F6652I59
I59
I60I
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HR 2828 IH

I39
I46
I41109T4th CONGRESS
I421T4st Session
I43H. R. 2828

I30To ensure that the United States leads the world in developing and manufacturing next generation energy technologies, to grow the economy of the United States, to create new highly trained, highly skilled American jobs, to eliminate American overdependence on foreign oil, and to address the threat of global warming.
I44
I45IN THE HOUSE OF REPRESENTATIVES
I46June T19, 2005
I47Mr. T4InsleeT1 (for himself, Mr. T4Van HollenT1, Mr. T4HoltT1, Mr. T4IsraelT1, Mr. T4HondaT1, Mr. T4McDermottT1, Mr. T4LarsenT1 of Washington, Mr. T4JacksonT1 of Illinois, Ms. T4SchakowskyT1, Mr. T4LangevinT1, Mr. T4GrijalvaT1, Mr. T4EmanuelT1, Ms. T4BaldwinT1, Mr. T4George MillerT1 of California, and Mr. T4SmithT1 of Washington) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Science, Ways and Means, Financial Services, Transportation and Infrastructure, Education and the Workforce, Government Reform, and Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned
I48
I49A BILL
I53To ensure that the United States leads the world in developing and manufacturing next generation energy technologies, to grow the economy of the United States, to create new highly trained, highly skilled American jobs, to eliminate American overdependence on foreign oil, and to address the threat of global warming.

S6201
I20T3Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,T1 

I72SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
I20(a) T5Short TitleK._This Act may be cited as the ``New Apollo Energy Act of 2005''.
I20(b) T5Table of ContentsK._The table of contents of this Act is as follows:
Q10
S6211

I42Sec.1.Short title; table of contents.
I74TITLEI_FINDINGS AND PERFORMANCE GOALS
I42Sec.101.Findings.
I42Sec.102.Performance goals.
I74TITLEII_FEDERAL RESEARCH AND DEVELOPMENT PARTNERSHIPS WITH INDUSTRY FOR NEW TECHNOLOGY
I74T1SubtitleA_General provisions
I42Sec.201.Authorization of appropriations.
I42Sec.202.Participation.
I42Sec.203.Cost sharing.
I42Sec.204.Education and outreach.
I42Sec.205.Definition.
I74T1SubtitleB_Clean energy technology research program
I42Sec.211.Definitions.
I42Sec.212.Enhanced clean energy research, development, and demonstration.
I74T1SubtitleC_Energy efficiency research, development, and demonstration program
I42Sec.221.Enhanced energy efficiency research, development, and demonstration.
I42Sec.222.Enhanced aeronautical system energy efficiency research, development, and public-private partnership.
I42Sec.223.Next Generation Lighting Initiative.
I42Sec.224.National Building Performance Initiative.
I74T1SubtitleD_Additional research programs
I74Part1_Fusion
I42Sec.231.Plan for fusion experiment.
I42Sec.232.Definitions.
I74Part2_Ultra-deepwater and extended reach drilling and carbon sequestration technologies
I42Sec.241.Program authority.
I42Sec.242.Ultra-deepwater and extended reach drilling and carbon sequestration and unconventional technologies program.
I42Sec.243.Sunset.
I42Sec.244.Definitions.
I74TITLEIII_TAX INCENTIVES FOR NEW TECHNOLOGIES
I42Sec.301.References.
I42Sec.302.Administration of title.
I74T1SubtitleA_Near term tax incentives
I42Sec.311.Extension through 2015 for placing qualified facilities in service for producing renewable electric energy.
I42Sec.312.Expansion and modification of renewable resource credit.
I42Sec.313.Tradable renewable resource credit for public utilities and other tax exempt organizations.
I42Sec.314.Alternative motor vehicle credit.
I42Sec.315.Modification of credit for qualified electric vehicles.
I42Sec.316.Extension of biodiesel tax credits.
I42Sec.317.Credit for retail sale of alternative fuels as motor vehicle fuel.
I42Sec.318.Study of effectiveness of certain provisions by GAO.
I42Sec.319.Extension of deduction for certain refueling property.
I42Sec.320.Credit for installation of alternative fueling stations.
I42Sec.321.Incentive for certain energy efficient property used in business.
I42Sec.322.Energy efficient commercial buildings deduction.
I42Sec.323.Credit for construction of new highly energy-efficient homes.
I42Sec.324.Credit for energy efficient appliances.
I42Sec.325.Credit for distributed energy generation and demand management property.
I42Sec.326.Credit for energy efficient recycling or remanufacturing equipment.
I42Sec.327.Credit for distributed energy generation and demand management property used in residences.
I42Sec.328.Credit for energy management systems using residential real time metering systems.
I42Sec.329.Credit for flywheel property.
I42Sec.330.Credits for clean coal.
I74T1SubtitleB_Long Term Incentives
I42Sec.331.Tax incentives for retooling and investment in new facilities and assets to produce energy efficiency technologies and domestic clean energy production technologies.
I42Sec.332.Special rules for automotive industry.
I42Sec.333.Special rules for high-capacity airplanes.
I42Sec.334.New electricity transmission lines designed primarily to carry electricity from renewable energy resources.
I42Sec.335.New energy technologies commission.
I42Sec.336.Expenditure limitation.
I74TITLEIV_FEDERAL GOVERNMENT LEVERAGE TO MOVE NEW TECHNOLOGIES TO MARKET
I42Sec.401.Improved coordination of technology transfer activities.
I42Sec.402.Federal support for commercialization of new technologies.
I42Sec.403.Clean energy technology exports program.
I42Sec.404.International energy technology deployment program.
I42Sec.405.Risk pool for qualifying advanced clean energy technology.
I42Sec.406.Federal renewable and clean energy use.
I42Sec.407.Require the Export-Import Bank of the United States to meet renewable energy targets in its lending practices.
I42Sec.408.Grants for transit programs.
I42Sec.409.Grants for water and sewer improvement programs.
I42Sec.410.Loans for high-efficiency vehicles.
I42Sec.411.Requirement regarding purchase of motor vehicles by Executive agencies.
I42Sec.412.Federal energy efficiency.
I42Sec.413.Federal agency ethanol-blended gasoline and biodiesel purchasing requirement.
I42Sec.414.Permitting of wind energy development projects on public lands.
I42Sec.415.Energy savings performance contracts.
I42Sec.416.Municipality grants for distributed energy plans.
I42Sec.417.Green building standards for Federal buildings.
I74TITLEV_CONSUMER PROTECTION AND ASSISTANCE
I42Sec.501.Strategic Petroleum Reserve.
I42Sec.502.Regulatory oversight over energy trading markets and metals trading markets.
I42Sec.503.Increased funding for liheap, weatherization assistance.
I42Sec.504.National energy efficient housing.
I42Sec.505.National net metering requirement for utilities and interconnection standards for distributive energy generation.
I42Sec.506.Appliance standards.
I42Sec.507.Energy Star certification for solar water heaters.
I42Sec.508.Electric reliability standards.
I74TITLEVI_MARKET-BASED INITIATIVES TO REDUCE GREENHOUSE GASES
I42Sec.600.Definitions.
I74T1SubtitleA_Federal climate change research and related activities
I42Sec.601.National Science Foundation fellowships.
I42Sec.602.Research grants.
I42Sec.603.Abrupt climate change research.
I42Sec.604.NIST greenhouse gas functions.
I42Sec.605.Development of new measurement technologies.
I42Sec.606.Enhanced environmental measurements and standards.
I42Sec.607.Technology development and diffusion.
I42Sec.608.Agricultural outreach program.
I42Sec.609.NOAA report on climate change effects; preparation assistance.
I74T1SubtitleB_National Greenhouse Gas Database
I42Sec.611.National Greenhouse Gas Database and registry established.
I42Sec.612.Inventory of greenhouse gas emissions for covered entities.
I42Sec.613.Greenhouse gas reduction reporting.
I42Sec.614.Measurement and verification.
I74T1SubtitleC_Market-driven greenhouse gas reductions
I74Chapter1_Emission reduction requirements; use of tradeable allowances
I42Sec.621.Covered entities must submit allowances for emissions.
I42Sec.622.Compliance.
I42Sec.623.Borrowing against future reductions.
I42Sec.624.Other uses of tradeable allowances.
I42Sec.625.Exemption of source categories.
I74Chapter2_Establishment and allocation of tradeable allowances
I42Sec.631.Establishment of tradeable allowances.
I42Sec.632.Determination of tradeable allowance allocations.
I42Sec.633.Allocation of tradeable allowances.
I42Sec.634.Ensuring target adequacy.
I42Sec.635.Initial allocations for early participation and accelerated participation.
I42Sec.636.Bonus for accelerated participation.
I74Chapter3_Climate Change Credit Corporation
I42Sec.641.Establishment.
I42Sec.642.Purposes and functions.
I74Chapter4_Sequestration accounting; penalties
I42Sec.651.Penalties.
I42Sec.652.Sequestration accounting.
I74TITLEVII_ENERGY INDEPENDENCE
I74T1SubtitleA_Renewable fuels standard
I42Sec.701.Renewable fuels standard.
I42Sec.702.Elimination of oxygen content requirement for reformulated gasoline.
I42Sec.703.Public health and environmental impacts of fuels and fuel additives.
I42Sec.704.Analyses of motor vehicle fuel changes.
I42Sec.705.Additional Opt-in areas under reformulated gasoline program.
I42Sec.706.Federal enforcement of State fuels requirements.
I42Sec.707.Fuel system requirements harmonization study.
I42Sec.708.Report on renewable motor fuel.
I74T1SubtitleB_Renewable portfolio standard
I42Sec.711.Renewable portfolio standard.
I74T1SubtitleC_Oil Savings
I42Sec.721.Oil savings.
I42Sec.722.Determination of Equivalency between CAFE credits and greenhouse gas credits.
I42Sec.723.Elimination of 2˙09FLEET rule.
I74T1SubtitleD_Loan guarantees for biorefineries and renewable electricity generation facilities
I42Sec.731.Loan guarantees for biorefineries and renewable energy production facilities.
I74TITLEVIII_TAX OFFSETS
I42Sec.801.References.
I74T1SubtitleA_Budget neutrality
I42Sec.811.Tax reductions limited to revenue raised by tax offsets.
I74T1SubtitleB_Denial of treaty benefits
I42Sec.821.Denial of treaty benefits for certain deductible payments.
I74T1SubtitleC_Abusive tax shelter shutdown and taxpayer accountability
I42Sec.831.Findings and purpose.
I42Sec.832.Clarification of economic substance doctrine.
I42Sec.833.Penalty for understatements attributable to transactions lacking economic substance, etc.
I42Sec.834.Understatement of taxpayer's liability by income tax return preparer.
I42Sec.835.Frivolous tax submissions.
I42Sec.836.Expanded authority to disallow tax benefits under section 269.
S6201


I78TITLE I_FINDINGS AND PERFORMANCE GOALS
I72SEC. 101. FINDINGS.
I20(a) T5FindingsK._The Congress finds the following:
I22(1) The United States imports over half the oil it consumes and consumes about one fourth of the world's daily oil production.
I22(2) According to present trends, the United States reliance on foreign oil will increase to 68 percent of total consumption by 2025.
I22(3) Having only 3 percent of the world's known oil reserves, the health of the United States economy is dependent on world oil prices.
I22(4) World oil prices are overwhelmingly dictated by countries other than the United States, particularly by the member countries of the Organization of Petroleum Exporting Countries.
I22(5) A major portion of the world's oil supply is controlled by unstable governments and countries that are known to finance, harbor, or otherwise support terrorists and terrorist activities.
I22(6) Since World War II, the United States has made significant expenditures of American taxpayer dollars in attempts to stabilize governments and protect American interests in the Middle East.
I22(7) Countries such as Japan, Germany, Denmark, and Great Britain lead the United States in manufacturing alternative energy technologies that both decrease reliance on fossil fuels and do not contribute to global warming.
I22(8) The United States has led the world in the development of a wide array of technological advances and is now poised to lead the world, using its unique national genius for innovation, in the development of a host of new energy technologies.
I22(9) Development of renewable energy resources in the United States offers a substantial opportunity for economic development in rural, agriculture-dependent areas.
I22(10) A bold new national energy plan can lead to a surge of investment in, development of, and deployment of clean energy and energy efficient technologies that would result in the creation of millions of highly trained manufacturing and technical jobs throughout the American economy.
I22(11) Innovative uses of tax incentives to encourage the manufacturing of new clean energy technologies in the United States will help create American jobs, decrease America's dependence on foreign oil, and address pressing environmental concerns, and are preferable to large tax breaks for the wealthiest in society.
I22(12) Human activities have caused rapid increases in atmospheric concentrations of carbon dioxide and other greenhouse gases in the last century.
I22(13) According to the Intergovernmental Panel on Climate Change and the National Research Council_
I24(A) the Earth has warmed in the last century; and
I24(B) the majority of the observed warming is attributable to human activities, including fossil fuel-generated carbon dioxide emissions.
I22(14) Despite the fact that many uncertainties in climate science remain, the potential impacts from human-induced climate change pose a substantial risk that should be managed in a responsible manner.
I22(15) The United States has ratified the UNFCCC (United Nations Framework Convention on Climate Change), which states, in part, ``the Parties to the Convention are to implement policies with the aim of returning to their 1990 levels anthropogenic emissions of carbon dioxide and other greenhouse gases''.
I22(16) Global warming poses a significant threat to national security, the American economy, public health and welfare, and the global environment. According to a report commissioned by the Department of Defense in 2003 entitled ``An Abrupt Climate Change Scenario and its Implications for United States National Security'', the risk of abrupt climate change due to global warming should be elevated beyond a scientific debate to a US national security concern.
I72SEC. 102. PERFORMANCE GOALS.
I20(a) T5New Apollo Energy Act Performance GoalsK._In order to ensure that the national energy policy of the United States is the most effective policy for protecting national and homeland security, expanding our economy and creating jobs, addressing global warming and environmental health concerns, and protecting the interests of American consumers, Congress establishes the New Apollo Energy Act Performance Goals, which the President shall consider when formulating and enforcing national energy policy. These goals are to_
I22(1) reduce demand for oil in the United States by at least 600,000 barrels per day from the demand for oil projected by the Energy Information Administration for 2010, 1,700,000 barrels per day from projected demand for oil in 2015, and 3,000,000 barrels per day from projected demand for oil in 2020;
I22(2) create and retain 3,000,000 new highly skilled, high-waged jobs in the United States by 2015;
I22(3) meet 15 percent of the country's electricity needs from electricity generated from renewable resources by 2015, and 5 percent of the country's electricity needs from electricity generated from carbon-based zero emission carbon dioxide sources by 2015;
I22(4) produce 8,100,000,000 gallons per year of renewable fuels, including traditional ethanol, cellulose ethanol, and biodiesel by 2013 without creating regional cost disparities for fuel;
I22(5) lower energy costs for consumers by meeting 25 percent of energy supply needs, as projected for the year 2013 by the Energy Information Administration, through increased conservation and improved energy efficiency;
I22(6) maximize long-term production of existing domestic marginal and stripper oil reserves;
I22(7) encourage stable energy prices and markets by promoting energy production and energy infrastructure modernization, while maintaining existing environmental protections;
I22(8) reduce total carbon dioxide emissions in the United States to 5,806,100,000 metric tons per year by 2015;
I22(9) encourage domestic manufacturing and production of new energy and energy efficient technologies;
I22(10) redevelop and enhance existing industrial facilities in areas of the country adversely impacted by manufacturing job losses; and

I22(11) promote rural economic development.

I78TITLE II_FEDERAL RESEARCH AND DEVELOPMENT PARTNERSHIPS WITH INDUSTRY FOR NEW TECHNOLOGY

I78Subtitle A_General Provisions
I72SEC. 201. AUTHORIZATION OF APPROPRIATIONS.
I20There are authorized to be appropriated for carrying out this title $36,000,000,000.
I72SEC. 202. PARTICIPATION.
I20The Secretary of Energy, in collaboration with the Secretary of Commerce, shall coordinate the participation of National Laboratories, universities, commercial industry, and other organizations in carrying out this title.
I72SEC. 203. COST SHARING.
I20(a) T5In GeneralK._Unless otherwise specified, the Secretary shall require a commitment from non-Federal sources of at least 20 percent of the cost of proposed research and development projects under this title.
I20(b) T5Reduction or EliminationK._The Secretary may reduce or eliminate the cost sharing requirement under subsection (a)_
I22(1) if the Secretary determines that the research and development is of a basic or fundamental nature; or
I22(2) for technical analyses, outreach activities, and educational programs that the Secretary does not expect to result in a marketable product.
I72SEC. 204. EDUCATION AND OUTREACH.
I20(a) T5ProgramK._The Secretary of Energy shall establish a program of education and outreach, including innovative education and outreach techniques, on renewable energy and energy efficiency technologies to manufacturers, consumers, engineers, architects, builders, energy service companies, universities, facility planners and managers, State and local governments, and other appropriate entities.
I20(b) T5Authorization of AppropriationsK._There are authorized to be appropriated to the Secretary of Energy for carrying out this section $100,000,000 for each of the fiscal years 2006 through 2009, and such sums as may be necessary for each of the fiscal years 2010 through 2022.
I72SEC. 205. DEFINITION.
I20For purposes of this title, the term ``National Laboratory'' means any of the following laboratories owned by the Department of Energy:
I22(1) Ames National Laboratory.
I22(2) Argonne National Laboratory.
I22(3) Brookhaven National Laboratory.
I22(4) Fermi National Laboratory.
I22(5) Idaho National Engineering and Environmental Laboratory.
I22(6) Lawrence Berkeley National Laboratory.
I22(7) Lawrence Livermore National Laboratory.
I22(8) Los Alamos National Laboratory.
I22(9) National Energy Technology Laboratory.
I22(10) National Renewable Energy Laboratory.
I22(11) Oak Ridge National Laboratory.
I22(12) Pacific Northwest National Laboratory.
I22(13) Princeton Plasma Physics Laboratory.
I22(14) Sandia National Laboratories.
I22(15) Savannah River National Laboratory.
I22(16) Stanford Linear Accelerator Center. 

I22(17) Thomas Jefferson National Accelerator Facility.

I78Subtitle B_Clean Energy Technology Research Program
I72SEC. 211. DEFINITIONS.
I20For purposes of this subtitle_
I22(1) the term ``biomass'' means any organic matter that is available on a renewable or recurring basis, including agricultural crops and trees, wood and wood wastes and residues, plants (including aquatic plants), grasses, residues, fibers, animal wastes, and municipal wastes;
I22(2) the term ``clean energy source'' means_
I24(A) wind;
I24(B) biomass;
I24(C) a geothermal source;
I24(D) ocean waves;
I24(E) a solar source;
I24(F) a photovoltaic source;
I24(G) additional hydroelectric generation capacity achieved from increased efficiency at an existing hydroelectric dam; or
I24(H) minimal emission coal; and
I22(3) the term ``minimal emission coal'' means coal resources that result in zero or near zero emissions of sulfur dioxide, nitrogen oxides, and mercury, and 90 percent or more sequestration of carbon dioxide emissions.
I72SEC. 212. ENHANCED CLEAN ENERGY RESEARCH, DEVELOPMENT, AND DEMONSTRATION.
I20(a) T5GoalsK._In order to achieve the goals stated in section 102 of this Act, the United States shall have an energy research, development, and demonstration program to enhance clean energy with the following goals:
I22(1) For wind power, the program should reduce the cost of wind-generated electricity by 40 percent by 2015, compared to the cost as of the date of the enactment of this Act, with concentration within the program on a variety of advanced wind turbine concepts, manufacturing technologies, and optimal demonstration locations.
I22(2) For photovoltaics, the programs should pursue research, development, and demonstration that would lead to photovoltaic systems with generation costs of 10 cents kWh by 2015, and 7 cents kWh by 2020. Program activities should include assisting industry in developing manufacturing technologies, giving greater attention to balance of system issues, and expanding fundamental research on relevant advanced materials.
I22(3) For solar thermal electric systems the program should strengthen ongoing research, development, and demonstration combining high-efficiency and high-temperature receivers with advanced thermal storage and power cycles, with the goal of making solar-only power (including baseload solar power) widely competitive with fossil fuel power by 2017.
I22(4) For geothermal energy, the program should continue work on hydrothermal systems, and reactivate research, development, and demonstration of advanced concepts, giving top priority to hot dryrock geothermal energy.
I22(5) For ocean wave energy, the program should reactivate and strengthen ongoing research, development, and demonstration programs that would lead to generating technologies for deriving electrical power from the ocean, including tidal power, wave power, and ocean thermal energy conversion.
I22(6) For stationary power generation, the Secretary shall work with domestic manufacturers and the utilities to encourage commercial production of cost-competitive, fuel cell power generating facilities. The program should provide new technologies that achieve an efficiency of 70˙0980 percent Lower Heating Value with an average cost of $400 per kilowatt by 2015.
I22(7) For biomass energy_
I24(A) the program should enable the United States to triple biomass energy use by 2010;
I24(B) for biomass-based power systems, the program should enable commercialization, within five years after the date of the enactment of this Act, of integrated power-generating technologies that employ gas turbines and fuel cells integrated with biomass gasifiers; and
I24(C) for biofuels, the program should accelerate research, development, and demonstration on advanced cellulosic conversion, including recalcitrance of biomass, feedstock development, and co-products development.
I22(8) For hydropower, the program should provide for a new generation of turbine technologies that will increase generating capacity and will be less damaging to fish and aquatic ecosystems.
I22(9) For electric energy systems and storage, the program should develop_
I24(A) technologies for generators and transmission, distribution, and storage systems that combine high capacity with high efficiency (particularly for electric transmission facilities in rural and remote areas);
I24(B) new transmission and distribution technologies, including flexible alternating current transmission systems, composite conductor materials, advanced protection devices, and controllers;
I24(C) technologies for interconnection of distributed energy resources with electric power systems;
I24(D) technologies to sequester 90 percent or more of carbon dioxide emissions;
I24(E) high-temperature superconducting materials for power delivery equipment such as transmission and distribution cables, transformers, and generators; and
I24(F) real-time transmission and distribution system control technologies that provide for continual exchange of information between generation, transmission, distribution, and end-user facilities.
I22(10) For minimum emission coal, the program shall pursue research that develops and demonstrates facilities generating electricity from coal, in a cost-competitive manner, that by 2020_
I24(A) remove 99 percent of total sulfur dioxide emissions;
I24(B) emit no more than .05 lbs of NOx per million BTU;
I24(C) achieve a 90 percent reduction in mercury emissions;
I24(D) sequester 90 percent or more of carbon dioxide emissions; and
I24(E) achieve a thermal efficiency of_
I26(i) 60 percent for coal of more than 9,000 Btu;
I26(ii) 59 percent for coal of 7,000 to 9,000 Btu; and
I26(iii) 57 percent for coal of less than 7,000 Btu.
I22(11) The Secretary shall work to maximize the production of hydrogen from clean energy sources.
I22(12) The Secretary shall support under this section any other technology that may help achieve the goals stated in section 102.
I20(b) T5Technical Criteria for GasificationK._In allocating the funds made available for minimum emission coal, the Secretary shall ensure that at least 80 percent of the funds are used for coal-based gasification technologies or coal-based projects that include gasification combined cycle, gasification fuel cells, gasification co-production, or hybrid gasification/combustion. The Secretary shall set technical milestones specifying emissions levels that coal gasification projects must be designed to, and can reasonably be expected to, achieve. The milestones shall get more restrictive through the life of the program.

I20(c) T5Coordination With Other BenefitsK._The Secretary shall not provide assistance under this section to any person if such person has received assistance under section 642 or 731.

I78Subtitle C_Energy Efficiency Research, Development, and Demonstration Program
I72SEC. 221. ENHANCED ENERGY EFFICIENCY RESEARCH, DEVELOPMENT, AND DEMONSTRATION.
I20(a) T5GoalsK._In order to achieve the goal stated in section 102 of this Act, the United States shall have an energy research, development, and demonstration program to enhance energy efficiency with the following goals:
I22(1) For energy efficiency in housing, the program should develop technologies, housing components, designs, and production methods that will, by 2010_
I24(A) reduce the time needed to move energy-efficient technologies to market by 50 percent, compared to the time needed as of the date of the enactment of this Act;
I24(B) reduce the monthly cost of new housing by 20 percent, compared to the cost as of the date of the enactment of this Act;
I24(C) cut the environmental impact and energy use of new housing by 50 percent, compared to the impact and use as of the date of the enactment of this Act;
I24(D) ensure that at least 15,000,000 homes existing as of the date of the enactment of this Act reduce their total energy consumption by 30 percent, compared to the use as of the date of the enactment of this Act; and
I24(E) improve the durability and reduce maintenance costs of housing technology components by 50 percent compared to the durability and costs as of the date of the enactment of this Act.
I22(2) For industrial energy efficiency, the program should, in cooperation with the affected industries_
I24(A) develop a microturbine (40 to 300 kilowatt) that is greater than 40 percent more efficient by 2008, compared to the efficiency as of the date of the enactment of this Act;
I24(B) develop a microturbine that is greater than 50 percent more efficient by 2012, compared to the efficiency as of the date of the enactment of this Act;
I24(C) develop advanced materials for combustion systems that reduce emissions of nitrogen oxides by 30 to 50 percent while increasing efficiency 5 to 10 percent by 2010, compared to such emissions as of the date of the enactment of this Act; and
I24(D) improve the energy intensity of the major energy-consuming industries by at least 25 percent by 2012, compared to the energy intensity as of the date of the enactment of this Act.
I22(3) For transportation energy efficiency, the Secretary shall work with domestic automobile manufacturers to encourage commercial production of cost-competitive, highly fuel-efficient vehicles. In developing these public-private partnerships, the Secretary shall take into consideration the following:
I24(A) Hybrid gas/electric vehicles.
I24(B) Fuel cells.
I24(C) Alternative fuel driven engines.
I24(D) Maximizing the production of hydrogen from clean energy sources.
I22(4) The Secretary shall support under this section any other technology that may help achieve the goals stated in section 102.
I20(b) T5DefinitionsK._For purposes of this section_
I22(1) the term ``alternative fuel'' has the meaning given that term in section 301(2) of the Energy Policy Act of 1992; and
I22(2) the term ``major energy-consuming industries'' means_
I24(A) the forest product industry;
I24(B) the steel industry;
I24(C) the aluminum industry;
I24(D) the metal casting industry;
I24(E) the chemical industry;
I24(F) the petroleum refining industry; and
I24(G) the glass-making industry.
I20(c) T5Limits on Use of FundsK._None of the funds authorized to be appropriated under this section may be used for_
I22(1) the promulgation and implementation of energy efficiency regulations;
I22(2) the Weatherization Assistance Program under part A of title IV of the Energy Conservation and Production Act;
I22(3) the State Energy Program under part D of title III of the Energy Policy and Conservation Act; or
I22(4) the Federal Energy Management Program under part 3 of title V of the National Energy Conservation Policy Act.
I72SEC. 222. ENHANCED AERONAUTICAL SYSTEM ENERGY EFFICIENCY RESEARCH, DEVELOPMENT, AND PUBLIC-PRIVATE PARTNERSHIP.
I20(a) T5GoalsK._For aeronautical system energy efficiency, the Secretary of Energy, the Secretary of the Treasury, and the Secretary of Transportation shall develop for commercial production by 2008 a superefficient, high-capacity commercial airplane. To carry out this section, the Secretaries shall form a public-private partnership research and development loan program such that_
I22(1) the Federal Government enters into an agreement with a domestic commercial airplane manufacturer in which the Federal Government provides loans for up to 49 percent of the research and development cost; and
I22(2) the Federal Government receives repayment for loans under paragraph (1) from the commercial airplane manufacturer through a royalty system agreed upon by the Secretary of the Treasury.
I20(b) T5DefinitionK._For purposes of this section, the term ``superefficient, high-capacity commercial airplane'' means a commercial airplane with a passenger seating capacity of no less than 200 people with a range of at least 7,200 nautical miles which consumes at least 15 percent less fuel than comparable airplanes.
I72SEC. 223. NEXT GENERATION LIGHTING INITIATIVE.
I20(a) T5In GeneralK._The Secretary shall carry out a Next Generation Lighting Initiative in accordance with this section to support research, development, demonstration, and commercial application activities related to advanced solid-state lighting technologies based on white light emitting diodes.
I20(b) T5ObjectivesK._The objectives of the initiative shall be_
I22(1) to develop, by 2012, advanced solid-state lighting technologies based on white light emitting diodes that, compared to incandescent and fluorescent lighting technologies, are_
I24(A) longer lasting;
I24(B) more energy-efficient; and
I24(C) cost-competitive;
I22(2) to develop an inorganic white light emitting diode that has an efficiency of 160 lumens per watt and a 10-year lifetime; and
I22(3) to develop an organic white light emitting diode with an efficiency of 100 lumens per watt with a 5-year lifetime that_
I24(A) illuminates over a full color spectrum;
I24(B) covers large areas over flexible surfaces; and
I24(C) does not contain harmful pollutants, such as mercury, typical of fluorescent lamps.
I20(c) T5Fundamental ResearchK._
I22(1) T4ConsortiumK._The Secretary shall carry out the fundamental research activities of the Next Generation Lighting Initiative through a private consortium (which may include private firms, trade associations and institutions of higher education), which the Secretary shall select through a competitive process. Each proposed consortium shall submit to the Secretary such information as the Secretary may require, including a program plan agreed to by all participants of the consortium.
I22(2) T4Joint ventureK._The consortium shall be structured as a joint venture among the participants of the consortium. The Secretary shall serve on the governing council of the consortium.
I22(3) T4EligibilityK._To be eligible to be selected as the consortium under paragraph (1), an applicant must be broadly representative of United States solid-state lighting research, development, and manufacturing expertise as a whole.
I22(4) T4GrantsK._T1(A) The Secretary shall award grants for fundamental research to the consortium, which the consortium may disburse to researchers, including those who are not participants of the consortium.
I22(B) To receive a grant, the consortium must provide a description to the Secretary of the proposed research and list the parties that will receive funding.
I22(C) At least 20 percent of the cost of a research and development project for which a grant is made under this section shall be matched by the consortium, and at least 50 percent of the cost of a demonstration or commercial application project for which a grant is made under this section shall be matched by the consortium.
I22(5) T4National laboratoriesK._National Laboratories may participate in the research described in this section, and may receive funds from the consortium.
I22(6) T4Intellectual propertyK._Participants in the consortium and the Federal Government shall have royalty-free nonexclusive rights to use intellectual property derived from research funded pursuant to this subsection.
I20(d) T5Development, Demonstration, and Commercial ApplicationK._The Secretary shall carry out the development, demonstration, and commercial application activities of the Next Generation Lighting Initiative through awards to private firms, trade associations, and institutions of higher education. In selecting awardees, the Secretary may give preference to members of the consortium selected pursuant to subsection (c).
I20(e) T5Plans and AssessmentsK._T1(1) The consortium shall formulate an annual operating plan which shall include research priorities, technical milestones, and plans for technology transfer, and which shall be subject to approval by the Secretary.
I20(2) The Secretary shall enter into an arrangement with the National Academy of Sciences to conduct periodic reviews of the Next Generation Lighting Initiative. The Academy shall review the research priorities, technical milestones, and plans for technology transfer established under paragraph (1) and evaluate the progress toward achieving them. The Secretary shall consider the results of such reviews in evaluating the plans submitted under paragraph (1).
I20(f) T5AuditK._The Secretary shall retain an independent, commercial auditor to perform an audit of the consortium to determine the extent to which the funds authorized by this section have been expended in a manner consistent with the purposes of this section. The auditor shall transmit a report annually to the Secretary, who shall transmit the report to the Congress, along with a plan to remedy any deficiencies cited in the report.
I20(g) T5SunsetK._The Next Generation Lighting Initiative shall terminate no later than September 30, 2013.
I20(h) T5DefinitionsK._As used in this section:
I22(1) T4Advanced solid-state lightingK._The term ``advanced solid-state lighting'' means a semiconducting device package and delivery system that produces white light using externally applied voltage.
I22(2) T4Fundamental researchK._The term ``fundamental research'' includes basic research on both solid-state materials and manufacturing processes.
I22(3) T4Inorganic white light emitting diodeK._The term ``inorganic white light emitting diode'' means an inorganic semiconducting package that produces white light using externally applied voltage.
I22(4) T4Organic white light emitting diodeK._The term ``organic white light emitting diode'' means an organic semiconducting compound that produces white light using externally applied voltage.
I72SEC. 224. NATIONAL BUILDING PERFORMANCE INITIATIVE.
I20(a) T5Interagency GroupK._Not later than 3 months after the date of enactment of this Act, the Director of the Office of Science and Technology Policy shall establish an interagency group to develop, in coordination with the advisory committee established under subsection (e), a National Building Performance Initiative (in this section referred to as the ``Initiative''). The interagency group shall be cochaired by appropriate officials of the Department and the Department of Commerce, who shall jointly arrange for the provision of necessary administrative support to the group.
I20(b) T5Integration of EffortsK._The Initiative shall integrate Federal, State, and voluntary private sector efforts to reduce the costs of construction, operation, maintenance, and renovation of commercial, industrial, institutional, and residential buildings.
I20(c) T5PlanK._Not later than 1 year after the date of enactment of this Act, the interagency group shall submit to Congress a plan for carrying out the appropriate Federal role in the Initiative. The plan shall include_
I22(1) research, development, demonstration, and commercial application of systems and materials for new construction and retrofit relating to the building envelope and building system components; and
I22(2) the collection, analysis, and dissemination of research results and other pertinent information on enhancing building performance to industry, government entities, and the public.
I20(d) T5Department of Energy RoleK._Within the Federal portion of the Initiative, the Department shall be the lead agency for all aspects of building performance related to use and conservation of energy.
I20(e) T5Advisory CommitteeK._
I22(1) T4EstablishmentK._The Director of the Office of Science and Technology Policy shall establish an advisory committee to_
I24(A) analyze and provide recommendations on potential private sector roles and participation in the Initiative; and
I24(B) review and provide recommendations on the plan described in subsection (c).
I22(2) T4MembershipK._Membership of the advisory committee shall include representatives with a broad range of appropriate expertise, including expertise in_
I24(A) building research and technology;
I24(B) architecture, engineering, and building materials and systems; and
I24(C) the residential, commercial, and industrial sectors of the construction industry.

I20(f) T5ConstructionK._Nothing in this section provides any Federal agency with new authority to regulate building performance.

I78Subtitle D_Additional Research Programs

I73PART 1_FUSION
I72SEC. 231. PLAN FOR FUSION EXPERIMENT.
I20(a) T5In GeneralK._
I22(1) T4Priority for international burning plasma projectK._The Secretary of Energy (in this part referred to as ``the Secretary'') is authorized to undertake full scientific and technological cooperation in the international burning plasma project known as ITER.
I22(2) T4Alternative projectK._If at any time during the negotiations on the ITER project, the Secretary determines that construction and operation of the ITER project is unlikely or infeasible, the Secretary shall send to Congress, as part of the budget request for the following year, a plan for implementing an alternative plan, such as the domestic burning plasma experiment known as FIRE, including costs and schedules for such a plan. The Secretary shall refine such plan in full consultation with the Fusion Energy Sciences Advisory Committee and shall also transmit such plan to the National Research Council for review.
I20(b) T5United States Policy With Respect to Fusion Energy ScienceK._
I22(1) T4Declaration of policyK._It shall be the policy of the United States to develop the scientific, engineering, and commercial infrastructure necessary to ensure that the United States is competitive with other nations in providing fusion energy for its own needs and the needs of other nations, including demonstrating electric hydrogen power production for national power grid utilizing fusion energy by the earliest date possible.
I22(2) T4Fusion energy planK._
I24(A) T4RequirementK._Within 6 months of the date of enactment of this Act, the Secretary shall transmit to Congress a plan for carrying out the policy set forth in paragraph (1), including cost estimates, proposed budgets, potential international partners, and specific programs for implementing such policy.
I24(B) T4Requirements of planK._Such plan shall also ensure that_
I26(i) existing fusion research facilities are more fully utilized;
I26(ii) fusion science, technology, theory, advanced computation, modeling, and simulation are strengthened;
I26(iii) new magnetic and inertial fusion research facilities are selected based on scientific innovation, cost effectiveness, and their potential to advance the goal of practical fusion energy at the earliest date possible;
I26(iv) such facilities that are selected are funded at a cost-effective rate;
I26(v) communication of scientific results and methods between the fusion energy science community and the broader scientific and technology communities is improved;
I26(vi) inertial confinement fusion facilities are utilized to the extent practicable for the purpose of inertial fusion energy research and development; and
I26(vii) attractive alternative inertial and magnetic fusion energy approaches are more fully explored.
I24(C) T4Report on fusion materials and technology projectK._In addition, the plan required by this section shall also address the status of, and to the degree possible, the costs and schedules for_
I26(i) the design and implementation of international or national facilities for the testing of fusion materials; and
I26(ii) the design and implementation of international or national facilities for the testing and development of key fusion technologies.
I72SEC. 232. DEFINITIONS.
I20As used in this part, the following definitions apply:
I22(1) The term ``ITER'' refers to the international fusion research project whose design is complete and whose location and financing is currently being negotiated between Japan, Europe, the Russian Federation, Canada, China, and the United States.

I22(2) The term ``FIRE'' refers to the Fusion Ignition Research Experiment, the fusion research experiment for which design work has been supported by the Department of Energy as a possible alternative burning plasma experiment in the event that the ITER project fails to move forward.

I73PART 2_ULTRA-DEEPWATER AND EXTENDED REACH DRILLING AND CARBON SEQUESTRATION TECHNOLOGIES
I72SEC. 241. PROGRAM AUTHORITY.
I20(a) T5In GeneralK._The Secretary shall carry out a program under this part of research, development, demonstration, and commercial application of technologies for ultra-deepwater and extended reach drilling and carbon sequestration.
I20(b) T5ProgramK._The program under this part shall address the following areas, including improving safety and minimizing environmental impacts of activities within each area:
I22(1) Ultra-deepwater technology.
I22(2) Ultra-deepwater architecture.
I22(3) Extended reach drilling.
I22(4) Sequestration of carbon.
I20(c) T5Limitation on Location of Field ActivitiesK._Field activities under the program under this part shall be carried out only_
I22(1) in_
I24(A) areas in the territorial waters of the United States not under any Outer Continental Shelf moratorium as of September 30, 2002;
I24(B) areas onshore in the United States on public land administered by the Secretary of the Interior available for oil and gas leasing, where consistent with applicable law and land use plans; and
I24(C) areas onshore in the United States on State or private land, subject to applicable law; and
I22(2) with the approval of the appropriate Federal or State land management agency or private land owner.
I20(d) T5Research at National Energy Technology LaboratoryK._The Secretary, through the National Energy Technology Laboratory, shall carry out research complementary to research under subsection (b).
I20(e) T5Consultation With Secretary of the InteriorK._In carrying out this part, the Secretary shall consult regularly with the Secretary of the Interior.
I72SEC. 242. ULTRA-DEEPWATER AND EXTENDED REACH DRILLING AND CARBON SEQUESTRATION AND UNCONVENTIONAL TECHNOLOGIES PROGRAM.
I20(a) T5In GeneralK._The Secretary shall carry out the activities under section 241(b), to_
I22(1) maximize the value of the ultra-deepwater natural gas and other petroleum resources of the United States by increasing the supply of such resources and by reducing the cost and increasing the efficiency of exploration for and production of such resources, while improving safety and minimizing environmental impacts;
I22(2) maximize the value of existing natural gas and petroleum production on existing lease sites by utilizing long range extended reach drilling technology;
I22(3) maximize the value of the onshore unconventional natural gas resources of the United States by increasing supply of such resources and improving efficiencies; and
I22(4) develop commercial carbon sequestration and carbon recapture methods with the goal of_
I24(A) sequestering 20 percent of the total quantity of direct greenhouse gas emissions from stationary sources in the United States per year, expressed in units of carbon dioxide equivalence, by 2010;
I24(B) sequestering 40 percent of the total quantity of direct greenhouse gas emissions from stationary sources in the United States per year, expressed in units of carbon dioxide equivalence, by 2015; and
I24(C) sequestering 60 percent of the total quantity of direct greenhouse gas emissions from stationary sources in the United States per year, expressed in units of carbon dioxide equivalence, by 2020.
I20(b) T5Role of the SecretaryK._The Secretary shall have ultimate responsibility for, and oversight of, all aspects of the program under this section.
I20(c) T5Role of the Program ConsortiumK._
I22(1) T4In generalK._The Secretary shall contract with a consortium to_
I24(A) manage awards pursuant to subsection (f)(4);
I24(B) make recommendations to the Secretary for project solicitations;
I24(C) disburse funds awarded under subsection (f) as directed by the Secretary in accordance with the annual plan under subsection (e); and
I24(D) carry out other activities assigned to the program consortium by this section.
I22(2) T4LimitationK._The Secretary may not assign any activities to the program consortium except as specifically authorized under this section.
I22(3) T4Conflict of interestK._
I24(A) The Secretary shall establish procedures_
I26(i) to ensure that each board member, officer, or employee of the program consortium who is in a decisionmaking capacity under subsection (f)(3) or (4) shall disclose to the Secretary any financial interests in, or financial relationships with, applicants for or recipients of awards under this section, including those of his or her spouse or minor child, unless such relationships or interests would be considered to be remote or inconsequential; and
I26(ii) to require any board member, officer, or employee with a financial relationship or interest disclosed under clause (i) to recuse himself or herself from any review under subsection (f)(3) or oversight under subsection (f)(4) with respect to such applicant or recipient.
I24(B) The Secretary may disqualify an application or revoke an award under this section if a board member, officer, or employee has failed to comply with procedures required under subparagraph (A)(ii).
I20(d) T5Selection of the Program ConsortiumK._
I22(1) T4In generalK._The Secretary shall select the program consortium through an open, competitive process.
I22(2) T4MembersK._The program consortium may include corporations, institutions of higher education, National Laboratories, or other research institutions. After submitting a proposal under paragraph (4), the program consortium may not add members without the consent of the Secretary.
I22(3) T4Tax statusK._The program consortium shall be an entity that is exempt from tax under section 501(c)(3) of the Internal Revenue Code of 1986.
I22(4) T4ScheduleK._Not later than 90 days after the date of enactment of this Act, the Secretary shall solicit proposals for the creation of the program consortium, which must be submitted not less than 180 days after the date of enactment of this Act. The Secretary shall select the program consortium not later than 240 days after such date of enactment.
I22(5) T4ApplicationK._Applicants shall submit a proposal including such information as the Secretary may require. At a minimum, each proposal shall_
I24(A) list all members of the consortium;
I24(B) fully describe the structure of the consortium, including any provisions relating to intellectual property; and
I24(C) describe how the applicant would carry out the activities of the program consortium under this section.
I22(6) T4EligibilityK._To be eligible to be selected as the program consortium, an applicant must be an entity whose members collectively have demonstrated capabilities in planning and managing research, development, demonstration, and commercial application programs in natural gas or other petroleum exploration or production.
I22(7) T4CriterionK._The Secretary may consider the amount of the fee an applicant proposes to receive under subsection (g) in selecting a consortium under this section.
I20(e) T5Annual PlanK._
I22(1) T4In generalK._The program under this section shall be carried out pursuant to an annual plan prepared by the Secretary in accordance with paragraph (2).
I22(2) T4DevelopmentK._T1(A) Before drafting an annual plan under this subsection, the Secretary shall solicit specific written recommendations from the program consortium for each element to be addressed in the plan, including those described in paragraph (4). The Secretary may request that the program consortium submit its recommendations in the form of a draft annual plan.
I22(B) The Secretary shall consult regularly with the program consortium throughout the preparation of the annual plan. The Secretary may also solicit comments from any other experts.
I22(3) T4PublicationK._The Secretary shall transmit to the Congress and publish in the Federal Register the annual plan, along with any written comments received under paragraph (2). The annual plan shall be transmitted and published not later than 60 days after the date of enactment of an Act making appropriations for a fiscal year for the program under this section.
I22(4) T4ContentsK._The annual plan shall describe the ongoing and prospective activities of the program under this section and shall include_
I24(A) a list of any solicitations for awards that the Secretary plans to issue to carry out research, development, demonstration, or commercial application activities, including the topics for such work, who would be eligible to apply, selection criteria, and the duration of awards; and
I24(B) a description of the activities expected of the program consortium to carry out subsection (f)(4).
I20(f) T5AwardsK._
I22(1) T4In generalK._The Secretary shall make awards to carry out research, development, demonstration, and commercial application activities under the program under this section. The program consortium shall not be eligible to receive such awards, but members of the program consortium may receive such awards.
I22(2) T4ProposalsK._The Secretary shall solicit proposals for awards under this subsection in such manner and at such time as the Secretary may prescribe, in consultation with the program consortium.
I22(3) T4ReviewK._The Secretary shall make awards under this subsection through a competitive process, which shall include a review by individuals selected by the Secretary. Such individuals shall include, for each application, Federal officials, the program consortium, and non-Federal experts who are not board members, officers, or employees of the program consortium or of a member of the program consortium.
I22(4) T4OversightK._T1(A) The program consortium shall oversee the implementation of awards under this subsection, consistent with the annual plan under subsection (e), including disbursing funds and monitoring activities carried out under such awards for compliance with the terms and conditions of the awards.
I22(B) Nothing in subparagraph (A) shall limit the authority or responsibility of the Secretary to oversee awards, or limit the authority of the Secretary to review or revoke awards.
I22(C) The Secretary shall provide to the program consortium the information necessary for the program consortium to carry out its responsibilities under this paragraph.
I20(g) T5FeeK._
I22(1) T4In generalK._To compensate the program consortium for carrying out its activities under this section, the Secretary shall provide to the program consortium a fee in an amount not to exceed 7.5 percent of the amounts awarded under subsection (f) for each fiscal year.
I22(2) T4AdvanceK._The Secretary shall advance funds to the program consortium upon selection of the consortium, which shall be deducted from amounts to be provided under paragraph (1).
I20(h) T5AuditK._The Secretary shall retain an independent, commercial auditor to determine the extent to which funds provided to the program consortium, and funds provided under awards made under subsection (f), have been expended in a manner consistent with the purposes and requirements of this part. The auditor shall transmit a report annually to the Secretary, who shall transmit the report to Congress, along with a plan to remedy any deficiencies cited in the report.
I72SEC. 243. SUNSET.
I20The authority provided by this part shall terminate on September 30, 2010.
I72SEC. 244. DEFINITIONS.
I20In this part:
I22(1) T4Carbon sequestrationK._The term ``carbon sequestration'' means the capture and secure storage of carbon dioxide emitted from the combustion of fossil fuels or other organic matter.
I22(2) T4Extended reach drillingK._The term ``extended reach drilling'' means technology designed to achieve a range up to 50,000 feet, so that more energy resources can be realized with fewer drilling facilities.
I22(3) T4Program consortiumK._The term ``program consortium'' means the consortium selected under section 242(d).
I22(4) T4Remote or inconsequentialK._The term ``remote or inconsequential'' has the meaning given that term in regulations issued by the Office of Government Ethics under section 208(b)(2) of title 18, United States Code.
I22(5) T4Ultra-deepwaterK._The term ``ultra-deepwater'' means a water depth that is equal to or greater than 1,500 meters.
I22(6) T4Ultra-deepwater architectureK._The term ``ultra-deepwater architecture'' means the integration of technologies for the exploration for, or production of, natural gas or other petroleum resources located at ultra-deepwater depths.
I22(7) T4Ultra-deepwater technologyK._The term ``ultra-deepwater technology'' means a discrete technology that is specially suited to address one or more challenges associated with the exploration for, or production of, natural gas or other petroleum resources located at ultra-deepwater depths.

I22(8) T4Unconventional natural gas and other petroleum resourceK._The term ``unconventional natural gas and other petroleum resource'' means natural gas and other petroleum resource located onshore in an economically inaccessible geological formation.

I78TITLE III_TAX INCENTIVES FOR NEW TECHNOLOGIES
I72SEC. 301. REFERENCES.
I20Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. 
I72SEC. 302. ADMINISTRATION OF TITLE.
I20(a) T5In GeneralK._Notwithstanding any other provision of law, the Secretary of the Treasury shall allocate the tax incentives provided in subtitles A and B among taxpayers in accordance with regulations promulgated by the Secretary.
I20(b) T5Limitation on Total AllocatedK._The total amount of incentives allocated under subsection (a) shall not exceed_
I22(1) $14,000,000,000 in the case of the tax incentives provided in subtitle A for the 10-year period beginning with taxable years beginning after the date of the enactment of this Act, and
I22(2) $22,000,000,000 in the case of the tax incentives provided in subtitle B for the 10-year period beginning with taxable years beginning after the date of the enactment of this Act.

