the Federal 
        Acquisition Regulation issued pursuant to section 
        25(c)(1) of the Office of Federal Procurement Policy 
        Act (41 U.S.C. 421(c)(1)) may be credited toward costs 
        paid by non-Federal sources to a project, if the 
        expenses meet the other requirements of this section.
            (3) All projects under this section shall be 
        competitively selected using procedures determined by 
        the Secretary.
            (4) Any participant that receives funds under this 
        section may use generally accepted accounting 
        principles for maintaining accounts, books, and records 
        relating to the project.
            (5) No Federal funds shall be made available under 
        this section for construction or any project for more 
        than 5 years.
    (e) Selection Criteria.--
            (1) In general.--The Secretary shall allocate funds 
        under this section only if the Director of the National 
        Laboratory or single-purpose research facility managing 
        the project determines that the project is likely to 
        improve the ability of the National Laboratory or 
        single-purpose research facility to achieve technical 
        success in meeting departmental missions.
            (2) Criteria.--The Secretary shall consider the 
        following criteria in selecting a project to receive 
        Federal funds:
                    (A) The potential of the project to promote 
                the development of a commercially sustainable 
                technology cluster following the period of 
                Department investment, which will derive most 
                of the demand for its products or services from 
                the private sector, and which will support 
                departmental missions at the participating 
                National Laboratory or single-purpose research 
                facility.
                    (B) The potential of the project to promote 
                the use of commercial research, technology, 
                products, processes, and services by the 
                participating National Laboratory or single-
                purpose research facility to achieve its 
                mission or the commercial development of 
                technological innovations made at the 
                participating National Laboratory or single-
                purpose research facility.
                    (C) The extent to which the project 
                involves a wide variety and number of 
                institutions of higher education, nonprofit 
                institutions, and technology-related business 
                concerns that can support the missions of the 
                participating National Laboratory or single-
                purpose research facility and that will make 
                substantive contributions to achieving the 
                goals of the project.
                    (D) The extent to which the project focuses 
                on promoting the development of technology-
                related business concerns that are small 
                businesses or involves such small businesses 
                substantively in the project.
                    (E) Such other criteria as the Secretary 
                determines to be appropriate.
    (f) Allocation.--In allocating funds for projects approved 
under this section, the Secretary shall provide--
            (1) the Federal share of the project costs; and
            (2) additional funds to the National Laboratory or 
        single-purpose research facility managing the project 
        to permit the National Laboratory or single-purpose 
        research facility to carry out activities relating to 
        the project, and to coordinate such activities with the 
        project.
    (g) Report to Congress.--Not later than July 1, 2006, the 
Secretary shall report to Congress on whether the Technology 
Infrastructure Program should be continued and, if so, how the 
program should be managed.
    (h) Definitions.--In this section:
            (1) Technology cluster.--The term ``technology 
        cluster'' means a concentration of technology-related 
        business concerns, institutions of higher education, or 
        nonprofit institutions that reinforce each other's 
        performance in the areas of technology development 
        through formal or informal relationships.
            (2) Technology-related business concern.--The term 
        ``technology-related business concern'' means a for-
        profit corporation, company, association, firm, 
        partnership, or small business concern that conducts 
        scientific or engineering research; develops new 
        technologies; manufactures products based on new 
        technologies; or performs technological services.
    (i) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary for activities under this 
section $10,000,000 for each of fiscal years 2004, 2005, and 
2006.

SEC. 979. REPROGRAMMING.

    (a) Distribution Report.--Not later than 60 days after the 
date of the enactment of an Act appropriating amounts 
authorized under this title, the Secretary shall transmit to 
the appropriate authorizing committees of Congress a report 
explaining how such amounts will be distributed among the 
authorizations contained in this title.
    (b) Prohibition.--
            (1) In general.--No amount identified under 
        subsection (a) shall be reprogrammed if such 
        reprogramming would result in an obligation which 
        changes an individual distribution required to be 
        reported under subsection (a) by more than 5 percent 
        unless the Secretary has transmitted to the appropriate 
        authorizing committees of Congress a report described 
        in subsection (c) and a period of 30 days has elapsed 
        after such committees receive the report.
            (2) Computation.--In the computation of the 30-day 
        period described in paragraph (1), there shall be 
        excluded any day on which either House of Congress is 
        not in session because of an adjournment of more than 3 
        days to a day certain.
    (c) Reprogramming Report.--A report referred to in 
subsection (b)(1) shall contain a full and complete statement 
of the action proposed to be taken and the facts and 
circumstances relied on in support of the proposed action.

SEC. 980. CONSTRUCTION WITH OTHER LAWS.

    Except as otherwise provided in this title, the Secretary 
shall carry out the research, development, demonstration, and 
commercial application programs, projects, and activities 
authorized by this title in accordance with the applicable 
provisions of the Atomic Energy Act of 1954 (42 U.S.C. 2011 et 
seq.), the Federal Nonnuclear Research and Development Act of 
1974 (42 U.S.C. 5901 et seq.), the Energy Policy Act of 1992 
(42 U.S.C. 13201 et seq.), the Stevenson-Wydler Technology 
Innovation Act of 1980 (15 U.S.C. 3701 et seq.), chapter 18 of 
title 35, United States Code (commonly referred to as the Bayh-
Dole Act), and any other Act under which the Secretary is 
authorized to carry out such activities.

SEC. 981. REPORT ON RESEARCH AND DEVELOPMENT PROGRAM EVALUATION 
                    METHODOLOGIES.

    Not later than 180 days after the date of enactment of this 
Act, the Secretary shall enter into appropriate arrangements 
with the National Academy of Sciences to investigate and report 
on the scientific and technical merits of any evaluation 
methodology currently in use or proposed for use in relation to 
the scientific and technical programs of the Department by the 
Secretary or other Federal official. Not later than 6 months 
after receiving the report of the National Academy, the 
Secretary shall submit such report to Congress, along with any 
other views or plans of the Secretary with respect to the 
future use of such evaluation methodology.

SEC. 982. DEPARTMENT OF ENERGY SCIENCE AND TECHNOLOGY SCHOLARSHIP 
                    PROGRAM.

    (a) Establishment of Program.--
            (1) In general.--The Secretary is authorized to 
        establish a Department of Energy Science and Technology 
        Scholarship Program to award scholarships to 
        individuals that is designed to recruit and prepare 
        students for careers in the Department.
            (2) Competitive process.--Individuals shall be 
        selected to receive scholarships under this section 
        through a competitive process primarily on the basis of 
        academic merit, with consideration given to financial 
        need and the goal of promoting the participation of 
        individuals identified in section 33 or 34 of the 
        Science and Engineering Equal Opportunities Act (42 
        U.S.C. 1885a or 1885b).
            (3) Service agreements.--To carry out the Program 
        the Secretary shall enter into contractual agreements 
        with individuals selected under paragraph (2) under 
        which the individuals agree to serve as full-time 
        employees of the Department, for the period described 
        in subsection (f)(1), in positions needed by the 
        Department and for which the individuals are qualified, 
        in exchange for receiving a scholarship.
    (b) Scholarship Eligibility.--In order to be eligible to 
participate in the Program, an individual must--
            (1) be enrolled or accepted for enrollment as a 
        full-time student at an institution of higher education 
        in an academic program or field of study described in 
        the list made available under subsection (d);
            (2) be a United States citizen; and
            (3) at the time of the initial scholarship award, 
        not be a Federal employee as defined in section 2105 of 
        title 5 of the United States Code.
    (c) Application Required.--An individual seeking a 
scholarship under this section shall submit an application to 
the Secretary at such time, in such manner, and containing such 
information, agreements, or assurances as the Secretary may 
require.
    (d) Eligible Academic Programs.--The Secretary shall make 
publicly available a list of academic programs and fields of 
study for which scholarships under the Program may be utilized, 
and shall update the list as necessary.
    (e) Scholarship Requirement.--
            (1) In general.--The Secretary may provide a 
        scholarship under the Program for an academic year if 
        the individual applying for the scholarship has 
        submitted to the Secretary, as part of the application 
        required under subsection (c), a proposed academic 
        program leading to a degree in a program or field of 
        study on the list made available under subsection (d).
            (2) Duration of eligibility.--An individual may not 
        receive a scholarship under this section for more than 
        4 academic years, unless the Secretary grants a waiver.
            (3) Scholarship amount.--The dollar amount of a 
        scholarship under this section for an academic year 
        shall be determined under regulations issued by the 
        Secretary, but shall in no case exceed the cost of 
        attendance.
            (4) Authorized uses.--A scholarship provided under 
        this section may be expended for tuition, fees, and 
        other authorized expenses as established by the 
        Secretary by regulation.
            (5) Contracts regarding direct payments to 
        institutions.--The Secretary may enter into a 
        contractual agreement with an institution of higher 
        education under which the amounts provided for a 
        scholarship under this section for tuition, fees, and 
        other authorized expenses are paid directly to the 
        institution with respect to which the scholarship is 
        provided.
    (f) Period of Obligated Service.--
            (1) Duration of service.--The period of service for 
        which an individual shall be obligated to serve as an 
        employee of the Department is, except as provided in 
        subsection (h)(2), 24 months for each academic year for 
        which a scholarship under this section is provided.
            (2) Schedule for service.--
                    (A) In general.--Except as provided in 
                subparagraph (B), obligated service under 
                paragraph (1) shall begin not later than 60 
                days after the individual obtains the 
                educational degree for which the scholarship 
                was provided.
                    (B) Deferral.--The Secretary may defer the 
                obligation of an individual to provide a period 
                of service under paragraph (1) if the Secretary 
                determines that such a deferral is appropriate. 
                The Secretary shall prescribe the terms and 
                conditions under which a service obligation may 
                be deferred through regulation.
    (g) Penalties for Breach of Scholarship Agreement.--
            (1) Failure to complete academic training.--
        Scholarship recipients who fail to maintain a high 
        level of academic standing, as defined by the Secretary 
        by regulation, who are dismissed from their educational 
        institutions for disciplinary reasons, or who 
        voluntarily terminate academic training before 
        graduation from the educational program for which the 
        scholarship was awarded, shall be in breach of their 
        contractual agreement and, in lieu of any service 
        obligation arising under such agreement, shall be 
        liable to the United States for repayment not later 
        than 1 year after the date of default of all 
        scholarship funds paid to them and to the institution 
        of higher education on their behalf under the 
        agreement, except as provided in subsection (h)(2). The 
        repayment period may be extended by the Secretary when 
        determined to be necessary, as established by 
        regulation.
            (2) Failure to begin or complete the service 
        obligation or meet the terms and conditions of 
        deferment.--A scholarship recipient who, for any 
        reason, fails to begin or complete a service obligation 
        under this section after completion of academic 
        training, or fails to comply with the terms and 
        conditions of deferment established by the Secretary 
        pursuant to subsection (f)(2)(B), shall be in breach of 
        the contractual agreement. When a recipient breaches an 
        agreement for the reasons stated in the preceding 
        sentence, the recipient shall be liable to the United 
        States for an amount equal to--
                    (A) the total amount of scholarships 
                received by such individual under this section; 
                plus
                    (B) the interest on the amounts of such 
                awards which would be payable if at the time 
                the awards were received they were loans 
                bearing interest at the maximum legal 
                prevailing rate, as determined by the Treasurer 
                of the United States,
        multiplied by 3.
    (h) Waiver or Suspension of Obligation.--
            (1) Death of individual.--Any obligation of an 
        individual incurred under the Program (or a contractual 
        agreement thereunder) for service or payment shall be 
        canceled upon the death of the individual.
            (2) Impossibility or extreme hardship.--The 
        Secretary shall by regulation provide for the partial 
        or total waiver or suspension of any obligation of 
        service or payment incurred by an individual under the 
        Program (or a contractual agreement thereunder) 
        whenever compliance by the individual is impossible or 
        would involve extreme hardship to the individual, or if 
        enforcement of such obligation with respect to the 
        individual would be contrary to the best interests of 
        the Government.
    (i) Definitions.--In this section the following definitions 
apply:
            (1) Cost of attendance.--The term ``cost of 
        attendance'' has the meaning given that term in section 
        472 of the Higher Education Act of 1965 (20 U.S.C. 
        1087ll).
            (2) Program.--The term ``Program'' means the 
        Department of Energy Science and Technology Scholarship 
        Program established under this section.
    (j) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary for activities under this 
section--
            (1) for fiscal year 2004, $800,000;
            (2) for fiscal year 2005, $1,600,000;
            (3) for fiscal year 2006, $2,000,000;
            (4) for fiscal year 2007, $2,000,000; and
            (5) for fiscal year 2008, $2,000,000.

SEC. 983. REPORT ON EQUAL EMPLOYMENT OPPORTUNITY PRACTICES.

    Not later than 12 months after the date of enactment of 
this Act, and biennially thereafter, the Secretary shall 
transmit to Congress a report on the equal employment 
opportunity practices at National Laboratories. Such report 
shall include--
            (1) a thorough review of each laboratory 
        contractor's equal employment opportunity policies, 
        including promotion to management and professional 
        positions and pay raises;
            (2) a statistical report on complaints and their 
        disposition in the laboratories;
            (3) a description of how equal employment 
        opportunity practices at the laboratories are treated 
        in the contract and in calculating award fees for each 
        contractor;
            (4) a summary of disciplinary actions and their 
        disposition by either the Department or the relevant 
        contractors for each laboratory;
            (5) a summary of outreach efforts to attract women 
        and minorities to the laboratories;
            (6) a summary of efforts to retain women and 
        minorities in the laboratories; and
            (7) a summary of collaboration efforts with the 
        Office of Federal Contract Compliance Programs to 
        improve equal employment opportunity practices at the 
        laboratories.

SEC. 984. SMALL BUSINESS ADVOCACY AND ASSISTANCE.

    (a) Small Business Advocate.--The Secretary shall require 
the Director of each National Laboratory, and may require the 
Director of a single-purpose research facility, to designate a 
small business advocate to--
            (1) increase the participation of small business 
        concerns, including socially and economically 
        disadvantaged small business concerns, in procurement, 
        collaborative research, technology licensing, and 
        technology transfer activities conducted by the 
        National Laboratory or single-purpose research 
        facility;
            (2) report to the Director of the National 
        Laboratory or single-purpose research facility on the 
        actual participation of small business concerns, 
        including socially and economically disadvantaged small 
        business concerns, in procurement, collaborative 
        research, technology licensing, and technology transfer 
        activities along with recommendations, if appropriate, 
        on how to improve participation;
            (3) make available to small businesses training, 
        mentoring, and information on how to participate in 
        procurement and collaborative research activities;
            (4) increase the awareness inside the National 
        Laboratory or single-purpose research facility of the 
        capabilities and opportunities presented by small 
        business concerns; and
            (5) establish guidelines for the program under 
        subsection (b) and report on the effectiveness of such 
        program to the Director of the National Laboratory or 
        single-purpose research facility.
    (b) Establishment of Small Business Assistance Program.--
The Secretary shall require the Director of each National 
Laboratory, and may require the Director of a single-purpose 
research facility, to establish a program to provide small business 
concerns--
            (1) assistance directed at making them more 
        effective and efficient subcontractors or suppliers to 
        the National Laboratory or single-purpose research 
        facility; or
            (2) general technical assistance, the cost of which 
        shall not exceed $10,000 per instance of assistance, to 
        improve the small business concerns' products or 
        services.
    (c) Use of Funds.--None of the funds expended under 
subsection (b) may be used for direct grants to the small 
business concerns.
    (d) Definitions.--In this section:
            (1) Small business concern.--The term ``small 
        business concern'' has the meaning given such term in 
        section 3 of the Small Business Act (15 U.S.C. 632).
            (2) Socially and economically disadvantaged small 
        business concerns.--The term ``socially and 
        economically disadvantaged small business concerns'' 
        has the meaning given such term in section 8(a)(4) of 
        the Small Business Act (15 U.S.C. 637(a)(4)).
    (e) Authorization of Appropriations.--There are authorized 
to be appropriated to the Secretary for activities under this 
section $5,000,000 for each of fiscal years 2004 through 2008.

SEC. 985. REPORT ON MOBILITY OF SCIENTIFIC AND TECHNICAL PERSONNEL.

    Not later than 2 years after the date of enactment of this 
Act, the Secretary shall transmit a report to Congress 
identifying any policies or procedures of a contractor 
operating a National Laboratory or single-purpose research 
facility that create disincentives to the temporary transfer of 
scientific and technical personnel among the contractor-
operated National Laboratories or contractor-operated single-
purpose research facilities and provide suggestions for 
improving interlaboratory exchange of scientific and technical 
personnel.

SEC. 986. NATIONAL ACADEMY OF SCIENCES REPORT.

    Not later than 90 days after the date of enactment of this 
Act, the Secretary shall enter into an arrangement with the 
National Academy of Sciences for the Academy to--
            (1) conduct a study on--
                    (A) the obstacles to accelerating the 
                commercial application of energy technology; 
                and
                    (B) the adequacy of Department policies and 
                procedures for, and oversight of, technology 
                transfer-related disputes between contractors 
                of the Department and the private sector; and
            (2) transmit a report to Congress on 
        recommendations developed as a result of the study.

SEC. 987. OUTREACH.

    The Secretary shall ensure that each program authorized by 
this title includes an outreach component to provide 
information, as appropriate, to manufacturers, consumers, 
engineers, architects, builders, energy service companies, 
institutions of higher education, small businesses, facility 
planners and managers, State and local governments, and other 
entities.

SEC. 988. COMPETITIVE AWARD OF MANAGEMENT CONTRACTS.

    None of the funds authorized to be appropriated to the 
Secretary by this title may be used to award a management and 
operating contract for a nonmilitary energy laboratory of the 
Department unless such contract is competitively awarded or the 
Secretary grants, on a case-by-case basis, a waiver to allow 
for such a deviation. The Secretary may not delegate the 
authority to grant such a waiver and shall submit to Congress a 
report notifying Congress of the waiver and setting forth the 
reasons for the waiver at least 60 days prior to the date of 
the award of such a contract.

SEC. 989. EDUCATIONAL PROGRAMS IN SCIENCE AND MATHEMATICS.

    (a) Activities.--Section 3165(a) of the Department of 
Energy Science Education Enhancement Act (42 U.S.C. 7381b(a)) 
is amended by adding at the end the following:
            ``(14) Support competitive events for students, 
        under supervision of teachers, designed to encourage 
        student interest and knowledge in science and 
        mathematics.''.
    (b) Authorization of Appropriations.--Section 3169 of the 
Department of Energy Science Education Enhancement Act (42 
U.S.C. 7381e), as so redesignated by section 1102(b), is 
amended by inserting before the period ``; and $40,000,000 for 
each of fiscal years 2004 through 2008''.

                TITLE X--DEPARTMENT OF ENERGY MANAGEMENT

SEC. 1001. ADDITIONAL ASSISTANT SECRETARY POSITION.

    (a) Additional Assistant Secretary Position To Enable 
Improved Management of Nuclear Energy Issues.--
            (1) In general.--Section 203(a) of the Department 
        of Energy Organization Act (42 U.S.C. 7133(a)) is 
        amended by striking ``six Assistant Secretaries'' and 
        inserting ``7 Assistant Secretaries''.
            (2) Sense of congress.--It is the sense of Congress 
        that the leadership for departmental missions in 
        nuclear energy should be at the Assistant Secretary 
        level.
    (b) Technical and Conforming Amendments.--
            (1) Title 5.--Section 5315 of title 5, United 
        States Code, is amended by striking ``Assistant 
        Secretaries of Energy (6)'' and inserting ``Assistant 
        Secretaries of Energy (7)''.
            (2) Department of energy organization act.--The 
        table of contents for the Department of Energy 
        Organization Act (42 U.S.C. 7101 note) is amended--
                    (A) by striking ``Section 209'' and 
                inserting ``Sec. 209'';
                    (B) by striking ``213.'' and inserting 
                ``Sec. 213.'';
                    (C) by striking ``214.'' and inserting 
                ``Sec. 214.'';
                    (D) by striking ``215.'' and inserting 
                ``Sec. 215.''; and
                    (E) by striking ``216.'' and inserting 
                ``Sec. 216.''.

SEC. 1002. OTHER TRANSACTIONS AUTHORITY.

    Section 646 of the Department of Energy Organization Act 
(42 U.S.C. 7256) is amended by adding at the end the following:
    ``(g)(1) In addition to other authorities granted to the 
Secretary under law, the Secretary may enter into other 
transactions on such terms as the Secretary may deem 
appropriate in furtherance of research, development, or 
demonstration functions vested in the Secretary. Such other 
transactions shall not be subject to the provisions of section 
9 of the Federal Nonnuclear Energy Research and Development Act 
of 1974 (42 U.S.C. 5908) or section 152 of the Atomic Energy 
Act of 1954 (42 U.S.C. 2182).
    ``(2)(A) The Secretary shall ensure that--
            ``(i) to the maximum extent the Secretary 
        determines practicable, no transaction entered into 
        under paragraph (1) provides for research, development, 
        or demonstration that duplicates research, development, 
        or demonstration being conducted under existing 
        projects carried out by the Department;
            ``(ii) to the extent the Secretary determines 
        practicable, the funds provided by the Government under 
        a transaction authorized by paragraph (1) do not exceed 
        the total amount provided by other parties to the 
        transaction; and
            ``(iii) to the extent the Secretary determines 
        practicable, competitive, merit-based selection 
        procedures shall be used when entering into 
        transactions under paragraph (1).
    ``(B) A transaction authorized by paragraph (1) may be used 
for a research, development, or demonstration project only if 
the Secretary makes a written determination that the use of a 
standard contract, grant, or cooperative agreement for the 
project is not feasible or appropriate.
    ``(3)(A) The Secretary shall protect from disclosure, 
including disclosure under section 552 of title 5, United 
States Code, for up to 5 years after the date the information 
is received by the Secretary--
            ``(i) a proposal, proposal abstract, and supporting 
        documents submitted to the Department in a competitive 
        or noncompetitive process having the potential for 
        resulting in an award under paragraph (1) to the party 
        submitting the information; and
            ``(ii) a business plan and technical information 
        relating to a transaction authorized by paragraph (1) 
        submitted to the Department as confidential business 
        information.
    ``(B) The Secretary may protect from disclosure, for up to 
5 years after the information was developed, any information 
developed pursuant to a transaction under paragraph (1) which 
developed information is of a character that it would be 
protected from disclosure under section 552(b)(4) of title 5, 
United States Code, if obtained from a person other than a 
Federal agency.
    ``(4) Not later than 90 days after the date of enactment of 
this subsection, the Secretary shall prescribe guidelines for 
using other transactions authorized by paragraph (1). Such 
guidelines shall be published in the Federal Register for 
public comment under rulemaking procedures of the Department.
    ``(5) The authority of the Secretary under this subsection 
may be delegated only to an officer of the Department who is 
appointed by the President by and with the advice and consent 
of the Senate and may not be delegated to any other person.
    ``(6)(A) Not later than September 31, 2005, the Comptroller 
General of the United States shall report to Congress on the 
Department's use of the authorities granted under this section, 
including the ability to attract nontraditional government 
contractors and whether additional safeguards are needed with 
respect to the use of such authorities.
    ``(B) In this section, the term `nontraditional Government 
contractor' has the same meaning as the term `nontraditional 
defense contractor' as defined in section 845(e) of the 
National Defense Authorization Act for Fiscal Year 1994 (Public 
Law 103-160; 10 U.S.C. 2371 note).''.

                    TITLE XI--PERSONNEL AND TRAINING

SEC. 1101. TRAINING GUIDELINES FOR ELECTRIC ENERGY INDUSTRY PERSONNEL.

    The Secretary of Energy, in consultation with the Secretary 
of Labor and jointly with the electric industry and recognized 
employee representatives, shall develop model personnel 
training guidelines to support electric system reliability and 
safety. The training guidelines shall, at a minimum--
            (1) include training requirements for workers 
        engaged in the construction, operation, inspection, and 
        maintenance of electric generation, transmission, and 
        distribution, including competency and certification 
        requirements, and assessment requirements that include 
        initial and ongoing evaluation of workers, 
        recertification assessment procedures, and methods for 
        examining or testing the qualification of individuals 
        performing covered tasks; and
            (2) consolidate existing training guidelines on the 
        construction, operation, maintenance, and inspection of 
        electric generation, transmission, and distribution 
        facilities, such as those established by the National 
        Electric Safety Code and other industry consensus 
        standards.

SEC. 1102. IMPROVED ACCESS TO ENERGY-RELATED SCIENTIFIC AND TECHNICAL 
                    CAREERS.

    (a) Department of Energy Science Education Programs.--
Section 3164 of the Department of Energy Science Education 
Enhancement Act (42 U.S.C. 7381a) is amended by adding at the 
end the following:
    ``(c) Programs for Students From Underrepresented Groups.--
In carrying out a program under subsection (a), the Secretary 
shall give priority to activities that are designed to 
encourage students from underrepresented groups to pursue 
scientific and technical careers.''.
    (b) Partnerships With Historically Black Colleges and 
Universities, Hispanic-Servicing Institutions, and Tribal 
Colleges.--The Department of Energy Science Education 
Enhancement Act (42 U.S.C. 7381 et seq.) is amended--
            (1) by redesignating sections 3167 and 3168 as 
        sections 3168 and 3169, respectively; and
            (2) by inserting after section 3166 the following:

``SEC. 3167. PARTNERSHIPS WITH HISTORICALLY BLACK COLLEGES AND 
                    UNIVERSITIES, HISPANIC-SERVING INSTITUTIONS, AND 
                    TRIBAL COLLEGES.

    ``(a) Definitions.--In this section:
            ``(1) Hispanic-serving institution.--The term 
        `Hispanic-serving institution' has the meaning given 
        that term in section 502(a) of the Higher Education Act 
        of 1965 (20 U.S.C. 1101a(a)).
            ``(2) Historically black college or university.--
        The term `historically Black college or university' has 
        the meaning given the term `part B institution' in 
        section 322 of the Higher Education Act of 1965 (20 
        U.S.C. 1061).
            ``(3) National laboratory.--The term `National 
        Laboratory' has the meaning given that term in section 
        902 of the Energy Policy Act of 2003.
            ``(4) Science facility.--The term `science 
        facility' has the meaning given the term `single-
        purpose research facility' in section 902 of the Energy 
        Policy Act of 2003.
            ``(5) Tribal college.--The term `tribal college' 
        has the meaning given the term `Tribal College or 
        University' in section 316(b)(3) of the Higher 
        Education Act of 1965 (20 U.S.C. 1059c(b)(3)).
    ``(b) Education Partnership.--The Secretary shall direct 
the Director of each National Laboratory and, to the extent 
practicable, the head of any science facility to increase the 
participation of historically Black colleges or universities, 
Hispanic-serving institutions, or tribal colleges in activities 
that increase the capacity of the historically Black colleges 
or universities, Hispanic-serving institutions, or tribal 
colleges to train personnel in science or engineering.
    ``(c) Activities.--An activity under subsection (b) may 
include--
            ``(1) collaborative research;
            ``(2) equipment transfer;
            ``(3) training activities conducted at a National 
        Laboratory or science facility; and
            ``(4) mentoring activities conducted at a National 
        Laboratory or science facility.
    ``(d) Report.--Not later than 2 years after the date of 
enactment of the Energy Policy Act of 2003, the Secretary shall 
submit to Congress a report on the activities carried out under 
this section.''.

SEC. 1103. NATIONAL POWER PLANT OPERATIONS TECHNOLOGY AND EDUCATION 
                    CENTER.

    (a) Establishment.--The Secretary shall support the 
establishment of a National Power Plant Operations Technology 
and Education Center (in this section referred to as the 
``Center''), to address the need for training and educating 
certified operators for nonnuclear electric power generation 
plants.
    (b) Role.--The Center shall provide both training and 
continuing education relating to nonnuclear electric power 
generation plant technologies and operations. The Center shall 
conduct training and education activities on site and through 
Internet-based information technologies that allow for learning 
at remote sites.
    (c) Criteria for Competitive Selection.--The Secretary 
shall support the establishment of the Center at an institution 
of higher education with expertise in power plant technology 
and operation and with the ability to provide onsite as well as 
Internet-based training.

SEC. 1104. INTERNATIONAL ENERGY TRAINING.

    (a) In General.--The Secretary of Energy, in consultation 
with the Secretaries of Commerce, Interior, and State and the 
Federal Energy Regulatory Commission, shall coordinate training 
and outreach efforts for international commercial energy 
markets in countries with developing and restructuring 
economies.
    (b) Components.--The efforts may address--
            (1) production-related fiscal regimes;
            (2) grid and network issues;
            (3) energy user and demand side response;
            (4) international trade of energy; and
            (5) international transportation of energy.
    (c) Authorization of Appropriations.--There are authorized 
to be appropriated to carry out this section $1,500,000 for 
each of fiscal years 2004 through 2007.

                         TITLE XII--ELECTRICITY

SEC. 1201. SHORT TITLE.

    This title may be cited as the ``Electric Reliability Act 
of 2003''.

                   Subtitle A--Reliability Standards

SEC. 1211. ELECTRIC RELIABILITY STANDARDS.

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

``SEC. 215. ELECTRIC RELIABILITY.

    ``(a) Definitions.--For purposes of this section:
            ``(1) The term `bulk-power system' means--
                    ``(A) facilities and control systems 
                necessary for operating an interconnected 
                electric energy transmission network (or any 
                portion thereof); and
                    ``(B) electric energy from generation 
                facilities needed to maintain transmission 
                system reliability.
        The term does not include facilities used in the local 
        distribution of electric energy.
            ``(2) The terms `Electric Reliability Organization' 
        and `ERO' mean the organization certified by the 
        Commission under subsection (c) the purpose of which is 
        to establish and enforce reliability standards for the 
        bulk-power system, subject to Commission review.
            ``(3) The term `reliability standard' means a 
        requirement, approved by the Commission under this 
        section, to provide for reliable operation of the bulk-
        power system. The term includes requirements for the 
        operation of existing bulk-power system facilities and 
        the design of planned additions or modifications to 
        such facilities to the extent necessary to provide for 
        reliable operation of the bulk-power system, but the 
        term does not include any requirement to enlarge such 
        facilities or to construct new transmission capacity or 
        generation capacity.
            ``(4) The term `reliable operation' means operating 
        the elements of the bulk-power system within equipment 
        and electric system thermal, voltage, and stability 
        limits so that instability, uncontrolled separation, or 
        cascading failures of such system will not occur as a 
        result of a sudden disturbance or unanticipated failure 
        of system elements.
            ``(5) The term `Interconnection' means a geographic 
        area in which the operation of bulk-power system 
        components is synchronized such that the failure of 1 
        or more of such components may adversely affect the 
        ability of the operators of other components within the 
        system to maintain reliable operation of the facilities 
        within their control.
            ``(6) The term `transmission organization' means a 
        Regional Transmission Organization, Independent System 
        Operator, independent transmission provider, or other 
        transmission organization finally approved by the 
        Commission for the operation of transmission 
        facilities.
            ``(7) The term `regional entity' means an entity 
        having enforcement authority pursuant to subsection 
        (e)(4).
    ``(b) Jurisdiction and Applicability.--(1) The Commission 
shall have jurisdiction, within the United States, over the ERO 
certified by the Commission under subsection (c), any regional 
entities, and all users, owners and operators of the bulk-power 
system, including but not limited to the entities described in 
section 201(f), for purposes of approving reliability standards 
established under this section and enforcing compliance with 
this section. All users, owners and operators of the bulk-power 
system shall comply with reliability standards that take effect 
under this section.
    ``(2) The Commission shall issue a final rule to implement 
the requirements of this section not later than 180 days after 
the date of enactment of this section.
    ``(c) Certification.--Following the issuance of a 
Commission rule under subsection (b)(2), any person may submit 
an application to the Commission for certification as the 
Electric Reliability Organization. The Commission may certify 1 
such ERO if the Commission determines that such ERO--
            ``(1) has the ability to develop and enforce, 
        subject to subsection (e)(2), reliability standards 
        that provide for an adequate level of reliability of 
        the bulk-power system; and
            ``(2) has established rules that--
                    ``(A) assure its independence of the users 
                and owners and operators of the bulk-power 
                system, while assuring fair stakeholder 
                representation in the selection of its 
                directors and balanced decisionmaking in any 
                ERO committee or subordinate organizational 
                structure;
                    ``(B) allocate equitably reasonable dues, 
                fees, and other charges among end users for all 
                activities under this section;
                    ``(C) provide fair and impartial procedures 
                for enforcement of reliability standards 
                through the imposition of penalties in 
                accordance with subsection (e) (including 
                limitations on activities, functions, or 
                operations, or other appropriate sanctions);
                    ``(D) provide for reasonable notice and 
                opportunity for public comment, due process, 
                openness, and balance of interests in 
                developing reliability standards and otherwise 
                exercising its duties; and
                    ``(E) provide for taking, after 
                certification, appropriate steps to gain 
                recognition in Canada and Mexico.
    ``(d) Reliability Standards.--(1) The Electric Reliability 
Organization shall file each reliability standard or 
modification to a reliability standard that it proposes to be 
made effective under this section with the Commission.
    ``(2) The Commission may approve, by rule or order, a 
proposed reliability standard or modification to a reliability 
standard if it determines that the standard is just, 
reasonable, not unduly discriminatory or preferential, and in 
the public interest. The Commission shall give due weight to 
the technical expertise of the Electric Reliability 
Organization with respect to the content of a proposed standard 
or modification to a reliability standard and to the technical 
expertise of a regional entity organized on an Interconnection-
wide basis with respect to a reliability standard to be 
applicable within that Interconnection, but shall not defer 
with respect to the effect of a standard on competition. A 
proposed standard or modification shall take effect upon 
approval by the Commission.
    ``(3) The Electric Reliability Organization shall 
rebuttably presume that a proposal from a regional entity 
organized on an Interconnection-wide basis for a reliability 
standard or modification to a reliability standard to be 
applicable on an Interconnection-wide basis is just, 
reasonable, and not unduly discriminatory or preferential, and 
in the public interest.
    ``(4) The Commission shall remand to the Electric 
Reliability Organization for further consideration a proposed 
reliability standard or a modification to a reliability 
standard that the Commission disapproves in whole or in part.
    ``(5) The Commission, upon its own motion or upon 
complaint, may order the Electric Reliability Organization to 
submit to the Commission a proposed reliability standard or a 
modification to a reliability standard that addresses a 
specific matter if the Commission considers such a new or 
modified reliability standard appropriate to carry out this 
section.
    ``(6) The final rule adopted under subsection (b)(2) shall 
include fair processes for the identification and timely 
resolution of any conflict between a reliability standard and 
any function, rule, order, tariff, rate schedule, or agreement 
accepted, approved, or ordered by the Commission applicable to 
a transmission organization. Such transmission organization 
shall continue to comply with such function, rule, order, 
tariff, rate schedule or agreement accepted approved, or 
ordered by the Commission until--
            ``(A) the Commission finds a conflict exists 
        between a reliability standard and any such provision;
            ``(B) the Commission orders a change to such 
        provision pursuant to section 206 of this part; and
            ``(C) the ordered change becomes effective under 
        this part.
If the Commission determines that a reliability standard needs 
to be changed as a result of such a conflict, it shall order 
the ERO to develop and file with the Commission a modified 
reliability standard under paragraph (4) or (5) of this 
subsection.
    ``(e) Enforcement.--(1) The ERO may impose, subject to 
paragraph (2), a penalty on a user or owner or operator of the 
bulk-power system for a violation of a reliability standard 
approved by the Commission under subsection (d) if the ERO, 
after notice and an opportunity for a hearing--
            ``(A) finds that the user or owner or operator has 
        violated a reliability standard approved by the 
        Commission under subsection (d); and
            ``(B) files notice and the record of the proceeding 
        with the Commission.
    ``(2) A penalty imposed under paragraph (1) may take effect 
not earlier than the 31st day after the ERO files with the 
Commission notice of the penalty and the record of proceedings. 
Such penalty shall be subject to review by the Commission, on 
its own motion or upon application by the user, owner or 
operator that is the subject of the penalty filed within 30 
days after the date such notice is filed with the Commission. 
Application to the Commission for review, or the initiation of 
review by the Commission on its own motion, shall not operate 
as a stay of such penalty unless the Commission otherwise 
orders upon its own motion or upon application by the user, 
owner or operator that is the subject of such penalty. In any 
proceeding to review a penalty imposed under paragraph (1), the 
Commission, after notice and opportunity for hearing (which 
hearing may consist solely of the record before the ERO and 
opportunity for the presentation of supporting reasons to 
affirm, modify, or set aside the penalty), shall by order 
affirm, set aside, reinstate, or modify the penalty, and, if 
appropriate, remand to the ERO for further proceedings. The 
Commission shall implement expedited procedures for such 
hearings.
    ``(3) On its own motion or upon complaint, the Commission 
may order compliance with a reliability standard and may impose 
a penalty against a user or owner or operator of the bulk-power 
system if the Commission finds, after notice and opportunity 
for a hearing, that the user or owner or operator of the bulk-
power system has engaged or is about to engage in any acts or 
practices that constitute or will constitute a violation of a 
reliability standard.
    ``(4) The Commission shall issue regulations authorizing 
the ERO to enter into an agreement to delegate authority to a 
regional entity for the purpose of proposing reliability 
standards to the ERO and enforcing reliability standards under 
paragraph (1) if--
            ``(A) the regional entity is governed by--
                    ``(i) an independent board;
                    ``(ii) a balanced stakeholder board; or
                    ``(iii) a combination independent and 
                balanced stakeholder board.
            ``(B) the regional entity otherwise satisfies the 
        provisions of subsection (c)(1) and (2); and
            ``(C) the agreement promotes effective and 
        efficient administration of bulk-power system 
        reliability.
The Commission may modify such delegation. The ERO and the 
Commission shall rebuttably presume that a proposal for 
delegation to a regional entity organized on an 
Interconnection-wide basis promotes effective and efficient 
administration of bulk-power system reliability and should be 
approved. Such regulation may provide that the Commission may 
assign the ERO's authority to enforce reliability standards 
under paragraph (1) directly to a regional entity consistent 
with the requirements of this paragraph.
    ``(5) The Commission may take such action as is necessary 
or appropriate against the ERO or a regional entity to ensure 
compliance with a reliability standard or any Commission order 
affecting the ERO or a regional entity.
    ``(6) Any penalty imposed under this section shall bear a 
reasonable relation to the seriousness of the violation and 
shall take into consideration the efforts of such user, owner, 
or operator to remedy the violation in a timely manner.
    ``(f) Changes in Electric Reliability Organization Rules.--
The Electric Reliability Organization shall file with the 
Commission for approval any proposed rule or proposed rule 
change, accompanied by an explanation of its basis and purpose. 
The Commission, upon its own motion or complaint, may propose a 
change to the rules of the ERO. A proposed rule or proposed 
rule change shall take effect upon a finding by the Commission, 
after notice and opportunity for comment, that the change is 
just, reasonable, not unduly discriminatory or preferential, is 
in the public interest, and satisfies the requirements of 
subsection (c).
    ``(g) Reliability Reports.--The ERO shall conduct periodic 
assessments of the reliability and adequacy of the bulk-power 
system in North America.
    ``(h) Coordination With Canada and Mexico.--The President 
is urged to negotiate international agreements with the 
governments of Canada and Mexico to provide for effective 
compliance with reliability standards and the effectiveness of 
the ERO in the United States and Canada or Mexico.
    ``(i) Savings Provisions.--(1) The ERO shall have authority 
to develop and enforce compliance with reliability standards 
for only the bulk-power system.
    ``(2) This section does not authorize the ERO or the 
Commission to order the construction of additional generation 
or transmission capacity or to set and enforce compliance with 
standards for adequacy or safety of electric facilities or 
services.
    ``(3) Nothing in this section shall be construed to preempt 
any authority of any State to take action to ensure the safety, 
adequacy, and reliability of electric service within that 
State, as long as such action is not inconsistent with any 
reliability standard.
    ``(4) Within 90 days of the application of the Electric 
Reliability Organization or other affected party, and after 
notice and opportunity for comment, the Commission shall issue 
a final order determining whether a State action is 
inconsistent with a reliability standard, taking into 
consideration any recommendation of the ERO.
    ``(5) The Commission, after consultation with the ERO and 
the State taking action, may stay the effectiveness of any 
State action, pending the Commission's issuance of a final 
order.
    ``(j) Regional Advisory Bodies.--The Commission shall 
establish a regional advisory body on the petition of at least 
\2/3\ of the States within a region that have more than \1/2\ 
of their electric load served within the region. A regional 
advisory body shall be composed of 1 member from each 
participating State in the region, appointed by the Governor of 
each State, and may include representatives of agencies, 
States, and provinces outside the United States. A regional 
advisory body may provide advice to the Electric Reliability 
Organization, a regional entity, or the Commission regarding 
the governance of an existing or proposed regional entity 
within the same region, whether a standard proposed to apply 
within the region is just, reasonable, not unduly 
discriminatory or preferential, and in the public interest, 
whether fees proposed to be assessed within the region are 
just, reasonable, not unduly discriminatory or preferential, 
and in the public interest and any other responsibilities 
requested by the Commission. The Commission may give deference 
to the advice of any such regional advisory body if that body 
is organized on an Interconnection-wide basis.
    ``(k) Alaska and Hawaii.--The provisions of this section do 
not apply to Alaska or Hawaii.''.
    (b) Status of ERO.--The Electric Reliability Organization 
certified by the Federal Energy Regulatory Commission under 
section 215(c) of the Federal Power Act and any regional entity 
delegated enforcement authority pursuant to section 215(e)(4) 
of that Act are not departments, agencies, or instrumentalities 
of the United States Government.

         Subtitle B--Transmission Infrastructure Modernization

SEC. 1221. SITING OF INTERSTATE ELECTRIC TRANSMISSION FACILITIES.

    (a) Amendment of Federal Power Act.--Part II of the Federal 
Power Act is amended by adding at the end the following:

``SEC. 216. SITING OF INTERSTATE ELECTRIC TRANSMISSION FACILITIES.

    ``(a) Designation of National Interest Electric 
Transmission Corridors.--
            ``(1) Transmission congestion study.--Within 1 year 
        after the enactment of this section, and every 3 years 
        thereafter, the Secretary of Energy, in consultation 
        with affected States, shall conduct a study of electric 
        transmission congestion. After considering alternatives 
        and recommendations from interested parties, including 
        an opportunity for comment from affected States, the 
        Secretary shall issue a report, based on such study, 
        which may designate any geographic area experiencing 
        electric energy transmission capacity constraints or 
        congestion that adversely affects consumers as a 
        national interest electric transmission corridor. The 
        Secretary shall conduct the study and issue the report 
        in consultation with any appropriate regional entity 
        referenced in section 215 of this Act.
            ``(2) Considerations.--In determining whether to 
        designate a national interest electric transmission 
        corridor referred to in paragraph (1) under this 
        section, the Secretary may consider whether--
                    ``(A) the economic vitality and development 
                of the corridor, or the end markets served by 
                the corridor, may be constrained by lack of 
                adequate or reasonably priced electricity;
                    ``(B)(i) economic growth in the corridor, 
                or the end markets served by the corridor, may 
                be jeopardized by reliance on limited sources 
                of energy; and
                    ``(ii) a diversification of supply is 
                warranted;
                    ``(C) the energy independence of the United 
                States would be served by the designation;
                    ``(D) the designation would be in the 
                interest of national energy policy; and
                    ``(E) the designation would enhance 
                national defense and homeland security.
    ``(b) Construction Permit.--Except as provided in 
subsection (i), the Commission is authorized, after notice and 
an opportunity for hearing, to issue a permit or permits for 
the construction or modification of electric transmission 
facilities in a national interest electric transmission 
corridor designated by the Secretary under subsection (a) if 
the Commission finds that--
            ``(1)(A) a State in which the transmission 
        facilities are to be constructed or modified is without 
        authority to--
                    ``(i) approve the siting of the facilities; 
                or
                    ``(ii) consider the interstate benefits 
                expected to be achieved by the proposed 
                construction or modification of transmission 
                facilities in the State;
            ``(B) the applicant for a permit is a transmitting 
        utility under this Act but does not qualify to apply 
        for a permit or siting approval for the proposed 
        project in a State because the applicant does not serve 
        end-use customers in the State; or
            ``(C) a State commission or other entity that has 
        authority to approve the siting of the facilities has--
                    ``(i) withheld approval for more than 1 
                year after the filing of an application 
                pursuant to applicable law seeking approval or 
                1 year after the designation of the relevant 
                national interest electric transmission 
                corridor, whichever is later; or
                    ``(ii) conditioned its approval in such a 
                manner that the proposed construction or 
                modification will not significantly reduce 
                transmission congestion in interstate commerce 
                or is not economically feasible;
            ``(2) the facilities to be authorized by the permit 
        will be used for the transmission of electric energy in 
        interstate commerce;
            ``(3) the proposed construction or modification is 
        consistent with the public interest;
            ``(4) the proposed construction or modification 
        will significantly reduce transmission congestion in 
        interstate commerce and protects or benefits consumers; 
        and
            ``(5) the proposed construction or modification is 
        consistent with sound national energy policy and will 
        enhance energy independence.
    ``(c) Permit Applications.--Permit applications under 
subsection (b) shall be made in writing to the Commission. The 
Commission shall issue rules setting forth the form of the 
application, the information to be contained in the 
application, and the manner of service of notice of the permit 
application upon interested persons.
    ``(d) Comments.--In any proceeding before the Commission 
under subsection (b), the Commission shall afford each State in 
which a transmission facility covered by the permit is or will 
be located, each affected Federal agency and Indian tribe, 
private property owners, and other interested persons, a 
reasonable opportunity to present their views and 
recommendations with respect to the need for and impact of a 
facility covered by the permit.
    ``(e) Rights-of-Way.--In the case of a permit under 
subsection (b) for electric transmission facilities to be 
located on property other than property owned by the United 
States or a State, if the permit holder cannot acquire by 
contract, or is unable to agree with the owner of the property 
to the compensation to be paid for, the necessary right-of-way 
to construct or modify such transmission facilities, the permit 
holder may acquire the right-of-way by the exercise of the 
right of eminent domain in the district court of the United 
States for the district in which the property concerned is 
located, or in the appropriate court of the State in which the 
property is located. The practice and procedure in any action 
or proceeding for that purpose in the district court of the 
United States shall conform as nearly as may be with the 
practice and procedure in similar action or proceeding in the 
courts of the State where the property is situated.
    ``(f) State Law.--Nothing in this section shall preclude 
any person from constructing or modifying any transmission 
facility pursuant to State law.
    ``(g) Compensation.--Any exercise of eminent domain 
authority pursuant to this section shall be considered a taking 
of private property for which just compensation is due. Just 
compensation shall be an amount equal to the full fair market 
value of the property taken on the date of the exercise of 
eminent domain authority, except that the compensation shall 
exceed fair market value if necessary to make the landowner 
whole for decreases in the value of any portion of the land not 
subject to eminent domain. Any parcel of land acquired by 
eminent domain under this subsection shall be transferred back 
to the owner from whom it was acquired (or his heirs or 
assigns) if the land is not used for the construction or 
modification of electric transmission facilities within a 
reasonable period of time after the acquisition. Other than 
construction, modification, operation, or maintenance of 
electric transmission facilities and related facilities, 
property acquired under subsection (e) may not be used for any 
purpose (including use for any heritage area, recreational 
trail, or park) without the consent of the owner of the parcel 
from whom the property was acquired (or the owner's heirs or 
assigns).
    ``(h) Coordination of Federal Authorizations for 
Transmission and Distribution Facilities.--
            ``(1) Lead agency.--If an applicant, or prospective 
        applicant, for a Federal authorization related to an 
        electric transmission or distribution facility so 
        requests, the Department of Energy (DOE) shall act as 
        the lead agency for purposes of coordinating all 
        applicable Federal authorizations and related 
        environmental reviews of the facility. For purposes of 
        this subsection, the term `Federal authorization' means 
        any authorization required under Federal law in order 
        to site a transmission or distribution facility, 
        including but not limited to such permits, special use 
        authorizations, certifications, opinions, or other 
        approvals as may be required, whether issued by a 
        Federal or a State agency. To the maximum extent 
        practicable under applicable Federal law, the Secretary 
        of Energy shall coordinate this Federal authorization 
        and review process with any Indian tribes, multi-State 
        entities, and State agencies that are responsible for 
        conducting any separate permitting and environmental 
        reviews of the facility, to ensure timely and efficient 
        review and permit decisions.
            ``(2) Authority to set deadlines.--As lead agency, 
        the Department of Energy, in consultation with agencies 
        responsible for Federal authorizations and, as 
        appropriate, with Indian tribes, multi-State entities, 
        and State agencies that are willing to coordinate their 
        own separate permitting and environmental reviews with 
        the Federal authorization and environmental reviews, 
        shall establish prompt and binding intermediate 
        milestones and ultimate deadlines for the review of, 
        and Federal authorization decisions relating to, the 
        proposed facility. The Secretary of Energy shall ensure 
        that once an application has been submitted with such 
        data as the Secretary considers necessary, all permit 
        decisions and related environmental reviews under all 
        applicable Federal laws shall be completed within 1 
        year or, if a requirement of another provision of 
        Federal law makes this impossible, as soon thereafter 
        as is practicable. The Secretary of Energy also shall 
        provide an expeditious pre-application mechanism for 
        prospective applicants to confer with the agencies 
        involved to have each such agency determine and 
        communicate to the prospective applicant within 60 days 
        of when the prospective applicant submits a request for 
        such information concerning--
                    ``(A) the likelihood of approval for a 
                potential facility; and
                    ``(B) key issues of concern to the agencies 
                and public.
            ``(3) Consolidated environmental review and record 
        of decision.--As lead agency head, the Secretary of 
        Energy, in consultation with the affected agencies, 
        shall prepare a single environmental review document, 
        which shall be used as the basis for all decisions on 
        the proposed project under Federal law. The document 
        may be an environmental assessment or environmental 
        impact statement under the National Environmental 
        Policy Act of 1969 if warranted, or such other form of 
        analysis as may be warranted. The Secretary of Energy 
        and the heads of other agencies shall streamline the 
        review and permitting of transmission and distribution 
        facilities within corridors designated under section 
        503 of the Federal Land Policy and Management Act (43 
        U.S.C. 1763) by fully taking into account prior 
        analyses and decisions relating to the corridors. Such 
        document shall include consideration by the relevant 
        agencies of any applicable criteria or other matters as 
        required under applicable laws.
            ``(4) Appeals.--In the event that any agency has 
        denied a Federal authorization required for a 
        transmission or distribution facility, or has failed to 
        act by the deadline established by the Secretary 
        pursuant to this section for deciding whether to issue 
        the authorization, the applicant or any State in which 
        the facility would be located may file an appeal with 
        the Secretary, who shall, in consultation with the 
        affected agency, review the denial or take action on 
        the pending application. Based on the overall record 
        and in consultation with the affected agency, the 
        Secretary may then either issue the necessary 
        authorization with any appropriate conditions, or deny 
        the application. The Secretary shall issue a decision 
        within 90 days of the filing of the appeal. In making a 
        decision under this paragraph, the Secretary shall 
        comply with applicable requirements of Federal law, 
        including any requirements of the Endangered Species 
        Act, the Clean Water Act, the National Forest 
        Management Act, the National Environmental Policy Act 
        of 1969, and the Federal Land Policy and Management 
        Act.
            ``(5) Conforming regulations and memoranda of 
        understanding.--Not later than 18 months after the date 
        of enactment of this section, the Secretary of Energy 
        shall issue any regulations necessary to implement this 
        subsection. Not later than 1 year after the date of 
        enactment of this section, the Secretary and the heads 
        of all Federal agencies with authority to issue Federal 
        authorizations shall enter into Memoranda of 
        Understanding to ensure the timely and coordinated 
        review and permitting of electricity transmission and 
        distribution facilities. The head of each Federal 
        agency with authority to issue a Federal authorization 
        shall designate a senior official responsible for, and 
        dedicate sufficient other staff and resources to 
        ensure, full implementation of the DOE regulations and 
        any Memoranda. Interested Indian tribes, multi-State 
        entities, and State agencies may enter such Memoranda 
        of Understanding.
            ``(6) Duration and Renewal.--Each Federal land use 
        authorization for an electricity transmission or 
        distribution facility shall be issued--
                    ``(A) for a duration, as determined by the 
                Secretary of Energy, commensurate with the 
                anticipated use of the facility, and
                    ``(B) with appropriate authority to manage 
                the right-of-way for reliability and 
                environmental protection.
        Upon the expiration of any such authorization 
        (including an authorization issued prior to enactment 
        of this section),the authorization shall be reviewed 
for renewal taking fully into account reliance on such electricity 
infrastructure, recognizing its importance for public health, safety 
and economic welfare and as a legitimate use of Federal lands.
            ``(7) Maintaining and enhancing the transmission 
        infrastructure.--In exercising the responsibilities 
        under this section, the Secretary of Energy shall 
        consult regularly with the Federal Energy Regulatory 
        Commission (FERC), FERC-approved electric reliability 
        organizations (including related regional entities), 
        and FERC-approved Regional Transmission Organizations 
        and Independent System Operators.
    ``(i) Interstate Compacts.--The consent of Congress is 
hereby given for 3 or more contiguous States to enter into an 
interstate compact, subject to approval by Congress, 
establishing regional transmission siting agencies to 
facilitate siting of future electric energy transmission 
facilities within such States and to carry out the electric 
energy transmission siting responsibilities of such States. The 
Secretary of Energy may provide technical assistance to 
regional transmission siting agencies established under this 
subsection. Such regional transmission siting agencies shall 
have the authority to review, certify, and permit siting of 
transmission facilities, including facilities in national 
interest electric transmission corridors (other than facilities 
on property owned by the United States). The Commission shall 
have no authority to issue a permit for the construction or 
modification of electric transmission facilities within a State 
that is a party to a compact, unless the members of a compact 
are in disagreement and the Secretary makes, after notice and 
an opportunity for a hearing, the finding described in section 
(b)(1)(C).
    ``(j) Savings Clause.--Nothing in this section shall be 
construed to affect any requirement of the environmental laws 
of the United States, including, but not limited to, the 
National Environmental Policy Act of 1969. Subsection (h)(4) of 
this section shall not apply to any Congressionally-designated 
components of the National Wilderness Preservation System, the 
National Wild and Scenic Rivers System, or the National Park 
system (including National Monuments therein).
    ``(k) ERCOT.--This section shall not apply within the area 
referred to in section 212(k)(2)(A).''.
    (b) Reports to Congress on Corridors and Rights of Way on 
Federal Lands.--The Secretary of the Interior, the Secretary of 
Energy, the Secretary of Agriculture, and the Chairman of the 
Council on Environmental Quality shall, within 90 days of the 
date of enactment of this subsection, submit a joint report to 
Congress identifying each of the following:
            (1) All existing designated transmission and 
        distribution corridors on Federal land and the status 
        of work related to proposed transmission and 
        distribution corridor designations under Title V of the 
        Federal Land Policy and Management Act (43 U.S.C. 1761 
        et. seq.), the schedule for completing such work, any 
        impediments to completing the work, and steps that 
        Congress could take to expedite the process.
            (2) The number of pending applications to locate 
        transmission and distribution facilities on Federal 
        lands, key information relating to each such facility, 
        how long each application has been pending, the 
        schedule for issuing a timely decision as to each 
        facility, and progress in incorporating existing and 
        new such rights-of-way into relevant land use and 
        resource management plans or their equivalent.
            (3) The number of existing transmission and 
        distribution rights-of-way on Federal lands that will 
        come up for renewal within the following 5-, 10-, and 
        15-year periods, and a description of how the 
        Secretaries plan to manage such renewals.

SEC. 1222. THIRD-PARTY FINANCE.

    (a) Existing Facilities.--The Secretary of Energy 
(hereinafter in this section referred to as the ``Secretary''), 
acting through the Administrator of the Western Area Power 
Administration (hereinafter in this section referred to as 
``WAPA''), or through the Administrator of the Southwestern 
Power Administration (hereinafter in this section referred to 
as ``SWPA''), or both, may design, develop, construct, operate, 
maintain, or own, or participate with other entities in 
designing, developing, constructing, operating, maintaining, or 
owning, an electric power transmission facility and related 
facilities (``Project'') needed to upgrade existing 
transmission facilities owned by SWPA or WAPA if the Secretary 
of Energy, in consultation with the applicable Administrator, 
determines that the proposed Project--
            (1)(A) is located in a national interest electric 
        transmission corridor designated under section 216(a) 
        of the Federal Power Act and will reduce congestion of 
        electric transmission in interstate commerce; or
            (B) is necessary to accommodate an actual or 
        projected increase in demand for electric transmission 
        capacity;
            (2) is consistent with--
                    (A) transmission needs identified, in a 
                transmission expansion plan or otherwise, by 
                the appropriate Regional Transmission 
                Organization or Independent System Operator (as 
                defined in the Federal Power Act), if any, or 
                approved regional reliability organization; and
                    (B) efficient and reliable operation of the 
                transmission grid; and
            (3) would be operated in conformance with prudent 
        utility practice.
    (b) New Facilities.--The Secretary, acting through WAPA or 
SWPA, or both, may design, develop, construct, operate, 
maintain, or own, or participate with other entities in 
designing, developing, constructing, operating, maintaining, or 
owning, a new electric power transmission facility and related 
facilities (``Project'') located within any State in which WAPA 
or SWPA operates if the Secretary, in consultation with the 
applicable Administrator, determines that the proposed 
Project--
            (1)(A) is located in an area designated under 
        section 216(a) of the Federal Power Act and will reduce 
        congestion of electric transmission in interstate 
        commerce; or
            (B) is necessary to accommodate an actual or 
        projected increase in demand for electric transmission 
        capacity;
            (2) is consistent with--
                    (A) transmission needs identified, in a 
                transmission expansion plan or otherwise, by 
                the appropriate Regional Transmission 
                Organization or Independent System Operator, if 
                any, or approved regional reliability 
                organization; and
                    (B) efficient and reliable operation of the 
                transmission grid;
            (3) will be operated in conformance with prudent 
        utility practice;
            (4) will be operated by, or in conformance with the 
        rules of, the appropriate (A) Regional Transmission 
        Organization or Independent System Operator, if any, or 
        (B) if such an organization does not exist, regional 
        reliability organization; and
            (5) will not duplicate the functions of existing 
        transmission facilities or proposed facilities which 
        are the subject of ongoing or approved siting and 
        related permitting proceedings.
    (c) Other Funds.--
            (1) In general.--In carrying out a Project under 
        subsection (a) or (b), the Secretary may accept and use 
        funds contributed by another entity for the purpose of 
        carrying out the Project.
            (2) Availability.--The contributed funds shall be 
        available for expenditure for the purpose of carrying 
        out the Project--
                    (A) without fiscal year limitation; and
                    (B) as if the funds had been appropriated 
                specifically for that Project.
            (3) Allocation of costs.--In carrying out a Project 
        under subsection (a) or (b), any costs of the Project 
        not paid for by contributions from another entity shall 
        be collected through rates charged to customers using 
        the new transmission capability provided by the Project 
        and allocated equitably among these project 
        beneficiaries using the new transmission capability.
    (d) Relationship to Other Laws.--Nothing in this section 
affects any requirement of--
            (1) any Federal environmental law, including the 
        National Environmental Policy Act of 1969 (42 U.S.C. 
        4321 et seq.);
            (2) any Federal or State law relating to the siting 
        of energy facilities; or
            (3) any existing authorizing statutes.
    (e) Savings Clause.--Nothing in this section shall 
constrain or restrict an Administrator in the utilization of 
other authority delegated to the Administrator of WAPA or SWPA.
    (f) Secretarial Determinations.--Any determination made 
pursuant to subsections (a) or (b) shall be based on findings 
by the Secretary using the best available data.
    (g) Maximum Funding Amount.--The Secretary shall not accept 
and use more than $100,000,000 under subsection (c)(1) for the 
period encompassing fiscal years 2004 through 2013.

SEC. 1223. TRANSMISSION SYSTEM MONITORING.

    Within 6 months after the date of enactment of this Act, 
the Secretary of Energy and the Federal Energy Regulatory 
Commission shall study and report to Congress on the steps 
which must be taken to establish a system to make available to 
all transmission system owners and Regional Transmission 
Organizations (as defined in the Federal Power Act) within the 
Eastern and Western Interconnections real-time information on 
the functional status of all transmission lines within such 
Interconnections. In such study, the Commission shall assess 
technical means for implementing such transmission information 
system and identify the steps the Commission or Congress must 
take to require the implementation of such system.

SEC. 1224. ADVANCED TRANSMISSION TECHNOLOGIES.

    (a) Authority.--The Federal Energy Regulatory Commission, 
in the exercise of its authorities under the Federal Power Act 
and the Public Utility Regulatory Policies Act of 1978, shall 
encourage the deployment of advanced transmission technologies.
    (b) Definition.--For the purposes of this section, the term 
``advanced transmission technologies'' means technologies that 
increase the capacity, efficiency, or reliability of existing 
or new transmission facilities, including, but not limited to--
            (1) high-temperature lines (including 
        superconducting cables);
            (2) underground cables;
            (3) advanced conductor technology (including 
        advanced composite conductors, high-temperature low-sag 
        conductors, and fiber optic temperature sensing 
        conductors);
            (4) high-capacity ceramic electric wire, 
        connectors, and insulators;
            (5) optimized transmission line configurations 
        (including multiple phased transmission lines);
            (6) modular equipment;
            (7) wireless power transmission;
            (8) ultra-high voltage lines;
            (9) high-voltage DC technology;
            (10) flexible AC transmission systems;
            (11) energy storage devices (including pumped 
        hydro, compressed air, superconducting magnetic energy 
        storage, flywheels, and batteries);
            (12) controllable load;
            (13) distributed generation (including PV, fuel 
        cells, microturbines);
            (14) enhanced power device monitoring;
            (15) direct system state sensors;
            (16) fiber optic technologies;
            (17) power electronics and related software 
        (including real time monitoring and analytical 
        software); and
            (18) any other technologies the Commission 
        considers appropriate.
    (c) Obsolete or Impracticable Technologies.--The Commission 
is authorized to cease encouraging the deployment of any 
technology described in this section on a finding that such 
technology has been rendered obsolete or otherwise 
impracticable to deploy.

SEC. 1225. ELECTRIC TRANSMISSION AND DISTRIBUTION PROGRAMS.

    (a) Electric Transmission and Distribution Program.--The 
Secretary of Energy (hereinafter in this section referred to as 
the ``Secretary'') acting through the Director of the Office of 
Electric Transmission and Distribution shall establish a 
comprehensive research, development, demonstration and 
commercial application program to promote improved reliability 
and efficiency of electrical transmission and distribution 
systems. This program shall include--
            (1) advanced energy delivery and storage 
        technologies, materials, and systems, including new 
        transmission technologies, such as flexible alternating 
        current transmission systems, composite conductor 
        materials and other technologies that enhance 
        reliability, operational flexibility, or power-carrying 
        capability;
            (2) advanced grid reliability and efficiency 
        technology development;
            (3) technologies contributing to significant load 
        reductions;
            (4) advanced metering, load management, and control 
        technologies;
            (5) technologies to enhance existing grid 
        components;
            (6) the development and use of high-temperature 
        superconductors to--
                    (A) enhance the reliability, operational 
                flexibility, or power-carrying capability of 
                electric transmission or distribution systems; 
                or
                    (B) increase the efficiency of electric 
                energy generation, transmission, distribution, 
                or storage systems;
            (7) integration of power systems, including systems 
        to deliver high-quality electric power, electric power 
        reliability, and combined heat and power;
            (8) supply of electricity to the power grid by 
        small scale, distributed and residential-based power 
        generators;
            (9) the development and use of advanced grid 
        design, operation and planning tools;
            (10) any other infrastructure technologies, as 
        appropriate; and
            (11) technology transfer and education.
    (b) Program Plan.--Not later than 1 year after the date of 
the enactment of this legislation, the Secretary, in 
consultation with other appropriate Federal agencies, shall 
prepare and transmit to Congress a 5-year program plan to guide 
activities under this section. In preparing the program plan, 
the Secretary may consult with utilities, energy services 
providers, manufacturers, institutions of higher education, 
other appropriate State and local agencies, environmental 
organizations, professional and technical societies, and any 
other persons the Secretary considers appropriate.
    (c) Implementation.--The Secretary shall consider 
implementing this program using a consortium of industry, 
university and national laboratory participants.
    (d) Report.--Not later than 2 years after the transmittal 
of the plan under subsection (b), the Secretary shall transmit 
a report to Congress describing the progress made under this 
section and identifying any additional resources needed to 
continue the development and commercial application of 
transmission and distribution infrastructure technologies.
    (e) Power Delivery Research Initiative.--
            (1) In general.--The Secretary shall establish a 
        research, development, demonstration, and commercial 
        application initiative specifically focused on power 
        delivery utilizing components incorporating high 
        temperature superconductivity.
            (2) Goals.--The goals of this initiative shall be 
        to--
                    (A) establish facilities to develop high 
                temperature superconductivity power 
                applications in partnership with manufacturers 
                and utilities;
                    (B) provide technical leadership for 
                establishing reliability for high temperature 
                superconductivity power applications including 
                suitable modeling and analysis;
                    (C) facilitate commercial transition toward 
                direct current power transmission, storage, and 
                use for high power systems utilizing high 
                temperature superconductivity; and
                    (D) facilitate the integration of very low 
                impedance high temperature superconducting 
                wires and cables in existing electric networks 
                to improve system performance, power flow 
                control and reliability.
            (3) Requirements.--The initiative shall include--
                    (A) feasibility analysis, planning, 
                research, and design to construct 
                demonstrations of superconducting links in high 
                power, direct current and controllable 
                alternating current transmission systems;
                    (B) public-private partnerships to 
                demonstrate deployment of high temperature 
                superconducting cable into testbeds simulating 
                a realistic transmission grid and under varying 
                transmission conditions, including actual grid 
                insertions; and
                    (C) testbeds developed in cooperation with 
                national laboratories, industries, and 
                universities to demonstrate these technologies, 
                prepare the technologies for commercial 
                introduction, and address cost or performance 
                roadblocks to successful commercial use.
            (4) Authorization of appropriations.--For purposes 
        of carrying out this subsection, there are authorized 
        to be appropriated--
                    (A) for fiscal year 2004, $15,000,000;
                    (B) for fiscal year 2005, $20,000,000;
                    (C) for fiscal year 2006, $30,000,000;
                    (D) for fiscal year 2007, $35,000,000; and
                    (E) for fiscal year 2008, $40,000,000.

SEC. 1226. ADVANCED POWER SYSTEM TECHNOLOGY INCENTIVE PROGRAM.

    (a) Program.--The Secretary of Energy is authorized to 
establish an Advanced Power System Technology Incentive Program 
to support the deployment of certain advanced power system 
technologies and to improve and protect certain critical 
governmental, industrial, and commercial processes. Funds 
provided under this section shall be used by the Secretary to 
make incentive payments to eligible owners or operators of 
advanced power system technologies to increase power generation 
through enhanced operational, economic, and environmental 
performance. Payments under this section may only be made upon 
receipt by the Secretary of an incentive payment application 
establishing an applicant as either--
            (1) a qualifying advanced power system technology 
        facility; or
            (2) a qualifying security and assured power 
        facility.
    (b) Incentives.--Subject to availability of funds, a 
payment of 1.8 cents per kilowatt-hour shall be paid to the 
owner or operator of a qualifying advanced power system 
technology facility under this section for electricity 
generated at such facility. An additional 0.7 cents per 
kilowatt-hour shall be paid to the owner or operator of a 
qualifying security and assured power facility for electricity 
generated at such facility. Any facility qualifying under this 
section shall be eligible for an incentive payment for up to, 
but not more than, the first 10,000,000 kilowatt-hours produced 
in any fiscal year.
    (c) Eligibility.--For purposes of this section:
            (1) Qualifying advanced power system technology 
        facility.--The term ``qualifying advanced power system 
        technology facility'' means a facility using an 
        advanced fuel cell, turbine, or hybrid power system or 
        power storage system to generate or store electric 
        energy.
            (2) Qualifying security and assured power 
        facility.--The term ``qualifying security and assured 
        power facility'' means a qualifying advanced power 
        system technology facility determined by the Secretary 
        of Energy, in consultation with the Secretary of 
        Homeland Security, to be in critical need of secure, 
        reliable, rapidly available, high-quality power for 
        critical governmental, industrial, or commercial 
        applications.
    (d) Authorization.--There are authorized to be appropriated 
to the Secretary of Energy for the purposes of this section, 
$10,000,000 for each of the fiscal years 2004 through 2010.

SEC. 1227. OFFICE OF ELECTRIC TRANSMISSION AND DISTRIBUTION.

    (a) Creation of an Office of Electric Transmission and 
Distribution.--Title II of the Department of Energy 
Organization Act (42 U.S.C. 7131 et seq.) (as amended by 
section 502(a) of this Act) is amended by inserting the 
following after section 217, as added by title V of this Act:

``SEC. 218. OFFICE OF ELECTRIC TRANSMISSION AND DISTRIBUTION.

    ``(a) Establishment.--There is established within the 
Department an Office of Electric Transmission and Distribution. 
This Office shall be headed by a Director, subject to the 
authority of the Secretary. The Director shall be appointed by 
the Secretary. The Director shall be compensated at the annual 
rate prescribed for level IV of the Executive Schedule under 
section 5315 of title 5, United States Code.
    ``(b) Director.--The Director shall--
            ``(1) coordinate and develop a comprehensive, 
        multi-year strategy to improve the Nation's electricity 
        transmission and distribution;
            ``(2) implement or, where appropriate, coordinate 
        the implementation of, the recommendations made in the 
        Secretary's May 2002 National Transmission Grid Study;
            ``(3) oversee research, development, and 
        demonstration to support Federal energy policy related 
        to electricity transmission and distribution;
            ``(4) grant authorizations for electricity import 
        and export pursuant to section 202(c), (d), (e), and 
        (f) of the Federal Power Act (16 U.S.C. 824a);
            ``(5) perform other functions, assigned by the 
        Secretary, related to electricity transmission and 
        distribution; and
            ``(6) develop programs for workforce training in 
        power and transmission engineering.''.
    (b) Conforming Amendments.--(1) The table of contents of 
the Department of Energy Organization Act (42 U.S.C. 7101 note) 
is amended by inserting after the item relating to section 217 
the following new item:

``Sec. 218. Office of Electric Transmission and Distribution.''.

    (2) Section 5315 of title 5, United States Code, is amended 
by inserting after the item relating to ``Inspector General, 
Department of Energy.'' the following:
            ``Director, Office of Electric Transmission and 
        Distribution, Department of Energy.''.

            Subtitle C--Transmission Operation Improvements

SEC. 1231. OPEN NONDISCRIMINATORY ACCESS.

    Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is 
amended by inserting after section 211 the following new 
section:

``SEC. 211A. OPEN ACCESS BY UNREGULATED TRANSMITTING UTILITIES.

    ``(a) Transmission Services.--Subject to section 212(h), 
the Commission may, by rule or order, require an unregulated 
transmitting utility to provide transmission services--
            ``(1) at rates that are comparable to those that 
        the unregulated transmitting utility charges itself; 
        and
            ``(2) on terms and conditions (not relating to 
        rates) that are comparable to those under which such 
        unregulated transmitting utility provides transmission 
        services to itself and that are not unduly 
        discriminatory or preferential.
    ``(b) Exemption.--The Commission shall exempt from any rule 
or order under this section any unregulated transmitting 
utility that--
            ``(1) sells no more than 4,000,000 megawatt hours 
        of electricity per year; or
            ``(2) does not own or operate any transmission 
        facilities that are necessary for operating an 
        interconnected transmission system (or any portion 
        thereof); or
            ``(3) meets other criteria the Commission 
        determines to be in the public interest.
    ``(c) Local Distribution Facilities.--The requirements of 
subsection (a) shall not apply to facilities used in local 
distribution.
    ``(d) Exemption Termination.--Whenever the Commission, 
after an evidentiary hearing held upon a complaint and after 
giving consideration to reliability standards established under 
section 215, finds on the basis of a preponderance of the 
evidence that any exemption granted pursuant to subsection (b) 
unreasonably impairs the continued reliability of an 
interconnected transmission system, it shall revoke the 
exemption granted to that transmitting utility.
    ``(e) Application to Unregulated Transmitting Utilities.--
The rate changing procedures applicable to public utilities 
under subsections (c) and (d) of section 205 are applicable to 
unregulated transmitting utilities for purposes of this 
section.
    ``(f) Remand.--In exercising its authority under paragraph 
(1) of subsection (a), the Commission may remand transmission 
rates to an unregulated transmitting utility for review and 
revision where necessary to meet the requirements of subsection 
(a).
    ``(g) Other Requests.--The provision of transmission 
services under subsection (a) does not preclude a request for 
transmission services under section 211.
    ``(h) Limitation.--The Commission may not require a State 
or municipality to take action under this section that would 
violate a private activity bond rule for purposes of section 
141 of the Internal Revenue Code of 1986 (26 U.S.C. 141).
    ``(i) Transfer of Control of Transmitting Facilities.--
Nothing in this section authorizes the Commission to require an 
unregulated transmitting utility to transfer control or 
operational control of its transmitting facilities to an RTO or 
any other Commission-approved independent transmission 
organization designated to provide nondiscriminatory 
transmission access.
    ``(j) Definition.--For purposes of this section, the term 
`unregulated transmitting utility' means an entity that--
            ``(1) owns or operates facilities used for the 
        transmission of electric energy in interstate commerce; 
        and
            ``(2) is an entity described in section 201(f).''.

SEC. 1232. SENSE OF CONGRESS ON REGIONAL TRANSMISSION ORGANIZATIONS.

    It is the sense of Congress that, in order to promote fair, 
open access to electric transmission service, benefit retail 
consumers, facilitate wholesale competition, improve 
efficiencies in transmission grid management, promote grid 
reliability, remove opportunities for unduly discriminatory or 
preferential transmission practices, and provide for the 
efficient development of transmission infrastructure needed to 
meet the growing demands of competitive wholesale power 
markets, all transmitting utilities in interstate commerce 
should voluntarily become members of Regional Transmission 
Organizations as defined in section 3 of the Federal Power Act.

SEC. 1233. REGIONAL TRANSMISSION ORGANIZATION APPLICATIONS PROGRESS 
                    REPORT.

    Not later than 120 days after the date of enactment of this 
section, the Federal Energy Regulatory Commission shall submit 
to Congress a report containing each of the following:
            (1) A list of all regional transmission 
        organization applications filed at the Commission 
        pursuant to subpart F of part 35 of title 18, Code of 
        Federal Regulations (in this section referred to as 
        ``Order No. 2000''), including an identification of 
        each public utility and other entity included within 
        the proposed membership of the regional transmission 
        organization.
            (2) A brief description of the status of each 
        pending regional transmission organization application, 
        including a precise explanation of how each fails to 
        comply with the minimal requirements of Order No. 2000 
        and what steps need to be taken to bring each 
        application into such compliance.
            (3) For any application that has not been finally 
        approved by the Commission, a detailed description of 
        every aspect of the application that the Commission has 
        determined does not conform to the requirements of 
        Order No. 2000.
            (4) For any application that has not been finally 
        approved by the Commission, an explanation by the 
        Commission of why the items described pursuant to 
        paragraph (3) constitute material noncompliance with 
        the requirements of the Commission's Order No. 2000 
        sufficient to justify denial of approval by the 
        Commission.
            (5) For all regional transmission organization 
        applications filed pursuant to the Commission's Order 
        No. 2000, whether finally approved or not--
                    (A) a discussion of that regional 
                transmission organization's efforts to minimize 
                rate seams between itself and--
                            (i) other regional transmission 
                        organizations; and
                            (ii) entities not participating in 
                        a regional transmission organization;
                    (B) a discussion of the impact of such 
                seams on consumers and wholesale competition; 
                and
                    (C) a discussion of minimizing cost-
                shifting on consumers.

SEC. 1234. FEDERAL UTILITY PARTICIPATION IN REGIONAL TRANSMISSION 
                    ORGANIZATIONS.

    (a) Definitions.--For purposes of this section--
            (1) Appropriate federal regulatory authority.--The 
        term ``appropriate Federal regulatory authority'' 
        means--
                    (A) with respect to a Federal power 
                marketing agency (as defined in the Federal 
                Power Act), the Secretary of Energy, except 
                that the Secretary may designate the 
                Administrator of a Federal power marketing 
                agency to act as the appropriate Federal 
                regulatory authority with respect to the 
                transmission system of that Federal power 
                marketing agency; and
                    (B) with respect to the Tennessee Valley 
                Authority, the Board of Directors of the 
                Tennessee Valley Authority.
            (2) Federal utility.--The term ``Federal utility'' 
        means a Federal power marketing agency or the Tennessee 
        Valley Authority.
            (3) Transmission system.--The term ``transmission 
        system'' means electric transmission facilities owned, 
        leased, or contracted for by the United States and 
        operated by a Federal utility.
    (b) Transfer.--The appropriate Federal regulatory authority 
is authorized to enter into a contract, agreement or other 
arrangement transferring control and use of all or part of the 
Federal utility's transmission system to an RTO or ISO (as 
defined in the Federal Power Act), approved by the Federal 
Energy Regulatory Commission. Such contract, agreement or 
arrangement shall include--
            (1) performance standards for operation and use of 
        the transmission system that the head of the Federal 
        utility determines necessary or appropriate, including 
        standards that assure recovery of all the Federal 
        utility's costs and expenses related to the 
        transmission facilities that are the subject of the 
        contract, agreement or other arrangement; consistency 
        with existing contracts and third-party financing 
        arrangements; and consistency with said Federal 
        utility's statutory authorities, obligations, and 
        limitations;
            (2) provisions for monitoring and oversight by the 
        Federal utility of the RTO's or ISO's fulfillment of 
        the terms and conditions of the contract, agreement or 
        other arrangement, including a provision for the 
        resolution of disputes through arbitration or other 
        means with the regional transmission organization or 
        with other participants, notwithstanding the 
        obligations and limitations of any other law regarding 
        arbitration; and
            (3) a provision that allows the Federal utility to 
        withdraw from the RTO or ISO and terminate the 
        contract, agreement or other arrangement in accordance 
        with its terms.
Neither this section, actions taken pursuant to it, nor any 
other transaction of a Federal utility using an RTO or ISO 
shall confer upon the Federal Energy Regulatory Commission 
jurisdiction or authority over the Federal utility's electric 
generation assets, electric capacity or energy that the Federal 
utility is authorized by law to market, or the Federal 
utility's power sales activities.
    (c) Existing Statutory and Other Obligations.--
            (1) System operation requirements.--No statutory 
        provision requiring or authorizing a Federal utility 
totransmit electric power or to construct, operate or maintain its 
transmission system shall be construed to prohibit a transfer of 
control and use of its transmission system pursuant to, and subject to 
all requirements of subsection (b).
            (2) Other obligations.--This subsection shall not 
        be construed to--
                    (A) suspend, or exempt any Federal utility 
                from, any provision of existing Federal law, 
                including but not limited to any requirement or 
                direction relating to the use of the Federal 
                utility's transmission system, environmental 
                protection, fish and wildlife protection, flood 
                control, navigation, water delivery, or 
                recreation; or
                    (B) authorize abrogation of any contract or 
                treaty obligation.
            (3) Repeal.--Section 311 of title III of Appendix B 
        of the Act of October 27, 2000 (P.L. 106-377, section 
        1(a)(2); 114 Stat. 1441, 1441A-80; 16 U.S.C. 824n) is 
        repealed.

SEC. 1235. STANDARD MARKET DESIGN.

    (a) Remand.--The Commission's proposed rulemaking entitled 
``Remedying Undue Discrimination through Open Access 
Transmission Service and Standard Electricity Market Design'' 
(Docket No. RM01-12-000) (``SMD NOPR'') is remanded to the 
Commission for reconsideration. No final rule mandating a 
standard electricity market design pursuant to the proposed 
rulemaking, including any rule or order of general 
applicability within the scope of the proposed rulemaking, may 
be issued before October 31, 2006, or take effect before 
December 31, 2006. Any final rule issued by the Commission 
pursuant to the proposed rulemaking shall be preceded by a 
second notice of proposed rulemaking issued after the date of 
enactment of this Act and an opportunity for public comment.
    (b) Savings Clause.--This section shall not be construed to 
modify or diminish any authority or obligation the Commission 
has under this Act, the Federal Power Act, or other applicable 
law, including, but not limited to, any authority to--
            (1) issue any rule or order (of general or 
        particular applicability) pursuant to any such 
        authority or obligation; or
            (2) act on a filing or filings by 1 or more 
        transmitting utilities for the voluntary formation of a 
        Regional Transmission Organization or Independent 
        System Operator (as defined in the Federal Power Act) 
        (and related market structures or rules) or voluntary 
        modification of an existing Regional Transmission 
        Organization or Independent System Operator (and 
        related market structures or rules).

SEC. 1236. NATIVE LOAD SERVICE OBLIGATION.

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

``SEC. 217. NATIVE LOAD SERVICE OBLIGATION.

    ``(a) Meeting Service Obligations.--(1) Any load-serving 
entity that, as of the date of enactment of this section--
            ``(A) owns generation facilities, markets the 
        output of Federal generation facilities, or holds 
        rights under 1 or more wholesale contracts to purchase 
        electric energy, for the purpose of meeting a service 
        obligation, and
            ``(B) by reason of ownership of transmission 
        facilities, or 1 or more contracts or service 
        agreements for firm transmission service, holds firm 
        transmission rights for delivery of the output of such 
        generation facilities or such purchased energy to meet 
        such service obligation,
is entitled to use such firm transmission rights, or, 
equivalent tradable or financial transmission rights, in order 
to deliver such output or purchased energy, or the output of 
other generating facilities or purchased energy to the extent 
deliverable using such rights, to the extent required to meet 
its service obligation.
    ``(2) To the extent that all or a portion of the service 
obligation covered by such firm transmission rights or 
equivalent tradable or financial transmission rights is 
transferred to another load-serving entity, the successor load-
serving entity shall be entitled to use the firm transmission 
rights or equivalent tradable or financial transmission rights 
associated with the transferred service obligation. Subsequent 
transfers to another load-serving entity, or back to the 
original load-serving entity, shall be entitled to the same 
rights.
    ``(3) The Commission shall exercise its authority under 
this Act in a manner that facilitates the planning and 
expansion of transmission facilities to meet the reasonable 
needs of load-serving entities to satisfy their service 
obligations.
    ``(b) Allocation of Transmission Rights.--Nothing in this 
section shall affect any methodology approved by the Commission 
prior to September 15, 2003, for the allocation of transmission 
rights by an RTO or ISO that has been authorized by the 
Commission to allocate transmission rights.
    ``(c) Certain Transmission Rights.--The Commission may 
exercise authority under this Act to make transmission rights 
not used to meet an obligation covered by subsection (a) 
available to other entities in a manner determined by the 
Commission to be just, reasonable, and not unduly 
discriminatory or preferential.
    ``(d) Obligation To Build.--Nothing in this Act shall 
relieve a load-serving entity from any obligation under State 
or local law to build transmission or distribution facilities 
adequate to meet its service obligations.
    ``(e) Contracts.--Nothing in this section shall provide a 
basis for abrogating any contract or service agreement for firm 
transmission service or rights in effect as of the date of the 
enactment of this subsection.
    ``(f) Water Pumping Facilities.--The Commission shall 
ensure that any entity described in section 201(f) that owns 
transmission facilities used predominately to support its own 
water pumping facilities shall have, with respect to such 
facilities, protections for transmission service comparable to 
those provided to load-serving entities pursuant to this 
section.
    ``(g) ERCOT.--This section shall not apply within the area 
referred to in section 212(k)(2)(A).
    ``(h) Jurisdiction.--This section does not authorize the 
Commission to take any action not otherwise within its 
jurisdiction.
    ``(i) Effect of Exercising Rights.--An entity that lawfully 
exercises rights granted under subsection (a) shall not be 
considered by such action as engaging in undue discrimination 
or preference under this Act.
    ``(j) TVA Area.--For purposes of subsection (a)(1)(B), a 
load-serving entity that is located within the service area of 
the Tennessee Valley Authority and that has a firm wholesale 
power supply contract with the Tennessee Valley Authority shall 
be deemed to hold firm transmission rights for the transmission 
of such power.
    ``(k) Definitions.--For purposes of this section:
            ``(1) The term `distribution utility' means an 
        electric utility that has a service obligation to end-
        users or to a State utility or electric cooperative 
        that, directly or indirectly, through 1 or more 
        additional State utilities or electric cooperatives, 
        provides electric service to end-users.
            ``(2) The term `load-serving entity' means a 
        distribution utility or an electric utility that has a 
        service obligation.
            ``(3) The term `service obligation' means a 
        requirement applicable to, or the exercise of authority 
        granted to, an electric utility under Federal, State or 
        local law or under long-term contracts to provide 
        electric service to end-users or to a distribution 
        utility.
            ``(4) The term `State utility' means a State or any 
        political subdivision of a State, or any agency, 
        authority, or instrumentality of any 1 or more of the 
        foregoing, or a corporation which is wholly owned, 
        directly or indirectly, by any 1 or more of the 
        foregoing, competent to carry on the business of 
        developing, transmitting, utilizing or distributing 
        power.''.

SEC. 1237. STUDY ON THE BENEFITS OF ECONOMIC DISPATCH.

    (a) Study.--The Secretary of Energy, in coordination and 
consultation with the States, shall conduct a study on--
            (1) the procedures currently used by electric 
        utilities to perform economic dispatch;
            (2) identifying possible revisions to those 
        procedures to improve the ability of nonutility 
        generation resources to offer their output for sale for 
        the purpose of inclusion in economic dispatch; and
            (3) the potential benefits to residential, 
        commercial, and industrial electricity consumers 
        nationally and in each State if economic dispatch 
        procedures were revised to improve the ability of 
        nonutility generation resources to offer their output 
        for inclusion in economic dispatch.
    (b) Definition.--The term ``economic dispatch'' when used 
in this section means the operation of generation facilities to 
produce energy at the lowest cost to reliably serve consumers, 
recognizing any operational limits of generation and 
transmission facilities.
    (c) Report to Congress and the States.--Not later than 90 
days after the date of enactment of this Act, and on a yearly 
basis following, the Secretary of Energy shall submit a report 
to Congress and the States on the results of the study 
conducted under subsection (a), including recommendations to 
Congress and the States for any suggested legislative or 
regulatory changes.

                  Subtitle D--Transmission Rate Reform

SEC. 1241. TRANSMISSION INFRASTRUCTURE INVESTMENT.

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

``SEC. 218. TRANSMISSION INFRASTRUCTURE INVESTMENT.

    ``(a) Rulemaking Requirement.--Within 1 year after the 
enactment of this section, the Commission shall establish, by 
rule, incentive-based (including, but not limited to 
performance-based) rate treatments for the transmission of 
electric energy in interstate commerce by public utilities for 
the purpose of benefiting consumers by ensuring reliability and 
reducing the cost of delivered power by reducing transmission 
congestion. Such rule shall--
            ``(1) promote reliable and economically efficient 
        transmission and generation of electricity by promoting 
        capital investment in the enlargement, improvement, 
        maintenance and operation of facilities for the 
        transmission of electric energy in interstate commerce;
            ``(2) provide a return on equity that attracts new 
        investment in transmission facilities (including 
        related transmission technologies);
            ``(3) encourage deployment of transmission 
        technologies and other measures to increase the 
        capacity and efficiency of existing transmission 
        facilities and improve the operation of such 
        facilities; and
            ``(4) allow recovery of all prudently incurred 
        costs necessary to comply with mandatory reliability 
        standards issued pursuant to section 215 of this Act.
The Commission may, from time to time, revise such rule.
    ``(b) Additional Incentives for RTO Participation.--In the 
rule issued under this section, the Commission shall, to the 
extent within its jurisdiction, provide for incentives to each 
transmitting utility or electric utility that joins a Regional 
Transmission Organization or Independent System Operator. 
Incentives provided by the Commission pursuant to such rule 
shall include--
            ``(1) recovery of all prudently incurred costs to 
        develop and participate in any proposed or approved 
        RTO, ISO, or independent transmission company;
            ``(2) recovery of all costs previously approved by 
        a State commission which exercised jurisdiction over 
        the transmission facilities prior to the utility's 
        participation in the RTO or ISO, including costs 
        necessary to honor preexisting transmission service 
        contracts, in a manner which does not reduce the 
        revenues the utility receives for transmission services 
        for a reasonable transition period after the utility 
        joins the RTO or ISO;
            ``(3) recovery as an expense in rates of the costs 
        prudently incurred to conduct transmission planning and 
        reliability activities, including the costs of 
        participating in RTO, ISO and other regional planning 
        activities and design, study and other precertification 
        costs involved in seeking permits and approvals for 
        proposed transmission facilities;
            ``(4) a current return in rates for construction 
        work in progress for transmission facilities and full 
        recovery of prudently incurred costs for constructing 
        transmission facilities;
            ``(5) formula transmission rates; and
            ``(6) a maximum 15-year accelerated depreciation on 
        new transmission facilities for rate treatment 
        purposes.
The Commission shall ensure that any costs recoverable pursuant 
to this subsection may be recovered by such utility through the 
transmission rates charged by such utility or through the 
transmission rates charged by the RTO or ISO that provides 
transmission service to such utility.
    ``(c) Just and Reasonable Rates.--All rates approved under 
the rules adopted pursuant to this section, including any 
revisions to such rules, are subject to the requirement of 
sections 205 and 206 that all rates, charges, terms, and 
conditions be just and reasonable and not unduly discriminatory 
or preferential.''.

SEC. 1242. VOLUNTARY TRANSMISSION PRICING PLANS.

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

``SEC. 219. VOLUNTARY TRANSMISSION PRICING PLANS.

    ``(a) In General.--Any transmission provider, including an 
RTO or ISO, may submit to the Commission a plan or plans under 
section 205 containing the criteria for determining the person 
or persons that will be required to pay for any construction of 
new transmission facilities or expansion, modification or 
upgrade of transmission facilities (in this section referred to 
as `transmission service related expansion') or new generator 
interconnection.
    ``(b) Voluntary Transmission Pricing Plans.--(1) Any plan 
or plans submitted under subsection (a) shall specify the 
method or methods by which costs may be allocated or assigned. 
Such methods may include, but are not limited to:
            ``(A) directly assigned;
            ``(B) participant funded; or
            ``(C) rolled into regional or sub-regional rates.-
    ``(2) FERC shall approve a plan or plans submitted under 
subparagraph (B) of paragraph (1) if such plan or plans--
            ``(A) result in rates that are just and reasonable 
        and not unduly discriminatory or preferential 
        consistent with section 205; and
            ``(B) ensure that the costs of any transmission 
        service related expansion or new generator 
        interconnection not required to meet applicable 
        reliability standards established under section 215 are 
        assigned in a fair manner, meaning that those who 
        benefit from the transmission service related expansion 
        or new generator interconnection pay an appropriate 
        share of the associated costs, provided that--
                    ``(i) costs may not be assigned or 
                allocated to an electric utility if the native 
                load customers of that utility would not have 
                required such transmission service related 
                expansion or new generator interconnection 
                absent the request for transmission service 
                related expansion or new generator 
                interconnection that necessitated the 
                investment;
                    ``(ii) the party requesting such 
                transmission service related expansion or new 
                generator interconnection shall not be required 
                to pay for both--
                            ``(I) the assigned cost of the 
                        upgrade; and
                            ``(II) the difference between--
                                    ``(aa) the embedded cost 
                                paid for transmission services 
                                (including the cost of the 
                                requested upgrade); and
                                    ``(bb) the embedded cost 
                                that would have been paid 
                                absent the upgrade; and
                    ``(iii) the party or parties who pay for 
                facilities necessary for the transmission 
                service related expansion or new generator 
                interconnection receives full compensation for 
                its costs for the participant funded facilities 
                in the form of--
                            ``(I) monetary credit equal to the 
                        cost of the participant funded 
                        facilities (accounting for the time 
                        value of money at the Gross Domestic 
                        Product deflator), which credit shall 
                        be pro-rated in equal installments over 
                        a period of not more than 30 years and 
                        shall not exceed in total the amount of 
                        the initial investment, against the 
                        transmission charges that the funding 
                        entity or its assignee is otherwise 
                        assessed by the transmission provider;
                            ``(II) appropriate financial or 
                        physical rights; or
                            ``(III) any other method of cost 
                        recovery or compensation approved by 
                        the Commission.
    ``(3) A plan submitted under this section shall apply only 
to--
            ``(A) a contract or interconnection agreement 
        executed or filed with the Commission after the date of 
        enactment of this section; or
            ``(B) an interconnection agreement pending 
        rehearing as of November 1, 2003.
    ``(4) Nothing in this section diminishes or alters the 
rights of individual members of an RTO or ISO under this Act.
    ``(5) Nothing in this section shall affect the allocation 
of costs or the cost methodology employed by an RTO or ISO 
authorized by the Commission to allocate costs (including costs 
for transmission service related expansion or new generator 
interconnection) prior to the date of enactment of this 
section.
    ``(6) This section shall not apply within the area referred 
to in section 212(k)(2)(A).
    ``(7) The term `transmission provider' means a public 
utility that owns or operates facilities that provide 
interconnection or transmission service in interstate 
commerce.''.

                    Subtitle E--Amendments to PURPA

SEC. 1251. NET METERING AND ADDITIONAL STANDARDS.

    (a) Adoption of Standards.--Section 111(d) of the Public 
Utility Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) is 
amended by adding at the end the following:
            ``(11) Net metering.--Each electric utility shall 
        make available upon request net metering service to any 
        electric consumer that the electric utility serves. For 
        purposes of this paragraph, the term `net metering 
        service' means service to an electric consumer under 
        which electric energy generated by that electric 
        consumer from an eligible on-site generating facility 
        and delivered to the local distribution facilities may 
        be used to offset electric energy provided by the 
        electric utility to the electric consumer during the 
        applicable billing period.
            ``(12) Fuel sources.--Each electric utility shall 
        develop a plan to minimize dependence on 1 fuel source 
        and to ensure that the electric energy it sells to 
        consumers is generated using a diverse range of fuels 
        and technologies, including renewable technologies.
            ``(13) Fossil fuel generation efficiency.--Each 
        electric utility shall develop and implement a 10-year 
        plan to increase the efficiency of its fossil fuel 
        generation.''.
    (b) Compliance.--
            (1) Time limitations.--Section 112(b) of the Public 
        Utility Regulatory Policies Act of 1978 (16 U.S.C. 
        2622(b)) is amended by adding at the end the following:
    ``(3)(A) Not later than 2 years after the enactment of this 
paragraph, each State regulatory authority (with respect to 
each electric utility for which it has ratemaking authority) 
and each nonregulated electric utility shall commence the 
consideration referred to in section 111, or set a hearing date 
for such consideration, with respect to each standard 
established by paragraphs (11) through (13) of section 111(d).
    ``(B) Not later than 3 years after the date of the 
enactment of this paragraph, each State regulatory authority 
(with respect to each electric utility for which it has 
ratemaking authority), and each nonregulated electric utility, 
shall complete the consideration, and shall make the 
determination, referred to in section 111 with respect to each 
standard established by paragraphs (11) through (13) of section 
111(d).''.
            (2) Failure to comply.--Section 112(c) of the 
        Public Utility Regulatory Policies Act of 1978 (16 
        U.S.C. 2622(c)) is amended by adding at the end the 
        following:

``In the case of each standard established by paragraphs (11) 
through (13) of section 111(d), the reference contained in this 
subsection to the date of enactment of this Act shall be deemed 
to be a reference to the date of enactment of such paragraphs 
(11) through (13).''.
            (3) Prior state actions.--
                    (A) In general.--Section 112 of the Public 
                Utility Regulatory Policies Act of 1978 (16 
                U.S.C. 2622) is amended by adding at the end 
                the following:
    ``(d) Prior State Actions.--Subsections (b) and (c) of this 
section shall not apply to the standards established by 
paragraphs (11) through (13) of section 111(d) in the case of 
any electric utility in a State if, before the enactment of 
this subsection--
            ``(1) the State has implemented for such utility 
        the standard concerned (or a comparable standard);
            ``(2) the State regulatory authority for such State 
        or relevant nonregulated electric utility has conducted 
        a proceeding to consider implementation of the standard 
        concerned (or a comparable standard) for such utility; 
        or
            ``(3) the State legislature has voted on the 
        implementation of such standard (or a comparable 
        standard) for such utility.''.
                    (B) Cross reference.--Section 124 of such 
                Act (16 U.S.C. 2634) is amended by adding the 
                following at the end thereof: ``In the case of 
                each standard established by paragraphs (11) 
                through (13) of section 111(d), the reference 
                contained in this subsection to the date of 
                enactment of this Act shall be deemed to be a 
                reference to the date of enactment of such 
                paragraphs (11) through (13).''.

SEC. 1252. SMART METERING.

    (a) In General.--Section 111(d) of the Public Utilities 
Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) is amended 
by adding at the end the following:
            ``(14) Time-based metering and communications.--
                    ``(A) Not later than 18 months after the 
                date of enactment of this paragraph, each 
                electric utility shall offer each of its 
                customer classes, and provide individual 
                customers upon customer request, a time-based 
                rate schedule under which the rate charged by 
                the electric utility varies during different 
                time periods and reflects the variance, if any, 
                in the utility's costs of generating and 
                purchasing electricity at the wholesale level. 
                The time-based rate schedule shall enable the 
                electric consumer to manage energy use and cost 
                through advanced metering and communications 
                technology.
                    ``(B) The types of time-based rate 
                schedules that may be offered under the 
                schedule referred to in subparagraph (A) 
                include, among others--
                            ``(i) time-of-use pricing whereby 
                        electricity prices are set for a 
                        specific time period on an advance or 
                        forward basis, typically not changing 
                        more often than twice a year, based on 
                        the utility's cost of generating and/or 
                        purchasing such electricity at the 
                        wholesale level for the benefit of the 
                        consumer. Prices paid for energy 
                        consumed during these periods shall be 
                        pre-established and known to consumers 
                        in advance of such consumption, 
                        allowing them to vary their demand and 
                        usage in response to such prices and 
                        manage their energy costs by shifting 
                        usage to a lower cost period or 
                        reducing their consumption overall;
                            ``(ii) critical peak pricing 
                        whereby time-of-use prices are in 
                        effect except for certain peak days, 
                        when prices may reflect the costs of 
                        generating and/or purchasing 
                        electricity at the wholesale level and 
                        when consumers may receive additional 
                        discounts for reducing peak period 
                        energy consumption; and
                            ``(iii) real-time pricing whereby 
                        electricity prices are set for a 
                        specific time period on an advanced or 
                        forward basis, reflecting the utility's 
                        cost of generating and/or purchasing 
                        electricity at the wholesale level, and 
                        may change as often as hourly.
                    ``(C) Each electric utility subject to 
                subparagraph (A) shall provide each customer 
                requesting a time-based rate with a time-based 
                meter capable of enabling the utility and 
                customer to offer and receive such rate, 
                respectively.
                    ``(D) For purposes of implementing this 
                paragraph, any reference contained in this 
                section to the date of enactment of the Public 
                Utility Regulatory Policies Act of 1978 shall 
                be deemed to be a reference to the date of 
                enactment of this paragraph.
                    ``(E) In a State that permits third-party 
                marketers to sell electric energy to retail 
                electric consumers, such consumers shall be 
                entitled to receive the same time-based 
                metering and communications device and service 
                as a retail electric consumer of the electric 
                utility.
                    ``(F) Notwithstanding subsections (b) and 
                (c) of section 112, each State regulatory 
                authority shall, not later than 18 months after 
                the date of enactment of this paragraph conduct 
                an investigation in accordance with section 
                115(i) and issue a decision whether it is 
                appropriate to implement the standards set out 
                in subparagraphs (A) and (C).''.
    (b) State Investigation of Demand Response and Time-Based 
Metering.--Section 115 of the Public Utilities Regulatory 
Policies Act of 1978 (16 U.S.C. 2625) is amended as follows:
            (1) By inserting in subsection (b) after the phrase 
        ``the standard for time-of-day rates established by 
        section 111(d)(3)'' the following: ``and the standard 
        for time-based metering and communications established 
        by section 111(d)(14)''.
            (2) By inserting in subsection (b) after the phrase 
        ``are likely to exceed the metering'' the following: 
        ``and communications''.
            (3) By adding the at the end the following:
    ``(i) Time-based metering and communications.--In making a 
determination with respect to the standard established by 
section 111(d)(14), the investigation requirement of section 
111(d)(14)(F) shall be as follows: Each State regulatory 
authority shall conduct an investigation and issue a decision 
whether or not it is appropriate for electric utilities to 
provide and install time-based meters and communications 
devices for each of their customers which enable such customers 
to participate in time-based pricing rate schedules and other 
demand response programs.''.
    (c) Federal Assistance on Demand Response.--Section 132(a) 
of the Public Utility Regulatory Policies Act of 1978 (16 
U.S.C. 2642(a)) is amended by striking ``and'' at the end of 
paragraph (3), striking the period at the end of paragraph (4) 
and inserting ``; and'', and by adding the following at the end 
thereof:
            ``(5) technologies, techniques, and rate-making 
        methods related to advanced metering and communications 
        and the use of these technologies, techniques and 
        methods in demand response programs.''.
    (d) Federal Guidance.--Section 132 of the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 2642) is amended by 
adding the following at the end thereof:
    ``(d) Demand response.--The Secretary shall be responsible 
for--
            ``(1) educating consumers on the availability, 
        advantages, and benefits of advanced metering and 
        communications technologies, including the funding of 
        demonstration or pilot projects;
            ``(2) working with States, utilities, other energy 
        providers and advanced metering and communications 
        experts to identify and address barriers to the 
        adoption of demand response programs; and
            ``(3) not later than 180 days after the date of 
        enactment of the Energy Policy Act of 2003, providing 
        Congress with a report that identifies and quantifies 
        the national benefits of demand response and makes a 
        recommendation on achieving specific levels of such 
        benefits by January 1, 2005.''.
    (e) Demand Response and Regional Coordination.--
            (1) In general.--It is the policy of the United 
        States to encourage States to coordinate, on a regional 
        basis, State energy policies to provide reliable and 
        affordable demand response services to the public.
            (2) Technical assistance.--The Secretary of Energy 
        shall provide technical assistance to States and 
        regional organizations formed by 2 or more States to 
        assist them in--
                    (A) identifying the areas with the greatest 
                demand response potential;
                    (B) identifying and resolving problems in 
                transmission and distribution networks, 
                including through the use of demand response;
                    (C) developing plans and programs to use 
                demand response to respond to peak demand or 
                emergency needs; and
                    (D) identifying specific measures consumers 
                can take to participate in these demand 
                response programs.
            (3) Report.--Not later than 1 year after the date 
        of enactment of the Energy Policy Act of 2003, the 
        Commission shall prepare and publish an annual report, 
        by appropriate region, that assesses demand response 
        resources, including those available from all consumer 
        classes, and which identifies and reviews--
                    (A) saturation and penetration rate of 
                advanced meters and communications 
                technologies, devices and systems;
                    (B) existing demand response programs and 
                time-based rate programs;
                    (C) the annual resource contribution of 
                demand resources;
                    (D) the potential for demand response as a 
                quantifiable, reliable resource for regional 
                planning purposes; and
                    (E) steps taken to ensure that, in regional 
                transmission planning and operations, demand 
                resources are provided equitable treatment as a 
                quantifiable, reliable resource relative to the 
                resource obligations of any load-serving 
                entity, transmission provider, or transmitting 
                party.
    (f) Federal Encouragement of Demand Response Devices.--It 
is the policy of the United States that time-based pricing and 
other forms of demand response, whereby electricity customers 
are provided with electricity price signals and the ability to 
benefit by responding to them, shall be encouraged, and the 
deployment of such technology and devices that enable 
electricity customers to participate in such pricing and demand 
response systems shall be facilitated. It is further the policy 
of the United States that the benefits of such demand response 
that accrue to those not deploying such technology and devices, 
but who are part of the same regional electricity entity, shall 
be recognized.
    (g) Time Limitations.--Section 112(b) of the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 2622(b)) is amended 
by adding at the end the following:
            ``(4)(A) Not later than 1 year after the enactment 
        of this paragraph, each State regulatory authority 
        (with respect to each electric utility for which it has 
        ratemaking authority) and each nonregulated electric 
        utility shall commence the consideration referred to in 
        section 111, or set a hearing date for such 
        consideration, with respect to the standard established 
        by paragraph (14) of section 111(d).
            ``(B) Not later than 2 years after the date of the 
        enactment of this paragraph, each State regulatory 
        authority (with respect to each electric utility for 
        which it has ratemaking authority), and each 
        nonregulated electric utility, shall complete the 
        consideration, and shall make the determination, 
        referred to in section 111 with respect to the standard 
        established by paragraph (14) of section 111(d).''.
    (h) Failure To Comply.--Section 112(c) of the Public 
Utility Regulatory Policies Act of 1978 (16 U.S.C. 2622(c)) is 
amended by adding at the end the following:

``In the case of the standard established by paragraph (14) of 
section 111(d), the reference contained in this subsection to 
the date of enactment of this Act shall be deemed to be a 
reference to the date of enactment of such paragraph (14).''.
    (i) Prior State Actions Regarding Smart Metering 
Standards.--
            (1) In general.--Section 112 of the Public Utility 
        Regulatory Policies Act of 1978 (16 U.S.C. 2622) is 
        amended by adding at the end the following:
    ``(e) Prior State Actions.--Subsections (b) and (c) of this 
section shall not apply to the standard established by 
paragraph (14) of section 111(d) in the case of any electric 
utility in a State if, before the enactment of this 
subsection--
            ``(1) the State has implemented for such utility 
        the standard concerned (or a comparable standard);
            ``(2) the State regulatory authority for such State 
        or relevant nonregulated electric utility has conducted 
        a proceeding to consider implementation of the standard 
        concerned (or a comparable standard) for such utility 
        within the previous 3 years; or
            ``(3) the State legislature has voted on the 
        implementation of such standard (or a comparable 
        standard) for such utility within the previous 3 
        years.''.
            (2) Cross reference.--Section 124 of such Act (16 
        U.S.C. 2634) is amended by adding the following at the 
        end thereof: ``In the case of the standard established 
        by paragraph (14) of section 111(d), the reference 
        contained in this subsection to the date of enactment 
        of this Act shall be deemed to be a reference to the 
        date of enactment of such paragraph (14).''.

