Omnibus Energy Legislation, 109th Congress: Assessment of H.R. 6 as Passed by the House

Omnibus Energy Legislation, 109 Congress:
Assessment of H.R. 6 as Passed by the House
June 3, 2005
Mark Holt and Carol Glover, Coordinators
Resources, Science, and Industry Division

Omnibus Energy Legislation, 109 Congress:
Assessment of H.R. 6 as Passed by the House
The House approved an omnibus energy bill (H.R. 6) on April 21, 2005, that
would open the Arctic National Wildlife Refuge (ANWR) to oil and gas leasing,
substantially change oversight of electric utilities, increase the use of alternative
motor fuels, provide $8.1 billion in energy tax incentives, extend the nuclear accident
liability system, and authorize numerous energy R&D programs. The House-passed
bill contains many provisions from the conference version of an omnibus energy bill
(also H.R. 6) in the 108th Congress that was blocked by a Senate filibuster.
Electricity. In part, the electricity section would repeal the Public Utility
Holding Company Act (PUHCA) and establish mandatory standards for interstate
transmission. Standard market design (SMD) would be remanded to the Federal
Energy Regulatory Commission (FERC).
Renewable Fuels and Ethanol. An increase in renewable fuel and ethanol
consumption to 5 billion gallons annually by 2012 would be mandated. However,
states could petition for a waiver if the mandate would have severe economic or
environmental repercussions, other than loss of revenue to the highway trust fund.
MTBE. Methyl tertiary butyl ether (MTBE), a gasoline additive widely used to
meet Clean Air Act requirements, has caused water contamination. The bill would
ban the use of MTBE by 2015 with some possible exceptions, provide funds for
MTBE cleanup, and provide protection for fuel producers and blenders of renewable
fuels and MTBE from defective product lawsuits.
Energy Taxes. The bill would reduce energy taxes about $8.1 billion over 10
years, as compared with $23.5 billion in the H.R. 6 conference report in the 108th
Congress and $6.7 billion in President Bush’s FY2006 budget request.
Nuclear Energy. H.R. 6 would provide a 20-year extension of the Price-
Anderson nuclear liability system to the end of 2025 and authorize new reactors.
Energy Efficiency Standards. New statutory efficiency standards would be
established for several consumer and commercial products and appliances. For
certain other appliances, the Department of Energy could set new standards.
ANWR. The House-passed bill would authorize oil and gas exploration,
development, and production in ANWR, with a 2,000-acre limit on production and
support facilities. Supporters of the provision maintain that ANWR oil could be
developed with minimal environmental harm, but opponents contend that intrusion
on this ecosystem cannot be justified.
Energy Production on Federal Lands. Royalty reductions would be provided
for marginal oil and gas wells on federal lands and the outer continental shelf.
This report will not be updated.

In troduction ......................................................1
Title I — Energy Efficiency..........................................8
Title II — Renewable Energy.......................................12
Title III — Oil and Gas............................................15
Title IV — Coal..................................................22
Title V — Indian Energy...........................................24
Title VI — Nuclear Matters.........................................25
Title VII — Vehicles and Fuels......................................31
Title VIII — Hydrogen.............................................35
Title IX — Research and Development................................36
Title X — Department of Energy Management..........................46
Title XII — Electricity.............................................46
Title XIII — Energy Tax Incentives..................................65
Title XIV — Miscellaneous.........................................71
Title XV — Ethanol and Motor Fuels.................................74
Title XVI — Studies..............................................78
Title XVII — Renewable Energy — Resources.........................80
Title XVIII — Geothermal Energy...................................81
Title XIX — Hydropower — Resources...............................83
Title XX — Oil and Gas — Resources................................83
Title XXI — Coal — Resources.....................................91
Title XXII — Energy Development in Arctic Refuge.....................92
Title XXIII — Set America Free (SAFE)..............................96

Demonstration ...............................................97
Title XXV — Additional Provisions..................................97
List of Tables
Table 1. Authorizations in H.R. 6 as passed by the House.................98

Omnibus Energy Legislation,
109 Congress: Assessment of H.R. 6
as Passed by the House
Since the Arab oil embargo in 1973-1974, Congress has periodically taken up
energy policy legislation with a comprehensive scope — often spurred by the price
of oil and U.S. dependence upon imported oil. The price of crude oil began to rise
in 2003 and briefly approached $60/barrel (bbl) in the spring of 2005, setting the
scene for renewed debate over omnibus energy legislation in the 109th Congress.
National and world demand for oil continues to grow. However, domestic oil
production in the United States continues to decline. As a consequence, the gap
between U.S. production and consumption has had to be covered by increased oil
imports. These imports, roughly 6 million barrels per day (mbd) after the Arab oil
embargo, now exceed 10 mbd to satisfy U.S. oil consumption of nearly 21 mbd.1
Addressing dependence on imported oil raises a number of issues touching on
both demand and consumption of fossil fuels. Chief among these are the production
of additional fossil fuels, development of alternative energy sources, and
conservation and energy efficiency. Energy infrastructure has also been a growing
issue, including the oil refining and distribution sector, and electricity transmission,
reliability, and regulation. Increased use of domestic coal and reassessment of many
issues associated with nuclear energy have drawn attention as well.
Developing a comprehensive approach to energy policy that balances economic,
security, and environmental issues — as well as competing regional priorities in the
United States — is an enormous challenge for policymakers. Keeping a clear eye on
distinguishing between short- and long-term policies is also difficult, but important
in keeping expectations realistic for what comprehensive legislation can achieve.
In the 109th Congress, the House approved an omnibus energy bill (H.R. 6) on
April 21, 2005, that would open the Arctic National Wildlife Refuge (ANWR) to oil
and gas leasing, substantially change oversight of electric utilities, increase the use
of alternative motor fuels, provide $8.1 billion in energy tax incentives, extend the
nuclear accident liability system, and authorize numerous energy R&D programs.
The House-passed bill contains many provisions from the conference version of an

1 U.S. Department of Energy, Energy Information Administration, at
[ h t t p : / / www.ei pub/ oi l _ ga s/ pet r ol eu m/ d a t a _publications/

omnibus energy bill (also H.R. 6) in the 108th Congress that was blocked by a Senate
The bill would mandate increasing levels of ethanol production through 2012
but allow regions to opt out under certain conditions. Use of methyl tertiary butyl
ether (MTBE) as a domestic gasoline additive would be banned by the end of 2014,
but the President could void the ban and a state could authorize continued use.
Producers of MTBE and renewable fuels would be granted protection (a “safe
harbor”) from product liability lawsuits, a provision that proved highly contentious
in the 108th Congress.
Royalty reductions would be provided for marginal oil and gas wells on federal
lands and the outer continental shelf. Provisions are also included to increase access
by energy projects to federal lands. Several new statutory efficiency standards would
be established for consumer and commercial products and appliances, and other
standards could be set by the Department of Energy (DOE).
Funding authorizations in the bill total about $82 billion over 10 years. (The
likely cost of the funding authorizations has not yet been estimated by the
Congressional Budget Office.)
Major Provisions
Electricity Regulation. Title XII would create an electric reliability
organization (ERO) that would enforce mandatory reliability standards for the bulk-
power system. All ERO standards would be approved by the Federal Energy
Regulatory Commission (FERC). Under this Title, the ERO could impose penalties
on a user, owner, or operator of the bulk-power system that violates any FERC-
approved reliability standard. This Title also addresses transmission infrastructure
issues. The Secretary of Energy would be able to certify congestion on the
transmission lines and issue permits to transmission owners. Permit holders would
be able to petition in U.S. District Court to acquire rights-of-way for the construction
of transmission lines through the exercise of the right of eminent domain. A
provision that would have required FERC to approve participant funding for new
transmission lines was removed in markup by the House Committee on Energy and
FERC’s Standard Market Design notice of proposed rulemaking would be
remanded. Native load service obligations would be clarified, and federal utilities
would be allowed to participate in regional transmission organizations.
The electricity title would repeal the mandatory purchase requirements under the
Public Utility Regulatory Policy Act. The Public Utility Holding Company Act of
1935 (PUHCA) would be repealed. The Federal Energy Regulatory Commission and
state regulatory bodies would be given access to utility books and records.
FERC would be required to issue rules to establish an electronic system that
provides information about the availability and price of wholesale electric energy and
transmission services. For electric rates that the Federal Energy Regulatory
Commission finds to be unjust, unreasonable, or unduly discriminatory, the effective

date for refunds would begin at the time of the filing of a complaint with FERC but
not later than five months after filing of a complaint. Criminal and civil penalties
would be increased. The Federal Power Act would be amended to give FERC review
authority for transfer of assets valued in excess of $10 million.
(For additional discussion on these issues, see CRS Report RL32728, Electric
Utility Regulatory Reform: Issues for the 109th Congress; and CRS Report RL32133,
Federal Merger Review Authority.)
Renewable Fuel Standard and MTBE. As passed by the House, H.R. 6
would amend the Clean Air Act to eliminate the requirement that reformulated
gasoline (RFG) contain 2% oxygen to reduce automotive emissions, a requirement
which prompted the widespread use of MTBE and, to a lesser degree, ethanol.
Instead, the bill would establish a new requirement that an increasing amount of
gasoline contain renewable fuels such as ethanol. The bill would require that 3.1
billion gallons of renewable fuel be used in 2005, increasing to 5.0 billion gallons by
2012 (as compared to 3.4 billion gallons used in 2004). However, concerns have
been raised that this requirement could significantly raise the pump price for gasoline
in some areas.
Because of concerns over drinking water contamination by MTBE (a major
competitor with ethanol), the bill would ban the use of MTBE in motor vehicle fuel,
except in states that specifically authorize its use, not later than December 31, 2014.
The ban has two possible exceptions. First, EPA may allow MTBE in motor fuel up
to 0.5 percent by volume, in cases that the Administrator determines to be
appropriate; and second, the President may make a determination, not later than June
30, 2014, that the restrictions on the use of MTBE shall not take place. The bill
would also authorize $2.0 billion to assist the conversion of merchant MTBE
production facilities to the production of other fuel additives. Further, the bill would
preserve the reductions in emissions of toxic substances achieved by the RFG
One of the most controversial provisions in H.R. 6 is the establishment of a
“safe harbor” from product liability lawsuits for producers of MTBE and renewable
fuels. The safe harbor provision would protect anyone in the product chain, from
manufacturers down to retailers, from liability for cleanup of MTBE and renewable
fuels or for personal injury or property damage based on the product being deemed
defective. (That legal approach has been used in California to require refiners to
shoulder liability for MTBE cleanup.) The safe harbor would be retroactive to
September 5, 2003. Prior to that date, five lawsuits had been filed. After that date, at
least 150 suits were filed, on behalf of 210 communities in 15 different states.
(For additional information, see CRS Report RL32865, Renewable Fuels and
MTBE: A Comparison of Selected Legislative Initiatives; CRS Report RL30369, Fuel
Ethanol: Background and Public Policy Issues; and CRS Report RL32787, MTBE
in Gasoline: Clean Air and Drinking Water Issues.)
Energy Taxes. After the failure of the conference report on H.R. 6 in the
108th Congress, several of the measure’s energy tax provisions — estimated at $1.3
billion over 10 years — were included in the Working Families Tax Relief Act of

2004 (P.L. 108-311), enacted on October 4, 2004. About $5 billion in additional
energy tax incentives over 10 years were part of the American Jobs Creation Act of

2004 (P.L. 108-357) enacted on October 22, 2004.

Many of the energy tax incentives in H.R. 6 from the 108th Congress that were
not enacted in 2004 have been repackaged into the House-passed H.R. 6 in the 109th
Congress. The bill would reduce energy taxes about $8.1 billion over 10 years as
compared with $23.5 billion in H.R. 6 in the 108th Congress. President Bush’s
FY2006 budget request was for $6.7 billion in energy tax incentives. Counting the
tax provisions enacted in the 108th Congress, the House-passed version of H.R. 6
excludes roughly $9 billion in tax breaks from the H.R. 6 conference report in the

108th Congress.

H.R. 6’s tax cuts are weighted primarily toward energy (oil, gas, and electricity)
production and supply, particularly energy infrastructure. The most notable
provisions would accelerate depreciation deductions for natural gas gathering lines
and distribution lines, and significantly reduce the depreciation period for
transmission assets and for oil and gas production.
(For more background, see CRS Issue Brief IB10054, Energy Tax Policy.)
Nuclear Energy. Reauthorization of the Price-Anderson Act nuclear liability
system is one of the top nuclear items on the energy agenda. Under Price-Anderson,
commercial reactor accident damages are paid through a combination of
private-sector insurance and a nuclear industry self-insurance system. Liability is
capped at the maximum coverage available under the system, currently about $10.7
billion. Price-Anderson also authorizes the Department of Energy to indemnify its
nuclear contractors. The limit on DOE contractor liability is the same as for
commercial reactors, except when the limit for commercial reactors drops because
of a decline in the number of covered reactors.
H.R. 6 would provide a 20-year extension of Price-Anderson to the end of 2025.
The nuclear industry contends that the system has worked well and should be
continued, but opponents charge that Price-Anderson’s liability limits provide an
unwarranted subsidy to nuclear power. The bill would also require the Nuclear
Regulatory Commission (NRC) to assess nuclear power plant security and require
additional security measures.
The bill would authorize $1.3 billion for a nuclear-hydrogen cogeneration
project at the Idaho National Laboratory, along with five projects to demonstrate
hydrogen production at existing nuclear power plants. In addition to the hydrogen
cogeneration projects, about $1.3 billion would be authorized for DOE to design,
build, and operate an advanced technology nuclear reactor by 2015.
Not included in the House-passed bill is a 1.8 cents per kilowatt-hour nuclear
energy tax credit that would have been provided by the conference report on H.R 6th
in the 108 Congress.
(For more information, see CRS Issue Brief IB88090, Nuclear Energy Policy.)

Renewable Energy and Efficiency. H.R. 6 would legislate new energy
efficiency standards for several consumer and commercial products and appliances.
For certain other products and appliances, DOE would be empowered to set new
standards. Also, the bill would provide increased funding authorizations for the DOE
weatherization program and establish a voluntary program to promote energy
efficiency in industry.
However, the bill does not include one of the top priorities of environmental
groups: a renewable portfolio standard (RPS), which would require retail electricity
suppliers to obtain a minimum percentage of their power from a portfolio of new
renewable energy resources.
(For additional information, see CRS Issue Brief IB10020, Energy Efficiency:
Budget, Oil Conservation and Electricity Conservation Issues, and CRS Issue Brief
IB10041, Renewable Energy: Tax Credit, Budget, and Electricity Production Issues.)
Arctic National Wildlife Refuge. The congressional debate over whether
to open ANWR to energy development has continued for more than 40 years. H.R.
6 as passed by the House would authorize oil and gas exploration, development, and
production in ANWR, with a 2,000-acre limit on production and support facilities.
Development advocates argue that ANWR oil would reduce U.S. energy markets’
exposure to crises in the Middle East; boost North Slope oil production; lower oil
prices; extend the economic life of the Trans Alaska Pipeline System; and create
many jobs in Alaska and elsewhere in the United States. They maintain that ANWR
oil could be developed with minimal environmental harm, and that the footprint of
development could be limited to a total of 2,000 acres.
Opponents of development in ANWR argue that intrusion on this ecosystem
cannot be justified on any terms; that economically recoverable oil found (if any)
would provide little energy security and could be replaced by cost-effective
alternatives, including conservation; and that job claims are overstated. They also
maintain that the footprint of oil development, despite a provision in the measure to
limit certain facilities to 2,000 acres, would still be scattered in many parcels across
the landscape, and would have a greater impact than is implied by any limit on total
acreage. They also argue that past proposals to limit any footprint have not been
worded so as to apply clearly to the extensive Native lands in the Refuge, which
could be developed if the Arctic Refuge were opened.
On April 20, 2005, the House rejected the Markey/Johnson amendment (H.
Amdt 73) to strike the ANWR title (yeas 200, nays 231, Roll Call #122). (For
additional information, see CRS Issue Brief IB10136, The Arctic National Wildlife
Refuge: Controversies for the 109th Congress; and CRS Report RL31115, Legal
Issues Related to Proposed Drilling for Oil and Gas in the Arctic National Wildlife
Refuge and CRS Report RS22143, Oil and Gas Leasing in the Arctic National
Wildlife Refuge (ANWR): the 2,000-Acre Limit).
Domestic Energy Production. The Department of the Interior (DOI) has
estimated that roughly a quarter of oil resources and less than one-fifth of gas
resources on Indian lands have been developed. H.R. 6 would allow Indian tribes to
enter into business agreements with energy developers without obtaining prior

approval from the Department of the Interior, but only if DOI has already approved
the tribe’s regulations governing such energy agreements.
To encourage production on federal lands, royalty reductions would be provided
for marginal oil and gas wells on public lands and the outer continental shelf.
Provisions are also included to increase access to federal lands by energy projects —
such as drilling activities, electric transmission lines, and gas pipelines.
Hydrogen and Fuel Cells. H.R. 6 would authorize $4 billion for
FY2006-2010 for hydrogen and fuel cell R&D. The bill would also establish a goal
of producing commercial fuel cell vehicles and developing hydrogen infrastructure
by 2020. Critics of the Administration suggest that the hydrogen program is intended
to forestall any attempts to significantly raise vehicle Corporate Average Fuel
Economy (CAFE) standards, and that it relieves the automotive industry of assuming
more initiative in pursuing technological innovations. On the other hand, some
contend that it is appropriate for government to become involved in the development
of technologies that could address national environmental and energy goals but are
too risky to draw private-sector investment.
(For additional information, see CRS Report RS21442, Hydrogen and Fuel Cell
R&D: FreedomCAR and the President’s Hydrogen Fuel Initiative; and CRS Report
RL32196, A Hydrogen Economy and Fuel Cells: An Overview.)

Organization of Report
The remainder of this report provides a section-by-section summary of the
House-passed version of H.R. 6. Some of the most controversial sections are
discussed in greater detail, while multiple sections that deal with a single program
have been combined. Funding authorizations are shown in Table 1 at the end of the
The following analysts in the CRS Resources, Science, and Industry Division
contributed to this report:
!Amy Abel, electric utilities;
!Anthony Andrews, nuclear security, DOE management;
!Robert Bamberger, energy security;
!Carl Behrens, nuclear nonproliferation;
!Claudia Copeland, Federal Water Pollution Control Act;
!Lynne Corn, ANWR;
!Bernard Gelb, gasoline industry;
!Carol Glover, Native American energy, general authorizations;
!Mark Holt, nuclear energy;
!Marc Humphries, federal energy leasing, coal;
!Larry Kumins, oil and gas;
!Salvatore Lazzari, taxes;
!Jim McCarthy, Clean Air Act, MTBE;
!Dan Morgan, science programs;
!Kyna Powers, hydropower;
!Fred Sissine, conservation and renewable energy;
!Mary Tiemann, underground storage tanks, drinking water;
!Brent Yacobucci, motor fuels;
!Jeff Zinn, Coastal Zone Management Act.

Title I — Energy Efficiency
Subtitle A — Federal Programs
Section 101: Energy and Water Saving Measures in Congressional
Buildings. The Architect of the Capitol would be required to plan and implement
an energy and water conservation strategy for congressional buildings that would be
consistent with that required of other federal buildings. An annual report would be
required. Up to $2 million would be authorized. Section 310 of the Legislative
Branch Appropriations Act of 1999 called for the Architect of the Capitol (AOC) to
develop an energy efficiency plan for congressional buildings.
Section 102: Energy Management Requirements. The baseline for
federal energy savings would be updated from FY1985 to FY2003 and a new goal
of 20% reduction would be set for FY2015. At that time, DOE would be directed to
assess progress and set a new goal for FY2025. Section 202 of Executive Order
13123 uses FY1985 as the baseline for measuring federal building energy efficiency
improvements and calls for a 35% reduction in energy use per gross square foot by
FY2010. Most of the other provisions for federal agencies in this Subtitle are
administrative measures that would help agencies achieve the above-described goal.
Section 103: Energy Use Measurement and Accountability. Federal
buildings would be required to be metered or sub-metered by late 2010, to help
reduce energy costs and promote energy savings.
Section 104: Procurement of Energy-Efficient Products. Statutory
authority would be created to require federal agencies to purchase products certified
as energy-efficient under the Energy Star program or energy-efficient products
designated by the Federal Energy Management Program (FEMP) — provided the
products are found to be “cost-effective” and “reasonably-available.” Currently,
Section 403 of Executive Order 13123 directs federal agencies to purchase life-cycle
cost-effective Energy Star products.
Section 105: Energy Savings Performance Contracts. This would
amend the National Energy Conservation Policy Act (42 U.S.C. 8287) by limiting all
federal agencies combined to a total of 100 energy savings performance contracts and
payments of no more than a total of $500,000,000. Under such contracts, energy
saving measures are installed at government facilities by private-sector firms in
return for a share of the resulting energy cost reductions. The Sunset and Reporting
Provisions of section 801(c) of the Act would be effectively repealed October 1,

2006, and any new contract after that date would be included in the contract limits.

Section 107: Voluntary Commitments to Reduce Industrial Energy
Intensity. DOE would be authorized to form voluntary agreements with industry
sectors or companies to reduce energy use per unit of production by an unspecified
amount. While there is no current statutory authority, industry energy efficiency
programs have been in place, such as the former Climate Wise program at the
Environmental Protection Agency (EPA).

Section 108: Advanced Building Efficiency Testbed. DOE would be
required to create a program to develop, test, and demonstrate advanced federal and
private building efficiency technologies.
Section 109: Federal Building Performance Standards. DOE would
be directed to set revised energy efficiency standards for new federal buildings at a
level 30% stricter than industry or international standards — provided the standards
would be “life-cycle cost-effective.” Mandatory energy efficiency performance
standards for federal buildings are currently set in Section 305(a) of P.L. 94-385 and
implemented through 10 CFR Part 435.
Section 111: Daylight Savings. Daylight saving time would begin one
month earlier (in March) and end one month later (in November). This is expected
to reduce energy used for night-time electric lighting. Under current law (Uniform
Time Act, P.L. 89-387, §3a), states can choose whether to participate. However, if
a state chooses to participate, the duration of daylight savings is set by federal law.
Section 112: Enhancing Energy Efficiency in Management of
Federal Lands. National parks, forests, and wildlife refuges would be required to
employ energy efficiency measures in buildings and energy-efficient vehicles
(including biodiesel and hybrid engines) “to the extent practicable.”
Subtitle B — Energy Assistance and State Programs
Section 121: Low Income Home Energy Assistance Program
(LIHEAP). Increased funding would be authorized for the LIHEAP grant program
for FY2005 through FY2007. Department of Health and Human Services funding
for LIHEAP was authorized through FY2003 in the Human Services Authorization
Act of 1998. Also, states and their designees would be allowed to use renewable
fuels (including biomass) to carry out the purposes of this section.
Section 122: Weatherization Assistance. Increased funding would be
authorized for the DOE weatherization grant program for FY2006 through FY2008.
Funding for the program was authorized through FY2003 under 42 U.S.C. 6872.
Section 123: State Energy Programs. New requirements would be set for
state energy conservation goals and plans. Also, increased funding would be
authorized for FY2006 through FY2008 for DOE state energy grant programs.
Section 124: Energy-Efficient Appliance Rebate Programs. DOE
would be authorized to fund rebate programs in eligible states to support residential
end-user purchases of Energy Star products.
Section 125: Energy-Efficient Public Buildings. A grant program would
be created for energy-efficient renovation and construction of local government
Section 126: Low Income Community Energy Efficiency Pilot
Program. A pilot energy-efficiency and renewable energy grant program would be

created for local governments, private companies, community development
corporations, and Native American economic development entities.
Subtitle C — Energy-Efficient Products
Section 131: Energy Star Program. DOE and EPA would be given
statutory authority to carry out the Energy Star program, which identifies and
promotes energy-efficient products and buildings.
Section 132: HVAC Maintenance Consumer Education Program.
DOE would be required to implement a public education program for homeowners
and small businesses that explained the energy-saving benefits of improved
maintenance of heating, ventilating, and air conditioning equipment. Also, the Small
Business Administration would be directed to assist small businesses in becoming
more energy-efficient.
Section 133: Energy Conservation Standards for Additional
Products. DOE would be directed to issue a rule that determined whether
efficiency standards should be set for standby mode in battery chargers and external
power supplies. Also, energy efficiency standards would be set by statute for exit
signs, traffic signals, torchieres (floor lamps), distribution transformers (electric
utility equipment), unit heaters (fan-type heaters, usually portable), and medium base
compact fluorescent lamps (CFLs). Further, DOE would be directed to issue a rule
that prescribed efficiency standards for ceiling fans, vending machines, commercial
refrigerators and freezers and refrigerator-freezers, and residential fans.
Section 134: Energy Labeling. The Federal Trade Commission (FTC)
would be required to consider improvements in the effectiveness of energy labels for
consumer products. Also, DOE or FTC would be directed to consider prescribing
labeling requirements for many of the products listed in Section 133 of the bill. The
FTC is currently required by Section 324(a) of the Energy Policy and Conservation
Act (P.L. 94-163) to issue rules for energy efficiency labels on consumer products
(42 U.S.C. 6294).
Section 135: Preemption. As of January 1, 2006, the energy efficiency
standard for ceiling fans set out in Section 133 shall supersede all state and local
standards for ceiling fans.
Section 136: State Consumer Product Energy Efficiency Standards.
If the product efficiency standards set forth in Section 133 are not implemented
within three years of this law’s enactment, the federal preemption of state standards
will expire.
Section 137: Intermittent Escalators. With certain exceptions, all new
escalators acquired for federal buildings will operate on an intermittent (on-demand)

Subtitle D — Public Housing
Section 141: Capacity Building for Energy-Efficient, Affordable
Housing. Activities would be required that would provide energy-efficient,
affordable housing and other residential measures under the HUD Demonstration
Section 142: Increase of CDBG Public Services Cap for Energy
Conservation and Efficiency Activities. The amount of community
development block grant (CDBG) public services funding that could be used for
energy efficiency would be increased to 25%. The current limit is 15% under Section

105(a)(8) of the Housing and Community Development Act of 1974.

Section 143: FHA Mortgage Insurance Incentives for Energy-
Efficient Housing. Solar energy equipment can be eligible for up to 30% of the
total amount of property value that can be covered by Federal Housing
Administration mortgage insurance. The current limit is 20% under Section

203(b)(2) of the National Housing Act.

Section 144: Public Housing Capital Fund. The Public Housing Capital
Fund would be modified to include certain energy- and water-use efficiency
improvements. Under Section 9 of the United States Housing Act, the Capital Fund
is available to public housing agencies to develop, finance, and modernize public
housing developments and to make management improvements to these housing
facilities. There is currently no provision for energy conservation projects that
involve water-conserving plumbing fixtures and fittings.
Section 145: Grants for Energy-Conserving Improvements for
Assisted Housing. The Department of Housing and Urban Development (HUD)
would be directed to provide grants for certain energy and water efficiency
improvements to multifamily housing projects. Section 2(a)(2) of the National
Housing Act, as amended by Section 251(b)(1) of the National Energy Conservation
Policy Act, empowers HUD to make grants for energy conservation projects in public
housing, but it has no provision for energy- and water-conserving plumbing fixtures
and fittings.
Section 147: Energy-Efficient Appliances. Public housing agencies
would be required to purchase cost-effective Energy Star and FEMP-designated
appliances and products.
Section 148: Energy-Efficient Standards. The energy efficiency standards
and codes that the federal government encourages states to use would be changed
from the codes set by the Council of American Building Officials to the 2003
International Energy Conservation Code.
Section 149: Energy Strategy for HUD. The Secretary of Housing and
Urban Development would be required to implement an energy conservation strategy
to reduce utility expenses through cost-effective energy-efficient design and
construction of public and assisted housing.

Title II — Renewable Energy
Subtitle A — General Provisions
Section 201: Assessment of Renewable Energy Resources. DOE
would be required to report annually on resource potential, including solar, wind,
biomass, ocean (tidal, wave, current, and thermal), geothermal, and hydroelectric
energy resources. DOE would be required to review available assessments and
undertake new assessments as necessary, accounting for changes in market
conditions, available technologies, and other relevant factors. The resource potential
for renewables has not been assessed as thoroughly as that for conventional energy
resources, and the potential may be altered somewhat by climate change.
Section 202: Renewable Energy Production Incentive. Eligibility for
the existing incentive would be extended through 2025 and expanded to include
electric cooperatives and tribal governments. Qualifying resources would be
expanded to include landfill gas, livestock methane, and ocean (tidal, wave, current,
and thermal) energy. Federal law currently provides a 1.5 cent/kwh incentive for
power produced from wind and biomass by state and local governments and non-2
profit electrical cooperatives. The incentive is funded by appropriations to DOE and
was created to encourage public agencies, which are not eligible for tax incentives,
in a fashion parallel to the renewable energy production tax credit for private sector
businesses. This incentive has played a major role in wind energy development and
is viewed by the wind industry as the single-most important provision in the bill.
Section 203: Federal Purchase Requirement. Federal agencies would
be required, to the extent “economically feasible and technically practicable,” to
purchase power produced from renewable sources. The collective total percentage
of renewables use, as a share of total federal electric energy use, would start at 3%
in FY2007, rise to 5% in FY2010, and then reach 7.5% in 2013 and all subsequent
years. Renewable energy produced at a federal site, on federal lands, or on Indian
lands would be eligible for double credit toward the purchase requirement. This
provision aims to help develop the market for renewables. A report to Congress
would be required every two years.
Section 204: Insular Areas Energy Security. This section includes
congressional findings that electric power transmission and distribution lines in
insular areas are not adequate to withstand hurricane and typhoon damage, and that
an assessment is needed of energy production, consumption, infrastructure, reliance
on imported energy, and indigenous sources of energy in insular areas. Federal law
currently requires comprehensive energy plans for insular areas that describe the
potential for renewable energy resources.3 This section would require the Secretary
of the Interior, in consultation with the Secretary of Energy and the head of
government of each insular area, to update insular area plans by 2007 to reflect these
findings, and to seek to reduce energy imports by increasing energy conservation and

2 Energy Policy Act, Sec. 1212 (42 U.S.C. 13317)
3 42 U.S.C. 1492 .

energy efficiency and by attempting to maximize the use of indigenous resources.
Annual appropriations would be authorized that would, in part, be used for matching
grants (federal share maximum is 75%) for projects designed to protect electric
power transmission distribution lines in one or more of the territories of the United
States from damage caused by hurricanes and typhoons.
Section 205: Use of Photovoltaic Energy in Public Buildings. The
General Services Administration (GSA) would be authorized to encourage use of
solar photovoltaic energy systems in new and existing buildings. This provision aims
to help reduce federal fossil fuel use. Further, it seeks to reduce costs and, thereby,
stimulate the market for photovoltaic equipment.
Section 206: Federal Procurement of Biobased Products. This
provision amends the existing requirement4 that federal agencies give procurement
preference to items composed of the highest percentage of biobased products
practicable by adding a specific reference to degradable six-pack rings.5
Section 207: Renewable Energy Security. For the DOE Weatherization
grant program, Section 207(a) increases the limit on support for renewable energy
equipment from $2,500 to $3,000 per dwelling unit. Also, Section 207(d) creates a
consumer rebate for renewable energy equipment installed in a dwelling or small
business. The maximum rebate is the lesser of 25% of equipment cost or $3,000.
Section 208: Installation of Photovoltaic System. This provision
authorizes $20 million for the Administrator of GSA to proceed with the Sun Wall
Design Project, the winning entry in a national design competition sponsored jointly
by DOE and the National Renewable Energy Laboratory, to install a photovoltaic
solar electric system on the headquarters building of DOE.
Section 209: Sugar Cane Ethanol Pilot Program. This provision
authorizes a three-year demonstration program for the production of ethanol in
Hawaii to parallel the existing program for corn to show that the process can be
applicable to cane sugar and can be replicated on a larger scale once the sugar cane
industry has located a site and constructed ethanol production facilities.
Subtitle C — Hydroelectric
Section 231: Alternative Conditions and Fishways. Under the Federal
Power Act (FPA, 16 U.S.C. 797 et. seq.) the Federal Energy Regulatory Commission
has primary responsibility for balancing multiple water uses and evaluating
hydropower relicensing applications. However, the FPA also creates a role in the
licensing process for federal agencies that are responsible for managing fisheries or
federal reservations (e.g. national forests, etc.). Specifically, sections 4(e) and 18 of

4 7 U.S.C. 8201(c)(1) gives preference to procurement of items made with the highest
percentage of biobased products.
5 42 U.S.C. 6914b-1 provides for use of naturally degradable material in plastic ring carriers
to help reduce litter and to protect fish and wildlife.

the FPA give certain federal agencies the authority to attach conditions to FERC
licenses. For example, federal agencies may require applicants to build passageways
through which fish can travel around the dam, schedule periodic water releases for
recreation, ensure minimum flows of water for fish migration, control water release
rates to reduce erosion, or limit reservoir fluctuations to protect the reservoir’s
shoreline habitat. Once an agency issues such conditions, FERC must include them
in its license. While these conditions often generate environmental or recreational
benefits, they may also require construction expenditures and may increase costs by
reducing operational flexibility.
This provision in H.R. 6 would allow license applicants to propose alternative
license conditions, and would require federal agencies to consider alternatives
proposed by license applicants. It would also require an agency to accept an
applicant’s proposed alternative if it found that the alternative (1) provides for the
adequate protection and utilization of the federal reservation, or is no less protective
of the fish resource than the fishway initially prescribed, and (2) costs less to
implement, and/or will improve operation of the project for electricity production.
H.R. 6 also requires agencies that are issuing conditions to provide FERC with a
written statement demonstrating that the relevant Secretary gave “equal
consideration” to the effects of the conditions on factors such as energy supply, flood
control, navigation, water supply, and air quality. This equal consideration clause
may be a topic of debate during further consideration of H.R. 6. Opponents of the
provision are concerned that it would hamper agencies’ ability to protect the
resources under their jurisdiction; proponents argue that conditioning agencies, like
FERC, should be required to balance competing water uses.
Section 241: Hydroelectric Production Incentives. The Secretary of
Energy would make incentive payments to non-federal owners or operators of
hydroelectric facilities for power that is first produced within 10 years of the date of
enactment by generating equipment added to existing facilities. Payments of 1.8
cents per kilowatt-hour (kWh), up to a total of $750,000/year, may be made for up
to 10 years from the first year after the facility begins operating.
Section 242: Hydroelectric Efficiency Improvement. The Secretary of
Energy would make incentive payments to the owners or operators of hydroelectric
facilities who make capital improvements on existing facilities that improve
efficiency by at least 3%. Payments would not exceed 10% of the improvement cost
and would not exceed $750,000 at any single facility.
Section 243: Small Hydroelectric Power Projects. This provision
would amend the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2078),
to change the date on or before which a dam must be constructed to qualify as an
existing dam, from April 20, 1977, to March 4, 2003.

