``(B) are well qualified to manage the civilian research and
        development programs of the Department.

    ``(4) The Under Secretary for Science shall--
            ``(A) serve as the Science and Technology Advisor to the
        Secretary;
            ``(B) monitor the research and development programs of the
        Department in order to advise the Secretary with respect to any
        undesirable duplication or gaps in the programs;
            ``(C) advise the Secretary with respect to the well-being
        and management of the multipurpose laboratories under the
        jurisdiction of the Department;
            ``(D) advise the Secretary with respect to education and
        training activities required for effective short- and long-term
        basic and applied research activities of the Department;
            ``(E) advise the Secretary with respect to grants and other
        forms of financial assistance required for effective short- and
        long-term basic and applied research activities of the
        Department;
            ``(F) advise the Secretary with respect to long-term
        planning, coordination, and development of a strategic framework
        for Department research and development activities; and
            ``(G) carry out such additional duties assigned to the Under
        Secretary by the Secretary relating to basic and applied
        research, including supervision or support of research
        activities carried out by any of the Assistant Secretaries
        designated by section 203 of this Act, as the Secretary
        considers advantageous.''.

    (b) Additional Assistant Secretary Position.--
            (1) In general.--Section 203(a) of the Department of Energy
        Organization Act (42 U.S.C. 7133(a)) is amended in the first
        sentence by striking ``six Assistant Secretaries'' and inserting
        ``7 Assistant Secretaries''.
            (2) Assistant secretary level.--It is the sense of Congress
        that the leadership for departmental missions in nuclear energy
        should be at the Assistant Secretary level.

    (c) Technical and Conforming Amendments.--
            (1) Section 202 of the Department of Energy Organization Act
        (42 U.S.C. 7132) is amended by adding at the end the following:

    ``(d)(1) There <<NOTE: President.>> shall be in the Department an
Under Secretary, who shall be appointed by the President, by and with
the advice and consent of the Senate, and who shall perform such
functions and duties as the Secretary shall prescribe, consistent with
this section.

    ``(2) The Under Secretary shall be compensated at the rate provided
for level III of the Executive Schedule under section 5314 of title 5,
United States Code.
    ``(e)(1) There <<NOTE: President.>> shall be in the Department a
General Counsel, who shall be appointed by the President, by and with
the advice and consent of the Senate, and who shall perform such
functions and duties as the Secretary shall prescribe.

    ``(2) The General Counsel shall be compensated at the rate provided
for level IV of the Executive Schedule under section 5315 of title 5,
United States Code.''.

[[Page 119 STAT. 932]]

            (2) Section 5314 of title 5, United States Code, is amended
        by striking ``Under Secretaries of Energy (2)'' and inserting
        ``Under Secretaries of Energy (3)''.
            (3) Section 5315 of title 5, United States Code, is amended
        by striking ``Assistant Secretaries of Energy (6)'' and
        inserting ``Assistant Secretaries of Energy (7)''.
            (4) Section 209(b) of the Department of Energy Organization
        Act (42 U.S.C. 7139(b)) is amended by striking paragraph (6) and
        inserting the following:
            ``(6) to carry out such additional duties assigned to the
        Office by the Secretary.''.

SEC. 1007. OTHER TRANSACTIONS AUTHORITY.

    Section 646 of the Department of Energy Organization Act (42 U.S.C.
7256) is amended by adding at the end the following:
    ``(g)(1) In addition to authority granted to the Secretary under any
other provision of law, the Secretary may exercise the same authority to
enter into transactions (other than contracts, cooperative agreements,
and grants), subject to the same terms and conditions as the Secretary
of Defense under section 2371 of title 10, United States Code (other
than subsections (b) and (f) of that section).
    ``(2) In applying section 2371 of title 10, United States Code, to
the Secretary under paragraph (1)--
            ``(A) the term `basic' shall be replaced by the term
        `research';
            ``(B) the term `applied' shall be replaced by the term
        `development'; and
            ``(C) the terms `advanced research projects' and `advanced
        research' shall be replaced by the term `demonstration
        projects'.

    ``(3) The authority of the Secretary under paragraph (1) shall not
be subject to--
            ``(A) section 9 of the Federal Nonnuclear Energy Research
        and Development Act of 1974 (42 U.S.C. 5908); or
            ``(B) section 152 of the Atomic Energy Act of 1954 (42
        U.S.C. 2182).

    ``(4)(A) The Secretary shall use such competitive, merit-based
selection procedures in entering into transactions under paragraph (1),
as the Secretary determines in writing to be practicable.
    ``(B) A transaction under paragraph (1) shall relate to a research,
development, or demonstration project only if the Secretary determines
in writing that the use of a standard contract, grant, or cooperative
agreement for the project is not feasible or appropriate.
    ``(5) The Secretary may protect from disclosure, for up to 5 years
after the date on which the information is developed, any information
developed pursuant to a transaction under paragraph (1) that would be
protected from disclosure under section 552(b)(4) of title 5, United
States Code, if obtained from a person other than a Federal agency.
    ``(6)(A) Not <<NOTE: Deadline. Guidelines.>> later than 90 days
after the date of enactment of this subsection, the Secretary shall
issue guidelines for transactions under paragraph (1).

    ``(B) The <<NOTE: Federal Register, publication.>> guidelines shall
be published in the Federal Register for public comment in accordance
with rulemaking procedures of the Department.

[[Page 119 STAT. 933]]

    ``(C) The Secretary shall not have authority to carry out
transactions under paragraph (1) until the guidelines for transactions
required under subparagraph (A) are final.
    ``(7) The <<NOTE: Reports.>> annual report of the head of an
executive agency under section 2371(h) of title 10, United States Code,
shall be submitted to Congress.

    ``(8)(A) In this paragraph, the term `nontraditional Government
contractor' has the meaning given the term `nontraditional defense
contractor' in section 845(f) of the National Defense Authorization Act
for Fiscal Year 1994 (Public Law 103-160; 10 U.S.C. 2371 note).
    ``(B) Not <<NOTE: Deadline. Reports.>> later than 1 year after the
date on which the final guidelines are published under paragraph (6),
the Comptroller General of the United States shall submit to Congress a
report describing--
            ``(i) the use by the Department of authorities under this
        section, including the ability to attract nontraditional
        Government contractors; and
            ``(ii) whether additional safeguards are necessary to carry
        out the authorities.

    ``(9) The authority of the Secretary under this subsection may be
delegated only to an officer of the Department who is appointed by the
President by and with the advice and consent of the Senate.
    ``(10) Notwithstanding <<NOTE: Termination date.>> any other
provision of law, the authority to enter into transactions under
paragraph (1) shall terminate on September 30, 2010.''.

SEC. 1008. <<NOTE: 42 USC 16396.>> PRIZES FOR ACHIEVEMENT IN GRAND
            CHALLENGES OF SCIENCE AND TECHNOLOGY.

    (a) Authority.--The Secretary may carry out a program to award cash
prizes in recognition of breakthrough achievements in research,
development, demonstration, and commercial application that have the
potential for application to the performance of the mission of the
Department.
    (b) Competition Requirements.--The program under subsection (a) may
include prizes for the achievement of goals articulated by the Secretary
in a specific area through a widely advertised solicitation of
submission of results for research, development, demonstration, or
commercial application projects.
    (c) Prizes for Processes and Technologies to Reduce Dependence on
Imported Oil.--The Secretary, in cooperation with the Freedom Prize
Foundation, shall support a program of awarding prizes, to be known as
Freedom Prizes, to encourage and recognize the development and
deployment of processes and technologies that serve to reduce the
dependence of the United States on imported oil.
    (d) Relationship to Other Authority.--The program under subsection
(a) may be carried out in conjunction with or in addition to the
exercise of any other authority of the Secretary to acquire, support, or
stimulate research, development, demonstration, or commercial
application projects.
    (e) Authorization of Appropriations.--There are authorized to be
appropriated--
            (1) $10,000,000 to carry out the program under subsection
        (a); and
            (2) $5,000,000 to carry out the program under subsection
        (c).

[[Page 119 STAT. 934]]

SEC. 1009. TECHNICAL CORRECTIONS.

    (a) Coal Research and Development.--
            (1) In general.--Public Law 86-599 (30 U.S.C. 661 et seq.)
        is amended--
                    (A) by striking the first section (30 U.S.C. 661)
                and inserting the following:

    ``Sec. 1. (a) This Act may be cited as the `Coal Research and
Development Act of 1960'.
    ``(b) In this Act:
            ``(1) The term `research' means scientific, technical, and
        economic research and the practical application of that
        research.
            ``(2) The term `Secretary' means the Secretary of Energy.'';
                    (B) in section 2 (30 U.S.C. 662), by striking
                ``shall establish within'' and all that follows through
                ``such Office'';
                    (C) by striking sections 3, 4, and 7 (30 U.S.C. 663,
                664, 667); and
                    (D) by redesignating sections 5, 6, and 8 (30 U.S.C.
                665, 666, 668) as sections 3, 4, and 5, respectively.
            (2) Patents.--Section 210(a)(8) of title 35, United States
        Code, is amended by striking ``Coal Research Development Act of
        1960'' and inserting ``Coal Research and Development Act of
        1960''.