I78Subtitle A_Near Term Tax Incentives
I72SEC. 311. EXTENSION THROUGH 2015 FOR PLACING QUALIFIED FACILITIES IN SERVICE FOR PRODUCING RENEWABLE ELECTRIC ENERGY.
I20(a) T5In GeneralK._Subsection (d) of section 45 is amended by striking ``January 1, 2006'' each place it appears and inserting ``January 1, 2015''. 
I20(b) T5Effective DateK._The amendments made by this section shall apply to property originally placed in service on or after January 1, 2006.
I72SEC. 312. EXPANSION AND MODIFICATION OF RENEWABLE RESOURCE CREDIT.
I20(a) T5Additional Qualified Energy ResourcesK._
I22(1) T4In generalK._Section 45(c)(1) is amended by striking ``and'' at the end of subparagraph (F), by striking the period at the end of subparagraph (G), and by adding at the end the following new subparagraphs: 
I24``(H) incremental hydropower,
I24``(I) incremental geothermal, and
I24``(J) ocean (tidal, wave, current, or thermal).''T1.
I22(2) T4Definition of resourcesK._Section 45(c) is amended by adding at the end the following new paragraphs:
I22``(8) T4Incremental hydropowerK._The term `incremental hydropower' means additional generating capacity achieved at a qualified facility before January 1, 2015, from increased efficiency .
I22``(9) T4Incremental geothermalK._The term `incremental geothermal' means additional generating capacity achieved at a qualified facility before January 1, 2015, from_
I24``(A) increased efficiency, or 
I24``(B) additions of new capacity.''T1.
I22(3) T4Definition of facilitiesK._Section 45(d) is amended by adding at the end the following new paragraphs:
I22``(9) T4Incremental hydopower facilitiesK._In the case of a facility producing electricity from incremental hydropower, the term `qualified facility' means any facility which is_
I24``(A) owned by the taxpayer,
I24``(B) originally placed in service before the date of the enactment of this paragraph, and
I24``(C) licensed by the Federal Energy Regulatory Commission.
I22``(10) T4Incremental geothermal facilitiesK._In the case of a facility producing electricity from incremental geothermal, the term `qualified facility' means any facility owned by the taxpayer which is originally placed in service before the date of the enactment of this paragraph.
I22``(11) T4Ocean facilitiesK._In the case of a facility producing electricity from the ocean, the term `qualified facility' means any facility owned by the taxpayer which is originally placed in service after the date of the enactment of this paragraph and before January 1, 2015.''T1.
I20(b) T5Modifications Regarding Open-Loop BiomassK._
I22(1) Subclause (I) of section 45(c)(3)(A)(ii) is amended by adding at the end ``but not including old-growth timber or black liquor,''.
I22(2) Subclause (II) of section 45(c)(3)(A)(ii) is amended by striking ``municipal solid waste, gas derived from the biodegradation of solid waste, or paper which is commonly recycled'' and inserting ``unsegregated municipal solid waste (garbage) or postconsumer wastepaper which can be recycled affordably''.
I20(c) T5Qualified Facilities With Co-productionK._Section 45(b) is amended by striking paragraph (4) and inserting the following new paragraph:
I22``(4) T4Increased credit for co-production facilitiesK._
I24``(A) T4In generalK._In the case of a qualified facility described in paragraph (2) or (3) of subsection (c) which adds a co-production facility after the date of the enactment of this paragraph, the amount in effect under subsection (a)(1) for an eligible taxable year of the taxpayer shall (after adjustment under paragraphs (1), (2), and (3)) be increased by .25 cents.
I24``(B) T4Co-production facilityK._For purposes of subparagraph (A), the term `co-production facility' means a facility which_
I26``(i) enables a qualified facility to produce heat, mechanical power, or minerals from qualified energy resources in addition to electricity, and
I26``(ii) produces such energy on a continuous basis.
I24``(C) T4Eligible taxable yearK._For purposes of subparagraph (A), the term `eligible taxable year' means any taxable year in which the amount of gross receipts attributable to the co-production facility of a qualified facility are at least 10 percent of the amount of gross receipts attributable to electricity produced by such facility.''T1.
I20(d) T5Qualified Facilities Located Within Qualified Indian LandsK._Section 45(b) is amended by adding at the end the following new paragraph:
I22``(5) T4Increased credit for qualified facility located within qualified indian landK._In the case of a qualified facility described in subsection (d)(2)(A) which_
I24``(A) is located within_
I26``(i) qualified Indian lands (as defined in section 7871(c)(3)), or
I26``(ii) lands which are held in trust by a Native Corporation (as defined in section 3(m) of the Alaska Native Claims Settlement Act (43 U.S.C. 1602(m))) for Alaska Natives, and
I24``(B) is operated with the explicit written approval of the Indian tribal government or Native Corporation (as so defined) having jurisdiction over such lands, the amount in effect under subsection (a)(1) for a taxable year shall (after adjustment under paragraphs (1), (2), (3), and (4)) be increased by .25 cents.''T1.
I20(e) T5Treatment of Qualified Facilities not in Compliance With Pollution LawsK._Section 45(c) is further amended by adding at the end the following new paragraph:
I22``(10) T4Noncompliance with pollution lawsK._A facility which is not in compliance with the applicable State and Federal pollution prevention, control, and permit requirements for any period of time shall not be treated as a qualified facility during such period.''T1.
I20(f) T5Coordination With Other CreditsK._Section 45(e) is amended by adding at the end the following new paragraph:
I22``(10) T4Coordination with other creditsK._This section shall not apply to any qualified facility with respect to which a credit under any other section is allowed for the taxable year unless the taxpayer elects to waive application of such credit to such facility.''T1.
I20(g) T5Effective DateK._The amendments made by this section shall apply to electricity and other energy produced in taxable years beginning after the date of the enactment of this Act.
I72SEC. 313. TRADABLE RENEWABLE RESOURCE CREDIT FOR PUBLIC UTILITIES AND OTHER TAX EXEMPT ORGANIZATIONS.
I20(a) T5Credits for Certain Tax-Exempt Organizations and Governmental UnitsK._
I22(1) T4In generalK._Section 45(d) (relating to definitions and special rules), as amended by section 312, is amended by adding at the end the following:
I22``(10) T4Credits for certain tax-exempt organizations and governmental unitsK._
I24``(A) T4Allowance of creditK._Any credit which would be allowable under subsection (a) with respect to a qualified facility of an entity if such entity were not exempt from tax under this chapter shall be treated as a credit allowable under subpart D to such entity if such entity is_
I26``(i) an organization described in section 501(c)(12)(C) and exempt from tax under section 501(a),
I26``(ii) an organization described in section 1381(a)(2)(C),
I26``(iii) an entity the income of which is excludable from gross income under section 115, or
I26``(iv) a State, the District of Columbia, any territory or possession of the United States, or any political subdivision thereof.
I24``(B) T4Use of creditK._
I26``(i) T4Transfer of creditK._An entity described in subparagraph (A) may assign, trade, sell, or otherwise transfer any credit allowable to such entity under subparagraph (A) to any taxpayer.
I26``(ii) T4Use of credit as an offsetK._Notwithstanding any other provision of law, in the case of an entity described in clause (i) or (ii) of subparagraph (A), any credit allowable to such entity under subparagraph (A) may be applied by such entity, without penalty, as a prepayment of any loan, debt, or other obligation the entity has incurred under subchapter I of chapter 31 of title 7 of the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.).
I24``(C) T4Credit not incomeK._Neither a transfer under clause (i) nor a use under clause (ii) of subparagraph (B) of any credit allowable under subparagraph (A) shall result in income for purposes of section 501(c)(12).
I24``(D) T4Transfer proceeds treated as arising from essential government functionK._Any proceeds derived by an entity described in subparagraph (A)(iii) from the transfer of any credit under subparagraph (B)(i) shall be treated as arising from an essential government function.
I24``(E) T4Credits not reduced by tax-exempt bonds or certain other subsidiesK._Subsection (b)(3) shall not apply to reduce any credit allowable under subparagraph (A) with respect to_
I26``(i) proceeds described in subparagraph (A)(ii) of such subsection, or
I26``(ii) any loan, debt, or other obligation incurred under subchapter I of chapter 31 of title 7 of the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.), used to provide financing for any qualified facility.
I24``(F) T4Treatment of unrelated personsK._For purposes of this paragraph, sales among and between entities described in subparagraph (A) shall be treated as sales between unrelated parties.''T1.
I22(2) T4Inclusion of indian tribal governmentsK._Section 7871(a)(7) is amended by striking ``and'' at the end of subparagraph (A), by striking the period at the end of subparagraph (B), and by adding at the end the following:
I24``(C) section 45 (relating to credit for electricity produced from certain renewable resources).''T1.
I20(b) T5Effective DateK._The amendments made by this section shall apply to electricity and other energy produced in taxable years beginning after the date of the enactment of this Act.
I72SEC. 314. ALTERNATIVE MOTOR VEHICLE CREDIT.
I20(a) T5In GeneralK._Subpart B of part IV of subchapter A of chapter 1 (relating to foreign tax credit, etc.) is amended by adding at the end the following new section:
I72``SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.
I20``(a) T5Allowance of CreditK._There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of_
I22``(1) the new qualified fuel cell motor vehicle credit determined under subsection (b),
I22``(2) the new qualified hybrid motor vehicle credit determined under subsection (c), 
I22``(3) the new qualified alternative fuel motor vehicle credit determined under subsection (d), and
I22``(4) the new qualified advanced diesel motor vehicle credit determined under subsection (e).
I20``(b) T5New Qualified Fuel Cell Motor Vehicle CreditK._
I22``(1) T4In generalK._For purposes of subsection (a), the new qualified fuel cell motor vehicle credit determined under this subsection with respect to a new qualified fuel cell motor vehicle placed in service by the taxpayer during the taxable year is_
I24``(A) $8,000 ($4,000 in the case of vehicles placed in service after December 31, 2008), if such vehicle has a gross vehicle weight rating of not more than 8,500 pounds,
I24``(B) $10,000, if such vehicle has a gross vehicle weight rating of more than 8,500 pounds but not more than 14,000 pounds,
I24``(C) $20,000, if such vehicle has a gross vehicle weight rating of more than 14,000 pounds but not more than 26,000 pounds, and
I24``(D) $40,000, if such vehicle has a gross vehicle weight rating of more than 26,000 pounds.
I22``(2) T4Increase for fuel efficiencyK._
I24``(A) T4In generalK._The amount determined under paragraph (1)(A) with respect to a new qualified fuel cell motor vehicle which is a passenger automobile or light truck shall be increased by_
I26``(i) $1,000, if such vehicle achieves at least 150 percent but less than 175 percent of the 2002 model year city fuel economy,
I26``(ii) $1,500, if such vehicle achieves at least 175 percent but less than 200 percent of the 2002 model year city fuel economy,
I26``(iii) $2,000, if such vehicle achieves at least 200 percent but less than 225 percent of the 2002 model year city fuel economy,
I26``(iv) $2,500, if such vehicle achieves at least 225 percent but less than 250 percent of the 2002 model year city fuel economy,
I26``(v) $3,000, if such vehicle achieves at least 250 percent but less than 275 percent of the 2002 model year city fuel economy,
I26``(vi) $3,500, if such vehicle achieves at least 275 percent but less than 300 percent of the 2002 model year city fuel economy, and
I26``(vii) $4,000, if such vehicle achieves at least 300 percent of the 2002 model year city fuel economy.
I24``(B) 2002 T4model year city fuel economyK._For purposes of subparagraph (A), the 2002 model year city fuel economy with respect to a vehicle shall be determined in accordance with the following tables:
I26``(i) In the case of a passenger automobile:
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I50The 2002 model year city
I49````If vehicle inertia weight class is:
I50fuel economy is:
I511,500 or 1,750 lbs
I5245.2 mpg
I512,000 lbs
I5239.6 mpg
I512,250 lbs
I5235.2 mpg
I512,500 lbs
I5231.7 mpg
I512,750 lbs
I5228.8 mpg
I513,000 lbs
I5226.4 mpg
I513,500 lbs
I5222.6 mpg
I514,000 lbs
I5219.8 mpg
I514,500 lbs
I5217.6 mpg
I515,000 lbs
I5215.9 mpg
I515,500 lbs
I5214.4 mpg
I516,000 lbs
I5213.2 mpg
I516,500 lbs
I5212.2 mpg
I517,000 to 8,500 lbs
I5211.3 mpg.
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I26``(ii) In the case of a light truck:
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I50The 2002 model year city
I49````If vehicle inertia weight class is:
I50fuel economy is:
I511,500 or 1,750 lbs
I5239.4 mpg
I512,000 lbs
I5235.2 mpg
I512,250 lbs
I5231.8 mpg
I512,500 lbs
I5229.0 mpg
I512,750 lbs
I5226.8 mpg
I513,000 lbs
I5224.9 mpg
I513,500 lbs
I5221.8 mpg
I514,000 lbs
I5219.4 mpg
I514,500 lbs
I5217.6 mpg
I515,000 lbs
I5216.1 mpg
I515,500 lbs
I5214.8 mpg
I516,000 lbs
I5213.7 mpg
I516,500 lbs
I5212.8 mpg
I517,000 to 8,500 lbs
I5212.1 mpg.
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I24``(C) T4Vehicle inertia weight classK._For purposes of subparagraph (B), the term `vehicle inertia weight class' has the same meaning as when defined in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.).
I22``(3) T4New qualified fuel cell motor vehicleK._For purposes of this subsection, the term `new qualified fuel cell motor vehicle' means a motor vehicle_
I24``(A) which is propelled by power derived from one or more cells which convert chemical energy directly into electricity by combining oxygen with hydrogen fuel which is stored on board the vehicle in any form and may or may not require reformation prior to use,
I24``(B) which, in the case of a passenger automobile or light truck_
I26``(i) for 2002 and later model vehicles, has received a certificate of conformity under the Clean Air Act and meets or exceeds the equivalent qualifying California low emission vehicle standard under section 243(e)(2) of the Clean Air Act for that make and model year, and
I26``(ii) for 2004 and later model vehicles, has received a certificate that such vehicle meets or exceeds the Bin 5 Tier II emission level established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle,
I24``(C) the original use of which commences with the taxpayer,
I24``(D) which is acquired for use or lease by the taxpayer and not for resale, and
I24``(E) which is made by a manufacturer.
I20``(c) T5New Qualified Hybrid Motor Vehicle CreditK._
I22``(1) T4In generalK._For purposes of subsection (a), the new qualified hybrid motor vehicle credit determined under this subsection with respect to a new qualified hybrid motor vehicle placed in service by the taxpayer during the taxable year is the credit amount determined under paragraph (2).
I22``(2) T4Credit amountK._
I24``(A) T4In generalK._The credit amount determined under this paragraph shall be determined in accordance with the following tables:
I26``(i) In the case of a new qualified hybrid motor vehicle which is a passenger automobile, medium duty passenger vehicle, or light truck and which provides the following percentage of the maximum available power:
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I49````If percentage of the maximum
I49available power is:
I50The credit amount is:
I51At least 5 percent but less than 10 percent
I52$250
I51At least 10 percent but less than 20 percent
I52$500
I51At least 20 percent but less than 30 percent
I52$750
I51At least 30 percent
I52$1,000.
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I26``(ii) In the case of a new qualified hybrid motor vehicle which is a heavy duty hybrid motor vehicle and which provides the following percentage of the maximum available power:
I28``(I) If such vehicle has a gross vehicle weight rating of not more than 14,000 pounds:
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I49````If percentage of the maximum
I49available power is:
I50The credit amount is:
I51At least 20 percent but less than 30 percent
I52$1,000
I51At least 30 percent but less than 40 percent
I52$1,750
I51At least 40 percent but less than 50 percent
I52$2,000
I51At least 50 percent but less than 60 percent
I52$2,250
I51At least 60 percent
I52$2,500.
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I28``(II) If such vehicle has a gross vehicle weight rating of more than 14,000 but not more than 26,000 pounds:
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I49````If percentage of the maximum
I49available power is:
I50The credit amount is:
I51At least 20 percent but less than 30 percent
I52$4,000
I51At least 30 percent but less than 40 percent
I52$4,500
I51At least 40 percent but less than 50 percent
I52$5,000
I51At least 50 percent but less than 60 percent
I52$5,500
I51At least 60 percent
I52$6,000.
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I28``(III) If such vehicle has a gross vehicle weight rating of more than 26,000 pounds:
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I49````If percentage of the maximum
I49available power is:
I50The credit amount is:
I51At least 20 percent but less than 30 percent
I52$6,000
I51At least 30 percent but less than 40 percent
I52$7,000
I51At least 40 percent but less than 50 percent
I52$8,000
I51At least 50 percent but less than 60 percent
I52$9,000
I51At least 60 percent
I52$10,000.
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I24``(B) T4Increase for fuel efficiencyK._
I26``(i) T4AmountK._The amount determined under subparagraph (A)(i) with respect to a new qualified hybrid motor vehicle which is a passenger automobile or light truck shall be increased by_
I28``(I) $500, if such vehicle achieves at least 125 percent but less than 150 percent of the 2002 model year city fuel economy,
I28``(II) $1,000, if such vehicle achieves at least 150 percent but less than 175 percent of the 2002 model year city fuel economy,
I28``(III) $1,500, if such vehicle achieves at least 175 percent but less than 200 percent of the 2002 model year city fuel economy,
I28``(IV) $2,000, if such vehicle achieves at least 200 percent but less than 225 percent of the 2002 model year city fuel economy,
I28``(V) $2,500, if such vehicle achieves at least 225 percent but less than 250 percent of the 2002 model year city fuel economy, and
I28``(VI) $3,000, if such vehicle achieves at least 250 percent of the 2002 model year city fuel economy.
I26``(ii) 2002 T4model year city fuel economyK._For purposes of clause (i), the 2002 model year city fuel economy with respect to a vehicle shall be determined on a gasoline gallon equivalent basis as determined by the Administrator of the Environmental Protection Agency using the tables provided in subsection (b)(2)(B) with respect to such vehicle.
I24``(C) T4Increase for accelerated emissions performanceK._The amount determined under subparagraph (A)(ii) with respect to an applicable heavy duty hybrid motor vehicle shall be increased by the increased credit amount determined in accordance with the following tables:
I26``(i) In the case of a vehicle which has a gross vehicle weight rating of not more than 14,000 pounds:
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I45````If the model year is:
I46The increased credit amount is:
I512005
I52$3,000
I512006
I52$2,500
I512007
I52$2,000
I512008
I52$1,500.
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I26``(ii) In the case of a vehicle which has a gross vehicle weight rating of more than 14,000 pounds but not more than 26,000 pounds:
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I45````If the model year is:
I46The increased credit amount is:
I512005
I52$7,750
I512006
I52$6,500
I512007
I52$5,250
I512008
I52$4,000.
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I26``(iii) In the case of a vehicle which has a gross vehicle weight rating of more than 26,000 pounds:
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I45````If the model year is:
I46The increased credit amount is:
I512005
I52$12,000
I512006
I52$10,000
I512007
I52$8,000
I512008
I52$6,000.
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I24``(D) T4Definitions relating to credit amountK._
I26``(i) T4Applicable heavy duty hybrid motor vehicleK._For purposes of subparagraph (C), the term `applicable heavy duty hybrid motor vehicle' means a heavy duty hybrid motor vehicle which is powered by an internal combustion or heat engine which is certified as meeting the emission standards set in the regulations prescribed by the Administrator of the Environmental Protection Agency for 2007 and later model year diesel heavy duty engines, or for 2008 and later model year ottocycle heavy duty engines, as applicable.
I26``(ii) T4Maximum available powerK._
I28``(I) T4Passenger automobile, medium duty passenger vehicle, or light truckK._For purposes of subparagraph (A)(i), the term `maximum available power' means the maximum power available from the rechargeable energy storage system, during a standard 10 second pulse power or equivalent test, divided by such maximum power and the SAE net power of the heat engine.
I28``(II) T4Heavy duty hybrid motor vehicleK._For purposes of subparagraph (A)(ii), the term `maximum available power' means the maximum power available from the rechargeable energy storage system, during a standard 10 second pulse power or equivalent test, divided by the vehicle's total traction power. The term `total traction power' means the sum of the peak power from the rechargeable energy storage system and the heat engine peak power of the vehicle, except that if such storage system is the sole means by which the vehicle can be driven, the total traction power is the peak power of such storage system.
I22``(3) T4New qualified hybrid motor vehicleK._For purposes of this subsection, the term `new qualified hybrid motor vehicle' means a motor vehicle_
I24``(A) which draws propulsion energy from onboard sources of stored energy which are both_
I26``(i) an internal combustion or heat engine using combustible fuel, and
I26``(ii) a rechargeable energy storage system,
I24``(B) which, in the case of a passenger automobile, medium duty passenger vehicle, or light truck_
I26``(i) for 2002 and later model vehicles, has received a certificate of conformity under the Clean Air Act and meets or exceeds the equivalent qualifying California low emission vehicle standard under section 243(e)(2) of the Clean Air Act for that make and model year, and
I26``(ii) for 2004 and later model vehicles, has received a certificate that such vehicle meets or exceeds the Bin 5 Tier II emission level established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle,
I24``(C) which, in the case of a heavy duty hybrid motor vehicle, the internal combustion or heat engine of which has received a certificate of conformity under the Clean Air Act as meeting the emission standards set in the regulations prescribed by the Administrator of the Environmental Protection Agency for 2004 through 2007 model year diesel heavy duty engines or ottocycle heavy duty engines, as applicable,
I24``(D) the original use of which commences with the taxpayer,
I24``(E) which is acquired for use or lease by the taxpayer and not for resale, and
I24``(F) which is made by a manufacturer.
I22``(4) T4Heavy duty hybrid motor vehicleK._For purposes of this subsection, the term `heavy duty hybrid motor vehicle' means a new qualified hybrid motor vehicle which has a gross vehicle weight rating of more than 8,500 pounds. Such term does not include a medium duty passenger vehicle.
I20``(d) T5New Qualified Alternative Fuel Motor Vehicle CreditK._
I22``(1) T4Allowance of creditK._Except as provided in paragraph (5), the new qualified alternative fuel motor vehicle credit determined under this subsection is an amount equal to the applicable percentage of the incremental cost of any new qualified alternative fuel motor vehicle placed in service by the taxpayer during the taxable year.
I22``(2) T4Applicable percentageK._For purposes of paragraph (1), the applicable percentage with respect to any new qualified alternative fuel motor vehicle is_
I24``(A) 50 percent, plus
I24``(B) 30 percent, if such vehicle_
I26``(i) has received a certificate of conformity under the Clean Air Act and meets or exceeds the most stringent standard available for certification under the Clean Air Act for that make and model year vehicle (other than a zero emission standard), or
I26``(ii) has received an order certifying the vehicle as meeting the same requirements as vehicles which may be sold or leased in California and meets or exceeds the most stringent standard available for certification under the State laws of California (enacted in accordance with a waiver granted under section 209(b) of the Clean Air Act) for that make and model year vehicle (other than a zero emission standard).
I22For purposes of the preceding sentence, in the case of any new qualified alternative fuel motor vehicle which weighs more than 14,000 pounds gross vehicle weight rating, the most stringent standard available shall be such standard available for certification in 2002.

I22``(3) T4Incremental costK._For purposes of this subsection, the incremental cost of any new qualified alternative fuel motor vehicle is equal to the amount of the excess of the manufacturer's suggested retail price for such vehicle over such price for a gasoline or diesel fuel motor vehicle of the same model, to the extent such amount does not exceed_
I24``(A) $5,000, if such vehicle has a gross vehicle weight rating of not more than 8,500 pounds,
I24``(B) $10,000, if such vehicle has a gross vehicle weight rating of more than 8,500 pounds but not more than 14,000 pounds,
I24``(C) $25,000, if such vehicle has a gross vehicle weight rating of more than 14,000 pounds but not more than 26,000 pounds, and
I24``(D) $40,000, if such vehicle has a gross vehicle weight rating of more than 26,000 pounds.
I22``(4) T4New qualified alternative fuel motor vehicleK._For purposes of this subsection_
I24``(A) T4In generalK._The term `new qualified alternative fuel motor vehicle' means any motor vehicle_
I26``(i) which is only capable of operating on an alternative fuel,
I26``(ii) the original use of which commences with the taxpayer,
I26``(iii) which is acquired by the taxpayer for use or lease, but not for resale, and
I26``(iv) which is made by a manufacturer.
I24``(B) T4Alternative fuelK._The term `alternative fuel' means compressed natural gas, liquefied natural gas, liquefied petroleum gas, hydrogen, and any liquid at least 85 percent of the volume of which consists of methanol or ethanol.
I22``(5) T4Credit for mixed-fuel vehiclesK._
I24``(A) T4In generalK._In the case of a mixed-fuel vehicle placed in service by the taxpayer during the taxable year, the credit determined under this subsection is an amount equal to_
I26``(i) in the case of a 75/25 mixed-fuel vehicle, 70 percent of the credit which would have been allowed under this subsection if such vehicle was a qualified alternative fuel motor vehicle, and
I26``(ii) in the case of a 90/10 mixed-fuel vehicle, 90 percent of the credit which would have been allowed under this subsection if such vehicle was a qualified alternative fuel motor vehicle.
I24``(B) T4Mixed-fuel vehicleK._For purposes of this subsection, the term `mixed-fuel vehicle' means any motor vehicle described in subparagraph (C) or (D) of paragraph (3), which_
I26``(i) is certified by the manufacturer as being able to perform efficiently in normal operation on a combination of an alternative fuel and a petroleum-based fuel,
I26``(ii) either_
I28``(I) has received a certificate of conformity under the Clean Air Act, or
I28``(II) has received an order certifying the vehicle as meeting the same requirements as vehicles which may be sold or leased in California and meets or exceeds the low emission vehicle standard under section 88.105˙0994 of title 40, Code of Federal Regulations, for that make and model year vehicle,
I26``(iii) the original use of which commences with the taxpayer,
I26``(iv) which is acquired by the taxpayer for use or lease, but not for resale, and
I26``(v) which is made by a manufacturer.
I24``(C) 75/25 T4mixed-fuel vehicleK._For purposes of this subsection, the term `75/25 mixed-fuel vehicle' means a mixed-fuel vehicle which operates using at least 75 percent alternative fuel and not more than 25 percent petroleum-based fuel.
I24``(D) 90/10 T4mixed-fuel vehicleK._For purposes of this subsection, the term `90/10 mixed-fuel vehicle' means a mixed-fuel vehicle which operates using at least 90 percent alternative fuel and not more than 10 percent petroleum-based fuel.
I20``(e) T5New Qualified Advanced Diesel Motor Vehicle CreditK._
I22``(1) T4In generalK._For purposes of subsection (a), the new qualified advanced diesel motor vehicle credit determined under this subsection with respect to a new qualified advanced diesel motor vehicle placed in service by the taxpayer during the taxable year is_
I24``(A) $3,000 for vehicles with a gross vehicle weight rating of not more than 14,000 pounds, placed in service before December 31, 2009, if such vehicle has received a certificate that such vehicle meets or exceeds the Bin 5 Tier II emission level established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year,
I24``(B) $5,000 for vehicles with a gross vehicle weight rating of not more than 14,000 pounds, placed in service before December 31, 2013, if such vehicle has received a certificate that such vehicle meets or exceeds the Ultra Low Emission Vehicle II (ULEV II) emission level established in regulations prescribed by the California Air Resources Board under chapter 1 of division 3 of title 13, California Code of Regulations, for that make and model year, and 
I24``(C) zero in any other case.
I22``(2) T4DefinitionsK._
I24``(A) T4Vehicle inertia weight classK._For purposes of this subsection, the term `vehicle inertia weight class' has the same meaning as when defined in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.).
I24``(B) T4New qualified advanced diesel motor vehicleK._For purposes of this subsection, the term `new qualified advanced diesel motor vehicle' means any motor vehicle_
I26``(i) with a direct-injection diesel engine which achieves at least 20% increased fuel efficiency over the comparably sized gasoline engine, as determined by the Secretary, 
I26``(ii) the original use of which commences with the taxpayer,
I26``(iii) which is acquired for use or lease by the taxpayer and not for resale, and 
I26``(iv) which is made by a manufacturer.
I20``(f) T5Application With Other CreditsK._The credit allowed under subsection (a) for any taxable year shall not exceed the excess (if any) of_
I22``(1) the regular tax for the taxable year reduced by the sum of the credits allowable under subpart A and sections 27, 29, and 30, over
I22``(2) the tentative minimum tax for the taxable year.
I20``(g) T5Other Definitions and Special RulesK._For purposes of this section_
I22``(1) T4Consumable fuelK._The term `consumable fuel' means any solid, liquid, or gaseous matter which releases energy when consumed by an auxiliary power unit.
I22``(2) T4Motor vehicleK._The term `motor vehicle' has the meaning given such term by section 30(c)(2).
I22``(3) T4City fuel economyK._The city fuel economy with respect to any vehicle shall be measured in a manner which is substantially similar to the manner city fuel economy is measured in accordance with procedures under part 600 of subchapter Q of chapter I of title 40, Code of Federal Regulations, as in effect on the date of the enactment of this section.
I22``(4) T4Other termsK._The terms `automobile', `passenger automobile', `medium duty passenger vehicle', `light truck', and `manufacturer' have the meanings given such terms in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.).
I22``(5) T4Reduction in basisK._For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed (determined without regard to subsection (e)).
I22``(6) T4No double benefitK._The amount of any deduction or other credit allowable under this chapter_
I24``(A) for any incremental cost taken into account in computing the amount of the credit determined under subsection (d) shall be reduced by the amount of such credit attributable to such cost, and
I24``(B) with respect to a vehicle described under subsection (b) or (c), shall be reduced by the amount of credit allowed under subsection (a) for such vehicle for the taxable year.
I22``(7) T4Property used by tax-exempt entitiesK._In the case of a credit amount which is allowable with respect to a motor vehicle which is acquired by an entity exempt from tax under this chapter, the person which sells or leases such vehicle to the entity shall be treated as the taxpayer with respect to the vehicle for purposes of this section and the credit shall be allowed to such person, but only if the person clearly discloses to the entity at the time of any sale or lease the specific amount of any credit otherwise allowable to the entity under this section.
I22``(8) T4RecaptureK._The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property which ceases to be property eligible for such credit (including recapture in the case of a lease period of less than the economic life of a vehicle).
I22``(9) T4Property used outside united states, etc., not qualifiedK._No credit shall be allowed under subsection (a) with respect to any property referred to in section 50(b) or with respect to the portion of the cost of any property taken into account under section 179.
I22``(10) T4Election to not take creditK._No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such vehicle.
I22``(11) T4Carryback and carryforward allowedK._
I24``(A) T4In generalK._If the credit amount allowable under subsection (a) for a taxable year exceeds the amount of the limitation under subsection (e) for such taxable year (in this paragraph referred to as the `unused credit year'), such excess shall be allowed as a credit carryback for each of the 3 taxable years beginning after the date of the enactment of this section, which precede the unused credit year and a credit carryforward for each of the 20 taxable years which succeed the unused credit year.
I24``(B) T4RulesK._Rules similar to the rules of section 39 shall apply with respect to the credit carryback and credit carryforward under subparagraph (A).
I22``(12) T4Interaction with air quality and motor vehicle safety standardsK._Unless otherwise provided in this section, a motor vehicle shall not be considered eligible for a credit under this section unless such vehicle is in compliance with_
I24``(A) the applicable provisions of the Clean Air Act for the applicable make and model year of the vehicle (or applicable air quality provisions of State law in the case of a State which has adopted such provision under a waiver under section 209(b) of the Clean Air Act), and
I24``(B) the motor vehicle safety provisions of sections 30101 through 30169 of title 49, United States Code.
I20``(h) T5RegulationsK._
I22``(1) T4In generalK._Except as provided in paragraph (2), the Secretary shall promulgate such regulations as necessary to carry out the provisions of this section.
I22``(2) T4Coordination in prescription of certain regulationsK._The Secretary of the Treasury, in coordination with the Secretary of Transportation and the Administrator of the Environmental Protection Agency, shall prescribe such regulations as necessary to determine whether a motor vehicle meets the requirements to be eligible for a credit under this section.
I20``(i) T5TerminationK._This section shall not apply to any property purchased after_
I22``(1) in the case of a new qualified fuel cell motor vehicle (as described in subsection (b)), December 31, 2013,
I22``(2) in the case of a new qualified advanced diesel motor vehicle to which subsection (e)(1)(B) applies, December 31, 2013, and
I22``(3) in the case of any other property, December 31, 2009.''T1.
I20(b) T5Conforming AmendmentsK._
I22(1) Section 1016(a) is amended by striking ``and'' at the end of paragraph (30), by striking the period at the end of paragraph (31) and inserting ``, and'', and by adding at the end the following new paragraph:
I22``(32) to the extent provided in section 30B(g)(5).''T1.
I22(2) Section 55(c)(3) is amended by inserting ``30B(f),'' after ``30(b)(3)''.
I22(3) Section 6501(m) is amended by inserting ``30B(g)(10),'' after ``30(d)(4),''.
I22(4) The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 30A the following new item:
Q10
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I42``Sec. 30B. Alternative motor vehicle credit.''T1.S6201

I20(c) T5Effective DateK._The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.
I72SEC. 315. MODIFICATION OF CREDIT FOR QUALIFIED ELECTRIC VEHICLES.
I20(a) T5Amount of CreditK._
I22(1) T4In generalK._Section 30(a) (relating to allowance of credit) is amended by striking ``10 percent of''.
I22(2) T4Limitation of credit according to type of vehicleK._Section 30(b) (relating to limitations) is amended_
I24(A) by striking paragraphs (1) and (2) and inserting the following new paragraph:
I22``(1) T4Limitation according to type of vehicleK._The amount of the credit allowed under subsection (a) for any vehicle shall not exceed the greatest of the following amounts applicable to such vehicle:
I24``(A) In the case of a vehicle which conforms to the Motor Vehicle Safety Standard 500 prescribed by the Secretary of Transportation, as in effect on the date of the enactment of the New Apollo Energy Act of 2005, the lesser of_
I26``(i) 10 percent of the manufacturer's suggested retail price of the vehicle, or
I26``(ii) $1,500.
I24``(B) In the case of a vehicle not described in subparagraph (A) with a gross vehicle weight rating not exceeding 8,500 pounds_
I26``(i) $4,000, or
I26``(ii) $6,000, if such vehicle is_
I28``(I) capable of a driving range of at least 100 miles on a single charge of the vehicle's rechargeable batteries as measured pursuant to the urban dynamometer schedules under appendix I to part 86 of title 40, Code of Federal Regulations, or
I28``(II) capable of a payload capacity of at least 1,000 pounds.
I24``(C) In the case of a vehicle with a gross vehicle weight rating exceeding 8,500 but not exceeding 14,000 pounds, $10,000.
I24``(D) In the case of a vehicle with a gross vehicle weight rating exceeding 14,000 but not exceeding 26,000 pounds, $20,000.
I24``(E) In the case of a vehicle with a gross vehicle weight rating exceeding 26,000 pounds, $40,000.''T1, and
I24(B) by redesignating paragraph (3) as paragraph (2).
I22(3) T4Conforming amendmentsK._
I24(A) Section 53(d)(1)(B)(iii) is amended by striking ``section 30(b)(3)(B)'' and inserting ``section 30(b)(2)(B)''.
I24(B) Section 55(c)(3) is amended by striking ``30(b)(3)'' and inserting ``30(b)(2)''.
I20(b) T5Qualified Battery Electric VehicleK._
I22(1) T4In generalK._Section 30(c)(1)(A) (defining qualified electric vehicle) is amended to read as follows:
I24``(A) which is_
I26``(i) operated solely by use of a battery or battery pack, or
I26``(ii) powered primarily through the use of an electric battery or battery pack using a flywheel or capacitor which stores energy produced by an electric motor through regenerative braking to assist in vehicle operation,''T1.
I22(2) T4Leased vehiclesK._Section 30(c)(1)(C) is amended by inserting ``or lease'' after ``use''.
I22(3) T4Conforming amendmentsK._
I24(A) Subsections (a), (b)(2), and (c) of section 30 are each amended by inserting ``battery'' after ``qualified'' each place it appears.
I24(B) The heading of subsection (c) of section 30 is amended by inserting ``T5BatteryK'' after ``T5QualifiedK''.
I24(C) The heading of section 30 is amended by inserting ``G2T1G2batteryKK'' after ``G2T1G2qualifiedKK''.
I24(D) The item relating to section 30 in the table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by inserting ``battery'' after ``qualified''.
I24(E) Section 179A(c)(3) is amended by inserting ``battery'' before ``electric''.
I24(F) The heading of paragraph (3) of section 179A(c) is amended by inserting ``T4batteryK'' before ``T4electricK''.
I20(c) T5Additional Special RulesK._
I22(1) T4In generalK._Section 30(d) (relating to special rules) is amended by adding at the end the following new paragraphs:
I22``(5) T4No double benefitK._The amount of any deduction or other credit allowable under this chapter for any cost taken into account in computing the amount of the credit determined under subsection (a) shall be reduced by the amount of such credit attributable to such cost.
I22``(6) T4Property used by tax-exempt entitiesK._In the case of a credit amount which is allowable with respect to a vehicle which is acquired by an entity exempt from tax under this chapter, the person which sells or leases such vehicle to the entity shall be treated as the taxpayer with respect to the vehicle for purposes of this section and the credit shall be allowed to such person, but only if the person clearly discloses to the entity at the time of any sale or lease the specific amount of any credit otherwise allowable to the entity under this section.
I22``(7) T4Carryback and carryforward allowedK._
I24``(A) T4In generalK._If the credit amount allowable under subsection (a) for a taxable year exceeds the amount of the limitation under subsection (b)(2) for such taxable year (in this paragraph referred to as the `unused credit year'), such excess shall be allowed as a credit carryback for each of the 3 taxable years beginning after the date of the enactment of this paragraph, which precede the unused credit year and a credit carryforward for each of the 20 taxable years which succeed the unused credit year.
I24``(B) T4RulesK._Rules similar to the rules of section 39 shall apply with respect to the credit carryback and credit carryforward under subparagraph (A).''T1.
I22(2) T4Conforming amendmentK._Section 179A(c) is amended by striking paragraph (3).
I20(d) T5Extension of CreditK._Section 30(e) (relating to termination) is amended by striking ``2006'' and inserting ``2009''. 
I20(e) T5Effective DateK._The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.
I72SEC. 316. EXTENSION OF BIODIESEL TAX CREDITS.
I20(a) T5In GeneralK._Sections 40A(e), 6426(c)(6), and 6427(e)(3)(B) are each amended by stirking ``2006'' and inserting ``2014''.
I20(b) T5Effective DateK._The amendments made by this section shall take effect on the date of the enactment of this Act.
I72SEC. 317. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS AS MOTOR VEHICLE FUEL.
I20(a) T5In GeneralK._Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits) is amended by inserting after section 40A the following new section:
I72``SEC. 40B. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS AS MOTOR VEHICLE FUEL.
I20``(a) T5General RuleK._For purposes of section 38, the alternative fuel retail sales credit for any taxable year is the applicable amount for each gasoline gallon equivalent of alternative fuel sold at retail by the taxpayer during such year as a fuel to propel any qualified motor vehicle.
I20``(b) T5DefinitionsK._For purposes of this section_
I22``(1) T4Applicable amountK._The term `applicable amount' means as follows:
I24``(A) T4In generalK._Except as provided in subparagraph (B), the amount determined in accordance with the following table:
S6211
I49````In the case of any taxable year
I49ending in_
I50The applicable amount is_
I512006
I5230 cents
I512007
I5240 cents
I512008 and 2009
I5250 cents
I512010
I5240 cents
I512011
I5230 cents.
S6201
I24``(B) T4Hydrogen fuelK._In the case of an alternative fuel which is hydrogen fuel, the amount determined in accordance with the following table:
S6211
I49````In the case of any taxable year
I49ending in_
I50The applicable amount is_
I512006
I5230 cents
I512007
I5240 cents
I512008 through 2013
I5250 cents
I512014
I5240 cents
I512015
I5230 cents.
S6201
I22``(2) T4Alternative fuelK._The term `alternative fuel' means compressed natural gas, liquefied natural gas, liquefied petroleum gas, hydrogen, and any liquid at least 85 percent of the volume of which consists of methanol or ethanol.
I22``(3) T4Gasoline gallon equivalentK._The term `gasoline gallon equivalent' means, with respect to any alternative fuel, the amount (determined by the Secretary) of such fuel having a Btu content of 114,000.
I22``(4) T4Qualified motor vehicleK._The term `qualified motor vehicle' means any motor vehicle (as defined in section 30(c)(2)) which meets any applicable Federal or State emissions standards with respect to each fuel by which such vehicle is designed to be propelled.
I22``(5) T4Sold at retailK._
I24``(A) T4In generalK._The term `sold at retail' means the sale, for a purpose other than resale, after manufacture, production, or importation.
I24``(B) T4Use treated as saleK._If any person uses alternative fuel (including any use after importation) as a fuel to propel any qualified alternative fuel motor vehicle (as defined in section 30B(d)(4)) before such fuel is sold at retail, then such use shall be treated in the same manner as if such fuel were sold at retail as a fuel to propel such a vehicle by such person.
I20``(c) T5Election to Pass CreditK._A person which sells alternative fuel at retail may elect to pass the credit allowable under this section to the purchaser of such fuel or, in the event the purchaser is a tax-exempt entity or otherwise declines to accept such credit, to the person which supplied such fuel, under rules established by the Secretary.
I20``(d) T5No Double BenefitK._The amount of any deduction or other credit allowable under this chapter for any fuel taken into account in computing the amount of the credit determined under subsection (a) shall be reduced by the amount of such credit attributable to such fuel.
I20``(e) T5Pass-Thru in the Case of Estates and TrustsK._Under regulations prescribed by the Secretary, rules similar to the rules of subsection (d) of section 52 shall apply.
I20``(f) T5TerminationK._
I22``(1) T4In generalK._Except as provided in paragraph (2), this section shall not apply to any fuel sold at retail after December 31, 2011.
I22``(2) T4Hydrogen fuelK._In the case of an alternative fuel which is hydrogen fuel, this section shall not apply to any fuel sold at retail after December 31, 2015.''T1.
I20(b) T5Credit Treated as Business CreditK._Section 38(b) (relating to current year business credit) is amended by striking ``plus'' at the end of paragraph (18), by striking the period at the end of paragraph (19) and inserting ``, plus'', and by adding at the end the following new paragraph:
I22``(20) the alternative fuel retail sales credit determined under section 40B(a).''T1.
I20(c) T5Clerical AmendmentK._The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 40A the following new item:
Q10
S6211

I42``Sec. 40B. Credit for retail sale of alternative fuels as motor vehicle fuel.''T1.S6201

I20(d) T5Effective DateK._The amendments made by this section shall apply to fuel sold at retail after December 31, 2005, in taxable years ending after such date.
I72SEC. 318. STUDY OF EFFECTIVENESS OF CERTAIN PROVISIONS BY GAO.
I20(a) T5StudyK._The Comptroller General of the United States shall undertake an ongoing analysis of_
I22(1) the effectiveness of the alternative motor vehicles and fuel incentives provisions under this Act, and
I22(2) the recipients of the tax benefits contained in such provisions, including an identification of such recipients by income and other appropriate measurements.
I20Such analysis shall quantify the effectiveness of such provisions by examining and comparing the Federal Government's forgone revenue to the aggregate amount of energy actually conserved and tangible environmental benefits gained as a result of such provisions.

I20(b) T5ReportsK._The Comptroller General of the United States shall report the analysis required under subsection (a) to Congress not later than December 31, 2006, and annually thereafter.
I72SEC. 319. EXTENSION OF DEDUCTION FOR CERTAIN REFUELING PROPERTY.
I20(a) T5In GeneralK._Section 179A(f) (relating to termination) is amended by striking ``2006'' and inserting ``2009''.
I20(b) T5Effective DateK._The amendments made by this section shall apply to property placed in service after December 31, 2005, in taxable years ending after such date.
I72SEC. 320. CREDIT FOR INSTALLATION OF ALTERNATIVE FUELING STATIONS.
I20(a) T5In GeneralK._Subpart B of part IV of subchapter A of chapter 1 (relating to foreign tax credit, etc.), as amended by this Act, is amended by adding at the end the following new section:
I72``SEC. 30C. CLEAN-FUEL VEHICLE REFUELING PROPERTY CREDIT.
I20``(a) T5Credit AllowedK._There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 50 percent of the amount paid or incurred by the taxpayer during the taxable year for the installation of qualified clean-fuel vehicle refueling property.
I20``(b) T5LimitationK._
I22``(1) T4In generalK._The credit allowed under subsection (a)_
I24``(A) with respect to any retail clean-fuel vehicle refueling property, shall not exceed $30,000, and
I24``(B) with respect to any residential clean-fuel vehicle refueling property, shall not exceed $1,000.
I22``(2) T4PhaseoutK._
I24``(A) T4In generalK._Except as provided in subparagraph (B), in the case of any qualified clean-fuel vehicle refueling property placed in service after December 31, 2007, the limit otherwise applicable under paragraph (1) shall be reduced by_
I26``(i) 25 percent in the case of any vehicle placed in service in calendar year 2008, and
I26``(ii) 50 percent in the case of any vehicle placed in service in calendar year 2009.
I24``(B) T4Hydrogen propertyK._In the case of any qualified clean-fuel vehicle refueling property relating to hydrogen placed in service after December 31, 2011, the limit otherwise applicable under paragraph (1) shall be reduced by_
I26``(i) 25 percent in the case of any vehicle placed in service in calendar year 2012, and
I26``(ii) 50 percent in the case of any vehicle placed in service in calendar year 2013.
I20``(c) T5Year Credit AllowedK._The credit allowed under subsection (a) shall be allowed in the taxable year in which the qualified clean-fuel vehicle refueling property is placed in service by the taxpayer.
I20``(d) T5DefinitionsK._For purposes of this section_
I22``(1) T4Qualified clean-fuel vehicle refueling propertyK._The term `qualified clean-fuel vehicle refueling property' has the same meaning given such term by section 179A(d).
I22``(2) T4Residential clean-fuel vehicle refueling propertyK._The term `residential clean-fuel vehicle refueling property' means qualified clean-fuel vehicle refueling property which is installed on property which is used as the principal residence (within the meaning of section 121) of the taxpayer.
I22``(3) T4Retail clean-fuel vehicle refueling propertyK._The term `retail clean-fuel vehicle refueling property' means qualified clean-fuel vehicle refueling property which is installed on property (other than property described in paragraph (2)) used in a trade or business of the taxpayer.
I20``(e) T5Application With Other CreditsK._The credit allowed under subsection (a) for any taxable year shall not exceed the excess (if any) of_
I22``(1) the regular tax for the taxable year reduced by the sum of the credits allowable under subpart A and sections 27, 29, 30, and 30B, over
I22``(2) the tentative minimum tax for the taxable year.
I20``(f) T5Basis ReductionK._For purposes of this title, the basis of any property shall be reduced by the portion of the cost of such property taken into account under subsection (a).
I20``(g) T5No Double BenefitK._No deduction shall be allowed under section 179A with respect to any property with respect to which a credit is allowed under subsection (a).
I20``(h) T5Refueling Property Installed for Tax-Exempt EntitiesK._In the case of qualified clean-fuel vehicle refueling property installed on property owned or used by an entity exempt from tax under this chapter, the person which installs such refueling property for the entity shall be treated as the taxpayer with respect to the refueling property for purposes of this section (and such refueling property shall be treated as retail clean-fuel vehicle refueling property) and the credit shall be allowed to such person, but only if the person clearly discloses to the entity in any installation contract the specific amount of the credit allowable under this section.
I20``(i) T5Carryforward AllowedK._
I22``(1) T4In generalK._If the credit amount allowable under subsection (a) for a taxable year exceeds the amount of the limitation under subsection (e) for such taxable year (referred to as the `unused credit year' in this subsection), such excess shall be allowed as a credit carryforward for each of the 20 taxable years following the unused credit year.
I22``(2) T4RulesK._Rules similar to the rules of section 39 shall apply with respect to the credit carryforward under paragraph (1).
I20``(j) T5Special RulesK._Rules similar to the rules of paragraphs (4) and (5) of section 179A(e) shall apply.
I20``(k) T5RegulationsK._The Secretary shall prescribe such regulations as necessary to carry out the provisions of this section.
I20``(l) T5TerminationK._This section shall not apply to any property placed in service_
I22``(1) in the case of property relating to hydrogen, after December 31, 2013, and
I22``(2) in the case of any other property, after December 31, 2009.''T1.
I20(b) T5Incentive for Production of Hydrogen at Qualified Clean-Fuel Vehicle Refueling PropertyK._Section 179A(d) (defining qualified clean-fuel vehicle refueling property) is amended by adding at the end the following new flush sentence:I20 ``In the case of clean-burning fuel which is hydrogen produced from another clean-burning fuel, paragraph (3)(A) shall be applied by substituting ``production, storage, or dispensing'' for ``storage or dispensing'' both places it appears.''T1.
I20(c) T5Conforming AmendmentsK._T1(1) Section 1016(a), as amended by this Act, is amended by striking ``and'' at the end of paragraph (31), by striking the period at the end of paragraph (32) and inserting ``, and'', and by adding at the end the following new paragraph:
I22``(33) to the extent provided in section 30C(f).''T1.
I20(2) Section 55(c)(3) is amended by inserting ``30C(e),'' after ``30B(e)''.
I20(3) The table of sections for subpart B of part IV of subchapter A of chapter 1, as amended by this Act, is amended by inserting after the item relating to section 30B the following new item:
Q10
S6211

I42``Sec. 30C. Clean-fuel vehicle refueling property credit.''T1.S6201

I20(d) T5Effective DateK._The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.
I72SEC. 321. INCENTIVE FOR CERTAIN ENERGY EFFICIENT PROPERTY USED IN BUSINESS.
I20(a) T5In GeneralK._Part VI of subchapter B of chapter 1 is amended by adding at the end the following new section:
I72``SEC. 200. ENERGY PROPERTY DEDUCTION.
I20``(a) T5In GeneralK._There shall be allowed as a deduction for the taxable year an amount equal to the sum of_
I22``(1) the amount determined under subsection (b) for each energy property of the taxpayer placed in service during such taxable year, and
I22``(2) the energy efficient residential rental building property deduction determined under subsection (e).
I20``(b) T5Amount for Energy PropertyK._
I22``(1) T4In generalK._The amount determined under this subsection for the taxable year for each item of energy property shall equal the amount specified for such property in the following table:
c2,L1,ns,tp0,p8,10/12,g1,t1,s10,xls90
I95``
h1T2Description of property:K
h1T2Allowable amount is:K
j
I01Elected solar hot water propertyD$1.00 per each kwh/year of savings.
I01Photovoltaic propertyD$4.50 per peak watt.
I01Advanced main air circulating fan or a Tier 1 natural gas, propane, or oil water heaterD$150.
I01Tier 2 energy-efficient building propertyD$900.14
I01Tier 1 energy-efficient building property (other than an advanced main air circulating fan or a natural gas, propane, or oil water heater)D$450.''
e

I22``(2) T4Elected solar hot water propertyK._In the case of elected solar hot water property, the taxpayer may elect to substitute `$21 per annual Therm of natural gas savings' for `$1.00 per each kwh/year of savings' in the table contained in paragraph (1).
I20``(c) T5Energy Property DefinedK._
I22``(1) T4In generalK._For purposes of this part, the term `energy property' means any property_
I24``(A) which is_
I26``(i) solar energy property,
I26``(ii) Tier 2 energy-efficient building property, or
I26``(iii) Tier 1 energy-efficient building property,
I24``(B)T1(i) the construction, reconstruction, or erection of which is completed by the taxpayer, or
I24``(ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer,
I24``(C) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and
I24``(D) which meets the performance and quality standards, and the certification requirements (if any), which_
I26``(i) have been prescribed by the Secretary by regulations (after consultation with the Secretary of Energy or the Administrator of the Environmental Protection Agency, as appropriate),
I26``(ii) in the case of the energy efficiency ratio (EER) for central air conditioners and electric heat pumps_
I28``(I) require measurements to be based on published data which is tested by manufacturers at 95 degrees Fahrenheit, and
I28``(II) may be based on certified data of the Air Conditioning and Refrigeration Institute,
I26``(iii) in the case of geothermal heat pumps_
I28``(I) shall be based on testing under the conditions of ARI/ISO Standard 13256˙091 for Water Source Heat Pumps or ARI 870 for Direct Expansion GeoExchange Heat Pumps (DX), as appropriate, and
I28``(II) shall include evidence that water heating services have been provided through a desuperheater or integrated water heating system connected to the storage water heater tank, and
I26``(iv) are in effect at the time of the acquisition of the property.
I22``(2) T4Solar energy propertyK._In the case of_
I24``(A) elected solar hot water property, the regulations under paragraph (1)(D) shall be based on the OG˙09300 Standard for the Annual Performance of OG˙09300 Certified Systems of the Solar Rating and Certification Corporation, and
I24``(B) photovoltaics, such regulations shall be based on the ASTM Standard E 1036 and E 1036M˙0996 Standard Test Method for Electric Performance of Nonconcentrator Terrestrial Photovoltaic Modules and Arrays Using Reference Cells,
I22to the extent the Secretary determines such standards carry out the purposes of this section.

I22``(3) T4ExceptionK._Such term shall not include any property which is public utility property (as defined in section 46(f)(5) as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).
I20``(d) T5Definitions Relating to Types of Energy PropertyK._For purposes of this section_
I22``(1) T4Solar energy propertyK._
I24``(A) T4In generalK._The term `solar energy property' means equipment which uses solar energy_
I26``(i) to generate electricity, or
I26``(ii) to provide hot water for use in a structure.
I24``(B) T4Elected solar hot water propertyK._
I26``(i) T4In generalK._The term `elected solar hot water property' means property which is solar energy property by reason of subparagraph (A)(ii) and for which an election under this subparagraph is in effect.
I26``(ii) T4ElectionK._For purposes of clause (i), a taxpayer may elect to treat property described in clause (i) as elected solar hot water property.
I24``(C) T4Photovoltaic propertyK._The term `photovoltaic property' means solar energy property which uses a solar photovoltaic process to generate electricity.
I24``(D) T4Swimming pools, etc., used as storage mediumK._The term `solar energy property' shall not include a swimming pool, hot tub, or any other energy storage medium which has a function other than the function of such storage.
I24``(E) T4Solar panelsK._No solar panel or other property installed as a roof (or portion thereof) shall fail to be treated as solar energy property solely because it constitutes a structural component of the structure on which it is installed.
I22``(2) T4Tier 2 energy-efficient building propertyK._The term `Tier 2 energy-efficient building property' means_
I24``(A) an electric heat pump water heater which yields an energy factor of at least 2.0 in the standard Department of Energy test procedure,
I24``(B) an electric heat pump which has a heating seasonal performance factor (HSPF) of at least 9, a seasonal energy efficiency ratio (SEER) of at least 15, and an energy efficiency ratio (EER) of at least 13,
I24``(C) a geothermal heat pump which_
I26``(i) in the case of a closed loop product, has an energy efficiency ratio (EER) of at least 14.1 and a heating coefficient of performance (COP) of at least 3.3,
I26``(ii) in the case of an open loop product, has an energy efficiency ratio (EER) of at least 16.2 and a heating coefficient of performance (COP) of at least 3.6, and
I26``(iii) in the case of a direct expansion (DX) product, has an energy efficiency ratio (EER) of at least 15 and a heating coefficient of performance (COP) of at least 3.5,
I24``(D) a central air conditioner which has a seasonal energy efficiency ratio (SEER) of at least 15 and an energy efficiency ratio (EER) of at least 13, and
I24``(E) a natural gas, propane, or oil water heater which has an energy factor of at least 0.80.
I22``(3) T4Tier 1 energy-efficient building propertyK._The term `Tier 1 energy-efficient building property' means_
I24``(A) an electric heat pump which has a heating system performance factor (HSPF) of at least 8.5, a cooling seasonal energy efficiency ratio (SEER) of at least 14, and an energy efficiency ratio (EER) of at least 12,
I24``(B) a central air conditioner which has a cooling seasonal energy efficiency ratio (SEER) of at least 14 and an energy efficiency ratio (EER) of at least 12,
I24``(C) a natural gas, propane, or oil water heater which has an energy factor of at least 0.65, and
I24``(D) an oil, natural gas, or propane furnace or hot water boiler which achieves at least 95 percent annual fuel utilization efficiency (AFUE).
I22``(4) T4Advanced main air circulating fanK._The term `advanced main air circulating fan' means a fan used in a natural gas, propane, or oil furnace originally placed in service by the taxpayer during the taxable year, including a fan which uses a brushless permanent magnet motor or another type of motor which achieves similar or higher efficiency at full and half speed, as determined by the Secretary.
I20``(e) T5Energy Efficient Residential Rental Building Property DeductionK._
I22``(1) T4Deduction allowedK._For purposes of subsection (a)_
I24``(A) T4In generalK._The energy efficient residential rental building property deduction determined under this subsection is an amount equal to energy efficient residential rental building property expenditures made by a taxpayer for the taxable year.
I24``(B) T4Maximum amount of deductionK._The amount of energy efficient residential rental building property expenditures taken into account under subparagraph (A) with respect to each dwelling unit shall not exceed_
I26``(i) $6,000 in the case of a percentage reduction of 50 percent as determined under paragraph (2)(B), and
I26``(ii) $12,000 times the percentage reduction in the case of a percentage reduction of less than 50 percent as determined under paragraph (2)(B).
I24``(C) T4Year deduction allowedK._The deduction under subparagraph (A) shall be allowed in the taxable year in which the construction, reconstruction, erection, or rehabilitation of the property is completed.
I22``(2) T4Energy efficient residential rental building property expendituresK._For purposes of this subsection_
I24``(A) T4In generalK._The term `energy efficient residential rental building property expenditures' means an amount paid or incurred in connection with construction, reconstruction, erection, or rehabilitation of energy efficient residential rental building property_
I26``(i) for which depreciation is allowable under section 167,
I26``(ii) which is located in the United States, and
I26``(iii) the construction, reconstruction, erection, or rehabilitation of which is completed by the taxpayer.
I24Such term includes expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property.