Title III — Oil and Gas
Subtitle A — Petroleum Reserve and Home Heating Oil
Section 301: Permanent Authority to Operate the Strategic
Petroleum Reserve. Congress authorized the Strategic Petroleum Reserve (SPR)
in the Energy Policy and Conservation Act (EPCA, P.L. 94-163) to help prevent a
repetition of the economic dislocation caused by the 1973-74 Arab oil embargo.
Physically, the SPR comprises five underground storage facilities, hollowed out from
naturally occurring salt domes, located in Texas and Louisiana. In 2000, Congress
also authorized establishment of a Northeast Heating Oil Reserve (NHOR) where
two million barrels of home heating oil is kept in leased, above-ground storage, to be
released if the price of heating oil exceeds a calculated historic average. The
authorities governing the SPR and NHOR are included in the Energy Policy and
Conservation Act (EPCA, P.L. 94-163) and are currently authorized through FY2008
by P.L. 108-7. These authorities also provide for U.S. participation in emergency
activities of the International Energy Agency (IEA) without risking violation of
antitrust law and regulation.
The House bill would permanently reauthorize both programs, avoiding
awkward periods such as occurred in 2000 when differences between the House and
Senate over certain issues resulted in a period of several months when the authorities
were not in force.
Section 302: National Oilheat Research Alliance. The National Oilheat
Research Alliance (NORA) was established by the Energy Policy Act of 2000 (P.L.
106-469), and assesses a fee of $.002 per gallon on home heating oil sold by retail
distributors. The proceeds, among other purposes, are dedicated to research on
improving the efficiency of furnaces and boilers, and providing education and
training resources to professionals in the industry. The House bill would extend the
authorization for NORA until nine years (2010) after the date on which the Alliance
was established.
Section 303: Site Selection. Pursuant to Section 310(d), the Secretary of
Energy would be required, within one year of the enactment of the legislation, to
select sites — from among those that have been previously studied — for expansion
of the SPR to its fully authorized volume of one billion barrels.
Section 304: Suspension of Strategic Petroleum Reserve
Deliveries. Producers of offshore leases in the Gulf of Mexico pay a royalty to the
U.S. Treasury based upon production at their sites. Since 1999, most new fill of the
SPR has been accomplished by the acceptance of royalty-in-kind (RIK) oil from these
producers in lieu of cash paid to the Treasury. Some policymakers have objected to
RIK deliveries, arguing that diverting any oil from the markets was contributing to
rising crude prices. The Administration argued that the volumes involved, never
more than 200,000 b/d and often less, was not large enough to have the effect on
prices that some alleged. The SPR holds roughly 700 million barrels. Current
capacity is estimated at 727 million barrels. It is not apparent whether the
Administration plans to continue RIK fill after current contracts end during the

summer of 2005. Should the Administration do so, this provision of H.R. 6 would
permit accepting deliveries of RIK oil only when crude prices were below $40/barrel.
Subtitle B — Production Incentives
Section 320: Liquefied Natural Gas. This section would expand the scope
of the Natural Gas Act (15 U.S.C. 717b) to include importing and exporting natural
gas as well as the construction of liquefaction and re-gasification facilities. Building
and operating such facilities would require authorization by the Federal Energy
Regulatory Commission. FERC would be designated as lead agency for the purpose
of coordinating all applicable federal authorizations, and for coordinating compliance
with the National Environmental Policy Act of 1969 (42 U.S.C.4312). FERC would
set a schedule ensuring expeditious administrative proceedings, and compile the
consolidated record of all state and federal proceedings.
The section would limit the criteria upon which FERC could reject a proposed
liquefied natural gas (LNG) project or a facility expansion. FERC could deny an
application only by finding the project not in the public interest, or that the project
sponsor was not capable of constructing and operating an LNG facility. FERC would
be barred from imposing certain conditions on an applicant — such as the provision
of additional services. Additionally, FERC could not deny a “certificate of
convenience and necessity”prior to January 1, 2011, solely because a facility would
be at least partly dedicated to importing the project sponsor’s own natural gas.
FERC would be tasked to issue a construction certificate within one year of
application. Judicial review would be exclusively delegated to the U.S. Court of
Appeals for the District of Colombia Circuit, which must provide expedited
Current Law. Under the Natural Gas Act, FERC reviews jurisdictional project
proposals (including those for natural gas importation) to determine if a public need
would be met. A wide variety of criteria are applied in making such a determination.
The Commission can reject a project for a range of reasons, including impact on the
competitive nature of U.S. natural gas markets.
Section 327: Hydraulic Fracturing. This section would amend the Safe
Drinking Water Act (SDWA), Section 1421(d), to specify that the definition of
“underground injection” excludes the injection of fluids or propping agents used in
hydraulic fracturing operations related to oil or gas production activities. Responding
to a 1997 court ruling that directed EPA to regulate hydraulic fracturing as
underground injection, this section would expressly preclude EPA from regulating
the underground injection of fluids used in hydraulic fracturing for oil and gas
production. This provision is unchanged from the conference report for H.R. 6 in the

108th Congress.

Current Law. The SDWA required EPA to promulgate regulations for state
underground injection control (UIC) programs that included minimum requirements
for programs to prevent underground injection that endangers sources of drinking
water. The Act specifies that UIC program regulations may not prescribe
requirements that interfere with “any underground injection for the secondary or

tertiary recovery of oil or natural gas, unless such requirements are essential to assure
that underground sources of drinking water will not be endangered by such injection”
Policy Context. Before 1997, EPA had not considered regulating hydraulic
fracturing for oil and gas development, because it did not view this well-production
process as an activity subject to regulation under SDWA’s UIC program. In 1997,
the 11th Circuit Court of Appeals ruled that the injection of fluids for the purpose of
hydraulic fracturing constituted underground injection, that all underground injection
must be regulated, and that hydraulic fracturing of coalbed methane (CBM) wells in
Alabama must be regulated under the state’s UIC program (LEAF v. EPA, 118 F. 3d


Hydraulic fracturing involves the high-pressure injection of fluids into coal beds
to enhance the recovery of oil and natural gas from underground formations. Water-
based fluids are typically used as fracturing fluids; however, diesel fuel often is used6
instead of water, and various chemicals are added to fracturing fluids. While
hydraulic fracturing has been used in the recovery of conventional oil and gas since
the 1950s, this practice has been used for CBM recovery mainly since the 1990s.
A growing concern is that, in many CBM-producing regions, the target coalbeds
occur within underground sources of drinking water, and the fracturing process
injects fluids directly into the drinking water sources; EPA has determined that the
use of diesel fuel as a fracturing fluid introduces benzene and other toxic substances7
directly into underground sources of drinking water. Also, because the process
fractures rock, fracturing can create new pathways for natural gas (primarily
methane) to enter drinking water aquifers. As the number of coalbed methane (CBM)
wells and the use of hydraulic fracturing have increased rapidly in recent years, so has
concern over the potential impact on water resources, particularly in the water-scarce
West, and very few studies have been done to evaluate these impacts.
In 2003, EPA’s National Drinking Water Advisory Council recommended that
EPA (1) work to eliminate the use of diesel fuel and related additives in fracturing
fluids that are injected into formations containing drinking water sources; (2)
continue to study the problems that could occur from hydraulic fracturing for CBM
production; and (3) defend its discretion to implement the UIC program in a way that
advances protection of groundwater resources from contamination.

6 Environmental Protection Agency, Evaluation of Impacts to Underground Sources of
Drinking Water by Hydraulic Fracturing of Coalbed Methane Reservoirs, Washington,
D.C., June 2004, pp. 4-3 - 4-4.
7 Environmental Protection Agency, Evaluation of Impacts to Underground Sources of
Drinking Water by Hydraulic Fracturing of Coalbed Methane Reservoirs, pp. 1-6.
According to EPA, hydraulic fracturing of oil and gas found in conventional geologic traps
is well established; however, hydraulic fracturing of coal beds is relatively new.
Conventional sites are usually very deep and involve saline ground water that is unsuitable
for drinking water. In contrast, formations that contain coal bed methane can be near the
surface where ground water may be used as a source of drinking water supplies. pp. 4-9 -


In late 2003, EPA entered into an agreement with three companies that provide
most hydraulic fracturing services.8 Under this voluntary agreement, the firms agree
to remove diesel fuel from CBM fluids injected directly into drinking water sources,
if cost-effective alternatives are available.
In 2004, EPA issued a final report that concluded that the injection of hydraulic
fracturing fluids into CBM wells poses little or no threat to underground sources of
drinking water and requires no further study; however, EPA noted that very little
documented research has been done on the environmental impacts of injecting
fracturing fluids.9 The report has been criticized by some, and the EPA Inspector
General has been asked to review a whistle-blower’s assertions that EPA’s findings
are scientifically unfounded.10 (For more information, see CRS Report RL32262,
Selected Legal and Policy Issues Related to Coalbed Methane Development, by
Aaron M. Flynn.)
Section 328: Oil and Gas Exploration and Production Defined. This
section would give a permanent exemption from Clean Water Act (CWA)
stormwater runoff rules for the construction of exploration and production facilities
by oil and gas companies and the roads that service those sites. Currently under the
CWA, the operation of facilities involved in oil and gas exploration, production,
processing, transmission, or treatment generally is exempt from stormwater runoff
regulations, but the construction of these facilities is not. The amendment would
modify the act to specifically include construction activities in the types of oil and
gas facilities that are covered by the law’s statutory exemption from stormwater
The issue arises from stormwater permitting rules for small construction sites
and municipal separate storm sewer systems that were issued by EPA in 1999 and
became effective March 10, 2003. Those rules, known as Phase II of the CWA
stormwater program, require most small construction sites disturbing one to five
acres and municipal separate storm sewer systems serving populations of up to
100,000 people to have a CWA discharge permit. The permits require
pollution-prevention plans describing practices for curbing sediment and other
pollutants from being washed by stormwater runoff into local water bodies. Phase
I of the stormwater program required construction sites larger than five acres
(including oil and gas facilities) and larger municipal separate storm sewer systems
to obtain discharge permits beginning in 1991.
As the March 2003 compliance deadline approached, EPA authorized a
two-year extension of the Phase II rules for small oil and gas construction sites to
allow the agency to assess the economic impact of the rule on that industry. In March

8 Memorandum of Agreement Between the United States Environmental Protection Agency
and BJ Services Company, Halliburton Energy Services, Inc., and Schlumberger Technology
Corporation, December 12, 2003.
9 EPA, Evaluation of Impacts to Underground Sources of Drinking Water by Hydraulic
Fracturing of Coalbed Methane Reservoirs, 2004. p. 4-1.
10 Letter to Senators Wayne Allard and Ben Nighthorse Campbell and Representative Diana
DeGette from Weston Wilson, U.S. Environmental Protection Agency, October 8, 2004.

2005 EPA extended the exemption until June 2006 and said it would propose a
specific rule for small oil and gas construction sites by September 11, 2005. EPA
had initially assumed that most oil and gas facilities would be smaller than one acre
in size and thus excluded from the Phase II rules, but recent Department of Energy
data indicate that several thousand new sites per year would be of sizes subject to the
The provision in H.R. 6 is identical to one in H.R. 6/S. 2095 in the 108th
Congress, making EPA’s delay permanent and making it applicable to construction
activities at all oil and gas development and production sites, regardless of size,
including those covered by Phase I rules. Industry has argued that the stormwater
rule creates costly permitting requirements, even though the short construction period
for drilling sites carries little potential for stormwater runoff pollution. Supporters
say the amendment is intended to clarify existing CWA language. Opponents argue
that the provision does not belong in the energy legislation, and that there is no
evidence that construction at oil and gas sites causes less pollution than other
construction activities, which are regulated under EPA’s stormwater program.
Section 329: Outer Continental Shelf Provisions. For applications to
build deepwater ports, the Secretary of Transportation could use environmental
impact statements or other studies prepared by other federal agencies instead of
conducting separate studies. Information from state and local governments and
private-sector sources could also be used.
Section 330: Appeals Relating to Pipeline Construction or Offshore
Mineral Development Projects. Appeals of decisions under the Coastal Zone
Management Act on natural gas pipelines and offshore energy projects would be
based exclusively on the record compiled by FERC or the relevant permitting agency.
It would be the sense of Congress that appeals relating to natural gas pipeline
construction would be coordinated within FERC’s established timeframes under
sections 3 and 7 of the Natural Gas Act (15 U.S.C. 717 b 717 (f).
Sections 332 — 333: Natural Gas Market Reform. These sections
would address natural gas price reporting issues in the wake of the Enron scandal.
During extremely volatile market episodes in 2000-2001 — when gas prices briefly
soared to unprecedented levels — it was alleged that market participants reported
false trading information to price-reporting services. Beyond creating higher prices
for the market participants involved, these price-reporting schemes arguably resulted
in higher transactions prices for unrelated gas deals whose prices were derived from
published price indices artificially escalated by the allegedly false reports.
Section 332, entitled “Natural Gas Market Reform,” would modify the
Commodity Exchange Act (CEA, 7 U.S.C. 13), banning “knowingly false or
knowingly misleading or knowingly inaccurate reports.” It also would increase the
penalties for false reporting.
Section 333, entitled “Natural Gas Market Transparency,” would direct FERC
to issue rules calling for the timely reporting of natural gas prices and availability and
to evaluate the data for accuracy. The language specifies that FERC not impinge on
the role of commercial publishers of natural gas prices.

Current Law. The Commodity Futures Trading Commission regulates public
trading in gas under a variety of securities laws, including the CEA. FERC also has
existing authority to prevent market manipulation and issued Order 644 on
November 13, 2003, to prevent market abuse, set “rules of the road,” and provide a
more stable marketplace for both electricity and natural gas. It establishes rules
relating to market manipulation, data reporting, and record retention. It also makes
sellers subject to disgorgement of unjust profits and revocation of FERC authorities
to operate under market-based rules (i.e. without direct regulatory supervision) and
to do business.
Section 334: Oil, Gas, and Mineral Industry Workers. Within a year
after enactment, the secretaries of Energy, Labor, and the Interior must submit a
report to Congress with recommendations on meeting future labor requirements for
the domestic oil, gas, and mining industries. This section was not in the H.R. 6
conference report in the 108th Congress.
Subtitle C — Access to Federal Land
Sections 344 and 346: Leasing and Permitting Processes. These
sections would address concerns over delays in the permitting process for oil and gas
development after leases are granted. Some lease stipulations are considered by the
Administration to be impediments to domestic oil and gas development. However,
concerns have also been raised that faster permitting could bypass important
environmental protections.
Current Law. The federal oil and gas leasing program is governed under the
Mineral Leasing Act of 1920, as amended (30 U.S.C. 181 et. seq.). Bureau of Land
Management (BLM) procedures for an application for a permit to drill (APD) are
contained in 43 CFR 3162.3-1. The APD is posted for 30 days. Within 5 working
days after the 30-day period, the BLM consults with surface-managing agencies
whose consent is also required, then notifies the applicant of the results. The BLM
is also required to process the application within the 35-day period. The Bush
Administration has taken some action on this issue, including processing and
conducting environmental analyses on multiple permit applications with similar
characteristics, implementing geographic area development planning for oil and gas
fields or areas within a field, and allowing for block surveys of cultural resources.
H.R. 6. The Secretaries of the Interior and Agriculture would be required to
sign a memorandum of understanding (MOU) on the “timely processing” of oil and
gas lease applications, surface use plans and drilling applications, the elimination of
duplication, and ensuring consistency in applying lease stipulations (Sec. 344).
Compliance with Executive Order No. 13211 (42 U.S.C. 12301 note), requiring
energy impact studies, would be required before taking action on regulations having
an effect on domestic energy supply (Sec. 346).
Section 355: Encouraging Prohibition of Drilling in the Great Lakes.
Congress would urge that no federal or state permits be issued for oil and gas drilling
in or under the Great Lakes.

Section 358: Federal Coalbed Methane Regulation. States on the list
of “affected states” under section 1339(b) of the Energy Policy Act of 1992 (42
U.S.C. 13368(b)) would be removed if they took specified actions within three years
after enactment of H.R. 6 or had previously taken action under section 1339(b). The
list of “affected states” established under the Energy Policy Act of 1992 (42 U.S.C.

13368 (b)) includes: West Virginia, Pennsylvania, Kentucky, Ohio, Tennessee,

Indiana, and Illinois. These states are on the list as a result of coalbed methane
(CBM) ownership disputes, impediments to development, lack of a regulatory
framework to encourage CBM development in the state, and no current extensive
development of CBM. A state may be removed from the list through a petitioning
process initiated by the governor of that state.
Subtitle D — Refining Revitalization
Sections 371- 379: Refining Revitalization. This subtitle is designated
as the “United States Refinery Revitalization Act of 2005.” Based on the finding that
fuel demand exceeds the production capacity of domestic refineries, it is in the
national interest to increase capacity to refine fuels within the United States. The
findings in Sec. 372 note that no new refinery has been built in the country since
1976, and there has been a reduction in the number of operating facilities. It also
notes that gasoline demand is expected to increase 45% between 2005 and 2025.
Closure of refineries since 1981 has resulted in the shuttering of nearly 500,000
barrels per day of capacity. While the number of operating facilities has fallen from
324 to 149, the total amount of capacity has risen, the result of expansion of existing
plants. But the investment climate for expansion of old plants and construction of
new remains clouded, in part due to regulatory uncertainty at the federal, state, and
local levels. The findings make note of the planned Yuma, AZ, refinery, which just
received its federal air quality permit after five years under the current regulatory
The Act’s purpose, as stated in Sec. 373, is to provide an accelerated review and
approval process for idled refineries, and to lend legal and technical support to states
needing help to meet such permit demands.
Refinery Revitalization Zones are designated in Sec. 374, and the Secretary of
Energy is directed to identify areas (within 90 days after enactment) that have
experienced mass layoffs in manufacturing, contain an idle refinery, and have an
unemployment rate that exceeds the national average by 10%.
Sec. 375 calls for a memorandum of understanding between the Secretary of
Energy and the EPA Administrator that designates appropriate agency officials and
staff to implement the purposes of the Act and administer any regulations issued
thereunder. State Governors and Indian Tribe representatives may enter into this
MOU. Once a qualifying state enters into the MOU, Sec. 376 calls on the Secretary
of Energy to delegate agency staff to provide assistance to the state. The EPA
Administrator is similarly charged, and specifically directed to provide expertise
regarding the laws the agency administers as they relate to refineries.

DOE is designated lead agency in Sec. 377. Upon written request of an
applicant, the Department will coordinate all applicable authorizations and
environmental reviews, including those at the state and local level. It would be
required to set a prompt and binding schedule for federal reviews and authorizations,
such that the whole federal process would be completed within six months. The
Department would maintain a complete consolidated record of the proceedings, and
act as the arbiter in the case of appeals. Decisions on appeals would be required
within 60 days.
The Secretary would establish a 60-day pre-application process to help establish
likelihood of approval and identify potential issues. In its lead agency role, the
Department would coordinate all federal actions for NEPA compliance, as well as
consolidation of the impact statement into one document covering all environmental
Sec. 378 calls for the compliance with all applicable laws and regulations.
Sec. 379 contains definitions for a number of significant items, including:
!Federal authorizations means those required under the Clean Air
Act, the Federal Water Pollution Control Act, the Safe Drinking
Water Act, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Solid Waste Disposal
Act, the National Historic Preservation Act, and the National
Environmental Policy Act of 1969.
!An idle refinery is real property used as a refinery since December

31, 1979, and not operational before April 1, 2005.

!A refinery means any facility designed and operated to store or ship
oil, as well as to operate as a refinery or a refinery component. This
includes places where fuel blending took place.
!A qualifying state is a state or Indian tribe which has entered into a
MOU with the Secretary of Energy, and has a refining infrastructure
coordination office.
Title IV — Coal
Subtitle A — Clean Coal Power Initiative
Sections 401- 404: Clean Coal Power Initiative. The Clean Coal Power
Initiative (CCPI) is in its third year of funding under a 10-year, $2 billion program
outlined by the Bush Administration. According to DOE, the program supports cost-
shared projects with the private sector to demonstrate new technologies that could
boost the efficiency and reduce emissions from coal-fired power plants.

Current Law. CCPI does not currently have a specific authorization, although
it has been funded through FY2005 in the annual Interior and Related Agencies
Appropriations bill. The program supersedes the Clean Coal Technology Program,
which has completed most of its projects and has been subject to rescissions and
deferrals since the mid-1990s.
H.R. 6. Funding for CCPI would be authorized for $200 million for each year
from FY2006-FY2014 (Sec. 401). The technical criteria would be established for
coal-based gasification and other projects. The federal share of financing for each
clean coal project would not exceed 50% (Sec. 402). A report on the projects’ status
and technical milestones would be submitted after the first year and every two years
by the Secretary of Energy to various congressional committees (Sec. 403). The
program would include grants to universities to establish Centers of Excellence for
energy systems of the future (Sec. 404).
Policy Context. A key ingredient of President Bush’s May 2001 National
Energy Policy is to bolster U.S. energy supply. One of its goals is to use coal more
efficiently, as coal is an abundant national resource. The Administration contends
that new technologies could cost-effectively reduce emissions from coal-fired power
plants and overcome barriers to expanded coal use.
Subtitle B — Clean Power Projects
Sections 411- 416: Clean Power Projects. The Secretary of Energy
would be authorized to provide a $125 million loan to an experimental clean coal
power plant in Healy, Alaska (Sec. 411). Loan guarantees would be authorized for
a power plant of at least 400MW capacity using integrated combined-cycle (IGCC)
technology in a deregulated market and receiving no ratepayer subsidy (Sec. 412).
Loan guarantees would be available for at least five petro-coke gasification
polygeneration projects, involving co-production of electricity and fuels (Sec. 414).
The Secretary of Energy would be directed to use $5 million of appropriated funds
to begin a project managed by the DOE Chicago Operations Office to demonstrate
high-energy electron scrubbing technology for high-sulfur coal emissions (Sec. 416).
Subtitle D — Coal and Related Programs
Section 441: Clean Air Coal Program. This section would amend the
Energy Policy Act of 1992 with the addition of a clean air coal program to promote
increased use of coal, acceptance of new clean coal technologies, and advance
deployment of pollution control equipment to meet the Clean Air Act (42 U.S.C.

7402 et seq.).

A total of $500 million over FY2006-FY2010 would be authorized for pollution
control projects to control mercury, nitrogen dioxide, sulfur dioxide emissions,
particulate matter, or more than one pollutant; and allow use of the waste byproducts.
Additional authorizations totaling $2.5 billion over FY2007-FY2013 would be
provided for projects using coal-based electrical generation equipment and processes,
and associated environmental control equipment.

Project selection criteria would be based on significantly improving air quality,
replacing less efficient units, and improving thermal efficiency. Up to 25% of
projects would be cogeneration or other gasification projects. At least 25% of the
projects would be solely for electrical generation, with priority for those generating
less than 600 MW. Federal loans or loan guarantees would not exceed 30% of the
total funds obligated during any fiscal year. The federal share of projects funded
would not exceed 50%.
No technology funded by the program, or level of emissions reduction achieved
by funded projects, would be considered adequately demonstrated for purposes of
Sections 111, 169, or 171 of the Clean Air Act.
Title V — Indian Energy
Section 501: Short Title. This title would be cited as the “Indian Tribal
Energy Development and Self-Determination Act of 2005.”
Section 502: Office of Indian Energy Policy and Programs. Title II
of the Department of Energy Organization Act (42 U.S.C. 7131 et. seq.) would be
amended to create the Office of Indian Energy Policy and Programs at the
Department of Energy.
Section 503: Indian Energy. Title 26 the Energy Policy Act of 1992 (25
U.S.C. 3501) would be replaced by this section, which outlines procedures whereby
Indian tribes would be able to develop and manage the energy resources located on,
and rights-of-way through, tribal land. Within a year of enactment of the bill, the
Department of the Interior (DOI) would issue regulations on the requirements for
approval of tribal energy resource agreements. Under their own tribal energy
resource agreements as approved by DOI, Indian tribes would be able to enter into
leases or business agreements for energy development and grant rights-of-way over
tribal land for pipelines or electric lines.
Assistance for tribal energy development would be provided through DOI by
grants and low-interest loans and through DOE by grants and loan guarantees.
Federal agencies could give preference to Indian energy when purchasing energy
products and byproducts.
DOI would be required to undertake a review and make recommendations
regarding tribal opportunities under the Indian Mineral Development Act of 1982 (25
U.S.C. 2101 et. seq.). The Bonneville Power Administration and Western Area
Power Administration would be authorized to assist in developing distribution
systems that provide power to Indian tribes using the federal transmission system.
Section 504: Consultation with Indian Tribes. The Secretaries of Energy
and of the Interior would be required to consult with Indian tribes in carrying out this

Section 505. Four Corners Transmission Line Project. The Dine
Power Authority, an enterprise of the Navajo nation, would be eligible to receive
grants and other assistance to develop a transmission line from the Four Corners Area
to southern Nevada, including related generation facilities.
Title VI — Nuclear Matters
Subtitle A — Price-Anderson Act Amendments
Sections 601- 612: Price-Anderson Nuclear Liability Coverage. The11
Price-Anderson Act, which addresses liability for damages to the general public
from nuclear incidents, would be extended through 2025. The Price-Anderson
liability system was up for reauthorization on August 1, 2002, and was extended for
commercial nuclear reactors through December 31, 2003, by the FY2003
consolidated appropriations resolution (P.L. 108-7). Even without further extension,
existing reactors will continue to operate under the current Price-Anderson liability
system, but any new reactors would not be covered. Price-Anderson coverage for
DOE nuclear contractors was extended through December 31, 2004, by the National
Defense Authorization Act for FY2003 (P.L. 107-314). A further two-year extension
for DOE contractors was approved by Congress on October 9, 2004, as part of the
Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 (P.L.


Current Law. Under Price-Anderson, the owners of commercial reactors must
assume all liability for nuclear damages awarded to the public by the court system,
and they must waive most of their legal defenses following a severe radioactive
release (“extraordinary nuclear occurrence”). To pay any such damages, each
licensed reactor must carry financial protection in the amount of the maximum
liability insurance available, which was increased by the insurance industry from
$200 million to $300 million on January 1, 2003. Any damages exceeding that
amount are to be assessed equally against all covered commercial reactors, up to
$95.8 million per reactor (most recently adjusted for inflation on August 20, 2003).
Those assessments — called “retrospective premiums” — would be paid at an annual
rate of no more than $10 million per reactor, to limit the potential financial burden
on reactor owners following a major accident. According to the Nuclear Regulatory
Commission (NRC), 103 commercial reactors are currently covered by the Price-
Anderson retrospective premium requirement.
Funding for public compensation following a major nuclear incident, therefore,
would include the $300 million in insurance coverage carried by the reactor that
suffered the incident, plus the $95.8 million in retrospective premiums from each of
the 103 currently covered reactors, totaling $10.2 billion. On top of those payments,
a 5% surcharge may also be imposed, raising the total per-reactor retrospective
premium to $100.6 million and the total potential compensation for each incident to
about $10.7 billion. Under Price-Anderson, the nuclear industry’s liability for an

11 Primarily Sec. 170 of the Atomic Energy Act of 1954, 42 U.S.C. 2210.

incident is capped at that amount, which varies depending on the number of covered
reactors, the amount of available insurance, and an inflation adjustment that is made
every five years. Payment of any damages above that liability limit would require
congressional approval under special procedures in the act.
The Price-Anderson Act also covers contractors who operate hazardous DOE
nuclear facilities. The liability limit for DOE contractors is the same as for
commercial reactors, excluding the 5% surcharge, except when the limit for
commercial reactors drops because of a decline in the number of covered reactors.
Because two closed reactors had been covered until recently (for a total of 105), the
liability limit for commercial reactors, minus the surcharge, had been $10.4 billion,
which remains the liability limit for DOE contractors. Price-Anderson authorizes
DOE to indemnify its contractors for the entire amount, so any damage payments for
nuclear incidents at DOE facilities would ultimately come from the U.S. Treasury.
However, the law also allows DOE to fine its contractors for safety violations, and
contractor employees and directors can face criminal penalties for “knowingly and
willfully” violating nuclear safety rules. However, Section 234A of the Atomic
Energy Act specifically exempts seven non-profit DOE contractors and their
subcontractors. Under the same section, DOE automatically remits any civil
penalties imposed on non-profit educational institutions serving as DOE contractors.
House Bill. Price-Anderson liability coverage for commercial reactors and for
DOE contractors would be extended through December 31, 2025 (Sec. 602). The
total retrospective premium for each reactor would be set at the current level of $95.8
million and the limit on per-reactor annual payments raised to $15 million (Sec. 603),
with both to be adjusted for inflation every five years (Sec. 607). For the purposes
of those payment limits, a nuclear plant consisting of multiple small reactors (100-
300 megawatts, up to a total of 1,300 megawatts) would be considered a single
reactor (Sec. 608). Therefore, a power plant with six 120-megawatt modular reactors
would be liable for retrospective premiums of up to $95.8 million, rather than $574.8
million. The liability limit on DOE contractors would be set at $10 billion per
accident, also to be adjusted for inflation (Sec. 604).
The liability limit and maximum indemnification for DOE contractors for
nuclear incidents outside the United States would be raised from $100 million to
$500 million (Sec. 605). However, Price-Anderson indemnification would be
prohibited for contracts related to nuclear facilities in countries found to sponsor
terrorism (Sec. 610). None of the increased liability limits would apply to nuclear
incidents taking place before the amendments are enacted (Sec. 609). NRC and DOE
would have to report to Congress by the end of 2021 on the need for further Price-
Anderson extensions and modifications (Sec. 606).
For future contracts, the House-passed bill would eliminate the civil penalty
exemption for nuclear safety violations by the seven non-profit contractors listed in
current law. DOE’s authority to automatically remit penalties imposed on all non-
profit educational institutions serving as contractors would also be repealed.
However, the bill would limit the civil penalties against a non-profit contractor to the
amount of management fees received under that contract (Sec. 611).