    (b) Nonnuclear Energy Research and Development.--
            (1) Short title; definitions.--Section 1 of the Federal
        Nonnuclear Energy Research and Development Act of 1974 (42
        U.S.C. 5902) is amended to read as follows:

                      ``short title and definitions

    ``Sec. 1. <<NOTE: 42 USC 5901 note.>> (a) This Act may be cited as
the `Federal Nonnuclear Energy Research and Development Act of 1974'.

    ``(b) In this Act:
            ``(1) The term `Department' means the Department of Energy.
            ``(2) The term `Secretary' means the Secretary of Energy.''.
            (2) Statement of policy.--Section 3(b) of the Federal
        Nonnuclear Energy Research and Development Act of 1974 (42
        U.S.C. 5902(b)) is amended--
                    (A) in paragraph (1), by striking ``Energy Research
                and Development Administration'' and inserting
                ``Department'';
                    (B) in paragraph (2), by striking ``Administrator of
                the Energy Research and Development Administration
                (hereinafter in this Act referred to as the
                `Administrator')'' and inserting ``Secretary''; and
                    (C) in paragraph (3)--
                          (i) by striking ``Administrator'' and
                      inserting ``Secretary''; and
                          (ii) by inserting ``Demonstration'' after
                      ``Cooling''.
            (3) Duties and authorities.--Section 4 of the Federal
        Nonnuclear Energy Research and Development Act of 1974 (42
        U.S.C. 5903) is amended--
                    (A) by striking the section heading and inserting
                the following: ``duties and authorities of the
                secretary''; and
                    (B) in the matter preceding subsection (a), by
                striking ``Administrator'' and inserting ``Secretary''.

[[Page 119 STAT. 935]]

            (4) Comprehensive planning and programming.--Section 6 of
        the Federal Nonnuclear Energy Research and Development Act of
        1974 (42 U.S.C. 5905) is amended--
                    (A) by striking ``Administrator'' each place it
                appears and inserting ``Secretary''; and
                    (B) in subsection (b)(3)--
                          (i) in subparagraph (I), by inserting
                      ``Demonstration'' after ``Cooling''; and
                          (ii) in subparagraph (L), by inserting
                      ``Energy'' after ``Solar''.
            (5) Forms of federal assistance.--Section 7 of the Federal
        Nonnuclear Energy Research and Development Act of 1974 (42
        U.S.C. 5906) is amended--
                    (A) by striking ``Administrator'' each place it
                appears and inserting ``Secretary''; and
                    (B) in subsection (a)(4), by striking ``of the
                section''.
            (6) Demonstrations.--Section 8 of the Federal Nonnuclear
        Energy Research and Development Act of 1974 (42 U.S.C. 5907) is
        amended--
                    (A) in subsections (a) through (c), by striking
                ``Administrator'' each place it appears and inserting
                ``Secretary'';
                    (B) in subsection (d)--
                          (i) in the first sentence of paragraph (1), by
                      inserting ``of the Energy Research and Development
                      Administration'' after ``Administrator''; and
                          (ii) in paragraph (3), by striking
                      ``Administrator'' and inserting ``Secretary''; and
                    (C) in subsection (f)--
                          (i) by striking ``Administrator'' each place
                      it appears and inserting ``Secretary''; and
                          (ii) in the proviso of the first sentence, by
                      striking ``Administrator's'' and inserting
                      ``Secretary's''.
            (7) Patent policy.--Section 9 of the Federal Nonnuclear
        Energy Research and Development Act of 1974 (42 U.S.C. 5908) is
        amended--
                    (A) by striking ``Administration'' each place it
                appears and inserting ``Department'';
                    (B) by striking ``Administrator'' each place it
                appears and inserting ``Secretary''; and
                    (C) in subsection (c)(3), by striking
                ``Administration's'' and inserting ``Department's''.
            (8) Acquisition of essential materials.--Section 12 of the
        Federal Nonnuclear Energy Research and Development Act of 1974
        (42 U.S.C. 5911) is amended by striking subsection (b) and
        inserting the following:

    ``(b) A rule or order under subsection (a) shall be considered to be
a major rule subject to chapter 8 of title 5, United States Code.''.
            (9) Water resource evaluation.--Section 13 of the Federal
        Nonnuclear Energy Research and Development Act of 1974 (42
        U.S.C. 5912) is amended by striking ``Administrator'' each place
        it appears and inserting ``Secretary''.
            (10) Authorization of appropriations.--Section 16 of the
        Federal Nonnuclear Energy Research and Development Act of 1974
        (42 U.S.C. 5915) is amended--
                    (A) by striking the section heading and inserting
                the following: ``authorization of appropriations'';

[[Page 119 STAT. 936]]

                    (B) by striking ``(a) There may be appropriated to
                the Administrator'' and inserting ``There may be
                appropriated to the Secretary''; and
                    (C) by striking subsections (b) and (c).
            (11) Central source of nonnuclear energy information.--
        Section 17 of the Federal Nonnuclear Energy Research and
        Development Act of 1974 (42 U.S.C. 5916) is amended--
                    (A) by striking ``Administrator'' each place it
                appears and inserting ``Secretary'';
                    (B) in the first sentence, by striking
                ``Administrator's'';
                    (C) in the second sentence, by striking ``he'' and
                inserting ``the Secretary'';
                    (D) in the third sentence--
                          (i) in paragraph (2) of the first proviso, by
                      striking ``section 1905 or title 18'' and
                      inserting ``section 1905 of title 18''; and
                          (ii) in subparagraph (B) of the second
                      proviso--
                                    (I) by striking ``the Federal Energy
                                Administration,'';
                                    (II) by striking ``the Federal Power
                                Commission,'' and inserting ``the
                                Federal Energy Regulatory Commission'';
                                and
                                    (III) by striking ``General
                                Accounting Office'' and inserting
                                ``Government Accountability Office'';
                                and
                    (E) in the last sentence, by inserting ``or ranking
                minority member'' after ``chairman''.
            (12) Energy information, loan guarantees, and financial
        support.--Sections 18 through 20 of the Federal Nonnuclear
        Energy Research and Development Act of 1974 (42 U.S.C. 5917
        through 5920) are repealed.

    (c) Stevenson-Wydler Technology Innovation Act of 1980.--Section 20
of the Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C.
3712) is amended by striking ``and the National Science Foundation'' and
inserting ``, the Secretary of Energy, and the Director of the National
Science Foundation''.

SEC. 1010. <<NOTE: Deadline. Reports.>>  UNIVERSITY COLLABORATION.

    Not later than 2 years after the date of enactment of this Act, the
Secretary shall transmit to the Congress a report that examines the
feasibility of promoting collaborations between major universities and
other colleges and universities in grants, contracts, and cooperative
agreements made by the Secretary for energy projects. For purposes of
this section, major universities are schools listed by the Carnegie
Foundation as Doctoral Research Extensive Universities. The Secretary
shall also consider providing incentives to increase the inclusion of
small institutions of higher education, including minority-serving
institutions, in energy grants, contracts, and cooperative agreements.

SEC. 1011. SENSE OF CONGRESS.

    It is the sense of Congress that--
            (1) the Secretary should develop and implement more
        stringent procurement and inventory controls, including controls
        on the purchase card program, to prevent waste, fraud, and abuse
        of taxpayer funds by employees and contractors of the
        Department; and

[[Page 119 STAT. 937]]

            (2) the Department's Inspector General should continue to
        closely review purchase card purchases and other procurement and
        inventory practices at the Department.

                    TITLE XI--PERSONNEL AND TRAINING

SEC. 1101. <<NOTE: 42 USC 16411.>>  WORKFORCE TRENDS AND TRAINEESHIP
            GRANTS.

    (a) Definitions.--In this section:
            (1) Energy technology industry.--The term ``energy
        technology industry'' includes--
                    (A) a renewable energy industry;
                    (B) a company that develops or commercializes a
                device to increase energy efficiency;
                    (C) the oil and gas industry;
                    (D) the nuclear power industry;
                    (E) the coal industry;
                    (F) the electric utility industry; and
                    (G) any other industrial sector, as the Secretary
                determines to be appropriate.
            (2) Skilled technical personnel.--The term ``skilled
        technical personnel'' means--
                    (A) journey- and apprentice-level workers who are
                enrolled in, or have completed, a federally-recognized
                or State-recognized apprenticeship program; and
                    (B) other skilled workers in energy technology
                industries, as determined by the Secretary.

    (b) Workforce Trends.--
            (1) Monitoring.--The Secretary, in consultation with, and
        using data collected by, the Secretary of Labor, shall monitor
        trends in the workforce of--
                    (A) skilled technical personnel that support energy
                technology industries; and
                    (B) electric power and transmission engineers.
            (2) Report on trends.--Not later than 1 year after the date
        of enactment of this Act, the Secretary shall submit to Congress
        a report on current trends under paragraph (1), with
        recommendations (as appropriate) to meet the future labor
        requirements for the energy technology industries.
            (3) Report on shortage.--As soon as practicable after the
        date on which the Secretary identifies or predicts a significant
        national shortage of skilled technical personnel in one or more
        energy technology industries, the Secretary shall submit to
        Congress a report describing the shortage.