SEC. 1253. COGENERATION AND SMALL POWER PRODUCTION PURCHASE AND SALE 
                    REQUIREMENTS.

    (a) Termination of Mandatory Purchase and Sale 
Requirements.--Section 210 of the Public Utility Regulatory 
Policies Act of 1978 (16 U.S.C. 824a-3) is amended by adding at 
the end the following:
    ``(m) Termination of Mandatory Purchase and Sale 
Requirements.--
            ``(1) Obligation to purchase.--After the date of 
        enactment of this subsection, no electric utility shall 
        be required to enter into a new contract or obligation 
        to purchase electric energy from a qualifying 
        cogeneration facility or a qualifying small power 
        production facility under this section if the 
        Commission finds that the qualifying cogeneration 
        facility or qualifying small power production facility 
        has nondiscriminatory access to--
                    ``(A)(i) independently administered, 
                auction-based day ahead and real time wholesale 
                markets for the sale of electric energy; and 
                (ii) wholesale markets for long-term sales of 
                capacity and electric energy; or
                    ``(B)(i) transmission and interconnection 
                services that are provided by a Commission-
                approved regional transmission entity and 
                administered pursuant to an open access 
                transmission tariff that affords 
                nondiscriminatory treatment to all customers; 
                and (ii) competitive wholesale markets that 
                provide a meaningful opportunity to sell 
                capacity, including long-term and short-term 
                sales, and electric energy, including long-
                term, short-term and real-time sales, to buyers 
                other than the utility to which the qualifying 
                facility is interconnected. In determining 
                whether a meaningful opportunity to sell 
                exists, the Commission shall consider, among 
                other factors, evidence of transactions within 
                the relevant market; or
                    ``(C) wholesale markets for the sale of 
                capacity and electric energy that are, at a 
                minimum, of comparable competitive quality as 
                markets described in subparagraphs (A) and (B).
            ``(2) Revised purchase and sale obligation for new 
        facilities.--(A) After the date of enactment of this 
        subsection, no electric utility shall be required 
        pursuant to this section to enter into a new contract 
        or obligation to purchase from or sell electric energy 
        to a facility that is not an existing qualifying 
        cogeneration facility unless the facility meets the 
        criteria for qualifying cogeneration facilities 
        established by the Commission pursuant to the 
        rulemaking required by subsection (n).
            ``(B) For the purposes of this paragraph, the term 
        `existing qualifying cogeneration facility' means a 
        facility that--
                    ``(i) was a qualifying cogeneration 
                facility on the date of enactment of subsection 
                (m); or
                    ``(ii) had filed with the Commission a 
                notice of self-certification, self 
                recertification or an application for 
                Commission certification under 18 C.F.R. 
                292.207 prior to the date on which the 
                Commission issues the final rule required by 
                subsection (n).
            ``(3) Commission review.--Any electric utility may 
        file an application with the Commission for relief from 
        the mandatory purchase obligation pursuant to this 
        subsection on a service territory-wide basis. Such 
        application shall set forth the factual basis upon 
        which relief is requested and describe why the 
        conditions set forth in subparagraphs (A), (B) or (C) 
        of paragraph (1) of this subsection have been met. 
        After notice, including sufficient notice to 
        potentially affected qualifying cogeneration facilities 
        and qualifying small power production facilities, and 
        an opportunity for comment, the Commission shall make a 
        final determination within 90 days of such application 
        regarding whether the conditions set forth in 
        subparagraphs (A), (B) or (C) of paragraph (1) have 
        been met.
            ``(4) Reinstatement of obligation to purchase.--At 
        any time after the Commission makes a finding under 
        paragraph (3) relieving an electric utility of its 
        obligation to purchase electric energy, a qualifying 
        cogeneration facility, a qualifying small power 
        production facility, a State agency, or any other 
        affected person may apply to the Commission for an 
        order reinstating the electric utility's obligation to 
        purchase electric energy under this section. Such 
        application shall set forth the factual basis upon 
        which the application is based and describe why the 
        conditions set forth in subparagraphs (A), (B) or (C) 
        of paragraph (1) of this subsection are no longer met. 
        After notice, including sufficient notice to 
        potentially affected utilities, and opportunity for 
        comment, the Commission shall issue an order within 90 
        days of such application reinstating the electric 
        utility's obligation to purchase electric energy under 
        this section if the Commission finds that the 
        conditions set forth in subparagraphs (A), (B) or (C) 
        of paragraph (1) which relieved the obligation to 
        purchase, are no longer met.
            ``(5) Obligation to sell.--After the date of 
        enactment of this subsection, no electric utility shall 
        be required to enter into a new contract or obligation 
        to sell electric energy to a qualifying cogeneration 
        facility or a qualifying small power production 
        facility under this section if the Commission finds 
        that--
                    ``(A) competing retail electric suppliers 
                are willing and able to sell and deliver 
                electric energy to the qualifying cogeneration 
                facility or qualifying small power production 
                facility; and
                    ``(B) the electric utility is not required 
                by State law to sell electric energy in its 
                service territory.
            ``(6) No effect on existing rights and remedies.--
        Nothing in this subsection affects the rights or 
        remedies of any party under any contract or obligation, 
        in effect or pending approval before the appropriate 
        State regulatory authority or non-regulated electric 
        utility on the date of enactment of this subsection, to 
        purchase electric energy or capacity from or to sell 
        electric energy or capacity to a qualifying 
        cogeneration facility or qualifying small power 
        production facility under this Act (including the right 
        to recover costs of purchasing electric energy or 
        capacity).
            ``(7) Recovery of costs.--(A) The Commission shall 
        issue and enforce such regulations as are necessary to 
        ensure that an electric utility that purchases electric 
        energy or capacity from a qualifying cogeneration 
        facility or qualifying small power production facility 
        in accordance with any legally enforceable obligation 
        entered into or imposed under this section recovers all 
        prudently incurred costs associated with the purchase.
            ``(B) A regulation under subparagraph (A) shall be 
        enforceable in accordance with the provisions of law 
        applicable to enforcement of regulations under the 
        Federal Power Act (16 U.S.C. 791a et seq.).
    ``(n) Rulemaking for New Qualifying Facilities.--(1)(A) Not 
later than 180 days after the date of enactment of this 
section, the Commission shall issue a rule revising the 
criteria in 18 C.F.R. 292.205 for new qualifying cogeneration 
facilities seeking to sell electric energy pursuant to section 
210 of this Act to ensure--
            ``(i) that the thermal energy output of a new 
        qualifying cogeneration facility is used in a 
        productive and beneficial manner;
            ``(ii) the electrical, thermal, and chemical output 
        of the cogeneration facility is used fundamentally for 
        industrial, commercial, or institutional purposes and 
        is not intended fundamentally for sale to an electric 
        utility, taking into account technological, efficiency, 
        economic, and variable thermal energy requirements, as 
        well as State laws applicable to sales of electric 
        energy from a qualifying facility to its host facility; 
        and
            ``(iii) continuing progress in the development of 
        efficient electric energy generating technology.
    ``(B) The rule issued pursuant to section (n)(1)(A) shall 
be applicable only to facilities that seek to sell electric 
energy pursuant to section 210 of this Act. For all other 
purposes, except as specifically provided in section (m)(2)(A), 
qualifying facility status shall be determined in accordance 
with the rules and regulations of this Act.
    ``(2) Notwithstanding rule revisions under paragraph (1), 
the Commission's criteria for qualifying cogeneration 
facilities in effect prior to the date on which the Commission 
issues the final rule required by paragraph (1) shall continue 
to apply to any cogeneration facility that--
            ``(A) was a qualifying cogeneration facility on the 
        date of enactment of subsection (m), or
            ``(B) had filed with the Commission a notice of 
        self-certification, self-recertification or an 
        application for Commission certification under 18 
        C.F.R. 292.207 prior to the date on which the 
        Commission issues the final rule required by paragraph 
        (1).''.
    (b) Elimination of Ownership Limitations.--
            (1) Qualifying small power production facility.--
        Section 3(17)(C) of the Federal Power Act (16 U.S.C. 
        796(17)(C)) is amended to read as follows:
                    ``(C) `qualifying small power production 
                facility' means a small power production 
                facility that the Commission determines, by 
                rule, meets such requirements (including 
                requirements respecting fuel use, fuel 
                efficiency, and reliability) as the Commission 
                may, by rule, prescribe;''.
            (2) Qualifying cogeneration facility.--Section 
        3(18)(B) of the Federal Power Act (16 U.S.C. 
        796(18)(B)) is amended to read as follows:
                    ``(B) `qualifying cogeneration facility' 
                means a cogeneration facility that the 
                Commission determines, by rule, meets such 
                requirements (including requirements respecting 
                minimum size, fuel use, and fuel efficiency) as 
                the Commission may, by rule, prescribe;''.

                      Subtitle F--Repeal of PUHCA

SEC. 1261. SHORT TITLE.

    This subtitle may be cited as the ``Public Utility Holding 
Company Act of 2003''.

SEC. 1262. DEFINITIONS.

    For purposes of this subtitle:
            (1) Affiliate.--The term ``affiliate'' of a company 
        means any company, 5 percent or more of the outstanding 
        voting securities of which are owned, controlled, or 
        held with power to vote, directly or indirectly, by 
        such company.
            (2) Associate company.--The term ``associate 
        company'' of a company means any company in the same 
        holding company system with such company.
            (3) Commission.--The term ``Commission'' means the 
        Federal Energy Regulatory Commission.
            (4) Company.--The term ``company'' means a 
        corporation, partnership, association, joint stock 
        company, business trust, or any organized group of 
        persons, whether incorporated or not, or a receiver, 
        trustee, or other liquidating agent of any of the 
        foregoing.
            (5) Electric utility company.--The term ``electric 
        utility company'' means any company that owns or 
        operates facilities used for the generation, 
        transmission, or distribution of electric energy for 
        sale.
            (6) Exempt wholesale generator and foreign utility 
        company.--The terms ``exempt wholesale generator'' and 
        ``foreign utility company'' have the same meanings as 
        in sections 32 and 33, respectively, of the Public 
        Utility Holding Company Act of 1935 (15 U.S.C. 79z-5a, 
        79z-5b), as those sections existed on the day before 
        the effective date of this subtitle.
            (7) Gas utility company.--The term ``gas utility 
        company'' means any company that owns or operates 
        facilities used for distribution at retail (other than 
        the distribution only in enclosed portable containers 
        or distribution to tenants or employees of the company 
        operating such facilities for their own use and not for 
        resale) of natural or manufactured gas for heat, light, 
        or power.
            (8) Holding company.--The term ``holding company'' 
        means--
                    (A) any company that directly or indirectly 
                owns, controls, or holds, with power to vote, 
                10 percent or more of the outstanding voting 
                securities of a public-utility company or of a 
                holding company of any public-utility company; 
                and
                    (B) any person, determined by the 
                Commission, after notice and opportunity for 
                hearing, to exercise directly or indirectly 
                (either alone or pursuant to an arrangement or 
                understanding with 1 or more persons) such a 
                controlling influence over the management or 
                policies of any public-utility company or 
                holding company as to make it necessary or 
                appropriate for the rate protection of utility 
                customers with respect to rates that such 
                person be subject to the obligations, duties, 
                and liabilities imposed by this subtitle upon 
                holding companies.
            (9) Holding company system.--The term ``holding 
        company system'' means a holding company, together with 
        its subsidiary companies.
            (10) Jurisdictional rates.--The term 
        ``jurisdictional rates'' means rates accepted or 
        established by the Commission for the transmission of 
        electric energy in interstate commerce, the sale of 
        electric energy at wholesale in interstate commerce, 
        the transportation of natural gas in interstate 
        commerce, and the sale in interstate commerce of 
        natural gas for resale for ultimate public consumption 
        for domestic, commercial, industrial, or any other use.
            (11) Natural gas company.--The term ``natural gas 
        company'' means a person engaged in the transportation 
        of natural gas in interstate commerce or the sale of 
        such gas in interstate commerce for resale.
            (12) Person.--The term ``person'' means an 
        individual or company.
            (13) Public utility.--The term ``public utility'' 
        means any person who owns or operates facilities used 
        for transmission of electric energy in interstate 
        commerce or sales of electric energy at wholesale in 
        interstate commerce.
            (14) Public-utility company.--The term ``public-
        utility company'' means an electric utility company or 
        a gas utility company.
            (15) State commission.--The term ``State 
        commission'' means any commission, board, agency, or 
        officer, by whatever name designated, of a State, 
        municipality, or other political subdivision of a State 
        that, under the laws of such State, has jurisdiction to 
        regulate public utility companies.
            (16) Subsidiary company.--The term ``subsidiary 
        company'' of a holding company means--
                    (A) any company, 10 percent or more of the 
                outstanding voting securities of which are 
                directly or indirectly owned, controlled, or 
                held with power to vote, by such holding 
                company; and
                    (B) any person, the management or policies 
                of which the Commission, after notice and 
                opportunity for hearing, determines to be 
                subject to a controlling influence, directly or 
                indirectly, by such holding company (either 
                alone or pursuant to an arrangement or 
                understanding with 1 or more other persons) so 
                as to make it necessary for the rate protection 
                of utility customers with respect to rates that 
                such person be subject to the obligations, 
                duties, and liabilities imposed by this 
                subtitle upon subsidiary companies of holding 
                companies.
            (17) Voting security.--The term ``voting security'' 
        means any security presently entitling the owner or 
        holder thereof to vote in the direction or management 
        of the affairs of a company.

SEC. 1263. REPEAL OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935.

    The Public Utility Holding Company Act of 1935 (15 U.S.C. 
79 et seq.) is repealed.

SEC. 1264. FEDERAL ACCESS TO BOOKS AND RECORDS.

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

SEC. 1265. STATE ACCESS TO BOOKS AND RECORDS.

    (a) In General.--Upon the written request of a State 
commission having jurisdiction to regulate a public-utility 
company in a holding company system, the holding company or any 
associate company or affiliate thereof, other than such public-
utility company, wherever located, shall produce for inspection 
books, accounts, memoranda, and other records that--
            (1) have been identified in reasonable detail in a 
        proceeding before the State commission;
            (2) the State commission determines are relevant to 
        costs incurred by such public-utility company; and
            (3) are necessary for the effective discharge of 
        the responsibilities of the State commission with 
        respect to such proceeding.
    (b) Limitation.--Subsection (a) does not apply to any 
person that is a holding company solely by reason of ownership 
of 1 or more qualifying facilities under the Public Utility 
Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.).
    (c) Confidentiality of Information.--The production of 
books, accounts, memoranda, and other records under subsection 
(a) shall be subject to such terms and conditions as may be 
necessary and appropriate to safeguard against unwarranted 
disclosure to the public of any trade secrets or sensitive 
commercial information.
    (d) Effect on State Law.--Nothing in this section shall 
preempt applicable State law concerning the provision of books, 
accounts, memoranda, and other records, or in any way limit the 
rights of any State to obtain books, accounts, memoranda, and 
other records under any other Federal law, contract, or 
otherwise.
    (e) Court Jurisdiction.--Any United States district court 
located in the State in which the State commission referred to 
in subsection (a) is located shall have jurisdiction to enforce 
compliance with this section.

SEC. 1266. EXEMPTION AUTHORITY.

    (a) Rulemaking.--Not later than 90 days after the effective 
date of this subtitle, the Commission shall issue a final rule 
to exempt from the requirements of section 1264 (relating to 
Federal access to books and records) any person that is a 
holding company, solely with respect to 1 or more--
            (1) qualifying facilities under the Public Utility 
        Regulatory Policies Act of 1978 (16 U.S.C. 2601 et 
        seq.);
            (2) exempt wholesale generators; or
            (3) foreign utility companies.
    (b) Other Authority.--The Commission shall exempt a person 
or transaction from the requirements of section 1264 (relating 
to Federal access to books and records) if, upon application or 
upon the motion of the Commission--
            (1) the Commission finds that the books, accounts, 
        memoranda, and other records of any person are not 
        relevant to the jurisdictional rates of a public 
        utility or natural gas company; or
            (2) the Commission finds that any class of 
        transactions is not relevant to the jurisdictional 
        rates of a public utility or natural gas company.

SEC. 1267. AFFILIATE TRANSACTIONS.

    (a) Commission Authority Unaffected.--Nothing in this 
subtitle shall limit the authority of the Commission under the 
Federal Power Act (16 U.S.C. 791a et seq.) to require that 
jurisdictional rates are just and reasonable, including the 
ability to deny or approve the pass through of costs, the 
prevention of cross-subsidization, and the issuance of such 
rules and regulations as are necessary or appropriate for the 
protection of utility consumers.
    (b) Recovery of Costs.--Nothing in this subtitle shall 
preclude the Commission or a State commission from exercising 
its jurisdiction under otherwise applicable law to determine 
whether a public-utility company, public utility, or natural 
gas company may recover in rates any costs of an activity 
performed by an associate company, or any costs of goods or 
services acquired by such public-utility company from an 
associate company.

SEC. 1268. APPLICABILITY.

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

SEC. 1269. EFFECT ON OTHER REGULATIONS.

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

SEC. 1270. ENFORCEMENT.

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

SEC. 1271. SAVINGS PROVISIONS.

    (a) In General.--Nothing in this subtitle, or otherwise in 
the Public Utility Holding Company Act of 1935, or rules, 
regulations, or orders thereunder, prohibits a person from 
engaging in or continuing to engage in activities or 
transactions in which it is legally engaged or authorized to 
engage on the date of enactment of this Act, if that person 
continues to comply with the terms (other than an expiration 
date or termination date) of any such authorization, whether by 
rule or by order.
    (b) Effect on Other Commission Authority.--Nothing in this 
subtitle limits the authority of the Commission under the 
Federal Power Act (16 U.S.C. 791a et seq.) or the Natural Gas 
Act (15 U.S.C. 717 et seq.).

SEC. 1272. IMPLEMENTATION.

    Not later than 12 months after the date of enactment of 
this subtitle, the Commission shall--
            (1) issue such regulations as may be necessary or 
        appropriate to implement this subtitle (other than 
        section 1265, relating to State access to books and 
        records); and
            (2) submit to Congress detailed recommendations on 
        technical and conforming amendments to Federal law 
        necessary to carry out this subtitle and the amendments 
        made by this subtitle.

SEC. 1273. TRANSFER OF RESOURCES.

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

SEC. 1274. EFFECTIVE DATE.

    (a) In General.--Except for section 1272 (relating to 
implementation), this subtitle shall take effect 12 months 
after the date of enactment of this subtitle.
    (b) Compliance With Certain Rules.--If the Commission 
approves and makes effective any final rulemaking modifying the 
standards of conduct governing entities that own, operate, or 
control facilities for transmission of electricity in 
interstate commerce or transportation of natural gas in 
interstate commerce prior to the effective date of this 
subtitle, any action taken by a public-utility company or 
utility holding company to comply with the requirements of such 
rulemaking shall not subject such public-utility company or 
utility holding company to any regulatory requirement 
applicable to a holding company under the Public Utility 
Holding Company Act of 1935 (15 U.S.C. 79 et seq.).

SEC. 1275. SERVICE ALLOCATION.

    (a) FERC Review.--In the case of non-power goods or 
administrative or management services provided by an associate 
company organized specifically for the purpose of providing 
such goods or services to any public utility in the same 
holding company system, at the election of the system or a 
State commission having jurisdiction over the public utility, 
the Commission, after the effective date of this subtitle, 
shall review and authorize the allocation of the costs for such 
goods or services to the extent relevant to that associate 
company in order to assure that each allocation is appropriate 
for the protection of investors and consumers of such public 
utility.
    (b) Cost Allocation.--Nothing in this section shall 
preclude the Commission or a State commission from exercising 
its jurisdiction under other applicable law with respect to the 
review or authorization of any costs allocated to a public 
utility in a holding company system located in the affected 
State as a result of the acquisition of non-power goods or 
administrative and management services by such public utility 
from an associate company organized specifically for that 
purpose.
    (c) Rules.--Not later than 6 months after the date of 
enactment of this Act, the Commission shall issue rules (which 
rules shall be effective no earlier than the effective date of 
this subtitle) to exempt from the requirements of this section 
any company in a holding company system whose public utility 
operations are confined substantially to a single State and any 
other class of transactions that the Commission finds is not 
relevant to the jurisdictional rates of a public utility.
    (d) Public Utility.--As used in this section, the term 
``public utility'' has the meaning given that term in section 
201(e) of the Federal Power Act.

SEC. 1276. AUTHORIZATION OF APPROPRIATIONS.

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

SEC. 1277. CONFORMING AMENDMENTS TO THE FEDERAL POWER ACT.

    (a) Conflict of Jurisdiction.--Section 318 of the Federal 
Power Act (16 U.S.C. 825q) is repealed.
    (b) Definitions.--(1) Section 201(g)(5) of the Federal 
Power Act (16 U.S.C. 824(g)(5)) is amended by striking ``1935'' 
and inserting ``2003''.
    (2) Section 214 of the Federal Power Act (16 U.S.C. 824m) 
is amended by striking ``1935'' and inserting ``2003''.

 Subtitle G--Market Transparency, Enforcement, and Consumer Protection

SEC. 1281. MARKET TRANSPARENCY RULES.

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

``SEC. 220. MARKET TRANSPARENCY RULES.

    ``(a) In General.--Not later than 180 days after the date 
of enactment of this section, the Commission shall issue rules 
establishing an electronic information system to provide the 
Commission and the public with access to such information as is 
necessary or appropriate to facilitate price transparency and 
participation in markets subject to the Commission's 
jurisdiction under this Act. Such systems shall provide 
information about the availability and market price of 
wholesale electric energy and transmission services to the 
Commission, State commissions, buyers and sellers of wholesale 
electric energy, users of transmission services, and the public 
on a timely basis. The Commission shall have authority to 
obtain such information from any electric utility or 
transmitting utility, including any entity described in section 
201(f).
    ``(b) Exemptions.--The Commission shall exempt from 
disclosure information it determines would, if disclosed, be 
detrimental to the operation of an effective market or 
jeopardize system security. This section shall not apply to 
transactions for the purchase or sale of wholesale electric 
energy or transmission services within the area described in 
section 212(k)(2)(A). In determining the information to be made 
available under this section and time to make such information 
available, the Commission shall seek to ensure that consumers 
and competitive markets are protected from the adverse effects 
of potential collusion or other anti-competitive behaviors that 
can be facilitated by untimely public disclosure of 
transaction-specific information.
    ``(c) Commodity Futures Trading Commission.--This section 
shall not affect the exclusive jurisdiction of the Commodity 
Futures Trading Commission with respect to accounts, 
agreements, contracts, or transactions in commodities under the 
Commodity Exchange Act (7 U.S.C. 1 et seq.). Any request for 
information to a designated contract market, registered 
derivatives transaction execution facility, board of trade, 
exchange, or market involving accounts, agreements, contracts, 
or transactions in commodities (including natural gas, 
electricity and other energy commodities) within the exclusive 
jurisdiction of the Commodity Futures Trading Commission shall 
be directed to the Commodity Futures Trading Commission.
    ``(d) Savings Provision.--In exercising its authority under 
this section, the Commission shall not--
            ``(1) compete with, or displace from the market 
        place, any price publisher; or
            ``(2) regulate price publishers or impose any 
        requirements on the publication of information.''.

SEC. 1282. MARKET MANIPULATION.

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

``SEC. 221. PROHIBITION ON FILING FALSE INFORMATION.

    ``No person or other entity (including an entity described 
in section 201(f)) shall willfully and knowingly report any 
information relating to the price of electricity sold at 
wholesale or availability of transmission capacity, which 
information the person or any other entity knew to be false at 
the time of the reporting, to a Federal agency with intent to 
fraudulently affect the data being compiled by such Federal 
agency.

``SEC. 222. PROHIBITION ON ROUND TRIP TRADING.

    ``(a) Prohibition.--No person or other entity (including an 
entity described in section 201(f)) shall willfully and 
knowingly enter into any contract or other arrangement to 
execute a `round trip trade' for the purchase or sale of 
electric energy at wholesale.
    ``(b) Definition.--For the purposes of this section, the 
term `round trip trade' means a transaction, or combination of 
transactions, in which a person or any other entity--
            ``(1) enters into a contract or other arrangement 
        to purchase from, or sell to, any other person or other 
        entity electric energy at wholesale;
            ``(2) simultaneously with entering into the 
        contract or arrangement described in paragraph (1), 
        arranges a financially offsetting trade with such other 
        person or entity for the same such electric energy, at 
        the same location, price, quantity and terms so that, 
        collectively, the purchase and sale transactions in 
        themselves result in no financial gain or loss; and
            ``(3) enters into the contract or arrangement with 
        a specific intent to fraudulently affect reported 
        revenues, trading volumes, or prices.''.

SEC. 1283. ENFORCEMENT.

    (a) Complaints.--Section 306 of the Federal Power Act (16 
U.S.C. 825e) is amended as follows:
            (1) By inserting ``electric utility,'' after ``Any 
        person,''.
            (2) By inserting ``, transmitting utility,'' after 
        ``licensee'' each place it appears.
    (b) Review of Commission Orders.--Section 313(a) of the 
Federal Power Act (16 U.S.C. 8251) is amended by inserting 
`electric utility,' after `person,' in the first 2 places it 
appears and by striking `any person unless such person' and 
inserting `any entity unless such entity'.
    (c) Investigations.--Section 307(a) of the Federal Power 
Act (16 U.S.C. 825f(a)) is amended as follows:
            (1) By inserting `, electric utility, transmitting 
        utility, or other entity' after `person' each time it 
        appears.
            (2) By striking the period at the end of the first 
        sentence and inserting the following: ``or in obtaining 
        information about the sale of electric energy at 
        wholesale in interstate commerce and the transmission 
        of electric energy in interstate commerce.''.
    (d) Criminal Penalties.--Section 316 of the Federal Power 
Act (16 U.S.C. 825o) is amended--
            (1) in subsection (a), by striking ``$5,000'' and 
        inserting ``$1,000,000'', and by striking ``two years'' 
        and inserting ``5 years'';
            (2) in subsection (b), by striking ``$500'' and 
        inserting ``$25,000''; and
            (3) by striking subsection (c).
    (e) Civil Penalties.--Section 316A of the Federal Power Act 
(16 U.S.C. 825o-1) is amended as follows:
            (1) In subsections (a) and (b), by striking 
        ``section 211, 212, 213, or 214'' each place it appears 
        and inserting ``Part II''.
            (2) In subsection (b), by striking ``$10,000'' and 
        inserting ``$1,000,000''.

SEC. 1284. REFUND EFFECTIVE DATE.

    Section 206(b) of the Federal Power Act (16 U.S.C. 824e(b)) 
is amended as follows:
            (1) By striking ``the date 60 days after the filing 
        of such complaint nor later than 5 months after the 
        expiration of such 60-day period'' in the second 
        sentence and inserting ``the date of the filing of such 
        complaint nor later than 5 months after the filing of 
        such complaint''.
            (2) By striking ``60 days after'' in the third 
        sentence and inserting ``of''.
            (3) By striking ``expiration of such 60-day 
        period'' in the third sentence and inserting 
        ``publication date''.
            (4) By striking the fifth sentence and inserting 
        the following: ``If no final decision is rendered by 
        the conclusion of the 180-day period commencing upon 
        initiation of a proceeding pursuant to this section, 
        the Commission shall state the reasons why it has 
        failed to do so and shall state its best estimate as to 
        when it reasonably expects to make such decision.''.

SEC. 1285. REFUND AUTHORITY.

    Section 206 of the Federal Power Act (16 U.S.C. 824e) is 
amended by adding the following new subsection at the end 
thereof:
    ``(e)(1) Except as provided in paragraph (2), if an entity 
described in section 201(f) voluntarily makes a short-term sale 
of electric energy and the sale violates Commission rules in 
effect at the time of the sale, such entity shall be subject to 
the Commission's refund authority under this section with 
respect to such violation.
    ``(2) This section shall not apply to--
            ``(A) any entity that sells less than 8,000,000 
        megawatt hours of electricity per year; or
            ``(B) any electric cooperative.
    ``(3) For purposes of this subsection, the term `short-term 
sale' means an agreement for the sale of electric energy at 
wholesale in interstate commerce that is for a period of 31 
days or less (excluding monthly contracts subject to automatic 
renewal).
    ``(4) The Commission shall have refund authority under 
subsection (e)(1) with respect to a voluntary short-term sale 
of electric energy by the Bonneville Power Administration (in 
this section `Bonneville') only if the sale is at an unjust and 
unreasonable rate and, in that event, may order a refund only 
for short-term sales made by Bonneville at rates that are 
higher than the highest just and reasonable rate charged by any 
other entity for a short-term sale of electric energy in the 
same geographic market for the same, or most nearly comparable, 
period as the sale by Bonneville.
    ``(5) With respect to any Federal power marketing agency or 
the Tennessee Valley Authority, the Commission shall not assert 
or exercise any regulatory authority or powers under subsection 
(e)(1) other than the ordering of refunds to achieve a just and 
reasonable rate.''.

SEC. 1286. SANCTITY OF CONTRACT.

    (a) In General.--The Federal Energy Regulatory Commission 
(in this section, ``the Commission'') shall have no authority 
to abrogate or modify any provision of an executed contract or 
executed contract amendment described in subsection (b) that 
has been entered into or taken effect, except upon a finding 
that failure to take such action would be contrary to the 
public interest.
    (b) Limitation.--Except as provided in subsection (c), this 
section shall apply only to a contract or contract amendment--
            (1) executed on or after the date of enactment of 
        this Act; and
            (2) entered into--
                    (A) for the purchase or sale of electric 
                energy under section 205 of the Federal Power 
                Act (16 U.S.C. 824d) where the seller has been 
                authorized by the Commission to charge market-
                based rates; or
                    (B) under section 4 of the Natural Gas Act 
                (15 U.S.C. 717c) where the natural gas company 
                has been authorized by the Commission to charge 
                market-based rates for the service described in 
                the contract.
    (c) Exclusion.--This section shall not apply to an executed 
contract or executed contract amendment that expressly provides 
for a standard of review other than the public interest 
standard.
    (d) Savings Provision.--With respect to contracts to which 
this section does not apply, nothing in this section alters 
existing law regarding the applicable standard of review for a 
contract subject to the jurisdiction of the Commission.

SEC. 1287. CONSUMER PRIVACY AND UNFAIR TRADE PRACTICES.

    (a) Privacy.--The Federal Trade Commission may issue rules 
protecting the privacy of electric consumers from the 
disclosure of consumer information obtained in connection with 
the sale or delivery of electric energy to electric consumers.
    (b) Slamming.--The Federal Trade Commission may issue rules 
prohibiting the change of selection of an electric utility 
except with the informed consent of the electric consumer or if 
approved by the appropriate State regulatory authority.
    (c) Cramming.--The Federal Trade Commission may issue rules 
prohibiting the sale of goods and services to an electric 
consumer unless expressly authorized by law or the electric 
consumer.
    (d) Rulemaking.--The Federal Trade Commission shall proceed 
in accordance with section 553 of title 5, United States Code, 
when prescribing a rule under this section.
    (e) State Authority.--If the Federal Trade Commission 
determines that a State's regulations provide equivalent or 
greater protection than the provisions of this section, such 
State regulations shall apply in that State in lieu of the 
regulations issued by the Commission under this section.
    (f) Definitions.--For purposes of this section:
            (1) State regulatory authority.--The term ``State 
        regulatory authority'' has the meaning given that term 
        in section 3(21) of the Federal Power Act (16 U.S.C. 
        796(21)).
            (2) Electric consumer and electric utility.--The 
        terms ``electric consumer'' and ``electric utility'' 
        have the meanings given those terms in section 3 of the 
        Public Utility Regulatory Policies Act of 1978 (16 
        U.S.C. 2602).

                       Subtitle H--Merger Reform

SEC. 1291. MERGER REVIEW REFORM AND ACCOUNTABILITY.

    (a) Merger Review Reform.--Within 180 days after the date 
of enactment of this Act, the Secretary of Energy, in 
consultation with the Federal Energy Regulatory Commission and 
the Attorney General of the United States, shall prepare, and 
transmit to Congress each of the following:
            (1) A study of the extent to which the authorities 
        vested in the Federal Energy Regulatory Commission 
        under section 203 of the Federal Power Act are 
        duplicative of authorities vested in--
                    (A) other agencies of Federal and State 
                Government; and
                    (B) the Federal Energy Regulatory 
                Commission, including under sections 205 and 
                206 of the Federal Power Act.
            (2) Recommendations on reforms to the Federal Power 
        Act that would eliminate any unnecessary duplication in 
        the exercise of regulatory authority or unnecessary 
        delays in the approval (or disapproval) of applications 
        for the sale, lease, or other disposition of public 
        utility facilities.
    (b) Merger Review Accountability.--Not later than 1 year 
after the date of enactment of this Act and annually 
thereafter, with respect to all orders issued within the 
preceding year that impose a condition on a sale, lease, or 
other disposition of public utility facilities under section 
203(b) of the Federal Power Act, the Federal Energy Regulatory 
Commission shall transmit a report to Congress explaining each 
of the following:
            (1) The condition imposed.
            (2) Whether the Commission could have imposed such 
        condition by exercising its authority under any 
        provision of the Federal Power Act other than under 
        section 203(b).
            (3) If the Commission could not have imposed such 
        condition other than under section 203(b), why the 
        Commission determined that such condition was 
        consistent with the public interest.

SEC. 1292. ELECTRIC UTILITY MERGERS.

    (a) Amendment.--Section 203(a) of the Federal Power Act (16 
U.S.C. 824b(a)) is amended to read as follows:
    ``(a)(1) No public utility shall, without first having 
secured an order of the Commission authorizing it to do so--
            ``(A) sell, lease, or otherwise dispose of the 
        whole of its facilities subject to the jurisdiction of 
        the Commission, or any part thereof of a value in 
        excess of $10,000,000;
            ``(B) merge or consolidate, directly or indirectly, 
        such facilities or any part thereof with those of any 
        other person, by any means whatsoever; or
            ``(C) purchase, acquire, or take any security with 
        a value in excess of $10,000,000 of any other public 
        utility.
    ``(2) No holding company in a holding company system that 
includes a public utility shall purchase, acquire, or take any 
security with a value in excess of $10,000,000 of, or, by any 
means whatsoever, directly or indirectly, merge or consolidate 
with, a public utility or a holding company in a holding 
company system that includes a public utility with a value in 
excess of $10,000,000 without first having secured an order of 
the Commission authorizing it to do so.
    ``(3) Upon receipt of an application for such approval the 
Commission shall give reasonable notice in writing to the 
Governor and State commission of each of the States in which 
the physical property affected, or any part thereof, is 
situated, and to such other persons as it may deem advisable.
    ``(4) After notice and opportunity for hearing, the 
Commission shall approve the proposed disposition, 
consolidation, acquisition, or change in control, if it finds 
that the proposed transaction will be consistent with the 
public interest. In evaluating whether a transaction will be 
consistent with the public interest, the Commission shall 
consider whether the proposed transaction--
            ``(A) will adequately protect consumer interests;
            ``(B) will be consistent with competitive wholesale 
        markets;
            ``(C) will impair the financial integrity of any 
        public utility that is a party to the transaction or an 
        associate company of any party to the transaction; and
            ``(D) satisfies such other criteria as the 
        Commission considers consistent with the public 
        interest.
    ``(5) The Commission shall, by rule, adopt procedures for 
the expeditious consideration of applications for the approval 
of dispositions, consolidations, or acquisitions under this 
section. Such rules shall identify classes of transactions, or 
specify criteria for transactions, that normally meet the 
standards established in paragraph (4). The Commission shall 
provide expedited review for such transactions. The Commission 
shall grant or deny any other application for approval of a 
transaction not later than 180 days after the application is 
filed. If the Commission does not act within 180 days, such 
application shall be deemed granted unless the Commission 
finds, based on good cause, that further consideration is 
required to determine whether the proposed transaction meets 
the standards of paragraph (4) and issues an order tolling the 
time for acting on the application for not more than 180 days, 
at the end of which additional period the Commission shall 
grant or deny the application.
    ``(6) For purposes of this subsection, the terms `associate 
company', `holding company', and `holding company system' have 
the meaning given those terms in the Public Utility Holding 
Company Act of 2003.''.
    (b) Effective Date.--The amendments made by this section 
shall take effect 12 months after the date of enactment of this 
section.

                        Subtitle I--Definitions

SEC. 1295. DEFINITIONS.

    (a) Electric Utility.--Section 3(22) of the Federal Power 
Act (16 U.S.C. 796(22)) is amended to read as follows:
            ``(22) Electric utility.--The term `electric 
        utility' means any person or Federal or State agency 
        (including any entity described in section 201(f)) that 
        sells electric energy; such term includes the Tennessee 
        Valley Authority and each Federal power marketing 
        administration.''.
    (b) Transmitting Utility.--Section 3(23) of the Federal 
Power Act (16 U.S.C. 796(23)) is amended to read as follows:
            ``(23) Transmitting utility.--The term 
        `transmitting utility' means an entity, including any 
        entity described in section 201(f), that owns, 
        operates, or controls facilities used for the 
        transmission of electric energy--
                    ``(A) in interstate commerce; or
                    ``(B) for the sale of electric energy at 
                wholesale.''.
    (c) Additional Definitions.--Section 3 of the Federal Power 
Act (16 U.S.C. 796) is amended by adding at the end the 
following:
            ``(26) Electric cooperative.--The term `electric 
        cooperative' means a cooperatively owned electric 
        utility.
            ``(27) RTO.--The term `Regional Transmission 
        Organization' or `RTO' means an entity of sufficient 
        regional scope approved by the Commission to exercise 
        operational or functional control of facilities used 
        for the transmission of electric energy in interstate 
        commerce and to ensure nondiscriminatory access to such 
        facilities.
            ``(28) ISO.--The term `Independent System Operator' 
        or `ISO' means an entity approved by the Commission to 
        exercise operational or functional control of 
        facilities used for the transmission of electric energy 
        in interstate commerce and to ensure nondiscriminatory 
        access to such facilities.''.
    (d) Commission.--For the purposes of this title, the term 
``Commission'' means the Federal Energy Regulatory Commission.
    (e) Applicability.--Section 201(f) of the Federal Power Act 
(16 U.S.C. 824(f)) is amended by adding after ``political 
subdivision of a state,'' the following: ``an electric 
cooperative that has financing under the Rural Electrification 
Act of 1936 (7 U.S.C. 901 et seq.) or that sells less than 
4,000,000 megawatt hours of electricity per year,''.

            Subtitle J--Technical and Conforming Amendments

SEC. 1297. CONFORMING AMENDMENTS.

    The Federal Power Act is amended as follows:
            (1) Section 201(b)(2) of such Act (16 U.S.C. 
        824(b)(2)) is amended as follows:
                    (A) In the first sentence by striking 
                ``210, 211, and 212'' and inserting 
                ``203(a)(2), 206(e), 210, 211, 211A, 212, 215, 
                216, 217, 218, 219, 220, 221, and 222''.
                    (B) In the second sentence by striking 
                ``210 or 211'' and inserting ``203(a)(2), 
                206(e), 210, 211, 211A, 212, 215, 216, 217, 
                218, 219, 220, 221, and 222''.
                    (C) Section 201(b)(2) of such Act is 
                amended by striking ``The'' in the first place 
                it appears and inserting ``Notwithstanding 
                section 201(f), the'' and in the second 
                sentence after ``any order'' by inserting ``or 
                rule''.
            (2) Section 201(e) of such Act is amended by 
        striking ``210, 211, or 212'' and inserting ``206(e), 
        206(f), 210, 211, 211A, 212, 215, 216, 217, 218, 219, 
        220, 221, and 222''.
            (3) Section 206 of such Act (16 U.S.C. 824e) is 
        amended as follows:
                    (A) In subsection (b), in the seventh 
                sentence, by striking ``the public utility to 
                make''.
                    (B) In the first sentence of subsection 
                (a), by striking `hearing had' and inserting 
                ``hearing held''.
            (4) Section 211(c) of such Act (16 U.S.C. 824j(c)) 
        is amended by--
                    (A) striking ``(2)'';
                    (B) striking ``(A)'' and inserting ``(1)''
                    (C) striking ``(B)'' and inserting ``(2)''; 
                and
                    (D) striking ``termination of 
                modification'' and inserting ``termination or 
                modification''.
            (5) Section 211(d)(1) of such Act (16 U.S.C. 
        824j(d)(1)) is amended by striking ``electric utility'' 
        the second time it appears and inserting ``transmitting 
        utility''.
            (6) Section 315 (c) of such Act (16 U.S.C. 825n(c)) 
        is amended by striking ``subsection'' and inserting 
        ``section''.

                   TITLE XIII--ENERGY TAX INCENTIVES

SEC. 1300. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This title may be cited as the ``Energy 
Tax Policy Act of 2003''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this title an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section 
or other provision, the reference shall be considered to be 
made to a section or other provision of the Internal Revenue 
Code of 1986.

                        Subtitle A--Conservation

               PART I--RESIDENTIAL AND BUSINESS PROPERTY

SEC. 1301. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

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

``SEC. 25C. RESIDENTIAL ENERGY EFFICIENT PROPERTY.

    ``(a) Allowance of Credit.--In the case of an individual, 
there shall be allowed as a credit against the tax imposed by 
this chapter for the taxable year an amount equal to the sum 
of--
            ``(1) 15 percent of the qualified solar water 
        heating property expenditures made by the taxpayer 
        during such year,
            ``(2) 15 percent of the qualified photovoltaic 
        property expenditures made by the taxpayer during such 
        year,
            ``(3) 15 percent of the qualified wind energy 
        property expenditures made by the taxpayer during such 
        year, and
            ``(4) 20 percent of the qualified fuel cell 
        property expenditures made by the taxpayer during such 
        year.
    ``(b) Limitations.--
            ``(1) Maximum credit.--
                    ``(A) In general.--The credit allowed under 
                subsection (a) shall not exceed--
                            ``(i) $2,000 for property described 
                        in paragraph (1), (2), or (3) of 
                        subsection (c), and
                            ``(ii) $500 for each 0.5 kilowatt 
                        of capacity of property described in 
                        subsection (c)(4).
                    ``(B) Prior expenditures by taxpayer on 
                same residence taken into account.--In 
                determining the amount of the credit allowed to 
                a taxpayer with respect to any dwelling unit 
                under this section, the dollar amount under 
                subparagraph (A)(i) with respect to each type 
                of property described in such subparagraph 
                shall be reduced by the credit allowed to the 
                taxpayer under this section with respect to 
                such property for all preceding taxable years 
                with respect to such dwelling unit.
            ``(2) Property standards.--No credit shall be 
        allowed under this section for an item of property 
        unless--
                    ``(A) the original use of such property 
                commences with the taxpayer,
                    ``(B) such property reasonably can be 
                expected to remain in use for at least 5 years,
                    ``(C) such property is installed on or in 
                connection with a dwelling unit located in the 
                United States and used as a residence by the 
                taxpayer,
                    ``(D) in the case of solar water heating 
                property, such property is certified for 
                performance by the non-profit Solar Rating and 
                Certification Corporation or a comparable 
                entity endorsed by the government of the State 
                in which such property is installed,
                    ``(E) in the case of fuel cell property, 
                such property meets the performance and quality 
                standards (if any) which have been prescribed 
                by the Secretary by regulations (after 
                consultation with the Secretary of Energy), and
                    ``(F) in the case of any photovoltaic 
                property, fuel cell property, or wind energy 
                property, such property meets appropriate fire 
                and electric code requirements.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified solar water heating property 
        expenditure.--The term `qualified solar water heating 
        property expenditure' means an expenditure for property 
        which uses solar energy to heat water for use in a 
        dwelling unit.
            ``(2) Qualified photovoltaic property 
        expenditure.--The term `qualified photovoltaic property 
        expenditure' means an expenditure for property which 
        uses solar energy to generate electricity for use in a 
        dwelling unit and which is not described in paragraph 
        (1).
            ``(3) Qualified wind energy property expenditure.--
        The term `qualified wind energy property expenditure' 
        means an expenditure for property which uses wind 
        energy to generate electricity for use in a dwelling 
        unit.
            ``(4) Qualified fuel cell property expenditure.--
        The term `qualified fuel cell property expenditure' 
        means an expenditure for any qualified fuel cell 
        property (as defined in section 48(c)(1)).
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Solar panels.--No expenditure relating to a 
        solar panel or other property installed as a roof (or 
        portion thereof) shall fail to be treated as property 
        described in paragraph (1) or (2) of subsection (c) 
        solely because it constitutes a structural component of 
        the structure on which it is installed.
            ``(2) Swimming pools, etc., used as storage 
        medium.--Expenditures which are properly allocable to a 
        swimming pool, hot tub, or any other energy storage 
        medium which has a function other than the function of 
        such storage shall not be taken into account for 
        purposes of this section.
            ``(3) Dollar amounts in case of joint occupancy.--
        In the case of any dwelling unit which is jointly 
        occupied and used during any calendar year as a 
        residence by 2 or more individuals, the following rules 
        shall apply:
                    ``(A) The amount of the credit allowable 
                under subsection (a) by reason of expenditures 
                made during such calendar year by any of such 
                individuals with respect to such dwelling unit 
                shall be determined by treating all of such 
                individuals as 1 taxpayer whose taxable year is 
                such calendar year.
                    ``(B) There shall be allowable, with 
                respect to such expenditures to each of such 
                individuals, a credit under subsection (a) for 
                the taxable year in which such calendar year 
                ends in an amount which bears the same ratio to 
                the amount determined under subparagraph (A) as 
                the amount of such expenditures made by such 
                individual during such calendar year bears to 
                the aggregate of such expenditures made by all 
                of such individuals during such calendar year.
                    ``(C) Subparagraphs (A) and (B) shall be 
                applied separately with respect to expenditures 
                described in paragraphs (1), (2), (3), and (4) 
                of subsection (c).
            ``(4) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a 
        tenant-stockholder (as defined in section 216) in a 
        cooperative housing corporation (as defined in such 
        section), such individual shall be treated as having 
        made the individual's tenant-stockholder's 
        proportionate share (as defined in section 216(b)(3)) 
        of any expenditures of such corporation.
            ``(5) Condominiums.--
                    ``(A) In general.--In the case of an 
                individual who is a member of a condominium 
                management association with respect to a 
                condominium which the individual owns, such 
                individual shall be treated as having made the 
                individual's proportionate share of any 
                expenditures of such association.
                    ``(B) Condominium management association.--
                For purposes of this paragraph, the term 
                `condominium management association' means an 
                organization which meets the requirements of 
                paragraph (1) of section 528(c) (other than 
                subparagraph (E) thereof) with respect to a 
                condominium project substantially all of the 
                units of which are used as residences.
            ``(6) Allocation in certain cases.--Except in the 
        case of qualified wind energy property expenditures, if 
        less than 80 percent of the use of an item is for 
        nonbusiness purposes, only that portion of the 
        expenditures for such item which is properly allocable 
        to use for nonbusiness purposes shall be taken into 
        account.
            ``(7) When expenditure made; amount of 
        expenditure.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), an expenditure with respect 
                to an item shall be treated as made when the 
                original installation of the item is completed.
                    ``(B) Expenditures part of building 
                construction.--In the case of an expenditure in 
                connection with the construction or 
                reconstruction of a structure, such expenditure 
                shall be treated as made when the original use 
                of the constructed or reconstructed structure 
                by the taxpayer begins.
                    ``(C) Amount.--The amount of any 
                expenditure shall be the cost thereof.
            ``(8) Property financed by subsidized energy 
        financing.--For purposes of determining the amount of 
        expenditures made by any individual with respect to any 
        dwelling unit, there shall not be taken into account 
        expenditures which are made from subsidized energy 
        financing (as defined in section 48(a)(4)(C)).
            ``(9) Denial of depreciation on wind energy 
        property for which credit allowed.--No deduction shall 
        be allowed under section 167 for property which uses 
        wind energy to generate electricity if the taxpayer is 
        allowed a credit under this section with respect to 
        such property.
    ``(e) Basis Adjustments.--For purposes of this subtitle, if 
a credit is allowed under this section for any expenditure with 
respect to any property, the increase in the basis of such 
property which would (but for this subsection) result from such 
expenditure shall be reduced by the amount of the credit so 
allowed.
    ``(f) Termination.--The credit allowed under this section 
shall not apply to taxable years beginning after December 31, 
2006 (December 31, 2008, with respect to qualified photovoltaic 
property expenditures).''.
    (b) Conforming Amendments.--
            (1) Section 1016(a) is amended by striking ``and'' 
        at the end of paragraph (27), by striking the period at 
        the end of paragraph (28) and inserting ``, and'', and 
        by adding at the end the following new paragraph:
            ``(29) to the extent provided in section 25C(e), in 
        the case of amounts with respect to which a credit has 
        been allowed under section 25C.''.
            (2) The table of sections for subpart A of part IV 
        of subchapter A of chapter 1 is amended by inserting 
        after the item relating to section 25B the following 
        new item:

        ``Sec. 25C. Residential energy efficient property.''.

    (c) Effective Date.--The amendments made by this section 
shall apply to taxable years ending after December 31, 2003.

SEC. 1302. EXTENSION AND EXPANSION OF CREDIT FOR ELECTRICITY PRODUCED 
                    FROM CERTAIN RENEWABLE RESOURCES.

    (a) Expansion of Qualified Energy Resources.--Subsection 
(c) of section 45 (relating to electricity produced from 
certain renewable resources) is amended to read as follows:
    ``(c) Qualified Energy Resources.--For purposes of this 
section--
            ``(1) In general.--The term `qualified energy 
        resources' means--
                    ``(A) wind,
                    ``(B) closed-loop biomass,
                    ``(C) open-loop biomass,
                    ``(D) geothermal energy,
                    ``(E) solar energy,
                    ``(F) small irrigation power, and
                    ``(G) municipal solid waste.
            ``(2) Closed-loop biomass.--The term `closed-loop 
        biomass' means any organic material from a plant which 
        is planted exclusively for purposes of being used at a 
        qualified facility to produce electricity.
            ``(3) Open-loop biomass.--
                    ``(A) In general.--The term `open-loop 
                biomass' means--
                            ``(i) any agricultural livestock 
                        waste nutrients, or
                            ``(ii) any solid, nonhazardous, 
                        cellulosic waste material which is 
                        segregated from other waste materials 
                        and which is derived from--
                                    ``(I) any of the following 
                                forest-related resources: mill 
                                and harvesting residues, 
                                precommercial thinnings, slash, 
                                and brush,
                                    ``(II) solid wood waste 
                                materials, including waste 
                                pallets, crates, dunnage, 
                                manufacturing and construction 
                                wood wastes (other than 
                                pressure-treated, chemically-
                                treated, or painted wood 
                                wastes), and landscape or 
                                right-of-way tree trimmings, 
                                but not including municipal 
                                solid waste, gas derived from 
                                the biodegradation of solid 
                                waste, or paper which is 
                                commonly recycled, or
                                    ``(III) agriculture 
                                sources, including orchard tree 
                                crops, vineyard, grain, 
                                legumes, sugar, and other crop 
                                by-products or residues.
                Such term shall not include closed-loop 
                biomass.
                    ``(B) Agricultural livestock waste 
                nutrients.--
                            ``(i) In general.--The term 
                        `agricultural livestock waste 
                        nutrients' means agricultural livestock 
                        manure and litter, including wood 
                        shavings, straw, rice hulls, and other 
                        bedding material for the disposition of 
                        manure.
                            ``(ii) Agricultural livestock.--The 
                        term `agricultural livestock' includes 
                        bovine, swine, poultry, and sheep.
            ``(4) Geothermal energy.--The term `geothermal 
        energy' means energy derived from a geothermal deposit 
        (within the meaning of section 613(e)(2)).
            ``(5) Small irrigation power.--The term `small 
        irrigation power' means power--
                    ``(A) generated without any dam or 
                impoundment of water through an irrigation 
                system canal or ditch, and
                    ``(B) the nameplate capacity rating of 
                which is not less than 150 kilowatts but is 
                less than 5 megawatts.
            ``(6) Municipal solid waste.--The term `municipal 
        solid waste' has the meaning given the term `solid 
        waste' under section 2(27) of the Solid Waste Disposal 
        Act (42 U.S.C. 6903).''.
    (b) Extension and Expansion of Qualified Facilities.--
            (1) In general.--Section 45 is amended by 
        redesignating subsection (d) as subsection (e) and by 
        inserting after subsection (c) the following new 
        subsection:
    ``(d) Qualified Facilities.--For purposes of this section--
            ``(1) Wind facility.--In the case of a facility 
        using wind to produce electricity, the term `qualified 
        facility' means any facility owned by the taxpayer 
        which is originally placed in service after December 
        31, 1993, and before January 1, 2007.
            ``(2) Closed-loop biomass facility.--
                    ``(A) In general.--In the case of a 
                facility using closed-loop biomass to produce 
                electricity, the term `qualified facility' 
                means any facility--
                            ``(i) owned by the taxpayer which 
                        is originally placed in service after 
                        December 31, 1992, and before January 
                        1, 2007, or
                            ``(ii) owned by the taxpayer which 
                        before January 1, 2007, is originally 
                        placed in service and modified to use 
                        closed-loop biomass to co-fire with 
                        coal, with other biomass, or with both, 
                        but only if the modification is 
                        approved under the Biomass Power for 
                        Rural Development Programs or is part 
                        of a pilot project of the Commodity 
                        Credit Corporation as described in 65 
                        Fed. Reg. 63052.
                    ``(B) Special rules.--In the case of a 
                qualified facility described in subparagraph 
                (A)(ii)--
                            ``(i) the 10-year period referred 
                        to in subsection (a) shall be treated 
                        as beginning no earlier than the date 
                        of the enactment of the Energy Tax 
                        Policy Act of 2003,
                            ``(ii) the amount of the credit 
                        determined under subsection (a) with 
                        respect to the facility shall be an 
                        amount equal to the amount determined 
                        without regard to this clause 
                        multiplied by the ratio of the thermal 
                        content of the closed-loop biomass used 
                        in such facility to the thermal content 
                        of all fuels used in such facility, and
                            ``(iii) if the owner of such 
                        facility is not the producer of the 
                        electricity, the person eligible for 
                        the credit allowable under subsection 
                        (a) shall be the lessee or the operator 
                        of such facility.
            ``(3) Open-loop biomass facilities.--
                    ``(A) In general.--In the case of a 
                facility using open-loop biomass to produce 
                electricity, the term `qualified facility' 
                means any facility owned by the taxpayer 
                which--
                            ``(i) in the case of a facility 
                        using agricultural livestock waste 
                        nutrients--
                                    ``(I) is originally placed 
                                in service after the date of 
                                the enactment of the Energy Tax 
                                Policy Act of 2003 and before 
                                January 1, 2007, and
                                    ``(II) the nameplate 
                                capacity rating of which is not 
                                less than 150 kilowatts, and
                            ``(ii) in the case of any other 
                        facility, is originally placed in 
                        service before January 1, 2007.
                    ``(B) Credit eligibility.--In the case of 
                any facility described in subparagraph (A), if 
                the owner of such facility is not the producer 
                of the electricity, the person eligible for the 
                credit allowable under subsection (a) shall be 
                the lessee or the operator of such facility.
            ``(4) Geothermal or solar energy facility.--In the 
        case of a facility using geothermal or solar energy to 
        produce electricity, the term `qualified facility' 
        means any facility owned by the taxpayer which is 
        originally placed in service after the date of the 
        enactment of the Energy Tax Policy Act of 2003 and 
        before January 1, 2007. Such term shall not include any 
        property described in section 48(a)(3) the basis of 
        which is taken into account by the taxpayer for 
        purposes of determining the energy credit under section 
        48.
            ``(5) Small irrigation power facility.--In the case 
        of a facility using small irrigation power to produce 
        electricity, the term `qualified facility' means any 
        facility owned by the taxpayer which is originally 
        placed in service after the date of the enactment of 
        the Energy Tax Policy Act of 2003 and before January 1, 
        2007.
            ``(6) Landfill gas facilities.--In the case of a 
        facility producing electricity from gas derived from 
        the biodegradation of municipal solid waste, the term 
        `qualified facility' means any facility owned by the 
        taxpayer which is originally placed in service after 
        the date of the enactment of the Energy Tax Policy Act 
        of 2003 and before January 1, 2007.
            ``(7) Trash combustion facilities.--In the case of 
        a facility which burns municipal solid waste to produce 
        electricity, the term `qualified facility' means any 
        facility owned by the taxpayer which is originally 
        placed in service after the date of the enactment of 
        the Energy Tax Policy Act of 2003 and before January 1, 
        2007.''.
            (2) Conforming amendment.--Section 45(e), as so 
        redesignated, is amended by striking ``subsection 
        (c)(3)(A)'' in paragraph (7)(A)(i) and inserting 
        ``subsection (d)(1)''.
    (c) Special Credit Rate and Period for Electricity Produced 
and Sold After Enactment Date.--Section 45(b) is amended by 
adding at the end the following new paragraph:
            ``(4) Credit rate and period for electricity 
        produced and sold from certain facilities.--
                    ``(A) Credit rate.--In the case of 
                electricity produced and sold in any calendar 
                year after 2003 at any qualified facility 
                described in paragraph (3), (5), (6), or (7) of 
                subsection (d), the amount in effect under 
                subsection (a)(1) for such calendar year 
                (determined before the application of the last 
                sentence of paragraph (2) of this subsection) 
                shall be reduced by one-third.
                    ``(B) Credit period.--
                            ``(i) In general.--Except as 
                        provided in clause (ii), in the case of 
                        any facility described in paragraph 
                        (3), (4), (5), (6), or (7) of 
                        subsection (d), the 5-year period 
                        beginning on the date the facility was 
                        originally placed in service shall be 
                        substituted for the 10-year period in 
                        subsection (a)(2)(A)(ii).
                            ``(ii) Certain open-loop biomass 
                        facilities.--In the case of any 
                        facility described in subsection 
                        (d)(3)(A)(ii) placed in service before 
                        the date of the enactment of this 
                        paragraph, the 5-year period beginning 
                        on January 1, 2004, shall be 
                        substituted for the 10-year period in 
                        subsection (a)(2)(A)(ii).''.
    (d) Coordination With Other Credits.--Section 45(e), as so 
redesignated, is amended by adding at the end the following new 
paragraph:
            ``(8) Coordination with other credits.--The term 
        `qualified facility' shall not include--
                    ``(A) any property with respect to which a 
                credit is allowed under section 25C, and
                    ``(B) any facility the production from 
                which is allowed as a credit under section 45K,
        for the taxable year or any prior taxable year.''.
    (e) Coordination With Section 48.--Section 48(a)(3) 
(defining energy property) is amended by adding at the end the 
following new sentence: ``Such term shall not include any 
property which is part of a facility the production from which 
is allowed as a credit under section 45 for the taxable year or 
any prior taxable year.''.
    (f) Elimination of Certain Credit Reductions.--Section 
45(b)(3) (relating to credit reduced for grants, tax-exempt 
bonds, subsidized energy financing, and other credits) is 
amended--
            (1) by inserting ``the lesser of \1/2\ or'' before 
        ``a fraction'' in the matter preceding subparagraph 
        (A), and
            (2) by adding at the end the following new 
        sentence: ``This paragraph shall not apply with respect 
        to any facility described in subsection 
        (d)(2)(A)(ii).''.
    (g) Effective Dates.--
            (1) In general.--Except as otherwise provided in 
        this subsection, the amendments made by this section 
        shall apply to electricity produced and sold after the 
        date of the enactment of this Act, in taxable years 
        ending after such date.
            (2) Certain biomass facilities.--With respect to 
        any facility described in section 45(d)(3)(A)(ii) of 
        the Internal Revenue Code of 1986, as added by 
        subsection (b)(1), which is placed in service before 
        the date of the enactment of this Act, the amendments 
        made by this section shall apply to electricity 
        produced and sold after December 31, 2003, in taxable 
        years ending after such date.
            (3) Credit rate and period for new facilities.--The 
        amendments made by subsection (c)shall apply to 
electricity produced and sold after December 31, 2003, in taxable years 
ending after such date.
            (4) Nonapplication of amendments to preeffective 
        date poultry waste facilities.--The amendments made by 
        this section shall not apply with respect to any 
        poultry waste facility (within the meaning of section 
        45(c)(3)(C), as in effect on the day before the date of 
        the enactment of this Act) placed in service before 
        January 1, 2004.
    (h) GAO Study.--The Comptroller General of the United 
States shall conduct a study on the market viability of 
producing electricity from resources with respect to which 
credit is allowed under section 45 of the Internal Revenue Code 
of 1986 but without such credit. In the case of open-loop 
biomass and municipal solid waste resources, the study should 
take into account savings associated with not having to dispose 
of such resources. In conducting such study, the Comptroller 
shall estimate the dollar value of the environmental impact of 
producing electricity from such resources relative to producing 
electricity from fossil fuels using the latest generation of 
technology. Not later than June 30, 2006, the Comptroller shall 
report on such study to the Committee on Ways and Means of the 
House of Representatives and the Committee on Finance of the 
Senate.

SEC. 1303. CREDIT FOR BUSINESS INSTALLATION OF QUALIFIED FUEL CELLS.

    (a) In General.--Section 48(a)(3)(A) (defining energy 
property) is amended by striking ``or'' at the end of clause 
(i), by adding ``or'' at the end of clause (ii), and by 
inserting after clause (ii) the following new clause:
                            ``(iii) qualified fuel cell 
                        property,''.
    (b) Qualified Fuel Cell Property.--Section 48 (relating to 
energy credit; reforestation credit) is amended by adding at 
the end the following new subsection:
    ``(c) Qualified Fuel Cell Property.--For purposes of 
subsection (a)(3)(A)(iii)--
            ``(1) In general.--The term `qualified fuel cell 
        property' means a fuel cell power plant which generates 
        at least 0.5 kilowatt of electricity using an 
        electrochemical process.
            ``(2) Limitation.--The energy credit with respect 
        to any qualified fuel cell property shall not exceed an 
        amount equal to $500 for each 0.5 kilowatt of capacity 
        of such property.
            ``(3) Fuel cell power plant.--The term `fuel cell 
        power plant' means an integrated system, comprised of a 
        fuel cell stack assembly and associated balance of 
        plant components, which converts a fuel into 
        electricity using electrochemical means.
            ``(4) Termination.--The term `qualified fuel cell 
        property' shall not include any property placed in 
        service after December 31, 2006.''.
    (c) Energy Percentage.--Subparagraph (A) of section 
48(a)(2) (relating to energy percentage) is amended to read as 
follows:
                    ``(A) In general.--The energy percentage 
                is--
                            ``(i) in the case of qualified fuel 
                        cell property, 20 percent, and
                            ``(ii) in the case of any other 
                        energy property, 10 percent.''.
    (d) Conforming Amendment.--Section 48(a)(1) is amended by 
inserting ``except as provided in subsection (c)(2),'' before 
``the energy''.
    (e) Effective Date.--The amendments made by this section 
shall apply to periods after December 31, 2003, 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. 1304. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

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

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

    ``(a) Allowance of Credit.--In the case of an individual, 
there shall be allowed as a credit against the tax imposed by 
this chapter for the taxable year an amount equal to 20 percent 
of the amount paid or incurred by the taxpayer for qualified 
energy efficiency improvements installed during such taxable 
year.
    ``(b) Limitations.--
            ``(1) Maximum credit.--The credit allowed by this 
        section with respect to a dwelling unit shall not 
        exceed $2,000.
            ``(2) Prior credit amounts for taxpayer on same 
        dwelling taken into account.--If a credit was allowed 
        to the taxpayer under subsection (a) with respect to a 
        dwelling unit in 1 or more prior taxable years, the 
        amount of the credit otherwise allowable for the 
        taxable year with respect to that dwelling unit shall 
        be reduced by the sum of the credits allowed under 
        subsection (a) to the taxpayer with respect to the 
        dwelling unit for all prior taxable years.
    ``(c) Qualified Energy Efficiency Improvements.--For 
purposes of this section, the term `qualified energy efficiency 
improvements' means any energy efficient building envelope 
component which meets the prescriptive criteria for such 
component established by the 2000 International Energy 
Conservation Code, as such Code (including supplements) is in 
effect on the date of the enactment of this section (or, in the 
case of a metal roof with appropriate pigmented coatings which 
meet the Energy Star program requirements), if--
            ``(1) such component is installed in or on a 
        dwelling unit--
                    ``(A) located in the United States,
                    ``(B) owned and used by the taxpayer as the 
                taxpayer's principal residence (within the 
                meaning of section 121), and
                    ``(C) which has not been treated as a 
                qualified new energy efficient home for 
                purposes of any credit allowed under section 
                45G,
            ``(2) the original use of such component commences 
        with the taxpayer, and
            ``(3) such component reasonably can be expected to 
        remain in use for at least 5 years.
If the aggregate cost of such components with respect to any 
dwelling unit exceeds $1,000, such components shall be treated 
as qualified energy efficiency improvements only if such 
components are also certified in accordance with subsection (d) 
as meeting such prescriptive criteria.
    ``(d) Certification.--The certification described in 
subsection (c) shall be--
            ``(1) determined on the basis of the technical 
        specifications or applicable ratings (including product 
        labeling requirements) for the measurement of energy 
        efficiency (based upon energy use or building envelope 
        component performance) for the energy efficient 
        building envelope component,
            ``(2) provided by a local building regulatory 
        authority, a utility, a manufactured home production 
        inspection primary inspection agency (IPIA), or an 
        accredited home energy rating system provider who is 
        accredited by or otherwise authorized to use approved 
        energy performance measurement methods by the 
        Residential Energy Services Network (RESNET), and
            ``(3) made in writing in a manner which specifies 
        in readily verifiable fashion the energy efficient 
        building envelope components installed and their 
        respective energy efficiency levels.
    ``(e) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Building envelope component.--The term 
        `building envelope component' means--
                    ``(A) any insulation material or system 
                which is specifically and primarily designed to 
                reduce the heat loss or gain of a dwelling unit 
                when installed in or on such dwelling unit,
                    ``(B) exterior windows (including 
                skylights),
                    ``(C) exterior doors, and
                    ``(D) any metal roof installed on a 
                dwelling unit, but only if such roof has 
                appropriate pigmented coatings which are 
                specifically and primarily designed to reduce 
                the heat gain of such dwelling unit.
            ``(2) Manufactured homes included.--The term 
        `dwelling unit' includes a manufactured home which 
        conforms to Federal Manufactured Home Construction and 
        Safety Standards (section 3280 of title 24, Code of 
        Federal Regulations).
            ``(3) Application of rules.--Rules similar to the 
        rules under paragraphs (3), (4), and (5) of section 
        25C(d) shall apply.
    ``(f) Basis Adjustment.--For purposes of this subtitle, if 
a credit is allowed under this section for any expenditure with 
respect to any property, the increase in the basis of such 
property which would (but for this subsection) result from such 
expenditure shall be reduced by the amount of the credit so 
allowed.
    ``(g) Application of Section.--This section shall apply to 
qualified energy efficiency improvements installed after 
December 31, 2003, and before January 1, 2007.''.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 1016, as amended by 
        this Act, is amended by striking ``and'' at the end of 
        paragraph (28), by striking the period at the end of 
        paragraph (29) and inserting ``, and'', and by adding 
        at the end the following new paragraph:
            ``(30) to the extent provided in section 25D(f), in 
        the case of amounts with respect to which a credit has 
        been allowed under section 25D.''.
            (2) The table of sections for subpart A of part IV 
        of subchapter A of chapter 1, as amended by this Act, 
        is amended by inserting after the item relating to 
        section 25C the following new item:

        ``Sec. 25D. Energy efficiency improvements to existing homes.''.

    (c) Effective Date.--The amendments made by this section 
shall apply to taxable years ending after December 31, 2003.

SEC. 1305. CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT HOMES.

    (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. 45G. NEW ENERGY EFFICIENT HOME CREDIT.

    ``(a) In General.--For purposes of section 38, in the case 
of an eligible contractor with respect to a qualified new 
energy efficient home, the credit determined under this section 
for the taxable year with respect to such home is an amount 
equal to the aggregate adjusted bases of all energy efficient 
property installed in such home during construction of such 
home.
    ``(b) Limitations.--
            ``(1) Maximum credit.--
                    ``(A) In general.--The credit allowed by 
                this section with respect to a dwelling unit 
                shall not exceed--
                            ``(i) in the case of a dwelling 
                        unit described in clause (i) or (iii) 
                        of subsection (c)(3)(D), $1,000, and
                            ``(ii) in the case of a dwelling 
                        unit described in subsection 
                        (c)(3)(D)(ii), $2,000.
                    ``(B) Prior credit amounts on same dwelling 
                unit taken into account.--If a credit was 
                allowed under subsection (a) with respect to a 
                dwelling unit in 1 or more prior taxable years, 
                the amount of the credit otherwise allowable 
                for the taxable year with respect to such 
                dwelling unit shall be reduced by the sum of 
                the credits allowed under subsection (a) with 
                respect to the dwelling unit for all prior 
                taxable years.
            ``(2) Coordination with certain credits.--For 
        purposes of this section--
                    ``(A) the basis of any property referred to 
                in subsection (a) shall be reduced by that 
                portion of the basis of any property which is 
                attributable to qualified rehabilitation 
                expenditures (as defined in section 47(c)(2)) 
                or to the energy percentage of energy property 
                (as determined under section 48(a)), and
                    ``(B) expenditures taken into account under 
                section 47 or 48(a) shall not be taken into 
                account under this section.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible contractor.--The term `eligible 
        contractor' means--
                    ``(A) the person who constructed the 
                qualified new energy efficient home, or
                    ``(B) in the case of a qualified new energy 
                efficient home which is a manufactured home, 
                the manufactured home producer of such home.
        If more than 1 person is described in subparagraph (A) 
        or (B) with respect to any qualified new energy 
        efficient home, such term means the person designated 
        as such by the owner of such home.
            ``(2) Energy efficient property.--The term `energy 
        efficient property' means any energy efficient building 
        envelope component, and any energy efficient heating or 
        cooling equipment or system, which can, individually or 
        in combination with other components, result in a 
        dwelling unit meeting the requirements of this section.
            ``(3) Qualified new energy efficient home.--The 
        term `qualified new energy efficient home' means a 
        dwelling unit--
                    ``(A) located in the United States,
                    ``(B) the construction of which is 
                substantially completed after December 31, 
                2003,
                    ``(C) the original use of which, after such 
                construction, is reasonably expected to be as a 
                residence by the person who acquires such 
                dwelling unit from the eligible contractor,
                    ``(D) which is--
                            ``(i) certified to have a level of 
                        annual heating and cooling energy 
                        consumption which is at least 30 
                        percent below the annual level of 
                        heating and cooling energy consumption 
                        of a comparable dwelling unit 
                        constructed in accordance with the 
                        standards of chapter 4 of the 2000 
                        International Energy Conservation Code, 
                        as such Code (including supplements) is 
                        in effect on the date of the enactment 
                        of this section, and to have building 
                        envelope component improvements account 
                        for at least \1/3\ of such 30 percent,
                            ``(ii) certified to have a level of 
                        annual heating and cooling energy 
                        consumption which is at least 50 
                        percent below such annual level and to 
                        have building envelope component 
                        improvements account for at least \1/5\ 
                        of such 50 percent, or
                            ``(iii) a manufactured home which--
                                    ``(I) conforms to Federal 
                                Manufactured Home Construction 
                                and Safety Standards (section 
                                3280 of title 24, Code of 
                                Federal Regulations), and
                                    ``(II) meets the applicable 
                                standards required by the 
                                Administrator of the 
                                Environmental Protection Agency 
                                under the Energy Star Labeled 
                                Homes program.
            ``(4) Construction.--The term `construction' 
        includes substantial reconstruction and rehabilitation.
            ``(5) Acquire.--The term `acquire' includes 
        purchase and, in the case of reconstruction and 
        rehabilitation, such term includes a binding written 
        contract for such reconstruction or rehabilitation.
            ``(6) Building envelope component.--The term 
        `building envelope component' means--
                    ``(A) any insulation material or system 
                which is specifically and primarily designed to 
                reduce the heat loss or gain of a dwelling unit 
                when installed in or on such dwelling unit,
                    ``(B) exterior windows (including 
                skylights),
                    ``(C) exterior doors, and
                    ``(D) any metal roof installed on a 
                dwelling unit, but only if such roof has 
                appropriate pigmented coatings which--
                            ``(i) are specifically and 
                        primarily designed to reduce the heat 
                        gain of such dwelling unit, and
                            ``(ii) meet the Energy Star program 
                        requirements.
    ``(d) Certification.--
            ``(1) Method of certification.--A certification 
        described in subsection (c)(3)(D) shall be determined 
        in accordance with guidance prescribed by the 
        Secretary. Such guidance shall specify procedures and 
        methods for calculating energy and cost savings.
            ``(2) Form.--A certification described in 
        subsection (c)(3)(D) shall be made in writing--
                    ``(A) in a manner which specifies in 
                readily verifiable fashion the energy efficient 
                building envelope components and energy 
                efficient heating or cooling equipment 
                installed and their respective rated energy 
                efficiency performance, and
                    ``(B) in the case of a qualified new energy 
                efficient home which is a manufactured home, 
                accompanied by such documentation as required 
                by the Administrator of the Environmental 
                Protection Agency under the Energy Star Labeled 
                Homes program.
    ``(e) Basis Adjustment.--For purposes of this subtitle, if 
a credit is determined under this section for any expenditure 
with respect to any property, the increase in the basis of such 
property which would (but for this subsection) result from such 
expenditure shall be reduced by the amount of the credit so 
determined.
    ``(f) Application of Section.--Subsection (a) shall apply 
to qualified new energy efficient homes acquired during the 
period beginning on January 1, 2004, and ending on December 31, 
2006.''.
    (b) Credit Made Part of General Business Credit.--Section 
38(b) (relating to current year business credit) is amended by 
striking ``plus'' at the end of paragraph (14), by striking the 
period at the end of paragraph (15) and inserting ``, plus'', 
and by adding at the end the following new paragraph:
            ``(16) the new energy efficient home credit 
        determined under section 45G(a).''.
    (c) Basis Adjustment.--Subsection (a) of section 1016, as 
amended by this Act, is amended by striking ``and'' at the end 
of paragraph (29), by striking the period at the end of 
paragraph (30) and inserting ``, and'', and by adding at the 
end the following new paragraph:
            ``(31) to the extent provided in section 45G(e), in 
        the case of amounts with respect to which a credit has 
        been allowed under section 45G.''.
    (d) Limitation on Carryback.--
            (1) In general.--Subsection (d) of section 39 is 
        amended to read as follows:
    ``(d) Transitional Rule.--No portion of the unused business 
credit for any taxable year which is attributable to a credit 
specified in section 38(b) or any portion thereof may be 
carried back to any taxable year before the first taxable year 
for which such specified credit or such portion is allowable 
(without regard to subsection (a)).''.
            (2) Effective date.--The amendment made by 
        paragraph (1) shall apply with respect to taxable years 
        ending after December 31, 2002.
    (e) Deduction for Certain Unused Business Credits.--Section 
196(c) (defining qualified business credits) is amended by 
striking ``and'' at the end of paragraph (10), by striking the 
period at the end of paragraph (11) and inserting ``, and'', 
and by adding after paragraph (11) the following new paragraph:
            ``(12) the new energy efficient home credit 
        determined under section 45G(a).''.
    (f) Clerical Amendment.--The table of sections for subpart 
D of part IV of subchapter A of chapter 1 is amended by adding 
at the end the following new item:

        ``Sec. 45G. New energy efficient home credit.''.

    (g) Effective Date.--The amendments made by this section 
shall apply to taxable years ending after December 31, 2003.

SEC. 1306. ENERGY CREDIT FOR COMBINED HEAT AND POWER SYSTEM PROPERTY.

    (a) In General.--Section 48(a)(3)(A) (defining energy 
property), as amended by this Act, is amended by striking 
``or'' at the end of clause (ii), by adding ``or'' at the end 
of clause (iii), and by inserting after clause (iii) the 
following new clause:
                            ``(iv) combined heat and power 
                        system property,''.
    (b) Combined Heat and Power System Property.--Section 48 
(relating to energy credit; reforestation credit), as amended 
by this Act, 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)(iv)--
            ``(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, 2007.
            ``(2) Special rules.--
                    ``(A) Energy efficiency percentage.--For 
                purposes of this subsection, the energy 
                efficiency percentage of a system is the 
                fraction--
                            ``(i) the numerator of which is the 
                        total useful electrical, thermal, and 
                        mechanical power produced by the system 
                        at normal operating rates, and expected 
                        to be consumed in its normal 
                        application, and
                            ``(ii) the denominator of which is 
                        the lower heating value of the 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) Public utility property.--
                            ``(i) Accounting rule for public 
                        utility property.--If the combined heat 
                        and power system property is public 
                        utility property (as defined in section 
                        168(i)(10)), the taxpayer may only 
                        claim the credit under subsection (a) 
                        if, with respect to such property, the 
                        taxpayer uses a normalization method of 
                        accounting.
                            ``(ii) Certain exception not to 
                        apply.--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.''.
    (c) Effective Date.--The amendments made by this subsection 
shall apply to periods after December 31, 2003, 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. 1307. CREDIT FOR ENERGY EFFICIENT APPLIANCES.

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

``SEC. 45H. ENERGY EFFICIENT APPLIANCE CREDIT.

    ``(a) Allowance of Credit.--For purposes of section 38, the 
energy efficient appliance credit determined under this section 
for the taxable year is an amount equal to the sum of--
            ``(1) the tier I appliance amount, and
            ``(2) the tier II appliance amount,

with respect to qualified energy efficient appliances produced 
by the taxpayer during the calendar year ending with or within 
the taxable year.
    ``(b) Appliance Amounts.--For purposes of subsection (a)--
            ``(1) Tier i appliance amount.--The tier I 
        appliance amount is equal to--
                    ``(A) $100, multiplied by
                    ``(B) an amount (rounded to the nearest 
                whole number) equal to the applicable 
                percentage of the eligible production.
            ``(2) Tier ii appliance amount.--The tier II 
        appliance amount is equal to $150, multiplied by an 
        amount equal to the eligible production reduced by the 
        amount determined under paragraph (1)(B).
            ``(3) Applicable percentage.--The applicable 
        percentage is the percentage determined by dividing the 
        tier I appliances produced by the taxpayer during the 
        calendar year by the sum of the tier I and tier II 
        appliances so produced.
            ``(4) Eligible production.--The eligible production 
        of qualified energy efficient appliances by the 
        taxpayer for any calendar year is the excess of--
                    ``(A) the number of such appliances which 
                are produced by the taxpayer during such 
                calendar year, over
                    ``(B) 110 percent of the average annual 
                number of such appliances which were produced 
                by the taxpayer (or any predecessor) during the 
                preceding 3-calendar year period.
    ``(c) Qualified Energy Efficient Appliance.--For purposes 
of this section--
            ``(1) In general.--The term `qualified energy 
        efficient appliance' means any tier I appliance or tier 
        II appliance which is produced in the United States.
            ``(2) Tier i appliance.--The term `tier I 
        appliance' means--
                    ``(A) a clothes washer which is produced 
                with at least a 1.50 MEF, and
                    ``(B) a refrigerator which consumes at 
                least 15 percent (20 percent in the case of a 
                refrigerator produced after 2006) less kilowatt 
                hours per year than the energy conservation 
                standards for refrigerators promulgated by the 
                Department of Energy and effective on July 1, 
                2001.
            ``(3) Tier ii appliance.--The term `tier II 
        appliance' means a refrigerator produced before 2007 
        which consumes at least 20 percent less kilowatt hours 
        per year than the energy conservation standards 
        described in paragraph (2)(B).
            ``(4) Clothes washer.--The term `clothes washer' 
        means a residential clothes washer, including a 
        residential style coin operated washer.
            ``(5) Refrigerator.--The term `refrigerator' means 
        an automatic defrost refrigerator-freezer which has an 
        internal volume of at least 16.5 cubic feet.
            ``(6) MEF.--The term `MEF' means Modified Energy 
        Factor (as determined by the Secretary of Energy).
            ``(7) Produced.--The term `produced' includes 
        manufactured.
    ``(d) Limitation on Maximum Credit.--
            ``(1) In general.--The amount of credit allowed 
        under subsection (a) with respect to a taxpayer for any 
        taxable year shall not exceed $60,000,000, reduced by 
        the amount of the credit allowed under subsection (a) 
        to the taxpayer (or any predecessor) for any prior 
        taxable year.
            ``(2) Limitation based on gross receipts.--The 
        credit allowed under subsection (a) with respect to a 
        taxpayer for the taxable year shallnot exceed an amount 
equal to 2 percent of the average annual gross receipts of the taxpayer 
for the 3 taxable years preceding the taxable year for which the credit 
is determined.
            ``(3) Gross receipts.--For purposes of this 
        subsection, the rules of paragraphs (2) and (3) of 
        section 448(c) shall apply.
    ``(e) Special Rules.--For purposes of this section--
            ``(1) In general.--Rules similar to the rules of 
        subsections (c), (d), and (e) of section 52 shall 
        apply.
            ``(2) Controlled groups.--
                    ``(A) In general.--All persons treated as a 
                single employer under subsection (a) or (b) of 
                section 52 or subsection (m) or (o) of section 
                414 shall be treated as a single manufacturer.
                    ``(B) Inclusion of foreign corporations.--
                For purposes of subparagraph (A), in applying 
                subsections (a) and (b) of section 52 to this 
                section, section 1563 shall be applied without 
                regard to subsection (b)(2)(C) thereof.
    ``(f) Verification.--The taxpayer shall submit such 
information or certification as the Secretary, after 
consultation with the Secretary of Energy, determines necessary 
to claim the credit amount under subsection (a).
    ``(g) Termination.--This section shall not apply with 
respect to appliances produced after December 31, 2007.''.
    (b) Credit Made Part of General Business Credit.--Section 
38(b) (relating to current year business credit), as amended by 
this Act, is amended by striking ``plus'' at the end of 
paragraph (15), by striking the period at the end of paragraph 
(16) and inserting ``, plus'', and by adding at the end the 
following new paragraph:
            ``(17) the energy efficient appliance credit 
        determined under section 45H(a).''.
    (c) Clerical Amendment.--The table of sections for subpart 
D of part IV of subchapter A of chapter 1, as amended by this 
Act, is amended by adding at the end the following new item:

        ``Sec. 45H. Energy efficient appliance credit.''.

    (d) Effective Date.--The amendments made by this section 
shall apply to appliances produced after December 31, 2003, in 
taxable years ending after such date.

SEC. 1308. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

    (a) In General.--Part VI of subchapter B of chapter 1 
(relating to itemized deductions for individuals and 
corporations) is amended by inserting after section 179A the 
following new section:

``SEC. 179B. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

    ``(a) In General.--There shall be allowed as a deduction an 
amount equal to the cost of energy efficient commercial 
building property placed in service during the taxable year.
    ``(b) Maximum Amount of Deduction.--The deduction under 
subsection (a) with respect to any building for the taxable 
year and all prior taxable years shall not exceed an amount 
equal to the product of--
            ``(1) $1.50, and
            ``(2) the square footage of the building.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Energy efficient commercial building 
        property.--The term `energy efficient commercial 
        building property' means property--
                    ``(A) which is installed on or in a 
                building--
                            ``(i) which is located in the 
                        United States, and
                            ``(ii) which is the type of 
                        structure to which the Standard 90.1-
                        2001 is applicable,
                    ``(B) which is installed as part of--
                            ``(i) the lighting systems,
                            ``(ii) the heating, cooling, 
                        ventilation, and hot water systems, or
                            ``(iii) the building envelope, and
                    ``(C) which is certified in accordance with 
                subsection (d)(4) as being installed as part of 
                a plan designed to reduce the total annual 
                energy and power costs with respect to the 
                lighting systems, heating, cooling, 
                ventilation, and hot water systems of the 
                building by 50 percent or more in comparison to 
                a reference building which meets the minimum 
                requirements of Standard 90.1-2001 using 
                methods of calculation under subsection (d)(2).
            ``(2) Standard 90.1-2001.--The term `Standard 90.1-
        2001' means Standard 90.1-2001 of the American Society 
        of Heating, Refrigerating, and Air Conditioning 
        Engineers and the Illuminating Engineering Society of 
        North America (as in effect on April 2, 2003).
    ``(d) Special Rules.--
            ``(1) Partial allowance.--
                    ``(A) In general.--Except as provided in 
                subsection (f), in the case of a building 
                placed in service on or before the date of the 
                enactment of this section, if--
                            ``(i) the requirement of subsection 
                        (c)(1)(C) is not met, but
                            ``(ii) there is a certification in 
                        accordance with subsection (d)(4) that 
                        any system referred to in subsection 
                        (c)(1)(B) satisfies the energy-savings 
                        targets established by the Secretary 
                        under subparagraph (B) with respect to 
                        such system,
                then the requirement of subsection (c)(1)(C) 
                shall be treated as met with respect to such 
                system, and the deduction under subsection (a) 
                shall be allowed with respect to energy 
                efficient commercial building property 
                installed as part of such system and as part of 
                a plan to meet such targets, except that 
                subsection (b) shall be applied to such 
                property by substituting `$.50' for `$1.50'.
                    ``(B) Regulations.--The Secretary, after 
                consultation with the Secretary of Energy, 
                shall establish a target for each system 
                described in subsection (c)(1)(B) which, if 
                such targets were met for all such systems, the 
                building would meet the requirements of 
                subsection (c)(1)(C).
            ``(2) Methods of calculation.--The Secretary, after 
        consultation with the Secretary of Energy, shall 
        promulgate regulations which describe in detail methods 
        for calculating and verifying energy and power cost for 
        purposes of this section.
            ``(3) Notice to owner.--Each certification required 
        under this section shall include an explanation to the 
        building owner regarding the energy efficiency features 
        of the building and its projected annual energy costs.
            ``(4) Certification.--
                    ``(A) In general.--The Secretary shall 
                prescribe the manner and method for the making 
                of certifications under this section.
                    ``(B) Procedures.--The Secretary shall 
                include as part of the certification process 
                procedures for inspection and testing by 
                qualified individuals described in subparagraph 
                (C) to ensure compliance of buildings with 
                energy-savings plans and targets. Such 
                procedures shall be--
                            ``(i) comparable, given the 
                        difference between commercial and 
                        residential buildings, to the 
                        requirements in the Mortgage Industry 
                        National Accreditation Procedures for 
                        Home Energy Rating Systems, and
                            ``(ii) fuel neutral such that the 
                        same energy efficiency measures allow a 
                        building to be eligible for the 
                        deduction under this section regardless 
                        of whether such building uses a gas or 
                        oil furnace or boiler, an electric heat 
                        pump, or other fuel source.
                    ``(C) Qualified individuals.--Individuals 
                qualified to determine compliance shall be only 
                those individuals who are recognized by an 
                organization certified by the Secretary for 
                such purposes.
    ``(e) Basis Reduction.--For purposes of this subtitle, if a 
deduction is allowed under this section with respect to any 
energy efficient commercial building property, the basis of 
such property shall be reduced by the amount of the deduction 
so allowed.
    ``(f) Interim Rules for Lighting Systems.--Until such time 
as the Secretary issues final regulations under subsection 
(d)(1)(B) with respect to property which is part of a lighting 
system--
            ``(1) In general.--The lighting system target under 
        subsection (d)(1)(A)(ii) shall be a reduction in 
        lighting power density of 25 percent (50 percent in the 
        case of a warehouse) of the minimum requirements in 
        Table 9.3.1.1 or Table 9.3.1.2 (not including 
        additional interior lighting power allowances) of 
        Standard 90.1-2001.
            ``(2) Reduction in deduction if reduction less than 
        40 percent.--
                    ``(A) In general.--If, with respect to the 
                lighting system of any building other than a 
                warehouse, the reduction in lighting power 
                density of the lighting system is not at least 
                40 percent, only the applicable percentage of 
                the amount of deduction otherwise allowable 
                under this section with respect to such 
                property shall be allowed.
                    ``(B) Applicable percentage.--For purposes 
                of subparagraph (A), the applicable percentage 
                is the number of percentage points (not greater 
                than 100) equal to the sum of--
                            ``(i) 50, and
                            ``(ii) the amount which bears the 
                        same ratio to 50 as the excess of the 
                        reduction of lighting power density of 
                        the lighting system over 25 percentage 
                        points bears to 15.
                    ``(C) Exceptions.--This subsection shall 
                not apply to any system--
                            ``(i) the controls and circuiting 
                        of which do not comply fully with the 
                        mandatory and prescriptive requirements 
                        of Standard 90.1-2001 and which do not 
                        include provision for bilevel switching 
                        in all occupancies except hotel and 
                        motel guest rooms, store rooms, 
                        restrooms, and public lobbies, or
                            ``(ii) which does not meet the 
                        minimum requirements for calculated 
                        lighting levels as set forth in the 
                        Illuminating Engineering Society of 
                        North America Lighting Handbook, 
                        Performance and Application, Ninth 
                        Edition, 2000.
    ``(g) Regulations.--The Secretary shall promulgate such 
regulations as necessary--
            ``(1) to take into account new technologies 
        regarding energy efficiency and renewable energy for 
        purposes of determining energy efficiency and savings 
        under this section, and
            ``(2) to provide for a recapture of the deduction 
        allowed under this section if the plan described in 
        subsection (c)(1)(C) or (d)(1)(A) is not fully 
        implemented.
    ``(h) Termination.--This section shall not apply with 
respect to property placed in service after December 31, 
2007.''.
    (b) Conforming Amendments.--
            (1) Section 1016(a), as amended by this section, is 
        amended by striking ``and'' at the end of paragraph 
        (30), by striking the period at the end of paragraph 
        (31) and inserting ``, and'', and by adding at the end 
        the following new paragraph:
            ``(32) to the extent provided in section 
        179B(e).''.
            (2) Section 1245(a) is amended by inserting 
        ``179B,'' after ``179A,'' both places it appears in 
        paragraphs (2)(C) and (3)(C).
            (3) Section 1250(b)(3) is amended by inserting 
        before the period at the end of the first sentence ``or 
        by section 179B''.
            (4) Section 263(a)(1) is amended by striking ``or'' 
        at the end of subparagraph (G), by striking the period 
        at the end of subparagraph (H) and inserting ``, or'', 
        and by inserting after subparagraph (H) the following 
        new subparagraph:
                    ``(I) expenditures for which a deduction is 
                allowed under section 179B.''.
            (5) Section 312(k)(3)(B) is amended by striking 
        ``or 179A'' each place it appears in the heading and 
        text and inserting ``, 179A, or 179B''.
    (c) Clerical Amendment.--The table of sections for part VI 
of subchapter B of chapter 1 is amended by inserting after 
section 179A the following new item:

        ``Sec. 179B. Energy efficient commercial buildings deduction.''.

    (d) 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. 1309. 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:
            ``(15) 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, 2008, 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) Alternative System.--The table contained in section 
168(g)(3)(B) is amended by inserting after the item relating to 
subparagraph (A)(iii) the following:

``(A)(iv)......................................................... 20''.

    (d) 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. 1310. CREDIT FOR PRODUCTION FROM ADVANCED NUCLEAR POWER 
                    FACILITIES.

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

``SEC. 45L. CREDIT FOR PRODUCTION FROM ADVANCED NUCLEAR POWER 
                    FACILITIES.

    ``(a) General Rule.--For purposes of section 38, the 
advanced nuclear power facility production credit of any 
taxpayer for any taxable year is equal to the product of--
            ``(1) 1.8 cents, multiplied by
            ``(2) the kilowatt hours of electricity--
                    ``(A) produced by the taxpayer at an 
                advanced nuclear power facility during the 8-
                year period beginning on the date the facility 
                was originally placed in service, and
                    ``(B) sold by the taxpayer to an unrelated 
                person during the taxable year.
    ``(b) National Limitation.--
            ``(1) In general.--The amount of credit which would 
        (but for this subsection and subsection (c)) be allowed 
        with respect to any facility for any taxable year shall 
        not exceed the amount which bears the same ratio to 
        such amount of credit as--
                    ``(A) the national megawatt capacity 
                limitation allocated to the facility, bears to
                    ``(B) the total megawatt nameplate capacity 
                of such facility.
            ``(2) Amount of national limitation.--The national 
        megawatt capacity limitation shall be 6,000 megawatts.
            ``(3) Allocation of limitation.--The Secretary 
        shall allocate the national megawatt capacity 
        limitation in such manner as the Secretary may 
        prescribe.
            ``(4) Regulations.--Not later than 6 months after 
        the date of the enactment of this section, the 
        Secretary shall prescribe such regulations as may be 
        necessary or appropriate to carry out the purposes of 
        this subsection. Such regulations shall provide a 
        certification process under which the Secretary, after 
        consultation with the Secretary of Energy, shall 
        approve and allocate the national megawatt capacity 
        limitation.
    ``(c) Other Limitations.--
            ``(1) Annual limitation.--The amount of the credit 
        allowable under subsection (a) (after the application 
        of subsection (b)) for any taxable year with respect to 
        any facility shall not exceed an amount which bears the 
        same ratio to $125,000,000 as--
                    ``(A) the national megawatt capacity 
                limitation allocated under subsection (b) to 
                the facility, bears to
                    ``(B) 1,000.
            ``(2) Other limitations.--Rules similar to the 
        rules of section 45(b) shall apply for purposes of this 
        section, except that paragraph (2) thereof shall not 
        apply to the 1.8 cents under subsection (a)(1).
    ``(d) Advanced Nuclear Power Facility.--For purposes of 
this section--
            ``(1) In general.--The term `advanced nuclear power 
        facility' means any advanced nuclear facility--
                    ``(A) which is owned by the taxpayer and 
                which uses nuclear energy to produce 
                electricity, and
                    ``(B) which is placed in service after the 
                date of the enactment of this paragraph and 
                before January 1, 2021.
            ``(2) Advanced nuclear facility.--For purposes of 
        paragraph (1), the term `advanced nuclear facility' 
        means any nuclear facility the reactor design for which 
        is approved after the date of the enactment of this 
        paragraph by the Nuclear Regulatory Commission (and 
        such design or a substantially similar design of 
        comparable capacity was not approved on or before such 
        date).
    ``(e) Other Rules To Apply.--Rules similar to the rules of 
paragraphs (1), (2), (3), (4), and (5) of section 45(e) shall 
apply for purposes of this section.''
    (b) Credit Treated as Business Credit.--Section 38(b), as 
amended by this Act, is amended by striking ``plus'' at the end 
of paragraph (20), by striking the period at the end of 
paragraph (21) and inserting ``, plus'', and by adding at the 
end the following:
            ``(22) the advanced nuclear power facility 
        production credit determined under section 45L(a).''.
    (c) Clerical Amendment.--The table of sections for subpart 
D of part IV of subchapter A of chapter 1, as amended by this 
Act, is amended by adding at the end the following:

        ``Sec. 45L. Credit for production from advanced nuclear power 
                  facilities.''.

    (d) Effective Date.--The amendments made by this section 
shall apply to production in taxable years beginning after 
December 31, 2003.

             PART II--FUELS AND ALTERNATIVE MOTOR VEHICLES

SEC. 1311. REPEAL OF 4.3-CENT MOTOR FUEL EXCISE TAXES ON RAILROADS AND 
                    INLAND WATERWAY TRANSPORTATION WHICH REMAIN IN 
                    GENERAL FUND.

    (a) Taxes on Trains.--
            (1) In general.--Subparagraph (A) of section 
        4041(a)(1) is amended by striking ``or a diesel-powered 
        train'' each place it appears and by striking ``or 
        train''.
            (2) Conforming amendments.--
                    (A) Subparagraph (C) of section 4041(a)(1) 
                is amended by striking clause (ii) and by 
                redesignating clause (iii) as clause (ii).
                    (B) Subparagraph (C) of section 4041(b)(1) 
                is amended by striking all that follows 
                ``section 6421(e)(2)'' and inserting a period.
                    (C) Subsection (d) of section 4041 is 
                amended by redesignating paragraph (3) as 
                paragraph (4) and by inserting after paragraph 
                (2) the following new paragraph:
            ``(3) Diesel fuel used in trains.--There is hereby 
        imposed a tax of 0.1 cent per gallon on any liquid 
        other than gasoline (as defined in section 4083)--
                    ``(A) sold by any person to an owner, 
                lessee, or other operator of a diesel-powered 
                train for use as a fuel in such train, or
                    ``(B) used by any person as a fuel in a 
                diesel-powered train unless there was a taxable 
                sale of such fuel under subparagraph (A).
        No tax shall be imposed by this paragraph on the sale 
        or use of any liquid if tax was imposed on such liquid 
        under section 4081.''.
                    (D) Subsection (f) of section 4082 is 
                amended by striking ``section 4041(a)(1)'' and 
                inserting ``subsections (d)(3) and (a)(1) of 
                section 4041, respectively''.
                    (E) Paragraph (3) of section 4083(a) is 
                amended by striking ``or a diesel-powered 
                train''.
                    (F) Paragraph (3) of section 6421(f) is 
                amended to read as follows:
            ``(3) Gasoline used in trains.--In the case of 
        gasoline used as a fuel in a train, this section shall 
        not apply with respect to the Leaking Underground 
        Storage Tank Trust Fund financing rate under section 
        4081.''.
                    (G) Paragraph (3) of section 6427(l) is 
                amended to read as follows:
            ``(3) Refund of certain taxes on fuel used in 
        diesel-powered trains.--For purposes of this 
        subsection, the term `nontaxable use' includes fuel 
        used in a diesel-powered train. The preceding sentence 
        shall not apply to the tax imposed by section 4041(d) 
        and the Leaking Underground Storage Tank Trust Fund 
        financing rate under section 4081 except with respect 
        to fuel sold for exclusive use by a State or any 
        political subdivision thereof.''.
    (b) Fuel Used on Inland Waterways.--
            (1) In general.--Paragraph (1) of section 4042(b) 
        is amended by adding ``and'' at the end of subparagraph 
        (A), by striking ``, and'' at the end of subparagraph 
        (B) and inserting a period, and by striking 
        subparagraph (C).
            (2) Conforming amendment.--Paragraph (2) of section 
        4042(b) is amended by striking subparagraph (C).
    (c) Effective Date.--The amendments made by this section 
shall take effect on January 1, 2004.

SEC. 1312. REDUCED MOTOR FUEL EXCISE TAX ON CERTAIN MIXTURES OF DIESEL 
                    FUEL.