The House-passed version of H.R. 6 would also authorize the federal
government to sue DOE contractors to recover at least some of the compensation that
the government had paid for any accident caused by intentional DOE contractor
management misconduct. Such cost recovery would be limited to the amount of the
contractor’s profit under the contract involved, and no recovery would be allowed
from nonprofit contractors (Sec. 612). This section was also in H.R. 6 as passed byth
the House in the 108 Congress but not in the conference report.
Policy Context. The Price-Anderson Act’s limits on liability were crucial in
establishing the commercial nuclear power industry in the 1950s. Supporters of the
Price-Anderson system contend that it has worked well since that time in ensuring
that nuclear accident victims would have a secure source of compensation, at little
cost to the taxpayer. However, opponents contend that Price-Anderson subsidizes
the nuclear power industry by protecting it from some or most of the financial
consequences of the worst conceivable accidents.
Because no new U.S. reactors are currently planned, missing the deadline for
extension has had little immediate effect on the nuclear power industry, as existing
reactors continue to be covered. For the first time in more than 20 years, however,
several U.S. utilities have announced that they are considering whether to build new
reactors. It is unlikely that any such projects would move forward without Price-
Anderson coverage. A lapse in Price-Anderson would also affect all subsequently
signed DOE nuclear facility contracts, which would have to use alternate
indemnification authority.
Subtitle B — General Nuclear Matters
Section 621: Commercial Reactor License Period. The initial 40-year
period for a commercial nuclear reactor license would begin when NRC authorized
the reactor to commence operation after construction had been completed. Currently,
under Atomic Energy Act Section 185 b. (added by the Energy Policy Act of 1992,
P.L. 102-486), the 40-year initial license period may begin when a “combined
construction and operating license” is issued several years before the reactor is to
start operating. Before Section 185 was added in 1992, reactor operating licenses had
been issued only after construction was complete, but any future licenses are
expected to use the combined license option.
Section 622: NRC Training and Fellowship Program. Funding of $1
million per year would be authorized from FY2005-FY2009 for NRC to conduct a
training and fellowship program to develop critical nuclear safety regulatory skills.
Section 623: Cost Recovery From Government Agencies. NRC would
be authorized to charge cost-based fees for all services rendered to other federal
agencies. Such authority is limited under current law (Atomic Energy Act, Section

161 w.).

Section 624: Elimination of Pension Offset for Key NRC Personnel.
When NRC has a critical need for the skills of a retired employee, NRC could hire
the retiree as a contractor and exempt him or her from the annuity reductions that
would otherwise apply.

Section 625: Antitrust Review Suspension. NRC would no longer have
to submit nuclear reactor license applications to the Attorney General for antitrust
reviews, as currently required by Atomic Energy Act Section 105 c.
Section 626: Decommissioning Fund Protection. NRC would be
explicitly authorized to issue regulations ensuring that funds collected to
decommission nuclear power plants would not be used for other purposes. This
provision is particularly aimed at cases in which an original nuclear power plant
owner has sold the plant but retained control over decommissioning funds collected
before the ownership transfer.
Section 627: Limitation on DOE Legal Fee Reimbursement. Except
as required by existing contracts, DOE would be prohibited from reimbursing its
contractors for legal expenses incurred in defending against “whistleblower”
complaints that are ultimately upheld.
Section 629: Feasibility Study for Commercial Reactors at DOE
Sites. The Secretary of Energy would be required to submit a study to Congress on
the feasibility of developing commercial nuclear power plants at existing DOE sites.
Section 630: Government Uranium Sales. With certain exceptions,
DOE uranium sales would be restricted to 3 million pounds per year from FY2005-
FY2009, 5 million pounds per year in FY2010-FY2011, 7 million pounds per year
in FY2012, and 10 million pounds per year thereafter. DOE must report to Congress
within three years on the impact of such sales on the domestic uranium industry.
Section 631: Uranium Mining Research and Development. Funding
of $10 million per year would be authorized during FY2006-FY2008 for a cost-
shared research and development program by DOE and domestic uranium producers
on in-situ leaching mining technologies and related environmental restoration
technologies, except that “no activities funded under this section may be carried out
in the State of New Mexico.”
Section 632: Whistleblower Protection. Existing whistleblower
protections for employees of nuclear power plants and other NRC licensees and
employees of DOE contractors would be extended to employees of NRC contractors.
An employee whose whistleblower retaliation complaint did not receive a final
decision by the Secretary of Labor within 540 days could take the case to federal
Section 633: Uranium Exports for Medical Isotope Production.
Highly enriched uranium (HEU) could be exported to Canada, Belgium, France,
Germany, and the Netherlands for production of medical isotopes in nuclear reactors.
Those countries would be exempt from existing requirements (under Section 134 of
the Atomic Energy Act) that they agree to switch to low-enriched uranium (LEU) as
soon as possible and that LEU fuel for their reactors be under active development.
Instead, those countries would have to agree to convert to suitable LEU fuel when it
became available. NRC would have to review current security requirements for HEU
used for medical isotope production and impose additional requirements if necessary.
The National Academy of Sciences would study the potential availability and cost of

medical isotopes produced in LEU reactors; that study would be used by DOE to help
determine whether U.S. medical isotope demand could be reliably and economically
met with production facilities that do not use HEU. If the Secretary of Energy
certifies that such demand can be met, the export exemption in the House bill would
terminate. The current HEU export restrictions are intended to spur foreign
cooperation with U.S. efforts to convert all HEU reactors to LEU, but supporters of
the exemption contend that the restrictions could disrupt the supply of medical
isotopes produced in foreign HEU reactors.
Section 634: Fernald Byproduct Material. DOE-managed material in the
concrete silos at the Fernald uranium processing facility would 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)). DOE would dispose of the material in an NRC- or state-
regulated facility.
Section 635: Safe Disposal of Greater-than-Class-C Radioactive
Waste. DOE would designate an office with the responsibility for developing a
comprehensive plan for permanent disposal of all low-level radioactive waste with
concentrations of radionuclides that exceed the limits established by the NRC for
Class C radioactive waste. The plan would include developing a new facility or use
of an existing facility for disposal.
Section 636: Prohibition on Nuclear Exports to Terrorism
Sponsors. Exports of nuclear materials, equipment, and sensitive technology
would be prohibited to any country identified by the Secretary of State as a sponsor
of terrorism. The President could waive the export restriction under certain
conditions. It is intended to block implementation of a 1994 agreement under which
North Korea was to receive a U.S.-designed nuclear power plant in return for
abandoning its nuclear weapons program. The agreement has been suspended in
light of North Korea’s continuing weapons activities.
Section 638: National Uranium Stockpile. The Secretary of Energy
would be authorized to create a national low-enriched uranium stockpile.
Section 639: Nuclear Regulatory Commission Meetings. Whenever
a quorum of the Nuclear Regulatory Commission gathers to discuss official business,
other than at formal Commission meetings, the discussions would have to be
recorded and the public notified within 15 days. A transcript of the recording would
be available to the public upon request except for information that is exempted or
prohibited from disclosure by law.
Section 640: Employee Benefits. Subject to the availability of funds,
workers at DOE’s uranium enrichment plants at Portsmouth, Ohio, and Paducah,
Kentucky, who were eligible for certain pension and health care benefits on April 1,

2005, shall continue such eligibility.

Subtitle C — Advanced Reactor Hydrogen Production
Sections 651-652: Hydrogen Cogeneration Production Programs.
DOE would be authorized to develop, design, construct, and operate an advanced
nuclear reactor to produce hydrogen and electricity. The project would be managed
by the DOE Office of Nuclear Energy, Science, and Technology, and the reactor
would be located at the Idaho National Laboratory. Among other requirements, the
project should begin producing hydrogen or electricity by 2011 unless the Secretary
of Energy finds that goal infeasible. The reactor would be licensed and regulated by
NRC. Five projects to demonstrate hydrogen production at existing nuclear power
plants would also be authorized. Funding for the program would be authorized at
$1.3 billion through FY2015.
Subtitle D — Nuclear Security
Section 661: Nuclear Facility Threats. In consultation with NRC and
other appropriate agencies, the President would be required to identify types of
security threats at nuclear facilities. The President would have to issue reports on the
identified threats and on actions taken or to be taken to address the threats. NRC
would be authorized to revise its regulations based on the President’s threat-
identification report. NRC would be required to conduct periodic force-on-force
exercises to test nuclear facility security. NRC would be authorized to issue
regulations to protect information about nuclear facility security, and would be
required to assign a security coordinator to each NRC region.
Section 662: Fingerprinting for Criminal Background Checks. The
existing requirement that individuals be fingerprinted for criminal background checks
before receiving unescorted access to nuclear power plants (Atomic Energy Act,
Section 149) would be extended to individuals with unescorted access to any
radioactive material or property that could pose a health or security threat. Other
biometric methods could be used instead of fingerprinting.
Section 663: Use of Firearms by Nuclear Licensees. NRC would be
authorized to allow the use of firearms by security personnel at nuclear power plants
and other facilities licensed or regulated by NRC. Federal law currently authorizes
NRC employees and contractors to use firearms, but not employees or contractors of
nuclear licensees (Atomic Energy Act, Section 161 k.). This provision would counter
some state laws that preclude private guard forces from utilizing some weapons.
Section 664: Unauthorized Introduction of Dangerous Weapons.
Existing NRC controls on the entry of dangerous weapons or materials into
Commission facilities (Atomic Energy Act, Section 229a) would be extended to
commercial nuclear power plants and other NRC-regulated facilities.
Section 665: Sabotage of Nuclear Facilities or Fuel. Maximum
penalties for sabotage of licensed nuclear facilities or materials (Atomic Energy Act,
Section 236 a.) would be increased from $10,000 and 10 years in prison to $1 million
and life imprisonment without parole. The language would clarify that the penalties

could apply to facilities “certified” as well as “licensed” by NRC, and also to
sabotage of facilities under construction.
Section 666: Secure Transfer of Nuclear Materials. Nuclear materials
transferred or received in the United States pursuant to an import or export license
would have to be accompanied by a detailed manifest. Every worker involved in
such shipments would have to undergo a federal security background check.
Section 667: Department of Homeland Security Consultation. Before
issuing a license for a nuclear power plant, NRC would have to consult with the
Department of Homeland Security about the vulnerability of the proposed plant
location to terrorist attack.
Section 668: Authorization of Appropriations. Appropriation of such
sums as necessary to carry out this subtitle would be authorized. A statutory
requirement that the Nuclear Regulatory Commission recover 90% of its costs (minus
certain exceptions) through licensee fees would be made permanent. The current fee
requirement, imposed by the Omnibus Budget Reconciliation Act of 1990 (42 U.S.C.
2214), is set to expire September 20, 2005. NRC’s costs in regulating residual
defense radioactive waste under Section 3116 of the Ronald W. Reagan National
Defense Authorization Act for Fiscal Year 2005 (50 U.S.C. 2601 note) would be
excluded from costs subject to the 90% cost recovery requirement.
Title VII — Vehicles and Fuels
Subtitle A — Existing Programs
The sections of this subtitle refer to alternative fuel and vehicle purchase
requirements under the Energy Policy and Conservation Act (EPCA) (P.L. 94-163)
and the Energy Policy Act of 1992 (EPAct, P.L. 102-486). Various requirements
apply to federal vehicle fleets, as well as state fleets and fleets operated by alternative
fuel providers.
Section 701: Use of Alternative Fuels by Dual-Fueled Vehicles.
Section 400AA of EPCA would be amended to require that all federal agencies
operate dual-fueled vehicles on alternative fuels or petition the Secretary of Energy
for a waiver from the requirement. Under current law, agencies are not required to
file a petition to be exempted from the requirement. A dual-fuel vehicle is one that
can be operated on either an alternative fuel (e.g., ethanol or natural gas) or a
conventional fuel (e.g., gasoline). Currently, most federally owned dual-fuel vehicles
are operated on gasoline as opposed to alternative fuel.
Section 704: Incremental Cost Allocation. Section 303(c) of EPAct
allows federal agencies to allocate the incremental cost of required alternative-fuel
vehicles across the whole vehicle fleet. H.R. 6 would require agencies to do so.
Section 705: Lease Condensates. Section 705 would amend the definition
of alternative fuel to include lease condensate (liquids recovered from natural gas

separation) and fuels derived from lease condensate. Fleets could generate one
vehicle purchase credit for the use of a certain volume (to be determined by the
Secretary of Energy) of lease condensate fuel in medium- and heavy-duty vehicles.
This provision is similar to the existing credit structure for the use of biodiesel.
Section 706: Review of Energy Policy Act of 1992 Programs. The
Secretary of Energy would be required to conduct a study on the effectiveness of the
alternative fuel vehicle programs under EPAct. Specifically, the Secretary would be
required to assess the effects on vehicle technology, availability, and cost.
Section 707: Report Concerning Compliance with Alternative Fuel
Vehicle Purchasing Requirements. Each federal agency is required to report
annually (through 2012) to Congress on its compliance with EPAct vehicle purchase
requirements. The conference report would extend the requirement through 2020.
Subtitle B — Hybrid Vehicles, Advanced Vehicles, and Fuel
Cell Buses
Section 711: Hybrid Vehicles. Section 711 would require the Secretary of
Energy to accelerate research on technologies for hybrid vehicles. No new funds
would be authorized.
Section 712: Hybrid Retrofit and Electric Conversion Program. The
Administrator of the Environmental Protection Agency (EPA) would be required to
establish a grant program for the installation of technologies to retrofit existing
combustion engines with electric or hybrid systems. Retrofitted vehicles must
achieve federal Low Emission Vehicle standards. Section 712 authorizes a total of
$100 million between FY2005 and FY2007 for the program.
Section 713: Efficient Hybrid and Advanced Diesel Vehicles. The
EPA Administrator would be required to establish a program to encourage the
domestic production and sales of efficient hybrid and advanced diesel vehicles. The
program must include grants to domestic vehicle manufacturers to encourage
production and provide consumer purchase incentives. A total of $3 billion is
authorized between FY2006 and FY2015.
Sections 721-724: Advanced Vehicles. The Secretary of Energy would
be authorized to provide grants to state governments, local governments, and
metropolitan transit authorities for the purchase of alternative fuel, hybrid, fuel cell,
and ultra-low sulfur diesel vehicles (defined in Sec. 721), and the infrastructure to
support them. The program would be administered through the Clean Cities
Program. Grants would be capped at $20 million per applicant. Between 20% and

25% of all grant funds would be used for ultra-low sulfur diesel vehicles (Sec. 722).

The Secretary would be required to submit reports to Congress identifying grant
recipients and evaluating the program’s effectiveness (Sec. 723). $200 million total
would be authorized for the grant program (Sec. 724).
Section 731: Fuel Cell Transit Bus Demonstration. The Secretary of
Energy would be required to establish a program to demonstrate up to 25 fuel cell

transit buses in various localities. $10 million annually would be authorized for
FY2006 through FY2010.
Subtitle C — Clean School Buses
Sections 741-744: Clean School Buses. A pilot program administered
by the Environmental Protection Agency would be established to provide grants to
local governments and contractors that provide school bus service for public school
systems. Grants would be provided to aid in the purchase of alternative fuel and
advanced diesel buses (as defined in Sec. 741), and the infrastructure necessary to
support them. A total of $200 million would be authorized for FY2005 through
FY2007, and a maximum of 30% of the grant funds could be used to purchase
advanced diesel buses (Sec. 742). A pilot program would also be established to
provide grants for the development and application of retrofit technologies for diesel
school buses. A total of $100 million would be authorized for FY2005 through
FY2007 (Sec. 743). In addition, a pilot program would be established for the
development and demonstration of fuel cell school buses. A total of $25 million
would be authorized for FY2005 through FY2007 (Sec. 744).
Section 743A: Diesel Truck Retrofit and Fleet Modernization
Program. The EPA Administrator would be required to establish a program to
provide grants (administered by state or local governments) to modernize cargo truck
operations. Grants would be used to retrofit pre-1999 vehicles with advanced
emissions control devices. A total of $100 million would be authorized between
FY2005 and FY2007.
Subtitle D — Miscellaneous
Section 751: Railroad Efficiency. A public-private research partnership
would be established for the development and demonstration of locomotive engines
that increase fuel economy, reduce emissions, and lower costs. A total of $110
million would be authorized for FY2006 through FY2008.
Section 752: Mobile Emission Reductions Trading. Within 180 days
of enactment, the EPA Administrator would be required to submit a report to
Congress on EPA’s experience with the trading of mobile source emission reduction
credits to stationary sources to meet emission offset requirements within Clean Air
Act nonattainment areas.
Section 753: Aviation Fuel Conservation and Emissions. This section
would require the Federal Aviation Administration and EPA to initiate a joint study
of the impact of aircraft emissions on air quality in Clean Air Act nonattainment
areas, ways to promote fuel conservation measures and reduce emissions, and
opportunities to reduce air traffic inefficiencies that increase fuel burn and emissions
within 60 days of the date of enactment, and to report the results to Congress within
one year of initiating the study.
Section 754: Diesel Fueled Vehicles. The Secretary of Energy would be
required to accelerate research on emissions control technologies for diesel motor

vehicles. The objective of the research would be to enable diesel technology to meet
Tier 2 emission standards not later than 2010. (These standards would apply to cars
and light trucks after the 2003 model year.) No new funding would be authorized.
Section 755: Conserve by Bicycling Program. This provision was
added as a floor amendment (H.Amdt. 88). The Department of Transportation
(DOT) would be directed to conduct up to 10 pilot bicycling projects to conserve
energy. A minimum of 20% of each project’s costs would have to be provided by
state or local sources. Also, DOT would be directed to engage the National Academy
of Sciences to conduct a research study on the feasibility of converting motor vehicle
trips to bicycle trips. Some local governments have experimented with police bicycle
patrols and other bicycling programs. This provision may help expand such uses of
Section 756: Reduction of Engine Idling of Heavy-Duty Vehicles.
EPA would be required to study whether existing air emission models accurately
reflect emissions from idling vehicles. Further, EPA would be required to establish
a program to support the deployment of idle-reduction technologies. A total of $95
million would be authorized for FY2006 through FY2008 for the deployment
Section 757: Biodiesel Engine Testing Program. The Secretary of
Energy would be required to study the effects of biodiesel and biodiesel blends on
current and future emissions control technologies. $5 million would be authorized
annually for FY2006 through FY2010.
Section 758: High Occupancy Vehicle Exception. The Transportation
Equity Act for the 21st Century (TEA-21, P.L. 105-178) would be amended to allow
states to exempt hybrid and dedicated alternative fuel vehicles from high occupancy
vehicle (HOV) restrictions. Through September 30, 2003, states had the authority
to exempt certain types of alternative fuel vehicles from the restrictions. However,
hybrid vehicles and some alternative fuel vehicles did not qualify. As the existing
authorization has expired, states do not currently have the authority to exempt any
type of alternative fuel vehicle from HOV restrictions.
Section 759: Ultra-Efficient Engine Technology for Aircraft. The
Secretary of Energy, in cooperation with the National Aeronautics and Space
Administration, would be required to develop new engine technology for aircraft with
a goal of a 10% increase in fuel efficiency and a 70% decrease in nitrogen oxide
emissions during takeoff and landing. A total of $225 million would be authorized
between FY2006 and FY2010.
Subtitle E — Automobile Efficiency
Sections 771-775: Fuel Economy Standards. The bill would authorize
$2 million annually during FY2006-FY2010 for the National Highway Traffic Safety
Administration (NHTSA) to carry out fuel economy rulemakings (Sec. 771). It
would expand the criteria that the agency would be required to take into account in
setting maximum feasible fuel economy for cars and light trucks, including the

effects of prospective standards on vehicle safety and automotive industry
employment In many instances, these additional factors may add specificity to
broader considerations that are already taken into account by NHTSA in developing
its rules (Sec. 772).
The legislation would also extend corporate average fuel economy (CAFE)
credits that accrue to manufacturers of dual-fueled vehicles. The cap to the credit of
1.2 miles per gallon (mpg) earned by any individual manufacturer would be extended
to model year (MY) 2010. It was otherwise scheduled to drop to a cap of 0.9 mpg
beginning in MY2005. The bill would postpone institution of the 0.9 cap until
MY2011 and authorize it through MY2014 (Sec. 773). It also would require a study
to explore the feasibility and effects of reducing automobile fuel consumption “a
significant percentage” by MY2012 (Sec. 774). A new provision to the Energy Policyth
Act of 2005, not a part of H.R. 6 in the 108 Congress, would require a revision to
the adjustment made to tested fuel economy levels so that the in-use fuel economy
estimates posted on new vehicles would be more in conformance with the fuel
economy that purchasers of new vehicles experience in actual use. The adjustment
would have to take into account current use of air conditioning, currently higher
speed limits, and faster acceleration rates (Sec. 775).
Title VIII — Hydrogen
Sections 801-809: Hydrogen Research and Development. Sections
801 through 809 would reauthorize hydrogen fuel research and development at the
Department of Energy (Sec. 803). The title would establish an Interagency Task
Force to coordinate federal research (Sec. 804). Further, the title would require the
Secretary of Energy to develop a plan for the development of hydrogen fuel and fuel
cells (Sec. 802), and would establish a Hydrogen Technical and Fuel Cell Advisory
Committee to advise the Secretary and review the development plan (Sec. 805).
DOE’s plans for the hydrogen program would be reviewed by the National Academy
of Sciences (Sec. 806), and the Secretary of Energy would represent U.S. interests
related to hydrogen programs in consultation with relevant agencies (Sec. 807).
Specified authorities of the Secretary of Transportation would not be affected (Sec.

808). A total of $4 billion would be authorized for FY2006 through FY2010 (Sec.

809). Definitions are provided in Sec. 801.

Section 810: Solar and Wind Technologies. A program of five pilot
projects is created to demonstrate the use of solar energy to produce hydrogen.
Further, a program of five pilot projects is created to demonstrate the use of wind
energy to produce hydrogen. Also, DOE is directed to support research programs at
universities that study the use of solar and wind energy technologies to produce
Section 811: Hydrogen Fuel Cell Buses. The Secretary of Energy,
through the Advanced Vehicle Technologies Program, would be required to establish
four fuel cell bus demonstration sites.

Title IX — Research and Development
Section 900: Short Title; Definitions. This title would be referred to as
the “Energy Research, Development, Demonstration, and Commercial Application
Act of 2005.” Defines, for the purposes of this title, the terms applied programs,
biomass, Department, departmental mission, institution of higher education,
National Laboratory, renewable energy, Secretary, State, university, and user
Subtitle A — Science Programs
Section 901: Office of Science Programs. The programs of the Office
of Science would be authorized in general, and DOE would be directed to commence
construction of the Rare Isotope Accelerator no later than September 30, 2008.
Expenditures on the Rare Isotope Accelerator prior to operation would be limited to
$1.1 billion.
Section 902: Systems Biology Program. DOE would be directed to
establish a research, development, and demonstration program in genetics, protein
science, and computational biology, with specified goals. DOE would have to submit
a research plan for this program to Congress within one year and contract with the
National Academy of Sciences to review the plan within an additional 18 months.
Biomedical research and research related to humans would not be permitted as part
of the program.
Section 903: Catalysis Research and Development Program. DOE
would be directed to conduct a program of R&D in catalysis science.
Section 904: Hydrogen. DOE would be directed to conduct a program of
fundamental R&D in support of the hydrogen programs authorized in Title VIII.
Section 905: Advanced Scientific Computing Research. DOE would
be directed to conduct a program of R&D in advanced scientific computing,
including applied mathematics and the activities authorized by the Department of
Energy High-End Computing Revitalization Act of 2004 (P.L. 108-423).
Section 906: Fusion Energy Sciences Program. Research,
development, demonstration, and commercial application directed at competitiveness
in fusion energy, including a demonstration of the utilization of fusion energy to
produce electric power or hydrogen, would be declared to be U.S. policy. DOE would
be directed to submit a plan to carry out that policy. Authority would be given for the
United States to participate in the international fusion energy experiment known as
ITER (International Thermonuclear Experimental Reactor). DOE would be directed
to develop a plan for ITER participation and have it reviewed by the National
Academy of Sciences. Funds could not be expended for ITER construction until the
plan and other reports were provided to Congress. If construction of ITER appeared
unlikely, DOE would be directed to submit a plan for a domestic burning plasma

The United States withdrew from the design phase of ITER in 1998 at
congressional direction, largely because of concerns about cost and scope. The
project has since been restructured, and in January 2003, the Administration
announced its intention to reenter the project. Other international partners include the
European Union, Japan, Russia, China, and South Korea. A decision on whether to
build ITER in France or in Japan was supposed to be made in November 2003, but
negotiations were still under way when the House passed H.R. 6 in April 2005.
Section 907: Science and Technology Scholarship Program. DOE
would be authorized to establish a scholarship program to help recruit and prepare
students for careers in DOE. Scholarship recipients would be required to work for
DOE for 24 months per academic year of scholarship received.
Section 908: Office of Scientific and Technical Information. DOE
would be directed to maintain the Office of Scientific and Technical Information.
Section 909: Science and Engineering Pilot Program. DOE would be
directed to award a grant to Oak Ridge Associated Universities to establish a regional
pilot program to enhance scientific, technological, engineering, and mathematical
literacy, creativity, and decisionmaking. The program would involve research
universities, universities that train elementary and secondary school teachers, and
DOE national laboratories. A report would be required on lessons learned from the
pilot program, including a plan for expanding the program nationwide.
Section 910: Authorization of Appropriations. Appropriations would
be authorized for the Office of Science for FY2006 through FY2010, with increases
of 10%-15% per year. Within these totals, appropriations would be authorized for the
individual programs described in Sections 902, 905, 906 (except ITER), 907, 908,
and 909. Appropriations for construction of ITER would be authorized separately,
as would appropriations for integrated bioenergy R&D for FY2005 through FY2009.
Subtitle B — Research Administration and Operations
Section 911: Cost Sharing. Cost sharing would be required for programs
carried out under this title. The minimum non-federal share would be 20% for R&D
programs and 50% for demonstration and commercial application programs, but
DOE could lower or waive these requirements in certain circumstances.
Section 912: Reprogramming. Within 60 days after any appropriation
authorized under this title, DOE would be required to report to Congress on how the
appropriated amounts would be distributed. Subsequent reprogramming would be
limited to the lesser of 2% or $2 million unless reported to Congress with at least 30
days’ notice.
Section 913: Merit-Based Competition. Awards of funds authorized
under this title would be permitted only through open competitions following an
impartial review of scientific and technical merit.

Section 914: External Technical Review of Departmental Programs.
Advisory committees would be established for DOE programs in energy efficiency,
renewable energy, nuclear energy, and fossil energy. The requirement could be met
by existing DOE committees. Existing advisory committees would continue for the
programs of the Office of Science, and the chairs of the Office of Science committees
would constitute a Science Advisory Committee for the Director of the Office. DOE
would be directed to arrange with the National Academy of Sciences to review and
assess the programs authorized by this title, and reports on the results of these
reviews and assessments would be due to Congress within two years of enactment.
Section 915: Competitive Award of Management Contracts.
Management and operating contracts for DOE national laboratories (except
Livermore, Los Alamos, Sandia, and Savannah River) would have to be awarded
competitively unless the Secretary of Energy granted a waiver on a case-by-case
basis. The Secretary would not be permitted to delegate his waiver authority and
would have to notify Congress at least 60 days before awarding a non-competitive
In the past, management contracts at most DOE laboratories have been extended
without competition. In some cases, laboratories have been managed by the same
contractor for 60 years or more. In November 2003, DOE released the report of a
blue-ribbon commission that it established to examine this issue. The commission’s
report is available online at [].
It states that “the issue of whether competition should be routinely used for research
and development laboratories is subject to wide and varied opinions.”
Section 916: National Laboratory Designation. DOE would be
prohibited from designating additional facilities as national laboratories, beyond
those defined in Sec. 900.
Section 917: Report on Equal Employment Opportunity Practices.
DOE would be required to report to Congress with one year and every two years
thereafter on equal employment opportunity practices at the national laboratories.
Section 918: User Facility Best Practices Plan. No DOE facility would
be permitted to begin operating as a user facility unless DOE had developed and
transmitted to Congress a plan for staffing the facility, allocating time fairly to its
users, and operating it in a safe and fiscally prudent manner.
Section 919: Support for Science and Energy Infrastructure and
Facilities. DOE would be directed to develop and implement a strategy for
maintaining existing facilities and infrastructure, closing unnecessary facilities,
modifying facilities, and building new facilities. A report to Congress would be
required by June 1, 2007, summarizing the strategy.
Section 920: Coordination Plan. DOE would be directed to develop a plan
to improve coordination and collaboration in research, development, demonstration,
and commercial application activities across DOE organizational boundaries. A
conference of program managers from the Office of Science and the applied
programs would be convened as part of the process of developing this plan. DOE

would be required to transmit the plan to Congress within nine months and transmit
a revised version every two years thereafter.
Section 921: Availability of Funds. Funds authorized under this title
would remain available for three years.
Subtitle C — Energy Efficiency
Chapter 1 — Vehicles, Buildings, and Industries
Section 922: Programs. General objectives would be set for DOE energy
efficiency programs in terms of energy security, reduced costs, and environmental
impacts. A report would be required to provide cost and performance baselines and
set quantitative targets for energy and cost savings over five fiscal years.
Section 923: Vehicles. DOE would be directed to conduct a research,
development, demonstration, and commercial application (RDD&C) program for
hybrid and electric vehicles, advanced engines, advanced materials, and advanced
drivetrains. Also, a hydrogen propulsion and infrastructure RDD&C program would
be established.
Section 924: Buildings. This provision would direct DOE to conduct an
RDD&C program to improve the energy efficiency and environmental performance
of commercial, industrial, institutional, and residential buildings. This program is to
include advanced controls, building envelope, building components (e.g. lighting,
appliances), and onsite renewable energy use. Also, a pilot grant program would be
created to help businesses and organizations demonstrate energy efficiency
technologies for buildings. It would provide up to 50% of design and energy
modeling costs, with a maximum of $50,000. Further, DOE would be directed to
work with the National Institute of Building Sciences to assess voluntary building
energy performance standards.
Section 925: Industries. This provision would direct DOE to conduct an
RDD&C program to improve the energy efficiency, environmental performance, and
process efficiency of energy-intensive and waste-intensive industries. This program
would include RDD&C on advanced control devices to improve the efficiency of
electric motors, including those used in industrial settings.
Section 926: Demonstration and Commercial Application. DOE
would be directed to consider applying more efficient technologies to improve the
energy efficiency of equipment and test procedures used to measure appliance energy
efficiency. Further, DOE would be required to coordinate with public and private
organizations to study means of updating building energy codes. Also, a DOE grant
program (50% federal match) would be established to support state and local
governments, universities, and nonprofit organizations to create a network of
Advanced Energy Technology Transfer Centers. Additionally, this section would
require that a periodic report to Congress be prepared on activities generated by the
foregoing provisions.