    (c) Traineeship Grants for Skilled Technical Personnel.--The
Secretary, in consultation with the Secretary of Labor, may establish
programs in the appropriate offices of the Department under which the
Secretary provides grants to enhance training (including distance
learning) for any workforce category for which a shortage is identified
or predicted under subsection (b)(2).
    (d) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this section $20,000,000 for each of fiscal
years 2006 through 2008.

[[Page 119 STAT. 938]]

SEC. 1102. EDUCATIONAL PROGRAMS IN SCIENCE AND MATHEMATICS.

    (a) Science Education Enhancement Fund.--Section 3164 of the
Department of Energy Science Education Enhancement Act (42 U.S.C. 7381a)
is amended by adding at the end:
    ``(c) Science Education Enhancement Fund.--The Secretary shall use
not less than 0.3 percent of the amount made available to the Department
for research, development, demonstration, and commercial application for
fiscal year 2006 and each fiscal year thereafter to carry out activities
authorized by this part.''.
    (b) Authorized Education Activities.--Section 3165 of the Department
of Energy Science Education Enhancement Act (42 U.S.C. 7381b) is amended
by adding at the end the following:
            ``(14) Support competitive events for students under the
        supervision of teachers, designed to encourage student interest
        and knowledge in science and mathematics.
            ``(15) Support competitively-awarded, peer-reviewed programs
        to promote professional development for mathematics teachers and
        science teachers who teach in grades from kindergarten through
        grade 12 at Department research and development facilities.
            ``(16) Support summer internships at Department research and
        development facilities, for mathematics teachers and science
        teachers who teach in grades from kindergarten through grade 12.
            ``(17) Sponsor and assist in educational and training
        activities identified as critical skills needs for future
        workforce development at Department research and development
        facilities.''.

    (c) Educational Partnerships.--Section 3166(b) of the Department of
Energy Science Education Enhancement Act (42 U.S.C. 7381c(b)) is
amended--
            (1) by striking paragraph (1) and inserting the following:
            ``(1) loaning or transferring equipment to the
        institution;'';
            (2) in paragraph (5), by striking ``and'' at the end;
            (3) in paragraph (6), by striking the period at the end and
        inserting ``; and''; and
            (4) by adding at the end the following:
            ``(7) providing funds to educational institutions to hire
        personnel to facilitate interactions between local school
        systems, Department research and development facilities, and
        corporate and governmental entities.''.

    (d) Definition of Department Research and Development Facilities.--
Section 3167(3) of the Department of Energy Science Education
Enhancement Act (42 U.S.C. 7381d(3)) is amended by striking ``from the
Office of Science of the Department of Energy'' and inserting ``by the
Department of Energy''.
    (e) Study.--
            (1) In general.--The Secretary, in consultation with the
        Secretary of Education, shall enter into an arrangement with the
        National Academy of Public Administration to conduct a study of
        the priorities, quality, local and regional flexibility, and
        plans for educational programs at Department research and
        development facilities.
            (2) Inclusion.--The study shall recommend measures that the
        Secretary may take to improve Department-wide coordination of
        educational, workforce development, and critical skills
        development activities.

[[Page 119 STAT. 939]]

            (3) Report.--Not later than 2 years after the date of
        enactment of this Act, the Secretary shall submit to Congress a
        report on the results of the study conducted under this
        subsection.

SEC. 1103. TRAINING <<NOTE: 42 USC 16412.>> GUIDELINES FOR NONNUCLEAR
            ELECTRIC ENERGY INDUSTRY PERSONNEL.

    (a) In General.--The Secretary of Labor, in consultation with the
Secretary and in conjunction with the electric industry and recognized
employee representatives, shall develop model personnel training
guidelines to support the reliability and safety of the nonnuclear
electric system.
    (b) Requirements.--The training guidelines under subsection (a)
shall, at a minimum--
            (1) include training requirements for workers engaged in the
        construction, operation, inspection, or maintenance of
        nonnuclear electric generation, transmission, or distribution
        systems, including requirements relating to--
                    (A) competency;
                    (B) certification; and
                    (C) assessment, including--
                          (i) initial and continuous evaluation of
                      workers;
                          (ii) recertification procedures; and
                          (iii) methods for examining or testing the
                      qualification of an individual who performs a
                      covered task; and
            (2) consolidate training guidelines in existence on the date
        on which the guidelines under subsection (a) are developed
        relating to the construction, operation, maintenance, and
        inspection of nonnuclear electric generation, transmission, and
        distribution facilities, such as guidelines established by the
        National Electric Safety Code and other industry consensus
        standards.

SEC. 1104. <<NOTE: 42 USC 16413.>> NATIONAL CENTER FOR ENERGY MANAGEMENT
            AND BUILDING TECHNOLOGIES.

    The Secretary shall support the ongoing activities of and explore
opportunities for expansion of the National Center for Energy Management
and Building Technologies to carry out research, education, and training
activities to facilitate the improvement of energy efficiency, indoor
environmental quality, and security of industrial, commercial,
residential, and public buildings.

SEC. 1105. IMPROVED ACCESS TO ENERGY-RELATED SCIENTIFIC AND TECHNICAL
            CAREERS.

    (a) Science Education Programs.--Section 3164 of the Department of
Energy Science Education Enhancement Act (42 U.S.C. 7381a) (as amended
by section 1102(a)) is amended by adding at the end the following:
    ``(d) Programs for Students From Under-Represented Groups.--In
carrying out a program under subsection (a), the Secretary shall give
priority to activities that are designed to encourage students from
under-represented groups to pursue scientific and technical careers.''.
    (b) Partnerships With Historically Black Colleges and Universities,
Hispanic-Servicing Institutions, and Tribal Colleges.--The Department of
Energy Science Education Enhancement Act (42 U.S.C. 7381 et seq.) is
amended--

[[Page 119 STAT. 940]]

            (1) by redesignating sections 3167 and 3168 <<NOTE: 42 USC
        7381d, 7381e.>> as sections 3168 and 3169, respectively; and
            (2) by inserting after section 3166 the following:

``SEC. 3167. <<NOTE: 42 USC 7381c-1.>> PARTNERSHIPS WITH HISTORICALLY
            BLACK COLLEGES AND UNIVERSITIES, HISPANIC-SERVING
            INSTITUTIONS, AND TRIBAL COLLEGES.

    ``(a) Definitions.--In this section:
            ``(1) Hispanic-serving institution.--The term `Hispanic-
        serving institution' has the meaning given the term in section
        502(a) of the Higher Education Act of 1965 (20 U.S.C. 1101a(a)).
            ``(2) Historically black college or university.--The term
        `historically Black college or university' has the meaning given
        the term `part B institution' in section 322 of the Higher
        Education Act of 1965 (20 U.S.C. 1061).
            ``(3) National laboratory.--The term `National Laboratory'
        has the meaning given the term in section 2 of the Energy Policy
        Act of 2005.
            ``(4) Science facility.--The term `science facility' has the
        meaning given the term `single-purpose research facility' in
        section 903 of the Energy Policy Act of 2005.
            ``(5) Tribal college.--The term `tribal college' has the
        meaning given the term `tribally controlled college or
        university' in section 2(a) of the Tribally Controlled College
        Assistance Act of 1978 (25 U.S.C. 1801(a)).

    ``(b) Education Partnership.--The Secretary shall require the
director of each National Laboratory, and may require the head of any
science facility, to increase the participation of historically Black
colleges or universities, Hispanic-serving institutions, or tribal
colleges in any activity that increases the capacity of the historically
Black colleges or universities, Hispanic-serving institutions, or tribal
colleges to train personnel in science or engineering.
    ``(c) Activities.--An activity described in subsection (b)
includes--
            ``(1) collaborative research;
            ``(2) equipment transfer;
            ``(3) training activities carried out at a National
        Laboratory or science facility; and
            ``(4) mentoring activities carried out at a National
        Laboratory or science facility.

    ``(d) Report.--Not later than 2 years after the date of enactment of
this subsection, the Secretary shall submit to Congress a report
describing the activities carried out under this section.''.

SEC. 1106. <<NOTE: 42 USC 16414.>> NATIONAL POWER PLANT OPERATIONS
            TECHNOLOGY AND EDUCATIONAL CENTER.

    (a) Establishment.--The Secretary shall support the establishment of
a National Power Plant Operations Technology and Education Center
(referred to in this section as the ``Center''), to address the need for
training and educating certified operators and technicians for the
electric power industry.
    (b) Location of Center.--The Secretary shall support the
establishment of the Center at an institution of higher education that
has--
            (1) expertise in providing degree programs in electric power
        generation, transmission, and distribution technologies;
            (2) expertise in providing onsite and Internet-based
        training; and

[[Page 119 STAT. 941]]

            (3) demonstrated responsiveness to workforce and training
        requirements in the electric power industry.