    (a) In General.--Paragraph (2) of section 4081(a) is 
amended by adding at the end the following:
                    ``(C) Diesel-water fuel emulsion.--In the 
                case of diesel-water fuel emulsion at least 14 
                percent of which is water and with respect to 
                which the emulsion additive is registered by a 
                United States manufacturer with the 
                Environmental Protection Agency pursuant to 
                section 211 of the Clean Air Act (as in effect 
                on March 31, 2003), subparagraph (A)(iii) shall 
                be applied by substituting `19.7 cents' for 
                `24.3 cents'.''.
    (b) Special Rules for Diesel-Water Fuel Emulsions.--
            (1) Refunds for tax-paid purchases.--Section 6427 
        is amended by redesignating subsections(m) through (p) 
as subsections (n) through (q), respectively, and by inserting after 
subsection (l) the following new subsection:
    ``(m) Diesel Fuel Used To Produce Emulsion.--
            ``(1) In general.--Except as provided in subsection 
        (k), if any diesel fuel on which tax was imposed by 
        section 4081 at the regular tax rate is used by any 
        person in producing an emulsion described in section 
        4081(a)(2)(C) which is sold or used in such person's 
        trade or business, the Secretary shall pay (without 
        interest) to such person an amount equal to the excess 
        of the regular tax rate over the incentive tax rate 
        with respect to such fuel.
            ``(2) Definitions.--For purposes of paragraph (1)--
                    ``(A) Regular tax rate.--The term `regular 
                tax rate' means the aggregate rate of tax 
                imposed by section 4081 determined without 
                regard to section 4081(a)(2)(C).
                    ``(B) Incentive tax rate.--The term 
                `incentive tax rate' means the aggregate rate 
                of tax imposed by section 4081 determined with 
                regard to section 4081(a)(2)(C).''.
            (2) Later separation of fuel.--
                    (A) In general.--Section 4081 (relating to 
                imposition of tax) is amended by redesignating 
                subsections (d) and (e) as subsections (e) and 
                (f), respectively, and by inserting after 
                subsection (c) the following new subsection:
    ``(d) Later Separation of Fuel From Diesel-Water Fuel 
Emulsion.--If any person separates the taxable fuel from a 
diesel-water fuel emulsion on which tax was imposed under 
subsection (a) at a rate determined under subsection (a)(2)(C) 
(or with respect to which a credit or payment was allowed or 
made by reason of section 6427), such person shall be treated 
as the refiner of such taxable fuel. The amount of tax imposed 
on any removal of such fuel by such person shall be reduced by 
the amount of tax imposed (and not credited or refunded) on any 
prior removal or entry of such fuel.''.
                    (B) Conforming amendment.--Subsection (d) 
                of section 6416 is amended by striking 
                ``section 4081(e)'' and inserting ``section 
                4081(f)''.
    (c) Effective Date.--The amendments made by this section 
shall take effect on January 1, 2004.

SEC. 1313. SMALL ETHANOL PRODUCER CREDIT.

    (a) Allocation of Alcohol Fuels Credit to Patrons of a 
Cooperative.--Section 40(g) (relating to definitions and 
special rules for eligible small ethanol producer credit) is 
amended by adding at the end the following new paragraph:
            ``(6) Allocation of small ethanol producer credit 
        to patrons of cooperative.--
                    ``(A) Election to allocate.--
                            ``(i) In general.--In the case of a 
                        cooperative organization described in 
                        section 1381(a), any portion of the 
                        credit determined under subsection 
                        (a)(3) for the taxable year may, at the 
                        election of the organization, be 
                        apportioned pro rata among patrons of 
                        the organization on the basis of the 
                        quantity or value of business done with 
                        or for such patrons for the taxable 
                        year.
                            ``(ii) Form and effect of 
                        election.--An election under clause (i) 
                        for any taxable year shall be made on a 
                        timely filed return for such year. Such 
                        election, once made, shall be 
                        irrevocable for such taxable year.
                    ``(B) Treatment of organizations and 
                patrons.--The amount of the credit apportioned 
                to patrons under subparagraph (A)--
                            ``(i) shall not be included in the 
                        amount determined under subsection (a) 
                        with respect to the organization for 
                        the taxable year, and
                            ``(ii) shall be included in the 
                        amount determined under subsection (a) 
                        for the taxable year of each patron for 
                        which the patronage dividends for the 
                        taxable year described in subparagraph 
                        (A) are included in gross income.
                    ``(C) Special rule.--If the amount of a 
                credit which has been apportioned to any patron 
                under this paragraph is decreased for any 
                reason--
                            ``(i) such amount shall not 
                        increase the tax imposed on such 
                        patron, and
                            ``(ii) the tax imposed by this 
                        chapter on such organization shall be 
                        increased by such amount.
                The increase under clause (ii) shall not be 
                treated as tax imposed by this chapter for 
                purposes of determining the amount of any 
                credit under this chapter or for purposes of 
                section 55.''.
    (b) Definition of Small Ethanol Producer.--Section 40(g) 
(relating to definitions and special rules for eligible small 
ethanol producer credit) is amended by striking ``30,000,000'' 
each place it appears and inserting ``60,000,000''.
    (c) Conforming Amendment.--Section 1388 (relating to 
definitions and special rules for cooperative organizations) is 
amended by adding at the end the following new subsection:
    ``(k) Cross Reference.--

          ``For provisions relating to the apportionment of the alcohol 
        fuels credit between cooperative organizations and their 
        patrons, see section 40(g)(6).''.

    (d) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2003.

SEC. 1314. INCENTIVES FOR BIODIESEL.

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

``SEC. 40A. BIODIESEL USED AS FUEL.

    ``(a) General Rule.--For purposes of section 38, the 
biodiesel fuels credit determined under this section for the 
taxable year is an amount equal to the sum of--
            ``(1) the biodiesel mixture credit, plus
            ``(2) the biodiesel credit.
    ``(b) Definition of Biodiesel Mixture Credit and Biodiesel 
Credit.--For purposes of this section--
            ``(1) Biodiesel mixture credit.--
                    ``(A) In general.--The biodiesel mixture 
                credit of any taxpayer for any taxable year is 
                50 cents for each gallon of biodiesel used by 
                the taxpayer in the production of a qualified 
                biodiesel mixture.
                    ``(B) Qualified biodiesel mixture.--The 
                term `qualified biodiesel mixture' means a 
                mixture of biodiesel and a taxable fuel (within 
                the meaning of section 4083(a)(1)) which--
                            ``(i) is sold by the taxpayer 
                        producing such mixture to any person 
                        for use as a fuel, or
                            ``(ii) is used as a fuel by the 
                        taxpayer producing such mixture.
                    ``(C) Sale or use must be in trade or 
                business, etc.--Biodiesel used in the 
                production of a qualified biodiesel mixture 
                shall be taken into account--
                            ``(i) only if the sale or use 
                        described in subparagraph (B) is in a 
                        trade or business of the taxpayer, and
                            ``(ii) for the taxable year in 
                        which such sale or use occurs.
                    ``(D) Casual off-farm production not 
                eligible.--No credit shall be allowed under 
                this section with respect to any casual off-
                farm production of a qualified biodiesel 
                mixture.
            ``(2) Biodiesel credit.--
                    ``(A) In general.--The biodiesel credit of 
                any taxpayer for any taxable year is 50 cents 
                for each gallon of biodiesel which is not in a 
                mixture and which during the taxable year--
                            ``(i) is used by the taxpayer as a 
                        fuel in a trade or business, or
                            ``(ii) is sold by the taxpayer at 
                        retail to a person and placed in the 
                        fuel tank of such person's vehicle.
                    ``(B) User credit not to apply to biodiesel 
                sold at retail.--No credit shall be allowed 
                under subparagraph (A)(i) with respect to any 
                biodiesel which was sold in a retail sale 
                described in subparagraph (A)(ii).
            ``(3) Credit for agri-biodiesel.--In the case of 
        any biodiesel which is agri-biodiesel, paragraphs 
        (1)(A) and (2)(A) shall be applied by substituting 
        `$1.00' for `50 cents'.
            ``(4) Certification for biodiesel.--No credit shall 
        be allowed under this section unless the taxpayer 
        obtains a certification (in such form and manner as 
        prescribed by the Secretary) from the producer of the 
        biodiesel which identifies the product produced and the 
        percentage of biodiesel and agri-biodiesel in the 
        product.
    ``(c) Coordination With Credit Against Excise Tax.--The 
amount of the credit determined under this section with respect 
to any biodiesel shall be properly reduced to take into account 
any benefit provided with respect to such biodiesel solely by 
reason of the application of section 6426.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Biodiesel.--The term `biodiesel' means the 
        monoalkyl esters of long chain fatty acids derived from 
        plant or animal matter which meet--
                    ``(A) the registration requirements for 
                fuels and fuel additives established by the 
                Environmental Protection Agency under section 
                211 of the Clean Air Act (42 U.S.C. 7545), and
                    ``(B) the requirements of the American 
                Society of Testing and Materials D6751.
            ``(2) Agri-biodiesel.--The term `agri-biodiesel' 
        means biodiesel derived solely from virgin oils, 
        including esters derived from virgin vegetable oils 
        from corn, soybeans, sunflower seeds, cottonseeds, 
        canola, crambe, rapeseeds, safflowers, flaxseeds, rice 
        bran, and mustard seeds, and from animal fats.
            ``(3) Mixture or biodiesel not used as a fuel, 
        etc.--
                    ``(A) Mixtures.--If--
                            ``(i) any credit was determined 
                        under this section with respect to 
                        biodiesel used in the production of any 
                        qualified biodiesel mixture, and
                            ``(ii) any person--
                                    ``(I) separates the 
                                biodiesel from the mixture, or
                                    ``(II) without separation, 
                                uses the mixture other than as 
                                a fuel,
                then there is hereby imposed on such person a 
                tax equal to the product of the rate applicable 
                under subsection (b)(1)(A) and the number of 
                gallons of such biodiesel in such mixture.
                    ``(B) Biodiesel.--If--
                            ``(i) any credit was determined 
                        under this section with respect to the 
                        retail sale of any biodiesel, and
                            ``(ii) any person mixes such 
                        biodiesel or uses such biodiesel other 
                        than as a fuel,
                then there is hereby imposed on such person a 
                tax equal to the product of the rate applicable 
                under subsection (b)(2)(A) and the number of 
                gallons of such biodiesel.
                    ``(C) Applicable laws.--All provisions of 
                law, including penalties, shall, insofar as 
                applicable and not inconsistent with this 
                section, apply in respect of any tax imposed 
                under subparagraph (A) or (B) as if such tax 
                were imposed by section 4081 and not by this 
                chapter.
            ``(4) Pass-thru in the case of estates and 
        trusts.--Under regulations prescribed by the Secretary, 
        rules similar to the rules of subsection (d) of section 
        52 shall apply.
    ``(e) Termination.--This section shall not apply to any 
sale or use after December 31, 2005.''.
    (b) Credit Treated as Part of General Business Credit.--
Section 38(b) (relating to current year business credit) is 
amended by striking ``plus'' at the end of paragraph (16), by 
striking the period at the end ofparagraph (17) and inserting 
``, plus'', and by adding at the end the following new paragraph:
            ``(18) the biodiesel fuels credit determined under 
        section 40A(a).''.
    (c) Conforming Amendments.--
            (1)(A) Section 87 is amended to read as follows:

``SEC. 87. ALCOHOL AND BIODIESEL FUELS CREDITS.

    ``Gross income includes--
            ``(1) the amount of the alcohol fuels credit 
        determined with respect to the taxpayer for the taxable 
        year under section 40(a), and
            ``(2) the biodiesel fuels credit determined with 
        respect to the taxpayer for the taxable year under 
        section 40A(a).''.
            (B) The item relating to section 87 in the table of 
        sections for part II of subchapter B of chapter 1 is 
        amended by striking ``fuel credit'' and inserting ``and 
        biodiesel fuels credits''.
            (2) Section 196(c), as amended by this Act, is 
        amended by striking ``and'' at the end of paragraph 
        (11), by striking the period at the end of paragraph 
        (12) and inserting ``, and'', and by adding at the end 
        the following new paragraph:
            ``(13) the biodiesel fuels credit determined under 
        section 40A(a).''.
            (3) The table of sections for subpart D of part IV 
        of subchapter A of chapter 1 is amended by adding after 
        the item relating to section 40 the following new item:

        ``Sec. 40A. Biodiesel used as fuel.''.

    (d) Effective Date.--The amendments made by this section 
shall apply to fuel produced, and sold or used, after December 
31, 2003, in taxable years ending after such date.

SEC. 1315. ALCOHOL FUEL AND BIODIESEL MIXTURES EXCISE TAX CREDIT.

    (a) In General.--Subchapter B of chapter 65 (relating to 
rules of special application) is amended by inserting after 
section 6425 the following new section:

``SEC. 6426. CREDIT FOR ALCOHOL FUEL AND BIODIESEL MIXTURES.

    ``(a) Allowance of Credits.--There shall be allowed as a 
credit against the tax imposed by section 4081 an amount equal 
to the sum of--
            ``(1) the alcohol fuel mixture credit, plus
            ``(2) the biodiesel mixture credit.
    ``(b) Alcohol Fuel Mixture Credit.--
            ``(1) In general.--For purposes of this section, 
        the alcohol fuel mixture credit is the product of the 
        applicable amount and the number of gallons of alcohol 
        used by the taxpayer in producing any alcohol fuel 
        mixture for sale or use in a trade or business of the 
        taxpayer.
            ``(2) Applicable amount.--For purposes of this 
        subsection--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the applicable amount is 52 
                cents (51 cents in the case of any sale or use 
                after 2004).
                    ``(B) Mixtures not containing ethanol.--In 
                the case of an alcohol fuel mixture in which 
                none of the alcohol consists of ethanol, the 
                applicable amount is 60 cents.
            ``(3) Alcohol fuel mixture.--For purposes of this 
        subsection, the term `alcohol fuel mixture' means a 
        mixture of alcohol and a taxable fuel which--
                    ``(A) is sold by the taxpayer producing 
                such mixture to any person for use as a fuel,
                    ``(B) is used as a fuel by the taxpayer 
                producing such mixture, or
                    ``(C) is removed from the refinery by a 
                person producing such mixture.
            ``(4) Other definitions.--For purposes of this 
        subsection--
                    ``(A) Alcohol.--The term `alcohol' includes 
                methanol and ethanol but does not include--
                            ``(i) alcohol produced from 
                        petroleum, natural gas, or coal 
                        (including peat), or
                            ``(ii) alcohol with a proof of less 
                        than 190 (determined without regard to 
                        any added denaturants).
                Such term also includes an alcohol gallon 
                equivalent of ethyl tertiary butyl ether or 
                other ethers produced from such alcohol.
                    ``(B) Taxable fuel.--The term `taxable 
                fuel' has the meaning given such term by 
                section 4083(a)(1).
            ``(5) Termination.--This subsection shall not apply 
        to any sale, use, or removal for any period after 
        December 31, 2010.
    ``(c) Biodiesel Mixture Credit.--
            ``(1) In general.--For purposes of this section, 
        the biodiesel mixture credit is the product of the 
        applicable amount and the number of gallons ofbiodiesel 
used by the taxpayer in producing any biodiesel mixture for sale or use 
in a trade or business of the taxpayer.
            ``(2) Applicable amount.--For purposes of this 
        subsection--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the applicable amount is 50 
                cents.
                    ``(B) Amount for agri-biodiesel.--In the 
                case of any biodiesel which is agri-biodiesel, 
                the applicable amount is $1.00.
            ``(3) Biodiesel mixture.--For purposes of this 
        section, the term `biodiesel mixture' means a mixture 
        of biodiesel and a taxable fuel which--
                    ``(A) is sold by the taxpayer producing 
                such mixture to any person for use as a fuel,
                    ``(B) is used as a fuel by the taxpayer 
                producing such mixture, or
                    ``(C) is removed from the refinery by a 
                person producing such mixture.
            ``(4) Certification for biodiesel.--No credit shall 
        be allowed under this section unless the taxpayer 
        obtains a certification (in such form and manner as 
        prescribed by the Secretary) from the producer of the 
        biodiesel which identifies the product produced and the 
        percentage of biodiesel and agri-biodiesel in the 
        product.
            ``(5) Other definitions.--Any term used in this 
        subsection which is also used in section 40A shall have 
        the meaning given such term by section 40A.
            ``(6) Termination.--This subsection shall not apply 
        to any sale, use, or removal for any period after 
        December 31, 2005.
    ``(d) Mixture not used as a fuel, etc.--
            ``(1) Imposition of tax.--If--
                    ``(A) any credit was determined under this 
                section with respect to alcohol or biodiesel 
                used in the production of any alcohol fuel 
                mixture or biodiesel mixture, respectively, and
                    ``(B) any person--
                            ``(i) separates the alcohol or 
                        biodiesel from the mixture, or
                            ``(ii) without separation, uses the 
                        mixture other than as a fuel,
                then there is hereby imposed on such person a 
                tax equal to the product of the applicable 
                amount and the number of gallons of such 
                alcohol or biodiesel.
            ``(2) Applicable laws.--All provisions of law, 
        including penalties, shall, insofar as applicable and 
        not inconsistent with this section, apply in respect of 
        any tax imposed under paragraph (1) as if such tax were 
        imposed by section 4081 and not by this section.
    ``(e) Coordination With Exemption From Excise Tax.--Rules 
similar to the rules under section 40(c) shall apply for 
purposes of this section.''.
    (b) Registration Requirement.--Section 4101(a) (relating to 
registration) is amended by inserting ``and every person 
producing biodiesel (as defined in section 40A(d)(1)) or 
alcohol (as defined in section 6426(b)(4)(A))'' after ``4091''.
    (c) Additional Amendments.--
            (1) Section 40(c) is amended by striking ``or 
        section 4091(c)'' and inserting ``section 4091(c), or 
        section 6426''.
            (2) Section 40(e)(1) is amended--
                    (A) by striking ``2007'' in subparagraph 
                (A) and inserting ``2010'', and
                    (B) by striking ``2008'' in subparagraph 
                (B) and inserting ``2011''.
            (3) Section 40(h) is amended--
                    (A) by striking ``2007'' in paragraph (1) 
                and inserting ``2010'', and
                    (B) by striking ``, 2006, or 2007'' in the 
                table contained in paragraph (2) and inserting 
                ``through 2010''.
            (4)(A) Subpart C of part III of subchapter A of 
        chapter 32 is amended by adding at the end the 
        following new section:

``SEC. 4104. INFORMATION REPORTING FOR PERSONS CLAIMING CERTAIN TAX 
                    BENEFITS.

    ``(a) In General.--The Secretary shall require any person 
claiming tax benefits under the provisions of section 34, 40, 
40A, 4041(b)(2), 4041(k), 4081(c), 6426, or 6427(f) to file a 
quarterly return (in such manner as the Secretary may 
prescribe) providing such information relating to such benefits 
and the coordination of such benefits as the Secretary may 
require to ensure the proper administration and use of such 
benefits.
    ``(b) Enforcement.--With respect to any person described in 
subsection (a) and subject to registration requirements under 
this title, rules similar to rules of section 4222(c) shall 
apply with respect to any requirement under this section.''.
            (B) The table of sections for subpart C of part III 
        of subchapter A of chapter 32 is amended by adding at 
        the end the following new item:

    ``Sec. 4104. Information reporting for persons claiming certain tax 
              benefits.''.

            (5) Section 6427(i)(3) is amended--
                    (A) by adding at the end of subparagraph 
                (A) the following new flush sentence:
                ``In the case of an electronic claim, this 
                subparagraph shall be applied without regard to 
                clause (i).'', and
                    (B) by striking ``20 days of the date of 
                the filing of such claim'' in subparagraph (B) 
                and inserting ``45 days of the date of the 
                filing of such claim (20 days in the case of an 
                electronic claim)''.
            (6) Section 9503(b)(1) is amended by adding at the 
        end the following new flush sentence:
        ``For purposes of this paragraph, taxes received under 
        sections 4041 and 4081 shall be determined without 
        reduction for credits under section 6426.''.
    (d) Clerical Amendment.--The table of sections for 
subchapter B of chapter 65 is amended by inserting after the 
item relating to section 6425 the following new item:

    ``Sec. 6426. Credit for alcohol fuel and biodiesel mixtures.''.

    (e) Effective Dates.--
            (1) In general.--Except as provided in paragraphs 
        (2) and (3), the amendments made by this section shall 
        apply to fuel sold, used, or removed after December 31, 
        2003.
            (2) Subsection (c)(4).--The amendments made by 
        subsection (c)(4) shall take effect on January 1, 2004.
            (3) Subsection (c)(5).--The amendments made by 
        subsection (c)(5) shall apply to claims filed after 
        December 31, 2004.
    (f) Format for Filing.--The Secretary of the Treasury shall 
prescribe the electronic format for filing claims described in 
section 6427(i)(3)(B) of the Internal Revenue Code of 1986 (as 
amended by subsection (c)(5)(A)) not later than December 31, 
2004.

SEC. 1316. NONAPPLICATION OF EXPORT EXEMPTION TO DELIVERY OF FUEL TO 
                    MOTOR VEHICLES REMOVED FROM UNITED STATES.

    (a) In General.--Section 4221(d)(2) (defining export) is 
amended by adding at the end the following new sentence: ``Such 
term does not include the delivery of a taxable fuel (as 
defined in section 4083(a)(1)) into a fuel tank of a motor 
vehicle which is shipped or driven out of the United States.''.
    (b) Conforming Amendments.--
            (1) Section 4041(g) (relating to other exemptions) 
        is amended by adding at the end the following new 
        sentence: ``Paragraph (3) shall not apply to the sale 
        for delivery of a liquid into a fuel tank of a motor 
        vehicle which is shipped or driven out of the United 
        States.''.
            (2) Clause (iv) of section 4081(a)(1)(A) (relating 
        to tax on removal, entry, or sale) is amended by 
        inserting ``or at a duty-free sales enterprise (as 
        defined in section 555(b)(8) of the Tariff Act of 
        1930)'' after ``section 4101''.
    (c) Effective Date.--The amendments made by this section 
shall apply to sales or deliveries made after the date of the 
enactment of this Act.

SEC. 1317. REPEAL OF PHASEOUTS FOR QUALIFIED ELECTRIC VEHICLE CREDIT 
                    AND DEDUCTION FOR CLEAN FUEL-VEHICLES.

    (a) Credit for Qualified Electric Vehicles.--Subsection (b) 
of section 30 (relating to limitations) is amended by striking 
paragraph (2) and redesignating paragraph (3) as paragraph (2).
    (b) Deduction for Clean-Fuel Vehicles and Certain Refueling 
Property.--Paragraph (1) of section 179A(b) (relating to 
qualified clean-fuel vehicle property) is amended to read as 
follows:
            ``(1) Qualified clean-fuel vehicle property.-- The 
        cost which may be taken into account under subsection 
        (a)(1)(A) with respect to any motor vehicle shall not 
        exceed--
                    ``(A) in the case of a motor vehicle not 
                described in subparagraph (B) or (C), $2,000,
                    ``(B) in the case of any truck or van with 
                a gross vehicle weight rating greater than 
                10,000 pounds but not greater than 26,000 
                pounds, $5,000, or
                    ``(C) $50,000 in the case of--
                            ``(i) a truck or van with a gross 
                        vehicle weight rating greater than 
                        26,000 pounds, or
                            ``(ii) any bus which has a seating 
                        capacity of at least 20 adults (not 
                        including the driver).''.
    (c) Effective Date.--The amendments made by this section 
shall apply to property placed in service after the date of the 
enactment of this Act.

SEC. 1318. ALTERNATIVE MOTOR VEHICLE 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:

``SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.

    ``(a) Allowance of Credit.--There shall be allowed as a 
credit against the tax imposed by this chapter for the taxable 
year an amount equal to the sum of--
            ``(1) the new qualified fuel cell motor vehicle 
        credit determined under subsection (b),
            ``(2) the new advanced lean burn technology motor 
        vehicle credit determined under subsection (c),
            ``(3) the new qualified hybrid motor vehicle credit 
        determined under subsection (d), and
            ``(4) the new qualified alternative fuel motor 
        vehicle credit determined under subsection (e).
    ``(b) New Qualified Fuel Cell Motor Vehicle Credit.--
            ``(1) In general.--For purposes of subsection (a), 
        the new qualified fuel cell motor vehicle credit 
        determined under this subsection with respect to a new 
        qualified fuel cell motor vehicle placed in service by 
        the taxpayer during the taxable year shall be 
        determined in accordance with the following table:

``In the case of a vehicle
  which has a gross
  vehicle weight rating of--                           The new qualified
                                                         fuel cell motor
                                                     vehicle credit is--
    Not more than 8,500 lbs...................................   $4,000 
    More than 8,500 lbs but not more than 14,000 lbs..........  $10,000 
    More than 14,000 lbs but not more than 26,000 lbs.........  $20,000 
    More than 26,000 lbs......................................  $40,000.

            ``(2) Increase for fuel efficiency.--
                    ``(A) In general.--The amount determined 
                under paragraph (1) with respect to a new 
                qualified fuel cell motor vehicle which is a 
                passenger automobile or light truck shall be 
                increased by the additional credit amount.
                    ``(B) Additional credit amount.--For 
                purposes of subparagraph (A), the additional 
                credit amount shall be determined in accordance 
                with the following table:

``In the case of a vehicle which achieves a
  fuel economy (expressed as a percentage
  of the 2002 model year city fuel economy) of--          The additional
                                                      credit amount is--
    At least 150 percent but less than 175 percent............   $1,000 
    At least 175 percent but less than 200 percent............   $1,500 
    At least 200 percent but less than 225 percent............   $2,000 
    At least 225 percent but less than 250 percent............   $2,500 
    At least 250 percent but less than 275 percent............   $3,000 
    At least 275 percent but less than 300 percent............   $3,500 
    At least 300 percent......................................   $4,000.

            ``(3) New qualified fuel cell motor vehicle.--For 
        purposes of this subsection, the term `new qualified 
        fuel cell motor vehicle' means a motor vehicle--
                    ``(A) which is propelled by power derived 
                from one or more cells which convert chemical 
                energy directly into electricity by combining 
                oxygen with hydrogen fuel which is stored on 
                board the vehicle in any form and may or may 
                not require reformation prior to use,
                    ``(B) which, in the case of a passenger 
                automobile or light truck, has received--
                            ``(i) a certificate of conformity 
                        under the Clean Air Act and meets or 
                        exceeds the equivalent qualifying 
                        California low emission vehicle 
                        standard under section 243(e)(2) of the 
                        Clean Air Act for that make and model 
                        year, and
                            ``(ii) a certificate that such 
                        vehicle meets or exceeds the Bin 5 Tier 
                        II emission standard established in 
                        regulations prescribed by the 
                        Administrator of the Environmental 
                        Protection Agency under section 202(i) 
                        of the Clean Air Act for that make and 
                        model year vehicle,
                    ``(C) the original use of which commences 
                with the taxpayer,
                    ``(D) which is acquired for use or lease by 
                the taxpayer and not for resale, and
                    ``(E) which is made by a manufacturer.
    ``(c) New Advanced Lean Burn Technology Motor Vehicle 
Credit.--
            ``(1) In general.--For purposes of subsection (a), 
        the new advanced lean burn technology motor vehicle 
        credit determined under this subsection with respect to 
        a new advanced lean burn technology motor vehicle 
        placed in service by the taxpayer during the taxable 
        year is the credit amount determined under paragraph 
        (2).
            ``(2) Credit amount.--
                    ``(A) Fuel economy.--The credit amount 
                determined under this paragraph shall be 
                determined in accordance with the following 
                table:

``In the case of a vehicle which achieves a fuel economy (expressed as a 
    percentage of the 2002 model year city fuel economy) of-- The credit
                                                             amount is--
    At least 125 percent but less than 150 percent............     $400 
    At least 150 percent but less than 175 percent............     $800 
    At least 175 percent but less than 200 percent............   $1,200 
    At least 200 percent but less than 225 percent............   $1,600 
    At least 225 percent but less than 250 percent............   $2,000 
    At least 250 percent......................................   $2,400.

                    ``(B) Conservation credit.--The amount 
                determined under subparagraph (A) with respect 
                to a new advanced lean burn technology motor 
                vehicle shall be increased by the conservation 
                credit amount determined in accordance with the 
                following table:

``In the case of a vehicle which
  achieves a lifetime fuel savings
  (expressed in gallons of gasoline) of--               The conservation
                                                           credit amount
                                                                    is--
    At least 1,200 but less than 1,800........................     $250 
    At least 1,800 but less than 2,400........................     $500 
    At least 2,400 but less than 3,000........................     $750 
    At least 3,000............................................   $1,000.

            ``(3) New advanced lean burn technology motor 
        vehicle.--For purposes of this subsection, the term 
        `new advanced lean burn technology motor vehicle' means 
        a passenger automobile or a light truck--
                    ``(A) with an internal combustion engine 
                which--
                            ``(i) is designed to operate 
                        primarily using more air than is 
                        necessary for complete combustion of 
                        the fuel,
                            ``(ii) incorporates direct 
                        injection,
                            ``(iii) achieves at least 125 
                        percent of the 2002 model year city 
                        fuel economy,
                            ``(iv) for 2004 and later model 
                        vehicles, has received a certificate 
                        that such vehicle meets or exceeds--
                                    ``(I) in the case of a 
                                vehicle having a gross vehicle 
                                weight rating of 6,000 pounds 
                                or less, the Bin 5 Tier II 
                                emission standard established 
                                in regulations prescribed by 
                                the Administrator of the 
                                Environmental Protection Agency 
                                under section 202(i) of the 
                                Clean Air Act for that make and 
                                model year vehicle, and
                                    ``(II) in the case of a 
                                vehicle having a gross vehicle 
                                weight rating of more than 
                                6,000 pounds but not more than 
                                8,500 pounds, the Bin 8 Tier II 
                                emission standard which is so 
                                established.
                    ``(B) the original use of which commences 
                with the taxpayer,
                    ``(C) which is acquired for use or lease by 
                the taxpayer and not for resale, and
                    ``(D) which is made by a manufacturer.
            ``(4) Lifetime fuel savings.--For purposes of this 
        subsection, the term `lifetime fuel savings' means, in 
        the case of any new advanced lean burn technology motor 
        vehicle, an amount equal to the excess (if any) of--
                    ``(A) 120,000 divided by the 2002 model 
                year city fuel economy for the vehicle inertia 
                weight class, over
                    ``(B) 120,000 divided by the city fuel 
                economy for such vehicle.
    ``(d) New Qualified Hybrid Motor Vehicle Credit.--
            ``(1) In general.--For purposes of subsection (a), 
        the new qualified hybrid motor vehicle credit 
        determined under this subsection with respect to a new 
        qualified hybrid motor vehicle placed in service by the 
        taxpayer during the taxable year is the credit amount 
        determined under paragraph (2).
            ``(2) Credit amount.--
                    ``(A) Credit amount for passenger 
                automobiles and light trucks.--In the case of a 
                new qualified hybrid motor vehicle which is a 
                passenger automobile or light truck and which 
                has a gross vehicle weight rating of not more 
                than 8,500 pounds, the amount determined under 
                this paragraph is the sum of the amounts 
                determined under clauses (i) and (ii).
                            ``(i) Fuel economy.--The amount 
                        determined under this clause is the 
                        amount which would be determined under 
                        subsection (c)(2)(A) if such vehicle 
                        were a vehicle referred to in such 
                        subsection.
                            ``(ii) Conservation credit.--The 
                        amount determined under this clause is 
                        the amount which would be determined 
                        undersubsection (c)(2)(B) if such 
vehicle were a vehicle referred to in such subsection.
                    ``(B) Credit amount for other motor 
                vehicles.--
                            ``(i) In general.--In the case of 
                        any new qualified hybrid motor vehicle 
                        to which subparagraph (A) does not 
                        apply, the amount determined under this 
                        paragraph is the amount equal to the 
                        applicable percentage of the qualified 
                        incremental hybrid cost of the vehicle 
                        as certified under clause (v).
                            ``(ii) Applicable percentage.--For 
                        purposes of clause (i), the applicable 
                        percentage is--
                                    ``(I) 20 percent if the 
                                vehicle achieves an increase in 
                                city fuel economy relative to a 
                                comparable vehicle of at least 
                                30 percent but less than 40 
                                percent,
                                    ``(II) 30 percent if the 
                                vehicle achieves such an 
                                increase of at least 40 percent 
                                but less than 50 percent, and
                                    ``(III) 40 percent if the 
                                vehicle achieves such an 
                                increase of at least 50 
                                percent.
                            ``(iii) Qualified incremental 
                        hybrid cost.--For purposes of this 
                        subparagraph, the qualified incremental 
                        hybrid cost of any vehicle is equal to 
                        the amount of the excess of the 
                        manufacturer's suggested retail price 
                        for such vehicle over such price for a 
                        comparable vehicle, to the extent such 
                        amount does not exceed--
                                    ``(I) $7,500, if such 
                                vehicle has a gross vehicle 
                                weight rating of not more than 
                                14,000 pounds,
                                    ``(II) $15,000, if such 
                                vehicle has a gross vehicle 
                                weight rating of more than 
                                14,000 pounds but not more than 
                                26,000 pounds, and
                                    ``(III) $30,000, if such 
                                vehicle has a gross vehicle 
                                weight rating of more than 
                                26,000 pounds.
                            ``(iv) Comparable vehicle.--For 
                        purposes of this subparagraph, the term 
                        `comparable vehicle' means, with 
                        respect to any new qualified hybrid 
                        motor vehicle, any vehicle which is 
                        powered solely by a gasoline or diesel 
                        internal combustion engine and which is 
                        comparable in weight, size, and use to 
                        such vehicle.
                            ``(v) Certification.--A 
                        certification described in clause (i) 
                        shall be made by the manufacturer and 
                        shall be determined in accordance with 
                        guidance prescribed by the Secretary. 
                        Such guidance shall specify procedures 
                        and methods for calculating fuel 
                        economy savings and incremental hybrid 
                        costs.
            ``(3) New qualified hybrid motor vehicle.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `new qualified 
                hybrid motor vehicle' means a motor vehicle--
                            ``(i) which draws propulsion energy 
                        from onboard sources of stored energy 
                        which are both--
                                    ``(I) an internal 
                                combustion or heat engine using 
                                consumable fuel, and
                                    ``(II) a rechargeable 
                                energy storage system,
                            ``(ii) which, in the case of a 
                        vehicle to which paragraph (2)(A) 
                        applies, has received a certificate of 
                        conformity under the Clean Air Act and 
                        meets or exceeds the equivalent 
                        qualifying California low emission 
                        vehicle standard under section 
                        243(e)(2) of the Clean Air Act for that 
                        make and model year, and
                                    ``(I) in the case of a 
                                vehicle having a gross vehicle 
                                weight rating of 6,000 pounds 
                                or less, the Bin 5 Tier II 
                                emission standard established 
                                in regulations prescribed by 
                                the Administrator of the 
                                Environmental Protection Agency 
                                under section 202(i) of the 
                                Clean Air Act for that make and 
                                model year vehicle, and
                                    ``(II) in the case of a 
                                vehicle having a gross vehicle 
                                weight rating of more than 
                                6,000 pounds but not more than 
                                8,500 pounds, the Bin 8 Tier II 
                                emission standard which is so 
                                established,
                            ``(iii) which has a maximum 
                        available power of at least--
                                    ``(I) 4 percent in the case 
                                of a vehicle to which paragraph 
                                (2)(A) applies,
                                    ``(II) 10 percent in the 
                                case of a vehicle which has a 
                                gross vehicle weight rating or 
                                more than 8,500 pounds and not 
                                than 14,000 pounds, and
                                    ``(III) 15 percent in the 
                                case of a vehicle in excess of 
                                14,000 pounds,
                            ``(iv) which, in the case of a 
                        vehicle to which paragraph (2)(B) 
                        applies, has an internal combustion or 
                        heat engine which has received a 
                        certificate of conformity under the 
                        Clean Air Act as meeting the emission 
                        standards set in the regulations 
                        prescribed by the Administrator of the 
                        Environmental Protection Agency for 
                        2004 through 2007 model year diesel 
                        heavy duty engines or ottocycle heavy 
                        duty engines, as applicable,
                            ``(v) the original use of which 
                        commences with the taxpayer,
                            ``(vi) which is acquired for use or 
                        lease by the taxpayer and not for 
                        resale, and
                            ``(vii) which is made by a 
                        manufacturer.
                Such term shall not include any vehicle which 
                is not a passenger automobile or light truck if 
                such vehicle has a gross vehicle weight rating 
                of less than 8,500 pounds.
                    ``(B) Consumable fuel.--For purposes of 
                subparagraph (A)(i)(I), the term `consumable 
                fuel' means any solid, liquid, or gaseous 
                matter which releases energy when consumed by 
                an auxiliary power unit.
                    ``(C) Maximum available power.--
                            ``(i) Certain passenger automobiles 
                        and light trucks.--In the case of a 
                        vehicle to which paragraph (2)(A) 
                        applies, the term `maximum available 
                        power' means the maximum power 
                        available from the rechargeable energy 
                        storage system, during a standard 10 
                        second pulse power or equivalent test, 
                        divided by such maximum power and the 
                        SAE net power of the heat engine.
                            ``(ii) Other motor vehicles.--In 
                        the case of a vehicle to which 
                        paragraph (2)(B) applies, the term 
                        `maximum available power' means the 
                        maximum power available from the 
                        rechargeable energy storage system, 
                        during a standard 10 second pulse power 
                        or equivalent test, divided by the 
                        vehicle's total traction power. For 
                        purposes of the preceding sentence, the 
                        term `total traction power' means the 
                        sum of the peak power from the 
                        rechargeable energy storage system and 
                        the heat engine peak power of the 
                        vehicle, except that if such storage 
                        system is the sole means by which the 
                        vehicle can be driven, the total 
                        traction power is the peak power of 
                        such storage system.
    ``(e) New Qualified Alternative Fuel Motor Vehicle 
Credit.--
            ``(1) Allowance of credit.--Except as provided in 
        paragraph (5), the new qualified alternative fuel motor 
        vehicle credit determined under this subsection is an 
        amount equal to the applicable percentage of the 
        incremental cost of any new qualified alternative fuel 
        motor vehicle placed in service by the taxpayer during 
        the taxable year.
            ``(2) Applicable percentage.--For purposes of 
        paragraph (1), the applicable percentage with respect 
        to any new qualified alternative fuel motor vehicle 
        is--
                    ``(A) 40 percent, plus
                    ``(B) 30 percent, if such vehicle--
                            ``(i) has received a certificate of 
                        conformity under the Clean Air Act and 
                        meets or exceeds the most stringent 
                        standard available for certification 
                        under the Clean Air Act for that make 
                        and model year vehicle (other than a 
                        zero emission standard), or
                            ``(ii) has received an order 
                        certifying the vehicle as meeting the 
                        same requirements as vehicles which may 
                        be sold or leased in California and 
                        meets or exceeds the most stringent 
                        standard available for certification 
                        under the State laws of California 
                        (enacted in accordance with a waiver 
                        granted under section 209(b) of the 
                        Clean Air Act) for that make and model 
                        year vehicle (other than a zero 
                        emission standard).
        For purposes of the preceding sentence, in the case of 
        any new qualified alternative fuel motor vehicle which 
        has a gross vehicle weight rating of more than 14,000 
        pounds, the most stringent standard available shall be 
        such standard available for certification on the date 
        of the enactment of the Energy Tax Policy Act of 2003.
            ``(3) Incremental cost.--For purposes of this 
        subsection, the incremental cost of any new qualified 
        alternative fuel motor vehicle is equal to the amount 
        of the excess of the manufacturer's suggested retail 
        price for such vehicle over such price for a gasoline 
        or diesel fuel motor vehicle of the same model, to the 
        extent such amount does not exceed--
                    ``(A) $5,000, if such vehicle has a gross 
                vehicle weight rating of not more than 8,500 
                pounds,
                    ``(B) $10,000, if such vehicle has a gross 
                vehicle weight rating of more than 8,500 pounds 
                but not more than 14,000 pounds,
                    ``(C) $25,000, if such vehicle has a gross 
                vehicle weight rating of more than 14,000 
                pounds but not more than 26,000 pounds, and
                    ``(D) $40,000, if such vehicle has a gross 
                vehicle weight rating of more than 26,000 
                pounds.
            ``(4) New qualified alternative fuel motor 
        vehicle.--For purposes of this subsection--
                    ``(A) In general.--The term `new qualified 
                alternative fuel motor vehicle' means any motor 
                vehicle--
                            ``(i) which is only capable of 
                        operating on an alternative fuel,
                            ``(ii) the original use of which 
                        commences with the taxpayer,
                            ``(iii) which is acquired by the 
                        taxpayer for use or lease, but not for 
                        resale, and
                            ``(iv) which is made by a 
                        manufacturer.
                    ``(B) Alternative fuel.--The term 
                `alternative fuel' means compressed natural 
                gas, liquefied natural gas, liquefied petroleum 
                gas,hydrogen, and any liquid at least 85 
percent of the volume of which consists of methanol.
            ``(5) Credit for mixed-fuel vehicles.--
                    ``(A) In general.--In the case of a mixed-
                fuel vehicle placed in service by the taxpayer 
                during the taxable year, the credit determined 
                under this subsection is an amount equal to--
                            ``(i) in the case of a 75/25 mixed-
                        fuel vehicle, 70 percent of the credit 
                        which would have been allowed under 
                        this subsection if such vehicle was a 
                        qualified alternative fuel motor 
                        vehicle, and
                            ``(ii) in the case of a 90/10 
                        mixed-fuel vehicle, 90 percent of the 
                        credit which would have been allowed 
                        under this subsection if such vehicle 
                        was a qualified alternative fuel motor 
                        vehicle.
                    ``(B) Mixed-fuel vehicle.--For purposes of 
                this subsection, the term `mixed-fuel vehicle' 
                means any motor vehicle described in 
                subparagraph (C) or (D) of paragraph (3), 
                which--
                            ``(i) is certified by the 
                        manufacturer as being able to perform 
                        efficiently in normal operation on a 
                        combination of an alternative fuel and 
                        a petroleum-based fuel,
                            ``(ii) either--
                                    ``(I) has received a 
                                certificate of conformity under 
                                the Clean Air Act, or
                                    ``(II) has received an 
                                order certifying the vehicle as 
                                meeting the same requirements 
                                as vehicles which may be sold 
                                or leased in California and 
                                meets or exceeds the low 
                                emission vehicle standard under 
                                section 88.105-94 of title 40, 
                                Code of Federal Regulations, 
                                for that make and model year 
                                vehicle,
                            ``(iii) the original use of which 
                        commences with the taxpayer,
                            ``(iv) which is acquired by the 
                        taxpayer for use or lease, but not for 
                        resale, and
                            ``(v) which is made by a 
                        manufacturer.
                    ``(C) 75/25 mixed-fuel vehicle.--For 
                purposes of this subsection, the term `75/25 
                mixed-fuel vehicle' means a mixed-fuel vehicle 
                which operates using at least 75 percent 
                alternative fuel and not more than 25 percent 
                petroleum-based fuel.
                    ``(D) 90/10 mixed-fuel vehicle.--For 
                purposes of this subsection, the term `90/10 
                mixed-fuel vehicle' means a mixed-fuel vehicle 
                which operates using at least 90 percent 
                alternative fuel and not more than 10 percent 
                petroleum-based fuel.
    ``(f) Limitation on Number of New Qualified Hybrid and 
Advanced Lean-Burn Technology Vehicles Eligible for Credit.--
            ``(1) In general.--In the case of a qualified 
        vehicle sold during the phaseout period, only the 
        applicable percentage of the credit otherwise allowable 
        under subsection (c) or (d) shall be allowed.
            ``(2) Phaseout period.--For purposes of this 
        subsection, the phaseout period is the period beginning 
        with the second calendar quarter following the calendar 
        quarter which includes the first date on which the 
        number of qualified vehicles manufactured by the 
        manufacturer of the vehicle referred to in paragraph 
        (1) sold for use in the United States after the date of 
        the enactment of this section is at least 80,000.
            ``(3) Applicable percentage.--For purposes of 
        paragraph (1), the applicable percentage is--
                    ``(A) 50 percent for the first 2 calendar 
                quarters of the phaseout period,
                    ``(B) 25 percent for the 3d and 4th 
                calendar quarters of the phaseout period, and
                    ``(C) 0 percent for each calendar quarter 
                thereafter.
            ``(4) Controlled groups.--
                    ``(A) In general.--For purposes of this 
                subsection, all persons treated as a single 
                employer under subsection (a) or (b) of section 
                52 or subsection (m) or (o) of section 414 
                shall be treated as a single manufacturer.
                    ``(B) Inclusion of foreign corporations.--
                For purposes of subparagraph (A), in applying 
                subsections (a) and (b) of section 52 to this 
                section, section 1563 shall be applied without 
                regard to subsection (b)(2)(C) thereof.
            ``(5) Qualified vehicle.--For purposes of this 
        subsection, the term `qualified vehicle' means any new 
        qualified hybrid motor vehicle and any new advanced 
        lean burn technology motor vehicle.
    ``(g) 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 the regular tax liability (as 
        defined in section 26(b)) plus the tax imposed by 
        section 55, over
            ``(2) the sum of the credits allowable under 
        subpart A and sections 27 and 30 for the taxable year.
    ``(h) Other Definitions and Special Rules.--For purposes of 
this section--
            ``(1) Motor vehicle.--The term `motor vehicle' has 
        the meaning given such term by section 30(c)(2).
            ``(2) Other terms.--The terms `automobile', 
        `passenger automobile', `light truck', and 
        `manufacturer' have the meanings given such terms in 
        regulations prescribed by the Administrator of the 
        Environmental Protection Agency for purposes of the 
        administration of title II of the Clean Air Act (42 
        U.S.C. 7521 et seq.).
            ``(3) 2002 model year city fuel economy.--
                    ``(A) In general.--The 2002 model year city 
                fuel economy with respect to a vehicle shall be 
                determined in accordance with the following 
                tables:
                            ``(i) In the case of a passenger 
                        automobile:
``If vehicle inertia weight claThe 2002 model year city fuel economy is:
1,500 or 1,750 lbs............................................ 45.2 mpg 
2,000 lbs..................................................... 39.6 mpg 
2,250 lbs..................................................... 35.2 mpg 
2,500 lbs..................................................... 31.7 mpg 
2,750 lbs..................................................... 28.8 mpg 
3,000 lbs..................................................... 26.4 mpg 
3,500 lbs..................................................... 22.6 mpg 
4,000 lbs..................................................... 19.8 mpg 
4,500 lbs..................................................... 17.6 mpg 
5,000 lbs..................................................... 15.9 mpg 
5,500 lbs..................................................... 14.4 mpg 
6,000 lbs..................................................... 13.2 mpg 
6,500 lbs..................................................... 12.2 mpg 
7,000 to 8,500 lbs............................................ 11.3 mpg.

                            ``(ii) In the case of a light 
                        truck:

``If vehicle inertia weight claThe 2002 model year city fuel economy is:
1,500 or 1,750 lbs............................................ 39.4 mpg 
2,000 lbs..................................................... 35.2 mpg 
2,250 lbs..................................................... 31.8 mpg 
2,500 lbs..................................................... 29.0 mpg 
2,750 lbs..................................................... 26.8 mpg 
3,000 lbs..................................................... 24.9 mpg 
3,500 lbs..................................................... 21.8 mpg 
4,000 lbs..................................................... 19.4 mpg 
4,500 lbs..................................................... 17.6 mpg 
5,000 lbs..................................................... 16.1 mpg 
5,500 lbs..................................................... 14.8 mpg 
6,000 lbs..................................................... 13.7 mpg 
6,500 lbs..................................................... 12.8 mpg 
7,000 to 8,500 lbs............................................ 12.1 mpg.

                    ``(B) Vehicle inertia weight class.--For 
                purposes of subparagraph (A), the term `vehicle 
                inertia weight class' has the same meaning as 
                when defined in regulations prescribed by the 
                Administrator of the Environmental Protection 
                Agency for purposes of the administration of 
                title II of the Clean Air Act (42 U.S.C. 7521 
                et seq.).
            ``(4) Fuel economy.--Fuel economy with respect to 
        any vehicle shall be measured under rules similar to 
        the rules under section 4064(c).
            ``(5)  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.
            ``(6) No double benefit.--The amount of any 
        deduction or credit allowable under this chapter (other 
        than the credits allowable under this section and 
        section 30) shall be reduced by the amount of credit 
        allowed under subsection (a) for such vehicle for the 
        taxable year.
            ``(7) Recapture.--The Secretary shall, by 
        regulations, provide for recapturing the benefit of any 
        credit allowable under subsection (a) with respect to 
        any property which ceases to be property eligible for 
        such credit (including recapture in the case of a lease 
        period of less than the economic life of a vehicle).
            ``(8) Property used outside united states, etc., 
        not qualified.--No credit shall be allowed under 
        subsection (a) with respect to any property referred to 
        in section 50(b) or with respect to the portion of the 
        cost of any property taken into account under section 
        179.
            ``(9) Election not to take credit.--No credit shall 
        be allowed under subsection (a) for any vehicle if the 
        taxpayer elects to not have this section apply to such 
        vehicle.
            ``(10) Business carryovers allowed.--If the credit 
        allowable under subsection (a) for a taxable year 
        exceeds the limitation under subsection (g) 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.
            ``(11) Interaction with motor vehicle safety 
        standards.--Unless otherwise provided in this section, 
        a motor vehicle shall not be considered eligible for a 
        credit under this section unless such vehicle is in 
        compliance with the motor vehicle safety provisions of 
        sections 30101 through 30169 of title 49, United States 
        Code.
    ``(i) Regulations.--
            ``(1) In general.--The Secretary shall promulgate 
        such regulations as necessary to carry out the 
        provisions of this section.
            ``(2) Determination of motor vehicle eligibility.--
        The Secretary, after coordination with the Secretary of 
        Transportation and the Administrator of the 
        Environmental Protection Agency, shall prescribe such 
        regulations as necessary to determine whether a motor 
        vehicle meets the requirements to be eligible for a 
        credit under this section.
    ``(j) Termination.--This section shall not apply to any 
property placed in service after--
            ``(1) in the case of a new qualified alternative 
        fuel motor vehicle, December 31, 2006,
            ``(2) in the case of a new advanced lean burn 
        technology motor vehicle or a new qualified hybrid 
        motor vehicle, December 31, 2008, and
            ``(3) in the case of a new qualified fuel cell 
        motor vehicle, December 31, 2012.''.
    (b) Conforming Amendments.--
            (1) Section 30(d) (relating to special rules) is 
        amended by adding at the end the following new 
        paragraphs:
            ``(5) No double benefit.--No credit shall be 
        allowed under this section for any motor vehicle for 
        which a credit is also allowed under section 30B.''.
            (2) Section 1016(a), as amended by this Act, is 
        amended by striking ``and'' at the end of paragraph 
        (31), by striking the period at the end of paragraph 
        (32) and inserting ``, and'', and by adding at the end 
        the following:
            ``(33) to the extent provided in section 
        30B(h)(5).''.
            (3) Section 6501(m) is amended by inserting 
        ``30B(h)(9),'' after ``30(d)(4),''.
            (4) 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 30A the following:

        ``Sec. 30B. Alternative motor vehicle credit.''.

    (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.
    (d) Sticker Information Required at Retail Sale.--
            (1) In general.--The Secretary of the Treasury 
        shall issue regulations under which each qualified 
        vehicle sold at retail shall display a notice--
                    (A) that such vehicle is a qualified 
                vehicle, and
                    (B) that the buyer may not benefit from the 
                credit allowed under section 30B of the 
                Internal Revenue Code of 1986 if such buyer has 
                insufficient tax liability.
            (2) Qualified vehicle.--For purposes of paragraph 
        (1), the term ``qualified vehicle'' means a vehicle 
        with respect to which a credit is allowed under section 
        30B of the Internal Revenue Code of 1986.

SEC. 1319. MODIFICATIONS OF DEDUCTION FOR CERTAIN REFUELING PROPERTY.

    (a) In General.--Subsection (f) of section 179A is amended 
to read as follows:
    ``(f) Termination.--This section shall not apply to any 
property placed in service--
            ``(1) in the case of property relating to hydrogen, 
        after December 31, 2011, and
            ``(2) in the case of any other property, after 
        December 31, 2008.''.
    (b) Incentive for Production of Hydrogen at Qualified 
Clean-Fuel Vehicle Refueling Property.--Section 179A(d) 
(defining qualified clean-fuel vehicle refueling property) is 
amended by adding at the end the following new flush sentence:

``In the case of clean-burning fuel which is hydrogen produced 
from another clean-burning fuel, paragraph (3)(A) shall be 
applied by substituting `production, storage, or dispensing' 
for `storage or dispensing' both places it appears.''.
    (c) Increase in Location Expenditures.--Section 
179A(b)(2)(A)(i) is amended by striking ``$100,000'' and 
inserting ``$150,000''.
    (d) Nonbusiness Use of Qualified Clean-Fuel Vehicle 
Refueling Property.--Section 179A(d) is amended by striking 
paragraph (1) and by redesignating paragraphs (2) and (3) as 
paragraphs (1) and (2), respectively.
    (e) 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.

                        Subtitle B--Reliability

SEC. 1321. NATURAL GAS GATHERING LINES TREATED AS 7-YEAR PROPERTY.

    (a) In General.--Subparagraph (C) of section 168(e)(3) 
(relating to classification of certain property) is amended by 
striking ``and'' at the end of clause (i), by redesignating 
clause (ii) as clause (iii), and by inserting after clause (i) 
the following new clause:
                            ``(ii) any natural gas gathering 
                        line, and''.
    (b) Natural Gas Gathering Line.--Subsection (i) of section 
168, as amended by this Act, is amended by adding after 
paragraph (15) the following new paragraph:
            ``(16) Natural gas gathering line.--The term 
        `natural gas gathering line' means--
                    ``(A) the pipe, equipment, and 
                appurtenances determined to be a gathering line 
                by the Federal Energy Regulatory Commission, or
                    ``(B) the pipe, equipment, and 
                appurtenances used to deliver natural gas from 
                the wellhead or a commonpoint to the point at 
                which such gas first reaches--
                            ``(i) a gas processing plant,
                            ``(ii) an interconnection with a 
                        transmission pipeline for which a 
                        certificate as an interstate 
                        transmission pipeline has been issued 
                        by the Federal Energy Regulatory 
                        Commission,
                            ``(iii) an interconnection with an 
                        intrastate transmission pipeline, or
                            ``(iv) a direct interconnection 
                        with a local distribution company, a 
                        gas storage facility, or an industrial 
                        consumer.''.
    (c) Alternative System.--The table contained in section 
168(g)(3)(B) is amended by inserting after the item relating to 
subparagraph (C)(i) the following:

``(C)(ii)......................................................... 14''.

    (d) Alternative Minimum Tax Exception.--Subparagraph (B) of 
section 56(a)(1) is amended by inserting before the period the 
following: ``, or in section 168(e)(3)(C)(ii)''.
    (e) 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. 1322. NATURAL GAS DISTRIBUTION LINES TREATED AS 15-YEAR PROPERTY.

    (a) In General.--Subparagraph (E) of section 168(e)(3) 
(relating to classification of certain property) is amended by 
striking ``and'' at the end of clause (ii), by striking the 
period at the end of clause (iii) and by inserting ``, and'', 
and by adding at the end the following new clause:
                            ``(iv) any natural gas distribution 
                        line.''.
    (b) Alternative System.--The table contained in section 
168(g)(3)(B) is amended by inserting after the item relating to 
subparagraph (E)(iii) the following:

``(E)(iv)......................................................... 35''.

    (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. 1323. ELECTRIC TRANSMISSION PROPERTY TREATED AS 15-YEAR PROPERTY.

    (a) In General.--Subparagraph (E) of section 168(e)(3) 
(relating to classification of certain property), as amended by 
this Act, is amended by striking ``and'' at the end of clause 
(iii), by striking the period at the end of clause (iv) and by 
inserting ``, and'', and by adding at the end the following new 
clause:
                            ``(v) any section 1245 property (as 
                        defined in section 1245(a)(3)) used in 
                        the transmission at 69 or more 
                        kilovolts of electricity for sale the 
                        original use of which commences with 
                        the taxpayer after the date of the 
                        enactment of this clause.''.
    (b) Alternative System.--The table contained in section 
168(g)(3)(B) is amended by inserting after the item relating to 
subparagraph (E)(iv) the following:

``(E)(v).......................................................... 30''.

    (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. 1324. EXPENSING OF CAPITAL COSTS INCURRED IN COMPLYING WITH 
                    ENVIRONMENTAL PROTECTION AGENCY SULFUR REGULATIONS.

    (a) In General.--Part VI of subchapter B of chapter 1 
(relating to itemized deductions for individuals and 
corporations), as amended by this Act, is amended by inserting 
after section 179B the following new section:

``SEC. 179C. DEDUCTION FOR CAPITAL COSTS INCURRED IN COMPLYING WITH 
                    ENVIRONMENTAL PROTECTION AGENCY SULFUR REGULATIONS.

    ``(a) Treatment as Expenses.--A small business refiner (as 
defined in section 45I(c)(1)) may elect to treat 75 percent of 
qualified capital costs (as defined in section 45I(c)(2)) which 
are paid or incurred by the taxpayer during the taxable year as 
expenses which are not chargeableto capital account. Any cost 
so treated shall be allowed as a deduction for the taxable year in 
which paid or incurred.
    ``(b) Reduced Percentage.--In the case of a small business 
refiner with average daily domestic refinery runs for the 1-
year period ending on December 31, 2002, in excess of 155,000 
barrels, the number of percentage points described in 
subsection (a) shall be reduced (not below zero) by the product 
of such number (before the application of this subsection) and 
the ratio of such excess to 50,000 barrels.
    ``(c) Basis Reduction.--
            ``(1) In general.--For purposes of this title, the 
        basis of any property shall be reduced by the portion 
        of the cost of such property taken into account under 
        subsection (a).
            ``(2) Ordinary income recapture.--For purposes of 
        section 1245, the amount of the deduction allowable 
        under subsection (a) with respect to any property which 
        is of a character subject to the allowance for 
        depreciation shall be treated as a deduction allowed 
        for depreciation under section 167.''.
    ``(d) Coordination With Other Provisions.--Section 280B 
shall not apply to amounts which are treated as expenses under 
this section.''.
    (b) Conforming Amendments.--
            (1) Section 263(a)(1), as amended by this Act, is 
        amended by striking ``or'' at the end of subparagraph 
        (H), by striking the period at the end of subparagraph 
        (I) and inserting ``; or'', and by adding at the end 
        the following new subparagraph:
                    ``(J) expenditures for which a deduction is 
                allowed under section 179C.''.
            (2) Section 263A(c)(3) is amended by inserting 
        ``179C,'' after ``section''.
            (3) Section 312(k)(3)(B), as amended by this Act, 
        is amended by striking ``or 179B'' each place it 
        appears in the heading and text and inserting ``179B, 
        or 179C''.
            (4) Section 1016(a), as amended by this Act, is 
        amended by striking ``and'' at the end of paragraph 
        (32), by striking the period at the end of paragraph 
        (33) and inserting ``, and'', and by adding at the end 
        the following new paragraph:
            ``(34) to the extent provided in section 179C(c).''
            (5) Paragraphs (2)(C) and (3)(C) of section 
        1245(a), as amended by this Act, are each amended by 
        inserting ``179C,'' after ``179B,''.
            (6) The table of sections for part VI of subchapter 
        B of chapter 1, as amended by this Act, is amended by 
        inserting after the item relating to section 179B the 
        following new item:

        ``Sec. 179C. Deduction for capital costs incurred in complying 
                  with Environmental Protection Agency sulfur 
                  regulations.''.

    (c) Effective Date.--The amendment made by this section 
shall apply to expenses paid or incurred after December 31, 
2002, in taxable years ending after such date.

SEC. 1325. CREDIT FOR PRODUCTION OF LOW SULFUR DIESEL FUEL.

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

``SEC. 45I. CREDIT FOR PRODUCTION OF LOW SULFUR DIESEL FUEL.

    ``(a) In General.--For purposes of section 38, the amount 
of the low sulfur diesel fuel production credit determined 
under this section with respect to any facility of a small 
business refiner is an amount equal to 5 cents for each gallon 
of low sulfur diesel fuel produced during the taxable year by 
such small business refiner at such facility.
    ``(b) Maximum Credit.--
            ``(1) In general.--The aggregate credit determined 
        under subsection (a) for any taxable year with respect 
        to any facility shall not exceed--
                    ``(A) 25 percent of the qualified capital 
                costs incurred by the small business refiner 
                with respect to such facility, reduced by
                    ``(B) the aggregate credits determined 
                under this section for all prior taxable years 
                with respect to such facility.
            ``(2) Reduced percentage.--In the case of a small 
        business refiner with average daily domestic refinery 
        runs for the 1-year period ending on December 31, 2002, 
        in excess of 155,000 barrels, the number of percentage 
        points described in paragraph (1) shall be reduced (not 
        below zero) by the product of such number (before the 
        application of this paragraph) and the ratio of such 
        excess to 50,000 barrels.
    ``(c) Definitions and Special Rule.--For purposes of this 
section--
            ``(1) Small business refiner.--The term `small 
        business refiner' means, with respect to any taxable 
        year, a refiner of crude oil--
                    ``(A) with respect to which not more than 
                1,500 individuals are engaged in the refinery 
                operations of the business on any day during 
                such taxable year, and
                    ``(B) the average daily domestic refinery 
                run or average retained production of which for 
                all facilities of the taxpayer for the 1-year 
                period ending on December 31, 2002, did not 
                exceed 205,000 barrels.
            ``(2) Qualified capital costs.--The term `qualified 
        capital costs' means, with respect to any facility, 
        those costs paid or incurred during the applicable 
        period for compliance with the applicable EPA 
        regulations with respect to such facility, including 
        expenditures for the construction of new process 
        operation units or the dismantling and reconstruction 
        of existing process units to be used in the production 
        of low sulfur diesel fuel, associated adjacent or 
        offsite equipment (including tankage, catalyst, and 
        power supply), engineering, construction period 
        interest, and sitework.
            ``(3) Applicable epa regulations.--The term 
        `applicable EPA regulations' means the Highway Diesel 
        Fuel Sulfur Control Requirements of the Environmental 
        Protection Agency.
            ``(4) Applicable period.--The term `applicable 
        period' means, with respect to any facility, the period 
        beginning on January 1, 2003, and ending on the earlier 
        of the date which is 1 year after the date on which the 
        taxpayer must comply with the applicable EPA 
        regulations with respect to such facility or December 
        31, 2009.
            ``(5) Low sulfur diesel fuel.--The term `low sulfur 
        diesel fuel' means diesel fuel with a sulfur content of 
        15 parts per million or less.
    ``(d) Reduction in Basis.--For purposes of this subtitle, 
if a credit is determined under this section for any 
expenditure with respect to any property, the increase in basis 
of such property which would (but for this subsection) result 
from such expenditure shall be reduced by the amount of the 
credit so determined.
    ``(e) Special Rule for Determination of Refinery Runs.--For 
purposes this section and section 179C(b), in the calculation 
of average daily domestic refinery run or retained production, 
only refineries which on April 1, 2003, were refineries of the 
refiner or a related person (within the meaning of section 
613A(d)(3)), shall be taken into account.
    ``(f) Certification.--
            ``(1) Required.--No credit shall be allowed unless, 
        not later than the date which is 30 months after the 
        first day of the first taxable year in which the low 
        sulfur diesel fuel production credit is allowed with 
        respect to a facility, the small business refiner 
        obtains certification from the Secretary, after 
        consultation with the Administrator of the 
        Environmental Protection Agency, that the taxpayer's 
        qualified capital costs with respect to such facility 
        will result in compliance with the applicable EPA 
        regulations.
            ``(2) Contents of application.--An application for 
        certification shall include relevant information 
        regarding unit capacities and operating characteristics 
        sufficient for the Secretary, after consultation with 
        the Administrator of the Environmental Protection 
        Agency, to determine that such qualified capital costs 
        are necessary for compliance with the applicable EPA 
        regulations.
            ``(3) Review period.--Any application shall be 
        reviewed and notice of certification, if applicable, 
        shall be made within 60 days of receipt of such 
        application. In the event the Secretary does not notify 
        the taxpayer of the results of such certification 
        within such period, the taxpayer may presume the 
        certification to be issued until so notified.
            ``(4) Statute of limitations.--With respect to the 
        credit allowed under this section--
                    ``(A) the statutory period for the 
                assessment of any deficiency attributable to 
                such credit shall not expire before the end of 
                the 3-year period ending on the date that the 
                review period described in paragraph (3) ends 
                with respect to the taxpayer, and
                    ``(B) such deficiency may be assessed 
                before the expiration of such 3-year period 
                notwithstanding the provisions of any other law 
                or rule of law which would otherwise prevent 
                such assessment.
    ``(g) Cooperative Organizations.--
            ``(1) Apportionment of credit.--
                    ``(A) In general.--In the case of a 
                cooperative organization described in section 
                1381(a), any portion of the credit determined 
                under subsection (a) for the taxable year may, 
                at the election of the organization, be 
                apportioned among patrons eligible to share in 
                patronage dividends on the basis of the 
                quantityor value of business done with or for 
such patrons for the taxable year.
                    ``(B) Form and effect of election.--An 
                election under subparagraph (A) for any taxable 
                year shall be made on a timely filed return for 
                such year. Such election, once made, shall be 
                irrevocable for such taxable year.
            ``(2) Treatment of organizations and patrons.--
                    ``(A) Organizations.--The amount of the 
                credit not apportioned to patrons pursuant to 
                paragraph (1) shall be included in the amount 
                determined under subsection (a) for the taxable 
                year of the organization.
                    ``(B) Patrons.--The amount of the credit 
                apportioned to patrons pursuant to paragraph 
                (1) shall be included in the amount determined 
                under subsection (a) for the first taxable year 
                of each patron ending on or after the last day 
                of the payment period (as defined in section 
                1382(d)) for the taxable year of the 
                organization or, if earlier, for the taxable 
                year of each patron ending on or after the date 
                on which the patron receives notice from the 
                cooperative of the apportionment.
            ``(3) Special rule.--If the amount of a credit 
        which has been apportioned to any patron under this 
        subsection is decreased for any reason--
                    ``(A) such amount shall not increase the 
                tax imposed on such patron, and
                    ``(B) the tax imposed by this chapter on 
                such organization shall be increased by such 
                amount.
        The increase under subparagraph (B) shall not be 
        treated as tax imposed by this chapter for purposes of 
        determining the amount of any credit under this chapter 
        or for purposes of section 55.''.
    (b) Credit Made Part of General Business Credit.--
Subsection (b) of section 38 (relating to general business 
credit), as amended by this Act, is amended by striking 
``plus'' at the end of paragraph (17), by striking the period 
at the end of paragraph (18) and inserting ``, plus'', and by 
adding at the end the following new paragraph:
            ``(19) in the case of a small business refiner, the 
        low sulfur diesel fuel production credit determined 
        under section 45I(a).''.
    (c) Denial of Double Benefit.--Section 280C (relating to 
certain expenses for which credits are allowable) is amended by 
adding at the end the following new subsection:
    ``(d) Low Sulfur Diesel Fuel Production Credit.--No 
deduction shall be allowed for that portion of the expenses 
otherwise allowable as a deduction for the taxable year which 
is equal to the amount of the credit determined for the taxable 
year under section 45I(a).''.
    (d) Basis Adjustment.--Section 1016(a) (relating to 
adjustments to basis), as amended by this Act, is amended by 
striking ``and'' at the end of paragraph (33), by striking the 
period at the end of paragraph (34) and inserting ``, and'', 
and by adding at the end the following new paragraph:
            ``(35) in the case of a facility with respect to 
        which a credit was allowed under section 45I, to the 
        extent provided in section 45I(d).''.
    (e) Deduction for Certain Unused Business Credits.--Section 
196(c) (defining qualified business credits), as amended by 
this Act, is amended by striking ``and'' at the end of 
paragraph (12), by striking the period at the end of paragraph 
(13) and inserting ``, and'', and by adding after paragraph 
(13) the following new paragraph:
            ``(14) the low sulfur diesel fuel production credit 
        determined under section 45I(a).''.
    (e) Clerical Amendment.--The table of sections for subpart 
D of part IV of subchapter A of chapter 1, as amended by this 
Act, is amended by adding at the end the following new item:

        ``Sec. 45I. Credit for production of low sulfur diesel fuel.''.

    (f) Effective Date.--The amendments made by this section 
shall apply to expenses paid or incurred after December 31, 
2002, in taxable years ending after such date.

SEC. 1326. DETERMINATION OF SMALL REFINER EXCEPTION TO OIL DEPLETION 
                    DEDUCTION.

    (a) In General.--Paragraph (4) of section 613A(d) (relating 
to limitations on application of subsection (c)) is amended to 
read as follows:
            ``(4) Certain refiners excluded.--If the taxpayer 
        or 1 or more related persons engages in the refining of 
        crude oil, subsection (c) shall not apply to the 
        taxpayer for a taxable year if the average daily 
        refinery runs of the taxpayer and such persons for the 
        taxable year exceed 67,500 barrels. For purposes of 
        this paragraph, the average daily refinery runs for any 
        taxable year shall be determined by dividing the 
        aggregate refinery runs for the taxable year by the 
        number of days in the taxable year.''.
    (b) Effective Date.--The amendment made by this section 
shall apply to taxable years ending after the date of the 
enactment of this Act.

SEC. 1327. SALES OR DISPOSITIONS TO IMPLEMENT FEDERAL ENERGY REGULATORY 
                    COMMISSION OR STATE ELECTRIC RESTRUCTURING POLICY.

    (a) In General.--Section 451 (relating to general rule for 
taxable year of inclusion) is amended by adding at the end the 
following new subsection:
    ``(i) Special Rule for Sales or Dispositions To Implement 
Federal Energy Regulatory Commission or State Electric 
Restructuring Policy.--
            ``(1) In general.--In the case of any qualifying 
        electric transmission transaction for which the 
        taxpayer elects the application of this section, 
        qualified gain from such transaction shall be 
        recognized--
                    ``(A) in the taxable year which includes 
                the date of such transaction to the extent the 
                amount realized from such transaction exceeds--
                            ``(i) the cost of exempt utility 
                        property which is purchased by the 
                        taxpayer duringthe 4-year period 
beginning on such date, reduced (but not below zero) by
                            ``(ii) any portion of such cost 
                        previously taken into account under 
                        this subsection, and
                    ``(B) ratably over the 8-taxable year 
                period beginning with the taxable year which 
                includes the date of such transaction, in the 
                case of any such gain not recognized under 
                subparagraph (A).
            ``(2) Qualified gain.--For purposes of this 
        subsection, the term `qualified gain' means, with 
        respect to any qualifying electric transmission 
        transaction in any taxable year--
                    ``(A) any ordinary income derived from such 
                transaction which would be required to be 
                recognized under section 1245 or 1250 for such 
                taxable year (determined without regard to this 
                subsection), and
                    ``(B) any income derived from such 
                transaction in excess of the amount described 
                in subparagraph (A) which is required to be 
                included in gross income for such taxable year 
                (determined without regard to this subsection).
            ``(3) Qualifying electric transmission 
        transaction.--For purposes of this subsection, the term 
        `qualifying electric transmission transaction' means 
        any sale or other disposition before January 1, 2007, 
        of--
                    ``(A) property used in the trade or 
                business of providing electric transmission 
                services, or
                    ``(B) any stock or partnership interest in 
                a corporation or partnership, as the case may 
                be, whose principal trade or business consists 
                of providing electric transmission services,
        but only if such sale or disposition is to an 
        independent transmission company.
            ``(4) Independent transmission company.--For 
        purposes of this subsection, the term `independent 
        transmission company' means--
                    ``(A) an independent transmission provider 
                approved by the Federal Energy Regulatory 
                Commission,
                    ``(B) a person--
                            ``(i) who the Federal Energy 
                        Regulatory Commission determines in its 
                        authorization of the transaction under 
                        section 203 of the Federal Power Act 
                        (16 U.S.C. 824b) or by declaratory 
                        order is not a market participant 
                        within the meaning of such Commission's 
                        rules applicable to independent 
                        transmission providers, and
                            ``(ii) whose transmission 
                        facilities to which the election under 
                        this subsection applies are under the 
                        operational control of a Federal Energy 
                        Regulatory Commission-approved 
                        independent transmission provider 
                        before the close of the period 
                        specified in such authorization, but 
                        not later than the close of the period 
                        applicable under subsection (a)(2)(B) 
                        as extended under paragraph (2), or
                    ``(C) in the case of facilities subject to 
                the jurisdiction of the Public Utility 
                Commission of Texas--
                            ``(i) a person which is approved by 
                        that Commission as consistent with 
                        Texas State law regarding an 
                        independent transmission provider, or
                            ``(ii) a political subdivision or 
                        affiliate thereof whose transmission 
                        facilities are under the operational 
                        control of a person described in clause 
                        (i).
            ``(5) Exempt utility property.--For purposes of 
        this subsection--
                    ``(A) In general.--The term `exempt utility 
                property' means property used in the trade or 
                business of--
                            ``(i) generating, transmitting, 
                        distributing, or selling electricity, 
                        or
                            ``(ii) producing, transmitting, 
                        distributing, or selling natural gas.
                    ``(B) Nonrecognition of gain by reason of 
                acquisition of stock.--Acquisition of control 
                of a corporation shall be taken into account 
                under this subsection with respect to a 
                qualifying electric transmission transaction 
                only if the principal trade or business of such 
                corporation is a trade or business referred to 
                in subparagraph (A).
            ``(6) Special rule for consolidated groups.--In the 
        case of a corporation which is a member of an 
        affiliated group filing a consolidated return, any 
        exempt utility property purchased by another member of 
        such group shall be treated as purchased by such 
        corporation for purposes of applying paragraph (1)(A).
            ``(7) Time for assessment of deficiencies.--If the 
        taxpayer has made the election under paragraph (1) and 
        any gain is recognized by such taxpayer as provided in 
        paragraph (1)(B), then--
                    ``(A) the statutory period for the 
                assessment of any deficiency, for any taxable 
                year in which any part of the gain on the 
                transaction is realized, attributable to such 
                gain shall not expire prior to the expiration 
                of 3 years from the date the Secretary is 
                notified by the taxpayer (in such manner as the 
                Secretary may by regulations prescribe) of the 
                purchase of exempt utility property or of an 
                intention not to purchase such property, and
                    ``(B) such deficiency may be assessed 
                before the expiration of such 3-year period 
                notwithstanding any law or rule of law which 
                would otherwise prevent such assessment.
            ``(8) Purchase.--For purposes of this subsection, 
        the taxpayer shall be considered to have purchased any 
        property if the unadjusted basis of such property is 
        its cost within the meaning of section 1012.
            ``(9) Election.--An election under paragraph (1) 
        shall be made at such time and in such manner as the 
        Secretary may require and, once made, shall be 
        irrevocable.
            ``(10) Nonapplication of installment sales 
        treatment.--Section 453 shall not apply to any 
        qualifying electric transmission transaction with 
        respect to which an election to apply this subsection 
        is made.''.
    (b) Effective Date.--The amendments made by this section 
shall apply to transactions occurring after the date of the 
enactment of this Act, in taxable years ending after such date.

SEC. 1328. MODIFICATIONS TO SPECIAL RULES FOR NUCLEAR DECOMMISSIONING 
                    COSTS.

    (a) Repeal of Limitation on Deposits Into Fund Based on 
Cost of Service; Contributions After Funding Period.--
Subsection (b) of section 468A (relating to special rules for 
nuclear decommissioning costs) is amended to read as follows:
    ``(b) Limitation on Amounts Paid Into Fund.--
            ``(1) In general.--The amount which a taxpayer may 
        pay into the Fund for any taxable year shall not exceed 
        the ruling amount applicable to such taxable year.
            ``(2) Contributions after funding period.--
        Notwithstanding any other provision of this section, a 
        taxpayer may pay into the Fund in any taxable year 
        after the last taxable year to which the ruling amount 
        applies. Payments may not be made under the preceding 
        sentence to the extent such payments would cause the 
        assets of the Fund to exceed the nuclear 
        decommissioning costs allocable to the taxpayer's 
        current or former interest in the nuclear power plant 
        to which the Fund relates. The limitation under the 
        preceding sentence shall be determined by taking into 
        account a reasonable rate of inflation for the nuclear 
        decommissioning costs and a reasonable after-tax rate 
        of return on the assets of the Fund until such assets 
        are anticipated to be expended.''.
    (b) Clarification of Treatment of Fund Transfers.--Section 
468A(e) (relating to Nuclear Decommissioning Reserve Fund) is 
amended by adding at the end the following new paragraph:
            ``(8) Treatment of fund transfers.--
                    ``(A) In general.--If, in connection with 
                the transfer of the taxpayer's interest in a 
                nuclear power plant, the taxpayer transfers the 
                Fund with respect to such power plant to the 
                transferee of such interest and the transferee 
                elects to continue the application of this 
                section to such Fund--
                            ``(i) the transfer of such Fund 
                        shall not cause such Fund to be 
                        disqualified from the application of 
                        this section, and
                            ``(ii) no amount shall be treated 
                        as distributed from such Fund, or be 
                        includable in gross income, by reason 
                        of such transfer.
                    ``(B) Special rules if transferor is tax-
                exempt entity.--
                            ``(i) In general.--If--
                                    ``(I) a person exempt from 
                                taxation under this title 
                                transfers an interest in a 
                                nuclear power plant,
                                    ``(II) such person has set 
                                aside amounts for nuclear 
                                decommissioning which are 
                                transferred to the transferee 
                                of the interest, and
                                    ``(III) the transferee 
                                elects the application of this 
                                subparagraph no later than the 
                                due date (including extensions) 
                                of its return of tax for the 
                                taxable year in which the 
                                transfer occurs,
                        the amounts so set aside shall be 
                        treated as if contributed by such 
                        person to a Fund immediately before the 
                        transfer and then transferred in the 
                        Fund to the transferee.
                            ``(ii) Limitation.--The amount 
                        treated as transferred to a Fund under 
                        clause (i) shall not exceed the amount 
                        which bears the same ratio to the 
                        present value of the nuclear 
                        decommissioning costs of the transferor 
                        with respect to the nuclear power plant 
                        as the number of years the nuclear 
                        power plant has been in service bears 
                        to the estimated useful life of such 
                        power plant.
                            ``(iii) Basis.--The transferee's 
                        basis in any asset treated as 
                        transferred in the Fund shall be the 
                        same as the adjusted basis of such 
                        asset in the hands of the transferor.
                            ``(iv) Ruling amount required.--
                        This subparagraph shall not apply to 
                        any transfer unless the transferee 
                        requests from the Secretary a schedule 
                        of ruling amounts.
                            ``(v) Election disregarded.--An 
                        election under this subparagraph shall 
                        be disregarded in determining the 
                        Federal income tax of the transferor.''
    (c) Treatment of Certain Decommissioning Costs.--
            (1) In general.--Section 468A is amended by 
        redesignating subsections (f) and (g) as subsections 
        (g) and (h), respectively, and by inserting after 
        subsection (e) the following new subsection:
    ``(f) Transfers Into Qualified Funds.--
            ``(1) In general.--Notwithstanding subsection (b), 
        any taxpayer maintaining a Fund to which this section 
        applies with respect to a nuclear power plant may 
        transfer into such Fund not more than an amount equal 
        to the present value of the portion of the total 
        nuclear decommissioning costs with respect to such 
        nuclear power plant previously excluded for such 
        nuclear power plant under subsection (d)(2)(A) as in 
        effect immediately before the date of the enactment of 
        the Energy Tax Policy Act of 2003.
            ``(2) Deduction for amounts transferred.--
                    ``(A) In general.--Except as provided in 
                subparagraph (C), the deduction allowed by 
                subsection (a) for any transfer permitted by 
                this subsection shall be allowed ratably over 
                the remaining estimated useful life (within the 
                meaning of subsection (d)(2)(A)) of the nuclear 
                power plant beginning with the taxable year 
                during which the transfer is made.
                    ``(B) Denial of deduction for previously 
                deducted amounts.--No deduction shall be 
                allowed for any transfer under this subsection 
                of an amount for which a deduction was 
                previously allowed to the taxpayer (or a 
                predecessor) or a corresponding amount was not 
                included in gross income of the taxpayer (or a 
                predecessor). For purposes of the preceding 
                sentence, a ratable portion of each transfer 
                shall be treated as being from previously 
                deducted or excluded amounts to the extent 
                thereof.
                    ``(C) Transfers of qualified funds.--If--
                            ``(i) any transfer permitted by 
                        this subsection is made to any Fund to 
                        which this section applies, and
                            ``(ii) such Fund is transferred 
                        thereafter,
                any deduction under this subsection for taxable 
                years ending after the date that such Fund is 
                transferred shall be allowed to the transferor 
                for the taxable year which includes such date.
                    ``(D) Special rules.--
                            ``(i) Gain or loss not 
                        recognized.--No gain or loss shall be 
                        recognized on any transfer permitted by 
                        this subsection.
                            ``(ii) Transfers of appreciated 
                        property.--If appreciated property is 
                        transferred in a transfer permitted by 
                        this subsection, the amount of the 
                        deduction shall not exceed the adjusted 
                        basis of such property.
            ``(3) New ruling amount required.--Paragraph (1) 
        shall not apply to any transfer unless the taxpayer 
        requests from the Secretary a new schedule of ruling 
        amounts in connection with such transfer.
            ``(4) No basis in qualified funds.--Notwithstanding 
        any other provision of law, the taxpayer's basis in any 
        Fund to which this section applies shall not be 
        increased by reason of any transfer permitted by this 
        subsection.''.
            (2) New ruling amount to take into account total 
        costs.--Subparagraph (A) of section 468A(d)(2) 
        (defining ruling amount) is amended to read as follows:
                    ``(A) fund the total nuclear 
                decommissioning costs with respect to such 
                power plant over the estimated useful life of 
                such power plant, and''.
    (d) Technical Amendments.--Section 468A(e)(2) (relating to 
taxation of Fund) is amended--
            (1) by striking ``rate set forth in subparagraph 
        (B)'' in subparagraph (A) and inserting ``rate of 20 
        percent'',
            (2) by striking subparagraph (B), and
            (3) by redesignating subparagraphs (C) and (D) as 
        subparagraphs (B) and (C), respectively.
    (e) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2003.

SEC. 1329. TREATMENT OF CERTAIN INCOME OF COOPERATIVES.

    (a) Income From Open Access and Nuclear Decommissioning 
Transactions.--
            (1) In general.--Subparagraph (C) of section 
        501(c)(12) is amended by striking ``or'' at the end of 
        clause (i), by striking clause (ii), and by adding at 
        the end the following new clauses:
                            ``(ii) from any provision or sale 
                        of electric energy transmission 
                        services or ancillary services if such 
                        services are provided on a 
                        nondiscriminatory open access basis 
                        under an open access transmission 
                        tariff approved or accepted by FERC or 
                        under an independent transmission 
                        provider agreement approved or accepted 
                        by FERC (other than income received or 
                        accrued directly or indirectly from a 
                        member),
                            ``(iii) from the provision or sale 
                        of electric energy distribution 
                        services or ancillary services if such 
                        services are provided on a 
                        nondiscriminatory open access basis to 
                        distribute electric energy not owned by 
                        the mutual or electric cooperative 
                        company--
                                    ``(I) to end-users who are 
                                served by distribution 
                                facilities not owned by such 
                                company or any of its members 
                                (other than income received or 
                                accrued directly or indirectly 
                                from a member), or
                                    ``(II) generated by a 
                                generation facility not owned 
                                or leased by such company or 
                                any of its members and which is 
                                directly connected to 
                                distribution facilities owned 
                                by such company or any of its 
                                members (other than income 
                                received or accrued directly or 
                                indirectly from a member),
                            ``(iv) from any nuclear 
                        decommissioning transaction, or
                            ``(v) from any asset exchange or 
                        conversion transaction.''.
            (2) Definitions and special rules.--Paragraph (12) 
        of section 501(c) is amended by adding at the end the 
        following new subparagraphs:
                    ``(E) For purposes of subparagraph (C)(ii), 
                the term `FERC' means the Federal Energy 
                Regulatory Commission and references to such 
                term shall be treated as including the Public 
                Utility Commission of Texas with respect to any 
                ERCOT utility (as defined in section 
                212(k)(2)(B) of the Federal Power Act (16 
                U.S.C. 824k(k)(2)(B))).
                    ``(F) For purposes of subparagraph 
                (C)(iii), the term `nuclear decommissioning 
                transaction' means--
                            ``(i) any transfer into a trust, 
                        fund, or instrument established to pay 
                        any nuclear decommissioning costs if 
                        the transfer is in connection with the 
                        transfer of the mutual or cooperative 
                        electric company's interest in a 
                        nuclear power plant or nuclear power 
                        plant unit,
                            ``(ii) any distribution from any 
                        trust, fund, or instrument established 
                        to pay any nuclear decommissioning 
                        costs, or
                            ``(iii) any earnings from any 
                        trust, fund, or instrument established 
                        to pay any nuclear decommissioning 
                        costs.
                    ``(G) For purposes of subparagraph (C)(iv), 
                the term `asset exchange or conversion 
                transaction' means any voluntary exchange or 
                involuntary conversion of any property related 
                to generating, transmitting, distributing, or 
                selling electric energy by a mutual or 
                cooperative electric company, the gain from 
                which qualifies for deferred recognition under 
                section 1031 or 1033, but only if the 
                replacement property acquired by such company 
                pursuant to such section constitutes property 
                which is used, or to be used, for--
                            ``(i) generating, transmitting, 
                        distributing, or selling electric 
                        energy, or
                            ``(ii) producing, transmitting, 
                        distributing, or selling natural 
                        gas.''.
    (b) Treatment of Income From Load Loss Transactions, Etc.--
Paragraph (12) of section 501(c), as amended by subsection 
(a)(2), is amended by adding after subparagraph (G) the 
following new subparagraph:
                    ``(H)(i) In the case of a mutual or 
                cooperative electric company described in this 
                paragraph or an organization described in 
                section 1381(a)(2)(C), income received or 
                accrued from a load loss transaction shall be 
                treated as an amount collected from members for 
                the sole purpose of meeting losses and 
                expenses.
                    ``(ii) For purposes of clause (i), the term 
                `load loss transaction' means any wholesale or 
                retail sale of electric energy (other than to 
                members) to the extent that the aggregate sales 
                during the recovery period do not exceed the 
                load loss mitigation sales limit for such 
                period.
                    ``(iii) For purposes of clause (ii), the 
                load loss mitigation sales limit for the 
                recovery period is the sum of the annual load 
                losses for each year of such period.
                    ``(iv) For purposes of clause (iii), a 
                mutual or cooperative electric company's annual 
                load loss for each year of the recovery period 
                is the amount (if any) by which--
                            ``(I) the megawatt hours of 
                        electric energy sold during such year 
                        to members of such electric company are 
                        less than
                            ``(II) the megawatt hours of 
                        electric energy sold during the base 
                        year to such members.
                    ``(v) For purposes of clause (iv)(II), the 
                term `base year' means--
                            ``(I) the calendar year preceding 
                        the start-up year, or
                            ``(II) at the election of the 
                        mutual or cooperative electric company, 
                        the second or third calendar years 
                        preceding the start-up year.
                    ``(vi) For purposes of this subparagraph, 
                the recovery period is the 7-year period 
                beginning with the start-up year.
                    ``(vii) For purposes of this subparagraph, 
                the start-up year is the first year that the 
                mutual or cooperative electric company offers 
                nondiscriminatory open access or the calendar 
                year which includes the date of the enactment 
                of this subparagraph, if later, at the election 
                of such company.
                    ``(viii) A company shall not fail to be 
                treated as a mutual or cooperative electric 
                company for purposes of this paragraph or as a 
                corporation operating on a cooperative basis 
                for purposes of section 1381(a)(2)(C) by reason 
                of the treatment under clause (i).
                    ``(ix) For purposes of subparagraph (A), in 
                the case of a mutual or cooperative electric 
                company, income received, or accrued, 
                indirectly from a member shall be treated as an 
                amount collected from members for the sole 
                purpose of meeting losses and expenses.''.
    (c) Exception From Unrelated Business Taxable Income.--
Subsection (b) of section 512 (relating to modifications) is 
amended by adding at the end the following new paragraph:
            ``(18) Treatment of mutual or cooperative electric 
        companies.--In the case of a mutual or cooperative 
        electric company described in section 501(c)(12), there 
        shall be excluded income which is treated as member 
        income under subparagraph (H) thereof.''.
    (d) Cross Reference.--Section 1381 is amended by adding at 
the end the following new subsection:
    ``(c) Cross Reference.--

          ``For treatment of income from load loss transactions of 
        organizations described in subsection (a)(2)(C), see section 
        501(c)(12)(H).''.

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

SEC. 1330. ARBITRAGE RULES NOT TO APPLY TO PREPAYMENTS FOR NATURAL GAS.

    (a) In General.--Subsection (b) of section 148 (relating to 
higher yielding investments) is amended by adding at the end 
the following new paragraph:
            ``(4) Safe harbor for prepaid natural gas.--
                    ``(A) In general.--The term `investment-
                type property' does not include a prepayment 
                under a qualified natural gas supply contract.
                    ``(B) Qualified natural gas supply 
                contract.--For purposes of this paragraph, the 
                term `qualified natural gas supply 
contract'means any contract to acquire natural gas for resale by a 
utility owned by a governmental unit if the amount of gas permitted to 
be acquired under the contract by the utility during any year does not 
exceed the sum of--
                            ``(i) the annual average amount 
                        during the testing period of natural 
                        gas purchased (other than for resale) 
                        by customers of such utility who are 
                        located within the service area of such 
                        utility, and
                            ``(ii) the amount of natural gas to 
                        be used to transport the prepaid 
                        natural gas to the utility during such 
                        year.
                    ``(C) Natural gas used to generate 
                electricity.--Natural gas used to generate 
                electricity shall be taken into account in 
                determining the average under subparagraph 
                (B)(i)--
                            ``(i) only if the electricity is 
                        generated by a utility owned by a 
                        governmental unit, and
                            ``(ii) only to the extent that the 
                        electricity is sold (other than for 
                        resale) to customers of such utility 
                        who are located within the service area 
                        of such utility.
                    ``(D) Adjustments for changes in customer 
                base.--
                            ``(i) New business customers.--If--
                                    ``(I) after the close of 
                                the testing period and before 
                                the date of issuance of the 
                                issue, the utility owned by a 
                                governmental unit enters into a 
                                contract to supply natural gas 
                                (other than for resale) for a 
                                business use at a property 
                                within the service area of such 
                                utility, and
                                    ``(II) the utility did not 
                                supply natural gas to such 
                                property during the testing 
                                period or the ratable amount of 
                                natural gas to be supplied 
                                under the contract is 
                                significantly greater than the 
                                ratable amount of gas supplied 
                                to such property during the 
                                testing period,
                        then a contract shall not fail to be 
                        treated as a qualified natural gas 
                        supply contract by reason of supplying 
                        the additional natural gas under the 
                        contract referred to in subclause (I).
                            ``(ii) Lost customers.--The average 
                        under subparagraph (B)(i) shall not 
                        exceed the annual amount of natural gas 
                        reasonably expected to be purchased 
                        (other than for resale) by persons who 
                        are located within the service area of 
                        such utility and who, as of the date of 
                        issuance of the issue, are customers of 
                        such utility.
                    ``(E) Ruling requests.--The Secretary may 
                increase the average under subparagraph (B)(i) 
                for any period if the utility owned by the 
                governmental unit establishes to the 
                satisfaction of the Secretary that, based on 
                objective evidence of growth in natural gas 
                consumption or population, such average would 
                otherwise be insufficient for such period.
                    ``(F) Adjustment for natural gas otherwise 
                on hand.--
                            ``(i) In general.--The amount 
                        otherwise permitted to be acquired 
                        under the contract for any period shall 
                        be reduced by--
                                    ``(I) the applicable share 
                                of natural gas held by the 
                                utility on the date of issuance 
                                of the issue, and
                                    ``(II) the natural gas (not 
                                taken into account under 
                                subclause (I)) which the 
                                utility has a right to acquire 
                                during such period (determined 
                                as of the date of issuance of 
                                the issue).
                            ``(ii) Applicable share.--For 
                        purposes of the clause (i), the term 
                        `applicable share' means, with respect 
                        to any period, the natural gas 
                        allocable to such period if the gas 
                        were allocated ratably over the period 
                        to which the prepayment relates.
                    ``(G) Intentional acts.--Subparagraph (A) 
                shall cease to apply to any issue if the 
                utility owned by the governmental unit engages 
                in any intentional act to render the volume of 
                natural gas acquired by such prepayment to be 
                in excess of the sum of--
                            ``(i) the amount of natural gas 
                        needed (other than for resale) by 
                        customers of such utility who are 
                        located within the service area of such 
                        utility, and
                            ``(ii) the amount of natural gas 
                        used to transport such natural gas to 
                        the utility.
                    ``(H) Testing period.--For purposes of this 
                paragraph, the term `testing period' means, 
                with respect to an issue, the most recent 5 
                calendar years ending before the date of 
                issuance of the issue.
                    ``(I) Service area.--For purposes of this 
                paragraph, the service area of a utility owned 
                by a governmental unit shall be comprised of--
                            ``(i) any area throughout which 
                        such utility provided at all times 
                        during the testing period--
                                    ``(I) in the case of a 
                                natural gas utility, natural 
                                gas transmission or 
                                distribution services, and
                                    ``(II) in the case of an 
                                electric utility, electricity 
                                distribution services,
                            ``(ii) any area within a county 
                        contiguous to the area described in 
                        clause (i) in which retail customers of 
                        such utility are located if such area 
                        is not also served by another utility 
                        providing natural gas or electricity 
                        services, as the case may be, and
                            ``(iii) any area recognized as the 
                        service area of such utility under 
                        State or Federal law.''.
    (b) Private Loan Financing Test Not To Apply to Prepayments 
for Natural Gas.--Paragraph (2) of section 141(c) (providing 
exceptions to the private loan financing test) is amended by 
striking ``or'' at the end of subparagraph (A), by striking the 
period at the end of subparagraph (B) and inserting ``, or'', 
and by adding at the end the following new subparagraph:
                    ``(C) is a qualified natural gas supply 
                contract (as defined in section 148(b)(4)).''.
    (c) Exception for Qualified Electric and Natural Gas Supply 
Contracts.--Section 141(d) is amended by adding at the end the 
following new paragraph:
            ``(7) Exception for qualified electric and natural 
        gas supply contracts.--The term `nongovernmental output 
        property' shall not include any contract for the 
        prepayment of electricity or natural gas which is not 
        investment property under section 148(b)(2).''.
    (d) Effective Date.--The amendments made by this section 
shall apply to obligations issued after the date of the 
enactment of this Act.

                         Subtitle C--Production

                     PART I--OIL AND GAS PROVISIONS

SEC. 1341. OIL AND GAS FROM MARGINAL WELLS.

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

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

    ``(a) General Rule.--For purposes of section 38, the 
marginal well production credit for any taxable year is an 
amount equal to the product of--
            ``(1) the credit amount, and
            ``(2) the qualified credit oil production and the 
        qualified natural gas production which is attributable 
        to the taxpayer.
    ``(b) Credit Amount.--For purposes of this section--
            ``(1) In general.--The credit amount is--
                    ``(A) $3 per barrel of qualified crude oil 
                production, and
                    ``(B) 50 cents per 1,000 cubic feet of 
                qualified natural gas production.
            ``(2) Reduction as oil and gas prices increase.--
                    ``(A) In general.--The $3 and 50 cents 
                amounts under paragraph (1) shall each be 
                reduced (but not below zero) by an amount which 
                bears the same ratio to such amount (determined 
                without regard to this paragraph) as--
                            ``(i) the excess (if any) of the 
                        applicable reference price over $15 
                        ($1.67 for qualified natural gas 
                        production), bears to
                            ``(ii) $3 ($0.33 for qualified 
                        natural gas production).
                The applicable reference price for a taxable 
                year is the reference price of the calendar 
                year preceding the calendar year in which the 
                taxable year begins.
                    ``(B) Inflation adjustment.--In the case of 
                any taxable year beginning in a calendar year 
                after 2003, each of the dollar amounts 
                contained in subparagraph (A) shall be 
                increased to an amount equal to such dollar 
                amount multiplied by the inflation adjustment 
                factor for such calendar year (determined under 
                section 43(b)(3)(B) by substituting `2002' for 
                `1990').
                    ``(C) Reference price.--For purposes of 
                this paragraph, the term `reference price' 
                means, with respect to any calendar year--
                            ``(i) in the case of qualified 
                        crude oil production, the reference 
                        price determined under section 
                        45K(d)(2)(C), and
                            ``(ii) in the case of qualified 
                        natural gas production, the Secretary's 
                        estimate of the annual average wellhead 
                        price per 1,000 cubic feet for all 
                        domestic natural gas.
    ``(c) Qualified Crude Oil and Natural Gas Production.--For 
purposes of this section--
            ``(1) In general.--The terms `qualified crude oil 
        production' and `qualified natural gas production' mean 
        domestic crude oil or natural gas which is produced 
        from a qualified marginal well.
            ``(2) Limitation on amount of production which may 
        qualify.--
                    ``(A) In general.--Crude oil or natural gas 
                produced during any taxable year from any well 
                shall not be treated as qualified crude oil 
                production or qualified natural gas production 
                to the extent production from the well during 
                the taxable year exceeds 1,095 barrels or 
                barrel-of-oil equivalents (as defined in 
                section 45K(d)(5)).
                    ``(B) Proportionate reductions.--
                            ``(i) Short taxable years.--In the 
                        case of a short taxable year, the 
                        limitations under this paragraph shall 
                        be proportionately reduced to reflect 
                        the ratio which the number of days in 
                        such taxable year bears to 365.
                            ``(ii) Wells not in production 
                        entire year.--In the case of a well 
                        which is not capable of production 
                        during each day of a taxable year, the 
                        limitations under this paragraph 
                        applicable to the well shall be 
                        proportionately reduced to reflect the 
                        ratio which the number of days of 
                        production bears to the total number of 
                        days in the taxable year.
            ``(3) Definitions.--
                    ``(A) Qualified marginal well.--The term 
                `qualified marginal well' means a domestic 
                well--
                            ``(i) the production from which 
                        during the taxable year is treated as 
                        marginal production under section 
                        613A(c)(6), or
                            ``(ii) which, during the taxable 
                        year--
                                    ``(I) has average daily 
                                production of not more than 25 
                                barrel-of-oil equivalents (as 
                                so defined), and
                                    ``(II) produces water at a 
                                rate not less than 95 percent 
                                of total well effluent.
                    ``(B) Crude oil, etc.--The terms `crude 
                oil', `natural gas', `domestic', and `barrel' 
                have the meanings given such terms by section 
                613A(e).
    ``(d) Other Rules.--
            ``(1) Production attributable to the taxpayer.--In 
        the case of a qualified marginal well in which there is 
        more than one owner of operating interests in the well 
        and the crude oil or natural gas production exceeds the 
        limitation under subsection (c)(2), qualifying crude 
        oil production or qualifying natural gas production 
        attributable to the taxpayer shall be determined on the 
        basis of the ratio which taxpayer's revenue interest in 
        the production bears to the aggregate of the revenue 
        interests of all operating interest owners in the 
        production.
            ``(2) Operating interest required.--Any credit 
        under this section may be claimed only on production 
        which is attributable to the holder of an operating 
        interest.
            ``(3) Production from nonconventional sources 
        excluded.--In the case of production from a qualified 
        marginal well which is eligible for the credit allowed 
        under section 45K for the taxable year, no credit shall 
        be allowable under this section unless the taxpayer 
        elects not to claim the credit under section 45K with 
        respect to the well.''.
    (b) Credit Treated as Business Credit.--Section 38(b), as 
amended by this Act, is amended by striking ``plus'' at the end 
of paragraph (18), by striking the period at the end of 
paragraph (19) and inserting ``, plus'', and by adding at the 
end the following:
            ``(20) the marginal oil and gas well production 
        credit determined under section 45J(a).''.
    (c) Carryback.--Subsection (a) of section 39 (relating to 
carryback and carryforward of unused credits generally) is 
amended by adding at the end the following:
            ``(3) 5-year carryback for marginal oil and gas 
        well production credit.--Notwithstanding subsection 
        (d), in the case of the marginal oil and gas well 
        production credit--
                    ``(A) this section shall be applied 
                separately from the business credit (other than 
                the marginal oil and gas well production 
                credit),
                    ``(B) paragraph (1) shall be applied by 
                substituting `5 taxable years' for `1 taxable 
                years' in subparagraph (A) thereof, and
                    ``(C) paragraph (2) shall be applied--
                            ``(i) by substituting `25 taxable 
                        years' for `21 taxable years' in 
                        subparagraph (A) thereof, and
                            ``(ii) by substituting `24 taxable 
                        years' for `20 taxable years' in 
                        subparagraph (B) thereof.''.
    (d) Clerical Amendment.--The table of sections for subpart 
D of part IV of subchapter A of chapter 1, as amended by this 
Act, is amended by adding at the end the following:

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

    (e) Effective Date.--The amendments made by this section 
shall apply to production in taxable years beginning after 
December 31, 2003.

SEC. 1342. TEMPORARY SUSPENSION OF LIMITATION BASED ON 65 PERCENT OF 
                    TAXABLE INCOME AND EXTENSION OF SUSPENSION OF 
                    TAXABLE INCOME LIMIT WITH RESPECT TO MARGINAL 
                    PRODUCTION.

    (a) Limitation Based on 65 Percent of Taxable Income.--
Subsection (d) of section 613A (relating to limitation on 
percentage depletion in case of oil and gas wells) is amended 
by adding at the end the following new paragraph:
            ``(6) Temporary suspension of taxable income 
        limit.--Paragraph (1) shall not apply to taxable years 
        beginning after December 31, 2003, and before January 
        1, 2005, including with respect to amounts carried 
        under the second sentence of paragraph (1) to such 
        taxable years.''.
    (b) Extension of Suspension of Taxable Income Limit With 
Respect to Marginal Production.--Subparagraph (H) of section 
613A(c)(6) (relating to temporary suspension of taxable income 
limit with respect to marginal production) is amended by 
striking ``2004'' and inserting ``2005''.
    (c) Effective Date.--The amendment made by subsection (a) 
shall apply to taxable years beginning after December 31, 2003.

SEC. 1343. AMORTIZATION OF DELAY RENTAL PAYMENTS.

    (a) In General.--Section 167 (relating to depreciation) is 
amended by redesignating subsection (h) as subsection (i) and 
by inserting after subsection (g) the following new subsection:
    ``(h) Amortization of Delay Rental Payments for Domestic 
Oil and Gas Wells.--
            ``(1) In general.--Any delay rental payment paid or 
        incurred in connection with the development of oil or 
        gas wells within the United States (as defined in 
        section 638) shall be allowed as a deduction ratably 
        over the 24-month period beginning on the date that 
        such payment was paid or incurred.
            ``(2) Half-year convention.--For purposes of 
        paragraph (1), any payment paid or incurred during the 
        taxable year shall be treated as paid or incurred on 
        the mid-point of such taxable year.
            ``(3) Exclusive method.--Except as provided in this 
        subsection, no depreciation or amortization deduction 
        shall be allowed with respect to such payments.
            ``(4) Treatment upon abandonment.--If any property 
        to which a delay rental payment relates is retired or 
        abandoned during the 24-month period described in 
        paragraph (1), no deduction shall be allowed on account 
        of such retirement or abandonment and the amortization 
        deduction under this subsection shall continue with 
        respect to such payment.
            ``(5) Delay rental payments.--For purposes of this 
        subsection, the term `delay rental payment' means an 
        amount paid for the privilege of deferring development 
        of an oil or gas well under an oil or gas lease.''.
    (b) Effective Date.--The amendments made by this section 
shall apply to amounts paid or incurred in taxable years 
beginning after the date of the enactment of this Act.

SEC. 1344. AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL EXPENDITURES.