Section 927: Secondary Electric Vehicle Battery Use Program. A
program would be established at DOE for RDD&C on applications of used electric
vehicle batteries for utility and commercial power storage and power quality.
Section 928: Next Generation Lighting Initiative. A DOE program
would be created that aims to develop advanced white light-emitting diodes (LEDs)
for high efficiency lighting. These LEDs are expected to be more efficient than
incandescent and fluorescent lights. Also, DOE would be directed to arrange for the
National Academy of Sciences to conduct periodic reviews of the initiative.
Section 929: Definitions. This section would define the phrase “cost-
effective” in terms of simple payback within 10 years and define “whole-buildings
approach” in terms of a life-cycle basis for energy use and costs.
Section 930: Authorization of Appropriations. For the preceding
sections of Subtitle C, this provision sets out authorization figures for FY2006
through FY2010.
Section 931: Limitation on Use of Funds. This section would prohibit
the use of funds authorized by Sec. 930 for energy efficiency regulations and for
DOE’s Weatherization, State Energy, and Federal Energy Management Programs.
Chapter 2 — Distributed Energy and Electric Energy Systems
Section 932: Distributed Energy. This provision would authorize a DOE
RDD&C program for a variety of technologies that includes the integration of
renewable energy, fuel cells, combined heat and power (CHP), microturbines, and
other equipment. Also, DOE would be directed to make competitive grants to
consortia to develop micro-cogeneration technology, including systems that could be
used for residential heating, and to report to Congress on outcome measures that
cover five-year cost and energy-saving performance baselines.
Section 933: Electricity Transmission and Distribution and Energy
Assurance. This provision would authorize a DOE RDD&C program aimed at
improving the energy efficiency and reliability of the nation’s electric transmission
and distribution system. Also, the program would focus on ways to protect against
severe energy supply disruptions. The program would include a focus on
technologies for delivery and storage, grid reliability, load reduction, high
temperature superconductivity, and others. Further, a report to Congress would be
required, which covers outcome measures with five-year cost and energy-saving
performance baselines.
Section 933A: Advanced Portable Power Devices. DOE would be
directed to establish an RDD&C program for small-scale mechanical and
electromechanical devices that can be used for communications, mobility
enhancement, medical needs, and other purposes. Further, the provision would direct
DOE to utilize the resources of universities that have demonstrated capability to
develop these devices for civilian or military use.

Section 934: Authorization of Appropriations. For the programs in
Sections 932, 933, and 933A, this provision would authorize appropriations for
FY2006 through FY2010.
Subtitle D — Renewable Energy
Section 935: Findings. One finding would be that renewable energy is a
growth industry in which the United States is losing market share. Specifically, the
U.S. share of the global solar equipment market has dropped from 44% in 1996 to
13% in 2003. Also, in 2003, the U.S. government spent considerably less than
Germany and Japan on solar RDD&C, and the U.S. solar industry employed less than
one-fifth as many people as the industries in Germany and Japan. Two other key
findings would be that the United States is increasingly dependent on imported
energy and that the high cost of fossil fuels hurts the economy. Further findings
would include that renewable energy can reduce demand for imported energy and
small reductions in demand can yield large reductions in price.
Section 936: Definitions. “Biobased product” would be defined as a
commercial or industrial product (other than food or feed) that is composed mainly
of agricultural or forestry materials. “Cellulosic biomass” would be defined as a crop
grown to produce lignocellulose or hemicellulose as a feedstock. This could include
barley grain, rice matter, soybean matter, bagasse, forest thinnings, or other materials.
Section 937: Programs. DOE would be directed to conduct a renewable
energy RDD&C program with goals that include improving energy security, reducing
costs, decreasing environmental impacts, and increasing equipment exports. Further,
a report to Congress would be required, which covers outcome measures with
five-year cost and energy-saving performance baselines.
Section 938: Solar. DOE would be required to conduct an RDD&C program
for solar energy, including photovoltaics, solar hot water, solar space heating, and
concentrating solar power. Also, DOE would be required to include efforts to
develop products that could be easily integrated into new and existing buildings and
manufacturing techniques that could produce low-cost, high quality equipment.
Section 939: Bioenergy Programs. DOE would be directed to conduct
programs on cellulosic biomass, biofuels, bio-based products, integrated
biorefineries, and university biodiesel fuel use for electric power. Also, grants would
be established to support these programs at Historically Black Colleges and
Universities, Tribal Colleges, and Hispanic-Serving Institutions.
Section 940: Wind. This provision would authorize the wind energy
RDD&C program at DOE. Covered activities would include low-speed wind,
offshore wind, testing and verification, and distributed wind energy generation.
Section 939: Geothermal. This provision would authorize the geothermal
energy RDD&C program at DOE. The program would focus on resource detection,
decreasing drilling and maintenance costs, mineral production, and reservoir

Section 942: Photovoltaic Demonstration Program. DOE would be
required to make grants to states to support solar photovoltaic demonstration
projects, providing up to 40% of a project’s costs (maximum $1 million). Also, DOE
would be required to report to Congress on program costs and the amount of capacity
Section 943: Additional Programs. DOE would be empowered to conduct
programs on ocean and wave energy, and combinations of renewable energy
technologies with one another and with other energy technologies. Also, DOE would
be required to arrange with the National Academy of Sciences to conduct a study on
renewable energy generation from the ocean, including energy from waves, tides, and
currents, and from the variation in water temperature with ocean depth (ocean
thermal energy). Additionally, DOE would be required to conduct an innovative
program to put renewable energy equipment in state and local buildings, providing
up to 40% of a project’s incremental costs.
Section 944: Analysis and Evaluation. DOE would be required to
conduct analysis and evaluation in support of the programs under this subtitle. Up
to 1% of the funds for this subtitle could be designated for these activities, including
economic and technical analysis of renewable energy resources and potential and
analysis of past performance in terms of technical advances and market penetration.
Section 945: Authorization of Appropriations. Funding for DOE
renewable energy programs would be authorized for five fiscal years. Also, specific
authorizations would be provided for bioenergy, concentrating solar power, and
public buildings. Funding for Renewable Support and Implementation would be
Subtitle E — Nuclear Energy
Section 946: Definition of Junior Faculty. For the purpose of receiving
grants under Section 949, junior faculty members would be defined as having held
doctorates less than 10 years.
Section 947: Nuclear Energy Programs. DOE would be required to
conduct nuclear energy research, development, demonstration, and commercial
application programs, including DOE nuclear R&D infrastructure support. Annual
performance reports on the programs must be submitted to Congress.
Section 948: Advanced Fuel Recycling Program. DOE would be
required to conduct a program on advanced technologies for the reprocessing of spent
nuclear fuel. The technologies should be resistant to nuclear weapons proliferation
and support alternative spent fuel disposal strategies and advanced reactor concepts.
DOE is currently implementing the Advanced Fuel Cycle Initiative without a specific
funding authorization. Spent fuel recycling or reprocessing involves the extraction
of plutonium and uranium from spent nuclear fuel for use in new fuel. Supporters
contend that it could extend domestic energy supplies and reduce the hazard posed
by nuclear waste, while opponents are concerned that the extracted plutonium could
be used for weapons.

Section 949: University Nuclear Science and Engineering Support.
DOE would be required to support human resources and infrastructure in nuclear
science and engineering and related fields. The program would include fellowship
and faculty assistance programs and support for fundamental and collaborative
research. The program would also be authorized to help convert research reactors to
low-enriched fuels, support training in reactor relicensing and upgrading, and provide
funding for research reactor improvements. DOE funding for research projects could
be used for some of the operating costs of research reactors used in those projects.
This section would add new statutory requirements to the existing DOE University
Reactor Fuel Assistance and Support Program.
Section 950: University-National Laboratory Interactions. DOE
would be required to conduct a nuclear science and technology fellowship program
for university professors to spend sabbaticals at National Laboratories and a visiting
scientist program to allow National Laboratory staff to spend time in university
nuclear departments.
Section 951: Nuclear Power 2010 Program. DOE would be required to
carry out the existing Nuclear Power 2010 Program to encourage deployment of new
commercial reactors as soon as feasible.
Section 952: Generation IV Nuclear Energy Systems Initiative. DOE
would be required to carry out the existing Generation IV Nuclear Energy Systems
Initiative, which supports development of advanced concepts that could replace
existing commercial reactor technology. The program would have to include
proliferation-resistant advanced reactor designs that, in comparison with existing
reactors, would have higher efficiency, lower cost, improved safety, and lower rates
of high-level waste production.
Section 953-955: Infrastructure and Facilities. DOE would be required
to operate and maintain infrastructure and facilities for nuclear energy programs (Sec.
953). DOE would have to develop an inventory of nuclear energy infrastructure and
a priority list of needed improvements (Sec. 954). A comprehensive plan would be
required for the facilities at Idaho National Laboratory, which DOE has designated
as its lead laboratory for nuclear energy programs (Sec. 955).
Section 956: Authorization of Appropriations. Funding for DOE nuclear
energy programs in Sections 948-955 are authorized for FY2006-2010.
Sections 957-961: Next Generation Nuclear Plant. DOE would be
required to design, build, and operate an advanced technology nuclear reactor by
2015. For development and design of the reactor, $150 million per year would be
authorized for FY2006-FY2010. For construction, $500 million would be authorized,
and such sums as necessary would be authorized for operation. This program could
demonstrate Generation IV reactor technology authorized under Sec. 952.
Generation IV technology could also be demonstrated by the hydrogen production
reactor to be constructed at Idaho National Laboratory under Sec. 651.

Subtitle F — Fossil Energy
Chapter 1 — Research Programs
Section 962: Enhanced Fossil Energy Research and Development
Programs. Specified priority programs are spelled out to improve the efficiency,
effectiveness and environmental performance of fossil energy production, upgrading,
conversion, and consumption.
Section 963: Fossil Research and Development. The objective of the
Fossil R&D program would be to reduce emissions from fossil fuel use such as
mercury, fine particles, smog, and carbon dioxide using technologies including pre-
combustion technologies.
Section 964: Oil and Gas Research and Development. Research
programs would be focused on assisting small domestic producers of oil and gas, the
extraction of methane hydrates, improving other extraction technologies, and
reducing the costs of acquiring unconventional fuels.
Section 965: Transportation Fuels. The Secretary would conduct R&D
projects on the commercialization of coal and natural gas to transportation fuel and
indirect liquefaction of coal and biomass.
Section 966: Fuel Cells. The Secretary would conduct R&D on fuel cell
commercialization including fuel cell proton exchange membrane technology.
Section 967: Carbon Dioxide Capture Research and Development.
The Secretary would support a 10-year R&D program aimed at developing carbon
dioxide capture technologies for pulverized coal combustion units. The program
would focus on developing add-on carbon dioxide capture technologies, combustion
technologies and increasing the efficiency of the overall combustion system. In
addition, the Secretary would support a carbon sequestration program with the
private sector through regional partnerships.
Section 968: Authorization of Appropriations. Funds are authorized in
general and for programs described in Sec. 967 for years FY2006- FY2010.
Section 968A: Western Michigan Demonstration Project. The EPA
in consultation with the State of Michigan would conduct demonstration projects to
assess the effect of transported ozone and ozone precursors in southwest Michigan.
Section 968B: Western Hemisphere Energy Cooperation. The
Secretary would carry out a program to promote cooperation on energy issues among
Western Hemisphere countries including, to the extent practicable, universities.
Authorized funding would be for years FY2006-FY2010.
Section 968C: Arctic Engineering Research Center. The Secretary of
Energy in consultation with the Secretary of Transportation would establish the
Arctic Engineering Research Center in Fairbanks, AK, to conduct R&D on
improving the infrastructure in the Arctic region. A sum of $3 million would

authorized and made available in a grant to a specified university each year for years
Section 968D: Barrow Geophysical Research Facility. The Secretary
of Commerce in consultation with the Secretaries of Energy and the Interior and
Director of the National Science Foundation and the Administrator of the EPA would
establish the “Barrow Geophysical Research Facility in Barrow, Alaska. A sum of
$61 million would be authorized to be appropriated.
Chapter 2 — Ultra-Deepwater and Unconventional Natural
Gas and Other Petroleum Resources
Sections 969 - 976: Ultra-Deepwater and Unconventional Natural
Gas and Other Petroleum Resources. Chapter 2 of Subtitle F would authorize
and provide funding for a DOE oil and gas research awards program. Advances in
seismic surveying, improved drilling methods, and other new technology have
allowed oil and gas drilling at greater depths on the outer continental shelf (OCS) and
greater production of unconventional on-shore resources. While the OCS is a major
source of domestic oil and gas supply, offshore drilling proposals often generate
substantial environmental controversy.
Current Law. DOE R&D programs for natural gas and petroleum
technologies are funded in the annual Energy and Water Development appropriations
H.R. 6. R&D would be directed toward the demonstration and commercial
application of technology for ultra-deepwater oil and gas production, including
unconventional oil and gas resources. The R&D program would be designed to
benefit “small producers” and address environmental concerns. Complementary
research would be carried out through DOE’s National Energy Technology
Laboratory (Sec. 969). The Secretary of Energy could contract with a consortium to
recommend ultra-deepwater research projects and manage funding awarded under
this program. The Secretary would make competitive awards to research consortia
for conducting R&D on advanced technologies for recovering coalbed methane and
other unconventional resources (Sec. 970). The Secretary could reduce or eliminate
the non-federal cost-share requirement for awards under this program, 2.5% of each
award would be designated for technology transfer, and various additional award
requirements would be stipulated (Sec. 971). An Ultra-Deepwater Advisory
Committee and an Unconventional Resources Technology Advisory Committee
would be established (Sec. 972) as would criteria for foreign participation (Sec. 973).
The authority in this part would terminate at the end of FY2014 (Sec. 974). The terms
deepwater, ultra-deepwater, unconventional oil and gas, independent producers of oil
and gas, and others would be defined (Sec. 975).
The Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum
Research Fund would be established. Revenues derived from federal oil and gas
leases, after all previously mandated distributions of those revenues had been made,
would be deposited in the fund, up to $200 million annually during FY2005-FY2014.
The Secretary of Energy could obligate money from the fund for programs in this part

without an overall annual limit, although annual percentage allocations among the
programs would be spelled out (Sec. 976).
Title X — Department of Energy Management
Section 1002: Other Transactions Authority. This would amend Section
646 of the DOE Organization Act (42 U.S.C. 7256) to allow the Energy Secretary to
enter into additional transactions furthering research, development, or demonstration
without requiring that title to inventions be vested in the federal government as
currently specified by 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).
Section 1003: University Collaboration. The Secretary of Energy would
report on the feasibility of promoting collaboration between Doctoral Research
Extensive Universities in grants, contracts, and cooperative agreements made by the
Secretary for energy projects. This section was not in the 108th Congress conference
Section 1004: Sense of Congress. This section would establish a sense
of Congress that the Secretary of Energy should apply more stringent procurement
and inventory controls to prevent waste of taxpayer funds, and the Department’s
Inspector General should continue to closely review the use of purchase cards. This
section was not in the 108th Congress conference bill.
Title XII — Electricity
Section 1201: Short Title. This title may be cited as the “Electric Reliability
Act of 2005.”
Subtitle A — Reliability Standards
Section 1211: Electric Reliability Standards. This section would
require the Federal Energy Regulatory Commission to promulgate rules within 180
days of enactment to create a FERC-certified electric reliability organization (ERO).
The North American Electric Reliability Council (NERC) currently has responsibility
for reliability of the bulk power system. NERC has established reliability guidelines
but has no enforcement authority. The Federal Power Act currently gives FERC
jurisdiction over unbundled transmission and authority to regulate wholesale rates;
however, no authority was provided to regulate reliability. Under this section, the
ERO would develop and enforce reliability standards for the bulk-power system,
including cybersecurity protection. All ERO standards would be approved by FERC.
Under this title, the ERO could impose penalties on a user, owner, or operator of the
bulk-power system that violates any FERC-approved reliability standard. In addition,
FERC could order compliance with a reliability standard and could impose a penalty
if FERC finds that a user, owner, or operator of the bulk-power system has engaged
in or is about to engage in a violation of a reliability standard. This provision would

not give an ERO or FERC authorization to order construction of additional
generation or transmission capacity.
This provision would also require that FERC establish a regional advisory body
if requested by at least two-thirds of the states within a region that have more than
half of their electric load served within that region. The advisory body would be
composed of one member from each participating state in the region, appointed by
the Governor of each state, and could provide advice to the ERO or FERC on
reliability standards, proposed regional entities, proposed fees, and any other
responsibilities requested by FERC. The entire reliability provision would not apply
to Alaska or Hawaii. The state of New York is authorized to develop rules that
would result in greater reliability for New York, as long as those rules do not result
in lower reliability for neighboring states.
H.R. 6 would require the ERO to be funded through contributions from its
utility members. The Congressional Budget Office (CBO) determined that, under
the Unfunded Mandates Reform Act (UMRA) of 1995,12 these contributions would
constitute an unfunded mandate both on the private sector and intergovernmentally,
because both private sector utilities and those run by local governments (munis)
would be obligated to contribute. H.R. 6 would limit the total amount “of all dues,
fees, and other charges collected by the ERO” to $50,000,000 annually, with no
adjustment for inflation, through 2015. This limit was initially included in H.R. 6 to
avoid a point of order based on the budget resolution. UMRA limits would not apply
to dues collected from Canadian utilities, and it is unclear whether the $50,000,000
limit on the ERO budget applies to fees collected from U.S. and Canadian utilities
or just the U.S. utilities’ contributions.13 This limit would restrict the cost of this
mandate to less than the threshold at which UMRA subjects congressional
consideration of legislation containing intergovernmental mandates to a point of
order. The 2005 budget for NERC and all of its regional entities, however, is
$51,950,000, of which munis contributed approximately $6,370,000, and the ERO
would be required to engage in functions beyond what NERC already performs. One
new function is the ability of the ERO to impose and collect penalties. A
$50,000,000 cap on all dues, fees, and other charges that can be collected by the ERO
could limit the penalties that could be collected by the ERO.
CBO provided no separate estimate for the cost of the mandates in this subtitle,
but estimated that H.R. 6 as a whole contains both intergovernmental and private
sector unfunded mandates that would exceed the applicable thresholds. The CBO
estimate stated that the cost of complying with intergovernmental mandates, in
aggregate, could be significant and likely would exceed the threshold established in
UMRA ($62 million in 2005, adjusted annually for inflation) at some point over the
next five years because CBO expects future damage awards for state and local

12 P.L. 104-4, 109 Stat. 48 et seq.
13 According to NERC, Canadian utilities contribute approximately 12.5% to the total NERC
budget, leaving U.S. utilities contributing approximately $45,500,000 to the 2005 NERC

governments under the bill’s safe harbor provision (title XV) would likely be
reduced. 14
Section 1211(c) would authorize to be appropriated not more than $50 million
per year for fiscal years 2006 through 2015 for all activities under the amendment to
the Federal Power Act that creates the ERO. This is in addition to the dues paid by
the ERO members. It is unclear whether FERC would be the sole recipient of the
$50 million annual authorization since section 1211(b) specifically states that the
ERO, and its regional entities, are not Departments, agencies, or instrumentalities of
the United States Government.
The proposed legislation is intended to provide federal jurisdiction over
activities that are required to support reliability of the U.S. bulk power system.
Clarifying FERC authority to establish and regulate an ERO is intended to improve
reliability as restructuring of the U.S. bulk power system proceeds. Similar
provisions were included in the conference report of H.R. 6 in the 108th Congress.
Advocates of giving FERC authority over the ERO contend that central
jurisdiction would provide more accountability. FERC would be ultimately
responsible for reliability issues. If the penalties employed by the ERO were not
successful, then FERC would have the authority to enforce penalties for entities that
did not comply with reliability standards. Establishing this new relationship between
FERC and the ERO would have the potential to improve coordination between
market functions and reliability functions. Similar legislation has been introduced
during the past several sessions of Congress, but has not been enacted, despite
general support. Minor opposition to this proposal has centered on giving FERC
jurisdiction over bulk power system reliability, contending that FERC has no
experience in this area. If FERC is given this authority, it would have to rely on the
ERO for much of its expertise. Placing FERC in this position may add to the
uncertainty associated with the changes in institutional structure as FERC takes on
this new role.
Section 1221: Siting of Interstate Electric Transmission Facilities.
The Secretary of Energy would be required to conduct a study of electric
transmission congestion every three years. Based on the findings, the Secretary of
Energy could designate a geographic area as being congested. Under certain
conditions, FERC would be authorized to issue construction permits. Under proposed
Federal Power Act (FPA) section 216(d), affected states, federal agencies, Indian
tribes, property owners, and other interested parties would have an opportunity to
present their views and recommendations with respect to the need for and impact of
a proposed construction permit. However, there is no requirement for a specific
comment period. New FPA section 216(e) would allow permit holders to petition
in U.S. District Court to acquire rights-of-way through the exercise of the right of
eminent domain. Any exercise of eminent domain authority would be considered to
be takings of private property for which just compensation is due. New FPA section

14 Congressional Budget Office. Letter to Honorable David Dreier. April 19, 2005. The
safe harbor provision would potentially provide a liability shield for all those who might be
sued for supplying a defective renewable fuel or methyl tertiary butyl ether (MTBE).

216(g) does not state whether property owners would be required to reimburse
compensation if the rights-of-way were transferred back to the owner.
An applicant for federal authorization to site transmission facilities on federal
lands could request that the Department of Energy be the lead agency to coordinate
environmental review and other federal authorization. Once a completed application
is submitted, all related environmental reviews would be required to be completed
within one year unless another federal law makes that impossible. FPA section
216(h) would give the Department of Energy new authority to prepare environmental
documents and appears to give DOE additional decision-making authority for rights-
of-way and siting on federal lands. This would appear to give DOE input into the
decision process for creating rights-of-way. Review under section 503 of the Federal
Land Policy and Management Act could be streamlined by relying on prior analyses.
If a federal agency has denied an authorization required by a transmission or
distributions facility, the denial could be appealed by the applicant or relevant state
to the Secretary of Energy. The Secretary of Energy would be required to issue a
decision within 90 days of the appeal’s filing. States could enter into interstate
compacts for the purposes of siting transmission facilities and the Secretary of
Energy could provide technical assistance. This section would not apply to the
Electric Reliability Council of Texas (ERCOT). A similar provision was included
in the conference report of H.R. 6 in the 108th Congress.
Section 1222: Third-Party Finance. The Western Area Power
Administration (WAPA) and the Southwestern Power Administration (SWPA)
would be able to either continue to design, develop, construct, operate, maintain, or
own transmission facilities within their regions or participate with other entities for
the same purposes if: the Secretary of Energy designates the area as a National
Interest Electric Transmission Corridor and the project would reduce congestion, or
the project is needed to accommodate projected increases in demand for transmission
capacity. The project would be required to be consistent with the needs identified by
the appropriate Regional Transmission Organization or Independent System
Operator. No more than $100 million from third-party financing may be used during
fiscal years 2006 through 2015. A similar provision was included in the conference
report of H.R. 6 in the 108th Congress. Under current law the enabling statutes for
power marketing administrations may restrict third-party financing, construction,
operation, and maintenance of transmission facilities.15
Section 1223: Transmission System Monitoring. Within six months
of enactment, the Secretary of Energy and the Federal Energy Regulatory
Commission would be required to complete a study and report to Congress on what
would be required to create and implement a transmission monitoring system for the
Eastern and Western interconnections. The monitoring system would provide all
transmission system owners and Regional Transmission Organizations real-time
information on the operating status of all transmission lines. A similar provision was
included in the conference report of H.R. 6 in the 108th Congress.

15 16 U.S.C. 460 (SWPA) and 43 U.S.C. 485 (WAPA).

Section 1224: Advanced Transmission Technologies. FERC would
be directed to encourage deployment of advanced transmission technologies. Ath
similar provision was included in the conference report of H.R. 6 in the 108
Section 1225: Electric Transmission and Distribution Programs.
The Secretary of Energy acting through the Director of the Office of Electric
Transmission and Distribution would be required to implement a program to promote
reliability and efficiency of the electric transmission system. Within one year of
enactment, the Secretary of Energy would be required to submit to Congress a report
detailing the program’s five-year plan. Within two years of enactment, the Secretary
of Energy would be required to submit to Congress a report detailing the progress of
the program. The Secretary of Energy would be directed to establish a research,
development, demonstration, and commercial application initiative that would focus
on high-temperature superconductivity. For this project, appropriations would be
authorized for FY2006 through FY2010. A similar provision was included in the
conference report of H.R. 6 in the 108th Congress.
Section 1226: Advanced Power System Technology Incentive
Program. A program would be established to provide incentive payments to
owners or operators of advanced power generation systems. Eligible systems would
include advanced fuel cells, turbines, or hybrid power systems. For FY2006 through
FY2012 an annual appropriation of $10 million would be authorized. A similarth
provision was included in the conference report of H.R. 6 in the 108 Congress.
Section 1227: Office of Electric Transmission and Distribution.
This would amend Title II of the Department of Energy Organization Act16 and
would establish an Office of Electric Transmission and Distribution. The Director
of the office would, in part, coordinate and develop a strategy to improve electric
transmission distribution, implement recommendations from the Department of
Energy’s National Transmission Grid Study, oversee research, development, and
demonstration to support federal energy policy related to electricity transmission and
distribution, and develop programs for workforce training and power transmission
engineering. A similar provision was included in the conference report of H.R. 6 in
the 108th Congress.
Subtitle C — Transmission Operation Improvements
Section 1231: Open Nondiscriminatory Access. FERC would be
authorized to require, by rule or order, unregulated transmitting utilities (power
marketing administrations, state entities, and rural electric cooperatives) to charge
rates comparable to what they charge themselves and require that the terms and
conditions of the sales be comparable to those required of other utilities. Currently
under the Federal Power Act (Section 201(f)), federal power marketing
administrations, state entities, and rural electric cooperatives are not subject to
FERC’s ratemaking. In §1231, exemptions are established for utilities selling less
than 4 million megawatt-hours of electricity per year, for distribution utilities, and

16 42 U.S.C. 7131 et seq.

for utilities that own or operate transmission facilities that are not necessary to
facilitate a nationwide interconnected transmission system. This exemption could be
revoked to maintain transmission system reliability. FERC would not be authorized
to order states or municipalities to take action under this section if such action would
constitute a private use under section 141 of the Internal Revenue Code of 1986.
FERC may remand transmission rates to an unregulated transmitting utility if the
rates do not comply with this section. FERC is not authorized to order an unregulated
transmitting utility to join a Regional Transmission Organization or other FERC-
approved independent transmission organization. This section is often referred to as
“FERC-lite.” A similar provision was included in the conference report of H.R. 6 in
the 108th Congress.
Section 1232: Sense of Congress on Regional Transmission
Organizations. This would establish a sense of Congress that utilities should
voluntarily become members of regional transmission organizations. A similar
provision was included in the conference report of H.R. 6 in the 108th Congress.
Currently, section 202(a) of the Federal Power Act directs FERC to promote and
encourage regional districts for the voluntary interconnection and coordination of
transmission facilities by public utilities and non-public utilities for the purpose of
assuring an abundant supply of electric energy throughout the United States with the
greatest possible economy.
Section 1233: Regional Transmission Organization Applications
Progress Report. FERC would be required to report to Congress within 120 days
of enactment the status of all regional transmission organization applications. A
similar provision was included in the conference report of H.R. 6 in the 108th
Section 1234: Federal Utility Participation in Regional
Transmission Organizations. Federal utilities (power marketing administrations
or the Tennessee Valley Authority) would be authorized to participate in regional
transmission organizations. A law allowing federal utilities to study formation and
operation of a regional transmission organization would be repealed.17 A similarth
provision was included in the conference report of H.R. 6 in the 108 Congress.
Section 1235: Standard Market Design. FERC’s proposed rulemaking
on standard market design would be remanded to FERC for reconsideration. No final
rulemaking, including any rule or order of general applicability to the standard
market design proposed rulemaking, could be issued before October 31, 2006, or
could take effect before December 31, 2006. This section would retain FERC’s
ability to issue rules or orders and act on regional transmission organization or
independent system operator filings. A similar provision was included in the
conference report of H.R. 6 in the 108th Congress.