I24``(B) T4Energy efficient residential rental building propertyK._
I26``(i) T4In generalK._The term `energy efficient residential rental building property' means any property which reduces total annual energy and power costs with respect to heating and cooling of the building by a percentage certified according to clause (ii).
I26``(ii) T4ProceduresK._
I28``(I) T4In generalK._For purposes of clause (i), energy usage and costs shall be demonstrated by performance-based compliance.
I28``(II) T4Performance-based complianceK._Performance-based compliance shall be demonstrated by calculating the percent energy cost savings for heating and cooling, as applicable, with respect to a dwelling unit when compared to the original condition of the dwelling unit.
I28``(III) T4Computer softwareK._Computer software shall be used in support of performance-based compliance under subclause (II) and such software shall meet all of the procedures and methods for calculating energy savings reductions which are promulgated by the Secretary of Energy. Such regulations on the specifications for software and verification protocols shall be based on the 2005 California Residential Alternative Calculation Method Approval Manual.
I28``(IV) T4Calculation requirementsK._In calculating tradeoffs and energy performance, the regulations prescribed under this clause shall prescribe for the taxable year the costs per unit of energy and power, such as kilowatt hour, kilowatt, gallon of fuel oil, and cubic foot or Btu of natural gas, which may be dependent on time of usage. Where a State has developed annual energy usage and cost reduction procedures based on time of usage costs for use in the performance standards of the State's building energy code prior to the effective date of this section, the State may use those annual energy usage and cost reduction procedures in lieu of those adopted by the Secretary.
I28``(V) T4Approval of software submissionsK._The Secretary shall approve software submissions which comply with the requirements of subclause (III).
I28``(VI) T4Procedures for inspection and testing of homesK._The Secretary shall ensure that procedures for the inspection and testing for compliance comply with the calculation requirements under subclause (IV) of this clause and clause (iv).
I26``(iii) T4Determinations of complianceK._A determination of compliance with respect to energy efficient residential rental building property made for the purposes of this subparagraph shall be filed with the Secretary not later than 1 year after the date of such determination and shall include the TIN of the certifier, the address of the building in compliance, and the identity of the person for whom such determination was performed. Determinations of compliance filed with the Secretary shall be available for inspection by the Secretary of Energy.
I26``(iv) T4ComplianceK._
I28``(I) T4In generalK._The Secretary, after consultation with the Secretary of Energy, shall establish requirements for certification and compliance procedures after examining the requirements for energy consultants and home energy ratings providers specified by the Mortgage Industry National Home Energy Rating Standards.
I28``(II) T4Individuals qualified to determine complianceK._The determination of compliance may be provided by a local building regulatory authority, a utility, a manufactured home production inspection primary inspection agency (IPIA), or an accredited home energy rating system provider. All providers shall be accredited, or otherwise authorized to use approved energy performance measurement methods, by the Residential Energy Services Network (RESNET).
I24``(C) T4Allocation of deduction for public propertyK._In the case of energy efficient residential rental building property which is public property, the Secretary shall promulgate a regulation to allow the allocation of the deduction to the person primarily responsible for designing the improvements to the property in lieu of the public entity which is the owner of such property. Such person shall be treated as the taxpayer for purposes of this subsection.
I20``(f) T5Special RulesK._For purposes of this section_
I22``(1) T4Basis reductionK._For purposes of this subtitle, if a deduction is allowed under this section with respect to any property, the basis of such property shall be reduced by the amount of the deduction so allowed.
I22``(2) T4Double benefitK._Property which would, but for this paragraph, be eligible for deduction under more than one provision of this section shall be eligible only under one such provision, the provision specified by the taxpayer.
I20``(g) T5RegulationsK._The Secretary shall promulgate such regulations as necessary to take into account new technologies regarding energy efficiency and renewable energy for purposes of determining energy efficiency and savings under this section.
I20``(h) T5TerminationK._This section shall not apply with respect to_
I22``(1) any energy property placed in service after December 31, 2010 (December 31, 2006, in the case of Tier 1 energy-efficient building property), and
I22``(2) any energy efficient residential rental building property expenditures in connection with property_
I24``(A) placed in service after December 31, 2008, or
I24``(B) the construction, reconstruction, erection, or rehabilitation of which is not completed on or before December 31, 2008.''T1.
I20(b) T5Conforming AmendmentsK._
I22(1) Section 48(a)(3)(A) is amended to read as follows:
I24``(A) which is equipment used to produce, distribute, or use energy derived from a geothermal deposit (within the meaning of section 613(e)(2)), but only, in the case of electricity generated by geothermal power, up to (but not including) the electrical transmission stage,''T1.
I22(2) Subparagraph (B) of section 168(e)(3) is amended_
I24(A) in clause (vi)(I)_
I26(i) by striking ``section 48(a)(3)'' and inserting ``section 200(d)(1)'', and
I26(ii) by striking ``clause (i)'' and inserting ``such subparagraph (A)'', and
I24(B) in the last sentence, by striking ``section 48(a)(3)'' and inserting ``section 200(c)(3)''.
I22(3) Section 1016(a) is amended by striking ``and'' at the end of paragraph (32), by striking the period at the end of paragraph (33) and inserting ``, and'', and by inserting the following new paragraph:
I22``(34) for amounts allowed as a deduction under section 200(a).''T1.
I20(c) T5Clerical AmendmentK._The table of sections for part VI of subchapter B of chapter 1 is amended by adding at the end the following new item:
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I42``Sec.200.Energy property deduction.''T1.S6201

I20(d) T5Authorization of AppropriationsK._There are authorized to be appropriated to the Department of Energy out of amounts not already appropriated such sums as necessary to carry out this section.
I20(e) T5Effective DateK._The amendments made by this section shall apply to taxable years beginning after December 31, 2005.
I72SEC. 322. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
I20(a) T5In GeneralK._Part VI of subchapter B of chapter 1 (relating to itemized deductions for individuals and corporations) is amended by inserting after section 179B the following new section:
I72``SEC. 179C. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
I20``(a) T5In GeneralK._There shall be allowed as a deduction an amount equal to the cost of energy efficient commercial building property placed in service during the taxable year.
I20``(b) T5Maximum Amount of DeductionK._The deduction under subsection (a) with respect to any building for the taxable year and all prior taxable years shall not exceed an amount equal to the product of_
I22``(1) $2.25, and
I22``(2) the square footage of the building.
I20``(c) T5DefinitionsK._For purposes of this section_
I22``(1) T4Energy efficient commercial building propertyK._The term `energy efficient commercial building property' means property_
I24``(A) which is installed on or in any building located in the United States,
I24``(B) which is installed as part of_
I26``(i) the interior lighting systems,
I26``(ii) the heating, cooling, ventilation, and hot water systems, or
I26``(iii) the building envelope, and
I24``(C) which is certified in accordance with subsection (d)(6) as being installed as part of a plan designed to reduce the total annual energy and power costs with respect to the interior lighting systems, heating, cooling, ventilation, and hot water systems of the building by 50 percent or more in comparison to a reference building which meets the minimum requirements of Standard 90.1˙092001 using methods of calculation under subsection (d)(2).
I22A building described in subparagraph (A) may include any residential rental property, including any low-rise multifamily structure or single family housing property which is not within the scope of Standard 90.1˙092001, but shall not include any highly energy-efficient principal residence (within the meaning of section 45J(b)) for which a credit under section 45J has been allowed.

I22``(2) T4Standard 90.1˙092001K._The term `Standard 90.1˙092001' means Standard 90.1˙092001 of the American Society of Heating, Refrigerating, and Air Conditioning Engineers and the Illuminating Engineering Society of North America (as in effect on April 2, 2003).
I20``(d) T5Special RulesK._
I22``(1) T4Partial allowanceK._
I24``(A) T4In generalK._Except as provided in subsection (f), if_
I26``(i) the requirement of subsection (c)(1)(C) is not met, but
I26``(ii) there is a certification in accordance with paragraph (6) that any system referred to in subsection (c)(1)(B) satisfies the energy-savings targets established by the Secretary under subparagraph (B) with respect to such system,
I24then the requirement of subsection (c)(1)(C) shall be treated as met with respect to such system, and the deduction under subsection (a) shall be allowed with respect to energy efficient commercial building property installed as part of such system and as part of a plan to meet such targets, except that subsection (b) shall be applied to such property by substituting `$.75' for `$2.25'.

I24``(B) T4RegulationsK._The Secretary, after consultation with the Secretary of Energy, shall establish a target for each system described in subsection (c)(1)(B) which, if such targets were met for all such systems, the building would meet the requirements of subsection (c)(1)(C).
I22``(2) T4Methods of calculationK._The Secretary, after consultation with the Secretary of Energy, shall promulgate regulations which describe in detail methods for calculating and verifying energy and power consumption and cost, based on the provisions of the 2005 California Nonresidential Alternative Calculation Method Approval Manual or, in the case of residential property, the 2005 California Residential Alternative Calculation Method Approval Manual. These regulations shall meet the following requirements:
I24``(A) In calculating tradeoffs and energy performance, the regulations shall prescribe the costs per unit of energy and power, such as kilowatt hour, kilowatt, gallon of fuel oil, and cubic foot or Btu of natural gas, which may be dependent on time of usage. If a State has developed annual energy usage and cost calculation procedures based on time of usage costs for use in the performance standards of the State's building energy code before the effective date of this section, the State may use those annual energy usage and cost calculation procedures in lieu of those adopted by the Secretary.
I24``(B) The calculation methods under this paragraph need not comply fully with section 11 of Standard 90.1˙092001.
I24``(C) The calculation methods shall be fuel neutral, such that the same energy efficiency features shall qualify a building for the deduction under this section regardless of whether the heating source is a gas or oil furnace or an electric heat pump. The reference building for a proposed design which employs electric resistance heating shall be modeled as using a heat pump.
I24``(D) The calculation methods shall provide appropriate calculated energy savings for design methods and technologies not otherwise credited in either Standard 90.1˙092001 or in the 2005 California Nonresidential Alternative Calculation Method Approval Manual, including the following:
I26``(i) Natural ventilation.
I26``(ii) Evaporative cooling.
I26``(iii) Automatic lighting controls such as occupancy sensors, photocells, and timeclocks.
I26``(iv) Daylighting.
I26``(v) Designs utilizing semi-conditioned spaces which maintain adequate comfort conditions without air conditioning or without heating.
I26``(vi) Improved fan system efficiency, including reductions in static pressure.
I26``(vii) Advanced unloading mechanisms for mechanical cooling, such as multiple or variable speed compressors.
I26``(viii) The calculation methods may take into account the extent of commissioning in the building, and allow the taxpayer to take into account measured performance which exceeds typical performance.
I26``(ix) On-site generation of electricity, including combined heat and power systems, fuel cells, and renewable energy generation such as solar energy.
I26``(x) Wiring with lower energy losses than wiring satisfying Standard 90.1˙092001 requirements for building power distribution systems.
I22``(3) T4Computer softwareK._
I24``(A) T4In generalK._Any calculation under paragraph (2) shall be prepared by qualified computer software.
I24``(B) T4Qualified computer softwareK._For purposes of this paragraph, the term `qualified computer software' means software_
I26``(i) for which the software designer has certified that the software meets all procedures and detailed methods for calculating energy and power consumption and costs as required by the Secretary,
I26``(ii) which provides such forms as required to be filed by the Secretary in connection with energy efficiency of property and the deduction allowed under this section, and
I26``(iii) which provides a notice form which documents the energy efficiency features of the building and its projected annual energy costs.
I22``(4) T4Allocation of deduction for public propertyK._In the case of energy efficient commercial building property installed on or in public property, the Secretary shall promulgate a regulation to allow the allocation of the deduction to the person primarily responsible for designing the property in lieu of the public entity which is the owner of such property. Such person shall be treated as the taxpayer for purposes of this section.
I22``(5) T4Notice to ownerK._Each certification required under this section shall include an explanation to the building owner regarding the energy efficiency features of the building and its projected annual energy costs as provided in the notice under paragraph (3)(B)(iii).
I22``(6) T4CertificationK._
I24``(A) T4In generalK._The Secretary shall prescribe the manner and method for the making of certifications under this section.
I24``(B) T4ProceduresK._The Secretary shall include as part of the certification process procedures for inspection and testing by qualified individuals described in subparagraph (C) to ensure compliance of buildings with energy-savings plans and targets. Such procedures shall be comparable, given the difference between commercial and residential buildings, to the requirements in the Mortgage Industry National Accreditation Procedures for Home Energy Rating Systems.
I24``(C) T4Qualified individualsK._Individuals qualified to determine compliance shall be only those individuals who are recognized by an organization certified by the Secretary for such purposes.
I20``(e) T5Basis ReductionK._For purposes of this subtitle, if a deduction is allowed under this section with respect to any energy efficient commercial building property, the basis of such property shall be reduced by the amount of the deduction so allowed.
I20``(f) T5Interim Rules for Lighting SystemsK._Until such time as the Secretary issues final regulations under subsection (d)(1)(B) with respect to property which is part of a lighting system_
I22``(1) T4In generalK._The lighting system target under subsection (d)(1)(A)(ii) shall be a reduction in lighting power density of 25 percent (50 percent in the case of a warehouse) of the minimum requirements in Table 9.3.1.1 or Table 9.3.1.2 (not including additional interior lighting power allowances) of Standard 90.1˙092001.
I22``(2) T4Reduction in deduction if reduction less than 40 percentK._
I24``(A) T4In generalK._If, with respect to the lighting system of any building other than a warehouse, the reduction in lighting power density of the lighting system is not at least 40 percent, only the applicable percentage of the amount of deduction otherwise allowable under this section with respect to such property shall be allowed.
I24``(B) T4Applicable percentageK._For purposes of subparagraph (A), the applicable percentage is the number of percentage points (not greater than 100) equal to the sum of_
I26``(i) 50, and
I26``(ii) the amount which bears the same ratio to 50 as the excess of the reduction of lighting power density of the lighting system over 25 percentage points bears to 15.
I24``(C) T4ExceptionsK._This subsection shall not apply to any system_
I26``(i) the controls and circuiting of which do not comply fully with the mandatory and prescriptive requirements of Standard 90.1˙092001 and which do not include provision for bilevel switching in all occupancies except hotel and motel guest rooms, store rooms, restrooms, and public lobbies, or
I26``(ii) which does not meet the minimum requirements for calculated lighting levels as set forth in the Illuminating Engineering Society of North America Lighting Handbook, Performance and Application, Ninth Edition, 2000.
I20``(g) T5Coordination With Other Tax BenefitsK._
I22``(1) T4No double benefitK._No deduction shall be allowed under subsection (a) with respect to any building for which a credit under section 45J has been allowed.
I22``(2) T4Special rule with respect to buildings with energy efficient propertyK._In any case in which a deduction under section 200 or a credit under section 25C has been allowed with respect to property in connection with a building, the annual energy and power costs of the reference building referred to in subsection (c)(1)(C) shall be determined assuming such reference building contains the property for which such deduction or credit has been allowed.
I20``(h) T5RegulationsK._The Secretary shall promulgate such regulations as necessary_
I22``(1) to take into account new technologies regarding energy efficiency and renewable energy for purposes of determining energy efficiency and savings under this section, and
I22``(2) to provide for a recapture of the deduction allowed under this section if the plan described in subsection (c)(1)(C) or (d)(1)(A) is not fully implemented.
I20``(i) T5TerminationK._This section shall not apply with respect to property placed in service after December 31, 2010.''T1.
I20(b) T5Conforming AmendmentsK._
I22(1) Section 1016(a) is amended by striking ``and'' at the end of paragraph (33), by striking the period at the end of paragraph (34) and inserting ``, and'', and by adding at the end the following new paragraph:
I22``(35) to the extent provided in section 179C(e).''T1.
I22(2) Section 1245(a) is amended by inserting ``179C,'' after ``179B,'' both places it appears in paragraphs (2)(C) and (3)(C).
I22(3) Section 1250(b)(3) is amended by inserting before the period at the end of the first sentence ``or by section 179C''.
I22(4) Section 263(a)(1) is amended by striking ``or'' at the end of subparagraph (H), by striking the period at the end of subparagraph (I) and inserting ``, or'', and by inserting after subparagraph (I) the following new subparagraph:
I24``(J) expenditures for which a deduction is allowed under section 179C.''T1.
I22(5) Section 312(k)(3)(B) is amended by striking ``section 179, 179A, or 179B'' each place it appears in the heading and text and inserting ``section 179, 179A, 179B, or 179C''.
I20(c) T5Clerical AmendmentK._The table of sections for part VI of subchapter B of chapter 1 is amended by inserting after the item relating to section 179B the following new item:
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I42``Sec.179C.Energy efficient commercial buildings deduction.''T1.S6201

I20(d) T5Effective DateK._The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act in taxable years ending after such date.
I72SEC. 323. CREDIT FOR CONSTRUCTION OF NEW HIGHLY ENERGY-EFFICIENT HOMES.
I20(a) T5In GeneralK._Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits) is amended by inserting after section 45I the following:
I72``SEC. 45J. NEW HIGHLY ENERGY-EFFICIENT HOME CREDIT.
I20``(a) T5In GeneralK._For purposes of section 38, in the case of an eligible contractor, the credit determined under this section for the taxable year is an amount equal to the credit amount specified in the following table for a new, highly energy-efficient principal residence:
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c2,L2(4,4,4,4,0,0),tp0,p10,10/10,g1,t1,s50,10
I95
h1``New, highly energy-efficient principal residence:
h1Credit amount:
j
I0130 percent propertyD$1,000
I0150 percent propertyD$2,000
e

I20``(b) T5Highly Energy-Efficient Principal ResidenceK._For purposes of this section_
I22``(1) T4In generalK._The term `highly energy-efficient principal residence' means a dwelling_
I24``(A) located in the United States,
I24``(B) the construction of which is substantially completed after December 31, 2005,
I24``(C) the original use of which is as a principal residence (within the meaning of section 121) which commences with the person who acquires such dwelling from the eligible contractor, and
I24``(D) which is certified before such use commences as being 50 percent property or 30 percent property.
I22``(2) 50 T4or 30 percent propertyK._
I24``(A) T4In generalK._For purposes of paragraph (1), property is 50 percent property or 30 percent property if the projected heating and cooling energy usage of such property, measured in terms of average annual energy cost to taxpayer, is reduced by 50 percent, or 30 percent, respectively, in comparison to the energy usage of the standard design reference house as determined using the procedures under subparagraph (D).
I24``(B) T4Standard design reference houseK._For purposes of this subsection, the term `standard design reference house' means a dwelling which conforms with the standards of chapter 4 of the 2000 International Energy Conservation Code of the International Code Council and the minimum equipment efficiency standards promulgated by the Department of Energy under the National Appliance Energy Conservation Act.
I24``(C) T4Energy efficient reference houseK._For purposes of this paragraph, the term `energy efficient reference house' means a design of a dwelling which uses the same heating fuel type as the proposed design and which uses minimum standards equipment, as required by the Department of Energy under the National Appliance Energy Conservation Act and which achieves, on average over fuel type and house geometry, the required 30 percent or 50 percent reductions in annual energy cost as calculated using the procedures under subparagraph (D).
I24``(D) T4ProceduresK._
I26``(i) T4In generalK._For purposes of subparagraph (A), energy usage shall be demonstrated either by a component-based approach or a performance-based approach.
I26``(ii) T4Component approachK._Compliance by the component approach is achieved when all of the components of the house comply with the requirements of prescriptive packages established by the Secretary of Energy, in consultation with the Administrator of the Environmental Protection Agency, such that they are equivalent, for the strong majority of houses which can use this method, to the results of using the performance-based approach of clause (iii) to achieve the required reduction in energy usage.
I26``(iii) T4Performance-based approachK._Performance-based compliance shall be demonstrated in terms of equivalent or less energy usage when compared to the energy efficient reference house of the same heating fuel type as the dwelling concerned or through an alternate method prescribed by the Secretary which yields equivalent results.
I26``(iv) T4Computer softwareK._Computer software shall be used in support of performance-based compliance under clause (iii) and such software shall meet all of the procedures and methods for calculating energy savings reductions that are promulgated by the Secretary of Energy. Such regulations on the specifications for software and verification protocols shall be based on the 2005 California Residential Alternative Calculation Method Approval Manual.
I26``(v) T4Fuel parityK._In the case of both the component and the performance-based approaches, and any software used in support of either such approach, the Secretary shall assure fuel parity by requiring both the energy efficient reference house and the prescriptive package under clause (ii) to employ the same envelope energy efficiency measures for a house heated by a gas furnace as for a house heated by an electric air source heat pump or by an oil furnace or boiler; and, for equipment efficiency, to employ electric, oil, or gas equipment efficiency of corresponding efficiency improvement. Such determination of corresponding efficiency improvement shall be made on a linear scale between the minimum standard equipment efficiency and the best available marketplace technology efficiency as determined by the Secretary after considering the information provided by the Air Conditioning and Refrigeration Institute (ARI) and the Gas Appliance Manufacturers Association (GAMA) guides for the respective electric, oil, and natural gas equipment of such type (such as heating and cooling).
I26``(vi) T4Approval of software submissionsK._The Secretary shall approve software submissions that comply with the calculation requirements of clause (iv).
I26``(vii) T4Procedures for inspection and testing of homesK._The Secretary shall ensure that procedures for the inspection and testing for compliance comply with the calculation requirements under clause (iv).
I22``(3) T4Determinations of complianceK._A determination of compliance made for the purposes of this subsection shall be filed with the Secretary within 1 year after the date of such determination and shall include the TIN of the certifier, the address of the building in compliance, and the identity of the person for whom such determination was performed. Determinations of compliance filed with the Secretary shall be available for inspection by the Secretary of Energy.
I22``(4) T4ComplianceK._
I24``(A) T4In generalK._The Secretary, in consultation with the Secretary of Energy shall establish requirements for certification and compliance procedures after examining the requirements for energy consultants and home energy ratings providers specified by the Mortgage Industry National Accreditation Procedures for Home Energy Rating Systems.
I24``(B) T4Individuals qualified to determine complianceK._Individuals qualified to determine compliance shall be only those individuals who are recognized by an organization certified by the Secretary for such purposes. The Secretary may qualify a Home Energy Rating Systems Organization, a local building code agency, a State or local energy office, a utility, or other organizations which meet the requirements prescribed under this section.
I22``(5) T4Form provided to buyerK._
I24``(A) T4In generalK._A form documenting the energy-efficiency of the dwelling, including the rated energy efficiency performance of equipment installed in the dwelling, shall be provided to the buyer of the dwelling. The form shall include labeled R-value for insulation products, NFRC-labeled U-factor and Solar Heat Gain Coefficient for windows, skylights, and doors, labeled AFUE ratings for furnaces and boilers, labeled HSPF ratings for electric heat pumps, and labeled SEER ratings for air conditioners.
I24``(B) T4Ratings label affixed in dwellingK._A permanent label documenting the ratings in subparagraph (A) shall be affixed to the front of the electrical distribution panel of the dwelling, or shall be otherwise permanently displayed in a readily inspectable location in the dwelling.
I20``(c) T5Additional DefinitionsK._For purposes of this section_
I22``(1) T4Eligible contractorK._The term `eligible contractor' means the person who constructed the new energy-efficient home, or in the case of a manufactured home which conforms to Federal Manufactured Home Construction and Safety Standards (24 C.F.R. 3280), the manufactured home producer of such home.
I22``(2) T4ConstructionK._The term `construction' includes reconstruction and rehabilitation.
I22``(3) T4AcquireK._The term `acquire' includes purchase and, in the case of reconstruction and rehabilitation, such term includes a binding written contract for such reconstruction or rehabilitation.
I22``(4) T4Manufactured home includedK._The term `dwelling' includes a manufactured home conforming to Federal Manufactured Home Construction and Safety Standards (24 C.F.R. 3280).
I20``(d) T5Coordination With Other CreditsK._Property which would, but for this paragraph, be eligible for credit under more than one provision of this section shall be eligible only under one such provision, the provision specified by the taxpayer.
I20``(e) T5Basis AdjustmentK._For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.
I20``(f) T5TerminationK._Subsection (a) shall apply to dwellings purchased during the period beginning on January 1, 2006, and ending on December 31, 2010.''T1.
I20(b) T5Credit Made Part of General Business CreditK._Section 38(b) (relating to current year business credit) is amended by striking ``plus'' at the end of paragraph (19), by striking the period at the end of paragraph (20) and inserting ``, plus'', and by adding at the end the following:
I22``(21) the new highly energy-efficient home credit determined under section 45J.''T1.
I20(c) T5Denial of Double BenefitK._Section 280C (relating to certain expenses for which credits are allowable) is amended by adding at the end the following:
I20``(e) T5New Energy-Efficient Home ExpensesK._No deduction shall be allowed for that portion of expenses for a new highly energy-efficient home otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section 45J.''T1.
I20(d) T5Credit Allowed Against Regular and Minimum TaxK._
I22(1) T4In generalK._Section 38(c) (relating to limitation based on amount of tax) is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph:
I22``(5) T4Special rules for new energy efficient home creditK._
I24``(A) T4In generalK._In the case of the new energy efficient home credit_
I26``(i) this section and section 39 shall be applied separately with respect to the credit, and
I26``(ii) in applying paragraph (1) to the credit_
I28``(I) subparagraphs (A) and (B) thereof shall not apply, and
I28``(II) the limitation under paragraph (1) (as modified by subclause (I)) shall be reduced by the credit allowed under subsection (a) for the taxable year (other than the new energy efficient home credit).
I24``(B) T4New highly energy efficient home creditK._For purposes of this subsection, the term `new highly energy efficient home credit' means the credit allowable under subsection (a) by reason of section 45J.''T1.
I22(2) T4Conforming amendmentK._Subclause (II) of section 38(c)(2)(A)(ii) is amended by inserting ``or the new highly energy efficient home credit'' after ``employment credit''.
I20(e) T5Deduction for Certain Unused Business CreditsK._Subsection (c) of section 196 is amended by striking ``and'' at the end of paragraph (11), by striking the period at the end of paragraph (12) and inserting ``, and'', and by adding after paragraph (12) the following:
I22``(13) the new highly energy-efficient home credit determined under section 45J.''T1.
I20(f) T5Clerical AmendmentK._The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 45I the following:
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I42``Sec. 45J. New highly energy-efficient home credit.''T1.S6201

I20(g) T5Effective DateK._The amendments made by this section shall apply to taxable years ending after December 31, 2005.
I72SEC. 324. CREDIT FOR ENERGY EFFICIENT APPLIANCES.
I20(a) T5In GeneralK._Subpart D of part IV of subchapter A of chapter 1 (relating to business-related credits) is amended by adding after section 45J the following:
I72``SEC. 45K. ENERGY EFFICIENT APPLIANCE CREDIT.
I20``(a) T5General RuleK._For purposes of section 38, the energy efficient appliance credit determined under this section for the taxable year is an amount equal to the applicable amount determined under subsection (b) with respect to qualified energy efficient appliances produced by the taxpayer during the calendar year ending with or within the taxable year.
I20``(b) T5Applicable AmountK._For purposes of subsection (a), the applicable amount determined under this subsection with respect to a taxpayer is the sum of_
I22``(1) in the case of an energy efficient clothes washer described in subsection (d)(2)(A) or an energy efficient refrigerator described in subsection (d)(3)(B)(i), an amount equal to_
I24``(A) $50, multiplied by
I24``(B) the number of such washers and refrigerators produced by the taxpayer during such calendar year, and
I22``(2) in the case of an energy efficient clothes washer described in subsection (d)(2)(B) or an energy efficient refrigerator described in subsection (d)(3)(B)(ii), an amount equal to_
I24``(A) $100, multiplied by
I24``(B) the number of such washers and refrigerators produced by the taxpayer during such calendar year.
I20``(c) T5Limitation on Maximum CreditK._
I22``(1) T4In generalK._The maximum amount of credit allowed under subsection (a) with respect to a taxpayer for all taxable years shall be_
I24``(A) $30,000,000 with respect to the credit determined under subsection (b)(1), and
I24``(B) $30,000,000 with respect to the credit determined under subsection (b)(2).
I22``(2) T4Limitation based on gross receiptsK._The credit allowed under subsection (a) with respect to a taxpayer for the taxable year shall not exceed an amount equal to 2 percent of the average annual gross receipts of the taxpayer for the 3 taxable years preceding the taxable year in which the credit is determined.
I22``(3) T4Gross receiptsK._For purposes of this subsection, the rules of paragraphs (2) and (3) of section 448(c) shall apply.
I20``(d) T5Qualified Energy Efficient ApplianceK._For purposes of this section_
I22``(1) T4In generalK._The term `qualified energy efficient appliance' means_
I24``(A) an energy efficient clothes washer, or
I24``(B) an energy efficient refrigerator.
I22``(2) T4Energy efficient clothes washerK._The term `energy efficient clothes washer' means a residential clothes washer, including a residential style coin operated washer, which is manufactured with_
I24``(A) a 8.5 Water Factor (referred to in this paragraph as `WF') (as determined by the Secretary) and a 1.60 Modified Energy Factor (referred to in this paragraph as `MEF') (as determined by the Secretary of Energy) for calendar years 2006 through 2008, or
I24``(B) a 7.5 WF (as determined by the Secretary) and a 1.80 MEF (as determined by the Secretary of Energy) for calendar years after 2008.
I22``(3) T4Energy efficient refrigeratorK._The term `energy efficient refrigerator' means an automatic defrost refrigerator-freezer which_
I24``(A) has an internal volume of at least 16.5 cubic feet, and
I24``(B) consumes_
I26``(i) 15 percent less kw/hr/yr than the energy conservation standards promulgated by the Department of Energy for such refrigerator for 2005, or
I26``(ii) 20 to 25 percent less kw/hr/yr than such energy conservation standards.
I20``(e) T5Special RulesK._
I22``(1) T4In generalK._Rules similar to the rules of subsections (c), (d), and (e) of section 52 shall apply for purposes of this section.
I22``(2) T4Aggregation rulesK._All persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as one person for purposes of subsection (a).
I20``(f) T5VerificationK._The taxpayer shall submit such information or certification as the Secretary, in consultation with the Secretary of Energy, determines necessary to claim the credit amount under subsection (a).
I20``(g) T5TerminationK._This section shall not apply to qualified energy efficient appliances produced in calendar years beginning after 2010.''T1.
I20(b) T5Conforming AmendmentK._Section 38(b) (relating to general business credit) is amended by striking ``plus'' at the end of paragraph (20), by striking the period at the end of paragraph (21) and inserting ``, plus'', and by adding at the end the following new paragraph:
I22``(22) the energy efficient appliance credit determined under section 45K(a).''T1.
I20(c) T5Clerical AmendmentK._The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 45J the following new item:
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I42``45K. Energy efficient appliance credit.''T1.S6201

I20(d) T5Effective DateK._The amendments made by this section shall apply to taxable years beginning after December 31, 2005.
I72SEC. 325. CREDIT FOR DISTRIBUTED ENERGY GENERATION AND DEMAND MANAGEMENT PROPERTY.
I20(a) T5In GeneralK._Subpart E of part IV of subchapter A of chapter 1 (relating to rules for computing investment credit) is amended by inserting after section 48 the following:
I72``SEC. 48A. ENERGY CREDIT.
I20``(a) T5In GeneralK._For purposes of section 46, the energy credit for any taxable year is the energy percentage of the basis of each energy property placed in service during such taxable year.
I20``(b) T5Energy PercentageK._
I22``(1) T4In generalK._The energy percentage is_
I24``(A) except as otherwise provided in this subparagraph, 10 percent,
I24``(B) in the case of energy property described in clauses (ii), (iv), and (v) of subsection (c)(1)(A), 20 percent,
I24``(C) in the case of energy property described in subsection (c)(1)(A)(vii), 15 percent, 
I24``(D) in the case of energy property described in subsection (c)(1)(A)(iii) relating to a high risk geothermal well, 20 percent, and
I24``(E) in the case of energy property described in subsection (c)(1)(A)(i), 50 percent.
I22``(2) T4Coordination with rehabilitationK._The energy percentage shall not apply to that portion of the basis of any property which is attributable to qualified rehabilitation expenditures as determined under section 47.
I20``(c) T5Energy Property DefinedK._
I22``(1) T4In generalK._For purposes of this subpart, the term `energy property' means any property_
I24``(A) which is_
I26``(i) photovoltaic property,
I26``(ii) other solar energy property,
I26``(iii) geothermal energy property,
I26``(iv) energy-efficient building property other than property described in clauses (iii)(I) and (v)(I) of subsection (d)(3)(A),
I26``(v) combined heat and power system property,
I26``(vi) qualified anaerobic digester property, 
I26``(vii) waste conversion property, or
I26``(viii) adjustable speed drive property,
I24``(B)T1(i) the construction, reconstruction, or erection of which is completed by the taxpayer, or
I24``(ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer,
I24``(C) which can reasonably be expected to remain in operation for at least 5 years,
I24``(D) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and
I24``(E) which meets the performance and quality standards (if any) which_
I26``(i) have been prescribed by the Secretary by regulations (after consultation with the Secretary of Energy), and
I26``(ii) are in effect at the time of the acquisition of the property.
I22``(2) T4Exception for public utility propertyK._Such term shall not include any property which is public utility property (as defined in section 46(f)(5) as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990), except for property described in paragraph (1)(A)(iv).
I20``(d) T5Limitation on Credit for Photovoltaic PropertyK._
I22``(1) T4In generalK._The credit allowed under this section which is attributable to photovoltaic property shall not exceed the sum of_
I24``(A) the applicable low-wattage rate multiplied by the number of watts of generating capacity of the property which does not exceed 10 kilowatts, plus
I24``(B) the applicable high-wattage rate multiplied by the number of watts of generating capacity of the property in excess of 10 kilowatts (if any).
I22``(2) T4Applicable low- and high-wattage ratesK._For purposes of this subsection, the applicable low- and high-wattage rates shall be determined under the following table:
Q10
c3,L0(4,4,4,4,4,17),tp0,p10,9/10,g1,t1,s120,xl80C,12C
I95
h1``In the case of taxable years beginning in calendar year:
h1The applicable low-wattage rate is:
h1The applicable high-wattage rate is:
j
I012006D$3.00Dxl$2.00
I012007D$2.85Dxl$1.90
I012008D$2.70Dxl$1.80
I012009D$2.55Dxl$1.70
I012010 and thereafterD$2.40Dxl$1.60
e

I22``(3) T4Generating capacityK._For purposes of this subsection, generating capacity shall be measured as the rated peak power output of a system's component modules as established by the American Society for Testing and Materials. Any photovoltaic property which is electrically contiguous or serves the same customer load shall be treated as one system for purposes of this section.
I20``(e) T5Definitions Relating to Types of Energy PropertyK._For purposes of this section_
I22``(1) T4Solar energy propertyK._
I24``(A) T4Photovoltaic propertyK._The term `photovoltaic property' means equipment_
I26``(i) which uses solar energy to generate electricity, and
I26``(ii) which the taxpayer has elected (at such time and in such form and manner as the Secretary may specify) to treat as photovoltaic property for purposes of this section.
I24``(B) T4Other solar energy propertyK._The term `other solar energy property' means equipment_
I26``(i) which uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat, and
I26``(ii) which is not photovoltaic property.
I24``(C) T4Swimming pools, etc. used as storage mediumK._Photovoltaic and other solar energy property shall not include property with respect to which expenditures are properly allocable to a swimming pool, hot tub, or any other energy storage medium which has a function other than the function of such storage.
I24``(D) T4Solar panelsK._No solar panel or other property installed as a roof (or portion thereof) shall fail to be treated as photovoltaic or other solar energy property solely because it constitutes a structural component of the structure on which it is installed.
I22``(2) T4Geothermal energy propertyK._
I24``(A) T4In generalK._The term `geothermal energy property' means equipment used to produce, distribute, or use energy derived from a geothermal deposit (within the meaning of section 613(e)(2)), but only, in the case of electricity generated by geothermal power, up to (but not including) the electrical transmission stage.
I24``(B) T4High risk geothermal wellK._The term `high risk geothermal well' means a geothermal deposit (within the meaning of section 613(e)(2)) which requires high risk drilling techniques. Such deposit may not be located in a State or national park or in an area in which the relevant State park authority or the National Park Service determines the development of such a deposit will negatively impact on a State or national park.
I22``(3) T4Energy-efficient building propertyK._
I24``(A) T4In generalK._The term `energy-efficient building property' means_
I26``(i) a fuel cell which_
I28``(I) generates electricity using an electrochemical process,
I28``(II) has an electricity-only generation efficiency greater than 30 percent, and
I28``(III) has a minimum generating capacity of 1 kilowatt,
I26``(ii) an electric heat pump hot water heater which yields an energy factor of 2.0 or greater under test procedures prescribed by the Secretary of Energy,
I26``(iii)T1(I) an electric heat pump which has a heating system performance factor (HSPF) of at least 8.5 but less than 9 and a cooling seasonal energy efficiency ratio (SEER) of at least 14 but less than 15 and an energy efficiency ratio (EER) of at least 12,
I26``(II) an electric heat pump which has a heating system performance factor (HSPF) of 9 or greater and a cooling seasonal energy efficiency ratio (SEER) of 15 or greater and an energy efficiency ratio (EER) of at least 13,
I26``(iv) a natural gas heat pump which has a coefficient of performance of not less than 1.25 for heating and not less than 0.80 for cooling,
I26``(v)T1(I) a central air conditioner which has a cooling seasonal energy efficiency ratio (SEER) of at least 14 but less than 15 and an energy efficiency ratio (EER) of at least 12,
I26``(II) a central air conditioner which has a cooling seasonal energy efficiency ratio (SEER) of 15 or greater and an energy efficiency ratio (EER) of at least 13,
I26``(vi) an advanced natural gas water heater which_
I28``(I) increases steady state efficiency and reduces standby and vent losses, and
I28``(II) has an energy factor of at least 0.80, and
I26``(vii) an advanced natural gas furnace which achieves a 95 percent AFUE and rated for seasonal electricity use of less than 300 kWh per year.
I24``(B) T4LimitationsK._The credit under subsection (a) for the taxable year may not exceed_
I26``(i) $500 in the case of property described in subparagraph (A) other than clauses (i) and (iv) thereof,
I26``(ii) $500 for each kilowatt of capacity in the case of any fuel cell described in subparagraph (A)(i), and
I26``(iii) $3,000 in the case of any natural gas heat pump described in subparagraph (A)(iv).
I22``(4) T4Combined heat and power system propertyK._
I24``(A) T4In generalK._The term `combined heat and power system property' means property_
I26``(i) comprising a system for the same energy source for the simultaneous or sequential generation of electrical power, mechanical shaft power, or both, in combination with steam, heat, or other forms of useful energy,
I26``(ii) which has an electrical capacity of more than 20 kilowatts or a mechanical energy capacity of more than 67 horsepower or an equivalent combination of electrical and mechanical energy capacities,
I26``(iii) which produces_
I28``(I) at least 20 percent of its total useful energy in the form of thermal energy, and
I28``(II) at least 20 percent of its total useful energy in the form of electrical or mechanical power (or a combination thereof), and
I26``(iv) the energy efficiency percentage of which exceeds_
I28``(I) 60 percent in the case of a system with an electrical capacity of less than 1 megawatt,
I28``(II) 65 percent in the case of a system with an electrical capacity of not less than 1 megawatt and not in excess of 50 megawatts, and
I28``(III) 70 percent in the case of a system with an electrical capacity in excess of 50 megawatts.
I24``(B) T4Special rulesK._
I26``(i) T4Energy efficiency percentageK._For purposes of subparagraph (A)(iv), the energy efficiency percentage of a system is the fraction_
I28``(I) the numerator of which is the total useful electrical, thermal, and mechanical power produced by the system at normal operating rates, and
I28``(II) the denominator of which is the lower heating value of the primary fuel source for the system.
I26``(ii) T4Determinations made on btu basisK._The energy efficiency percentage shall be determined on a Btu basis.
I26``(iii) T4Input and output property not includedK._The term `combined heat and power system property' does not include property used to transport the energy source to the facility or to distribute energy produced by the facility.
I26``(iv) T4Accounting rule for public utility propertyK._If the combined heat and power system property is public utility property (as defined in section 46(f)(5) as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990), the taxpayer may only claim the credit under subsection (a)(1) if, with respect to such property, the taxpayer uses a normalization method of accounting.
I22``(5) T4Qualified anaerobic digester propertyK._The term `qualified anaerobic digester property' means an anaerobic digester for manure or crop waste which achieves at least 65 percent efficiency measured in terms of the fraction of energy input converted to electricity and useful thermal energy.
I22``(6) T4Waste conversion propertyK._The term `waste conversion property' means equipment used to produce a usable liquid or gaseous synthetic fuel derived from a waste feedstock (including plastic waste and biomass (as defined in section 29(c)).
I22``(7) T4Adjustable speed drive propertyK._
I24``(A) T4In generalK._The term `adjustable speed drive property' means equipment installed as part of an electric motor driven system of 10 horsepower or greater_
I26``(i) that is used to adjust the speed of the electric motor drive output to the requirements of a fluctuating load, and
I26``(ii) that achieves an energy savings of at least 20 percent during a complete cycle of operation.
I24``(B) T4LimitationK._In the case of adjustable speed drive property placed in service during the taxable year, the credit under subsection (a) for such year may not exceed $10,000 for each item of such property.
I24``(C) T4Coordination with deduction for energy-efficient commercial building propertyK._The energy percentage shall apply to the basis of adjustable speed drive property after adjustment under section 1016(a)(34).
I20``(f) T5Special RulesK._For purposes of this section_
I22``(1) T4Special rule for property financed by subsidized energy financing or industrial development bondsK._
I24``(A) T4Reduction of basisK._For purposes of applying the energy percentage to any property, if such property is financed in whole or in part by_
I26``(i) subsidized energy financing, or
I26``(ii) the proceeds of a private activity bond (within the meaning of section 141) the interest on which is exempt from tax under section 103, the amount taken into account as the basis of such property shall not exceed the amount which (but for this subparagraph) would be so taken into account multiplied by the fraction determined under subparagraph (B).
I24``(B) T4Determination of fractionK._For purposes of subparagraph (A), the fraction determined under this subparagraph is 1 reduced by a fraction_
I26``(i) the numerator of which is that portion of the basis of the property which is allocable to such financing or proceeds, and
I26``(ii) the denominator of which is the basis of the property.
I24``(C) T4Subsidized energy financingK._For purposes of subparagraph (A), the term `subsidized energy financing' means financing provided under a Federal, State, or local program a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy.
I22``(2) T4Certain progress expenditure rules made applicableK._Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section.
I20``(g) T5Application of SectionK._This section shall apply to property placed in service after December 31, 2005, and before January 1, 2011.''T1.
I20(b) T5Conforming AmendmentsK._
I22(1) Section 48 is repealed.
I22(2) Section 280C is amended by adding after subsection (e) the following:
I20``(f) T5Credit for Energy Property ExpensesK._
I22``(1) T4In generalK._No deduction shall be allowed for that portion of the expenses for energy property (as defined in section 48A(c)) otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section 48A(a).
I22``(2) T4Similar rule where taxpayer capitalizes rather than deducts expensesK._If_
I24``(A) the amount of the credit allowable for the taxable year under section 48A (determined without regard to section 38(c)), exceeds
I24``(B) the amount allowable as a deduction for the taxable year for expenses for energy property (determined without regard to paragraph (1)), the amount chargeable to capital account for the taxable year for such expenses shall be reduced by the amount of such excess.
I22``(3) T4Controlled groupsK._Paragraph (3) of subsection (b) shall apply for purposes of this subsection.''T1.
I22(3) Section 29(b)(3)(A)(i)(III) is amended by striking ``section 48(a)(4)(C)'' and inserting ``section 48A(e)(1)(C)''.
I22(4) Section 50(a)(2)(E) is amended by striking ``section 48(a)(5)'' and inserting ``section 48A(e)(2)''.
I22(5) Section 168(e)(3)(B) is amended_
I24(A) by striking clause (vi)(I) and inserting the following:
I28``(I) is described in paragraph (1) or (2) of section 48A(d) (or would be so described if `solar and wind' were substituted for `solar' in paragraph (1)(B)),''T1, and
I24(B) in the last sentence by striking ``section 48(a)(3)'' and inserting ``section 48A(c)(2)(A)''.
I22(6) The table of sections for subpart E of part IV of subchapter A of chapter 1 is amended by striking the item relating to section 48 and inserting the following:
Q10
S6211

I42``Sec. 48A. Energy credit.''T1.S6201

I20(c) T5Effective DateK._The amendments made by this section shall apply to property placed in service after December 31, 2005, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).
I72SEC. 326. CREDIT FOR ENERGY EFFICIENT RECYCLING OR REMANUFACTURING EQUIPMENT.
I20(a) T5In GeneralK._Section 46 (relating to amount of investment credit) is amended by striking ``and'' at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting ``, and'', and by adding at the end the following new paragraph:
I22``(3) the reclamation credit.''T1.
I20(b) T5Reclamation CreditK._Subpart E of part IV of subchapter A of chapter 1 is amended by inserting before section 48A, as added by this Act, the following new section:
I72``SEC. 48. RECLAMATION CREDIT.
I20``(a) T5In GeneralK._For purposes of section 46, the reclamation credit for any taxable year is 20 percent of the basis of each qualified reclamation property placed in service during the taxable year.
I20``(b) T5Qualified Reclamation PropertyK._
I22``(1) T4In generalK._For purposes of this section, the term `qualified reclamation property' means property_
I24``(A) which is qualified recycling property or qualified remanufacturing property,
I24``(B) which is tangible property (not including a building and its structural components),
I24``(C) with respect to which depreciation (or amortization in lieu of depreciation) is allowable,
I24``(D) which has a useful life of at least 5 years, and
I24``(E) which is_
I26``(i) acquired by purchase (as defined in section 179(d)(2)) by the taxpayer if the original use of such property commences with the taxpayer, or
I26``(ii) constructed by or for the taxpayer.
I22``(2) T4Dollar limitationK._
I24``(A) T4In generalK._The basis of qualified reclamation property taken into account under paragraph (1) for any taxable year shall not exceed $10,000,000 for a taxpayer.
I24``(B) T4Treatment of controlled groupK._For purposes of clause (i)_
I26``(i) all component members of a controlled group shall be treated as one taxpayer, and
I26``(ii) the Secretary shall apportion the dollar limitation in such clause among the component members of such controlled group in such manner as he shall by regulation prescribe.
I24``(C) T4Treatment of partnerships and s corporationsK._In the case of a partnership, the dollar limitation in clause (i) shall apply with respect to the partnership and with respect to each partner. A similar rule shall apply in the case of an S corporation and its shareholders.
I24``(D) T4Controlled group definedK._For purposes of clause (ii), the term `controlled group' has the meaning given such term by section 1563(a), except that `more than 50 percent' shall be substituted for `at least 80 percent' each place it appears in section 1563(a)(1).
I20``(c) T5Certain Progress Expenditure Rules Made ApplicableK._Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this subsection.
I20``(d) T5DefinitionsK._For purposes of this subsection_
I22``(1) T4Qualified recycling propertyK._The term `qualified recycling property' means equipment used exclusively to collect, distribute, or sort used ferrous or nonferrous metals. The term does not include equipment used to collect, distribute, or sort precious metals such as gold, silver, or platinum unless such use is coincidental to the collection, distribution, or sorting of other used ferrous or nonferrous metals.
I22``(2) T4Qualified remanufacturing propertyK._The term `qualified remanufacturing property' means equipment used primarily by the taxpayer in the business of rebuilding or remanufacturing a used product or part, but only if_
I24``(A) the rebuilt or remanufactured product or part includes 50 percent or less virgin material, and
I24``(B) the equipment is not used primarily in a process occurring after the product or part is rebuilt or remanufactured.
I22``(3) T4Coordination with rehabilitation and energy creditsK._For purposes of this section_
I24``(A) the basis of any qualified reclamation property shall be reduced by that portion of the basis of any property which is attributable to qualified rehabilitation expenditures (as defined in section 47(c)(2)) or to the energy percentage of energy property (as determined under section 48A), and
I24``(B) expenditures taken into account under either section 47 or 48A shall not be taken into account under this section.''T1.
I20(c) T5Special Basis Adjustment RuleK._Paragraph (3) of section 50(c) (relating to basis adjustment to investment credit property) is amended by inserting ``or reclamation credit'' after ``energy credit''.
I20(d) T5Clerical AmendmentK._The table of sections for subpart E of part IV of subchapter A of chapter 1 is amended by inserting before the item relating to section 48A the following:
Q10
S6211

I42``Sec.48.Reclamation credit.''T1.S6201

I20(e) T5Effective DateK._The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.
I72SEC. 327. CREDIT FOR DISTRIBUTED ENERGY GENERATION AND DEMAND MANAGEMENT PROPERTY USED IN RESIDENCES.
I20(a) T5In GeneralK._Subpart A of part IV of subchapter A of chapter 1 (relating to nonrefundable personal credits) is amended by inserting after section 25B the following:
I72``SEC. 25C. RESIDENTIAL DISTRIBUTED ENERGY GENERATION AND DEMAND MANAGEMENT PROPERTY.
I20``(a) T5Allowance of CreditK._In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of_
I22``(1) 50 percent of the qualified photovoltaic property expenditures,
I22``(2) 15 percent of the qualified solar water heating property expenditures,
I22``(3) 25 percent of the qualified wind energy property expenditures, and
I22``(4) 20 percent for the qualified fuel cell property expenditures,
I22``(5) 20 percent for qualified energy-efficient building property expenditures (10 percent for expenditures described in subsection (c)(5)(B)), made by the taxpayer during the taxable year.
I20``(b) T5LimitationsK._
I22``(1) T4Maximum creditK._
I24``(A) T4Photovoltaic propertyK._
I26``(i) T4In generalK._The credit allowed under subsection (a)(1) shall not exceed the applicable rate multiplied by the number of watts of generating capacity of the property which does not exceed 10 kilowatts.
I26``(ii) T4Applicable rateK._For purposes of this subparagraph, the applicable rate is the rate determined under the following table:
Q10
c2,L0(4,4,4,4,4,17),tp0,p10,10/10,g1,t1,s50,10
I95
h1``In the case of taxable years beginning in calendar year:
h1The applicable rate is:
j
I012006D$3.00
I012007D$2.75
I012008D$2.50
I012009 and thereafterD$2.25
e