    (c) Training and Continuing Education.--
            (1) In general.--The Center shall provide training and
        continuing education in electric power generation, transmission,
        and distribution technologies and operations.
            (2) Location.--The Center shall carry out training and
        education activities under paragraph (1)--
                    (A) at the Center; and
                    (B) through Internet-based information technologies
                that allow for learning at remote sites.

TITLE <<NOTE: Electricity Modernization Act of 2005.>> XII--ELECTRICITY

SEC. 1201. <<NOTE: 42 USC 15801 note.>> SHORT TITLE.

    This title may be cited as the ``Electricity Modernization Act of
2005''.

                    Subtitle A--Reliability Standards

SEC. 1211. ELECTRIC RELIABILITY STANDARDS.

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

``SEC. 215. <<NOTE: 16 USC 824o.>> ELECTRIC RELIABILITY.

    ``(a) Definitions.--For purposes of this section:
            ``(1) The term `bulk-power system' means--
                    ``(A) facilities and control systems necessary for
                operating an interconnected electric energy transmission
                network (or any portion thereof); and
                    ``(B) electric energy from generation facilities
                needed to maintain transmission system reliability.
        The term does not include facilities used in the local
        distribution of electric energy.
            ``(2) The terms `Electric Reliability Organization' and
        `ERO' mean the organization certified by the Commission under
        subsection (c) the purpose of which is to establish and enforce
        reliability standards for the bulk-power system, subject to
        Commission review.
            ``(3) The term `reliability standard' means a requirement,
        approved by the Commission under this section, to provide for
        reliable operation of the bulk-power system. The term includes
        requirements for the operation of existing bulk-power system
        facilities, including cybersecurity protection, and the design
        of planned additions or modifications to such facilities to the
        extent necessary to provide for reliable operation of the bulk-
        power system, but the term does not include any requirement to
        enlarge such facilities or to construct new transmission
        capacity or generation capacity.
            ``(4) The term `reliable operation' means operating the
        elements of the bulk-power system within equipment and electric
        system thermal, voltage, and stability limits so that
        instability, uncontrolled separation, or cascading failures of
        such system will not occur as a result of a sudden disturbance,
        including a cybersecurity incident, or unanticipated failure of
        system elements.

[[Page 119 STAT. 942]]

            ``(5) The term `Interconnection' means a geographic area in
        which the operation of bulk-power system components is
        synchronized such that the failure of one or more of such
        components may adversely affect the ability of the operators of
        other components within the system to maintain reliable
        operation of the facilities within their control.
            ``(6) The term `transmission organization' means a Regional
        Transmission Organization, Independent System Operator,
        independent transmission provider, or other transmission
        organization finally approved by the Commission for the
        operation of transmission facilities.
            ``(7) The term `regional entity' means an entity having
        enforcement authority pursuant to subsection (e)(4).
            ``(8) The term `cybersecurity incident' means a malicious
        act or suspicious event that disrupts, or was an attempt to
        disrupt, the operation of those programmable electronic devices
        and communication networks including hardware, software and data
        that are essential to the reliable operation of the bulk power
        system.

    ``(b) Jurisdiction and Applicability.--(1) The Commission shall have
jurisdiction, within the United States, over the ERO certified by the
Commission under subsection (c), any regional entities, and all users,
owners and operators of the bulk-power system, including but not limited
to the entities described in section 201(f), for purposes of approving
reliability standards established under this section and enforcing
compliance with this section. All users, owners and operators of the
bulk-power system shall comply with reliability standards that take
effect under this section.
    ``(2) <<NOTE: Regulations. Deadline.>> The Commission shall issue a
final rule to implement the requirements of this section not later than
180 days after the date of enactment of this section.

    ``(c) Certification.--Following the issuance of a Commission rule
under subsection (b)(2), any person may submit an application to the
Commission for certification as the Electric Reliability Organization.
The Commission may certify one such ERO if the Commission determines
that such ERO--
            ``(1) has the ability to develop and enforce, subject to
        subsection (e)(2), reliability standards that provide for an
        adequate level of reliability of the bulk-power system; and
            ``(2) has established rules that--
                    ``(A) assure its independence of the users and
                owners and operators of the bulk-power system, while
                assuring fair stakeholder representation in the
                selection of its directors and balanced decisionmaking
                in any ERO committee or subordinate organizational
                structure;
                    ``(B) allocate equitably reasonable dues, fees, and
                other charges among end users for all activities under
                this section;
                    ``(C) provide fair and impartial procedures for
                enforcement of reliability standards through the
                imposition of penalties in accordance with subsection
                (e) (including limitations on activities, functions, or
                operations, or other appropriate sanctions);
                    ``(D) provide for reasonable notice and opportunity
                for public comment, due process, openness, and balance
                of interests in developing reliability standards and
                otherwise exercising its duties; and

[[Page 119 STAT. 943]]

                    ``(E) provide for taking, after certification,
                appropriate steps to gain recognition in Canada and
                Mexico.

    ``(d) Reliability Standards.--(1) The Electric Reliability
Organization shall file each reliability standard or modification to a
reliability standard that it proposes to be made effective under this
section with the Commission.
    ``(2) The Commission may approve, by rule or order, a proposed
reliability standard or modification to a reliability standard if it
determines that the standard is just, reasonable, not unduly
discriminatory or preferential, and in the public interest. The
Commission shall give due weight to the technical expertise of the
Electric Reliability Organization with respect to the content of a
proposed standard or modification to a reliability standard and to the
technical expertise of a regional entity organized on an
Interconnection-wide basis with respect to a reliability standard to be
applicable within that Interconnection, but shall not defer with respect
to the effect of a standard on competition. A proposed standard or
modification shall take effect upon approval by the Commission.
    ``(3) The Electric Reliability Organization shall rebuttably presume
that a proposal from a regional entity organized on an Interconnection-
wide basis for a reliability standard or modification to a reliability
standard to be applicable on an Interconnection-wide basis is just,
reasonable, and not unduly discriminatory or preferential, and in the
public interest.
    ``(4) The Commission shall remand to the Electric Reliability
Organization for further consideration a proposed reliability standard
or a modification to a reliability standard that the Commission
disapproves in whole or in part.
    ``(5) The Commission, upon its own motion or upon complaint, may
order the Electric Reliability Organization to submit to the Commission
a proposed reliability standard or a modification to a reliability
standard that addresses a specific matter if the Commission considers
such a new or modified reliability standard appropriate to carry out
this section.
    ``(6) The final rule adopted under subsection (b)(2) shall include
fair processes for the identification and timely resolution of any
conflict between a reliability standard and any function, rule, order,
tariff, rate schedule, or agreement accepted, approved, or ordered by
the Commission applicable to a transmission organization. Such
transmission organization shall continue to comply with such function,
rule, order, tariff, rate schedule or agreement accepted, approved, or
ordered by the Commission until--
            ``(A) the Commission finds a conflict exists between a
        reliability standard and any such provision;
            ``(B) the Commission orders a change to such provision
        pursuant to section 206 of this part; and
            ``(C) the ordered change becomes effective under this part.

If the Commission determines that a reliability standard needs to be
changed as a result of such a conflict, it shall order the ERO to
develop and file with the Commission a modified reliability standard
under paragraph (4) or (5) of this subsection.
    ``(e) Enforcement.--(1) The ERO may impose, subject to paragraph
(2), a penalty on a user or owner or operator of the bulk-power system
for a violation of a reliability standard approved by the Commission
under subsection (d) if the ERO, after notice and an opportunity for a
hearing--

[[Page 119 STAT. 944]]

            ``(A) finds that the user or owner or operator has violated
        a reliability standard approved by the Commission under
        subsection (d); and
            ``(B) files notice and the record of the proceeding with the
        Commission.

    ``(2) A penalty imposed under paragraph (1) may take effect not
earlier than the 31st day after the ERO files with the Commission notice
of the penalty and the record of proceedings. Such penalty shall be
subject to review by the Commission, on its own motion or upon
application by the user, owner or operator that is the subject of the
penalty filed within 30 days after the date such notice is filed with
the Commission. Application to the Commission for review, or the
initiation of review by the Commission on its own motion, shall not
operate as a stay of such penalty unless the Commission otherwise orders
upon its own motion or upon application by the user, owner or operator
that is the subject of such penalty. In any proceeding to review a
penalty imposed under paragraph (1), the Commission, after notice and
opportunity for hearing (which hearing may consist solely of the record
before the ERO and opportunity for the presentation of supporting
reasons to affirm, modify, or set aside the penalty), shall by order
affirm, set aside, reinstate, or modify the penalty, and, if
appropriate, remand to the ERO for further proceedings. The Commission
shall implement expedited procedures for such hearings.
    ``(3) On its own motion or upon complaint, the Commission may order
compliance with a reliability standard and may impose a penalty against
a user or owner or operator of the bulk-power system if the Commission
finds, after notice and opportunity for a hearing, that the user or
owner or operator of the bulk-power system has engaged or is about to
engage in any acts or practices that constitute or will constitute a
violation of a reliability standard.
    ``(4) <<NOTE: Regulations. Contracts.>> The Commission shall issue
regulations authorizing the ERO to enter into an agreement to delegate
authority to a regional entity for the purpose of proposing reliability
standards to the ERO and enforcing reliability standards under paragraph
(1) if--
            ``(A) the regional entity is governed by--
                    ``(i) an independent board;
                    ``(ii) a balanced stakeholder board; or
                    ``(iii) a combination independent and balanced
                stakeholder board.
            ``(B) the regional entity otherwise satisfies the provisions
        of subsection (c)(1) and (2); and
            ``(C) the agreement promotes effective and efficient
        administration of bulk-power system reliability.