    (a) In General.--Section 167 (relating to depreciation), as 
amended by this Act, is amended by redesignating subsection (i) 
as subsection (j) and by inserting after subsection (h) the 
following new subsection:
    ``(i) Amortization of Geological and Geophysical 
Expenditures.--
            ``(1) In general.--Any geological and geophysical 
        expenses paid or incurred in connection with the 
        exploration for, or development of, oil or gas within 
        the United States (as defined in section 638) shall be 
        allowed as a deduction ratably over the 24-month period 
        beginning on the date that such expense was paid or 
        incurred.
            ``(2) Special rules.--For purposes of this 
        subsection, rules similar to the rules of paragraphs 
        (2), (3), and (4) of subsection (h) shall apply.''.
    (b) Conforming Amendment.--Section 263A(c)(3) is amended by 
inserting ``167(h), 167(i),'' after ``under section''.
    (c) Effective Date.--The amendments made by this section 
shall apply to amounts paid or incurred in taxable years 
beginning after the date of the enactment of this Act.

SEC. 1345. EXTENSION AND MODIFICATION OF CREDIT FOR PRODUCING FUEL FROM 
                    A NONCONVENTIONAL SOURCE.

    (a) In General.--Section 29 (relating to credit for 
producing fuel from a nonconventional source) is amended by 
adding at the end the following new subsection:
    ``(h) Extension for Other Facilities.--Notwithstanding 
subsection (f)--
            ``(1) New oil and gas wells and facilities.--In the 
        case of a well or facility for producing qualified 
        fuels described in subparagraph (A) or (B) of 
        subsection (c)(1) which was drilled or placed in 
        service after the date of the enactment of this 
        subsection and before January 1, 2007, this 
sectionshall apply with respect to such fuels produced at such well or 
facility and sold during the period--
                    ``(A) beginning on the later of January 1, 
                2004, or the date that such well is drilled or 
                such facility is placed in service, and
                    ``(B) ending on the earlier of the date 
                which is 4 years after the date such period 
                began or December 31, 2009.
            ``(2) Old oil and gas wells and facilities.--In the 
        case of a well or facility producing qualified fuels 
        described in subparagraph (A) or (B)(i) of subsection 
        (c)(1) or a facility producing natural gas and 
        byproducts by coal gasification from lignite, 
        subsection (f)(2) shall be applied by substituting 
        `2008' for `2003' with respect to wells and facilities 
        described in subsection (f)(1) with respect to such 
        fuels.
            ``(3) Extension for facilities producing qualified 
        fuel from landfill gas.--
                    ``(A) In general.--In the case of a 
                facility for producing qualified fuel from 
                landfill gas which was placed in service after 
                June 30, 1998, and before January 1, 2007, this 
                section shall apply to fuel produced at such 
                facility and sold during the period--
                            ``(i) beginning on the later of 
                        January 1, 2004, or the date that such 
                        facility is placed in service, and
                            ``(ii) ending on the earlier of the 
                        date which is 4 years after the date 
                        such period began or December 31, 2009.
                    ``(B) Reduction of credit for certain 
                landfill facilities.--In the case of a facility 
                to which subparagraph (A) applies and which is 
                located at a landfill which is required 
                pursuant to section 60.751(b)(2) or section 
                60.33c of title 40, Code of Federal Regulations 
                (as in effect on April 3, 2003) to install and 
                operate a collection and control system which 
                captures gas generated within the landfill, 
                subsection (a)(1) shall be applied to gas so 
                captured by substituting `$2' for `$3' for the 
                taxable year during which such system is 
                required to be installed and operated.
            ``(4) Facilities producing fuels from agricultural 
        and animal waste.--
                    ``(A) In general.--In the case of any 
                facility for producing liquid, gaseous, or 
                solid fuels from qualified agricultural and 
                animal wastes, including such fuels when used 
                as feedstocks, which is placed in service after 
                the date of the enactment of this subsection 
                and before January 1, 2007, this section shall 
                apply with respect to fuel produced at such 
                facility and sold during the period--
                            ``(i) beginning on the later of 
                        January 1, 2004, or the date that such 
                        facility is placed in service, and
                            ``(ii) ending on the earlier of the 
                        date which is 4 years after the date 
                        such period began or December 31, 2009.
                    ``(B) Qualified agricultural and animal 
                waste.--For purposes of this paragraph, the 
                term `qualified agricultural and animal waste' 
                means agriculture and animal waste, including 
                by-products, packaging, and any materials 
                associated with the processing, feeding, 
                selling, transporting, or disposal of 
                agricultural or animal products or wastes.
            ``(5) Facilities producing refined coal.--
                    ``(A) In general.--In the case of a 
                facility described in subparagraph (C) for 
                producing refined coal which is placed in 
                service after the date of the enactment of this 
                subsection and before January 1, 2008, this 
                section shall apply with respect to fuel 
                produced at such facility and sold before the 
                close of the 5-year period beginning on the 
                date such facility is placed in service.
                    ``(B) Refined coal.--For purposes of this 
                paragraph, the term `refined coal' means a fuel 
                which is a liquid, gaseous, or solid synthetic 
                fuel produced from coal (including lignite) or 
                high carbon fly ash, including such fuel used 
                as a feedstock.
                    ``(C) Covered facilities.--
                            ``(i) In general.--A facility is 
                        described in this subparagraph if such 
                        facility produces refined coal using a 
                        technology which the taxpayer certifies 
                        (in such manner as the Secretary may 
                        prescribe) results in--
                                    ``(I) a qualified emission 
                                reduction, and
                                    ``(II) a qualified enhanced 
                                value.
                            ``(ii) Qualified emission 
                        reduction.--For purposes of this 
                        subparagraph, the term `qualified 
                        emission reduction' means a reduction 
                        of at least 20 percent of the emissions 
                        of nitrogen oxide and either sulfur 
                        dioxide or mercury released when 
                        burning the refined coal (excluding any 
                        dilution caused by materials combined 
                        or added during the production 
                        process), as compared to the emissions 
                        released when burning the feedstock 
                        coal or comparable coal predominantly 
                        available in the marketplace as of 
                        January 1, 2003.
                            ``(iii) Qualified enhanced value.--
                        For purposes of this subparagraph, the 
                        term `qualified enhanced value' means 
                        an increase of at least 50 percent in 
                        the market value of the refined coal 
                        (excluding any increase caused by 
                        materials combined or added during the 
                        production process), as compared to the 
                        value of the feedstock coal.
                            ``(iv) Advanced clean coal 
                        technology units excluded.--A facility 
                        described in this subparagraph shall 
                        not include any advanced clean coal 
                        technology unit (as defined in section 
                        48A(e)).
            ``(6) Coalmine gas.--
                    ``(A) In general.--This section shall apply 
                to coalmine gas--
                            ``(i) captured or extracted by the 
                        taxpayer during the period beginning on 
                        the day after the date of the enactment 
                        of this subsection and ending on 
                        December 31, 2006, and
                            ``(ii) utilized as a fuel source or 
                        sold by or on behalf of the taxpayer to 
                        an unrelated person during such period.
                    ``(B) Coalmine gas.--For purposes of this 
                paragraph, the term `coalmine gas' means any 
                methane gas which is--
                            ``(i) liberated during or as a 
                        result of coal mining operations, or
                            ``(ii) extracted up to 10 years in 
                        advance of coal mining operations as 
                        part of a specific plan to mine a coal 
                        deposit.
                    ``(C) Special rule for advanced 
                extraction.--In the case of coalmine gas which 
                is captured in advance of coal mining 
                operations, the credit under subsection (a) 
                shall be allowed only after the date the coal 
                extraction occurs in the immediate area where 
                the coalmine gas was removed.
                    ``(D) Noncompliance with pollution laws.--
                This paragraph shall not apply to the capture 
                or extraction of coalmine gas from coal mining 
                operations with respect to any period in which 
                such coal mining operations are not in 
                compliance with applicable Federal pollution 
                prevention, control, and permit requirements.
            ``(7) Coke and coke gas.--In the case of a facility 
        for producing coke or coke gas which was placed in 
        service before January 1, 1993, or after June 30, 1998, 
        and before January 1, 2007, this section shall apply 
        with respect to coke and coke gas produced in such 
        facility and sold during the during the period--
                    ``(A) beginning on the later of January 1, 
                2004, or the date that such facility is placed 
                in service, and
                    ``(B) ending on the earlier of the date 
                which is 4 years after the date such period 
                began or December 31, 2009.
            ``(8) Special rules.--In determining the amount of 
        credit allowable under this section solely by reason of 
        this subsection--
                    ``(A) Fuels treated as qualified fuels.--
                Any fuel described in paragraph (3), (4), (5), 
                or (6) shall be treated as a qualified fuel for 
                purposes of this section.
                    ``(B) Daily limit.--The amount of qualified 
                fuels sold during any taxable year which may be 
                taken into account by reason of this subsection 
                with respect to any property or facility shall 
                not exceed an average barrel-of-oil equivalent 
                of 200,000 cubic feet of natural gas per day. 
                Days before the date the property or facility 
                is placed in service shall not be taken into 
                account in determining such average.
                    ``(C) Extension period to commence with 
                unadjusted credit amount and new phaseout 
                adjustment.--For purposes of applying 
                subsection (b)(2), in the case of fuels sold 
                after 2003--
                            ``(i) paragraphs (1)(A) and (2) of 
                        subsection (b) shall be applied by 
                        substituting `$35.00' for `$23.50', and
                            ``(ii) subparagraph (B) of 
                        subsection (d)(2) shall be applied by 
                        substituting `2002' for `1979'.
                    ``(D) Denial of double benefit.--This 
                subsection shall not apply to any facility 
                producing qualified fuels for which a credit 
                was allowed under this section for the taxable 
                year or any preceding taxable year by reason of 
                subsection (g).''.
    (b) Treatment as Business Credit.--
            (1) Credit moved to subpart relating to business 
        related credits.--The Internal Revenue Code of 1986 is 
        amended by redesignating section 29, as amended by this 
        Act, as section 45K and by moving section 45K (as so 
        redesignated) from subpart B of part IV of subchapter A 
        of chapter 1 to the end of subpart D of part IV of 
        subchapter A of chapter 1.
            (2) Credit treated as business credit.--Section 
        38(b) is amended by striking ``plus'' at the end of 
        paragraph (19), by striking the period at the end of 
        paragraph (20) and inserting ``, plus'', and by adding 
        at the end the following:
            ``(21) the nonconventional source production credit 
        determined under section 45K(a).''.
            (3) Conforming amendments.--
                    (A) Section 30(b)(2)(A), as redesignated by 
                section 1317(a), is amended by striking 
                ``sections 27 and 29'' and inserting ``section 
                27''.
                    (B) Sections 43(b)(2) and 613A(c)(6)(C) are 
                each amended by striking ``section 
                29(d)(2)(C)'' and inserting ``section 
                45K(d)(2)(C)''.
                    (C) Section 45K(a), as redesignated by 
                paragraph (1), is amended by striking ``At the 
                election of the taxpayer, there shall be 
                allowed as a credit against the tax imposed by 
                this chapter for the taxable year'' and 
                inserting ``For purposes of section 38, if the 
                taxpayer elects to have this section apply, the 
                nonconventional source production credit 
                determined under this section for the taxable 
                year is''.
                    (D) Section 45K(b), as so redesignated, is 
                amended by striking paragraph (6).
                    (E) Section 53(d)(1)(B)(iii) is amended by 
                striking ``under section 29'' and all that 
                follows through ``or not allowed''.
                    (F) Section 55(c)(2) is amended by striking 
                ``29(b)(6),''.
                    (G) Subsection (a) of section 772 is 
                amended by inserting ``and'' at the end of 
                paragraph (9), by striking paragraph (10), and 
                by redesignating paragraph (11) as paragraph 
                (10).
                    (H) Paragraph (5) of section 772(d) is 
                amended by striking ``the foreign tax credit, 
                and the credit allowable under section 29'' and 
                inserting ``and the foreign tax credit''.
                    (I) The table of sections for subpart B of 
                part IV of subchapter A of chapter 1 is amended 
                by striking the item relating to section 29.
                    (J) The table of sections for subpart D of 
                part IV of subchapter A of chapter 1, as 
                amended by this Act, is amended by inserting 
                after the item relating to section 45J the 
                following new item:

        ``Sec. 45K. Credit for producing fuel from a nonconventional 
                  source.''.

    (c) Determinations Under Natural Gas Policy Act of 1978.--
Subparagraph (A) of section 45K(c)(2), as redesignated by 
subsection (b)(1), is amended--
            (1) by inserting ``by the Secretary, after 
        consultation with the Federal Energy Regulatory 
        Commission,'' after ``shall be made'', and
            (2) by inserting ``(as in effect before the repeal 
        of such section)'' after ``1978''.
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph 
        (2), the amendments made by this section shall apply to 
        fuel produced and sold after December 31, 2003, in 
        taxable years ending after such date.
            (2) Determinations under natural gas policy act of 
        1978.--The amendments made by subsection (c) shall 
        apply as if included in the provisions repealing 
        section 503 of the Natural Gas Policy Act of 1978.

              PART II--ALTERNATIVE MINIMUM TAX PROVISIONS

SEC. 1346. NEW NONREFUNDABLE PERSONAL CREDITS ALLOWED AGAINST REGULAR 
                    AND MINIMUM TAXES.

    (a) In General.--
            (1) Section 25c.--Section 25C(b), as added by 
        section 1301 of this Act, is amended by adding at the 
        end the following new paragraph:
            ``(3) Limitation based on amount of tax.--The 
        credit allowed under subsection (a) for the taxable 
        year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability 
                (as defined in section 26(b)) plus the tax 
                imposed by section 55, over
                    ``(B) the sum of the credits allowable 
                under this subpart (other than this section and 
                section 25D) and section 27 for the taxable 
                year.''.
            (2) Section 25D.--Section 25D(b), as added by 
        section 1304 of this Act, is amended by adding at the 
        end the following new paragraph:
            ``(3) Limitation based on amount of tax.--The 
        credit allowed under subsection (a) for the taxable 
        year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability 
                (as defined in section 26(b)) plus the tax 
                imposed by section 55, over
                    ``(B) the sum of the credits allowable 
                under this subpart (other than this section) 
                and section 27 for the taxable year.''.
    (b) Conforming Amendments.--
            (1) Section 23(b)(4)(B) is amended by inserting 
        ``and sections 25C and 25D'' after ``this section''.
            (2) Section 24(b)(3)(B) is amended by striking 
        ``and 25B'' and inserting ``, 25B, 25C, and 25D''.
            (3) Section 25(e)(1)(C) is amended by inserting 
        ``25C, and 25D'' after ``25B,''.
            (4) Section 25B(g)(2) is amended by striking 
        ``section 23'' and inserting ``sections 23, 25C, and 
        25D''.
            (5) Section 26(a)(1) is amended by striking ``and 
        25B'' and inserting ``25B, 25C, and 25D''.
            (6) Section 904(h) is amended by striking ``and 
        25B'' and inserting ``25B, 25C, and 25D''.
            (7) Section 1400C(d) is amended by striking ``and 
        25B'' and inserting ``25B, 25C, and 25D''.
    (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2003.

SEC. 1347. BUSINESS RELATED ENERGY CREDITS ALLOWED AGAINST REGULAR AND 
                    MINIMUM TAX.

    (a) In General.--Subsection (c) of section 38 (relating to 
limitation based on amount of tax) is amended by redesignating 
paragraph (4) as paragraph (5) and by inserting after paragraph 
(3) the following new paragraph:
            ``(4) Special rules for specified energy credits.--
                    ``(A) In general.--In the case of specified 
                energy credits--
                            ``(i) this section and section 39 
                        shall be applied separately with 
                        respect to such credits, and
                            ``(ii) in applying paragraph (1) to 
                        such credits--
                                    ``(I) the tentative minimum 
                                tax shall be treated as being 
                                zero, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by 
                                subclause (I)) shall be reduced 
                                by the credit allowed under 
                                subsection (a) for the taxable 
                                year (other than the specified 
                                energy credits).
                    ``(B) Specified energy credits.--For 
                purposes of this subsection, the term 
                `specified energy credits' means the credits 
                determined under sections 45G, 45H, 45I, and 
                45J. For taxable years beginning after December 
                31, 2003, such term includes the credit 
                determined under section 40. For taxable years 
                beginning after December 31, 2003, and before 
                January 1, 2006, such term includes the credit 
                determined under section 43.
                    ``(C) Special rule for electricity produced 
                from qualified facilities.--For purposes of 
                this subsection, the term `specified energy 
                credits' shall include the credit determined 
                under section 45 to the extent that such credit 
                is attributable to electricity produced--
                            ``(i) at a facility which is 
                        originally placed in service after the 
                        date of the enactment of this 
                        paragraph, and
                            ``(ii) during the 4-year period 
                        beginning on the date that such 
                        facility was originally placed in 
                        service.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2)(A)(ii)(II) of section 38(c) is 
        amended by striking ``or'' and inserting a comma and by 
        inserting ``, and the specified energy credits'' after 
        ``employee credit''.
            (2) Paragraph (3)(A)(ii)(II) of section 38(c) is 
        amended by inserting ``and the specified energy 
        credits'' after ``employee credit''.
    (c) Effective Date.--The amendments made by this section 
shall apply to taxable years ending after the date of the 
enactment of this Act.

SEC. 1348. TEMPORARY REPEAL OF ALTERNATIVE MINIMUM TAX PREFERENCE FOR 
                    INTANGIBLE DRILLING COSTS.

    (a) In General.--Clause (ii) of section 57(a)(2)(E) is 
amended by adding at the end the following new sentence: ``The 
preceding sentence shall not apply to taxable years beginning 
after December 31, 2003, and before January 1, 2006.''.
    (b) Effective Date.--The amendment made by this section 
shall apply to taxable years beginning after December 31, 2003.

                    PART III--CLEAN COAL INCENTIVES

SEC. 1351. CREDIT FOR CLEAN COAL TECHNOLOGY UNITS.

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

``SEC. 48A. CLEAN COAL TECHNOLOGY CREDIT.

    ``(a) In General.--For purposes of section 46, the clean 
coal technology credit for any taxable year is an amount equal 
to the applicable percentage of the basis of qualified clean 
coal property placed in service during such year.
    ``(b) Applicable Percentage.--For purposes of this section, 
the applicable percentage is--
            ``(1) 15 percent in the case of property placed in 
        service in connection with any basic clean coal 
        technology unit, and
            ``(2) 17.5 percent in the case of property placed 
        in service in connection with any advanced clean coal 
        technology unit.
    ``(c) Qualified Clean Coal Property.--For purposes of this 
section--
            ``(1) In general.--The term `qualified clean coal 
        property' means section 1245 property--
                    ``(A) which is installed in connection 
                with--
                            ``(i) an existing coal-based unit 
                        as part of the conversion of such unit 
                        to any basic or advanced clean coal 
                        technology unit, or
                            ``(ii) any new advanced clean coal 
                        technology unit,
                    ``(B) which is placed in service after 
                December 31, 2003, and before--
                            ``(i) in the case of property to 
                        which subsection (b)(1) applies, 
                        January 1, 2014, and
                            ``(ii) in the case of property to 
                        which subsection (b)(2) applies, 
                        January 1, 2017 (January 1, 2013, in 
                        the case of property installed in 
                        connection with an eligible advanced 
                        pulverized coal or atmospheric 
                        fluidized bed combustion technology 
                        unit),
                    ``(C) the original use of which commences 
                with the taxpayer, and
                    ``(D) which has a useful life of not less 
                than 4 years.
            ``(2) Existing coal-based unit.--The term `existing 
        coal-based unit' means a coal-based electricity 
        generating steam generator-turbine unit--
                    ``(A) which is not a basic or advanced 
                clean coal technology unit, and
                    ``(B) which is in operation on or before 
                January 1, 2004.
        In the case of a unit being converted to a basic clean 
        coal technology unit, such term shall not include a 
        unit having a nameplate capacity rating of more than 
        300 megawatts.
            ``(3) New advanced clean coal technology unit.--The 
        term `new advanced clean coal technology unit' means 
        any advanced clean coal technology unit which is placed 
        in service after December 31, 2003, and the original 
        use of which commences with the taxpayer.
    ``(d) Basic Clean Coal Technology Unit.--For purposes of 
this section--
            ``(1) In general.--The term `basic clean coal 
        technology unit' means a unit which--
                    ``(A) uses clean coal technology (including 
                advanced pulverized coal or atmospheric 
                fluidized bed combustion, pressurized fluidized 
                bed combustion, and integrated gasification 
                combined cycle) for the production of 
                electricity,
                    ``(B) uses an input of at least 75 percent 
                coal to produce at least 50 percent of its 
                thermal output as electricity,
                    ``(C) has a design net heat rate of at 
                least 500 less than that of the existing coal-
                based unit prior to its conversion,
                    ``(D) has a maximum design net heat rate of 
                not more than 9,500, and
                    ``(E) meets the pollution control 
                requirements of paragraph (2).
        Such term shall not include an advanced clean coal 
        technology unit.
            ``(2) Pollution control requirements.--
                    ``(A) In general.--A unit meets the 
                requirements of this paragraph if--
                            ``(i) its emissions of sulfur 
                        dioxide, nitrogen oxide, or 
                        particulates meet the lower of the 
                        emission levels for each such emission 
                        specified in--
                                    ``(I) subparagraph (B), or
                                    ``(II) the new source 
                                performance standards of the 
                                Clean Air Act (42 U.S.C. 7411) 
                                which are in effect forthe 
category of source at the time of the conversion of the unit, and
                            ``(ii) its emissions do not exceed 
                        any relevant emission level specified 
                        by regulation pursuant to the hazardous 
                        air pollutant requirements of the Clean 
                        Air Act (42 U.S.C. 7412) in effect at 
                        the time of the conversion of the unit.
                    ``(B) Specific levels.--The levels 
                specified in this subparagraph are--
                            ``(i) in the case of sulfur dioxide 
                        emissions, 50 percent of the sulfur 
                        dioxide emission levels specified in 
                        the new source performance standards of 
                        the Clean Air Act (42 U.S.C. 7411) in 
                        effect on the date of the enactment of 
                        this section for the category of 
                        source,
                            ``(ii) in the case of nitrogen 
                        oxide emissions--
                                    ``(I) 0.1 pound per million 
                                Btu of heat input if the unit 
                                is not a cyclone-fired boiler, 
                                and
                                    ``(II) if the unit is a 
                                cyclone-fired boiler, 15 
                                percent of the uncontrolled 
                                nitrogen oxide emissions from 
                                such boilers, and
                            ``(iii) in the case of particulate 
                        emissions, 0.02 pound per million Btu 
                        of heat input.
            ``(3) Design net heat rate.--The design net heat 
        rate with respect to any unit, measured in Btu per 
        kilowatt hour (HHV)--
                    ``(A) shall be based on the design annual 
                heat input to and the design annual net 
                electrical power, fuels, and chemicals output 
                from such unit (determined without regard to 
                such unit's co-generation of steam),
                    ``(B) shall be adjusted for the heat 
                content of the design coal to be used by the 
                unit if it is less than 12,000 Btu per pound 
                according to the following formula:
        Design net heat rate = Unit net heat rate  [l- 
        (((12,000-design coal heat content, Btu per pound)/
        1,000)  0.013)],
                    ``(C) shall be corrected for the site 
                reference conditions of--
                            ``(i) elevation above sea level of 
                        500 feet,
                            ``(ii) air pressure of 14.4 pounds 
                        per square inch absolute (psia),
                            ``(iii) temperature, dry bulb of 
                        63+F,
                            ``(iv) temperature, wet bulb of 
                        54+F, and
                            ``(v) relative humidity of 55 
                        percent, and
                    ``(D) if carbon capture controls have been 
                installed with respect to any existing coal-
                based unit and such controls remove at least 50 
                percent of the unit's carbon dioxide emissions, 
                shall be adjusted up to the design heat rate 
                level which would have resulted without the 
                installation of such controls.
            ``(4) HHV.--The term `HHV' means higher heating 
        value.
    ``(e) Advanced Clean Coal Technology Unit.--For purposes of 
this section--
            ``(1) In general.--The term `advanced clean coal 
        technology unit' means any electricity generating unit 
        of the taxpayer--
                    ``(A) which is--
                            ``(i) an eligible advanced 
                        pulverized coal or atmospheric 
                        fluidized bed combustion technology 
                        unit,
                            ``(ii) an eligible pressurized 
                        fluidized bed combustion technology 
                        unit,
                            ``(iii) an eligible integrated 
                        gasification combined cycle technology 
                        unit, or
                            ``(iv) an eligible other technology 
                        unit,
                    ``(B) which uses an input of at least 75 
                percent coal to produce at least 50 percent of 
                its thermal output as electricity, and
                    ``(C) which meets the carbon emission rate 
                requirements of paragraph (6).
            ``(2) Eligible advanced pulverized coal or 
        atmospheric fluidized bed combustion technology unit.--
        The term `eligible advanced pulverized coal or 
        atmospheric fluidized bed combustion technology unit' 
        means a clean coal technology unit using advanced 
        pulverized coal or atmospheric fluidized bed combustion 
        technology which has a design net heat rate of not more 
        than 8,500 (8,900 in the case of units placed in 
        service before 2009).
            ``(3) Eligible pressurized fluidized bed combustion 
        technology unit.--The term `eligible pressurized 
        fluidized bed combustion technology unit' means a clean 
        coal technology unit using pressurized fluidized bed 
        combustion technology which has a design net heat rate 
        of not more than 7,720 (8,900 in the case of units 
        placed in service before 2009, and 8,500 in the case of 
        units placed in service after 2008 and before 2013).
            ``(4) Eligible integrated gasification combined 
        cycle technology unit.--The term `eligible integrated 
        gasification combined cycle technology unit' means a 
        clean coal technology unit using integrated 
        gasification combined cycle technology, with or without 
        fuel or chemical co-production--
                    ``(A) which has a design net heat rate of 
                not more than 7,720 (8,900 in the case of units 
                placed in service before 2009, and 8,500 in the 
                case of units placed in service after 2008 and 
                before 2013), and
                    ``(B) has a net thermal efficiency (HHV) 
                using coal with fuel or chemical co-production 
                of not less than 44.2 percent (38.4 percent in 
                the case of units placed in service before 
                2009, and 40.2 percent in the case of units 
                placed in service after 2008 and before 2013).
            ``(5) Eligible other technology unit.--The term 
        `eligible other technology unit' means a clean coal 
        technology unit--
                    ``(A) which uses any other technology for 
                the production of electricity, and
                    ``(B) which has a design net heat rate 
                which meets the requirement of paragraph (2).
            ``(6) Carbon emission rate requirements.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a unit meets the requirements 
                of this paragraph if--
                            ``(i) in the case of a unit using 
                        design coal with a heat content of not 
                        more than 9,000 Btu per pound, the 
                        carbon emission rate is less than 0.60 
                        pound of carbon per kilowatt hour, and
                            ``(ii) in the case of a unit using 
                        design coal with a heat content of more 
                        than 9,000 Btu per pound, the carbon 
                        emission rate is less than 0.54 pound 
                        of carbon per kilowatt hour.
                    ``(B) Eligible other technology unit.--In 
                the case of an eligible other technology unit, 
                subparagraph (A) shall be applied by 
                substituting `0.51' and `0.459' for `0.60' and 
                `0.54', respectively.
    ``(f) National Limitations on Credit.--For purposes of this 
section--
            ``(1) In general.--The amount of credit which would 
        (but for this subsection) be allowed with respect to 
        any property shall not exceed the amount which bears 
        the same ratio to such amount of credit as--
                    ``(A) the national megawatt capacity 
                limitation allocated to the taxpayer with 
                respect to the basic or advanced clean coal 
                technology unit to which such property relates, 
                bears to
                    ``(B) the total megawatt capacity of such 
                unit.
        The capacity described in subparagraph (B) shall be the 
        reasonably expected capacity after the installation of 
        the property.
            ``(2) Amount of national limitation.--
                    ``(A) Advanced units.--The national 
                megawatt capacity limitation for advanced clean 
                coal technology units shall be 6,000 megawatts. 
                Of such amount, the national megawatt capacity 
                limitation is--
                            ``(i) for advanced clean coal 
                        technology units using advanced 
                        pulverized coal or atmospheric 
                        fluidized bed combustion technology, 
                        not more than 1,500 megawatts (not more 
                        than 750 megawatts in the case of units 
                        placed in service before 2009),
                            ``(ii) for such units using 
                        pressurized fluidized bed combustion 
                        technology, not more than 750 megawatts 
                        (not more than 375 megawatts in the 
                        case of units placed in service before 
                        2009),
                            ``(iii) for such units using 
                        integrated gasification combined cycle 
                        technology, with or without fuel or 
                        chemical co-production, not more than 
                        3,000 megawatts (not more than 1,250 
                        megawatts in the case of units placed 
                        in service before 2009), and
                            ``(iv) for such units using other 
                        technology for the production of 
                        electricity, not more than 750 
                        megawatts (not more than 375 megawatts 
                        in the case of units placed in service 
                        before 2009).
                    ``(B) Basic units.--The national megawatt 
                capacity limitation for basic clean coal 
                technology units shall be 4,000 megawatts.
            ``(3) Allocation of limitation.--The Secretary 
        shall allocate the national megawatt capacity 
        limitations in such manner as the Secretary may 
        prescribe, except that the Secretary may not allocate 
        more than 300 megawatts to any basic clean coal 
        technology unit.
            ``(4) Regulations.--Not later than 6 months after 
        the date of the enactment of this section, the 
        Secretary shall prescribe such regulations as may be 
        necessary or appropriate to carry out the purposes of 
        this subsection. Such regulations shall provide a 
        certification process under which the Secretary, after 
        consultation with the Secretary of Energy, shall 
        approve and allocate the national megawatt capacity 
        limitations--
                    ``(A) to encourage that units with the 
                highest thermal efficiencies, when adjusted for 
                the heat content of the design coal and site 
                reference conditions, and environmental 
                performance, be placed in service as soon as 
                possible, and
                    ``(B) to allocate capacity to taxpayers 
                which have a definite and credible plan for 
                placing into commercial operation a basic or 
                advanced clean coal technology unit, 
                including--
                            ``(i) a site,
                            ``(ii) contractual commitments for 
                        procurement and construction or, in the 
                        case of regulated utilities, the 
                        agreement of the State utility 
                        commission,
                            ``(iii) filings for all necessary 
                        preconstruction approvals,
                            ``(iv) a demonstrated record of 
                        having successfully completed 
                        comparable projects on a timely basis, 
                        and
                            ``(v) such other factors which the 
                        Secretary determines are appropriate.
    ``(g) Special Rules.--For purposes of this section--
            ``(1) Certain progress expenditure rules made 
        applicable.--Rules similar to the rules of subsections 
        (c)(4) and (d) of section 46 (as in effect on the day 
        before the date of the enactment of the Revenue 
        Reconciliation Act of 1990) shall apply for purposes of 
        this section.
            ``(2) Property financed by subsidized financing or 
        industrial development bonds.--Rules similar to the 
        rules of section 45(b)(3) shall apply for purposes of 
        this section.
            ``(3) Noncompliance with pollution laws.--The terms 
        `basic clean coal technology unit'and `advanced clean 
coal technology unit' shall not include any unit which is not in 
compliance with the applicable Federal pollution prevention, control, 
and permit requirements at any time during the period applicable under 
subsection (c)(1)(B).
            ``(4) Denial of credit for units receiving certain 
        other federal assistance.--The terms `basic clean coal 
        technology unit' and `advanced clean coal technology 
        unit' shall not include any unit if, at any time during 
        the period applicable under subsection (c)(1)(B), any 
        funding is provided to such unit under the Clean Coal 
        Technology Program, the Power Plant Improvement 
        Initiative, or the Clean Coal Power Initiative 
        administered by the Secretary of Energy.
            ``(5) Coordination with other credits.--This 
        section shall not apply to any property with respect to 
        which the rehabilitation credit under section 47, the 
        energy credit under section 48, or any credit under 
        section 45 or 45K is allowable unless the taxpayer 
        elects to waive the application of such credit to such 
        property.''.
    (b) Special Recapture Rules.--
            (1) Subsection (a) of section 50 is amended by 
        redesignating paragraph (3), (4), and (5) as paragraphs 
        (4), (5), and (6), respectively, and by inserting after 
        paragraph (2) the following new paragraph:
            ``(3) Special rules for clean coal technology 
        credits.--
                    ``(A) Early disposition, etc.--If, during 
                any taxable year, qualified clean coal property 
                is disposed of, or otherwise ceases to be part 
                of a basic or advanced clean coal technology 
                unit with respect to the taxpayer, before the 
                close of the recovery period under section 168 
                for such unit, then the tax under this chapter 
                for such taxable year shall be increased by--
                            ``(i) the aggregate decrease in the 
                        credits allowed under section 38 for 
                        all prior taxable years which would 
                        have resulted solely from reducing to 
                        zero any credit determined under 
                        section 48A with respect to such 
                        property, multiplied by
                            ``(ii) a fraction--
                                    ``(I) the numerator of 
                                which is the number of years in 
                                the period beginning with the 
                                year of such disposition or 
                                cessation and ending with the 
                                last year of such recovery 
                                period, and
                                    ``(II) the denominator of 
                                which is the total number of 
                                years in such recovery period.
                    ``(B) Property ceases to qualify for 
                progress expenditures.--Rules similar to the 
                rules of this paragraph shall apply in cases 
                where qualified progress expenditures were 
                taken into account under the rules referred to 
                in section 48A(g)(1).
                    ``(C) Increased recapture in certain 
                cases.--The fraction in subparagraph (A)(ii) 
                shall be 1 in any case in which the property 
                ceases to be a basic or advanced clean coal 
                technology unit by reason of paragraph (3), 
                (4), or (5) of section 48A(g).
                    ``(D) Coordination with other recapture 
                rules.--Paragraphs (1) and (2) shall not apply 
                to qualified clean coal property.
                    ``(E) Definitions.--Terms used in this 
                section which are also used in section 48A 
                shall have the meanings given to such terms in 
                section 48A.''.
            (2) Paragraph (4) of section 50(a), as redesignated 
        by paragraph (1), is amended by striking ``or (2)'' and 
        inserting ``, (2), or (3)''.
            (3) Paragraph (5) of section 50(a), as so 
        redesignated, is amended by striking ``and (2)'' and 
        inserting ``, (2), and (3)''.
            (4) Section 1371(d)(1) is amended by striking 
        ``section 50(a)(4)'' and inserting ``section 
        50(a)(5)''.
    (c) Technical Amendments.--
            (1) Section 46 (relating to amount of credit) is 
        amended by striking ``and'' at the end of paragraph 
        (2), by striking the period at the end of paragraph (3) 
        and inserting ``, and'', and by adding at the end the 
        following new paragraph:
            ``(4) the clean coal technology credit.''.
            (2) Section 49(a)(1)(C) is amended by striking 
        ``and'' at the end of clause (ii), by striking the 
        period at the end of clause (iii) and inserting ``, 
        and'', and by adding at the end the following new 
        clause:
                            ``(iv) the portion of the basis of 
                        any qualified clean coal property (as 
                        defined by section 48A(c)).''.
            (3) 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. 48A. Clean coal technology credit.''.

    (d) Effective Date.--The amendments made by this section 
shall apply to periods after December 31, 2003, 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. 1352. EXPANSION OF AMORTIZATION FOR CERTAIN POLLUTION CONTROL 
                    FACILITIES.

    (a) Eligibility of Post-1975 Pollution Control 
Facilities.--
            (1) In general.--Paragraph (1) of section 169(d) is 
        amended by striking ``before January 1, 1976,'' and by 
        striking ``a new identifiable'' and inserting ``an 
        identifiable''.
            (2) Identifiable treatment facility.--Paragraph (4) 
        of section 169(d) is amended to read as follows:
                    ``(4) Identifiable treatment facility.--For 
                purposes of paragraph (1), the term 
                `identifiable treatment facility' includes only 
                tangible property (not including a building and 
                its structural components, other than a 
                buildingwhich is exclusively a treatment 
facility) which is of a character subject to the allowance for 
depreciation provided in section 167, which is identifiable as a 
treatment facility, and which is property--
                    ``(A) the construction, reconstruction, or 
                erection of which is completed by the taxpayer, 
                or
                    ``(B) the original use of the property 
                commences with the taxpayer.''
            (3) Technical amendment.--Section 169(d)(3) is 
        amended by striking ``Health, Education, and Welfare'' 
        and inserting ``Health and Human Services''.
    (b) Coordination With Section 48A Investment Credit.--
Section 169 is amended by redesignating subsections (e) though 
(j) as subsection (f) through (k), respectively, and by 
inserting after subsection (d) the following new subsection:
    ``(e) Coordination With Section 48A Investment Credit.--
            ``(1) In general.--In the case of any treatment 
        facility used in connection with a plant or other 
        property to which an amount is allocated under section 
        48A(f), this section shall apply only if such plant or 
        other property was in operation before January 1, 1976.
            ``(2) 36-month amortization with respect to pre-
        1976 plants not allocated credit.--References in this 
        section to 60 months shall be treated as references to 
        36 months in the case of treatment facilities used in 
        connection with a plant or other property in operation 
        before January 1, 1976, if no allocation is made under 
        section 48A(f) with respect to such plant or 
        property.''
    (c) Effective Date.--The amendments made by this section 
shall apply to facilities placed in service after the date of 
the enactment of this Act.

SEC. 1353. 5-YEAR RECOVERY PERIOD FOR ELIGIBLE INTEGRATED GASIFICATION 
                    COMBINED CYCLE TECHNOLOGY UNIT ELIGIBLE FOR CREDIT.

    (a) In General.--Subparagraph (B) of section 168(e)(3) 
(defining 5-year property) is amended by striking ``and'' at 
the end of clause (v), by striking the period at the end of 
clause (vi) and inserting ``, and'', and by inserting after 
clause (vi) the following new clause:
                            ``(vii) any section 1245 property 
                        which is part of an eligible integrated 
                        gasification combined cycle technology 
                        unit (as defined in section 48A(e)(4)) 
                        for which an allocation is made under 
                        section 48A(f).''
    (b) Alternative System.--The table contained in section 
168(g)(3)(B) (relating to special rule for certain property 
assigned to classes) is amended by inserting after the item 
relating to subparagraph (B)(iii) the following new item:

``(B)(vii)........................................................ 20''.

    (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.

              PART IV--HIGH VOLUME NATURAL GAS PROVISIONS

SEC. 1355. HIGH VOLUME NATURAL GAS PIPE TREATED AS 7-YEAR PROPERTY.

    (a) In General.--Section 168(e)(3)(C) (defining 7-year 
property), as amended by this Act, is amended by striking 
``and'' at the end of clause (ii), by redesignating clause 
(iii) as clause (iv), and by inserting after clause (ii) the 
following new clause:
                            ``(iii) any high volume natural gas 
                        pipe the original use of which 
                        commences with the taxpayer after the 
                        date of the enactment of this clause, 
                        and''.
    (b) High Volume Natural Gas Pipe.--Section 168(i) (relating 
to definitions and special rules), as amended by this Act, is 
amended by adding at the end the following new paragraph:
            ``(17) High volume natural gas pipe.--The term 
        `high volume natural gas pipe' means--
                    ``(A) pipe which has an interior diameter 
                of at least 42 inches and which is part of a 
                natural gas pipeline system, and
                    ``(B) any related equipment and 
                appurtenances used in connection with such 
                pipe.''.
    (c) Alternative System.--The table contained in section 
168(g)(3)(B) (relating to special rule for certain property 
assigned to classes), as amended by this Act, is amended by 
inserting after the item relating to subparagraph (C)(ii) the 
following new item:

``(C)(iii)........................................................ 22''.

    (d) Alternative Minimum Tax Exception.--Subparagraph (B) of 
section 56(a)(1), as amended by this Act, is amended by 
inserting before the period the following: ``, or in section 
168(e)(3)(C)(iii)''.
    (e) Effective Date.--The amendments made by this section 
shall apply to property placed in service on or after the date 
of the enactment of this Act.

SEC. 1356. EXTENSION OF ENHANCED OIL RECOVERY CREDIT TO HIGH VOLUME 
                    NATURAL GAS FACILITIES.

    (a) In General.--Section 43(c)(1) (defining qualified 
enhanced oil recovery costs) is amended by adding at the end 
the following new subparagraph:
                    ``(D) Any amount which is paid or incurred 
                during the taxable year in connection with the 
                construction of a gas treatment plant which--
                            ``(i) prepares natural gas for 
                        transportation through a pipeline with 
                        a capacity of at least 
                        1,000,000,000,000 Btu of natural gas 
                        per day, and
                            ``(ii) produces carbon dioxide 
                        which is injected into hydrocarbon-
                        bearing geological formations.''.
    (b) Effective Date.--The amendment made by this section 
shall apply to costs paid or incurred in taxable years 
beginning after December 31, 2003.

                   Subtitle D--Additional Provisions

SEC. 1361. EXTENSION OF ACCELERATED DEPRECIATION BENEFIT FOR ENERGY-
                    RELATED BUSINESSES ON INDIAN RESERVATIONS.

    Paragraph (8) of section 168(j) (relating to termination) 
is amended by adding at the end the following new sentence: 
``The preceding sentence shall be applied by substituting 
`December 31, 2005' for `December 31, 2004' in the case of 
property placed in service as part of a facility for--
                    ``(A) the generation or transmission of 
                electricity (including from any qualified 
                energy resource, as defined in section 45(c)),
                    ``(B) an oil or gas well,
                    ``(C) the transmission or refining of oil 
                or gas, or
                    ``(D) the production of any qualified fuel 
                (as defined in section 45K(c)).''.

SEC. 1362. PAYMENT OF DIVIDENDS ON STOCK OF COOPERATIVES WITHOUT 
                    REDUCING PATRONAGE DIVIDENDS.

    (a) In General.--Subsection (a) of section 1388 (relating 
to patronage dividend defined) is amended by adding at the end 
the following: ``For purposes of paragraph (3), net earnings 
shall not be reduced by amounts paid during the year as 
dividends on capital stock or other proprietary capital 
interests of the organization to the extent that the articles 
of incorporation or bylaws of such organization or other 
contract with patrons provide that such dividends are in 
addition to amounts otherwise payable to patrons which are 
derived from business done with or for patrons during the 
taxable year.''.
    (b) Effective Date.--The amendment made by this section 
shall apply to distributions in taxable years ending after the 
date of the enactment of this Act.

SEC. 1363. DISTRIBUTIONS FROM PUBLICLY TRADED PARTNERSHIPS TREATED AS 
                    QUALIFYING INCOME OF REGULATED INVESTMENT 
                    COMPANIES.

    (a) In General.--Paragraph (2) of section 851(b) (defining 
regulated investment company) is amended to read as follows:
            ``(2) at least 90 percent of its gross income is 
        derived from--
                    ``(A) dividends, interest, payments with 
                respect to securities loans (as defined in 
                section 512(a)(5)), and gains from the sale or 
                other disposition of stock or securities (as 
                defined in section 2(a)(36) of the Investment 
                Company Act of 1940, as amended) or foreign 
                currencies, or other income (including but not 
                limited to gains from options, futures or 
                forward contracts) derived with respect to its 
                business of investing in such stock, 
                securities, or currencies, and
                    ``(B) distributions or other income derived 
                from an interest in a qualified publicly traded 
                partnership (as defined in subsection (h)); 
                and''
    (b) Source Flow-Through Rule Not To Apply.--The last 
sentence of section 851(b) is amended by inserting ``(other 
than a qualified publicly traded partnership as defined in 
subsection (h))'' after ``derived from a partnership''.
    (c) Limitation on Ownership.--Subsection (c) of section 851 
is amended by redesignating paragraph (5) as paragraph (6) and 
inserting after paragraph (4) the following new paragraph:
            ``(5) The term `outstanding voting securities of 
        such issuer' shall include the equity securities of a 
        qualified publicly traded partnership (as defined in 
        subsection (h)).''.
    (d) Definition of Qualified Publicly Traded Partnership.--
Section 851 is amended by adding at the end the following new 
subsection:
    ``(h) Qualified Publicly Traded Partnership.--For purposes 
of this section, the term `qualified publicly traded 
partnership' means a publicly traded partnership described in 
section 7704(b) other than a partnership which would satisfy 
the gross income requirements of section 7704(c)(2) if 
qualifying income included only income described in subsection 
(b)(2)(A).''.
    (e) Definition of Qualifying Income.--Section 7704(d)(4) is 
amended by striking ``section 851(b)(2)'' and inserting 
``section 851(b)(2)(A)''.
    (f) Limitation on Composition of Assets.--Subparagraph (B) 
of section 851(b)(3) is amended to read as follows:
                    ``(B) not more than 25 percent of the value 
                of its total assets is invested in--
                            ``(i) the securities (other than 
                        Government securities or the securities 
                        of other regulated investment 
                        companies) of any one issuer,
                            ``(ii) the securities (other than 
                        the securities of other regulated 
                        investment companies) of two or more 
                        issuers which the taxpayer controls and 
                        which are determined, under regulations 
                        prescribed by the Secretary, to be 
                        engaged in the same or similar trades 
                        or businesses or related trades or 
                        businesses, or
                            ``(iii) the securities of one or 
                        more qualified publicly traded 
                        partnerships (as defined in subsection 
                        (h)).''.
    (g) Application of Special Passive Activity Rule to 
Regulated Investment Companies.--Subsection (k) of section 469 
(relating to separate application of section in case of 
publicly traded partnerships) is amended by adding at the end 
the following new paragraph:
            ``(4) Application to regulated investment 
        companies.--For purposes of this section, a regulated 
        investment company (as defined in section 851) holding 
        an interest in a qualified publicly traded partnership 
        (as defined in section 851(h)) shall be treated as a 
        taxpayer described in subsection (a)(2) with respect to 
        items attributable to such interest.''.
    (h) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after the date of the 
enactment of this Act.

SEC. 1364. CEILING FANS.

    (a) In General.--Subchapter II of chapter 99 of the 
Harmonized Tariff Schedule of the United States is amended by 
inserting in numerical sequence the following new heading:


``            9902.84.14      Ceiling fans for  Free          No change    No change    On or            ''.
                               permanent                                                 before 12/
                               installation                                              31/2005
                               (provided for
                               in subheading
                               8414.51.00).

    (b) Effective Date.--The amendment made by this section 
applies to goods entered, or withdrawn from warehouse, for 
consumption on or after the 15th day after the date of 
enactment of this Act.

SEC. 1365. CERTAIN STEAM GENERATORS, AND CERTAIN REACTOR VESSEL HEADS, 
                    USED IN NUCLEAR FACILITIES.

    (a) Certain Steam Generators.--Heading 9902.84.02 of the 
Harmonized Tariff Schedule of the United States is amended by 
striking ``12/31/2006'' and inserting ``12/31/2008''.
    (b) Certain Reactor Vessel Heads.--Subchapter II of chapter 
99 of the Harmonized Tariff Schedule of the United States is 
amended by inserting in numerical sequence the following new 
heading:
      

``            9902.84.03      Reactor vessel    Free          No change    No change    On or            ''.
                               heads for                                                 before 12/
                               nuclear                                                   31/2007
                               reactors
                               (provided for
                               in subheading
                               8401.40.00).

    (c) Effective Date.--
            (1) Subsection (a).--The amendment made by 
        subsection (a) shall take effect on the date of the 
        enactment of this Act.
            (2) Subsection (b).--The amendment made by 
        subsection (b) shall apply to goods entered, or 
        withdrawn from warehouse, for consumption on or after 
        the 15th day after the date of the enactment of this 
        Act.

SEC. 1366. BROWNFIELDS DEMONSTRATION PROGRAM FOR QUALIFIED GREEN 
                    BUILDING AND SUSTAINABLE DESIGN PROJECTS.

    (a) Treatment as Exempt Facility Bond.--Subsection (a) of 
section 142 (relating to the definition of exempt facility 
bond) is amended by striking ``or'' at the end of paragraph 
(12), by striking the period at the end of paragraph (13) and 
inserting ``, or'', and by inserting at the end the following 
new paragraph:
            ``(14) qualified green building and sustainable 
        design projects.''.
    (b) Qualified Green Building and Sustainable Design 
Projects.--Section 142 (relating to exempt facility bonds) is 
amended by adding at the end thereof the following new 
subsection:
    ``(l) Qualified Green Building and Sustainable Design 
Projects.--
            ``(1) In general.--For purposes of subsection 
        (a)(14), the term `qualified green building and 
        sustainable design project' means any project which is 
        designated by the Secretary, after consultation with 
        the Administrator of the Environmental Protection 
        Agency, as a qualified green building and sustainable 
        design project and which meets the requirements of 
        clauses (i), (ii), (iii), and (iv) of paragraph (4)(A).
            ``(2) Designations.--
                    ``(A) In general.--Within 60 days after the 
                end of the application period described in 
                paragraph (3)(A), the Secretary, after 
                consultation with the Administrator of the 
                Environmental Protection Agency, shall 
                designate qualified green building and 
                sustainable design projects. At least one of 
                the projects designated shall be located in, or 
                within a 10-mile radius of, an empowerment zone 
                as designated pursuant to section 1391, and at 
                least one of the projects designated shall be 
                located in a rural State. No more than one 
                project shall be designated in a State. A 
                project shall not be designated if such project 
                includes a stadium or arena for professional 
                sports exhibitions or games.
                    ``(B) Minimum conservation and technology 
                innovation objectives.--The Secretary, after 
                consultation with the Administrator of the 
                Environmental Protection Agency, shall ensure 
                that, in the aggregate, the projects designated 
                shall--
                            ``(i) reduce electric consumption 
                        by more than 150 megawatts annually as 
                        compared to conventional construction,
                            ``(ii) reduce daily sulfur dioxide 
                        emissions by at least 10 tons compared 
                        to coal generation power,
                            ``(iii) expand by 75 percent the 
                        domestic solar photovoltaic market in 
                        the United States (measured in 
                        megawatts) as compared to the expansion 
                        of that market from 2001 to 2002, and
                            ``(iv) use at least 25 megawatts of 
                        fuel cell energy generation.
            ``(3) Limited designations.--A project may not be 
        designated under this subsection unless--
                    ``(A) the project is nominated by a State 
                or local government within 180 days of the 
                enactment of this subsection, and
                    ``(B) such State or local government 
                provides written assurances that the project 
                willsatisfy the eligibility criteria described 
in paragraph (4).
            ``(4) Application.--
                    ``(A) In general.--A project may not be 
                designated under this subsection unless the 
                application for such designation includes a 
                project proposal which describes the energy 
                efficiency, renewable energy, and sustainable 
                design features of the project and demonstrates 
                that the project satisfies the following 
                eligibility criteria:
                            ``(i) Green building and 
                        sustainable design.--At least 75 
                        percent of the square footage of 
                        commercial buildings which are part of 
                        the project is registered for United 
                        States Green Building Council's LEED 
                        certification and is reasonably 
                        expected (at the time of the 
                        designation) to receive such 
                        certification.
                            ``(ii) Brownfield redevelopment.--
                        The project includes a brownfield site 
                        as defined by section 101(39) of the 
                        Comprehensive Environmental Response, 
                        Compensation, and Liability Act of 1980 
                        (42 U.S.C. 9601), including a site 
                        described in subparagraph 
                        (D)(ii)(II)(aa) thereof.
                            ``(iii) State and local support.--
                        The project receives specific State or 
                        local government resources which will 
                        support the project in an amount equal 
                        to at least $5,000,000. For purposes of 
                        the preceding sentence, the term 
                        `resources' includes tax abatement 
                        benefits and contributions in kind.
                            ``(iv) Size.--The project includes 
                        at least one of the following:
                                    ``(I) At least 1,000,000 
                                square feet of building.
                                    ``(II) At least 20 acres.
                            ``(v) Use of tax benefit.--The 
                        project proposal includes a description 
                        of the net benefit of the tax-exempt 
                        financing provided under this 
                        subsection which will be allocated for 
                        financing of one or more of the 
                        following:
                                    ``(I) The purchase, 
                                construction, integration, or 
                                other use of energy efficiency, 
                                renewable energy, and 
                                sustainable design features of 
                                the project.
                                    ``(II) Compliance with LEED 
                                certification standards.
                                    ``(III) The purchase, 
                                remediation, and foundation 
                                construction and preparation of 
                                the brownfields site.
                            ``(vi) Employment.--The project is 
                        projected to provide permanent 
                        employment of at least 1,500 full time 
                        equivalents (150 full time equivalents 
                        in rural States) when completed and 
                        construction employment of at least 
                        1,000 full time equivalents (100 full 
                        time equivalents in rural States).
                The application shall include an independent 
                analysis which describes the project's economic 
                impact, including the amount of projected 
                employment.
                    ``(B) Project description.--Each 
                application described in subparagraph (A) shall 
                contain for each project a description of--
                            ``(i) the amount of electric 
                        consumption reduced as compared to 
                        conventional construction,
                            ``(ii) the amount of sulfur dioxide 
                        daily emissions reduced compared to 
                        coal generation,
                            ``(iii) the amount of the gross 
                        installed capacity of the project's 
                        solar photovoltaic capacity measured in 
                        megawatts, and
                            ``(iv) the amount, in megawatts, of 
                        the project's fuel cell energy 
                        generation.
            ``(5) Certification of use of tax benefit.--No 
        later than 30 days after the completion of the project, 
        each project must certify to the Secretary that the net 
        benefit of the tax-exempt financing was used for the 
        purposes described in paragraph (4).
            ``(6) Definitions.--For purposes of this 
        subsection--
                    ``(A) Rural state.--The term `rural State' 
                means any State which has--
                            ``(i) a population of less than 
                        4,500,000 according to the 2000 census,
                            ``(ii) a population density of less 
                        than 150 people per square mile 
                        according to the 2000 census, and
                            ``(iii) increased in population by 
                        less than half the rate of the national 
                        increase between the 1990 and 2000 
                        censuses.
                    ``(B) Local government.--The term `local 
                government' has the meaning given such term by 
                section 1393(a)(5).
                    ``(C) Net benefit of tax-exempt 
                financing.--The term `net benefit of tax-exempt 
                financing' means the present value of the 
                interest savings (determined by a calculation 
                established by the Secretary) which result from 
                the tax-exempt status of the bonds.
            ``(7) Aggregate face amount of tax-exempt 
        financing.--
                    ``(A) In general.--An issue shall not be 
                treated as an issue described in subsection 
                (a)(14) if the aggregate face amount of bonds 
                issued by the State or local government 
                pursuant thereto for a project (when added to 
                the aggregate face amount of bonds previously 
                so issued for such project) exceeds an amount 
                designated by the Secretary as part of the 
                designation.
                    ``(B) Limitation on amount of bonds.--The 
                Secretary may not allocate authority to issue 
                qualified green building and sustainable design 
                project bonds in an aggregate face amount 
                exceeding $2,000,000,000.
            ``(8) Termination.--Subsection (a)(14) shall not 
        apply with respect to any bond issued after September 
        30, 2009.
            ``(9) Treatment of current refunding bonds.--
        Paragraphs (7)(B) and (8) shall not apply to any bond 
        (or series of bonds) issued to refund a bond issued 
        under subsection (a)(14) before October 1, 2009, if--
                    ``(A) the average maturity date of the 
                issue of which the refunding bond is a part is 
                not later than the average maturity date of the 
                bonds to be refunded by such issue,
                    ``(B) the amount of the refunding bond does 
                not exceed the outstanding amount of the 
                refunded bond, and
                    ``(C) the net proceeds of the refunding 
                bond are used to redeem the refunded bond not 
                later than 90 days after the date of the 
                issuance of the refunding bond.
For purposes of subparagraph (A), average maturity shall be 
determined in accordance with section 147(b)(2)(A).''.
    (c) Exemption From General State Volume Caps.--Paragraph 
(3) of section 146(g) (relating to exception for certain bonds) 
is amended--
            (1) by striking ``or (13)'' and inserting ``(13), 
        or (14)'', and
            (2) by striking ``and qualified public educational 
        facilities'' and inserting ``qualified public 
        educational facilities, and qualified green building 
        and sustainable design projects''.
    (d) Special Rule for Assets Financed Under This Section and 
Accountability.--
            (1) Denial of double benefit.--Any asset financed 
        with bonds issued pursuant to this section shall be 
        ineligible for any credit or deduction established 
        under the Energy Tax Policy Act of 2003.
            (2) Accountability.--Each issuer shall maintain, on 
        behalf of each project, an interest bearing reserve 
        account equal to 1 percent of the net proceeds of any 
        bond issued under this section for such project. Not 
        later than 5 years after the date of issuance, the 
        Secretary of the Treasury, after consultation with the 
        Administrator of the Environmental Protection Agency, 
        shall determine whether the project financed with such 
        bonds has substantially complied with the terms and 
        conditions described in section 142(l)(4) of the 
        Internal Revenue Code of 1986 (as added by this 
        section). If the Secretary, after such consultation, 
        certifies that the project has substantially complied 
        with such terms and conditions and meets the 
        commitments set forth in the application for such 
        project described in section 142(l)(4) of such Code, 
        amounts in the reserve account, including all interest, 
        shall be released to the project. If the Secretary 
        determines that the project has not substantially 
        complied with such terms and conditions, amounts in the 
        reserve account, including all interest, shall be paid 
        to the United States Treasury.
    (e) Effective Date.--The amendments made by this section 
shall apply to bonds issued after the date of the enactment of 
this Act.

                        TITLE XIV--MISCELLANEOUS

         Subtitle A--Rural and Remote Electricity Construction

SEC. 1401. DENALI COMMISSION PROGRAMS.

    (a) Power Cost Equalization Program.--There are authorized 
to be appropriated to the Denali Commission established by the 
Denali Commission Act of 1998 (42 U.S.C. 3121 note) not more 
than $5,000,000 for each of fiscal years 2005 through 2011 for 
the purposes of funding the power cost equalization program 
established under section 42.45.100 of the Alaska Statutes.
    (b) Availability of Funds.--
            (1) Purpose.--Amounts described in paragraph (2) 
        shall be available to the Denali Commission to permit 
        energy generation and development (including fuel 
        cells, hydroelectric, solar, wind, wave, and tidal 
        energy, and alternative energy sources), energy 
        transmission (including interties), fuel tank 
        replacement and clean-up, fuel transportation networks 
        and related facilities, power cost equalization 
        programs, and other energy programs, notwithstanding 
        any other provision of law.
            (2) Amounts.--(A) Except as provided in 
        subparagraph (B), the amounts referred to in paragraph 
        (1) shall be any Federal royalties, rents, and bonuses 
        derived from the Federal share of Federal oil and gas 
        leases in the National Petroleum Reserve in Alaska, up 
        to a maximum of $50,000,000, for each of the fiscal 
        years 2004 through 2013.
            (B) If amounts available under subparagraph (A) for 
        one of the fiscal years 2004 through 2013 are less than 
        $50,000,000, the Secretary of Energy shall make 
        available an amount sufficient to ensure that the 
        amount available under this subsection for that fiscal 
        year equals $50,000,000, from amounts remaining after 
        deposits are made under section 949(a)(1), from the 
        same source from which those deposits are made.

SEC. 1402. RURAL AND REMOTE COMMUNITY ASSISTANCE.

    (a) Program.--Section 19 of the Rural Electrification Act 
of 1936 (7 U.S.C 918a) is amended by striking all that precedes 
subsection (b) and inserting the following:

``SEC. 19. ELECTRIC GENERATION, TRANSMISSION, AND DISTRIBUTION 
                    FACILITIES EFFICIENCY GRANTS AND LOANS TO RURAL AND 
                    REMOTE COMMUNITIES WITH EXTREMELY HIGH ELECTRICITY 
                    COSTS.

    ``(a) In General.--The Secretary, acting through the Rural 
Utilities Service, may--
            ``(1) in coordination with State rural development 
        initiatives, make grants and loans to persons, States, 
        political subdivisions of States, and other entities 
        organized under the laws of States, to acquire, 
        construct, extend, upgrade, and otherwise improve 
        electric generation, transmission, and distribution 
        facilities serving communities in which the average 
        revenue per kilowatt hour of electricity for all 
        consumers is greater than 150 percent of the average 
        revenue per kilowatt hour of electricity for all 
        consumers in the United States (as determined by the 
        Energy Information Administration using the most recent 
        data available);
            ``(2) make grants and loans to the Denali 
        Commission established by the Denali Commission Act of 
        1998 (42 U.S.C. 3121 note; Public 105-277) to be used 
        for the purpose of providing funds to acquire, 
        construct, extend, upgrade, finance, and otherwise 
        improve electric generation, transmission, and 
        distribution facilities serving communities described 
        in paragraph (1); and
            ``(3) make grants to State entities to establish 
        and support a revolving fund to provide a more cost-
        effective means of purchasing fuel in areas where the 
        fuel cannot be shipped by means of surface 
        transportation.''.
    (b) Definition of Person.--Section 13 of the Rural 
Electrification Act of 1936 (7 U.S.C. 913) is amended by 
striking ``or association'' and inserting ``association, or 
Indian tribe (as defined in section 4 of the Indian Self-
Determination and Education Assistance Act)''.

                      Subtitle B--Coastal Programs

SEC. 1411. ROYALTY PAYMENTS UNDER LEASES UNDER THE OUTER CONTINENTAL 
                    SHELF LANDS ACT.

    (a) Royalty Relief.--
            (1) In general.--For purposes of providing 
        compensation for lessees and a State for which amounts 
        are authorized by section 6004(c) of the Oil Pollution 
        Act of 1990 (Public Law 101-380), a lessee may withhold 
        from payment any royalty due and owing to the United 
        States under any leases under the Outer Continental 
        Shelf Lands Act (43 U.S.C. 1301 et seq.) for offshore 
        oil or gas production from a covered lease tract if, on 
        or before the date that the payment is due and payable 
        to the United States, the lessee makes a payment to the 
        Secretary of the Interior of 44 cents for every $1 of 
        royalty withheld.
            (2) Use of amounts paid to secretary.--Within 30 
        days after the Secretary of the Interior receives 
        payments under paragraph (1), the Secretary of the 
        Interior shall--
                    (A) make 47.5 percent of such payments 
                available to the State referred to in section 
                6004(c) of the Oil Pollution Act of 1990; and
                    (B) make 52.5 percent of such payments 
                available equally, only for the programs and 
                purposes identified as number 282 at page 1389 
                of House Report number 108-10 and for a program 
                described at page 1159 of that Report in the 
                State referred to in such section 6004(c).
            (3) Treatment of amounts.--Any royalty withheld by 
        a lessee in accordance with this section (including any 
        portion thereof that is paid to the Secretary of the 
        Interior under paragraph (1)) shall be treated as paid 
        for purposes of satisfaction of the royalty obligations 
        of the lessee to the United States.
            (4) Certification of withheld amounts.--The 
        Secretary of the Treasury shall--
                    (A) determine the amount of royalty 
                withheld by a lessee under this section; and
                    (B) promptly publish a certification when 
                the total amount of royalty withheld by the 
                lessee under this section is equal to--
                            (i) the dollar amount stated at 
                        page 47 of Senate Report number 101-
                        534, which is designated therein as the 
                        total drainage claim for the West Delta 
                        field; plus
                            (ii) interest as described at page 
                        47 of that Report.
    (b) Period of Royalty Relief.--Subsection (a) shall apply 
to royalty amounts that are due and payable in the period 
beginning on January 1, 2004, and ending on the date on which 
the Secretary of the Treasury publishes a certification under 
subsection (a)(4)(B).
    (c) Definitions.--As used in this section:
            (1) Covered lease tract.--The term ``covered lease 
        tract'' means a leased tract (or portion of a leased 
        tract)--
                    (A) lying seaward of the zone defined and 
                governed by section 8(g) of the Outer 
                Continental Shelf Lands Act (43 U.S.C. 
                1337(g)); or
                    (B) lying within such zone but to which 
                such section does not apply.
            (2) Lessee.--The term ``lessee''--
                    (A) means a person or entity that, on the 
                date of the enactment of the Oil Pollution Act 
                of 1990, was a lessee referred to in section 
                6004(c) of that Act (as in effect on that date 
                of the enactment), but did not hold lease 
                rights in Federal offshore lease OCS-G-5669; 
                and
                    (B) includes successors and affiliates of a 
                person or entity described in subparagraph (A).

SEC. 1412. DOMESTIC OFFSHORE ENERGY REINVESTMENT.

    (a) Domestic Offshore Energy Reinvestment Program.--The 
Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) is 
amended by adding at the end the following:

``SEC. 32. DOMESTIC OFFSHORE ENERGY REINVESTMENT PROGRAM.

    ``(a) Definitions.--In this section:
            ``(1) Approved plan.--The term `approved plan' 
        means a Secure Energy Reinvestment Plan approved by the 
        Secretary under this section.
            ``(2) Coastal energy state.--The term `Coastal 
        Energy State' means a Coastal State off the coastline 
        of which, within the seaward lateral boundary as 
        determined by the map referenced in subsection 
        (c)(2)(A), outer Continental Shelf bonus bids or 
        royalties are generated, other than bonus bids or 
        royalties from a leased tract within any area of the 
        outer Continental Shelf for which a moratorium on new 
        leasing was in effect as of January 1, 2002, unless the 
        lease was issued before the establishment of the 
        moratorium and was in production on such date.
            ``(3) Coastal political subdivision.--The term 
        `coastal political subdivision' means a county, parish, 
        or other equivalent subdivision of a Coastal Energy 
        State, all or part of which lies within the boundaries 
        of the coastal zone of the State, as identified in the 
        State's approved coastal zone management program under 
        the Coastal Zone Management Act of 1972 (16 U.S.C. 1451 
        et seq.) on the date of the enactment of this section.
            ``(4) Coastal population.--The term `coastal 
        population' means the population of a coastal political 
        subdivision, as determined by the most recent official 
        data of the Census Bureau.
            ``(5) Coastline.--The term `coastline' has the same 
        meaning as the term `coast line' in subsection 2(c) of 
        the Submerged Lands Act (43 U.S.C. 1301(c)).
            ``(6) Fund.--The term `Fund' means the Secure 
        Energy Reinvestment Fund established by this section.
            ``(7) Leased tract.--The term `leased tract' means 
        a tract maintained under section 6 or leased under 
        section 8 for the purpose of drilling for, developing, 
        and producing oil and natural gas resources.
            ``(8) Qualified outer continental shelf revenues.--
        (A) Except as provided in subparagraph (B), the term 
        `qualified outer Continental Shelf revenues' means all 
        amounts received by the United States on or after 
        October 1, 2003, from each leased tract or portion of a 
        leased tract lying seaward of the zone defined and 
        governed by section 8(g), or lying within such zone but 
        to which section 8(g) does not apply, including bonus 
        bids, rents, royalties (including payments for 
        royalties taken in kind and sold), net profit share 
        payments, and related interest.
            ``(B) Such term does not include any revenues from 
        a leased tract or portion of a leased tract that is 
        included within any area of the outer Continental Shelf 
        for which a moratorium on new leasing was in effect as 
        of January 1, 2002, unless the lease was issued before 
        the establishment of the moratorium and was in 
        production on such date.
            ``(9) Secretary.--The term `Secretary' means the 
        Secretary of the Interior.
    ``(b) Secure Energy Reinvestment Fund.--
            ``(1) Establishment.--There is established in the 
        Treasury of the United States a separate account which 
        shall be known as the `Secure Energy Reinvestment 
        Fund'. The Fund shall consist of amounts deposited 
        under paragraph (2), and such other amounts as may be 
        appropriated to the Fund.
            ``(2) Deposits.--For each fiscal year after fiscal 
        year 2003, the Secretary of the Treasury shall deposit 
        into the Fund the following:
                    ``(A) Notwithstanding section 9, all 
                qualified outer Continental Shelf revenues 
                attributable to royalties received by the 
                United States in the fiscal year that are in 
                excess of the following amount:
                            ``(i) $3,455,000,000 in the case of 
                        royalties received in fiscal year 2004.
                            ``(ii) $3,726,000,000 in the case 
                        of royalties received in fiscal year 
                        2005.
                            ``(iii) $4,613,000,000 in the case 
                        of royalties received in fiscal year 
                        2006.
                            ``(iv) $5,226,000,000 in the case 
                        of royalties received in fiscal year 
                        2007.
                            ``(v) $5,841,000,000 in the case of 
                        royalties received in fiscal year 2008.
                            ``(vi) $5,763,000,000 in the case 
                        of royalties received in fiscal year 
                        2009.
                            ``(vii) $6,276,000,000 in the case 
                        of royalties received in fiscal year 
                        2010.
                            ``(viii) $6,351,000,000 in the case 
                        of royalties received in fiscal year 
                        2011.
                            ``(ix) $6,551,000,000 in the case 
                        of royalties received in fiscal year 
                        2012.
                            ``(x) $5,120,000,000 in the case of 
                        royalties received in fiscal year 2013.
                    ``(B) Notwithstanding section 9, all 
                qualified outer Continental shelf revenues 
                attributable to bonus bids received by the 
                United States in each of the fiscal years 2004 
                through 2013 that are in excess of 
                $1,000,000,000.
                    ``(C) Notwithstanding section 9, in 
                addition to amounts deposited under 
                subparagraphs (A) and (B), $35,000,000 of 
                amounts received by the United States each 
                fiscal year as royalties for oil or gas 
                production on the outer Continental Shelf, 
                except that no amounts shall be deposited under 
                this subparagraph before fiscal year 2004 or 
                after fiscal year 2013.
                    ``(D) All interest earned under paragraph 
                (4).
                    ``(E) All repayments under subsection (f).
            ``(3) Reduction in deposit.--(A) For each fiscal 
        year after fiscal year 2013 in which amounts received 
        by the United States as royalties for oil or gas 
        production on the outer Continental Shelf are less than 
        the sum of the amounts described in subparagraph (B) 
        (before the application of this subparagraph), the 
        Secretary of the Treasury shall reduce each of the 
        amounts described in subparagraph (B) proportionately.
            ``(B) The amounts referred to in subparagraph (A) 
        are the following:
                    ``(i) The amount required to be covered 
                into the Historic Preservation Fund under 
                section 108 of the National Historic 
                Preservation Act (16 U.S.C. 470h) on the date 
                of the enactment of this paragraph.
                    ``(ii) The amount required to be credited 
                to the Land and Water Conservation Fund under 
                section 2(c)(2) of the Land and Water 
                Conservation Fund Act of 1965 (16 U.S.C. 4601-
                5(c)(2)) on the date of the enactment of this 
                paragraph.
                    ``(iii) The amount required to be deposited 
                under subparagraph (C) of paragraph (2) of this 
                subsection.
            ``(4) Investment.--The Secretary of the Treasury 
        shall invest moneys in the Fund (including interest) in 
        public debt securities with maturities suitable to the 
        needs of the Fund, as determined by the Secretary of 
        the Treasury, and bearing interest at rates determined 
        by the Secretary of the Treasury, taking into 
        consideration current market yields on outstanding 
        marketable obligations of the United States of 
        comparable maturity. Such invested moneys shall remain 
        invested until needed to meet requirements for 
        disbursement under this section.
            ``(5) Review and revision of baseline amounts.--Not 
        later than December 31, 2008, the Secretary of the 
        Interior, in consultation with the Secretary of the 
        Treasury, shall--
                    ``(A) determine the amount and composition 
                of outer Continental Shelf revenues that were 
                received by the United States in each of the 
                fiscal years 2004 through 2008;
                    ``(B) project the amount and composition of 
                outer Continental Shelf revenues that will be 
                received in the United States in each of the 
                fiscal years 2009 through 2013; and
                    ``(C) submit to the Congress a report 
                regarding whether any of the dollar amounts set 
                forth in clauses (v) though (x) of paragraph 
                (2)(A) or paragraph (2)(B) should be modified 
                to reflect those projections.
            ``(6) Authorization of appropriation of additional 
        amounts.--In addition to the amounts deposited into the 
        Fund under paragraph (2) there are authorized to be 
        appropriated to the Fund--
                    ``(A) for each of fiscal years 2004 through 
                2013 up to $500,000,000; and
                    ``(B) for each fiscal year after fiscal 
                year 2013 up to 25 percent of qualified outer 
                Continental Shelf revenues received by the 
                United States in the preceding fiscal year.
    ``(c) Use of Secure Energy Reinvestment Fund.--
            ``(1) In general.--(A) The Secretary shall use 
        amounts in the Fund remaining after the application of 
        subsections (h) and (i) to pay to each Coastal Energy 
        State that has a Secure Energy Reinvestment Plan 
        approved by the Secretary under this section, and to 
        coastal political subdivisions of such State, the 
        amount allocated to the State or coastal political 
        subdivision, respectively, under this subsection.
            ``(B) The Secretary shall make payments under this 
        paragraph in December of 2004, and of each year 
        thereafter, from revenues received by the United States 
        in the immediately preceding fiscal year.
            ``(2) Allocation.--The Secretary shall allocate 
        amounts deposited into the Fund in a fiscal year, and 
        other amounts determined by the Secretary to be 
        available, among Coastal Energy States that have an 
        approved plan, and to coastal political subdivisions of 
        such States, as follows:
                    ``(A)(i) Of the amounts made available for 
                each of the first 10 fiscal years for which 
                amounts are available for allocation under this 
                paragraph, the allocation for each Coastal 
                Energy State shall be calculated based on the 
                ratio of qualified outer Continental Shelf 
                revenues generated off the coastline of the 
                Coastal Energy State to the qualified outer 
                Continental Shelf revenues generated off the 
                coastlines of all Coastal Energy States for the 
                period beginning January 1, 1992, and ending 
                December 31, 2001.
                    ``(ii) Of the amounts available for a 
                fiscal year in a subsequent 10-fiscal-year 
                period, the allocation for each Coastal Energy 
                State shall be calculated based on such ratio 
                determined by the Secretary with respect to 
                qualified outer Continental Shelf revenues 
                generated in each subsequent corresponding 10-
                year period.
                    ``(iii) For purposes of this subparagraph, 
                qualified outer Continental Shelf revenues 
                shall be considered to be generated off the 
                coastline of a Coastal Energy State if the 
                geographic center of the lease tract from which 
                the revenues are generated is located within 
                the area formed by the extension of the State's 
                seaward lateral boundaries, calculated using 
                the strict and scientifically derived 
                conventions established to delimit 
                international lateral boundaries under the Law 
                of the Sea, as indicated on the map entitled 
                `Calculated Seaward Lateral Boundaries' and 
                dated October 2003, on file in the Office of 
                the Director, Minerals Management Service.
                    ``(B) 35 percent of each Coastal Energy 
                State's allocable share as determined under 
                subparagraph (A) shall be allocated among and 
                paid directly to the coastal political 
                subdivisions of the State by the Secretary 
                based on the following formula:
                            ``(i) 25 percent shall be allocated 
                        based on the ratio of each coastal 
                        political subdivision's coastal 
                        population to the coastal population of 
                        all coastal political subdivisions of 
                        the Coastal Energy State.
                            ``(ii) 25 percent shall be 
                        allocated based on the ratio of each 
                        coastal political subdivision's 
                        coastline miles to the coastline miles 
                        of all coastal political subdivisions 
                        of the State. In the case of a coastal 
                        political subdivision without a 
                        coastline, the coastline of the 
                        political subdivision for purposes of 
                        this clause shall be one-third the 
                        average length of the coastline of the 
                        other coastal political subdivisions of 
                        the State.
                            ``(iii) 50 percent shall be 
                        allocated based on a formula that 
                        allocates 75 percent of the funds based 
                        on such coastal political subdivision's 
                        relative distance from any leased tract 
                        used to calculate that State's 
                        allocation and 25 percent of the funds 
                        based on the relative level of outer 
                        Continental Shelf oil and gas 
                        activities in a coastal political 
                        subdivision to the level of outer 
                        Continental Shelf oil and gas 
                        activities in all coastal political 
                        subdivisions in such State, as 
                        determined by the Secretary, except 
                        that in the case of a coastal political 
                        subdivision in the State of California 
                        that has a coastal shoreline, that is 
                        not within 200 miles of the geographic 
                        center of a leased tract or portion of 
                        a leased tract, and in which there is 
                        located one or more oil refineries the 
                        allocation under this clause shall be 
                        determined as if that coastal political 
                        subdivision were located within a 
                        distance of 50 miles from the 
                        geographic center of the closest leased 
                        tract with qualified outer Continental 
                        Shelf revenues.
            ``(3) Reallocation.--Any amount allocated to a 
        Coastal Energy State or coastal political subdivision 
        of such a State but not disbursed because of a failure 
        of a Coastal Energy State to have an approved plan 
        shall be reallocated by the Secretary among all other 
        Coastal Energy States in a manner consistent with this 
        subsection, except that the Secretary--
                    ``(A) shall hold the amount in escrow 
                within the Fund until the earlier of the end of 
                the next fiscal year in which the allocation is 
                made or the final resolution of any appeal 
                regarding the disapproval of a plan submitted 
                by the State under this section; and
                    ``(B) shall continue to hold such amount in 
                escrow until the end of the subsequent fiscal 
                year thereafter, if the Secretary determines 
                that such State is making a good faith effort 
                to develop and submit, or update, a Secure 
                Energy Reinvestment Plan under subsection (d).
            ``(4) Minimum share.--Notwithstanding any other 
        provision of this subsection, the amount allocated 
        under this subsection to each Coastal Energy State each 
        fiscal year shall be not less than 5 percent of the 
        total amount available for that fiscal year for 
        allocation under this subsection to Coastal Energy 
        States, except that for any Coastal Energy State 
        determined by the Secretary to have an area formed by 
        the extension of the State's seaward lateral boundary, 
        as designated by the map referenced in paragraph 
        (2)(A)(iii), of less than 490 square statute miles, the 
        amount allocated to such State shall not be less than 
        10 percent of the total amount available for that 
        fiscal year for allocation under this subsection.
            ``(5) Recomputation.--If the allocation to one or 
        more Coastal Energy States under paragraph (4) with 
        respect to a fiscal year is greater than the amount 
        that would be allocated to such States under this 
        subsection if paragraph (4) did not apply, then the 
        allocations under this subsection to all other Coastal 
        Energy States shall be paid from the amount remaining 
        after deduction of the amounts allocated under 
        paragraph (4), but shall be reduced on a pro rata basis 
        by the sum of the allocations under paragraph (4) so 
        that not more than 100 percent of the funds available 
        in the Fund for allocation with respect to that fiscal 
        year is allocated.
    ``(d) Secure Energy Reinvestment Plan.--
            ``(1) Development and submission of state plans.--
        The Governor of each State seeking to receive funds 
        under this section shall prepare, and submit to the 
        Secretary, a Secure Energy Reinvestment Plan describing 
        planned expenditures of funds received under this 
        section. The Governor shall include in the State plan 
        submitted to the Secretary plans prepared by the 
        coastal political subdivisions of the State. The 
        Governor and the coastal political subdivision shall 
        solicit local input and provide for public 
        participation in the development of the State plan. In 
        describing the planned expenditures, the State and 
        coastal political subdivisions shall include only items 
        that are uses authorized under subsection (e).
            ``(2) Approval or disapproval.--
                    ``(A) In general.--The Secretary may not 
                disburse funds to a State or coastal political 
                subdivision of a State under this section 
                before the date the State has an approved plan. 
                The Secretary shall approve a Secure Energy 
                Reinvestment Plan submitted by a State under 
                paragraph (1) if the Secretary determines that 
                the expenditures provided for in the plan are 
                uses authorized under subsection (e), and that 
                the plan contains each of the following:
                            ``(i) The name of the State agency 
                        that will have the authority to 
                        represent and act for the State in 
                        dealing with the Secretary for purposes 
                        of this section.
                            ``(ii) A program for the 
                        implementation of the plan, that (I) 
                        has as a goal improving the 
                        environment, (II) has as a goal 
                        addressing the impacts of oil and gas 
                        production from the outer Continental 
                        Shelf, and (III) includes a description 
                        of how the State and coastal political 
                        subdivisions of the State will evaluate 
                        the effectiveness of the plan.
                            ``(iii) Certification by the 
                        Governor that ample opportunity has 
                        been accorded for public participation 
                        in the development and revision of the 
                        plan.
                            ``(iv) Measures for taking into 
                        account other relevant Federal 
                        resources and programs. The plan shall 
                        be correlated so far as practicable 
                        with other State, regional, and local 
                        plans.
                            ``(v) For any State for which the 
                        ratio determined under subsection 
                        (c)(2)(A)(i) or (c)(2)(A)(ii), as 
                        appropriate, expressed as a percentage, 
                        exceeds 25 percent, a plan to spend not 
                        less than 30 percent of the total funds 
                        provided under this section each fiscal 
                        year to that State and appropriate 
                        coastal political subdivisions, to 
                        address the socioeconomic or 
                        environmental impacts identified in the 
                        plan that remain significant or 
                        progressive after implementation of 
                        mitigation measures identified in the 
                        most current environmental impact 
                        statement (as of the date of the 
                        enactment of this clause) required 
                        under the National Environmental 
                        Protection Act of 1969 for lease sales 
                        under this Act.
                            ``(vi) A plan to utilize at least 
                        one-half of the funds provided pursuant 
                        to subsection (c)(2)(B), and a portion 
                        of other funds provided to such State 
                        under this section, on programs or 
                        projects that are coordinated and 
                        conducted in partnership between the 
                        State and coastal political 
                        subdivision.
                    ``(B) Procedure and timing.--The Secretary 
                shall approve or disapprove each plan submitted 
                in accordance with this subsection within 90 
                days after its submission.
            ``(3) Amendment or revision.--Any amendment to or 
        revision of an approved plan shall be prepared and 
        submitted in accordance with the requirements under 
        this paragraph for the submittal of plans, and shall be 
        approved or disapproved by the Secretary in accordance 
        with paragraph (2)(B).
    ``(e) Authorized Uses.--A Coastal Energy State, and a 
coastal political subdivision of such a State, shall use 
amounts paid under this section (including any such amounts 
deposited into a trust fund administered by the State or 
coastal political subdivision dedicated to uses consistent with 
this subsection), in compliance with Federal and State law and 
the approved plan of the State, only for one or more of the 
following purposes:
            ``(1) Projects and activities, including 
        educational activities, for the conservation, 
        protection, or restoration of coastal areas including 
        wetlands.
            ``(2) Mitigating damage to, or the protection of, 
        fish, wildlife, or natural resources.
            ``(3) To the extent of such sums as are considered 
        reasonable by the Secretary, planning assistance and 
        administrative costs of complying with this section.
            ``(4) Implementation of federally approved plans or 
        programs for marine, coastal, subsidence, or 
        conservation management or for protection of resources 
        from natural disasters.
            ``(5) Mitigating impacts of outer Continental Shelf 
        activities through funding onshore infrastructure and 
        public service needs.
    ``(f) Compliance With Authorized Uses.--If the Secretary 
determines that an expenditure of an amount made by a Coastal 
Energy State or coastal political subdivision is not in 
accordance with the approved plan of the State (including the 
plans of coastal political subdivisions included in such plan), 
the Secretary shall not disburse any further amounts under this 
section to that Coastal Energy State or coastal political 
subdivision until--
            ``(1) the amount is repaid to the Secretary; or
            ``(2) the Secretary approves an amendment to the 
        plan that authorizes the expenditure.
    ``(g) Arbitration of State and Local Disputes.--The 
Secretary may require, as a condition of any payment under this 
section, that a State or coastal political subdivision in a 
State must submit to arbitration--
            ``(1) any dispute between the State or coastal 
        political subdivision (or both) and the Secretary 
        regarding implementation of this section; and
            ``(2) any dispute between the State and political 
        subdivision regarding implementation of this section, 
        including any failure to include, in the plan submitted 
        by the State for purposes of subsection (d), any 
        spending plan of the coastal political subdivision.
    ``(h) Administrative Expenses.--Of amounts in the Fund each 
fiscal year, the Secretary may use up to one-half of one 
percent for the administrative costs of implementing this 
section.
    ``(i) Funding for Consortium.--
            ``(1) In general.--Of amounts deposited into the 
        Fund in each fiscal year 2004 through 2013, 2 percent 
        shall be available to the Secretary of the Interior to 
        provide funding for the Coastal Restoration and 
        Enhancement through Science and Technology program.
            ``(2) Treatment.--Any amount available under this 
        subsection for a fiscal year shall, for purposes of 
        determining the amount appropriated under any other 
        provision of law that authorizes appropriations to 
        carry out the program referred to in paragraph (1), be 
        treated as appropriated under that other provision.
    ``(j) Disposition of Funds.--A Coastal Energy State or 
coastal political subdivision may use funds provided to such 
entity under this section, subject to subsection (e), for any 
payment that is eligible to be made with funds provided to 
States under section 35 of the Mineral Leasing Act (30 U.S.C. 
191).
    ``(k) Reports.--Each fiscal year following a fiscal year in 
which a Coastal Energy State or coastal political subdivision 
of a Coastal Energy State receives funds under this section, 
the Governor of the Coastal Energy State, in coordination with 
such State's coastal political subdivisions, shall account for 
all funds so received for the previous fiscal year in a written 
report to the Secretary. The report shall include, in 
accordance with regulations prescribed by the Secretary, a 
description of all projects and activities that received such 
funds. In order to avoid duplication, such report may 
incorporate, by reference, any other reports required to be 
submitted under other provisions of law.
    ``(l) Signs.--The Secretary shall require, as a condition 
of any allocation of funds provided with amounts made available 
by this section, that each State and coastal political 
subdivision shall include on any sign otherwise installed at 
any site at or near an entrance or public use focal point area 
for which such funds are used, a statement that the existence 
or development of the site (or both), as appropriate, is a 
product of such funds.''.
    (b) Additional Amendments.--Section 31 of the Outer 
Continental Shelf Lands Act (43 U.S.C. 1356a) is amended--
            (1) by striking subsection (a);
            (2) in subsection (c) by striking ``For fiscal year 
        2001, $150,000,000 is'' and inserting ``Such sums as 
        may be necessary to carry out this section are'';
            (3) in subsection (d)(1)(B) by striking ``, 
        except'' and all that follows through the end of the 
        sentence and inserting a period;
            (4) by redesignating subsections (b) though (g) in 
        order as subsection (a) through (f); and
            (5) by striking ``subsection (f)'' each place it 
        appears and inserting ``subsection (e)''.
    (c) Utilization of Coastal Restoration and Enhancement 
Through Science and Technology Program.--
            (1) Authorization.--The Secretary of the Interior 
        and the Secretary of Commerce may each use the Coastal 
        Restoration and Enhancement through Science and 
        Technology program for the purposes of--
                    (A) assessing the effects of coastal 
                habitat restoration techniques;
                    (B) developing improved ecosystem modeling 
                capabilities for improved predictions of 
                coastal conditions and habitat change and for 
                developing new technologies for restoration 
                activities; and
                    (C) identifying economic options to address 
                socioeconomic consequences of coastal 
                degradation.
            (2) Condition.--The Secretary of the Interior, in 
        consultation with the Secretary of Commerce, shall 
        ensure that the program--
                    (A) establishes procedures designed to 
                avoid duplicative activities among Federal 
                agencies and entities receiving Federal funds;
                    (B) coordinates with persons involved in 
                similar activities; and
                    (C) establishes a mechanism to collect, 
                organize, and make available information and 
                findings on coastal restoration.
            (3) Report.--Not later than September 30, 2008, the 
        Secretary of the Interior, in consultation with the 
        Secretary of Commerce, shall transmit a report to the 
        Congress on the effectiveness of any Federal and State 
        restoration efforts conducted pursuant to this 
        subsection and make recommendations to improve 
        coordinated coastal restoration efforts.
            (4) Funding.--For each of fiscal years 2004 through 
        2013, there is authorized to be appropriated to the 
        Secretary $10,000,000 to carry out activities under 
        this subsection.

 Subtitle C--Reforms to the Board of Directors of the Tennessee Valley 
                               Authority

SEC. 1431. CHANGE IN COMPOSITION, OPERATION, AND DUTIES OF THE BOARD OF 
                    DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY.

    The Tennessee Valley Authority Act of 1933 (16 U.S.C. 831 
et seq.) is amended by striking section 2 and inserting the 
following:

``SEC. 2. MEMBERSHIP, OPERATION, AND DUTIES OF THE BOARD OF DIRECTORS.

    ``(a) Membership.--
            ``(1) Appointment.--The Board of Directors of the 
        Corporation (referred to in this Act as the `Board') 
        shall be composed of 9 members appointed by the 
        President by and with the advice and consent of the 
        Senate, at least 5 of whom shall be a legal resident of 
        a State any part of which is in the service area of the 
        Corporation.
            ``(2) Chairman.--The members of the Board shall 
        select 1 of the members to act as chairman of the 
        Board.
    ``(b) Qualifications.--To be eligible to be appointed as a 
member of the Board, an individual--
            ``(1) shall be a citizen of the United States;
            ``(2) shall have management expertise relative to a 
        large for-profit or nonprofit corporate, government, or 
        academic structure;
            ``(3) shall not be an employee of the Corporation; 
        and
            ``(4) shall make full disclosure to Congress of any 
        investment or other financial interest that the 
        individual holds in the energy industry.
    ``(c) Recommendations.--In appointing members of the Board, 
the President shall--
            ``(1) consider recommendations from such public 
        officials as--
                    ``(A) the Governors of States in the 
                service area;
                    ``(B) individual citizens;
                    ``(C) business, industrial, labor, electric 
                power distribution, environmental, civic, and 
                service organizations; and
                    ``(D) the congressional delegations of the 
                States in the service area; and
            ``(2) seek qualified members from among persons who 
        reflect the diversity, including the geographical 
        diversity, and needs of the service area of the 
        Corporation.
    ``(d) Terms.--
            ``(1) In general.--A member of the Board shall 
        serve a term of 5 years. A member of the Board whose 
        term has expired may continue to serve after the 
        member's term has expired until the date on which a 
        successor takes office, except that the member shall 
        not serve beyond the end of the session of Congress in 
        which the term of the member expires.
            ``(2) Vacancies.--A member appointed to fill a 
        vacancy on the Board occurring before the expiration of 
        the term for which the predecessor of the member was 
        appointed shall be appointed for the remainder of that 
        term.
    ``(e) Quorum.--
            ``(1) In general.--Five of the members of the Board 
        shall constitute a quorum for the transaction of 
        business.
            ``(2) Vacancies.--A vacancy on the Board shall not 
        impair the power of the Board to act.
    ``(f) Compensation.--
            ``(1) In general.--A member of the Board shall be 
        entitled to receive--
                    ``(A) a stipend of--
                            ``(i) $45,000 per year; or
                            ``(ii)(I) in the case of the 
                        chairman of any committee of the Board 
                        created by the Board, $46,000 per year; 
                        or
                            ``(II) in the case of the chairman 
                        of the Board, $50,000 per year; and
                    ``(B) travel expenses, including per diem 
                in lieu of subsistence, in the same manner as 
                persons employed intermittently in Government 
                service under section 5703 of title 5, United 
                States Code.
            ``(2) Adjustments in stipends.--The amount of the 
        stipend under paragraph (1)(A)(i) shall be adjusted by 
        the same percentage, at the same time and manner, and 
        subject to the same limitations as are applicable to 
        adjustments under section 5318 of title 5, United 
        States Code.
    ``(g) Duties.--
            ``(1) In general.--The Board shall--
                    ``(A) establish the broad goals, 
                objectives, and policies of the Corporation 
                that are appropriate to carry out this Act;
                    ``(B) develop long-range plans to guide the 
                Corporation in achieving the goals, objectives, 
                and policies of the Corporation and provide 
                assistance to the chief executive officer to 
                achieve those goals, objectives, and policies;
                    ``(C) ensure that those goals, objectives, 
                and policies are achieved;
                    ``(D) approve an annual budget for the 
                Corporation;
                    ``(E) adopt and submit to Congress a 
                conflict-of-interest policy applicable to 
                members of the Board and employees of the 
                Corporation;
                    ``(F) establish a compensation plan for 
                employees of the Corporation in accordance with 
                subsection (i);
                    ``(G) approve all compensation (including 
                salary or any other pay, bonuses, benefits, 
                incentives, and any other form of remuneration) 
                of all managers and technical personnel that 
                report directly to the chief executive officer 
                (including any adjustment to compensation);
                    ``(H) ensure that all activities of the 
                Corporation are carried out in compliance with 
                applicable law;
                    ``(I) create an audit committee, composed 
                solely of Board members independent of the 
                management of the Corporation, which shall--
                            ``(i) in consultation with the 
                        inspector general of the Corporation, 
                        recommend to the Board an external 
                        auditor;
                            ``(ii) receive and review reports 
                        from the external auditor of the 
                        Corporation and inspector general of 
                        the Corporation; and
                            ``(iii) make such recommendations 
                        to the Board as the audit committee 
                        considers necessary;
                    ``(J) create such other committees of Board 
                members as the Board considers to be 
                appropriate;
                    ``(K) conduct such public hearings as it 
                deems appropriate on issues that could have a 
                substantial effect on--
                            ``(i) the electric ratepayers in 
                        the service area; or
                            ``(ii) the economic, environmental, 
                        social, or physical well-being of the 
                        people of the service area;
                    ``(L) establish the electricity rates 
                charged by the Corporation; and
                    ``(M) engage the services of an external 
                auditor for the Corporation.
            ``(2) Meetings.--The Board shall meet at least 4 
        times each year.
    ``(h) Chief Executive Officer.--
            ``(1) Appointment.--The Board shall appoint a 
        person to serve as chief executive officer of the 
        Corporation.
            ``(2) Qualifications.--
                    ``(A) In general.--To serve as chief 
                executive officer of the Corporation, a 
                person--
                            ``(i) shall have senior executive-
                        level management experience in large, 
                        complex organizations;
                            ``(ii) shall not be a current 
                        member of the Board or have served as a 
                        member of the Board within 2 years 
                        before being appointed chief executive 
                        officer; and
                            ``(iii) shall comply with the 
                        conflict-of-interest policy adopted by 
                        the Board.
                    ``(B) Expertise.--In appointing a chief 
                executive officer, the Board shall give 
                particular consideration to appointing an 
                individual with expertise in the electric 
                industry and with strong financial skills.
            ``(3) Tenure.--The chief executive officer shall 
        serve at the pleasure of the Board.
    ``(i) Compensation Plan.--
            ``(1) In general.--The Board shall approve a 
        compensation plan that specifies all compensation 
        (including salary or any other pay, bonuses, benefits, 
        incentives, and any other form of remuneration) for the 
        chief executive officer and employees of the 
        Corporation.
            ``(2) Annual survey.--The compensation plan shall 
        be based on an annual survey of the prevailing 
        compensation for similar positions in private industry, 
        including engineering and electric utility companies, 
        publicly owned electric utilities, and Federal, State, 
        and local governments.
            ``(3) Considerations.--The compensation plan shall 
        provide that education, experience, level of 
        responsibility, geographic differences, and retention 
        and recruitment needs will be taken into account in 
        determining compensation of employees.
            ``(4) Positions at or below level iv.--The chief 
        executive officer shall determine the salary and 
        benefits of employees whose annual salary is not 
        greater than the annual rate payable for positions at 
        level IV of the Executive Schedule under section 5315 
        of title 5, United States Code.
            ``(5) Positions above level iv.--On the 
        recommendation of the chief executive officer, the 
        Board shall approve the salaries of employees whose 
        annual salaries would be in excess of the annual rate 
        payable for positions at level IV of the Executive 
        Schedule under section 5315 of title 5, United States 
        Code.''.

SEC. 1432. CHANGE IN MANNER OF APPOINTMENT OF STAFF.

    Section 3 of the Tennessee Valley Authority Act of 1933 (16 
U.S.C. 831b) is amended--
            (1) by striking the first undesignated paragraph 
        and inserting the following:
    ``(a) Appointment by the Chief Executive Officer.--The 
chief executive officer shall appoint, with the advice and 
consent of the Board, and without regard to the provisions of 
the civil service laws applicable to officers and employees of 
the United States, such managers, assistant managers, officers, 
employees, attorneys, and agents as are necessary for the 
transaction of the business of the Corporation.''; and
            (2) by striking ``All contracts'' and inserting the 
        following:
    ``(b) Wage Rates.--All contracts''.

SEC. 1433. CONFORMING AMENDMENTS.

    (a) The Tennessee Valley Authority Act of 1933 (16 U.S.C. 
831 et seq.) is amended--
            (1) by striking ``board of directors'' each place 
        it appears and inserting ``Board of Directors''; and
            (2) by striking ``board'' each place it appears and 
        inserting ``Board''.
    (b) Section 9 of the Tennessee Valley Authority Act of 1933 
(16 U.S.C. 831h) is amended--
            (1) by striking ``The Comptroller General of the 
        United States shall audit'' and inserting the 
        following:
    ``(c) Audits.--The Comptroller General of the United States 
shall audit''; and
            (2) by striking ``The Corporation shall determine'' 
        and inserting the following:
    ``(d) Administrative Accounts and Business Documents.--The 
Corporation shall determine''.
    (c) Title 5, United States Code, is amended--
            (1) in section 5314, by striking ``Chairman, Board 
        of Directors of the Tennessee Valley Authority.''; and
            (2) in section 5315, by striking ``Members, Board 
        of Directors of the Tennessee Valley Authority.''.

SEC. 1434. APPOINTMENTS; EFFECTIVE DATE; TRANSITION.

    (a) Appointments.--
            (1) In general.--As soon as practicable after the 
        date of enactment of this Act, the President shall 
        submit to the Senate nominations of 6 persons to serve 
        as members of the Board of Directors of the Tennessee 
        Valley Authority in addition to the members serving on 
        the date of enactment of this Act.
            (2) Initial terms.--Notwithstanding section 2(d) of 
        the Tennessee Valley Authority Act of 1933 (as amended 
        by this subtitle), in making the appointments under 
        paragraph (1), the President shall appoint--
                    (A) 2 members for a term to expire on May 
                18, 2006;
                    (B) 2 members for a term to expire on May 
                18, 2008; and
                    (C) 2 members for a term to expire on May 
                18, 2010.
    (b) Effective Date.--The amendments made by this section 
and sections 1431, 1432, and 1433 take effect on the later of 
the date on which at least 3 persons nominated under subsection 
(a) take office or May 18, 2005.
    (c) Selection of Chairman.--The Board of Directors of the 
Tennessee Valley Authority shall select 1 of the members to act 
as chairman of the Board not later than 30 days after the 
effective date of this section.
    (d) Conflict-of-Interest Policy.--The Board of Directors of 
the Tennessee Valley Authority shall adopt and submit to 
Congress a conflict-of-interest policy, as required by section 
2(g)(1)(E) of the Tennessee Valley Authority Act of 1933 (as 
amended by this subtitle), as soon as practicable after the 
effective date of this section.
    (e) Transition.--A person who is serving as a member of the 
board of directors of the Tennessee Valley Authority on the 
date of enactment of this Act--
            (1) shall continue to serve until the end of the 
        current term of the member; but
            (2) after the effective date specified in 
        subsection (b), shall serve under the terms of the 
        Tennessee Valley Authority Act of 1933 (as amended by 
        this subtitle); and
            (3) may not be reappointed.

                      Subtitle D--Other Provisions

SEC. 1441. CONTINUATION OF TRANSMISSION SECURITY ORDER.

    Department of Energy Order No. 202-03-2, issued by the 
Secretary of Energy on August 28, 2003, shall remain in effect 
unless rescinded by Federal statute.

SEC. 1442. REVIEW OF AGENCY DETERMINATIONS.

    Section 7 of the Natural Gas Act (15 U.S.C. 717f) is 
amended by adding at the end the following:
    ``(i)(1) The United States Court of Appeals for the 
District of Columbia Circuit shall have original and exclusive 
jurisdiction over any civil action--
            ``(A) for review of any order or action of any 
        Federal or State administrative agency or officer to 
        issue, condition, or deny any permit, license, 
        concurrence, or approval issued under authority of any 
        Federal law, other than the Coastal Zone Management Act 
        of 1972 (16 U.S.C. 1451 et seq.), required for the 
        construction of a natural gas pipeline for which a 
        certificate of public convenience and necessity is 
        issued by the Commission under this section;
            ``(B) alleging unreasonable delay by any Federal or 
        State administrative agency or officer in entering an 
        order or taking other action described in subparagraph 
        (A); or
            ``(C) challenging any decision made or action taken 
        under this subsection.
    ``(2)(A) If the Court finds that the order, action, or 
failure to act is not consistent with the public convenience 
and necessity (as determined by the Commission under this 
section), or would prevent the construction and operation of 
natural gas facilities authorized by the certificate of public 
convenience and necessity, the permit, license, concurrence, or 
approval that is the subject of the order, action, or failure 
to act shall be deemed to have been issued subject to any 
conditions set forth in the reviewed order or action that the 
Court finds to be consistent with the public convenience and 
necessity.
    ``(B) For purposes of paragraph (1)(B), the failure of an 
agency or officer to issue any such permit, license, 
concurrence, or approval within the later of 1 year after the 
date of filing of an application for the permit, license, 
concurrence, or approval or 60 days after the date of issuance 
of the certificate of public convenience and necessity under 
this section, shall be considered to be unreasonable delay 
unless the Court, for good cause shown, determines otherwise.
    ``(C) The Court shall set any action brought under 
paragraph (1) for expedited consideration.''.

SEC. 1443. ATTAINMENT DATES FOR DOWNWIND OZONE NONATTAINMENT AREAS.

    Section 181 of the Clean Air Act (42 U.S.C. 7511) is 
amended by adding the following new subsection at the end 
thereof:
    ``(d) Extended Attainment Date for Certain Downwind 
Areas.--
            ``(1) Definitions.--(A) The term `upwind area' 
        means an area that--
                    ``(i) significantly contributes to 
                nonattainment in another area, hereinafter 
                referred to as a `downwind area'; and
                    ``(ii) is either--
                            ``(I) a nonattainment area with a 
                        later attainment date than the downwind 
                        area, or
                            ``(II) an area in another State 
                        that the Administrator has found to be 
                        significantly contributing to 
                        nonattainment in the downwind area in 
                        violation of section 110(a)(2)(D) and 
                        for which the Administrator has 
                        established requirements through notice 
                        and comment rulemaking to eliminate the 
                        emissions causing such significant 
                        contribution.
            ``(B) The term `current classification' means the 
        classification of a downwind area under this section at 
        the time of the determination under paragraph (2).
            ``(2) Extension.--If the Administrator--
                    ``(A) determines that any area is a 
                downwind area with respect to a particular 
                national ambient air quality standard for 
                ozone; and
                    ``(B) approves a plan revision for such 
                area as provided in paragraph (3) prior to a 
                reclassification under subsection (b)(2)(A),
        the Administrator, in lieu of such reclassification, 
        shall extend the attainment date for such downwind area 
        for such standard in accordance with paragraph (5).
            ``(3) Required approval.--In order to extend the 
        attainment date for a downwind area under this 
        subsection, the Administrator must approve a revision 
        of the applicable implementation plan for the downwind 
        area for such standard that--
                    ``(A) complies with all requirements of 
                this Act applicable under the current 
                classification of the downwind area, including 
                any requirements applicable to the area under 
                section 172(c) for such standard; and
                    ``(B) includes any additional measures 
                needed to demonstrate attainment by the 
                extended attainment date provided under this 
                subsection.
            ``(4) Prior reclassification determination.--If, no 
        more than 18 months prior to the date of enactment of 
        this subsection, the Administrator made a 
        reclassification determination under subsection 
        (b)(2)(A) for any downwind area, and the Administrator 
        approves the plan revision referred to in paragraph (3) 
        for such area within 12 months after the date of 
        enactment of this subsection, the reclassification 
        shall be withdrawn and the attainment date extended in 
        accordance with paragraph (5) upon such approval. The 
        Administrator shall also withdraw a reclassification 
        determination under subsection (b)(2)(A) made after the 
        date of enactment of this subsection and extend the 
        attainment date in accordance with paragraph (5) if the 
        Administrator approves the plan revision referred to in 
        paragraph (3) within 12 months of the date the 
        reclassification determination under subsection 
        (b)(2)(A) is issued. In such instances the `current 
        classification' used for evaluating the revision of the 
        applicable implementation plan under paragraph (3) 
        shall be the classification of the downwind area under 
        this section immediately prior to such 
        reclassification.
            ``(5) Extended date.--The attainment date extended 
        under this subsection shall provide for attainment of 
        such national ambient air quality standard for ozone in 
        the downwind area as expeditiously as practicable but 
        no later than the date on which the last reductions in 
        pollution transport necessary for attainment in the 
        downwind area are required to be achieved by the upwind 
        area or areas.''.