17 16 U.S.C. 824n

On July 31, 2002, FERC issued a Notice of Proposed Rulemaking (NOPR) on
standard market design (SMD).18 FERC’s stated goal of establishing SMD
requirements in conjunction with a standardized transmission service is to create
“seamless” wholesale power markets that allow sellers to transact easily across
transmission grid boundaries. The proposed rulemaking would create a new tariff
under which each transmission owner would be required to turn over operation of its
transmission system to an unaffiliated independent transmission provider (ITP). The
ITP, which could be an RTO, would provide service to all customers and run energy
markets. Under the NOPR, congestion would be managed with locational marginal
pricing. The NOPR comment period originally was 75 days (November 15, 2002),
but the comment period was extended to January 10, 2003, for the following issues:

1) market design for the Western Interconnection; 2) transmission pricing plan,

including participant funding; 3) Regional State Advisory Committees and state
participation; 4) resource adequacy; and 5) congestion revenue rights and transition
Under the NOPR, FERC would assert jurisdiction over all power transmission,
including service to bundled retail customers. Commissioners from 15 states
(Alabama, Arkansas, California, Georgia, Idaho, Kentucky, Louisiana, Mississippi,
New Hampshire, North Carolina, South Carolina, Oregon, South Dakota,
Washington, and Wyoming) have argued that the SMD proposal usurps state
authority. On August 15, 2002, state regulators from 22 states and the District of
Columbia (Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Montana, North
Dakota, Ohio, Oklahoma, Texas, Wisconsin, Delaware, the District of Columbia,
New Jersey, New York, Pennsylvania, West Virginia, Connecticut, Maine,
Massachusetts, New Hampshire, and Rhode Island) released a statement that “voiced
support for FERC’s ongoing effort to remedy undue discrimination in the use of the
nation’s interstate high voltage transmission system in order to create a truly
competitive bulk power market.” Some industry groups have voiced concerns about
the implementation of SMD.
On April 28, 2003, FERC staff issued Wholesale Power Market Platform, a
White Paper that intended to clarify FERC’s SMD proposal. The White Paper
responds to approximately 1,000 sets of formal comments submitted to FERC. In the
White Paper, FERC states its intention to eliminate a proposed requirement that
utilities join an Independent Transmission Provider. Instead, the final rule would
require utilities to join an RTO or ISO. In the NOPR, FERC proposed to assert
jurisdiction over the transmission component of bundled retail service. The White
Paper reverses this position and states that the final rule will not assert new FERC
jurisdiction over bundled retail sales.
Some state officials have expressed concern that the proposed rule would
infringe on state authority. FERC responded to this in the White Paper by clarifying
that the final rule would not include a requirement for a minimum level of resource
adequacy. In addition, the final rule would eliminate the NOPR’s requirement that
Firm Transmission Rights be auctioned. The White Paper noted that each RTO or
ISO would need to have a cost recovery policy outlined in its tariff, but each region

18 Docket No. RM01-12-000

may differ on how participant funding would be used. In addition, FERC stated that
the final rule would allow for phased implementation to address regional differences.
The report language that accompanied the FY2003 Consolidated Appropriations
Resolution asked the Department of Energy to analyze the SMD NOPR’s impact on
wholesale electricity prices, and the safety and reliability of generation and
transmission facilities.19 DOE issued its report to Congress on April 30, 2003, but
did not include changes from FERC’s White Paper in its analysis. DOE, in part,
quantitatively analyzed the wholesale and retail price impacts of SMD using two
economic models: General Electric’s Multi-Area Production Simulation (MAPS) and
DOE’s Policy Office Electricity Modeling System (POEMS).
Some of the assumptions that DOE uses are: the annual increase in electricity
demand is assumed to be approximately 1.8% per year from 2005 to 2020; most
regions are assumed to have reserve margins of 15%; current environmental laws and
regulations are assumed to apply; generator efficiency for fossil steam plants is
assumed to be 2% to 4% higher in new RTO regions with SMD. In the non-SMD
case, the models were not able to take into account freezes on retail rates in states
that are transitioning to competitive markets, and no increase in transmission capacity
is assumed. Under the SMD case, a 5% increase in transmission capability by 2005
is assumed by DOE due to improved operational efficiency at regional seams. In
addition, DOE assumes that adopting the SMD would result in some savings that are
difficult to quantify but would be a result of several factors including the
consolidation of control areas from the currently existing 150, the possible avoidance
of capital cost and software expenditures that would have been needed at existing
control centers, improved regional planning, and consistency of market design. DOE
assigns a 10% savings due to these efficiency improvements. DOE believes that the
assumptions used in the models are conservative and result in an underestimation of
the net economic benefits of the SMD.
DOE calculates the median cost of FERC’s SMD rule to be about $760 million
per year, or about 21 cents per megawatt-hour. The model’s range for uncertainties
is estimated to be about $100 million. The cost varies significantly by region,
ranging from 47 cents per megawatt-hour for GridFlorida to 12 cents per megawatt-
hour for PJM.20 Regions with existing RTOs have zero additional costs. Under the
SMD case, the effects of SMD on retail rates are influenced to a significant extent by
whether the states in question have cost-of-service regulation or competitive retail
choice. DOE found that for some importing regions with cost-based rates, the net
result could be increased costs associated with wholesale purchases, which would be
passed through to retail customers. For some exporting regions with cost-based rates,
additional utility revenues from exports are expected to lead to lower retail prices for
the region under the SMD case. In contrast, in regions in which most states have
adopted retail choice, increased electricity exports are expected to lead to higher
market-clearing prices in the short-term markets and somewhat higher consumer

19 Conference report H.Rept. 108-10 to accompany H.J.Res. 2.
20 The PJM control area includes all or parts of Delaware, Illinois, Indiana, Kentucky,
Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia,
West Virginia and the District of Columbia.

prices. However, in areas such as California that are projected to see increased
imports, lower wholesale prices and lower prices for consumers are expected. DOE
found that the magnitude of the projected changes, both positive and negative,
decreases through 2020. Overall, DOE projects the net benefit for all consumers
would be about $1 billion per year over the first six years, after factoring in the
estimated $760 million per year and RTO costs. Over the long-term (2016-2020), the
net benefit is expected to be about $700 million per year. However, the projected
change in retail prices varies by region. The mid-Atlantic region is expected to see
a 4% decrease in retail prices, but Illinois, Wisconsin, and Arizona are expected to
have a 3% increase in retail prices as a result of SMD.
Section 1236: Native Load Service Obligation. This section would
amend the Federal Power Act to clarify that a load-serving entity is entitled to use its
transmission facilities or firm transmission rights to serve its existing customers
before it is obligated to make its transmission capacity available for other uses.
FERC would not be able to change any approved allocation of transmission rights by
an RTO or ISO approved prior to January 1, 2005. This section contains language
not included in the conference report on H.R. 6 from the 108th Congress to allow for
public power utilities to enter into long-term contracts to serve their native load as
well as giving them access to the transmission system.
Currently Section 201 of the Federal Power Act gives FERC jurisdiction over
“the transmission of electric energy in interstate commerce and the sale of such
energy at wholesale in interstate commerce.” Section 205 of the Federal Power Act
prohibits utilities from granting “undue preference or advantage to any person or
subject any person to any undue prejudice or disadvantage” (16 U.S.C. 824). The
new language of this section is intended to clarify that reserving transmission for
existing customers (native load) is not considered unduly discriminatory.
Section 1237: Study on the Benefits of Economic Dispatch. The
Secretary of Energy, in consultation with the states, would be required to issue an
annual report to Congress and the states on the current status of economic dispatch.
Economic dispatch would be defined as “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.” A similar provision was
included in the conference report of H.R. 6 in the 108th Congress.
Subtitle D — Transmission Rate Reform
Section 1241: Transmission Infrastructure Investment. FERC would
be required to establish a rule to create incentive-based transmission rates. FERC
would be authorized to revise the rule. The rule would promote reliable and
economically efficient electric transmission and generation, provide for a return on
equity that would attract new investment in transmission, encourage use of
technologies that increased the transfer capacity of existing transmission facilities,
and allow for the recovery of all prudently incurred costs that are necessary to comply
with mandatory reliability standards. In addition, FERC would be directed to
implement incentive rate-making for utilities that join a Regional Transmission
Organization or Independent System Operator. A similar provision was included in
the conference report of H.R. 6 in the 108th Congress.

Subtitle E — Amendments to PURPA
Section 1251: Net Metering and Additional Standards. For states that
have not considered implementation and adoption of net metering standards, within
three years of enactment, state regulatory authorities would be required to consider
whether to implement net metering. Net metering service is defined as service to an
electric consumer under which electric energy generated by that electric consumer
from an eligible on-site generating facility (e.g., solar or small generator) and
delivered to local distribution facilities may be used to offset electric energy provided
by the electric utility to the electric consumer during the applicable billing period.
Net metering provisions were included in the conference report of H.R. 6 in the 108th
Section 1252: Smart Metering. For states that have not considered
implementation and adoption of a smart metering standard, state regulatory
authorities would be required to initiate an investigation within one year of
enactment, and issue a decision within two years of enactment, whether to implement
a standard for time-based meters and communications devices for all electric utility
customers. These devices would allow customers to participate in time-based pricing
rate schedules. This section would amend the Public Utility Regulatory Policies Act
of 197821 (PURPA) and would require the Secretary of Energy to provide consumer
education on advanced metering and communications technologies, to identify and
address barriers to adoption of demand response programs, and issue a report to
Congress that identifies and quantifies the benefits of demand response. The
Secretary of Energy would provide technical assistance to regional organizations to
identify demand response potential and to develop demand response programs to
respond to peak demand or emergency needs. FERC would be directed to issue an
annual report, by region, to assess demand response resources. A provision for real-
time pricing and time-of-use metering standards was included in the conferenceth
report of H.R. 6 in the 108 Congress.
Section 1253: Cogeneration and Small Power Production Purchase
and Sale Requirements. Currently, §210 of PURPA requires utilities to purchase
power from qualifying facilities and small power producers at a rate based on the22
utilities’ avoided cost. This section would repeal the mandatory purchase
requirement under §210 of PURPA for new contracts if FERC finds that a
competitive electricity market exists and a qualifying facility has access to
independently administered, auction-based day-ahead and real-time wholesale
markets and long-term wholesale markets. Qualifying facilities would also need to
have access to transmission and interconnection services provided by a FERC-
approved regional transmission entity that provides non-discriminatory treatment for
all customers. Ownership limitations under PURPA would be repealed. Repeal of
the mandatory purchase requirement was included in the conference report of H.R.

6 in the 108th Congress.

21 P.L. 95-617.
22 16 U.S.C. 824a-3.

The oil embargoes of the 1970s created concerns about the security of the
nation’s electricity supply and led to enactment of the Public Utility Regulatory
Policies Act of 1978. For the first time, utilities were required to purchase power
from outside sources. The purchase price was set at the utilities’ “avoided cost,” the
cost they would have incurred to generate the additional power themselves, as
determined by utility regulators. PURPA was established in part to augment electric
utility generation with more efficiently produced electricity and to provide equitable
rates to electric consumers.
In addition to PURPA, the Fuel Use Act of 1978 (FUA) helped qualifying
facilities (QFs) become established.23 Under FUA, utilities were not permitted to use
natural gas to fuel new generating technology. QFs, which are by definition not
utilities, were able to take advantage of abundant natural gas as well as new
generating technology, such as combined-cycle plants that use hot gases from
combustion turbines to generate additional power. These technologies lowered the
financial threshold for entrance into the electricity generation business as well as
shortened the lead time for constructing new plants. FUA was repealed in 1987, but
by this time QFs and small power producers had gained a portion of the total
electricity supply.
This influx of QF power challenged the cost-based rates that previously guided
wholesale transactions. Before implementation of PURPA, FERC approved
wholesale interstate electricity transactions based on the seller’s costs to generate and
transmit the power. Since nonutility generators typically do not have enough market
power to influence the rates they charge, FERC began approving certain wholesale
transactions whose rates were a result of a competitive bidding process. These rates
are called market-based rates.
This first incremental change to traditional electricity regulation started a
movement toward a market-oriented approach to electricity supply. Following the
enactment of PURPA, two basic issues stimulated calls for further change: whether
to encourage nonutility generation and whether to permit utilities to diversify into
non-regulated activities.
The Energy Policy Act of 1992 (EPACT) removed several regulatory barriers
for entry into electricity generation to increase competition of electricity supply.24
However, EPACT does not permit FERC to mandate that utilities transmit exempt
wholesale generator (EWG) power to retail consumers (commonly called “retail
wheeling” or “retail competition”), an activity that remains under the jurisdiction of
state public utility commissions. PURPA began to shift more regulatory
responsibilities to the federal government, and EPACT continued that shift away
from the states by creating new options for utilities and regulators to meet electricity
Proponents of PURPA repeal — primarily investor-owned utilities (IOUs)
located in the Northeast and in California — argue that their state regulators’

23 P.L. 95-620.
24 P.L. 102-486.

“misguided” implementation of PURPA in the early 1980s has forced them to pay
contractually high prices for power they do not need. They argue that, given the
current environment for cost-conscious competition, PURPA is outdated. The
PURPA Reform Group, which promotes IOU interests, strongly supports repeal of
§210 of PURPA contending that the current law’s mandatory purchase obligation is
anti-competitive and anti-consumer.
Opponents of mandatory purchase requirement repeal (independent power
producers, industrial power customers, most segments of the natural gas industry, the
renewable energy industry, and environmental groups) have many reasons to support
PURPA as it stands. Mainly, their argument is that PURPA introduced competition
in the electric generating sector and, at the same time, helped promote wider use of
cleaner, alternative fuels to generate electricity. Since the electric generating sector
is not yet fully competitive, they argue, repeal of PURPA would decrease
competition and impede the development of the renewable energy industry.
Additionally, opponents of PURPA repeal argue that it would result in less
competition and greater utility monopoly control over the electric industry. Some
state regulators have expressed concern that §210 repeal would prevent them from
deciding matters currently under their jurisdiction.
Section 1253: Interconnection. Each state regulatory authority and each
nonregulated utility would consider establishing an interconnection standard for on-
site generating facilities wishing to be connected to the local distribution facilities,
if it has not already done so. Consideration of the standard would be commenced not
later than one year after enactment and completed not later than two years after the
date of enactment.
Subtitle F — Repeal of PUHCA
Section 1261: Short Title. This subtitle may be cited as the “Public Utility
Holding Company Act of 2005.”
Section 1262: Definitions. This section would provide definitions for:
affiliate, associate company, commission, company, electric utility company, exempt
wholesale generator and foreign utility company, gas utility company, holding
company, holding company system, jurisdictional rates, natural gas company, person,
public utility, public-utility company, state commission, subsidiary company, and
voting security.
Section 1263: Repeal of the Public Utility Holding Company Act of
1935. The Public Utility Holding Company Act of 1935 (PUHCA) would be
repealed. The provision to repeal PUHCA was included in the conference report of
H.R. 6 in the 108th Congress.
In general, the Public Utility Holding Company Act of 1935 currently sets forth
the structure of holding companies by prohibiting all holding companies that are
more than twice removed from the operating subsidiaries. It also federally regulates
holding companies of investor-owned utilities, and provides for Securities and
Exchange Commission (SEC) regulation of mergers and diversification proposals.
Registered holding companies of subsidiaries are required to have SEC approval

prior to issuing securities; all loans and intercompany financial transactions are
regulated by the SEC. A holding company can be exempt from PUHCA if its
business operations and those of its subsidiaries occur within one state or within
contiguous states.
Historically, electricity service was defined as a natural monopoly, meaning that
the industry has (1) an inherent tendency toward declining long-term costs, (2) high
threshold investment, and (3) technological conditions that limit the number of
potential entrants. In addition, many regulators have considered unified control of
generation, transmission, and distribution as the most efficient means of providing
service. As a result, most people (about 75%) are currently served by a vertically
integrated, investor-owned utility.
As the electric utility industry has evolved, however, there has been a growing
belief that the historic classification of electric utilities as natural monopolies has
been overtaken by events and that market forces can and should replace some of the
traditional economic regulatory structure. For example, the existence of utilities that
do not own all of their generating facilities, primarily cooperatives and publicly
owned utilities, has provided evidence that vertical integration has not been necessary
for providing efficient electric service. Moreover, recent changes in electric utility
regulation and improved technologies have allowed additional generating capacity
to be provided by independent firms rather than utilities.
The Public Utility Holding Company Act and the Federal Power Act (FPA) of
1935 (Title I and Title II of the Public Utility Act) established a regime of regulating
electric utilities that gave specific and separate powers to the states and the federal
government. A regulatory bargain was made between the government and utilities.
In exchange for an exclusive franchise service territory, utilities must provide
electricity to all users at reasonable, regulated rates. State regulatory commissions
address intrastate utility activities, including wholesale and retail rate-making. State
authority currently tends to be as broad and as varied as the states are diverse. At the
least, a state public utility commission will have authority over retail rates, and often
over investment and debt. At the other end of the spectrum, the state regulatory body
will oversee many facets of utility operation. Despite this diversity, the essential
mission of the state regulator in states that have not restructured is the establishment
of retail electric prices. This is accomplished through an adversarial hearing process.
The central issues in such cases are the total amount of money the utility will be
permitted to collect and how the burden of the revenue requirement will be
distributed among the various customer classes (residential, commercial, and
Under the FPA, federal economic regulation addresses wholesale transactions
and rates for electric power flowing in interstate commerce. Federal regulation
followed state regulation and is premised on the need to fill the regulatory vacuum
resulting from the constitutional inability of states to regulate interstate commerce.
In this bifurcation of regulatory jurisdiction, federal regulation is limited and
conceived to supplement state regulation. FERC has the principal functions at the
federal level for the economic regulation of the electric utility industry, including
financial transactions, wholesale rate regulation, transactions involving transmission
of unbundled retail electricity, interconnection and wheeling of wholesale electricity,

and ensuring adequate and reliable service. In addition, to prevent a recurrence of the
abusive practices of the 1920s (e.g., cross-subsidization, self-dealing, pyramiding,
etc.), SEC regulates utilities’ corporate structure and business ventures under
The electric utility industry has been in the process of transformation. During
the past two decades, there has been a major change in direction concerning
generation. First, improved technologies have reduced the cost of generating
electricity as well as the size of generating facilities. Prior preference for large-scale
— often nuclear or coal-fired — powerplants has been supplanted by a preference
for small-scale production facilities that can be brought on line more quickly and
cheaply, with fewer regulatory impediments. Second, this has lowered the entry
barrier to electricity generation and permitted non-utility entities to build profitable
One argument for additional PUHCA change has been made by electric utilities
that want to further diversify their assets. Currently under PUHCA, a holding
company can acquire securities or utility assets only if the SEC finds that such a
purchase will improve the economic efficiency and service of an integrated public
utility system. It has been argued that reform to allow diversification would improve
the risk profile of electric utilities in much the same way as in other businesses: the
risk of any one investment is diluted by the risk associated with all investments.
Utilities have also argued that diversification would lead to better use of
under-utilized resources (due to the seasonal nature of electric demand). Utility
holding companies that have been exempt from SEC regulation argue that PUHCA
discourages diversification because the SEC could repeal exempt status if exemption
would be “detrimental to the public interest.”
For a number of years there has been significant bipartisan congressional
support for repealing much of PUHCA. Since the 1980s, the Securities and
Exchange Commission has testified before Congress that many provisions of
PUHCA are no longer relevant and other provisions are redundant with state and
other federal regulations.25 However, as a result of Enron’s dealings and collapse,
some in Congress have taken a somewhat different view toward significantly
amending or repealing PUHCA.26 Even though Enron had claimed exemption from
PUHCA, on February 6, 2003, Securities and Exchange Commission Chief
Administrative Law Judge Brenda P. Murray denied Enron’s PUHCA exemption
applications of April 12, 2000, and February 28, 2002, amended on May 31, 2002.27
In the case of Enron, PUHCA, and many other laws, did not deter or prevent
fraudulent filing of information with the SEC.
State regulators have expressed concerns that increased diversification could
lead to abuses, including cross-subsidization: a regulated company subsidizing an

25 Testimony is available at [].
26 See [].
27 Initial Decision Release No. 222 (File No. 3-10909) can be found at
[http://www.sec.go v/litigation/alj dec/id222bpm.htm] .

unregulated affiliate. Cross-subsidization was a major argument against the creation
of exempt wholesale generators (EWGs) and has reemerged as an argument against
further PUHCA change. In the case of electric and gas companies, non-utility
ventures that are undertaken as a result of diversification may benefit from the
regulated utilities’ allowed rate of return. Moneymaking non-utility enterprises
would contribute to the overall financial health of a holding company. However,
unsuccessful ventures could harm the entire holding company, including utility
subsidiaries. In this situation, opponents fear that utilities would not be penalized for
failure in terms of reduced access to new capital, because they could increase retail
Several consumer and environmental public interest groups, as well as state
legislators, have expressed concerns about PUHCA repeal. PUHCA repeal, such
groups argue, could only exacerbate market power abuses in what they see as a
monopolistic industry where true competition does not yet exist.
Section 1264: Federal Access to Books and Records. Federal access
to books and records of holding companies and their affiliates would be provided.
Affiliate companies would have to make available to FERC books and records of
affiliate transactions. Federal officials would have to maintain confidentiality of such
books and records. A similar provision was included in the conference report of H.R.

6 in the 108th Congress.

Currently, registered holding companies and subsidiary companies are required
to preserve accounts, cost-accounting procedures, correspondence, memoranda,
papers, and books that the SEC deems necessary or appropriate in the public interest28
or for the protection of investors and consumers.
Section 1265: State Access to Books and Records. A jurisdictional
state commission would be able to make a reasonably detailed written request to a
holding company or any associate company for access to specific books and records,
which would be kept confidential. This section would not apply to an entity that is
considered to be a holding company solely by reason of ownership of one or more
qualifying facilities. Response to such a request would be mandatory. Compliance
with this section would be enforceable in U.S. District Court. A similar provision
was included in the conference report of H.R. 6 in the 108th Congress.
Currently under the Federal Power Act, state commissions may examine the
books, accounts, memoranda, contracts, and records of a jurisdictional electric utility
company, an exempt wholesale generator that sells to such electric utility, and an
electric utility company or holding company that is an associate company or affiliate
of an exempt wholesale generator. In issuing such an order, a state commission
currently is not required to specify which books, accounts, memoranda, contracts,
and records it is requesting.29

28 15 U.S.C. 79o.
29 16 U.S.C. 824.

Section 1266: Exemption Authority. FERC would be directed to
promulgate rules to exempt qualifying facilities, exempt wholesale generators , and
foreign utilities, from the federal access to books and records provision (Section

1264). A similar provision was included in the conference report of H.R. 6 in theth

108 Congress.

Section 1267: Affiliate Transactions. FERC would retain the authority
to prevent cross-subsidization and to assure that jurisdictional rates are just and
reasonable. FERC and state commissions would retain jurisdiction to determine
whether associate company activities could be recovered in rates. A similar
provision was included in the conference report of H.R. 6 in the 108th Congress.
Currently, the Federal Power Act requires that jurisdictional rates are just and
reasonable and prohibits cross-subsidization.30
Section 1268: Applicability. Except as specifically noted, this subtitle
would not apply to the U.S. government, a state or any political subdivision of the
state, or foreign governmental authority operating outside the United States. Ath
similar provision was included in the conference report of H.R. 6 in the 108
Section 1269: Effect on Other Regulations. FERC or state commissions
would not be precluded from exercising their jurisdiction under otherwise applicable
laws to protect utility customers. A similar provision was included in the conference
report of H.R. 6 in the 108th Congress.
Section 1270: Enforcement. FERC would have authority to enforce these
provisions under sections 306-317 of the Federal Power Act. Currently, the
Securities and Exchange Commission has authority to investigate and enforce31
provisions of the Public Utility Holding Company Act of 1935. A similar provision
was included in the conference report of H.R. 6 in the 108th Congress.
Section 1271: Savings Provisions. Persons would be able to continue to
engage in legal activities in which they have been engaged or are authorized to
engage in on the effective date of this Act. This subtitle would not limit the authority
of FERC under the Federal Power Act or the Natural Gas Act. A similar provision
was included in the conference report of H.R. 6 in the 108th Congress.
Section 1272: Implementation. Not later than 12 months after enactment,
FERC would be required to promulgate regulations necessary to implement this
subtitle and submit to Congress recommendations for technical or conforming
amendments to federal law that would be necessary to carry out this subtitle. Ath
similar provision was included in the conference report of H.R. 6 in the 108
Section 1273: Transfer of Resources. The Securities and Exchange
Commission would be required to transfer all applicable books and records to FERC.

30 16 U.S.C. 791a et seq.
31 15 U.S.C. 79r.

However, no time frame for transfer of books and records is provided. Currently, the
Securities and Exchange Commission maintains books and records and regulates
security transactions.32 A similar provision was included in the conference report of
H.R. 6 in the 108th Congress.
Section 1274: Effective Date. Twelve months after enactment, this
subtitle would take effect.
Section 1275: Service Allocation. FERC would be required to review and
authorize cost allocations for non-power goods or administrative or management
services provided by an associate company that was organized specifically for the
purpose of providing such goods or services. This section would not preclude FERC
or state commissions from exercising their jurisdiction under other applicable laws
with respect to review or authorization of any costs. FERC would be required to
issue rules within six months of enactment to exempt from the section any company
and holding company system if operations are confined substantially to a single state.
A similar provision was included in the conference report of H.R. 6 in the 108th
Section 1276: Authorization of Appropriations. Necessary funds to
carry out this subtitle would be authorized to be appropriated. A similar provisionth
was included in the conference report of H.R. 6 in the 108 Congress.
Section 1277: Conforming Amendments to the Federal Power Act.
The Federal Power Act would be amended to reflect the changes to the Public Utility
Holding Company Act of 1935.33
Subtitle G — Market Transparency, Enforcement,
and Consumer Protection
Section 1281: Market Transparency Rules. Within 180 days after
enactment, FERC would be required to issue rules to establish an electronic system
that provides information about the availability and price of wholesale electric energy
and transmission services. FERC would exempt from disclosure any information
that, if disclosed, could be detrimental to the operation of the effective market or
jeopardize system security. FERC would be required to assure that consumers in
competitive markets are protected from adverse effects of potential collusion or other
anti-competitive behaviors that could occur as a result of untimely public disclosure
of transaction-specific information. This section would not affect the exclusive
jurisdiction of the Commodity Futures Trading Commission with respect to accounts,
agreement, contracts, or transactions in commodities under the Commodity Exchange
Act. FERC would not be allowed to compete with, or displace, any price publisher
or regulate price publishers or impose any requirements on the publication of

32 15 U.S.C. 79 et seq.
33 Current jurisdiction of the Securities and Exchange Commission under the Public Utility
Holding Company Act of 1935 is referenced by 16 U.S.C. 825q; 16 U.S.C. 824(g)(5), and

16 U.S.C. 824m.

information. Creation of market transparency rules was included in the conference
report of H.R. 6 in the 108th Congress.
Section 1282: Market Manipulation. It would be unlawful to willfully and
knowingly file a false report on any information relating to the price of electricity
sold at wholesale or the availability of transmission capacity, with the intent to
fraudulently affect data being compiled by a federal agency. It would be unlawful for
any individual, corporation, or government entity (municipality, state, power
marketing administration) to engage in round-trip electricity trading. Round-trip
trading is defined to include contracts in which purchase and sale transactions have
no specific financial gain or loss and are entered into with the intent to distort
reported revenues, trading volumes, or prices. A similar provision was included inth
the conference report of H.R. 6 in the 108 Congress.
Currently, mail fraud laws in part apply to use of the mail for the purpose of
executing, or attempting to execute, a scheme or artifice to defraud or for obtaining34
money or property by false or fraudulent pretenses, representations, or promises.
Wire fraud statutes cover use of wire, radio, or television communication in interstate
or foreign commerce to transmit or to cause to be transmitted any writings, signs,
signals, pictures, or sounds for the purpose of executing a scheme or artifice to
defraud or for obtaining money or property by means of false or fraudulent pretenses,
representations, or promises.35
Section 1283: Enforcement. The Federal Power Act would be amended
to allow electric utilities to file complaints with FERC and to allow complaints to be
filed against transmitting utilities. Criminal and civil penalties under the Federal
Power Act would be increased. Criminal penalties would not exceed $1 million
and/or five years’ imprisonment. In addition, a fine of $25,000 could be imposed.
A civil penalty not exceeding $1 million per day per violation could be assessed for
violations of sections 211, 212, 213, or 214 of the Federal Power Act. A similar
provision was included in the conference report of H.R. 6 in the 108th Congress.
Currently, criminal penalties may not exceed $5,000 and/or two years’
imprisonment. An additional fine of $500 can be imposed. A civil penalty not
exceeding $10,000 per day per violation may be assessed for violations of sections

211, 212, 213, or 214 of the Federal Power Act.

Section 1284: Refund Effective Date. Section 206(b) of the Federal
Power Act would be amended to allow the effective date for refunds to begin at the
time of the filing of a complaint with FERC but not later than five months after such
a filing. If FERC does not make its decision within the time-frame provided, FERC
would be required to state its reasons for not acting in the provided time-frame for
the decision. A similar provision was included in the conference report of H.R. 6 inth
the 108 Congress.

34 18 U.S.C. 1341.
35 18 U.S.C. 1343.

Currently, refunds for rates that FERC finds to be unjust, unreasonable, unduly
discriminatory, or preferential begin a minimum of 60 days after a complaint is
Section 1285: Refund Authority. Any entity that is not a public utility
(including an entity referred to under § 201(f) of the Federal Power Act) and enters
into a short-term sale of electricity would be subject to the FERC refund authority.
A short-term sale would include any agreement to the sale of electric energy at
wholesale that is for a period of 31 days or less. This section would not apply to
electric cooperatives, or any entity that sells less than 8 million megawatt hours of
electricity per year. FERC would have refund authority over voluntary short-term
sales of electricity by Bonneville Power Administration if the rates charged are unjust
and unreasonable. FERC would have authority over all power marketing
administrations and the Tennessee Valley Authority to order refunds to achieve just
and reasonable rates. Currently, Section 201(f) of the Federal Power Act exempts
government entities from FERC rate regulation.37 Refund authority was provided forth
in the conference report of H.R. 6 in the 108 Congress.
Section 1286: Sanctity of Contract. Upon determining that failure to take
action would be contrary to protection of the public interest, FERC would be
authorized to modify or abrogate any contract entered into after enactment of this
section. FERC would not be able to abrogate or modify contracts that expressly
provide for a standard of review other than the public interest standard. A similar
provision was included in the conference report of H.R. 6 in the 108th Congress.
Section 1287: Consumer Privacy and Unfair Trade Practices. The
Federal Trade Commission would be authorized to issue rules to prohibit slamming
and cramming. Slamming occurs when an electric utility switches a customer’s
electric provider without the consumer’s knowledge. Cramming occurs when an
electric utility adds additional services and charges to a customer’s account without
permission of the customer. If the Federal Trade Commission determines that a
state’s regulations provide equivalent or greater protection, then the state regulations
would apply in lieu of regulations issued by the Federal Trade Commission. Ath
similar provision was included in the conference report of H.R. 6 in the 108
Subtitle H — Merger Reform
Section 1291: Merger Review Reform and Accountability. Within 180
days of enactment, the Secretary of Energy would be required to transmit to Congress
a study on whether FERC’s merger review authority is duplicative with other
agencies’ authority and that would include recommendations for eliminating any
unnecessary duplication. FERC would be required to issue an annual report to
Congress describing all conditions placed on mergers under section 203(b) of the
Federal Power Act. FERC would also be required to include in its report whether

36 16 U.S.C. 824e(b).
37 16 U.S.C. 824

such a condition could have been imposed under any other provision of the Federal
Power Act. A similar provision was included in the conference report of H.R. 6 in
the 108th Congress.
Section 1292: Electric Utility Mergers. The Federal Power Act would be
amended to give FERC review authority for transfer of assets valued in excess of $10
million. FERC would be required to give state public utility commissions and
governors reasonable notice in writing. FERC would be required to establish rules
to comply with this section. Currently, under Section 203(a) of the Federal Power
Act, FERC review of asset transfers applies to transactions valued at $50,000 or38
more. A similar provision was included in the conference report of H.R. 6 in the

108th Congress.