The Commission may modify such delegation. The ERO and the Commission
shall rebuttably presume that a proposal for delegation to a regional
entity organized on an Interconnection-wide basis promotes effective and
efficient administration of bulk-power system reliability and should be
approved. Such regulation may provide that the Commission may assign the
ERO's authority to enforce reliability standards under paragraph (1)
directly to a regional entity consistent with the requirements of this
paragraph.
    ``(5) The Commission may take such action as is necessary or
appropriate against the ERO or a regional entity to ensure compliance
with a reliability standard or any Commission order affecting the ERO or
a regional entity.

[[Page 119 STAT. 945]]

    ``(6) Any penalty imposed under this section shall bear a reasonable
relation to the seriousness of the violation and shall take into
consideration the efforts of such user, owner, or operator to remedy the
violation in a timely manner.
    ``(f) Changes in Electric Reliability Organization Rules.--The
Electric Reliability Organization shall file with the Commission for
approval any proposed rule or proposed rule change, accompanied by an
explanation of its basis and purpose. The Commission, upon its own
motion or complaint, may propose a change to the rules of the ERO. A
proposed rule or proposed rule change shall take effect upon a finding
by the Commission, after notice and opportunity for comment, that the
change is just, reasonable, not unduly discriminatory or preferential,
is in the public interest, and satisfies the requirements of subsection
(c).
    ``(g) Reliability Reports.--The ERO shall conduct periodic
assessments of the reliability and adequacy of the bulk-power system in
North America.
    ``(h) Coordination With Canada and Mexico.--The President is urged
to negotiate international agreements with the governments of Canada and
Mexico to provide for effective compliance with reliability standards
and the effectiveness of the ERO in the United States and Canada or
Mexico.
    ``(i) Savings Provisions.--(1) The ERO shall have authority to
develop and enforce compliance with reliability standards for only the
bulk-power system.
    ``(2) This section does not authorize the ERO or the Commission to
order the construction of additional generation or transmission capacity
or to set and enforce compliance with standards for adequacy or safety
of electric facilities or services.
    ``(3) Nothing in this section shall be construed to preempt any
authority of any State to take action to ensure the safety, adequacy,
and reliability of electric service within that State, as long as such
action is not inconsistent with any reliability standard, except that
the State of New York may establish rules that result in greater
reliability within that State, as long as such action does not result in
lesser reliability outside the State than that provided by the
reliability standards.
    ``(4) <<NOTE: Deadline. Standards.>> Within 90 days of the
application of the Electric Reliability Organization or other affected
party, and after notice and opportunity for comment, the Commission
shall issue a final order determining whether a State action is
inconsistent with a reliability standard, taking into consideration any
recommendation of the ERO.

    ``(5) The Commission, after consultation with the ERO and the State
taking action, may stay the effectiveness of any State action, pending
the Commission's issuance of a final order.
    ``(j) <<NOTE: Establishment.>> Regional Advisory Bodies.--The
Commission shall establish a regional advisory body on the petition of
at least two-thirds of the States within a region that have more than
one-half of their electric load served within the region. A regional
advisory body shall be composed of one member from each participating
State in the region, appointed by the Governor of each State, and may
include representatives of agencies, States, and provinces outside the
United States. A regional advisory body may provide advice to the
Electric Reliability Organization, a regional entity, or the Commission
regarding the governance of an existing or proposed regional entity
within the same region, whether a standard

[[Page 119 STAT. 946]]

proposed to apply within the region is just, reasonable, not unduly
discriminatory or preferential, and in the public interest, whether fees
proposed to be assessed within the region are just, reasonable, not
unduly discriminatory or preferential, and in the public interest and
any other responsibilities requested by the Commission. The Commission
may give deference to the advice of any such regional advisory body if
that body is organized on an Interconnection-wide basis.

    ``(k) Alaska and Hawaii.--The provisions of this section do not
apply to Alaska or Hawaii.''.
    (b) <<NOTE: 16 USC 824o note.>> Status of ERO.--The Electric
Reliability Organization certified by the Federal Energy Regulatory
Commission under section 215(c) of the Federal Power Act and any
regional entity delegated enforcement authority pursuant to section
215(e)(4) of that Act are not departments, agencies, or
instrumentalities of the United States Government.

    (c) <<NOTE: 16 USC 824o note.>> Access Approvals by Federal
Agencies.--Federal agencies responsible for approving access to electric
transmission or distribution facilities located on lands within the
United States shall, in accordance with applicable law, expedite any
Federal agency approvals that are necessary to allow the owners or
operators of such facilities to comply with any reliability standard,
approved by the Commission under section 215 of the Federal Power Act,
that pertains to vegetation management, electric service restoration, or
resolution of situations that imminently endanger the reliability or
safety of the facilities.

          Subtitle B--Transmission Infrastructure Modernization

SEC. 1221. SITING OF INTERSTATE ELECTRIC TRANSMISSION FACILITIES.

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

``SEC. 216. <<NOTE: 16 USC 824p.>> SITING OF INTERSTATE ELECTRIC
            TRANSMISSION FACILITIES.

    ``(a) <<NOTE: Deadlines.>> Designation of National Interest Electric
Transmission Corridors.--(1) Not later than 1 year after the date of
enactment of this section and every 3 years thereafter, the Secretary of
Energy (referred to in this section as the `Secretary'), in consultation
with affected States, shall conduct a study of electric transmission
congestion.

    ``(2) <<NOTE: Reports.>> After considering alternatives and
recommendations from interested parties (including an opportunity for
comment from affected States), the Secretary shall issue a report, based
on the study, which may designate any geographic area experiencing
electric energy transmission capacity constraints or congestion that
adversely affects consumers as a national interest electric transmission
corridor.

    ``(3) The Secretary shall conduct the study and issue the report in
consultation with any appropriate regional entity referred to in section
215.
    ``(4) In determining whether to designate a national interest
electric transmission corridor under paragraph (2), the Secretary may
consider whether--

[[Page 119 STAT. 947]]

            ``(A) the economic vitality and development of the corridor,
        or the end markets served by the corridor, may be constrained by
        lack of adequate or reasonably priced electricity;
            ``(B)(i) economic growth in the corridor, or the end markets
        served by the corridor, may be jeopardized by reliance on
        limited sources of energy; and
            ``(ii) a diversification of supply is warranted;
            ``(C) the energy independence of the United States would be
        served by the designation;
            ``(D) the designation would be in the interest of national
        energy policy; and
            ``(E) the designation would enhance national defense and
        homeland security.

    ``(b) Construction Permit.--Except as provided in subsection (i),
the Commission may, after notice and an opportunity for hearing, issue
one or more permits for the construction or modification of electric
transmission facilities in a national interest electric transmission
corridor designated by the Secretary under subsection (a) if the
Commission finds that--
            ``(1)(A) a State in which the transmission facilities are to
        be constructed or modified does not have authority to--
                    ``(i) approve the siting of the facilities; or
                    ``(ii) consider the interstate benefits expected to
                be achieved by the proposed construction or modification
                of transmission facilities in the State;
            ``(B) the applicant for a permit is a transmitting utility
        under this Act but does not qualify to apply for a permit or
        siting approval for the proposed project in a State because the
        applicant does not serve end-use customers in the State; or
            ``(C) a State commission or other entity that has authority
        to approve the siting of the facilities has--
                    ``(i) withheld approval for more than 1 year after
                the filing of an application seeking approval pursuant
                to applicable law or 1 year after the designation of the
                relevant national interest electric transmission
                corridor, whichever is later; or
                    ``(ii) conditioned its approval in such a manner
                that the proposed construction or modification will not
                significantly reduce transmission congestion in
                interstate commerce or is not economically feasible;
            ``(2) the facilities to be authorized by the permit will be
        used for the transmission of electric energy in interstate
        commerce;
            ``(3) the proposed construction or modification is
        consistent with the public interest;
            ``(4) the proposed construction or modification will
        significantly reduce transmission congestion in interstate
        commerce and protects or benefits consumers;
            ``(5) the proposed construction or modification is
        consistent with sound national energy policy and will enhance
        energy independence; and
            ``(6) the proposed modification will maximize, to the extent
        reasonable and economical, the transmission capabilities of
        existing towers or structures.