I26``(iii) T4Generating capacityK._For purposes of this subparagraph, generating capacity shall be measured as the rated peak power output of a system's component modules as established by the American Society for Testing and Materials. Any photovoltaic property which is electrically contiguous or serves the same customer load shall be treated as one system for purposes of this section.
I24``(B) T4Solar water heatingK._The credit allowed under subsection (a)(2) shall not exceed $2,000 for each system of solar energy property.
I24``(C) T4WindK._The credit allowed under subsection (a)(3) shall not exceed $5,000 for each system of wind energy property.
I24``(D) T4Energy-efficient building propertyK._The credit allowed under subsection (a)(5) shall not exceed $500 for each item of energy-efficient building property.
I22``(2) T4Type of propertyK._No expenditure may be taken into account under this section unless such expenditure is made by the taxpayer for property installed on or in connection with a dwelling unit which is located in the United States and which is used as a residence.
I22``(3) T4Safety certificationsK._No credit shall be allowed under this section for an item of property unless_
I24``(A) in the case of solar water heating property, such property is certified for performance and safety by the nonprofit Solar Rating Certification Corporation or a comparable entity endorsed by the government of the State in which such property is installed, and
I24``(B) in the case of a photovoltaic, wind energy, or fuel cell property, such property meets appropriate fire and electric code requirements.
I20``(c) T5Definitions and Special Rules Relating to ExpendituresK._For purposes of this section_
I22``(1) T4Qualified photovoltaic property expenditureK._The term `qualified photovoltaic property expenditure' means an expenditure for property which uses solar energy to generate electricity for use in a dwelling unit.
I22``(2) T4Qualified solar water heating property expenditureK._The term `qualified solar water heating property expenditure' means an expenditure for property which uses solar energy to heat water for use in a dwelling unit with respect to which a majority of the energy is derived from the sun.
I22``(3) T4Qualified wind energy property expenditureK._The term `qualified wind energy property expenditure' means an expenditure for property which uses wind energy to generate electricity for use in a dwelling unit.
I22``(4) T4Qualified fuel cell property expenditureK._The term `qualified fuel cell property expenditure' means an expenditure for property which uses an electrochemical fuel cell system to generate electricity for use in a dwelling unit.
I22``(5) T4Qualified energy-efficient building property expenditureK._
I24``(A) T4In generalK._The term `qualified energy-efficient building property expenditure' means an expenditure for energy efficient building property defined in clauses (ii), (iii), (iv), (v), (vi), and (vii) of section 48A(d)(3)(A).
I24``(B) 10 T4percent credit for certain propertyK._For purposes of subsection (a)(5), the expenditures described in this subparagraph are expenditures for energy efficient building property defined in clauses (iii)(II) and (iv)(II) of section 48A(d)(3)(A).
I22``(6) T4Solar panelsK._No expenditure relating to a solar panel or other property installed as a roof (or portion thereof) shall fail to be treated as property described in paragraph (1) or (2) solely because it constitutes a structural component of the structure on which it is installed.
I22``(7) T4Labor costsK._Expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property described in paragraph (1), (2), (3), (4), or (5) and for piping or wiring to interconnect such property to the dwelling unit shall be taken into account for purposes of this section.
I22``(8) T4Energy storage mediumK._Expenditures which are properly allocable to a swimming pool, hot tub, or any other energy storage medium which has a function other than the function of such storage shall not be taken into account for purposes of this section.
I20``(d) T5Special RulesK._For purposes of this section_
I22``(1) T4Dollar amounts in case of joint occupancyK._In the case of any dwelling unit which is jointly occupied and used during any calendar year as a residence by 2 or more individuals the following shall apply:
I24``(A) The amount of the credit allowable under subsection (a) by reason of expenditures (as the case may be) made during such calendar year by any of such individuals with respect to such dwelling unit shall be determined by treating all of such individuals as 1 taxpayer whose taxable year is such calendar year.
I24``(B) There shall be allowable with respect to such expenditures to each of such individuals, a credit under subsection (a) for the taxable year in which such calendar year ends in an amount which bears the same ratio to the amount determined under subparagraph (A) as the amount of such expenditures made by such individual during such calendar year bears to the aggregate of such expenditures made by all of such individuals during such calendar year.
I22``(2) T4Tenant-stockholder in cooperative housing corporationK._In the case of an individual who is a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as defined in such section), such individual shall be treated as having made his tenant-stockholder's proportionate share (as defined in section 216(b)(3)) of any expenditures of such corporation.
I22``(3) T4CondominiumsK._
I24``(A) T4In generalK._In the case of an individual who is a member of a condominium management association with respect to a condominium which such individual owns, such individual shall be treated as having made his proportionate share of any expenditures of such association.
I24``(B) T4Condominium management associationK._For purposes of this paragraph, the term `condominium management association' means an organization which meets the requirements of paragraph (1) of section 528(c) (other than subparagraph (E) thereof) with respect to a condominium project substantially all of the units of which are used as residences.
I22``(4) T4Joint ownership of items of solar or wind energy propertyK._
I24``(A) T4In generalK._Any expenditure otherwise qualifying as an expenditure described in paragraph (1), (2), or (3) of subsection (c) shall not be treated as failing to so qualify merely because such expenditure was made with respect to 2 or more dwelling units.
I24``(B) T4Limits applied separatelyK._In the case of any expenditure described in subparagraph (A), the amount of the credit allowable under subsection (a) shall (subject to paragraph (1)) be computed separately with respect to the amount of the expenditure made for each dwelling unit.
I22``(5) T4Allocation in certain casesK._If less than 80 percent of the use of an item is for nonbusiness residential purposes, only that portion of the expenditures for such item which is properly allocable to use for nonbusiness residential purposes shall be taken into account. For purposes of this paragraph, use for a swimming pool shall be treated as use which is not for residential purposes.
I22``(6) T4When expenditure made; amount of expenditureK._
I24``(A) T4In generalK._Except as provided in subparagraph (B), an expenditure with respect to an item shall be treated as made when the original installation of the item is completed.
I24``(B) T4Expenditures part of building constructionK._In the case of an expenditure in connection with the construction or reconstruction of a structure, such expenditure shall be treated as made when the original use of the constructed or reconstructed structure by the taxpayer begins.
I24``(C) T4AmountK._The amount of any expenditure shall be the cost thereof.
I22``(7) T4Reduction of credit for grants, tax-exempt bonds, and subsidized energy financingK._The rules of section 29(b)(3) shall apply for purposes of this section.
I20``(e) T5Basis AdjustmentsK._For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.
I20``(f) T5TerminationK._The credit allowed under this section shall not apply to taxable years beginning after December 31, 2009.''T1.
I20(b) T5Conforming AmendmentsK._
I22(1) Section 1016(a) is amended by striking ``and'' at the end of paragraph (34), by striking the period at the end of paragraph (35) and inserting ``; and'', and by adding at the end the following:
I22``(36) to the extent provided in section 25C(e), in the case of amounts with respect to which a credit has been allowed under section 25C.''T1.
I22(2) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 25B the following:
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I42``Sec. 25C. Residential solar, wind, and fuel cell energy property.''T1.S6201

I20(c) T5Effective DateK._The amendments made by this section shall apply to expenditures made after the date of the enactment of this Act, in taxable years ending after such date.
I72SEC. 328. CREDIT FOR ENERGY MANAGEMENT SYSTEMS USING RESIDENTIAL REAL TIME METERING SYSTEMS.
I20(a) T5Credit for Energy Management SystemsK._
I22(1) T4In generalK._Subpart B of part IV of subchapter A of chapter 1 (relating to foreign tax credits, etc.) is amended by inserting after section 30C the following new section:
I72``SEC. 30D. CREDIT FOR ENERGY MANAGEMENT SYSTEMS.
I20``(a) T5Allowance of CreditK._There shall be allowed as a credit against the tax imposed by this chapter for the taxable year_
I22``(1) an amount equal to $20 for each qualified energy management device originally placed in service during the taxable year, and
I22``(2) for each qualified retrofitted meter originally placed in service during the taxable year, an amount equal to the lesser of_
I24``(A) $20, or
I24``(B) the adjusted basis of such meter.
I20``(b) T5DefinitionsK._
I22``(1) T4Qualified energy management deviceK._For purposes of this section, the term `qualified energy management device' means any meter or metering device acquired and used by an electric energy or natural gas supplier or service provider to enable consumers or others to manage their purchase, sale, or use of electricity or natural gas in response to energy price and usage signals.
I22``(2) T4Qualified retrofitted meterK._For purposes of this section, the term `qualified retrofitted meter' means an electric energy or natural gas meter or metering device that has been modified by the addition of equipment designed to enable users to manage the purchase, sale, or use of electricity and natural gas in response to energy price and usage signals.
I22``(3) T4Placed in serviceK._For purposes of this section, the term `placed in service' means interconnected with other devices in a manner that permits reading of energy price and usage signals on at least a daily basis.
I22``(4) T4Cost of meters includes cost of installationK._The cost of any qualified energy management device or qualified retrofitted meter referred to in paragraph (1) or (2) shall include the cost of the original installation of such property.
I20``(c) T5Special RulesK._
I22``(1) T4Basis reductionK._The basis of any property for which a credit is allowed under subsection (a) shall be reduced by the amount of such credit.
I22``(2) T4RecaptureK._The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property that ceases to be property eligible for such credit.
I22``(3) T4Property used outside the united states, etc., not qualifiedK._No credit shall be allowed under subsection (a) with respect to any property referred to in section 50(b)(1) or with respect to the portion of the cost of any property taken into account under section 179.
I22``(4) T4Election to not take creditK._No credit shall be allowed under subsection (a) for any energy management device if the taxpayer elects to not have this section apply to such device.
I22``(5) T4Credits for certain tax exempt organizations and governmental unitsK._
I24``(A) T4Allowance of creditK._Any credit which would be allowable under subsection (a) with respect to a qualified energy management device or a qualified retrofitted meter placed in service by an entity if such entity were not exempt from tax under this chapter shall be treated as a credit allowable under subpart B to such entity if such entity is_
I26``(i) an organization described in section 501(c)(12)(C) and exempt from tax under section 501(a),
I26``(ii) an organization described in section 1381(a)(2)(C),
I26``(iii) an entity the income of which is excludable from gross income under section 115, or
I26``(iv) a State, the District of Columbia, any territory or possession of the United States, or any political subdivision thereof.
I24``(B) T4Use of creditK._
I26``(i) T4Transfer of creditK._An entity described in subparagraph (A) may assign, trade, sell, or otherwise transfer any credit allowable to such entity under subparagraph (A) to any taxpayer.
I26``(ii) T4Use of credit as an offsetK._Notwithstanding any other provision of law, in the case of an entity described in clause (i) or (ii) of subparagraph (A), any credit allowable to such entity under subparagraph (A) may be applied by such entity, without penalty, as a prepayment of any loan, debt, or other obligation the entity has incurred under subchapter I of chapter 31 of title 7 of the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.).
I24``(C) T4Credit not incomeK._Neither a transfer under clause (i) nor a use under clause (ii) of subparagraph (B) of any credit allowable under subparagraph (A) shall result in income for purposes of section 501(c)(12).
I24``(D) T4Transfer proceeds treated as arising from essential government functionK._Any proceeds derived by an entity described in subparagraph (A)(iii) from the transfer of any credit under subparagraph (B)(i) shall be treated as arising from an essential government function.
I20``(d) T5TerminationK._This section shall not apply to any property placed in service after December 31, 2012.''T1.
I22(2) T4Inclusion of indian tribal governmentsK._Section 7871(a)(7) is amended by striking ``and'' at the end of subparagraph (B), by striking the period at the end of subparagraph (C), and by adding at the end the following:
I24``(D) section 30D (relating to credit for energy management systems).''T1.
I22(3) T4Conforming amendmentsK._
I24(A) The table of contents for subpart B of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 30C the following new item:
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I42``Sec. 30D. Credit for energy management systems.''T1.S6201

I24(B) Section 1016(a) is amended by striking ``and'' at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting ``, and'', and by adding at the end the following new paragraph:
I22``(37) to the extent provided in section 30D(c)(1).''T1.
I22(4) T4Effective dateK._The amendments made by this subsection shall apply to qualified energy management devices placed in service after the date of the enactment of this Act and to qualified retrofitted meters that are placed in service on or after, or that are in use as of, January 1, 2006.
I20(b)  5˙09Year Applicable Recovery Period for Depreciation of Qualified Energy Management DevicesK._
I22(1) T4In generalK._Subparagraph (B) of section 168(e)(3) (relating to classification of property) is amended by striking ``and'' at the end of clause (v), by striking the period at the end of clause (vi) and inserting ``, and'', and by adding at the end the following new clause:
I26``(vii) any qualified energy management device.''T1.
I22(2) T4Definition of qualified energy management deviceK._Section 168(i) (relating to definitions and special rules) is amended by inserting at the end the following new paragraph:
I22``(17) T4Qualified energy management deviceK._The term `qualified energy management device' means a meter or metering device that is acquired and used by an electric energy or natural gas supplier or service provider to enable consumers and others to manage their purchase, sale, and use of electricity or natural gas in response to energy price and usage signals that are readable on at least a daily basis. For purposes of the preceding sentence, the cost of any qualified energy management device shall (at the election of the taxpayer) include the cost of the original installation of such property.''T1.
I22(3) T4Effective dateK._The amendments made by this subsection shall apply to property placed in service after December 31, 2005, and before January 1, 2012.
I72SEC. 329. CREDIT FOR FLYWHEEL PROPERTY.
I20(a) T5In GeneralK._Subpart B of part IV of subchapter A of chapter 1 (relating to foreign tax credits, etc.) is amended by inserting after section 30D the following new section:
I72``SEC. 30E. CREDIT FOR FLYWHEEL PROPERTY.
I20``(a) T5Allowance of CreditK._There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 10 percent of the cost of any qualified flywheel property placed in service by the taxpayer during the taxable year.
I20``(b) T5LimitationK._The credit allowed under subsection (a) shall not exceed $2,000 for a taxable year.
I20``(c) T5Qualified Flywheel PropertyK._For purposes of this section, the term `qualified flywheel property' means a flywheel designed exclusively to store energy that is used to generate electricity.
I20``(d) T5Special RulesK._
I22``(1) T4Basis reductionK._The basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit.
I22``(2) T4RecaptureK._The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property that ceases to be property eligible for such credit.
I22``(3) T4Property used outside the united states, etc., not qualifiedK._No credit shall be allowed under subsection (a) with respect to any property referred to in section 50(b)(1) or with respect to the portion of the cost of any property taken into account under section 179.
I22``(4) T4Election to not take creditK._No credit shall be allowed under subsection (a) for any qualified flywheel property if the taxpayer elects to not have this section apply to such property.
I20``(d) T5TerminationK._This section shall not apply to any property placed in service after December 31, 2009.''T1.
I20(b) T5Conforming AmendmentsK._
I22(1) The table of contents for subpart B of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 30D the following new item:
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I42``Sec. 30E. Credit for qualified flywheel property.''T1.S6201

I22(2) Section 1016(a) is amended by striking ``and'' at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting ``, and'', and by adding at the end the following new paragraph:
I22``(38) to the extent provided in section 30E(c)(1).''T1.
I20(c) T5Effective DateK._The amendments made by this section shall apply to property placed in service in taxable years ending after the date of the enactment of this Act.
I72SEC. 330. CREDITS FOR CLEAN COAL.
I20(a) T5Allowance of Qualifying Clean Coal Technology Unit CreditK._
I22(1) T4In generalK._Section 46 (relating to amount of credit), as amended by this Act, is amended by striking ``and'' at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting ``, and'', and by adding at the end the following:
I22``(4) the qualifying clean coal technology unit credit.''T1.
I22(2) T4Amount of qualifying clean coal technology unit creditK._Subpart E of part IV of subchapter A of chapter 1 (relating to rules for computing investment credit) is amended by inserting after section 48A the following:
I72``SEC. 48B. QUALIFYING CLEAN COAL TECHNOLOGY UNIT CREDIT.
I20``(a) T5In GeneralK._For purposes of section 46, the qualifying clean coal technology unit credit for any taxable year is an amount equal to 10 percent of the qualified investment in a qualifying system of continuous emission control for such taxable year.
I20``(b) T5Qualifying System of Continuous Emission ControlK._
I22``(1) T4In generalK._For purposes of subsection (a), the term `qualifying system of continuous emission control' means a system of the taxpayer which_
I24``(A) serves, is added to, or retrofits an existing coal-based electricity generation unit, the construction, installation, or retrofitting of which is completed by the taxpayer (but only with respect to that portion of the basis which is properly attributable to such construction, installation, or retrofitting),
I24``(B) removes or reduces_
I26``(i) 90 percent or more of carbon dioxide emissions, or
I26``(ii) any pollutant subject to the requirements of section 109 of the Clean Air Act or any hazardous pollutant listed under section 112(b) of such Act, to a greater extent than is required under such Act,
I24``(C) is depreciable under section 167,
I24``(D) has a useful life of not less than 4 years, and
I24``(E) is located in the United States.
I22``(2) T4Special rule for sale-leasebacksK._For purposes of subparagraph (A) of paragraph (1), in the case of a unit which_
I24``(A) is originally placed in service by a person, and
I24``(B) is sold and leased back by such person, or is leased to such person, within 3 months after the date such unit was originally placed in service, for a period of not less than 12 years, such unit shall be treated as originally placed in service not earlier than the date on which such property is used under the leaseback (or lease) referred to in subparagraph (B). The preceding sentence shall not apply to any property if the lessee and lessor of such property make an election under this sentence. Such an election, once made, may be revoked only with the consent of the Secretary.
I20``(c) T5Existing Coal-Based Electricity Generation UnitK._For purposes of subsection (a), the term `existing coal-based electricity generating unit' means, with respect to any taxable year, a steam generator-turbine unit which uses coal to produce 75 percent or more of its output as electricity and was in operation before the effective date of this section.
I20``(d) T5Limit on Qualifying Clean Coal Technology Unit CreditK._For purposes of subsection (a), the credit shall be applicable to not more than the first $100,000,000 of qualifying investment in a qualifying system of continuous emission control at any 1 existing coal-based electricity generating unit.
I20``(e) T5Qualified InvestmentK._For purposes of subsection (a), the term `qualified investment' means, with respect to any taxable year, the basis of a qualifying system of continuous emission control placed in service by the taxpayer during such taxable year.
I20``(f) T5Qualified Progress ExpendituresK._
I22``(1) T4Increase in qualified investmentK._In the case of a taxpayer who has made an election under paragraph (5), the amount of the qualified investment of such taxpayer for the taxable year (determined under subsection (e) without regard to this subsection) shall be increased by an amount equal to the aggregate of each qualified progress expenditure for the taxable year with respect to progress expenditure property.
I22``(2) T4Progress expenditure property definedK._For purposes of this subsection, the term `progress expenditure property' means any property being constructed by or for the taxpayer and which it is reasonable to believe will qualify as a qualifying system of continuous emission control which is being constructed by or for the taxpayer when it is placed in service.
I22``(3) T4Qualified progress expenditures definedK._For purposes of this subsection_
I24``(A) T4Self-constructed propertyK._In the case of any self-constructed property, the term `qualified progress expenditures' means the amount which, for purposes of this subpart, is properly chargeable (during such taxable year) to capital account with respect to such property.
I24``(B) T4Nonself-constructed propertyK._In the case of nonself-constructed property, the term `qualified progress expenditures' means the amount paid during the taxable year to another person for the construction of such property.
I22``(4) T4Other definitionsK._For purposes of this subsection_
I24``(A) T4Self-constructed propertyK._The term `self-constructed property' means property for which it is reasonable to believe that more than half of the construction expenditures will be made directly by the taxpayer.
I24``(B) T4Nonself-constructed propertyK._The term `nonself-constructed property' means property which is not self-constructed property.
I24``(C) T4Construction, etcK._The term `construction' includes reconstruction and erection, and the term `constructed' includes reconstructed and erected.
I24``(D) T4Only construction of qualifying system of continuous emission control to be taken into accountK._Construction shall be taken into account only if, for purposes of this subpart, expenditures therefore are properly chargeable to capital account with respect to the property.
I22``(5) T4ElectionK._An election under this subsection may be made at such time and in such manner as the Secretary may by regulations prescribe. Such an election shall apply to the taxable year for which made and to all subsequent taxable years. Such an election, once made, may not be revoked except with the consent of the Secretary.
I20``(g) T5Coordination With Other CreditsK._This section shall not apply to any property with respect to which the rehabilitation credit under section 47 or the energy credit under section 48A is allowed unless the taxpayer elects to waive the application of such credit to such property.
I20``(h) T5TerminationK._This section shall not apply with respect to any qualified investment made more than 10 years after the effective date of this section.''T1.
I22(3) T4RecaptureK._Section 50(a) (relating to other special rules) is amended by adding at the end the following:
I22``(6) T4Special rules relating to qualifying system of continuous emission controlK._For purposes of applying this subsection in the case of any credit allowable by reason of section 48B, the following shall apply:
I24``(A) T4General ruleK._In lieu of the amount of the increase in tax under paragraph (1), the increase in tax shall be an amount equal to the investment tax credit allowed under section 38 for all prior taxable years with respect to a qualifying system of continuous emission control (as defined by section 48B(b)(1)) multiplied by a fraction whose numerator is the number of years remaining to fully depreciate under this title the qualifying system of continuous emission control disposed of, and whose denominator is the total number of years over which such unit would otherwise have been subject to depreciation. For purposes of the preceding sentence, the year of disposition of the qualifying system of continuous emission control property shall be treated as a year of remaining depreciation.
I24``(B) T4Property ceases to qualify for progress expendituresK._Rules similar to the rules of paragraph (2) shall apply in the case of qualified progress expenditures for a qualifying system of continuous emission control under section 48B, except that the amount of the increase in tax under subparagraph (A) of this paragraph shall be substituted in lieu of the amount described in such paragraph (2).
I24``(C) T4Application of paragraphK._This paragraph shall be applied separately with respect to the credit allowed under section 38 regarding a qualifying system of continuous emission control.''T1.
I22(4) T4Technical amendmentsK._
I24(A) Section 49(a)(1)(C) is amended by striking ``and'' at the end of clause (ii), by striking the period at the end of clause (iii) and inserting ``, and'', and by adding at the end the following:
I26``(iv) the portion of the basis of any qualifying system of continuous emission control attributable to any qualified investment (as defined by section 48B(e)).''T1.
I24(B) Section 50(a)(4) is amended by striking ``and (2)'' and inserting ``, (2), and (6)''.
I24(C) Section 50(c) is amended by adding at the end the following:
I22``(6) T4NonapplicationK._Paragraphs (1) and (2) shall not apply to any qualifying clean coal technology unit credit under section 48B.''T1.
I24(D) The table of sections for subpart E of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 48A the following:
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I42``Sec. 48B. Qualifying clean coal technology unit credit.''T1.S6201

I22(5) T4Effective dateK._The amendments made by this subsection shall apply to periods after December 31, 2005, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of enactment of the Revenue Reconciliation Act of 1990).
I20(b) T5Credit for Production From a Qualifying Clean Coal Technology UnitK._
I22(1) T4In generalK._Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits) is amended by adding at the end the following:
I72``SEC. 45L. CREDIT FOR PRODUCTION FROM A QUALIFYING CLEAN COAL TECHNOLOGY UNIT.
I20``(a) T5General RuleK._For purposes of section 38, the qualifying clean coal technology production credit of any taxpayer for any taxable year is equal to the product of_
I22``(1) the applicable amount of clean coal technology production credit, multiplied by
I22``(2) the kilowatt hours of electricity produced by the taxpayer during such taxable year at a qualifying clean coal technology unit during the 10-year period beginning on the date the unit was returned to service after retrofit, repowering, or replacement.
I20``(b) Applicable Amount.
I22``(1) T4In generalK._For purposes of this section, the applicable amount of clean coal technology production credit is equal to $0.0034.
I22``(2) T4Inflation adjustment factorK._For calendar years after 2005, the applicable amount of clean coal technology production credit shall be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the amount is applied. If any amount as increased under the preceding sentence is not a multiple of 0.01 cent, such amount shall be rounded to the nearest multiple of 0.01 cent.
I20``(c) T5Definitions and Special RulesK._For purposes of this section_
I22``(1) T4Qualifying clean coal technology unitK._The term `qualifying clean coal technology unit' means a unit of the taxpayer which_
I24``(A) is an existing coal-based electricity generating steam generator-turbine unit,
I24``(B) has a nameplate capacity rating of not more than 300,000 kilowatts, and
I24``(C) has been retrofitted, repowered, or replaced with a clean coal technology within 10 years of the effective date of this section.
I22``(2) T4Clean coal technologyK._The term `clean coal technology' means technology which_
I24``(A) uses coal to produce 50 percent or more of its thermal output as electricity, including advanced pulverized coal or atmospheric fluidized bed combustion, pressurized fluidized bed combustion, integrated gasification combined cycle, or any other technology for the production of electricity,
I24``(B) has a design heat rate not less than 500 Btu/kWh below that of the existing unit before it is retrofit, repowered, or replaced with the qualifying clean coal technology,
I24``(C) has a maximum design heat rate of not more than 9,000 Btu/kWh when the design coal has a heat content of more than 8,000 Btu per pound, and
I24``(D) has a maximum design heat rate of not more than 10,500 Btu/kWh when the design coal has a heat content of 8,000 Btu per pound or less.
I22``(3) T4Application of certain rulesK._The rules of paragraphs (3), (4), and (5) of section 45(e) shall apply.
I22``(4) T4Inflation adjustment factorK._The term `inflation adjustment factor' means, with respect to a calendar year, a fraction the numerator of which is the GDP implicit price deflator for the preceding calendar year and the denominator of which is the GDP implicit price deflator for the calendar year 2005.
I22``(5) T4GDP implicit price deflatorK._The term `GDP implicit price deflator' means the most recent revision of the implicit price deflator for the gross domestic product as computed by the Department of Commerce before March 15 of the calendar year.
I20``(d) T5Coordination With Other CreditsK._This section shall not apply to any property with respect to which the qualifying clean coal technology unit credit under section 48A is allowed unless the taxpayer elects to waive the application of such credit to such property.''T1.
I22(2) T4Credit treated as business creditK._Section 38(b) is amended by striking ``plus'' at the end of paragraph (21), by striking the period at the end of paragraph (22) and inserting ``, plus'', and by adding at the end the following:
I22``(23) the qualifying clean coal technology production credit determined under section 45L(a).''T1.
I22(3) T4Clerical amendmentK._The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended after the item relating to section 45K the following:
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I42``Sec. 45L. Credit for production from a qualifying clean coal technology unit.''T1.S6201

I22(4) T4Effective dateK._The amendments made by this subsection shall apply to production after the date of enactment of this Act.
I20(c) T5Credit for Investment in Qualifying Advanced Clean Coal TechnologyK._
I22(1) T4Allowance of qualifying advanced clean coal technology facility creditK._Section 46 (relating to amount of credit) is amended by striking ``and'' at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting ``, and'', and by adding at the end the following:
I22``(5) the qualifying advanced clean coal technology facility credit.''T1.
I22(2) T4Amount of qualifying advanced clean coal technology facility creditK._Subpart E of part IV of subchapter A of chapter 1 (relating to rules for computing investment credit) is amended by inserting after section 48B the following:
I72``SEC. 48C. QUALIFYING ADVANCED CLEAN COAL TECHNOLOGY FACILITY CREDIT.
I20``(a) T5In GeneralK._For purposes of section 46, the qualifying advanced clean coal technology facility credit for any taxable year is an amount equal to 10 percent of the qualified investment in a qualifying advanced clean coal technology facility for such taxable year.
I20``(b) T5Qualifying Advanced Clean Coal Technology FacilityK._
I22``(1) T4In generalK._For purposes of subsection (a), the term `qualifying advanced clean coal technology facility' means a facility of the taxpayer which_
I24``(A)T1(i)T1(I) replaces a conventional technology facility of the taxpayer and the original use of which commences with the taxpayer, or
I24``(II) is a retrofitted or repowered conventional technology facility, the retrofitting or repowering of which is completed by the taxpayer (but only with respect to that portion of the basis which is properly attributable to such retrofitting or repowering), or
I24``(ii) is acquired through purchase (as defined by section 179(d)(2)),
I24``(B) is depreciable under section 167,
I24``(C) has a useful life of not less than 4 years,
I24``(D) is located in the United States, and
I24``(E) uses qualifying advanced clean coal technology.
I22``(2) T4Special rule for sale-leasebacksK._For purposes of subparagraph (A) of paragraph (1), in the case of a facility which_
I24``(A) is originally placed in service by a person, and
I24``(B) is sold and leased back by such person, or is leased to such person, within 3 months after the date such facility was originally placed in service, for a period of not less than 12 years, such facility shall be treated as originally placed in service not earlier than the date on which such property is used under the leaseback (or lease) referred to in subparagraph (B). The preceding sentence shall not apply to any property if the lessee and lessor of such property make an election under this sentence. Such an election, once made, may be revoked only with the consent of the Secretary.
I22``(3) T4Qualifying advanced clean coal technologyK._For purposes of paragraph (1)_
I24``(A) T4In generalK._The term `qualifying advanced clean coal technology' means, with respect to clean coal technology_
I28``(i) multiple applications, with a combined capacity of not more than 5,000 megawatts, of advanced pulverized coal or atmospheric fluidized bed combustion technology_
I30``(I) installed as a new, retrofit, or repowering application,
I30``(II) operated between 2006 and 2015, and
I30``(III) with a design net heat rate of not more than 9,500 Btu per kilowatt hour when the design coal has a heat content of more than 8,000 Btu per pound, or a design net heat rate of not more than 9,900 Btu per kilowatt hour when the design coal has a heat content of 8,000 Btu per pound or less,
I26``(ii) multiple applications, with a combined capacity of not more than 1,000 megawatts, of pressurized fluidized bed combustion technology_
I28``(I) installed as a new, retrofit, or repowering application,
I28``(II) operated between 2006 and 2015, and
I28``(III) with a design net heat rate of not more than 8,400 Btu per kilowatt hour when the design coal has a heat content of more than 8,000 Btu per pound, or a design net heat rate of not more than 9,900 Btu's per kilowatt hour when the design coal has a heat content of 8,000 Btu per pound or less,
I26``(iii) multiple applications, with a combined capacity of not more than 2,000 megawatts, of integrated gasification combined cycle technology, with or without fuel or chemical co-production_
I28``(I) installed as a new, retrofit, or repowering application,
I28``(II) operated between 2006 and 2015,
I28``(III) with a design net heat rate of not more than 8,550 Btu per kilowatt hour when the design coal has a heat content of more than 8,000 Btu per pound, or a design net heat rate of not more than 9,900 Btu per kilowatt hour when the design coal has a heat content of 8,000 Btu per pound or less, and
I28``(IV) with a net thermal efficiency on any fuel or chemical co-production of not less than 39 percent (higher heating value), and
I26``(iv) multiple applications, with a combined capacity of not more than 2,000 megawatts of technology for the production of electricity_
I28``(I) installed as a new, retrofit, or repowering application,
I28``(II) operated between 2006 and 2015, and
I28``(III) with a carbon emission rate which is not more than 85 percent of conventional technology.
I24``(B) T4ExceptionsK._Such term shall not include clean coal technology projects receiving or scheduled to receive funding under the Clean Coal Technology Program of the Department of Energy.
I24``(C) T4Clean coal technologyK._The term `clean coal technology' means advanced technology which uses coal to produce 75 percent or more of its thermal output as electricity including advanced pulverized coal or atmospheric fluidized bed combustion, pressurized fluidized bed combustion, integrated gasification combined cycle with or without fuel or chemical co-production, and any other technology for the production of electricity which exceeds the performance of conventional technology.
I24``(D) T4Conventional technologyK._The term `conventional technology' means_
I26``(i) coal-fired combustion technology with a design net heat rate of not less than 9,500 Btu per kilowatt hour (HHV) and a carbon equivalents emission rate of not more than 0.54 pounds of carbon per kilowatt hour when the design coal has a heat content of more than 8,000 Btu per pound,
I26``(ii) coal-fired combustion technology with a design net heat rate of not less than 10,500 Btu per kilowatt hour (HHV) and a carbon equivalents emission rate of not more than 0.60 pounds of carbon per kilowatt hour when the design coal has a heat content of 8,000 Btu per pound or less, or
I26``(iii) natural gas-fired combustion technology with a design net heat rate of not less than 7,500 Btu per kilowatt hour (HHV) and a carbon equivalents emission rate of not more than 0.24 pounds of carbon per kilowatt hour.
I24``(E) T4Design net heat rateK._The design net heat rate shall be based on the design annual heat input to and the design annual net electrical output from the qualifying advanced clean coal technology (determined without regard to such technology's co-generation of steam).
I24``(F) T4Selection criteriaK._Selection criteria for clean coal technology facilities_
I26``(i) shall be established by the Secretary of Energy as part of a competitive solicitation,
I26``(ii) shall include primary criteria of minimum design net heat rate, maximum design thermal efficiency, and lowest cost to the government, and
I26``(iii) shall include supplemental criteria as determined appropriate by the Secretary of Energy.
I20``(c) T5Qualified InvestmentK._For purposes of subsection (a), the term `qualified investment' means, with respect to any taxable year, the basis of a qualifying advanced clean coal technology facility placed in service by the taxpayer during such taxable year.
I20``(d) T5Qualified Progress ExpendituresK._
I22``(1) T4Increase in qualified investmentK._In the case of a taxpayer who has made an election under paragraph (5), the amount of the qualified investment of such taxpayer for the taxable year (determined under subsection (c) without regard to this section) shall be increased by an amount equal to the aggregate of each qualified progress expenditure for the taxable year with respect to progress expenditure property.
I22``(2) T4Progress expenditure property definedK._For purposes of this subsection, the term `progress expenditure property' means any property being constructed by or for the taxpayer and which it is reasonable to believe will qualify as a qualifying advanced clean coal technology facility which is being constructed by or for the taxpayer when it is placed in service.
I22``(3) T4Qualified progress expenditures definedK._For purposes of this subsection_
I24``(A) T4Self-constructed propertyK._In the case of any self-constructed property, the term `qualified progress expenditures' means the amount which, for purposes of this subpart, is properly chargeable (during such taxable year) to capital account with respect to such property.
I24``(B) T4Nonself-constructed propertyK._In the case of nonself-constructed property, the term `qualified progress expenditures' means the amount paid during the taxable year to another person for the construction of such property.
I22``(4) T4Other definitionsK._For purposes of this subsection_
I24``(A) T4Self-constructed propertyK._The term `self-constructed property' means property for which it is reasonable to believe that more than half of the construction expenditures will be made directly by the taxpayer.
I24``(B) T4Nonself-constructed propertyK._The term `nonself-constructed property' means property which is not self-constructed property.
I24``(C) T4Construction, etcK._The term `construction' includes reconstruction and erection, and the term `constructed' includes reconstructed and erected.
I24``(D) T4Only construction of qualifying advanced clean coal technology facility to be taken into accountK._Construction shall be taken into account only if, for purposes of this subpart, expenditures therefore are properly chargeable to capital account with respect to the property.
I22``(5) T4ElectionK._An election under this subsection may be made at such time and in such manner as the Secretary may by regulations prescribe. Such an election shall apply to the taxable year for which made and to all subsequent taxable years. Such an election, once made, may not be revoked except with the consent of the Secretary.
I20``(e) T5Coordination With Other CreditsK._This section shall not apply to any property with respect to which the rehabilitation credit under section 47 or the energy credit under section 48A is allowed unless the taxpayer elects to waive the application of such credit to such property.
I20``(f) T5TerminationK._This section shall not apply with respect to any qualified investment made more than 10 years after the effective date of this section.''T1.
I22(3) T4RecaptureK._Section 50(a) (relating to other special rules) is amended by inserting after paragraph (6) the following:
I22``(7) T4Special rules relating to qualifying advanced clean coal technology facilityK._For purposes of applying this subsection in the case of any credit allowable by reason of section 48C, the following shall apply:
I24``(A) T4General ruleK._In lieu of the amount of the increase in tax under paragraph (1), the increase in tax shall be an amount equal to the investment tax credit allowed under section 38 for all prior taxable years with respect to a qualifying advanced clean coal technology facility (as defined by section 48C(b)(1)) multiplied by a fraction whose numerator is the number of years remaining to fully depreciate under this title the qualifying advanced clean coal technology facility disposed of, and whose denominator is the total number of years over which such facility would otherwise have been subject to depreciation. For purposes of the preceding sentence, the year of disposition of the qualifying advanced clean coal technology facility property shall be treated as a year of remaining depreciation.
I24``(B) T4Property ceases to qualify for progress expendituresK._Rules similar to the rules of paragraph (2) shall apply in the case of qualified progress expenditures for a qualifying advanced clean coal technology facility under section 48C, except that the amount of the increase in tax under subparagraph (A) of this paragraph shall be substituted in lieu of the amount described in such paragraph (2).
I24``(C) T4Application of paragraphK._This paragraph shall be applied separately with respect to the credit allowed under section 38 regarding a qualifying advanced clean coal technology facility.''T1.
I22(4) T4Technical amendmentsK._
I24(A) Section 49(a)(1)(C) is amended by striking ``and'' at the end of clause (iii), by striking the period at the end of clause (iv) and inserting ``, and'', and by adding at the end the following:
I26``(v) the portion of the basis of any qualifying advanced clean coal technology facility attributable to any qualified investment (as defined by section 48C(c)).''T1.
I24(B) Section 50(a)(4) of such Code is amended by striking ``and (6)'' and inserting ``(6), and (7)''.
I24(C) Section 50(c)(6) of such Code, as added by section 201(e)(3), is amended by inserting ``or any advanced clean coal technology facility credit under section 48C'' after ``section 48B''.
I24(D) The table of sections for subpart E of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 48B the following:
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I42``Sec. 48C. Qualifying advanced clean coal technology facility credit.''T1.S6201

I22(5) T4Effective dateK._The amendments made by this subsection shall apply to periods after December 31, 2005, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of enactment of the Revenue Reconciliation Act of 1990).
I20(d) T5Credit for Production From Qualifying Advanced Clean Coal TechnologyK._
I22(1) T4In generalK._Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits) is amended by inserting after section 45L the following:
I72``SEC. 45M. CREDIT FOR PRODUCTION FROM QUALIFYING ADVANCED CLEAN COAL TECHNOLOGY.
I20``(a) T5General RuleK._For purposes of section 38, the qualifying advanced clean coal technology production credit of any taxpayer for any taxable year is equal to_
I22``(1) the applicable amount of advanced clean coal technology production credit, multiplied by
I22``(2) the sum of_
I24``(A) the kilowatt hours of electricity, plus
I24``(B) each 3,413 Btu of fuels or chemicals, produced by the taxpayer during such taxable year at a qualifying advanced clean coal technology facility during the 10-year period beginning on the date the facility was originally placed in service.
I20``(b) T5Applicable AmountK._For purposes of this section, the applicable amount of advanced clean coal technology production credit with respect to production from a qualifying advanced clean coal technology facility shall be determined as follows:
I22``(1) Where the design coal has a heat content of more than 8,000 Btu per pound:
I24``(A) In the case of a facility originally placed in service before 2008, if_
Q10
c4,L1,ns,tp0,p8,8/8,g1,t1,xls14,r10,xls60,xls60
I95``
h1
h1``The facility design net heat rate, Btu/kWh (HHV) is:
h1The applicable amount is:
h2For 1st 5 years of such service
h2For 2d 5 years of such service
j
I01DNot more than 8,400D$.0050D$.003005
I01DMore than 8,400 but not more than 8,550D$.0010D$.001005
I01DMore than 8,550 but less than 8,750D$.0005D$.0005.
e

I24``(B) In the case of a facility originally placed in service after 2007 and before 2012, if_
Q10
c4,L1,ns,tp0,p8,8/8,g1,t1,xls14,r10,xls60,xls60
I95``
h1
h1``The facility design net heat rate, Btu/kWh (HHV) is:
h1The applicable amount is:
h2For 1st 5 years of such service
h2For 2d 5 years of such service
j
I01DNot more than 7,770D$.0090D$.007505
I01DMore than 7,770 but not more than 8,125D$.0070D$.005005
I01DMore than 8,125 but not more than 8,350D$.0060D$.0040.
e

I24``(C) In the case of a facility originally placed in service after 2011 and before 2015, if_
Q10
c4,L1,ns,tp0,p8,8/8,g1,t1,xls14,r10,xls60,xls60
I95``
h1
h1``The facility design net heat rate, Btu/kWh (HHV) is:
h1The applicable amount is:
h2For 1st 5 years of such service
h2For 2d 5 years of such service
j
I01DNot more than 7,380D$.0120D$.009005
I01DMore than 7,380 but not more than 7,720D$.0095D$.0070.
e

I22``(2) Where the design coal has a heat content of not more than 8,000 Btu per pound:
I24``(A) In the case of a facility originally placed in service before 2008, if_
Q10
c4,L1,ns,tp0,p8,8/8,g1,t1,xls14,r10,xls60,xls60
I95``
h1
h1``The facility design net thermal efficiency (HHV) is:
h1The applicable amount is:
h2For 1st 5 years of such service
h2For 2d 5 years of such service
j
I01DNot more than 8,500D$.0050D$.003005
I01DMore than 8,500 but not more than 8,650D$.0010D$.001005
I01DMore than 8,650 but not more than 8,750D$.0005D$.0005.
e

I24``(B) In the case of a facility originally placed in service after 2007 and before 2012, if_
Q10
c4,L1,ns,tp0,p8,8/8,g1,t1,xls14,r10,xls60,xls60
I95``
h1
h1``The facility design net heat rate, Btu/kWh (HHV) is:
h1The applicable amount is:
h2For 1st 5 years of such service
h2For 2d 5 years of such service
j
I01DNot more than 8,000D$.0090D$.007505
I01DMore than 8,000 but not more than 8,250D$.0070D$.005005
I01DMore than 8,250 but not more than 8,400D$.0060D$.0040.
e

I24``(C) In the case of a facility originally placed in service after 2011 and before 2015, if_
Q10
c4,L1,ns,tp0,p8,8/8,g1,t1,xls14,r10,xls60,xls60
I95``
h1
h1The facility design net heat rate, Btu/kWh (HHV) is:
h1The applicable amount is:
h2For 1st 5 years of such service
h2For 2d 5 years of such service
j
I01DNot more than 7,800D$.0120D$.009005
I01DMore than 7,800 but not more than 7,950D$.0095D$.0070.
e

I22``(3) Where the clean coal technology facility is producing fuel or chemicals:
I24``(A) In the case of a facility originally placed in service before 2008, if_
Q10
c4,L1,ns,tp0,p8,8/8,g1,t1,xls14,r10,xls60,xls60
I95``
h1
h1``The facility design net thermal efficiency (HHV) is:
h1The applicable amount is:
h2For 1st 5 years of such service
h2For 2d 5 years of such service
j
I01DNot less than 40.6 percentD$.0050D$.003005
I01DLess than 40.6 but not less than 40 percentD$.0010D$.001005
I01DLess than 40 but not less than 39 percentD$.0005D$.0005.
e

I24``(B) In the case of a facility originally placed in service after 2007 and before 2012, if_
Q10
c4,L1,ns,tp0,p8,8/8,g1,t1,xls14,r10,xls60,xls60
I95``
h1
h1``The facility design net thermal efficiency (HHV) is:
h1The applicable amount is:
h2For 1st 5 years of such service
h2For 2d 5 years of such service
j
I01DNot less than 43.9 percentD$.0090D$.007505
I01DLess than 43.9 but not less than 42 percentD$.0070D$.005005
I01DLess than 42 but not less than 40.9 percentD$.0060D$.0040.
e

I24``(C) In the case of a facility originally placed in service after 2011 and before 2015, if_
Q10
c4,L1,ns,tp0,p8,8/8,g1,t1,xls14,r10,xls60,xls60
I95``
h1
h1``The facility design net thermal efficiency (HHV) is:
h1The applicable amount is:
h2For 1st 5 years of such service
h2For 2d 5 years of such service
j
I01DNot less than 44.2 percentD$.0120D$.0090
I01DLess than 44.2 but not less than 43.6 percentD$.0095D$.0070
e

I20``(c) T5Inflation Adjustment FactorK._For calendar years after 2005, each amount in paragraphs (1), (2), and (3) shall be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the amount is applied. If any amount as increased under the preceding sentence is not a multiple of 0.01 cent, such amount shall be rounded to the nearest multiple of 0.01 cent.
I20``(d) T5Definitions and Special RulesK._For purposes of this section_
I22``(1) T4In generalK._Any term used in this section which is also used in section 48B shall have the meaning given such term in section 48B.
I22``(2) T4Applicable rulesK._The rules of paragraphs (3), (4), and (5) of section 45(e) shall apply.
I22``(3) T4Inflation adjustment factorK._The term `inflation adjustment factor' means, with respect to a calendar year, a fraction the numerator of which is the GDP implicit price deflator for the preceding calendar year and the denominator of which is the GDP implicit price deflator for the calendar year 2005.
I22``(4) T4GDP implicit price deflatorK._The term `GDP implicit price deflator' means the most recent revision of the implicit price deflator for the gross domestic product as computed by the Department of Commerce before March 15 of the calendar year.''T1.
I22(2) T4Credit treated as business creditK._Section 38(b) is amended by striking ``plus'' at the end of paragraph (22), by striking the period at the end of paragraph (23) and inserting ``, plus'', and by adding at the end the following:
I22``(24) the qualifying advanced clean coal technology production credit determined under section 45M(a).''T1.
I22(3) T4Clerical amendmentK._The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 45I the following:
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I42``Sec. 45M. Credit for production from qualifying advanced clean coal technology.''T1.S6201


I22(4) T4Effective dateK._The amendments made by this subsection shall apply to production after the date of enactment of this Act.

I78Subtitle B_Long Term Incentives
I72SEC. 331. TAX INCENTIVES FOR RETOOLING AND INVESTMENT IN NEW FACILITIES AND ASSETS TO PRODUCE ENERGY EFFICIENCY TECHNOLOGIES AND DOMESTIC CLEAN ENERGY PRODUCTION TECHNOLOGIES.
I20(a) T5Research CreditK._Section 41 (relating to credit for increasing research activities) is amended by adding at the end the following new subsection:
I20``(i) T5Certain TechnologiesK._
I22``(1) T4Increased credit amountK._In the case of expenses relating to a technology described in paragraph (2), subsection (a)(1) shall be applied by substituting `40 percent' for `20 percent'.
I22``(2) T4Technology describedK._A technology described in this paragraph is_
I24``(A) a facility modified to use closed-loop biomass to co-fire with coal (within the meaning of section 45(d)(2)(A)(ii)),
I24``(B) a facility which uses qualified clean energy resources (as defined in section 45(c)(1)),
I24``(C) a technology which enables a vehicle to qualify for the alternative motor vehicle credit under section 30B, as determined by the secretary, and which is_
I26``(i) a fuel cell described in section 30B(b)(3),
I26``(ii) a hybrid motor vehicle technology described in paragraphs (2) or (3) of section 30B(c),
I26``(iii) an alternative fuel motor vehicle described in section 30B(d)(4), or
I26``(iv) an advanced diesel motor vehicle described in section 30B(e),
I24``(D) a qualified energy efficient appliance (as defined by section 45K(d)),
I24``(E) energy property described in section 48A(c),
I24``(F) property, expenditures for which a credit is allowed under section 25C,
I24``(G) qualified energy management device or qualified retrofitted meter (as defined by section 30D(b)),
I24``(H) qualified flywheel property (as defined by section 30E(c)), and
I24``(I) new electricity transmission lines designed and built primarily to transmit electricity from rural renewable energy resources which do not currently have access to such transmission lines.
I22``(3) T4Domestic production requirementK._An expense shall be treated as not described in paragraph (1) unless any research qualified under this section is conducted substantially within the United States.
I22``(4) T4Technology portion of credit refundable for small businessesK._
I24``(A) T4In generalK._In the case of an eligible small business, the portion of the credit which is attributable to expenses relating to technologies described in paragraph (2) and which would (but for subparagraph (B)) be allowable under this section shall be treated for purposes of this title as a credit allowed under subpart C.
I24``(B) T4No double benefitK._The amount of the credit allowed under this section shall be reduced by the amount of any credit treated as allowed under subpart C by reason of subparagraph (A).
I24``(C) T4Eligible small businessK._For purposes of this paragraph, a taxpayer is an eligible small business for any taxable year if the average annual gross receipts of the taxpayer for the 3 preceding taxable years do not exceed $5,000,000. For purposes of the preceding sentence, rules similar to the rules of paragraphs (2) and (3) of section 448(c) shall apply.''T1.
I20(b) T5Investment Tax Credit for Equipment, Structures, and All Assets Involved in Production of Qualified TechnologiesK._
I22(1) T4In generalK._Section 46 (relating to amount of investment credit) is amended by striking ``and'' at the end of paragraph (4), by striking the period at the end of paragraph (5) and inserting ``; and'', and by adding at the end the following new paragraph:
I22``(6) the qualified technology credit.''T1.
I22(2) T4Qualified technology creditK._Subpart E of part IV of subchapter A of chapter 1 (relating to rules for computing investment credit) is amended by inserting after section 48C the following:
I72``SEC. 48D. QUALIFIED TECHNOLOGY CREDIT.
I20``(a) T5In GeneralK._For purposes of section 46, the qualified technology credit for any taxable year is 35 percent of the basis of each facility placed in service in the United States during such taxable year which is primarily used in the production or manufacture of technology property described in section 41(i)(2).
I20``(b) T5Certain Progress Expenditure Rules Made ApplicableK._Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section.''T1.
I22(3) T4Special basis adjustment ruleK._Paragraph (3) of section 50(c) (relating to basis adjustment to investment credit property) is amended by striking ``or reclamation credit'' and inserting ``, reclamation credit, or qualified technology credit''.
I22(4) T4Clerical amendmentK._The table of sections for subpart E of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 48C the following new item:
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I42``Sec. 48D. Qualified technology credit.''T1.S6201

I22(5) T4Effective dateK._The amendments made by this subsection shall apply to property placed in service after the date of enactment of this Act.
I20(c) T5Accelerated DepreciationK._Section 168 (relating to accelerated cost recovery system) is amended by adding at the end the following new subsection:
I20``(l) T5Certain TechnologiesK._
I22``(1) T4Increased additional allowanceK._In the case of any property located in the United States which is primarily used in the production or manufacture of technology property described in section 41(i)(2)_
I24``(A) the depreciation deduction provided by section 167(a) for the taxable year in which such property is placed in service shall include an allowance equal to the applicable percentage of the adjusted basis of such property; and
I24``(B) the adjusted basis of such property shall be reduced by the amount of such deduction before computing the amount otherwise allowable as a depreciation deduction under this chapter for such taxable year and any subsequent taxable year.
I22``(2) T4Applicable percentageK._For purposes of paragraph (1), the term `applicable percentage' means_
I24``(A) 70 percent for taxable years beginning in 2005, 2006, or 2007;
I24``(B) 50 percent for taxable years beginning in 2008 or 2009;
I24``(C) 30 percent for taxable years beginning in 2010, 2011, 2012, 2013, or 2014; and
I24``(D) zero thereafter.''T1.
I20(d) T5ExpensingK._Section 179 is amended by adding at the end the following new subsection:
I20``(e) T5Property Purchased for Production of Qualified TechnologyK._In the case of section 179 property placed in service in the United States for the primary purpose of producing or manufacturing technology property described in section 41(i)(2), subsection (b)(1) shall be applied by substituting $500,000 for any dollar amount specified therein.''T1.
I20(e) T5Exclusion for Interest on Loans for Production of Qualified TechnologyK._
I22(1) T4In generalK._Part III of subchapter B of chapter 1 is amended by inserting after section 139B the following new section:
I72``SEC. 139C. INTEREST ON LOANS FOR PRODUCTION OF QUALIFIED TECHNOLOGY.
I20``Gross income shall not include 50 percent of the interest received on any obligation the proceeds of which are used exclusively in the production in the United States of a qualified technology property described in section 41(i)(2).''T1.
I22(2) T4Clerical amendmentK._The table of sections for part III of subchapter B of chapter 1 is amended by inserting after the item relating to section 139B the following new item:
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I42``Sec. 139C. Interest on loans for production of qualified technology.''T1.S6201

I20(f) T5Increased CarryoversK._Subsection (a) of section 39 is amended by adding at the end the following new paragraph:
I22``(3) T4Increased carryovers for credits relating to certain technologiesK._In the case of the credits allowable under section 38 by reason of section 41(i) or section 46(6)_
I24``(A) the carryback under paragraphs (1) and (2) shall be 5 years in lieu of 1 year;
I24``(B) the carryforward paragraphs (1) and (2) shall be 25 years in lieu of 20 years;
I24``(C) this paragraph shall be applied separately with respect to any other carryover under this section; and
I24``(D) the determination of the amounts carried over under this paragraph shall be made after this section is applied after the application of subparagraph (C).''T1.
I20(g) T5Alternative Minimum TaxK._Subsection (a) of section 56 is amended by adding at the end the following new paragraph:
I22``(8) T4Qualified technologiesK._Notwithstanding any other provision of this part, no provision of this part shall apply with respect to sections 41(i), 48D, 139C, 168(l), and 179(e).''T1.
I20(h) T5Effective DateK._The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
I72SEC. 332. SPECIAL RULES FOR AUTOMOTIVE INDUSTRY.
I20(a) T5In GeneralK._Chapter 77 is amended by adding at the end the following new section:
I72``SEC. 7529. SPECIAL RULES FOR AUTOMOTIVE INDUSTRY.
I20``(a) T5In GeneralK._For purposes of sections 41(i), 48D, and 39(a)(3) any vehicle for which a credit is allowed by section 30B shall be treated as a technology described in section 41(i)(2), except that_
I22``(1)  section 41(i)(1) shall be applied by substituting `60 percent' for `40 percent',
I22``(2) section 48D shall be applied by substituting `50 percent' for `35 percent', and
I22``(3) section 39(a)(3) shall be applied by substituting `30 years' for `25 years' and `10 years' for `5 years'.
I20``(b) T5Special Rule Relating to Accelerated DepreciationK._For purposes of section 168(l), the applicable percentage shall be the percentage specified in subparagraphs (A), (B), and (C) of paragraph (2) thereof, increased by 10 percentage points.''T1.
I20(b) T5Clerical AmendmentK._The table of sections for chapter 77 is amended by adding at the end the following new item:
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I42``Sec.7529.Special rules for automotive industry.''T1.S6201