Subtitle I — Definitions
Section 1295: Definitions. The definitions for “electric utility” and
“transmitting utility” under the Federal Power Act would be amended. Definitions
for the following terms would be added to the Federal Power Act: electric
cooperative, regional transmission organization, independent system operator, and
Section 1297: Conforming Amendments. The Federal Power Act would
be amended to conform with this title.
Subtitle K — Economic Dispatch
Section 1298. Economic Dispatch. FERC is directed to convene regional
boards to study “security constrained economic dispatch.” A member of FERC will
chair each regional joint board that is to be composed of a representative from each
state. Within one year of enactment, FERC is required to submit a report to Congress
on the recommendations of the joint regional boards. This section does not define
“security constrained economic dispatch” but it generally means a dispatch system
that ensures that all normal and contingency limits of the system are simultaneously
met under a base case with one contingency (i.e, the loss of a critical network
element, N-1 security analysis).
Title XIII — Energy Tax Incentives
Section 1300: Short Title. This title may be cited as the “Enhanced Energy
Infrastructure and Technology Tax Act of 2005.”
Subtitle A — Energy Infrastructure Tax Incentives
Section 1301: Natural Gas Gathering Lines Treated As 7-Year
Property. Under IRC§168(e)(3) and IRS regulations, the recovery period for natural

38 16 U.S.C. 824b.

gas gathering lines could be either 7 or 15 years, depending upon whether they are
classified as production or transportation equipment. Recent court cases reflect the
ambiguous tax treatment. Natural gas pipelines have a recovery period of 15 years,
while natural gas distribution lines have a recovery period of 20 years. The House
bill would assign natural gas gathering lines a seven-year recovery period.
Section 1302: Natural Gas Distribution Lines Treated As 15-Year
Property. As noted above, natural gas distribution lines currently are assigned a 20-
year recovery period. The House bill would reduce this to 15 years.
Section 1303: Electric Transmission Property Treated As 15-Year
Property. The current law recovery period for transmission property is generally
20 years [IRC §168(e)(3)]. In order to create incentives to increase investment in
transmission assets, H.R. 6 would shorten the recovery period for transmission
property from 20 to 15 years.
Section 1304: Expansion of Amortization of Certain Atmospheric
Pollution Control Facilities in Connection With Plants First Placed-in-
Service After 1975. Under current law, pollution control equipment can also
qualify for a type of accelerated depreciation if it is installed in connection with older
facilities (essentially a plant or equipment placed into service before January 1,1976).
Such equipment can be amortized over five years instead of the standard 15- or 20-
year period applicable to conventional generating equipment and instead of the same
15- or 20-year period applicable to pollution control equipment installed in
connection with newer plants. Amortization is a method of depreciation that
recovers the total cost basis evenly over the recovery period. More specifically, the
amortization period is five years and if the pollution control equipment has a useful
life of 15 years or less, 100% of the cost can be amortized over five years. (If the
equipment has a useful life greater than 15 years, then the proportion of the costs that39
can be amortized is less than 100%.) Pollution control equipment added to “newer”
plants (those placed in service after 1975) is depreciated using the same General
Depreciation System (GDS) methods that apply to other electric generating
equipment on the date they are placed in service (15- or 20-year recovery period
using the 150% declining balance method, as discussed below).
Pollution control equipment used in connection with coal-fired power plants
(scrubbers, particulate collectors and removal equipment such as electrostatic
precipitators) is a significant fraction of the cost of a power plant. Thus, the tax
treatment of this type of equipment is important in determining the investment
decision of the Investor Owned Utility. The more rapid amortization of the cost of
pollution control equipment connected with older generating technologies would
appear to also provide an incentive to retain old equipment rather than invest in new
H.R. 6 would repeal the condition that only pollution control equipment
installed on pre-1976 plants qualifies for 60-month amortization.

39 Equal to the cost times 15 divided by the useful life. So, if the useful life is 20 years, only

3/4 of the cost could be amortized over five years.

Section 1305: Modification of Credit for Producing Fuel From a
Nonconventional Source. IRC §29 provides a $3 tax credit (in 1979 dollars) for
each barrel (or equivalent) of fuels produced or mined from unconventional sources,
and sold to independent parties in an arms-length transaction. For most fuels, the
credit ended in 2002 for facilities and mines placed in service by the end of 1992; for
biogases and synfuels, the credit ends in 2007 for facilities placed in service by June
30, 1998. No credit is available for facilities placed in service after these cut-off
dates (which apply to different fuels). The credit is phased out when oil prices exceed
certain limits (currently $49.75/barrel). The credit in 2004 was $6.56/barrel of oil
equivalent, which is equivalent to $1.16/mcf of gas. Most of the benefits from this
tax credit have accrued to coalbed methane and to other unconventional fossil gases,
and more recently to coal, due to the way synfuels is treated. (See archived CRS
Report 97-679 E.) The §29 tax credit is limited to the excess of the regular tax over
the tentative minimum tax and it may not be carried forward or back to other taxable
H.R. 6 would make the §29 tax credit part of the general business tax credit
under IRC§38. The current-year general business credit is the sum of the following
(1) investment tax credit;
(2) work opportunity credit (formerly the targeted jobs credit);
(3) alcohol fuels credit;
(4) credit for increasing research activities;
(5) low-income housing credit;
(6) enhanced oil recovery credit;
(7) disabled access credit for expenditures paid or incurred by an eligible small
(8) renewable resources electricity production credit;
(9) empowerment zone employment credit;
(10) Indian employment credit;
(11) employer social security credit;
(12) orphan drug credit;
(13) new markets tax credit;
(14) small employer pension plan startup costs credit;
(15) employer-provided child care credit;
(16) credit for unused payments into the trans-Alaska pipeline liability fund; and
(17) credit for contributions to certain community development corporations (CDCs).
Each of the above credits is computed separately under its respective IRC
section, and then the total of these components becomes the current-year business
credit. The general business credit is equal to the sum of (1) the current-year business
credit (adjusted for passive activity credits), (2) any carry-forwards (of the general
business credit, former employee stock ownership credit in effect before 1987, and
the former WIN credit in effect for pre-1982 wages), and (3) general business credit
carry-backs.40 This amount is subject to a tax liability limitation. If more than one

40 WIN denotes the “Work Incentive” program that was in effect from the 1960s through the

of these components is claimed, or if there is a general business credit carry-back or
carryforward, Form 3800 must be filed in conjunction with the respective form used
to compute a component. The sum of (1) the business credit carry-forwards carried
to the tax year, (2) the current-year business credit, and (3) the business credit carry-
backs carried to the tax year constitutes the general business credit for purposes of
applying the tax liability limitation rules of IRC §38 and the carry-back and carry-
forward rules of IRC §39.
Section 1306: Modifications to Special Rules for Nuclear
Decommissioning Costs. Contributions into a nuclear decommissioning fund
are tax deductible in the year made and as long as the utility is regulated. Deductions
are limited to the lesser of the amounts relating to the cost of service regulations or
the IRS’s ruling amount. Moneys withdrawn from the fund are taxable as income,
and expenditures for decommissioning are deductible as costs on an accrual basis.
Decommissioning funds may be transferred tax-free in connection with a change in
ownership of the nuclear facility to which they relate, but the transferee generally has
to be a regulated utility eligible to maintain such a fund. In a deregulated and
restructured industry, ambiguity regarding the tax treatment of decommissioning fund
transfers may make such transactions taxable [IRC§468A].
The House provision would repeal the requirement that the utility has to be
regulated under cost of service rate regulations in order to qualify for the deduction.
Thus, unregulated utilities would also qualify. The bill also would repeal the current
limitations regarding the magnitude of the fund accumulations — a utility could
make contributions into the fund in excess of the maximum amount established by
the Internal Revenue Service in certain circumstances.
Section 1307: Arbitrage Rules Not to Apply to Prepayment of
Natural Gas. State and local governments currently cannot use the proceeds of tax-
exempt bond issues to profit from arbitrage (by pre-payment) on natural gas
purchases [IRC§148] — bond proceeds must be used to finance qualifying public-
purpose projects. Under the House bill, state and local governments would be exempt
from the arbitrage restrictions of the tax-exempt bond rules, thus allowing (with some
restrictions) such proceeds to purchase a supply of natural gas for customers of a
public utility.
Section 1308: Determination of Small Refiner Exception to Oil
Depletion Allowance. The percentage depletion allowance for oil and gas is 15%
of revenues and is only available to independent producers and royalty owners.
Independent producers can claim a higher depletion rate (up to 25%, rather than the
normal 15%) for up to 15 barrels per day (bpd) of oil (or the equivalent amount of
gas) from marginal wells (“stripper” oil/gas and heavy oil). For purposes of
percentage depletion, an independent oil producer is a) one that, on any given day,

40 (...continued)
1980s. As part of the Revenue Act of 1971, businesses could claim a tax credit for
employing AFDC (Aid to Families with Dependent Children) recipients who registered for
the WIN program.

does not refine more than 50,000 barrels of oil, and b) does not have a retail
operation grossing more than $5 million/year [IRC§613A(d)].
Under H.R. 6, the 50,000 barrel daily limit would be raised to 75,000, and it
would apply to the average over an entire taxable year, rather than on any day during
the taxable year.
Subtitle B — Miscellaneous Energy Tax Provisions
Section 1311: Credit for Residential Energy Efficiency Property.
There are no tax subsidies, under current law, for residential applications of solar,
wind, or other renewable energy technologies. The 1978 energy tax credits for solar
and wind established under President Carter’s National Energy Act expired in 1985.
Under the House bill, a 15% tax credit (up to $2,000) would be provided for
residential applications of solar technologies to heat water, rooftop photovoltaics to
generate electricity, and fuel cell property. The credit for fuel cell property would be
limited to $1,000/kilowatt (KW) of capacity.
Section 1312: Credit for Business Installation of Qualified Fuel
Cells. Various business tax subsidies are available to renewable energy technologies
under current law [IRC§45,46,48, 613(e)]. A 10% tax credit is provided for
investment in solar equipment 1) to generate electricity (including photovoltaic
systems), 2) to heat or cool a structure, and 3) for process heat. Geothermal energy
reservoirs qualify for a 15% depletion allowance. Electricity from wind technologies
receives the §45 tax credit. The recovery period for renewable technologies used to
generate electricity is five years. Fuel cells do not qualify for tax subsidies.
Under H.R. 6, a 15% tax credit would be provided for business investments in
stationary fuel cells, subject to a maximum credit of $1,000/KW of capacity.
Section 1313: Reduced Motor Fuels Excise Tax on Certain Mixtures
of Diesel Fuel. Diesel fuel used in highway vehicles is generally taxed at

24.4¢/gal., comprising the 24.3¢ Highway Trust Fund (HTF) rate, and the 0.1¢

leaking underground storage tank (LUST) trust fund rate. Gasoline is taxed at
18.4¢/gal., comprising a 18.3¢ HTF rate and the .01¢ LUST tax [IRC§4081]. Other
motor fuels are taxed at various rates per gallon, with the rates set so as to equate the
tax on a Btu basis.
Under the House bill, the 24.3¢ HTF component of the tax on emulsified blends
of diesel and water fuels would be reduced to 19.7¢, reflecting the lower Btu value
of such blended fuel.
Section 1314: Amortization of Delay Rentals. Under the uniform
capitalization rules, delay rental payments must be capitalized (via depletion). All
costs of abandoned properties are deductible [IRC§263,263A]. Under the House bill,
delay rental payments would be deducted evenly (amortizable) over two years. The
same rule would apply to abandoned properties.
Section 1315: Amortization of Geological and Geophysical
Expenditures. Under current law, geological and geophysical (G&G) costs for

retained properties must be capitalized (via depletion) [IRC§263]. Dry hole costs are
expensed (deducted in the year incurred).
Under H.R. 6, G&G costs for retained properties would be amortizable
(deducted evenly) over two years. The same rule would apply to abandoned
Section 1316: Advanced Lean-Burn Technology Motor Credit. Under
current law [IRC§179A], the incremental costs of an alternative-fuel vehicle are tax
deductible, up to $2,000 for a car, and up to $50,000 for a truck or van (depending
on weight class). This applies to vehicles powered by LPG, LNG, CNG, hydrogen,
E85 and M85. The credit is reduced by 25% in 2006, and is not available for
purchases after December 31, 2006. No credit is currently available for advanced
lean burn vehicles, which are advanced technology vehicles that are highly fuel
efficient yet generate fewer emissions than standard internal combustion engines.
The House bill would provide a tax credit for advanced lean-burn technology
vehicles ranging from a base of $500 to $3,000 depending on fuel efficiency, and an
additional tax credit of $250-$550 depending on estimated lifetime fuel savings.
Section 1317: Credit for Energy Efficiency Improvements to
Existing Homes. No special tax treatment is accorded homeowners for purchases
of materials and property that enhances the energy efficiency of a personal residence.
Subsidies provided by utilities can be excluded from gross income [IRC§136]. The
1978 Energy Tax Act — part of President Carter’s National Energy Act — provided
conservation tax credits for certain types of energy efficiency retrofits (insulation,
storm windows and doors, weatherstripping), but these expired in 1985.
Under H.R. 6, a tax credit of 20% would be provided for expenditures on
energy efficient envelope components — more energy-efficient insulation,
windows/doors, roofs, and structural envelope components — retrofitted to existing
homes that reduce heat loss (in winter) or heat gain (in summer) for a dwelling unit.
The maximum lifetime credit per dwelling unit would be $2,000. Qualifying units
and materials must meet energy efficiency guidelines for such components
established by the International Energy Conservation Code.
Subtitle C — Alternative Minimum Tax Relief
Section 1321: New Non-refundable Personal Credit Allowed Against
Regular and Alternative Minimum Tax. Under current tax law, most non-
refundable personal income tax credits are available only to the extent of the
difference between the personal and the tentative minimum tax liability — this means
that the alternative minimum tax could limit the amount of the tax credit claimed.
Such limitation, if triggered, would reduce the incentive effect of the credits, which
in the case of any new energy-efficiency credits that may be enacted would reduce
the incentives to invest in the qualifying materials and property.
Under H.R. 6, the alternative minimum tax limitation would not apply to the
new energy-efficiency tax credits proposed under sections 1311, and 1317.

Section 1322: Certain Business Energy Credits Allowed Against
Regular and Minimum Taxes. Under current tax law, businesses have access to
a variety of energy tax incentives, both for energy conservation, renewable fuels
(such as the §45 tax credit) and for energy production (such as the marginal oil and
gas production tax credit, and the enhanced oil recovery tax credit). For some of
these tax credits, the alternative minimum tax also acts to limit the amount of a tax
credit otherwise available under the income tax laws. This might reduce the
incentive effects of energy tax credits.
H.R. 6 would expand the list of business energy tax credits for which the
tentative minimum tax is removed as a limitation on the amount of tax credit
otherwise claimed.
Title XIV — Miscellaneous
Subtitle C — Other Provisions
Section 1441. Continuation of Transmission Security Order. On
August 28, 2003, the Secretary of Energy issued Order No. 202-03-2, allowing the
Cross Sound Cable between Connecticut and Long Island to begin transmitting
electric power. This provision would require the order to remain in effect unless
rescinded by federal statute.
In 2002, a 24-mile 330-megawatt (MW) transmission cable was installed
beneath the seabed of Long Island Sound between Connecticut and Long Island.
Shortly after the line was installed, it was determined that in several places the cable
was not buried to depths specified in permits issued by the U.S. Army Corps of
Engineers (Corps) and the Connecticut Department of Environmental Protection
(CDEP). While the Corps determined that operation of the cable would not pose
environmental or navigational harm and did not object to the operation of the
transmission line, the CDEP objected to the operation of the line based on procedural
grounds. CDEP’s position was that operation of the cable would violate the permit,
unless the cable was installed to the permitted depth requirements. CDEP denied a
request to modify the permit.
On June 12, 2003, Cross-Sound, the owners of the cable, filed a new permit
application with the CDEP. However, on June 26, 2003, Connecticut Governor John
Rowland signed into law a bill extending a prohibition on considering permits or
applications related to certain infrastructure crossings of the sound. On August 14,

2003, the Northeast experienced a widespread electric blackout. In response,

Secretary of Energy Spencer Abraham issued an emergency order to energize the
cross-sound cable. This order was rescinded on May 7, 2004. Long Island Power
Authority (LIPA) and Cross-Sound filed a petition with FERC to have the cable re-
energized by July 1, 2004. At a June 17, 2004, FERC meeting, Chairman Pat Wood
asked the parties to negotiate a settlement within seven days, after which FERC was
ready to issue an order. On June 25, 2004, the parties came to an agreement and the
cross-sound cable was re-energized.

Section 1442: Review of Agency Determinations on Gas Projects.
This section would amend the Natural Gas Act, giving the D.C. Circuit Court of
Appeals exclusive jurisdiction over disputes involving “unreasonable delay” of a
natural gas pipeline project certificated by FERC. Unreasonable delay would mean
the failure of a permitting agency to take action within a year after the date of filing
for the permit in question, or within 60 days after the issuance of a FERC certificate.
There is no explicit time-line in existing law for issuance of ancillary permits and
licenses, or requirement to consolidate authority in one court. This fast-tracking
measure would limit the amount of time taken by other agencies after FERC had
issued a certificate for a pipeline project.
Section 1443: Attainment Dates for Downwind Ozone
Nonattainment Areas. This section would extend Clean Air Act deadlines for
areas that have not attained ozone air quality standards if upwind areas “significantly
contribute” to their nonattainment. Under the 1990 Clean Air Act Amendments (P.L.

101-549), ozone nonattainment areas were classified in one of five categories:

Marginal, Moderate, Serious, Severe, or Extreme. Areas with higher concentrations
of the pollutant were given more time to reach attainment. In return for the
additional time, they were required to implement more stringent controls on
emissions. Failure to reach attainment by the specified deadline was to result in
reclassification of an area to the next higher category and the imposition of more
stringent controls. Areas such as Dallas-Fort Worth, for example, classified as
Serious, were required to reach attainment by 1999. If they did not do so, the law
required that they be reclassified (or “bumped up”) to the Severe category, with a
new deadline of 2005, and more stringent controls.
For a variety of reasons, EPA has often not reclassified areas when they failed
to reach attainment by the statutory deadlines. As of April 2005, the agency’s website
listed 18 Marginal areas, 6 Moderate areas, and 9 Serious areas; most of the 33
should have been categorized as Severe under the statutory requirements. In several
cases, the agency granted additional time to reach attainment on the grounds that a
significant cause of the area’s continued nonattainment was pollution generated
outside the area and transported into it by prevailing winds. EPA has been sued over
its failure to bump up five of these areas; the Agency lost the first three cases decided
(Washington, D.C.; St. Louis; and Beaumont-Port Arthur, Texas).41
Sec. 1443 would roll back reclassifications that occurred after April 1, 2003, and
would extend attainment deadlines in areas affected by upwind pollution to the date
on which the last reductions in pollution necessary for attainment in the downwind
area are required to be achieved in the upwind area. The specific date is open for
interpretation. Under EPA’s overturned policy, areas were given extensions no
longer than the attainment or compliance deadline in the upwind area (generally
2004, 2005, or 2007). The language of Section 1443 appears to give EPA flexibility
to extend the deadlines beyond those dates, however. It also would apply to the

41 The three cases were Sierra Club v. EPA, 311 F.3d 853, 55 ERC 1385 (7th Cir. 2002);
Sierra Club v. EPA, 314 F.3d 735, 55 ERC 1577 (5th Cir. 2002);and Sierra Club v. EPA,

294 F.3d 155, 54 ERC 1641 (D.C. Cir. 2002).

agency’s new eight-hour ozone standard implemented last year, making many
additional areas eligible for extensions.
Section 1444: Energy Production Incentives. States would be allowed
to provide taxpayers that generate electricity from selected types of energy, or
produce ethanol fuel, credits against any state taxes or fees owed to the state either
under a state law or federal law without violating the commerce clause of the U.S.
Constitition. The provision would apply to 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. 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 would be considered to be a reasonable
regulation of commerce, and not be considered to impose an undue burden on
interstate commerce or to otherwise impair, restrain, or discriminate against interstate
Section 1446: Regulation of Certain Oil Used in Transformers.
Under this section, utilities would not be required to develop a “Spill Prevention,
Control, and Countermeasure Plan” for soy bean oil use in transformers as regulated
by the Environmental Protection Agency under 40 CFR Part 112.12-15.
Section 1447: Risk Assessments. The Energy Policy Act of 1992 would
be amended to require that federal agencies conducting risk assessments of energy
related technologies use sound and objective scientific practices that consider the best
available science. This section was not in the 108th Congress conference bill.
Section 1448: Oxygen-fuel. DOE would be directed to create a program for
oxygen-fuel systems, in which pure oxygen is substituted for air in high-temperature
boilers of industrial and electric utility steam generators. If feasible, the program
would include two small (10 to 50 megawatt) units, one retrofit and one new; and
two large (100 megawatts or larger) units, one retrofit and one new.
Section 1449: Petrochemical and Oil Refinery Facility Health
Assessment. The Secretary of Energy would be charged to study the health
impacts of living near petrochemical and oil refining plants. In designing the study,
the Secretary would consult with the National Cancer Institute and other
governmental bodies having expertise. The Secretary would have to transmit the
report to Congress within six months of enactment. Such sums as necessary would
be authorized for this study.
Sec. 1450: United States — Israel Cooperation. The United States and
Israel have an agreement “to establish a framework for collaboration” between the
two nations for collaboration on energy research and development activities. The
agreement, which went into effect in February 2000, was automatically extended
(pursuant to terms of the original agreement) in early 2005 for an additional five
years. This provision would require the Secretary of Energy to submit reports to the
relevant House and Senate Committees on past, current, and future activities and
projects that are attributable to the agreement.

Section 1451: Carbon-Based Fuel Cell Development. The Secretary
of Energy would be authorized to make a single grant for the design and fabrication
of a 5-kilowatt prototype direct coal fuel cell.
Section 1452: National Priority Project Designation. This section,
added as a floor amendment (H.Amdt. 91), would establish a presidential National
Priority Project designation for organizations with projects certified by the Secretary
of Energy as advancing renewable energy technology.
Title XV — Ethanol and Motor Fuels
Subtitle A — General Provisions
Section 1501: Renewable Content of Motor Vehicle Fuel. This section
would require the use of renewable fuel in motor fuel. Renewable fuels include
ethanol, biodiesel, and natural gas produced from landfills and sewage treatment
plants. H.R. 6 would require the use of 3.1 billion gallons of renewable fuel in 2005,
increasing to 5.0 billion gallons in 2012. After 2012, the minimum percentage of
renewable fuel in gasoline would be equal to the percentage in 2012. The
Environmental Protection Agency would be required to promulgate regulations for
the generation and trading of credits between entities; in this manner refiners and
blenders who could not meet the requirement would be able to purchase credits from
those refiners or blenders who exceeded the requirement.
Policy Context. The Clean Air Act Amendments of 1990 established the
Reformulated Gasoline (RFG) program. Among its provisions is a requirement that
RFG contain oxygen. The two main ways to meet the requirement are the use of
MTBE and ethanol. However, MTBE (methyl tertiary butyl ether) has been found
to contaminate groundwater, and there is interest in banning the substance (see Sec.
1504). Because some states have acted to limit the use of MTBE, and because of the
potential federal ban, there is interest in eliminating the oxygen standard as well (see
Sec. 1506).
The ethanol industry has benefitted significantly from the oxygen requirement,
and some are concerned about the future of ethanol in the absence of the requirement.
Further, proponents of the fuel see ethanol use as a way to limit petroleum
consumption and dependence on foreign oil. Thus, the interest in establishing a
renewable fuels standard. However, opponents of ethanol have raised concerns that
the fuel is too costly, that the energy efficiency of the ethanol fuel cycle is
questionable, and that the potential for groundwater contamination by ethanol-
blended fuels has not been fully studied.
Section 1502: Fuels Safe Harbor. This section would provide a “safe
harbor” for renewable fuels and fuels containing MTBE (i.e., such fuels could not be
deemed defective in design or manufacture by virtue of the fact that they contain
renewables or MTBE). The effect of this provision would be to protect anyone in the
product chain, from manufacturers to retailers, from liability for cleanup of MTBE
and renewable fuels or for personal injury or property damage based on the nature of

the product (a legal approach that has been used in California to require refiners to
shoulder liability for MTBE cleanup). Were liability for manufacturing and design
defects ruled out, plaintiffs would need to demonstrate negligence in the handling of
such fuels to establish liability — a more difficult legal standard to meet. The bill
sets an effective date of September 5, 2003, for the safe harbor, rather than the date
of enactment. This effective date would protect oil and chemical industry defendants
from defective product claims in about 150 lawsuits that were filed in 15 states after
that date.42
Section 1503: MTBE Transition Assistance. This section would amend
the Clean Air Act to authorize $2 billion ($250 million in each of FY2005-FY2012)
for grants to help merchant U.S. producers of MTBE convert to production of other
fuel additives (including renewable fuels), unless EPA determines that such fuel
additives may reasonably be anticipated to endanger public health or the
Sections 1504-1505: Ban on the Use of MTBE. The use of MTBE in
motor vehicle fuel would be prohibited after December 31, 2014, except in states that
specifically authorize its use. EPA could allow MTBE in motor vehicle fuel in
quantities up to 0.5% in cases the Administrator determines to be appropriate (Sec.
1504). The bill would also allow the President to make a determination, not later
than June 30, 2014, that the restrictions on the use of MTBE should not take place.
The National Academy of Sciences would conduct a review of MTBE’s beneficial
and detrimental effects on environmental quality or public health or welfare,
including costs and benefits, by May 31, 2014 (Sec. 1505).
Section 1506: Elimination of Oxygen Requirement and Maintenance
of Toxic Emission Reductions. This section would amend the Clean Air Act
to eliminate the requirement that reformulated gasoline contain at least 2% oxygen.
This requirement has been a major stimulus to the use of MTBE. The provision
would take effect 270 days after enactment, except in California, where it would take
effect immediately upon enactment.
The section would also amend the Clean Air Act to require that each refinery
or importer of gasoline maintain the average annual reductions in emissions of toxic
air pollutants achieved by the reformulated gasoline it produced or distributed in
1999 and 2000. This provision is intended to prevent backsliding, since the
reductions actually achieved in those years exceeded the regulatory requirements. A
credit trading program would be established among refiners and importers for
emissions of toxic air pollutants.
In addition, the section would require EPA to promulgate final regulations to
control hazardous air pollutants from motor vehicles and their fuels by July 1, 2005.
It would also eliminate the less stringent requirements for volatility applicable to

42 Environmental Working Group. “Communities That Have Filed MTBE Lawsuits Against
Oil Companies.” []

reformulated gasoline sold in northern states, by applying the more stringent
standards of VOC Control Region 1 (southern states).43
Sections 1507-1508: Analyses and Data Collection. EPA would be
required to publish an analysis of the effects of the fuels provisions in the Clean Air
Act on air pollutant emissions and air quality, within five years of enactment (Sec.
1507). DOE would be required to collect and publish monthly survey data on the
production, blending, importing, demand, and price of renewable fuels, both on a
national and regional basis (Sec. 1508).
Section 1509: Reducing the Proliferation of State Fuel Controls.
Section 211 of the Clean Air Act allows states to establish their own fuel standards
with approval from EPA. H.R. 6 would bar the EPA Administrator from approving
a state fuel restriction unless the Administrator, after consultation with the Secretary
of Energy, determined that the fuel standard would not cause fuel supply disruptions
or adversely affect the ability to produce fuel for nearby areas in other states.
Section 1510: Fuel System Requirements Harmonization Study. The
EPA Administrator and the Secretary of Energy would be required to study all
federal, state, and local motor fuels requirements. They would be required to analyze
the effects of various standards on consumer prices, fuel availability, domestic
suppliers, air quality, and vehicle emissions. Further, they would be required to study
the feasibility of developing national or regional fuel standards.
Section 1511: Commercial Byproducts From Municipal Solid Waste
and Cellulosic Biomass Loan Guarantee Program. The Secretary of Energy
would be required to establish a loan guarantee program for the construction of
facilities to produce fuel ethanol and other commercial byproducts from municipal
solid waste and cellulosic biomass.
Section 1512: Conversion Assistance for Cellulosic Biomass,
Waste-Derived Ethanol, Approved Renewable Fuels. DOE would be
allowed to provide grants to help build production facilities. To qualify, the ethanol
must be produced from cellulosic biomass, municipal solid waste, wood residues,
agricultural waste, or agricultural byproducts.
Section 1513: Blending of Compliant Reformulated Gasolines. This
provision would allow reformulated gasoline (RFG) retailers to blend batches with
and without ethanol as long as both batches were compliant with the Clean Air Act.
In a given year, retailers would be permitted to blend batches over any two 10-day
periods in the summer months. Currently, retailers must drain their tanks before
switching from ethanol-blended RFG to non-ethanol RFG (or vice versa).
Subtitle B — Underground Storage Tank Compliance
Sections 1521- 1533: Underground Storage Tank Provisions. As part
of the legislative effort to address drinking water contamination by MTBE, this

43 VOC: volatile organic compounds.

subtitle would amend Subtitle I of the Solid Waste Disposal Act (SWDA) to add new
leak prevention provisions to the underground storage tank (UST) regulatory
program, and to broaden the allowable uses of the Leaking Underground Storage
Tank (LUST) Trust Fund.
Policy Context. Congress created the UST leak prevention, detection, and
cleanup program in 1984, to address a nationwide pollution problem caused by
leaking tanks. In 1986, Congress established the LUST Trust Fund to help EPA and
states pay the costs of cleaning up leaking petroleum USTs where owners fail to do
so, and to oversee LUST cleanup activities. While much progress has been made in
the program, several issues remain. A major issue concerns the discovery of MTBE
at thousands of LUST sites across the country. This gasoline additive, used to reduce
air pollution from auto emissions, is very water soluble, and leaks involving MTBE
are more costly to remediate than conventional gasoline leaks. MTBE tends to
separate from the gasoline and spread further, and these leaks are more likely to reach
water supplies. Another issue is that state resources have not met the demands of
overseeing the UST regulatory program, which is aimed at preventing leaks. States
have long sought larger appropriations from the Trust Fund to support the LUST44
program, and some have sought more flexibility in using LUST funds.
Subtitle B would require EPA or states to conduct compliance inspections of
USTs every three years (Sec. 1523); add operator training requirements (Sec. 1524);
authorize EPA and states to use LUST Trust Fund money to respond to tank leaks
involving oxygenated fuel additives (e.g., MTBE and ethanol) (Sec. 1525). It also
would prohibit fuel delivery to ineligible tanks (Sec. 1527); clarify and expand UST
compliance requirements for federal facilities (Sec. 1528); and require EPA, with
Indian tribes, to develop and implement a strategy to address releases on tribal lands
(Sec. 1529). This subtitle would allow EPA and states to use LUST funds to
conduct inspections and enforce UST release prevention and detection requirements
(Sec. 1526). It would require that, when determining the portion of cleanup costs to
recover from a tank owner or operator, EPA or a state must consider the owner or
operator’s ability to pay for cleanup and still maintain basic business operations (Sec.


Sec. 1530 would require states to do one of the following: 1) require that new
tanks are secondarily contained and monitored for leaks if the tank is within 1,000
feet of a community water system or potable well; or 2) require that UST
manufacturers and installers maintain evidence of financial responsibility to pay for
corrective actions; and require that persons installing UST systems are certified or
licensed, or that their UST system installation is certified by a professional engineer

44 The LUST Trust Fund has been funded primarily through a 0.1 cent-per-gallon motor
fuels tax that commenced in 1987. During FY2004, the tax generated $193 million in
revenues, and the fund earned $66.7 million in interest (on an accrual basis). At the end of
FY2004, the fund’s net assets were $2.24 billion. For EPA and states to administer the
LUST cleanup program, Congress appropriated from the Fund nearly $76 million for
FY2004 and nearly $70 million for FY2005. The President has requested $73 million for
FY2006. Roughly 81% of the appropriated amount goes to the states to oversee and enforce
cleanups by responsible parties. EPA uses the remainder for its program responsibilities and
for LUST activities on Indian lands.

or inspected and approved by the state, or is compliant with a code of practice or
other method that is no less protective of human health and the environment.
Sect. 1531 would authorize annually, from the LUST Trust Fund for FY2005
through FY2009, the appropriation of $200 million for cleaning up leaks from
petroleum tanks generally, and another $200 million for responding to tank leaks45
involving MTBE or other oxygenated fuel additives (e.g., other ethers and ethanol).
Also from the Trust Fund, Sec. 1531 would authorize to be appropriated, for
each of FY2005 through FY2009, $155 million for EPA and states to carry out and
enforce the UST leak prevention and detection requirements added by this bill and
the LUST cleanup program. From general revenues, this section would authorize the
appropriation of another $50 million, for each of FY2005 through FY2009, for EPA
and states to carry out the general UST program.
Subtitle C — Boutique Fuels
Section 1541: Reducing the Proliferation of Boutique Fuels. The
EPA Administrator would be permitted to temporarily waive fuel requirements,
including state fuel requirements and RFG standards, in the case of a natural disaster,
Act of God, pipeline or refinery equipment malfunction, or other unforeseeable event.
In addition, the Administrator could not approve a fuel standard under a State
Implementation Plan if that standard would increase the number of unique state
formulations above the number as of September 1, 2004.
Title XVI — Studies
Section 1601: Study on Inventory of Petroleum and Natural Gas
Storage. The Secretary of Energy would have to report to Congress within a year
of enactment on the amount of storage capacity for petroleum and natural gas. While
the oil and gas industry is subject to broad reporting requirements under a variety of
laws, this language would call for a comprehensive study of the nation’s storage
capability and the role it plays in the marketplace and the hydrocarbon industries’
ability to meet demand. The relationship between storage capacity and price volatility
could be significant in the current context of oil and natural gas markets — which
have experienced a number of price spikes.