    ``(c) Permit Applications.--(1) Permit applications under subsection
(b) shall be made in writing to the Commission.

[[Page 119 STAT. 948]]

    ``(2) <<NOTE: Regulations.>> The Commission shall issue rules
specifying--
            ``(A) the form of the application;
            ``(B) the information to be contained in the application;
        and
            ``(C) the manner of service of notice of the permit
        application on interested persons.

    ``(d) Comments.--In any proceeding before the Commission under
subsection (b), the Commission shall afford each State in which a
transmission facility covered by the permit is or will be located, each
affected Federal agency and Indian tribe, private property owners, and
other interested persons, a reasonable opportunity to present their
views and recommendations with respect to the need for and impact of a
facility covered by the permit.
    ``(e) Rights-of-Way.--(1) In the case of a permit under subsection
(b) for electric transmission facilities to be located on property other
than property owned by the United States or a State, if the permit
holder cannot acquire by contract, or is unable to agree with the owner
of the property to the compensation to be paid for, the necessary right-
of-way to construct or modify the transmission facilities, the permit
holder may acquire the right-of-way by the exercise of the right of
eminent domain in the district court of the United States for the
district in which the property concerned is located, or in the
appropriate court of the State in which the property is located.
    ``(2) Any right-of-way acquired under paragraph (1) shall be used
exclusively for the construction or modification of electric
transmission facilities within a reasonable period of time after the
acquisition.
    ``(3) The practice and procedure in any action or proceeding under
this subsection in the district court of the United States shall conform
as nearly as practicable to the practice and procedure in a similar
action or proceeding in the courts of the State in which the property is
located.
    ``(4) Nothing in this subsection shall be construed to authorize the
use of eminent domain to acquire a right-of-way for any purpose other
than the construction, modification, operation, or maintenance of
electric transmission facilities and related facilities. The right-of-
way cannot be used for any other purpose, and the right-of-way shall
terminate upon the termination of the use for which the right-of-way was
acquired.
    ``(f) Compensation.--(1) Any right-of-way acquired pursuant to
subsection (e) shall be considered a taking of private property for
which just compensation is due.
    ``(2) Just compensation shall be an amount equal to the fair market
value (including applicable severance damages) of the property taken on
the date of the exercise of eminent domain authority.
    ``(g) State Law.--Nothing in this section precludes any person from
constructing or modifying any transmission facility in accordance with
State law.
    ``(h) Coordination of Federal Authorizations for Transmission
Facilities.--(1) In this subsection:
            ``(A) The term `Federal authorization' means any
        authorization required under Federal law in order to site a
        transmission facility.
            ``(B) The term `Federal authorization' includes such
        permits, special use authorizations, certifications, opinions,
        or other

[[Page 119 STAT. 949]]

        approvals as may be required under Federal law in order to site
        a transmission facility.

    ``(2) The Department of Energy shall act as the lead agency for
purposes of coordinating all applicable Federal authorizations and
related environmental reviews of the facility.
    ``(3) To the maximum extent practicable under applicable Federal
law, the Secretary shall coordinate the Federal authorization and review
process under this subsection with any Indian tribes, multistate
entities, and State agencies that are responsible for conducting any
separate permitting and environmental reviews of the facility, to ensure
timely and efficient review and permit decisions.
    ``(4)(A) As head of the lead agency, the Secretary, in consultation
with agencies responsible for Federal authorizations and, as
appropriate, with Indian tribes, multistate entities, and State agencies
that are willing to coordinate their own separate permitting and
environmental reviews with the Federal authorization and environmental
reviews, shall establish prompt and binding intermediate milestones and
ultimate deadlines for the review of, and Federal authorization
decisions relating to, the proposed facility.
    ``(B) <<NOTE: Deadline.>> The Secretary shall ensure that, once an
application has been submitted with such data as the Secretary considers
necessary, all permit decisions and related environmental reviews under
all applicable Federal laws shall be completed--
            ``(i) within 1 year; or
            ``(ii) if a requirement of another provision of Federal law
        does not permit compliance with clause (i), as soon thereafter
        as is practicable.

    ``(C) <<NOTE: Deadline.>> The Secretary shall provide an expeditious
pre-application mechanism for prospective applicants to confer with the
agencies involved to have each such agency determine and communicate to
the prospective applicant not later than 60 days after the prospective
applicant submits a request for such information concerning--
            ``(i) the likelihood of approval for a potential facility;
        and
            ``(ii) key issues of concern to the agencies and public.

    ``(5)(A) As lead agency head, the Secretary, in consultation with
the affected agencies, shall prepare a single environmental review
document, which shall be used as the basis for all decisions on the
proposed project under Federal law.
    ``(B) The Secretary and the heads of other agencies shall streamline
the review and permitting of transmission within corridors designated
under section 503 of the Federal Land Policy and Management Act (43
U.S.C. 1763) by fully taking into account prior analyses and decisions
relating to the corridors.
    ``(C) The document shall include consideration by the relevant
agencies of any applicable criteria or other matters as required under
applicable law.
    ``(6)(A) If any agency has denied a Federal authorization required
for a transmission facility, or has failed to act by the deadline
established by the Secretary pursuant to this section for deciding
whether to issue the authorization, the applicant or any State in which
the facility would be located may file an appeal with the President, who
shall, in consultation with the affected agency, review the denial or
failure to take action on the pending application.
    ``(B) Based on the overall record and in consultation with the
affected agency, the President may--

[[Page 119 STAT. 950]]

            ``(i) issue the necessary authorization with any appropriate
        conditions; or
            ``(ii) deny the application.

    ``(C) <<NOTE: President. Deadline.>> The President shall issue a
decision not later than 90 days after the date of the filing of the
appeal.

    ``(D) <<NOTE: President.>> In making a decision under this
paragraph, the President shall comply with applicable requirements of
Federal law, including any requirements of--
            ``(i) the National Forest Management Act of 1976 (16 U.S.C.
        472a et seq.);
            ``(ii) the Endangered Species Act of 1973 (16 U.S.C. 1531 et
        seq.);
            ``(iii) the Federal Water Pollution Control Act (33 U.S.C.
        1251 et seq.);
            ``(iv) the National Environmental Policy Act of 1969 (42
        U.S.C. 4321 et seq.); and
            ``(v) the Federal Land Policy and Management Act of 1976 (43
        U.S.C. 1701 et seq.).

    ``(7)(A) <<NOTE: Deadline. Regulations.>> Not later than 18 months
after the date of enactment of this section, the Secretary shall issue
any regulations necessary to implement this subsection.

    ``(B)(i) <<NOTE: Deadline. Memorandum.>> Not later than 1 year after
the date of enactment of this section, the Secretary and the heads of
all Federal agencies with authority to issue Federal authorizations
shall enter into a memorandum of understanding to ensure the timely and
coordinated review and permitting of electricity transmission
facilities.

    ``(ii) Interested Indian tribes, multistate entities, and State
agencies may enter the memorandum of understanding.
    ``(C) The head of each Federal agency with authority to issue a
Federal authorization shall designate a senior official responsible for,
and dedicate sufficient other staff and resources to ensure, full
implementation of the regulations and memorandum required under this
paragraph.
    ``(8)(A) Each Federal land use authorization for an electricity
transmission facility shall be issued--
            ``(i) for a duration, as determined by the Secretary,
        commensurate with the anticipated use of the facility; and
            ``(ii) with appropriate authority to manage the right-of-way
        for reliability and environmental protection.

    ``(B) On the expiration of the authorization (including an
authorization issued before the date of enactment of this section), the
authorization shall be reviewed for renewal taking fully into account
reliance on such electricity infrastructure, recognizing the importance
of the authorization for public health, safety, and economic welfare and
as a legitimate use of Federal land.
    ``(9) In exercising the responsibilities under this section, the
Secretary shall consult regularly with--
            ``(A) the Federal Energy Regulatory Commission;
            ``(B) electric reliability organizations (including related
        regional entities) approved by the Commission; and
            ``(C) Transmission Organizations approved by the Commission.

    ``(i) Interstate Compacts.--(1) The consent of Congress is given for
three or more contiguous States to enter into an interstate compact,
subject to approval by Congress, establishing regional transmission
siting agencies to--

[[Page 119 STAT. 951]]

            ``(A) facilitate siting of future electric energy
        transmission facilities within those States; and
            ``(B) carry out the electric energy transmission siting
        responsibilities of those States.