I20(c) T5Effective DateK._The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
I72SEC. 333. SPECIAL RULES FOR HIGH-CAPACITY AIRPLANES.
I20(a) T5In GeneralK._Chapter 77 is amended by adding at the end the following new section:
I72``SEC. 7530. SPECIAL RULES FOR HIGH-CAPACITY AIRPLANES.
I20``(a) T5In GeneralK._For purposes of sections 41(i), 48D, and 39(a)(3) any high-capacity airplane shall be treated as a technology described in section 41(i)(2), except that_
I22``(1) section 41(i)(1) shall be applied by substituting `60 percent' for `40 percent';
I22``(2) section 48D shall be applied by substituting `50 percent' for `35 percent';
I22``(3) section 39(a)(3) shall be applied by substituting `30 years' for `25 years' and `8 years' for `5 years'.
I20``(b) T5Special Rule Relating to Accelerated DepreciationK._For purposes of section 168(l), the applicable percentage shall be the percentage specified in subparagraphs (A), (B), and (C) of paragraph (2) thereof, increased by 10 percentage points.
I20``(c) T5High-Capacity AirplaneK._For purposes of this section, the term `high-capacity airplane' means a commercial airplane which_
I22``(1) has a passenger seating capacity of no less than 200 people;
I22``(2) has a range of at least 7,200 nautical miles; and
I22``(3) consumes at least 15 percent less fuel than comparable airplanes.''T1.
I20(b) T5Clerical AmendmentK._The table of sections for chapter 77 is amended by adding at the end the following new item:
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I42``Sec.7530.Special rules for high-capacity airplanes.''T1.S6201

I20(c) T5Effective DateK._The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
I72SEC. 334. NEW ELECTRICITY TRANSMISSION LINES DESIGNED PRIMARILY TO CARRY ELECTRICITY FROM RENEWABLE ENERGY RESOURCES.
I20The Secretary of the Treasury, in consultation with the Secretary of Energy, the Secretary of Commerce, and the Administrator of the Environmental Protection Agency, shall establish an appropriate investment tax credit for the construction of new electricity transmission lines designed primarily to carry electricity from renewable energy resources. Such credit shall be sufficient to encourage the development of promising rural renewable energy domestic resources that otherwise would likely not be developed.
I72SEC. 335. NEW ENERGY TECHNOLOGIES COMMISSION.
I20(a) T5EstablishmentK._There is established a commission to be known as the ``New Energy Technologies Commission'' (hereafter in this section referred to as the ``Commission'').
I20(b) T5DutiesK._
I22(1) T4Identify new energy technologies eligible for tax incentivesK._
I24(A) T4In generalK._The Commission shall oversee_
I26(i) the identification of_
I28(I) Apollo Approved energy efficiency technologies; and
I28(II) Apollo Approved domestic clean energy production technologies; that the Commission finds substantially contributes to the goals of this Act and merits consideration for favorable tax incentives by Congress; and
I26(ii) the identification of criteria and standards for determining technologies eligible under clause (i) as qualifying energy efficiency standards used to determine eligibility for the investment, production, and consumption tax incentives outlined in this title.
I24(B) T4Matters to be considered by the commissionK._In developing energy efficiency standards, the Commission shall_
I26(i) consult with the Environmental Protection Agency program known as ``Energy Star''; and
I26(ii) focus on technologies manufactured domestically.
I22(2) T4ReportK._Not later than one year after the date of enactment of this Act, and every six months thereafter the Commission shall submit to Congress a report that contains_
I24(A) a detailed statement of any technology that qualifies for or merits the tax incentives in this title;
I24(B) recommendations for tax incentives specifically tailored to be beneficial to such technologies and any standards that should be defined in statute to determine eligibility for such benefits; and
I24(C) recommendations for other legislation, administrative actions, and voluntary actions necessary to implement such incentives.
I22(3) T4Apollo approved energy technologiesK._For purposes of this section, the term ``Apollo Approved energy technologies'' means any final unit product that the Commission finds substantially contributes to the goals of this Act and merits consideration for favorable tax incentives by Congress not already included in this Act.
I22(4) T4Apollo approved domestic clean energy production technologiesK._For purposes of this section, the term ``Apollo Approved domestic clean energy production technologies'' means any domestic energy production technology that the Commission finds substantially contributes to the goals of this Act and merits consideration for favorable tax incentives by Congress not already included in this Act.
I20(c) T5MembershipK._
I22(1) T4In generalK._The Commission shall be comprised of 11 members.
I22(2) T4Appointments by this actK._The following are hereby designated as members of the Commission:
I24(A) The Secretary of the Department of Energy, the Director of the Office of Energy Efficiency and Renewable Energy of the Department of Energy, or the Administrator of the Energy Information Administration of the Department of Energy.
I24(B) The Secretary of the Department of Commerce or designee.
I24(C) The Secretary of the Department of Treasury or designee.
I24(D) The Director of the Environmental Protection Agency or designee.
I22(3) T4Appointments by the senate and house of representativesK._7 members appointed jointly by the majority leader and minority leader of the Senate and the Speaker and minority leader of the House of Representatives, of whom_
I24(A) 1 shall represent consumer advocacy organizations focusing on energy issues;
I24(B) 1 shall represent auto manufacturers;
I24(C) 1 shall represent the lending community;
I24(D) 1 shall represent environmental advocacy organizations focusing on energy issues;
I24(E) 1 shall represent organized labor;
I24(F) 1 shall represent small business manufacturers; and
I24(G) 1 shall represent the energy industry.
I22(4) T4Date of appointmentsK._The appointment of a member of the Commission shall be made not later than 30 days after the date of enactment of this Act.
I22(5) T4TermK._A member shall be appointed for 5 year terms.
I20(d) T5Powers of CommissionK._
I22(1) T4Hearings and sessionsK._The Commission may, for the purpose of carrying out this section, hold hearings, sit and act at times and places, take testimony, and receive evidence to carry out its duties under subsection (b). The Commission may administer oaths or affirmations to witnesses appearing before it.
I22(2) T4Powers of members and agentsK._Any member or agent of the Commission may, if authorized by the Commission, take any action which the Commission is authorized to take by this section.
I22(3) T4Obtaining official informationK._
I24(A) T4Requirement to furnishK._Except as provided in subparagraph (B), if the Commission submits a request to a Federal department or agency for information necessary to enable the Commission to carry out this section, the head of that department or agency shall furnish that information to the Commission.
I24(B) T4Exception for national securityK._If the head of a Federal department or agency determines that it is necessary to withhold requested information from disclosure to protect the national security interests of the United States, the department or agency head shall not furnish that information to the Commission.
I22(4) T4MailsK._The Commission may use the United States mails in the same manner and under the same conditions as other departments and agencies of the United States.
I22(5) T4Administrative support servicesK._Upon the request of the Director, the Administrator of General Services shall provide to the Commission, on a reimbursable basis, the administrative support services necessary for the Commission to carry out this section.
I22(6) T4Gifts and donationsK._The Commission may accept, use, and dispose of gifts or donations of services or property to carry out this Act, but only to the extent or in the amounts provided in advance in appropriation Acts.
I22(7) T4ContractsK._The Commission may contract with and compensate persons and government agencies for supplies and services, without regard to section 3709 of the Revised Statutes (41 U.S.C. 5).
I20(e) T5Initial MeetingK._The Commission shall hold the initial meeting of the Commission not later than the earlier of_
I22(1) the date that is 30 days after the date on which all members of the Commission have been appointed; or
I22(2) the date that is 90 days after the date of enactment of this Act, regardless of whether all members have been appointed.
I20(f) T5Chairperson and Vice ChairpersonK._The Commission shall select a Chairperson and Vice Chairperson from among the members of the Commission determined under subsection (c)(2).
I20(g) T5Executive CommitteeK._The Commission shall have an executive committee comprised of any five members of the Commission.
I20(h) T5Conflicts of InterestK._Each member appointed to the Commission shall submit a financial disclosure report pursuant to the Ethics in Government Act of 1978, notwithstanding the minimum required rate of compensation or time period employed.
I20(i) T5Staff Appointment and CompensationK._The Chairperson, in consultation with the Vice Chairperson, in accordance with rules agreed upon by the Commission, may appoint and fix the compensation of a staff director and such other personnel as may be necessary to enable the Commission to carry out its functions, without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, and without regard to the provisions of chapter 51 and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates; except that no rate of pay fixed under this subsection may exceed the equivalent of that payable for a position at level V of the Executive Schedule under section 5316 of title 5, United States Code.
I20(j) T5Personnel as Federal EmployeesK._
I22(1) T4In generalK._The staff director and any personnel of the Commission who are employees shall be employees under section 2105 of title 5, United States Code, for purposes of chapters 63, 81, 83, 84, 85, 87, 89, and 90 of that title.
I22(2) T4Members of commissionK._Subparagraph (A) shall not be construed to apply to members of the Commission.
I20(k) T5DetaileesK._Any Federal Government employee may be detailed to the Commission without reimbursement from the Commission, and such detailee shall retain the rights, status, and privileges of his or her regular employment without interruption.
I20(l) T5Consultant ServicesK._The Commission is authorized to procure the services of experts and consultants in accordance with section 3109 of title 5, United States Code, but at rates not to exceed the daily rate paid a person occupying a position at level IV of the Executive Schedule under section 5315 of title 5, United States Code.
I20(m) T5Member CompensationK._Each member of the Commission specified in subsection (c)(3) may be compensated at a rate not to exceed the daily equivalent of the annual rate of basic pay in effect for a position at level IV of the Executive Schedule under section 5315 of title 5, United States Code, for each day during which that member is engaged in the actual performance of the duties of the Commission.
I20(n) T5Information and Administrative ExpensesK._The Federal agencies and members specified in subsection (c)(3) shall provide the Commission such information and pay such administrative and members expenses as the Commission requires to carry out this section, consistent with the requirements and guidelines of the Federal Advisory Commission Act (5 U.S.C. App.).
I20(o) T5Travel ExpensesK._While away from their homes or regular places of business in the performance of services for the Commission, members of the Commission shall be allowed travel expenses, including per diem in lieu of subsistence, in the same manner as persons employed intermittently in the Government service are allowed expenses under section 5703 of title 5, United States Code.
I20(p) T5Authorization of AppropriationsK._
I22(1) T4In generalK._There is authorized to be appropriated to the Commission such sums as may be necessary to carry out this section.
I22(2) T4AvailabilityK._Amounts appropriated under paragraph (1) are authorized to remain available until expended.
I72SEC. 336. EXPENDITURE LIMITATION.
I20Not later than 6 months after the date of the enactment of this Act, the Secretary of the Treasury shall submit a report to the Congress on the tax expenditures incurred by reason of this subtitle, determined on both an annual basis and for the 10-year period beginning on January 1, 2006, together with such recommendations as the Secretary determines necessary or appropriate to achieve a national 10-year tax expenditure under this subtitle of_
I22(1) $10,000,000,000 with respect to automobiles, of which $7,000,000,000 shall be expended in the first 5 years of such 10-year period;
I22(2) $1,500,000,000 with respect to airplanes, of which $1,000,000,000 shall be expended in the first 5 years of such 10-year period, and
I22(3) $10,500,000,000 with respect to all other tax expenditures under this subtitle, of which_
I24(A) $6,500,000,000 shall be expended in the first 3 years of such 10-year period;
I24(B) $2,000,000,000 shall be expended in the fourth and fifth years of such 10-year period; and

I24(C) $2,000,000,000 shall be expended over the last 5 years of such 10-year period.

I78TITLE IV_FEDERAL GOVERNMENT LEVERAGE TO MOVE NEW TECHNOLOGIES TO MARKET
I72SEC. 401. IMPROVED COORDINATION OF TECHNOLOGY TRANSFER ACTIVITIES.
I20(a) T5Technology Transfer CoordinatorK._The Secretary shall designate a Technology Transfer Coordinator to perform oversight of and policy development for technology transfer activities at the Department. The Technology Transfer Coordinator shall coordinate the activities of the Technology Transfer Working Group, and shall oversee the expenditure of funds allocated to the Technology Transfer Working Group, and shall coordinate with each technology partnership ombudsman appointed under section 11 of the Technology Transfer Commercialization Act of 2000 (42 U.S.C. 7261c).
I20(b) T5Technology Transfer Working GroupK._The Secretary shall establish a Technology Transfer Working Group, which shall consist of representatives of the National Laboratories and single-purpose research facilities, to_
I22(1) coordinate technology transfer activities occurring at National Laboratories and single-purpose research facilities;
I22(2) exchange information about technology transfer practices, including alternative approaches to resolution of disputes involving intellectual property rights and other technology transfer matters; and
I22(3) develop and disseminate to the public and prospective technology partners information about opportunities and procedures for technology transfer with the Department, including those related to alternative approaches to resolution of disputes involving intellectual property rights and other technology transfer matters.
I20(c) T5Technology Transfer ResponsibilityK._Nothing in this section shall affect the technology transfer responsibilities of Federal employees under the Stevenson-Wydler Technology Innovation Act of 1980.
I20(d) T5DefinitionK._For purposes of this section, the term ``National Laboratory'' means any of the following laboratories owned by the Department:
I22
I24(A) Ames National Laboratory.
I24(B) Argonne National Laboratory.
I24(C) Brookhaven National Laboratory.
I24(D) Fermi National Laboratory.
I24(E) Idaho National Engineering and Environmental Laboratory.
I24(F) Lawrence Berkeley National Laboratory.
I24(G) Lawrence Livermore National Laboratory.
I24(H) Los Alamos National Laboratory.
I24(I) National Energy Technology Laboratory.
I24(J) National Renewable Energy Laboratory.
I24(K) Oak Ridge National Laboratory.
I24(L) Pacific Northwest National Laboratory.
I24(M) Princeton Plasma Physics Laboratory.
I24(N) Sandia National Laboratories.
I24(O) Thomas Jefferson National Accelerator Facility.
I72SEC. 402. FEDERAL SUPPORT FOR COMMERCIALIZATION OF NEW TECHNOLOGIES.
I20(a) T5ProgramK._The Secretary of Energy shall establish a program of support, through grants, low-interest loans, and loan guarantees, for the commercialization, including support for pilot projects, of new_
I22(1) renewable energy technologies;
I22(2) technologies for energy generation from fossil fuels that incorporate carbon sequestration; and
I22(3) energy efficiency technologies.
I20(b) T5Authorization of AppropriationsK._There are authorized to be appropriated to the Secretary of Energy for carrying out this section $5,000,000,000.
I72SEC. 403. CLEAN ENERGY TECHNOLOGY EXPORTS PROGRAM.
I20(a) T5DefinitionsK._In this section:
I22(1) T4Interagency working groupK._The term ``interagency working group'' means the Interagency Working Group on Clean Energy Technology Exports established under subsection (b).
I22(2) T4United states clean energy technologyK._The term ``United States clean energy technology'' means an energy supply or end-use technology, including a technology using renewable energy sources, that_
I24(A) over its lifecycle and compared to a similar technology already in commercial use in developing countries, countries in transition, and other partner countries_
I26(i) emits substantially lower levels of pollutants and/or greenhouse gases; and
I26(ii) may generate substantially smaller and/or less toxic volumes of solid or liquid waste; and
I24(B) consists of manufactured articles, materials, and supplies produced in the United States substantially all from articles, materials, or supplies mined, produced, or manufactured in the United States, within the meaning of the Buy American Act (41 U.S.C. 10a).
I20(b) T5Interagency Working GroupK._
I22(1) T4EstablishmentK._Not later than 90 days after the date of enactment of this section, the Secretary of Energy, the Secretary of Commerce, and the Administrator of the United States Agency for International Development shall jointly establish a Interagency Working Group on Clean Energy Technology Exports. The interagency working group will focus on opening and expanding energy markets and transferring clean energy technology generated in the United States to developing countries, countries in transition, and other partner countries that are expected to experience, over the next 20 years, the most significant growth in energy production and associated greenhouse gas emissions, including through technology transfer programs under the Framework Convention on Climate Change, other international agreements, and relevant Federal efforts.
I22(2) T4MembershipK._The interagency working group shall be jointly chaired by representatives appointed by the agency heads under paragraph (1) and shall also include representatives from the Department of State, the Department of the Treasury, the Environmental Protection Agency, the Export-Import Bank, the Overseas Private Investment Corporation, the Trade and Development Agency, and other Federal agencies as deemed appropriate by all three agency heads under paragraph (1).
I22(3) T4DutiesK._The interagency working group shall_
I24(A) analyze technology, policy, and market opportunities for international development, demonstration, and deployment of clean energy technology developed in the United States;
I24(B) investigate issues associated with building capacity to deploy clean energy technology generated in the United States in developing countries, countries in transition, and other partner countries, including_
I26(i) energy-sector reform;
I26(ii) creation of open, transparent, and competitive markets for clean energy technologies;
I26(iii) availability of trained personnel to deploy and maintain the technology; and
I26(iv) demonstration and cost-buydown mechanisms to promote first adoption of the technology;
I24(C) examine relevant trade, tax, international, and other policy issues to assess what policies would help open markets and improve United States clean energy technology exports in support of the following areas_
I26(i) enhancing energy innovation and cooperation, including energy sector and market reform, capacity building, and financing measures;
I26(ii) improving energy end-use efficiency technologies, including buildings and facilities, vehicle, industrial, and co-generation technology initiatives; and
I26(iii) promoting energy supply technologies, including fossil, nuclear, and renewable technology initiatives;
I24(D) establish an advisory committee involving the private sector and other interested groups on the export and deployment of United States clean energy technology;
I24(E) monitor each agency's progress towards meeting goals in the 5-year strategic plan submitted to Congress pursuant to the Energy and Water Development Appropriations Act, 2001, and the Energy and Water Development Appropriations Act, 2002;
I24(F) make recommendations to heads of appropriate Federal agencies on ways to streamline Federal programs and policies to improve each agency's role in the international development, demonstration, and deployment of United States clean energy technology;
I24(G) make assessments and recommendations regarding the distinct technological, market, regional, and stakeholder challenges necessary to carry out the program; and
I24(H) recommend conditions and criteria that will help ensure that United States funds promote sound energy policies in participating countries while simultaneously opening their markets and exporting United States energy technology.
I20(c) T5Federal Support for Clean Energy Technology TransferK._Notwithstanding any other provision of law, each Federal agency or Government corporation carrying out an assistance program in support of the activities of United States persons in the environment or energy sector of a developing country, country in transition, or other partner country shall support, to the maximum extent practicable, the transfer of United States clean energy technology as part of that program.
I20(d) T5Annual ReportK._Not later than 90 days after the date of the enactment of this Act, and on March 31 of each year thereafter, the Interagency Working Group shall submit a report to Congress on its activities during the preceding calendar year. The report shall include a description of the technology, policy, and market opportunities for international development, demonstration, and deployment of United States clean energy technology investigated by the Interagency Working Group in that year, as well as any policy recommendations to improve the expansion of clean energy markets and United States clean energy technology exports.
I20(e) T5Authorization of AppropriationsK._There are authorized to be appropriated to the appropriate departments, agencies, and entities of the United States such sums as may be necessary for each of the fiscal years 2006 through 2016 to support the transfer of United States clean energy technology, consistent with the subsidy codes of the World Trade Organization, as part of assistance programs carried out by those departments, agencies, and entities in support of activities of United States persons in the energy sector of a developing country, country in transition, or other partner country.
I72SEC. 404. INTERNATIONAL ENERGY TECHNOLOGY DEPLOYMENT PROGRAM.
I20Section 1608 of the Energy Policy Act of 1992 (42 U.S.C. 13387) is amended by striking subsection (l) and inserting the following:
I20``(l) T5International Energy Technology Deployment ProgramK._
I22``(1) T4DefinitionsK._In this subsection:
I24``(A) T4International energy deployment projectK._The term `international energy deployment project' means a project to construct an energy production facility outside the United States_
I26``(i) the output of which will be consumed outside the United States; and
I26``(ii) the deployment of which will result in a greenhouse gas reduction per unit of energy produced when compared to the technology that would otherwise be implemented_
I28``(I) 20 percentage points or more, in the case of a unit placed in service before January 1, 2010;
I28``(II) 40 percentage points or more, in the case of a unit placed in service after December 31, 2009, and before January 1, 2020; or
I28``(III) 60 percentage points or more, in the case of a unit placed in service after December 31, 2019, and before January 1, 2030.
I24``(B) T4Qualifying international energy deployment projectK._The term `qualifying international energy deployment project' means an international energy deployment project that_
I26``(i) is submitted by a United States firm to the Secretary in accordance with procedures established by the Secretary by regulation;
I26``(ii) uses technology that has been successfully developed or deployed in the United States;
I26``(iii) uses technology that consists of manufactured articles, materials, and supplies produced in the United States substantially from articles, materials, or supplies mined, produced, or manufactured in the United States, within the meaning of the Buy American Act (41 U.S.C. 10a);
I26``(iv) meets the criteria of subsection (k);
I26``(v) is approved by the Secretary, with notice of the approval being published in the Federal Register; and
I26``(vi) complies with such terms and conditions as the Secretary establishes by regulation.
I24``(C) T4United statesK._For purposes of this paragraph, the term `United States', when used in a geographical sense, means the 50 States, the District of Columbia, Puerto Rico, Guam, the Virgin Islands, American Samoa, and the Commonwealth of the Northern Mariana Islands.
I22``(2) T4Pilot program for financial assistanceK._
I24``(A) T4In generalK._Not later than 180 days after the date of enactment of this subsection, the Secretary shall, by regulation, provide for a pilot program for financial assistance for qualifying international energy deployment projects.
I24``(B) T4Selection criteriaK._After consultation with the Secretary of State, the Secretary of Commerce, and the United States Trade Representative, the Secretary shall select projects for participation in the program based solely on the criteria under this title and without regard to the country in which the project is located.
I24``(C) T4Financial assistanceK._
I26``(i) T4In generalK._A United States firm that undertakes a qualifying international energy deployment project that is selected to participate in the pilot program shall be eligible to receive a loan or a loan guarantee from the Secretary.
I26``(ii) T4Rate of interestK._The rate of interest of any loan made under clause (i) shall be equal to the rate for Treasury obligations then issued for periods of comparable maturities.
I26``(iii) T4AmountK._The amount of a loan or loan guarantee under clause (i) shall not exceed 50 percent of the total cost of the qualified international energy deployment project.
I26``(iv) T4Developed countriesK._Loans or loan guarantees made for projects to be located in a developed country, as listed in Annex I of the United Nations Framework Convention on Climate Change, shall require at least a 50 percent contribution towards the total cost of the loan or loan guarantee by the host country.
I26``(v) T4Developing countriesK._Loans or loan guarantees made for projects to be located in a developing country (those countries not listed in Annex I of the United Nations Framework Convention on Climate Change) shall require at least a 10 percent contribution towards the total cost of the loan or loan guarantee by the host country.
I26``(vi) T4Capacity building researchK._Proposals made for projects to be located in a developing country may include a research component intended to build technological capacity within the host country. Such research must be related to the technologies being deployed and must involve both an institution in the host country and an industry, university or national laboratory participant from the United States. The host institution shall contribute at least 50 percent of funds provided for the capacity building research.
I24``(D) T4Coordination with other programsK._A qualifying international energy deployment project funded under this section shall not be eligible as a qualifying clean coal technology under section 415 of the Clean Air Act (42 U.S.C. 7651n).
I24``(E) T4ReportK._Not later than 5 years after the date of enactment of this subsection, the Secretary shall submit to the President a report on the results of the pilot projects.
I24``(F) T4RecommendationK._Not later than 60 days after receiving the report under subparagraph (E), the President shall submit to Congress a recommendation, based on the results of the pilot projects as reported by the Secretary of Energy, concerning whether the financial assistance program under this section should be continued, expanded, reduced, or eliminated.
I22``(3) T4Authorization of appropriationsK._There are authorized to be appropriated to the Secretary to carry out this section $500,000,000 for each of fiscal years 2006 through 2016, to remain available until expended.''T1.
I72SEC. 405. RISK POOL FOR QUALIFYING ADVANCED CLEAN ENERGY TECHNOLOGY.
I20(a) T5EstablishmentK._The Secretary of the Treasury shall establish a financial risk pool which shall be available to any United States owner or developer of a technology that the Secretary determines will help achieve the goals stated in section 102 of this Act (whether or not such owner or developer receives any loan guaranteed under section 731), to offset for the first 3 years of the operation of such technology the costs (not to exceed 5 percent of the total cost of installation) for modifications resulting from the technology's failure to achieve its design performance.
I20(b) T5Authorization of AppropriationsK._There are authorized to be appropriated $4,500,000,000 to carry out the purposes of this section.
I72SEC. 406. FEDERAL RENEWABLE AND CLEAN ENERGY USE.
I20(a) T5In GeneralK._The President shall take measures necessary to ensure that, within 10 years after the date of the enactment of this Act, at least 20 percent of the electricity consumed by nondefense related activities of the Federal Government shall be generated from renewable sources or zero-emission fossil fuel energy sources.
I20(b) T5Solar Panels and PhotovoltaicsK._The requirement in subsection (a) may be achieved through the purchase and installation of solar panels or photovoltaics on executive agency properties.
I72SEC. 407. REQUIRE THE EXPORT-IMPORT BANK OF THE UNITED STATES TO MEET RENEWABLE ENERGY TARGETS IN ITS LENDING PRACTICES.
I20(a) T5Allocation of Assistance Among Energy ProjectsK._Of the total amount available to the Export-Import Bank of the United States for the extension of credit for transactions related to energy projects, the Bank shall, not later than the beginning of fiscal year 2008, use_
I22(1) not more than 85 percent for transactions related to fossil fuel projects; and
I22(2) not less than 15 percent for transactions related to renewable energy and energy efficiency projects.
I20(b) T5Renewable Energy and Technology CommissionK._
I22(1) T4EstablishmentK._Within 1 year after the date of the enactment of this Act, the Export-Import Bank of the United States (in this subsection referred to as the ``Bank'') shall establish a commission which shall be known as the ``Renewable Energy and Technology Commission'' (in this subsection referred to as the ``Commission'').
I22(2) T4FunctionK._The Commission shall help the Bank achieve the percentage goal set forth in subsection (a)(2) by the beginning of fiscal year 2008, by proactively assisting the Bank in identifying new opportunities for renewable energy and energy efficiency financing.
I22(3) T4CompositionK._The Commission shall be composed of_
I24(A) 6 representatives selected by companies involved in renewable energy and energy efficiency technology;
I24(B) 2 representatives selected by environmental organizations;
I24(C) 2 members of the academic community who are knowledgeable about renewable energy; and
I24(D) representatives of the Bank.
I22(4) T4ReportsK._The Commission shall submit annually to the Committee on Resources and the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate a report that contains the following information for the fiscal year covered by the report:
I24(A) A detailed description of the activities of the Commission.
I24(B) Any recommendations made by the Commission that were adopted by the Bank.
I24(C) An analysis comparing the level of credit extended by the Bank for renewable energy and energy efficiency projects with the level of credit so extended for the preceding fiscal year.
I20(c) T5Definition of Renewable Energy and Energy Efficiency ProjectsK._In this section, the term ``renewable energy and energy efficiency projects'' means projects related to solar, wind, biomass, or geothermal energy sources.
I72SEC. 408. GRANTS FOR TRANSIT PROGRAMS.
I20(a) T5In GeneralK._The Secretary of Transportation shall award grants to a State or local governmental authority to improve mass transportation programs, including capital projects.
I20(b) T5Authorization of AppropriationsK._There are authorized to be appropriated to carry out this section $1,500,000,000 for each of 10 fiscal years beginning with the first fiscal year after the date of enactment of this Act.
I20(c) T5Labor StandardsK._The Secretary of Transportation shall not provide a grant under this section unless the Secretary receives reasonable assurances from a State that laborers and mechanics employed by contractors or subcontractors in the performance of construction or modernization on the a transit project will be paid wages not less than those prevailing on similar construction or modernization in the locality as determined by the Secretary of Labor under the Act of March 3, 1931 (known as the Davis-Bacon Act) (40 U.S.C. 276a et seq.).
I20(d) T5DefinitionsK._
I22(1) T4General definitionsK._For purposes of this section, the terms ``capital project'', ``local governmental authority'', and ``mass transportation'' have the same meanings such terms have in section 5302 of title 49, United States Code.
I22(2) T4State definedK._For purposes of this section, the term ``State'' means a State of the United States, the District of Columbia, Puerto Rico, the Northern Mariana Islands, Guam, American Samoa, and the United States Virgin Islands.
I72SEC. 409. GRANTS FOR WATER AND SEWER IMPROVEMENT PROGRAMS.
I20(a) T5In GeneralK._The Secretary of Transportation shall award grants to a State or local governmental authority to improve water and sewer systems by increasing energy efficiency in such systems by not less than 25 percent.
I20(b) T5Authorization of AppropriationsK._There are authorized to be appropriated to carry out this section $1,000,000,000 for each of 10 fiscal years beginning with the first fiscal year after the date of enactment of this Act.
I20(c) T5Labor StandardsK._The Secretary of Transportation shall not provide a grant under this section unless the Secretary receives reasonable assurances from a State that laborers and mechanics employed by contractors or subcontractors in the performance of construction or modernization on a water or sewer system improvement project will be paid wages not less than those prevailing on similar construction or modernization in the locality as determined by the Secretary of Labor under the Act of March 3, 1931 (known as the Davis-Bacon Act) (40 U.S.C. 276a et seq.).
I20(d) T5DefinitionsK._
I22(1) T4General definitionsK._For purposes of this section, the terms ``capital project'', ``local governmental authority'', and ``mass transportation'' have the same meanings such terms have in section 5302 of title 49, United States Code.
I22(2) T4State definedK._For purposes of this section, the term ``State'' means a State of the United States, the District of Columbia, Puerto Rico, the Northern Mariana Islands, Guam, American Samoa, and the United States Virgin Islands.
I72SEC. 410. LOANS FOR HIGH-EFFICIENCY VEHICLES.
I20(a) T5Loan Program AuthorizedK._Subject to the availability of appropriations, the Secretary of Transportation shall establish a program to offer federally financed, interest-free loans to local educational agencies, public institutions of higher education, municipalities, and local governments for the purchase of hybrid electric vehicles or high-efficiency vehicles.
I20(b) T5Repayment TermK._The time for repayment of a loan under this section may not exceed 5 years.
I20(c) T5Security InterestK._The Secretary shall require, as a condition of a loan under this section, that the borrower grant to the United States a security interest in any vehicle purchased with the proceeds of such loan.
I20(d) T5DefinitionsK._In this section:
I22(1) The term ``high-efficiency vehicle'' means a motor vehicle the fuel economy of which is rated at not less than 40 miles per gallon.
I22(2) The term ``hybrid electric vehicle'' means a motor vehicle with a fuel-efficient gasoline engine assisted by an electric motor.
I22(3) The term ``motor vehicle'' has the meaning given that term in section 30102(a)(6) of title 49, United States Code.
I22(4) The term ``local educational agency'' has the meaning given that term in the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.).
I22(5) The term ``public institution of higher education'' has the meaning given the term ``institution of higher education'' in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)), but does not include private institutions described in that section.
I20(e) T5Authorization of AppropriationsK._There are authorized to be appropriated to carry out this section $50,000,000 for each of fiscal years 2006 through 2011 and such sums as may be necessary for each fiscal year thereafter.
I72SEC. 411. REQUIREMENT REGARDING PURCHASE OF MOTOR VEHICLES BY EXECUTIVE AGENCIES.
I20(a) T5In GeneralK._At least ten percent of the motor vehicles purchased by an Executive agency in any fiscal year shall be comprised of high-efficiency vehicles or hybrid electric vehicles.
I20(b) T5DefinitionsK._In this Act:
I22(1) The term ``Executive agency'' has the meaning given that term in section 105 of title 5, United States Code, but also includes Amtrak, the Smithsonian Institution, and the United States Postal Service.
I22(2) The term ``high-efficiency vehicle'' means a motor vehicle the fuel economy of which is rated at not less than 40 miles per gallon.
I22(3) The term ``hybrid electric vehicle'' means a motor vehicle with a fuel-efficient gasoline engine assisted by an electric motor.
I22(4) The term ``motor vehicle'' has the meaning given that term in section 102(7) of title 40, United States Code.
I20(c) T5Pro-Rated Applicability in Year of EnactmentK._In the fiscal year in which this Act is enacted, the requirement in subsection (a) shall only apply with respect to motor vehicles purchased after the date of the enactment of this Act in such fiscal year.
I72SEC. 412. FEDERAL ENERGY EFFICIENCY.
I20The President shall take measures necessary to ensure that electricity consumption for nondefense related activities of the Federal Government shall be decreased by 35 percent by 2015.
I72SEC. 413. FEDERAL AGENCY ETHANOL-BLENDED GASOLINE AND BIODIESEL PURCHASING REQUIREMENT.
I20Title III of the Energy Policy Act of 1992 is amended by striking section 306 (42 U.S.C. 13215) and inserting the following:
I72``SEC. 306. FEDERAL AGENCY ETHANOL-BLENDED GASOLINE AND BIODIESEL PURCHASING REQUIREMENT.
I20``(a) T5Ethanol-Blended GasolineK._The head of each Federal agency shall ensure that, in areas in which ethanol-blended gasoline is reasonably available at a generally competitive price, the Federal agency purchases ethanol-blended gasoline containing at least 85 percent ethanol rather than nonethanol-blended gasoline, for use in vehicles used by the agency that use gasoline. If 85 percent ethanol-blended gasoline is not reasonably available, then each agency shall purchase ethanol-blended gasoline containing at least 10 percent ethanol in areas in which ethanol-blended gasoline is reasonably available at a generally competitive price.
I20``(b) T5BiodieselK._
I22``(1) T4Definition of biodieselK._In this subsection, the term `biodiesel' has the meaning given the term in section 312(f).
I22``(2) T4RequirementK._The head of each Federal agency shall ensure that the Federal agency purchases, for use in fueling fleet vehicles that use diesel fuel used by the Federal agency at the location at which fleet vehicles of the Federal agency are centrally fueled, in areas in which the biodiesel-blended diesel fuel described in subparagraphs (A) and (B) is available at a generally competitive price_
I24``(A) as of the date that is 5 years after the date of enactment of this paragraph, biodiesel-blended diesel fuel that contains at least 2 percent biodiesel, rather than nonbiodiesel-blended diesel fuel; and
I24``(B) as of the date that is 10 years after the date of enactment of this paragraph, biodiesel-blended diesel fuel that contains at least 20 percent biodiesel, rather than nonbiodiesel-blended diesel fuel.
I22``(3) T4Requirement of federal lawK._The provisions of this subsection shall not be considered a requirement of Federal law for the purposes of section 312.
I20``(c) T5ExemptionK._This section does not apply to fuel used in vehicles excluded from the definition of `fleet' by subparagraphs (A) through (H) of section 301(9).''T1.
I72SEC. 414. PERMITTING OF WIND ENERGY DEVELOPMENT PROJECTS ON PUBLIC LANDS.
I20(a) T5Required Policies and ProceduresK._The Secretary of the Interior shall process right-of-way applications for wind energy site testing and monitoring facilities on public lands administered by the Bureau of Land Management in accordance with policies and procedures that are substantially the same as those set forth in Bureau of Land Management Instruction Memorandum No. 9 2003˙09020, dated October 16, 2002.
I20(b) T5Limitation on Rent and Other ChargesK._
I22(1) T4In generalK._The Secretary of the Interior may not impose rent and other charges with respect to any wind energy development project on public lands that, in the aggregate, exceed 50 percent of the maximum amount of rent that could be charged with respect to that project under the terms of the Bureau of Land Management Instruction Memorandum referred to in subsection (a).
I22(2) T4TerminationK._Paragraph (1) shall not apply after the earlier of_
I24(A) the date on which the Secretary of the Interior determines there exists at least 10,000 megawatts of electricity generating capacity from nonhydropower renewable energy resources on public lands; or
I24(B) the end of the 10-year period beginning on the date of the enactment of this Act.
I22(3) T4State share not affectedK._This subsection shall not affect any State share of rent and other charges with respect to any wind energy development project on public lands.
I72SEC. 415. ENERGY SAVINGS PERFORMANCE CONTRACTS.
I20(a) T5Permanent ExtensionK._Section 801(c) of the National Energy Conservation Policy Act (42 U.S.C. 8287(c)) is repealed.
I20(b) T5Payment of CostsK._Section 802 of the National Energy Conservation Policy Act (42 U.S.C. 8287a) is amended by inserting ``, water, or wastewater treatment'' after ``payment of energy''.
I20(c) T5Energy SavingsK._Section 804(2) of the National Energy Conservation Policy Act (42 U.S.C. 8287c(2)) is amended to read as follows:
I22``(2) The term `energy savings' means a reduction in the cost of energy, water, or wastewater treatment, from a base cost established through a methodology set forth in the contract, used in an existing federally owned building or buildings or other federally owned facilities as a result of_
I24``(A) the lease or purchase of operating equipment, improvements, altered operation and maintenance, or technical services;
I24``(B) the increased efficient use of existing energy sources by cogeneration or heat recovery, excluding any cogeneration process for other than a federally owned building or buildings or other federally owned facilities; or
I24``(C) the increased efficient use of existing water sources in either interior or exterior applications.''T1.
I20(d) T5Energy Savings ContractK._Section 804(3) of the National Energy Conservation Policy Act (42 U.S.C. 8287c(3)) is amended to read as follows:
I22``(3) The terms `energy savings contract' and `energy savings performance contract' mean a contract that provides for the performance of services for the design, acquisition, installation, testing, and, where appropriate, operation, maintenance, and repair, of an identified energy or water conservation measure or series of measures at 1 or more locations. Such contracts shall, with respect to an agency facility that is a public building (as such term is defined in section 3301 of title 40, United States Code), be in compliance with the prospectus requirements and procedures of section 3307 of title 40, United States Code.''T1.
I20(e) T5Energy or Water Conservation MeasureK._Section 804(4) of the National Energy Conservation Policy Act (42 U.S.C. 8287c(4)) is amended to read as follows:
I22``(4) The term `energy or water conservation measure' means_
I24``(A) an energy conservation measure, as defined in section 551; or
I24``(B) a water conservation measure that improves the efficiency of water use, is life-cycle cost-effective, and involves water conservation, water recycling or reuse, more efficient treatment of wastewater or stormwater, improvements in operation or maintenance efficiencies, retrofit activities, or other related activities, not at a Federal hydroelectric facility.''T1.
I20(f) T5ReviewK._Not later than 180 days after the date of the enactment of this Act, the Secretary of Energy shall complete a review of the Energy Savings Performance Contract program to identify statutory, regulatory, and administrative obstacles that prevent Federal agencies from fully utilizing the program. In addition, this review shall identify all areas for increasing program flexibility and effectiveness, including audit and measurement verification requirements, accounting for energy use in determining savings, contracting requirements, including the identification of additional qualified contractors, and energy efficiency services covered. The Secretary shall report these findings to Congress and shall implement identified administrative and regulatory changes to increase program flexibility and effectiveness to the extent that such changes are consistent with statutory authority.
I72SEC. 416. MUNICIPALITY GRANTS FOR DISTRIBUTED ENERGY PLANS.
I20(a) T5ProgramK._The Secretary of Energy shall award grants to municipalities or tribes to facilitate the promulgation of distributed energy implementation plans.
I20(b) T5Authorization of AppropriationsK._There are authorized to be appropriated to the Secretary of Energy for carrying out this section $100,000,000.
I72SEC. 417. GREEN BUILDING STANDARDS FOR FEDERAL BUILDINGS.
I20(a) T5RequirementK._A Federal building for which the design phase for construction or major renovation is begun after the date of enactment of this Act shall be designed, constructed, and certified to meet, at a minimum, the LEED silver standard.
I20(b) T5ExceptionsK._Subsection (a) shall not apply to Federal laboratories or defense facilities, or to a building of a type for which no LEED silver standard exists.
I20(c) T5StudyK._Not later than 1 year after the date of enactment of this Act, the Secretary of Energy shall transmit to Congress the results of a study comparing the expected energy savings resulting from the implementation of this section with energy savings under all other Federal energy savings requirements. The Secretary shall include any recommendations for changes to Federal law necessary to reduce or eliminate duplicative or inconsistent Federal energy savings requirements.

I20(d) T5DefinitionK._For purposes of this section, the term ``LEED silver standard'' means the Leadership in Energy and Environmental Design green building rating standard identified as silver by the United States Green Building Council. 

I78TITLE V_CONSUMER PROTECTION AND ASSISTANCE
I72SEC. 501. STRATEGIC PETROLEUM RESERVE.
I20(a) T5Full CapacityK._The President shall_
I22(1) fill the Strategic Petroleum Reserve established pursuant to part B of title I of the Energy Policy and Conservation Act (42 U.S.C. 6231 et seq.) to full capacity as soon as practicable; and
I22(2) ensure that the fill rate minimizes impacts on petroleum markets.
I20(b) T5RecommendationsK._Not later than 180 days after the date of enactment of this Act, the Secretary of Energy shall submit to Congress a plan to_
I22(1) eliminate any infrastructure impediments that may limit maximum drawdown capability; and
I22(2) determine whether the capacity of the Strategic Petroleum Reserve on the date of enactment of this section is adequate in light of the increasing consumption of petroleum and the reliance on imported petroleum.
I72SEC. 502. REGULATORY OVERSIGHT OVER ENERGY TRADING MARKETS AND METALS TRADING MARKETS.
I20(a) T5Jurisdiction of the Commodity Futures Trading Commission Over Energy Trading Markets and Metals Trading MarketsK._
I22(1) T4FERC liaisonK._Section 2(a)(8) of the Commodity Exchange Act (7 U.S.C. 2(a)(8)) is amended by adding at the end the following:
I22``(C) T4FERC liaisonK._The Commission shall, in cooperation with the Federal Energy Regulatory Commission, maintain a liaison between the Commission and the Federal Energy Regulatory Commission.''T1.
I22(2) T4Exempt transactionsK._Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended_
I24(A) in subsection (h), by adding at the end the following:
I22``(7) T4ApplicabilityK._This subsection does not apply to an agreement, contract, or transaction in an exempt energy commodity or an exempt metal commodity described in subsection (j)(1).''T1; and
I24(B) by adding at the end the following:
I20``(j) T5Exempt TransactionsK._
I22``(1) T4Transactions in exempt energy commodities and exempt metals commoditiesK._An agreement, contract, or transaction (including a transaction described in section 2(g)) in an exempt energy commodity or exempt metal commodity shall be subject to_
I24``(A) sections 4b, 4c(a), 4c(b), 4o, and 5b;
I24``(B) subsections (c) and (d) of section 6 and sections 6c, 6d, and 8a, to the extent that those provisions_
I26``(i) provide for the enforcement of the requirements specified in this subsection; and
I26``(ii) prohibit the manipulation of the market price of any commodity in interstate commerce or for future delivery on or subject to the rules of any contract market;
I24``(C) sections 6c, 6d, 8a, and 9(a)(2), to the extent that those provisions prohibit the manipulation of the market price of any commodity in interstate commerce or for future delivery on or subject to the rules of any contract market;
I24``(D) section 12(e)(2); and
I24``(E) section 22(a)(4).
I22``(2) T4Bilateral dealer marketsK._
I24``(A) T4In generalK._Except as provided in paragraph (6), a person or group of persons that constitutes, maintains, administers, or provides a physical or electronic facility or system in which a person has the ability to offer, execute, trade, or confirm the execution of an agreement, contract, or transaction (including a transaction described in section 2(g)) (other than an agreement, contract, or transaction in an excluded commodity) by making or accepting the bids and offers of 1 or more participants on the facility or system (including facilities or systems described in clauses (i) and (iii) of section 1a(33)(B)), the person or group of persons, and the facility or system (referred to in this subsection as a `bilateral dealer market') may offer to enter into, enter into, or confirm the execution of any agreement, contract, or transaction under paragraph (1) (other than an agreement, contract, or transaction in an excluded commodity) if the bilateral dealer market meets the requirement of subparagraph (B).
I24``(B) T4RequirementK._The requirement of this subparagraph is that a bilateral dealer market shall_
I26``(i) provide notice to the Commission in such form as the Commission may specify by rule or regulation;
I26``(ii) file with the Commission any reports (including large trader position reports) that the Commission requires by rule or regulation;
I26``(iii)T1(I) consistent with section 4i, maintain books and records relating to each transaction in such form as the Commission may specify for a period of 5 years after the date of the transaction; and
I26``(II) make those books and records available to representatives of the Commission and the Department of Justice for inspection for a period of 5 years after the date of each transaction; and
I26``(iv) make available to the public on a daily basis such information as total volume by commodity, settlement price, open interest, opening and closing ranges, and any other information that the Commission determines to be appropriate for public disclosure, except that the Commission may not_
I28``(I) require the real-time publication of proprietary information; or
I28``(II) prohibit the commercial sale of real-time proprietary information.
I22``(3) T4Reporting requirementsK._On request of the Commission, an eligible contract participant that trades on a bilateral dealer market shall provide to the Commission, within the time period specified in the request and in such form and manner as the Commission may specify, any information relating to the transactions of the eligible contract participant on the bilateral dealer market within 5 years after the date of any transaction that the Commission determines to be appropriate.
I22``(4) T4Capital requirementsK._
I24``(A) T4In generalK._Except as provided in subparagraph (B), a bilateral dealer market shall adopt a value-at-risk model approved by the Commission.
I24``(B) T4Capital commensurate with riskK._If there is an interaction of multiple bids and multiple offers on the bilateral dealer market in a predetermined, nondiscretionary automated trade matching and trade execution algorithm or bids and offers and acceptances of bids and offers made on the bilateral dealer market are binding, a bilateral dealer market shall maintain sufficient capital commensurate with the risk associated with transactions on the bilateral dealer market, as determined by the Commission.
I22``(5) T4Transactions exempted by commission actionK._Any agreement, contract, or transaction on a bilateral dealer market (other than an agreement, contract, or transaction in an excluded commodity) that would otherwise be exempted by the Commission under section 4(c) shall be subject to_
I24``(A) sections 4b, 4c(a), 4c(b), 4o, and 5b; and
I24``(B) subsections (c) and (d) of section 6 and sections 6c, 6d, 8a, and 9(a)(2), to the extent that those provisions prohibit the manipulation of the market price of any commodity in interstate commerce or for future delivery on or subject to the rules of any contract market.
I22``(6) T4No effect on other ferc authorityK._This subsection does not affect the authority of the Federal Energy Regulatory Commission to regulate transactions under the Federal Power Act (16 U.S.C. 791a et seq.) or the Natural Gas Act (15 U.S.C 717 et seq.).
I22``(7) T4ApplicabilityK._This subsection does not apply to_
I24``(A) a designated contract market regulated under section 5; or
I24``(B) a registered derivatives transaction execution facility regulated under section 5a.''T1.
I22(3) T4Contracts designed to defraud or misleadK._Section 4b of the Commodity Exchange Act (7 U.S.C. 6b) is amended by striking subsection (a) and inserting the following:
I20``(a) T5ProhibitionK._It shall be unlawful for any member of a registered entity, or for any correspondent, agent, or employee of any member, in or in connection with any order to make, or the making of, any contract of sale of any commodity in interstate commerce, made, or to be made on or subject to the rules of any registered entity, or for any person, in or in connection with any order to make, or the making of, any agreement, transaction, or contract in a commodity subject to this Act_
I22``(1) to cheat or defraud or attempt to cheat or defraud any person;
I22``(2) willfully to make or cause to be made to any person any false report or statement, or willfully to enter or cause to be entered any false record;
I22``(3) willfully to deceive or attempt to deceive any person by any means; or
I22``(4) to bucket the order, or to fill the order by offset against the order of any person, or willfully, knowingly, and without the prior consent of any person to become the buyer in respect to any selling order of any person, or to become the seller in respect to any buying order of any person.''T1.
I22(4) T4Conforming amendmentsK._The Commodity Exchange Act is amended_
I24(A) in section 2 (7 U.S.C. 2)_
I26(i) in subsection (h)_
I28(I) in paragraph (1), by striking ``paragraph (2)'' and inserting ``paragraphs (2) and (7)''; and
I28(II) in paragraph (3), by striking ``paragraph (4)'' and inserting ``paragraphs (4) and (7)''; and
I26(ii) in subsection (i)(1)(A), by striking ``section 2(h) or 4(c)'' and inserting ``section 2(h), 2(j), or 4(c)'';
I24(B) in section 4i (7 U.S.C. 6i)_
I26(i) by striking ``any contract market or'' and inserting ``any contract market,''; and
I26(ii) by inserting ``, or pursuant to an exemption under section 4(c)'' after ``transaction execution facility'';
I24(C) in section 5a(g)(1) (7 U.S.C. 7a(g)(1)), by striking ``2(h)'' and inserting ``2(h) or 2(j)'';
I24(D) in section 5b (7 U.S.C. 7a˙091)_
I26(i) in subsection (a)(1), by striking ``2(h) or'' and inserting ``2(h), 2(j), or''; and
I26(ii) in subsection (b), by striking ``2(h) or'' and inserting ``2(h), 2(j), or''; and
I24(E) in section 12(e)(2)(B) (7 U.S.C. 16(e)(2)(B)), by striking ``2(h)'' and inserting ``2(h), 2(j),''.
I20(b) T5Jurisdiction of the Federal Energy Regulatory Commission Over Energy Trading MarketsK._Section 402 of the Department of Energy Organization Act (42 U.S.C. 7172) is amended by adding at the end the following:
I20``(i) T5Jurisdiction Over Derivatives TransactionsK._
I22``(1) T4In generalK._To the extent that the Commission determines that any contract that comes before the Commission is not under the jurisdiction of the Commission, the Commission shall refer the contract to the appropriate Federal agency.
I22``(2) T4MeetingsK._A designee of the Commission shall meet quarterly with a designee of the Commodity Futures Trading Commission, the Securities Exchange Commission, the Federal Trade Commission, and the Federal Reserve Board to discuss_
I24``(A) conditions and events in energy trading markets; and
I24``(B) any changes in Federal law (including regulations) that may be appropriate to regulate energy trading markets.
I22``(3) T4LiaisonK._The Commission shall, in cooperation with the Commodity Futures Trading Commission, maintain a liaison between the Commission and the Commodity Futures Trading Commission.''T1.
I72SEC. 503. INCREASED FUNDING FOR LIHEAP, WEATHERIZATION ASSISTANCE.
I20(a) T5LiheapK._T1(1) Section 2602(b) of the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8621(b)) is amended by striking the first sentence and inserting ``There are authorized to be appropriated to carry out the provisions of this title (other than section 2607A), $3,400,000,000 for each of fiscal years 2006 through 2008.''.
I20(2) Section 2602(e) of the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8621(e)) is amended by striking ``$600,000,000'' and inserting ``$1,000,000,000''.
I20(3) Section 2609A(a) of the Low-Income Energy Assistance Act of 1981 (42 U.S.C. 8628a(a)) is amended by striking ``not more than $300,000'' and inserting ``not more than $750,000''.
I20(b) T5Weatherization AssistanceK._Section 422 of the Energy Conservation and Production Act (42 U.S.C. 6872) is amended by striking ``for fiscal years 1999 through 2003 such sums as may be necessary.'' and inserting ``$325,000,000 for fiscal year 2006, $400,000,000 for fiscal year 2007, and $500,000,000 for fiscal year 2008.''.
I72SEC. 504. NATIONAL ENERGY EFFICIENT HOUSING.
I20(a) T5EstablishmentK._There is created a body corporate to be known as the ``Federal Energy Efficient Home Mortgage Association'' (in this section referred to as the ``Corporation''), which shall be regulated by the Office of Federal Housing Enterprise Oversight. The Corporation shall have succession until dissolved by Act of Congress. The Corporation shall maintain its principal office in the District of Columbia and shall be deemed, for purposes of venue in civil actions, to be a resident thereof. The Corporation may establish agencies or offices in such other place or places as it may deem necessary or appropriate in the conduct of its business.
I20(b) T5AuthorityK._The Corporation may_
I22(1) pursuant to commitments or otherwise, purchase, service, sell, or otherwise deal in any mortgages that meet or exceed the eligibility requirements for the Environmental Protection Agency program known as ``Energy Star'' including mortgages that were previously purchased, serviced, or held by the Secretary of Housing and Urban Development pursuant to the National Housing Act, any Federal Home Loan Bank, the Government National Mortgage Association, the Department of Veterans Affairs, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation;
I22(2) purchase, service, sell, lend on the security of, and otherwise deal in loans or advances of credit for the purchase and installation of home energy conserving improvements; and
I22(3) upon such terms and conditions as it may deem appropriate, issue, and guarantee the timely payment of principal of and interest on, such trust certificates or other securities that are based on and backed by a trust or pool composed of mortgages described in paragraph (1), (2), or (3).
I20(c) T5LimitationK._The price of a mortgage purchased by the Corporation pursuant to the authority under subsection (b) may not exceed 100 percent of the unpaid principal amount of the mortgage at the time of purchase, with adjustments for interest and any comparable items.
I20(d) T5Borrowing From TreasuryK._
I22(1) T4AuthorityK._The Corporation may issue to the Secretary of the Treasury, and the Secretary may purchase, obligations as may be necessary to fund the operations of the Corporation.
I22(2) T4TermsK._Obligations issued under this subsection shall be in such forms and denomination, bear such maturities and rates of interest, and be subject to such other terms and conditions, as the Secretary of the Treasury shall determine.
I22(3) T4Public debt transactionsK._For the purpose of purchasing any such obligations, the Secretary may use a public debt transaction the proceeds of the sale of any securities issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under such chapter are extended to include such purpose.
I20(3) T5Limitation on AmountK._The Secretary of the Treasury shall not at any time purchase any obligations under this subsection if the purchase would increase the aggregate principal amount of the outstanding holdings of obligations under this subsection by the Secretary to an amount greater than $1,000,000,000.
I20(4) T5SaleK._The Secretary of the Treasury may at any time sell, upon terms and conditions and at prices determined by the Secretary, any of the obligations acquired by the Secretary under this subsection.
I20(5) T5TreatmentK._All redemptions, purchases and sales by the Secretary of the Treasury of obligations under this subsection shall be treated as public debt transactions of the United States.
I72SEC. 505. NATIONAL NET METERING REQUIREMENT FOR UTILITIES AND INTERCONNECTION STANDARDS FOR DISTRIBUTIVE ENERGY GENERATION.
I20The Federal Power Act is amended by adding the following new part at the end thereof:

I73``PART IV_NATIONAL REQUIREMENTS AFFECTING RETAIL ELECTRIC ENERGY
I72``SEC. 401. NET METERING.
I20``(a) T5DefinitionsK._As used in this section:
I22``(1) The term `customer-generator' means the owner or operator of an electric generation unit qualified for net metering under this section.
I22``(2) The term `net metering' means measuring the difference between the electricity supplied to a customer-generator and the electricity generated by a customer-generator that is delivered to a local distribution section system at the same point of interconnection during an applicable billing period.
I22``(3) The terms `electric generation unit qualified for net metering' and `qualified generation unit' mean an electric energy generation unit that meets each of the following requirements:
I24``(A) The unit is a fuel cell or uses as its energy source either solar, wind, or biomass.
I24``(B) The unit has a generating capacity of not more than 100 kilowatts.
I24``(C) The unit is located on premises that are owned, operated, leased, or otherwise controlled by the customer-generator.
I24``(D) The unit operates in parallel with the retail electric supplier.
I24``(E) The unit is intended primarily to offset part or all of the customer-generator's requirements for electric energy.
I22``(4) The term `retail electric supplier' means any person that sells electric energy to the ultimate consumer thereof.
I22``(5) The term `local distribution system' means any system for the distribution section of electric energy to the ultimate consumer thereof, whether or not the owner or operator of such system is also a retail electric supplier.
I20``(b) T5AdoptionK._Not later than one year after the enactment of this section, each retail electric supplier shall comply with each of the following requirements and notify all of its retail customers of such requirements not less frequently than quarterly:
I22``(1) The supplier shall offer to arrange (either directly or through a local distribution company or other third party) to make available, on a first-come-first-served basis, to each of its retail customers that has installed an energy generation unit that is intended for net metering and that notifies the supplier of its generating capacity an electric energy meter that is capable of net metering if the customer-generator's existing electrical meter cannot perform that function.
I22``(2) Rates and charges and contract terms and conditions applicable to the sale by the supplier of electric energy to customer-generators shall be the same as the rates and charges and contract terms and conditions that would be applicable if the customer-generator did not own or operate a qualified generation unit and use a net metering system.
I20The requirements of this subsection are subject to the percent limitations set forth in subsection (d).