SEC. 1444. ENERGY PRODUCTION INCENTIVES

    (a) In General.--A State may provide to any entity--
            (1) a credit against any tax or fee owed to the 
        State under a State law, or
            (2) any other tax incentive,
determined by the State to be appropriate, in the amount 
calculated under and in accordance with a formula determined by 
the State, for production described in subsection (b) in the 
State by the entity that receives such credit or such 
incentive.
    (b) Eligible Entities.--Subsection (a) shall apply with 
respect to the production in the State of--
            (1) electricity from coal mined in the State and 
        used in a facility, if such production meets all 
        applicable Federal and State laws and if such facility 
        uses scrubbers or other forms of clean coal technology,
            (2) electricity from a renewable source such as 
        wind, solar, or biomass, or
            (3) ethanol.
    (c) Effect on Interstate Commerce--Any action taken by a 
State in accordance with this section with respect to a tax or 
fee payable, or incentive applicable, for any period beginning 
after the date of the enactment of this Act shall--
            (1) be considered to be a reasonable regulation of 
        commerce; and
            (2) not be considered to impose an undue burden on 
        interstate commerce or to otherwise impair, restrain, 
        or discriminate, against interstate commerce.

SEC. 1445. USE OF GRANULAR MINE TAILINGS.

    (a) Amendment.--Subtitle F of the Solid Waste Disposal Act 
(42 U.S.C. 6961 et seq.) is amended by adding at the end the 
following:

``SEC. 6006. USE OF GRANULAR MINE TAILINGS.

    ``(a) Mine Tailings.--
            ``(1) In general.--Not later than 180 days after 
        the date of enactment of this section, the 
        Administrator, in consultation with the Secretary of 
        Transportation and heads of other Federal agencies, 
        shall establish criteria (including an evaluation of 
        whether to establish a numerical standard for 
        concentration of lead and other hazardous substances) 
        for the safe and environmentally protective use of 
        granular mine tailings from the Tar Creek, Oklahoma 
        Mining District, known as `chat', for--
                    ``(A) cement or concrete projects; and
                    ``(B) transportation construction projects 
                (including transportation construction projects 
                involving the use of asphalt) that are carried 
                out, in whole or in part, using Federal funds.
            ``(2) Requirements.--In establishing criteria under 
        paragraph (1), the Administrator shall consider--
                    ``(A) the current and previous uses of 
                granular mine tailings as an aggregate for 
                asphalt; and
                    ``(B) any environmental and public health 
                risks and benefits derived from the removal, 
                transportation, and use in transportation 
                projects of granular mine tailings.
            ``(3) Public participation.--In establishing the 
        criteria under paragraph (1), the Administrator shall 
        solicit and consider comments from the public.
            ``(4) Applicability of criteria.--On the 
        establishment of the criteria under paragraph (1), any 
        use of the granular mine tailings described in 
        paragraph (1) in a transportation project that is 
        carried out, in whole or in part, using Federal funds, 
        shall meet the criteria established under paragraph 
        (1).
    ``(b) Effect of Sections.--Nothing in this section or 
section 6005 affects any requirement of any law (including a 
regulation) in effect on the date of enactment of this 
section.''.
    (b) Conforming Amendment.--The table of contents of the 
Solid Waste Disposal Act (42 U.S.C. prec. 6901) is amended by 
adding at the end of the items relating to subtitle F the 
following:

``Sec. 6006. Use of granular mine tailings.''.

                   TITLE XV--ETHANOL AND MOTOR FUELS

                     Subtitle A--General Provisions

SEC. 1501. RENEWABLE CONTENT OF MOTOR VEHICLE FUEL.

    (a) In General.--Section 211 of the Clean Air Act (42 
U.S.C. 7545) is amended--
            (1) by redesignating subsection (o) as subsection 
        (q); and
            (2) by inserting after subsection (n) the 
        following:
    ``(o) Renewable Fuel Program.--
            ``(1) Definitions.--In this section:
                    ``(A) Ethanol.--(i) The term `cellulosic 
                biomass ethanol' means ethanol derived from any 
                lignocellulosic or hemicellulosic matter that 
                is available on a renewable or recurring basis, 
                including--
                            ``(I) dedicated energy crops and 
                        trees;
                            ``(II) wood and wood residues;
                            ``(III) plants;
                            ``(IV) grasses;
                            ``(V) agricultural residues; and
                            ``(VI) fibers.
                    ``(ii) The term `waste derived ethanol' 
                means ethanol derived from--
                            ``(I) animal wastes, including 
                        poultry fats and poultry wastes, and 
                        other waste materials; or
                            ``(II) municipal solid waste.
                    ``(B) Renewable fuel.--
                            ``(i) In general.--The term 
                        `renewable fuel' means motor vehicle 
                        fuel that--
                                    ``(I)(aa) is produced from 
                                grain, starch, oilseeds, or 
                                other biomass; or
                                    ``(bb) is natural gas 
                                produced from a biogas source, 
                                including a landfill, sewage 
                                waste treatment plant, feedlot, 
                                or other place where decaying 
                                organic material is found; and
                                    ``(II) is used to replace 
                                or reduce the quantity of 
                                fossil fuel present in a fuel 
                                mixture used to operate a motor 
                                vehicle.
                            ``(ii) Inclusion.--The term 
                        `renewable fuel' includes cellulosic 
                        biomass ethanol, waste derived ethanol, 
                        and biodiesel (as defined in section 
                        312(f) of the Energy Policy Act of 1992 
                        (42 U.S.C. 13220(f)) and any blending 
                        components derived from renewable fuel 
                        (provided that only the renewable fuel 
                        portion of any such blending component 
                        shall be considered part of the 
                        applicable volume under the renewable 
                        fuel program established by this 
                        subsection).
                    ``(C) Small refinery.--The term `small 
                refinery' means a refinery for which average 
                aggregate daily crude oil throughput for the 
                calendar year (as determined by dividing the 
                aggregate throughput for the calendar year by 
                the number of days in the calendar year) does 
                not exceed 75,000 barrels.
            ``(2) Renewable fuel program.--
                    ``(A) In general.--Not later than 1 year 
                after the enactment of this subsection, the 
                Administrator shall promulgate regulations 
                ensuring that motor vehicle fuel sold or 
                dispensed to consumers in the contiguous United 
                States, on an annual average basis, contains 
                the applicable volume of renewable fuel as 
                specified in subparagraph (B). Regardless of 
                the date of promulgation, such regulations 
                shall contain compliance provisions for 
                refiners, blenders, and importers, as 
                appropriate, to ensure that the requirements of 
                this section are met, but shall not restrict 
                where renewable fuel can be used, or impose any 
                per-gallon obligation for the use of renewable 
                fuel. If the Administrator does not promulgate 
                such regulations, the applicable percentage 
                referred to in paragraph (4), on a volume 
                percentage of gasoline basis, shall be 2.2 in 
                2005.
                    ``(B) Applicable volume.--
                            ``(i) Calendar years 2005 through 
                        2012.--For the purpose of subparagraph 
                        (A), the applicable volume for any of 
                        calendar years 2005 through 2012 shall 
                        be determined in accordance with the 
                        following table:

                  ``Applicable volume of renewable fuel

  Calendar year:                                (In billions of gallons)
        2005..................................................      3.1 
        2006..................................................      3.3 
        2007..................................................      3.5 
        2008..................................................      3.8 
        2009..................................................      4.1 
        2010..................................................      4.4 
        2011..................................................      4.7 
        2012..................................................      5.0 

                            ``(ii) Calendar year 2013 and 
                        thereafter.--For the purpose of 
                        subparagraph (A), the applicable volume 
                        for calendar year 2013 and each 
                        calendar year thereafter shall be equal 
                        to the product obtained by 
                        multiplying--
                                    ``(I) the number of gallons 
                                of gasoline that the 
                                Administrator estimates will be 
                                sold or introduced into 
                                commerce in the calendar year; 
                                and
                                    ``(II) the ratio that--
                                            ``(aa) 5.0 billion 
                                        gallons of renewable 
                                        fuels; bears to
                                            ``(bb) the number 
                                        of gallons of gasoline 
                                        sold or introduced into 
                                        commerce in calendar 
                                        year 2012.
            ``(3) Non-contiguous state opt-in.--Upon the 
        petition of a non-contiguous State, the Administrator 
        may allow the renewable fuel program established by 
        subtitle A of title XV of the Energy Policy Act of 2003 
        to apply in such non-contiguous State at the same time 
        or any time after the Administrator promulgates 
        regulations under paragraph (2). The Administrator may 
        promulgate or revise regulations under paragraph (2), 
        establish applicablepercentages under paragraph (4), 
provide for the generation of credits under paragraph (6), and take 
such other actions as may be necessary to allow for the application of 
the renewable fuels program in a non-contiguous State.
            ``(4) Applicable percentages.--
                    ``(A) Provision of estimate of volumes of 
                gasoline sales.--Not later than October 31 of 
                each of calendar years 2004 through 2011, the 
                Administrator of the Energy Information 
                Administration shall provide to the 
                Administrator of the Environmental Protection 
                Agency an estimate of the volumes of gasoline 
                that will be sold or introduced into commerce 
                in the United States during the following 
                calendar year.
                    ``(B) Determination of applicable 
                percentages.--
                            ``(i) In general.--Not later than 
                        November 30 of each of the calendar 
                        years 2004 through 2011, based on the 
                        estimate provided under subparagraph 
                        (A), the Administrator shall determine 
                        and publish in the Federal Register, 
                        with respect to the following calendar 
                        year, the renewable fuel obligation 
                        that ensures that the requirements of 
                        paragraph (2) are met.
                            ``(ii) Required elements.--The 
                        renewable fuel obligation determined 
                        for a calendar year under clause (i) 
                        shall--
                                    ``(I) be applicable to 
                                refiners, blenders, and 
                                importers, as appropriate;
                                    ``(II) be expressed in 
                                terms of a volume percentage of 
                                gasoline sold or introduced 
                                into commerce; and
                                    ``(III) subject to 
                                subparagraph (C)(i), consist of 
                                a single applicable percentage 
                                that applies to all categories 
                                of persons specified in 
                                subclause (I).
                    ``(C) Adjustments.--In determining the 
                applicable percentage for a calendar year, the 
                Administrator shall make adjustments--
                            ``(i) to prevent the imposition of 
                        redundant obligations to any person 
                        specified in subparagraph (B)(ii)(I); 
                        and
                            ``(ii) to account for the use of 
                        renewable fuel during the previous 
                        calendar year by small refineries that 
                        are exempt under paragraph (11).
            ``(5) Equivalency.--For the purpose of paragraph 
        (2), 1 gallon of either cellulosic biomass ethanol or 
        waste derived ethanol--
                    ``(A) shall be considered to be the 
                equivalent of 1.5 gallon of renewable fuel; or
                    ``(B) if the cellulostic biomass ethanol or 
                waste derived ethanol is derived from 
                agricultural residue or is an agricultural 
                byproduct (as that term is used in section 919 
                of the Energy Policy Act of 2003), shall be 
                considered to be the equivalent of 2.5 gallons 
                of renewable fuel.
            ``(6) Credit program.--
                    ``(A) In general.--The regulations 
                promulgated to carry out this subsection shall 
                provide for the generation of an appropriate 
                amount of credits by any person that refines, 
                blends, or imports gasoline that contains a 
                quantity of renewable fuel that is greater than 
                the quantity required under paragraph (2). Such 
                regulations shall provide for the generation of 
                an appropriate amount of credits for biodiesel 
                fuel. If a small refinery notifies the 
                Administrator that it waives the exemption 
                provided paragraph (11), the regulations shall 
                provide for the generation of credits by the 
                small refinery beginning in the year following 
                such notification.
                    ``(B) Use of credits.--A person that 
                generates credits under subparagraph (A) may 
                use the credits, or transfer all or a portion 
                of the credits to another person, for the 
                purpose of complying with paragraph (2).
                    ``(C) Life of credits.--A credit generated 
                under this paragraph shall be valid to show 
                compliance--
                            ``(i) in the calendar year in which 
                        the credit was generated or the next 
                        calendar year; or
                            ``(ii) in the calendar year in 
                        which the credit was generated or next 
                        two consecutive calendar years if the 
                        Administrator promulgates regulations 
                        under paragraph (7).
                    ``(D) Inability to purchase sufficient 
                credits.--The regulations promulgated to carry 
                out this subsection shall include provisions 
                allowing any person that is unable to generate 
                or purchase sufficient credits to meet the 
                requirements under paragraph (2) to carry 
                forward a renewable fuel deficit provided that, 
                in the calendar year following the year in 
                which the renewable fuel deficit is created, 
                such person shall achieve compliance with the 
                renewable fuel requirement under paragraph (2), 
                and shall generate or purchase additional 
                renewable fuel credits to offset the renewable 
                fuel deficit of the previous year.
            ``(7) Seasonal variations in renewable fuel use.--
                    ``(A) Study.--For each of the calendar 
                years 2005 through 2012, the Administrator of 
                the Energy Information Administration shall 
                conduct a study of renewable fuels blending to 
                determine whether there are excessive seasonal 
                variations in the use of renewable fuels.
                    ``(B) Regulation of excessive seasonal 
                variations.--If, for any calendar year, the 
                Administrator of the Energy Information 
                Administration, based on the study under 
                subparagraph (A), makes the determinations 
                specified in subparagraph (C), the 
                Administrator shall promulgate regulations to 
                ensure that 35 percent or more of the quantity 
                of renewable fuels necessary to meet the 
                requirement of paragraph (2) is used during 
                each of the periods specified in subparagraph 
                (D) of each subsequent calendar year.
                    ``(C) Determinations.--The determinations 
                referred to in subparagraph (B) are that--
                            ``(i) less than 35 percent of the 
                        quantity of renewable fuels necessary 
                        to meet the requirement of paragraph 
                        (2) has been used during one of the 
                        periods specified in subparagraph (D) 
                        of the calendar year;
                            ``(ii) a pattern of excessive 
                        seasonal variation described in clause 
                        (i) will continue in subsequent 
                        calendar years; and
                            ``(iii) promulgating regulations or 
                        other requirements to impose a 35 
                        percent or more seasonal use of 
                        renewable fuels will not prevent or 
                        interfere with the attainment of 
                        national ambient air quality standards 
                        or significantly increase the price of 
                        motor fuels to the consumer.
                    ``(D) Periods.--The two periods referred to 
                in this paragraph are--
                            ``(i) April through September; and
                            ``(ii) January through March and 
                        October through December.
                    ``(E) Exclusions.--Renewable fuels blended 
                or consumed in 2005 in a State which has 
                received a waiver under section 209(b) shall 
                not be included in the study in subparagraph 
                (A).
            ``(8) Waivers.--
                    ``(A) In general.--The Administrator, in 
                consultation with the Secretary of Agriculture 
                and the Secretary of Energy, may waive the 
                requirement of paragraph (2) in whole or in 
                part on petition by one or more States by 
                reducing the national quantity of renewable 
                fuel required under this subsection--
                            ``(i) based on a determination by 
                        the Administrator, after public notice 
                        and opportunity for comment, that 
                        implementation of the requirement would 
                        severely harm the economy or 
                        environment of a State, a region, or 
                        the United States; or
                            ``(ii) based on a determination by 
                        the Administrator, after public notice 
                        and opportunity for comment, that there 
                        is an inadequate domestic supply or 
                        distribution capacity to meet the 
                        requirement.
                     ``(B) Petitions for waivers.--The 
                Administrator, in consultation with the 
                Secretary of Agriculture and the Secretary of 
                Energy, shall approve or disapprove a State 
                petition for a waiver of the requirement of 
                paragraph (2) within 90 days after the date on 
                which the petition is received by the 
                Administrator.
                    ``(C) Termination of waivers.--A waiver 
                granted under subparagraph (A) shall terminate 
                after 1 year, but may be renewed by the 
                Administrator after consultation with the 
                Secretary of Agriculture and the Secretary of 
                Energy.
            ``(9) Study and waiver for initial year of 
        program.--Not later than 180 days after the enactment 
        of this subsection, the Secretary of Energy shall 
        complete for the Administrator a study assessing 
        whether the renewable fuels requirement under paragraph 
        (2) will likely result in significant adverse consumer 
        impacts in 2005, on a national, regional, or State 
        basis. Such study shall evaluate renewable fuel 
        supplies and prices, blendstock supplies, and supply 
        and distribution system capabilities. Based on such 
        study, the Secretary shall make specific 
        recommendations to the Administrator regarding waiver 
        of the requirements of paragraph (2), in whole or in 
        part, to avoid any such adverse impacts. Within 270 
        days after the enactment of this subsection, the 
        Administrator shall, consistent with the 
        recommendations of the Secretary, waive, in whole or in 
        part, the renewable fuels requirement under paragraph 
        (2) by reducing the national quantity of renewable fuel 
        required under this subsection in 2005. This paragraph 
        shall not be interpreted as limiting the 
        Administrator's authority to waive the requirements of 
        paragraph (2) in whole, or in part, under paragraph (8) 
        or paragraph (10), pertaining to waivers.
            ``(10) Assessment and waiver.--The Administrator, 
        in consultation with the Secretary of Energy and the 
        Secretary of Agriculture, shall evaluate the 
        requirement of paragraph (2) and determine, prior to 
        January 1, 2007, and prior to January 1 of any 
        subsequent year in which the applicable volume of 
        renewable fuel is increased under paragraph (2)(B), 
        whether the requirement of paragraph (2), including the 
        applicable volume of renewable fuel contained in 
        paragraph (2)(B) should remain in effect, in whole or 
        in part, during 2007 or any year or years subsequent to 
        2007. In evaluating the requirement of paragraph (2) 
        and in making any determination under this section, the 
        Administrator shall consider the best available 
        information and data collected by accepted methods or 
        best available means regarding--
                    ``(A) the capacity of renewable fuel 
                producers to supply an adequate amount of 
                renewable fuel at competitive prices to fulfill 
                the requirement of paragraph (2);
                    ``(B) the potential of the requirement of 
                paragraph (2) to significantly raise the price 
                of gasoline, food (excluding the net price 
                impact on the requirement in paragraph (2) on 
                commodities used in the production of ethanol), 
                or heating oil for consumers in any significant 
                area or region of the country above the price 
                that would otherwise apply to such commodities 
                in the absence of such requirement;
                    ``(C) the potential of the requirement of 
                paragraph (2) to interfere with the supply of 
                fuel in any significant gasoline market or 
                region of the country, including interference 
                with the efficient operation of refiners, 
                blenders, importers, wholesale suppliers, and 
                retail vendors of gasoline, and other motor 
                fuels; and
                    ``(D) the potential of the requirement of 
                paragraph (2) to cause or promote exceedances 
                of Federal, State, or local air quality 
                standards.
        If the Administrator determines, by clear and 
        convincing information, after public notice and the 
        opportunity for comment, that the requirement of 
        paragraph (2) would have significant and meaningful 
        adverse impact on the supply of fuel and related 
        infrastructure or on the economy, public health, or 
        environment of any significant area or region of the 
        country, the Administrator may waive, in whole or in 
        part, the requirement of paragraph (2) in any one year 
        for which the determination is made for that area or 
        region of the country, except that any such waiver 
        shall not have the effect of reducing the applicable 
        volume of renewable fuel specified in paragraph (2)(B) 
        with respect to any year for which the determination is 
        made. In determining economic impact under this 
        paragraph, the Administrator shall not consider the 
        reduced revenues available from the Highway Trust Fund 
        (section 9503 of the Internal Revenue Code of 1986) as 
        a result of the use of ethanol.
            ``(11) Small refineries.--
                    ``(A) In general.--The requirement of 
                paragraph (2) shall not apply to small 
                refineries until the first calendar year 
                beginning more than 5 years after the first 
                year set forth in the table in paragraph 
                (2)(B)(i). Not later than December 31, 2007, 
                the Secretary of Energy shall complete for the 
                Administrator a study to determine whether the 
                requirement of paragraph (2) would impose a 
                disproportionate economic hardship on small 
                refineries. For any small refinery that the 
                Secretary of Energy determines would experience 
                a disproportionate economic hardship, the 
                Administrator shall extend the small refinery 
                exemption forsuch small refinery for no less 
than two additional years.
                    ``(B) Economic hardship.--
                            ``(i) Extension of exemption.--A 
                        small refinery may at any time petition 
                        the Administrator for an extension of 
                        the exemption from the requirement of 
                        paragraph (2) for the reason of 
                        disproportionate economic hardship. In 
                        evaluating a hardship petition, the 
                        Administrator, in consultation with the 
                        Secretary of Energy, shall consider the 
                        findings of the study in addition to 
                        other economic factors.
                            ``(ii) Deadline for action on 
                        petitions.--The Administrator shall act 
                        on any petition submitted by a small 
                        refinery for a hardship exemption not 
                        later than 90 days after the receipt of 
                        the petition.
                    ``(C) Credit program.--If a small refinery 
                notifies the Administrator that it waives the 
                exemption provided by this Act, the regulations 
                shall provide for the generation of credits by 
                the small refinery beginning in the year 
                following such notification.
                    ``(D) Opt-in for small refiners.--A small 
                refinery shall be subject to the requirements 
                of this section if it notifies the 
                Administrator that it waives the exemption 
                under subparagraph (A).
            ``(12) Ethanol market concentration analysis.--
                    ``(A) Analysis.--
                            ``(i) In general.--Not later than 
                        180 days after the date of enactment of 
                        this subsection, and annually 
                        thereafter, the Federal Trade 
                        Commission shall perform a market 
                        concentration analysis of the ethanol 
                        production industry using the 
                        Herfindahl-Hirschman Index to determine 
                        whether there is sufficient competition 
                        among industry participants to avoid 
                        price setting and other anticompetitive 
                        behavior.
                            ``(ii) Scoring.--For the purpose of 
                        scoring under clause (i) using the 
                        Herfindahl-Hirschman Index, all 
                        marketing arrangements among industry 
                        participants shall be considered.
                    ``(B) Report.--Not later than December 1, 
                2004, and annually thereafter, the Federal 
                Trade Commission shall submit to Congress and 
                the Administrator a report on the results of 
                the market concentration analysis performed 
                under subparagraph (A)(i).''.
    (b) Penalties and Enforcement.--Section 211(d) of the Clean 
Air Act (42 U.S.C. 7545(d)) is amended as follows:
            (1) In paragraph (1)--
                    (A) in the first sentence, by striking ``or 
                (n)'' each place it appears and inserting 
                ``(n), or (o)''; and
                    (B) in the second sentence, by striking 
                ``or (m)'' and inserting ``(m), or (o)''.
            (2) In the first sentence of paragraph (2), by 
        striking ``and (n)'' each place it appears and 
        inserting ``(n), and (o)''.
    (c) Survey of Renewable Fuel Market.--
            (1) Survey and report.--Not later than December 1, 
        2006, and annually thereafter, the Administrator of the 
        Environmental Protection Agency (in consultation with 
        the Secretary of Energy acting through the 
        Administrator of the Energy Information Administration) 
        shall--
                    (A) conduct, with respect to each 
                conventional gasoline use area and each 
                reformulated gasoline use area in each State, a 
                survey to determine the market shares of--
                            (i) conventional gasoline 
                        containing ethanol;
                            (ii) reformulated gasoline 
                        containing ethanol;
                            (iii) conventional gasoline 
                        containing renewable fuel; and
                            (iv) reformulated gasoline 
                        containing renewable fuel; and
                    (B) submit to Congress, and make publicly 
                available, a report on the results of the 
                survey under subparagraph (A).
            (2) Recordkeeping and reporting requirements.--The 
        Administrator of the Environmental Protection Agency 
        (hereinafter in this subsection referred to as the 
        ``Administrator'') may require any refiner, blender, or 
        importer to keep such records and make such reports as 
        are necessary to ensure that the survey conducted under 
        paragraph (1) is accurate. The Administrator, to avoid 
        duplicative requirements, shall rely, to the extent 
        practicable, on existing reporting and recordkeeping 
        requirements and other information available to the 
        Administrator including gasoline distribution patterns 
        that include multistate use areas.
            (3) Applicable law.--Activities carried out under 
        this subsection shall be conducted in a manner designed 
        to protect confidentiality of individual responses.

SEC. 1502. FUELS SAFE HARBOR.

    (a) In General.--Notwithstanding any other provision of 
Federal or State law, no renewable fuel, as defined by section 
211(o)(1) of the Clean Air Act, or methyl tertiary butyl ether 
(hereinafterin this section referred to as ``MTBE''), used or 
intended to be used as a motor vehicle fuel, nor any motor 
vehicle fuel containing such renewable fuel or MTBE, shall be 
deemed a defective product by virtue of the fact that it is, or 
contains, such a renewable fuel or MTBE, if it does not violate 
a control or prohibition imposed by the Administrator of the 
Environmental Protection Agency (hereinafter in this section 
referred to as the ``Administrator'') under section 211 of such 
Act, and the manufacturer is in compliance with all requests 
for information under subsection (b) of such section 211 of 
such Act. If the safe harbor provided by this section does not 
apply, the existence of a claim of defective product shall be 
determined under otherwise applicable law. Nothing in this 
subsection shall be construed to affect the liability of any 
person for environmental remediation costs, drinking water 
contamination, negligence for spills or other reasonably 
foreseeable events, public or private nuisance, trespass, 
breach of warranty, breach of contract, or any other liability 
other than liability based upon a claim of defective product.
    (b) Effective Date.--This section shall be effective as of 
September 5, 2003, and shall apply with respect to all claims 
filed on or after that date.

SEC. 1503. FINDINGS AND MTBE TRANSITION ASSISTANCE.

    (a) Findings.--Congress finds that--
            (1) since 1979, methyl tertiary butyl ether 
        (hereinafter in this section referred to as ``MTBE'') 
        has been used nationwide at low levels in gasoline to 
        replace lead as an octane booster or anti-knocking 
        agent;
            (2) Public Law 101-549 (commonly known as the 
        ``Clean Air Act Amendments of 1990'') (42 U.S.C. 7401 
        et seq.) established a fuel oxygenate standard under 
        which reformulated gasoline must contain at least 2 
        percent oxygen by weight;
            (3) at the time of the adoption of the fuel oxygen 
        standard, Congress was aware that significant use of 
        MTBE would result from the adoption of that standard, 
        and that the use of MTBE would likely be important to 
        the cost-effective implementation of that program;
            (4) Congress was aware that gasoline and its 
        component additives can and do leak from storage tanks;
            (5) the fuel industry responded to the fuel 
        oxygenate standard established by Public Law 101-549 by 
        making substantial investments in--
                    (A) MTBE production capacity; and
                    (B) systems to deliver MTBE-containing 
                gasoline to the marketplace;
            (6) having previously required oxygenates like MTBE 
        for air quality purposes, Congress has--
                    (A) reconsidered the relative value of MTBE 
                in gasoline;
                    (B) decided to establish a date certain for 
                action by the Environmental Protection Agency 
                to prohibit the use of MTBE in gasoline; and
                    (C) decided to provide for the elimination 
                of the oxygenate requirement for reformulated 
                gasoline and to provide for a renewable fuels 
                content requirement for motor fuel; and
            (7) it is appropriate for Congress to provide some 
        limited transition assistance--
                    (A) to merchant producers of MTBE who 
                produced MTBE in response to a market created 
                by the oxygenate requirement contained in the 
                Clean Air Act; and
                    (B) for the purpose of mitigating any fuel 
                supply problems that may result from the 
                elimination of the oxygenate requirement for 
                reformulated gasoline and from the decision to 
                establish a date certain for action by the 
                Environmental Protection Agency to prohibit the 
                use of MTBE in gasoline.
    (b) Purposes.--The purpose of this section is to provide 
assistance to merchant producers of MTBE in making the 
transition from producing MTBE to producing other fuel 
additives.
    (c) MTBE Merchant Producer Conversion Assistance.--Section 
211(c) of the Clean Air Act (42 U.S.C. 7545(c)) is amended by 
adding at the end the following:
            ``(5) MTBE merchant producer conversion 
        assistance.--
                    ``(A) In general.--
                            ``(i) Grants.--The Secretary of 
                        Energy, in consultation with the 
                        Administrator, may make grants to 
                        merchant producers of methyl tertiary 
                        butyl ether (hereinafter in this 
                        subsection referred to as `MTBE') in 
                        the United States to assist the 
                        producers in the conversion of eligible 
                        production facilities described in 
                        subparagraph (C) to the production of 
                        iso-octane, iso-octene, alkylates, or 
                        renewable fuels.
                            ``(ii) Determination.--The 
                        Administrator, in consultation with the 
                        Secretary of Energy, may determine that 
                        transition assistance for the 
                        production of iso-octane, iso-octene, 
                        alkylates, or renewable fuels is 
                        inconsistent with the provisions of 
                        subparagraph (B) and, on that basis, 
                        may deny applications for grants 
                        authorized by this paragraph.
                    ``(B) Further grants.--The Secretary of 
                Energy, in consultation with the Administrator, 
                may also further make grants to merchant 
                producers of MTBE in the United States to 
                assist the producers in the conversion of 
                eligible production facilities described in 
                subparagraph (C) to the production of such 
                other fuel additives (unless the Administrator 
                determines that such fuel additives may 
                reasonably be anticipated to endanger public 
                health or the environment) that, consistent 
                with this subsection--
                            ``(i) have been registered and have 
                        been tested or are being tested in 
                        accordance with the requirements of 
                        this section; and
                            ``(ii) will contribute to replacing 
                        gasoline volumes lost as a result of 
                        amendments made to subsection (k) of 
                        this section by section 1504(a) and 
                        1506 of the Energy Policy Act of 2003.
                    ``(C) Eligible production facilities.--A 
                production facility shall be eligible to 
                receive a grant under this paragraph if the 
                production facility--
                            ``(i) is located in the United 
                        States; and
                            ``(ii) produced MTBE for 
                        consumption before April 1, 2003 and 
                        ceased production at any time after the 
                        date of enactment of this paragraph.
                    ``(D) Authorization of appropriations.--
                There are authorized to be appropriated to 
                carry out this paragraph $250,000,000 for each 
                of fiscal years 2005 through 2012, to remain 
                available until expended.''.
    (d) Effect on State Law.--The amendments made to the Clean 
Air Act by this title have no effect regarding any available 
authority of States to limit the use of methyl tertiary butyl 
ether in motor vehicle fuel.

SEC. 1504. USE OF MTBE.

    (a) In General.--Subject to subsections (e) and (f), not 
later than December 31, 2014, the use of methyl tertiary butyl 
ether (hereinafter in this section referred to as ``MTBE'') in 
motor vehicle fuel in any State other than a State described in 
subsection (c) is prohibited.
    (b) Regulations.--The Administrator of the Environmental 
Protection Agency (hereafter referred to in this section as the 
``Administrator'') shall promulgate regulations to effect the 
prohibition in subsection (a).
    (c) States That Authorize Use.--A State described in this 
subsection is a State in which the Governor of the State 
submits a notification to the Administrator authorizing the use 
of MTBE in motor vehicle fuel sold or used in the State.
    (d) Publication of Notice.--The Administrator shall publish 
in the Federal Register each notice submitted by a State under 
subsection (c).
    (e) Trace Quantities.--In carrying out subsection (a), the 
Administrator may allow trace quantities of MTBE, not to exceed 
0.5 percent by volume, to be present in motor vehicle fuel in 
cases that the Administrator determines to be appropriate.
    (f) Limitation.--The Administrator, under authority of 
subsection (a), shall not prohibit or control the production of 
MTBE for export from the United States or for any other use 
other than for use in motor vehicle fuel.

SEC. 1505. NATIONAL ACADEMY OF SCIENCES REVIEW AND PRESIDENTIAL 
                    DETERMINATION.

    (a) NAS Review.--Not later than May 31, 2013, the Secretary 
shall enter into an arrangement with the National Academy of 
Sciences to review the use of methyl tertiary butyl ether 
(hereafter referred to in this section as ``MTBE'') in fuel and 
fuel additives. The review shall only use the best available 
scientific information and data collected by accepted methods 
or the best available means. The review shall examine the use 
of MTBE in fuel and fuel additives, significant beneficial and 
detrimental effects of this use on environmental quality or 
public health or welfare including the costs and benefits of 
such effects, likely effects of controls or prohibitions on 
MTBE regarding fuel availability and price, and other 
appropriate and reasonable actions that are available to 
protect the environment or public health or welfare from any 
detrimental effects of the use of MTBE in fuel or fuel 
additives. The review shall be peer-reviewed prior to 
publication and all supporting data and analytical models shall 
be available to the public. The review shall be completed no 
later than May 31, 2014.
    (b) Presidential Determination.--No later than June 30, 
2014, the President may make a determination that restrictions 
on the use of MTBE to be implemented pursuant to section 1504 
shall not take place and that the legal authority contained in 
section 1504 to prohibit the use of MTBE in motor vehicle fuel 
shall become null and void.

SEC. 1506. ELIMINATION OF OXYGEN CONTENT REQUIREMENT FOR REFORMULATED 
                    GASOLINE.

    (a) Elimination.--
            (1) In general.--Section 211(k) of the Clean Air 
        Act (42 U.S.C. 7545(k)) is amended as follows:
                    (A) In paragraph (2)--
                            (i) in the second sentence of 
                        subparagraph (A), by striking 
                        ``(including the oxygen content 
                        requirement contained in subparagraph 
                        (B))'';
                            (ii) by striking subparagraph (B); 
                        and
                            (iii) by redesignating 
                        subparagraphs (C) and (D) as 
                        subparagraphs (B) and (C), 
                        respectively.
                    (B) In paragraph (3)(A), by striking clause 
                (v).
                    (C) In paragraph (7)--
                            (i) in subparagraph (A)--
                                    (I) by striking clause (i); 
                                and
                                    (II) by redesignating 
                                clauses (ii) and (iii) as 
                                clauses (i) and (ii), 
                                respectively; and
                            (ii) in subparagraph (C)--
                                    (I) by striking clause 
                                (ii).
                                    (II) by redesignating 
                                clause (iii) as clause (ii).
            (2) Effective date.--The amendments made by 
        paragraph (1) take effect 270 days after the date of 
        enactment of this Act, except that such amendments 
        shall take effect upon such date of enactment in any 
        State that has received a waiver under section 209(b) 
        of the Clean Air Act.
    (b) Maintenance of Toxic Air Pollutant Emission 
Reductions.--Section 211(k)(1) of the Clean Air Act (42 U.S.C. 
7545(k)(1)) is amended as follows:
            (1) By striking ``Within 1 year after the enactment 
        of the Clean Air Act Amendments of 1990,'' and 
        inserting the following:
                    ``(A) In general.--Not later than November 
                15, 1991,''.
            (2) By adding at the end the following:
                    ``(B) Maintenance of toxic air pollutant 
                emissions reductions from reformulated 
                gasoline.--
                            ``(i) Definitions.--In this 
                        subparagraph the term `PADD' means a 
                        Petroleum Administration for Defense 
                        District.
                            ``(ii) Regulations regarding 
                        emissions of toxic air pollutants.--Not 
                        later than 270 days after the date of 
                        enactment of this subparagraph the 
                        Administrator shall establish, for each 
                        refinery or importer, standards for 
                        toxic air pollutants from use of the 
                        reformulated gasoline produced or 
                        distributed by the refinery or importer 
                        that maintain the reduction of the 
                        average annual aggregate emissions of 
                        toxic air pollutants for reformulated 
                        gasoline produced or distributed by the 
                        refinery or importer during calendar 
                        years 1999 and 2000, determined on the 
                        basis of data collected by the 
                        Administrator with respect to the 
                        refinery or importer.
                            ``(iii) Standards applicable to 
                        specific refineries or importers.--
                                    ``(I) Applicability of 
                                standards.--For any calendar 
                                year, the standards applicable 
                                to a refinery or importer under 
                                clause (ii) shall apply to the 
                                quantity of gasoline produced 
                                or distributed by the refinery 
                                or importer in the calendar 
                                year only to the extent that 
                                the quantity is less than or 
                                equal to the average annual 
                                quantity of reformulated 
                                gasoline produced or 
                                distributed by the refinery or 
                                importer during calendar years 
                                1999 and 2000.
                                    ``(II) Applicability of 
                                other standards.--For any 
                                calendar year, the quantity of 
                                gasoline produced or 
                                distributed by a refinery or 
                                importer that is in excess of 
                                the quantity subject to 
                                subclause (I) shall be subject 
                                to standards for toxic air 
                                pollutants promulgated under 
                                subparagraph (A) and paragraph 
                                (3)(B).
                            ``(iv) Credit program.--The 
                        Administrator shall provide for the 
                        granting and use of credits for 
                        emissions of toxic air pollutants in 
                        the same manner as provided in 
                        paragraph (7).
                            ``(v) Regional protection of toxics 
                        reduction baselines.--
                                    ``(I) In general.--Not 
                                later than 60 days after the 
                                date of enactment of this 
                                subparagraph, and not later 
                                than April 1 of each calendar 
                                year that begins after that 
                                date of enactment, the 
                                Administrator shall publish in 
                                the Federal Register a report 
                                that specifies, with respect to 
                                the previous calendar year--
                                            ``(aa) the quantity 
                                        of reformulated 
                                        gasoline produced that 
                                        is in excess of the 
                                        average annual quantity 
                                        of reformulated 
                                        gasoline produced in 
                                        1999 and 2000; and
                                            ``(bb) the 
                                        reduction of the 
                                        average annual 
                                        aggregate emissions of 
                                        toxic air pollutants in 
                                        each PADD, based on 
                                        retail survey data or 
                                        data from other 
                                        appropriate sources.
                                    ``(II) Effect of failure to 
                                maintain aggregate toxics 
                                reductions.--If, in any 
                                calendar year, the reduction of 
                                the average annual aggregate 
                                emissions of toxic air 
                                pollutants in a PADD fails to 
                                meet or exceed the reduction of 
                                the average annual aggregate 
                                emissions of toxic air 
                                pollutants in the PADD in 
                                calendar years 1999 and 2000, 
                                the Administrator, not later 
                                than 90 days after the date of 
                                publication of the report for 
                                the calendar year under 
                                subclause (I), shall--
                                            ``(aa) identify, to 
                                        the maximum extent 
                                        practicable, the 
                                        reasons for the 
                                        failure, including the 
                                        sources, volumes, and 
                                        characteristics of 
                                        reformulated gasoline 
                                        that contributed to the 
                                        failure; and
                                            ``(bb) promulgate 
                                        revisions to the 
                                        regulations promulgated 
                                        under clause (ii), to 
                                        take effect not earlier 
                                        than 180 days but not 
                                        later than 270 days 
                                        after the date of 
                                        promulgation, to 
                                        provide that, 
                                        notwithstanding clause 
                                        (iii)(II), all 
                                        reformulated gasoline 
                                        produced or distributed 
                                        at each refinery or 
                                        importer shall meet the 
                                        standards applicable 
                                        under clause (ii) not 
                                        later than April 1 of 
                                        the year following the 
                                        report in subclause 
                                        (II) and for subsequent 
                                        years.
                            ``(vi) Regulations to control 
                        hazardous air pollutants from motor 
                        vehicles and motor vehicle fuels.--Not 
                        later than July 1, 2004, the 
                        Administrator shall promulgate final 
                        regulations to control hazardous air 
                        pollutants from motor vehicles and 
                        motor vehicle fuels, as provided for in 
                        section 80.1045 of title 40, Code of 
                        Federal Regulations (as in effect on 
                        the date of enactment of this 
                        subparagraph).''.
    (c) Consolidation in Reformulated Gasoline Regulations.--
Not later than 180 days after the date of enactment of this 
Act, the Administrator of the Environmental Protection Agency 
shall revise the reformulated gasoline regulations under 
subpart D of part 80 of title 40, Code of Federal Regulations, 
to consolidate the regulations applicable to VOC-Control 
Regions 1 and 2 under section 80.41 of that title by 
eliminating the less stringent requirements applicable to 
gasoline designated for VOC-Control Region 2 and instead 
applying the more stringent requirements applicable to gasoline 
designated for VOC-Control Region 1.
    (d) Savings Clause.--Nothing in this section is intended to 
affect or prejudice either any legal claims or actions with 
respect to regulations promulgated by the Administrator of 
theEnvironmental Protection Agency (hereinafter in this subsection 
referred to as the ``Administrator'') prior to the date of enactment of 
this Act regarding emissions of toxic air pollutants from motor 
vehicles or the adjustment of standards applicable to a specific 
refinery or importer made under such prior regulations and the 
Administrator may apply such adjustments to the standards applicable to 
such refinery or importer under clause (iii)(I) of section 211(k)(1)(B) 
of the Clean Air Act, except that--
            (1) the Administrator shall revise such adjustments 
        to be based only on calendar years 1999-2000; and
            (2) for adjustments based on toxic air pollutant 
        emissions from reformulated gasoline significantly 
        below the national annual average emissions of toxic 
        air pollutants from all reformulated gasoline, the 
        Administrator may revise such adjustments to take 
        account of the scope of Federal or State prohibitions 
        on the use of methyl tertiary butyl ether imposed after 
        the date of the enactment of this paragraph, except 
        that any such adjustment shall require such refiner or 
        importer, to the greatest extent practicable, to 
        maintain the reduction achieved during calendar years 
        1999-2000 in the average annual aggregate emissions of 
        toxic air pollutants from reformulated gasoline 
        produced or distributed by the refinery or importer: 
        Provided that, any such adjustment shall not be made at 
        a level below the average percentage of reductions of 
        emissions of toxic air pollutants for reformulated 
        gasoline supplied to PADD I during calendar years 1999-
        2000.

SEC. 1507. ANALYSES OF MOTOR VEHICLE FUEL CHANGES.

    Section 211 of the Clean Air Act (42 U.S.C. 7545) is 
amended by inserting after subsection (o) the following:
    ``(p) Analyses of Motor Vehicle Fuel Changes and Emissions 
Model.--
            ``(1) Anti-backsliding analysis.--
                    ``(A) Draft analysis.--Not later than 4 
                years after the date of enactment of this 
                subsection, the Administrator shall publish for 
                public comment a draft analysis of the changes 
                in emissions of air pollutants and air quality 
                due to the use of motor vehicle fuel and fuel 
                additives resulting from implementation of the 
                amendments made by subtitle A of title XV of 
                the Energy Policy Act of 2003.
                    ``(B) Final analysis.--After providing a 
                reasonable opportunity for comment but not 
                later than 5 years after the date of enactment 
                of this paragraph, the Administrator shall 
                publish the analysis in final form.
            ``(2) Emissions model.--For the purposes of this 
        subsection, as soon as the necessary data are 
        available, the Administrator shall develop and finalize 
        an emissions model that reasonably reflects the effects 
        of gasoline characteristics or components on emissions 
        from vehicles in the motor vehicle fleet during 
        calendar year 2005.''.

SEC. 1508. DATA COLLECTION.

    Section 205 of the Department of Energy Organization Act 
(42 U.S.C. 7135) is amended by adding at the end the following:
    ``(m) Renewable Fuels Survey.--(1) In order to improve the 
ability to evaluate the effectiveness of the Nation's renewable 
fuels mandate, the Administrator shall conduct and publish the 
results of a survey of renewable fuels demand in the motor 
vehicle fuels market in the United States monthly, and in a 
manner designed to protect the confidentiality of individual 
responses. In conducting the survey, the Administrator shall 
collect information both on a national and regional basis, 
including each of the following:
            ``(A) The quantity of renewable fuels produced.
            ``(B) The quantity of renewable fuels blended.
            ``(C) The quantity of renewable fuels imported.
            ``(D) The quantity of renewable fuels demanded.
            ``(E) Market price data.
            ``(F) Such other analyses or evaluations as the 
        Administrator finds is necessary to achieve the 
        purposes of this section.
    ``(2) The Administrator shall also collect or estimate 
information both on a national and regional basis, pursuant to 
subparagraphs (A) through (F) of paragraph (1), for the 5 years 
prior to implementation of this subsection.
    ``(3) This subsection does not affect the authority of the 
Administrator to collect data under section 52 of the Federal 
Energy Administration Act of 1974 (15 U.S.C. 790a).''.

SEC. 1509. REDUCING THE PROLIFERATION OF STATE FUEL CONTROLS.

    (a) EPA Approval of State Plans With Fuel Controls.--
Section 211(c)(4)(C) of the Clean Air Act (42 U.S.C. 
7545(c)(4)(C)) is amended by adding at the end the following: 
``The Administrator shall not approve a control or prohibition 
respecting the use of a fuel or fuel additive under this 
subparagraph unless the Administrator, after consultation with 
the Secretary of Energy, publishes in the Federal Register a 
finding that, in the Administrator's judgment, such control or 
prohibition will not cause fuel supply or distribution 
interruptions or have a significant adverse impact on fuel 
producibility in the affected area or contiguous areas.''.
    (b) Study.--The Administrator of the Environmental 
Protection Agency (hereinafter in this subsection referred to 
as the ``Administrator''), in cooperation with the Secretary of 
Energy, shall undertake a study of the projected effects on air 
quality, the proliferation of fuel blends, fuel availability, 
and fuel costs of providing a preference for each of the 
following:
            (A) Reformulated gasoline referred to in subsection 
        (k) of section 211 of the Clean Air Act.
            (B) A low RVP gasoline blend that has been 
        certified by the Administrator as having a Reid Vapor 
        Pressure of 7.0 pounds per square inch (psi).
            (C) A low RVP gasoline blend that has been 
        certified by the Administrator as having a Reid Vapor 
        Pressure of 7.8 pounds per square inch (psi).
In carrying out such study, the Administrator shall obtain 
comments from affected parties. The Administrator shall submit 
the results of such study to the Congress not later than 18 
months after the date of enactment of this Act, together with 
any recommended legislative changes.

SEC. 1510. FUEL SYSTEM REQUIREMENTS HARMONIZATION STUDY.

    (a) Study.--
            (1) In general.--The Administrator of the 
        Environmental Protection Agency (hereinafter in this 
        section referred to as the ``Administrator'') and the 
        Secretary of Energy shall jointly conduct a study of 
        Federal, State, and local requirements concerning motor 
        vehicle fuels, including--
                    (A) requirements relating to reformulated 
                gasoline, volatility (measured in Reid vapor 
                pressure), oxygenated fuel, and diesel fuel; 
                and
                    (B) other requirements that vary from State 
                to State, region to region, or locality to 
                locality.
            (2) Required elements.--The study shall assess--
                    (A) the effect of the variety of 
                requirements described in paragraph (1) on the 
                supply, quality, and price of motor vehicle 
                fuels available to consumers in various States 
                and localities;
                    (B) the effect of the requirements 
                described in paragraph (1) on achievement of--
                            (i) national, regional, and local 
                        air quality standards and goals; and
                            (ii) related environmental and 
                        public health protection standards and 
                        goals;
                    (C) the effect of Federal, State, and local 
                motor vehicle fuel regulations, including 
                multiple motor vehicle fuel requirements, on--
                            (i) domestic refineries;
                            (ii) the fuel distribution system; 
                        and
                            (iii) industry investment in new 
                        capacity;
                    (D) the effect of the requirements 
                described in paragraph (1) on emissions from 
                vehicles, refineries, and fuel handling 
                facilities;
                    (E) the feasibility of developing national 
                or regional motor vehicle fuel slates for the 
                48 contiguous States that, while improving air 
                quality at the national, regional and local 
                levels consistent with the attainment of 
                national ambient air quality standards, could--
                            (i) enhance flexibility in the fuel 
                        distribution infrastructure and improve 
                        fuel fungibility;
                            (ii) reduce price volatility and 
                        costs to consumers and producers;
                            (iii) provide increased liquidity 
                        to the gasoline market; and
                            (iv) enhance fuel quality, 
                        consistency, and supply;
                    (F) the feasibility of providing incentives 
                to promote cleaner burning motor vehicle fuel; 
                and
                    (G) the extent to which improvements in air 
                quality and any increases or decreases in the 
                price of motor fuel can be projected to result 
                from the Environmental Protection Agency's Tier 
                II requirements for conventional gasoline and 
                vehicle emission systems, the reformulated 
                gasoline program, the renewable content 
                requirements established by this subtitle, 
                State programs regarding gasoline volatility, 
                and any other requirements imposed by States or 
                localities affecting the composition of motor 
                fuel.
    (b) Report.--
            (1) In general.--Not later than December 31, 2007, 
        the Administrator and the Secretary of Energy shall 
        submit to Congress a report on the results of the study 
        conducted under subsection (a).
            (2) Recommendations.--
                    (A) In general.--The report under this 
                subsection shall contain recommendations for 
                legislative and administrative actions that may 
                be taken--
                            (i) to improve air quality;
                            (ii) to reduce costs to consumers 
                        and producers; and
                            (iii) to increase supply liquidity.
                    (B) Required considerations.--The 
                recommendations under subparagraph (A) shall 
                take into account the need to provide advance 
                notice of required modifications to refinery 
                and fuel distribution systems in order to 
                ensure an adequate supply of motor vehicle fuel 
                in all States.
            (3) Consultation.--In developing the report under 
        this subsection, the Administrator and the Secretary of 
        Energy shall consult with--
                    (A) the Governors of the States;
                    (B) automobile manufacturers;
                    (C) motor vehicle fuel producers and 
                distributors; and
                    (D) the public.

SEC. 1511. COMMERCIAL BYPRODUCTS FROM MUNICIPAL SOLID WASTE AND 
                    CELLULOSIC BIOMASS LOAN GUARANTEE PROGRAM.

    (a) Definition of Municipal Solid Waste.--In this section, 
the term ``municipal solid waste'' has the meaning given the 
term ``solid waste'' in section 1004 of the Solid Waste 
Disposal Act (42 U.S.C. 6903).
    (b) Establishment of Program.--The Secretary of Energy 
(hereinafter in this section referred to as the ``Secretary'') 
shall establish a program to provide guarantees of loans by 
private institutions for the construction of facilities for the 
processing and conversion of municipal solid waste and 
cellulosic biomass into fuel ethanol and other commercial 
byproducts.
    (c) Requirements.--The Secretary may provide a loan 
guarantee under subsection (b) to an applicant if--
            (1) without a loan guarantee, credit is not 
        available to the applicant under reasonable terms or 
        conditions sufficient to finance the construction of a 
        facility described in subsection (b);
            (2) the prospective earning power of the applicant 
        and the character and value of the security pledged 
        provide a reasonable assurance of repayment of the loan 
        to be guaranteed in accordance with the terms of the 
        loan; and
            (3) the loan bears interest at a rate determined by 
        the Secretary to be reasonable, taking into account the 
        current average yield on outstanding obligations of the 
        United States with remaining periods of maturity 
        comparable to the maturity of the loan.
    (d) Criteria.--In selecting recipients of loan guarantees 
from among applicants, the Secretary shall give preference to 
proposals that--
            (1) meet all applicable Federal and State 
        permitting requirements;
            (2) are most likely to be successful; and
            (3) are located in local markets that have the 
        greatest need for the facility because of--
                    (A) the limited availability of land for 
                waste disposal;
                    (B) the availability of sufficient 
                quantities of cellulosic biomass; or
                    (C) a high level of demand for fuel ethanol 
                or other commercial byproducts of the facility.
    (e) Maturity.--A loan guaranteed under subsection (b) shall 
have a maturity of not more than 20 years.
    (f) Terms and Conditions.--The loan agreement for a loan 
guaranteed under subsection (b) shall provide that no provision 
of the loan agreement may be amended or waived without the 
consent of the Secretary.
    (g) Assurance of Repayment.--The Secretary shall require 
that an applicant for a loan guarantee under subsection (b) 
provide an assurance of repayment in the form of a performance 
bond, insurance, collateral, or other means acceptable to the 
Secretary in an amount equal to not less than 20 percent of the 
amount of the loan.
    (h) Guarantee Fee.--The recipient of a loan guarantee under 
subsection (b) shall pay the Secretary an amount determined by 
the Secretary to be sufficient to cover the administrative 
costs of the Secretary relating to the loan guarantee.
    (i) Full Faith and Credit.--The full faith and credit of 
the United States is pledged to the payment of all guarantees 
made under this section. Any such guarantee made by the 
Secretary shall be conclusive evidence of the eligibility of 
the loan for the guarantee with respect to principal and 
interest. The validity of the guarantee shall be incontestable 
in the hands of a holder of the guaranteed loan.
    (j) Reports.--Until each guaranteed loan under this section 
has been repaid in full, the Secretary shall annually submit to 
Congress a report on the activities of the Secretary under this 
section.
    (k) Authorization of Appropriations.--There are authorized 
to be appropriated such sums as are necessary to carry out this 
section.
    (l) Termination of Authority.--The authority of the 
Secretary to issue a loan guarantee under subsection (b) 
terminates on the date that is 10 years after the date of 
enactment of this Act.

SEC. 1512. RESOURCE CENTER.

    (a) Definition.--In this section, the term ``RFG State'' 
means a State in which is located one or more covered areas (as 
defined in section 211(k)(10)(D) of the Clean Air Act (42 
U.S.C. 7545(k)(10)(D)).
    (b) Authorization of Appropriations for Resource Center.--
There are authorized to be appropriated, for a resource center 
to further develop bioconversion technology using low-cost 
biomass for the production of ethanol at the Center for 
Biomass-Based Energy at the University of Mississippi and the 
University of Oklahoma, $4,000,000 for each of fiscal years 
2004 through 2006.
    (c) Renewable Fuel Production Research and Development 
Grants.--
            (1) In general.--The Administrator of the 
        Environmental Protection Agency shall provide grants 
        for the research into, and development and 
        implementation of, renewable fuel production 
        technologies in RFG States with low rates of ethanol 
        production, including low rates of production of 
        cellulosic biomass ethanol.
            (2) Eligibility.--
                    (A) In general.--The entities eligible to 
                receive a grant under this subsection are 
                academic institutions in RFG States, and 
                consortia made up of combinations of academic 
                institutions, industry, State government 
                agencies, or local government agencies in RFG 
                States, that have proven experience and 
                capabilities with relevant technologies.
                    (B) Application.--To be eligible to receive 
                a grant under this subsection, an eligible 
                entity shall submit to the Administrator an 
                application in such manner and form, and 
                accompanied by such information, as the 
                Administrator may specify.
            (3) Authorization of appropriations.--There are 
        authorized to be appropriated to carry out this 
        subsection $25,000,000 for each of fiscal years 2004 
        through 2008.

SEC. 1513. CELLULOSIC BIOMASS AND WASTE-DERIVED ETHANOL CONVERSION 
                    ASSISTANCE.

    Section 211 of the Clean Air Act (42 U.S.C. 7545) is 
amended by adding at the end the following:
    ``(r) Cellulosic Biomass and Waste-Derived Ethanol 
Conversion Assistance.--
            ``(1) In general.--The Secretary of Energy may 
        provide grants to merchant producers of cellulosic 
        biomass ethanol and waste-derived ethanol in the United 
        States to assist the producers in building eligible 
        production facilities described in paragraph (2) for 
        the production of ethanol.
            ``(2) Eligible production facilities.--A production 
        facility shall be eligible to receive a grant under 
        this subsection if the production facility--
                    ``(A) is located in the United States; and
                    ``(B) uses cellulosic biomass or waste-
                derived feedstocks derived from agricultural 
                residues, municipal solid waste, or 
                agricultural byproducts as that term is used in 
                section 919 of the Energy Policy Act of 2003.
            ``(3) Authorization of appropriations.--There are 
        authorized to be appropriated the following amounts to 
        carry out this subsection:
                    ``(A) $100,000,000 for fiscal year 2004.
                    ``(B) $250,000,000 for fiscal year 2005.
                    ``(C) $400,000,000 for fiscal year 2006.''.

SEC. 1514. BLENDING OF COMPLIANT REFORMULATED GASOLINES.

    Section 211 of the Clean Air Act (42 U.S.C. 7545) is 
amended by adding at the end the following:
    ``(s) Blending of Compliant Reformulated Gasolines.--
            ``(1) In general.--Notwithstanding subsections (h) 
        and (k) and subject to the limitations in paragraph (2) 
        of this subsection, it shall not be a violation of this 
        subtitle for a gasoline retailer, during any month of 
        the year, to blend at a retail location batches of 
        ethanol-blended and non-ethanol-blended reformulated 
        gasoline, provided that--
                    ``(A) each batch of gasoline to be blended 
                has been individually certified as in 
                compliance with subsections (h) and (k) prior 
                to being blended;
                    ``(B) the retailer notifies the 
                Administrator prior to such blending, and 
                identifies the exact location of the retail 
                station and the specific tank in which such 
                blending will take place;
                    ``(C) the retailer retains and, as 
                requested by the Administrator or the 
                Administrator's designee, makes available for 
                inspection such certifications accounting for 
                all gasoline at the retail outlet; and
                    ``(D) the retailer does not, between June 1 
                and September 15 of each year, blend a batch of 
                VOC-controlled, or `summer', gasoline with a 
                batch of non-VOC-controlled, or `winter', 
                gasoline (as these terms are defined under 
                subsections (h) and (k)).
    ``(2) Limitations.--
                    ``(A) Frequency limitation.--A retailer 
                shall only be permitted to blend batches of 
                compliant reformulated gasoline under this 
                subsection a maximum of two blending periods 
                between May 1 and September 15 of each calendar 
                year.
                    ``(B) Duration of blending period.--Each 
                blending period authorized under subparagraph 
                (A) shall extend for a period of no more than 
                10 consecutive calendar days.
            ``(3) Surveys.--A sample of gasoline taken from a 
        retail location that has blended gasoline within the 
        past 30 days and is in compliance with subparagraphs 
        (A), (B), (C), and (D) of paragraph (1) shall not be 
        used in a VOC survey mandated by 40 C.F.R. Part 80.
            ``(4) State implementation plans.--A State shall be 
        held harmless and shall not be required to revise its 
        State implementation plan under section 110 to account 
        for the emissions from blended gasoline authorized 
        under paragraph (1).
            ``(5) Preservation of state law.--Nothing in this 
        subsection shall--
                    ``(A) preempt existing State laws or 
                regulations regulating the blending of 
                compliant gasolines; or
                    ``(B) prohibit a State from adopting such 
                restrictions in the future.
            ``(6) Regulations.--The Administrator shall 
        promulgate, after notice and comment, regulations 
        implementing this subsection within one year after the 
        date of enactment of this subsection.
            ``(7) Effective date.--This subsection shall become 
        effective 15 months after the date of its enactment and 
        shall apply to blended batches of reformulated gasoline 
        on or after that date, regardless of whether the 
        implementing regulations required by paragraph (6) have 
        been promulgated by the Administrator by that date.
            ``(8) Liability.--No person other than the person 
        responsible for blending under this subsection shall be 
        subject to an enforcement action or penalties under 
        subsection (d) solely arising from the blending of 
        compliant reformulated gasolines by the retailers.
            ``(9) Formulation of gasoline.--This subsection 
        does not grant authority to the Administrator or any 
        State (or any subdivision thereof) to require 
        reformulation of gasoline at the refinery to adjust for 
        potential or actual emissions increases due to the 
        blending authorized by this subsection.''.

            Subtitle B--Underground Storage Tank Compliance

SEC. 1521. SHORT TITLE.

    This subtitle may be cited as the ``Underground Storage 
Tank Compliance Act of 2003''.

SEC. 1522. LEAKING UNDERGROUND STORAGE TANKS.

    (a) In General.--Section 9004 of the Solid Waste Disposal 
Act (42 U.S.C. 6991c) is amended by adding at the end the 
following:
    ``(f) Trust Fund Distribution.--
            ``(1) In general.--
                    ``(A) Amount and permitted uses of 
                distribution.--The Administrator shall 
                distribute to States not less than 80 percent 
                of the funds from the Trust Fund that are made 
                available to the Administrator under section 
                9014(2)(A) for each fiscal year for use in 
                paying the reasonable costs, incurred under a 
                cooperative agreement with any State for--
                            ``(i) actions taken by the State 
                        under section 9003(h)(7)(A);
                            ``(ii) necessary administrative 
                        expenses, as determined by the 
                        Administrator, that are directly 
                        related to State fund or State 
                        assurance programs under subsection 
                        (c)(1);
                            ``(iii) any State fund or State 
                        assurance program carried out under 
                        subsection (c)(1) for a release from an 
                        underground storage tank regulated 
                        under this subtitle to the extent that, 
                        as determined by the State in 
                        accordance with guidelines developed 
                        jointly by the Administrator and the 
                        States, the financial resources of the 
                        owner and operator of the underground 
                        storage tank (including resources 
                        provided by a program in accordance 
                        with subsection (c)(1)) are not 
                        adequate to pay the cost of a 
                        corrective action without significantly 
                        impairing the ability of the owner or 
                        operator to continue in business; or
                            ``(iv) enforcement, by a State or a 
                        local government, of State or local 
                        regulations pertaining to underground 
                        storage tanks regulated under this 
                        subtitle.
                    ``(B) Use of funds for enforcement.--In 
                addition to the uses of funds authorized under 
                subparagraph (A), the Administrator may use 
                funds from the Trust Fund that are not 
                distributed to States under subparagraph (A) 
                for enforcement of any regulation promulgated 
                by the Administrator under this subtitle.
                    ``(C) Prohibited uses.--Funds provided to a 
                State by the Administrator under subparagraph 
                (A) shall not be used by the State to provide 
                financial assistance to an owner or operator to 
                meet any requirement relating to underground 
                storage tanks under subparts B, C, D, H, and G 
                of part 280 of title 40, Code of Federal 
                Regulations (as in effect on the date of 
                enactment of this subsection).
            ``(2) Allocation.--
                    ``(A) Process.--Subject to subparagraphs 
                (B) and (C), in the case of a State with which 
                the Administrator has entered into a 
                cooperative agreement under section 
                9003(h)(7)(A), the Administrator shall 
                distribute funds from the Trust Fund to the 
                State using an allocation process developed by 
                the Administrator.
                    ``(B) Diversion of state funds.--The 
                Administrator shall not distribute funds under 
                subparagraph (A)(iii) of subsection (f)(1) to 
                any State that has diverted funds from a State 
                fund or State assurance program for purposes 
                other than those related to the regulation of 
                underground storage tanks covered by this 
                subtitle, with the exception of those transfers 
                that had been completed earlier than the date 
                of enactment of this subsection.
                    ``(C) Revisions to process.--The 
                Administrator may revise the allocation process 
                referred to in subparagraph (A) after--
                            ``(i) consulting with State 
                        agencies responsible for overseeing 
                        corrective action for releases from 
                        underground storage tanks; and
                            ``(ii) taking into consideration, 
                        at a minimum, each of the following:
                                    ``(I) The number of 
                                confirmed releases from 
                                federally regulated leaking 
                                underground storage tanks in 
                                the States.
                                    ``(II) The number of 
                                federally regulated underground 
                                storage tanks in the States.
                                    ``(III) The performance of 
                                the States in implementing and 
                                enforcing the program.
                                    ``(IV) The financial needs 
                                of the States.
                                    ``(V) The ability of the 
                                States to use the funds 
                                referred to in subparagraph (A) 
                                in any year.
            ``(3) Distributions to state agencies.--
        Distributions from the Trust Fund under this subsection 
        shall be made directly to a State agency that--
                    ``(A) enters into a cooperative agreement 
                referred to in paragraph (2)(A); or
                    ``(B) is enforcing a State program approved 
                under this section.
            ``(4) Cost recovery prohibition.--Funds from the 
        Trust Fund provided by States to owners or operators 
        under paragraph (1)(A)(iii) shall not be subject to 
        cost recovery by the Administrator under section 
        9003(h)(6).''.
    (b) Withdrawal of Approval of State Funds.--Section 9004(c) 
of the Solid Waste Disposal Act (42 U.S.C. 6991c(c)) is amended 
by inserting the following new paragraph at the end thereof:
            ``(6) Withdrawal of approval.--After an opportunity 
        for good faith, collaborative efforts to correct 
        financial deficiencies with a State fund, the 
        Administrator may withdraw approval of any State fund 
        or State assurance program to be used as a financial 
        responsibility mechanism without withdrawing approval 
        of a State underground storage tank program under 
        section 9004(a).''.

SEC. 1523. INSPECTION OF UNDERGROUND STORAGE TANKS.

    (a) Inspection Requirements.--Section 9005 of the Solid 
Waste Disposal Act (42 U.S.C. 6991d) is amended by inserting 
the following new subsection at the end thereof:
    ``(c) Inspection Requirements.--
            ``(1) Uninspected tanks.--In the case of 
        underground storage tanks regulated under this subtitle 
        that have not undergone an inspection since December 
        22, 1998, not later than 2 years after the date of 
        enactment of this subsection, the Administrator or a 
        State that receives funding under this subtitle, as 
        appropriate, shall conduct on-site inspections of all 
        such tanks to determine compliance with this subtitle 
        and the regulations under this subtitle (40 C.F.R. 280) 
        or a requirement or standard of a State program 
        developed under section 9004.
            ``(2) Periodic inspections.--After completion of 
        all inspections required under paragraph (1), the 
        Administrator or a State that receives funding under 
        this subtitle, as appropriate, shall conduct on-site 
        inspections of each underground storage tank regulated 
        under this subtitle at least once every 3 years to 
        determine compliance with this subtitle and the 
        regulations under this subtitle (40 C.F.R. 280) or a 
        requirement or standard of a State program developed 
        under section 9004. The Administrator may extend for up 
        to one additional year the first 3-year inspection 
        interval under this paragraph if the State demonstrates 
        that it has insufficient resources to complete all such 
        inspections within the first 3-year period.
            ``(3) Inspection authority.--Nothing in this 
        section shall be construed to diminish the 
        Administrator's or a State's authorities under section 
        9005(a).''.
    (b) Study of Alternative Inspection Programs.--The 
Administrator of the Environmental Protection Agency, in 
coordination with a State, shall gather information on 
compliance assurance programs that could serve as an 
alternative to the inspection programs under section 9005(c) of 
the Solid Waste Disposal Act (42 U.S.C. 6991d(c)) and shall, 
within 4 years after the date of enactment of this Act, submit 
a report to the Congress containing the results of such study.

SEC. 1524. OPERATOR TRAINING.

    (a) In General.--Section 9010 of the Solid Waste Disposal 
Act (42 U.S.C. 6991i) is amended to read as follows:

``SEC. 9010. OPERATOR TRAINING.

    ``(a) Guidelines.--
            ``(1) In general.--Not later than 2 years after the 
        date of enactment of the Underground Storage Tank 
        Compliance Act of 2003, in consultation and cooperation 
        with States and after public notice and opportunity for 
        comment, the Administrator shall publish guidelines 
        that specify training requirements for persons having 
        primary daily on-site management responsibility for the 
        operation and maintenance of underground storage tanks.
            ``(2) Considerations.--The guidelines described in 
        paragraph (1) shall take into account--
                    ``(A) State training programs in existence 
                as of the date of publication of the 
                guidelines;
                    ``(B) training programs that are being 
                employed by tank owners and tank operators as 
                of the date of enactment of the Underground 
                Storage Tank Compliance Act of 2003;
                    ``(C) the high turnover rate of tank 
                operators and other personnel;
                    ``(D) the frequency of improvement in 
                underground storage tank equipment technology;
                    ``(E) the nature of the businesses in which 
                the tank operators are engaged; and
                    ``(F) such other factors as the 
                Administrator determines to be necessary to 
                carry out this section.
    ``(b) State Programs.--
            ``(1) In general.--Not later than 2 years after the 
        date on which the Administrator publishes the 
        guidelines under subsection (a)(1), each State that 
        receives funding under this subtitle shall develop 
        State-specific training requirements that are 
        consistent with the guidelines developed under 
        subsection (a)(1).
            ``(2) Requirements.--State requirements described 
        in paragraph (1) shall--
                    ``(A) be consistent with subsection (a);
                    ``(B) be developed in cooperation with tank 
                owners and tank operators;
                    ``(C) take into consideration training 
                programs implemented by tank owners and tank 
                operators as of the date of enactment of this 
                section; and
                    ``(D) be appropriately communicated to tank 
                owners and operators.
            ``(3) Financial incentive.--The Administrator may 
        award to a State that develops and implements 
        requirements described in paragraph (1), in addition to 
        any funds that the State is entitled to receive under 
        this subtitle, not more than $200,000, to be used to 
        carry out the requirements.
    ``(c) Operators.--All persons having primary daily on-site 
management responsibility for the operation and maintenance of 
any underground storage tank shall--
            ``(1) meet the training requirements developed 
        under subsection (b); and
            ``(2) repeat the applicable requirements developed 
        under subsection (b), if the tank for which they have 
        primary daily on-site management responsibilities is 
        determined to be out of compliance with--
                    ``(A) a requirement or standard promulgated 
                by the Administrator under section 9003; or
                    ``(B) a requirement or standard of a State 
                program approved under section 9004.''.
    (b) State Program Requirement.--Section 9004(a) of the 
Solid Waste Disposal Act (42 U.S.C. 6991c(a)) is amended by 
striking ``and'' at the end of paragraph (7), by striking the 
period at the end of paragraph (8) and inserting ``; and'', and 
by adding the following new paragraph at the end thereof:
            ``(9) State-specific training requirements as 
        required by section 9010.''.
    (c) Enforcement.--Section 9006(d)(2) of such Act (42 U.S.C. 
6991e) is amended as follows:
            (1) By striking ``or'' at the end of subparagraph 
        (B).
            (2) By adding the following new subparagraph after 
        subparagraph (C):
            ``(D) the training requirements established by 
        States pursuant to section 9010 (relating to operator 
        training); or''.
    (d) Table of Contents.--The item relating to section 9010 
in table of contents for the Solid Waste Disposal Act is 
amended to read as follows:

``Sec. 9010. Operator training.''.

SEC. 1525. REMEDIATION FROM OXYGENATED FUEL ADDITIVES.

    Section 9003(h) of the Solid Waste Disposal Act (42 U.S.C. 
6991b(h)) is amended as follows:
            (1) In paragraph (7)(A)--
                    (A) by striking ``paragraphs (1) and (2) of 
                this subsection'' and inserting ``paragraphs 
                (1), (2), and (12)'' ; and
                    (B) by striking ``and including the 
                authorities of paragraphs (4), (6), and (8) of 
                this subsection'' and inserting ``and the 
                authority under sections 9011 and 9012 and 
                paragraphs (4), (6), and (8),''.
            (2) By adding at the end the following:
            ``(12) Remediation of oxygenated fuel 
        contamination.--
                    ``(A) In general.--The Administrator and 
                the States may use funds made available under 
                section 9014(2)(B) to carry out corrective 
                actions with respect to a release of a fuel 
                containing an oxygenated fuel additive that 
                presents a threat to human health or welfare or 
                the environment.
                    ``(B) Applicable authority.--The 
                Administrator or a State shall carry out 
                subparagraph (A) in accordance with paragraph 
                (2), and in the case of a State, in accordance 
                with a cooperative agreement entered into by 
                the Administrator and the State under paragraph 
                (7).''.

SEC. 1526. RELEASE PREVENTION, COMPLIANCE, AND ENFORCEMENT.

    (a) Release Prevention and Compliance.--Subtitle I of the 
Solid Waste Disposal Act (42 U.S.C. 6991 et seq.) is amended by 
adding at the end the following:

``SEC. 9011. USE OF FUNDS FOR RELEASE PREVENTION AND COMPLIANCE.

    ``Funds made available under section 9014(2)(D) from the 
Trust Fund may be used to conduct inspections, issue orders, or 
bring actions under this subtitle--
            ``(1) by a State, in accordance with a grant or 
        cooperative agreement with the Administrator, of State 
        regulations pertaining to underground storage tanks 
        regulated under this subtitle; and
            ``(2) by the Administrator, for tanks regulated 
        under this subtitle (including under a State program 
        approved under section 9004).''.
    (b) Government-Owned Tanks.--Section 9003 of the Solid 
Waste Disposal Act (42 U.S.C. 6991b) is amended by adding at 
the end the following:
    ``(i) Government-Owned Tanks.--
            ``(1) State compliance report.--(A) Not later than 
        2 years after the date of enactment of this subsection, 
        each State that receives funding under this subtitle 
        shall submit to the Administrator a State compliance 
        report that--
                    ``(i) lists the location and owner of each 
                underground storage tank described in 
                subparagraph (B) in the State that, as of the 
                date of submission of the report, is not in 
                compliance with section 9003; and
                    ``(ii) specifies the date of the last 
                inspection and describes the actions that have 
                been and will be taken to ensure compliance of 
                the underground storage tank listed under 
                clause (i) with this subtitle.
            ``(B) An underground storage tank described in this 
        subparagraph is an underground storage tank that is--
                    ``(i) regulated under this subtitle; and
                    ``(ii) owned or operated by the Federal, 
                State, or local government.
            ``(C) The Administrator shall make each report, 
        received under subparagraph (A), available to the 
        public through an appropriate media.
            ``(2) Financial incentive.--The Administrator may 
        award to a State that develops a report described in 
        paragraph (1), in addition to any other funds that the 
        State is entitled to receive under this subtitle, not 
        more than $50,000, to be used to carry out the report.
            ``(3) Not a safe harbor.--This subsection does not 
        relieve any person from any obligation or requirement 
        under this subtitle.''.
    (c) Public Record.--Section 9002 of the Solid Waste 
Disposal Act (42 U.S.C. 6991a) is amended by adding at the end 
the following:
    ``(d) Public Record.--
            ``(1) In general.--The Administrator shall require 
        each State that receives Federal funds to carry out 
        this subtitle to maintain, update at least annually, 
        and make available to the public, in such manner and 
        form as the Administrator shall prescribe (after 
        consultation with States), a record of underground 
        storage tanks regulated under this subtitle.
            ``(2) Considerations.--To the maximum extent 
        practicable, the public record of a State, 
        respectively, shall include, for each year--
                    ``(A) the number, sources, and causes of 
                underground storage tank releases in the State;
                    ``(B) the record of compliance by 
                underground storage tanks in the State with--
                            ``(i) this subtitle; or
                            ``(ii) an applicable State program 
                        approved under section 9004; and
                    ``(C) data on the number of underground 
                storage tank equipment failures in the 
                State.''.
    (d) Incentive for Performance.--Section 9006 of the Solid 
Waste Disposal Act (42 U.S.C. 6991e) is amended by adding at 
the end the following:
    ``(e) Incentive for Performance.--Both of the following may 
be taken into account in determining the terms of a civil 
penalty under subsection (d):
            ``(1) The compliance history of an owner or 
        operator in accordance with this subtitle or a program 
        approved under section 9004.
            ``(2) Any other factor the Administrator considers 
        appropriate.''.
    (e) Table of Contents.--The table of contents for such 
subtitle I is amended by adding the following new item at the 
end thereof:

``Sec. 9011. Use of funds for release prevention and compliance.''.

SEC. 1527. DELIVERY PROHIBITION.

    (a) In General.--Subtitle I of the Solid Waste Disposal Act 
(42 U.S.C. 6991 et seq.) is amended by adding at the end the 
following:

``SEC. 9012. DELIVERY PROHIBITION.

    ``(a) Requirements.--
            ``(1) Prohibition of delivery or deposit.--
        Beginning 2 years after the date of enactment of this 
        section, it shall be unlawful to deliver to, deposit 
        into, or accept a regulated substance into an 
        underground storage tank at a facility which has been 
        identified by the Administrator or a State implementing 
        agency to be ineligible for fuel delivery or deposit.
            ``(2) Guidance.--Within 1 year after the date of 
        enactment of this section, the Administrator and States 
        that receive funding under this subtitle shall, in 
        consultation with the underground storage tank owner 
        and product delivery industries, for territory for 
        which they are the primary implementing agencies, 
        publish guidelines detailing the specific processes and 
        procedures they will use to implement the provisions of 
        this section. The processes and procedures include, at 
        a minimum--
                    ``(A) the criteria for determining which 
                underground storage tank facilities are 
                ineligible for delivery or deposit;
                    ``(B) the mechanisms for identifying which 
                facilities are ineligible for delivery or 
                deposit to the underground storage tank owning 
                and fuel delivery industries;
                    ``(C) the process for reclassifying 
                ineligible facilities as eligible for delivery 
                or deposit; and
                    ``(D) a delineation of, or a process for 
                determining, the specified geographic areas 
                subject to paragraph (4).
            ``(3) Delivery prohibition notice.--
                    ``(A) Roster.--The Administrator and each 
                State implementing agency that receives funding 
                under this subtitle shall establish within 24 
                months after the date of enactment of this 
                section a Delivery Prohibition Roster listing 
                underground storage tanks under the 
                Administrator's or the State's jurisdiction 
                that are determined to be ineligible for 
                delivery or deposit pursuant to paragraph (2).
                    ``(B) Notification.--The Administrator and 
                each State, as appropriate, shall make readily 
                known, to underground storage tank owners and 
                operators and to product delivery industries, 
                the underground storage tanks listed on a 
                Delivery Prohibition Roster by:
                            ``(i) posting such Rosters, 
                        including the physical location and 
                        street address of each listed 
                        underground storage tank, on official 
                        web sites and, if the Administrator or 
                        the State so chooses, other electronic 
                        means;
                            ``(ii) updating these Rosters 
                        periodically; and
                            ``(iii) installing a tamper-proof 
                        tag, seal, or other device blocking the 
                        fill pipes of such underground storage 
                        tanks to prevent the delivery of 
                        product into such underground storage 
                        tanks.
                    ``(C) Roster updates.--The Administrator 
                and the State shall update the Delivery 
                Prohibition Rosters as appropriate, but not 
                less than once a month on the first day of the 
                month.
                    ``(D) Tampering with device.--
                            ``(i) Prohibition.--It shall be 
                        unlawful for any person, other than an 
                        authorized representative of the 
                        Administrator or a State, as 
                        appropriate, to remove, tamper with, 
                        destroy, or damage a device installed 
                        by the Administrator or a State, as 
                        appropriate, under subparagraph 
                        (B)(iii) of this subsection.
                            ``(ii) Civil penalties.--Any person 
                        violating clause (i) of this 
                        subparagraph shall be subject to a 
                        civil penalty not to exceed $10,000 for 
                        each violation.
            ``(4) Limitation.--
                    ``(A) Rural and remote areas.--Subject to 
                subparagraph (B), the Administrator or a State 
                shall not include an underground storage tank 
                on a Delivery Prohibition Roster under 
                paragraph (3) if an urgent threat to public 
                health, as determined by the Administrator, 
                does not exist and if such a delivery 
                prohibition would jeopardize the availability 
                of, or access to, fuel in any rural and remote 
                areas.
                    ``(B) Applicability of limitation.--The 
                limitation under subparagraph (A) shall apply 
                only during the 180-day period following the 
                date of a determination by the Administrator or 
                the appropriate State that exercising the 
                authority of paragraph (3) is limited by 
                subparagraph (A).
    ``(b) Effect on State Authority.--Nothing in this section 
shall affect the authority of a State to prohibit the delivery 
of a regulated substance to an underground storage tank.
    ``(c) Defense to Violation.--A person shall not be in 
violation of subsection (a)(1) if the underground storage tank 
into which a regulated substance is delivered is not listed on 
the Administrator's or the appropriate State's Prohibited 
Delivery Roster 7 calendar days prior to the delivery being 
made.''.
    (b) Enforcement.--Section 9006(d)(2) of such Act (42 U.S.C. 
6991e(d)(2)) is amended as follows:
            (1) By adding the following new subparagraph after 
        subparagraph (D):
            ``(E) the delivery prohibition requirement 
        established by section 9012,''.
            (2) By adding the following new sentence at the end 
        thereof: ``Any person making or accepting a delivery or 
        deposit of a regulated substance to an underground 
        storage tank at an ineligible facility in violation of 
        section 9012 shall also be subject to the same civil 
        penalty for each day of such violation.''.
    (c) Table of Contents.--The table of contents for such 
subtitle I is amended by adding the following new item at the 
end thereof:

``Sec. 9012. Delivery prohibition.''.

SEC. 1528. FEDERAL FACILITIES.

    Section 9007 of the Solid Waste Disposal Act (42 U.S.C. 
6991f) is amended to read as follows:

``SEC. 9007. FEDERAL FACILITIES.

    ``(a) In General.--Each department, agency, and 
instrumentality of the executive, legislative, and judicial 
branches of the Federal Government (1) having jurisdiction over 
any underground storage tank or underground storage tank 
system, or (2) engaged in any activity resulting, or which may 
result, in the installation, operation, management, or closure 
of any underground storage tank, release response activities 
related thereto, or in the delivery, acceptance, or deposit of 
any regulated substance to an underground storage tank or 
underground storage tank system shall be subject to, and comply 
with, all Federal, State, interstate, and local requirements, 
both substantive and procedural (including any requirement for 
permits or reporting or any provisions for injunctive relief 
and such sanctions as may be imposed by a court to enforce such 
relief), respecting underground storage tanks in the same 
manner, and to the same extent, as any person is subject to 
such requirements, including the payment of reasonable service 
charges. The Federal, State, interstate, and local substantive 
and procedural requirements referred to in this subsection 
include, but are not limited to, all administrative orders and 
all civil and administrative penalties and fines, regardless of 
whether such penalties or fines are punitive or coercive in 
nature or are imposed for isolated, intermittent, or continuing 
violations. The United States hereby expressly waives any 
immunity otherwise applicable to the United States with respect 
to any such substantive or procedural requirement (including, 
but not limited to, any injunctive relief, administrative order 
or civil or administrative penalty or fine referred to in the 
preceding sentence, or reasonable service charge). The 
reasonable service charges referred to in this subsection 
include, but are not limited to, fees or charges assessed in 
connection with the processing and issuance of permits, renewal 
of permits, amendments to permits, review of plans, studies, 
and other documents, and inspection and monitoring of 
facilities, as well as any other nondiscriminatory charges that 
are assessed in connection with a Federal, State, interstate, 
or local underground storage tank regulatory program. Neither 
the United States, nor any agent, employee, or officer thereof, 
shall be immune or exempt from any process or sanction of any 
State or Federal Court with respect to the enforcement of any 
such injunctive relief. No agent, employee, or officer of the 
United States shall be personally liable for any civil penalty 
under any Federal, State, interstate, or local law concerning 
underground storage tanks with respect to any act or omission 
within the scope of the official duties of the agent, employee, 
or officer. An agent, employee, or officer of the United States 
shall be subject to any criminal sanction (including, but not 
limited to, any fine or imprisonment) under any Federal or 
State law concerning underground storage tanks, but no 
department, agency, or instrumentality of the executive, 
legislative, or judicial branch of the Federal Government shall 
be subject to any such sanction. The President may exempt any 
underground storage tank of any department, agency, or 
instrumentality in the executive branch from compliance with 
such a requirement if he determines it to be in the paramount 
interest of the United States to do so. No such exemption shall 
be granted due to lack of appropriation unless the President 
shall have specifically requested such appropriation as a part 
of the budgetary process and the Congress shall have failed to 
make available such requested appropriation. Any exemption 
shall be for a period not in excess of one year, but additional 
exemptions may be granted for periods not to exceed one year 
upon the President's making a new determination. The President 
shall report each January to the Congress all exemptions from 
the requirements of this section granted during the preceding 
calendar year, together with his reason for granting each such 
exemption.
    ``(b) Review of and Report on Federal Underground Storage 
Tanks.--
            ``(1) Review.--Not later than 12 months after the 
        date of enactment of the Underground Storage Tank 
        Compliance Act of 2003, each Federal agency that owns 
        or operates 1 or more underground storage tanks, or 
        that manages land on which 1 or more underground 
        storage tanks are located, shall submit to the 
        Administrator, the Committee on Energy and Commerce of 
        the United States House of Representatives, and the 
        Committee on the Environment and Public Works of the 
        United States Senate a compliance strategy report 
        that--
                    ``(A) lists the location and owner of each 
                underground storage tank described in this 
                paragraph;
                    ``(B) lists all tanks that are not in 
                compliance with this subtitle that are owned or 
                operated by the Federal agency;
                    ``(C) specifies the date of the last 
                inspection by a State or Federal inspector of 
                each underground storage tank owned or operated 
                by the agency;
                    ``(D) lists each violation of this subtitle 
                respecting any underground storage tank owned 
                or operated by the agency;
                    ``(E) describes the operator training that 
                has been provided to the operator and other 
                persons having primary daily on-site management 
                responsibility for the operation and 
                maintenance of underground storage tanks owned 
                or operated by the agency; and
                    ``(F) describes the actions that have been 
                and will be taken to ensure compliance for each 
                underground storage tank identified under 
                subparagraph (B).
            ``(2) Not a safe harbor.--This subsection does not 
        relieve any person from any obligation or requirement 
        under this subtitle.''.

SEC. 1529. TANKS ON TRIBAL LANDS.

    (a) In General.--Subtitle I of the Solid Waste Disposal Act 
(42 U.S.C. 6991 et seq.) is amended by adding the following at 
the end thereof:

``SEC. 9013. TANKS ON TRIBAL LANDS.

    ``(a) Strategy.--The Administrator, in coordination with 
Indian tribes, shall, not later than 1 year after the date of 
enactment of this section, develop and implement a strategy--
            ``(1) giving priority to releases that present the 
        greatest threat to human health or the environment, to 
        take necessary corrective action in response to 
        releases from leaking underground storage tanks located 
        wholly within the boundaries of--
                    ``(A) an Indian reservation; or
                    ``(B) any other area under the jurisdiction 
                of an Indian tribe; and
            ``(2) to implement and enforce requirements 
        concerning underground storage tanks located wholly 
        within the boundaries of--
                    ``(A) an Indian reservation; or
                    ``(B) any other area under the jurisdiction 
                of an Indian tribe.
    ``(b) Report.--Not later than 2 years after the date of 
enactment of this section, the Administrator shall submit to 
Congress a report that summarizes the status of implementation 
and enforcement of this subtitle in areas located wholly 
within--
            ``(1) the boundaries of Indian reservations; and
            ``(2) any other areas under the jurisdiction of an 
        Indian tribe.
The Administrator shall make the report under this subsection 
available to the public.
    ``(c) Not a Safe Harbor.--This section does not relieve any 
person from any obligation or requirement under this subtitle.
    ``(d) State Authority.--Nothing in this section applies to 
any underground storage tank that is located in an area under 
the jurisdiction of a State, or that is subject to regulation 
by a State, as of the date of enactment of this section.''.
    (b) Table of Contents.--The table of contents for such 
subtitle I is amended by adding the following new item at the 
end thereof:

``Sec. 9013. Tanks on Tribal lands.''.

SEC. 1530. FUTURE RELEASE CONTAINMENT TECHNOLOGY.

    Not later than 2 years after the date of enactment of this 
Act, the Administrator of the Environmental Protection Agency, 
after consultation with States, shall make available to the 
public and to the Committee on Energy and Commerce of the House 
of Representatives and the Committee on Environment and Public 
Works of the Senate information on the effectiveness of 
alternative possible methods and means for containing releases 
from underground storage tanks systems.

SEC. 1531. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--Subtitle I of the Solid Waste Disposal Act 
(42 U.S.C. 6991 et seq.) is amended by adding at the end the 
following:

``SEC. 9014. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to the 
Administrator the following amounts:
            ``(1) To carry out subtitle I (except sections 
        9003(h), 9005(c), 9011 and 9012) $50,000,000 for each 
        of fiscal years 2004 through 2008.
            ``(2) From the Trust Fund, notwithstanding section 
        9508(c)(1) of the Internal Revenue Code of 1986:
                    ``(A) to carry out section 9003(h) (except 
                section 9003(h)(12)) $200,000,000 for each of 
                fiscal years 2004 through 2008;
                    ``(B) to carry out section 9003(h)(12), 
                $200,000,000 for each of fiscal years 2004 
                through 2008;
                    ``(C) to carry out sections 9004(f) and 
                9005(c) $100,000,000 for each of fiscal years 
                2004 through 2008; and
                    ``(D) to carry out sections 9011 and 9012 
                $55,000,000 for each of fiscal years 2004 
                through 2008.''.
    (b) Table of Contents.--The table of contents for such 
subtitle I is amended by adding the following new item at the 
end thereof:

``Sec. 9014. Authorization of appropriations.''.

SEC. 1532. CONFORMING AMENDMENTS.

    (a) In General.--Section 9001 of the Solid Waste Disposal 
Act (42 U.S.C. 6991) is amended as follows:
            (1) By striking ``For the purposes of this 
        subtitle--'' and inserting ``In this subtitle:''.
            (2) By redesignating paragraphs (1), (2), (3), (4), 
        (5), (6), (7), and (8) as paragraphs (10), (7), (4), 
        (3), (8), (5), (2), and (6), respectively.
            (3) By inserting before paragraph (2) (as 
        redesignated by paragraph (2) of this subsection) the 
        following:
            ``(1) Indian tribe.--
                    ``(A) In general.-- The term `Indian tribe' 
                means any Indian tribe, band, nation, or other 
                organized group or community that is recognized 
                as being eligible for special programs and 
                services provided by the United States to 
                Indians because of their status as Indians.
                    ``(B) Inclusions.--The term `Indian tribe' 
                includes an Alaska Native village, as defined 
                in or established under the Alaska Native 
                Claims Settlement Act (43 U.S.C. 1601 et seq.); 
                and''.
            (4) By inserting after paragraph (8) (as 
        redesignated by paragraph (2) of this subsection) the 
        following:
            ``(9) Trust fund.-- The term `Trust Fund' means the 
        Leaking Underground Storage Tank Trust Fund established 
        by section 9508 of the Internal Revenue Code of 
        1986.''.
    (b) Conforming Amendments.--The Solid Waste Disposal Act 
(42 U.S.C. 6901 and following) is amended as follows:
            (1) Section 9003(f) (42 U.S.C. 6991b(f)) is 
        amended--
                    (A) in paragraph (1), by striking 
                ``9001(2)(B)'' and inserting ``9001(7)(B)''; 
                and
                    (B) in paragraphs (2) and (3), by striking 
                ``9001(2)(A)'' each place it appears and 
                inserting ``9001(7)(A)''.
            (2) Section 9003(h) (42 U.S.C. 6991b(h)) is amended 
        in paragraphs (1), (2)(C), (7)(A), and (11) by striking 
        ``Leaking Underground Storage Tank Trust Fund'' each 
        place it appears and inserting ``Trust Fund''.
            (3) Section 9009 (42 U.S.C. 6991h) is amended--
                    (A) in subsection (a), by striking 
                ``9001(2)(B)'' and inserting ``9001(7)(B)''; 
                and
                    (B) in subsection (d), by striking 
                ``section 9001(1) (A) and (B)'' and inserting 
                ``subparagraphs (A) and (B) of section 
                9001(10)''.

SEC. 1533. TECHNICAL AMENDMENTS.

    The Solid Waste Disposal Act is amended as follows:
            (1) Section 9001(4)(A) (42 U.S.C. 6991(4)(A)) is 
        amended by striking ``sustances'' and inserting 
        ``substances''.
            (2) Section 9003(f)(1) (42 U.S.C. 6991b(f)(1)) is 
        amended by striking ``subsection (c) and (d) of this 
        section'' and inserting ``subsections (c) and (d)''.
            (3) Section 9004(a) (42 U.S.C. 6991c(a)) is amended 
        by striking ``in 9001(2) (A) or (B) or both'' and 
        inserting ``in subparagraph (A) or (B) of section 
        9001(7)''.
            (4) Section 9005 (42 U.S.C. 6991d) is amended--
                    (A) in subsection (a), by striking ``study 
                taking'' and inserting ``study, taking'';
                    (B) in subsection (b)(1), by striking 
                ``relevent'' and inserting ``relevant''; and
                    (C) in subsection (b)(4), by striking 
                ``Evironmental'' and inserting 
                ``Environmental''.

                           TITLE XVI--STUDIES

SEC. 1601. STUDY ON INVENTORY OF PETROLEUM AND NATURAL GAS STORAGE.

    (a) Definition.--For purposes of this section ``petroleum'' 
means crude oil, motor gasoline, jet fuel, distillates, and 
propane.
    (b) Study.--The Secretary of Energy shall conduct a study 
on petroleum and natural gas storage capacity and operational 
inventory levels, nationwide and by major geographical regions.
    (c) Contents.--The study shall address--
            (1) historical normal ranges for petroleum and 
        natural gas inventory levels;
            (2) historical and projected storage capacity 
        trends;
            (3) estimated operation inventory levels below 
        which outages, delivery slowdown, rationing, 
        interruptions in service, or other indicators of 
        shortage begin to appear;
            (4) explanations for inventory levels dropping 
        below normal ranges; and
            (5) the ability of industry to meet United States 
        demand for petroleum and natural gas without shortages 
        or price spikes, when inventory levels are below normal 
        ranges.
    (d) Report to Congress.--Not later than 1 year after the 
date of enactment of this Act, the Secretary of Energy shall 
submit a report to Congress on the results of the study, 
including findings and any recommendations for preventing 
future supply shortages.

SEC. 1602. NATURAL GAS SUPPLY SHORTAGE REPORT.

    (a) Report.--Not later than 6 months after the date of 
enactment of this Act, the Secretary of Energy shall submit to 
Congress a report on natural gas supplies and demand. In 
preparing the report, the Secretary shall consult with experts 
in natural gas supply and demand as well as representatives of 
State and local units of government, tribal organizations, and 
consumer and other organizations. As the Secretary deems 
advisable, the Secretary may hold public hearings and provide 
other opportunities for public comment. The report shall 
contain recommendations for Federal actions that, if 
implemented, will result in a balance between natural gas 
supply and demand at a level that will ensure, to the maximum 
extent practicable, achievement of the objectives established 
in subsection (b).
    (b) Objectives of Report.--In preparing the report, the 
Secretary shall seek to develop a series of recommendations 
that will result in a balance between natural gas supply and 
demand adequate to--
            (1) provide residential consumers with natural gas 
        at reasonable and stable prices;
            (2) accommodate long-term maintenance and growth of 
        domestic natural gas-dependent industrial, 
        manufacturing, and commercial enterprises;
            (3) facilitate the attainment of national ambient 
        air quality standards under the Clean Air Act;
            (4) permit continued progress in reducing emissions 
        associated with electric power generation; and
            (5) support development of the preliminary phases 
        of hydrogen-based energy technologies.
    (c) Contents of Report.--The report shall provide a 
comprehensive analysis of natural gas supply and demand in the 
United States for the period from 2004 to 2015. The analysis 
shall include, at a minimum--
            (1) estimates of annual domestic demand for natural 
        gas that take into account the effect of Federal 
        policies and actions that are likely to increase and 
        decrease demand for natural gas;
            (2) projections of annual natural gas supplies, 
        from domestic and foreign sources, under existing 
        Federal policies;
            (3) an identification of estimated natural gas 
        supplies that are not available under existing Federal 
        policies;
            (4) scenarios for decreasing natural gas demand and 
        increasing natural gas supplies comparing relative 
        economic and environmental impacts of Federal policies 
        that--
                    (A) encourage or require the use of natural 
                gas to meet air quality, carbon dioxide 
                emission reduction, or energy security goals;
                    (B) encourage or require the use of energy 
                sources other than natural gas, including coal, 
                nuclear, and renewable sources;
                    (C) support technologies to develop 
                alternative sources of natural gas and 
                synthetic gas, including coal gasification 
                technologies;
                    (D) encourage or require the use of energy 
                conservation and demand side management 
                practices; and
                    (E) affect access to domestic natural gas 
                supplies; and
            (5) recommendations for Federal actions to achieve 
        the objectives of the report, including recommendations 
        that--
                    (A) encourage or require the use of energy 
                sources other than natural gas, including coal, 
                nuclear, and renewable sources;
                    (B) encourage or require the use of energy 
                conservation or demand side management 
                practices;
                    (C) support technologies for the 
                development of alternative sources of natural 
                gas and synthetic gas, including coal 
                gasification technologies; and
                    (D) will improve access to domestic natural 
                gas supplies.

SEC. 1603. SPLIT-ESTATE FEDERAL OIL AND GAS LEASING AND DEVELOPMENT 
                    PRACTICES.

    (a) Review.--In consultation with affected private surface 
owners, oil and gas industry, and other interested parties, the 
Secretary of the Interior shall undertake a review of the 
current policies and practices with respect to management of 
Federal subsurface oil and gas development activities and their 
effects on the privately owned surface. This review shall 
include--
            (1) a comparison of the rights and responsibilities 
        under existing mineral and land law for the owner of a 
        Federal mineral lease, the private surface owners and 
        the Department;
            (2) a comparison of the surface owner consent 
        provisions in section 714 of the Surface Mining Control 
        and Reclamation Act of 1977 (30 U.S.C. 1304) concerning 
        surface mining of Federal coal deposits and the surface 
        owner consent provisions for oil and gas development, 
        including coalbed methane production; and
            (3) recommendations for administrative or 
        legislative action necessary to facilitate reasonable 
        access for Federal oil and gas activities while 
        addressing surface owner concerns and minimizing 
        impacts to private surface.
    (b) Report.--The Secretary of the Interior shall report the 
results of such review to Congress not later than 180 days 
after the date of enactment of this Act.

SEC. 1604. RESOLUTION OF FEDERAL RESOURCE DEVELOPMENT CONFLICTS IN THE 
                    POWDER RIVER BASIN.

    The Secretary of the Interior shall--
            (1) undertake a review of existing authorities to 
        resolve conflicts between the development of Federal 
        coal and the development of Federal and non-Federal 
        coalbed methane in the Powder River Basin in Wyoming 
        and Montana; and
            (2) not later than 6 months after the date of 
        enactment of this Act, report to Congress on 
        alternatives to resolve these conflicts and 
        identification of a preferred alternative with specific 
        legislative language, if any, required to implement the 
        preferred alternative.

SEC. 1605. STUDY OF ENERGY EFFICIENCY STANDARDS.

    The Secretary of Energy shall contract with the National 
Academy of Sciences for a study, to be completed within 1 
yearafter the date of enactment of this Act, to examine whether the 
goals of energy efficiency standards are best served by measurement of 
energy consumed, and efficiency improvements, at the actual site of 
energy consumption, or through the full fuel cycle, beginning at the 
source of energy production. The Secretary shall submit the report to 
Congress.

SEC. 1606. TELECOMMUTING STUDY.

    (a) Study Required.--The Secretary, in consultation with 
the Commission, the Director of the Office of Personnel 
Management, the Administrator of General Services, and the 
Administrator of NTIA, shall conduct a study of the energy 
conservation implications of the widespread adoption of 
telecommuting by Federal employees in the United States.
    (b) Required Subjects of Study.--The study required by 
subsection (a) shall analyze the following subjects in relation 
to the energy saving potential of telecommuting by Federal 
employees:
            (1) Reductions of energy use and energy costs in 
        commuting and regular office heating, cooling, and 
        other operations.
            (2) Other energy reductions accomplished by 
        telecommuting.
            (3) Existing regulatory barriers that hamper 
        telecommuting, including barriers to broadband 
        telecommunications services deployment.
            (4) Collateral benefits to the environment, family 
        life, and other values.
    (c) Report Required.--The Secretary shall submit to the 
President and Congress a report on the study required by this 
section not later than 6 months after the date of enactment of 
this Act. Such report shall include a description of the 
results of the analysis of each of the subject described in 
subsection (b).
    (d) Definitions.--As used in this section:
            (1) Secretary.--The term ``Secretary'' means the 
        Secretary of Energy.
            (2) Commission.--The term ``Commission'' means the 
        Federal Communications Commission.
            (3) NTIA.--The term ``NTIA'' means the National 
        Telecommunications and Information Administration of 
        the Department of Commerce.
            (4) Telecommuting.--The term ``telecommuting'' 
        means the performance of work functions using 
        communications technologies, thereby eliminating or 
        substantially reducing the need to commute to and from 
        traditional worksites.
            (5) Federal employee.--The term ``Federal 
        employee'' has the meaning provided the term 
        ``employee'' by section 2105 of title 5, United States 
        Code.

SEC. 1607. LIHEAP REPORT.

    Not later than 1 year after the date of enactment of this 
Act, the Secretary of Health and Human Services shall transmit 
to Congress a report on how the Low-Income Home Energy 
Assistance Program could be used more effectively to prevent 
loss of life from extreme temperatures. In preparing such 
report, the Secretary shall consult with appropriate officials 
in all 50 States and the District of Columbia.

SEC. 1608. OIL BYPASS FILTRATION TECHNOLOGY.

    The Secretary of Energy and the Administrator of the 
Environmental Protection Agency shall--
            (1) conduct a joint study of the benefits of oil 
        bypass filtration technology in reducing demand for oil 
        and protecting the environment;
            (2) examine the feasibility of using oil bypass 
        filtration technology in Federal motor vehicle fleets; 
        and
            (3) include in such study, prior to any 
        determination of the feasibility of using oil bypass 
        filtration technology, the evaluation of products and 
        various manufacturers.

SEC. 1609. TOTAL INTEGRATED THERMAL SYSTEMS.

    The Secretary of Energy shall--
            (1) conduct a study of the benefits of total 
        integrated thermal systems in reducing demand for oil 
        and protecting the environment; and
            (2) examine the feasibility of using total 
        integrated thermal systems in Department of Defense and 
        other Federal motor vehicle fleets.

SEC. 1610. UNIVERSITY COLLABORATION.

    Not later than 2 years after the date of enactment of this 
Act, the Secretary of Energy shall transmit to Congress a 
report that examines the feasibility of promoting 
collaborations between large institutions of higher education 
and small institutions of higher education through grants, 
contracts, and cooperative agreements made by the Secretary for 
energy projects. The Secretary shall also consider providing 
incentives for the inclusion of small institutions of higher 
education, including minority-serving institutions, in energy 
research grants, contracts, and cooperative agreements.

SEC. 1611. RELIABILITY AND CONSUMER PROTECTION ASSESSMENT.

    Not later than 5 years after the date of enactment of this 
Act, and each 5 years thereafter, the Federal Energy Regulatory 
Commission shall assess the effects of the exemption of 
electric cooperatives and government-owned utilities from 
Commission regulation under section 201(f) of the Federal Power 
Act. The assessment shall include any effects on--
            (1) reliability of interstate electric transmission 
        networks;
            (2) benefit to consumers, and efficiency, of 
        competitive wholesale electricity markets;
            (3) just and reasonable rates for electricity 
        consumers; and
            (4) the ability of the Commission to protect 
        electricity consumers.
If the Commission finds that the 201(f) exemption results in 
adverse effects on consumers or electric reliability, the 
Commission shall make appropriate recommendations to Congress 
pursuant to section 311 of the Federal Power Act.
    And the Senate agree to the same.