45 Note that the MTBE cleanup money is for the LUST program; funds can be used to clean
up contaminated drinking water supplies if the contamination can be tied to a federally
regulated underground storage tank. However, because no federal standard has been
established for MTBE in drinking water, some states do not require testing for MTBE at
LUST sites, and fewer than half the states are taking steps to ensure that MTBE and other
oxygenates are not migrating beyond the standard monitoring boundaries for LUST cleanup.
For more information, see New England Interstate Water Pollution Control Commission,
Survey of State Experiences with MTBE and Other Oxygenate Contamination at LUST Sites,
August 2003.

Section 1605: Study of Energy Efficiency Standards. DOE would be
directed to have the National Academy of Sciences study whether the goals of energy
efficiency standards are best served by focusing measurement at the site (energy end-
use) or at the source (the full fuel cycle). This provision relates to a previous
Executive Order, which found that federal agencies should get credit toward meeting
energy efficiency goals even where “source energy use declines but site energy use46
i n creases.”
Section 1606: Telecommuting Study. DOE would be directed to study
and report on the energy conservation potential of widespread adoption of
telecommuting by federal employees. In this effort, DOE would be required to
consult with the Office of Personnel Management, General Services Administration,
and National Telecommunications and Information Administration.
Section 1607: LIHEAP Report. The Department of Health and Human
Services (HHS) would be directed to report on how the Low-Income Home Energy
Assistance Program could be used more effectively to prevent loss of life from
extreme temperatures.
Section 1608: Oil Bypass Filtration Technology. DOE and EPA would
be required to jointly study the benefits of oil bypass filtration technology in reducing
demand for oil and protecting the environment. This study would include
consideration of its use in federal motor vehicle fleets and an evaluation of products
and manufacturers.
Section 1609: Total Integrated Thermal Systems. DOE would be
directed to study the potential for integrated thermal systems to reduce oil demand
and to protect the environment. Also, DOE would study the feasibility of using this
technology in Department of Defense and other federal motor vehicle fleets.
Section 1610: University Collaboration. DOE would be directed to report
on the feasibility of promoting collaboration between large and small colleges
through grants, contracts, and cooperative agreements for energy projects. DOE
would also be directed to consider providing incentives for the inclusion of small
colleges in grants, contracts, and cooperative agreements.
Section 1611: Reliability and Consumer Protection Assessment.
Within five years of enactment, and every five years thereafter, FERC would be
required to assess the effects of electric cooperative and government-owned utilities’
exemption from FERC ratemaking regulation under section 201(f) of the Federal
Power Act. If FERC found that the exemption resulted in adverse effects on
consumers or electric reliability, FERC would be required to make recommendations
to Congress.

46 Executive Order 13123. DOE’s Federal Energy Management Program (FEMP) discusses
this issue in its Guidance for Providing Credit Toward Energy Efficiency Goals for Cost-
Effective Projects Where Source Energy Use Declines But Site Energy Use Increases, April

26, 2000, 4 pp.

Section 1612: Report on Energy Integration with Latin America. The
Secretary of Energy would be called on to submit a report to the House Committee
on Energy and Commerce and the Senate Energy and Natural Resources Committee
about energy export development in Latin America. With special focus on Mexico,
it would detail Latin America and regional energy integration, and describe U.S.
efforts to promote constructive relationships. In particular, it would focus on efforts
made with regard to U.S.-Mexico cross-border energy projects.
Section 1613: Low-Volume Gas Reservoir Study. The Secretary of
Energy would be required to make a grant to an organization of gas producing states
formed to deal with marginal oil and natural gas wells. The grant would be used for
an annual study of these reservoirs, to determine their location and production
characteristics, and recommend incentives for production enhancement. Extensive
data collection is envisioned, and this analysis would have to be performed by an
institution of higher education with GIS (geographic information system) technology
Section 1614: Consolidation of Gasoline Industry. In recent decades,
mergers, acquisitions, and regional withdrawals by oil producers and by marketers
of petroleum products have reduced substantially the number of sellers of petroleum
products in the United States, particularly on a regional and local level. Some have
asserted that a consequent increase in market power of the remaining sellers lies
behind the extended periods of considerably increased retail gasoline prices being
experienced by consumers. The bill would require the Comptroller General of the
United States to conduct a study of the consolidation of the refiners, importers,
producers, and wholesalers of gasoline with the sellers of such gasoline at retail. The
study would analyze the impact of such consolidation on the retail price of gasoline
and small business ownership, corollary effects on the market economy of fuel
distribution and local communities, and other market impacts of such consolidation.
Section 1615: Study of Fuel Savings From Information Technology
for Transportation. The Secretary of Energy, in consultation with the Secretary
of Transportation, would be required to report to Congress on the potential fuel
savings from the use of information technologies to help businesses and consumers
plan their trips and avoid delays.
Section 1616: Feasibility Study for Mustard Seed Biodiesel. The
Secretary of Energy would be required to contract with the National Academy of
Sciences for a study to determine the feasibility of using mustard seed as a feedstock
for biodiesel production.
Title XVII — Renewable Energy — Resources
Section 1701: Grants to Improve the Commercial Value of Forest
Biomass for Electric Energy, Useful Heat, Transportation Fuels,
Petroleum-Based Product Substitutes, and Other Commercial
Purposes. The Secretaries of Agriculture and the Interior would be authorized to
make grants of up to $20 per green ton (a ton of freshly sawed or undried wood or

other biomass) to individuals, businesses, communities, and Indian tribes for the
commercial use of biomass for fuel, heat, or electric power. Also, the Secretaries of
Agriculture and the Interior may make grants as an incentive to projects that develop
ways to improve the use of, or add value to, biomass. The maximum grant would be
$500,000. Preference is given to small towns, rural areas, and areas at risk of damage
to the biomass resource. This provision is intended to address the increasing risk of
wildfires and the growing threat to forests of insect infestation and disease.
Section 1702: Environmental Review for Renewable Energy
Projects. For all development projects proposed for federal lands (or other
federally controlled areas), the National Environmental Policy Act (NEPA) requires
an environmental assessment or environmental impact statement (EIS). This
provision would limit the number of alternative site analyses that a federal agency
must perform when these requirements are triggered by a proposed renewable energy
Section 1703: Sense of Congress Regarding Generation Capacity
of Electricity From Renewable Energy Resources on Public Lands. For
the Secretary of the Interior, this provision would set a goal of having 10,000
megawatts of non-hydropower renewable energy generation capacity installed on
public lands within 10 years from the date of enactment.
Title XVIII — Geothermal Energy
Sections 1801-1820: Geothermal Energy Leasing Amendments.
Much of the nation’s geothermal energy potential is located on federal lands.
Reducing delays in the federal geothermal leasing process and reducing royalties
could increase geothermal energy production, although the environmental impact of
greater geothermal development is also an issue.
Current Law. Competitive geothermal lease sales are based on whether lands
are within a known geothermal resource area (Geothermal Steam Act of 1970, U.S.C.

1003). Geothermal production on federal lands is charged a royalty of 10%-15%

under Section 5 of the Geothermal Steam Act. The royalty is imposed on the amount
or value of steam or other form of heat derived from production under a geothermal
The Secretary of the Interior can withdraw public lands from leasing or other
public use and modify, extend, or revoke withdrawals under provisions in the Federal
Land Policy and Management Act of 1976 (FLPMA, 43 U.S.C. 1714). At certain
intervals the Secretary may readjust terms and conditions of a geothermal lease,
including rental and royalty rates. Annual rental fees of not less than $1 per acre on
geothermal leases are paid in advance. The primary lease term is 10 years and would
continue as long as geothermal steam is produced or used in commercial quantities.
Rents are $1 per acre or fraction thereof for each year of a geothermal lease.
H.R. 6. Amendments to the Geothermal Steam Act would change lease
procedures for competitive and non-competitive lease sales. Competitive lease sales

would be held every two years. If there were no competitive bid, then lands would
be made available for two years under a non-competitive process (Sec. 1802). A fee
schedule in lieu of any royalty or rental payments would be established for
low-temperature geothermal resources. Existing geothermal leases may be converted
to leases for direct utilization of low-temperature geothermal resources (Sec. 1803).
Royalties on electricity produced from geothermal resources would be not less than
1% and not more than 2.5% of the gross proceeds from geothermal electricity sales
in the first 10 years of production and not less than 2% and more than 5% of the
gross proceeds from geothermal electricity sales each year after the 10-year period
(Sec. 1804). With respect to National Forest lands, the Secretary of Agriculture and
the Secretary of the Interior would ensure timely actions for processing applications
pending as of January 1, 2005 (Sec. 1805). A memorandum of understanding
between the Secretaries of the Interior and Agriculture should include provisions that
would identify known geothermal areas on public lands within the National Forest
system and establish an administrative procedure that would include time frames for
processing lease applications (Sec 1806).
The Secretary of the Interior would review all areas under moratoria or
withdrawals and report to Congress on whether the reasons for withdrawal still
applied (Sec. 1807). The Secretary could reimburse lessees for the costs of
environmental analyses required by NEPA through royalty credits under certain
circumstances (Sec. 1808). The U.S. Geological Survey (USGS) would provide
Congress with an assessment of current geothermal resources (Sec. 1809).
Cooperative or unit plans for geothermal development would be promoted (Sec.
1810). Leasable minerals produced as a byproduct of a geothermal lease would pay
royalties under the Mineral Leasing Act (30 U.S.C. 181) (Sec. 1811).
Sections 8(a) and (b) of the Geothermal Steam Act would be repealed, which
would eliminate the Secretary’s authority to readjust geothermal rental and royalty
rates at “not less than 20 year intervals beginning 35 years after the date geothermal
steam is produced” (Sec. 1812). Annual rentals would be credited towards the
royalty of the same lease (Sec. 1813), and the primary lease term could be extended
for two additional five-year terms if work commitments were met (Sec. 1814). If
production from a geothermal lease were suspended during a period in which a
royalty was required, royalties would be paid in advance until production resumed
(Sec. 1815). The bill would establish rental rates for competitive and non-competitive
lease sales (Sec. 1816). For the first five years after the enactment of this act, a
separate account would be established for revenue receipts from leases under the
Geothermal Steam Act of 1970, excluding money necessary for payments to states
and county governments (Sec. 1817). Section 7 of the Geothermal Steam Act on
acreage limitations is repealed (Sec. 1818). About two dozen technical amendments
are included in Sec. 1819. The Intermountain West Geothermal Consortium would
be established to focus on expanded use of geothermal energy. The consortium would
involve the participation of the Secretary of Energy, universities in the region, and
state agencies (Sec. 1820).

Title XIX — Hydropower — Resources
Section 1901: Increased Hydroelectric Generation at Existing
Federal Facilities. Within 18 months of enactment, the Secretaries of the Interior,
Energy, and the Army would submit a study of the potential for increasing electric
power production capability at federally owned or operated water regulation, storage,
and conveyance facilities.
Section 1902: Shift of Project Loads to Off-Peak Periods. The
Secretary of the Interior would review electric power consumption by the Bureau of
Reclamation facilities for water pumping, and, with the consent of affected irrigation
customers, adjust water pumping schedules to reduce power consumption during
periods of peak electric power demand. This section would not affect Interior’s
existing obligations to provide electric power, water, or other benefits.
Section 1903: Report Identifying and Describing the Status of
Potential Hydropower Facilities. Within 90 days of enactment, the Secretary
of the Interior would submit a report identifying and describing the status and
characteristics of potential hydropower facilities included in water surface storage
studies undertaken for projects that have not been completed or authorized for
Title XX — Oil and Gas — Resources
Subtitle A — Production Incentives
Section 2001: Definition of Secretary. In this subtitle, “Secretary” means
Secretary of the Interior.
Section 2002: Program on Oil and Gas Royalties-In-Kind. The federal
government would be allowed to continue to receive physical quantities of oil and
gas as royalty-in-kind payments if it can receive market value for the product and
revenues greater than or equal to the revenues it would have received under a
comparable cash-payment royalty. The royalty product would have to be placed in
marketable condition (as defined in H.R. 6) at no cost to the United States. Small
refineries would receive preferential treatment if supplies on the market were
insufficient. A report to Congress in each year from FY2004-FY2013 would explain,
among other things, how the Secretary determined whether the amount received was
at least the amount that would have been taken in cash and how a lease was evaluated
as to whether royalty in kind were taken.
Section 2003: Marginal Property Production Incentives. The Secretary
of the Interior would have the authority to reduce or terminate royalties for
independent producers under certain conditions. The Secretary would be authorized
to prescribe different standards for marginal properties in lieu of those in this section.
Section 2004: Incentives for Natural Gas Production From Deep
Wells in the Shallow Waters of the Gulf of Mexico. Royalty reductions

would be provided for shallow water production at certain depths not later than180
days after enactment. An “ultra-deep” well would also be defined in this section.
Section 2005: Royalty Reductions for Deep Water Production.
Royalty reductions would be provided for deepwater areas at fixed production levels
at certain depths.
Section 2006: Alaska Offshore Royalty Suspension. Planning areas
in offshore Alaska would be included under section 8(a)(3)(B) of the Outer
Continental Shelf Lands Act (OCSLA, 43 U.S.C. 1337(a)(3)(B)). This section of
OCSLA currently provides a mechanism for the Secretary of the Interior to reduce
or eliminate royalty or net profit share established in leases for oil and gas production
in Gulf of Mexico planning areas.
Section 2007: Oil and Gas Leasing in the National Petroleum
Reserve in Alaska. The competitive leasing system for oil and gas in the National
Petroleum Reserve in Alaska would be modified. Leases would be issued for
successive 10-year terms if leases met specific criteria. Active participation would
be sought by the State of Alaska and Regional Corporations as defined under the
Alaska Native Claims Settlement Act (43 U.S.C. 1602). The Secretary of the Interior
could grant royalty reductions if they were found to be in the public interest.
Section 2008: Orphaned, Abandoned, or Idled Wells on Federal
Land. Within a year after enactment, the Secretary would establish a technical
assistance program to help states remediate and close abandoned or idled wells.
Technical and financial assistance would be made available over a 10-year period to
quantify and mitigate environmental dangers. A program would be established for
reimbursing the private sector with credits against federal royalties for reclaiming,
remediating, and closing orphaned wells.
Section 2009: Combined Hydrocarbon Leasing. The Mineral Leasing
Act would be amended to allow separate leases for tar sands and for oil and gas in the
same area. Tar sands would be leased under the same system as for oil and gas and
would require a minimum acceptable bid of $2 per acre.
Section 2010: Alternate Related Uses on the Outer Continental
Shelf. The Secretary would be authorized to grant rights-of-way or easements on
the OCS for energy-related activity on a competitive or noncompetitive basis and
would charge fees for such access. A surety bond or other financial guarantee would
be required.
Section 2011: Preservation of Geological and Geophysical Data.
Under the proposed “National Geological and Geophysical Data Preservation
Program Act of 2003,” the Interior Department through the U.S. Geological Survey
would establish a program to archive geologic, geophysical, and engineering data,
maps, well logs, and samples; provide a national catalog of archival material; and
provide technical and financial assistance related to the archival material. State
agencies that elect to be part of the data archive system that stores and preserves
geologic samples would receive 50% financial assistance, subject to the availability
of appropriations. Private contributions would be applied to the non-federal share.

Appropriations of $30 million per year from FY2006 through FY2010 would be
Section 2012: Oil and Gas Lease Acreage Limitations. Lease acreage
limits would be altered so that additional federal lands would not fall under the
Mineral Leasing Act’s single-state ownership limitations.
Section 2013: Deadline for Decision on Appeals under the Coastal
Zone Management Act. This section would replace language in Section 319 of
the Coastal Zone Management Act of 1972 (CZMA), as amended (16 U.S.C. 1465).
Section 319 had been added as an amendment in 1996. It established a time line for
appeals to the Secretary of Commerce on consistency determinations when a state
and federal agency are unable to reach agreement. The consistency provisions, set
forth in Section 307 of the CZMA, require federal activities in or affecting the coastal
zone to be consistent with the policies of a federally approved and state-administered
coastal zone management plan. (Federal activities include activities and development
projects performed by a federal agency or by a contractor on behalf of a federal
agency, and federal financial assistance.) A proposal to modify the appeals time line
with deadlines very similar to this legislation was included in a proposed rule on
federal consistency, published in the June 11, 2003, Federal Register. A final rule
has not been issued.
The consistency provision creates an unusual relationship where states can halt
most federal actions that are incompatible with state interests. When enacted, the
consistency requirement was viewed as a main reason why states would pursue
development and implementation of coastal plans since the other incentive to
participate, federal financial grants, always has been modest. This view appears to
have some validity as 34 of the 35 eligible states and territories are now
administering federally approved coastal management programs.
Current Law. The consistency provisions in Section 307 of the CZMA guides
state consideration of whether a proposed federal activity will be compatible with a
federally approved and state-administered coastal zone management plan. Since the
first state plan was approved in the mid-1970s, there has been considerable friction
between states and federal agencies over the reach of the consistency provisions.
States have sought broader application to have a strong role in decisions about the
largest possible array of proposed federal activities, while the federal government has
sought narrower interpretations, especially relating to offshore energy development.
Determining an exact boundary separating actions on which the state is to have a
primary role in halting a proposal from actions on which the state does not have such
powers has been a subject of federal appeals and litigation, including decisions by the
U.S. Supreme Court (notably Secretary of the Interior v. California, 464 U.S. 312
(1984), in which the court determined that the sale of oil and gas leases on the outer
continental shelf was not an act affecting the coastal zone).
When a state and a federal agency cannot reach an agreement on a consistency
determination, the law and regulations lay out an elaborate process for resolving that
disagreement. Most disagreements are resolved through this process, but if no
agreement can be reached, the final step is an appeal to the Secretary of Commerce
to make a decision. Appeals to the Secretary have not been common. According to

citations of appeals posted on the website of the Office of Ocean and Coastal
Resource Management in the National Oceanic and Atmospheric Administration
(NOAA), viewed May 12, 2005, 38 consistency determinations were appealed to the
Secretary between 1984 and 1999, and 19 of them involved proposed activities by oil
companies. The appeals process, like all other aspects of consistency, is currently
covered under a final rule issued by NOAA in the December 8, 2000, Federal
Section 319 in current law has less detail than the proposed amendment. It
states that the Secretary will either issue a final decision on the appeal or publish a
notice in the Federal Register stating why a decision cannot be reached within 90
days after the record has closed. If the Secretary publishes a notice that a decision
has not been made, that decision must be issued within 45 days of the date of
publication of that notice.
Bill Language. H.R. 6 would replace the current Section 319 of the CZMA
with a new set of provisions that would stipulate three sequential deadlines, and
thereby limit the overall length of this appeals process to a total of 270 days from the
date when an appeal is filed. The first deadline would be for the Secretary of
Commerce to publish an initial notice of an appeal in the Federal Register within 30
days of the appeal’s filing. The second deadline would be that the administrative
record would be open for no more than 120 days. During that time period, the
Secretary could receive filings related to the appeal. The final deadline would give
the Secretary up to 120 days to issue a decision after the administrative record had
been closed. The second and third deadlines would also apply to all pending appeals
not resolved prior to the date of enactment. Also, any appeals in which the record is
open on the date of enactment would have to be closed within 120 days of that date.
Policy Context. Consistency appeals have been contentious and, in some
instances, the appeals process has dragged on for long time periods. The 1996
amendments in Section 319 were meant to address those delays by establishing some
time limits. This has proved unsatisfactory to some, who seek additional statutory
language that would remove decisions about deadlines from the unpredictable rule-
making process by defining the length of component steps in law, and therefore the
overall process, after an appeal to the Secretary has been filed.
Section 2014: Reimbursement for Costs of NEPA Analysis,
Documentation, and Studies. The Mineral Leasing Act would be amended to
provide reimbursement for costs of NEPA-related studies under certain
Section 2015: Gas Hydrate Production Incentive. Royalties would be
suspended for the first 50 billion cubic feet of natural gas produced from gas hydrate
resources per 9 square miles of leased tract, in addition to any other applicable
royalty relief.
Section 2016: Onshore Deep Gas Production Incentive. Royalties for
onshore deep-well natural gas would be suspended for up to 50 billion cubic feet per
natural gas lease.

Section 2017: Enhanced Oil and Natural Gas Production. Royalty
relief would be available for the purposes of enhancing oil and natural gas recovery
from specified leases.
Section 2018: Oil Shale. The Secretary of the Interior would develop an oil
shale leasing program as soon as practicable and publish a final regulation to
implement the program by December 31, 2006.
Section 2019: Use of Information about Oil and Gas Public
Challenges. The Secretary of the Interior and the Secretary of Agriculture would
collect and use information on public challenges to manage oil and gas programs
within their departments.
Subtitle B — Access to Federal Lands
Sections 2021- 2027: Leasing and Permitting Processes. An Office
of Federal Energy Project Coordination (FEPC) would be established to review and
report on accomplishments that are considered more efficient and effective for
federal permitting (Sec. 2021). The Secretary of the Interior would perform an
internal review of the federal onshore oil and gas leasing and permitting process with
particular focus on lease stipulations affecting the environment and conflicts over
resource use (Sec. 2022). The Secretary would be required to ensure expeditious
completion of environmental and other reviews and implement “best management
practices” that would lead to timely action on oil and gas leases and drilling permits
(Sec. 2023). The Secretary of the Interior and the Secretary of Agriculture would
enter into a memorandum of understanding to ensure timely processing of oil and gas
lease applications (Sec. 2024).
The U.S. Geological Survey would be required to estimate onshore oil and gas
resources and identify impediments and restrictions that might delay permits. The
Department of Energy would be required to make regular assessments of economic
reserves (Sec. 2025).
A pilot program would be established to demonstrate energy development on
federal land in accordance with the multiple-use mandate; Wyoming, Montana,
Colorado, Utah, and New Mexico would be asked to participate (Sec. 2026). The
Secretary of the Interior would have 10 days after receiving an application for a
permit to drill (APD) to notify the applicant whether the APD was complete. The
Secretary would have 30 days after a complete APD was submitted to issue or defer
a permit with correcting measures. If deferred, the applicant would have a two-year
window to complete the application, as specified by the Secretary. If the applicant
met the requirements, then the Secretary would issue a permit within 10 days. The
Secretary would deny the permit if the criteria were not met within the two-year
period (Sec. 2027).
Section 2028: Fair Market Rental Value Determinations for Public
Land and Forest Service Rights-of-Way. The Secretaries of the Interior and
Agriculture would annually revise and update rental fees for land encumbered by
linear rights-of-way to reflect fair market value.

Section 2029: Energy Facility Rights-of-Way and Corridors on
Federal Lands. Not later than one year after enactment, the Secretaries of the
Interior and Agriculture, in consultation with the Secretaries of Defense, Commerce,
and Energy and FERC, would submit to Congress a report addressing the location of
existing rights-of-way on federal land for oil and gas pipelines and electric
transmission and distribution facilities.
Section 2030: Consultation Regarding Energy Rights-of-Way on
Public Land. Within six months after enactment, the Secretaries of the Interior and
Agriculture would be required to enter into an MOU to coordinate environmental
compliance and processing of rights-of-way applications.
Section 2031: Electricity Transmission Line Right-of-Way in
Cleveland National Forest and Adjacent Public Land. The Bureau of Land
Management would become the lead federal agency for environmental and other
necessary reviews for a high-voltage electricity transmission line right-of-way
through the Trabuco Ranger District of the Cleveland National Forest in California.
Section 2032: Sense of Congress Regarding Development of
Minerals Under Padre Island National Seashore. In recognition of the split
estate on Padre Island National Seashore, it would be the sense of Congress that the
federal government owns the surface rights while the mineral rights are held privately
and also by the state of Texas.
Section 2033: Livingston Parish Mineral Rights Transfer. Section 102
of P.L. 102-562 is amended by striking the “Conveyance of Lands” provision, which
maintains the reservation of mineral rights held by the United States in specific areas
of Livingston Parish, Louisiana.
Subtitle C — Naval Petroleum Reserves
Sections 2041-2044: Naval Petroleum Reserves. The National Defense
Authorization Act for FY1996 (P.L. 104-106) authorized sale of the federal interest
in the oil field at Elk Hills, CA (Naval Petroleum Reserve-1 (NPR-1)). Transfers of
other NPR sites have followed in subsequent years. This leaves in the Naval
Petroleum Reserves program two small oil fields in California and Wyoming, which
will generate estimated revenue to the government of roughly $7.2 million during
FY2005. The Kern County site (NPR-2) comprises a “checkerboard” pattern of
government and privately owned tracts adjacent to the Elk Hills field. Of the 50 tracts
owned by the government, nearly 90% are leased by private oil companies with
royalty payments deposited in the U.S. Treasury. This provision would transfer
administration of virtually all the government-held tracts to the Department of the
Surface rights, title, and interest of a roughly 167-acre parcel would be
transferred to the city of Taft, CA. The federal government would retain rights to all
fossil fuel and mineral resources for itself or its lessees, but would yield all surface
rights and responsibilities for care of the surface. The Executive Order of December

13, 1912, establishing NPR-2 would be revoked.

Subtitle D — Miscellaneous Provisions
Section 2051: Split-Estate Federal Oil and Gas Leasing and
Development Practices. The Secretary of the Interior would conduct a review
of how management practices by federal subsurface oil and gas development
activities affect privately owned surface users. The review would detail the rights and
responsibilities of surface and subsurface owners, compare consent provisions under
the Surface Mining Control and Reclamation Act of 1977 with provisions for oil and
gas development, and make recommendations that would address surface owner
Section 2052: Royalty Payments Under Certain Leases. The lessee
of a “covered lease tract” off the coast of Louisiana would be allowed to withhold
royalties due to the United States if it paid the state of Louisiana 44 cents for every
dollar of the federal royalty withheld. This royalty relief would end when certain
drainage claims were satisfied.
Section 2053: Domestic Offshore Energy Reinvestment. This would
add a new Section 32 at the end of the Outer Continental Shelf Lands Act (43 U.S.C.
1331 et. seq.) to return a portion of the federal revenues from offshore energy
activities to affected coastal states to fund specified activities. Representatives of
states with offshore energy development have been seeking to return a significant
portion of the federal revenues generated to these states, and particularly the coastal
areas within these states that may be more affected by onshore and near-shore
activities that support that development. Proponents of these proposals look to the
rates at which funds are given to jurisdictions where energy development occurs
within those jurisdictions on federal lands, and seek revenues that will help coastal
states respond to adverse onshore effects of offshore energy development. Coastal
destruction has received more attention in Louisiana, where many square miles of
wetlands are being lost to the ocean each year.
A federal program to address the impacts of coastal energy development was
enacted during the energy crisis of the late 1970s. Called the Coastal Energy Impact
Assistance Program, it operated briefly, providing loans and grants to states through
the federal Coastal Zone Management Program.
Current Law. There is no comparable program operating under in current law.
H.R. 6. The House-passed bill would create a new Domestic Offshore Energy
Reinvestment Program. The program would be funded from a new Secure Energy
Reinvestment Fund. The fund would receive deposits of all qualified revenues from
energy activities on the outer continental shelf (OCS). All deposits into the fund
would be subject to appropriation. These revenues would include $35 million in
royalty income each year, plus all royalty income above a specified amount that
would generally increase annually (starting at $7 billion in FY2006, rising to $9
billion in FY2014, and ending at $7.5 billion in FY2015), bonus bid income above
$880 million each year, and interest income earned by the Fund. Each year beyond
FY2015 the Secretary of the Treasury would deposit 25% of all qualified revenues
of the preceding year into the Fund plus investment interest earned.

Coastal states where energy activities occur offshore and coastal political
subdivisions in those states would be eligible to receive money from the fund.
Eligible states and political subdivisions are defined in the legislation. Allocations
among eligible states would be determined by a formula that accounts for energy
revenues generated offshore in federal waters that lie between outward extensions of
the state’s lateral boundaries over the past 10 years. Each coastal state is to pass
along 35% of the total it receives to eligible coastal political subdivisions, with the
allocation among these subdivisions in each state to be based on a formula that
considers population, length of coastline, distance from leased tracts, and amount of
outer continental shelf support activities within that subdivision.
Each state could use these funds to implement a plan it develops that would
improve environmental quality and address the impacts of offshore energy activities.
All plans must be approved by the Secretary of the Interior before states could receive
funds. Plans must describe how recipients will evaluate the effectiveness of their
implementation efforts. Each eligible state with an approved plan would receive at
least 5% of the total available amount each year. Authorized uses of the funds would
be limited to (1) conserving, protecting or restoring coastal areas, including wetlands;
(2) mitigating damage to or protecting fish, wildlife, or natural resources; (3) paying
reasonable planning assistance and administrative costs; (4) implementing federally
approved plans or programs to minimize the effects of natural disasters, and; (5)
funding onshore infrastructure and public service projects that mitigate impacts of
outer continental shelf activities. Revisions and amendments to plans would have to
be approved by the Secretary. In addition, a new coastal restoration program would
be established using 2% of the funds available each year to assess the effects of
coastal habitat restoration techniques and develop new technologies, develop
improved models to predict ecosystem change, and identify economic options to
address socio-economic consequences of coastal degradation. This program would
be administered by the Secretaries of the Interior and Commerce. In addition to the

2% funding, an appropriation of $10 million annually would be authorized.