I20``(c) T5Net Energy Measurement and BillingK._Each retail electric supplier subject to subsection (b) shall calculate the net energy measurement for a customer using a net metering system in the following manner:
I22``(1) The retail electric supplier shall measure the net electricity produced or consumed during the billing period using the metering referred to in paragraph (1) of subsection (b) or in subsection (f).
I22``(2) If the electricity supplied by the retail electric supplier exceeds the electricity generated by the customer-generator during the billing period, the customer-generator shall be billed for the net electricity supplied by the retail electric supplier in accordance with normal metering practices.
I22``(3) If electricity generated by the customer-generator exceeds the electricity supplied by the retail electric supplier, the customer-generator_
I24``(A) shall be billed for the appropriate customer charges for that billing period;
I24``(B) shall be credited for the excess electric energy generated during the billing period, with this credit appearing on the bill to be applied against charges for the following billing period (except for a billing period that ends in the next calendar year); and
I24``(C) shall not be charged for transmission losses.
I22If the customer-generator is using a meter that reflects the time of generation (a `real time meter'), the credit shall be based on the retail rates for sale by the retail electric supplier at the time of such generation. At the beginning of each calendar year, any remaining unused kilowatt-hour credit accumulated by a customer-generator during the previous year may be sold by the customer-generator to any electric supplier that agrees to purchase such credit. In the absence of any such purchase, the credit shall be assigned (at no cost) to the retail electric supplier that supplied electric energy to such customer-generator at the end of the previous year.

I20``(d) T5Percent LimitationsK._
I22``(1) T4Two percent limitationK._A retail electric supplier shall not be required to comply with subsection (b) with respect to additional customer-generators after the date during any calendar year on which the total generating capacity of all customer-generators with qualified generation facilities and net metering systems served by that supplier is equal to or in excess of 2 percent of the capacity necessary to meet the supplier's average forecasted aggregate customer peak demand for that calendar year.
I22``(2) T4One percent limitationK._A retail electric supplier shall not be required to comply with subsection (b) with respect to additional customer-generators using a single type of qualified energy generation system after the date during any calendar year on which the total generating capacity of all customer-generators with qualified generation facilities of that type and net metering systems served by that supplier is equal to or in excess of 1 percent of the capacity necessary to meet the supplier's average forecasted aggregate customer peak demand for that calendar year.
I22``(3) T4Records and noticeK._Each retail electric supplier shall maintain, and make available to the public, records of the total generating capacity of customer-generators of such supplier that are using net metering, the type of generating systems and energy source used by the electric generating systems used by such customer-generators. Each such supplier shall notify the Commission when the total generating capacity of such customer-generators is equal to or in excess of 2 percent of the capacity necessary to meet the supplier's aggregate customer peak demand during the previous calendar year and when the total generating capacity of such customer-generators using a single type of qualified generation is equal to or in excess of 1 percent of such capacity.
I20``(e) T5Safety and Performance StandardsK._T1(1) A qualified generation unit and net metering system used by a customer-generator shall meet all applicable safety and performance and reliability standards established by the national electrical code, the Institute of Electrical and Electronics Engineers, Underwriters Laboratories, or the American National Standards Institute.
I20``(2) The Commission, after consultation with State regulatory authorities and nonregulated local distribution systems and after notice and opportunity for comment, may adopt by regulation additional control and testing requirements for customer-generators that the Commission determines are necessary to protect public safety and system reliability.
I20``(3) The Commission shall, after consultation with State regulatory authorities and nonregulated local distribution systems and after notice and opportunity for comment, prohibit by regulation the imposition of additional charges by electric suppliers and local distribution systems for equipment or services for safety or performance that are additional to those necessary to meet the standards and requirements referred to in paragraphs (2) and (3).
I20``(f) T5Additional MetersK._Any retail electric supplier or local distribution company may, at its own expense, install one or more additional electric energy meters to monitor the flow of electricity in either direction to and from customer-generators, to identify the time of generation by customer- generators, or both.
I20``(g) T5Federal CreditsK._Whenever a customer-generator with a net metering system uses any energy generation system entitled to credits under a Federal minimum renewable energy generation requirement, the total amount of energy generated by that system shall be treated as generated by the retail electric supplier for purposes of such requirement.
I20``(h) T5State AuthorityK._Nothing in this section shall preclude a State from establishing or imposing additional incentives or requirements to encourage qualified generation and net metering additional to that required under this section.
I20``(i) T5Interconnection StandardsK._T1(1) Within one year after the enactment of this section the Commission shall publish model standards for the physical connection between local distribution systems and qualified generation units and electric generation units that would be qualified generation units but for the fact that the unit has a generating capacity of more than 100 kilowatts (but not more than 250 kilowatts). Such model standards shall be designed to encourage the use of qualified generation units and to insure the safety and reliability of such units and the local distribution systems interconnected with such units. Within 2 years after the enactment of this section, each State shall adopt such model standards, with or without modification, and submit such standards to the Commission for approval. The Commission shall approve a modification of the model standards only if the Commission determines that such modification is consistent with the purpose of such standards and is required by reason of local conditions. If standards have not been approved under this paragraph by the Commission for any State within 2 years after the enactment of this section, the Commission shall, by rule or order, enforce the Commission's model standards in such State until such time as State standards are approved by the Commission.
I20``(2) The standards under this section shall establish such measures for the safety and reliability of the affected equipment and local distribution systems as may be appropriate. Such standards shall be consistent with all applicable safety and performance standards established by the national electrical code, the Institute of Electrical and Electronics Engineers, Underwriters Laboratories, or the American National Standards Institute and with such additional safety and reliability standards as the Commission shall, by rule, prescribe. Such standards shall ensure that generation units will automatically isolate themselves from the electrical system in the event of an electrical power outage. Such standards shall permit the owner or operator of the local distribution system to interrupt or reduce deliveries of available energy from the generation unit to the system when necessary in order to construct, install, maintain, repair, replace, remove, investigate, or inspect any of its equipment or part of its system; or if it determines that curtailment, interruption, or reduction is necessary because of emergencies, forced outages, force majeure, or compliance with prudent electrical practices.
I20``(3) The model standards under this subsection prohibit the imposition of additional charges by local distribution systems for equipment or services for interconnection that are additional to those necessary to meet such standards.
I20``(j) T5InterconnectionK._At the election of the owner or operator of the generation unit concerned, connections meeting the standards applicable under subsection (g) may be made_
I22``(1) by such owner or operator at such owner's or operator's expense, or
I22``(2) by the owner or operator of the local distribution system upon the request of the owner or operator of the generating unit and pursuant to an offer by the owner or operator of the generating unit to reimburse the local distribution system in an amount equal to the minimum cost of such connection, consistent with the procurement procedures of the State in which the unit is located, except that the work on all such connections shall be performed by qualified electrical personnel certified by a responsible body or licensed by a State or local government authority.

I20``(k) T5Consumer Friendly ContractsK._The Commission shall promulgate regulations insuring that simplified contracts will be used for the interconnection of electric energy by electric energy transmission or distribution systems and generating facilities that have a power production capacity not greater than 250 kilowatts.''T1.
I20(b) T5Conforming AmendmentsK._Section 316A of the Federal Power Act is amended by striking out ``or 214'' in both places it appears and inserting ``214, or title IV''.
I72SEC. 506. APPLIANCE STANDARDS.
I20(a) T5Standards for Household Appliances in Standby ModeK._Section 325 of the Energy Policy and Conservation Act (42 U.S.C. 6295) is amended by adding at the end the following:
I20``(u) T5Standby Mode Electric Energy Consumption by Household AppliancesK._
I22``(1) T4DefinitionsK._In this subsection:
I24``(A) T4Household applianceK._The term `household appliance' means any device that uses household electric current and operates in a standby mode except digital televisions, digital set top boxes, and digital video recorders.
I24``(B) T4Standby modeK._The term `standby mode' means a mode in which a household appliance uses household electric current but is not in the active or primary operating mode. For products with more than one operating mode, the term `standby mode' means the mode in which the appliance consumes the least amount of electric energy that the household appliance is capable of consuming without being completely switched off.
I22``(2) T4StandardK._
I24``(A) T4In generalK._Except as provided in subparagraph (B), a household appliance that is manufactured in, or imported for sale in, the United States on or after the date that is 3 years after the date of enactment of this subsection shall not consume in standby mode more than 1 watt.
I24``(B)T1(i) T4Household appliances participating in the energy star programK._A household appliance model that, as of the date of enactment of this subsection, is recognized under the Energy Star program administered by the Administrator of the Environmental Protection Agency and the Secretary shall have until January 1, 2010, to meet the standard under subparagraph (A).
I24``(ii) T4Analog televisionsK._In the case of analog televisions, the Secretary shall prescribe, on or after the date that is 2 years after the date of enactment of this subsection, in accordance with subsections (o) and (p) of section 325, an energy conservation standard that is technologically feasible and economically justified under section 325(o)(2)(A) (in lieu of the 1 watt standard under subparagraph (A)).
I22``(3) T4ExemptionsK._
I24``(A) T4ApplicationK._A manufacturer or importer of a household appliance or their designated agent may submit to the Secretary an application for an exemption of a household appliance of class of appliances from the standard under paragraph (2).
I24``(B) T4Criteria for exemptionK._The Secretary shall grant an exemption for a household appliance of class of appliances for which an application is made under subparagraph (A) if the applicant provides evidence showing that, and the Secretary determines that_
I26``(i) it is not technically feasible to modify the household appliance or appliances concerned to enable them to meet the standard;
I26``(ii) the standard is incompatible with an energy efficiency standard applicable to the household appliance of class of appliances under another subsection; or
I26``(iii) The cost of electricity that a typical consumer would save in operating the household appliance of class of appliances meeting the standard would not equal the increase in the price of the household appliance or class of household appliances that would be attributable to the modifications that would be necessary to enable the household appliance or class of household appliances to meet the standard by the earlier of_
I28``(I) the date that is 7 years after the date of purchase of the household appliance concerned; or
I28``(II) the end of the useful life of the household appliance.
I24``(C) T4Determination of technical infeasibilityK._If the Secretary determines that it is not technically feasible to modify a household appliance or class of household appliances to meet the standard under paragraph (2), the Secretary shall establish a different standard for the household appliance or class of household appliances in accordance with the criteria under subsection (l).
I22``(4) T4Test procedureK._
I24``(A) T4In generalK._Not later than 1 year after the date of enactment of this subsection, the Secretary shall establish a test procedure for determining the amount of consumption of power by a household appliance operating in standby mode.
I24``(B) T4ConsiderationsK._In establishing the test procedure, the Secretary shall consider_
I26``(i) international test procedures under development;
I26``(ii) test procedures used in connection with the Energy Star program; and
I26``(iii) test procedures used for measuring power consumption in standby mode in other countries.
I22``(5) T4Further reduction of standby power consumptionK._The Secretary shall provide technical assistance to manufacturers in achieving further reductions in standby mode electric energy consumption by household appliances.
I20``(v) T5Standby Mode Electric Energy Consumption by Digital Televisions, Digital Set Top Boxes, and Digital Video RecordersK._The Secretary shall initiate within 5 years of the date of enactment of this subsection a rulemaking to prescribe, in accordance with subsections (o) and (p), an energy conservation standard of standby mode electric energy consumption by digital television sets, digital set top boxes, and digital video recorders. The Secretary shall issue a final rule prescribing such standards not later than 18 months thereafter. In determining whether a standard under this section is technologically feasible and economically justified under section 325(o)(2)(A), the Secretary shall consider the potential negative effects on market penetration by digital products covered under this section, and shall consider any recommendations by the FCC regarding such effects.''T1.
I20(b) T5Standards for Noncovered ProductsK._
I22(1) Section 325(m) of the Energy Policy and Conservation Act (42 U.S.C. 6295(m)) is amended as follows:
I24(A) Inserting ``(1)'' before ``After''.
I24(B) Inserting the following at the end:
I20``(2) Not later than one year after the date of enactment of this paragraph, and every 5 years thereafter, the Secretary shall conduct a rulemaking to determine whether consumer or commercial products not classified as a covered product under section 322(a)(1) through (19) meet the criteria of section 322(b)(1). If the Secretary finds that a consumer or commercial product not classified as a covered product meets the criteria of section 322(b)(1), the Secretary shall prescribe, in accordance with subsections (o) and (p), an energy conservation standard for such consumer or commercial product.''T1.
I22(2) Part B of title III of such Act is amended as follows:
I24(A) In the heading for such part by inserting ``T2AND COMMERCIALK'' after ``T2CONSUMERK''.
I24(B) In section 321 by striking ``consumer product of a type specified in section 322'' and inserting: ``consumer or commercial product of a type specified in section 322(a)''.
I24(C) In paragraphs (4), (5), (7), (12), (13), (14), and (15) of section 321 by striking ``consumer'' in each place it appears and inserting ``covered''.
I24(D) In section 322(a) by inserting ``or commercial'' after ``consumer'' in the first place it appears in the material preceding paragraph (1).
I24(E) In section 322(b), by inserting ``or commercial'' after ``consumer'' in each place it appears.
I24(F) In section 322(b)(1)(B) and (b)(2)(A), by inserting ``(or per-business in the case of a commercial product)'' after ``per-household'' in each place it appears.
I24(G) In section 322(b)(2)(A) by inserting ``(or businesses in the case of commercial products)'' after ``households'' in each place it appears.
I24(H) In section 322(b)(2)(C) by striking ``term'' and inserting ``terms'' and by inserting ``and `business'˙1A'' after ``household''.
I24(I) In sections 323 though 339, by inserting ``or commercial'' after ``consumer'' in each place it appears.
I20(c) T5Consumer Education on Energy Efficiency Benefits of Air Conditioning, Heating and Ventilation MaintenanceK._Section 337 of the Energy Policy and Conservation Act (42 U.S.C. 6307) is amended by adding the following new subsection after subsection (b):
I20``(c) T5HVAC MaintenanceK._For the purpose of ensuring that installed air conditioning and heating systems operate at their maximum rated efficiency levels, the Secretary shall, within 180 days of the date of enactment of this subsection, develop and implement a public education campaign to educate homeowners and small business owners concerning the energy savings resulting from regularly scheduled maintenance of air conditioning, heating, and ventilating systems. The public service information shall provide sufficient information to allow consumers to make informed choices from among professional, licensed (where State or local licensing is required) contractors. There are authorized to be appropriated to carry out this subsection $5,000,000 for the fiscal years 2006 and 2007 in addition to amounts otherwise appropriated in this part.''T1.
I20(d) T5Efficiency Standards for Other Consumer and Commercial ProductsK._
I22(1) T4DefinitionsK._Section 321 of the Energy Policy and Conservation Act (42 U.S.C. 6291) is amended by adding the following at the end thereof:
I22``(32) The term `residential furnace fan' means an electric fan installed as part of a furnace for purposes of circulating air through the system air filters, the heat exchangers or heating elements of the furnace, and the duct work.
I22``(33) The terms `residential central air conditioner fan' and `heat pump circulation fan' mean an electric fan installed as part of a central air conditioner or heat pump for purposes of circulating air through the system air filters, the heat exchangers of the air conditioner or heat pump, and the duct work.
I22``(34) The term `suspended ceiling fan' means a fan intended to be mounted to a ceiling outlet box, ceiling building structure, or to a vertical rod suspended from the ceiling, and which as blades which rotate below the ceiling and consists of an electric motor, fan blades (which rotate in a direction parallel to the floor), an optional lighting kit, and one or more electrical controls (integral or remote) governing fan speed and lighting operation.
I22``(35) The term `refrigerated bottled or canned beverage vending machine' means a machine that cools bottled or canned beverages and dispenses them upon payment.
I22``(36) T4Automatic commercial icemakerK._The term `automatic commercial icemaker' means a factory-made assembly that
I24``(A) consists of a condensing unit and icemaking section operating as an integrated unit, with means for making and harvesting ice;
I24``(B) may include means for storing or dispensing ice; and
I24``(C) may or may not be shipped in 1 package.
I22``(37) T4Commercial freezerK._The term `commercial freezer' means a freezer that is not a consumer product regulated under this Act.
I22``(38) T4Commercial refrigeratorK._The term `commercial refrigerator' means a refrigerator that is not a consumer product regulated under this Act.
I22``(39) T4Commercial refrigerator-freezerK._The term `commercial refrigerator-freezer' means a refrigerator-freezer that is not a consumer product regulated under this Act.
I22``(40) T4Icemaking headK._The term `icemaking head' means an automatic commercial icemaker that does not include a storage compartment in an integral cabinet.
I22``(41) T4Illuminated exit signK._The term `illuminated exit sign' means a sign that
I24``(A) is designed to be permanently fixed in place to identify an exit; and
I24``(B) T4Consists ofK._
I26``(i) a light source that illuminates the sign or letters from within; and
I26``(iii) a background that is not transparent.
I22``(42) T4Remote condensing icemakerK._The term `remote condensing icemaker' means an automatic commercial icemaker in which the icemaking mechanism and condensing unit are in separate sections.
I22``(43) T4Traffic signal moduleK._The term `traffic signal module' means a standard 8-inch (200mm) or 12-inch (300mm) traffic signal indication, consisting of a light source, a lens, and all other parts necessary for operation, that communicates movement messages to drivers through red, amber, and green colors.
I22``(44) T4Torchiere fixtureK._The term `torchiere fixture' means a portable electric lighting fixture with a reflector bowl that directs light upward so as to give indirect illumination.
I22``(45) T4Unit heaterK._The term `unit heater' means a self-contained fan-type heater designed to be installed within the heated space. Unit heaters include an apparatus or appliance to supply heat, and a fan for circulating air over a heat exchange surface, all enclosed in a common casing. Unit heaters do not include furnaces as defined in this Act.''T1.
I22(2) T4Testing requirementsK._Section 323 of the Energy Policy and Conservation Act (42 U.S.C. 6293) is amended by adding the following at the end thereof:
I20``(f) T5Additional Consumer ProductsK._The Secretary shall within 18 months after the date of enactment of this subsection prescribe testing requirements for the consumer and commercial products referred to in paragraphs (36) though (45) of section 321. Such testing requirements shall be based on existing test procedures used in industry to the extent practical and reasonable. In the case of residential furnace fans, residential central air conditioner fans or heat pump circulation fans, and suspended ceiling fans unit heaters, such test procedures shall include efficiency at both maximum output and at an output no more than 50 percent of the maximum output.''T1.
I22(3) T4Standards for additional consumer productsK._Section 325 of the Energy Policy and Conservation Act (42 U.S.C. 6295), as amended by subsection (a) of this section, is amended by adding the following at the end thereof:
I20``(w) T5Residential, Other Consumer, and Commercial ProductsK._T1(1) The Secretary shall, within 18 months after the date of enactment of this subsection, assess the current and projected future market for the consumer, and commercial products referred to in paragraphs (36) through (45) of section 321, furnace fans, residential central air conditioner fans and heat pump circulation fans, suspended ceiling fans, and refrigerated bottled or canned beverage vending machines. This assessment shall include an examination of the types of these products sold, the number of these products in use, annual sales of these products, energy used by these products sold, estimates of the potential energy savings from specific technical improvements to these products, and an examination of the cost-effectiveness of these improvements. Prior to the end of this time period, the Secretary shall hold an initial scoping workshop to discuss and receive input to plans for developing minimum efficiency standards for these products.
I20``(2) The Secretary shall within 24 months after the date on which testing requirements are prescribed by the Secretary pursuant to section 323(f), prescribe, by rule, energy conservation standards for residential furnace fans, residential central air conditioner fans and heat pump circulation fans, suspended ceiling fans, and refrigerated bottled or canned beverage vending machines. In establishing these standards, the Secretary shall use the criteria and procedures contained in this section. Any standard prescribed under this section shall apply to products manufactured 36 months after the date such rule is published.''T1.
I22(4) T4LabelingK._Section 324(a) of the Energy Policy and Conservation Act (42 U.S.C. 6294(a)) is amended by adding the following at the end thereof:
I22``(5) The Secretary shall within 6 months after the date on which energy conservation standards are prescribed by the Secretary, prescribe, by rule, labeling requirements for the consumer and commercial products referred to in paragraphs (33) though (45) of section 321. These requirements shall take effect on the same date as the standards prescribed pursuant to section 325(w).''T1.
I22(5) T4Covered productsK._Section 322(a) of the Energy Policy and Conservation Act (42 U.S.C. 6292(a)) is amended by redesignating paragraph (19) as (20) and by inserting the following after paragraph (18):
I22``(19) Beginning on the effective date for standards established pursuant to subsection (w) of section 325, each product referred to in such subsection (w).''T1.
I20(e) T5Air Conditioner Energy Efficiency RulesK._Section 325(o)(1) of the Energy Policy and Conservation Act is amended by adding the following at the end thereof: ``Any rule relating to the energy efficiency of air conditioners that violates the preceding sentence shall have no force and effect after the date of the enactment of this sentence.''.
I72SEC. 507. ENERGY STAR CERTIFICATION FOR SOLAR WATER HEATERS.
I20Not later than January 1, 2007, the Secretary, in consultation with the Administrator of the Environmental Protection Agency, shall adopt regulations establishing Energy Star Program requirements and an Energy Star rating program for commercial and residential solar water heating devices.
I72SEC. 508. ELECTRIC RELIABILITY STANDARDS.
I20Part II of the Federal Power Act (16 U.S.C. 824 et seq.) is amended by adding at the end the following:
I72``SEC. 215. ELECTRIC RELIABILITY.
I20``(a) T5DefinitionsK._In this section_
I22``(1) `bulk power system' means the network of interconnected transmission facilities and generating facilities;
I22``(2) `electric reliability organization' means a self-regulating organization certified by the Commission under subsection (c) whose purpose is to promote the reliability of the bulk power system; and
I22``(3) `reliability standard' means a requirement to provide for reliable operation of the bulk power system approved by the Commission under this section.
I20``(b) T5Jurisdiction and ApplicabilityK._The Commission shall have jurisdiction, within the United States, over an electric reliability organization, any regional entities, and all users, owners and operators of the bulk power system, including but not limited to the entities described in section 201(f), for purposes of approving reliability standards and enforcing compliance with this section. All users, owners and operators of the bulk power system shall comply with reliability standards that take effect under this section.
I20``(c) T5CertificationK._
I22``(1) The Commission shall issue a final rule to implement the requirements of this section not later than 180 days after the date of enactment of this section.
I22``(2) Following the issuance of a Commission rule under paragraph (1), any person may submit an application to the Commission for certification as an electric reliability organization. The Commission may certify an applicant if the Commission determines that the applicant_
I24``(A) has the ability to develop, and enforce reliability standards that provide for an adequate level of reliability of the bulk power system; and
I24``(B) has established rules that_
I26``(i) assure the independence of the applicant from the users and owners and operators of the bulk power system while assuring fair stakeholder representation in the selection of its directors and balanced decision making in any committee or subordinate organizational structure;
I26``(ii) allocate equitably dues, fees, and other charges among users for all activities under this section;
I26``(iii) provide fair and impartial procedures for enforcement of reliability standards through imposition of penalties (including limitations on activities, functions, or operations, or other appropriate sanctions) and
I26``(iv) provide for reasonable notice and opportunity for public comment, due process, openness, and balance of interests in developing reliability standards and otherwise exercising its duties.
I22``(3) If the Commission receives 2 or more timely applications that satisfy the requirements of this subsection, the Commission shall approve only the application the Commission concludes will best implement the provisions of this section.
I20``(d) T5Reliability StandardsK._
I22``(1) An electric reliability organization shall file a proposed reliability standard or modification to a reliability standard with the Commission.
I22``(2) The Commission may approve a proposed reliability standard or modification to a reliability standard if it determines that the standard is just, reasonable, not unduly discriminatory or preferential, and in the public interest. The Commission shall give due weight to the technical expertise of the electric reliability organization with respect to the content of a proposed standard or modification to a reliability standard, but shall not defer with respect to its effect on competition.
I22``(3) The electric reliability organization and the Commission shall rebuttably presume that a proposal from a regional entity organized on an interconnection-wide basis for a reliability standard or modification to a reliability standard to be applicable on an interconnection-wide basis is just, reasonable, and not unduly discriminatory or preferential, and in the public interests.
I22``(4) The Commission shall remand to the electric reliability organization for further consideration a proposed reliability standard or a modification to a reliability standard that the Commission disapproves in whole or in part.
I22``(5) The Commission, upon its own motion or upon complaint, may order an electric reliability organization to submit to the Commission a proposed reliability standard or a modification to a reliability standard that addresses a specific matter if the Commission considers such a new or modified reliability standard appropriate to carry out this section.
I20``(e) T5EnforcementK._
I22``(1) An electric reliability organization may impose a penalty on a user or owner or operator of the bulk power system if the electric reliability organization, after notice and an opportunity for a hearing_
I24``(A) finds that the user or owner or operator of the bulk power system has violated a reliability standard approved by the Commission under subsection (d); and
I24``(B) files notice with the Commission, which shall affirm, set aside, or modify the action.
I22``(2) On its own motion or upon complaint, the Commission may order compliance with a reliability standard and may impose a penalty against a user or owner or operator of the bulk power system if the Commission finds, after notice and opportunity for a hearing, that the user or owner or operator of the bulk power system has violated or threatens to violate a reliability standard.
I22``(3) The Commission shall establish regulations authorizing the electric reliability organization to enter into an agreement to delegate authority to a regional entity for the purpose of proposing and enforcing reliability standards (including related activities) if the regional entity satisfies the provisions of subparagraphs (A) and (B) of subsection (c)(2) and the agreement promotes effective and efficient administration of bulk power system reliability. The Commission may modify such delegation. The electric reliability organization and the Commission shall rebuttably presume that a proposal for delegation to a regional entity organized on a interconnection-wide basis promotes effective and efficient administration of bulk power system reliability and should be approved. Such regulation may provide that the Commission may assign the electric reliability organization's authority to enforce reliability standards directly to a regional entity consistent with the requirements of this paragraph.
I22``(4) The Commission may take such action as is necessary or appropriate against the electric reliability organization or a regional entity to ensure compliance with a reliability standard or any Commission order affecting the electric reliability organization or a regional entity.
I20``(f) T5Changes in Electricity Reliability Organization RulesK._An electric reliability organization shall file with the Commission for approval any proposed rule or proposed rule change, accompanied by an explanation of its basis and purpose. The Commission, upon its own motion or complaint, may propose a change to the rules of the electric reliability organization. A proposed rule or proposed rule change shall take effect upon a finding by the Commission, after notice and opportunity for comment, that the change is just, reasonable, not unduly discriminatory or preferential, is in the public interest, and satisfies the requirements of subsection (c)(2).
I20``(g) T5Coordination With Canada and MexicoK._
I22``(1) The electric reliability organization shall take all appropriate steps to gain recognition in Canada and Mexico.
I22``(2) The President shall use his best efforts to enter into international agreements with the governments of Canada and Mexico to provide for effective compliance with reliability standards and the effectiveness of the electric reliability organization in the United States and Canada or Mexico.
I20``(h) T5Reliability ReportsK._The electric reliability organization shall conduct periodic assessments of the reliability and adequacy of the interconnected bulk power system in North America.
I20``(i) T5Savings ProvisionsK._
I22``(1) The electric reliability organization shall have authority to develop and enforce compliance with standards for the reliable operation of only the bulk power system.
I22``(2) This section does not provide the electric reliability organization or the Commission with authority to order the construction of additional generation or transmission capacity or to set and enforce compliance with standards for adequacy or safety of electric facilities or services.
I22``(3) Nothing in this section shall be construed to preempt any authority of any State to take action to ensure the safety, adequacy, and reliability of electric service within that State, as long as such action is not inconsistent with any reliability standard established under this section.
I22``(4) Not later than 90 days after the date of the application of the electric reliability organization or other affected party, and after notice and opportunity for comment, the Commission shall issue a final order determining whether a State action is inconsistent with a reliability standard, taking into consideration any recommendation of the electric reliability organization.
I22``(5) The Commission, after consultation with the electric reliability organization, may stay the effectiveness of any State action, pending the Commission's issuance of a final order.
I20``(j) T5Application of Antitrust LawsK._
I22``(1) To the extent undertaken to develop, implement, or enforce a reliability standard, each of the following activities shall not, in any action under the antitrust laws, be deemed illegal per se:
I24``(A) Activities undertaken by an electric reliability organization under this section.
I24``(B) Activities of a user or owner or operator of the bulk power system undertaken in good faith under the rules of an electric reliability organization.
I22``(2) In any action under the antitrust laws, an activity described in paragraph (1) shall be judged on the basis of its reasonableness, taking into account all relevant factors affecting competition and reliability.
I22``(3) For purposes of this subsection, the term `antitrust laws' has the meaning given the term in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), except that it includes section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that section 5 applies to unfair methods of competition.
I20``(k) T5Regional Advisory BodiesK._The Commission shall establish a regional advisory body on the petition of at least \2/3\ of the States within a region that have more than \1/2\ of their electric load served within the region. A regional advisory body shall be composed of one member from each participating State in the region, appointed by the Governor of each State, and may include representatives of agencies, States, and provinces outside the United States. A regional advisory body may provide advice to the electric reliability organization, a regional reliability entity, or the Commission regarding the governance of an existing or proposed regional reliability entity within the same region, whether a standard proposed to apply within the region is just, reasonable, not unduly discriminatory or preferential, and in the public interest, whether fees proposed to be assessed within the region are just, reasonable, not unduly discriminatory or preferential, and in the public interest and any other responsibilities requested by the Commission. The Commission may give deference to the advice of any such regional advisory body if that body is organized on an interconnection-wide basis.

I20``(l) T5Application to Alaska and HawaiiK._The provisions of this section apply only to the contiguous 48 States.''T1.

I78TITLE VI_MARKET-BASED INITIATIVES TO REDUCE GREENHOUSE GASES
I72SEC. 600. DEFINITIONS.
I20In this Act:
I22(1) T4AdministratorK._The term ``Administrator'' means the Administrator of the Environmental Protection Agency.
I22(2) T4BaselineK._The term ``baseline'' means the historic greenhouse gas emission levels of an entity, as adjusted upward by the Administrator to reflect actual reductions that are verified in accordance with_
I24(A) regulations promulgated under section 611(c)(1); and
I24(B) relevant standards and methods developed under this title.
I22(3) T4Carbon dioxide equivalentsK._The term ``carbon dioxide equivalents'' means, for each greenhouse gas, the amount of each such greenhouse gas that makes the same contribution to global warming as one metric ton of carbon dioxide, as determined by the Administrator.
I22(4) T4Covered sectorsK._The term ``covered sectors'' means the electricity, transportation, industry, and commercial sectors, as such terms are used in the Inventory.
I22(5) T4Covered entityK._The term ``covered entity'' means an entity (including a branch, department, agency, or instrumentality of Federal, State, or local government) that_
I24(A) owns or controls a source of greenhouse gas emissions in the electric power, industrial, or commercial sector of the United States economy (as defined in the Inventory), refines or imports petroleum products for use in transportation, or produces or imports hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride; and
I24(B) emits, from any single facility owned by the entity, over 10,000 metric tons of greenhouse gas per year, measured in units of carbon dioxide equivalents, or produces or imports_
I26(i) petroleum products that, when combusted, will emit,
I26(ii) hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride that, when used, will emit, or
I26(iii) other greenhouse gases that, when used, will emit,
I24over 10,000 metric tons of greenhouse gas per year, measured in units of carbon dioxide equivalents.

I22(6) T4DatabaseK._The term ``database'' means the national greenhouse gas database established under section 611.
I22(7) T4Direct emissionsK._The term ``direct emissions'' means greenhouse gas emissions by an entity from a facility that is owned or controlled by that entity.
I22(8) T4FacilityK._The term ``facility'' means a building, structure, or installation located on any 1 or more contiguous or adjacent properties of an entity in the United States.
I22(9) T4Greenhouse gasK._The term ``greenhouse gas'' means_
I24(A) carbon dioxide;
I24(B) methane;
I24(C) nitrous oxide;
I24(D) hydrofluorocarbons;
I24(E) perfluorocarbons; or
I24(F) sulfur hexafluoride.
I22(10) T4Indirect emissionsK._The term ``indirect emissions'' means greenhouse gas emissions that are_
I24(A) a result of the activities of an entity; but
I24(B) emitted from a facility owned or controlled by another entity.
I22(11) T4InventoryK._The term ``Inventory'' means the Inventory of U.S. Greenhouse Gas Emissions and Sinks, prepared in compliance with the United Nations Framework Convention on Climate Change Decision 3/CP.5.
I22(12) T4LeakageK._The term ``leakage'' means_
I24(A) an increase in greenhouse gas emissions by one facility or entity caused by a reduction in greenhouse gas emissions by another facility or entity; or
I24(B) a decrease in sequestration that is caused by an increase in sequestration at another location.
I22(13) T4PermanenceK._The term ``permanence'' means the extent to which greenhouse gases that are sequestered will not later be returned to the atmosphere.
I22(14) T4RegistryK._The term ``registry'' means the registry of greenhouse gas emission reductions established under section 611(b)(2).
I22(15) T4SecretaryK._The term ``Secretary'' means the Secretary of Commerce.
I22(16) T4SequestrationK._
I24(A) T4In generalK._The term ``sequestration'' means the capture, long-term separation, isolation, or removal of greenhouse gases from the atmosphere.
I24(B) T4InclusionsK._The term ``sequestration'' includes_
I26(i) agricultural and conservation practices;
I26(ii) reforestation;
I26(iii) forest preservation; and
I26(iv) any other appropriate method of capture, long-term separation, isolation, or removal of greenhouse gases from the atmosphere, as determined by the Administrator.
I24(C) T4ExclusionsK._The term ``sequestration'' does not include_
I26(i) any conversion of, or negative impact on, a native ecosystem; or
I26(ii) any introduction of non-native species.
I22(17) T4Source categoryK._The term ``source category'' means a process or activity that leads to direct emissions of greenhouse gases, as listed in the Inventory.
I22(18) T4Stationary sourceK._The term ``stationary source'' means generally any source of greenhouse gases except those emissions resulting directly from an engine for transportation purposes.

I78Subtitle A_Federal Climate Change Research and Related Activities
I72SEC. 601. NATIONAL SCIENCE FOUNDATION FELLOWSHIPS.
I20The Director of the National Science Foundation shall establish a fellowship program for students pursuing graduate studies in global climate change, including capability in observation, analysis, modeling, paleoclimatology, consequences, and adaptation.
I72SEC. 602. RESEARCH GRANTS.
I20Section 105 of the Global Change Research Act of 1990 (15 U.S.C. 2935) is amended_
I22(1) by redesignating subsection (c) as subsection (d); and
I22(2) by inserting after subsection (b) the following:
I20``(c) T5Research GrantsK._
I22``(1) T4Committee to develop list of priority research areasK._The Committee shall develop a list of priority areas for research and development on climate change that are not being addressed by Federal agencies.
I22``(2) T4Director of ostp to transmit list to nsfK._The Director of the Office of Science and Technology Policy shall transmit the list to the National Science Foundation.
I22``(3) T4Funding through nsfK._
I24``(A) T4Budget requestK._The National Science Foundation shall include, as part of the annual request for appropriations for the Science and Technology Policy Institute, a request for appropriations to fund research in the priority areas on the list developed under paragraph (1).
I24``(B) T4AuthorizationK._For fiscal year 2006 and each fiscal year thereafter, there are authorized to be appropriated to the National Science Foundation not less than $25,000,000, to be made available through the Science and Technology Policy Institute, for research in those priority areas.''T1.
I72SEC. 603. ABRUPT CLIMATE CHANGE RESEARCH.
I20(a) T5In GeneralK._The Secretary, through the National Oceanic and Atmospheric Administration, shall carry out a program of scientific research on potential abrupt climate change designed_
I22(1) to develop a global array of terrestrial and oceanographic indicators of paleoclimate in order to sufficiently to identify and describe past instances of abrupt climate change;
I22(2) to improve understanding of thresholds and nonlinearities in geophysical systems related to the mechanisms of abrupt climate change;
I22(3) to incorporate these mechanisms into advanced geophysical models of climate change; and
I22(4) to test the output of these models against an improved global array of records of past abrupt climate changes.
I20(b) T5Abrupt Climate Change DefinedK._In this section, the term ``abrupt climate change'' means a change in climate that occurs so rapidly or unexpectedly that human or natural systems may have difficulty adapting to it.
I20(c) T5Authorization of AppropriationsK._There are authorized to be appropriated to the Secretary for fiscal year 2006 $60,000,000 to carry out this section, such sum to remain available until expended.
I72SEC. 604. NIST GREENHOUSE GAS FUNCTIONS.
I20Section 2(c) of the National Institute of Standards and Technology Act (15 U.S.C. 272(c)) is amended_
I22(1) by striking ``and'' after the semicolon in paragraph (21);
I22(2) by redesignating paragraph (22) as paragraph (23); and
I22(3) by inserting after paragraph (21) the following:
I22``(22) perform research to develop enhanced measurements, calibrations, standards, and technologies which will facilitate activities that reduce emissions of greenhouse gases or increase sequestration of greenhouse gases, including carbon dioxide, methane, nitrous oxide, ozone, perfluorocarbons, hydrofluorocarbons, and sulfur hexafluoride; and''T1.
I72SEC. 605. DEVELOPMENT OF NEW MEASUREMENT TECHNOLOGIES.
I20To facilitate implementation of section 614, the Secretary shall initiate a program to develop, with technical assistance from appropriate Federal agencies, innovative standards and measurement technologies to calculate greenhouse gas emissions or reductions for which no accurate or reliable measurement technology exists. The program shall include_
I22(1) technologies (including remote sensing technologies) to measure carbon changes and other greenhouse gas emissions and reductions from agriculture, forestry, and other land use practices; and
I22(2) technologies to calculate non-carbon dioxide greenhouse gas emissions from transportation.
I72SEC. 606. ENHANCED ENVIRONMENTAL MEASUREMENTS AND STANDARDS.
I20The National Institute of Standards and Technology Act (15 U.S.C. 271 et seq.) is amended_
I22(1) by redesignating sections 17 through 32 as sections 18 through 33, respectively; and
I22(2) by inserting after section 16 the following:
I72``SEC. 17. CLIMATE CHANGE STANDARDS AND PROCESSES.
I20``(a) T5In GeneralK._The Director shall establish within the Institute a program to perform and support research on global climate change standards and processes, with the goal of providing scientific and technical knowledge applicable to the reduction of greenhouse gases (as defined in section 600 of the New Apollo Energy Act of 2005) and of facilitating implementation of section 614 of that Act.
I20``(b) T5Research ProgramK._
I22``(1) T4In generalK._The Director is authorized to conduct, directly or through contracts or grants, a global climate change standards and processes research program.
I22``(2) T4Research projectsK._The specific contents and priorities of the research program shall be determined in consultation with appropriate Federal agencies, including the Environmental Protection Agency, the National Oceanic and Atmospheric Administration, and the National Aeronautics and Space Administration. The program generally shall include basic and applied research_
I24``(A) to develop and provide the enhanced measurements, calibrations, data, models, and reference material standards which will enable the monitoring of greenhouse gases;
I24``(B) to assist in establishing a baseline reference point for future trading in greenhouse gases and the measurement of progress in emissions reduction;
I24``(C) that will be exchanged internationally as scientific or technical information which has the stated purpose of developing mutually recognized measurements, standards, and procedures for reducing greenhouse gases; and
I24``(D) to assist in developing improved industrial processes designed to reduce or eliminate greenhouse gases.
I20``(c) T5National Measurement LaboratoriesK._
I22``(1) T4In generalK._In carrying out this section, the Director shall utilize the collective skills of the National Measurement Laboratories of the National Institute of Standards and Technology to improve the accuracy of measurements that will permit better understanding and control of industrial chemical processes and result in the reduction or elimination of greenhouse gases.
I22``(2) T4Material, process, and building researchK._The National Measurement Laboratories shall conduct research under this subsection that includes_
I24``(A) developing material and manufacturing processes which are designed for energy efficiency and reduced greenhouse gas emissions into the environment;
I24``(B) developing chemical processes to be used by industry that, compared to similar processes in commercial use, result in reduced emissions of greenhouse gases or increased sequestration of greenhouse gases; and
I24``(C) enhancing building performance with a focus in developing standards or tools which will help incorporate low- or no-emission technologies into building designs.
I22``(3) T4Standards and toolsK._The National Measurement Laboratories shall develop standards and tools under this subsection that include software to assist designers in selecting alternate building materials, performance data on materials, artificial intelligence-aided design procedures for building subsystems and `smart buildings', and improved test methods and rating procedures for evaluating the energy performance of residential and commercial appliances and products.
I20``(d) T5National Voluntary Laboratory Accreditation ProgramK._The Director shall utilize the National Voluntary Laboratory Accreditation Program under this section to establish a program to include specific calibration or test standards and related methods and protocols assembled to satisfy the unique needs for accreditation in measuring the production of greenhouse gases. In carrying out this subsection the Director may cooperate with other departments and agencies of the Federal Government, State and local governments, and private organizations.''T1.
I72SEC. 607. TECHNOLOGY DEVELOPMENT AND DIFFUSION.
I20The Director of the National Institute of Standards and Technology, through the Manufacturing Extension Partnership Program, may develop a program to promote the use, by the more than 380,000 small manufacturers, of technologies and techniques that result in reduced emissions of greenhouse gases or increased sequestration of greenhouse gases.
I72SEC. 608. AGRICULTURAL OUTREACH PROGRAM.
I20(a) T5In GeneralK._The Secretary of Agriculture, acting through the Global Change Program Office and in consultation with the heads of other appropriate departments and agencies, shall establish the Climate Change Education and Outreach Initiative Program to educate, and reach out to, agricultural organizations and individual farmers on global climate change.
I20(b) T5Program ComponentsK._The program_
I22(1) shall be designed to ensure that agricultural organizations and individual farmers receive detailed information about_
I24(A) the potential impact of climate change on their operations and well-being;
I24(B) market-driven economic opportunities that may come from storing carbon in soils and vegetation, including emerging private sector markets for carbon storage; and
I24(C) techniques for measuring, monitoring, verifying, and inventorying such carbon capture efforts;
I22(2) may incorporate existing efforts in any area of activity referenced in paragraph (1) or in related areas of activity;
I22(3) shall provide_
I24(A) outreach materials to interested parties;
I24(B) workshops; and
I24(C) technical assistance; and
I22(4) may include the creation and development of regional centers on climate change or coordination with existing centers (including such centers within NRCS and the Cooperative State Research Education and Extension Service).
I72SEC. 609. NOAA REPORT ON CLIMATE CHANGE EFFECTS; PREPARATION ASSISTANCE.
I20The Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et seq.) is amended by adding at the end the following:
I89``Report on effects of climate change
I20``T4Sec. K320. T1(a) T5In GeneralK._The Secretary shall report to the Congress not later than 2 years after the date of enactment of this section, and every 5 years thereafter, on the possible and projected impacts of climate change on_
I22``(1) oceanic and coastal ecosystems, including marine fish and wildlife and their habitat, and the commercial and recreational fisheries and tourism industries associated with them; and
I22``(2) coastal communities, including private residential and commercial development and public infrastructure in the coastal zone.
I20``(b) T5ContentsK._Each report under this section shall include information regarding_
I22``(1) the impacts that may be due to climate change that have occurred as of the date of the submission of the report; and
I22``(2) the projected future impacts of climate change.
I20``(c) T5ImpactsK._The impacts reported on under subsection (b) shall include any_
I22``(1) increases in sea level;
I22``(2) increases in storm activity and intensity;
I22``(3) increases in floods, droughts, and other extremes of weather;
I22``(4) increases in the temperature of the air and the water on oceanic and coastal ecosystems, with a particular focus on vulnerable fisheries and ecosystems; and
I22``(5) changes in the acidity of the ocean surface associated with an increase in concentration of carbon dioxide in the atmosphere.
I89``Climate change preparation assistance
I20``T4Sec. K321. T1(a) T5In GeneralK._The Secretary shall provide technical assistance to each coastal state that has an approved coastal zone management plan under this title, to assist such States in preparing persons living within their coastal zones to adapt to climate change.
I20``(b) T5Identification of Affected Areas and AdaptationsK._In carrying out this section, the Secretary shall_
I22``(1) identify the projected impacts of climate change to which persons located in coastal zones may need to adapt, including_
I24``(A) increases in sea level;
I24``(B) increases in storm activity and intensity; and
I24``(C) increases in floods, droughts, and other extremes of weather;
I22``(2) identify the specific coastal areas of the United States, and the public and private development in coastal communities and the natural resources of the coastal zone, that are vulnerable to the impacts identified under paragraph (1);
I22``(3) identify the various adaptation measures that may be used to protect the areas and resources identified under paragraph (2) from the impacts identified under paragraph (1); and

I22``(4) estimate the costs of the adaptation measures identified under paragraph (3).''T1.