                From the Committee on Energy and Commerce, for 
                consideration of the House bill and the Senate 
                amendment, and modifications committed to 
                conference:
                                   Billy Tauzin,
                                   Michael Bilirakis,
                                   Joe Barton,
                                   Fred Upton,
                                   Cliff Stearns,
                                   Paul Gillmor,
                                   John Shimkus,
                From the Committee on Agriculture, for 
                consideration of secs. 30202, 30208, 30212, 
                Title III of Division C, secs. 30604, 30901, 
                and 30903 of the House bill and secs. 265, 301, 
                604, 941-948, 950, 1103, 1221, 1311-1313, and 
                2008 of the Senate amendment, and modifications 
                committed to conference:
                                   Bob Goodlatte,
                                   Frank D. Lucas,
                                   Charles W. Stenholm,
                From the Committee on Armed Services, for 
                consideration of secs. 11005, 11010, 14001-
                14007, 14009-14015, 21805 and 21806 of the 
                House bill and secs. 301, 501-507, 509, 513, 
                809, 821, 914, 920, 1401, 1407-1409, 1411, 
                1801, and 1803 of the Senate amendment, and 
                modifications committed to conference:
                                   Duncan Hunter,
                                   Curt Weldon,
                From the Committee on Education and the 
                Workforce, for consideration of secs. 11021, 
                12014, 14033, and 30406 of the House bill and 
                secs. 715, 774, 901, 903, 1505, and 1507 of the 
                Senate amendment, and modifications committed 
                to conference:
                                   Sam Johnson,
                From the Committee on Financial Services, for 
                consideration of Division G of the House bill 
                and secs. 931-940 and 950 of the Senate 
                amendment and modifications committed to 
                conference:
                                   Robert W. Ney,
                From the Committee on Government Reform, for 
                consideration of secs. 11002, 11005, 11006, 
                11010, 11011, 14025, 14033, and 22002 of the 
                House bill and secs. 263, 805, 806, 914-916, 
                918, 920, 1406, and 1410 of the Senate 
                amendment, and modifications committed to 
                conference:
                                   Tom Davis,
                                   Tim Murphy,
                From the Committee on the Judiciary, for 
                consideration of secs. 12008, 12401, 14014, 
                14026, 14027, 14028, 14033, 16012, 16045, 
                16084, 30101, 30210, and 30408 of the House 
                bill and secs. 206, 209, 253, 531-532, 708, 
                767, 783, and 1109 of the Senate amendment, and 
                modifications committed to conference:
                                   Lamar Smith,
                From the Committee on Resources, for 
                consideration of secs. 12005, 12007, 12011, 
                12101, 13001, 21501, 21521-21530, Division C, 
                and sec. 60009 of the House bill and secs. 201, 
                265, 272, 301, 401-407, 602-606, 609, 612, 705, 
                707, 712, 721, 1234, 1351-1352, 1704, and 1811 
                of the Senate amendment, and modifications 
                committed to conference:
                                   Richard Pombo,
                                   Barbara Cubin,
                Provided that Mr. Kind is appointed in lieu of 
                Mr. Rahall for consideration of Title IV of 
                Division C of the House bill, and modifications 
                committed to conference:

                From the Committee on Science, for 
                consideration of secs. 11009, 11025, 12301-
                12312, 14001-14007, 14009-14015, 14029, 15021-
                15024, 15031-15034, 15041, 15045, Division B, 
                sec. 30301, Division E, and Division F of the 
                House bill and secs. 501-507, 509, 513-516, 
                770-772, 807-809, 814-816, 824, 832, 1001-1022, 
                Title XI, Title XII, Title XIII, Title XIV, 
                secs. 1502, 1504-1505, Title XVI, and secs. 
                1801-1805 of the Senate amendment, and 
                modifications committed to conference:
                                   Judy Biggert,
                                   Ralph M. Hall,
                Provided that Mr. Costello is appointed in lieu 
                of Mr. Hall  of Texas for consideration of 
                Division E of the House bill, and modifications 
                committed to conference:
                                   Jerry Costello,
                Provided that Mr. Lampson is appointed in lieu 
                of Mr. Hall  of Texas for consideration of sec. 
                21708 and Division F of the House bill, and 
                secs. 824 and 1223 of the Senate amendment and 
                modifications committed to conference:
                                   Nick Lampson,
                From the Committee on Transportation and 
                Infrastructure, for consideration of secs. 
                11001-11004, 11006, 11009-11011, 12001-12012, 
                12014, 12401, 12403, 13001, 13201, 13202, 
                15021-15024, 15031-15034, 15041, 15043, 15051, 
                16012, 16021, 16022, 16023, 16031, 16081, 
                16082, 16092, 23001-23004, 30407, 30410, and 
                30901 of the House bill and secs. 102, 201, 
                205, 301, 701-783, 812, 814, 816, 823, 911-916, 
                918-920, 949, 1214, 1261-1262, and 1351-1352 of 
                the Senate amendment, and modifications 
                committed to conference:
                                   Don Young,
                                   Thomas Petri,
                From the Committee on Ways and Means, for 
                consideration of Division D of the House bill 
                and Division H and I of the Senate amendment, 
                and modifications committed to conference:
                                   William Thomas,
                                   Jim McCrery,
                                 Managers on the Part of the House.
                                   Pete V. Domenici,
                                   Don Nickles,
                                   Larry E. Craig,
                                   Ben Nighthorse Campbell,
                                   Craig Thomas,
                                   Chuck Grassley,
                                   Trent Lott,
                                   Byron L. Dorgan,
                                Managers on the Part of the Senate.
       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

      The managers on the part of the House and the Senate at 
the conference on the disagreeing votes of the two Houses on 
the amendment of the Senate to the bill (H.R. 6), to provide 
for security and diversity in the energy supply for the 
American people, and for other purposes, submit the following 
joint statement to the House and the Senate in explanation of 
the effect of the action agreed upon by the managers and 
recommended in the accompanying conference report:
      The Senate amendment struck all of the House bill after 
the enacting clause and inserted a substitute text.
      The House recedes from its disagreement to the amendment 
of the Senate with an amendment that is a substitute for the 
House bill and the Senate amendment. The differences between 
the House bill, the Senate amendment, and the substitute agreed 
to in conference are noted below, except for clerical 
corrections, conforming changes made necessary by agreements 
reached by the conferees, and minor drafting and clarifying 
changes.

                       TITLE I--ENERGY EFFICIENCY

      Title I of the conference report sets new performance 
requirements for the operations of Federal agencies and 
buildings, requires Federal agencies to procure energy 
efficient products, and mandates metering of energy use in 
Federal buildings. The title has a permanent authorization for 
the Energy Savings Performance Contracts (ESPC) program, and 
establishes a pilot program for ESPC non-building applications. 
The conference report authorizes funding for new programs to 
expand State and local energy efficiency programs in low-income 
communities and in public buildings such as schools, hospitals 
and government facilities. It provides funding to States and 
local governments to encourage consumers to replace existing 
appliances with more energy efficient units. The conference 
report sets energy efficiency standards for a number of new 
consumer products, and directs the Department of Energy to 
initiate rulemakings to set standards for others. It requires 
the Federal Trade Commission to review and improve energy 
efficiency labeling programs. The conference report also 
authorizes funding for the Energy Star program and a consumer 
education program on HVAC maintenance. Authorization for the 
Low-Income Home Energy Assistance Program is extended and 
expanded, and additional funds are provided for state energy 
and weatherization programs. The report includes a number of 
changes to public housing law that encourage improved energy 
efficiency in the construction and maintenance of public 
housing, improve Federal efficiency standards for public 
housing facilities, and require public housing agencies to 
purchase energy efficient products.

                       TITLE II--RENEWABLE ENERGY

      Title II of the conference report provides for an ongoing 
assessment of renewable energy resources, extends existing 
authority for incentive programs for production of renewable 
electricity, requires an update of energy plans for insular 
areas, and requires the Federal government to purchase a set 
amount of electric energy from renewable resources. The report 
authorizes $300 million for solar programs, and sets a goal of 
installing 20,000 solar roof-top systems in Federal buildings 
by 2010. The use of biomass from Federal or Indian lands is 
encouraged by the creation of a grant program to produce 
electric energy, transportation fuels, or substitutes for 
petroleum products from biomass. The program encourages removal 
of hazardous fuels from the highest risk areas on Federal and 
Indian lands and development of new technologies to use 
biomass.
      Subtitle B updates the Geothermal Steam Act by amending 
the leasing provisions to provide for a competitive leasing 
system. The subtitle also directs other actions that will 
facilitate new development of geothermal resources. Subtitle C 
amends the Federal Power Act to streamline the process for 
issuance of hydroelectric licenses. It also provides production 
incentives and promotes efficiency improvements at 
hydroelectric facilities.

                         TITLE III--OIL AND GAS

      Title III of the conference report includes a variety of 
oil and gas production provisions. It improves the Federal 
permitting process and expedites the construction of the Alaska 
Natural Gas Pipeline.
      Subtitle A permanently authorizes the Strategic Petroleum 
Reserve and extends authorization for the National Oilheat 
Research Alliance. Subtitle B provides financial incentives to 
encourage production in deep water and production from deep 
natural gas wells in the Gulf of Mexico. The subtitle also 
provides royalty relief to marginal wells located on Federal 
lands and the Outer Continental Shelf. The Secretary of the 
Interior is authorized to provide royalty relief to existing, 
non-producing offshore leases in Alaska. The report 
addressesnatural gas market transparency, and provides additional 
market reforms.
      Subtitle C includes several provisions that will improve 
access to Federal lands and expedite the approval of permits on 
multiple-use lands. There are also provisions to improve 
inspection and enforcement of existing permits. The Secretaries 
of the Interior and Agriculture are instructed to designate 
energy corridors on western lands that can be used for the 
deployment of energy transportation and transmission rights-of-
way. A regional pilot program is established to develop 
procedures for the timely processing of applications and 
permits for Federal lands.
      Subtitle D authorizes expedited certification and 
permitting of a pipeline to transport natural gas from Alaska 
to markets in the continental United States to meet the rapidly 
growing demand for natural gas. The conference report includes 
loan guarantee authority to support the construction of the 
pipeline, and establishes an executive-level office to 
coordinate agency actions related to the pipeline.

                             TITLE IV--COAL

      Title IV of the conference report contains provisions 
that provide critical research related to the country's most 
abundant fossil resource: coal: Subtitle A authorizes a Clean 
Coal Power Initiative, providing $200 million annually for 
clean coal research in coal-based gasification technologies. 
The Secretary of Energy is directed to set increasingly 
restrictive emission targets over the life of the program to 
develop state-of-the-art technology. Subtitle B provides 
financial assistance to a variety of clean coal projects around 
the nation. Subtitle C amends several provisions of the Mineral 
Leasing Act governing the Federal Coal Leasing Program, 
including those pertaining to: lease modifications to avoid the 
bypass of coal; mining requirements for logical mining units; 
payment of advance royalties; and the deadline for submission 
of a coal lease operation and reclamation plan.

                         TITLE V--INDIAN ENERGY

      Title V of the conference report, referred to as the 
Indian Tribal Energy Development and Self-Determination Act of 
2003, assists Indian Tribes in the development of Indian energy 
resources by increasing Tribes' internal capacity to develop 
their own resources. The title provides grants and technical 
assistance, and streamlines the approval process for Tribal 
leases, agreements, and rights-of-way so that outside parties 
have more incentive to partner with Tribes in developing energy 
resources. Included in this title are provisions creating an 
Office of Indian Energy Policy and Programs within the 
Department of Energy to support the development of tribal 
energy resources. Section 505 makes Dine Power Authority, a 
Navajo Nation enterprise, eligible for funding under this 
title. Section 506 directs the Secretary of Housing and Urban 
Development to promote energy efficiency for Indian housing.
      The title also provides a complete substitute for title 
26 of the Energy Policy Act of 1992. Sections 2602 and 2603 
authorize the Secretary of the Interior to provide grants to 
tribes to develop and utilize their energy resources and to 
enhance the legal and administrative ability of tribes to 
manage their resources. Section 2604 establishes a process by 
which an Indian tribe, upon demonstrating its technical and 
financial capacity, could negotiate and execute energy resource 
development leases, agreements and rights-of-way with third 
parties without first obtaining the approval of the Secretary 
of the Interior. Section 2605 authorizes the Secretary of the 
Interior to review activities authorized under the Indian 
Mineral Development Act. Section 2606 authorizes WAPA to make 
power allocations to meet the firming and reserve needs of 
Indian-owned energy projects and acquire power generated by 
Indian tribes for firming and reserve needs, so long as the 
rates and terms are competitive. Section 2607 authorizes a 
study of wind and hydropower potential along the Missouri 
River.

                       TITLE VI--NUCLEAR MATTERS

      Title VI of the conference report provides for programs 
to ensure that nuclear energy remains a major component of the 
Nation's energy supply. Price Anderson liability protection is 
extended for both NRC licensees and DOE contractors. Coverage 
is increased and indexed for inflation, and non-profit 
contractors of the Department are made subject to payment of 
penalties assessed for nuclear safety violations. A research, 
development, and construction project is authorized for a new 
test reactor to be constructed at the Idaho National 
Engineering and Environmental Laboratory. The reactor will 
serve as a national testbed for advanced reactor technologies 
that provide improved attributes over existing plants, and for 
co-generation of hydrogen by nuclear energy. Limits, with 
several listed exemptions, are imposed on future salesor 
transfers of government stockpiles of uranium, subject to tests that 
fair market value is received for sales and that national security is 
not adversely impacted. Important nuclear security programs are 
established, along with industry reforms, including whistleblower 
protection, antitrust review, and legal fee reimbursement.

                     TITLE VII--FUELS AND VEHICLES

      Title VII of the conference report makes a number of 
changes to the alternative fuel vehicle mandate program 
applicable to Federal, State, local and fuel provider vehicle 
fleets pursuant to the Energy Policy Act of 1992. In 
particular, credits towards compliance with fleet mandates can 
be accrued for the actual use of alternative fuels, the 
purchase of neighborhood electric vehicles, investment in 
alternative fuel infrastructures, or equivalent contributions 
toward compliance by other fleets with their mandates through 
the purchase of vehicles or fueling infrastructure. The bill 
requires a complete review of alternative fuel mandates, and 
enables States to enact regulations to allow alternative fuel 
vehicles to use High Occupancy Vehicle lanes regardless of the 
number of passengers carried. The conference report requires 
the National Highway Transportation Safety Administration 
(NHTSA) to additionally consider the effects on passenger 
safety and employment levels in the U.S. auto industry when 
setting fuel economy standards, requires an analysis of the 
fuel economy program, and extends incentives for ``dual-fuel'' 
vehicles for another four years.

                          TITLE VIII--HYDROGEN

      Title VIII of the conference report provides for basic 
hydrogen energy research and development programs. The title 
authorizes new research and development programs for hydrogen 
vehicle technologies and hydrogen fuel. The title provides 
authorization for a variety of programs to demonstrate hydrogen 
and fuel cells for use in light- and heavy-duty vehicle fleets, 
stationary power applications, and international projects. The 
title requires Federal agencies to consider methods of 
incorporating hydrogen and fuel cell technologies into their 
missions, and establishes an interagency task force to oversee 
hydrogen initiatives.

                   TITLE IX--RESEARCH AND DEVELOPMENT

      Title IX of the conference report provides the research 
and development base for the full range of energy-related 
technologies. Subtitles include those devoted to Energy 
Efficiency, Distributed Energy and Electric Energy Systems, 
Renewable Energy, Nuclear Energy, Fossil Energy, Science, 
Energy and Environment, and Management. Broad goals are 
established to guide the research and development activities of 
diversifying energy supplies, increasing energy efficiency, 
decreasing dependence on foreign energy supplies, improving 
energy security, and decreasing environmental impact. The 
Secretary is annually directed to publish specific goals in 
major program areas consistent with these broad goals.

                TITLE X--DEPARTMENT OF ENERGY MANAGEMENT

      Title X of the conference report creates a new Assistant 
Secretary position and expresses the sense of the Congress that 
the position should be used to improve management of Nuclear 
Energy at the Department of Energy, and grants the Secretary of 
Energy authority to enter into other transactions as 
appropriate to further research, development, or demonstration 
goals of the Department.

                    TITLE XI--PERSONNEL AND TRAINING

      Title XI of the conference report requires establishment 
of training guidelines for electric energy industry personnel 
and centers for building technologies and power plant 
operations training. It also directs increased activity by the 
Department of Energy to improve recruitment of under-
represented groups into energy professions. The title directs 
the Secretary of Energy to support establishment of a National 
Power Plant Operations Center, and encourages agency 
coordination for training and outreach efforts for 
international commercial energy markets in countries with 
developing and restructuring economies.

                         TITLE XII--ELECTRICITY

      Title XII of the conference report reduces regulatory 
uncertainty, promotes transmission infrastructure development 
and security, and increases consumer protections associated 
with the production and delivery of electricity. Subtitle A 
requires development of mandatory rules to ensure transmission 
grid reliability. Subtitle B addresses transmission siting, 
third-party financing of transmission, and research programs 
related to transmission upgrades and improvements. Subtitle C 
protects transmission access for native load customers and 
authorizes the Federal Energy Regulatory Commission [FERC] to 
exercise limited jurisdiction over currently unregulated 
transmitting utilities to ensure open access to the 
transmission grid. It also remands the proposed rulemaking on 
Standard Market Design to FERC and prohibits a final rule 
before December 31, 2006. Subtitle D directs FERC to issue 
rules on transmission pricing policies and cost allocation for 
transmission expansion. Subtitle E amends the Public Utility 
Regulatory Policies Act of 1978 (PURPA). It prospectively 
repeals the requirement for mandatory purchase from qualifying 
facilities by electric utilities if a competitive market exists 
and establishes new criteria for qualifying cogeneration 
facilities. Subtitle F repeals the Public Utility Holding 
Company Act of 1935 (PUHCA). Subtitle G addresses market 
transparency and manipulation, contract sanctity, and unfair 
trade practices. It also increases penalties for violations of 
the Federal Power Act. Subtitle H provides for merger review 
reform and accountability. Subtitle I defines new terms in the 
Federal Power Act, and Subtitle J makes technical and 
conforming amendments.

                        TITLE XIII--ENERGY TAXES

                              ----------                              


                                CONTENTS

                                                                   Page
 I. Conservation....................................................457
        A. Residential and Business Property.....................   457
             1. Residential solar hot water, photovoltaics and 
                other energy efficient property (sec. 41001 of 
                the House bill, sec. 2103 of the Senate 
                amendment, and new sec. 25C of the Code).........   457
             2. Credit for electricity produced from certain 
                sources (sec. 41002 of the House bill, secs. 
                1901, 1902, 1903, 1904, 1905, and 1906 of Senate 
                amendment, and sec. 45 of the Code)..............   459
             3. Tax incentives for fuel cells (sec. 41003 of the 
                House bill, secs. 2103 and 2104 of the Senate 
                amendment, and sec. 48 and new sec. 25C of the 
                Code)............................................   465
             4. Energy efficient improvements to existing homes 
                (secs. 41004 of the House bill, sec. 2109 of the 
                Senate amendment, and new sec. 25D of the Code)..   467
             5. Energy efficient new homes (sec. 41005 of the 
                House bill, sec. 2101 of the Senate amendment, 
                and new sec. 45G of the Code)....................   469
             6. Energy credit for combined heat and power system 
                property (sec. 41006 of the House bill, sec. 2108 
                of the Senate amendment, and sec. 48 of the Code)   472
             7. Energy efficient appliances (sec. 2102 of the 
                Senate amendment and new sec. 45H of the Code)...   474
             8. Energy efficient commercial building deduction 
                (sec. 2105 of Senate amendment, and new sec. 179B 
                of the Code).....................................   476
             9. Three-year applicable recovery period for 
                depreciation of qualified energy management 
                devices and qualified water submetering devices 
                (secs. 2107 and 2111 of the Senate amendment and 
                sec. 168 of the Code)............................   478
            10. Allowance of deduction for qualified energy 
                management devices and qualified water 
                submetering devices (secs. 2106 and 2110 of the 
                Senate amendment)................................   480
            11. Credit for electricity produced from advanced 
                nuclear power facilities (new sec. 45L of the 
                Code)............................................   480
        B. Fuels and Alternative Motor Vehicles..................   482
             1. Repeal certain excise taxes on rail diesel fuel 
                and inland waterway barge fuels (sec. 41008 of 
                the House bill and secs. 4041, 4042, 6421, and 
                6427 of the Code)................................   482
             2. Btu-based rate for diesel/water emulsion fuel 
                (sec. 41009 of the House bill and secs. 4081 and 
                6427 of the Code)................................   482
             3. Modifications to small producer ethanol credit 
                (sec. 2005 of the Senate amendment and sec. 40 of 
                the Code)........................................   483
             4. Transfer full amount of excise tax imposed on 
                gasohol to the highway trust fund (sec. 2006 of 
                the Senate amendment)............................   484
             5. Incentives for biodiesel (sec. 2008 of the Senate 
                amendment and new sec. 40A of the Code)..........   485
             6. Alcohol and biodiesel excise tax credit and 
                extension of alcohol fuels income tax credit 
                (secs. 40, 4101, 6427, 9503 and new secs. 4104, 
                and 6426 of the Code)............................   488
             7. Nonapplication of export exemption to delivery of 
                fuel to motor vehicles removed from United States 
                (sec. 2504 of the Senate amendment and secs. 
                4221, 4041, and 4081 of the Code)................   494
             8. Modification of credit for electric vehicles 
                (sec. 41010 of the House bill, sec. 2002 of 
                Senate amendment, and sec. 30 of the Code).......   496
             9. Alternative motor vehicle credit (sec. 41011 of 
                the House bill, secs. 2001 and 2010 of Senate 
                amendment, and new sec. 30B of the Code).........   497
            10. Modifications of deduction for refueling property 
                (secs. 2003 and 2010 of Senate amendment and sec. 
                179A of the Code)................................   505
            11. Credit for retail sale of alternative motor 
                vehicle fuels (secs. 2004 and 2010 of Senate 
                amendment).......................................   506
II. Reliability.....................................................507
        A. Natural Gas Gathering Lines Treated as Seven-Year 
            Property (sec. 42001 of the House bill, sec. 2302 of 
            the Senate amendment, and sec. 168 of the Code)......   507
        B. Natural Gas Distribution Lines Treated as Fifteen-Year 
            Property (sec. 42002 of the House bill, sec. 2311 of 
            the Senate amendment, and sec. 168 of the Code)......   508
        C. Transmission Property Treated as Fifteen-Year Property 
            (sec. 42003 of the House bill and sec. 168 of the 
            Code)................................................   509
        D. Expensing of Capital Costs Incurred for Production in 
            Complying with Environmental Protection Agency Sulfur 
            Regulations for Small Refiners (sec. 42004 of the 
            House bill, sec. 2303 of the Senate amendment, and 
            new sec. 179C of the Code)...........................   510
        E. Credit for Small Refiners for Production of Diesel 
            Fuel in Compliance with Environmental Protection 
            Agency Sulfur Regulations for Small Refiners (sec. 
            42005 of the House bill, sec. 2304 of Senate 
            amendment, and new sec. 45I of the Code).............   511
        F. Determination of Small Refiner Exception to Oil 
            Depletion Deduction (sec. 42006 of the House bill, 
            sec. 2305 of the Senate amendment, and sec. 613A of 
            the Code)............................................   512
        G. Sales or Dispositions to Implement Federal Energy 
            Regulatory Commission or State Electric Restructuring 
            Policy (sec. 42007 of the House bill, sec. 2404 of 
            the Senate amendment, and sec. 451 of the Code)......   513
        H. Modification to Special Rules for Nuclear 
            Decommissioning Costs (sec. 42008 of the House bill, 
            sec. 2402 of the Senate amendment, and sec. 468A of 
            the Code)............................................   514
        I. Treatment of Certain Income of Electric Cooperatives 
            (sec. 42009 of the House bill, secs. 2403 and 2406 of 
            the Senate amendment, and sec. 501 of the Code)......   518
            1. Exempt certain prepayments for natural gas from 
                tax-exempt bond arbitrage rules (sec. 3213 of the 
                House bill and secs. 141 and 148 of the Code)....   526
III.Production......................................................529

        A. Oil and Gas Provisions................................   529
            1. Oil and gas production from marginal wells (sec. 
                43001 of the House bill, sec. 2301 of the Senate 
                amendment, and secs., 38, 39, and new sec. 45J of 
                the Code)........................................   529
            2. Temporary suspension of limitation based on 65 
                percent of taxable income and extension of 
                suspension of taxable income limit with respect 
                to marginal production (sec. 43002 of the House 
                bill, sec. 2306 of the Senate amendment, and sec. 
                613A of the Code)................................   530
            3. Delay rental payments (sec. 43003 of the House 
                bill, sec. 2308 of the Senate amendment, and sec. 
                167 of the Code).................................   532
            4. Geological and geophysical costs (sec. 43004 of 
                the House bill, sec. 2307 of the Senate 
                amendment, and sec. 167 of the Code).............   533
        B. Extension and Modification of Credit for Producing 
            Fuel From a Non-Conventional Source (sec. 43005 of 
            the House bill, secs. 2309 and 2310 of the Senate 
            amendment, and sec. 29 and new section 45K of the 
            Code)................................................   534
        C. Alternative Minimum Tax Provisions....................   540
            1. Allow personal energy credits against the 
                alternative minimum tax (sec. 41007 of the House 
                bill, secs. 2103(b) and 2109(b) of the Senate 
                amendment, and sec. 26 of the Code)..............   540
            2. Increase tax limitation on use of business energy 
                credits (secs. 43006 and 43008 of the House bill, 
                secs. 2005(b)(3) and 2503(c) of the Senate 
                amendment, and sec. 38 of the Code)..............   541
            3. Intangible drilling costs (IDCs) (sec. 43007 of 
                the House bill and sec. 57 of the Code)..........   542
        D. Clean Coal Incentives.................................   543
            1. Credit for production from a clean coal technology 
                unit (secs. 2201 and 2221 of Senate amendment)...   543
            2. Investment credit for clean coal technology units 
                (secs. 2211 and 2221 of Senate amendment and new 
                sec. 48A of the Code)............................   544
            3. Credit for production from advanced clean coal 
                technology (secs. 2212 and 2221 of Senate 
                amendment).......................................   548
            4. Amortization of pollution control facilities (sec. 
                169 of the Code).................................   549
            5. Eligible integrated gasification combined cycle 
                technology unit treated as five-year property 
                (sec. 168 of the Code)...........................   550
        E. High Volume Natural Gas Provisions....................   551
            1. High volume natural gas pipe treated as seven-year 
                property (sec. 168 of the Code)..................   551
            2. Credit for production of Alaska natural gas (sec. 
                2503 of Senate amendment)........................   552
            3. Enhanced oil recovery credit for certain gas 
                processing facilities (sec. 43 of the Code)......   553
IV. Additional Provisions...........................................554
        A. Extension of Tax Incentives for Energy-Related 
            Businesses on Indian Reservations (sec. 2501 of the 
            Senate amendment and sec. 168 of the Code)...........   554
        B. GAO Study (sec. 2502 of the Senate amendment).........   555
        C. Treatment of Certain Dispositions of Dairy Property to 
            Implement Bovine Tuberculosis Eradication Program 
            (sec. 2505 of the Senate amendment)..................   556
        D. Expand Exemption from Aviation Fuels Excise Taxes for 
            Aerial Applicators (sec. 2506 of the Senate 
            amendment)...........................................   556
        E. Modification of Rural Airport Definition (sec. 2507 of 
            the Senate amendment)................................   557
        F. Exempt Transportation by Seaplane From Ticket Taxes 
            (sec. 2508 of the Senate amendment)..................   558
        G. Credit for Taxpayers Owning Commercial Power Takeoff 
            Vehicles (sec. 2009 of the Senate amendment).........   558
        H. Payment of Dividends on Stock of Cooperatives Without 
            Reducing Patronage Dividends (sec. 1388 of the Code).   559
        I. Distributions from Publicly Traded Partnerships 
            Treated as Qualifying Income of Regulated Investment 
            Company (secs. 851 and 469(k) of the Code)...........   560
        J. Suspension of Duties on Ceiling Fans (Chapter 99, II 
            of the Harmonized Tariff Schedule of the United 
            States)..............................................   562
        K. Suspension of Duties on Nuclear Steam Generators 
            (Chapter 99, II of the Harmonized Tariff Schedule of 
            the United States)...................................   563
        L. Suspension of Duties on Nuclear Reactor Vessel Heads 
            (Chapter 99, II of the Harmonized Tariff Schedule of 
            the United States)...................................   563
        M. Brownfields Demonstration Program for Qualified Green 
            Building and Sustainable Design Projects (secs. 142 
            and 146 of the Code).................................   564
 V. Tax Complexity Analysis.........................................567

                            I. CONSERVATION

                  A. Residential and Business Property

1. Residential solar hot water, photovoltaics and other energy 
        efficient property (sec. 41001 of the House bill, sec. 2103 of 
        the Senate amendment, and new sec. 25C of the Code)

                              PRESENT LAW

      A nonrefundable, 10-percent business energy credit is 
allowed for the cost of new property that is equipment (1) that 
uses solar energy to generate electricity, to heat or cool a 
structure, or to provide solar process heat, or (2) used to 
produce, distribute, or use energy derived from a geothermal 
deposit, but only, in the case of electricity generated by 
geothermal power, up to the electric transmission stage.
      The business energy tax credits are components of the 
general business credit (sec. 38(b)(1)). The business energy 
tax credits, when combined with all other components of the 
general business credit, generally may not exceed for any 
taxable year the excess of the taxpayer's net income tax over 
the greater of (1) 25 percent of net regular tax liability 
above $25,000 or (2) the tentative minimum tax. For credits 
arising in taxable years beginning after December 31, 1997, an 
unused general business credit generally may be carried back 
one year and carried forward 20 years (sec. 39).
      A taxpayer may exclude from income the value of any 
subsidy provided by a public utility for the purchase or 
installation of an energy conservation measure. An energy 
conservation measure means any installation or modification 
primarily designed to reduce consumption of electricity or 
natural gas or to improve the management of energy demand with 
respect to a dwelling unit (sec. 136).
      There is no present-law personal tax credit for energy 
efficient residential property.

                               HOUSE BILL

      The provision provides a personal tax credit for the 
purchase of qualified photovoltaic property and qualified solar 
water heating property that is used exclusively for purposes 
other than heating swimming pools and hot tubs. The credit is 
equal to 15 percent of qualified investment up to a maximum 
credit of $2,000 for solar water heating property and $2,000 
for rooftop photovoltaic property. This credit is 
nonrefundable, and the depreciable basis of the property is 
reduced by the amount of the credit.
      Qualifying solar water heating property is property that 
heats water for use in a dwelling unit located in the United 
States and used as a residence if at least half of the energy 
used by such property for such purpose is derived from the sun. 
Qualified photovoltaic property is property that uses solar 
energy to generate electricity for use in a dwelling unit. 
Expenditures for labor costs allocable to onsite preparation, 
assembly, or original installation of property eligible for the 
credit are eligible expenditures.
      Certain equipment safety requirements need to be met to 
qualify for the credit. Special proration rules apply in the 
case of jointly owned property, condominiums, and tenant-
stockholders in cooperative housing corporations.
      Effective date.--The credit applies to purchases in 
taxable years ending after December 31, 2003 and before January 
1, 2007 (January 1, 2009 in the case of qualified photovoltaic 
property).

                            SENATE AMENDMENT

      The Senate amendment includes the provisions of the House 
bill. Additionally, the Senate amendment adds a 30-percent 
credit for qualified wind energy property, up to a maximum 
credit of $2,000. Qualified wind energy property is property 
that uses wind energy to generate electricity for use in a 
dwelling unit.
      The Senate amendment also provides a 100 percent credit, 
with caps, for the purchase of other qualified energy efficient 
property, as described below.
      Electric heat pump hot water heaters with an energy 
factor of at least 1.7. The maximum credit is $75 per unit.
      Electric heat pumps with a heating efficiency of at least 
9 HSPF (Heating Seasonal Performance Factor) and a cooling 
efficiency of at least 15 SEER (Seasonal Energy Efficiency 
Rating) and an energy efficiency ratio (EER) of 12.5 or 
greater. The maximum credit is $250 per unit.
      Advanced natural gas furnaces that achieve a 95 percent 
annual fuel utilization efficiency. The maximum credit is $250 
per unit.
      Central air conditioners with an efficiency of at least 
15 SEER and an EER of 12.5 or greater. The maximum credit is 
$250 per unit.
      Natural gas water heaters with an Energy Factor of at 
least 0.8. The maximum credit is $75 per unit.
      Geothermal heat pumps that have an EER of at least 21. 
The maximum credit is $250 per unit.
      With the exception of wind energy property, if less than 
80 percent of the property is used for nonbusiness purposes, 
only that portion of expenditures that is used for nonbusiness 
purposes is taken into account.
      Effective date.--The credit applies to purchases after 
December 31, 2002, and before January 1, 2008.

                          CONFERENCE AGREEMENT

      The conference agreement generally follows the House bill 
with respect to residential solar and photovoltaic property. 
With respect to wind energy property, the conference agreement 
follows the Senate amendment with two modifications. First, the 
credit rate is reduced to 15 percent. Second, with respect to 
property a portion of which is used in business, the taxpayer 
may choose either to claim the personal credit, or to claim 
depreciation for the business use portion of the property, but 
not both. The conference agreement clarifies that the $2,000 
credit cap that applies to solar, photovoltaic, and wind energy 
property applies across all taxable years. Thus, with respect 
to a given dwelling, a taxpayer can claim at most $2,000 in 
credits for solar water heating property, $2,000 for 
photovoltaic property, and $2,000 for wind energy property. The 
conference agreement also clarifies that no section 45 credit 
may be claimed with respect to any electricity produced from 
property for which a residential energy efficient property 
credit has been claimed.
      The conference agreement does not follow the Senate 
amendment with respect to all other energy efficient property.
      It is intended under the conference agreement that 
availability of the credit for photovoltaic and wind energy 
property would not be impacted by any net-metering or net-
billing arrangements under which the taxpayer sells excess 
electricity back to a utility. It is also intended that 
expenditures for labor costs properly allocable to the onsite 
preparation, assembly, or original installation of qualifying 
property and for piping or wiring to interconnect such property 
to the dwelling unit can be taken into account for determining 
the amount of the credit.
      Effective date.--The credit applies to purchases in 
taxable years ending after December 31, 2003, and before 
January 1, 2007 (January 1, 2009, in the case of qualified 
photovoltaic property).
2. Credit for electricity produced from certain sources (sec. 41002 of 
        the House bill, secs. 1901, 1902, 1903, 1904, 1905, and 1906 of 
        Senate amendment, and sec. 45 of the Code)

                              PRESENT LAW

      An income tax credit is allowed for the production of 
electricity from either qualified wind energy, qualified 
``closed-loop'' biomass, or qualified poultry waste facilities 
(sec. 45). The amount of the credit is 1.5 cents per kilowatt-
hour (indexed for inflation) of electricity produced. The 
amount of the credit is 1.8 cents per kilowatt-hour for 2003. 
The credit is reduced for grants, tax-exempt bonds, subsidized 
energy financing, and other credits.
      The credit applies to electricity produced by a wind 
energy facility placed in service after December 31, 1993, and 
before January 1, 2004, to electricity produced by a closed-
loop biomass facility placed in service after December 31, 
1992, and before January 1, 2004, and to a poultry waste 
facility placed in service after December 31, 1999, and before 
January 1, 2004. The credit is allowable for production during 
the 10-year period after a facility is originally placed in 
service. In order to claim the credit, a taxpayer must own the 
facility and sell the electricity produced by the facility to 
an unrelated party. In the case of a poultry waste facility, 
the taxpayer may claim the credit as a lessee/operator of a 
facility owned by a governmental unit.

                               HOUSE BILL

Extension of placed in service date for existing facilities
      The House bill extends the placed in service date for 
wind facilities and closed-loop biomass facilities to 
facilities placed in service after December 31, 1993 (December 
31, 1992, in the case of closed-loop biomass facilities) and 
before January 1, 2007. The House bill does not extend the 
placed in service date for poultry waste facilities.
Additional qualifying facilities
      The House bill also defines three new qualifying 
facilities: open-loop biomass facilities, landfill gas 
facilities, and trash combustion facilities. Open-loop biomass 
is defined as any solid, nonhazardous, cellulosic waste 
material which is segregated from other waste materials and 
which is derived from any of forest-related resources, solid 
wood waste materials, or agricultural sources. Landfill gas is 
defined as methane gas derived from the biodegradation of 
municipal solid waste. Trash combustion facilities are 
facilities that burn municipal solid waste (garbage) to produce 
steam to drive a turbine for the production of electricity. 
Qualifying open-loop biomass facilities and qualifying landfill 
gas facilities include facilities used to produce electricity 
placed in service before January 1, 2007. Qualifying trash 
combustion facilities include facilities placed in service 
after the date of enactment and before January 1, 2007.
      In the case of qualifying open-loop biomass facilities 
and qualifying landfill gas facilities placed in service on or 
before the date of enactment, the taxpayer may claim the 
section 45 production credit for only five years, commencing on 
the date of enactment. In the case of qualifying open-loop 
biomass facilities and qualifying landfill gas facilities 
placed in service on or before the date of enactment, the 
taxpayer may claim two-thirds of the otherwise allowable credit 
for electricity produced at the facility.
Credit claimants and treatment of other subsidies
      In the case of qualifying open-loop biomass facilities 
originally placed in service on or before the date of 
enactment, a lessee or operator may claim the credit in lieu of 
the owner of the qualifying facility. In addition, for such 
facilities, any reduction in credit by reason of grants, tax-
exempt bonds, subsidized energy financing, and other credits 
cannot exceed 50 percent.
Alternative minimum tax
      In the case of wind facilities placed in service after 
the date of enactment, the taxpayer may claim credit for 
electricity production against both the taxpayer's regular tax 
and the taxpayer's alternative minimum tax, if any, for 
electricity produced during the first four years of production 
measured from the date on which the facility is placed in 
service.
      No facility that previously claimed or currently claims 
credit under section 29 of the Code is a qualifying facility 
for purposes of section 45.
      Effective date.--The provision is effective for 
electricity sold from qualifying facilities after the date of 
enactment.

                            SENATE AMENDMENT

Extension of placed in service date for existing facilities
      The Senate amendment extends the placed in service date 
for wind facilities, closed-loop biomass facilities, and 
poultry waste facilities to facilities placed in service after 
December 31, 1993 (December 31, 1992, in the case of closed-
loop biomass facilities and December 31, 1999, in the case of 
poultry waste facilities) and before January 1, 2007.
Additional qualifying facilities
      The Senate amendment also defines seven new qualifying 
energy resources: open-loop biomass, swine and bovine waste 
nutrients, geothermal energy, solar energy, municipal 
biosolids, recycled sludge, and small irrigation.
      Open-loop biomass is defined as any solid, nonhazardous, 
cellulosic waste material which is segregated from other waste 
materials and which is derived from any of forest-related 
resources, solid wood waste materials, or agricultural sources. 
Eligible forest-related resources are mill residues, 
precommercial thinnings, slash, and brush, but not including 
old-growth timber (other than old growth timber that has been 
permitted or contracted for removal by appropriate Federal 
authority under the National Environmental Policy Act or 
appropriate State law authority). Solid wood waste materials 
include waste pallets, crates, dunnage, manufacturing and 
construction wood wastes (other than pressure-treated, 
chemically-treated, or painted wood wastes), and landscape or 
right-of-way tree trimmings. Agricultural sources include 
orchard tree crops, vineyard, grain, legumes, sugar, and other 
crop by-products or residues. However, qualifying open-loop 
biomass does not include municipal solid waste (garbage), gas 
derived from biodegradation of solid waste, or paper that is 
commonly recycled.
      Swine and bovine waste nutrients are defined as swine and 
bovine manure and litter, including bedding material for the 
disposition of manure.
      Geothermal energy is energy derived from a geothermal 
deposit which is a geothermal reservoir consisting of natural 
heat which is stored in rocks or in an aqueous liquid or vapor 
(whether or not under pressure).
      Municipal biosolids are the residue or solids removed by 
a municipal wastewater treatment facility.
      Recycled sludge is the recycled residue byproduct created 
in the treatment of commercial, industrial, municipal, or 
navigational wastewater, but not including residues from 
incineration.
      A small irrigation power facility is a facility that 
generates electric power through an irrigation system canal or 
ditch without any dam or impoundment of water. The installed 
capacity of a qualified facility is less than five megawatts.
      Qualifying open-loop biomass facilities are facilities 
using open-loop biomass to produce electricity that are placed 
in service prior to January 1, 2005. Qualifying swine and 
bovine waste nutrient facilities are facilities using swine and 
bovine waste nutrients to produce electricity that are placed 
in service after the date of enactment and before January 1, 
2007. Qualifying geothermal energy facilities are facilities 
using geothermal deposits to produce electricity that are 
placed in service after the date of enactment and before 
January 1, 2007. Qualifying solar energy facilities are 
facilities using solar energy to generate electricity that are 
placed in service after the date of enactment and before 
January 1, 2007. Qualifying municipal biosolids facilities are 
facilities using municipal biosolids to generate electricity 
that are originally placed in service after December 31, 2001, 
and before January 1, 2007. Qualifying recycled sludge 
facilities are facilities using recycled sludge to generate 
electricity that are originally placed in service before 
January 1, 2007. Qualifying small irrigation power facilities 
are facilities using small irrigation power systems to generate 
electricity that are originally placed in service after the 
date of enactment and before January 1, 2007.
      In the case of qualifying open-loop biomass facilities, 
taxpayers may claim the otherwise allowable credit for a three-
year period. For a facility placed in service after the date of 
enactment, the three-year period commences when the facility is 
placed in service. In the case of open-loop biomass facility 
originally placed in service before the date of enactment, the 
three-year period commences after December 31, 2002, and the 
otherwise allowable 1.5 cent-per-kilowatt-hour credit (adjusted 
for inflation) is reduced to 1.0 cent-per-kilowatt-hour credit 
(adjusted for inflation). In the case of qualifying geothermal 
energy and solar energy facilities, taxpayers may claim the 
otherwise allowable credit for the five-year period commencing 
when the facility is placed service. In the case of electricity 
generated from a recycled sludge facility the 10-year credit 
period shall begin no earlier than the date of enactment.
      In addition, the Senate amendment modifies present law to 
provide that qualifying closed-loop biomass facilities include 
any facility originally placed in service before December 31, 
1992 and modified to use closed-loop biomass to co-fire with 
coal before January 1, 2007. The taxpayer may claim credit for 
all electricity produced at such qualifying facilities with no 
reduction for the thermal value of the coal.
Credit claimants and treatment of other subsidies
      In the case of qualifying open-loop biomass facilities 
and qualifying closed-loop biomass facilities modified to use 
closed-loop biomass to co-fire with coal, the Senate amendment 
permits a lessee operator to claim the credit in lieu of the 
owner of the facilities.
      The Senate amendment provides that certain persons 
(public utilities, electric cooperatives, rural electric 
cooperatives, and Indian tribes) may sell, trade, or assign to 
any taxpayer any credits that would otherwise be allowable to 
that person, if that person were a taxpayer, for production of 
electricity from a qualified facility owned by such person. 
However, any credit sold, traded, or assigned may only be sold, 
traded, or assigned once. Subsequent trades are not permitted. 
In addition, any credits that would otherwise be allowable to 
such person, to the extent provided by the Administrator of the 
Rural Electrification Administration, may be applied as a 
prepayment to certain loans or obligations undertaken by such 
person under the Rural Electrification Act of 1936.
      The Senate amendment repeals the present-law reduction in 
allowable credit for facilities financed with tax-exempt bonds 
or with certain loans received under the Rural Electrification 
Act of 1936.
      Effective date.--The Senate amendment generally is 
effective for electricity sold from qualifying facilities after 
the date of enactment. For electricity produced from qualifying 
open-loop biomass facilities originally placed in service prior 
to the date of enactment, the provision is effective January 1, 
2003.

                          CONFERENCE AGREEMENT

Extension of placed in service date for existing facilities
      The conference agreement extends the placed in service 
date for wind facilities and closed-loop biomass facilities to 
facilities placed in service after December 31, 1993 (December 
31, 1992, in the case of closed-loop biomass facilities) and 
before January 1, 2007.
      Under the conference agreement, qualifying closed-loop 
biomass facilities include any facility originally placed in 
service before December 31, 1992, and modified to use closed-
loop biomass to co-fire with coal, to co-fire with other 
biomass, or to co-fire with coal and other biomass before 
January 1, 2007. The taxpayer may claim credit for electricity 
produced at such qualifying facilities with the credit amount 
equal to the otherwise allowable credit multiplied by the ratio 
of the thermal content of the closed-loop biomass fuel burned 
in the facility to the thermal content of all fuels burned in 
the facility.
Additional qualifying resource and facilities
      The conference agreement also defines five new qualifying 
resources: open-loop biomass (including agricultural livestock 
waste nutrients), geothermal energy, solar energy, small 
irrigation power, and municipal solid waste. Two different 
qualifying facilities use municipal solid waste as a qualifying 
resource: landfill gas facilities and trash combustion 
facilities.
      Qualifying open-loop biomass facilities are facilities 
using biomass to produce electricity that are placed in service 
prior to January 1, 2007. Qualifying agricultural livestock 
waste nutrient facilities are facilities using agricultural 
livestock waste nutrients to produce electricity that are 
placed in service after the date of enactment and before 
January 1, 2007.\1\ The installed capacity of a qualified 
agricultural livestock waste nutrient facility is not less than 
150 kilowatts.
---------------------------------------------------------------------------
    \1\ The provision deletes poultry litter as a separate qualifying 
facility for facilities placed in service after the effective date. 
Poultry litter facilities remain qualifying facilities as agricultural 
waste nutrient facilities. Any poultry litter facility placed in 
service on or prior to December 31, 2003, is unaffected by the 
modifications made by this provision. For example, the value of the 
credit that may be claimed for production from such a facility would 
not be reduced by one-third as would be the case for other animal waste 
nutrient facilities.
---------------------------------------------------------------------------
      Qualifying geothermal energy facilities are facilities 
using geothermal deposits to produce electricity that are 
placed in service after the date of enactment and before 
January 1, 2007. Qualifying solar energy facilities are 
facilities using solar energy to generate electricity that are 
placed in service after the date of enactment and before 
January 1, 2007. A qualifying geothermal energy facility or 
solar energy facility may not have claimed any credit under 
sec. 48 of the Code.\2\
---------------------------------------------------------------------------
    \2\ If a geothermal facility or solar facility claims credit for 
any year under section 45 of the Code, the facility is precluded from 
claiming any investment credit under section 48 of the Code in the 
future.
---------------------------------------------------------------------------
      A qualified small irrigation power facility is a facility 
originally placed in service after the date of enactment and 
before January 1, 2007. A small irrigation power facility is a 
facility that generates electric power through an irrigation 
system canal or ditch without any dam or impoundment of water. 
The installed capacity of a qualified facility is not less than 
150 kilowatts and less than five megawatts.
      Landfill gas is defined as methane gas derived from the 
biodegradation of municipal solid waste. Trash combustion 
facilities are facilities that burn municipal solid waste 
(garbage) to produce steam to drive a turbine for the 
production of electricity. Qualifying landfill gas facilities 
and qualifying trash combustion facilities include facilities 
used to produce electricity placed in service after the date of 
enactment and before January 1, 2007.
Credit period and credit rates
      In general, as under present law, taxpayers may claim the 
credit at a rate of 1.5 cents per kilowatt-hour (indexed for 
inflation and currently 1.8 cents per kilowatt-hour) for 10 
years of production commencing on the date the facility is 
placed in service. In the case of open-loop biomass facilities 
(including agricultural livestock waste nutrients), geothermal 
energy, solar energy, small irrigation power, landfill gas 
facilities, and trash combustion facilities the 10-year credit 
period is reduced to five years commencing on the date the 
facility is placed in service. In general, for facilities 
placed in service prior to January 1, 2004, the credit period 
commences on January 1, 2004. In the case of closed-loop 
biomass facilities modified to co-fire with coal, to co-fire 
with other biomass, or to co-fire with coal and other biomass, 
the credit period shall begin no earlier than the date of 
enactment.
      In the case of open-loop biomass facilities (including 
agricultural livestock waste nutrients), small irrigation 
power, landfill gas facilities, and trash combustion 
facilities, the otherwise allowable credit amount is reduced by 
one-third.
Credit claimants and treatment of other subsidies
      A lessee or operation may claim the credit in lieu of the 
owner of the qualifying facility in the case of qualifying 
open-loop biomass facilities originally placed in service on or 
before the date of enactment and in the case of a closed-loop 
biomass facilities modified to co-fire with coal, to co-fire 
with other biomass, or to co-fire with coal and other biomass.
      In addition, for all qualifying facilities, other than 
closed-loop biomass facilities modified to co-fire with coal, 
to co-fire with other biomass, or to co-fire with coal and 
other biomass, any reduction in credit by reason of grants, 
tax-exempt bonds, subsidized energy financing, and other 
credits cannot exceed 50 percent. In the case of closed-loop 
biomass facilities modified to co-fire with coal, to co-fire 
with other biomass, or to co-fire with coal and other biomass, 
there is no reduction in credit by reason of grants, tax-exempt 
bonds, subsidized energy financing, and other credits.
      No facility that previously claimed or currently claims 
credit under section 45K of the Code (as amended by the 
conference agreement) \3\ is a qualifying facility for purposes 
of section 45.
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    \3\ The conference agreement modifies present-law section 29 as 
described below and moves present-law section 29 to new Code section 
45K.
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Alternative minimum tax
      In the case of qualifying facilities placed in service 
after the date of enactment, the taxpayer may claim credit for 
electricity production against both the taxpayer's regular tax 
and the taxpayer's alternative minimum tax, if any, for 
electricity produced during the first four years of production 
measured from the date on which the facility is placed in 
service.
GAO study
      The conference agreement directs the Comptroller General 
of the United States to conduct a study of the market viability 
of producing electricity from resources qualifying for the 
section 45 production credit (as amended by the conference 
agreement). The conferees seek a comparison of the cost of 
producing electricity from the various qualifying resources 
compared to the cost of producing electricity from fossil fuels 
(i.e., coal, oil, and natural gas) using the latest generation 
of production technology currently in service in the United 
States. The cost of producing electricity should be reported, 
on a per kilowatt-hour basis, both as the incremental cost of 
production from a facility and on a fully-amortized cost basis 
assuming capital costs are amortized over the useful life of 
the property. In the case of facilities using open-loop biomass 
and municipal solid waste resources, the measurement of costs 
should take into account the avoided costs of waste disposal 
for which taxpayers otherwise would be responsible. The study 
is to estimate the dollar value of the environmental impact of 
producing electricity from qualifying resources compared to 
fossil fuels. The Comptroller General is to report his findings 
to the Committee on Ways and Means and Committee on Finance not 
later than June 30, 2006.
      Effective date.--The provision is effective for 
electricity produced and sold from qualifying facilities after 
the date of enactment.
3. Tax incentives for fuel cells (sec. 41003 of the House bill, secs. 
        2103 and 2104 of the Senate amendment, and sec. 48 and new sec. 
        25C of the Code)

                              PRESENT LAW

      A nonrefundable, 10-percent business energy credit is 
allowed for the cost of new property that is equipment (1) that 
uses solar energy to generate electricity, to heat or cool a 
structure, or to provide solar process heat, or (2) used to 
produce, distribute, or use energy derived from a geothermal 
deposit, but only, in the case of electricity generated by 
geothermal power, up to the electric transmission stage.
      The business energy tax credits are components of the 
general business credit (sec. 38(b)(1)). The business energy 
tax credits, when combined with all other components of the 
general business credit, generally may not exceed for any 
taxable year the excess of the taxpayer's net income tax over 
the greater of (1) 25 percent of net regular tax liability 
above $25,000 or (2) the tentative minimum tax. For credits 
arising in taxable years beginning after December 31, 1997, an 
unused general business credit generally may be carried back 
one year and carried forward 20 years (sec. 39).
      A taxpayer may exclude from income the value of any 
subsidy provided by a public utility for the purchase or 
installation of an energy conservation measure. An energy 
conservation measure means any installation or modification 
primarily designed to reduce consumption of electricity or 
natural gas or to improve the management of energy demand with 
respect to a dwelling unit (sec. 136).
      There is no present-law credit for stationary fuel cell 
power plant property.

                               HOUSE BILL

      The provision provides a 10-percent credit for the 
purchase of qualified fuel cell power plants for businesses and 
individuals. A qualified fuel cell power plant is an integrated 
system comprised of a fuel cell stack assembly and associated 
balance of plant components that converts a fuel into 
electricity using electrochemical means, and which has an 
electricity-only generation efficiency of greater than 30 
percent. The credit may not exceed $500 for each 0.5 kilowatt 
of capacity. For individuals, the qualified fuel cell power 
plant must be installed on or in connection with a dwelling 
unit located in the United States and used by the taxpayer as a 
residence. The credit is nonrefundable. The taxpayer's basis in 
the property is reduced by the amount of the credit claimed.
      Effective date.--The credit for businesses applies to 
property placed in service after December 31, 2003, and before 
January 1, 2007, under rules similar to rules of section 48(m) 
of the Internal Revenue Code of 1986 (as in effect on the day 
before the date of enactment of the Revenue Reconciliation Act 
of 1990). The credit for individuals applies to expenditures 
made after December 31, 2003, and before January 1, 2007.

                            SENATE AMENDMENT

      The Senate amendment provides a 30-percent business 
energy credit for the purchase of qualified fuel cell power 
plants for businesses. A qualified fuel cell power plant is an 
integrated system comprised of a fuel cell stack assembly and 
associated balance of plant components that converts a fuel 
into electricity using electrochemical means, and which has an 
electricity-only generation efficiency of greater than 30 
percent and generates at least 500 watts of electricity. The 
credit for any fuel cell may not exceed $500 for each kilowatt 
of capacity. The taxpayer's basis in the property is reduced by 
the amount of the credit claimed.
      The proposal also provides a 30-percent credit for 
individuals for the purchase of qualified fuel cell power 
plants. The credit for any fuel cell may not exceed $1,000 for 
each kilowatt of capacity. The qualified fuel cell power plant 
must be installed on or in connection with a dwelling unit 
located in the United States and used by the taxpayer as a 
principal residence.
      Additionally, the Senate amendment provides a 10-percent 
credit for the purchase of qualifying stationary microturbine 
power plants. A qualified stationary microturbine power plant 
is a system comprising a rotary engine that is actuated by the 
aerodynamic reaction or impulse or both on radial or axial 
curved full-circumferential-admission airfoils on a central 
axial rotating spindle. Such system must have an electricity-
only generation efficiency of not less that 26 percent at 
International Standard Organization conditions. The credit is 
limited to the lesser of 10 percent of the basis of the 
property or $200 for each kilowatt of capacity.
      Effective date.--The credit for businesses applies to 
property placed in service after December 31, 2002, and before 
January 1, 2008 (January 1, 2007, in the case of 
microturbines), under rules similar to rules of section 48(m) 
of the Internal Revenue Code of 1986 (as in effect on the day 
before the date of enactment of the Revenue Reconciliation Act 
of 1990). The credit for individuals applies to expenditures 
made after December 31, 2002, and before January 1, 2008.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill with the 
modification that the credit rate is increased to 20 percent.
      Effective date.--The provision applies to periods after 
December 31, 2003, under rules similar to rules of section 
48(m) of the Internal Revenue Code of 1986 (as in effect on the 
day before the date of enactment of the Revenue Reconciliation 
Act of 1990), for property placed in service before January 1, 
2007. The credit for individuals applies to expenditures made 
after December 31, 2003, and before January 1, 2007.
4. Energy efficient improvements to existing homes (secs. 41004 of the 
        House bill, sec. 2109 of the Senate amendment, and new sec. 25D 
        of the Code)

                              PRESENT LAW

      A taxpayer may exclude from income the value of any 
subsidy provided by a public utility for the purchase or 
installation of an energy conservation measure. An energy 
conservation measure means any installation or modification 
primarily designed to reduce consumption of electricity or 
natural gas or to improve the management of energy demand with 
respect to a dwelling unit (sec. 136).
      There is no present law credit for energy efficiency 
improvements to existing homes.

                               HOUSE BILL

      The provision provides a 20-percent nonrefundable credit 
for the purchase of qualified energy efficiency improvements. 
The maximum credit for a taxpayer with respect to the same 
dwelling for all taxable years is $2,000. A qualified energy 
efficiency improvement is any energy efficiency building 
envelope component that is certified (in the case of 
expenditures that exceed $1,000) to meet or exceed the 
prescriptive criteria for such a component established by the 
2000 International Energy Conservation Code (or, in the case of 
metal roofs with appropriate pigmented coatings, meets the 
Energy Star program requirements), and (1) that is installed in 
or on a dwelling located in the United States; (2) owned and 
used by the taxpayer as the taxpayer's principal residence; (3) 
the original use of which commences with the taxpayer; and (4) 
such component reasonably can be expected to remain in use for 
at least five years.
      Building envelope components are: (1) insulation 
materials or systems which are specifically and primarily 
designed to reduce the heat loss or gain for a dwelling; (2) 
exterior windows (including skylights) and doors; and (3) metal 
roofs with appropriate pigmented coatings which are 
specifically and primarily designed to reduce the heat loss or 
gain for a dwelling.
      The taxpayer's basis in the property is reduced by the 
amount of the credit. Special rules apply in the case of 
condominiums and tenant-stockholders in cooperative housing 
corporations.
      Any unused credit may be carried forward to future years.
      Effective date.--The credit is effective for qualified 
energy efficiency improvements installed after December 31, 
2003 and before January 1, 2007.

                            SENATE AMENDMENT

      The provision provides a 10-percent nonrefundable credit 
for the purchase of qualified energy efficiency improvements. 
The maximum credit for a taxpayer with respect to the same 
dwelling for all taxable years is $300. A qualified energy 
efficiency improvement is any energy efficiency building 
envelope component that is certified to meet or exceed the 
prescriptive criteria for such a component established by the 
2000 International Energy Conservation Code, or any combination 
of energy efficiency measures that is certified to achieve at 
least a 30 percentreduction in heating and cooling energy usage 
for the dwelling and (1) that is installed in or on a dwelling located 
in the United States; (2) that is owned and used by the taxpayer as the 
taxpayer's principal residence; (3) the original use of which commences 
with the taxpayer; and (4) such component can reasonably be expected to 
remain in use for at least five years.
      Building envelope components are: (1) insulation 
materials or systems which are specifically and primarily 
designed to reduce the heat loss or gain for a dwelling; and 
(2) exterior windows (including skylights) and doors.
      Homes must be certified according to a component-based 
method or a performance-based method. The component-based 
method is based on applicable energy-efficiency ratings, 
including current product labeling requirements. The 
performance-based method is based on a comparison of the 
projected energy consumption of the dwelling in its original 
condition and after the completion of energy efficiency 
measures. The performance-based method of certification must be 
conducted by an individual or organization recognized by the 
Secretary for such purposes.
      The certification process requires that energy savings to 
the consumer be measured in terms of energy costs. To ensure 
consistent and reasonable energy cost analyses, the Department 
of Energy shall include in its rulemaking related to this bill 
specific reference data to be used for qualification for the 
credit.
      The taxpayer's basis in the property is reduced by the 
amount of the credit. Special rules apply in the case of 
condominiums and tenant-stockholders in cooperative housing 
corporations.
      The credit is allowed against the regular and alternative 
minimum tax.
      Effective date.--The credit is effective for qualified 
energy efficiency improvements installed on or after the date 
of enactment and before January 1, 2006.

                          CONFERENCE AGREEMENT

      The conference agreement generally follows the House bill 
with the modification that the credit may not be carried 
forward. Additionally, the efficiency is to be measured 
relative to the 2000 IECC standards as supplemented and as in 
effect on the date of enactment.
      Effective date.--The credit is effective for qualified 
energy efficiency improvements installed after December 31, 
2003, and before January 1, 2007.
5. Energy efficient new homes (sec. 41005 of the House bill, sec. 2101 
        of the Senate amendment, and new sec. 45G of the Code)

                              PRESENT LAW

      A nonrefundable, 10-percent business energy credit is 
allowed for the cost of new property that is equipment (1) that 
uses solar energy to generate electricity, to heat or cool a 
structure, or to provide solar process heat, or (2) used to 
produce, distribute, or use energy derived from a geothermal 
deposit, but only, in the case of electricity generated by 
geothermal power, up to the electric transmission stage.
      The business energy tax credits are components of the 
general business credit (sec. 38(b)(1)). The business energy 
tax credits, when combined with all other components of the 
general business credit, generally may not exceed for any 
taxable year the excess of the taxpayer's net income tax over 
the greater of (1) 25 percent of net regular tax liability 
above $25,000 or (2) the tentative minimum tax. For credits 
arising in taxable years beginning after December 31, 1997, an 
unused general business credit generally may be carried back 
one year and carried forward 20 years (sec. 39).
      A taxpayer may exclude from income the value of any 
subsidy provided by a public utility for the purchase or 
installation of an energy conservation measure. An energy 
conservation measure means any installation or modification 
primarily designed to reduce consumption of electricity or 
natural gas or to improve the management of energy demand with 
respect to a dwelling unit (sec. 136).
      There is no present-law credit for the construction of 
new energy-efficient homes.

                               HOUSE BILL

      The provision provides a credit to an eligible contractor 
(up to $2,000 per dwelling) of an amount equal to the aggregate 
adjusted bases of all energy-efficient property installed in a 
qualified new energy-efficient home during construction.
      The eligible contractor is the person who constructs the 
home, or in the case of a manufactured home, the producer of 
such home. Energy efficiency property is any energy-efficient 
building envelope component (insulation materials, exterior 
windows and doors, metal roofs with appropriate pigmented 
coatings) and any energy-efficient heating or cooling 
appliance.
      To qualify as an energy-efficient new home, the home must 
be: (1) a dwelling located in the United States; (2) the 
principal residence of the person who acquires the dwelling 
from the eligible contractor; (3) certified to have a level of 
annual heating and cooling energy consumption that is at least 
30 percent below the annual level of heating and cooling energy 
consumption of a comparable dwelling constructed in accordance 
with the standards of the 2000 International Energy 
Conservation Code; and (4) with respect to the building 
envelope alone, certified to have a level of annual heating and 
cooling energy consumption that is 10 percent below the annual 
level of heating and cooling energy consumption of a comparable 
dwelling constructed in accordance with the standards of the 
2000 International Energy Conservation Code.
      Effective date.--The credit applies to homes whose 
construction is substantially completed after December 31, 
2003, and which are purchased during the period beginning on 
January 1, 2003, and ending on December 31, 2006.

                            SENATE AMENDMENT

      The proposal provides a credit to an eligible contractor 
of an amount equal to the aggregate adjusted bases of all 
energy-efficient property installed in a qualified new energy-
efficient home during construction. The credit cannot exceed 
$1,250 ($2,000) in the case of a new home which has a projected 
level of annual heating and cooling costs that is 30 percent 
(50 percent) less than a comparable dwelling constructed in 
accordance with Chapter 4 of the 2000 International Energy 
Conservation Code.
      The eligible contractor is the person who constructed the 
home, or in the case of a manufactured home, the producer of 
such home. Energy efficiency property is any energy-efficient 
building envelope component (insulation materials or system 
designed to reduce heat loss or gain, and exterior windows, 
including skylights, and doors) and any energy-efficient 
heating or cooling appliance that can, individually or in 
combination with other components, meet the standards for the 
home.
      To qualify as an energy-efficient new home, the home must 
be: (1) a dwelling located in the United States; (2) the 
principal residence of the person who acquires the dwelling 
from the eligible contractor; and (3) certified to have a 
projected level of annual heating and cooling energy 
consumption that is either 30-percent or 50-percent less than a 
comparable dwelling constructed in accordance with Chapter 4 of 
the 2000 International Energy Conservation Code. The home may 
be certified according to a component-based method or an energy 
performance based method. Manufactured homes that meet the 
standards of the Department of Energy's Energy Star program are 
deemed to satisfy the 30-percent energy efficiency standard.
      The component-based method of certification will be based 
on applicable energy-efficiency specifications or ratings, 
including current product labeling requirements. The Secretary 
will develop component-based packages that are equivalent in 
energy performance to properties that qualify for the credit.
      The performance-based method of certification will be 
based on an evaluation of the home in reference to a home which 
uses the same energy source and system heating type, and is 
constructed in accordance with the Chapter 4 of the 2000 
International Energy Conservation Code. The certification will 
be provided by an individual recognized by the Secretary for 
such purposes.
      The certification process requires that energy savings to 
the consumer be measured in terms of energy costs. To ensure 
consistent and reasonable energy cost analyses, the Department 
of Energy will include in its rulemaking related to this bill 
specific reference data to be used for qualification for the 
credit.
      The credit will be part of the general business credit. 
No credits attributable to energy efficient homes may be 
carried back to any taxable year ending on or before the 
effective date of the credit.
      Effective date.--The credit applies to homes whose 
construction is substantially completed after the date of 
enactment and which are purchased during the period beginning 
on the date of enactment and ending on December 31, 2007.

                          CONFERENCE AGREEMENT

      The conference agreement generally follows the House bill 
with modifications. The requirement that the qualified new 
energy efficient home be used as the principal residence of the 
person acquiring the home is modified to provide that the 
contractor reasonably expect such home to be used as a 
residence of the person who acquires the home from the 
contractor. The credit amount is limited to $1,000 for new 
homes that are 30 percent more efficient than the 2000 IECC 
standards, as supplemented and as in effect on the date of 
enactment. The credit amount is limited to $2,000 for new homes 
that are 50 percent more efficient than the 2000 IECC 
standards, as supplemented and as in effect on the date of 
enactment. With respect to the building envelope alone, all 
qualifying new homes must be at least 10 percent more efficient 
than the 2000 IECC standard as supplemented and as in effect on 
the date of enactment. Additionally, the conference agreement 
includes the Senate amendment provision with respect to Energy 
Star manufactured homes, though the credit is limited to 
$1,000.
      Certification requirements are to be met in accordance 
with guidance prescribed by the Secretary of the Treasury. Such 
guidance shall specify procedures and methods for calculating 
energy and cost savings. It is expected that such guidance will 
allow for third-party certification, but will also allow the 
eligible contractor to meet the certification requirements 
without necessarily involving a third-party certifier. It is 
also expected that such guidance will provide sufficient 
safeguards to ensure that only homes meeting the required 
standards will obtain certification.
      The certification shall be made in writing in a manner 
which specifies the energy efficient building envelope 
components and energy efficient heating or cooling equipment 
installed and their respective energy efficiency performance. 
In the case of homes qualifying under the Energy Star program, 
the certification shall be accompanied by documentation as 
required by the Administrator of the Environmental Protection 
Agency under the Energy Star Labeled Homes program.
      The credit is treated as part of the general business 
credit and, under a special transition rule, may not be carried 
back to a taxable year ending before or on the effective date 
of the provision.
      Effective date.--The credit applies to homes whose 
construction is substantially completed after December 31, 
2003, and which are purchased during the period beginning on 
January 1, 2004, and ending on December 31, 2006.
6. Energy credit for combined heat and power system property (sec. 
        41006 of the House bill, sec. 2108 of the Senate amendment, and 
        sec. 48 of the Code)

                              PRESENT LAW

      A nonrefundable, 10-percent business energy credit is 
allowed for the cost of new property that is equipment (1) that 
uses solar energy to generate electricity, to heat or cool a 
structure, or to provide solar process heat, or (2) used to 
produce, distribute, or use energy derived from a geothermal 
deposit, but only, in the case of electricity generated by 
geothermal power, up to the electric transmission stage.
      The business energy tax credits are components of the 
general business credit (sec. 38(b)(1)). The business energy 
tax credits, when combined with all other components of the 
general business credit, generally may not exceed for any 
taxable year the excess of the taxpayer's net income tax over 
the greater of (1) 25 percent of net regular tax liability 
above $25,000 or (2) the tentative minimum tax. For credits 
arising in taxable years beginning after December 31, 1997, an 
unused general business credit generally may be carried back 
one year and carried forward 20 years (sec. 39).
      A taxpayer may exclude from income the value of any 
subsidy provided by a public utility for the purchase or 
installation of an energy conservation measure. An energy 
conservation measure means any installation or modification 
primarily designed to reduce consumption of electricity or 
natural gas or to improve the management of energy demand with 
respect to a dwelling unit (sec. 136).
      There is no present-law credit for combined heat and 
power (``CHP'') property.

                               HOUSE BILL

      The provision provides a 10-percent credit for the 
purchase of CHP property.
      CHP property is property: (1) that 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); (2) that has an electrical capacity of more than 
50 kilowatts or a mechanical energy capacity of more than 67 
horsepower or an equivalent combination of electrical and 
mechanical energy capacities; (3) that produces at least 20 
percent of its total useful energy in the form of thermal 
energy and at least 20 percent in the form of electrical or 
mechanical power (or a combination thereof); and (4) the energy 
efficiency percentage of which exceeds 60 percent (70 percent 
in the case of a system with an electrical capacity in excess 
of 50 megawatts or a mechanical energy capacity in excess of 
67,000 horsepower, or an equivalent combination of electrical 
and mechanical capacities.)
      CHP property does not include property used to transport 
the energy source to the generating facility or to distribute 
energy produced by the facility.
      If a taxpayer is allowed a credit for CHP property, and 
the property would ordinarily have a depreciation class life of 
15 years or less, the depreciation period for the property is 
treated as having a 22-year class life. The present-law carry 
back rules of the general business credit generally apply 
except that no credits attributable to combined heat and power 
property may be carried back before the effective date of this 
provision.
      Effective date.--The credit applies to property placed in 
service after December 31, 2003 and before January 1, 2007.

                            SENATE AMENDMENT

      The Senate amendment is similar to the House bill. 
However, for purposes of determining whether CHP 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 rankine, 
stirling, or kalina heat engine systems, the energy output 
requirements related to heat versus power described under (3), 
above, and the energy efficiency requirements of (4), above, 
may be disregarded.
      Effective date.--The credit applies to property placed in 
service after December 31, 2002 and before January 1, 2007.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill with 
modifications. The first modification removes the minimum 
system size requirement and limits the availability of the 
credit to systems with capacity less than 15 megawatts or 2,000 
horsepower. The second modification eliminates the extension of 
the depreciation period from 15 to 22 years. The third 
modification is that systems whose fuel source is at least 90 
percent bagasse and that would qualify for the credit, but for 
the failure to meet the efficiency standard, are eligible for a 
credit that is reduced in proportion to the degree to which the 
system fails to meet the efficiency standard. For example, a 
system that would otherwise be required to meet the 60-percent 
efficiency standard, but which only achieves 30-percent 
efficiency, would be permitted a credit equal to one-half of 
the otherwise allowable credit (i.e., a 5-percent credit).
      The credit may not be carried back to a taxable year 
ending before January 1, 2004.
      Effective date.--The provision applies to periods after 
December 31, 2003, in taxable years ending after such date, 
under rules similar to rules of section 48(m) of the Internal 
Revenue Code of 1986 (as in effect on the day before the date 
of enactment of the Revenue Reconciliation Act of 1990), for 
property placed in service before January 1, 2007.
7. Energy efficient appliances (sec. 2102 of the Senate amendment and 
        new sec. 45H of the Code)

                              PRESENT LAW

      A nonrefundable, 10-percent business energy credit is 
allowed for the cost of new property that is equipment: (1) 
that uses solar energy to generate electricity, to heat or cool 
a structure, or to provide solar process heat; or (2) used to 
produce, distribute, or use energy derived from a geothermal 
deposit, but only, in the case of electricity generated by 
geothermal power, up to the electric transmission stage.
      The business energy tax credits are components of the 
general business credit (sec. 38(b)(1)). The business energy 
tax credits, when combined with all other components of the 
general business credit, generally may not exceed for any 
taxable year the excess of the taxpayer's net income tax over 
the greater of: (1) 25 percent of net regular tax liability 
above $25,000 or (2) the tentative minimum tax. For credits 
arising in taxable years beginning after December 31, 1997, an 
unused general business credit generally may be carried back 
one year and carried forward 20 years (sec. 39).
      A taxpayer may exclude from income the value of any 
subsidy provided by a public utility for the purchase or 
installation of an energy conservation measure. An energy 
conservation measure means any installation or modification 
primarily designed to reduce consumption of electricity or 
natural gas or to improve the management of energy demand with 
respect to a dwelling unit (sec. 136).
      There is no present-law credit for the manufacture of 
energy-efficient appliances.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment provides a credit for the production 
of certain energy-efficient clothes washers and refrigerators. 
The credit would equal $50 per appliance for energy-efficient 
clothes washers produced with a modified energy factor 
(``MEF'') of 1.26 or greater and for refrigerators produced 
that consume 10 percent less kilowatt-hours per year than the 
energy conservation standards promulgated by the Department of 
Energy that took effect on July 1, 2001. The credit equals $100 
for energy-efficient clothes washers produced with a MEF of 
1.42 or greater (1.5 or greater for clothes washers produced 
after 2004) and for refrigerators produced that consume 15 
percent less kilowatt-hours per year than the energy 
conservation standards promulgated by the Department of Energy 
that took effect on July 1, 2001. A refrigerator must be an 
automatic defrost refrigerator-freezer with an internal volume 
of at least 16.5 cubic feet to qualify for the credit. A 
clothes washer is any residential clothes washer, including a 
residential style coin operated washer, that satisfies the 
relevant efficiency standard.
      For each category of appliances (i.e., clothes washers 
that meet the lower MEF standard, washers that meet the higher 
MEF standard, refrigerators that meet the 10 percent standard, 
refrigerators that meet the 15 percent standard), only 
production in excess of average production for each such 
category during calendar years 1999-2001 would be eligible for 
the credit. The taxpayer may not claim credits in excess of $30 
million for all taxable years for appliances that qualify for 
the $50 credit, and may not claim credits in excess of $30 
million for all taxable years for appliances that qualify for 
the $100 credit. Additionally, the credit allowed for all 
appliances may not exceed two percent of the average annual 
gross receipts of the taxpayer for the three taxable years 
preceding the taxable year in which the credit is determined.
      The credit will be part of the general business credit. 
No credits attributable to energy-efficient appliances may be 
carried back to taxable years ending before January 1, 2003.
      Effective date.--The credit applies to appliances 
produced after December 31, 2002, and prior to (1) January 1, 
2005, in the case of refrigerators that only meet the 10 
percent credit standard, or (2) January 1, 2007, in the case of 
all other qualified energy-efficient appliances.

                          CONFERENCE AGREEMENT

      The conference agreement generally follows the Senate 
amendment with modifications. The $50 credit is eliminated for 
clothes washers and refrigerators. A credit of $100 is allowed 
for refrigerators that consume 15 percent (20 percent for 
refrigerators produced after 2006) less kilowatt-hours per year 
than the energy conservation standards promulgated by the 
Department of Energy that took effect on July 1, 2001. A credit 
of $100 is allowed for clothes washers with a MEF of 1.5 or 
greater. A credit of $150 is allowed for refrigerators produced 
prior to 2007 that consume 20 percent less kilowatt-hours per 
year than the energy conservation standards promulgated by the 
Department of Energy that took effect on July 1, 2001. The $30 
million overall credit limitation for each of two separate 
categories of appliances is replaced with a cap of $60 million 
across all appliances combined.
      The three prior years are the base period years for 
calculation of the credit for any specific year. To qualify for 
any credit, production must exceed 110 percent of the average 
annual production in the base period years. Additionally, in 
order to determine if production has exceeded the baseline, all 
clothes washers and refrigerators are treated as a single 
group, rather than separately by their credit-specific 
efficiency standard. For example, if in the base period a 
producer produced an average of 1000 refrigerators and clothes 
washers combined that would have met the $100 credit standard, 
and no refrigerators that would have met the $150 credit 
standard, such producer would need to produce a combination of 
at least 1100 (110 percent of base period average) 
refrigerators or clothes washers that met the efficiency 
standards in order to receive any tax credit. Thus, even though 
the base period production of refrigerators meeting the $150 
credit standard is zero, a producer would not be eligible to 
receive a credit for production of such refrigerators unless a 
combination of at least 1100 refrigerators or clothes washers 
meeting any of the efficiency standards were produced. The 
aggregate amount of production eligible for a credit is 
allocated between the $100 and $150 credit categories in 
proportion to the total production in each credit category. 
Only production in the United States is eligible for credit and 
only U.S. production is considered for the base-period 
production levels.
      The credit is treated as part of the general business 
credit and, under a special transition rule, may not be carried 
back to a taxable year ending before or on the effective date 
of the provision.
      Effective date.--The credit applies to appliances 
produced after December 31, 2003, and before January 1, 2008.
8. Energy efficient commercial building deduction (sec. 2105 of Senate 
        amendment, and new sec. 179B of the Code)

                              PRESENT LAW

      No special deduction is currently provided for expenses 
incurred for energy-efficient commercial building property.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment provides a deduction equal to 
energy-efficient commercial building property expenditures made 
by the taxpayer. Energy-efficient commercial building property 
expenditures are defined as amounts paid or incurred for 
energy-efficient commercial building property installed in 
connection with the new construction or reconstruction of 
property: (1) which is depreciable property, (2) which is 
located in the United States, and (3) the construction or 
erection of which is completed by the taxpayer. The deduction 
is limited to an amount equal to the product of $2.25 and the 
square footage of the property for which such expenditures were 
made. The deduction is allowed in the taxable year in which the 
construction of the building is completed.
      Energy-efficient commercial building property means any 
property that reduces total annual energy and power costs with 
respect to the lighting, heating, cooling, ventilation, and hot 
water supply systems of the building by 50 percent or more in 
comparison to a reference building which meets the requirements 
of a Standard 90.1-1999 of the American Society of Heating, 
Refrigerating, and Air Conditioning Engineers and the 
Illuminating Engineering Society of North America (``ASHRAE/
IESNA'').
      Certain certification requirements must be met in order 
to qualify for the deduction. The Secretary, in consultation 
with the Secretary of Energy, is directed to promulgate 
regulations that describe methods of calculating and verifying 
energy and power costs, taking into consideration the 
provisions of the 2001 California Nonresidential Alternative 
Calculation Method Approval Manual. To allow proper 
calculations of cost, the Secretary shall prescribe the costs 
per unit of energy and power, such as kilowatt hour, kilowatt, 
gallon of fuel oil, and cubic foot or Btu of natural gas, which 
may be dependent on time of usage.
      The Secretary shall promulgate procedures for the 
inspection and testing for compliance of buildings that are 
comparable, given the difference between commercial and 
residential buildings, to the requirements in the Mortgage 
Industry National Home Energy Rating Standards. Such procedures 
are to be fuel neutral, such that the same energy efficiency 
features shall qualify a building for the deduction under this 
subsection regardless of whether the heating source is a gas or 
oil furnace or an electric heat pump. Individuals qualified to 
determine compliance shall only be those recognized by one or 
more organizations certified by the Secretary for such 
purposes.
      When final regulations are adopted, such regulations 
shall, with respect to methods of calculating and verifying 
energy and power costs, take into consideration appropriate 
energy savings from design methodologies and technologies not 
otherwise credited in ASHRAE/IESNA Standard 90.1-1999 or in the 
2001 California Nonresidential Alternative Calculation Method 
Approval Manual.
      For public property, such as schools, the Secretary will 
issue regulations to allow the deduction to be allocated to the 
person primarily responsible for designing the property in lieu 
of the public entity owner.
      The basis of the property is reduced by the amount of the 
deduction allowed.
      Effective date.--The Senate amendment is effective for 
taxable years beginning after September 1, 2002, for plans 
certified prior to December 31, 2007, whose construction is 
completed on or before December 31, 2009.

                          CONFERENCE AGREEMENT

      The conference agreement follows the Senate amendment 
with modifications. The maximum deduction is limited to $1.50 
per square foot, and energy efficiency is to be measured 
relative to the Standard 90.1-2001 of the American Society of 
Heating, Refrigerating, and Air Conditioning Engineers and the 
Illuminating Engineering Society of North America, as in effect 
on April 2, 2003. Additionally, with respect to public 
property, no transfer of the deduction to the person primarily 
responsible for designing the property is allowed.
      In the case of a retrofitted or reconstructed building, 
but not a new building placed in service after the date of 
enactment, that does not meet the overall building requirement 
of a 50-percent energy savings, a partial deduction is allowed 
with respect to each separate building system that comprises 
energy efficient property and which is certified by a qualified 
professional as meeting or exceeding the applicable system-
specific savings targets established by the Secretary of the 
Treasury. The applicable system-specific savings targets to be 
established by the Secretary are those that would result in a 
total annual energy savings with respect to the whole building 
of 50 percent, if each of the separate systems met the system 
specific target. The separate building systems are (1) the 
lighting system, (2) the heating cooling and ventilation and 
hot water systems, and (3) the building envelope. The maximum 
allowable deduction is $0.50 per square foot for each separate 
system.
      In the case of system-specific partial deductions for 
retrofitted or reconstructed buildings, in general no deduction 
is allowed until the Secretary establishes system-specific 
targets. However, in the case of lighting system retrofits, 
until such time as the Secretary issues final regulations, the 
system-specific energy savings target for the lighting system 
is deemed to be met by a reduction in Lighting Power Density of 
40 percent (50 percent in the case of a warehouse) of the 
minimum requirements in Table 9.3.1.1 or Table 9.3.1.2 of 
ASHRAE/IESNA Standard 90.1-2001. Also, in the case of a 
lighting system that reduces lighting power density by 25 
percent, a partial deduction of 25 cents per square foot is 
allowed. A prorated partial deduction is allowed in the case of 
a lighting system that reduces lighting power density between 
25 percent and 40 percent. Certain lighting level and lighting 
control requirements must also be met in order to qualify for 
the partial lighting deductions.
      The conference agreement provides that the Secretary 
shall establish procedures for certifying eligibility to claim 
the deduction. The Secretary shall include as part of the 
certification process procedures for inspection and testing by 
qualified individuals to ensure compliance of buildings with 
energy savings plans and targets. Individuals qualified to 
determine compliance shall only be those individuals who are 
recognized by an organization certified by the Secretary for 
such purposes.
      The Secretary, in consultation with the Secretary of 
Energy, is directed to promulgate regulations that describe 
methods of calculating and verifying energy and power costs. 
Additionally, the Secretary is directed to promulgate 
regulations as necessary to take intoaccount new technologies 
regarding energy efficiency and renewable energy for purposes of 
determining energy efficiency and savings. Additionally, the Secretary 
shall promulgate regulations for recapture of the deduction if the 
deduction is taken pursuant to a plan to achieve the requisite energy 
efficiency standard that is subsequently not fully implemented as 
necessary to achieve such standard.
      Effective date.--The provision is effective for property 
placed in service after the date of enactment and on or before 
December 31, 2007.
9. Three-year applicable recovery period for depreciation of qualified 
        energy management devices and qualified water submetering 
        devices (secs. 2107 and 2111 of the Senate amendment and sec. 
        168 of the Code)

                              PRESENT LAW

      No special recovery period is currently provided for 
depreciation of energy management devices or water submetering 
devices.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment provides a three-year recovery 
period for qualified new or retrofitted energy management 
devices placed in service by any taxpayer who is a supplier of 
electric energy or natural gas or is a provider of electric 
energy or natural gas services. A qualified energy management 
device is any tangible property eligible for accelerated 
depreciation under section 168 and which is acquired and used 
by the taxpayer to enable consumers or others to manage their 
purchase, sale, or use of electricity in response to energy 
price and usage signals and which permits reading of energy 
price and usage signals on at least a daily basis.
      Additionally, the provision provides a three-year 
recovery period for qualified new water submetering devices 
placed in service by any taxpayer who is an eligible 
resupplier. An eligible resupplier is any taxpayer who 
purchases and installs qualified water submetering devices in 
every unit in any multi-unit property. A qualified water 
submetering device is any tangible property eligible for 
accelerated depreciation under section 168 that enables 
consumers to manage their purchase or use of water in response 
to water price and usage signals and that permits reading of 
water price and usage signals on at least a daily basis.
      Effective date.--The provision is effective for any 
qualified energy management device placed in service after the 
date of enactment of the Act, and for any water submetering 
device placed in service after the date of enactment of the Act 
and prior to January 1, 2008.

                          CONFERENCE AGREEMENT

      The conference agreement generally follows the Senate 
amendment with respect to energy management devices, but with 
modifications. The conference agreement provides a three-year 
recovery period for qualified new energy management devices 
placed in service by any taxpayer who is a supplier of electric 
energy or is a provider of electric energy services. A 
qualified energy management device is any meter or metering 
device eligible for accelerated depreciation under section 168 
and which is used by the taxpayer (1) to measure and record 
electricity usage data on a time-differentiated basis in at 
least 4 separate time segments per day, and (2) to provide such 
data on at least a monthly basis to both consumers and the 
taxpayer.
      The conference agreement does not include the Senate 
amendment provision related to water submetering devices.
      Effective date.--The provision is effective for any 
qualified energy management device placed in service after the 
date of enactment and prior to January 1, 2008.
10. Allowance of deduction for qualified energy management devices and 
        qualified water submetering devices (secs. 2106 and 2110 of the 
        Senate amendment)

                              PRESENT LAW

      No special deduction is currently provided for expenses 
incurred for energy management devices or water submetering 
devices.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment provides a $30 deduction for each 
qualified new or retrofitted energy management device placed in 
service by any taxpayer who is a supplier of electric energy or 
natural gas or is a provider of electric energy or natural gas 
services. A qualified energy management device is any tangible 
property eligible for accelerated depreciation under section 
168 and which is acquired and used by the taxpayer to enable 
consumers or others to manage their purchase, sale, or use of 
electricity in response to energy price and usage signals and 
which permits reading of energy price and usage signals on at 
least a daily basis.
      The deduction is not allowed to property used outside of 
the United States. The taxpayer would have basis reduction for 
such property equal to the deduction. Other rules apply.
      In addition, the Senate amendment provides a $30 
deduction for qualified water submetering devices. A qualified 
water submetering device is any tangible property eligible for 
accelerated depreciation under section 168 that enables 
consumers to manage their purchase or use of water in response 
to water price and usage signals and that permits reading of 
water price and usage signals on at least a daily basis.
      Effective date.--The provision is effective for any 
qualified energy management device placed in service after the 
date of enactment of the Act, and for any water submetering 
device placed in service after the date of enactment of the Act 
and prior to January 1, 2008.

                          CONFERENCE AGREEMENT

      The conference agreement does not include the Senate 
amendment.
11. Credit for electricity produced from advanced nuclear power 
        facilities (new sec. 45L of the Code)

                              PRESENT LAW

      An income tax credit is allowed for the production of 
electricity from either qualified wind energy, qualified 
``closed-loop'' biomass, or qualified poultry waste facilities 
(sec. 45). The amount of the credit is 1.5 cents per kilowatt-
hour (indexed for inflation) of electricity produced. The 
amount of the credit is 1.8 cents per kilowatt-hour for 2003. 
The credit is reduced for grants, tax-exempt bonds, subsidized 
energy financing, and other credits.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement that a taxpayer producing 
electricity at a qualifying advanced nuclear power facility may 
claim a credit equal to 1.8 cents per kilowatt-hour of 
electricity produced for the eight year period starting when 
the facility is placed in service.\4\ The aggregate amount of 
credit that a taxpayer may claim in any year during the eight-
year period is subject to limitation based on allocated 
capacity and an annual limitation as described below.
---------------------------------------------------------------------------
    \4\ The 1.8-cents credit amount is reduced, but not below zero, if 
the annual average contract price per kilowatt-hour of electricity 
generated from advanced nuclear power facilities in the preceding year 
exceeds eight cents per kilowatt-hour. The eight-cent price comparison 
level is indexed for inflation after 1992.
---------------------------------------------------------------------------
      A qualifying advanced nuclear facility is an advanced 
nuclear facility for which the taxpayer has received an 
allocation of megawatt capacity from the Secretary and is 
placed in service before January 1, 2021. The taxpayer may only 
claim credit for production of electricity equal to the ratio 
of the allocated capacity that the taxpayer receives from the 
Secretary to the rated nameplate capacity of the taxpayer's 
facility. For example, if the taxpayer receives an allocation 
of 750 megawatts of capacity from the Secretary and the 
taxpayer's facility has a rated nameplate capacity of 1,000 
megawatts, then the taxpayer may claim three-quarters of the 
otherwise allowable credit, or 1.35 cents per kilowatt-hour, 
for each kilowatt-hour of electricity produced at the facility 
(subject to the annual limitation described below). The 
Secretary may allocate up to 6,000 megawatts of capacity.
      A taxpayer operating a qualified facility may claim no 
more than $125 million in tax credits per 1,000 megawatts of 
allocated capacity in any one year of the eight-year credit 
period. If the taxpayer operates a 1,350 megawatt rated 
nameplate capacity system and has received an allocation from 
the Secretary for 1,350 megawatts of capacity eligible for the 
credit, the taxpayer's annual limitation on credits that may be 
claimed is equal to 1.35 times $125 million, or $168.75 
million. If the taxpayer operates a facility with a nameplate 
rated capacity of 1,350 megawatts, but has received an 
allocation from the Secretary for 750 megawatts of credit 
eligible capacity, then the two limitations apply such that the 
taxpayer may claim a credit equal to 1.35 cents per kilowatt-
hour of electricity produced (as described above) subject to an 
annual credit limitation of $93.75 million in credits (three-
quarters of $125 million).
      An advanced nuclear facility is any nuclear facility for 
the production of electricity, the reactor design for which is 
approved after the date of enactment. For this purpose, a 
qualifying advanced nuclear facility is not any facility for 
which a substantial similar design for a facility of comparable 
capacity was approved on or before the date of enactment.
      In addition, the credit allowable to the taxpayer is 
reduced by reason of grants, tax-exempt bonds, subsidized 
energy financing, and other credits, but such reduction cannot 
exceed 50 percent of the otherwise allowable credit. The credit 
is treated as part of the general business credit and, under a 
special transition rule may not be carried back to a taxable 
year ending before or on the effective date of the provision.
      Effective date.--The provision is effective for 
production in taxable years beginning after December 31, 2003.

                B. Fuels and Alternative Motor Vehicles

1. Repeal certain excise taxes on rail diesel fuel and inland waterway 
        barge fuels (sec. 41008 of the House bill and secs. 4041, 4042, 
        6421, and 6427 of the Code)

                              PRESENT LAW

      Under present law, diesel fuel used in trains is subject 
to a 4.4-cents-per gallon excise tax. Revenues from 4.3 cents 
per gallon of this excise tax are retained in the General Fund 
of the Treasury. The remaining 0.1 cent per gallon is deposited 
in the Leaking Underground Storage Tank (``LUST'') Trust Fund.
      Similarly, fuels used in barges operating on the 
designated inland waterways system are subject to a 4.3-cents-
per-gallon General Fund excise tax. This tax is in addition to 
the 20.1-cents-per-gallon tax rates that are imposed on fuels 
used in these barges to fund the Inland Waterways Trust Fund 
and the Leaking Underground Storage Tank Trust Fund.
      In both cases, the 4.3-cents-per-gallon excise tax rates 
are permanent. The LUST tax is scheduled to expire after March 
31, 2005.

                               HOUSE BILL

      The 4.3-cents-per-gallon General Fund excise tax rate on 
diesel fuel used in trains and fuels used in barges operating 
on the designated inland waterways system is repealed. The 0.1 
cent per gallon for the Leaking Underground Storage Tank 
(``LUST'') Trust Fund is unchanged by the provision.
      Effective date.--The provision is effective on January 1, 
2004.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill.
2. Btu-based rate for diesel/water emulsion fuel (sec. 41009 of the 
        House bill and secs. 4081 and 6427 of the Code)

                              PRESENT LAW

      A 24.3 cents per gallon excise tax is imposed on diesel 
fuel to finance the Highway Trust Fund. Gasoline and most 
special motor fuels are subject to tax at 18.3 cents per gallon 
for the Trust Fund. The statutory rate for certain special 
motor fuels is determined on an energy equivalent basis, as 
follows:




Liquefied petroleum gas          13.6 cents per gallon.
 (propane).
Liquefied natural gas..........  11.9 cents per gallon.
Methanol derived from petroleum  9.15 cents per gallon.
 or natural gas.
Compressed natural gas.........  48.54 cents per MCF.


      No special tax rate is provided for diesel fuel blended 
in a water emulsion fuel.

                               HOUSE BILL

      A special tax rate of 19.7 cents per gallon is provided 
for diesel fuel blended with water into a diesel/water emulsion 
fuel to reflect the reduced Btu content per gallon resulting 
from the water. Emulsion fuels eligible for the special rate 
must consist of not more than 86 percent diesel fuel (and other 
minor chemical additives to enhance combustion) and at least 14 
percent water. Anyone who separates the diesel fuel from the 
diesel-water fuel emulsion on which a reduced rate of tax was 
imposed is treated as a refiner of the fuel and is liable for 
the difference between the amount of tax on the latest removal 
of the separated fuel and the amount of tax that was imposed on 
any prior removal or entry of such fuel.
      Effective date.--The provision applies to fuels removed 
after September 30, 2003.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill except as 
to the effective date.
      Effective date.--The provision is effective January 1, 
2004.
3. Modifications to small producer ethanol credit (sec. 2005 of the 
        Senate amendment and sec. 40 of the Code)

                              PRESENT LAW

Small producer credit
      Present law provides several tax benefits for ethanol and 
methanol produced from renewable sources (e.g., biomass) that 
are used as a motor fuel or that are blended with other fuels 
(e.g., gasoline) for such a use. In the case of ethanol, a 
separate 10-cents-per-gallon credit is provided for small 
producers, defined generally as persons whose production does 
not exceed 15 million gallons per year and whose production 
capacity does not exceed 30 million gallons per year. The small 
producer credit is part of the alcohol fuels tax credit under 
section 40 of the Code. The alcohol fuels tax credits are 
includible in income. This credit, like tax credits generally, 
may not be used to offset alternative minimum tax liability. 
The credit is treated as ageneral business credit, subject to 
the ordering rules and carryforward/carryback rules that apply to 
business credits generally. The alcohol fuels tax credit is scheduled 
to expire after December 31, 2007.
Taxation of cooperatives and their patrons
      Under present law, cooperatives in essence are treated as 
pass-through entities in that the cooperative is not subject to 
corporate income tax to the extent the cooperative timely pays 
patronage dividends. Under present law (sec. 38(d)(4)), the 
only excess credits that may be passed through to cooperative 
patrons are the rehabilitation credit (sec. 47), the energy 
property credit (sec. 48(a)), and the reforestation credit 
(sec. 48(b)).

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment makes several modifications to the 
rules governing the small producer ethanol credit. First, the 
provision liberalizes the definition of an eligible small 
producer to include persons whose production capacity does not 
exceed 60 million gallons. Second, the provision allows 
cooperatives to elect to pass through the small ethanol 
producer credits to its patrons. The credit is apportioned pro 
rata among patrons of the cooperative on the basis of the 
quantity or value of the business done with or for such patrons 
for the taxable year. An election to pass through the credit is 
made on a timely filed return for the taxable year and is 
irrevocable for such taxable year.
      Third, the provision repeals the rule that includes the 
small producer credit in income of taxpayers claiming it. 
Fourth, the provision allows the small producer credit to be 
claimed against the alternative minimum tax. Finally, the 
provision provides that the small producer ethanol credit is 
not treated as derived from a passive activity under the Code 
rules restricting credits and deductions attributable to such 
activities.
      Effective date.--The provision is effective for taxable 
years beginning after date of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement generally follows the Senate 
amendment except the small producer credit will continue to be 
included in the income of taxpayers claiming it and no 
exemption from the passive activity rules under the Code is 
provided. With respect to the alternative minimum tax, the 
conference agreement provides the same treatment given other 
business related energy credits that are the subject of the 
agreement as described below (see sec. 1347 of the Act).
      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2003.
4. Transfer full amount of excise tax imposed on gasohol to the highway 
        trust fund (sec. 2006 of the Senate amendment)

                              PRESENT LAW

      An 18.4 cents-per-gallon excise tax is imposed on 
gasoline. The tax is imposed when the fuel is removed from a 
refinery unless the removal is to a bulk transportation 
facility (e.g., removal by pipeline or barge to a registered 
terminal). In the case of gasoline removed in bulk by 
registered parties, tax is imposed when the gasoline is removed 
from the terminal facility, typically by truck (i.e., ``breaks 
bulk''). If gasoline is sold to an unregistered party before it 
is removed from a terminal, tax is imposed on that sale. When 
the gasoline subsequently breaks bulk, a second tax is imposed. 
The payor of the second tax may file a refund claim if it can 
prove payment of the first tax. The party liable for payment of 
the gasoline excise tax is called a ``position holder,'' 
defined as the owner of record inside the refinery or terminal 
facility.
      A 52-cents-per-gallon income tax credit is allowed for 
ethanol used as a motor fuel (the ``alcohol fuels credit''). 
The benefit of the alcohol fuels tax credit may be claimed as a 
reduction in excise tax payments when the ethanol is blended 
with gasoline (``gasohol''). The reduction is based on the 
amount of ethanol contained in the gasohol. The excise tax 
benefits apply to gasohol blends of 90 percent gasoline/10 
percent ethanol, 92.3 percent gasoline/7.7 percent ethanol, or 
94.3 percent gasoline/5.7 percent ethanol. The income tax 
credit is based on the amount of alcohol contained in the 
blended fuel.
      In general, 18.3 cents per gallon of the gasoline excise 
tax is deposited in the Highway Trust Fund and 0.1 cent per 
gallon is deposited in the Leaking Underground Storage Tank 
Trust Fund (the ``LUST'' rate). In the case of gasohol with 
respect to which a reduced excise tax is paid, 2.5 cents per 
gallon of the reduced tax is retained in the General Fund. The 
balance of the reduced rate (less the LUST rate) is deposited 
in the Highway Trust Fund.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment transfers the 2.5 cents per gallon 
of excise tax on gasohol that currently is retained in the 
General Fund to the Highway Trust Fund.
      Effective date.--The Senate amendment would be effective 
for taxes imposed after September 30, 2003.

                          CONFERENCE AGREEMENT

      The conference agreement does not include the Senate 
amendment provision.
5. Incentives for biodiesel (sec. 2008 of the Senate amendment and new 
        sec. 40A of the Code)

                              PRESENT LAW

      No income tax credit or excise tax rate reduction is 
provided for biodiesel fuels under present law.
      However, a 52-cents-per-gallon income tax credit (the 
``alcohol fuels credit'') is allowed for ethanol and methanol 
(derived from renewable sources) when the alcohol is used as a 
highway motor fuel. The 52-cents-per-gallon rate is scheduled 
to decline to 51 cents per gallon beginning in calendar year 
2005. The benefit of this income tax credit may be claimed 
through reductions in excise taxes paid on alcohol fuels. In 
the case of alcohol blended with other fuels (e.g., gasoline), 
the excise tax rate reductions are allowable only for blends of 
90 percent gasoline/10 percent alcohol, 92.3 percent gasoline/
7.7 percent alcohol, or 94.3 percent gasoline/5.7 percent 
alcohol. These present-law provisions are scheduled to expire 
after 2007.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      A new income tax credit is provided for biodiesel fuel 
mixtures (``biodiesel V'' and ``biodiesel NV''). The structure 
of the new credit is similar to structure of the present-law 
alcohol fuels credit. Biodiesel V is derived from virgin 
vegetable oils from corn, soybeans, sunflower seeds, 
cottonseeds, canola, crambe, rapeseeds, safflowers, flaxseeds, 
rice bran, or mustard seeds, for use in diesel engines. 
Biodiesel NV is derived from nonvirgin vegetable oils or animal 
fats for use in diesel engines. Both biodiesel V and biodiesel 
NV must meet the requirements of the Environmental Protection 
Agency under section 211 of the Clean Air Act (42 U.S.C. 7545) 
and the American Society of Testing and Materials D6751.
      The per gallon biodiesel mixture credit rate for 
biodiesel V equals one cent for each percentage point of 
biodiesel in the fuels mixture, subject to a maximum credit of 
20 cents per blended gallon of fuel. The per gallon biodiesel 
mixture credit rate for biodiesel NV equals .5 cent for each 
percentage point of biodiesel in the fuels mixture, subject to 
a maximum credit of 20 cents per blended gallon of fuel. The 
amount of the biodiesel fuel mixture credit is includible in 
income. The credit cannot be carried back to a taxable year 
beginning before January 1, 2003.
      Mixtures of biodiesel V are subject to a reduced rate of 
excise tax, which is coordinated with the income tax credit. An 
excise tax reduction is not available for biodiesel NV.
      The provision further provides for transfers to the 
Highway Trust Fund from the funds of the Commodity Credit 
Corporation of amounts equivalent to the reduction in receipts 
to the Trust Fund resulting from the excise tax rate reduction 
allowed under the provision.
      Effective date.--The income tax provision is effective 
for taxable years beginning after December 31, 2002, for fuel 
sold before January 1, 2006. The excise tax provision is 
effective for fuel sold after December 31, 2002, and before 
January 1, 2006.