    ``(2) The Secretary may provide technical assistance to regional
transmission siting agencies established under this subsection.
    ``(3) The regional transmission siting agencies shall have the
authority to review, certify, and permit siting of transmission
facilities, including facilities in national interest electric
transmission corridors (other than facilities on property owned by the
United States).
    ``(4) The Commission shall have no authority to issue a permit for
the construction or modification of an electric transmission facility
within a State that is a party to a compact, unless the members of the
compact are in disagreement and the Secretary makes, after notice and an
opportunity for a hearing, the finding described in subsection
(b)(1)(C).
    ``(j) Relationship to Other Laws.--(1) Except as specifically
provided, nothing in this section affects any requirement of an
environmental law of the United States, including the National
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).
    ``(2) Subsection (h)(6) shall not apply to any unit of the National
Park System, the National Wildlife Refuge System, the National Wild and
Scenic Rivers System, the National Trails System, the National
Wilderness Preservation System, or a National Monument.
    ``(k) ERCOT.--This section shall not apply within the area referred
to in section 212(k)(2)(A).''.
    (b) Reports to Congress on Corridors and Rights-of-Way on Federal
Lands.--Not later than 90 days after the date of enactment of this Act,
the Secretary of the Interior, the Secretary, the Secretary of
Agriculture, and the Chairman of the Council on Environmental Quality
shall submit to Congress a joint report identifying--
            (1)(A) all existing designated transmission and distribution
        corridors on Federal land and the status of work related to
        proposed transmission and distribution corridor designations
        under title V of the Federal Land Policy and Management Act of
        1976 (43 U.S.C. 1761 et seq.);
            (B) the schedule for completing the work;
            (C) any impediments to completing the work; and
            (D) steps that Congress could take to expedite the process;
            (2)(A) the number of pending applications to locate
        transmission facilities on Federal land;
            (B) key information relating to each such facility;
            (C) how long each application has been pending;
            (D) the schedule for issuing a timely decision as to each
        facility; and
            (E) progress in incorporating existing and new such rights-
        of-way into relevant land use and resource management plans or
        the equivalent of those plans; and
            (3)(A) the number of existing transmission and distribution
        rights-of-way on Federal land that will come up for renewal
        within the following 5-, 10-, and 15-year periods; and
            (B) a description of how the Secretaries plan to manage the
        renewals.

[[Page 119 STAT. 952]]

SEC. 1222. <<NOTE: 42 USC 16421.>> THIRD-PARTY FINANCE.

    (a) Existing Facilities.--The Secretary, acting through the
Administrator of the Western Area Power Administration (hereinafter in
this section referred to as ``WAPA''), or through the Administrator of
the Southwestern Power Administration (hereinafter in this section
referred to as ``SWPA''), or both, may design, develop, construct,
operate, maintain, or own, or participate with other entities in
designing, developing, constructing, operating, maintaining, or owning,
an electric power transmission facility and related facilities
(``Project'') needed to upgrade existing transmission facilities owned
by SWPA or WAPA if the Secretary, in consultation with the applicable
Administrator, determines that the proposed Project--
            (1)(A) is located in a national interest electric
        transmission corridor designated under section 216(a) of the
        Federal Power Act and will reduce congestion of electric
        transmission in interstate commerce; or
            (B) is necessary to accommodate an actual or projected
        increase in demand for electric transmission capacity;
            (2) is consistent with--
                    (A) transmission needs identified, in a transmission
                expansion plan or otherwise, by the appropriate
                Transmission Organization (as defined in the Federal
                Power Act), if any, or approved regional reliability
                organization; and
                    (B) efficient and reliable operation of the
                transmission grid; and
            (3) would be operated in conformance with prudent utility
        practice.

    (b) New Facilities.--The Secretary, acting through WAPA or SWPA, or
both, may design, develop, construct, operate, maintain, or own, or
participate with other entities in designing, developing, constructing,
operating, maintaining, or owning, a new electric power transmission
facility and related facilities (``Project'') located within any State
in which WAPA or SWPA operates if the Secretary, in consultation with
the applicable Administrator, determines that the proposed Project--
            (1)(A) is located in an area designated under section 216(a)
        of the Federal Power Act and will reduce congestion of electric
        transmission in interstate commerce; or
            (B) is necessary to accommodate an actual or projected
        increase in demand for electric transmission capacity;
            (2) is consistent with--
                    (A) transmission needs identified, in a transmission
                expansion plan or otherwise, by the appropriate
                Transmission Organization (as defined in the Federal
                Power Act) if any, or approved regional reliability
                organization; and
                    (B) efficient and reliable operation of the
                transmission grid;
            (3) will be operated in conformance with prudent utility
        practice;
            (4) will be operated by, or in conformance with the rules
        of, the appropriate (A) Transmission Organization, if any, or
        (B) if such an organization does not exist, regional reliability
        organization; and

[[Page 119 STAT. 953]]

            (5) will not duplicate the functions of existing
        transmission facilities or proposed facilities which are the
        subject of ongoing or approved siting and related permitting
        proceedings.

    (c) Other Funds.--
            (1) In general.--In carrying out a Project under subsection
        (a) or (b), the Secretary may accept and use funds contributed
        by another entity for the purpose of carrying out the Project.
            (2) Availability.--The contributed funds shall be available
        for expenditure for the purpose of carrying out the Project--
                    (A) without fiscal year limitation; and
                    (B) as if the funds had been appropriated
                specifically for that Project.
            (3) Allocation of costs.--In carrying out a Project under
        subsection (a) or (b), any costs of the Project not paid for by
        contributions from another entity shall be collected through
        rates charged to customers using the new transmission capability
        provided by the Project and allocated equitably among these
        project beneficiaries using the new transmission capability.

    (d) Relationship to Other Laws.--Nothing in this section affects any
requirement of--
            (1) any Federal environmental law, including the National
        Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.);
            (2) any Federal or State law relating to the siting of
        energy facilities; or
            (3) any existing authorizing statutes.

    (e) Savings Clause.--Nothing in this section shall constrain or
restrict an Administrator in the utilization of other authority
delegated to the Administrator of WAPA or SWPA.
    (f) Secretarial Determinations.--Any determination made pursuant to
subsections (a) or (b) shall be based on findings by the Secretary using
the best available data.
    (g) Maximum Funding Amount.--The Secretary shall not accept and use
more than $100,000,000 under subsection (c)(1) for the period
encompassing fiscal years 2006 through 2015.

SEC. 1223. <<NOTE: 42 USC 16422.>> ADVANCED TRANSMISSION TECHNOLOGIES.

    (a) Definition of Advanced Transmission Technology.--In this
section, the term ``advanced transmission technology'' means a
technology that increases the capacity, efficiency, or reliability of an
existing or new transmission facility, including--
            (1) high-temperature lines (including superconducting
        cables);
            (2) underground cables;
            (3) advanced conductor technology (including advanced
        composite conductors, high-temperature low-sag conductors, and
        fiber optic temperature sensing conductors);
            (4) high-capacity ceramic electric wire, connectors, and
        insulators;
            (5) optimized transmission line configurations (including
        multiple phased transmission lines);
            (6) modular equipment;
            (7) wireless power transmission;
            (8) ultra-high voltage lines;
            (9) high-voltage DC technology;
            (10) flexible AC transmission systems;

[[Page 119 STAT. 954]]

            (11) energy storage devices (including pumped hydro,
        compressed air, superconducting magnetic energy storage,
        flywheels, and batteries);
            (12) controllable load;
            (13) distributed generation (including PV, fuel cells, and
        microturbines);
            (14) enhanced power device monitoring;
            (15) direct system state sensors;
            (16) fiber optic technologies;
            (17) power electronics and related software (including real
        time monitoring and analytical software);
            (18) mobile transformers and mobile substations; and
            (19) any other technologies the Commission considers
        appropriate.

    (b) Authority.--In carrying out the Federal Power Act (16 U.S.C.
791a et seq.) and the Public Utility Regulatory Policies Act of 1978 (16
U.S.C. 2601 et seq.), the Commission shall encourage, as appropriate,
the deployment of advanced transmission technologies.

SEC. 1224. <<NOTE: 42 USC 16423.>> ADVANCED POWER SYSTEM TECHNOLOGY
            INCENTIVE PROGRAM.

    (a) Program.--The Secretary is authorized to establish an Advanced
Power System Technology Incentive Program to support the deployment of
certain advanced power system technologies and to improve and protect
certain critical governmental, industrial, and commercial processes.
Funds provided under this section shall be used by the Secretary to make
incentive payments to eligible owners or operators of advanced power
system technologies to increase power generation through enhanced
operational, economic, and environmental performance. Payments under
this section may only be made upon receipt by the Secretary of an
incentive payment application establishing an applicant as either--
            (1) a qualifying advanced power system technology facility;
        or
            (2) a qualifying security and assured power facility.

    (b) Incentives.--Subject to availability of funds, a payment of 1.8
cents per kilowatt-hour shall be paid to the owner or operator of a
qualifying advanced power system technology facility under this section
for electricity generated at such facility. An additional 0.7 cents per
kilowatt-hour shall be paid to the owner or operator of a qualifying
security and assured power facility for electricity generated at such
facility. Any facility qualifying under this section shall be eligible
for an incentive payment for up to, but not more than, the first
10,000,000 kilowatt-hours produced in any fiscal year.
    (c) Eligibility.--For purposes of this section:
            (1) Qualifying advanced power system technology facility.--
        The term ``qualifying advanced power system technology
        facility'' means a facility using an advanced fuel cell,
        turbine, or hybrid power system or power storage system to
        generate or store electric energy.
            (2) Qualifying security and assured power facility.--The
        term ``qualifying security and assured power facility'' means a
        qualifying advanced power system technology facility determined
        by the Secretary, in consultation with the Secretary of Homeland
        Security, to be in critical need of secure, reliable,

[[Page 119 STAT. 955]]

        rapidly available, high-quality power for critical governmental,
        industrial, or commercial applications.