Policy Context. This is the most recent of repeated efforts to allocate a
portion of federal offshore oil and gas revenues to coastal states to assist them in
addressing the impacts of these activities. Recent Congresses, starting with the 105th,
considered numerous similar legislative proposals. These proposals came to be
known as CARA, or the Conservation and Reinvestment Act. In the 106th Congress,
the House passed a version of CARA on May 11, 2000 (H.R. 701). Some of these
proposals were also reflected in the Clinton Administration’s Lands Legacy Initiative
proposal in 2000, and also a one-time $150 million appropriation provided in the
FY2001 Commerce appropriations legislation (P.L. 106-553) for coastal impact
Support for the CARA proposals, which would also have funded many related
federal natural resource protection programs, grew as the budget deficit of the early
and mid-1990s was replaced by forecasts of a surplus, as protecting natural resources
came to be viewed as part of the effort to address sprawl, and as efforts and support
to secure federal funding for coastal resource protection and restoration efforts grew.
With the replacement of the budget surplus forecast with deficit forecasts and
changing national priorities since the 9/11 terrorist attacks, broad support for wide-
ranging legislation like CARA has declined, but interest has remained in returning

a portion of the money currently paid to the federal government by private companies
leasing offshore areas to those locations most affected by the offshore activity.
Section 2054: Repurchase of Leases That Are Not Allowed To Be
Explored or Developed. Under certain circumstances any federal lease (oil, gas,
coal, tar sands, etc.) if not allowed to be explored or developed would be authorized
for repurchase and cancellation by the Secretary of the Interior.
Section 2055: Limitation on Required Review Under NEPA. Certain
activities would not be subject to NEPA if the activity is conducted for the purpose
of exploration or development of a domestic federal energy resource.
Title XXI — Coal — Resources
Sections 2101-2109: Federal Coal Leases. This subtitle would modify
federal coal leasing procedures to encourage greater coal production on federal lands.
Issues raised by these provisions include their impact on regional competition and
returns to the U.S. Treasury.
Current Law. Under the Mineral Leasing Act of 1920 (30 U.S.C. 203),
modifications to an existing coal lease would not exceed 160 acres or add acreage
larger than that in the original lease. Coal leases are subject to diligent development
requirements, but the Secretary of the Interior may suspend the condition upon
payment of advance royalties. Advance royalties are computed on a fixed production
reserve ratio, and the aggregate number of years advance royalties may be accepted
in lieu of production is 10. An operation and reclamation plan must be submitted
within three years after a lease is issued under the Leasing Act (30 U.S.C. 207).
Financial assurance is required to guarantee payment of bonus bid installments (30
U.S.C. 201 (a)).
H.R. 6. The House-passed bill would repeal the 160 acre limitation on coal
lease modifications. The total area added to an existing coal lease through a
modification could not exceed 1,280 acres or add acreage larger than the original
lease (Sec. 2102). Criteria would be established for extending the mine-out period of
a coal lease beyond 40 years (Sec. 2103). The Secretary of the Interior may upon
payment of an advance royalty, suspend a coal lessee’s requirement for continuous
operation. Advance royalties would be based on the average price of coal sold on the
spot market from the same region, and the aggregate number of years advance
royalties could be accepted in lieu of production would not exceed 20 (Sec. 2104).
The current three-year deadline for submission of a coal lease operation and
reclamation plan would be repealed (Sec. 2105). The financial surety bond or other
financial guarantee for a bonus bid would no longer be required (Sec. 2106). The
Secretary of the Interior, in consultation with the Secretaries of Agriculture and
Energy, would be required to assess coal on public lands, including low-sulfur coal
and various impediments to developing such resources (Sec. 2107). Amendments
made under this provision would apply to any coal lease issued before, on, or after
the date of enactment (Sec. 2108). The Secretary of the Interior would report to

Congress on plans to resolve conflicts between development of coal and coalbed
methane in the Powder River Basin (Sec. 2109).
Title XXII — Energy Development in Arctic Refuge
Current Law
Section 1003 of the Alaska National Interest Lands Conservation Act of 1980
(ANILCA, P.L. 96-487, 94 Stat. 2371) prohibited oil and gas development in the
entire Arctic National Wildlife Refuge, or “leasing or other development leading to
production of oil and gas from the range” unless authorized by an act of Congress.
Section 1002 required a legislative environmental impact statement on proposed
development and its potential effects. The Final Legislative Environmental Impact
Statement (FLEIS) and a recommendation to proceed to full development was issued
in 1987. Under current law for the management of national wildlife refuges (16
U.S.C. §668dd), and under 43 C.F.R. §3101.5-3 for Alaskan refuges specifically, an
activity may be allowed in a refuge only if it is compatible with the purposes of the
particular refuge and with those of the Refuge System as a whole. In the 25 years
since the passage of ANILCA, various unsuccessful attempts have been made to pass
development legislation.
Section 2201: Short Title. The short title is the “Arctic Coastal Plain
Domestic Energy Security Act of 2005.”
Section 2202: Definitions. The ANWR Coastal Plain would be defined
as approximately 1.5 million acres as identified under ANILCA, and described in
Appendix I to Part 37 of Title 50 C.F.R. “Secretary” would be defined as the
Secretary of the Interior.
Comments. The Appendix refers to the legal boundaries of the Coastal Plain
that were administratively drawn to exclude the three townships selected by the
Kaktovik Inupiat Corporation (KIC, an Alaska Native Village Corporation) from the
defined Coastal Plain. However, the lands are within the geographical limits of the
“coastal plain.” Also under ANILCA, KIC was entitled to select a fourth township,
for a total of approximately 92,000 acres. In addition, there are over 10,000 acres of
Native-owned allotments in the Refuge. These are basically surface ownerships, with
the federal government reserving the oil, gas, and coal rights. Although allotments
were originally restricted titles, under P.L. 108-337, allotments may now be
subdivided and dedicated as if the surface estate were held in unrestricted, fee-simple
title — a fact that could facilitate development on them if the Refuge is opened.
Section 2203: Leasing Program. This section would direct the Secretary
to establish the leasing program subject to various conditions, described below.
Section 2203(a) and (b): Establishment of Leasing Program and
Repeal of Leasing Prohibition. Acting through the Bureau of Land
Management and in consultation with the Fish and Wildlife Service, the Secretary
would be required to establish a competitive oil and gas leasing program under the

Mineral Leasing Act (30 U.S.C. 181 et seq.) for the Coastal Plain; the program is to
result in “no significant adverse effect” on specified environmental and subsistence
resources, and leasing is to be conducted in “a manner that ensures the receipt of fair
market value by the public for the mineral resources to be leased.” Section 1003 of
ANILCA would be repealed.
Section 2203(c) and (d): Compatibility with Purposes of Refuge;
NEPA Requirements; No Effect on State Authorities. Section 2203(c)
states that the oil and gas leasing program and activities in the Coastal Plain are
deemed to be compatible with the purposes for which ANWR was established and
that no further findings or decisions are required to implement this determination.
Subsection (c) would also declare that the FLEIS is deemed to satisfy the
requirements of NEPA with respect to actions by the Secretary to develop and
promulgate leasing regulations, yet requires the Secretary to prepare an
Environmental Impact Statement (EIS) with respect to other actions, some of which
might usually require only a (shorter) environmental assessment. Consideration of
alternatives is to be limited to two choices, a preferred option and a “single leasing
alternative.” (Generally, an EIS analyzes several alternatives, including a “no action”
Subsection (d) would declare that the title does not expand or limit state
regulatory authority.
Comments. The language of subsection (a) appears to answer the
compatibility question and to eliminate the usual compatibility determination
processes. The extent of leasing “activities” that might be included as compatible is
debatable: at issue would be whether the term encompasses, for example, necessary
support activities, such as construction and operation of port facilities, staging areas,
and personnel centers.
Section 2203(e) and (f): Special Areas. This subsection would allow the
Secretary to set aside up to 45,000 acres (and names one specific special area that
must be designated) in which leases, if permitted, must prohibit surface occupancy.
The FLEIS identified four special areas which together total more than 52,000 acres,
so the Secretary would be required to select among these areas or any others that may
seem significant. Section 2203(f) also would state that the closure authority in the
ANWR title was the Secretary’s sole closure authority, which might limit possible
secretarial actions under the Endangered Species Act.
Section 2203(g): Issuance and Revision of Regulations. Regulations
would be issued within 15 months of enactment, and reviewed and revised
periodically in light of any significant biological, environmental, or engineering data
coming to the Secretary’s attention.
Section 2204: Leasing Procedures, Bidding System, Minimum
Acreage. The Secretary would establish procedures (a) to receive and consider
nominations for areas to be included in a lease sale, (b) to hold the sales, and (c)
provide for public notice and comment. The bidding system would be by sealed
competitive cash bonus bids, and the first offering would total at least 200,000 acres.

The first sale would be conducted within 22 months of enactment, with additional
sales thereafter as industry interest warranted.
Section 2205: Grant of Leases. The Secretary could grant leases to the
highest responsible qualified bidder. Leases could not be transferred to another party
without approval of the Secretary, acting in consultation with the Attorney General.
Section 2206: Terms and Conditions of Leases; Project Labor
Agreements. Under § 2206(a), leases would provide for at least a 12.5% royalty
payment; allow for seasonal closure of the Coastal Plain to exploratory drilling to
protect caribou calving areas and other species; require lessees to be responsible for
reclamation of adversely affected lands in the Coastal Plain; and provide that lessees
could not delegate their obligation to reclaim lands without written approval of the
Secretary. The subsection would further require that the reclamation standard be an
ability to support the uses of the land before exploration and development, or “a
higher or better use” as approved by the Secretary, and that the lease contain fish,
wildlife, and environmental protection standards as required in §2203(a)(2). The
subsection would require that lessees use their best efforts to provide employment
and contracts to Alaska Natives and Native Corporations, and would prohibit export
of oil produced under the lease.
Subsection 2206(b) would direct the Secretary to require lessees to negotiate
project labor agreements (PLAs) — “recognizing the Government’s proprietary
interest in labor stability and the ability of construction labor and management to
meet the particular needs and conditions of projects to be developed ....” (A PLA is
an agreement between a project owner or main contractor and the union(s)
representing the craft workers for a particular project; it establishes the terms and
conditions of work that will apply for the particular project.)
Section 2207: Environmental Protection. This section contains most
(but not all) of the environmental protection provisions of the title.
Section 2207(a): No Significant Adverse Effect; 2,000-Acre Limit.
Subject to the requirements in §2203 (see above), the Secretary would ensure that oil
and gas activities on the Coastal Plain resulted in “no significant adverse impact” on
fish, wildlife, their habitat, and the environment; require use of best commercially
available technology; and “ensure that the maximum amount of surface acreage
covered by production and support facilities, including airstrips and any areas
covered by gravel berms or piers for support of pipelines, does not exceed 2,000
acres on the Coastal Plain.” (This last provision has been a focus of considerable
debate concerning (a) its applicability to the more than 100,000 acres of Native lands
in the Refuge, (b) the facilities that would be limited; and (c) the economic and
practical impacts of such a limitation. For more information, see CRS Report
RS22143, Oil and Gas Leasing in the Arctic National Wildlife Refuge (ANWR): the

2,000-Acre Limit.)

Section 2207(b): Assessment and Mitigation. The Secretary would
have to require a site-specific analysis of the probable effects of drilling and other
activities on fish, wildlife, and the environment; and a plan to avoid or reduce any

significant adverse effect on these resources. The plan’s developer would have to
consult with any agencies with jurisdiction over matters mitigated in the plan.
Section 2207(c): Promulgating Regulations. Before implementing the
leasing program, the Secretary would be required to promulgate “regulations, lease
terms, conditions, restrictions, prohibitions, stipulations, and other measures” to
ensure that activities on the Coastal Plain under this title were consistent with the
title’s environmental requirements and purposes.
Section 2207(d): Compliance with Other Environmental Laws and
Requirements. This subsection would set out 21 requirements for the
environmental standards in the leasing program, to be implemented through
regulations, lease terms, etc. These requirements would include, among other things:
complying with all applicable state and federal environmental laws; setting
appropriate seasonal limits on operations; prohibiting public access via specified
roads or other modes of transportation; consolidating facilities; treating and disposing
of specified wastes, avoiding (to the extent practicable) streams, rivers, wetlands,
etc.; complying with reasonable stipulations for cultural and archeological resources;
and other requirements.
Section 2207(e): Documents To Be Considered by Secretary. In
developing the regulations, lease terms, etc., the Secretary is to consider stipulations
and standards in three specified documents.
Section 2207(f): Consolidation of Facilities. The Secretary would be
directed to develop and update a plan to consolidate facilities, avoid unnecessary
duplication, site activities to minimize their environmental impacts, and use existing
facilities where practicable.
Section 2207(g): Access to Coastal Plain. The Secretary would be
required to manage the Coastal Plain to allow subsistence access, including the use
of snowmobiles and motorboats (16 U.S.C. 3121), and to allow local residents
generally to have “reasonable access” to the Coastal Plain for traditional uses.
Section 2208: Expedited Judicial Review. Section 2208 would require
that any complaints seeking judicial review be filed within 90 days. (Subsections
(a)(1) and (a)(2) appear to contradict each other as to where suits are to be filed.)
Section 2208(a)(3) would limit the scope of review by stating that review of a
Secretarial decision, including environmental analyses, would be limited to whether
the Secretary complied with the terms of the ANWR Title, be based on the
administrative record, and that the Secretary’s analysis of environmental effects is
“presumed to be correct unless shown otherwise by clear and convincing evidence
to the contrary.” (This standard is unclear, but in this context arguably would make
overturning a decision more difficult.)
Section 2209: Federal and State Distribution of Revenues; Low
Income Home Energy Assistance. This section would provide that 50% of
adjusted revenues be paid to Alaska, and the balance deposited in the U.S. Treasury
as miscellaneous receipts, except for part of the federal share of bonus bids that
would be available to be appropriated for low income home energy assistance and a

portion (not to exceed $11 million in an unspent balance, with $5 million available
for annual appropriation) that would go into a fund to assist Alaska communities
under §2212 in addressing local impacts of energy development (see below). Section
2209(c) would allow certain revenues from bids for leasing to be available for
appropriation for energy assistance for low-income households (42 U.S.C. 8621, the
LIHEAP program; see CRS Report RL31865, Low Income Home Energy Assistance
Program (LIHEAP): Program and Funding.)
Comments. Under §2203(a), the Secretary is to establish and implement a
leasing program under the Mineral Leasing Act, yet §2212 directs a revenue sharing
program different from that in the MLA, which may raise validity questions. If the
alternative disposition were struck down and the revenue provisions were determined
to be severable, Alaska could receive 90% of ANWR revenues.
Section 2210: Rights of Way Across the Coastal Plain. This section
would declare that the provisions of 16 U.S.C. 3161 (an ANILCA provision
containing a congressional finding in support of a single comprehensive statutory
authority for approval of transportation systems) would not apply to oil and gas
transportation on the Coastal Plain. The Secretary would have to ensure that rights
of way and easements would not cause significant adverse effects on fish, wildlife,
subsistence resources, and the environment, and that facilities were sited or designed
to avoid unnecessary duplication of roads and pipelines. Appropriate regulations
would have to be issued within 15 months of enactment, as required in §2203(g).
Section 2211: Surface and Subsurface Estate Conveyance to Native
Corporations. The Secretary would be required to convey certain additional
surface rights to the Kaktovik Inupiat Corporation and certain subsurface rights to the
Arctic Slope Regional Corporation (ASRC).
Section 2212: Local Government Impact and Community Service
Assistance. The Secretary would be authorized to use funds from the Coastal
Plain Local Government Impact Aid Assistance Fund for financial assistance to
eligible entities as a result of oil and gas exploration and development in the Coastal
Plain. A maximum of $5 million could be appropriated each year; the
unappropriated balance in the fund would be limited to a maximum of $11 million.
Title XXIII — Set America Free (SAFE)
Sections 2301- 2305: The Set America Free Act of 2005. The findings
in this title would recognize predictions of growing energy consumption and
dependence upon imported oil, and the accompanying risks (Sec. 2302). A U.S.
commission would make recommendations for “a coordinated and comprehensive
North American energy policy that will achieve energy self-sufficiency by 2025" for
not only the United States but Canada and Mexico as well (Sec. 2303). The panel
would be called United States Commission on North American Energy Freedom.
Citizens of any of the three nations may be among the 16 appointees to the
commission, which would submit a report on findings and recommendations within
a year. $10 million would be authorized for two fiscal years to carry out the act

(Sec. 2304). The President would submit a response or set of recommendations
pursuant to the commission’s report within 90 days of receipt of the report (Sec.


Title XXIV — Grand Canyon Hydrogen-Powered
Transportation Demonstration
Sections 2401-2406. The Secretaries of Energy and the Interior would be
required to establish a research and development program relating to hydrogen-based
transportation technologies suitable for operations in sensitive areas such as national
parks (Sec. 2404). Over the duration of the program, the Secretaries would report to
Congress annually on ongoing and planned activities (Sec. 2405). A total of
$120,000 would be authorized over three years for the program (Sec. 2406).
Title XXV — Additional Provisions
Section 2501: Wind Energy Royalty Relief. This provision, which was
added as a floor amendment (H.Amdt. 97), would reduce by 50% any royalty
payments, excluding the costs of processing the rights-of-way, for wind energy
generation on BLM lands that otherwise would be paid to the Treasury. This royalty
relief provision would terminate after 10 years of enactment or after the Secretary of
the Interior declared that at least 10,000 megawatts of electricity was available from
renewable sources on public lands, whichever is sooner.

Table 1. Authorizations in H.R. 6 as passed by the House
(in millions of dollars)
ble, text in italics and smaller font indicate subcategories.
. 6 HouseTitleFY2005FY2006FY2007FY2008FY2009FY2010FY2005-FY2011FY2012-FY2006-
FY2010 FY2015 FY2015
Subtitle A Federal Programs
Sec. 101Energy & Water Saving Measures in Congressional Buildings $2.0$2.0$2.0$2.0$2.0$10.0 $10.0
iki/CRS-RL32936Sec. 108Advanced Building Efficiency Testbed 18.0 18.0
g/wSubtitle B Energy Assistance and State Programs
leakSec. 121Low-income Home Energy Assistance Program 5,100.05,100.05,100.0 15,300.0 15,300.0
://wikiSec. 122Weatherization Assistance 500.0600.0700.0 1,800.0 1,800.0
httpSec. 123State Energy Programs 100.0100.0125.0 325.0 325.0
Sec. 124Energy Efficient Appliance Rebate Programs 250.0
Sec. 125Energy Efficient Public Buildings 150.0
Sec. 126Low Income Community Energy Efficiency Pilot Program 60.0 60.0
Subtitle A General Provisions
Sec. 201Assessment of Renewable Energy Resources 50.0
Sec. 202Renewable Energy Production Incentive (ss for FY05 - FY25)ssssssssssssssssssss
Sec. 204Insular Areas Energy Security a

. 6 HouseTitleFY2005FY2006FY2007FY2008FY2009FY2010FY2005-FY2011FY2012-FY2006-
FY2010 FY2015 FY2015
Sec. 205Use of Photovoltaic Energy in Public Buildings
Photovoltaic Energy Commercialization Program 250.0
Photovoltaic Systems Evaluation Program 50.0
Sec. 207Renewable Energy Security 150.0150.0200.0250.0250.01,000.0 1,000.0
Sec. 208Installation of Photovoltaic System 20.0 20.0 20.0
Sec. 209Sugar Cane Ethanol Pilot Program 8.0 8.0 8.0
Subtitle C Hydroelectric
iki/CRS-RL32936Sec. 241Hydroelectric Production Incentives
s.orSec. 242Hydroelectric Efficiency Improvement
leakTITLE III — OIL AND GAS — Commerce
://wikiSubtitle A Petroleum Reserve and Home Heating Oil
httpSec. 301Permanent Authority to Operate the Strategic Petroleum Reservessa ssssssssssssssssa
and Other Energy Programs
Subtitle A Clean Coal Power Initiative
Sec. 401Authorization of Appropriations 200.0200.0200.0200.0200.01,000.0200.0600.01,800.0
Subtitle B Clean Power Projects
Sec. 411Coal Technology Loan 125.0 125.0 125.0
Sec. 416Electron Scrubbing Demonstration (allocation from DOE funds) 5.0a 5.0 a5.0 a
Subtitle D Coal and Related Programs

. 6 HouseTitleFY2005FY2006FY2007FY2008FY2009FY2010FY2005-FY2011FY2012-FY2006-
FY2010 FY2015 FY2015
Sec. 441Clean Air Coal Program
Pollution Control Projects 300.0100. 500.0
Generation Projects (FY2012 $400M, FY2013 $300M) 250.0350.0400.0400.01,400.0400.0700.02,500.0
Sec. 503Indian Energy (ss for FY2006 - FY2016) ssssssssssssssssss
Federal Power Marketing Administrations (amount has been rounded up for this table, actual amount is $0.75M)0.8a 0.8 a 0.8a
g/wSubtitle B General Nuclear Matters
s.orSec. 622NRC Training Program 5.0 5.0
Sec. 631Cooperative R&D and Special Demonstration Projects for the 30.0 30.0
://wikiUranium Mining Industry
httpSubtitle C Additional Hydrogen Production Provisions
Sec. 651Hydrogen Production Programs 65.074.886.098.9113.7438.3130.7750.71,319.7
Subtitle D Nuclear Security
Sec. 668Authorization of Appropriationsssssssssssssssssss
Subtitle B Hybrid Vehicles, Advanced Vehicles & Fuel Cell Buses
Sec. 712Hybrid Retrofit & Electric Conversion Program20.035.045.0ssss 100.0 100.0
Sec. 713Efficient Hybrid & Advanced Diesel Vehicles 300.0300.0300.0300.0300.01,500.0300.01,200.03,000.0
Sec. 724Authorization of Appropriations 200.0a 200.0a 200.0a

Advanced Vehicles (secs.721-723)

. 6 HouseTitleFY2005FY2006FY2007FY2008FY2009FY2010FY2005-FY2011FY2012-FY2006-
FY2010 FY2015 FY2015
Sec. 731Fuel Cell Transit Bus Demonstration 50.0
Subtitle C Clean School Buses
Sec. 742Replacement of Certain School Buses w/ Clean School Buses45.065.090.0ssss 200.0 200.0
Sec. 743Diesel Retrofit Program20.035.045.0ssss 100.0 100.0
Sec. 743ADiesel Truck Retrofit & Fleet Modernization Program20.035.045.0ssss 100.0 100.0
Sec. 744Fuel Cell School Buses20.025.025.0 70.0 70.0
Subtitle D Miscellaneous
iki/CRS-RL32936Sec. 751Railroad Efficiency 110.0 110.0
g/w a a a
s.orSec. 755Conserve by Bicycling Program
leakSec. 756Reduction of Engine Idling of Heavy-Duty Vehicles 19.530.045.0 94.5 94.5
://wikiSec. 757Biodiesel Engine Testing Program 25.0
httpSubtitle E Automobile Efficiency
Sec. 771Implementation & Enforcement of Fuel Economy Standards c 10.0
Sec. 809Authorization of Appropriations 546.0750.0850.0900.01,000.04,046.04,046.0
Subtitle A Science Programs
Sec. 901Rare Isotope Accelerator d ssssssssssssssssss
Sec. 910Authorization of Appropriations Total 3,785.04,153.04,628.05,300.05,800.023,666.0 23,666.0

. 6 HouseTitleFY2005FY2006FY2007FY2008FY2009FY2010FY2005-FY2011FY2012-FY2006-
FY2010 FY2015 FY2015
Part of the total is specifically allocated as follows in italic:
Systems Biology Program (sec. 902)100.0ssssssss100.0100.0
Scientific Computing (sec. 905) — 252.0270.0350.0375.0400.01,647.01,647.0
Fusion Energy Sciences (sec.906, except sec. 906(c))335.0349.0362.0377.0393.01,816.01,816.0
ITER Construction (906c) ssssssssssssss
Science and Technology Scholarship Program (sec. 907)
Office of Science and Technical Information (sec. 908)
iki/CRS-RL32936Science and Engineering Pilot Program (sec. 909)
g/w e
s.orSec. 910(h)Integrated Bioenergy Research and Development 245.0 245.0
leakSubtitle C Energy Efficiency
://wikiChapter 1 Vehicles, Buildings, and Industries
httpSec. 930Authorization of Appropriations Total for Chapter 1 -620.0700.0800.0925.01,000.04,045.0 4,045.0
Part of the total is specifically allocated as follows in italic:
Vehicles (sec. 923)200.0240.0270.0310.0340.01,360.01,360.0
Buildings (sec. 924)100.0130.0160.0200.0240.0830.0830.0
(Buildings, grant prg. (924(b)) )
Industries (sec. 925(a))100.0115.0140.0170.0190.0715.0715.0
Electric Motor Control Technology (sec. 925(b))2.0
Demonstration & Commercial Applications (sec. 926)

. 6 HouseTitleFY2005FY2006FY2007FY2008FY2009FY2010FY2005-FY2011FY2012-FY2006-
FY2010 FY2015 FY2015
Secondary Electric Vehicle Battery Use Program (sec. 927)
Next Generation Lighting Initiative (sec. 928)
Chapter 2 Distributed Energy and Electric Energy Systems
Sec. 934Authorization of appropriations Total for Chapter 2 220.0240.0250.0265.0275.01,250.0 1,250.0
Part of the total is specifically allocated as follows in italic:
Micro-cogeneration Energy Technology (sec. 932(b))
Electricity Trans. & Dist. & Energy Assurance (sec. 933)130.0140.0150.0160.0165.0745.0745.0
iki/CRS-RL32936 (High Voltage Transmission Lines (sec.933(c)) )
s.orSubtitle D Renewable Energy
leakSec. 945Authorization of Appropriations Total 465.0605.0775.0940.01,125.03,910.0 3,910.0
://wikiPart of the total is specifically allocated as follows in italic:
httpConcentrating Solar power (sec. 938)100.0140.0200.0250.0300.0990.0990.0
Bioenergy (sec. 939)200.0245.0310.0355.0400.01,510.01,510.0
(Biorefinery (sec. 939(c)) )100.0125.0150.0175.0200.0750.0750.0
Wind (sec. 940)
(Regional Field Verification Program (sec. 940(c)) b)
(Research and Testing Facility (sec. 940(b)) )
Geothermal (sec. 941)
Photovoltaic (sec. 942)50.0100.0150.0200.0300.0800.0800.0

. 6 HouseTitleFY2005FY2006FY2007FY2008FY2009FY2010FY2005-FY2011FY2012-FY2006-
FY2010 FY2015 FY2015
Subtitle E Nuclear Energy Programs
Chapter 1Nuclear Energy Research Programs
Sec.956Authorization of appropriations Total for Chapter 1 407.0427.0449.0471.0495.02,249.0 2,249.0
Part of the total is specifically allocated as follows in italic:
University Nuclear Science & Engineering Support (sec. 949) 35.244.449.255.060.0243.7243.7
Chapter 2Next Generation Nuclear Plant Program
Sec. 961Authorization of appropriations Total for Chapter 2 except for 150.0150.0150.0150.0150.0750.0 750.0
iki/CRS-RL32936the demonstration plant activities in sec. 961(b).
g/wSec. 961(b)Reactor Operation & Construction f ssssssssssssss
s.orSubtitle F Fossil Energy
Chapter IResearch Programs
://wikiSec. 968 Fossil Energy Total for Chapter 1 583.0611.0626.0641.0657.03,118.0 3,118.0
Part of the total is specifically allocated as follows in italic:
Carbon Dioxide Capture Research & Development (sec. 967)
Sec. 968BWestern Hemisphere Energy Cooperation 66.0
Sec. 968CArctic Engineering Research Center 18.0
Sec. 968DBarrow Geophysical Research Facility 61.0 61.0 61.0
Chapter 2Ultra-Deepwater & Unconventional Natural Gas & Other Petroleum
Sec. 976Funding g Total for Chapter 2

. 6 HouseTitleFY2005FY2006FY2007FY2008FY2009FY2010FY2005-FY2011FY2012-FY2006-
FY2010 FY2015 FY2015
Subtitle A Reliability Standards
Sec. 1211Electric Reliability Standards b
Subtitle B Transmission Infrastructure Modernization
Sec. 1225Electric Transmission and Distribution Programs
(e) Power Delivery Research Initiative 140.0
Sec. 1226Advanced Power System Technology Incentive Program
Subtitle F Repeal of PUHCA
iki/CRS-RL32936Sec. 1276Authorization of Appropriations ssassssssssssssssssa
leakSubtitle C Other Provisions
://wikiSec. 1448Oxygen-Fuel 100.0100.0100.0 300.0 300.0
httpSec. 1451Carbon-Based Fuel Cell Development
(amount has been rounded up for this table, actual amount is $0.85M)
Subtitle A General Provisions
Sec. 1503MTBE Merchant Producer Conversion Assistance250.0250.0250.0250.0250.0250.01,500.0250.0250.02,000.0
Sec. 1512Conversion Assistance for Cellulosic Biomass & Waste-Derived100.0250.0400.0 750.0 750.0
Subtitle B Underground Storage Tank Compliance (UST)
Sec. 1531Authorization of Appropriations (from the Leaking UndergroundStorage Tank (LUST)Trust Fund h)

. 6 HouseTitleFY2005FY2006FY2007FY2008FY2009FY2010FY2005-FY2011FY2012-FY2006-
FY2010 FY2015 FY2015
Cleanup of Leaks from Underground Fuel Tanks, General 200.0200.0200.0200.0200.0 1,000.0 1,000.0
Cleanup of Leaks Containing Oxygenated Fuels (e.g. MTBE,200.0200.0200.0200.0200.0 1,000.0 1,000.0
State Ust/lust Program Implementation & Tank Inspections100.0100.0100.0100.0100.0 500.0 500.0
UST Leak Prevention & Program Compliance/enforcement55. 275.0 275.0
(Total amount authorized from LUST Trust Fund)555.0555.0555.0555.0555.0 2,775.0 2,775.0
Sec. 1531Authorization of Appropriations (from general revenues)
iki/CRS-RL32936Generally to Administer and Enforce Current UST Program(except for the activities specified here in sec. 1531 above) 200.0 200.0
g/wSolid Waste Disposal Act (SWDA, Subtitle I)
s.orSubtitle C Boutique Fuels
leak a a a
Sec. 1541Reducing the Proliferation of Boutique Fuels
Sec. 1613Low-Volume Gas Reservoir Study 3.5
Sec. 1701Grants to Improve the Commercial Value of Forest Biomass, **
(includes $50M for FY2016)
Subtitle A Production Incentives
Sec. 2008Orphaned, Abandoned, or Idled Wells on Federal Land 125.0
Technical Assistance for Non-Federal Land (sec. 2008 f)
Sec. 2011Preservation of Geological and Geophysical Data 150.0

. 6 HouseTitleFY2005FY2006FY2007FY2008FY2009FY2010FY2005-FY2011FY2012-FY2006-
FY2010 FY2015 FY2015
Subtitle B Access to Federal Land
ec.2023 a,bManagement of Federal Oil & Gas Leasing Programs 160.0 160.0
Sec. 2023 cImproved Enforcement 80.0 80.0
Subtitle D Miscellaneous Provisions
Sec. 2053Domestic Offshore Energy Reinvestment
Sec. 2212Local Government Impact Aid & Community Service Assistance a a
s.orSec. 2304U.S. Commission on North American Energy Freedom5.05.0 10.0 10.0
://wikiSec. 2406Authorization of Appropriations 1.2 1.2
Total Authorized Appropriations 6,185.016,000.816,824.612,235.912,354.412,572.276,172.81,523.74,280.782,027.2
Table prepared by CRS using the text of H.R. 6 as passed by the House on April 21, 2005.
This table shows funding that would be authorized, including loans but not loan guarantees, in H.R. 6 as passed by the House. The section number in the far left column is the
location of the authorizing language in the bill. When an activity is described in a separate section of the bill from where it is authorized, it is indicated in parentheses after the
program title in column two.
ss. Such sums as may be necessary.
a. No fiscal year(s) indicated. A single amount in a row indicates a lump sum.

b. No more than specified amount(s).
c. Sec. 771. Funds go to the National Highway Traffic Safety Administration in the Department of Transportation.
d. Sec. 901. No more than $1.1 billion in federal funds prior to operation.
e. Sec. 910(h). A minimum of $5M per year must go to training of minority and socially disadvantaged farmers and ranchers.
f. Sec. 961(b). Reactor Operation & Construction Limit of $500M for construction.
g. Sec. 976. Congressional Budget Office estimate
h. Sec. 1531. The LUST Trust Fund has been funded primarily through a 0.1 cent-per-gallon motor fuels tax that commenced in 1987. For EPA and states to administer the
iki/CRS-RL32936LUST cleanup program, Congress appropriated from the Fund nearly $76 million for FY2004 and nearly $70 million for FY2005. The President has requested $73 million for