                          CONFERENCE AGREEMENT

      The conference agreement generally follows S. 1548 as 
ordered reported by the Committee on Finance on September 17, 
2003, with respect to the income tax credit for biodiesel and 
biodiesel mixtures. The conference agreement does not provide 
for any reduced excise tax rate for mixtures of biodiesel, 
including virgin biodiesel.
      The provision provides a new income tax credit for 
biodiesel and qualified biodiesel mixtures, the biodiesel fuels 
credit. The biodiesel fuels credit is the sum of the biodiesel 
mixture credit plus the biodiesel credit and is treated as a 
general business credit. The amount of the biodiesel fuels 
credit is includable in gross income. The biodiesel fuels 
credit is coordinated to take into account benefits from the 
excise tax credit for qualified biodiesel mixtures. The credit 
is treated as part of the general business credit and, under a 
special transition rule, may not be carried back to a taxable 
year ending before or on the effective date of the provision. 
The provision does not apply to fuel used or sold after 
December 31, 2005.
      Biodiesel may be taken into account for purposes of the 
credit only if the taxpayer obtains a certification (in such 
form and manner as prescribed by the Secretary) from the 
producer of the biodiesel that identifies the product produced 
and the percentage of biodiesel and agri-biodiesel in the 
product. Biodiesel is monoalkyl esters of long chain fatty 
acids derived from plant or animal matter that meet (1) the 
registration requirements established by the Environmental 
Protection Agency under section 211 of the Clean Air Act, and 
(2) the requirements of the American Society of Testing and 
Materials D6751. Agri-biodiesel is biodiesel derived from 
virgin oils including esters derived from corn, soybeans, 
sunflower seeds, cottonseeds, canola, crambe, rapeseeds, 
safflowers, flaxseeds, rice bran, mustard seeds, or animal 
fats.
            Biodiesel mixture credit
      The biodiesel mixture credit is 50 cents for each gallon 
of biodiesel used by the taxpayer in the production of a 
qualified biodiesel mixture. For agri-biodiesel, the credit is 
$1.00 per gallon. A qualified biodiesel mixture is a mixture of 
biodiesel and a taxable fuel that is (1) sold by the taxpayer 
producing such mixture to any person for use as a fuel, or (2) 
is used as a fuel by the taxpayer producing such mixture. The 
sale or use must be in the trade or business of the taxpayer 
and must be taken into account for the taxable year in which 
such sale or use occurs. No credit is allowed with respect to 
any casual off-farm production of a qualified biodiesel 
mixture.
            Biodiesel credit
      The biodiesel credit is 50 cents for each gallon of 100 
percent biodiesel that is not in a mixture and which during the 
taxable year is (1) used by the taxpayer as a fuel in a trade 
or business or (2) sold by the taxpayer at retail to a person 
and placed in the fuel tank of suchperson's vehicle. The first 
condition is not satisfied by a person who acquires the biodiesel in a 
sale that satisfies the second condition. For agri-biodiesel, the 
credit is $1.00 per gallon.
            Later separation or failure to use as fuel
      In a manner similar to the treatment of alcohol fuels, a 
tax is imposed if a biodiesel fuels credit is claimed with 
respect to biodiesel that is subsequently used for a purpose 
for which the credit is not allowed or that is changed into a 
substance that does not qualify for the credit. The first tax 
applies if two conditions are satisfied. First, a biodiesel 
mixture credit must have been allowed with respect to biodiesel 
used in the production of a qualified mixture. Second, any 
person either separates the biodiesel from the mixture or, 
without separation, uses the mixture other than as a fuel. The 
tax equals the applicable amount ($1.00 in the case of agri-
biodiesel or 50 cents in the case of other biodiesel) 
multiplied by the number of gallons of biodiesel in such 
mixture. The second tax applies if two conditions are 
satisfied. First, a biodiesel credit must have been allowed 
with respect to the retail sale of any biodiesel. Second, any 
person mixes that biodiesel or uses it other than as a fuel. 
The tax equals the applicable amount multiplied by the number 
of gallons of biodiesel.
      Effective date.--The biodiesel fuel income tax credit 
provision is effective for fuel produced, and sold or used, 
after December 31, 2003, in taxable years ending after such 
date.
6. Alcohol and biodiesel excise tax credit and extension of alcohol 
        fuels income tax credit (secs. 40, 4101, 6427, 9503 and new 
        secs. 4104, and 6426 of the Code)

                              PRESENT LAW

Alcohol fuels income tax credit
      The alcohol fuels credit is the sum of three credits: the 
alcohol mixture credit, the alcohol credit, and the small 
ethanol producer credit. Generally, the alcohol fuels credit 
expires after December 31, 2007.\5\
---------------------------------------------------------------------------
    \5\ The alcohol fuels credit is unavailable when, for any period 
before January 1, 2008, the tax rates for gasoline and diesel fuels 
drop to 4.3 cents per gallon.
---------------------------------------------------------------------------
      A taxpayer (generally a petroleum refiner, distributor, 
or marketer) who mixes ethanol with gasoline (or a special 
fuel) \6\ is an ``ethanol blender.'' Ethanol blenders are 
eligible for an income tax credit of 52 cents per gallon of 
ethanol used in the production of a qualified mixture (the 
``alcohol mixture credit''). A qualified mixture means a 
mixture of alcohol and gasoline, (or of alcohol and a special 
fuel) sold by the blender as fuel, or used as fuel by the 
blender in producing the mixture. The term alcohol includes 
methanol and ethanol but does not include (1) alcohol produced 
from petroleum, natural gas, or coal (including peat), or (2) 
alcohol with a proof of less than 150. Businesses also may 
reduce their income taxes by 52 cents for each gallon of 
ethanol (not mixed with gasoline or other special fuel) that 
they sell at the retail level as vehicle fuel or use themselves 
as a fuel in their trade or business (``the alcohol credit''). 
The 52-cents-per-gallon income tax credit rate is scheduled to 
decline to 51 cents per gallon during the period 2005 through 
2007. For blenders using an alcohol other than ethanol, the 
rate is 60 cents per gallon.\7\
---------------------------------------------------------------------------
    \6\ A special fuel includes any liquid (other than gasoline) that 
is suitable for use in an internal combustion engine.
    \7\ In the case of any alcohol (other than ethanol) with a proof 
that is at least 150 but less than 190, the credit is 45 cents per 
gallon (the ``low-proof blender amount''). For ethanol with a proof 
that is at least 150 but less than 190, the low-proof blender amount is 
38.52 cents for sales or uses during calendar year 2003 and 2004, and 
37.78 cents for calendar years 2005, 2006, and 2007.
---------------------------------------------------------------------------
      A separate income tax credit is available for small 
ethanol producers (the ``small ethanol producer credit''). A 
small ethanol producer is defined as a person whose ethanol 
production capacity does not exceed 30 million gallons per 
year. The small ethanol producer credit is 10 cents per gallon 
of ethanol produced during the taxable year for up to a maximum 
of 15 million gallons.
      The credits that comprise the alcohol fuels tax credit 
are includible in income. The credit may not be used to offset 
alternative minimum tax liability. The credit is treated as a 
general business credit, subject to the ordering rules and 
carryforward/carryback rules that apply to business credits 
generally.
Excise tax reductions for alcohol mixture fuels
      Generally, motor fuels tax rates are as follows:\8\
---------------------------------------------------------------------------
    \8\ These rates include an additional 0.1 cent-per-gallon excise 
tax to fund the Leaking Underground Storage Tank Trust Fund. See secs. 
4041(d) and 4081(a)(2)(B). In addition, the basic fuel tax rate will 
drop to 4.3 cents per gallon beginning on October 1, 2005.




Gasoline.....................................  18.4 cents per gallon.
Diesel fuel and kerosene.....................  24.4 cents per gallon.
Special motor fuels..........................  18.4 cents per gallon generally.


      Alcohol-blended fuels are subject to a reduced rate of 
tax. The benefits provided by the alcohol fuels income tax 
credit and the excise tax reduction are integrated such that 
the alcohol fuels credit is reduced to take into account the 
benefit of any excise tax reduction.
            Gasohol
      Registered ethanol blenders may forgo the full income tax 
credit and instead pay reduced rates of excise tax on gasoline 
that they purchase for blending with ethanol. Most of the 
benefit of the alcohol fuels credit is claimed through the 
excise tax system.
      The reduced excise tax rates apply to gasohol upon its 
removal or entry. Gasohol is defined as a gasoline/ethanol 
blend that contains 5.7 percent ethanol, 7.7 percent ethanol, 
or 10 percent ethanol. For the calendar year 2003, the 
following reduced rates apply to gasohol:\9\
---------------------------------------------------------------------------
    \9\ These rates include the additional 0.1 cent-per-gallon excise 
tax to fund the Leaking Underground Storage Tank Trust Fund. These 
special rates will terminate after September 30, 2007 (sec. 
4081(c)(8)).




5.7 percent ethanol............  15.436 cents per gallon.
7.7 percent ethanol............  14.396 cents per gallon.
10.0 percent ethanol...........  13.200 cents per gallon.


      Reduced excise tax rates also apply when gasoline is 
being purchased for the production of ``gasohol.'' When 
gasoline is purchased for blending into gasohol, the rates 
above are multiplied by a fraction (e.g., 10/9 for 10-percent 
gasohol) so that the increased volume of motor fuel will be 
subject to tax. The reduced tax rates apply if the person 
liable for the tax is registered with the IRS and (1) produces 
gasohol with gasoline within 24 hours of removing or entering 
the gasoline or (2) gasoline is sold upon its removal or entry 
and such person has an unexpired certificate from the buyer and 
has no reason to believe the certificate is false.\10\
---------------------------------------------------------------------------
    \10\ Treas. Reg. sec. 48.4081-6(c). A certificate from the buyer 
assures that the gasoline will be used to produce gasohol within 24 
hours after purchase. A copy of the registrant's letter of registration 
cannot be used as a gasohol blender's certificate.
---------------------------------------------------------------------------
            Qualified methanol and ethanol fuels
      Qualified methanol or ethanol fuel is any liquid that 
contains at least 85 percent methanol or ethanol or other 
alcohol produced from a substance other than petroleum or 
natural gas. These fuels are taxed at reduced rates.\11\ The 
rate of tax on qualified methanol is 12.35 cents per gallon. 
The rate on qualified ethanol in 2003 and 2004 is 13.15 cents. 
From January 1, 2005, through September 30, 2007, the rate of 
tax on qualified ethanol is 13.25 cents.\12\
---------------------------------------------------------------------------
    \11\ A 0.05-cent-per-gallon Leaking Underground Storage Tank Trust 
Fund tax is imposed on such fuel. This provision expires on October 1, 
2007 (sec. 4041(b)(2)).
    \12\ These reduced rates terminate after September 30, 2007.
---------------------------------------------------------------------------
            Alcohol produced from natural gas
      A mixture of methanol, ethanol, or other alcohol produced 
from natural gas that consists of at least 85 percent alcohol 
is also taxed at reduced rates.\13\ For mixtures not containing 
ethanol, the applicable rate of tax is 9.25 cents per gallon 
before October 1, 2005. In all other cases, the rate is 11.4 
cents per gallon. After September 31, 2005, the rate is reduced 
to 2.15 cents per gallon when the mixture does not contain 
ethanol and 4.3 cents per gallon in all other cases.
---------------------------------------------------------------------------
    \13\ These rates include the additional 0.1 cent-per-gallon excise 
tax to fund the Leaking Underground Storage Tank Trust Fund (sec. 
4041(d)(1)).
---------------------------------------------------------------------------
            Blends of alcohol and diesel fuel or special motor fuels
      A reduced rate of tax applies to diesel fuel or kerosene 
that is combined with alcohol as long as at least 10 percent of 
the finished mixture is alcohol. If none of the alcohol in the 
mixture is ethanol, the rate of tax is 18.4 cents per gallon. 
For alcohol mixtures containing ethanol, the rate of tax in 
2003 and 2004 is 19.2 cents per gallon and for 2005 through 
September 30, 2007, the rate for ethanol mixtures is 19.3 cents 
per gallon. Fuel removed or entered for use in producing a 10 
percent diesel-alcohol fuel mixture (without ethanol), is 
subject to a tax of 20.44 cents. The rate of tax for fuel 
removed or entered to produce a 10 percent diesel-ethanol fuel 
mixture is 21.333 cents per gallon for 2003 and 2004 and 21.444 
cents per gallon for the period January 1, 2005, through 
September 30, 2007.
      Special motor fuel (nongasoline) mixtures with alcohol 
also are taxed at reduced rates.
            Aviation fuel
      Noncommercial aviation fuel is subject to a tax of 21.9 
cents per gallon.\14\ Fuel mixtures containing at least 10 
percent alcohol are taxed at lower rates.\15\ In the case of 10 
percent ethanol mixtures, any sale or use during 2003 and 2004, 
the 21.9 cents is reduced by 13.2 cents (for a tax of 8.7 cents 
per gallon), for 2005, 2006, and 2007 the reduction is 13.1 
cents (for a tax of 8.8 cents per gallon) and is reduced by 
13.4 cents in the case of any sale during 2008 or thereafter. 
For mixtures not containing ethanol, the 21.9 cents is reduced 
by 14 cents for a tax of 7.9 cents. These reduced rates expire 
after September 30, 2007.\16\
---------------------------------------------------------------------------
    \14\ This rate includes the additional 0.1 cent-per-gallon tax for 
the Leaking Underground Storage Tank Trust fund.
    \15\ Sec. 4041(k)(1) and 4091(c).
    \16\ Sec. 4091(c)(1).
---------------------------------------------------------------------------
      When aviation fuel is purchased for blending with 
alcohol, the rates above are multiplied by a fraction (10/9) so 
that the increased volume of aviation fuel will be subject to 
tax.
Refunds and payments
      If fully taxed gasoline (or other taxable fuel) is used 
to produce a qualified alcohol mixture, the Code permits the 
blender to file a claim for a quick excise tax refund. The 
refund is equal to the difference between the gasoline (or 
other taxable fuel) excise tax that was paid and the tax that 
would have been paid by a registered blender on the alcohol 
fuel mixture being produced. Generally, the IRS pays these 
quick refunds within 20 days. Interest accrues if the refund is 
paid more than 20 days after filing. A claim may be filed by 
any person with respect togasoline, diesel fuel, or kerosene 
used to produce a qualified alcohol fuel mixture for any period for 
which $200 or more is payable and which is not less than one week.
Ethyl tertiary butyl ether (ETBE)
      Ethyl tertiary butyl ether (``ETBE'') is an ether that is 
manufactured using ethanol. Unlike ethanol, ETBE can be blended 
with gasoline before the gasoline enters a pipeline because 
ETBE does not result in contamination of fuel with water while 
in transport. Treasury regulations provide that gasohol 
blenders may claim the income tax credit and excise tax rate 
reductions for ethanol used in the production of ETBE. The 
regulations also provide a special election allowing refiners 
to claim the benefit of the excise tax rate reduction even 
though the fuel being removed from terminals does not contain 
the requisite percentages of ethanol for claiming the excise 
tax rate reduction.
Highway Trust Fund
      With certain exceptions, the taxes imposed by section 
4041 (relating to retail taxes on diesel fuels and special 
motor fuels) and section 4081 (relating to tax on gasoline, 
diesel fuel and kerosene) are credited to the Highway Trust 
Fund. In the case of alcohol fuels, 2.5 cents per gallon of the 
tax imposed is retained in the General Fund.\17\ In the case of 
a taxable fuel taxed at a reduced rate upon removal or entry 
prior to mixing with alcohol, 2.8 cents of the reduced rate is 
retained in the General Fund.\18\
---------------------------------------------------------------------------
    \17\ Sec. 9503(b)(4)(E).
    \18\ Sec. 9503(b)(4)(F).
---------------------------------------------------------------------------
Biodiesel
      If biodiesel is used in the production of blended taxable 
fuel, the Code imposes tax on the removal or sale of the 
blended taxable fuel.\19\ In addition, the Code imposes tax on 
any liquid other than gasoline sold for use or used as a fuel 
in a diesel-powered highway vehicle or diesel-powered train 
unless tax was previously imposed and not refunded or 
credited.\20\ If biodiesel that was not previously taxed or 
exempt is sold for use or used as a fuel in a diesel-powered 
highway vehicle or a diesel-powered train, tax is imposed.\21\ 
There are no reduced excise tax rates for biodiesel.
---------------------------------------------------------------------------
    \19\ Sec. 4081(b); Rev. Rul. 2002-76, 2002-46 I.R.B. 841 (2002). 
``Taxable fuels'' are gasoline, diesel and kerosene (sec. 4083). 
Biodiesel, although suitable for use as a fuel in a diesel-powered 
highway vehicle or diesel-powered train, contains less than four 
percent normal paraffins and, therefore, is not treated as diesel fuel 
under the applicable Treasury regulations. Treas. Reg. secs. 48.4081-
1(c)(2)(i) and (ii), and 48.4081-1(b); Rev. Rul. 2002-76, 2002-46 
I.R.B. 841 (2002). As a result, biodiesel alone is not a taxable fuel 
for purposes of section 4081. As noted above, however, tax is imposed 
upon the removal or entry of blended taxable fuel made with biodiesel.
    \20\ Sec. 4041. The tax imposed under section 4041 also will not 
apply if an exemption from tax applies.
    \21\ Rev. Rul. 2002-76, 2002-46 I.R.B. 841 (2002).
---------------------------------------------------------------------------

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement creates two new excise tax 
credits, the alcohol fuel mixture excise tax credit and the 
biodiesel fuel mixture excise tax credit. The sum of these 
credits may be taken against the tax imposed on taxable fuels 
(by section 4081). The amount of fuel taxes transferred to the 
Highway Trust Fund is not reduced by any excise tax credits 
claimed. The conference agreement also extends the alcohol 
fuels income tax credit (sec. 40) through December 31, 
2010.\22\
---------------------------------------------------------------------------
    \22\ The conference agreement contains several provisions found in 
S. 1548 as ordered reported by the Committee on Finance on September 
17, 2003. While similar to S. 1548, the conference agreement differs 
from S. 1548 in several respects. Unlike S. 1548, the conference 
agreement leaves in place the present-law reduced rate excise tax 
structure. Also, the conference agreement does not eliminate the 
requirement that 2.5 and 2.8 cents per gallon of the reduced rate of 
excise tax be retained in the General Fund. In addition, the conference 
agreement does not contain any provisions regarding payments with 
respect to qualified alcohol and biodiesel fuel mixtures nor with 
respect to alcohol and biodiesel used as a fuel.
---------------------------------------------------------------------------
Alcohol fuel mixture excise tax credit
      The conference agreement provides for an excise tax 
credit, the alcohol fuel mixture credit. The alcohol fuel 
mixture credit is 52 cents for each gallon of alcohol used by a 
person in producing an alcohol fuel mixture for sale or use in 
a trade or business of the taxpayer. The credit declines to 51 
cents per gallon after calendar year 2004. For mixtures not 
containing ethanol (renewable source methanol), the credit is 
60 cents per gallon.
      For purposes of the alcohol fuel mixture credit, an 
``alcohol fuel mixture'' is a mixture of alcohol and a taxable 
fuel that is (1) sold for use or used as a fuel by the taxpayer 
producing the mixture or (2) removed from the refinery by a 
person producing the mixture. Alcohol for this purpose includes 
methanol, ethanol, and alcohol gallon equivalents of ETBE or 
other ethers produced from such alcohol. It does not include 
alcohol produced from petroleum, natural gas,or coal (including 
peat), or alcohol with a proof of less than 190 (determined without 
regard to any added denaturants). Taxable fuel is gasoline, diesel, and 
kerosene.\23\
---------------------------------------------------------------------------
    \23\ Sec. 4083(a)(1). As under present law, dyed fuels are taxable 
fuels that have been exempted from tax.
---------------------------------------------------------------------------
      The excise tax credit is coordinated with the alcohol 
fuels income tax credit and is available through December 31, 
2010. In addition, any excise tax exemption for alcohol fuels 
reduces the amount of the alcohol fuel excise tax credit.\24\
---------------------------------------------------------------------------
    \24\ Rules similar to those found in section 40(c) regarding the 
income tax credit for alcohol fuels apply.
---------------------------------------------------------------------------
Biodiesel mixture excise tax credit
      The provision provides an excise tax credit for biodiesel 
mixtures.\25\ The credit is 50 cents for each gallon of 
biodiesel used by the taxpayer in producing a qualified 
biodiesel mixture for sale or use in a trade or business of the 
taxpayer. A qualified biodiesel mixture is a mixture of 
biodiesel and taxable fuel that is (1) sold for use or used by 
the taxpayer producing such mixture as a fuel, or (2) removed 
from the refinery by a person producing the mixture. In the 
case of agri-biodiesel, the amount of the credit is $1.00 per 
gallon. The credit applies only if the taxpayer obtains a 
certification (in such form and manner as prescribed by the 
Secretary) from the producer of the biodiesel which identifies 
the product produced and the percentage of biodiesel and agri-
biodiesel in the product.
---------------------------------------------------------------------------
    \25\ The excise tax credit uses the same definitions as the 
biodiesel fuels income tax credit.
---------------------------------------------------------------------------
      The credit is not available for any sale, use or removal 
for any period after December 31, 2005. This excise tax credit 
is coordinated with the income tax credit for biodiesel such 
that the credit for the same biodiesel cannot be claimed for 
both income and excise tax purposes.
Later separation or mixture not used as fuel
      Under certain circumstances, a tax is imposed if an 
alcohol fuel mixture credit or biodiesel fuel mixture credit is 
claimed with respect to alcohol or biodiesel used in the 
production of any alcohol or biodiesel mixture, that is 
subsequently used for a purpose for which the credit is not 
allowed or changed into a substance that does not qualify for 
the credit. The tax applies if two conditions are satisfied. 
First, a credit must have been allowed with respect to alcohol 
or biodiesel used in the production of a qualified mixture. 
Second, any person either separates the alcohol or biodiesel 
from the mixture or, without separation, uses the mixture other 
than as a fuel. The tax equals the applicable amount multiplied 
by the number of gallons of such alcohol or biodiesel.
Registration requirements
      Under the provision, the Secretary shall require 
registration of every person that produces biodiesel or 
alcohol.
Information reporting for persons claiming certain tax benefits
      The Secretary shall require any person claiming tax 
benefits under certain sections relating to alcohol and 
biodiesel fuels \26\ to file a quarterly return (in such manner 
as the Secretary may prescribe) providing such information 
relating to such benefits and the coordination of such benefits 
as the Secretary may require to ensure the proper 
administration and use of such benefits. With respect to 
persons required to register with the Secretary, failure to 
comply with these information-reporting requirements could 
subject such a person to the denial, revocation or suspension 
of registration.
---------------------------------------------------------------------------
    \26\ These sections are sections 34, 40, 40A, 4041(b)(2), 4041(k), 
4081(c), 6426, and 6427(f).
---------------------------------------------------------------------------
Refund claims
      If fully taxed gasoline (or other taxable fuel) is used 
to produce a qualified alcohol mixture, the Code permits the 
blender to file a claim for a quick excise tax refund. For 
claims filed after December 31, 2004, if such claims are not 
paid within 45 days, the claim is to be paid with interest. In 
the case of an electronic claim, if such claim is not paid 
within 20 days, the claim is to be paid with interest. If 
claims are filed electronically, the claimant may make a claim 
for less than $200. The Secretary is to prescribe the 
electronic format for filing claims not later than December 31, 
2004.
Highway Trust Fund
      The provision provides that the amount of fuel taxes to 
be appropriated to the Highway Trust Fund shall be determined 
without reduction for amounts equivalent to the excise tax 
credits allowed for alcohol fuel mixtures and biodiesel 
mixtures.
      Effective date.--In general, the provisions are effective 
for fuel sold, used, or removed after December 31, 2003. The 
provisions relating to refund claims are effective for claims 
filed after December 31, 2004.
7. Nonapplication of export exemption to delivery of fuel to motor 
        vehicles removed from United States (sec. 2504 of the Senate 
        amendment and secs. 4221, 4041, and 4081 of the Code)

                              PRESENT LAW

      A manufacturer's excise tax is imposed upon
            (1) The removal of any taxable fuel from a refinery 
        or terminal;
            (2) The entry of any taxable fuel into the United 
        States for consumption, use or warehousing; or
            (3) The sale of any taxable fuel to any person who 
        is not registered, unless there was a prior taxable 
        removal or entry.\27\
---------------------------------------------------------------------------
    \27\ Sec. 4081(a)(1).
---------------------------------------------------------------------------
      The term ``taxable fuel'' means gasoline, diesel fuel and 
kerosene.
      Special provisions under the Code provide for a refund of 
tax to any person who sells gasoline to another for 
exportation.\28\ Section 6421(c) provides ``If gasoline is sold 
to any person for any purpose described in paragraph (2), (3), 
(4), or (5) of section 4221(a), the Secretary shall pay 
(without interest) to such person an amount equal to the 
product of the number of gallons so sold multiplied by the rate 
at which tax was imposed on such gasoline by section 4081.'' 
Section 4221 provides, in pertinent part, ``Under regulations 
prescribed by the Secretary, no tax shall be imposed under this 
chapter * * * on the sale by the manufacturer * * * of an 
article--* * * for export, or for resale by the purchaser to a 
second purchaser for export * * * but only if such exportation 
or use is to occur before any other use. * * *''
---------------------------------------------------------------------------
    \28\ Secs. 6421(c) and 4221(a)(2).
---------------------------------------------------------------------------
      It is the IRS administrative position that the exemption 
from manufacturers excise tax by reason of exportation does not 
apply to the sale of motor fuel pumped into a fuel tank of a 
vehicle that is to be driven, or shipped, directly out of the 
United States.\29\
---------------------------------------------------------------------------
    \29\ Rev. Rul. 69-150.
---------------------------------------------------------------------------
      A duty-free sales facility that meets certain conditions 
may sell and deliver for export from the customs territory of 
the United States duty-free merchandise. Duty-free merchandise 
is merchandise sold by a duty-free sales facility on which 
neither Federal duty nor Federal tax has been assessed pending 
exportation from the customs territory of the United States. 
The statutes covering duty-free facilities do not contain any 
limitation on what goods may qualify for duty-free treatment.
      The United States Court of Federal Claims (``Claims 
Court'') and a District Court in Michigan have taken different 
positions on whether fuel sold from a duty-free facility and 
placed into the tank of an automobile that is then driven out 
of the country is exported fuel.\30\ Both cases involved the 
same duty-free facility, which is near the Canadian border and 
is configured in such a way that anyone leaving the facility 
must depart the United States and enter into Canada. The 
District Court agreed with the IRS position that such fuel is 
not exported, while the Claims Court reached the opposite 
conclusion. The Claims Court concluded that the act of 
exportation began with the consumer's purchase and that the 
fuel necessarily enters into the stream of exportation at the 
moment it is placed into the fuel supply tank and the customer 
drives into Canada.
---------------------------------------------------------------------------
    \30\ See, Ammex Inc. v. United States, 52 Fed. Cl. 303 (2002) (on 
cross-motions for summary judgment, the court found that plaintiff 
established standing to proceed to trial pursuant to sec. 6421(c) 
respecting its gasoline purchases only); and Ammex Inc. v. United 
States, 2002 U.S. Dist. LEXIS 25771 (E.D. Mich. July 31, 2002) 
(granting defendant's motion for summary judgment), reconsideration 
denied, Ammex Inc. v. United States, 2002 U.S. Dist. LEXIS 22893 (E.D. 
Mich. Oct. 22, 2002). Although the Claims Court ruled that Ammex had 
standing to challenge the excise tax on gasoline, it subsequently held 
that Ammex was not entitled to a payment pursuant to sec. 6421(c) 
because it failed to prove at trial that it did not pass the tax on to 
its customers. Ammex Inc. v. United States, 2003 U.S. Claims LEXIS 63 
(Fed. Cl. Mar. 26, 2003).
---------------------------------------------------------------------------

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment amends section 555(b) of the Tariff 
Act of 1930 (19 U.S.C. 1555(b)) to provide that gasoline or 
diesel fuel sold at duty-free facilities are considered to be 
entered for consumption into the United States and thus 
ineligible for classification as duty-free merchandise.
      Effective date.--The provision is effective on the date 
of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement reaffirms the long-standing IRS 
position taken in Rev. Rul. 69-150 and restates present law by 
amending the Code definition of export to exclude the delivery 
of a taxable fuel into a fuel tank of a motor vehicle that is 
shipped or driven out of the United States. It also imposes a 
tax on the sale of taxable fuel at a duty-free sales enterprise 
unless there was a prior taxable removal, or entry of such 
fuel.
      Effective date.--The provision applies to sales or 
deliveries made after the date of enactment.
8. Modification of credit for electric vehicles (sec. 41010 of the 
        House bill, sec. 2002 of Senate amendment, and sec. 30 of the 
        Code)

                              PRESENT LAW

      A 10-percent tax credit is provided for the cost of a 
qualified electric vehicle, up to a maximum credit of $4,000 
(sec. 30). A qualified electric vehicle is a motor vehicle that 
is powered primarily by an electric motor drawing current from 
rechargeable batteries, fuel cells, or other portable sources 
of electrical current, the original use of which commences with 
the taxpayer, and that is acquired for use by the taxpayer and 
not for resale. The full amount of the credit is available for 
purchases prior to 2002. The credit phases down in the years 
2004 through 2006, and is unavailable for purchases after 
December 31, 2006. There is no carry forward or carryback of 
the credit for electric vehicles.

                               HOUSE BILL

      The House bill repeals the phased-down reduction in the 
credit for years 2004, 2005, and 2006. Thus, the House bill 
provides that a taxpayer may claim the full 10-percent credit 
(up to a $4,000) maximum for the purchase of qualified electric 
vehicles before January 1, 2007.
      Effective date.--The House bill provision is effective 
for property placed in service after the date of enactment.

                            SENATE AMENDMENT

      The Senate amendment modifies the present-law credit for 
electric vehicles to provide that the credit for qualifying 
vehicles generally ranges between $3,500 and $40,000 depending 
upon the weight of the vehicle and, for certain vehicles, the 
driving range of the vehicle. In the case of property purchased 
by tax-exempt persons, the seller may claim the credit. The 
taxpayer would be ineligible for the deduction allowable under 
present-law section 179A for a qualified battery electric 
vehicle on which a credit is allowable. The provision also 
extends the expiration date of the credit from December 31, 
2004, to December 31, 2006, and would repeal the phase-out 
schedule of present law. The taxpayer would be able to carry 
forward unused credits for 20 years or carry unused credits 
back for three years (but not carried back to taxable years 
beginning before October 1, 2002).
      Effective date.--The Senate amendment is effective for 
property placed in service after September 30, 2002.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill.
9. Alternative motor vehicle credit (sec. 41011 of the House bill, 
        secs. 2001 and 2010 of Senate amendment, and new sec. 30B of 
        the Code)

                              PRESENT LAW

      Certain costs of qualified clean-fuel vehicle may be 
expensed and deducted when such property is placed in service 
(sec. 179A). Qualified clean-fuel vehicle property includes 
motor vehicles that use certain clean-burning fuels (natural 
gas, liquefied natural gas, liquefied petroleum gas, hydrogen, 
electricity and any other fuel at least 85 percent of which is 
methanol, ethanol, any other alcohol or ether).\31\ The maximum 
amount of the deduction is $50,000 for a truck or van with a 
gross vehicle weight over 26,000 pounds or a bus with seating 
capacities of at least 20 adults; $5,000 in the case of a truck 
or van with a gross vehicle weight between 10,000 and 26,000 
pounds; and $2,000 in the case of any other motor vehicle. 
Qualified electric vehicles do not qualify for the clean-fuel 
vehicle deduction. The deduction phases down in the years 2004 
through 2006, and is unavailable for purchases after December 
31, 2006.
---------------------------------------------------------------------------
    \31\ A hybrid-electric vehicle may qualify as a clean-fuel vehicle 
under present law.
---------------------------------------------------------------------------

                               HOUSE BILL

Clean-fuel vehicles
      The House bill repeals the phased-down reduction in the 
allowable deduction for years 2004, 2005, and 2006. Thus, the 
provision provides that a taxpayer could claim a full deduction 
for allowable costs of clean-fuel vehicles purchased before 
January 1, 2007.
Fuel cell vehicles
      The House bill provides a credit for the purchase of a 
new qualified fuel cell motor vehicle. A qualifying fuel cell 
vehicle is a motor vehicle that is propelled by power derived 
from one or more cells which convert chemical energy directly 
into electricity by combining oxygen with hydrogen fuel which 
is stored on board the vehicle and may or may not require 
reformation prior to use. In general the House bill provides 
that the buyer claims the credit, unless the buyer is a tax-
exempt entity in which case the seller or lessor of the vehicle 
may claim the credit. The provision permits unused credits to 
be carried forward for up to 20 years. Qualified fuel cell 
motor vehicles are vehicles placed in service before 2013.
      The amount of credit for the purchase of a fuel cell 
vehicle is determined by a base credit amount that depends upon 
the weight class of the vehicle and, in the case of automobiles 
or light trucks, an additional credit amount that depends upon 
the rated fuel economy of the vehicle compared to a base fuel 
economy. For these purposes the base fuel economy is the 2000 
model year city fuel economy rating for vehicles of various 
weight classes (see below). Table 1, below, shows the base 
credit amounts.

           TABLE 1.--BASE CREDIT AMOUNT FOR FUEL CELL VEHICLES
------------------------------------------------------------------------
        Vehicle gross weight rating in pounds            Credit amount
------------------------------------------------------------------------
Vehicle = 8,500......................................             $4,000
8,500 < vehicle = 14,000.............................             10,000
14,000 < vehicle = 26,000............................             20,000
26,000 < vehicle.....................................             40,000
------------------------------------------------------------------------

      Table 2, below, shows the additional credits for 
automobiles or light trucks.

           TABLE 2.--CREDIT FOR QUALIFYING FUEL CELL VEHICLES
                     [Percent of base fuel economy]
------------------------------------------------------------------------
                                                     If fuel economy of
                                                        the fuel cell
                                                         vehicle is:
                      Credit                       ---------------------
                                                                But less
                                                     At least     than
------------------------------------------------------------------------
$1,000............................................        150        175
$1,500............................................        175        200
$2,000............................................        200        225
$2,500............................................        225        250
$3,000............................................        250        275
$3,500............................................        275        300
$4,000............................................           300
------------------------------------------------------------------------

Advanced lean-burn technology motor vehicle
      The House bill provides a credit for the purchase of a 
new advanced lean burn technology motor vehicle. A qualifying 
advanced lean burn technology motor vehicle must meet the 
Environmental Protection Agency's Tier II bin 8 emissions 
standards. In general the provision provides that the buyer 
claims the credit, unless the buyer is a tax-exempt entity in 
which case the seller or lessor of the vehicle may claim the 
credit. The House bill permits unused credits to be carried 
forward for up to 20 years. Qualified advanced lean burn 
technology motor vehicles are vehicles placed in service before 
2007. Table 3, below, shows the credits for the purchase of an 
advanced lean burn technology motor vehicle.

   TABLE 3.--CREDIT FOR QUALIFYING ADVANCED LEAN BURN TECHNOLOGY MOTOR
                                VEHICLES
                     [Percent of base fuel economy]
------------------------------------------------------------------------
                                                     If fuel economy of
                                                        the fuel cell
                                                         vehicle is:
                      Credit                       ---------------------
                                                                But less
                                                     At least     than
------------------------------------------------------------------------
$500..............................................        125        150
$1,000............................................        150        175
$1,500............................................        175        200
$2,000............................................        200        225
$2,500............................................        225        250
$3,000............................................           250
------------------------------------------------------------------------

      In addition to the credit amount shown in Table 3, an 
advanced lean burn technology automobile or light truck may be 
eligible for an additional credit of $250 if the vehicle 
achieves an estimated lifetime fuel savings of at least 1,500 
gallons of fuel and a further additional credit of $500 if the 
vehicle achieves an estimated lifetime fuel savings of at least 
2,500 gallons compared to a like conventional vehicle (using 
the 2000 model year city fuel economy rating for the like 
vehicle and assuming 120,000 miles driven).
Base fuel economy
      The base fuel economy is the 2000 model year city fuel 
economy for vehicles by inertia weight class by vehicle type. 
The ``vehicle inertia weight class'' is that defined in 
regulations prescribed by the Environmental Protection Agency 
for purposes of Title II of the Clean Air Act.
      Effective date.--The House bill provision is effective 
for property placed in service after the date of enactment.

                            SENATE AMENDMENT

Section 179A
      The Senate amendment extends the present-law deduction 
through December 31, 2011, for hydrogen-related property and 
through December 31, 2007, for all other vehicles. The Senate 
amendment provides that the otherwise allowable deduction is 
reduced by 25 percent in 2004 through 2009 for hydrogen-related 
property and in 2004 and 2005 for all other vehicles. The 
Senate amendment reduces the otherwise allowable deduction by 
50 percent and 75 percent in 2010 and 2011 respectively in the 
case of hydrogen-related property and in 2006 and 2007 for all 
other vehicles.
Fuel cell motor vehicles
      The Senate amendment provides a credit for the purchase 
of qualified fuel cell motor vehicles. The base credit for the 
purchase of new qualified fuel cell motor vehicles ranges 
between $4,000 and $40,000 depending upon the weight class of 
the vehicle. For automobiles and light trucks, the otherwise 
allowable credit amount ($4,000) is increased by an amount from 
$1,000 to $4,000 if the vehicle meets certain fuel economy 
increases compared to a stated standard. Credit may not be 
claimed for qualified fuel cell motor vehicles purchased after 
December 31, 2011.
Hybrid motor vehicles
      The Senate amendment provides a credit for the purchase 
of qualified hybrid motor vehicles. The base credit for the 
purchase of a new qualified hybrid motor vehicle ranges from 
$250 to $10,000 depending upon the weight of the vehicle and 
the maximum power available from the vehicle's rechargeable 
energy storage system. For automobiles and light trucks, the 
otherwise allowable credit amount ($250 to $1,000) is increased 
by an amount from $500 to $3,000 if the vehicle meets certain 
fuel economy increases. For heavy duty hybrid motor vehicles, 
the otherwise allowable credit ($1,000 to $10,000) is increased 
depending upon the vehicle's weight and provided the vehicle 
meets certain 2007 (and beyond) emissions standards. The amount 
of credit is increased by between $3,500 and $14,000 for 
vehicles placed in service in 2002; is increased by between 
$3,000 and $12,000 for vehicles placed in service in 2003, is 
increased by between $2,500 and $10,000 for vehicles placed in 
service in 2004, is increased bybetween $2,000 and $8,000 for 
vehicles placed in service in 2005, and is increased by between $1,500 
and $6,000 for vehicles placed in service in 2006. Credit may not be 
claimed for qualified hybrid motor vehicles purchased after December 
31, 2006.
Alternative fuel motor vehicles
      The Senate amendment provides a credit for the purchase 
of qualified alternative fuel motor vehicles. The base credit 
for the purchase of a new alternative fuel motor vehicle equals 
40 percent of the incremental cost of such vehicle. The 
otherwise allowable credit for 40 percent of the incremental 
cost is increased by an additional 30 percent of the 
incremental cost of the vehicle if the vehicle meets certain 
emissions standards. For computation of the credit, the 
incremental cost of the vehicle may not exceed between $5,000 
and $40,000 (resulting in a maximum total credit of between 
$3,500 and $28,000) depending upon the weight of the vehicle. 
For this purpose, incremental cost generally is defined as the 
amount of the increase of the manufacturer's suggested retail 
price of such a vehicle compared to the manufacturer's 
suggested retail price of a comparable gasoline or diesel 
model. Qualifying alternative fuel motor vehicles are vehicles 
that operate only on qualifying alternative fuels and are 
incapable of operating on gasoline or diesel (except in the 
extent gasoline or diesel fuel is part of a qualified mixed 
fuel). Qualifying alternative fuels are compressed natural gas, 
liquefied natural gas, liquefied petroleum gas, hydrogen, and 
any liquid mixture consisting of at least 85 percent methanol.
      Taxpayers purchasing certain mixed-fuel vehicles also may 
claim the alternative fuel motor vehicle credit, at a reduced 
rate. A mixed-fuel vehicle is a vehicle with gross weight of 
seven tons or more and is certified by the manufacturer as 
being able to operate on a combination of alternative fuel and 
a petroleum-based fuel. A qualifying mixed-fuel vehicle must 
use at least 75 percent alternative fuel (a ``75/25 mixed-fuel 
vehicle'') or 90 percent alternative fuel (a ``90/10 mixed-fuel 
vehicle'') and be incapable of operating on a mixture 
containing less than 75 percent alternative fuel in the case of 
a 75/25 vehicle (less than 90 percent alternative fuel in the 
case of a 90/10 vehicle). A taxpayer purchasing a 75/25 mixed-
fuel vehicle may claim 70 percent of the otherwise allowable 
credit. A taxpayer purchasing a 90/10 mixed-fuel vehicle may 
claim 90 percent of the otherwise allowable credit.
      Credit may not be claimed for qualified alternative fuel 
motor vehicles purchased after December 31, 2006. The 
taxpayer's basis in the property is reduced by the amount of 
credit claimed.
Provisions of general application
      The Senate amendment provides that unused credits may be 
carried forward for 20 years and three years (but not into 
taxable years beginning before October 1, 2002).
      If a tax-exempt person purchases or leases a qualifying 
vehicle, the seller or lessor may claim the credit.
Effective date
      The Senate amendment is effective for property placed in 
service after September 30, 2002.

                          CONFERENCE AGREEMENT

Clean-fuel vehicles (section 179A)
      The conference agreement follows the House bill with 
respect to modifications to present-law section 179A.
Fuel cell vehicles
      The conference agreement follows the House bill with 
respect to providing a credit for the purchase of a new 
qualified fuel cell motor vehicle, except the base-year for 
fuel economy comparisons is modified as described below.
Hybrid motor vehicles
      A qualifying hybrid vehicle is a motor vehicle that draws 
propulsion energy from on-board sources of stored energy which 
include both an internal combustion engine or heat engine using 
combustible fuel and a rechargeable energy storage system 
(e.g., batteries). A qualifying hybrid motor vehicle must be 
placed in service before January 1, 2009.
      In the case of an automobile or light truck (vehicles 
weighing 8,500 pounds or less), the amount of credit for the 
purchase of a hybrid vehicle is the sum of two components: a 
fuel economy credit amount that varies with the rated fuel 
economy of the vehicle compared to a 2002 model year standard 
and a conservation credit based on the estimated lifetime fuel 
savings of a qualifying vehicle compared to a comparable 2002 
model year vehicle. A qualifying hybrid automobile or light 
truck must have a maximum available power from the rechargeable 
energy storage system of at least four percent. In addition, 
the vehicle must meet or exceed certain EPA emissions 
standards. For a vehicle with a gross vehicle weight rating of 
6,000 pounds or less the applicable emissions standards are the 
Bin 5 Tier II emissions standards. For a vehicle with a gross 
vehicle weight rating greater than 6,000 pounds and less than 
or equal to 8,500 pounds, the applicable emissions standards 
are the Bin 8 Tier II emissions standards.
      Table 4, below, shows the fuel economy credit available 
to a hybrid passenger automobile or light truck whose fuel 
economy (on a gasoline gallon equivalent basis) exceeds that of 
a base fuel economy.

                      TABLE 4.--FUEL ECONOMY CREDIT
                     [Percent of base fuel economy]
------------------------------------------------------------------------
                                                     If fuel economy of
                                                     the hybrid vehicle
                                                             is:
                      Credit                       ---------------------
                                                                But less
                                                     At least     than
------------------------------------------------------------------------
$400..............................................        125        150
$800..............................................        150        175
$1,200............................................        175        200
$1,600............................................        200        225
$2,000............................................        225        250
$2,400............................................           250
------------------------------------------------------------------------

      Table 5, below, shows the conservation credit.

                      TABLE 5.--CONSERVATION CREDIT
------------------------------------------------------------------------
                                                          Conservation
           Estimated lifetime fuel savings                   amount
------------------------------------------------------------------------
At least 1,200 but less than 1,800...................               $250
At least 1,800 but less than 2,400...................                500
At least 2,400 but less than 3,000...................                750
At least 3,000.......................................              1,000
------------------------------------------------------------------------

      In the case of a qualifying hybrid motor vehicle weighing 
more than 8,500 pounds, the amount of credit is determined by 
the estimated increase in fuel economy and the incremental cost 
of the hybrid vehicle compared to a comparable vehicle powered 
solely by a gasoline or diesel internal combustion engine and 
that is comparable in weight, size, and use of the vehicle. For 
a vehicle that achieves a fuel economy increase of at least 30 
percent but less than 40 percent, the credit is equal to 20 
percent of the incremental cost of the hybrid vehicle. For a 
vehicle that achieves a fuel economy increase of at least 40 
percent but less than 50 percent, the credit is equal to 30 
percent of the incremental cost of the hybrid vehicle. For a 
vehicle that achieves a fuel economy increase of 50 percent or 
more, the credit is equal to 40 percent of the incremental cost 
of the hybrid vehicle.
      The credit is subject to certain maximum applicable 
incremental cost amounts. For a qualifying hybrid motor vehicle 
weighing more than 8,500 pounds but not more than 14,000 
pounds, the maximum allowable incremental cost amount is 
$7,500. For a qualifying hybrid motor vehicle weighing more 
than 14,000 pounds but not more than 26,000 pounds, the maximum 
allowable incremental cost amount is $15,000. For a qualifying 
hybrid motor vehicle weighing more than 26,000 pounds, the 
maximum allowable incremental cost amount is $30,000.
      A qualifying hybrid motor vehicle weighing more than 
8,500 pounds but not more than 14,000 pounds must have a 
maximum available power from the rechargeable energy storage 
system of at least 10 percent. A qualifying hybrid vehicle 
weighing more than 14,000 pounds must have a maximum available 
power from the rechargeable energy storage system of at least 
15 percent.
      The conferees recognize that these heavier hybrid 
vehicles generally are trucks and vans. The fuel economy 
performance of trucks and vans varies by the use of such 
equipment. For example, used by a plumbing company generally 
carry more weight than an otherwise identicalvan used by a 
florist. Hence, the fuel economy performance of the plumbing vans 
should be worse than that of the floral vans. In basing the credit for 
these heavier hybrid vehicles on fuel economy, the conferees do not 
intend that any fuel economy standards for such heavier vehicles be 
promogulated. Rather, the conferees intend that the Secretary provide 
guidance so that fuel economy increases may be assessed on a case-by-
case basis accounting for the intended use of the vehicles.
Advanced lean-burn technology motor vehicles
      The conference agreement a credit for the purchase of a 
new advanced lean burn technology motor vehicle. The amount of 
credit for the purchase of an advanced lean burn technology 
motor vehicle is the sum of two components: a fuel economy 
credit amount that varies with the rated fuel economy of the 
vehicle compared to a 2002 model year standard as described in 
Table 4, above and a conservation credit based on the estimated 
lifetime fuel savings of a qualifying vehicle compared to a 
comparable 2002 model year vehicle as described in Table 5 
above.
      A qualifying advanced lean burn technology motor vehicle 
that incorporates direct injection, achieves at least 125 
percent of the 2002 model year city fuel economy, and 2004 and 
later model vehicles meets or exceeds certain Environmental 
Protection Agency emissions standards. For a vehicle with a 
gross vehicle weight rating of 6,000 pounds or less the 
applicable emissions standards are the Bin 5 Tier II emissions 
standards. For a vehicle with a gross vehicle weight rating 
greater than 6,000 pounds and less than or equal to 8,500 
pounds, the applicable emissions standards are the Bin 8 Tier 
II emissions standards. A qualifying advanced lean burn 
technology motor vehicle must be placed in service before 
January 1, 2009.
Limitation on number of qualified hybrid and advanced lean-burn 
        technology motor vehicles eligible for the credit
      The conference agreement imposes a limitation on the 
number of qualified hybrid motor vehicles and advanced lean-
burn technology motor vehicles sold by each manufacturer of 
such vehicles that are eligible for the credit. Taxpayers may 
claim the full amount of the allowable credit up to the end of 
the first calendar quarter in which the manufacturer records 
its sale of the 80,000th hybrid and advanced lean-burn 
technology motor vehicle. Taxpayers may claim one half of the 
otherwise allowable credit during the two calendar quarters 
subsequent to the quarter after the manufacturer has recorded 
its 80,000th such sale. In the third and fourth calendar 
quarters subsequent to the quarter after the manufacturer has 
recorded its 80,000th such sale, the taxpayer may claim one 
quarter of the otherwise allowable credit.
      Thus, summing the sales of qualifying hybrid motor 
vehicles of all weight classes and all sales of qualifying 
advanced lean-burn technology motor vehicles, if a manufacturer 
records the sale of its 80,000th in February of 2006, taxpayers 
purchasing such vehicles from the manufacturer may claim the 
full amount of the credit on their purchases of qualifying 
vehicles through June 20, 2006. For the period July 1, 2006, 
through December 31, 2006, taxpayers may claim one half of the 
otherwise allowable credit on purchases of qualifying vehicles 
of the manufacturer. For the period January 1, 2007, through 
June 30, 2007, taxpayers may claim one quarter of the otherwise 
allowable credit on the purchases of qualifying vehicles of 
themanufacturer. After June 30, 2007, no credit may be claimed for 
purchases of hybrid motor vehicles or advanced lean-burn technology 
motor vehicles sold by the manufacturer.
Alternative fuel motor vehicles
      The credit for the purchase of a new alternative fuel 
vehicle is 40 percent of the incremental cost of such vehicle, 
plus an additional 30 percent if the vehicle meets certain 
emissions standards, but not more than between $5,000 and 
$40,000 depending upon the weight of the vehicle. Table 6, 
below, shows the maximum permitted incremental cost for the 
purpose of calculating the credit for alternative fuel vehicles 
by vehicle weight class.

     TABLE 6.--MAXIMUM ALLOWABLE INCREMENTAL COST FOR CALCULATION OF
                     ALTERNATIVE FUEL VEHICLE CREDIT
------------------------------------------------------------------------
                                                       Maximum allowable
        Vehicle gross weight rating in pounds           incremental cost
------------------------------------------------------------------------
Vehicle = 8,500......................................             $5,000
8,500 < vehicle = 14,000.............................             10,000
14,000 < vehicle = 26,000............................             25,000
26,000 < vehicle.....................................             40,000
------------------------------------------------------------------------

      Alternative fuels comprise compressed natural gas, 
liquefied natural gas, liquefied petroleum gas, hydrogen, and 
any liquid fuel that is at least 85 percent methanol. 
Qualifying alternative fuel motor vehicles are vehicles that 
operate only on qualifying alternative fuels and are incapable 
of operating on gasoline or diesel (except in the extent 
gasoline or diesel fuel is part of a qualified mixed fuel, 
described below).
      Certain mixed fuel vehicles, that is vehicles that use a 
combination of an alternative fuel and a petroleum-based fuel, 
are eligible for a reduced credit. If the vehicle operates on a 
mixed fuel that is at least 75 percent alternative fuel, the 
vehicle is eligible for 70 percent of the otherwise allowable 
alternative fuel vehicle credit. If the vehicle operates on a 
mixed fuel that is at least 90 percent alternative fuel, the 
vehicle is eligible for 90 percent of the otherwise allowable 
alternative fuel vehicle credit.
      A qualifying alternative fuel vehicle (or mixed fuel 
vehicle) must be placed in service before January 1, 2007.
Base fuel economy
      The base fuel economy is the 2002 model year city fuel 
economy for vehicles by inertia weight class by vehicle type. 
The ``vehicle inertia weight class'' is that defined in 
regulations prescribed by the Environmental Protection Agency 
for purposes of Title II of the Clean Air Act.
Alternative minimum tax and credit carry forward or carry back
      Taxpayers may claim credits with respect to purchases of 
qualified vehicles against both their regular and alternative 
minimum tax liabilities.
      The conference agreement provides that credits allowable, 
but unused in the current year, from the purchase of a 
qualifying vehicle for business use may be carried back one 
year and forward 20 years.\32\ Credit allowable with respect to 
a vehicle purchased for personal use may only be claimed in the 
year of purchase. The Secretary shall issue regulations under 
which qualified vehicle sold at retail is display a notice 
stating that the vehicle is a qualified vehicle and that the 
buyer may not benefit from the credit allowed if the buyer has 
insufficient tax liability to be offset by the allowable 
credit.
---------------------------------------------------------------------------
    \32\ The credit, however, is not made part of the general business 
credit.
---------------------------------------------------------------------------
      Effective date.--The provision is effective for property 
placed in service after the date of enactment.
10. Modifications of deduction for refueling property (secs. 2003 and 
        2010 of Senate amendment and sec. 179A of the Code)

                              PRESENT LAW

      Certain costs of qualified clean-fuel vehicle refueling 
property may be expensed and deducted when such property is 
placed in service (sec. 179A). Up to $100,000 of such property 
at each location owned by the taxpayer may be expensed with 
respect to that location. Natural gas, liquefied natural gas, 
liquefied petroleum gas, hydrogen, electricity and any other 
fuel at least 85 percent of which is methanol, ethanol, or any 
other alcohol or ether comprise clean-burning fuels.
      The deduction is unavailable for property placed in 
service after December 31, 2006.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment extends the present-law deduction to 
property placed in service before January 1, 2008, and to 
property placed in service before January 1, 2012, in the case 
of hydrogen refueling property.
      In addition, the Senate amendment provision permits 
taxpayers to claim a 50-percent credit for the cost of 
installing clean-fuel vehicle refueling property to be used in 
a trade or business of the taxpayer or installed at the 
principal residence of the taxpayer. In the case of retail 
clean-fuel vehicle refueling property the allowable credit may 
not exceed $30,000. In the case of residential clean-fuel 
vehicle refueling property the allowable credit may not 
exceed$1,000. The taxpayer's basis in the property is reduced by the 
amount of the credit and the taxpayer may not claim deductions under 
section 179A with respect to property for which the credit is claimed.
      In the case of refueling property installed on property 
owned or used by a tax-exempt person, the taxpayer that 
installs the property may claim the credit. To be eligible for 
the credit, the property must be placed in service before 
January 1, 2007 (before January 1, 2012 in the hydrogen 
refueling property). The credit allowable in the taxable year 
cannot exceed the difference between the taxpayer's regular tax 
(reduced by certain other credits) and the taxpayer's tentative 
minimum tax. The taxpayer may carry forward unused credits for 
20 years.
      Effective date.--The Senate amendment is effective for 
property placed in service after September 30, 2002.

                          CONFERENCE AGREEMENT

      The conference agreement extends and modifies present-law 
section 179A with respect to refueling property. The conference 
agreement increases the present-law limitation of $100,000 of 
qualifying expenses per refueling location of the taxpayer to 
$150,000 per location. In addition, the conference agreement 
modifies the definition of refueling property with respect to 
hydrogen produced from another clean-burning fuel (i.e., 
natural gas, liquefied natural gas, liquefied petroleum gas, 
any fuel at least 85 percent of which is one or more of 
methanol, ethanol, or other alcohol or ether) such that 
qualified refueling property included property for the 
production of hydrogen fuel, in addition to property for the 
storage and dispensing of hydrogen fuel, if such property is 
located at the point where hydrogen fuel is delivered into the 
fuel tank of a motor vehicle.
      The conference agreement extends the placed in service 
date for qualifying refueling property to property placed in 
service prior to January 1, 2009 (January 1, 2012, in the case 
of property related to hydrogen fuel).
      Effective date.--The provision is effective for property 
placed in service after the date of enactment.
11. Credit for retail sale of alternative motor vehicle fuels (secs. 
        2004 and 2010 of Senate amendment)

                              PRESENT LAW

      There is no retail credit for the sale of alternative 
motor vehicle fuels. However, a 52-cents-per-gallon income tax 
credit is allowed for alcohol fuels for 2003 and 2004 (51 cents 
for 2005-2007). The alcohol fuels credit may be claimed as a 
reduction in excise tax payments. Such tax payments generally 
are made before the retail level. In the case of ethanol, the 
Code provides a separate 10-cents-per-gallon credit for small 
producers.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment permits taxpayers to claim a credit 
equal to the gasoline gallon equivalent of 30 cents per gallon 
of alternative fuel sold in 2002 and 2003, 40 cents per gallon 
in 2004, and 50 cents per gallon thereafter. Qualifying 
alternative fuels are compressed natural gas, liquefied natural 
gas, liquefied petroleum gas, hydrogen, any liquid mixture 
consisting of at least 85 percent methanol, and any liquid 
mixture consisting of at least 85 percent ethanol. The credit 
may be claimed for sales prior to January 1, 2007. Under the 
provision, the credit is part of the general business credit.
      Effective date.--The Senate amendment is effective for 
fuel sold at retail after September 30, 2002.

                          CONFERENCE AGREEMENT

      The conference agreement does not include the Senate 
amendment provision.

                            II. RELIABILITY

     A. Natural Gas Gathering Lines Treated as Seven-Year Property

(sec. 42001 of the House bill, sec. 2302 of the Senate amendment, and 
        sec. 168 of the Code)

                              PRESENT LAW

      The applicable recovery period for assets placed in 
service under the Modified Accelerated Cost Recovery System is 
based on the ``class life of the property.'' The class lives of 
assets placed in service after 1986 are generally set forth in 
Revenue Procedure 87-56.\33\ Revenue Procedure 87-56 includes 
two asset classes that could describe natural gas gathering 
lines owned by nonproducers of natural gas. Asset class 46.0, 
describing pipeline transportation, provides a class life of 22 
years and a recovery period of 15 years. Asset class 13.2, 
describing assets used in the exploration for and production of 
petroleum and natural gas deposits, provides a class life of 14 
years and a depreciation recovery period of seven years. The 
uncertainty regarding the appropriate recovery period of 
natural gas gathering lines has resulted in litigation between 
taxpayers and the IRS. The 10th Circuit Court of Appeals and 
the 6th Circuit Court of Appeals have held that natural gas 
gathering lines owned by nonproducers falls within the scope of 
Asset class 13.2 (i.e., seven-year recovery period).\34\ The 
Tax Court has held that natural gas gathering lines owned by 
nonproducers falls within the scope of Asset class 46.0 (i.e., 
15-year recovery period).\35\
---------------------------------------------------------------------------
    \33\ 1987-2 C.B. 674 (as clarified and modified by Rev. Proc. 88-
22, 1988-1 C.B. 785).
    \34\ Duke Energy v. Commissioner, 172 F.3d 1255 (10th Cir. 1999), 
rev'g 109 T.C. 416 (1997). Saginaw Bay Pipeline Co. v. United States, 
2003 FED App. 0259P (6th Cir.) rev'g 124 F. Supp. 2d 465 (E.D. Mich. 
2001). See also True v. United States, 97-2 U.S. Tax Cas. (CCH) par. 
50,946 (D. Wyo. 1997).
    \35\ Clajon Gas Co., L.P. v. Commissioner, 119 T.C. 197 (2002).
---------------------------------------------------------------------------

                               HOUSE BILL

      The House bill establishes a statutory 7-year recovery 
period and a class life of 10 years for natural gas gathering 
lines. In addition, the House bill provides that there is no 
adjustment to the allowable amount of depreciation for purposes 
of computing a taxpayer's alternative minimum taxable income 
with respect to such property. A natural gas gathering line is 
defined to include any pipe, equipment, and appurtenance that 
is (1) determined to be a gathering line by the Federal Energy 
Regulatory Commission, or (2) used to deliver natural gas from 
the wellhead or a common point to the point at which such gas 
first reaches (a) a gas processing plant, (b) an 
interconnection with an interstate transmission line, (c) an 
interconnection with an intrastate transmission line, or (d) a 
direct interconnection with a local distribution company, a gas 
storage facility, or an industrial consumer.
      Effective date.--The provision is effective for property 
placed in service after the date of enactment. No inference is 
intended as to the proper treatment of natural gas gathering 
lines placed in service before the date of enactment.

                            SENATE AMENDMENT

      The Senate amendment is the same as the House bill, 
except that it does not include the provision providing that 
there is no adjustment to the allowable amount of depreciation 
for purposes of computing a taxpayer's alternative minimum 
taxable income with respect to natural gas gathering lines.
      Effective date.--The provision is effective for property 
placed in service after the date of enactment. No inference is 
intended as to the proper treatment of natural gas gathering 
lines placed in service before the date of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill with the 
following modification. The conference agreement provides a 
class life of 14 years for natural gas gathering lines (instead 
of 10 years).

   B. Natural Gas Distribution Lines Treated as Fifteen-Year Property

(sec. 42002 of the House bill, sec. 2311 of the Senate amendment, and 
        sec. 168 of the Code)

                              PRESENT LAW

      The applicable recovery period for assets placed in 
service under the Modified Accelerated Cost Recovery System is 
based on the ``class life of the property.'' The class lives of 
assets placed in service after 1986 are generally set forth in 
Revenue Procedure 87-56.\36\ Natural gas distribution pipelines 
are assigned a 20-year recovery period and a class life of 35 
years.
---------------------------------------------------------------------------
    \36\ 1987-2 C.B. 674 (as clarified and modified by Rev. Proc. 88-
22, 1988-1 C.B. 785).
---------------------------------------------------------------------------

                               HOUSE BILL

      The House bill establishes a statutory 15-year recovery 
period and a class life of 20 years for natural gas 
distribution lines. In addition, the House bill provides that 
there would be no adjustment to the allowable amount of 
depreciation for purposes of computing a taxpayer's alternative 
minimum taxable income with respect to such property.
      Effective date.--The provision is effective for property 
placed in service after the date of enactment.

                            SENATE AMENDMENT

      The Senate amendment establishes a statutory 15-year 
recovery period and a class life of 20 years for natural gas 
distribution lines.
      Effective date.--The provision is effective for property 
placed in service after the date of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill with the 
following modification. The conference agreement provides a 
class life of 35 years for natural gas distribution lines 
(instead of 20 years).

       C. Transmission Property Treated as Fifteen-Year Property

(sec. 42003 of the House bill and sec. 168 of the Code)

                              PRESENT LAW

      The applicable recovery period for assets placed in 
service under the Modified Accelerated Cost Recovery System is 
based on the ``class life of the property.'' The class lives of 
assets placed in service after 1986 are generally set forth in 
Revenue Procedure 87-56. Assets used in the transmission and 
distribution of electricity for sale and related land 
improvements are assigned a 20-year recovery period and a class 
life of 30 years.

                               HOUSE BILL

      The House bill establishes a statutory 15-year recovery 
period and a class life of 20 years for certain assets used in 
the transmission of electricity for sale and related land 
improvements. For purposes of the provision, section 1245 
property used in the transmission of electricity for sale at 69 
kilovolts and above will qualify for the new recovery period. 
In addition, the House bill provides that there would be no 
adjustment to the allowable amount of depreciation for purposes 
of computing a taxpayer's alternative minimum taxable income 
with respect to such property.
      Effective date.--The provision is effective for property 
placed in service after the date of enactment.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill with the 
following modifications. The conference agreement limits the 
provision to property the original use \37\ of which commences 
after the date of enactment and alters the class life of such 
property to 30 years (instead of 20 years).
---------------------------------------------------------------------------
    \37\ The term ``original use'' means the first use to which the 
property is put, whether or not such use corresponds to the use of such 
property by the taxpayer. It is intended that, when evaluating whether 
property qualifies as ``original use,'' the factors used to determine 
whether property qualified as ``new section 38 property'' for purposes 
of the investment tax credit would apply. See Treasury Regulation 1.48-
2. Thus, it is intended that additional capital expenditures incurred 
to recondition or rebuild acquired property (or owned property) would 
satisfy the ``original use'' requirement. However, the cost of 
reconditioned or rebuilt property acquired by the taxpayer would not 
satisfy the ``original use'' requirement. For example, if on August 11, 
2004, a taxpayer buys from RCM for $200,000 transmission lines that 
have been previously used by RCM. Subsequent to the purchase, the 
taxpayer makes an expenditure on the property of $50,000 of the type 
that must be capitalized. Regardless of whether the $50,000 is added to 
the basis of such property or is capitalized as a separate asset, such 
amount would be treated as satisfying the ``original use'' requirement 
and would be eligible for the reduced recovery period. No part of the 
$200,000 purchase price qualifies for the reduced recovery period.
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D. Expensing of Capital Costs Incurred for Production in Complying With 
 Environmental Protection Agency Sulfur Regulations for Small Refiners

(sec. 42004 of the House bill, sec. 2303 of the Senate amendment, and 
        new sec. 179C of the Code)

                              PRESENT LAW

      Taxpayers generally may recover the costs of investments 
in refinery property through annual depreciation deductions.

                               HOUSE BILL

      The bill permits small business refiners to claim an 
immediate deduction (i.e., expensing) for up to 75 percent of 
the costs paid or incurred for the purpose of complying with 
the Highway Diesel Fuel Sulfur Control Requirements of the 
Environmental Protection Agency (``EPA'').
      For these purposes a small business refiner is a taxpayer 
who is within the business of refining petroleum products 
employs not more than 1,500 employees directly in refining and 
has less than 205,000 barrels per day (average) of total 
refinery capacity. The deduction is reduced, pro rata, for 
taxpayers with capacity in excess of 155,000 barrels per day.
      Effective date.--The provision is effective for expenses 
paid or incurred after March 31, 2003.

                            SENATE AMENDMENT

      The Senate amendment generally is the same as the House 
bill.
      Effective date.--The provision is effective for expenses 
paid or incurred after the date of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement generally follows the House bill 
and the Senate amendment except with respect to the effective 
date. The conference agreement also clarifies that qualifying 
expenditures are those expenditures paid or incurred with 
respect to a facility beginning January 1, 2003, and ending the 
earlier of the date that is one year after the date on which 
the taxpayer must comply with applicable EPA regulation or 
December 31, 2009. In addition, with respect to the definition 
of a small business refiner, the conferees intend that, in any 
case in which refinery through-put or retained production of 
the refinery differs substantially from its average daily 
output of refined product, capacity be measured by reference to 
the average daily output of refined product.
      Effective date.--The provision is effective for expenses 
paid or incurred after December 31, 2002.

     E. Credit for Small Refiners for Production of Diesel Fuel in 
Compliance With Environmental Protection Agency Sulfur Regulations for 
                             Small Refiners

(sec. 42005 of the House bill, sec. 2304 of Senate amendment, and new 
        sec. 45I of the Code)

                              PRESENT LAW

      Present law does not provide a credit for the production 
of low-sulfur diesel fuel.

                               HOUSE BILL

      The House bill provides that a small business refiner may 
claim credit equal to five cents per gallon for each gallon of 
low sulfur diesel fuel produced during the taxable year that is 
in compliance with the Highway Diesel Fuel Sulfur Control 
Requirements of the Environmental Protection Agency (``EPA''). 
The total production credit claimed by the taxpayer is limited 
to 25 percent of the capital costs incurred to come into 
compliance with the EPA diesel fuel requirements. The 
taxpayer's basis in such property is reduced by the amount of 
production credit claimed.
      For these purposes a small business refiner is a taxpayer 
who is within the business of refining petroleum products 
employs not more than 1,500 employees directly in refining and 
has less than 205,000 barrels per day (average) of total 
refinery capacity. The credit is reduced, pro rata, for 
taxpayers with capacity in excess of 155,000 barrels per day.
      Effective date.--The provision is effective for expenses 
paid or incurred after March 31, 2003.

                            SENATE AMENDMENT

      The Senate amendment generally is the same as the House. 
In the case of a qualifying small business refiner that is 
owned by a cooperative, the cooperative is allowed to elect to 
pass any production credits to patrons of the organization.
      Effective date.--The Senate amendment is effective on the 
date of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill and the 
Senate amendment. The conference agreement provides that a 
small business refiner may claim credit equal to five cents per 
gallon for each gallon of low sulfur diesel fuel produced 
during the taxable year that is in compliance with the Highway 
Diesel Fuel Sulfur Control Requirements of the Environmental 
Protection Agency (``EPA''). The total production credit 
claimed by the taxpayer is limited to 25 percent of the capital 
costs incurred to come into compliance with the EPA diesel fuel 
requirements. The taxpayer's basis in such property is reduced 
by the amount of production credit claimed. In the case of a 
qualifying small business refiner that is owned by a 
cooperative, the cooperative is allowed to elect to pass any 
production credits to patrons of the organization.
      In addition, with respect to the definition of a small 
business refiner, the conferees intend that, in any case where 
refinery through-put or retained production of the refinery 
differs substantially from its average daily output of refined 
product, capacity be measured by reference to the average daily 
output of refined product.
      The conference agreement also clarifies that qualifying 
expenditures are those expenditures paid or incurred with 
respect to a facility beginning January 1, 2003 and ending the 
earlier of the date that is one year after the date on which 
the taxpayer must comply with applicable EPA regulation or 
December 31, 2009.
      Effective date.--The provision is effective for expenses 
paid or incurred after December 31, 2002.

 F. Determination of Small Refiner Exception to Oil Depletion Deduction

(sec. 42006 of the House bill, sec. 2305 of the Senate amendment, and 
        sec. 613A of the Code)

                              PRESENT LAW

      Present law classifies oil and gas producers as 
independent producers or integrated companies. The Code 
provides numerous special tax rules for operations by 
independent producers. One such rule allows independent 
producers to claim percentage depletion deductions rather than 
deducting the costs of their asset, a producing well, based on 
actual production from the well (i.e., cost depletion).
      A producer is an independent producer only if its 
refining and retail operations are relatively small. For 
example, an independent producer may not have refining 
operations the runs from which exceed 50,000 barrels on any day 
in the taxable year during which independent producer status is 
claimed.

                               HOUSE BILL

      The provision increases the current 50,000-barrel-per-day 
limitation to 75,000. In addition, the provision changes the 
refinery limitation on claiming independent producer status 
from a limit based on actual daily production to a limit based 
on average daily production for the taxable year. Accordingly, 
the average daily refinery run for the taxable year may not 
exceed 75,000 barrels. For this purpose, the taxpayer 
calculates average daily production by dividing total 
production for the taxable year by the total number of days in 
the taxable year.
      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2003.

                            SENATE AMENDMENT

      The Senate amendment is similar to the House Bill except 
the average daily refinery run may not exceed 60,000 barrels.
      Effective date.--The Senate amendment is effective for 
taxable years beginning after December 31, 2002.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill, except 
the average daily refinery run for the taxable year may not 
exceed 67,500 barrels.
      Effective date.--The provision is effective for taxable 
years ending after the date of enactment.

    G. Sales or Dispositions To Implement Federal Energy Regulatory 
           Commission or State Electric Restructuring Policy

(sec. 42007 of the House bill, sec. 2404 of the Senate amendment, and 
        sec. 451 of the Code)

                              PRESENT LAW

      Generally, a taxpayer recognizes gain to the extent the 
sales price (and any other consideration received) exceeds the 
seller's basis in the property. The recognized gain is subject 
to current income tax unless the gain is deferred or not 
recognized under a special tax provision.

                               HOUSE BILL

      The House bill permits a taxpayer to elect to recognize 
gain from a qualifying electric transmission transaction 
ratably over an eight-year period beginning in the year of sale 
if the amount realized from such sale is used to purchase 
exempt utility property within the applicable period \38\ (the 
``reinvestment property''). If the amount realized exceeds the 
amount used to purchase reinvestment property, any realized 
gain shall be recognized to the extent of such excess in the 
year of the qualifying electric transmission transaction. Any 
remaining realized gain is recognized ratably over the eight-
year period.
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    \38\ The applicable period for a taxpayer to reinvest the proceeds 
is four years after the close of the taxable year in which the 
qualifying electric transmission transaction occurs.
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      A qualifying electric transmission transaction is the 
sale or other disposition of property used by the taxpayer in 
the trade or business of providing electric transmission 
services, or an ownership interest in such an entity, to an 
independent transmission company prior to January 1, 2007. In 
general, an independent transmission company is defined as: (1) 
an independent transmission provider \39\ approved by the FERC; 
(2) a person (i) who the FERC determines under section 203 of 
the Federal Power Act (or by declaratory order) is not a 
``market participant'' and (ii) whose transmission facilities 
are placed under the operational control of a FERC-approved 
independent transmission provider before the close of the 
period specified in such authorization, but not later than 
January 1, 2007; or (3) in the case of facilities subject to 
the jurisdiction of the Public Utility Commission of Texas, (i) 
a person which is approved by that Commission as consistent 
with Texas State law regarding an independent transmission 
organization, or (ii) a political subdivision, or affiliate 
thereof, whose transmission facilities are under the 
operational control of an organization described in (i).
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    \39\ For example, a regional transmission organization, an 
independent system operator, or an independent transmission company.
---------------------------------------------------------------------------
      Exempt utility property is defined as: (1) property used 
in the trade or business of generating, transmitting, 
distributing, or selling electricity or producing, 
transmitting, distributing, or selling natural gas, or (2) 
stock in a controlled corporation whose principal trade or 
business consists of the activities described in (1).
      If a taxpayer is a member of an affiliated group of 
corporations filing a consolidated return, the provision 
permits the reinvestment property to be purchased by any member 
of the affiliated group (in lieu of the taxpayer).
      If a taxpayer elects the application of the House bill, 
then the statutory period for the assessment of any deficiency, 
for any taxable year in which any part of the gain eligible for 
the provision is realized, attributable to such gain shall not 
expire prior to the expiration of three years from the date the 
Secretary of the Treasury is notified by the taxpayer of the 
reinvestment property or an intention not to reinvest.
      An electing taxpayer is required to attach a statement to 
that effect in the tax return for the taxable year in which the 
transaction takes place in the manner as the Secretary shall 
prescribe. The election shall be binding for that taxable year 
and all subsequent taxable years.\40\ In addition, an electing 
taxpayer is required to attach a statement that identifies the 
reinvestment property in the manner as the Secretary shall 
prescribe.
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    \40\ The provision also provides that the installment sale rules 
shall not apply to any qualifying electric transmission transaction for 
which a taxpayer elects the application of this provision.
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      Effective date.--The provision is effective for 
transactions occurring after the date of enactment.

                            SENATE AMENDMENT

      Similar to the House bill, but does not have a 
reinvestment obligation.
      Effective date.--The provision is effective for 
transactions occurring after the date of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill.

   H. Modification to Special Rules for Nuclear Decommissioning Costs

(sec. 42008 of the House bill, sec. 2402 of the Senate amendment, and 
        sec. 468A of the Code)

                              PRESENT LAW

Overview
      Special rules dealing with nuclear decommissioning 
reserve funds were adopted by Congress in the Deficit Reduction 
Act of 1984 (``1984 Act''), when tax issues regarding the time 
value of money were addressed generally. Under general tax 
accounting rules, a deduction for accrual basis taxpayers is 
deferred until there is economic performance for the item for 
which the deduction is claimed. However, the 1984 Act contains 
an exception under which a taxpayer responsible for nuclear 
powerplant decommissioning may elect to deduct contributions 
made to a qualified nuclear decommissioning fund for future 
decommissioning costs. Taxpayers who do not elect this 
provision are subject to general tax accounting rules.
Qualified nuclear decommissioning fund
      A qualified nuclear decommissioning fund (a ``qualified 
fund'') is a segregated fund established by a taxpayer that is 
used exclusively for the payment of decommissioning costs, 
taxes on fund income, management costs of the fund, and for 
making investments. The income of the fund is taxed at a 
reduced rate of 20 percent for taxable years beginning after 
December 31, 1995.\41\
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    \41\ As originally enacted in 1984, a qualified fund paid tax on 
its earnings at the top corporate rate and, as a result, there was no 
present-value tax benefit of making deductible contributions to a 
qualified fund. Also, as originally enacted, the funds in the trust 
could be invested only in certain low risk investments. Subsequent 
amendments to the provision have reduced the rate of tax on a qualified 
fund to 20 percent and removed the restrictions on the types of 
permitted investments that a qualified fund can make.
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      Contributions to a qualified fund are deductible in the 
year made to the extent that these amounts were collected as 
part of the cost of service to ratepayers (the ``cost of 
service requirement'').\42\ Funds withdrawn by the taxpayer to 
pay for decommissioning costs are included in the taxpayer's 
income, but the taxpayer also is entitled to a deduction for 
decommissioning costs as economic performance for such costs 
occurs.
---------------------------------------------------------------------------
    \42\ Taxpayers are required to include in gross income customer 
charges for decommissioning costs (sec. 88).
---------------------------------------------------------------------------
      Accumulations in a qualified fund are limited to the 
amount required to fund decommissioning costs of a nuclear 
powerplant for the period during which the qualified fund is in 
existence (generally post-1984 decommissioning costs of a 
nuclear powerplant). For this purpose, decommissioning costs 
are considered to accrue ratably over a nuclear powerplant's 
estimated useful life. In order to prevent accumulations of 
funds over the remaining life of a nuclear powerplant in excess 
of those required to pay future decommissioning costs of such 
nuclear powerplant and to ensure that contributions to a 
qualified fund are not deducted more rapidly than level funding 
(taking into account an appropriate discount rate), taxpayers 
must obtain a ruling from the IRS to establish the maximum 
annual contribution that may be made to a qualified fund (the 
``ruling amount''). In certain instances (e.g., change in 
estimates), a taxpayer is required to obtain a new ruling 
amount to reflect updated information.
      A qualified fund may be transferred in connection with 
the sale, exchange or other transfer of the nuclear powerplant 
to which it relates. If the transferee is a regulated public 
utility and meets certain other requirements, the transfer will 
be treated as a nontaxable transaction. No gain or loss will be 
recognized on the transfer of the qualified fund and the 
transferee will take the transferor's basis in the fund.\43\ 
The transferee is required to obtain a new ruling amount from 
the IRS or accept a discretionary determination by the IRS.\44\
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    \43\ Treas. reg. sec. 1.468A-6.
    \44\ Treas. reg. sec. 1.468A-6(f).
---------------------------------------------------------------------------
Nonqualified nuclear decommissioning funds
      Federal and State regulators may require utilities to set 
aside funds for nuclear decommissioning costs in excess of the 
amount allowed as a deductible contribution to a qualified 
fund. In addition, taxpayers may have set aside funds prior to 
the effective date of the qualified fund rules.\45\ The 
treatment of amounts set aside for decommissioning costs prior 
to 1984 varies. Some taxpayers may have received no tax benefit 
while others may have deducted such amounts or excluded such 
amounts from income. Since 1984, taxpayers have been required 
to include in gross income customer charges for decommissioning 
costs (sec. 88), and a deduction has not been allowed for 
amounts set aside to pay for decommissioning costs except 
through the use of a qualified fund. Income earned in a 
nonqualified fund is taxable to the fund's owner as it is 
earned.
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    \45\ These funds are generally referred to as ``nonqualified 
funds.''
---------------------------------------------------------------------------

                               HOUSE BILL

Repeal of cost of service requirement
      The House bill repeals the cost of service requirement 
for deductible contributions to a nuclear decommissioning fund. 
Thus, all taxpayers, including unregulated taxpayers, are 
allowed a deduction for amounts contributed to a qualified 
fund.
Permit contributions to a qualified fund for pre-1984 decommissioning 
        costs
      The House bill also repeals the limitation that a 
qualified fund only accumulate an amount sufficient to pay for 
a nuclear powerplant's decommissioning costs incurred during 
the period that the qualified fund is in existence (generally 
post-1984 decommissioning costs). Thus, any taxpayer is 
permitted to accumulate an amount sufficient to cover the 
present value of 100 percent of a nuclear powerplant's 
estimated decommissioning costs in a qualified fund. TheHouse 
bill does not change the requirement that contributions to a qualified 
fund not be deducted more rapidly than level funding.
Exception to ruling amount for certain decommissioning costs
      The House bill permits a taxpayer to make contributions 
to a qualified fund in excess of the ruling amount in one 
circumstance. Specifically, a taxpayer is permitted to 
contribute up to the present value of the amount required to 
fund a nuclear powerplant's decommissioning costs which under 
present law section 468A(d)(2)(A) is not permitted to be 
accumulated in a qualified fund (generally pre-1984 
decommissioning costs).\46\ It is anticipated that an amount 
that is permitted to be contributed under this special rule 
shall be determined using the estimate of total decommissioning 
costs used for purposes of determining the taxpayer's most 
recent ruling amount. Any amount transferred to the qualified 
fund under this special rule that has not previously been 
deducted or excluded from gross income is allowed as a 
deduction over the remaining useful life of the nuclear 
powerplant.\47\ If a qualified fund that has received amounts 
under this rule is transferred to another person, the 
transferor will be permitted a deduction for any remaining 
deductible amounts at the time of transfer.
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    \46\ The ability to transfer property into a qualified fund under 
this special rule is available only to the extent the taxpayer has not 
obtained a new ruling amount incorporating the repeal of the limitation 
that a qualified fund only accumulate an amount sufficient to pay for 
decommissioning costs of a nuclear powerplant incurred during the 
period that the fund is in existence (generally post 1984 
decommissioning costs).
    \47\ A taxpayer recognizes no gain or loss on the contribution of 
property to a qualified fund under this special rule. The qualified 
fund will take a transferred (carryover) basis in such property. 
Correspondingly, a taxpayer's deduction (over the estimated life of the 
nuclear powerplant) is to be based on the adjusted tax basis of the 
property contributed rather than the fair market value of such 
property.
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Contributions to a qualified fund after useful life of powerplant
      The House bill also allows deductible contributions to a 
qualified fund subsequent to the end of a nuclear powerplant's 
estimated useful life. Such payments are permitted to the 
extent they do not cause the assets of the qualified fund to 
exceed the present value of the taxpayer's allocable share 
(current or former) of the nuclear decommissioning costs of 
such nuclear powerplant.
Clarify treatment of transfers of qualified funds
      The House bill clarifies the Federal income tax treatment 
of the transfer of a qualified fund. No gain or loss would be 
recognized to the transferor or the transferee as a result of 
the transfer of a qualified fund in connection with the 
transfer of the power plant with respect to which such fund was 
established.
      Effective date.--The provision would be effective for 
taxable years beginning after December 31, 2003.

                            SENATE AMENDMENT

Repeal of cost of service requirement
      The Senate amendment repeals the cost of service 
requirement for deductible contributions to a nuclear 
decommissioning fund. Thus, all taxpayers, including 
unregulated taxpayers, would be allowed a deduction for amounts 
contributed to a qualified fund.
Clarify treatment of transfers of qualified funds and deductibility of 
        decommissioning costs
      The Senate amendment clarifies the Federal income tax 
treatment of the transfer of a qualified fund. No gain or loss 
would be recognized to the transferor or the transferee (or the 
qualified fund) as a result of the transfer of a qualified fund 
in connection with the transfer of the power plant with respect 
to which such fund was established. In addition, the Senate 
amendment provides that all nuclear decommissioning costs are 
deductible when paid or incurred.
      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2002.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill with the 
following modifications. The conference agreement clarifies 
that, for purposes of the exception to ruling amount for 
certain costs (generally pre-1984 decommissioning costs), only 
the present value of total nuclear decommissioning costs with 
respect to a nuclear powerplant previously excluded under 
section 468A(d)(2)(A) may be contributed to a qualified fund. 
For example, if $100 is the present value of the total 
decommissioning costs of a nuclear powerplant, and if under 
present law the qualified fund is only permitted to accumulate 
(and has in fact accumulated) $75 of decommissioning costs over 
such plant's estimated useful life (because the qualified fund 
was not in existence during 25 percent of the estimated useful 
life of the nuclear powerplant), a taxpayer could contribute 
$25 to the qualified fund under this component of the 
provision.
      In addition, the Conference agreement provides that a 
purchaser of an interest in a nuclear powerplant may elect to 
treat certain amounts previously set aside for nuclear 
decommissioning by the seller and transferred to the taxpayer 
as part of the sale as if such amounts had been contributed to 
a qualified fund immediately prior to the transfer.\48\ The 
adjusted basis of such assets shall be the same as in the hands 
of the seller. The election is available only if the seller of 
the interest in the nuclear powerplant is a tax-exempt entity. 
In addition, the maximum amount eligible for such treatment is 
limited to the product of the present value of the estimated 
nuclear decommissioning costs and the applicable percentage. 
The ``applicable percentage'' is a fraction equal to the number 
of years the powerplant has been in service over the estimated 
useful life of such powerplant. A taxpayer shall make the 
election in the manner prescribed by the Secretary by the due 
date (including extensions of time) for its return of tax for 
the year in which the acquisition occurs. In addition, a 
taxpayer must request a new ruling amount from the IRS to be 
eligible for this provision.
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    \48\ An election under this special rule shall be disregarded in 
determining the Federal income tax treatment of the sale to the seller.
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        I. Treatment of Certain Income of Electric Cooperatives

(sec. 42009 of the House bill, secs. 2403 and 2406 of the Senate 
        amendment, and sec. 501 of the Code)

                              PRESENT LAW

In general
      Under present law, an entity must be operated on a 
cooperative basis in order to be treated as a cooperative for 
Federal income tax purposes. Although not defined by statute or 
regulation, the two principal criteria for determining whether 
an entity is operating on a cooperative basis are: (1) 
ownership of the cooperative by persons who patronize the 
cooperative; and (2) return of earnings to patrons in 
proportion to their patronage. The Internal Revenue Service 
requires that cooperatives must operate under the following 
principles: (1) subordination of capital in control over the 
cooperative undertaking and in ownership of the financial 
benefits from ownership; (2) democratic control by the members 
of the cooperative; (3) vesting in and allocation among the 
members of all excess of operating revenues over the expenses 
incurred to generate revenues in proportion to their 
participation in the cooperative (patronage); and (4) operation 
at cost (not operating for profit or below cost).\49\
---------------------------------------------------------------------------
    \49\ Announcement 96-24, ``Proposed Examination Guidelines 
Regarding Rural Electric Cooperatives,'' 1996-16 I.R.B. 35.
---------------------------------------------------------------------------
      In general, cooperative members are those who participate 
in the management of the cooperative and who share in patronage 
capital. As described below, income from the sale of electric 
energy by an electric cooperative may be member or non-member 
income to the cooperative, depending on the membership status 
of the purchaser. A municipal corporation may be a member of a 
cooperative.
      For Federal income tax purposes, a cooperative generally 
computes its income as if it were a taxable corporation, with 
one exception--the cooperative may exclude from its taxable 
income distributions of patronage dividends. In general, 
patronage dividends are the profits of the cooperative that are 
rebated to its patrons pursuant to a pre-existing obligation of 
the cooperative to do so. The rebate must be made in some 
equitable fashion on the basis of the quantity or value of 
business done with the cooperative.
      Except for tax-exempt farmers' cooperatives, cooperatives 
that are subject to the cooperative tax rules of subchapter T 
of the Code (sec. 1381, et seq.) are permitted a deduction for 
patronage dividends from their taxable income only to the 
extent of net income that is derived from transactions with 
patrons who are members of the cooperative (sec. 1382). The 
availability of such deductions from taxable income has the 
effect of allowing the cooperative to be treated like a conduit 
with respect to profits derived from transactions with patrons 
who are members of the cooperative.
      Cooperatives that qualify as tax-exempt farmers' 
cooperatives are permitted to exclude patronage dividends from 
their taxable income to the extent of all net income, including 
net income that is derived from transactions with patrons who 
are not members of the cooperative, provided the value of 
transactions with patrons who are not members of the 
cooperative does not exceed the value of transactions with 
patrons who are members of the cooperative (sec. 521).
Taxation of electric cooperatives exempt from subchapter T
      In general, the cooperative tax rules of subchapter T 
apply to any corporation operating on a cooperative basis 
(except mutual savings banks, insurance companies, other tax-
exempt organizations, and certain utilities), including tax-
exempt farmers' cooperatives (described in sec. 521(b)). 
However, subchapter T does not apply to an organization that is 
``engaged in furnishing electric energy, or providing telephone 
service, to persons in rural areas'' (sec. 1381(a)(2)(C)). 
Instead, electric cooperatives are taxed under rules that were 
generally applicable to cooperatives prior to the enactment of 
subchapter T in 1962. Under these rules, an electric 
cooperative can exclude patronage dividends from taxable income 
to the extent of all net income of the cooperative, including 
net income derived from transactions with patrons who are not 
members of the cooperative.\50\
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    \50\ See Rev. Rul. 83-135, 1983-2 C.B. 149.
---------------------------------------------------------------------------
Tax exemption of rural electric cooperatives
      Section 501(c)(12) provides an income tax exemption for 
rural electric cooperatives if at least 85 percent of the 
cooperative's income consists of amounts collected from members 
for the sole purpose of meeting losses and expenses of 
providing service to its members. The IRS takes the position 
that rural electric cooperatives also must comply with the 
fundamental cooperative principles described above in order to 
qualify for tax exemption under section 501(c)(12).\51\ The 85-
percent test is determined without taking into account any 
income from qualified pole rentals and cancellation of 
indebtedness income from the prepayment of a loan under 
sections 306A, 306B, or 311 of the Rural Electrification Act of 
1936 (as in effect on January 1, 1987). The exclusion for 
cancellation of indebtedness income applies to such income 
arising in 1987, 1988, or 1989 on debt that either originated 
with, or is guaranteed by, the Federal Government.
---------------------------------------------------------------------------
    \51\ Rev. Rul. 72-36, 1972-1 C.B. 151.
---------------------------------------------------------------------------
      The receipt by a rural electric cooperative of 
contributions in aid of construction and connection charges is 
taken into account for purposes of applying the 85-percent 
test.
      Rural electric cooperatives generally are subject to the 
tax on unrelated trade or business income under section 511.
Credit for producing fuel from a nonconventional source
      Under present law, an income tax credit is allowed for 
certain fuels produced from ``non-conventional sources'' and 
sold to unrelated parties. The amount of the credit is equal to 
$3 (generally adjusted for inflation) per barrel or BTU oil 
barrel equivalent (sec. 29), subject to a phaseout. Qualified 
fuels must be produced within the United States, and include: 
oil produced from shale and tar sands; gas produced from 
geopressured brine, Devonian shale, coal seams,tight formations 
(``tight sands''), or biomass; and liquid, gaseous, or solid synthetic 
fuels produced from coal (including lignite).
      The credit applies to fuels produced from wells drilled 
or facilities placed in service after December 31, 1979, and 
before January 1, 1993. An exception extends the January 1, 
1993 expiration date for facilities producing gas from biomass 
and synthetic fuel from coal if the facility producing the fuel 
is placed in service before July 1, 1998, pursuant to a binding 
contract entered into before January 1, 1997.
      The credit applies to qualified fuels produced and sold 
before January 1, 2003 (in the case of non-conventional sources 
subject to the January 1, 1993 expiration date) or January 1, 
2008 (in the case of biomass gas and synthetic fuel facilities 
eligible for the extension period).

                               HOUSE BILL

Treatment of income from open access transactions
      The House bill provides that income received or accrued 
by a rural electric cooperative (other than income received or 
accrued directly or indirectly from a member of the 
cooperative) from the provision or sale of electric energy 
transmission services or ancillary services on a 
nondiscriminatory open access basis under an independent 
transmission provider agreement approved by FERC (including an 
agreement providing for the transfer of control--but not 
ownership--of transmission facilities) \52\ is excluded in 
determining whether a rural electric cooperative satisfies the 
85-percent test for tax exemption under section 501(c)(12).
---------------------------------------------------------------------------
    \52\ Under this provision, references to FERC are treated as 
including references to the Public Utility Commission of Texas.
---------------------------------------------------------------------------
      For purposes of the 85-percent test, the House bill also 
provides that income received or accrued by a rural electric 
cooperative is treated as an amount collected from members for 
the sole purpose of meeting losses and expenses if the income 
is received or accrued indirectly from a member of the 
cooperative, provided that such income is derived from a ``like 
organization'' activity of the cooperative under present 
law.\53\ 
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    \53\ See, e.g., Rev. Rul. 2002-54, 2002-37 I.R.B. 527; Rev. Rul. 
83-170, 1983-2 C.B. 97; Rev. Rul. 65-201, 1965-2 C.B. 170.
---------------------------------------------------------------------------
Treatment of income from nuclear decommissioning transactions
      The House bill provides that income received or accrued 
by a rural electric cooperative from any ``nuclear 
decommissioning transaction'' also is excluded in determining 
whether a rural electric cooperative satisfies the 85-percent 
test for tax exemption under section 501(c)(12). The term 
``nuclear decommissioning transaction'' is defined as--
            (1) Any transfer into a trust, fund, or instrument 
        established to pay any nuclear decommissioning costs if 
        the transfer is in connection with the transfer of the 
        cooperative's interest in a nuclear powerplant or 
        nuclear powerplant unit;
            (2) Any distribution from a trust, fund, or 
        instrument established to pay any nuclear 
        decommissioning costs; or
            (3) Any earnings from a trust, fund, or instrument 
        established to pay any nuclear decommissioning costs.
Treatment of income from asset exchange or conversion transactions
      The House bill provides that gain realized by a tax-
exempt rural electric cooperative from a voluntary exchange or 
involuntary conversion of certain property is excluded in 
determining whether a rural electric cooperative satisfies the 
85-percent test for tax exemption under section 501(c)(12). 
This provision only applies to the extent that: (1) the gain 
would qualify for deferred recognition under section 1031 
(relating to exchanges of property held for productive use or 
investment) or section 1033 (relating to involuntary 
conversions); and (2) the replacement property that is acquired 
by the cooperative pursuant to section 1031 or section 1033 (as 
the case may be) constitutes property that is used, or to be 
used, for the purpose of generating, transmitting, 
distributing, or selling electricity or methane-based natural 
gas.
Treatment of income from load loss transactions
      Tax-exempt rural electric cooperatives.--The House bill 
provides that income received or accrued by a tax-exempt rural 
electric cooperative from a ``load loss transaction'' is 
treated under 501(c)(12) as income collected from members for 
the sole purpose of meeting losses and expenses of providing 
service to its members. Therefore, income from load loss 
transactions is treated as member income in determining whether 
a rural electric cooperative satisfies the 85-percent test for 
tax exemption under section 501(c)(12). The House bill also 
provides that income from load loss transactions does not cause 
a tax-exempt electric cooperative to fail to be treated for 
Federal income tax purposes as a mutual or cooperative company 
under the fundamental cooperative principles described above.
      The term ``load loss transaction'' generally is defined 
as any wholesale or retail sale of electric energy (other than 
to a member of the cooperative) to the extent that the 
aggregate amount of such sales during a seven-year period 
beginning with the ``start-up year'' does not exceed the 
reduction in the amount of sales of electric energy during such 
period by the cooperative to members. The ``start-up year'' is 
defined as the calendar year which includes the date of 
enactment of this provision or, if later, at the election of 
the cooperative: (1) the first year that the cooperative offers 
nondiscriminatory open access; or (2) the first year in which 
at least 10 percent of the cooperative's sales of electric 
energy are to patrons who are not members of the cooperative.
      The House bill also excludes income received or accrued 
by rural electric cooperatives from load loss transactions from 
the tax on unrelated trade or business income.
      Taxable electric cooperatives.--The House bill provides 
that the receipt or accrual of income from load loss 
transactions by taxable electric cooperatives is treated as 
income from patrons who are members of the cooperative. Thus, 
income from a load loss transaction is excludible from the 
taxable income of a taxable electric cooperative if the 
cooperative distributes such income pursuant to a pre-existing 
contract to distribute the income to a patron who is not 
amember of the cooperative. The House bill also provides that income 
from load loss transactions does not cause a taxable electric 
cooperative to fail to be treated for Federal income tax purposes as a 
mutual or cooperative company under the fundamental cooperative 
principles described above.
Effective date
      The House bill provision is effective for taxable years 
beginning after the date of enactment.

                            SENATE AMENDMENT

Treatment of income from open access transactions
      The Senate amendment provides that income received or 
accrued by a rural electric cooperative from any ``open access 
transaction'' (other than income received or accrued directly 
or indirectly from a member of the cooperative) is excluded in 
determining whether a rural electric cooperative satisfies the 
85-percent test for tax exemption under section 501(c)(12). The 
term ``open access transaction'' is defined as--
            (1) The provision or sale of electric energy 
        transmission services or ancillary services on a 
        nondiscriminatory open access basis: (i) pursuant to an 
        open access transmission tariff filed with and approved 
        by the Federal Energy Regulatory Commission (``FERC'') 
        (including acceptable reciprocity tariffs), but only if 
        (in the case of a voluntarily filed tariff) the 
        cooperative files a report with FERC within 90 days of 
        enactment of this provision relating to whether or not 
        the cooperative will join a regional transmission 
        organization (``RTO''); or (ii) under an RTO agreement 
        approved by FERC (including an agreement providing for 
        the transfer of control--but not ownership--of 
        transmission facilities);  \54\
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    \54\ Under this provision, references to FERC are treated as 
including references to the Public Utility Commission of Texas or the 
Rural Utilities Service.
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            (2) The provision or sale of electric energy 
        distribution services or ancillary services on a 
        nondiscriminatory open access basis to end-users served 
        by distribution facilities owned by the cooperative or 
        its members; or
            (3) The delivery or sale of electric energy on a 
        nondiscriminatory open access basis, provided that such 
        electric energy is generated by a generation facility 
        that is directly connected to distribution facilities 
        owned by the cooperative (or its members) which owns 
        the generation facility.
      For purposes of the 85-percent test, the Senate amendment 
also provides that income received or accrued by a rural 
electric cooperative from any ``open access transaction'' is 
treated as an amount collected from members for the sole 
purpose of meeting losses and expenses if the income is 
received or accrued indirectly from a member of the 
cooperative.
Treatment of income from nuclear decommissioning transactions
      The Senate amendment provides that income received or 
accrued by a rural electric cooperative from any ``nuclear 
decommissioning transaction'' also is excluded in determining 
whether a rural electric cooperative satisfies the 85-percent 
test for tax exemption under section 501(c)(12). The term 
``nuclear decommissioning transaction'' is defined as--
            (1) Any transfer into a trust, fund, or instrument 
        established to pay any nuclear decommissioning costs if 
        the transfer is in connection with the transfer of the 
        cooperative's interest in a nuclear powerplant or 
        nuclear powerplant unit;
            (2) Any distribution from a trust, fund, or 
        instrument established to pay any nuclear 
        decommissioning costs; or
            (3) Any earnings from a trust, fund, or instrument 
        established to pay any nuclear decommissioning costs.
Treatment of income from asset exchange or conversion transactions
      The Senate amendment provides that gain realized by a 
tax-exempt rural electric cooperative from a voluntary exchange 
or involuntary conversion of certain property is excluded in 
determining whether a rural electric cooperative satisfies the 
85-percent test for tax exemption under section 501(c)(12). 
This provision only applies to the extent that: (1) the gain 
would qualify for deferred recognition under section 1031 
(relating to exchanges of property held for productive use or 
investment) or section 1033 (relating to involuntary 
conversions); and (2) the replacement property that is acquired 
by the cooperative pursuant to section 1031 or section 1033 (as 
the case may be) constitutes property that is used, or to be 
used, for the purpose of generating, transmitting, 
distributing, or selling electricity or natural gas.
Treatment of cancellation of indebtedness income from prepayment of 
        certain loans
      The Senate amendment provides that income from the 
prepayment of any loan, debt, or obligation of a tax-exempt 
rural electric cooperative that is originated, insured, or 
guaranteed by the Federal Government under the Rural 
Electrification Act of 1936 is excluded in determining whether 
the cooperative satisfies the 85-percent test for tax exemption 
under section 501(c)(12).
Treatment of income from load loss transactions
      Tax-exempt rural electric cooperatives.--The Senate 
amendment provides that income received or accrued by a tax-
exempt rural electric cooperative from a ``load loss 
transaction'' is treated under 501(c)(12) as income collected 
from members for the sole purpose of meeting losses and 
expenses of providing service to its members. Therefore, income 
from load loss transactions is treated as member income in 
determining whether a rural electric cooperative satisfies the 
85-percent test for tax exemption under section 501(c)(12). The 
bill also provides that income from load loss transactions does 
not cause a tax-exempt electric cooperative to fail to be 
treated for Federal income tax purposes as a mutual or 
cooperative company under the fundamental cooperative 
principles described above.
      The term ``load loss transaction'' is generally defined 
as any wholesale or retail sale of electric energy (other than 
to a member of the cooperative) to the extent that the 
aggregate amount of such sales during a seven-year period 
beginning with the ``start-up year'' does not exceed the 
reduction in the amount of sales of electric energy during such 
period by the cooperative to members. The ``start-up year'' is 
defined as the calendar year which includes the date of 
enactment of this provision or, if later, at the election of 
the cooperative: (1) the first year that the cooperative offers 
nondiscriminatory open access; or (2) the first year in which 
at least 10 percent of the cooperative's sales of electric 
energy are to patrons who are not members of the cooperative.
      The Senate amendment also excludes income received or 
accrued by rural electric cooperatives from load loss 
transactions from the tax on unrelated trade or business 
income.
      Taxable electric cooperatives.--The Senate amendment 
provides that the receipt or accrual of income from load loss 
transactions by taxable electric cooperatives is treated as 
income from patrons who are members of the cooperative. Thus, 
income from a load loss transaction is excludible from the 
taxable income of a taxable electric cooperative if the 
cooperative distributes such income pursuant to a pre-existing 
contract to distribute the income to a patron who is not a 
member of the cooperative. The Senate amendment also provides 
that income from load loss transactions does not cause a 
taxable electric cooperative to fail to be treated for Federal 
income tax purposes as a mutual or cooperative company under 
the fundamental cooperative principles described above.
Treatment of income from certain contributions in aid of construction
      The Senate amendment excludes from the 85-percent test 
for tax exemption under section 501(c)(12) the receipt by an 
electric cooperative, before January 1, 2007, of any 
contribution in aid of construction or connection charge (in 
the form of money, property, capital or otherwise) that is 
intended to facilitate the provision of electric service by the 
cooperative for the purpose of the development, by the 
recipient of such electric service, of qualified fuels from 
nonconventional sources (within the meaning of section 29, as 
modified elsewhere in the Senate amendment).
Effective date
      The Senate amendment provision is effective for taxable 
years beginning after the date of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill with the 
following modifications:
Treatment of income from open access transactions
      Income received or accrued by a rural electric 
cooperative (other than income received or accrued directly or 
indirectly from a member of the cooperative) from the provision 
or sale of electric energy transmission services or ancillary 
services on a nondiscriminatory open access basis under an open 
access transmission tariff approved or accepted by FERC or 
under an independent transmission provider agreement approved 
or accepted by FERC (including an agreement providing for the 
transfer of control--but not ownership--of transmission 
facilities) \55\ is excluded in determining whether a rural 
electric cooperative satisfies the 85-percent test for tax 
exemption under section 501(c)(12).
---------------------------------------------------------------------------
    \55\ Under this provision, references to FERC are treated as 
including references to the Public Utility Commission of Texas.
---------------------------------------------------------------------------
      In addition, income is excluded for purposes of the 85-
percent test if it is received or accrued by a rural electric 
cooperative (other than income received or accrued directly or 
indirectly from a member of the cooperative) from the provision 
or sale of electric energy distribution services or ancillary 
services, provided such services are provided on a 
nondiscriminatory open access basis to distribute electric 
energy not owned by the cooperative: (1) to end-users who are 
served by distribution facilities not owned by the cooperative 
or any of its members; or (2) generated by a generation 
facility that is not owned or leased by the cooperative or any 
of its members and that is directly connected to distribution 
facilities owned by the cooperative or any of its members.
Treatment of income from load loss transactions
      For purposes of this provision, the ``start-up year'' is 
defined as the first year that the cooperative offers 
nondiscriminatory open access or, if later and at the election 
of the cooperative, the calendar year that includes the date of 
enactment of this provision.
Effective date
      The conference agreement provision is effective for 
taxable years beginning after the date of enactment.
1. Exempt certain prepayments for natural gas from tax-exempt bond 
        arbitrage rules (sec. 3213 of the House bill and secs. 141 and 
        148 of the Code)

                              PRESENT LAW

      Interest on bonds issued by States or local governments 
to finance activities carried out or paid for by those entities 
generally is exempt from income tax (sec. 103). Restrictions 
are imposed on the ability of States or local governments to 
invest the proceeds of these bonds for profit (the ``arbitrage 
restrictions''). One such restriction limits the use of bond 
proceeds to acquire ``investment-type property.'' The term 
investment-type property includes the acquisition of property 
in a transaction involving a prepayment. A prepayment can 
produce prohibited arbitrage profits when the discount received 
for prepaying the costs exceeds the yield on the tax-exempt 
bonds. In general, prohibited prepayments include all 
prepayments that are not customary in an industry by both 
beneficiaries of tax-exempt bonds and other persons using 
taxable financing for the same transaction.
      On August 4, 2003, the Treasury Department issued final 
regulations deeming to be customary, and not in violation of 
the arbitrage rules, certain prepayments for natural gas 
andelectricity. Generally, a qualified prepayment under the regulations 
requires that 90 percent of the natural gas or electricity purchased 
with the prepayment be used for a qualifying use. Generally, natural 
gas is used for a qualifying use if it is to be (1) furnished to retail 
gas customers of the issuing municipal utility who are located in the 
natural gas service area of the issuing municipal utility, however, gas 
used to produce electricity for sale is not included under this 
provision (2) used by the issuing municipal utility to produce 
electricity that will be furnished to retail electric service area 
customers of the issuing utility, (3) used by the issuing municipal 
utility to produce electricity that will be sold to a utility owned by 
a governmental person and furnished to the service area retail electric 
customers of the purchaser, (4) sold to a utility that is owned by a 
governmental person if the requirements of (1), (2) or (3) are 
satisfied by the purchasing utility (treating the purchaser as the 
issuing utility) or (5) used to fuel the pipeline transportation of the 
prepaid gas supply. Electricity is used for a qualifying use if it is 
to be (1) furnished to retail service area electric customers of the 
issuing municipal utility or (2) sold to a municipal utility and 
furnished to retail electric customers of the purchaser who are located 
in the electricity service area of the purchaser. Both governmental gas 
and electric utilities may take advantage of this regulatory provision.