I78Subtitle B_National Greenhouse Gas Database
I72SEC. 611. NATIONAL GREENHOUSE GAS DATABASE AND REGISTRY ESTABLISHED.
I20(a) T5EstablishmentK._As soon as practicable after the date of enactment of this Act, the Administrator, in coordination with the Secretary, the Secretary of Energy, the Secretary of Agriculture, and private sector and nongovernmental organizations, shall establish, operate, and maintain a database, to be known as the ``National Greenhouse Gas Database'', to collect, verify, and analyze information on greenhouse gas emissions by entities.
I20(b) T5National Greenhouse Gas Database ComponentsK._The database shall consist of_
I22(1) an inventory of greenhouse gas emissions; and
I22(2) a registry of greenhouse gas emission reductions and increases in greenhouse gas sequestrations.
I20(c) T5Comprehensive SystemK._
I22(1) T4In generalK._Not later than 2 years after the date of enactment of this Act, the Administrator shall promulgate regulations to implement a comprehensive system for greenhouse gas emissions reporting, inventorying, and reductions registration.
I22(2) T4RequirementsK._The Administrator shall ensure, to the maximum extent practicable, that_
I24(A) the comprehensive system described in paragraph (1) is designed to_
I26(i) maximize completeness, transparency, and accuracy of information reported; and
I26(ii) minimize costs incurred by entities in measuring and reporting greenhouse gas emissions; and
I24(B) the regulations promulgated under paragraph (1) establish procedures and protocols necessary_
I26(i) to prevent the double-counting of greenhouse gas emissions or emission reductions reported by more than 1 reporting entity;
I26(ii) to provide for corrections to errors in data submitted to the database;
I26(iii) to provide for adjustment to data by reporting entities that have had a significant organizational change (including mergers, acquisitions, and divestiture), in order to maintain comparability among data in the database over time;
I26(iv) to provide for adjustments to reflect new technologies or methods for measuring or calculating greenhouse gas emissions;
I26(v) to account for changes in registration of ownership of emission reductions resulting from a voluntary private transaction between reporting entities; and
I26(vi) to clarify the responsibility for reporting in the case of any facility owned or controlled by more than 1 entity.
I22(3) T4Serial numbersK._Through regulations promulgated under paragraph (1), the Administrator shall develop and implement a system that provides_
I24(A) for the verification of submitted emissions reductions registered under section 613;
I24(B) for the provision of unique serial numbers to identify the registered emission reductions made by an entity relative to the baseline of the entity;
I24(C) for the tracking of the registered reductions associated with the serial numbers; and
I24(D) for such action as may be necessary to prevent counterfeiting of the registered reductions.
I72SEC. 612. INVENTORY OF GREENHOUSE GAS EMISSIONS FOR COVERED ENTITIES.
I20(a) T5In GeneralK._Not later than July 1st of each calendar year after 2008, each covered entity shall submit to the Administrator a report that states, for the preceding calendar year, the entity-wide greenhouse gas emissions (as reported at the facility level), including_
I22(1) the total quantity of direct greenhouse gas emissions from stationary sources, expressed in units of carbon dioxide equivalents, except those reported under paragraph (3);
I22(2) the amount of petroleum products sold or imported by the entity and the amount of greenhouse gases, expressed in units of carbon dioxide equivalents, that would be emitted when these products are used for transportation in the United States, as determined by the Administrator under section 621(b);
I22(3) the amount of hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride, expressed in units of carbon dioxide equivalents, that are sold or imported by the entity and will ultimately be emitted in the United States, as determined by the Administrator under section 621(d); and
I22(4) such other categories of emissions as the Administrator determines in the regulations promulgated under section 611(c)(1) may be practicable and useful for the purposes of this Act, such as_
I24(A) indirect emissions from imported electricity, heat, and steam;
I24(B) process and fugitive emissions; and
I24(C) production or importation of greenhouse gases.
I20(b) T5Collection and Analysis of DataK._The Administrator shall collect and analyze information reported under subsection (a) for use under subtitle C.
I72SEC. 613. GREENHOUSE GAS REDUCTION REPORTING.
I20(a) T5In GeneralK._Subject to the requirements described in subsection (b)_
I22(1) a covered entity may register greenhouse gas emission reductions achieved after 1990 and before 2010 under this section; and
I22(2) an entity that is not a covered entity may register greenhouse gas emission reductions achieved at any time since 1990 under this section.
I20(b) T5RequirementsK._
I22(1) T4In generalK._The requirements referred to in subsection (a) are that an entity (other than an entity described in paragraph (2)) shall_
I24(A) establish a baseline; and
I24(B) submit the report described in subsection (c)(1).
I22(2) T4Requirements applicable to entities entering into certain agreementsK._An entity that enters into an agreement with a participant in the registry for the purpose of a carbon sequestration project shall not be required to comply with the requirements specified in paragraph (1) unless that entity is required to comply with the requirements by reason of an activity other than the agreement.
I20(c) T5ReportsK._
I22(1) T4Required reportK._Not later than July 1st of each calendar year beginning more than 2 years after the date of enactment of this Act, but subject to paragraph (3), an entity described in subsection (a) shall submit to the Administrator a report that states, for the preceding calendar year, the entity-wide greenhouse gas emissions (as reported at the facility level), including_
I24(A) the total quantity of direct greenhouse gas emissions from stationary sources, expressed in units of carbon dioxide equivalents;
I24(B) the amount of petroleum products sold or imported by the entity and the amount of greenhouse gases, expressed in units of carbon dioxide equivalents, that would be emitted when these products are used for transportation in the United States, as determined by the Administrator under section 621(b);
I24(C) the amount of hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride, expressed in units of carbon dioxide equivalents, that are sold or imported by the entity and will ultimately be emitted in the United States, as determined by the Administrator under section 621(d); and
I24(D) such other categories of emissions as the Administrator determines in the regulations promulgated under section 611(c)(1) may be practicable and useful for the purposes of this Act, such as_
I26(i) indirect emissions from imported electricity, heat, and steam;
I26(ii) process and fugitive emissions; and
I26(iii) production or importation of greenhouse gases.
I22(2) T4Voluntary reportingK._An entity described in subsection (a) may (along with establishing a baseline and reporting emissions under this section)_
I24(A) submit a report described in paragraph (1) before the date specified in that paragraph for the purposes of achieving and commoditizing greenhouse gas reductions through use of the registry and for other purposes; and
I24(B) submit to the Administrator, for inclusion in the registry, information that has been verified in accordance with regulations promulgated under section 611(c)(1) and that relates to_
I26(i) any activity that resulted in the net reduction of the greenhouse gas emissions of the entity or a net increase in sequestration by the entity that were carried out during or after 1990 and before the establishment of the database, verified in accordance with regulations promulgated under section 611(c)(1), and submitted to the Administrator before the date that is 4 years after the date of enactment of this Act; and
I26(ii) with respect to the calendar year preceding the calendar year in which the information is submitted, any project or activity that resulted in the net reduction of the greenhouse gas emissions of the entity or a net increase in net sequestration by the entity.
I22(3) T4Provision of verification information by reporting entitiesK._Each entity that submits a report under this subsection shall provide information sufficient for the Administrator to verify, in accordance with measurement and verification methods and standards developed under section 614, that the greenhouse gas report of the reporting entity_
I24(A) has been accurately reported; and
I24(B) in the case of each voluntary report under paragraph (2), represents_
I26(i) actual reductions in direct greenhouse gas emissions_
I28(I) relative to historic emission levels of the entity; and
I28(II) after accounting for any increases in indirect emissions described in paragraph (1)(D)(i); or
I26(ii) actual increases in net sequestration.
I22(4) T4Failure to submit reportK._An entity that participates or has participated in the registry and that fails to submit a report required under this subsection shall be prohibited from using, or allowing another entity to use, its registered emissions reductions or increases in sequestration to satisfy the requirements of section 621.
I22(5) T4Independent third-party verificationK._To meet the requirements of this section and section 614, an entity that is required to submit a report under this section may_
I24(A) obtain independent third-party verification; and
I24(B) present the results of the third-party verification to the Administrator.
I22(6) T4Availability of dataK._
I24(A) T4In generalK._The Administrator shall ensure that information in the database is_
I26(i) published; and
I26(ii) accessible to the public, including in electronic format on the Internet.
I24(B) T4ExceptionK._Subparagraph (A) shall not apply in any case in which the Administrator determines that publishing or otherwise making available information described in that subparagraph poses a risk to national security or discloses confidential business information that cannot be derived from information that is otherwise publicly available and that would cause competitive harm if published.
I22(7) T4Data infrastructureK._The Administrator shall ensure, to the maximum extent practicable, that the database uses, and is integrated with, Federal, State, and regional greenhouse gas data collection and reporting systems in effect as of the date of enactment of this Act.
I22(8) T4Additional issues to be consideredK._In promulgating the regulations under section 611(c)(1) and implementing the database, the Administrator shall take into consideration a broad range of issues involved in establishing an effective database, including_
I24(A) the data and information systems and measures necessary to identify, track, and verify greenhouse gas emissions in a manner that will encourage private sector trading and exchanges;
I24(B) the greenhouse gas reduction and sequestration measurement and estimation methods and standards applied in other countries, as applicable or relevant;
I24(C) the extent to which available fossil fuels, greenhouse gas emissions, and greenhouse gas production and importation data are adequate to implement the database; and
I24(D) the differences in, and potential uniqueness of, the facilities, operations, and business and other relevant practices of persons and entities in the private and public sectors that may be expected to participate in the database.
I20(d) T5Annual ReportK._The Administrator shall publish an annual report that_
I22(1) describes the total greenhouse gas emissions and emission reductions reported to the database during the year covered by the report;
I22(2) provides entity-by-entity and sector-by-sector analyses of the emissions and emission reductions reported;
I22(3) describes the atmospheric concentrations of greenhouse gases;
I22(4) provides a comparison of current and past atmospheric concentrations of greenhouse gases; and
I22(5) describes the activity during the year covered by the period in the trading of greenhouse gas emission allowances.
I72SEC. 614. MEASUREMENT AND VERIFICATION.
I20(a) T5StandardsK._
I22(1) T4In generalK._Not later than 1 year after the date of enactment of this Act, the Secretary shall establish by rule, in coordination with the Administrator, the Secretary of Energy, and the Secretary of Agriculture, comprehensive measurement and verification methods and standards to ensure a consistent and technically accurate record of greenhouse gas emissions, emission reductions, sequestration, and atmospheric concentrations for use in the registry.
I22(2) T4RequirementsK._The methods and standards established under paragraph (1) shall include_
I24(A) a requirement that a covered entity use a continuous emissions monitoring system, or another system of measuring or estimating emissions that is determined by the Secretary to provide information with precision, reliability, accessibility, and timeliness similar to that provided by a continuous emissions monitoring system where technologically feasible;
I24(B) establishment of standardized measurement and verification practices for reports made by all entities participating in the registry, taking into account_
I26(i) protocols and standards in use by entities requiring or desiring to participate in the registry as of the date of development of the methods and standards under paragraph (1);
I26(ii) boundary issues, such as leakage;
I26(iii) avoidance of double counting of greenhouse gas emissions and emission reductions;
I26(iv) protocols to prevent a covered entity from avoiding the requirements of this Act by reorganization into multiple entities that are under common control; and
I26(v) such other factors as the Secretary, in consultation with the Administrator, determines to be appropriate;
I24(C) establishment of methods of_
I26(i) estimating greenhouse gas emissions, for those cases in which the Secretary determines that methods of monitoring, measuring or estimating such emissions with precision, reliability, accessibility, and timeliness similar to that provided by a continuous emissions monitoring system are not technologically feasible at present; and
I26(ii) reporting the accuracy of such estimations;
I24(D) establishment of measurement and verification standards applicable to actions taken to reduce, avoid, or sequester greenhouse gas emissions;
I24(E) in coordination with the Secretary of Agriculture, standards to measure the results of the use of carbon sequestration and carbon recapture technologies, including_
I26(i) soil carbon sequestration practices; and
I26(ii) forest preservation and reforestation activities that adequately address the issues of permanence, leakage, and verification;
I24(F) establishment of such other measurement and verification standards as the Secretary, in consultation with the Secretary of Agriculture, the Administrator, and the Secretary of Energy, determines to be appropriate;
I24(G) establishment of standards for obtaining the Secretary's approval of the suitability of geological storage sites that include evaluation of both the geology of the site and the entity's capacity to manage the site; and
I24(H) establishment of other features that, as determined by the Secretary, will allow entities to adequately establish a fair and reliable measurement and reporting system.
I20(b) T5Review and RevisionK._The Secretary shall periodically review, and revise as necessary, the methods and standards developed under subsection (a).
I20(c) T5Public ParticipationK._The Secretary shall_
I22(1) make available to the public for comment, in draft form and for a period of at least 90 days, the methods and standards developed under subsection (a); and
I22(2) after the 90-day period referred to in paragraph (1), in coordination with the Secretary of Energy, the Secretary of Agriculture, and the Administrator, adopt the methods and standards developed under subsection (a) for use in implementing the database.
I20(d) T5Experts and ConsultantsK._
I22(1) T4In generalK._The Secretary may obtain the services of experts and consultants in the private and nonprofit sectors in accordance with section 3109 of title 5, United States Code, in the areas of greenhouse gas measurement, certification, and emission trading.

I22(2) T4Available arrangementsK._In obtaining any service described in paragraph (1), the Secretary may use any available grant, contract, cooperative agreement, or other arrangement authorized by law.

I78Subtitle C_Market-driven Greenhouse Gas Reductions

I74T2CHAPTER 1_EMISSION REDUCTION REQUIREMENTS; USE OF TRADEABLE ALLOWANCES
I72SEC. 621. COVERED ENTITIES MUST SUBMIT ALLOWANCES FOR EMISSIONS.
I20(a) T5In GeneralK._Beginning with calendar year 2010_
I22(1) each covered entity in the electric generation, industrial, and commercial sectors shall submit to the Administrator one tradeable allowance for every metric ton of greenhouse gases, measured in units of carbon dioxide equivalents, that it emits from stationary sources, except those described in paragraph (2);
I22(2) each producer or importer of hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride that is a covered entity shall submit to the Administrator one tradeable allowance for every metric ton of hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride, measured in units of carbon dioxide equivalents, that it produces or imports and that will ultimately be emitted in the United States, as determined by the Administrator under subsection (d) and
I22(3) each petroleum refiner or importer that is a covered entity shall submit one tradeable allowance for every unit of petroleum product it sells that will produce one metric ton of greenhouse gases, measured in units of carbon dioxide equivalents, as determined by the Administrator under subsection (b), when used for transportation.
I20(b) T5Determination of Transportation Sector AmountK._For the transportation sector, the Administrator shall determine the amount of greenhouse gases, measured in units of carbon dioxide equivalents, that will be emitted when petroleum products are used for transportation.
I20(c) T5Exception for Certain Deposited EmissionsK._Notwithstanding subsection (a), a covered entity is not required to submit a tradeable allowance for any amount of greenhouse gas that would otherwise have been emitted from a facility under the ownership or control of that entity if_
I22(1) the emission is deposited in a geological storage facility approved by the Administrator described in section 614(a)(2)(G); and
I22(2) the entity agrees to submit tradeable allowances for any portion of the deposited emission that is subsequently emitted from that facility.
I20(d) T5Determination of Hydroflurocarbon, Perfluorocarbon, and Sulfur Hexafluoride AmountK._The Administrator shall determine the amounts of hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride, measured in units of carbon dioxide equivalents, that will be deemed to be emitted for purposes of this Act.
I72SEC. 622. COMPLIANCE.
I20(a) T5In GeneralK._
I22(1) T4Source of tradeable allowances usedK._A covered entity may use a tradeable allowance to meet the requirements of this section without regard to whether the tradeable allowance was allocated to it under chapter 2 or acquired from another entity or the Climate Change Credit Corporation established under section 641.
I22(2) T4Verification by administratorK._At various times during each year, the Administrator shall determine whether each covered entity has met the requirements of this section. In making that determination, the Administrator shall_
I24(A) take into account the tradeable allowances submitted by the covered entity to the Administrator; and
I24(B) retire the serial number assigned to each such tradeable allowance.
I20(b) T5Alternative Means of ComplianceK._For the years after 2010, a covered entity may satisfy up to 15 percent of its total allowance submission requirement under this section by_
I22(1) submitting tradeable allowances from another nation's market in greenhouse gas emissions if_
I24(A) the Secretary determines that the other nation's system for trading in greenhouse gas emissions is complete, accurate, and transparent and reviews that determination at least once every 5 years;
I24(B) the other nation has adopted enforceable limits on its greenhouse gas emissions which the tradeable allowances were issued to implement; and
I24(C) the covered entity certifies that the tradeable allowance has been retired unused in the other nation's market;
I22(2) submitting a registered net increase in sequestration, as registered in the database, adjusted, if necessary, to comply with the accounting standards and methods established under section 651;
I22(3) submitting a greenhouse gas emissions reduction (other than a registered net increase in sequestration) that was registered in the database by a person that is not a covered entity; or
I22(4) submitting credits obtained from the Administrator under section 623.
I20(c) T5Dedicated Program for Sequestration in Agricultural SoilsK._If a covered entity chooses to satisfy 15 percent of its total allowance submission requirements under the provisions of subsection (b), it shall satisfy up to 1.5 percent of its total allowance submission requirement by submitting registered net increases in sequestration in agricultural soils, as registered in the database, adjusted, if necessary, to comply with the accounting standards and methods established under section 651.
I72SEC. 623. BORROWING AGAINST FUTURE REDUCTIONS.
I20(a) T5In GeneralK._The Administrator shall establish a program under which a covered entity may_
I22(1) receive a credit in the current calendar year for anticipated reductions in emissions in a future calendar year; and
I22(2) use the credit in lieu of a tradeable allowance to meet the requirements of this Act for the current calendar year, subject to the limitation imposed by section 622(b).
I20(b) T5Determination of Tradeable Allowance CreditsK._The Administrator may make credits available under subsection (a) only for anticipated reductions in emissions that_
I22(1) are attributable to the realization of capital investments in equipment, the construction, reconstruction, or acquisition of facilities, or the deployment of new technologies_
I24(A) for which the covered entity has executed a binding contract and secured, or applied for, all necessary permits and operating or implementation authority;
I24(B) that will not become operational within the current calendar year; and
I24(C) that will become operational and begin to reduce emissions from the covered entity within 5 years after the year in which the credit is used; and
I22(2) will be realized within 5 years after the year in which the credit is used.
I20(c) T5Carrying CostK._If a covered entity uses a credit under this section to meet the requirements of this Act for a calendar year (referred to as the use year), the tradeable allowance requirement for the year from which the credit was taken (referred to as the source year) shall be increased by an amount equal to_
I22(1) 10 percent for each credit borrowed from the source year; multiplied by
I22(2) the number of years beginning after the use year and before the source year.
I20(d) T5Maximum Borrowing PeriodK._A credit from a year beginning more than 5 years after the current year may not be used to meet the requirements of this Act for the current year.
I20(e) T5Failure to Achieve Reductions Generating CreditK._If a covered entity that uses a credit under this section fails to achieve the anticipated reduction for which the credit was granted for the year from which the credit was taken, then_
I22(1) the covered entity's requirements under this Act for that year shall be increased by the amount of the credit, plus the amount determined under subsection (c);
I22(2) any tradeable allowances submitted by the covered entity for that year shall be counted first against the increase in those requirements; and
I22(3) the covered entity may not use credits under this section to meet the increased requirements.
I72SEC. 624. OTHER USES OF TRADEABLE ALLOWANCES.
I20(a) T5In GeneralK._Subject to subsection (b)(2), tradeable allowances may be sold, exchanged, purchased, retired, or used as provided in this section.
I20(b) T5Limitations on Intersector TradingK._
I22(1) T4Intersector tradingK._Subject to paragraph (2), a covered entity in a covered sector may purchase or otherwise acquire tradeable allowances from a covered entity in another covered sector to satisfy the requirements of section 621. 
I22(2) T4ExceptionK._A covered entity in the electricity sector may not purchase or otherwise acquire a tradeable allowance from, or sell a tradeable allowance to, an entity in a sector other than the electricity sector.
I20(c) T5Climate Change Credit OrganizationK._The Climate Change Credit Corporation established under section 641 may sell tradeable allowances allocated to it under section 632(a)(2) to any covered entity or to any investor, broker, or dealer in such tradeable allowances. The Climate Change Credit Corporation shall use all proceeds from such sales in accordance with the provisions of section 642.
I20(d) T5Banking of Tradeable AllowancesK._Notwithstanding the requirements of section 621, a covered entity that has more than a sufficient amount of tradeable allowances to satisfy the requirements of section 621, may refrain from submitting a tradeable allowance to satisfy the requirements in order to sell, exchange, or use the tradeable allowance in the future.
I72SEC. 625. EXEMPTION OF SOURCE CATEGORIES.
I20(a) T5In GeneralK._The Administrator may grant an exemption from the requirements of this Act to a source category if the Administrator determines, after public notice and comment, that it is not feasible to measure or estimate emissions from that source category, until such time as measurement or estimation becomes feasible.
I20(b) T5Reduction of LimitationsK._If the Administrator exempts a source category under subsection (a), the Administrator shall also reduce the total tradeable allowances under section 631(a)(1) by the amount of greenhouse gas emissions that the exempted source category emitted in calendar year 2000, as identified in the 2000 Inventory.

I20(c) T5Limitation on ExemptionK._The Administrator may not grant an exemption under subsection (a) to carbon dioxide produced from fossil fuel.

I74T2CHAPTER 2_ESTABLISHMENT AND ALLOCATION OF TRADEABLE ALLOWANCES
I72SEC. 631. ESTABLISHMENT OF TRADEABLE ALLOWANCES.
I20(a) T5In GeneralK._The Administrator shall promulgate regulations to establish tradeable allowances, denominated in units of carbon dioxide equivalents, for calendar years beginning after 2009, equal to_
I22(1) 5896 million metric tons, measured in units of carbon dioxide equivalents, reduced by
I22(2) the amount of emissions of greenhouse gases in calendar year 2000 from non-covered entities.
I20(b) T5Serial NumbersK._The Administrator shall assign a unique serial number to each tradeable allowance established under subsection (a), and shall take such action as may be necessary to prevent counterfeiting of tradeable allowances.
I20(c) T5Nature of Tradeable AllowancesK._A tradeable allowance is not a property right, and nothing in this title or any other provision of law limits the authority of the United States to terminate or limit a tradeable allowance.
I20(d) T5Non-Covered EntityK._In this section:
I22(1) T4In generalK._The term ``non-covered entity'' means an entity that_
I24(A) owns or controls a source of greenhouse gas emissions in the electric power, industrial, or commercial sector of the United States economy (as defined in the Inventory), refines or imports petroleum products for use in transportation, or produces or imports hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride; and
I24(B) is not a covered entity.
I22(2) T4ExceptionK._Notwithstanding paragraph (1), an entity that is a covered entity for any calendar year beginning after 2009 shall not be considered to be a non-covered entity for purposes of subsection (a) only because it emitted, or its products would have emitted, 10,000 metric tons or less of greenhouse gas, measured in units of carbon dioxide equivalents, in the year 2000.
I72SEC. 632. DETERMINATION OF TRADEABLE ALLOWANCE ALLOCATIONS.
I20(a) T5In GeneralK._The Secretary shall determine_
I22(1) the amount of tradeable allowances to be allocated to each covered sector of that sector's allotments; and
I22(2) the amount of tradeable allowances to be allocated to the Climate Change Credit Corporation established under section 641.
I20(b) T5Allocation FactorsK._In making the determination required by subsection (a), the Secretary shall consider_
I22(1) the distributive effect of the allocations on household income and net worth of individuals;
I22(2) the impact of the allocations on corporate income, taxes, and asset value;
I22(3) the impact of the allocations on income levels of consumers and on their energy consumption;
I22(4) the effects of the allocations in terms of economic efficiency;
I22(5) the ability of covered entities to pass through compliance costs to their customers;
I22(6) the degree to which the amount of allocations to the covered sectors should decrease over time; and
I22(7) the need to maintain the international competitiveness of United States manufacturing and avoid the additional loss of United States manufacturing jobs.
I20(c) T5Allocation Recommendations and ImplementationK._Before allocating or providing tradeable allowances under subsection (a) and within 24 months after the date of enactment of this Act, the Secretary shall submit the determinations under subsection (a) to the Senate Committee on Commerce, Science, and Transportation, the Senate Committee on Environment and Public Works, the House of Representatives Committee on Science, and the House of Representatives Committee on Energy and Commerce. The Secretary's determinations under subsection (a)(1), including the allocations and provision of tradeable allowances pursuant to that determination, are deemed to be a major rule (as defined in section 804(2) of title 5, United States Code), and subject to the provisions of chapter 8 of that title.
I72SEC. 633. ALLOCATION OF TRADEABLE ALLOWANCES.
I20(a) T5In GeneralK._Beginning with calendar year 2010 and after taking into account any initial allocations under section 635, the Administrator shall_
I22(1) allocate to each covered sector that sector's allotments determined by the Administrator under section 632 (adjusted for any such initial allocations and the allocation to the Climate Change Credit Corporation established under section 641); and
I22(2) allocate to the Climate Change Credit Corporation established under section 641 the tradeable allowances allocable to that Corporation.
I20(b) T5Intrasectorial AllotmentsK._The Administrator shall, by regulation, establish a process for the allocation of tradeable allowances under this section, without cost to covered entities (except with respect to new entrants as provided in subsection (g)), that will_
I22(1) encourage investments that increase the efficiency of the processes that produce greenhouse gas emissions;
I22(2) minimize the costs to the Government of allocating the tradeable allowances;
I22(3) not penalize a covered entity for emissions reductions made before 2010 and registered with the database; and
I22(4) provide for the allocation and sale of tradeable allowances to new entrants in accordance with subsection (g).
I20(c) T5Point Source AllocationK._The Administrator shall allocate the tradeable allowances for the electricity generation, industrial, and commercial sectors to the entities owning or controlling the point sources of greenhouse gas emissions within that sector.
I20(d) T5Hydrofluorocarbons, Perfluorocarbons, and Sulfur HexafluorideK._The Administrator shall allocate the tradeable allowances for producers or importers of hydrofluorocarbons, perfluorocarbons, or sulfur hexafluoride to such producers or importers.
I20(e) T5Special Rule for Allocation Within the Transportation SectorK._The Administrator shall allocate the tradeable allowances for the transportation sector to petroleum refiners or importers that produce or import petroleum products that will be used as fuel for transportation.
I20(f) T5Allocations to Rural Electric CooperativesK._
I22(1) T4In generalK._The Administrator shall make the allocations described in paragraph (2) each year at no cost. The allocations shall be offset from the allowances allocated to the Climate Change Credit Corporation.
I22(2) T4Rural electric cooperativesK._For each electric generating unit that is owned or operated by a rural electric cooperative, the Administrator shall allocate allowances in an amount equal to the greenhouse gas emissions of each such unit in 2000, plus an amount equal to the average emissions growth expected for all such units.
I20(g) T5New EntrantsK._
I22(1) T4AllocationK._Of the tradeable allowances allocated under this section to a covered sector for a calendar year, the percentage of such allowances allocated to new entrants into the sector_
I24(A) shall be 5 percent for calendar year 2010; and
I24(B) shall be increased by 0.5 percent for 2013 and each succeeding calendar year, except that such total percentage shall not exceed 10 percent.
I22(2) T4AuctionsK._For calendar year 2010 and each subsequent calendar year, the Administrator shall conduct an auction for the purpose of selling to new entrants in each covered sector the tradeable allowances allocated for such purpose under paragraph (1).
I72SEC. 634. ENSURING TARGET ADEQUACY.
I20(a) T5In GeneralK._Beginning 2 years after the date of enactment of this Act, the Under Secretary of Commerce for Oceans and Atmosphere shall review the allowances established by section 631 no less frequently than biennially_
I22(1) to re-evaluate the levels established by that section, after taking into account the best available science and the most currently available data, and
I22(2) to re-evaluate the environmental and public health impacts of specific concentration levels of greenhouse gases,
I20to determine whether the allowances established by subsection (a) continue to be consistent with the objective of the United Nations' Framework Convention on Climate Change of stabilizing levels of greenhouse gas emissions at a level that will prevent dangerous anthropogenic interference with the climate system.

I20(b) T5Review of 2010 LevelsK._The Under Secretary shall specifically review in 2008 the level established under section 631(a)(1), and transmit a report on his reviews, together with any recommendations, including legislative recommendations, for modification of the levels, to the Senate Committee on Commerce, Science, and Transportation, the Senate Committee on Environment and Public Works, the House of Representatives Committee on Science, and the House of Representatives Committee on Energy and Commerce.
I72SEC. 635. INITIAL ALLOCATIONS FOR EARLY PARTICIPATION AND ACCELERATED PARTICIPATION.
I20Before making any allocations under section 633, the Administrator shall allocate_
I22(1) to any covered entity an amount of tradeable allowances equivalent to the amount of greenhouse gas emissions reductions registered by that covered entity in the national greenhouse gas database if_
I24(A) the covered entity has requested to use the registered reduction in the year of allocation;
I24(B) the reduction was registered prior to 2010; and
I24(C) the Administrator retires the unique serial number assigned to the reduction under section 611(c)(3); and
I22(2) to any covered entity that has entered into an accelerated participation agreement under section 636, such tradeable allowances as the Administrator has determined to be appropriate under that section.
I72SEC. 636. BONUS FOR ACCELERATED PARTICIPATION.
I20(a) T5In GeneralK._If a covered entity executes an agreement with the Administrator under which it agrees to reduce its level of greenhouse gas emissions to a level no greater than the level of its greenhouse gas emissions for calendar year 1990 by the year 2010, then, for the 6-year period beginning with calendar year 2010, the Administrator shall_
I22(1) provide additional tradeable allowances to that entity when allocating allowances under section 634 in order to recognize the additional emissions reductions that will be required of the covered entity;
I22(2) allow that entity to satisfy 20 percent of its requirements under section 621 by_
I24(A) submitting tradeable allowances from another nation's market in greenhouse gas emissions under the conditions described in section 622(b)(1);
I24(B) submitting a registered net increase in sequestration, as registered in the National Greenhouse Gas Database established under section 611, and as adjusted by the appropriate sequestration discount rate established under section 651; or
I24(C) submitting a greenhouse gas emission reduction (other than a registered net increase in sequestration) that was registered in the National Greenhouse Gas Database by a person that is not a covered entity.
I20(b) T5TerminationK._An entity that executes an agreement described in subsection (a) may terminate the agreement at any time.
I20(c) T5Failure to Meet CommitmentK._If an entity that executes an agreement described in subsection (a) fails to achieve the level of emissions to which it committed by calendar year 2010_
I22(1) its requirements under section 621 shall be increased by the amount of any tradeable allowances provided to it under subsection (a)(1); and

I22(2) any tradeable allowances submitted thereafter shall be counted first against the increase in those requirements.

I74T2CHAPTER 3_CLIMATE CHANGE CREDIT CORPORATION
I72SEC. 641. ESTABLISHMENT.
I20(a) T5In GeneralK._The Climate Change Credit Corporation is established as a nonprofit corporation without stock. The Corporation shall not be considered to be an agency or establishment of the United States Government.
I20(b) T5Applicable LawsK._The Corporation shall be subject to the provisions of this title and, to the extent consistent with this title, to the District of Columbia Business Corporation Act.
I20(c) T5Board of DirectorsK._The Corporation shall have a board of directors of 5 individuals who are citizens of the United States, of whom 1 shall be elected annually by the board to serve as chairman. No more than 3 members of the board serving at any time may be affiliated with the same political party. The members of the board shall be appointed by the President of the United States, by and with the advice and consent of the Senate and shall serve for terms of 5 years.
I72SEC. 642. PURPOSES AND FUNCTIONS.
I20(a) T5TradingK._The Corporation_
I22(1) shall receive and manage tradeable allowances allocated to it under section 633(a)(2); and
I22(2) shall buy and sell tradeable allowances, whether allocated to it under that section or obtained by purchase, trade, or donation from other entities; but
I22(3) may not retire tradeable allowances unused.
I20(b) T5Use of Tradeable Allowances and ProceedsK._
I22(1) T4In generalK._The Corporation shall use the tradeable allowances, and proceeds derived from its trading activities in tradeable allowances, to reduce costs borne by consumers as a result of the greenhouse gas reduction requirements of this Act. The reductions_
I24(A) may be obtained by buy-down, subsidy, negotiation of discounts, consumer rebates, or otherwise;
I24(B) shall be, as nearly as possible, equitably distributed across all regions of the United States; and
I24(C) may include arrangements for preferential treatment to consumers who can least afford any such increased costs.
I22(2) T4Transition assistance to dislocated workers and communitiesK._The Corporation shall allocate a percentage of the proceeds derived from its trading activities in tradeable allowances to provide transition assistance to dislocated workers and communities. Transition assistance may take the form of_
I24(A) grants to employers, employer associations, and representatives of employees_
I26(i) to provide training, adjustment assistance, and employment services to dislocated workers; and
I26(ii) to make income-maintenance and needs-related payments to dislocated workers; and
I24(B) grants to State and local governments to assist communities in attracting new employers or providing essential local government services.
I22(3) T4Phase-out of transition assistanceK._The percentage allocated by the Corporation under paragraph (2)_
I24(A) shall be 20 percent for 2010;
I24(B) shall be reduced by 2 percentage points each year thereafter; and
I24(C) may not be reduced below zero.
I22(4) T4Technology deployment programsK._The Corporation shall establish and carry out a program, through direct grants, revolving loan programs, or other financial measures, to provide support for the deployment of technology to assist in compliance with this Act by distributing the proceeds from no less than 10 percent of the total allowances allocated to it. The support shall include the following:
I24(A) T4Coal gasification combined-cycle and geological carbon storage programK._The Corporation shall establish and carry out a program, through direct grants, to provide incentives for the repowering of existing facilities or construction of new facilities producing electricity or other products from coal gasification combined-cycle plants that capture and geologically store at least 90 percent of the carbon dioxide produced at the facility in accordance with requirements established by the Administrator to ensure the permanence of the storage and that such storage will not cause or contribute to significant adverse effects on public health or the environment. The Corporation shall ensure that no less than 20 percent of the funding under this program is distributed to rural electric cooperatives.
I24(B) T4Agricultural programsK._The Corporation shall establish and carry out a program, through direct grants, revolving loan programs, or other financial measures, to provide incentives for greenhouse gas emissions reductions or net increases in greenhouse gas sequestration on agricultural lands. The program shall include incentives for_
I26(i) production of wind energy on agricultural lands;
I26(ii) agricultural management practices that achieve verified, incremental increases in net carbon sequestration, in accordance with the requirements established by the Administrator under section 651; and
I26(iii) production of renewable fuels that, after consideration of the energy needed to produce such fuels, result in a net reduction in greenhouse gas emissions.

I20(c) T5Coordination With Other BenefitsK._The Corporation shall not provide assistance under this section to any person if such person has received assistance under section 212 or 731.

I74T2CHAPTER 4_SEQUESTRATION ACCOUNTING; PENALTIES
I72SEC. 651. PENALTIES.
I20Any covered entity that fails to meet the requirements of section 621 for a year shall be liable for a civil penalty, payable to the Administrator, equal to thrice the market value (determined as of the last day of the year at issue) of the tradeable allowances that would be necessary for that covered entity to meet those requirements on the date of the emission that resulted in the violation.
I72SEC. 652. SEQUESTRATION ACCOUNTING.
I20(a) T5Sequestration AccountingK._If a covered entity uses a registered net increase in sequestration to satisfy the requirements of section 621 for any year, that covered entity shall submit information to the Administrator every 5 years thereafter sufficient to allow the Administrator to determine, using the methods and standards created under section 614, whether that net increase in sequestration still exists. Unless the Administrator determines that the net increase in sequestration continues to exist, the covered entity shall offset any loss of sequestration by submitting additional tradeable allowances of equivalent amount in the calender year following that determination.
I20(b) T5Regulations RequiredK._The Secretary, acting through the Under Secretary of Commerce for Science and Technology, in coordination with the Secretary of Agriculture, the Secretary of Energy, and the Administrator, shall issue regulations establishing the sequestration accounting rules for all classes of sequestration projects.
I20(c) T5Criteria for RegulationsK._In issuing regulations under this section, the Secretary shall use the following criteria:
I22(1) If the range of possible amounts of net increase in sequestration for a particular class of sequestration project is not more than 10 percent of the median of that range, the amount of sequestration awarded shall be equal to the median value of that range.
I22(2) If the range of possible amounts of net increase in sequestration for a particular class of sequestration project is more than 10 percent of the median of that range, the amount of sequestration awarded shall be equal to the fifth percentile of that range.
I22(3) The regulations shall include procedures for accounting for potential leakage from sequestration projects and for ensuring that any registered increase in sequestration is in addition to that which would have occurred if this Act had not been enacted.

I20(d) T5UpdatesK._The Secretary shall update the sequestration accounting rules for every class of sequestration project at least once every 5 years.

I78TITLE VII_ENERGY INDEPENDENCE

I78Subtitle A_Renewable Fuels Standard
I72SEC. 701. RENEWABLE FUELS STANDARD.
I20(a) T5In GeneralK._Section 211 of the Clean Air Act (42 U.S.C. 7545) is amended_
I22(1) by redesignating subsection (o) as subsection (q); and
I22(2) by inserting after subsection (n) the following:
I20``(o) T5Renewable Fuel ProgramK._
I22``(1) T4DefinitionsK._In this subsection:
I24``(A) T4Cellulosic biomass ethanolK._The term `cellulosic biomass ethanol' means ethanol derived from any nonhazardous lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis, including_
I26``(i) dedicated energy crops and trees;
I26``(ii) the following forest-related resources_
I28``(I) harvesting residue
I28``(II) pre-commercial thinnings;
I28``(III) slash; and
I28``(IV) bush;
I26``(iii) plants;
I26``(iv) grasses;
I26``(v) agricultural residues;
I26``(vi) fibers;
I26``(vii) animal wastes and other waste materials; and
I26``(viii) municipal solid waste.
I24``(B) T4Renewable fuelK._
I26``(i) T4In generalK._The term `renewable fuel' means motor vehicle fuel that_
I28``(I)T1(aa) is produced from grain, starch, oilseeds, or other biomass; or
I28``(bb) is natural gas produced from a biogas source, including a landfill, sewage waste treatment plant, feedlot, or other place where decaying organic material is found; and
I28``(II) is used to replace or reduce the quantity of fossil fuel present in a fuel mixture used to operate a motor vehicle.
I26``(ii) T4InclusionK._The term `renewable fuel' includes cellulosic biomass ethanol and biodiesel (as defined in section 312(f) of the Energy Policy Act of 1992).
I24``(C) T4Small refineryK._The term `small refinery' means a refinery for which average aggregate daily crude oil throughput for the calendar year (as determined by dividing the aggregate throughput for the calendar year by the number of days in the calendar year) does not exceed 75,000 barrels.
I22``(2) T4Renewable fuel programK._
I24``(A) T4In generalK._Not later than the beginning of calendar year 2007, the Administrator shall promulgate regulations ensuring that gasoline sold or dispensed to consumers in the United States, on an annual average basis, contains the applicable volume of renewable fuel as specified in subparagraph (B). Regardless of the date of promulgation, such regulations shall contain compliance provisions for refiners, blenders, and importers, as appropriate, to ensure that the requirements of this subsection are met, but shall not restrict where renewables can be used, or impose any per-gallon obligation for the use of renewables. If the Administrator does not promulgate such regulations, the applicable percentage, on a volume percentage of gasoline basis, shall be 1.62 in 2007.
I24``(B) T4Applicable volumeK._
I26``(i) T4Calendar years 2007 through 2013K._For the purpose of subparagraph (A), the applicable volume for any of calendar years 2007 through 2013 shall be determined in accordance with the following table: 
Q10
c2,L0(0,0,0,4,0,17),tp0,p10,10/12,g1,t1,s100n,xs95Rn
I95
h1
h1
j
I11``T2Calendar year:KDT2(In billions of gallons)K
I022007Dxl4.0
I022008Dxl4.5
I022009Dxl5.1
I022010Dxl5.7
I022011Dxl6.4
I022012Dxl7.2
I022013Dxl8.1
e

I26``(ii) T4Calendar year 2014 and thereafterK._For the purpose of subparagraph (A), the applicable volume for calendar year 2014 and each calendar year thereafter shall be equal to the product obtained by multiplying_
I28``(I) the number of gallons of gasoline that the Administrator estimates will be sold or introduced into commerce in the calendar year; and
I28``(II) the ratio that_
I30``(aa) 8.1 billion gallons of renewable fuels; bears to
I30``(bb) the number of gallons of gasoline sold or introduced into commerce in calendar year 2013.
I26``(iii) T4Cellulosic biomass ethanolK._For the purpose of subparagraph (A), the applicable volume shall include, as a percentage of the total applicable volume, cellulosic biomass ethanol as follows:
I28``(I) For calendar year 2007, 1.0 percent.
I28``(II) For calendar year 2008, 1.5 percent.
I28``(III) For calendar year 2009, 2.0 percent.
I28``(IV) For calendar year 2010, 2.5 percent.
I28``(V) For calendar year 2011, 3.0 percent.
I28``(VI) For calendar year 2012, 3.5 percent.
I28``(VII) For calendar year 2013 and each subsequent calendar year, 4.0 percent.
I22``(3) T4Applicable percentagesK._Not later than October 31 of each calendar year, through 2012, the Administrator of the Energy Information Administration shall provide the Administrator an estimate of the volumes of gasoline sales in the United States for the coming calendar year. Based on such estimates, the Administrator shall by November 30 of each calendar year, through 2012, determine and publish in the Federal Register, the renewable fuel obligation, on a volume percentage of gasoline basis, applicable to refiners, blenders, distributors and importers, as appropriate, for the coming calendar year, to ensure that the requirements of paragraph (2) are met. For each calendar year, the Administrator shall establish a single applicable percentage that applies to all parties, and make provision to avoid redundant obligations. In determining the applicable percentages, the Administrator shall make adjustments to account for the use of renewable fuels by exempt small refineries during the previous year.
I22``(4) T4Cellulosic biomass ethanolK._For the purpose of paragraph (2), 1 gallon of cellulosic biomass ethanol shall be considered to be the equivalent of 3.0 gallons of renewable fuel.
I22``(5) T4Credit programK._
I24``(A) T4In generalK._The regulations promulgated to carry out this subsection shall provide for the generation of an appropriate amount of credits by any person that refines, blends, or imports gasoline that contains a quantity of renewable fuel that is greater than the quantity required under paragraph (2). Such regulations shall provide for the generation of an appropriate amount of credits for biodiesel fuel. If a small refinery notifies the Administrator that it waives the exemption provided by this Act, the regulations shall provide for the generation of credits by the small refinery beginning in the year following such notification.
I24``(B) T4Use of creditsK._A person that generates credits under subparagraph (A) may use the credits, or transfer all or a portion of the credits to another person, for the purpose of complying with paragraph (2).
I24``(C) T4Life of creditsK._A credit generated under this paragraph shall be valid to show compliance_
I26``(i) in the calendar year in which the credit was generated or the next calendar year, or
I26``(ii) in the calendar year in which the credit was generated or the next two consecutive calendar years if the Administrator promulgates regulations under paragraph (6).
I24``(D) T4Inability to purchase sufficient creditsK._The regulations promulgated to carry out this subsection shall include provisions allowing any person that is unable to generate or purchase sufficient credits to meet the requirements under paragraph (2) to carry forward a renewables deficit provided that, in the calendar year following the year in which the renewables deficit is created, such person shall achieve compliance with the renewables requirement under paragraph (2), and shall generate or purchase additional renewables credits to offset the renewables deficit of the previous year.
I22``(6) T4Seasonal variations in renewable fuel useK._
I24``(A) T4StudyK._For each of calendar years 2007 through 2013, the Administrator of the Energy Information Administration shall conduct a study of renewable fuels blending to determine whether there are excessive seasonal variations in the use of renewable fuels.
I24``(B) T4Regulation of excessive seasonal variationsK._If, for any calendar year, the Administrator of the Energy Information Administration, based on the study under subparagraph (A), makes the determinations specified in subparagraph (C), the Administrator shall promulgate regulations to ensure that 35 percent or more of the quantity of renewable fuels necessary to meet the requirement of paragraph (2) is used during each of the periods specified in subparagraph (D) of each subsequent calendar year.
I24``(C) T4DeterminationsK._The determinations referred to in subparagraph (B) are that_
I26``(i) less than 35 percent of the quantity of renewable fuels necessary to meet the requirement of paragraph (2) has been used during one of the periods specified in subparagraph (D) of the calendar year; and
I26``(ii) a pattern of excessive seasonal variation described in clause (i) will continue in subsequent calendar years.
I24``(D) T4PeriodsK._The two periods referred to in this paragraph are_
I26``(i) April through September; and
I26``(ii) January through March and October through December.
I24``(E) T4ExclusionsK._Renewable fuels blended or consumed in 2007 in a State which has received a waiver under section 209(b) shall not be included in the study in subparagraph (A).
I22``(7) T4WaiversK._
I24``(A) T4In generalK._The Administrator, in consultation with the Secretary of Agriculture and the Secretary of Energy, may waive the requirement of paragraph (2) in whole or in part on petition by one or more States by reducing the national quantity of renewable fuel required under this subsection_
I26``(i) based on a determination by the Administrator, after public notice and opportunity for comment, that implementation of the requirement would severely harm the economy or environment of a State, a region, or the United States; or
I26``(ii) based on a determination by the Administrator, after public notice and opportunity for comment, that there is an inadequate domestic supply or distribution capacity to meet the requirement.
I24``(B) T4Petitions for waiversK._The Administrator, in consultation with the Secretary of Agriculture and the Secretary of Energy, shall approve or disapprove a State petition for a waiver of the requirement of paragraph (2) within 90 days after the date on which the petition is received by the Administrator.
I24``(C) T4Termination of waiversK._A waiver granted under subparagraph (A) shall terminate after 1 year, but may be renewed by the Administrator after consultation with the Secretary of Agriculture and the Secretary of Energy.
I22``(8) T4Study and waiver for initial year of programK._Not later than 180 days after the date of the enactment of this subsection, the Secretary of Energy (in this paragraph referred to as the `Secretary') shall complete for the Administrator a study assessing whether the renewable fuels requirement under paragraph (2) will likely result in significant adverse consumer impacts in 2007, on a national, regional, or State basis. Such study shall evaluate renewable fuel supplies and prices, blendstock supplies, and supply and distribution system capabilities. Based on such study, the Secretary shall make specific recommendations to the Administrator regarding waiver of the requirements of paragraph (2), in whole or in part, to avoid any such adverse impacts. Within 270 days after the date of the enactment of this subsection, the Administrator shall, consistent with the recommendations of the Secretary waive, in whole or in part, the renewable fuels requirement under paragraph (2) by reducing the national quantity of renewable fuel required under this subsection in 2007. This provision shall not be interpreted as limiting the Administrator's authority to waive the requirements of paragraph (2) in whole, or in part, under paragraph (7), pertaining to waivers.
I22``(9) T4Small refineriesK._
I24``(A) T4In generalK._The requirement of paragraph (2) shall not apply to small refineries until January 1, 2011. Not later than December 31, 2009, the Secretary of Energy shall complete for the Administrator a study to determine whether the requirement of paragraph (2) would impose a disproportionate economic hardship on small refineries. For any small refinery that the Secretary of Energy determines would experience a disproportionate economic hardship, the Administrator shall extend the small refinery exemption for such small refinery for no less than two additional years.
I24``(B) T4Economic hardshipK._
I26``(i) T4Extension of exemptionK._A small refinery may at any time petition the Administrator for an extension of the exemption from the requirement of paragraph (2) for the reason of disproportionate economic hardship. In evaluating a hardship petition, the Administrator, in consultation with the Secretary of Energy, shall consider the findings of the study under subparagraph (A) in addition to other economic factors.
I26``(ii) T4Deadline for action on petitionsK._The Administrator shall act on any petition submitted by a small refinery for a hardship exemption not later than 90 days after the receipt of the petition.
I24``(C) T4Credit programK._If a small refinery notifies the Administrator that it waives the exemption provided by this paragraph, the regulations shall provide for the generation of credits by the small refinery beginning in the year following such notification.
I24``(D) T4Opt-in for small refinersK._A small refinery shall be subject to the requirements of this subsection if it notifies the Administrator that it waives the exemption under subparagraph (A).''T1.
I20(b) T5Penalties and EnforcementK._Section 211(d) of the Clean Air Act (42 U.S.C. 7545(d)) is amended_
I22(1) in paragraph (1)_
I24(A) in the first sentence, by striking ``or (n)'' each place it appears and inserting ``(n), or (o)''; and
I24(B) in the second sentence, by striking ``or (m)'' and inserting ``(m), or (o)''; and
I22(2) in the first sentence of paragraph (2), by striking ``and (n)'' each place it appears and inserting ``(n), and (o)''.
I20(c) T5Exclusion From Ethanol WaiverK._Section 211(h) of the Clean Air Act (42 U.S.C. 7545(h)) is amended_
I22(1) by redesignating paragraph (5) as paragraph (6); and
I22(2) by inserting after paragraph (4) the following:
I22``(5) T4Exclusion from ethanol waiverK._
I24``(A) T4Promulgation of regulationsK._Upon notification, accompanied by supporting documentation, from the Governor of a State that the Reid vapor pressure limitation established by paragraph (4) will increase emissions that contribute to air pollution in any area in the State, the Administrator shall, by regulation, apply, in lieu of the Reid vapor pressure limitation established by paragraph (4), the Reid vapor pressure limitation established by paragraph (1) to all fuel blends containing gasoline and 10 percent denatured anhydrous ethanol that are sold, offered for sale, dispensed, supplied, offered for supply, transported or introduced into commerce in the area during the high ozone season.
I24``(B) T4Deadline for promulgationK._The Administrator shall promulgate regulations under subparagraph (A) not later than 90 days after the date of receipt of a notification from a Governor under that subparagraph.
I24``(C) T4Effective dateK._
I26``(i) T4In generalK._With respect to an area in a State for which the Governor submits a notification under subparagraph (A), the regulations under that subparagraph shall take effect on the later of_
I28``(I) the first day of the first high ozone season for the area that begins after the date of receipt of the notification; or
I28``(II) 1 year after the date of receipt of the notification.
I26``(ii) T4Extension of effective date based on determination of insufficient supplyK._
I28``(I) T4In generalK._If, after receipt of a notification with respect to an area from a Governor of a State under subparagraph (A), the Administrator determines, on the Administrator's own motion or on petition of any person and after consultation with the Secretary of Energy, that the promulgation of regulations described in subparagraph (A) would result in an insufficient supply of gasoline in the State, the Administrator, by regulation_
I30``(aa) shall extend the effective date of the regulations under clause (i) with respect to the area for not more than 1 year; and
I30``(bb) may renew the extension under item (aa) for two additional periods, each of which shall not exceed 1 year.
I28``(II) T4Deadline for action on petitionsK._The Administrator shall act on any petition submitted under subclause (I) not later than 180 days after the date of receipt of the petition.''T1.
I20(d) T5Survey of Renewable Fuel MarketK._
I22(1) T4Survey and reportK._Not later than December 1, 2008, and annually thereafter, the Administrator shall_
I24(A) conduct, with respect to each conventional gasoline use area and each reformulated gasoline use area in each State, a survey to determine the market shares of_
I26(i) conventional gasoline containing ethanol;
I26(ii) reformulated gasoline containing ethanol;
I26(iii) conventional gasoline containing renewable fuel; and
I26(iv) reformulated gasoline containing renewable fuel; and
I24(B) submit to the Congress, and make publicly available, a report on the results of the survey under subparagraph (A).
I22(2) T4Recordkeeping and reporting requirementsK._The Administrator may require any refiner, blender, or importer to keep such records and make such reports as are necessary to ensure that the survey conducted under paragraph (1) is accurate. The Administrator shall rely, to the extent practicable, on existing reporting and recordkeeping requirements to avoid duplicative requirements.
I22(3) T4Applicable lawK._Activities carried out under this subsection shall be conducted in a manner designed to protect confidentiality of individual responses.
I72SEC. 702. ELIMINATION OF OXYGEN CONTENT REQUIREMENT FOR REFORMULATED GASOLINE.
I20(a) T5EliminationK._
I22(1) T4In generalK._Section 211(k) of the clean air act (42 U.S.C. 7545(k)) is amended_
I24(A) In paragraph (2)_
I26(i) in the second sentence of subparagraph (A), by striking ``(including the oxygen content requirement contained in subparagraph (B))'';
I26(ii) by striking subparagraph (B); and
I26(iii) by redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively;
I24(B) in paragraph (3)(A), by striking clause (v); and
I24(C) In paragraph (7)_
I26(i) In subparagraph (A)
I28(I) by striking clause (i); and
I28(II) by redesignating clauses (ii) and (iii) as clauses (i) and (ii), respectively; and
I26(ii) in subparagraph (C)_
I28(I) by striking clause (ii); and
I28(II) by redesignating clause (iii) as clause (ii).
I22(2) T4Effective dateK._The amendments made by paragraph (1) take effect on the date that is 1 year after the date of enactment of this Act, except that the amendments shall take effect upon that date of enactment in any State that has received a waiver under section 209(b) of the Clean Air Act (42 U.S.C. 7543(b)).
I20(b) T5Maintenance of Toxic Air Pollutant Emission ReductionsK._Section 211(k)(1) of the Clean Air Act (42 U.S.C. 7545(k)(1)) is amended_
I22(1) by striking ``Within 1 year after the enactment of the Clean Air Act Amendments of 1990,'' and inserting the following:
I22``(A) T4In generalK._Not later than November 15, 1991,''T1; and
I22(2) by adding at the end the following:
I24``(B) T4Maintenance of toxic air pollutant emissions reductions from reformulated gasolineK._
I26``(i) T4Definition of paddK._In this subparagraph, the term `PADD' means a Petroleum Administration for Defense District
I26``(ii) T4Regulations regarding emissions of toxic air pollutantsK._Not later than 270 days after the date of enactment of this subparagraph, the Administrator shall establish, for each refinery or importer, standards for toxic air pollutants from use of the reformulated gasoline produced or distributed by the refinery or importer that maintain the reduction of the average annual aggregate emissions of toxic air pollutants for reformulated gasoline produced or distributed by the refinery or importer during calendar years 2002 and 2003, determined on the basis of data collected by the Administrator with respect to the refinery or importer.
I26``(iii) T4Standards applicable to specific refineries or importersK._
I28``(I) T4Applicability of standardsK._For any calendar year, the standards applicable to a refinery or importer under clause (ii) shall apply to the quantity of gasoline produced or distributed by the refinery or importer in the calendar year only to the extent that the quantity is less than or equal to the average annual quantity of reformulated gasoline produced or distributed by the refinery or importer during calendar years 2002 and 2003.
I28``(II) T4Applicability of other standardsK._For any calendar year, the quantity of gasoline produced or distributed by a refinery or importer that is in excess of the quantity subject to subclause (I) shall be subject to standards for toxic air pollutants promulgated under subparagraph (A) and paragraph (3)(B).
I26``(iv) T4Credit programK._The Administrator shall provide for the granting and use of credits for emissions of toxic air pollutants in the same manner as provided in paragraph (7).
I26``(v) T4Regional protection of toxics reduction baselinesK._
I28``(I) T4In generalK._Not later than 60 days after the date of enactment of this subparagraph, and not later than April 1 of each calendar year that begins after that date of enactment, the Administrator shall publish in the Federal Register a report that specifies, with respect to the previous calendar year_
I30``(aa) the quantity of reformulated gasoline produced that is in excess of the average annual quantity of reformulated gasoline produced in 2002 and 2003; and
I30``(bb) the reduction of the average annual aggregate emissions of toxic air pollutants in each PADD, based on retail survey data or data from other appropriate sources.
I28``(II) T4Effect of failure to maintain aggregate toxics reductionsK._If, in any calendar year, the reduction of the average annual aggregate emissions of toxic air pollutants in a PADD fails to meet or exceed the reduction of the average annual aggregate emissions of toxic air pollutants in the PADD in calendar years 2002 and 2003, the Administrator, not later than 90 days after the date of publication of the report for the calendar year under subclause (I), shall_
I30``(aa) identify, to the maximum extent practicable, the reasons for the failure, including the sources, volumes, and characteristics of reformulated gasoline that contributed to the failure; and
I30``(bb) promulgate revisions to the regulations promulgated under clause (ii), to take effect not earlier than 180 days but not later than 270 days after the date of promulgation, to provide that, notwithstanding clause (iii)(II), all reformulated gasoline produced or distributed at each refinery or importer shall meet the standards applicable under clause (ii) not later than April 1 of the year following the report under this subclause and for subsequent years.
I26``(vi) T4Regulations to control hazardous air pollutants from motor vehicles and motor vehicle fuelsK._Not later than July 1, 2006, the Administrator shall promulgate final regulations to control hazardous air pollutants from motor vehicles and motor vehicle fuels, as provided for in section 80.1045 of title 40, Code of Federal Regulations (as in effect on the date of enactment of this subparagraph).''T1.
I20(c) T5Consolidation in Reformulated Gasoline RegulationsK._Not later than 180 days after the date of enactment of this Act, the Administrator of the Environmental Protection Agency shall revise the reformulated gasoline regulations under subpart D of part 80 of title 40, Code of Federal Regulations (or any successor regulations), to consolidate the regulations applicable to VOC˙09Control Regions 1 and 2 under section 80.41 of that title by eliminating the less stringent requirements applicable to gasoline designated for VOC˙09Control Region 2 and instead applying the more stringent requirements applicable to gasoline designated for VOC˙09Control Region 1.
I20(d) T5Authority of AdministratorK._Nothing in this section affects or prejudices any legal claim or action with respect to regulations promulgated by the Administrator of the Environmental Protection Agency before the date of enactment of this act regarding_
I22(1) emissions of toxic air pollutants from motor vehicles; or
I22(2) the adjustment of standards applicable to a specific refinery or importer made under the prior regulations.
I20(e) T5Determination Regarding a State PetitionK._Section 211(k) of the Clean Air Act (42 U.S.C. 7545(k)) is amended by inserting after paragraph (10) the following:
I22``(11) T4Determination regarding a state petitionK._
I24``(A) T4In generalK._Notwithstanding any other provision of this section, not later than 30 days after the date of enactment of this paragraph, the Administrator shall determine the adequacy of any petition received from a Governor of a State to exempt gasoline sold in that State from the requirements under paragraph (2)(B).
I24``(B) T4ApprovalK._If a determination under subparagraph (A) is not made by the date that is 30 days after the date of enactment of this paragraph, the petition shall be considered to be approved.''T1.
I72SEC. 703. PUBLIC HEALTH AND ENVIRONMENTAL IMPACTS OF FUELS AND FUEL ADDITIVES.
I20Section 211(b) of the Clean Air Act (42 U.S.C. 7545(b)) is amended_
I22(1) in paragraph (2)_
I24(A) by striking ``may also'' and inserting ``shall, on a regular basis,''; and
I24(B) by striking subparagraph (A) and inserting the following:
I24``(A) to conduct tests to determine potential public health and environmental effects of the fuel or additive (including carcinogenic, teratogenic, or mutagenic effects); and''T1; and
I22(2) by adding at the end the following:
I22``(4) T4Study on certain fuel additives and blendstocksK._
I24``(A) T4In generalK._Not later than 2 years after the date of enactment of this paragraph, the Administrator shall_
I26``(i) conduct a study on the effects on public health, air quality, and water resources of increased use of, and the feasibility of using as substitutes for methyl tertiary butyl ether in gasoline
I28``(I) ethyl tertiary butyl ether;
I28``(II) tertiary amyl methyl ether;
I28``(III) di-isopropyl ether;
I28``(IV) tertiary butyl alcohol;
I28``(V) other ethers and heavy alcohols, as determined by the Administrator;
I28``(VI) ethanol;
I28``(VII) iso-octane; and
I28``(VIII) alkylates;
I26``(ii) conduct a study on the effects on public health, air quality, and water resources of the adjustment for ethanol-blended reformulated gasoline to the VOC performance requirements otherwise applicable under sections 211(k)(1) and 211(k)(3); and
I26``(iii) submit to the Committee on Environment and Public Works of the Senate and the Committee on Energy and Commerce of the House of Representatives a report describing the results of these studies.
I24``(B) T4Contracts for studyK._In carrying out this paragraph, the Administrator may enter into one or more contracts with nongovernmental entities including but not limited to National Energy Laboratories and institutions of higher education (as defined in section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001)).''T1.
I72SEC. 704. ANALYSES OF MOTOR VEHICLE FUEL CHANGES.
I20Section 211 of the Clean Air Act (42 U.S.C. 7545) is amended by inserting after subsection (o) (as added by section 101(a)(2)) the following:
I20``(p) T5Analyses of Motor Vehicle Fuel Changes and Emissions ModelK._
I22``(1) T4Anti-backsliding analysisK._
I24``(A) T4Draft analysisK._Not later than 4 years after the date of enactment of this subsection, the Administrator shall publish for public comment a draft analysis of the changes in emissions of air pollutants and air quality due to the use of motor vehicle fuel and fuel additives resulting from implementation of the amendments made by the New Apollo Energy Act of 2005.
I24``(B) T4Final analysisK._After providing a reasonable opportunity for comment, but not later than 5 years after the date of enactment of this paragraph, the Administrator shall publish the analysis in final form.
I22``(2) T4Emissions modelK._For the purposes of this subsection, as soon as the necessary data are available, the Administrator shall develop and finalize an emissions model that reasonably reflects the effects of gasoline characteristics or components on emissions from vehicles in the motor vehicle fleet during calendar year 2005.''T1.
I72SEC. 705. ADDITIONAL OPT-IN AREAS UNDER REFORMULATED GASOLINE PROGRAM.
I20Section 211(k)(6) of the Clean Air Act (42 U.S.C. 7545(k)(6)) is amended_
I22(1) by striking ``(6) Opt-in areas._(A) Upon'' and inserting the following:
I22``(6) T4Opt-in areasK._
I24``(A) T4Classified areasK._
I26``(i) T4In generalK._Upon''T1;
I22(2) in subparagraph (B), by striking ``(B) If'' and inserting the following:
I26``(ii) T4Effect of insufficient domestic capacity to produce reformulated gasolineK._If''T1;
I22(3) in subparagraph (A)(ii) (as redesignated by paragraph (2))_
I24(A) in the first sentence, by striking ``subparagraph (A)'' and inserting ``clause (i)''; and
I24(B) in the second sentence, by striking ``this paragraph'' and inserting ``this subparagraph''; and
I22(4) by adding at the end the following:
I24``(B) T4Ozone transport regionK._
I26``(i) T4Application of prohibitionK._
I28``(I) T4In generalK._In addition to the provisions of subparagraph (A), upon the application of the Governor of a State in the ozone transport region established by section 184(a), the Administrator, not later than 180 days after the date of receipt of the application, shall apply the prohibition specified in paragraph (5) to any area in the State (other than an area classified as a marginal, moderate, serious, or severe ozone nonattainment area under subpart 2 of part D of title I) unless the Administrator determines under clause (iii) that there is insufficient capacity to supply reformulated gasoline.
I28``(II) T4Publication of applicationK._As soon as practicable after the date of receipt of an application under subclause (I), the Administrator shall publish the application in the Federal Register.
I26``(ii) T4Period of applicabilityK._Under clause (i), the prohibition specified in paragraph (5) shall apply in a State_
I28``(I) commencing as soon as practicable but not later than 2 years after the date of approval by the Administrator of the application of the Governor of the State; and
I28``(II) ending not earlier than 4 years after the commencement date determined under subclause (I).
I26``(iii) T4Extension of commencement date based on insufficient capacityK._
I28``(I) T4In generalK._If, after receipt of an application from a Governor of a State under clause (i), the Administrator determines, on the Administrator's own motion or on petition of any person, after consultation with the Secretary of Energy, that there is insufficient capacity to supply reformulated gasoline, the Administrator, by regulation_
I30``(aa) shall extend the commencement date with respect to the State under clause (ii)(I) for not more than 1 year; and
I30``(bb) may renew the extension under item (aa) for 2 additional periods, each of which shall not exceed 1 year.
I28``(II) T4Deadline for action on petitionsK._The Administrator shall act on any petition submitted under subclause (I) not later than 180 days after the date of receipt of the petition.''T1.
I72SEC. 706. FEDERAL ENFORCEMENT OF STATE FUELS REQUIREMENTS.
I20Section 211(c)(4)(C) of the Clean Air Act (42 U.S.C. 7545(c)(4)(C)) is amended_
I22(1) by striking ``(C) A State'' and inserting the following:
I24``(C) T4Authority of state to control fuels and fuel additives for reasons of necessityK._
I26``(i) T4In generalK._A State''T1; and
I22(2) by adding at the end the following:
I26``(ii) T4Enforcement by the administratorK._In any case in which a State prescribes and enforces a control or prohibition under clause (i), the Administrator, at the request of the State, shall enforce the control or prohibition as if the control or prohibition had been adopted under the other provisions of this section.''T1.
I72SEC. 707. FUEL SYSTEM REQUIREMENTS HARMONIZATION STUDY.
I20(a) T5StudyK._
I22(1) T4In generalK._The Administrator of the Environmental Protection Agency and the Secretary of Energy shall jointly conduct a study of Federal, State, and local requirements concerning motor vehicle fuels, including_
I24(A) requirements relating to reformulated gasoline, volatility (measured in Reid vapor pressure), oxygenated fuel, and diesel fuel; and
I24(B) other requirements that vary from State to State, region to region, or locality to locality.
I22(2) T4Required elementsK._The study shall assess_
I24(A) the effect of the variety of requirements described in paragraph (1) on the supply, quality, and price of motor vehicle fuels available to the consumer;
I24(B) the effect of the requirements described in paragraph (1) on achievement of_
I26(i) national, regional, and local air quality standards and goals; and
I26(ii) related environmental and public health protection standards and goals;
I24(C) the effect of Federal, State, and local motor vehicle fuel regulations, including multiple motor vehicle fuel requirements, on_
I26(i) domestic refineries;
I26(ii) the fuel distribution system; and
I26(iii) industry investment in new capacity;
I24(D) the effect of the requirements described in paragraph (1) on emissions from vehicles, refineries, and fuel handling facilities;
I24(E) the feasibility of developing national or regional motor vehicle fuel slates for the 48 contiguous States that, while protecting and improving air quality at the national, regional, and local levels, could_
I26(i) enhance flexibility in the fuel distribution infrastructure and improve fuel fungibility;
I26(ii) reduce price volatility and costs to consumers and producers;
I26(iii) provide increased liquidity to the gasoline market; and
I26(iv) enhance fuel quality, consistency, and supply; and
I24(F) the feasibility of providing incentives, and the need for the development of national standards necessary, to promote cleaner burning motor vehicle fuel.
I20(b) T5ReportK._
I22(1) T4In generalK._Not later than June 1, 2006, the Administrator of the Environmental Protection Agency and the Secretary of Energy shall submit to Congress a report on the results of the study conducted under subsection (a).
I22(2) T4RecommendationsK._
I24(A) T4In generalK._The report shall contain recommendations for legislative and administrative actions that may be taken_
I26(i) to improve air quality;
I26(ii) to reduce costs to consumers and producers; and
I26(iii) to increase supply liquidity.
I24(B) T4Required considerationsK._The recommendations under subparagraph (A) shall take into account the need to provide advance notice of required modifications to refinery and fuel distribution systems in order to ensure an adequate supply of motor vehicle fuel in all States.
I22(3) T4ConsultationK._In developing the report, the Administrator of the Environmental Protection Agency and the Secretary of Energy shall consult with_
I24(A) the Governors of the States;
I24(B) automobile manufacturers;
I24(C) motor vehicle fuel producers and distributors; and
I24(D) the public.
I72SEC. 708. REPORT ON RENEWABLE MOTOR FUEL.
I20Not later than January 1, 2007, the Secretary of Energy and the Secretary of Agriculture shall jointly prepare and submit to Congress a report containing recommendations for achieving, by January 1, 2025, at least 25 percent renewable fuel content (calculated on an average annual basis) for all gasoline sold or introduced into commerce in the United States.

I78Subtitle B_Renewable Portfolio Standard
I72SEC. 711. RENEWABLE PORTFOLIO STANDARD.
I20(a) T5In GeneralK._Title VI of the Public Utility Regulatory Policies Act of 1978 is amended by adding at the end the following:
I72``SEC. 609. FEDERAL RENEWABLE PORTFOLIO STANDARD.
I20``(a) T5Minimum Renewable Generation RequirementK._For each calendar year beginning in calendar year 2007, each retail electric supplier shall submit to the Secretary, not later than April 1 of the following calendar year, renewable energy credits in an amount equal to the required annual percentage specified in subsection (b).
I20``(b) T5Required Annual PercentageK._T1(1) For calendar years 2007 through 2022, the required annual percentage of the retail electric supplier's base amount that shall be generated from renewable energy resources shall be the percentage specified in the following table:
Q10
c2,L0(0,0,0,4,0,17),tp0,p10,10/12,g1,t1,s100n,xs95Rn
I95
h1
h1
j
I11``T2Calendar yearsKDT2Required annual percentageK
I022007 through 2008Dxl1.0
I022009 through 2010Dxl2.2
I022011 through 2012Dxl3.4
I022013 through 2014Dxl4.6
I022015 through 2016Dxl5.8
I022017 through 2018Dxl7.0
I022019 through 2020Dxl8.5
I022021 through 2022Dxl10.0
e

I20``(2) Not later than January 1, 2017, the Secretary may, by rule, establish required annual percentages in amounts not less than 10.0 for calendar years 2022 through 2030.
I20``(c) T5Submission of CreditsK._T1(1) A retail electric supplier may satisfy the requirements of subsection (a) through the submission of renewable energy credits_
I22``(A) issued to the retail electric supplier under subsection (d);
I22``(B) obtained by purchase or exchange under subsection (e); or
I22``(C) borrowed under subsection (f).
I20``(2) A credit may be counted toward compliance with subsection (a) only once.
I20``(d) T5Issuance of CreditsK._T1(1) The Secretary shall establish, not later than 1 year after the date of enactment of this section, a program to issue, monitor the sale or exchange of, and track renewable energy credits.
I20``(2) Under the program, an entity that generates electric energy through the use of a renewable energy resource may apply to the Secretary for the issuance of renewable energy credits. The application shall indicate_
I22``(A) the type of renewable energy resource used to produce the electricity,
I22``(B) the location where the electric energy was produced, and
I22``(C) any other information the Secretary determines appropriate.
I20``(3)T1(A) Except as provided in paragraphs (B), (C), and (D), the Secretary shall issue to an entity one renewable energy credit for each kilowatt-hour of electric energy the entity generates after the date of enactment of this section and in each subsequent calendar year through the use of a renewable energy resource at an eligible facility.
I20``(B) For incremental hydropower, the credits shall be calculated based on the expected increase in average annual generation resulting from the efficiency improvements or capacity additions. The number of credits shall be calculated using the same water flow information used to determine a historic average annual generation baseline for the hydroelectric facility and certified by the Secretary or the Federal Energy Regulatory Commission. The calculation of the credits for incremental hydropower shall not be based on any operational changes at the hydroelectric facility not directly associated with the efficiency improvements or capacity additions.
I20``(C) The Secretary shall issue two renewable energy credits for each kilowatt-hour of electric energy generated and supplied to the grid in that calendar year through the use of a renewable energy resource at an eligible facility located on Indian land. For purposes of this paragraph, renewable energy generated by biomass cofired with other fuels is eligible for two credits only if the biomass was grown on the land eligible under this paragraph.
I20``(D) For renewable energy resources produced from a generation offset, the Secretary shall issue two renewable energy credits for each kilowatt-hour generated.
I20``(E) To be eligible for a renewable energy credit, the unit of electric energy generated through the use of a renewable energy resource may be sold or may be used by the generator. If both a renewable energy resource and a nonrenewable energy resource are used to generate the electric energy, the Secretary shall issue credits based on the proportion of the renewable energy resource used. The Secretary shall identify renewable energy credits by type and date of generation.
I20``(5) When a generator sells electric energy generated through the use of a renewable energy resource to a retail electric supplier under a contract subject to section 210 of this Act, the retail electric supplier is treated as the generator of the electric energy for the purposes of this section for the duration of the contract.
I20``(6) The Secretary may issue credits for existing facility offsets to be applied against a retail electric supplier's own required annual percentage. The credits are not tradeable and may only be used in the calendar year generation actually occurs.
I20``(e) T5Credit TradingK._A renewable energy credit may be sold or exchanged by the entity to whom issued or by any other entity who acquires the credit. A renewable energy credit for any year that is not used to satisfy the minimum renewable generation requirement of subsection (a) for that year may be carried forward for use within the next 4 years.
I20``(f) T5Credit BorrowingK._At any time before the end of calendar year 2007, a retail electric supplier that has reason to believe it will not have sufficient renewable energy credits to comply with subsection (a) may_
I22``(1) submit a plan to the Secretary demonstrating that the retail electric supplier will earn sufficient credits within the next 3 calendar years which, when taken into account, will enable the retail electric supplier's to meet the requirements of subsection (a) for calendar year 2007 and the subsequent calendar years involved; and
I22``(2) upon the approval of the plan by the Secretary, apply credits that the plan demonstrates will be earned within the next 3 calendar years to meet the requirements of subsection (a) for each calendar year involved.
I20``(g) T5Credit Cost CapK._The Secretary shall offer renewable energy credits for sale at the lesser of 3 cents per kilowatt-hour or 200 percent of the average market value of credits for the applicable compliance period. On January 1 of each year following calendar year 2007, the Secretary shall adjust for inflation the price charged per credit for such calendar year, based on the Gross Domestic Product Implicit Price Deflator. Amounts received by the Secretary under this subsection are authorized to be appropriated for purposes of section 610.
I20``(h) T5EnforcementK._The Secretary may bring an action in the appropriate United States district court to impose a civil penalty on a retail electric supplier that does not comply with subsection (a), unless the retail electric supplier was unable to comply with subsection (a) for reasons outside of the supplier's reasonable control (including weather-related damage, mechanical failure, lack of transmission capacity or availability, strikes, lockouts, actions of a governmental authority). A retail electric supplier who does not submit the required number of renewable energy credits under subsection (a) shall be subject to a civil penalty of not more than the greater of 3 cents or 200 percent of the average market value of credits for the compliance period for each renewable energy credit not submitted.
I20``(i) T5Information CollectionK._The Secretary may collect the information necessary to verify and audit_
I22``(1) the annual electric energy generation and renewable energy generation of any entity applying for renewable energy credits under this section,
I22``(2) the validity of renewable energy credits submitted by a retail electric supplier to the Secretary, and
I22``(3) the quantity of electricity sales of all retail electric suppliers.
I20``(j) T5Environmental Savings ClauseK._Incremental hydropower shall be subject to all applicable environmental laws and licensing and regulatory requirements.
I20``(k) T5State Savings ClauseK._This section does not preclude a State from requiring additional renewable energy generation in that State, or from specifying technology mix.
I20``(l) T5DefinitionsK._For purposes of this section:
I22``(1) T4BiomassK._The term `biomass' means any organic material that is available on a renewable or recurring basis, including dedicated energy crops, trees grown for energy production, wood waste and wood residues, plants (including aquatic plants, grasses, and agricultural crops), residues, fibers, animal wastes and other organic waste materials, and fats and oils, except that with respect to material removed from National Forest System lands the term includes only organic material from_
I24``(A) thinnings from trees that are less than 12 inches in diameter;
I24``(B) slash;
I24``(C) brush; and
I24``(D) mill residues.
I22``(2) T4Eligible facilityK._The term `eligible facility' means_
I24``(A) a facility for the generation of electric energy from a renewable energy resource that is placed in service on or after the date of enactment of this section; or
I24``(B) a repowering or cofiring increment that is placed in service on or after the date of enactment of this section at a facility for the generation of electric energy from a renewable energy resource that was placed in service before that date.
I22``(3) T4Eligible renewable energy resourceK._The term `renewable energy resource' means solar, wind, ocean, or geothermal energy, biomass (excluding solid waste and paper that is commonly recycled), landfill gas, a generation offset, or incremental hydropower.
I22``(4) T4Generation offsetK._The term `generation offset' means reduced electricity usage metered at a site where a customer consumes energy from a renewable energy technology.
I22``(5) T4Existing facility offsetK._The term `existing facility offset' means renewable energy generated from an existing facility, not classified as an eligible facility, that is owned or under contract to a retail electric supplier on the date of enactment of this section.
I22``(6) T4Incremental hydropowerK._The term `incremental hydropower' means additional generation that is achieved from increased efficiency or additions of capacity after the date of enactment of this section at a hydroelectric dam that was placed in service before that date.
I22``(7) T4Indian landK._The term `Indian land' means_
I24``(A) any land within the limits of any Indian reservation, pueblo, or rancheria,
I24``(B) any land not within the limits of any Indian reservation, pueblo, or rancheria title to which was on the date of enactment of this paragraph either held by the United States for the benefit of any Indian tribe or individual or held by any Indian tribe or individual subject to restriction by the United States against alienation,
I24``(C) any dependent Indian community, and
I24``(D) any land conveyed to any Alaska Native corporation under the Alaska Native Claims Settlement Act.
I22``(8) T4Indian tribeK._The term `Indian tribe' means any Indian tribe, band, nation, or other organized group or community, including any Alaskan Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.
I22``(9) T4Renewable energyK._The term `renewable energy' means electric energy generated by a renewable energy resource.
I22``(10) T4Renewable energy resourceK._The term `renewable energy resource' means solar, wind, ocean, or geothermal energy, biomass (including municipal solid waste), landfill gas, a generation offset, or incremental hydropower.
I22``(11) T4Repowering or cofiring incrementK._The term `repowering or cofiring increment' means the additional generation from a modification that is placed in service on or after the date of enactment of this section to expand electricity production at a facility used to generate electric energy from a renewable energy resource or to cofire biomass that was placed in service before the date of enactment of this section, or the additional generation above the average generation in the 3 years preceding the date of enactment of this section, to expand electricity production at a facility used to generate electric energy from a renewable energy resource or to cofire biomass that was placed in service before the date of enactment of this section.
I22``(12) T4Retail electric supplierK._The term `retail electric supplier' means a person that sells electric energy to electric consumers and sold not less than 1,000,000 megawatt-hours of electric energy to electric consumers for purposes other than resale during the preceding calendar year; except that such term does not include the United States, a State or any political subdivision of a State, or any agency, authority, or instrumentality of any one or more of the foregoing, or a rural electric cooperative.
I22``(13) T4Retail electric supplier's base amountK._The term `retail electric supplier's base amount' means the total amount of electric energy sold by the retail electric supplier to electric customers during the most recent calendar year for which information is available, excluding electric energy generated by_
I24``(A) an eligible renewable energy resource;
I24``(B) municipal solid waste; or
I24``(C) a hydroelectric facility.
I20``(m) T5SunsetK._This section expires December 31, 2030.
I72``SEC. 610. STATE GRANT PROGRAM.
I20``(a) T5In GeneralK._The Secretary is authorized to distribute, subject to available appropriations, amounts received from sales under subsection (g) of section 609 to States to be used for the purposes of the program established under subsection (b) of this section.
I20``(b) T5Grant ProgramK._
I22``(1) T4In generalK._Not later than 1 year after the date of enactment of this Act, the Secretary shall establish a program to promote State renewable energy production and use.
I22``(2) T4Use of fundK._The Secretary shall make funds available under this section to State energy agencies for grant programs for the construction of renewable energy facilities.
I20``(c) T5PreferenceK._In allocating funds under the program, the Secretary shall give preference to the following:
I22``(1) States that have a disproportionately small share of economically sustainable renewable energy generation capacity.
I22``(2) State grant programs that are most likely to stimulate or enhance innovative renewable energy technologies.''T1.
I20(b) T5Table of ContentsK._The table of contents for such title VI is amended by adding the following new items at the end thereof:
Q10
S6211

I42``Sec.609.Federal renewable portfolio standard.
I42``Sec.610.State grant program.''T1.S6201


I78Subtitle C_Oil Savings
I72SEC. 721. OIL SAVINGS.
I20(a) T5In GeneralK._Appropriate Federal departments and agencies, as identified by the President, shall propose voluntary, regulatory, and other actions sufficient to achieve_
I22(1) by 2010 a reduction in the demand for oil in the United States by at least 600,000 barrels per day from the demand projected, as of January 1, 2005, by the Energy Information Administration for the year 2010;
I22(2) by 2015 a reduction in the demand for oil in the United States by at least 1,700,000 barrels per day from the demand projected, as of January 1, 2005, by the Energy Information Administration for the year 2015; and
I22(3) by 2020 a reduction in the demand for oil in the United States by at least 3,000,000 barrels per day from the demand projected, as of January 1, 2005, by the Energy Information Administration for the year 2020.
I20(b) T5Monitoring and Reports to CongressK._Not later than 12 months after the date of the enactment of this Act, and each year thereafter, the departments and agencies referred to in subsection (a) shall report to the Congress on_
I22(1) proposed and finalized regulatory and other actions taken to achieve the requirements under subsection (a);
I22(2) progress made in achieving the actions required under subsection (a); and
I22(3) lack of funding or authority preventing the implementation of the actions required under subsection (a).
I20(c) T5Request to CongressK._If the President determines that the departments and agencies referred to in subsection (a) lack authority or funding to implement the actions proposed under subsection (a), the President shall request the necessary authority or funding from the Congress not later than 9 months after the date of enactment of this Act.
I20(d) T5Final ActionsK._Not later than 12 months after the date of the enactment of this Act, the departments and agencies referred to in subsection (a) shall finalize the actions proposed pursuant to subsection (a) for which they have authority and funding.
I72SEC. 722. DETERMINATION OF EQUIVALENCY BETWEEN CAFE CREDITS AND GREENHOUSE GAS CREDITS.
I20The Secretary of Transportation, the Administrator of the Environmental Protection Agency, and the Secretary of Commerce shall jointly conduct and submit to the Congress within 2 years of the date of the enactment of this section a study_
I22(1) showing a methodology for determining the equivalency of credits earned under Section 32903 of title 49, United States Code, and tradeable allowances under title VI of the New Apollo Energy Act of 2005; and
I22(2) recommending an appeals process for resolving any dispute that may arise out of such a determination, which may incorporate an arbitration option.
I72SEC. 723. ELIMINATION OF 2˙09FLEET RULE.
I20(a) T5In GeneralK._Section 32904 of title 49, United States Code, is amended_
I22(1) by striking subsection (b); and
I22(2) by redesignating subsections (c) through (e) as subsections (b) through (d), respectively.

I20(b) T5Effective DateK._The amendments made by subsection (a) shall apply to model years 2010 and later.

I78Subtitle D_Loan Guarantees for Biorefineries and Renewable Electricity Generation Facilities
I72SEC. 731. LOAN GUARANTEES FOR BIOREFINERIES AND RENEWABLE ENERGY PRODUCTION FACILITIES.
I20(a) T5AuthorityK._The Secretary of Energy may guarantee not more than 80 percent of the principal of any loan made to any person or other entity for any of the following:
I22(1) The construction of any new facility that primarily makes cellulosic biomass ethanol or biomethanol or generates electricity, or any combination thereof, from wind energy, biomass, solar energy, ocean energy or geothermal sources.
I22(2) The modification of any facility that primarily generates electricity from wind energy, biomass, solar energy, ocean energy, or geothermal sources if such modification adds additional electric generation capacity from any of such sources.
I22(3) The modification of any facility that primarily makes cellulosic biomass ethanol, biomethanol, or electricity from wind energy, biomass, solar energy, ocean energy or geothermal sources if such modification adds additional capacity to make cellulosic biomass ethanol or biomethanol from any such source or combination of sources.
I22(4) The conversion of any facility that primarily makes ethanol to a facility that primarily makes cellulosic biomass ethanol.
I22(5) The construction of any new ninety percent sequestration coal power facility.
I20(b) T5ConditionsK._
I22(1) T4Loan makerK._A loan guaranteed under this section shall be made by a financial institution subject to the examination of the Secretary. 
I22(2) T4Environmental lawsK._Any project for which a loan guarantee is issued under this section shall be required by the Secretary as a condition of the loan guarantee to comply with all applicable Federal, State, and local environmental laws.
I22(3) T4Other requirementsK._Loan requirements, including term, fees, maximum size, collateral requirements, and other features, shall be determined by the Secretary.
I20(c) T5Limitation on AmountK._The Secretary of Energy may make commitments to guarantee loans under this section only to the extent that the total amount of loan principal guaranteed by the Secretary does not exceed $49,000,000,000. Of such total amount, the Secretary may make commitments to guarantee_
I22(1) not more than $7,000,000,000 of loan principal for each of the following project types_
I24(A) biomass facilities;
I24(B) geothemal energy facilities;
I24(C) ninety percent sequestration coal power facilities;
I24(D) ocean energy facilities; and
I24(E) solar energy facilities;
I22(2) not more than $7,000,000,000 of loan principal for cellulosic biomass ethanol;
I22(3) not more than $2,000,000,000 of loan principal for biomethanol facilities; and
I22(4) not more than $5,000,000,000 of loan principal for wind energy facilities.
I20(d) T5Coordination With Other BenefitsK._The Secretary shall not guarantee under this section any loan made to any person if such person has received assistance under section 212 or 642.
I20(e) T5RegulationsK._The Secretary of Energy may issue regulations to carry out the provisions of this section. 
I20(f) T5DefinitionsK._As used in this section:
I22(1) The term ``agricultural livestock'' includes bovine, swine, poultry, and sheep.
I22(2) The term ``agricultural livestock waste nutrients'' means agricultural livestock manure and litter, including wood shavings, straw, rice hulls, and other bedding material for the disposition of manure.
I22(3) The term ``biomass facility'' means a facility that generates electricity from closed-loop biomass, open-loop biomass, or both.
I22(4) The term ``biomethanol facility'' means a facility that generates methanol from biomass, animal waste, or municipal solid waste.
I22(5) The term ``cellulosic biomass ethanol'' means ethanol derived from any nonhazardous lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis, including_
I24(A) dedicated energy crops and trees;
I24(B) the following forest-related resources_
I26(i) harvesting residue;
I26(ii) pre-commercial thinnings;
I26(iii) slash; and
I26(iv) bush;
I24(C) plants;
I24(D) grasses
I24(E) agricultural residues
I24(F) fibers;
I24(G) animal wastes and other waste materials; and
I24(H) municipal solid waste.
I22(6) The term ``cellulosic biomass ethanol facility'' means a facility that produces cellulosic biomass ethanol.
I22(7) The term ``closed-loop biomass'' means any organic material from a plant which is planted exclusively for purposes of being used at a biomass facility to produce electricity.'' 
I22(8) The term ``geothermal energy facility'' means a facility that generates electricity from geothermal energy.
I22(9) The term ``ninety percent sequestration coal power facility'' means a facility that generates electricity using coal as a fuel source and sequesters, rather than releases to the atmosphere, at least 90 percent of the carbon dioxide emissions resulting from such coal combustion. 
I22(10) The term ``ocean energy facility'' means a facility that generates electricity from ocean tidal, wave, current or thermal processes.
I22(11) The term ``open-loop biomass'' means any agricultural livestock waste nutrients, or any solid, nonhazardous, cellulosic waste material which is segregated from other waste materials and which is derived from:
I24(A) any of the following forest-related resources: mill and harvesting residues, precommercial thinnings, slash, and brush, but not including old-growth timber or black liquor,
I24(B) old wood waste materials, including waste pallets, crates, dunnage, manufacturing and construction wood wastes (other than pressure-treated, chemically-treated, or painted wood wastes), and landscape or right-of-way tree trimmings, but not including unsegregated municipal solid waste (garbage) or postconsumer wastepaper which can be recycled affordably, or
I24(C) agriculture sources, including orchard tree crops, vineyard, grain, legumes, sugar, and other crop by-products or residues.
I22Such term shall not include closed-loop biomass or biomass burned in conjunction with fossil fuel (cofiring) beyond such fossil fuel required for startup and flame stabilization.

I22(12) The term ``sequestration'' means the capture, long-term separation, isolation, or removal of greenhouse gases from the atmosphere. 
I22(13) The term ``solar energy facility'' means a facility that generates electricity from solar energy with a capacity of 25 kilowatts or more.
I22(14) The term ``wind energy facility'' means a facility that generates electricity from from wind energy.

I20(g) T5Authorization of AppropriationsK._There are authorized to be appropriated to the Secretary of Energy such sums as may be necessary to cover the cost of loan guarantees, as defined by section 502(5) of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5)).

I78TITLE VIII_TAX OFFSETS
I72SEC. 801. REFERENCES.
I20(a) T5Short TitleK._This title may be cited as the ``Balanced Energy Supply Tax Policy Act of 2005'' .
I20(b) T5Amendment of 1986 CodeK._Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

I78Subtitle A_Budget Neutrality
I72SEC. 811. TAX REDUCTIONS LIMITED TO REVENUE RAISED BY TAX OFFSETS.
I20(a) T5In GeneralK._The aggregate tax benefits provided by this Act, and any amendment made by this Act, shall not exceed the revenue raised by this Act, and any amendment made by this Act.
I20(b) T5Adjustment of Tax BenefitsK._If the Secretary of the Treasury determines for any year that the tax benefits provided by this Act, and any amendment made by this Act, exceed the revenue raised by this Act, and any amendment made by this Act, the Secretary shall reduce such excess to zero by adjusting such benefits in the manner determined by the Secretary in his sole discretion.
I20(c) T5Report to CongressK._Not later than 1 year after the date of the enactment of this Act, and annually thereafter, the Secretary of the Treasury shall submit a report to Congress on the total budget authority granted by this Act, and the amendments made by this Act, together with such recommendations as the Secretary determines necessary or appropriate to either_
I22(1) reduce such authority, or

I22(2) to increase receipts to the Treasury of the United States to pay for such authority.

I78Subtitle B_Denial of Treaty Benefits
I72SEC. 821. DENIAL OF TREATY BENEFITS FOR CERTAIN DEDUCTIBLE PAYMENTS.
I20(a) T5In GeneralK._Section 894 (relating to income affected by treaty) is amended by adding at the end the following new subsection:
I20``(d) T5Denial of Treaty Benefits for Certain Deductible PaymentsK._
I22``(1) T4In generalK._A foreign entity shall not be entitled under any income tax treaty of the United States with a foreign country to any reduced rate of any withholding tax imposed by this title on any deductible foreign payment unless such entity is predominantly owned by individuals who are residents of such foreign country.
I22``(2) T4Deductible foreign paymentK._For purposes of paragraph (1), the term `deductible foreign payment' means any payment_
I24``(A) which is made by a domestic entity directly or indirectly to a related person which is a foreign entity, and
I24``(B) which is allowable as a deduction under this chapter.
I22``(3) T4Domestic and foreign entities; related personK._For purposes of this subsection_
I24``(A) T4Domestic entityK._The term `domestic entity' means any domestic corporation or domestic partnership.
I24``(B) T4Foreign entityK._The term `foreign entity' means any foreign corporation or foreign partnership.
I24``(C) T4Related personK._The term `related person' has the meaning given such term by section 954(d)(3) (determined by substituting `domestic entity' for `controlled foreign corporation' each place it appears).
I22``(4) T4Predominant ownershipK._For purposes of this subsection_
I24``(A) T4In generalK._An entity is predominantly owned by individuals who are residents of a foreign country if_
I26``(i) in the case of a corporation, more than 50 percent (by value) of the stock of such corporation is owned (within the meaning of section 883(c)(4)) by individuals who are residents of such foreign country, or
I26``(ii) in the case of a partnership, more than 50 percent (by value) of the beneficial interests in such partnership are so owned.
I24``(B) T4Publicly traded corporationsK._A foreign corporation also shall be treated as predominantly owned by individuals who are residents of a foreign country if_
I26``(i)T1(I) the stock of such corporation is primarily and regularly traded on an established securities market in such foreign country, and
I26``(II) such corporation has activities within such foreign country which are substantial in relation to the total activities of such corporation and its related persons, or
I26``(ii) such corporation is wholly owned (directly or indirectly) by another foreign corporation which is described in clause (i).
I24``(C) T4Special ruleK._
I26``(i) T4In generalK._A foreign corporation shall be treated as meeting the requirements of subparagraph (A) if_
I28``(I) such requirements would be met if `30 percent' were substituted for `50 percent' in subparagraph (A)(i),
I28``(II) the treaty country is a member of a multinational economic association such as the European Union, and
I28``(III) at least 50 percent of the value of the stock of the corporation is owned (within the meaning of section 883(c)(4)) by individuals who are residents of the treaty country or other qualified foreign countries.
I26``(ii) T4Qualified foreign countryK._For purposes of this subparagraph, the term `qualified foreign country' means any foreign country if_
I28``(I) such foreign country is a member of the multinational economic association of which the treaty country is a member, and
I28``(II) such foreign country has a tax treaty with the United States providing a withholding tax rate reduction which is not less than the withholding tax rate reduction applicable (without regard to this subsection) to the payment received by such foreign corporation.
I22``(5) T4Exception for corporations with substantial business activities in treaty countryK._Paragraph (1) shall not apply to a payment received by a foreign corporation if such corporation has substantial business activities in the treaty country and if such corporation establishes to the satisfaction of the Secretary that the payment is subject to an effective rate of income tax imposed by such country greater than 90 percent of the maximum rate of tax specified in section 11.
I22``(6) T4Exception for payments received by controlled foreign corporationK._Paragraph (1) shall not apply to any deductible foreign payment made by a corporation if the recipient of the payment is a controlled foreign corporation and the payor is a United States shareholder (as defined in section 951(b)) of such corporation.
I22``(7) T4Conduit paymentsK._Under regulations prescribed by the Secretary, paragraph (1) shall not apply to a payment received by a foreign entity referred to in paragraph (1) if_
I24``(A) within a reasonable period after such entity receives such payment, such entity makes a comparable payment directly or indirectly to another related person,
I24``(B) such related person is a resident of a foreign country with which the United States has an income tax treaty,
I24``(C) such related person is predominantly owned by individuals who are residents of such country, and
I24``(D) the withholding tax rate applicable under such treaty is equal to or greater than the withholding tax rate applicable (without regard to this paragraph) to the payment received by such foreign entity.
I22A similar rule shall apply where the payment is includible in the gross income of a related person by reason of a foreign law comparable to subpart F of part III of subchapter N.''T1.

I20(b) T5Effective DateK._The amendment made by this section shall take effect on the date of the enactment of this Act.

I78Subtitle C_Abusive Tax Shelter Shutdown and Taxpayer Accountability
I72SEC. 831. FINDINGS AND PURPOSE.
I20(a) T5FindingsK._The Congress hereby finds that:
I22(1) Many corporate tax shelter transactions are complicated ways of accomplishing nothing aside from claimed tax benefits, and the legal opinions justifying those transactions take an inappropriately narrow and restrictive view of well-developed court doctrines under which_
I24(A) the taxation of a transaction is determined in accordance with its substance and not merely its form,
I24(B) transactions which have no significant effect on the taxpayer's economic or beneficial interests except for tax benefits are treated as sham transactions and disregarded,
I24(C) transactions involving multiple steps are collapsed when those steps have no substantial economic meaning and are merely designed to create tax benefits,
I24(D) transactions with no business purpose are not given effect, and
I24(E) in the absence of a specific congressional authorization, it is presumed that Congress did not intend a transaction to result in a negative tax where the taxpayer's economic position or rate of return is better after tax than before tax.
I22(2) Permitting aggressive and abusive tax shelters not only results in large revenue losses but also undermines voluntary compliance with the Internal Revenue Code of 1986.
I20(b) T5PurposeK._The purpose of this subtitle is to eliminate abusive tax shelters by denying tax attributes claimed to arise from transactions that do not meet a heightened economic substance requirement and by repealing the provision that permits legal opinions to be used to avoid penalties on tax underpayments resulting from transactions without significant economic substance or business purpose.
I72SEC. 832. CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.
I20(a) T5In GeneralK._Section 7701 is amended by redesignating subsection (o) as subsection (p) and by inserting after subsection (n) the following new subsection:
I20``(o) T5Clarification of Economic Substance Doctrine; EtcK._
I22``(1) T4General rulesK._
I24``(A) T4In generalK._In applying the economic substance doctrine, the determination of whether a transaction has economic substance shall be made as provided in this paragraph.
I24``(B) T4Definition of economic substanceK._For purposes of subparagraph (A)_
I26``(i) T4In generalK._A transaction has economic substance only if_
I28``(I) the transaction changes in a meaningful way (apart from Federal tax effects and, if there are any Federal tax effects, also apart from any foreign, State, or local tax effects) the taxpayer's economic position, and
I28``(II) the taxpayer has a substantial nontax purpose for entering into such transaction and the transaction is a reasonable means of accomplishing such purpose.
I26``(ii) T4Special rule where taxpayer relies on profit potentialK._A transaction shall not be treated as having economic substance by reason of having a potential for profit unless_
I28``(I) the present value of the reasonably expected pre-tax profit from the transaction is substantial in relation to the present value of the expected net tax benefits that would be allowed if the transaction were respected, and
I28``(II) the reasonably expected pre-tax profit from the transaction exceeds a risk-free rate of return.
I24``(C) T4Treatment of fees and foreign taxesK._Fees and other transaction expenses and foreign taxes shall be taken into account as expenses in determining pre-tax profit under subparagraph (B)(ii).
I22``(2) T4Special rules for transactions with tax-indifferent partiesK._
I24``(A) T4Special rules for financing transactionsK._The form of a transaction which is in substance the borrowing of money or the acquisition of financial capital directly or indirectly from a tax-indifferent party shall not be respected if the present value of the deductions to be claimed with respect to the transaction is substantially in excess of the present value of the anticipated economic returns of the person lending the money or providing the financial capital. A public offering shall be treated as a borrowing, or an acquisition of financial capital, from a tax-indifferent party if it is reasonably expected that at least 50 percent of the offering will be placed with tax-indifferent parties.
I24``(B) T4Artificial income shifting and basis adjustmentsK._The form of a transaction with a tax-indifferent party shall not be respected if_
I26``(i) it results in an allocation of income or gain to the tax-indifferent party in excess of such party's economic income or gain, or
I26``(ii) it results in a basis adjustment or shifting of basis on account of overstating the income or gain of the tax-indifferent party.
I22``(3) T4Definitions and special rulesK._For purposes of this subsection_
I24``(A) T4Economic substance doctrineK._The term `economic substance doctrine' means the common law doctrine under which tax benefits under subtitle A with respect to a transaction are not allowable if the transaction does not have economic substance or lacks a business purpose.
I24``(B) T4Tax-indifferent partyK._The term `tax-indifferent party' means any person or entity not subject to tax imposed by subtitle A. A person shall be treated as a tax-indifferent party with respect to a transaction if the items taken into account with respect to the transaction have no substantial impact on such person's liability under subtitle A.
I24``(C) T4Substantial nontax purposeK._In applying subclause (II) of paragraph (1)(B)(i), a purpose of achieving a financial accounting benefit shall not be taken into account in determining whether a transaction has a substantial nontax purpose if the origin of such financial accounting benefit is a reduction of income tax.
I24``(D) T4Exception for personal transactions of individualsK._In the case of an individual, this subsection shall apply only to transactions entered into in connection with a trade or business or an activity engaged in for the production of income.
I24``(E) T4Treatment of lessorsK._In applying subclause (I) of paragraph (1)(B)(ii) to the lessor of tangible property subject to a lease, the expected net tax benefits shall not include the benefits of depreciation, or any tax credit, with respect to the leased property and subclause (II) of paragraph (1)(B)(ii) shall be disregarded in determining whether any of such benefits are allowable.
I22``(4) T4Other common law doctrines not affectedK._Except as specifically provided in this subsection, the provisions of this subsection shall not be construed as altering or supplanting any other rule of law, and the requirements of this subsection shall be construed as being in addition to any such other rule of law.
I22``(5) T4RegulationsK._The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection. Such regulations may include exemptions from the application of this subsection.''T1
I20(b) T5Effective DateK._The amendments made by this section shall apply to transactions entered into after the date of the enactment of this Act.
I72SEC. 833. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
I20(a) T5In GeneralK._Subchapter A of chapter 68 is amended by inserting after section 6662A the following new section:
I72``SEC. 6662B. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.
I20``(a) T5Imposition of PenaltyK._If a taxpayer has an noneconomic substance transaction understatement for any taxable year, there shall be added to the tax an amount equal to 40 percent of the amount of such understatement.
I20``(b) T5Reduction of Penalty for Disclosed TransactionsK._Subsection (a) shall be applied by substituting `20 percent' for `40 percent' with respect to the portion of any noneconomic substance transaction understatement with respect to which the relevant facts affecting the tax treatment of the item are adequately disclosed in the return or a statement attached to the return.
I20``(c) T5Noneconomic Substance Transaction UnderstatementK._For purposes of this section_
I22``(1) T4In generalK._The term `noneconomic substance transaction understatement' means any amount which would be an understatement under section 6662A(b)(1) if section 6662A were applied by taking into account items attributable to noneconomic substance transactions rather than items to which section 6662A would apply without regard to this paragraph.
I22``(2) T4Noneconomic substance transactionK._The term `noneconomic substance transaction' means any transaction if_
I24``(A) there is a lack of economic substance (within the meaning of section 7701(m)(1)) for the transaction giving rise to the claimed tax benefit or the transaction was not respected under section 7701(m)(2), or
I24``(B) the transaction fails to meet the requirements of any similar rule of law.
I20``(d) T5Rules Applicable to Compromise of PenaltyK._
I22``(1) T4In generalK._If the 1st letter of proposed deficiency which allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Office of Appeals has been sent with respect to a penalty to which this section applies, only the Commissioner of Internal Revenue may compromise all or any portion of such penalty.
I22``(2) T4Applicable rulesK._The rules of paragraphs (3), (4), and (5) of section 6707A(d) shall apply for purposes of paragraph (1).
I20``(e) T5Coordination With Other PenaltiesK._Except as otherwise provided in this part, the penalty imposed by this section shall be in addition to any other penalty imposed by this title.
I20``(f) T5Cross ReferencesK._
I22``(1) For coordination of penalty with understatements under section 6662 and other special rules, see section 6662A(e).
I22``(2) For reporting of penalty imposed under this section to the Securities and Exchange Commission, see section 6707A(e).''T1
I20(b) T5Clerical AmendmentK._The table of sections for part II of subchapter A of chapter 68 is amended by inserting after the item relating to section 6662A the following new item:
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I42``Sec. 6662B. Penalty for understatements attributable to transactions lacking economic substance, etc.''T1S6201

I20(c) T5Effective DateK._The amendments made by this section shall apply to transactions entered into after January 1, 2006.
I72SEC. 834. UNDERSTATEMENT OF TAXPAYER'S LIABILITY BY INCOME TAX RETURN PREPARER.
I20(a) T5Standards Conformed to Taxpayer StandardsK._Section 6694(a) (relating to understatements due to unrealistic positions) is amended_
I22(1) by striking ``realistic possibility of being sustained on its merits'' in paragraph (1) and inserting ``reasonable belief that the tax treatment in such position was more likely than not the proper treatment'',
I22(2) by striking ``or was frivolous'' in paragraph (3) and inserting ``or there was no reasonable basis for the tax treatment of such position'', and
I22(3) by striking ``Unrealistic'' in the heading and inserting ``Improper''.
I20(b) T5Amount of PenaltyK._Section 6694 is amended_
I22(1) by striking ``$250'' in subsection (a) and inserting ``$1,000'', and
I22(2) by striking ``$1,000'' in subsection (b) and inserting ``$5,000''.
I20(c) T5Effective DateK._The amendments made by this section shall apply to documents prepared after the date of the enactment of this Act.
I72SEC. 835. FRIVOLOUS TAX SUBMISSIONS.
I20(a) T5Civil PenaltiesK._Section 6702 is amended to read as follows:
I72``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.
I20``(a) T5Civil Penalty for Frivolous Tax ReturnsK._A person shall pay a penalty of $5,000 if_
I22``(1) such person files what purports to be a return of a tax imposed by this title but which_
I24``(A) does not contain information on which the substantial correctness of the self-assessment may be judged, or
I24``(B) contains information that on its face indicates that the self-assessment is substantially incorrect; and
I22``(2) the conduct referred to in paragraph (1)_
I24``(A) is based on a position which the Secretary has identified as frivolous under subsection (c), or
I24``(B) reflects a desire to delay or impede the administration of Federal tax laws.
I20``(b) T5Civil Penalty for Specified Frivolous SubmissionsK._
I22``(1) T4Imposition of penaltyK._Except as provided in paragraph (3), any person who submits a specified frivolous submission shall pay a penalty of $5,000.
I22``(2) T4Specified frivolous submissionK._For purposes of this section_
I24``(A) T4Specified frivolous submissionK._The term `specified frivolous submission' means a specified submission if any portion of such submission_
I26``(i) is based on a position which the Secretary has identified as frivolous under subsection (c), or
I26``(ii) reflects a desire to delay or impede the administration of Federal tax laws.
I24``(B) T4Specified submissionK._The term `specified submission' means_
I26``(i) a request for a hearing under_
I28``(I) section 6320 (relating to notice and opportunity for hearing upon filing of notice of lien), or
I28``(II) section 6330 (relating to notice and opportunity for hearing before levy), and
I26``(ii) an application under_
I28``(I) section 6159 (relating to agreements for payment of tax liability in installments),
I28``(II) section 7122 (relating to compromises), or
I28``(III) section 7811 (relating to taxpayer assistance orders).
I22``(3) T4Opportunity to withdraw submissionK._If the Secretary provides a person with notice that a submission is a specified frivolous submission and such person withdraws such submission within 30 days after such notice, the penalty imposed under paragraph (1) shall not apply with respect to such submission.
I20``(c) T5Listing of Frivolous PositionsK._The Secretary shall prescribe (and periodically revise) a list of positions which the Secretary has identified as being frivolous for purposes of this subsection. The Secretary shall not include in such list any position that the Secretary determines meets the requirement of section 6662(d)(2)(B)(ii)(II).
I20``(d) T5Reduction of PenaltyK._The Secretary may reduce the amount of any penalty imposed under this section if the Secretary determines that such reduction would promote compliance with and administration of the Federal tax laws.
I20``(e) T5Penalties in Addition to Other PenaltiesK._The penalties imposed by this section shall be in addition to any other penalty provided by law.''T1
I20(b) T5Treatment of Frivolous Requests for Hearings Before LevyK._
I22(1) T4Frivolous requests disregardedK._Section 6330 (relating to notice and opportunity for hearing before levy) is amended by adding at the end the following new subsection:
I20``(g) T5Frivolous Requests for Hearing, EtcK._Notwithstanding any other provision of this section, if the Secretary determines that any portion of a request for a hearing under this section or section 6320 meets the requirement of clause (i) or (ii) of section 6702(b)(2)(A), then the Secretary may treat such portion as if it were never submitted and such portion shall not be subject to any further administrative or judicial review.''T1
I22(2) T4Preclusion from raising frivolous issues at hearingK._Section 6330(c)(4) is amended_
I24(A) by striking ``(A)'' and inserting ``(A)(i)'';
I24(B) by striking ``(B)'' and inserting ``(ii)'';
I24(C) by striking the period at the end of the first sentence and inserting ``; or''; and
I24(D) by inserting after subparagraph (A)(ii) (as so redesignated) the following:
I24``(B) the issue meets the requirement of clause (i) or (ii) of section 6702(b)(2)(A).''T1
I22(3) T4Statement of groundsK._Section 6330(b)(1) is amended by striking ``under subsection (a)(3)(B)'' and inserting ``in writing under subsection (a)(3)(B) and states the grounds for the requested hearing''.
I20(c) T5Treatment of Frivolous Requests for Hearings Upon Filing of Notice of LienK._Section 6320 is amended_
I22(1) in subsection (b)(1), by striking ``under subsection (a)(3)(B)'' and inserting ``in writing under subsection (a)(3)(B) and states the grounds for the requested hearing'', and
I22(2) in subsection (c), by striking ``and (e)'' and inserting ``(e), and (g)''.
I20(d) T5Treatment of Frivolous Applications for Offers-in-Compromise and Installment AgreementsK._Section 7122 is amended by adding at the end the following new subsection:
I20``(e) T5Frivolous Submissions, EtcK._Notwithstanding any other provision of this section, if the Secretary determines that any portion of an application for an offer-in-compromise or installment agreement submitted under this section or section 6159 meets the requirement of clause (i) or (ii) of section 6702(b)(2)(A), then the Secretary may treat such portion as if it were never submitted and such portion shall not be subject to any further administrative or judicial review.''T1
I20(e) T5Clerical AmendmentK._The table of sections for part I of subchapter B of chapter 68 is amended by striking the item relating to section 6702 and inserting the following new item:
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I42``Sec.6702.Frivolous tax submissions.''T1S6201

I20(f) T5Effective DateK._The amendments made by this section shall apply to submissions made and issues raised after the date on which the Secretary first prescribes a list under section 6702(c) of the Internal Revenue Code of 1986, as amended by subsection (a).
I72SEC. 836. EXPANDED AUTHORITY TO DISALLOW TAX BENEFITS UNDER SECTION 269.
I20(a) T5In GeneralK._Subsection (a) of section 269 (relating to acquisitions made to evade or avoid income tax) is amended to read as follows:
I20``(a) T5In GeneralK._If_
I22``(1)T1(A) any person acquires stock in a corporation, or
I22``(B) any corporation acquires, directly or indirectly, property of another corporation and the basis of such property, in the hands of the acquiring corporation, is determined by reference to the basis in the hands of the transferor corporation, and
I22``(2) the principal purpose for which such acquisition was made is evasion or avoidance of Federal income tax by securing the benefit of a deduction, credit, or other allowance,
I20then the Secretary may disallow such deduction, credit, or other allowance.''T1

I20(b) T5Effective DateK._The amendment made by this section shall apply to stock and property acquired after January 1, 2006.

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