                               HOUSE BILL

In general
      The provision creates a safe harbor exception to the 
general rule that tax-exempt bond-financed prepayments violate 
the arbitrage restrictions. The term ``investment type 
property'' does not include a prepayment under a qualified 
natural gas supply contract. The provision also provides that 
such prepayments are not treated as private loans for purposes 
of the private business tests.
      Under the provision, a prepayment financed with tax-
exempt bond proceeds for the purpose of obtaining a supply of 
natural gas for service area customers of a governmental 
utility is not treated as the acquisition of investment-type 
property. A contract is a qualified natural gas contract if the 
volume of natural gas secured for any year covered by the 
prepayment does not exceed the sum of (1) the average annual 
natural gas purchased (other than for resale) by customers of 
the utility within the service area of the utility (``retail 
natural gas consumption'') during the testing period, and (2) 
the amount of natural gas that is needed to fuel transportation 
of the natural gas to the governmental utility. The testing 
period is the 5-calendar-year period immediately preceding the 
calendar year in which the bonds are issued. A retail customer 
is one who does not purchase natural gas for resale. Natural 
gas used to generate electricity by a governmental utility is 
counted as retail natural gas consumption if the electricity 
was sold to retail customers within the service area of the 
governmental electric utility.
Adjustments
      The volume of gas permitted by the general rule is 
reduced by natural gas otherwise available on the date of 
issuance. Specifically, the amount of natural gas permitted to 
be acquired under a qualified natural gas contract for any 
period is to be reduced by natural gas held by the utility on 
the date of issuance of the bonds and natural gas that the 
utility has a right to acquire for the prepayment period 
(determined as of the date of issuance).\56\ For purposes of 
the preceding sentence, applicable share means, with respect to 
any period, the natural gas allocable to such period if the gas 
were allocated ratably over the period to which the prepayment 
relates.
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    \56\ For example, natural gas otherwise available on the date the 
bonds are issued includes supply covered by other prepayment contracts 
for the period, and supply held in storage or subject to an option to 
purchase by such utility that is available for retail natural gas 
consumption during the period covered by the prepayment. It does not 
include supply that could be purchased on the open market during the 
prepayment period.
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      For purposes of the safe harbor, if after the close of 
the testing period and before the issue date of the bonds (1) 
the government utility enters into a contract to supply natural 
gas (other than for resale) for a commercial person for use at 
a property within the service area of such utility and (2) the 
gas consumption for such property was not included in the 
testing period or the ratable amount of natural gas to be 
supplied under the contract is significantly greater than the 
ratable amount of gas supplied to such property during the 
testing period, then the amount of gas permitted to be 
purchased may be increased to accommodate the contract.
      The average annual retail natural gas consumption 
calculation for purposes of the safe harbor, however, is not to 
exceed the annual amount of natural gas reasonably expected to 
be purchased (other than for resale) by persons who are located 
within the service area of such utility and who, as of the date 
of issuance of the issue, are customers of such utility.
Intentional acts
      The safe harbor does not apply if the utility engages in 
intentional acts to render (1) the volume of natural gas 
covered by the prepayment to be in excess of that needed for 
retail natural gas consumption, and (2) the amount of natural 
gas that is needed to fuel transportation of the natural gas to 
the governmental utility.
Definition of service area
      Service area is defined as (1) any area throughout which 
the governmental utility provided (at all times during the 
testing period) in the case of a natural gas utility, natural 
gas transmission or distribution service, or in the case of an 
electric utility, electric distribution service; (2) limited 
areas contiguous to such areas, and (3) any area recognized as 
the service area of the governmental utility under State or 
Federal law. Contiguous areas are limited to any area within a 
county contiguous to the area described in (1) in which retail 
customers of the utility are located if such area is not also 
served by another utility providing the same service.
Ruling request for higher prepayment amounts
      Upon written request, the Secretary may allow an issuer 
to prepay for an amount of gas greater than that allowed by the 
safe harbor based on objective evidence of growth in gas 
consumption or population that demonstrates that the amount 
permitted by the exception is insufficient.
Effective date
      The provision is effective for obligations issued after 
the date of enactment.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill with a 
conforming amendment. The conferees understand that a qualified 
natural gas supply contract as defined in the conference 
agreement is not nongovernmental output property for purposes 
of subsection (d) of section 141. The conference agreement 
provides that subsection (d) of section 141 does not apply to 
prepayment contracts for natural gas or electricity that either 
under the Treasury regulations or statutory safe harbor are not 
investment-type property for purposes of the arbitrage rules 
under section 148. No inference is intended regarding the 
application of subsection 141(d) to prepayment contracts not 
covered by the statutory safe harbor or Treasury regulations.
      The conferees also recognize that a number of States have 
created under State law joint action agencies that can serve as 
purchasing agents for their member municipal gas utilities. The 
conferees intend the provision to allow municipal utilities in 
a State to participate in such buying arrangements as 
established under State law, subject to the same limitations 
that would apply if an individual utility were to purchase gas 
directly. When acting on behalf of its municipal gas utility 
members, the total amount of gas that can be purchased by a 
joint action agency under the bill's exception to the arbitrage 
rules is the aggregate of what each such member could purchase 
for itself on a direct basis. Thus, with respect to qualified 
natural gas supply contracts entered into by joint action 
agencies for or on behalf of one or more member municipal 
utilities, the requirements of the safe harbor are tested at 
the individual municipal utility level based on the amount of 
gas that would be allocated to such member during any year 
covered by the contract.

                            III. PRODUCTION

                       A. Oil and Gas Provisions

1. Oil and gas production from marginal wells (sec. 43001 of the House 
        bill, sec. 2301 of the Senate amendment, and secs. 38, 39, and 
        new sec. 45J of the Code)

                              PRESENT LAW

      There is no credit for the production of oil and gas from 
marginal wells. The costs of such production may be recovered 
under the Code's depreciation and depletion rules and in other 
cases as a deduction for ordinary and necessary business 
expenses.

                               HOUSE BILL

      The provision would create a new, $3 per barrel credit 
for the production of crude oil and a $0.50 credit per 1,000 
cubic feet of qualified natural gas production. The maximum 
amount of production on which credit could be claimed is 1,095 
barrels or barrel equivalents. In both cases, the credit is 
available only for production from a ``qualified marginal 
well.'' The credit is not available to production occurring if 
the reference price of oil exceeds $18 ($2.00 for natural gas). 
The credit is reduced proportionately as for reference prices 
between $15 and $18 ($1.67 and $2.00 for natural gas). 
Reference prices are determined on a one-year look-back basis.
      A qualified marginal well is defined as: (1) a well 
production from which was marginal production for purposes of 
the Code percentage depletion rules; or (2) a well that during 
the taxable year had average daily production of not more than 
25 barrel equivalents and produced water at a rate of not less 
than 95 percent of total well effluent.
      The credit is treated as part of the general business 
credit; however, unused credits can be carried back for up to 
10 years rather than the generally applicable carryback period 
of one year.
      Effective date.--The provision is effective for 
production in taxable years beginning after December 31, 2003.

                            SENATE AMENDMENT

      The Senate amendment is similar to the House bill, except 
it does not permit the credit to be carried back beyond the 
date of enactment and a marginal well that is not in compliance 
with the applicable State and Federal pollution prevention, 
control, and permit requirements for any period of time is not 
considered a qualified marginal well during such period.
      Effective date.--The Senate amendment is effective for 
production in taxable years beginning after date of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement generally follows the House bill 
except unused credits may be carried back only five years.
      Effective date.--The provision is effective for 
production in taxable years beginning after December 31, 2003.
2. Temporary suspension of limitation based on 65 percent of taxable 
        income and extension of suspension of taxable income limit with 
        respect to marginal production (sec. 43002 of the House bill, 
        sec. 2306 of the Senate amendment, and sec. 613A of the Code)

                              PRESENT LAW

In general
      Depletion, like depreciation, is a form of capital cost 
recovery. In both cases, the taxpayer is allowed a deduction in 
recognition of the fact that an asset--in the case of depletion 
for oil or gas interests, the mineral reserve itself--is being 
expended in order to produce income. Certain costs incurred 
prior to drilling an oil or gas property are recovered through 
the depletion deduction. These include costs of acquiring the 
lease or other interest in the property and geological and 
geophysical costs (in advance of actual drilling).
      Depletion is available to any person having an economic 
interest in a producing property. An economic interest is 
possessed in every case in which the taxpayer has acquired by 
investment any interest in minerals in place, and secures, by 
any form of legal relationship, income derived from the 
extraction of the mineral, to which it must look for a return 
of its capital.\57\ Thus, for example, both working interests 
and royalty interests in an oil- or gas-producing property 
constitute economic interests, thereby qualifying the interest 
holders for depletion deductions with respect to the property. 
A taxpayer who has no capital investment in the mineral deposit 
does not possess an economic interest merely because it 
possesses an economic or pecuniary advantage derived from 
production through a contractual relation.
---------------------------------------------------------------------------
    \57\ Treas. Reg. sec. 1.611-1(b)(1).
---------------------------------------------------------------------------
            Cost depletion
      Two methods of depletion are currently allowable under 
the Internal Revenue Code (the ``Code''): (1) the cost 
depletion method, and (2) the percentage depletion method 
(secs. 611-613). Under the cost depletion method, the taxpayer 
deducts that portion of the adjusted basis of the depletable 
property which is equal to the ratio of units sold from that 
property during the taxable year to the number of units 
remaining as of the end of taxable year plus the number of 
units sold during the taxable year. Thus, the amount recovered 
under cost depletion may never exceed the taxpayer's basis in 
the property.
            Percentage depletion and related income limitations
      The Code generally limits the percentage depletion method 
for oil and gas properties to independent producers and royalty 
owners.\58\ Generally, under the percentage depletion method 15 
percent of the taxpayer's gross income from an oil- or gas-
producing property is allowed as a deduction in each taxable 
year (sec. 613A(c)). The amount deducted generally may not 
exceed 100 percent of the net income from that property in any 
year (the ``net-income limitation'') (sec. 613(a)). The 100-
percent net-income limitation for marginal wells is suspended 
for taxable years beginning after December 31, 1997, and before 
January 1, 2004.
---------------------------------------------------------------------------
    \58\ Sec. 613A.
---------------------------------------------------------------------------
      Additionally, the percentage depletion deduction for all 
oil and gas properties may not exceed 65 percent of the 
taxpayer's overall taxable income (determined before such 
deduction and adjusted for certain loss carrybacks and certain 
trust distributions) (sec. 613A(d)(1)).\59\ Because percentage 
depletion, unlike cost depletion, is computed without regard to 
the taxpayer's basis in the depletable property, cumulative 
depletion deductions may be greater than the amount expended by 
the taxpayer to acquire or develop the property.
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    \59\ Amounts disallowed as a result of this rule may be carried 
forward and deducted in subsequent taxable years, subject to the 65-
percent taxable income limitation for those years.
---------------------------------------------------------------------------
      A taxpayer is required to determine the depletion 
deduction for each oil or gas property under both the 
percentage depletion method (if the taxpayer is entitled to use 
this method) and the cost depletion method. If the cost 
depletion deduction is larger, the taxpayer must utilize that 
method for the taxable year in question (sec. 613(a)).
Limitation of oil and gas percentage depletion to independent producers 
        and royalty owners
      Generally, only independent producers and royalty owners 
(as contrasted to integrated oil companies) are allowed to 
claim percentage depletion. Percentage depletion for eligible 
taxpayers is allowed only with respect to up to 1,000 barrels 
of average daily production of domestic crude oil or an 
equivalent amount of domestic natural gas (sec. 613A(c)). For 
producers of both oil and natural gas, this limitation applies 
on a combined basis.
      In addition to the independent producer and royalty owner 
exception, certain sales of natural gas under a fixed contract 
in effect on February 1, 1975, and certain natural gas from 
geopressured brine,\60\ are eligible for percentage depletion, 
at rates of 22 percent and 10 percent, respectively. These 
exceptions apply without regard to the 1,000-barrel-per-day 
limitation and regardless of whether the producer is an 
independent producer or an integrated oil company.
---------------------------------------------------------------------------
    \60\ This exception is limited to wells, the drilling of which 
began between September 30, 1978, and January 1, 1984.
---------------------------------------------------------------------------

                               HOUSE BILL

      The limit on percentage depletion deductions to no more 
than 65 percent of the taxpayer's overall taxable income is 
suspended for taxable years beginning after December 31, 2003, 
and before January 1, 2007. The suspension of the 100-percent 
net-income limitation for marginal wells is extended an 
additional three years, through taxable years beginning before 
January 1, 2007.
      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2003.

                            SENATE AMENDMENT

      The Senate amendment suspends only the 100-percent net-
income limitation for marginal wells through 2007.
      Effective date.--The Senate amendment is effective on the 
date of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement suspends the 100-percent net-
income limitation for marginal wells through December 31, 2004. 
The conference agreement suspends the 65-percent-taxable-income 
limitation through December 31, 2004.
      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2003.
3. Delay rental payments (sec. 43003 of the House bill, sec. 2308 of 
        the Senate amendment, and sec. 167 of the Code)

                              PRESENT LAW

      Present law generally requires costs associated with 
inventory and property held for resale to be capitalized rather 
than currently deducted as they are incurred. (sec. 263). Oil 
and gas producers typically contract for mineral production in 
exchange for royalty payments. If mineral production is 
delayed, these contracts provide for ``delay rental payments'' 
as a condition of their extension. The Treasury Department has 
taken the position that the uniform capitalization rules of 
section 263A require delay rental payments to be capitalized.

                               HOUSE BILL

      The House bill permits delay rental payments incurred in 
connection with the development of oil or gas to be amortized 
over two years. In the case of abandoned property, remaining 
basis may no longer be recovered in the year of abandonment of 
a property as all basis is recovered over the two-year 
amortization period.
      Effective date.--The House bill provision is effective 
for amounts paid or incurred in taxable years after 2003. No 
inference is intended from the prospective effective date of 
this proposal as to the proper treatment of pre-effective date 
delay rental payments.

                            SENATE AMENDMENT

      The Senate amendment provides delay rental payments 
incurred in connection with the development of oil or gas must 
be amortized over two years.
      Effective date.--The Senate amendment is effective for 
amounts paid or incurred in taxable years after 2002.

                          CONFERENCE AGREEMENT

      The conferees adopt a provision nearly identical to a 
provision in S. 1149 as reported by the Senate Committee on 
Finance on May 23, 2003. The provision allows delay rental 
payments incurred in connection with the development of oil or 
gas within the United States to be amortized over two years. In 
the case of abandoned property, remaining basis may no longer 
be recovered in the year of abandonment of a property as all 
basis is recovered over the two-year amortization period.
      Effective date.--The provision applies to delay rental 
payments paid or incurred in taxable years beginning after the 
date of enactment. No inference is intended from the 
prospective effective date of this proposal as to the proper 
treatment of pre-effective date delay rental payments.
4. Geological and geophysical costs (sec. 43004 of the House bill, sec. 
        2307 of the Senate amendment, and sec. 167 of the Code)

                              PRESENT LAW

      Under present law, geological and geophysical 
expenditures are costs incurred by a taxpayer for the purpose 
of obtaining and accumulating data that will serve as the basis 
for the acquisition and retention of mineral properties by 
taxpayers exploring for minerals. Capital expenditures are not 
currently deductible as ordinary and necessary expenses, but 
are allocated to the cost of the property (sec. 263). Courts 
have held that geological and geophysical costs are capital, 
and therefore, are allocable to the cost of property acquired 
or retained. The costs attributable to such exploration are 
allocable to the cost of the property acquired or retained.

                               HOUSE BILL

      The House Bill permits geological and geophysical costs 
incurred in connection with domestic oil and gas exploration to 
be amortized over two years. In the case of abandoned property, 
remaining basis may no longer be recovered in the year of 
abandonment of a property as all basis is recovered over the 
two-year amortization period.
      Effective date.--The House bill provision is effective 
for costs paid or incurred in taxable years after 2003. No 
inference is intended from the prospective effective date of 
this proposal as to the proper treatment of pre-effective date 
geological and geophysical costs.

                            SENATE AMENDMENT

      The Senate Amendment provides that geological and 
geophysical costs incurred in connection with domestic oil and 
gas exploration to be amortized over two years.
      Effective date.--The Senate amendment is effective for 
costs paid or incurred in taxable years after 2002.

                          CONFERENCE AGREEMENT

      The conferees adopt a provision nearly identical to a 
provision in S. 1149 as reported by the Senate Committee on 
Finance on May 23, 2003. The provision allows geological and 
geophysical amounts incurred in connection with oil and gas 
exploration in the United States to be amortized over two 
years. In the case of abandoned property, remaining basis may 
no longer be recovered in the year of abandonment of a property 
as all basis is recovered over the two-year amortization 
period.
      Effective date.--The provision is effective for 
geological and geophysical amounts paid or incurred in taxable 
years beginning after the date of enactment. No inference is 
intended from the prospective effective date of this proposal 
as to the proper treatment of pre-effective date geological and 
geophysical costs.

 B. Extension and Modification of Credit for Producing Fuel From a Non-
                          Conventional Source

(sec. 43005 of the House bill, secs. 2309 and 2310 of the Senate 
        amendment, and sec. 29 and new section 45K of the Code)

                              PRESENT LAW

      An income tax credit is allowed for certain fuels 
produced from ``non-conventional sources'' and sold to 
unrelated parties. The amount of the credit is equal to $3 
(generally adjusted for inflation \61\) per barrel or Btu oil 
barrel equivalent (sec. 29). Qualified fuels must be produced 
within the United States, and include: oil produced from shale 
and tar sands; gas produced from geopressured brine, Devonian 
shale, coal seams, tight formations (``tight sands''), or 
biomass; and liquid, gaseous, or solid synthetic fuels produced 
from coal (including lignite).
---------------------------------------------------------------------------
    \61\ The value of the section 29 credit for production in 2002 was 
$6.35 per barrel of oil equivalent.
---------------------------------------------------------------------------
      The credit applies to fuels produced from wells drilled 
or facilities placed in service after December 31, 1979, and 
before January 1, 1993. An exception extends the January 1, 
1993 expiration date for facilities producing gas from biomass 
and synthetic fuel from coal if the facility producing the fuel 
is placed in service before July 1, 1998, pursuant to a binding 
contract entered into before January 1, 1997.
      The credit applies to qualified fuels produced and sold 
before January 1, 2003 (in the case of non-conventional sources 
subject to the January 1, 1993, expiration date) or January 1, 
2008 (in the case of biomass gas and synthetic fuel facilities 
eligible for the extension period).

                               HOUSE BILL

      The House bill permits taxpayers to claim the section 29 
credit for production of certain non-conventional fuels 
produced at wells placed in service after April 1, 2003, and 
before January 1, 2007. Qualifying fuels are oil from shale or 
tar sands, and gas from geopressured brine, Devonian shale, 
coal seams or a tight formation. The value of the credit is re-
based to $3.00 for production in 2003 and is indexed for 
inflation commencing with the credit amount for 2004. The 
credit may be claimed for production from the well for each of 
the first four years of production, but not for any production 
occurring after December 31, 2009.
      The House bill further permits production from certain 
existing wells (any well drilled after December 31, 1979, and 
before January 1, 1993) to claim a credit equal to the newly 
re-indexed value of $3.00 for production in 2003 after date of 
enactment through 2006.
      The House bill also permits landfill gas sold to a third 
party from facilities placed in service after June 30, 1998, 
and before January 1, 2007, to be eligible for five years of 
credit from the later of the date of enactment or the date the 
facility is placed in service. The amount of credit is $3.00 
per barrel equivalent in 2003 and is indexed for inflation 
commencing with the credit amount for 2004. In the case of a 
landfill subject to the Environmental Protection Agency's 1996 
New Source Performance Standards/Emissions Guidelines, the 
amount of credit is $2.00 per barrel equivalent in 2003 and is 
indexed for inflation commencing with the credit amount for 
2004.
      Under the House bill, the taxpayer may not claim any 
credit for production in excess of a daily average \62\ of 
200,000 cubic feet of gas, or barrel of oil equivalent (200,000 
cubic feet is equivalent to 35.4 barrels of oil) from a 
qualifying well or facility with respect to any production for 
which credit can be claimed under the modifications described.
---------------------------------------------------------------------------
    \62\ The daily average is computed as total production divided by 
the total number of days the well or facility was in production during 
the year.
---------------------------------------------------------------------------
      The House bill adds section 29 to the list of general 
business credits.
      Effective date.--The House bill provision is effective 
for fuel sold from qualifying wells and facilities after April 
1, 2003.

                            SENATE AMENDMENT

Extension for certain non-conventional fuels
      The Senate amendment provides a credit for production of 
certain non-conventional fuels produced at wells placed in 
service after the date of enactment and before January 1, 2005. 
The amount of the credit is $3.00 (unindexed) per barrel or Btu 
oil equivalent for three years of production commencing when 
the facility is placed in service. Qualified fuels are oil from 
shale or tar sands, and gas from geopressured brine, Devonian 
shale, coal seams or a tight formation.
Extension and modification for ``refined coal''
      The Senate amendment provides a credit for production of 
``refined coal'' from facilities placed in service after the 
date of enactment and before January 1, 2007. The amount of the 
credit is $3.00 (unindexed) per barrel or Btu oil equivalent 
for five years of production commencing when the facility is 
placed in service. Refined coal is a qualifying liquid, 
gaseous, or solid synthetic fuel produced from coal (including 
lignite) or high-carbon fly ash, including such fuel used as a 
feedstock. A qualifying fuel is a fuel that when burned emits 
20 percent less SO2 and nitrogen oxides than the 
burning of feedstock coal or comparable coal predominantly 
available in the marketplace as of January 1, 2002, and if the 
fuel sells at prices at least 50 percent greater than the 
prices of the feedstock coal or comparable coal. However, no 
fuel produced at a qualifying advanced clean coal facility (as 
defined elsewhere) is a qualifying fuel.
Expansion for ``viscous oil''
      The Senate amendment provides a credit for production of 
certain viscous oil produced at wells placed in service after 
the date of enactment and before January 1, 2005. ``Viscous 
oil'' is domestic crude oil produced from any property if the 
crude oil has a weighted average gravity of 22 degrees API or 
less (corrected to 60 degrees Fahrenheit). The amount of the 
credit for viscous oil is $3.00 per barrel or Btu equivalent 
for three years of production commencing whenthe well is placed 
in service. The Senate amendment provides that qualifying sales to 
related parties for consumption not in the immediate vicinity of the 
wellhead qualify for the credit.
Credit for coalmine methane gas
      The Senate amendment provides a credit for production of 
``coalmine methane gas'' captured or extracted from a coal mine 
and sold after the date of enactment and before January 1, 
2005. The amount of the credit is $3.00 (unindexed) per barrel 
or Btu oil equivalent (51.7 cents per million Btu of heat value 
in the gas) for gas utilized captured or sold, for three years 
of production commencing when the facility is placed in 
service. Qualifying coalmine methane gas is any methane gas 
liberated during qualified mining operations or extracted up to 
five years in advance of qualified mining operations as part of 
a specific plan to mine a coal deposit. In the case of coalmine 
methane gas that is captured in advance of qualified coal 
mining operations, the credit is allowed only after the date 
the coal extraction occurs in the immediate area where the 
coalmine methane gas was removed.
Expansion for agricultural and animal wastes
      The Senate amendment adds facilities producing liquid, 
gaseous, or solid fuels, from agricultural and animal waste 
placed in service after the date of enactment and before 
January 1, 2005, to the list of qualified facilities for 
purposes of the non-conventional fuel credit. The amount of the 
credit is equal to $3.00 (unindexed) per barrel or Btu oil 
barrel equivalent, for three years of production commencing on 
the date the facility is placed in service. Agricultural and 
animal waste includes by-products, packaging, and any materials 
associated with processing, feeding, selling, transporting, or 
disposal of agricultural or animal products or wastes, 
including wood shavings, straw, rice hulls, and other bedding 
for the disposition of manure.
Extension of credit for certain existing facilities
      The Senate amendment extends the present-law credit 
through December 31, 2004, for production from existing 
facilities producing coke, coke gas, or natural gas and by-
products produced by coal gasification from lignite.
Study of coal bed methane gas
      The Senate amendment provides that the Secretary of the 
Treasury undertake a study of the effect of section 29 on the 
production of coal bed methane. The Secretary's study is to be 
made in conjunction with the study to be undertaken by the 
Secretary of the Interior on the effects of coal bed methane 
production on surface and water resources, as provided in 
section 607 of the Energy Policy Act of 2002 (should that study 
be required by law). The study should estimate the total amount 
of credit claimed annually and in aggregate related to the 
production of coal bed methane since the enactment of section 
29. The study should report the annual value of the credit 
allowable for coal bed methane compared to the average annual 
wellhead price of natural gas (per thousand cubic feet of 
natural gas). The study should estimate the incremental 
increase in production of coal bed methane that has resulted 
from the enactment of section 29. The study should also 
estimate the cost to the Federal government, in terms of the 
net tax benefits claimed, per thousand cubic feet of 
incremental coal bed methane produced annually and in aggregate 
since the enactment of section 29.
Effective date
      The Senate amendment is effective for fuel sold after the 
date of enactment.

                          CONFERENCE AGREEMENT

In general
      The conferees follow the House bill structure and a 
related provision in S. 1149 as reported by the Senate 
Committee on Finance on May 23, 2003. In general, the provision 
permits taxpayers to claim the section 29 credit for certain 
new wells or facilities placed in service after date of 
enactment and before January 1, 2007, and the provision also 
permits taxpayers to claim the section 29 credit for certain 
existing wells and facilities. For all qualifying wells and 
facilities the value of the credit is $3.00 for production in 
2003 and is indexed for inflation commencing with the credit 
amount for 2004. The credit can be claimed for production for 
each of the first four years of production, but not for any 
production occurring after December 31, 2009. The amount of the 
credit a taxpayer may claim with respect to any well or 
facility is subject to the daily limit.
Extension of placed in service date for certain new facilities
      For new facilities producing qualifying fuels that are 
oil from shale or tar sands, and gas from geopressured brine, 
Devonian shale, coal seams or a tight formation, the credit can 
be claimed for production from such new facilities placed in 
service after date of enactment and before January 1, 2007. 
Credit may be claimed for production for each of the first four 
years of production, but not for any production occurring after 
December 31, 2009.
Extension of credit for existing oil and gas wells or facilities
      The provision permits production from certain existing 
wells (any well drilled after December 31, 1979, and before 
January 1, 1993) to claim a credit equal to the newly re-
indexed value of $3.00 for production in 2003 after the date of 
enactment through 2007.
Extension of credit for certain other existing wells or facilities
      The provision extends the present-law credit through 
2007, for production from existing facilities producing natural 
gas and by-products produced by coal gasification from lignite.
Extension for landfill gas facilities
      The provision permits landfill gas sold from facilities 
placed in service after June 30, 1998, and before January 1, 
2007, to be eligible for four years of credit from the later of 
January 1, 2004, or the date such facility is placed in service 
and ending on the earlier of the date that is four years after 
the date such period began or December 31, 2009. In the case of 
a landfill subject to the Environmental Protection Agency's 
1996 New Source Performance Standards/Emissions Guidelines the 
amount of credit is $2.00 per barrel equivalent in 2003 and is 
indexed for inflation commencing with the credit amount for 
2004.
Expansion for coke facilities
      The provision permits a facility for producing coke or 
coke gas which was placed in service before January 1, 1993, or 
after June 30, 1998, or after the date of enactment and before 
January 1, 2007, to claim a credit beginning on the later of 
January 1, 2004, or the date such facility is placed in service 
and ending the earlier of the date four years after such period 
began or December 31, 2009. A facility currently claiming the 
credit under section 29(g) may not claim any credit at the 
$3.00 rate in the future.
Expansion for fuels from agricultural and animal waste
      The provision adds facilities producing liquid, gaseous, 
or solid fuels, from agricultural and animal waste placed in 
service after the date of enactment and before January 1, 2007, 
to the list of qualified facilities for purposes of the non-
conventional fuel credit. Taxpayers may claim the credit 
beginning on the later of January 1, 2004, or the date such 
facility is placed in service and ending the earlier of the 
date which is four years after such date began or December 31, 
2009. Agricultural and animal waste includes by-products, 
packaging, and any materials associated with processing, 
feeding, selling, transporting, or disposal of agricultural or 
animal products or wastes. An example of transforming 
agricultural and animal waste into qualifying fuels is through 
the use of the thermal depolymerization process.
Expansion for ``refined coal''
      The provision also expands section 29 to include certain 
``refined coal'' as a qualified non-conventional fuel. 
``Refined coal'' is a qualifying liquid, gaseous, or solid 
synthetic fuel produced from coal (including lignite) from 
facilities placed in service after date of enactment and before 
January 1, 2008. Taxpayers may claim the credit for fuel 
produced during the five-year period beginning on the date the 
facility is placed in service and without being subject to the 
general rule disallowing credit for production and sale after 
December 31, 2009. A qualifying fuel is a fuel that when burned 
emits 20 percent less nitrogen oxide and either sulfur dioxide 
or mercury than the burning of feedstock coal or comparable 
coal predominantly available in the marketplace as of January 
1, 2003, and if the fuel sells at prices at least 50 percent 
greater than the prices of the feedstock coal or comparable 
coal. A facility qualifies if the taxpayer certifies (in such a 
manner as the Secretary may prescribe) that the refined coal 
meets these requirements. Refined coal also includes a 
qualifying fuel derived from high-carbon fly ash. However, no 
fuel produced at a qualifying advanced clean coal facility (as 
defined elsewhere) would be a qualifying fuel.
      The conferees intend that fuels made from coal using the 
Fischer-Tropsch process would qualify as refined fuel provided 
that such fuels satisfy the environmental and value tests 
described above. The Fischer-Tropsch process for producing 
diesel fuel can be separated into three main parts: (1) the 
production of synthesis gas from the main feedstock; (2) the 
catalytic reaction which converts the synthesis gas into 
hydrocarbon components; and (3) the refining of these 
hydrocarbon components into diesel fuel. Production of 
synthesis gas is accomplished by reforming the feedstock 
through partial oxidation reforming, autotherman reforming,\63\ 
or steam reforming.
---------------------------------------------------------------------------
    \63\ Autotherman reforming can be accomplished with the use of 
ambient air, enriched air, or pure oxygen.
---------------------------------------------------------------------------
Expansion for coalmine gas
      In addition, the provision permits taxpayers to claim 
credit for coalmine gas captured or extracted by the taxpayer 
during the period beginning on the day after the date of 
enactment and ending on December 31, 2006, and utilized as a 
fuel source or sold by or on behalf of the taxpayer to an 
unrelated person. The term ``coalmine gas'' means any methane 
gas which is being liberated during qualified coal mining 
operations or as a result of past qualified coal mining 
operations, or which is captured 10 years in advance of 
qualified coal mining operations as part of a specific plan to 
mine a coal deposit. In the case of coalmine gas that is 
captured in advance of qualified coal mining operations, the 
credit is allowed only after the date the coal extraction 
occurs in the immediate area where the coalmine gas was 
removed. The capture or extraction of coalmine gas from coal 
mining operations is required to be in compliance with 
applicable Federal pollution prevention, control, and permit 
requirements in order to qualify for the credit.
Daily limit
      Under the provision, a taxpayer would not be able to 
claim any credit for production in excess of a daily average 
\64\ of 200,000 cubic feet of natural gas or barrel of oil 
equivalent (200,000 cubic feet is equivalent to approximately 
35.4 barrels of oil) of such gas with respect to any property 
or facility for which credit can be claimed under the 
modifications above.\65\ All facilities eligible for the $3.00 
credit under the conference agreement are subject to this 
limitation.
---------------------------------------------------------------------------
    \64\ The daily average is computed as total production divided by 
the total number of days the well or facility was in production during 
the year. Days before the date the project is placed in service are not 
taken into account in determining the daily average.
    \65\ The conferees observe that the daily limit adopted in the 
conference agreement is identical to the provision in H.R. 6 as passed 
by the House of Representatives and in S. 1149 as reported by the 
Senate Committee on Finance.
---------------------------------------------------------------------------
New phaseout adjustment
      In the case of fuels sold after 2003, the dollar amount 
is $3.00 (without regard to a phaseout adjustment). The new 
phaseout is increased to $35.00.
General business credit
      The provision adds section 29 to the list of general 
business credits and relabels present section 29 of the Code as 
new Code section 45K.
Effective date
      The provision is effective for fuel produced and sold 
from qualifying wells and facilities after December 31, 2003. 
For application of the general business credit, the provision 
is effective for taxable years ending after December 31, 2003.

                 C. Alternative Minimum Tax Provisions

1. Allow personal energy credits against the alternative minimum tax 
        (sec. 41007 of the House bill, secs. 2103(b) and 2109(b) of the 
        Senate amendment, and sec. 26 of the Code)

                              PRESENT LAW

      With certain exceptions, for taxable years beginning 
after December 31, 2003, nonrefundable personal credits may not 
exceed the excess of the regular tax liability over the 
tentative minimum tax.
      The tentative minimum tax is an amount equal to specified 
rates of tax imposed on the excess of the alternative minimum 
taxable income over an exemption amount. To the extent the 
tentative minimum tax exceeds the regular tax, a taxpayer is 
subject to the alternative minimum tax.

                               HOUSE BILL

      The House bill allows the personal energy credits added 
by the bill to offset both the regular tax and the alternative 
minimum tax. (The credits added by the House bill include the 
credit for residential solar energy property, the credit for 
qualified fuel cell power plants, and the credit for energy 
efficient improvements to existing homes)
      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2003.

                            SENATE AMENDMENT

      The Senate amendment is the same as the House bill. (The 
credits added by the Senate amendment include the credit for 
residential energy efficient property and the credit for energy 
efficient improvements to existing homes.)
      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2003.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill and the 
Senate amendment and allows the personal energy credits added 
by the conference agreement (credits for residential energy 
efficient property and energy efficiency improvements to 
existing homes) to offset both the regular tax and the 
alternative minimum tax.
      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2003.
2. Increase tax limitation on use of business energy credits (secs. 
        43006 and 43008 of the House bill, secs. 2005(b)(3) and 2503(c) 
        of the Senate amendment, and sec. 38 of the Code)

                              PRESENT LAW

      Generally, business tax credits may not exceed the excess 
of the taxpayer's income tax liability over the tentative 
minimum tax (or, if greater, 25 percent of the regular tax 
liability). Credits in excess of the limitation may be carried 
back one year and carried over for up to 20 years.
      The tentative minimum tax is an amount equal to specified 
rates of tax imposed on the excess of the alternative minimum 
taxable income over an exemption amount. To the extent the 
tentative minimum tax exceeds the regular tax, a taxpayer is 
subject to the alternative minimum tax.

                               HOUSE BILL

      The House bill treats the tentative minimum tax as being 
zero for purposes of determining the tax liability limitation 
with respect to (1) the business energy credits added by the 
bill for construction of new energy efficient homes; for 
production of low sulfur diesel fuel; and for oil and gas 
production from marginal wells, (2) for taxable years beginning 
in 2004 and 2005, the enhanced oil recovery credit, and (3) the 
section 45 credit for electricity produced from a wind facility 
(placed in service after the date of enactment) during the 
first four years of production beginning on the date the 
facility is placed in service.
      Effective date.--The provision is effective for taxable 
years ending after the date of enactment of the Act.

                            SENATE AMENDMENT

      The Senate amendment allows the small ethanol producer 
credit and the Alaska natural gas credit to be claimed against 
the entire regular tax and alternative minimum tax; other 
business energy credits are subject to the present law 
limitation.
      Effective date.--The provision is effective with 
effective date of the respective credits.

                          CONFERENCE AGREEMENT

      The conference agreement treats the tentative minimum tax 
as being zero for purposes of determining the tax liability 
limitation with respect to (1) the business energy credits 
added by the bill for construction of new energy efficient 
homes, energy efficient appliances, production of low sulfur 
diesel fuel, and oil and gas production from marginal wells; 
(2) for taxable years beginning after December 31, 2003, the 
section 40 alcohol fuels credit; (3) for taxable years 
beginning in 2004 and 2005, the section 43 enhanced oil 
recovery credit; and (4) the section 45 credit for electricity 
produced from a facility (placed in service after the date of 
enactment) during the first four years of production beginning 
on the date the facility is placed in service.
      Effective date.--The provision is effective for taxable 
years ending after the date of enactment of the Act.
3. Intangible drilling costs (IDCs) (sec. 43007 of the House bill and 
        sec. 57 of the Code)

                              PRESENT LAW

      Taxpayers who pay or incur intangible drilling or 
development costs (``IDCs'') in the development of domestic oil 
or gas production may elect to either expense or capitalize 
these amounts. If an election to expense IDCs is made, the 
taxpayer deducts the amount of the IDCs as an expense in the 
taxable year the cost is paid or incurred.
      The difference between the amount of a taxpayer's IDC 
deduction and the amount which would have been currently 
deductible had IDCs been capitalized and recovered over a 10-
year period is an item of tax preference for the alternative 
minimum tax (``AMT'') to the extent that this amount exceeds 65 
percent of the taxpayer's net income from oil and gas 
properties for the taxable year. This preference applies to 
taxpayers other than integrated oil companies only to the 
extent that the failure to apply the preference would result in 
a reduction of the taxpayer's alternative minimum taxable 
income by more than 40 percent.

                               HOUSE BILL

      The bill repeals the AMT preference for intangible 
drilling costs for oil and gas wells for taxpayers other than 
integrated oil companies.
      Effective date.--The provision applies to taxable years 
beginning after December 31, 2003, and beginning before January 
1, 2006.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement follows the House bill.

                        D. Clean Coal Incentives

1. Credit for production from a clean coal technology unit (secs. 2201 
        and 2221 of Senate amendment)

                              PRESENT LAW

      Present law does not provide a production credit for 
electricity generated at units that use coal as a fuel. 
However, an income tax credit is allowed for the production of 
electricity from either qualified wind energy, qualified 
``closed-loop'' biomass, or qualified poultry waste units 
placed in service prior to January 1, 2002 (sec. 45). The 
credit allowed equals 1.5 cents per kilowatt-hour of 
electricity sold. The 1.5-cent figure is indexed for inflation 
and equals 1.8 cents for 2002. The credit is allowable for 
production during the 10-year period after a unit is originally 
placed in service. The production tax credit is a component of 
the general business credit (sec. 38(b)(1)).

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment provides a production credit for 
electricity produced from certain units that have been 
retrofitted, repowered, or replaced with a clean coal 
technology within ten years of the date of enactment. The value 
of the credit is 0.34 cents per kilowatt-hour of electricity 
produced and is indexed for inflation occurring after 2002 with 
the first potential adjustment in 2004.
      A qualifying clean coal technology unit must meet certain 
capacity standards, thermal efficiency standards, and emissions 
standards for SO2, nitrous oxides, particulate 
emissions, and source emissions standards as provided in the 
Clean Air Act. To be a qualified clean coal technology unit, 
the taxpayer must receive a certificate from the Secretary of 
the Treasury. The Secretary may grant certificates to units 
only to the point that 4,000 megawatts of electricity 
production capacity qualifies for the credit. However, no 
qualifying unit would be eligible if the unit's capacity 
exceeded 300 megawatts.
      Certain persons (public utilities, electric cooperatives, 
Indian tribes, and the Tennessee Valley Authority) are eligible 
to obtain certifications from the Secretary for these credits 
and sell, trade, or assign the credit to any taxpayer. However, 
any credit sold, traded, or assigned may only be sold, traded, 
or assigned once. Subsequent trades are not permitted.
      Effective date.--The Senate amendment is effective for 
electricity sold after the date of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement does not include the Senate 
amendment provision.
2. Investment credit for clean coal technology units (secs. 2211 and 
        2221 of Senate amendment and new sec. 48A of the Code)

                              PRESENT LAW

      Present law does not provide an investment credit for 
electricity generating units that use coal as a fuel. However, 
a nonrefundable, 10-percent investment tax credit (``business 
energy credit'') is allowed for the cost of new property that 
is equipment (1) that uses solar energy to generate 
electricity, to heat or cool a structure, or to provide solar 
process heat, or (2) that is used to produce, distribute, or 
use energy derived from a geothermal deposit, but only, in the 
case of electricity generated by geothermal power, up to the 
electric transmission stage (sec. 48). The business energy tax 
credit is a component of the general business credit (sec. 
38(b)(1)).

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

In general
      The Senate amendment provides a 10-percent investment tax 
credit for qualified investments in advanced clean coal 
technology units. Certain persons (public utilities, electric 
cooperatives, Indian tribes, and the Tennessee Valley 
Authority) will be eligible to obtain certifications from the 
Secretary of the Treasury (as described below) for these 
credits and sell, trade, or assign the credit to any taxpayer. 
However, any credit sold, traded, or assigned may only be sold, 
traded, or assigned once. Subsequent trades are not permitted.
Qualifying advanced clean coal technology units
      Qualifying advanced clean coal technology units must 
utilize advanced pulverized coal or atmospheric fluidized bed 
combustion technology, pressurized fluidized bed combustion 
technology, integrated gasification combined cycle technology, 
or some other technology certified by the Secretary of Energy. 
Any qualifying advanced clean coal technology unit must meet 
certain capacity standards, thermal efficiency standards, and 
emissions standards for SO2, nitrous oxides, 
particulate emissions, and source emissions standards as 
provided in the Clean Air Act. In addition, a qualifying 
advanced clean coal technology unit must meet certain carbon 
emissions requirements.
      If the advanced clean coal technology unit is an advanced 
pulverized coal or atmospheric fluidized bed combustion 
technology unit, a pressurized fluidized bed combustion 
technology unit, or an integrated gasification combined cycle 
technology unit and if the unit uses a design coal with a heat 
content of not more than 9,000 Btu per pound, the unit must 
have a carbon emission rate less than 0.60 pound of carbon per 
kilowatt hour of electricity produced. If the advanced clean 
coal technology unit is an advanced pulverized coal or 
atmospheric fluidized bed combustion technology unit, a 
pressurized fluidized bed combustion technology unit, or an 
integrated gasification combined cycle technology unit and if 
the unit uses a design coal with a heat content greater than 
9,000 Btu per pound, the unit must have a carbon emission rate 
lessthan 0.54 pound of carbon per kilowatt hour of electricity 
produced. In the case of an advanced clean coal technology unit that 
uses another eligible technology and if the unit uses a design coal 
with a heat content of not more than 9,000 Btu per pound, the unit must 
have a carbon emission rate less than 0.51 pound of carbon per kilowatt 
hour of electricity produced. In the case of an advanced clean coal 
technology unit that uses another eligible technology and if the unit 
uses a design coal with a heat content greater than 9,000 Btu per 
pound, the unit must have a carbon emission rate less than 0.459 pound 
of carbon per kilowatt hour of electricity produced.
Allocation of credits
      To be a qualified investment in advanced clean coal 
technology, the taxpayer must receive a certificate from the 
Secretary of the Treasury. The Secretary may grant certificates 
to investments only to the point that 4,000 megawatts of 
electricity production capacity qualifies for the credit. From 
the potential pool of 4,000 megawatts of capacity, not more 
than 1,000 megawatts in total and not more than 500 megawatts 
in years prior to 2009 shall be allocated to units using 
advanced pulverized coal or atmospheric fluidized bed 
combustion technology. From the potential pool of 4,000 
megawatts of capacity, not more than 500 megawatts in total and 
not more than 250 megawatts in years prior to 2009 shall be 
allocated to units using pressurized fluidized bed combustion 
technology. From the potential pool of 4,000 megawatts of 
capacity, not more than 2,000 megawatts in total and not more 
than 1,000 megawatts in years prior to 2009 and not more than 
1,500 megawatts in year prior to 2013 shall be allocated to 
units using integrated gasification combined cycle technology, 
with or without fuel or chemical co-production. From the 
potential pool of 4,000 megawatts of capacity, not more than 
500 in total and not more than 250 megawatts in years prior to 
2009 shall be allocated to any other technology certified by 
the Secretary of Energy.
Effective date
      The Senate amendment is effective for property placed in 
service after the date of enactment.

                          CONFERENCE AGREEMENT

In general
      The conference establishes an investment tax credit for 
qualified clean coal property. The credit amount is 15 percent 
for property placed in service in connection with any basic 
clean coal technology unit and 17.5 percent for property placed 
in service in connection with any advanced clean coal 
technology unit. Qualifying clean coal property is section 1245 
property installed in connection with an existing coal-based 
unit for the production of electricity as part of a conversion 
to a basic or advanced clean coal technology unit, or is 
installed in connection with a new advanced clean coal 
technology unit. Qualifying property must be placed in service 
after December 31, 2003, and if part of a basic clean coal 
technology unit before January 1, 2014. If the qualifying 
property is placed in service as part of an advanced clean coal 
technology unit, it must be placed in service prior to January 
1, 2017.
      The total amount of clean coal property eligible for the 
credit is subject to a national megawatt limitation (detailed 
below). To be eligible to claim the credit, the taxpayer must 
receive an allocation of megawatt capacity from the Secretary. 
The amount of credit the taxpayer may claim with respect to 
clean coal property is the otherwise allowable credit amount 
multiplied by the ratio of the national megawatt capacity 
limitation allocated to the taxpayer over the total nameplate 
capacity of the taxpayer's unit.
      In addition, the credit allowable to the taxpayer is 
reduced by reason of grants, tax-exempt bonds, subsidized 
energy financing, and other credits, but such reduction cannot 
exceed 50 percent of the otherwise allowable credit. The credit 
is treated as part of the general business credit and, under a 
special transition rule may not be carried back to a taxable 
year ending before or on the effective date of the provision.
Basic clean coal technology units
      A qualifying clean coal technology unit is a unit using 
clean coal technology (including advanced pulverized coal or 
atmospheric fluidized bed combustion, pressurized fluidized bed 
combustion, and integrated gasification combined cycle) for the 
production of electricity. The unit must use at least 75 
percent coal to produce at least 50 percent of its thermal 
output as electricity. In addition, the unit must meet certain 
capacity standards, thermal efficiency standards, and emissions 
standards for SO2, nitrous oxides, particulate 
emissions, and source emissions standards as provided in the 
Clean Air Act. In addition, a qualifying clean coal technology 
unit cannot be a unit that is receiving or is scheduled to 
receive funding under the Clean Coal Technology Program, the 
Power Plant Improvement Initiative, or the Clean Coal Power 
Initiative administered by the Secretary of the Department of 
Energy. Lastly, to be a qualified clean coal technology unit, 
the taxpayer must receive a certificate from the Secretary of 
the Treasury. The Secretary may grant certificates to units 
only to the point that 4,000 megawatts of electricity 
production capacity qualifies for the credit. However, no 
qualifying unit is eligible if the unit's rated nameplate 
capacity prior to January 1, 2004, exceeded 300 megawatts. The 
maximum eligible allocation to any qualifying unit may not 
exceed 300 megawatts.
Advanced clean coal technology units
      A qualifying advanced clean coal technology unit is a 
unit using: (1) advanced pulverized coal or atmospheric 
fluidized bed combustion technology; (2) qualifying pressurized 
fluidized bed combustion technology; (3) integrated 
gasification combined cycle technology; or (4) other qualifying 
technology.
      (1) A qualifying advanced pulverized coal or atmospheric 
fluidized bed combustion technology unit is a unit placed in 
service after the date of enactment and before 2013 and having 
a design net heat rate of not more than 8,500 Btu (8,900 Btu if 
the unit is placed in service before 2009).
      (2) A qualifying pressurized fluidized bed combustion 
technology unit is a unit placed in service after the date of 
enactment and before 2017 and having a design net heat rate of 
not more than 7,720 Btu (8,900 Btu if the unit is placed in 
service before 2009 and 8,500 Btu if the unit is placed in 
service after 2008 and before 2013).
      (3) A qualifying integrated gasification combined cycle 
technology unit, with or without fuel or chemical co-
production, is a unit placed in service after the date of 
enactment and before 2017 and having a design net heat rate of 
not more than 7,720 Btu (8,900 Btu if the unit is placed in 
service before 2009 and 8,500 Btu if the unit is placed in 
service after 2008 and before 2013).
      (4) An other qualifying technology unit is a unit that 
uses any other technology and satisfies the design net heat 
rates of a qualifying advanced pulverized coal or atmospheric 
fluidized bed combustion technology unit.
      Any qualifying advanced clean coal technology unit must 
meet certain capacity standards, thermal efficiency standards, 
and emissions standards for SO2 nitrous oxides, 
particulate emissions, and source emissions standards as 
provided in the Clean Air Act. A qualifying advanced clean coal 
technology unit must use at least 75 percent coal to produce at 
least 50 percent of its thermal output as electricity. In 
addition, a qualifying advanced clean coal technology unit must 
meet certain carbon emissions requirements. For units using 
design coal with a heat content of not more than 9,000 Btu per 
pound, the carbon emission rate must be less than 0.60 pound of 
carbon per kilowatt hour (0.51 if the unit qualifies as an 
other technology unit). For units using design coal with a heat 
content in excess of 9,000 Btu per pound, the carbon emission 
rate must be less than 0.54 pound of carbon per kilowatt hour 
(0.459 if the unit qualifies as an other technology unit).
      To be a qualified investment in advanced clean coal 
technology, the taxpayer must receive a certificate from the 
Secretary of the Treasury. The Secretary may grant certificates 
to investments only to the point that 6,000 megawatts of 
electricity production capacity qualifies for the credit. From 
the potential pool of 6,000 megawatts of capacity, not more 
than 1,500 megawatts in total and not more than 750 megawatts 
in years prior to 2009 shall be allocated to units using 
advanced pulverized coal or atmospheric fluidized bed 
combustion technology. From the potential pool of 6,000 
megawatts of capacity, not more than 750 megawatts in total and 
not more than 375 megawatts in years prior to 2009 shall be 
allocated to units using pressurized fluidized bed combustion 
technology. From the potential pool of 6,000 megawatts of 
capacity, not more than 3,000 megawatts in total and not more 
than 1,250 megawatts in years prior to 2009 shall be allocated 
to units using integrated gasification combined cycle 
technology, with or without fuel or chemical co-production. 
From the potential pool of 6,000 megawatts of capacity, not 
more than 750 in total and not more than 375 megawatts in years 
prior to 2009 shall be allocated to any other technology unit.
      Effective date.--The provision is effective for property 
placed in service after the date of enactment.
3. Credit for production from advanced clean coal technology (secs. 
        2212 and 2221 of Senate amendment)

                              PRESENT LAW

      Present law does not provide a production credit for 
electricity generated at units that use coal as a fuel. 
However, an income tax credit is allowed for the production of 
electricity from either qualified wind energy, qualified 
``closed-loop'' biomass, or qualified poultry waste units 
placed in service prior to January 1, 2002 (sec. 45). The 
credit allowed equals 1.5 cents per kilowatt-hour of 
electricity sold. The 1.5-cent figure is indexed for inflation 
and equals 1.8 cents for 2002. The credit is allowable for 
production during the 10-year period after a unit is originally 
placed in service. The production tax credit is a component of 
the general business credit (sec. 38(b)(1)).

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

In general
      The Senate amendment creates a production credit for 
electricity produced from any qualified advanced clean coal 
technology electricity generation unit that qualifies for the 
investment credit for qualifying clean coal technology units, 
as described above. Certain persons (public utilities, electric 
cooperatives, Indian tribes, and the Tennessee Valley 
Authority) will be eligible to obtain certifications from the 
Secretary of the Treasury (as described below) for each of 
these credits and sell, trade, or assign the credit to any 
taxpayer. However, any credit sold, traded, or assigned may 
only be sold, traded, or assigned once. Subsequent trades are 
not permitted.
Value of production credit for electricity produced from qualifying 
        advanced clean coal technology
      The taxpayer may claim a production credit on the sum of 
each kilowatt-hour of electricity produced and the heat value 
of other fuels or chemicals produced by the taxpayer at the 
unit.\66\ The taxpayer may claim the production credit for the 
10-year period commencing with the date the qualifying unit is 
placed in service (or the date on which a conventional unit was 
retrofitted or repowered). The value of the credit varies 
depending upon the year the unit is placed in service, whether 
the unit produces solely electricity or electricity and fuels 
or chemicals, and the rated thermal efficiency of the unit. In 
addition, the value of the credit is reduced for the second 
five years of eligible production. The maximum value of the 
production credit from any qualifying unit during the first 
five years of production is $0.014 per kilowatt-hour and the 
minimum value is $0.001. During the second five years of 
production from a qualifying unit, the maximum value of the 
production credit is $0.0115 and the minimum value is $0.001. 
The value of the credit is indexed for inflation occurring 
after 2002 with the first potential adjustment in 2004.
---------------------------------------------------------------------------
    \66\ Each 3,413 Btu of heat content of the fuel or chemical is 
treated as equivalent to one kilowatt-hour of electricity.
---------------------------------------------------------------------------
Effective date
      The Senate amendment is effective for electricity sold 
after the date of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement does not include the Senate 
amendment provision.
4. Amortization of pollution control facilities (sec. 169 of the Code)

                              PRESENT LAW

      In general, a taxpayer may elect to recover the cost of 
any certified pollution control facility over a period of 60 
months.\67\ A certified pollution control facility is defined 
as a new, identifiable treatment facility which (1) is used in 
an existing plant in operation before January 1, 1976, to abate 
or control water or atmospheric pollution or contamination by 
removing, altering, disposing, storing, or preventing the 
creation or emission of pollutants, contaminants, wastes or 
heat; and (2) which does which does not lead to a significant 
increase in output or capacity, a significant extension of 
useful life, or a significant reduction in total operating 
costs for such plant or other property (or any unit thereof), 
or a significant alteration in the nature of a manufacturing 
production process or facility. Certification is required by 
appropriate State and Federal authorities that the facility 
comply with appropriate standards.
---------------------------------------------------------------------------
    \67\ Sec. 169. For purposes of the alternative minimum tax, such 
property is recovered using the straight-line method over its general 
recovery period (for property placed in service prior to 1999 and after 
1986 such property is recovered using the alternative system of 
depreciation contained in section 168(g)).
---------------------------------------------------------------------------
      For a pollution control facility with a useful life 
greater than 15 years, only the basis attributable to the first 
15 years is eligible to be amortized over a 5-year period.\68\ 
The remaining basis is depreciable under the regular rules for 
depreciation. In addition, a corporate taxpayer must reduce the 
amount of basis eligible for the 60-month recovery by 20 
percent.\69\ Such reduction is depreciable under the regular 
rules for depreciation.
---------------------------------------------------------------------------
    \68\ The amount attributable to the first 15 years is equal to an 
amount which bears the same ratio to the portion of the adjusted basis 
of such facility, which would be eligible for amortization but for the 
application of this rule, as 15 bears to the number of years of useful 
life of such facility.
    \69\ Sec. 291(a)(5).
---------------------------------------------------------------------------

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement expands the ability to recover 
certified pollution control facilities over 60 months by 
repealing the requirement that only a certified pollution 
control facility used in connection with a plant in operation 
before January 1, 1976 qualify. Thus, a certified pollution 
control facility used in connection with a plant or other 
property that began operation after January 1, 1976, will 
generally be eligible for recovery over 60 months.\70\ In 
addition, the conference agreement shortens the recovery period 
for a certified pollution control facility used in connection 
with a plant or other property in operation before January 1, 
1976, to 36 months (from 60 months) if no allocation is made 
under section 48A(f) (as added by another provision of the 
conference agreement). The conference agreement does not alter 
the present law limitation on the benefits of the provision for 
corporate taxpayers and pollution control facilities with a 
useful life greater than 15 years.
---------------------------------------------------------------------------
    \70\ In the case of a facility used in connection with a plant or 
other property to which an amount is allocated under section 48A(f) (as 
added by another provision in the conference agreement) the 60-month 
amortization period only applies if such plant or other property was in 
operation before January 1, 1976.
---------------------------------------------------------------------------
      Effective date.--The provision applies to facilities 
placed in service after the date of enactment.
5. Eligible integrated gasification combined cycle technology unit 
        treated as five-year property (sec. 168 of the Code)

                              PRESENT LAW

      The applicable recovery period for assets placed in 
service under the Modified Accelerated Cost Recovery System is 
based on the ``class life of the property.'' The class lives of 
assets placed in service after 1986 are generally set forth in 
Revenue Procedure 87-56.\71\ Electric utility steam production 
plant property, which includes combustion turbines operated in 
a combined cycle with a conventional steam unit, is assigned a 
20-year recovery period and a class life of 28 years.
---------------------------------------------------------------------------
    \71\ 1987-2 C.B. 674 (as clarified and modified by Rev. Proc. 88-
22, 1988-1 C.B. 785).
---------------------------------------------------------------------------

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement establishes a statutory 5-year 
recovery period and a class life of 20 years for an eligible 
integrated gasification combined cycle technology unit that 
receives an allocation of the clean coal technology credit.\72\ 
An eligible integrated gasification combined cycle technology 
unit is defined as a clean coal technology unit using 
integrated gasification combined cycle technology, with or 
without fuel or chemical co-production, which meets a certain 
design heat rate and net thermal efficiency.\73\
---------------------------------------------------------------------------
    \72\ Section 48A as added by another provision of the conference 
agreement.
    \73\ The design heat rate and net thermal efficiency standards are 
defined in section 48A(e)(4)(A) and (B) as added by another provision 
of the conference agreement.
---------------------------------------------------------------------------
      Effective date.--The provision is effective for property 
placed in service after the date of enactment.

                 E. High Volume Natural Gas Provisions

1. High volume natural gas pipe treated as seven-year property (sec. 
        168 of the Code)

                              PRESENT LAW

      The applicable recovery period for assets placed in 
service under the Modified Accelerated Cost Recovery System is 
based on the ``class life of the property.'' The class lives of 
assets placed in service after 1986 are generally set forth in 
Revenue Procedure 87-56.\74\ Asset class 46.0, describing 
assets used in the private, commercial, and contract carrying 
of petroleum, gas and other products by means of pipes and 
conveyors, are assigned a class life of 22 years and a recovery 
period of 15 years.
---------------------------------------------------------------------------
    \74\ 1987-2 C.B. 674 (as clarified and modified by Rev. Proc. 88-
22, 1988-1 C.B. 785).
---------------------------------------------------------------------------

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement establishes a statutory seven-
year recovery period and a class life of 22 years for any high 
volume natural gas pipe the original use \75\ of which 
commences after the date of enactment. High volume natural gas 
pipe is defined as a pipe which has an interior diameter at 
least 42 inches and which is part of a natural gas pipeline 
system. Such property includes any related equipment and 
appurtenances used in connection with such pipe. In addition, 
the conference agreement provides that there is no adjustment 
to the allowable amount of depreciation for purposes of 
computing a taxpayer's alternative minimum taxable income with 
respect to such property.
---------------------------------------------------------------------------
    \75\ The term ``original use'' means the first use to which the 
property is put, whether or not such use corresponds to the use of such 
property by the taxpayer. It is intended that, when evaluating whether 
property qualifies as ``original use,'' the factors used to determine 
whether property qualified as ``new section 38 property'' for purposes 
of the investment tax credit would apply. See Treasury Regulation 1.48-
2. Thus, it is intended that additional capital expenditures incurred 
to recondition or rebuild acquired property (or owned property) would 
satisfy the ``original use'' requirement. However, the cost of 
reconditioned or rebuilt property acquired by the taxpayer would not 
satisfy the ``original use'' requirement. For example, if on April 13, 
2004, a taxpayer buys from ACM for $20,000,000 a 42-inch natural gas 
pipeline that has been previously used by ACM. Subsequent to the 
purchase, the taxpayer makes an expenditure on the property of 
$5,000,000 for new 42-inch pipe that is required to be capitalized. 
Regardless of whether the $5,000,000 is added to the basis of such 
property or is capitalized as a separate asset, such amount would be 
treated as satisfying the ``original use'' requirement and would be 
eligible for the reduced recovery period. No part of the $20,000,000 
purchase price qualifies for the reduced recovery period.
---------------------------------------------------------------------------
      Effective date.--The provision is effective for property 
placed in service on or after the date of enactment.
2. Credit for production of Alaska natural gas (sec. 2503 of Senate 
        amendment)

                              PRESENT LAW

      Present law does not provide a credit for conventional 
production of natural gas or delivery of fuels to a pipeline. 
However, certain fuels produced from ``non-conventional 
sources'' and sold to unrelated parties are eligible for an 
income tax credit equal to $3 (generally adjusted for 
inflation) per barrel or BTU oil barrel equivalent (sec. 29). 
Qualified fuels must be produced within the United States.
      Qualified fuels include:
            (1) Gas produced from geopressured brine, Devonian 
        shale, coal seams, tight formations (``tight sands''), 
        or biomass; and
            (2) Liquid, gaseous, or solid synthetic fuels 
        produced from coal (including lignite).
      In general, the credit is available only with respect to 
fuels produced from wells drilled or facilities placed in 
service after December 31, 1979, and before January 1, 1993. An 
exception extends the January 1, 1993 expiration date for 
facilities producing gas from biomass and synthetic fuel from 
coal if the facility producing the fuel is placed in service 
before July 1, 1998, pursuant to a binding contract entered 
into before January 1, 1997.
      The credit may be claimed for qualified fuels produced 
and sold before January 1, 2003 (in the case of non-
conventional sources subject to the January 1, 1993 expiration 
date) or January 1, 2008 (in the case of biomass gas and 
synthetic fuel facilities eligible for the extension period).

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment provides a credit per million 
British thermal units (Btu) of natural gas for Alaska natural 
gas entering a pipeline during the 15-year period beginning the 
later of January 1, 2010 or the initial date for the interstate 
transportation of Alaska natural gas. Taxpayers may claim the 
credit against both the regular and minimum tax.
      The credit amount for any month is the excess of $3.25 
(indexed for inflation) per million Btu of natural gas over the 
average monthly price for that month for Alaska natural gas at 
theAECO C Hub in Alberta, Canada. Inflation adjustments in the 
$3.25 amount will be made by reference to changes in the GDP implicit 
price deflator for changes occurring after the first year in which the 
credit may be claimed.
      If in any month commencing three years after the first 
year in which the credit may be claimed the average monthly 
price for that month for Alaska natural gas at the AECO C Hub 
in Alberta, Canada, exceeds $4.875 (indexed for inflation) per 
million Btu, any prior credits claimed are recaptured by 
increasing the taxpayer's tax liability by the lesser of the 
excess of the average monthly price for that month for Alaska 
natural gas at the AECO C Hub over $4.875 (indexed for 
inflation) per million Btu or the aggregate amount of credit 
claimed for Alaska natural gas in all prior years.
      Alaska natural gas is any gas derived from an area of the 
State of Alaska lying north of 64 degrees North latitude 
generally from the area known as the ``North Slope of Alaska,'' 
but not including the Alaska National Wildlife Refuge.
      Effective date.--The provision is effective on the date 
of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement does not include the Senate 
amendment provision.
3. Enhanced oil recovery credit for certain gas processing facilities 
        (sec. 43 of the Code)

                              PRESENT LAW

      The taxpayer may claim a credit equal to 15 percent of 
enhanced oil recovery costs. Qualified enhanced oil recovery 
costs include costs of depreciable tangible property that is 
part of an enhanced oil recovery project, intangible drilling 
and development costs with respect to an enhanced oil recovery 
project, and tertiary injectant expenses incurred with respect 
to an enhanced oil recovery project. The credit is phased out 
when oil prices exceed a threshold amount.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement provides that expenses in 
connection with the construction of any qualifying natural gas 
processing plant capable of processing one trillion British 
thermal units of natural gas into a natural gas pipeline system 
on a daily basis are qualified enhanced oil recovery costs 
eligible for the enhanced oil recovery credit. A qualifying 
natural gas processing plant also must produce carbon dioxide 
for re-injection into a producing oil or gas field.
      Effective date.--The provision is effective for costs 
paid or incurred in taxable years beginning after 2003.

                       IV. ADDITIONAL PROVISIONS

A. Extension of Tax Incentives for Energy-Related Businesses on Indian 
                              Reservations

(sec. 2501 of the Senate amendment and sec. 168 of the Code)

                              PRESENT LAW

      The following tax incentives are available for businesses 
within Indian reservations.
Accelerated depreciation
      With respect to certain property used in connection with 
the conduct of a trade or business within an Indian 
reservation, depreciation deductions under section 168(j) are 
determined using shorter recovery periods.
      ``Qualified Indian reservation property'' eligible for 
accelerated depreciation includes property which is (1) used by 
the taxpayer predominantly in the active conduct of a trade or 
business within an Indian reservation, (2) not used or located 
outside the reservation on a regular basis, (3) not acquired 
(directly or indirectly) by the taxpayer from a person who is 
related to the taxpayer, and (4) described in the recovery-
period table above. In addition, property is not ``qualified 
Indian reservation property'' if it is placed in service for 
purposes of conducting gaming activities. Certain ``qualified 
infrastructure property'' may be eligible for the accelerated 
depreciation even if located outside an Indian reservation.
      The depreciation deduction allowed for regular tax 
purposes is also allowed for purposes of the alternative 
minimum tax. The accelerated depreciation is available with 
respect to property placed in service on or after January 1, 
1994, and before December 31, 2004.
Indian employment credit
      In general, a credit against income tax liability is 
allowed to employers for the first $20,000 of qualified wages 
and qualified employee health insurance costs paid or incurred 
by the employer with respect to certain employees (sec. 45A). 
The credit is equal to 20 percent of the excess of eligible 
employee qualified wages and health insurance costs during the 
current year over the amount of such wages and costs incurred 
by the employer during 1993. The credit is an incremental 
credit, such that an employer's current-year qualified wages 
and qualified employee health insurance costs (up to $20,000 
per employee) are eligible for the credit only to the extent 
that the sum of such costs exceeds the sum of comparable costs 
paid during 1993. No deduction is allowed for the portion of 
the wages equal to the amount of the credit.
      The wage credit is available for wages paid or incurred 
on or after January 1, 1994, in taxable years that begin before 
December 31, 2004.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment extends the accelerated depreciation 
incentive to property placed in service before January 1, 2006, 
and the Indian employment credit incentive to taxable years 
beginning before January 1, 2006.
      Effective date.--The provision is effective on the date 
of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement extends the accelerated 
depreciation incentive for property placed in service before 
January 1, 2006, as part of a facility for: (1) The generation 
or transmission of electricity (including any qualified energy 
resource as defined in section 45(c) for purposes of the credit 
for electricity produced from certain renewable resources), (2) 
an oil or gas well, (3) the transmission or refining of oil or 
gas, or (4) the production of any qualified fuel (as defined 
for purposes of the credit for producing fuel from a 
nonconventional source).
      Effective date.--The provision is effective on the date 
of enactment.

                              B. GAO Study

(sec. 2502 of the Senate amendment)

                              PRESENT LAW

      Present law does not require study of the present law 
provisions relating to clean fuel vehicles and electric 
vehicles.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment directs the Comptroller General to 
undertake an ongoing analysis of the effectiveness of the tax 
credits allowed to alternative motor vehicles and the tax 
credits allowed to various alternative fuels under Title II of 
the bill and the tax credits and enhanced deductions allowed 
for energy conservation and efficiency under Title III of the 
bill. The studies should estimate the energy savings and 
reductions in pollutants achieved from taxpayer utilization of 
these provisions. The studies should estimate the dollar value 
of the benefits of reduced energy consumption and reduced air 
pollution in comparison to estimates of the revenue cost of 
these provisions to the U.S. Treasury. The studies should 
include an analysis of the distribution of the taxpayers who 
utilize these provisions by income and other relevant 
characteristics.
      The bill directs the Comptroller General to submit annual 
reports to Congress beginning not later than December 31, 2002.
      Effective date.--The provision is effective on the date 
of enactment.

                          CONFERENCE AGREEMENT

      The conference agreement does not include the Senate 
amendment provision.

  C. Treatment of Certain Dispositions of Dairy Property To Implement 
                Bovine Tuberculosis Eradication Program

(sec. 2505 of the Senate amendment)

                              PRESENT LAW

      Generally, a taxpayer may elect not to recognize gain 
with respect to property that is involuntarily converted if the 
taxpayer acquires within an applicable period (generally the 
period ending two years after the end of the taxable year in 
which the first gain on the conversion is realized) property 
similar or related in service or use.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment extends involuntary conversion 
treatment to qualified dispositions of dairy property pursuant 
to the bovine tuberculosis eradication program. Treats any 
property acquired and held by the taxpayer either for 
productive use in a trade or business or for investment as 
property similar or related in use to the converted property. 
Extend the applicable acquisition period from two to four years 
and permits replacement property to be acquired from related 
parties. In addition to deferring gain, the provision also 
permits an ordinary loss equal to the adjusted basis of the 
converted property.
      Finally, the provision allows expensing for amounts paid 
or incurred by the taxpayer to convert any real property into 
unimproved land pursuant to the bovine tuberculosis eradication 
program.
      Effective date.--Effective for dispositions made and 
amounts received in taxable years beginning after May 22, 2001, 
but shall not apply to dispositions made after December 31, 
2006.

                          CONFERENCE AGREEMENT

      The conference agreement does not include the Senate 
amendment provision.

    D. Expand Exemption From Aviation Fuels Excise Taxes for Aerial 
                              Applicators

(sec. 2506 of the Senate amendment)

                              PRESENT LAW

      Excise taxes are imposed on aviation gasoline (19.4 cents 
per gallon) and jet fuel (21.9 cents per gallon) (secs. 4081 
and 4091). Fuel used on a farm for farming purposes is exempt 
from tax. Aerial applicators (crop dusters) are allowed to 
claim the exemption on behalf of farm owners and operators, 
e.g., in the case of aviation gasoline if the owners or 
operators give written consent to the aerial applicators. This 
exemption applies only to fuel consumed in the airplane while 
operating over the farm, i.e., fuel consumed traveling to and 
from the farm is not exempt.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment expands the present-law exception to 
include fuel used between farms and base airfields, and 
provides that the aerial applicator is the exclusive party 
entitled to the refund.
      Effective date.--The provision is effective for fuel use 
and air transportation after December 31, 2001 and before 
January 1, 2003.

                          CONFERENCE AGREEMENT

      The conference agreement does not include the Senate 
amendment provision.

              E. Modification of Rural Airport Definition

(sec. 2507 of the Senate amendment)

                              PRESENT LAW

      Most domestic air passenger transportation is subject to 
a two-part excise tax. First, an ad valorem tax is imposed at 
the rate of 7.5 percent of the amount paid for the 
transportation. Second, a flight segment tax of $3.00 per 
segment is imposed. The flight segment component of the tax 
does not apply to segments to or from qualified ``rural 
airports.'' A rural airport is defined as an airport that (1) 
in the second preceding calendar year had fewer than 100,000 
commercial passenger departures, and (2) either (a) is not 
located within 75 miles of another airport that had more than 
100,000 such departures in that year, or (b) is eligible for 
payments under the Federal ``essential air service'' program.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The provision expands the definition of qualified rural 
airport to include an airport that (1) is not connected by 
paved roads to another airport and (2) had fewer that 100,000 
passengers departing by air during the second preceding 
calendar year.
      Effective date.--The provision is effective for calendar 
years beginning after 2002.

                          CONFERENCE AGREEMENT

      The conference agreement does not include the Senate 
amendment provision.

         F. Exempt Transportation by Seaplane From Ticket Taxes

(sec. 2508 of the Senate amendment)

                              PRESENT LAW

      Most domestic air passenger transportation is subject to 
a two-part excise tax. First, an ad valorem tax is imposed at 
the rate of 7.5 percent of the amount paid for the 
transportation. Second, a flight segment tax of $3.00 per 
segment is imposed. Noncommercial aviation is subject to a 
higher fuel excise tax, but not the ticket tax.
      Commercial aviation also is subject to a 4.4-cents-per-
gallon fuels excise tax.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The Senate amendment exempts seaplane flights from the 
taxes on transportation of persons and property by air.
      Effective date.--The provision is effective for calendar 
years beginning after 2002.

                          CONFERENCE AGREEMENT

      The conference agreement does not include the Senate 
amendment provision.

    G. Credit for Taxpayers Owning Commercial Power Takeoff Vehicles

(sec. 2009 of the Senate amendment)

                              PRESENT LAW

      If gasoline is used in an off-highway business use, the 
ultimate purchaser of the gasoline is entitled to a credit or 
refund of excise taxes paid in respect of the gasoline.\76\ No 
credit or payment may be claimed in respect of gasoline used in 
a commercial highway vehicle solely by reason of the fact that 
the propulsion motor in the vehicle also is used for a purpose 
other than to propel the vehicle.\77\ Thus, if the propulsion 
motor of a highway vehicle also operates special equipment, 
such as a mixing unit on a concrete mixer or a pump for 
discharging fuel from a tank truck, by means of a power takeoff 
or power transfer, no credit or payment may be claimed in 
respect of the gasoline used to operate the special equipment, 
even though the special equipment is mounted on the highway 
vehicle.\78\
---------------------------------------------------------------------------
    \76\ Sec. 6421(a).
    \77\ Treas. Reg. sec. 48.6421-1(d)(2).
    \78\ Id.
---------------------------------------------------------------------------
      If the highway vehicle is equipped with a separate motor 
to operate the special equipment, credit or refund payment may 
be claimed in respect of gasoline used in the separate motor. 
For example, if a separate motor is used to operate a 
refrigeration unit, pump, generator or mixing unit, the 
ultimate purchaser could seek a refund with respect to the 
gasoline used in that separate motor. If the gasoline used in a 
separate motor is drawn from the same tank as the one which 
supplies gasoline for the propulsion of the highway vehicle, 
the determination as to the quantity of gasoline used in the 
separate motor operating the special equipment is based on 
operating experience and supported by records.\79\
---------------------------------------------------------------------------
    \79\ Treas. Reg. sec. 48.6421-1(d)(3).
---------------------------------------------------------------------------

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      The provision provides a yearly $250-per-vehicle income 
tax credit to business owners of certain highway vehicles that 
consume fuel for both transportation and in non-transportation-
related equipment, using a single motor. Specifically, the 
provision covers vehicles (1) designed to engage in the daily 
collection of refuse or recyclables from homes or businesses 
and is equipped with a mechanism under which the vehicles 
propulsion engine provides the power to operate a load 
compactor, (``refuse collection trucks'') or (2) designed to 
deliver ready mixed concrete on a daily basis and is equipped 
with a mechanism under which the vehicles propulsion engine 
provides the power to operate a mixer drum to agitate and mix 
the product en route to the delivery site (``concrete 
mixers''). Governmental vehicles and those owned by tax-exempt 
organizations are not eligible for the credit. The credit 
expires after the calendar year 2004.
      The provision further requires that by January 1, 2005, 
the Treasury provide by regulation a method for exempting 
refuse collection trucks and concrete mixers from the fuels 
excise tax on fuel used to power equipment attached to these 
vehicles.
      Effective date.--The provision is effective for taxable 
years beginning after the date of enactment through 2004.

                          CONFERENCE AGREEMENT

      The conference agreement does not contain the Senate 
amendment provision.

   H. Payment of Dividends on Stock of Cooperatives Without Reducing 
                          Patronage Dividends

(sec. 1388 of the Code)

                              PRESENT LAW

      Under present law, cooperatives generally are entitled to 
deduct or exclude amounts distributed as patronage dividends in 
accordance with Subchapter T of the Code. In general, patronage 
dividends are comprised of amounts that are paid to patrons (1) 
on the basis of the quantity or value of business done with or 
for patrons, (2) under a valid and enforceable obligation to 
pay such amounts that was in existence before the cooperative 
received the amounts paid, and (3) which are determined by 
reference to the net earnings of the cooperative from business 
done with or for patrons.
      Treasury Regulations provide that net earnings are 
reduced by dividends paid on capital stock or other proprietary 
capital interests (referred to as the ``dividend allocation 
rule'').\80\ The dividend allocation rule has been interpreted 
to require that such dividends be allocated between a 
cooperative's patronage and nonpatronage operations, with the 
amount allocated to the patronage operations reducing the net 
earnings available for the payment of patronage dividends.
---------------------------------------------------------------------------
    \80\ Treas. Reg. sec. 1.1388-1(a)(1).
---------------------------------------------------------------------------

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement provides a special rule for 
dividends on capital stock of a cooperative. To the extent 
provided in organizational documents of the cooperative, 
dividends on capital stock do not reduce patronage income and 
do not prevent the cooperative from being treated as operating 
on a cooperative basis.
      Effective date.--The conference agreement provision is 
effective for distributions made in taxable years ending after 
the date of enactment.

     I. Distributions From Publicly Traded Partnerships Treated as 
           Qualifying Income of Regulated Investment Company

(secs. 851 and 469(k) of the Code)

                              PRESENT LAW

Treatment of regulated investment companies
      A regulated investment company (``RIC'') generally is 
treated as a conduit for Federal income tax purposes. In 
computing its taxable income, a RIC deducts dividends paid to 
its shareholders to achieve conduit treatment (sec. 852(b)). In 
order to qualify for conduit treatment, a RIC must be a 
domestic corporation that, at all times during the taxable 
year, is registered under the Investment Company Act of 1940 as 
a management company or as a unit investment trust, or has 
elected to be treated as a business development company under 
that Act (sec. 851(a)). In addition, the corporation must elect 
RIC status, and must satisfy certain other requirements (sec. 
851(b)).
      One of the RIC qualification requirements is that at 
least 90 percent of the RIC's gross income is derived from 
dividends, interest, payments with respect to securities loans, 
and gains from the sale or other disposition of stock or 
securities or foreign currencies, or other income (including 
but not limited to gains from options, futures, or forward 
contracts) derived with respect to its business of investing in 
such stock, securities, or currencies (sec. 851(b)(2)). Income 
derived from a partnership is treated as meeting this 
requirement only to the extent such income is attributable to 
items of income of the partnership that would meet the 
requirement if realized by the RIC in the same manner as 
realized by the partnership (the ``look-through'' rule for 
partnership income) (sec. 851(b)). Under present law, no 
distinction is made under this rule between a publicly traded 
partnership (that is treated as a partnership for Federal tax 
purposes) and any other partnership.
      The RIC qualification rules include limitations on the 
ownership of assets and on the composition of the RIC's assets 
(sec. 851(b)(3)). Under the ownership limitation, at least 50 
percent of the value of the RIC's total assets must be 
represented by cash, government securities and securities of 
other RICs, and other securities; however, in the case of such 
other securities, the RIC may invest no more than 5 percent of 
the value of the total assets of the RIC in the securities of 
any one issuer, and may hold no more than 10 percent of the 
outstanding voting securities of any one issuer. Under the 
limitation on the composition of the RIC's assets, no more than 
25 percent of the value of the RIC's total assets may be 
invested in the securities of any one issuer (other than 
Government securities), or in securities of two or more 
controlled issuers in the same or similar trades or businesses. 
These limitations generally are applied at the end of each 
quarter (sec. 851(d)).
Treatment of publicly traded partnerships
      Under present law, a publicly traded partnership is 
defined as a partnership, interests in which are traded on an 
established securities market, or are readily tradable on a 
secondary market (or the substantial equivalent thereof). In 
general, a publicly traded partnership is treated as a 
corporation (sec. 7704(a)), but an exception to corporate 
treatment is provided if 90 percentor more of its gross income 
is interest, dividends, real property rents, or certain other types of 
qualifying income (sec. 7704(c) and (d)).
      A special rule for publicly traded partnerships applies 
under the passive loss rules. The passive loss rules limit 
deductions and credits from passive trade or business 
activities (sec. 469). Deductions attributable to passive 
activities, to the extent they exceed income from passive 
activities, generally may not be deducted against other income. 
Deductions and credits that are suspended under these rules are 
carried forward and treated as deductions and credits from 
passive activities in the next year. The suspended losses from 
a passive activity are allowed in full when a taxpayer disposes 
of his entire interest in the passive activity to an unrelated 
person. The special rule for publicly traded partnerships 
provides that the passive loss rules are applied separately 
with respect to items attributable to each publicly traded 
partnership (sec. 469(k)). Thus, income or loss from the 
publicly traded partnership is treated as separate from income 
or loss from other passive activities.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement includes a provision that 
modifies the 90 percent test with respect to income of a RIC to 
include income derived from an interest in certain publicly 
traded partnerships. The provision also modifies the 
lookthrough rule for partnership income of a RIC so that it 
applies only to income from a partnership other than such 
publicly traded partnerships.
      The provision provides that the limitation on ownership 
and the limitation on composition of assets that apply to other 
investments of a RIC also apply to RIC investments in such 
publicly traded partnership interests.
      A publicly traded partnership to which the provision 
applies is a publicly traded partnership described in section 
7704(b) other than one that would satisfy the 90-percent gross 
income requirements for publicly traded partnerships if 
qualifying income included only income that is qualifying 
income described in section 851(b)(2)(A) for a RIC (i.e., 
income that is derived from dividends, interest, payments with 
respect to securities loans, and gains from the sale or other 
disposition of stock or securities or foreign currencies, or 
other income (including but not limited to gains from options, 
futures, or forward contracts) derived with respect to its 
business of investing in such stock, securities, or 
currencies).
      The provision provides that the special rule for publicly 
traded partnerships under the passive loss rules (requiring 
separate treatment) applies to a RIC holding an interest in 
such a publicly traded partnership, with respect to items 
attributable to the interest in the publicly traded 
partnership.
      The conferees intend that the provision not be used to 
avoid tax on the partnership's income in the hands of the 
mutual fund shareholders that would be subject to tax (e.g., 
unrelated business income tax) or to withholding (e.g., 
withholding on foreign partners) if they held the partnership 
interest directly. The conferees expect that guidance issued by 
the Treasury Department with respect to the provision will 
provide rules that carry out this intent.
      Effective date.--The provision is effective for taxable 
years beginning after the date of enactment.

    J. Suspension of Duties on Ceiling Fans (Chapter 99, II of the 
            Harmonized Tariff Schedule of the United States)

                              PRESENT LAW

      A 4.7-percent ad valorem customs duty is collected on 
imported ceiling fans from all sources.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement suspends the present customs 
duty applicable to ceiling fans through December 31, 2005.
      Effective date.--The provision is effective on the 
fifteenth day after the date of enactment.

K. Suspension of Duties on Nuclear Steam Generators (Chapter 99, II of 
          the Harmonized Tariff Schedule of the United States)

                              PRESENT LAW

      Nuclear steam generators, as classified under heading 
9902.84.02 of the Harmonized Tariff Schedule of the United 
States, enter the United States duty free until December 31, 
2006. After December 31, 2006, the duty on nuclear steam 
generators returns to the column 1 rate of 5.2 percent under 
subheading 8402.11.00 of the Harmonized Tariff Schedule of the 
United States.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement extends the present-law 
suspension of customs duty applicable to nuclear steam 
generators through December 31, 2008.
      Effective date.--The provision is effective on the 
fifteenth day after the date of enactment.

L. Suspension of Duties on Nuclear Reactor Vessel Heads (Chapter 99, II 
        of the Harmonized Tariff Schedule of the United States)

                              PRESENT LAW

      According to section 5202 of the Trade Act of 2002, 
nuclear vessel heads are classified under subheading 8401.40.00 
of the Harmonized Tariff Schedule of the United States and 
enter the United States with a column 1 duty rate of 3.3 
percent.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The conference agreement temporarily suspends the present 
customs duty applicable to nuclear reactor vessel heads for 
column 1 countries through December 31, 2007.
      Effective date.--The provision is effective on the date 
of enactment.

 M. Brownfields Demonstration Program for Qualified Green Building and 
                      Sustainable Design Projects

(secs. 142 and 146 of the Code)

                              PRESENT LAW

Tax-exempt bonds
            In general
      Interest on debt incurred by States or local governments 
is excluded from income if the proceeds of the borrowing are 
used to carry out governmental functions of those entities or 
the debt is repaid with governmental funds (section 103). 
Interest on bonds that nominally are issued by States or local 
governments, but the proceeds of which are used (directly or 
indirectly) by a private person and payment of which is derived 
from funds of such a private person is taxable unless the 
purpose of the borrowing is approved specifically in the Code 
or in a non-Code provision of a revenue Act. These bonds are 
called ``private activity bonds.'' The term ``private person'' 
includes the Federal Government and all other individuals and 
entities other than States or local governments.
            Private activities eligible for financing with tax-exempt 
                    private activity bonds
      Present law includes several exceptions permitting States 
or local governments to act as conduits providing tax-exempt 
financing for private activities. Both capital expenditures and 
limited working capital expenditures of charitable 
organizations described in section 501(c)(3) of the Code may be 
financed with tax-exempt bonds (``qualified 501(c)(3) bonds'').
      States or local governments may issue tax-exempt 
``exempt-facility bonds'' to finance property for certain 
private businesses. Business facilities eligible for this 
financing include transportation (airports, ports, local mass 
commuting, and high speed intercity rail facilities); privately 
owned and/or privately operated public works facilities 
(sewage, solid waste disposal, local district heating or 
cooling, and hazardous waste disposal facilities); privately 
owned and/or operated low-income rental housing; \81\ and 
certain private facilities for the local furnishing of 
electricity or gas. A further provision allows tax-exempt 
financing for ``environmental enhancements of hydro-electric 
generating facilities.'' Tax-exempt financing also is 
authorized for capital expenditures for small manufacturing 
facilities and land and equipment for first-time farmers 
(``qualified small-issue bonds''), local redevelopment 
activities (``qualified redevelopment bonds''), and eligible 
empowerment zone and enterprise community businesses. Tax-
exempt private activity bonds also may be issued to finance 
limited non-business purposes: certain student loans and 
mortgage loans for owner-occupied housing (``qualified mortgage 
bonds'' and ``qualified veterans' mortgage bonds'').
---------------------------------------------------------------------------
    \81\ Residential rental projects must satisfy low-income tenant 
occupancy requirements for a minimum period of 15 years.
---------------------------------------------------------------------------
      With the exception of qualified 501(c)(3) bonds, private 
activity bonds may not be issued to finance working capital 
requirements of private businesses. In most cases, the 
aggregate volume of tax-exempt private activity bonds that may 
be issued in a State is restricted by annual volume limits.
      Several additional restrictions apply to the issuance of 
tax-exempt bonds. First, private activity bonds (other than 
qualified 501(c)(3) bonds) may not be advance refunded. 
Governmental bonds and qualified 501(c)(3) bonds may be advance 
refunded one time. An advance refunding occurs when the 
refunded bonds are not retired within 90 days of issuance of 
the refunding bonds.
      Issuance of private activity bonds is subject to 
restrictions on use of proceeds for the acquisition of land and 
existing property, use of proceeds to finance certain specified 
facilities (e.g., airplanes, skyboxes, other luxury boxes, 
health club facilities, gambling facilities, and liquor stores) 
and use of proceeds to pay costs of issuance (e.g., bond 
counsel and underwriter fees). Additionally, the term of the 
bonds generally may not exceed 120 percent of the economic life 
of the property being financed and certain public approval 
requirements (similar to requirements that typically apply 
under State law to issuance of governmental debt) apply under 
Federal law to issuance of private activity bonds. Present and 
prior law precludes substantial users of property financed with 
private activity bonds from owning the bonds to prevent their 
deducting tax-exempt interest paid to themselves. Finally, 
owners of most private-activity-bond-financed property are 
subject to special ``change-in-use'' penalties if the use of 
the bond-financed property changes to a use that is not 
eligible for tax-exempt financing while the bonds are 
outstanding.

                               HOUSE BILL

      No provision.

                            SENATE AMENDMENT

      No provision.

                          CONFERENCE AGREEMENT

      The bill creates a new category of tax-exempt bonds, the 
qualified green building and sustainable design project bond. A 
qualified green building and sustainable design project bond is 
defined as any bond issued as part of an issue that finances a 
project designated by the Secretary, after consultation with 
the Administrator of the Environmental Protection Agency (the 
``Administrator'') as a green building and sustainable design 
project that meets the following requirements: (1) at least 75 
percent of the square footage of the commercial buildings that 
are part of the project is registered for the U.S. Green 
Building Council's LEED certification and is reasonably 
expected (at the time of designation) to meet such 
certification; \82\ (2) the project includes a brownfield site; 
\83\ (3) the project receives at least $5 million dollars in 
specific State or local resources; and (4) the project includes 
at least one million square feet of building or 20 acres of 
land.
---------------------------------------------------------------------------
    \82\ The LEED (``Leadership in Energy and Environmental Design'') 
Green Building Rating System is a voluntary, consensus-based national 
standard for developing high-performance sustainable buildings. 
Registration is the first step toward LEED certification. Actual 
certification requires that the applicant project satisfy all 
prerequisites and receive a minimum number of points to attain a LEED 
rating level. Commercial buildings, as defined by standard building 
codes are eligible for certification. Commercial occupancies include, 
but are not limited to, offices, retail and service establishments, 
institutional buildings (e.g., libraries, schools, museums, churches, 
etc.), hotels, and residential buildings of four or more habitable 
stories. .
    \83\ For this purpose a brownfield site is defined by section 
101(39) of the Comprehensive Environmental Response, Compensation, and 
Liability Act of 1980 (42 U.S.C. 9601), including a site described in 
subparagraph (D)(ii)(II)(aa) (relating to a site that is contaminated 
by petroleum or a petroleum product excluded from the definition of 
``hazardous substance'' under section 101).
---------------------------------------------------------------------------
      Each project must be nominated by a State or local 
government within 180 days of enactment of this Act and such 
State or local government must provide written assurances that 
the project will satisfy certain eligibility criteria. Within 
60 days after the end of the application period, the Secretary, 
after consultation with the Administrator, will designate the 
qualified green building and sustainable design projects. At 
least one of the projects must be in or within a ten-mile 
radius of an empowerment zone (as defined under section 1391 of 
the Code) and at least one must be in a rural State.\84\ A 
project shall not be designated if such project includes a 
stadium or arena for professional sports exhibitions or games.
---------------------------------------------------------------------------
    \84\ The term ``rural State'' means any State that has (1) a 
population of less than 4.5 million according to the 2000 census; (2) a 
population density of less than 150 people per square mile according to 
the 2000 census; and (3) increased in population by less than half the 
rate of the national increase between the 1990 and 2000 censuses.
---------------------------------------------------------------------------
      The Secretary, after consultation with the Administrator, 
shall also ensure that, in the aggregate, the projects 
designated shall: (1) reduce electric consumption by more than 
150 megawatts annually as compared to conventional 
construction; (2) reduce daily sulfur dioxide emissions by at 
least 10 tons compared to coal generation power; (3) expand by 
75 percent the domestic solar photovoltaic market in the United 
States (measured in megawatts) as compared to the expansion of 
that market from 2001 to 2002; and (4) use at least 25 
megawatts of fuel cell energy generation.
      Each application shall contain for each project a 
description of: (1) amount of electric consumption reduced as 
compared to conventional construction; (2) the amount of sulfur 
dioxide daily emissions reduced compared to coal generation; 
(3) the amount of gross installed capacity of the project's 
solar photovoltaic capacity measured in megawatts; and (4) the 
amount, measured in megawatts, of the project's fuel cell 
energy generation. Each project application must also 
demonstrate that: (1) at least 75 percent of the square footage 
of the commercial buildings that are part of the project is 
registered for the U.S. Green Building Council's LEED 
certification and is reasonably expected (at the time of 
designation) to meet such certification; (2)the project 
includes a brownfield site (as defined above); (3) the project receives 
at least $5 million dollars in specific State or local resources; (4) 
the project includes at least one million square feet of building or at 
least 20 acres of land; (5) the project is projected to provide 
permanent employment of at least 1500 full time equivalents (150 full 
time equivalents in rural States) when completed and construction 
employment of at least 1000 full time equivalents (100 full time 
equivalents in rural States); \85\ and (6) the net benefit of the 
qualified green building and sustainable design project tax-exempt 
financing provided will be allocated for (i) the purchase, 
construction, integration or other use of energy efficiency, renewable 
energy and sustainable design features of the project, (ii) compliance 
with LEED certification standards, and/or (iii) the purchase, 
remediation, foundation construction, and preparation of the brownfield 
site. Not later than 30 days after the completion of the project, each 
project must certify to the Secretary that the net benefit of the tax-
exempt financing was used for the purposes described.
---------------------------------------------------------------------------
    \85\ The application is to include an independent analysis that 
describes the project's economic impact, including the amount of 
projected employment.
---------------------------------------------------------------------------
      Qualified green building and sustainable design project 
bonds are not subject to the State bond volume limitations. 
There is a national limitation of $2 billion of bonds. The 
Secretary may allocate, in the aggregate, no more than $2 
billion of bonds to qualified green building and sustainable 
design projects.
      Any asset financed with qualified green building and 
sustainable design project bonds is ineligible for any credit 
or deduction established or extended under the Energy Tax 
Policy Act of 2003. In addition, each issuer shall maintain, on 
behalf of each project, an interest bearing reserve account 
equal to one percent of the net proceeds of any qualified green 
building and sustainable design project bond issued for such 
project. Not later than five years after the date of issuance, 
the Secretary, after consultation with the Administrator, shall 
determine whether the project financed with such bonds has 
substantially complied requirements and commitments described 
in the project application for designation, including 
certification. If the Secretary, after such consultation, 
certifies that the project has substantially complied with 
requirements and commitments, amounts in the reserve account, 
including all interest, shall be released to the project. If 
the Secretary determines that the project has not substantially 
complied with such requirements and commitments, amounts in the 
reserve account, including all interest, shall be paid to the 
United States Treasury.
      Qualified green building and sustainable design project 
bonds may be currently refunded if certain conditions are met, 
but cannot be advance refunded.
      Effective date.--The provisions are effective for bonds 
issued after the date of enactment and before October 1, 2009.

                       V. TAX COMPLEXITY ANALYSIS

      Section 4022(b) of the Internal Revenue Service Reform 
and Restructuring Act of 1998 (the ``IRS Reform Act'') requires 
the Joint Committee on Taxation (in consultation with the 
Internal Revenue Service and the Department of the Treasury) to 
provide a tax complexity analysis. The complexity analysis is 
required for all legislation reported by the Senate Committee 
on Finance, the House Committee on Ways and Means, or any 
committee of conference if the legislation includes a provision 
that directly or indirectly amends the Internal Revenue Code 
(the ``Code'') and has widespread applicability to individuals 
or small businesses.
      The staff of the Joint Committee on Taxation has 
determined that a complexity analysis is not required under 
section 4022(b) of the IRS Reform Act because the bill contains 
no provisions that amend the Internal Revenue Code and that 
have ``widespread applicability'' to individuals or small 
businesses.

                  TITLE XIV--MISCELLANEOUS PROVISIONS

      Title XIV of the conference report provides funding for 
the power cost equalization program in Alaska, and authorizes 
assistance to rural communities for electric generation, 
transmission, and distribution upgrades and improvements. It 
establishes a coastal reinvestment program to assist coastal 
states in mitigating the impacts of offshore development, and 
allows lessees due compensation under the Oil Pollution Act of 
1980 to withhold royalty payments for production from a covered 
lease tract in the outer Continental Shelf under certain 
circumstances. The report provides for changes in the 
composition, operation, and duties of the Tennessee Valley 
Authority board of directors, authorizes the continued 
operation of certain electric transmission facilities, 
reinstates a regulation for downwind ozone nonattainment areas, 
authorizes States to provide energy production incentives, and 
directs the Administrator of the Environmental Protection 
Agency to establish criteria for the use of granular mine 
tailings.

                           TITLE XV--ETHANOL

      Title XV of the conference report establishes a renewable 
fuels standard requiring that 5.0 billion gallons of renewable 
fuels be introduced into the marketplace by 2012. It bans the 
use of MTBE in motor fuels after December 31, 2104, and 
authorizes transition assistance to aid manufacturers in 
converting production to other fuel additives. The title 
requires a National Academy of Sciences report on the use of 
MTBE to be completed by May 31, 2013, and provides opportunity 
for a Presidential determination concerning restrictions on the 
use of MTBE by June 30, 2013. It also provides limited 
liability protection for MTBE, fuels using MTBE, ethanol, and 
fuels using ethanol, for defective product claims. The title 
also makes changes to provisions related to leaking underground 
storage tanks, including requiring at least 80 percent of all 
dollars appropriated from the LUST Trust Fund to be sent to the 
States for operating leaking underground tanks programs. It 
requires onsite inspections of underground storage tanks every 
3 years after a brief period for the State to update its 
backlog. The title also prohibits Federal facilities from 
exempting themselves from compliance with all Federal, State, 
and local underground tank laws.

                           TITLE XVI--STUDIES

      Title XVI of the conference report authorizes a variety 
of studies on issues such as petroleum and natural gas 
supplies, coal bed methane, telecommuting, oil bypass 
filtration, and the Low-Income Home Energy Assistance Program.

                From the Committee on Energy and Commerce, for 
                consideration of the House bill and the Senate 
                amendment, and modifications committed to 
                conference:
                                   Billy Tauzin,
                                   Michael Bilirakis,
                                   Joe Barton,
                                   Fred Upton,
                                   Cliff Stearns,
                                   Paul Gillmor,
                                   John Shimkus,
                From the Committee on Agriculture, for 
                consideration of secs. 30203, 30308, 30212, 
                Title III of Division C, secs. 30604, 30901, 
                and 30903 of the House bill and secs. 265, 301, 
                604, 941-948, 950, 1103, 1221, 1311-1313, and 
                2008 of the Senate amendment, and modifications 
                committed to conference:
                                   Bob Goodlatte,
                                   Frank D. Lucas,
                                   Charles W. Stenholm,
                From the Committee on Armed Services, for 
                consideration of secs. 11005, 11010, 14001-
                14007, 14009-14015, 21805 and 21806 of the 
                House bill and secs. 301, 501-507, 509, 513, 
                809, 821, 914, 920, 1401, 1407-1409, 1411, 
                1801, and 1803 of the Senate amendment, and 
                modifications committed to conference:
                                   Duncan Hunter,
                                   Curt Weldon,
                From the Committee on Education and the 
                Workforce, for consideration of secs. 11021, 
                12014, 14033, and 30406 of the House bill and 
                secs. 715, 774, 901, 903, 1505, and 1507 of the 
                Senate amendment, and modifications committed 
                to conference:
                                   Sam Johnson,
                From the Committee on Financial Services, for 
                consideration of Division G of the House bill 
                and secs. 931-940 and 950 of the Senate 
                amendment and modifications committed to 
                conference:
                                   Robert W. Ney,
                From the Committee on Government Reform, for 
                consideration of secs. 11002, 11005, 11006, 
                11010, 11011, 14025, 14033, and 22002 of the 
                House bill and secs. 263, 805, 806, 914-916, 
                918, 920, 1406, and 1410 of the Senate 
                amendment, and modifications committed to 
                conference:
                                   Tom Davis,
                                   Tim Murphy,
                From the Committee on the Judiciary, for 
                consideration of secs. 12008, 12401, 14014, 
                14026, 14027, 14028, 14033, 16012, 16045, 
                16084, 30101, 30210, and 30408 of the House 
                bill and secs. 206, 209, 253, 531-532, 708, 
                767, 783, and 1109 of the Senate amendment, and 
                modifications committed to conference:
                                   Lamar Smith,
                From the Committee on Resources, for 
                consideration of secs. 12005, 12007, 12011, 
                12101, 13001, 21501, 21521-21530, Division C, 
                and sec. 60009 of the House bill and secs. 201, 
                265, 272, 301, 401-407, 602-606, 609, 612, 705, 
                707, 712, 721, 1234, 1351-1352, 1704, and 1811 
                of the Senate amendment, and modifications 
                committed to conference:
                                   Richard Pombo,
                                   Barbara Cubin,
                Provided that Mr. Kind is appointed in lieu of 
                Mr. Rahall for consideration of Title IV of 
                Division C of the House bill, and modifications 
                committed to conference:

                From the Committee on Science, for 
                consideration of secs. 11009, 11025, 12301-
                12312, 14001-14007, 14009-14015, 14029, 15021-
                15024, 15031-15034, 15041, 15045, Division B, 
                sec 30301, Division E, and Division F of the 
                House bill and secs. 501-507, 509, 513-516, 
                770-772, 807-809, 814-816, 824, 832, 1001-1022, 
                Title XI, Title XII, Title XIII, Title XIV, 
                secs. 1501, 1504-1505, Title XVI, and secs. 
                1801-1805 of the Senate amendment, and 
                modifications committed to conference:
                                   Judy Biggert,
                                   Ralph M. Hall,
                Provided that Mr. Costello is appointed in lieu 
                of Mr. Hall of Texas for consideration of 
                Division E of the House bill, and modifications 
                committed to conference:
                                   Jerry Costello,
                Provided that Mr. Lampson is appointed in lieu 
                of Mr. Hall of Texas for consideration of sec. 
                21708 and Division F of the House bill, and 
                secs. 824 and 1223 of the Senate amendment and 
                modifications committed to conference:
                                   Nick Lampson,
                From the Committee on Transportation and 
                Infrastructure, for consideration of secs. 
                11001-11004, 11006, 11009-110011, 12001-12012, 
                12014, 12401, 12403, 13001, 13201, 13202, 
                15021-15024, 15031-15034, 15041, 15043, 15051, 
                16012, 16021, 16022, 16023, 16031, 16081, 
                16082, 16092, 23001-23004, 30407, 30410, and 
                30901 of the House bill and secs. 102, 201, 
                205, 301, 701-783, 812, 814, 816, 823, 911-916, 
                918-920, 949, 1214, 1261-1262, and 1351-1352 of 
                the Senate amendment, and modifications 
                committed to conference:
                                   Don Young,
                                   Thomas Petri,
                From the Committee on Ways and Means, for 
                consideration of Division D of the House bill 
                and Division H and I of the Senate amendment, 
                and modifications committed to conference:
                                   William Thomas,
                                   Jim McCrery,
                                 Managers on the Part of the House.

                                   Pete V. Domenici,
                                   Don Nickles,
                                   Larry E. Craig,
                                   Ben Nighthorse Campbell,
                                   Craig Thomas,
                                   Chuck Grassley,
                                   Trent Lott,
                                   Byron L. Dorgan,
                                Managers on the Part of the Senate.

                                
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