    (d) Authorization.--There are authorized to be appropriated to the
Secretary for the purposes of this section, $10,000,000 for each of the
fiscal years 2006 through 2012.

             Subtitle C--Transmission Operation Improvements

SEC. 1231. OPEN NONDISCRIMINATORY ACCESS.

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

``SEC. 211A. <<NOTE: 16 USC 824j-1.>> OPEN ACCESS BY UNREGULATED
            TRANSMITTING UTILITIES.

    ``(a) Definition of Unregulated Transmitting Utility.--In this
section, the term `unregulated transmitting utility' means an entity
that--
            ``(1) owns or operates facilities used for the transmission
        of electric energy in interstate commerce; and
            ``(2) is an entity described in section 201(f).

    ``(b) Transmission Operation Services.--Subject to section 212(h),
the Commission may, by rule or order, require an unregulated
transmitting utility to provide transmission services--
            ``(1) at rates that are comparable to those that the
        unregulated transmitting utility charges itself; and
            ``(2) on terms and conditions (not relating to rates) that
        are comparable to those under which the unregulated transmitting
        utility provides transmission services to itself and that are
        not unduly discriminatory or preferential.

    ``(c) Exemption.--The Commission shall exempt from any rule or order
under this section any unregulated transmitting utility that--
            ``(1) sells not more than 4,000,000 megawatt hours of
        electricity per year;
            ``(2) does not own or operate any transmission facilities
        that are necessary for operating an interconnected transmission
        system (or any portion of the system); or
            ``(3) meets other criteria the Commission determines to be
        in the public interest.

    ``(d) Local Distribution Facilities.--The requirements of subsection
(b) shall not apply to facilities used in local distribution.
    ``(e) Exemption Termination.--If the Commission, after an
evidentiary hearing held on a complaint and after giving consideration
to reliability standards established under section 215, finds on the
basis of a preponderance of the evidence that any exemption granted
pursuant to subsection (c) unreasonably impairs the continued
reliability of an interconnected transmission system, the Commission
shall revoke the exemption granted to the transmitting utility.
    ``(f) Application to Unregulated Transmitting Utilities.--The rate
changing procedures applicable to public utilities under subsections (c)
and (d) of section 205 are applicable to unregulated transmitting
utilities for purposes of this section.

[[Page 119 STAT. 956]]

    ``(g) Remand.--In exercising authority under subsection (b)(1), the
Commission may remand transmission rates to an unregulated transmitting
utility for review and revision if necessary to meet the requirements of
subsection (b).
    ``(h) Other Requests.--The provision of transmission services under
subsection (b) does not preclude a request for transmission services
under section 211.
    ``(i) Limitation.--The Commission may not require a State or
municipality to take action under this section that would violate a
private activity bond rule for purposes of section 141 of the Internal
Revenue Code of 1986.
    ``(j) Transfer of Control of Transmitting Facilities.--Nothing in
this section authorizes the Commission to require an unregulated
transmitting utility to transfer control or operational control of its
transmitting facilities to a Transmission Organization that is
designated to provide nondiscriminatory transmission access.''.

SEC. 1232. <<NOTE: 42 USC 16431.>> FEDERAL UTILITY PARTICIPATION IN
            TRANSMISSION ORGANIZATIONS.

    (a) Definitions.--In this section:
            (1) Appropriate federal regulatory authority.--The term
        ``appropriate Federal regulatory authority'' means--
                    (A) in the case of a Federal power marketing agency,
                the Secretary, except that the Secretary may designate
                the Administrator of a Federal power marketing agency to
                act as the appropriate Federal regulatory authority with
                respect to the transmission system of the Federal power
                marketing agency; and
                    (B) in the case of the Tennessee Valley Authority,
                the Board of Directors of the Tennessee Valley
                Authority.
            (2) Federal power marketing agency.--The term ``Federal
        power marketing agency'' has the meaning given the term in
        section 3 of the Federal Power Act (16 U.S.C. 796).
            (3) Federal utility.--The term ``Federal utility'' means--
                    (A) a Federal power marketing agency; or
                    (B) the Tennessee Valley Authority.
            (4) Transmission organization.--The term ``Transmission
        Organization'' has the meaning given the term in section 3 of
        the Federal Power Act (16 U.S.C. 796).
            (5) Transmission system.--The term ``transmission system''
        means an electric transmission facility owned, leased, or
        contracted for by the United States and operated by a Federal
        utility.

    (b) Transfer.--The appropriate Federal regulatory authority may
enter into a contract, agreement, or other arrangement transferring
control and use of all or part of the transmission system of a Federal
utility to a Transmission Organization.
    (c) Contents.--The contract, agreement, or arrangement shall
include--
            (1) performance standards for operation and use of the
        transmission system that the head of the Federal utility
        determines are necessary or appropriate, including standards
        that ensure--
                    (A) recovery of all of the costs and expenses of the
                Federal utility related to the transmission facilities
                that

[[Page 119 STAT. 957]]

                are the subject of the contract, agreement, or other
                arrangement;
                    (B) consistency with existing contracts and third-
                party financing arrangements; and
                    (C) consistency with the statutory authorities,
                obligations, and limitations of the Federal utility;
            (2) provisions for monitoring and oversight by the Federal
        utility of the Transmission Organization's terms and conditions
        of the contract, agreement, or other arrangement, including a
        provision for the resolution of disputes through arbitration or
        other means with the Transmission Organization or with other
        participants, notwithstanding the obligations and limitations of
        any other law regarding arbitration; and
            (3) a provision that allows the Federal utility to withdraw
        from the Transmission Organization and terminate the contract,
        agreement, or other arrangement in accordance with its terms.

    (d) Commission.--Neither this section, actions taken pursuant to
this section, nor any other transaction of a Federal utility
participating in a Transmission Organization shall confer on the
Commission jurisdiction or authority over--
            (1) the electric generation assets, electric capacity, or
        energy of the Federal utility that the Federal utility is
        authorized by law to market; or
            (2) the power sales activities of the Federal utility.

    (e) Existing Statutory and Other Obligations.--
            (1) System operation requirements.--No statutory provision
        requiring or authorizing a Federal utility to transmit electric
        power or to construct, operate, or maintain the transmission
        system of the Federal utility prohibits a transfer of control
        and use of the transmission system pursuant to, and subject to,
        the requirements of this section.
            (2) Other obligations.--This subsection does not--
                    (A) suspend, or exempt any Federal utility from, any
                provision of Federal law in effect on the date of
                enactment of this Act, including any requirement or
                direction relating to the use of the transmission system
                of the Federal utility, environmental protection, fish
                and wildlife protection, flood control, navigation,
                water delivery, or recreation; or
                    (B) authorize abrogation of any contract or treaty
                obligation.
            (3) Conforming amendment.--Section 311 of the Energy and
        Water Development Appropriations Act, 2001 (16 U.S.C. 824n) is
        repealed.

SEC. 1233. NATIVE LOAD SERVICE OBLIGATION.

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

``SEC. 217. <<NOTE: 16 USC 824q.>> NATIVE LOAD SERVICE OBLIGATION.

    ``(a) Definitions.--In this section:
            ``(1) The term `distribution utility' means an electric
        utility that has a service obligation to end-users or to a State
        utility or electric cooperative that, directly or indirectly,
        through one or more additional State utilities or electric
        cooperatives, provides electric service to end-users.
            ``(2) The term `load-serving entity' means a distribution
        utility or an electric utility that has a service obligation.

[[Page 119 STAT. 958]]

            ``(3) The term `service obligation' means a requirement
        applicable to, or the exercise of authority granted to, an
        electric utility under Federal, State, or local law or under
        long-term contracts to provide electric service to end-users or
        to a distribution utility.
            ``(4) The term `State utility' means a State or any
        political subdivision of a State, or any agency, authority, or
        instrumentality of any one or more of the foregoing, or a
        corporation that is wholly owned, directly or indirectly, by any
        one or more of the foregoing, competent to carry on the business
        of developing, transmitting, utilizing, or distributing power.

    ``(b) <<NOTE: Applicability.>> Meeting Service Obligations.--(1)
Paragraph (2) applies to any load-serving entity that, as of the date of
enactment of this section--
            ``(A) owns generation facilities, markets the output of
        Federal generation facilities, or holds rights under one or more
        wholesale contracts to purchase electric energy, for the purpose
        of meeting a service obligation; and
            ``(B) by reason of ownership of transmission facilities, or
        one or more contracts or service agreements for firm
        transmission service, holds firm transmission rights for
        delivery of the output of the generation facilities or the
        purchased energy to meet the service obligation.

    ``(2) Any load-serving entity described in paragraph (1) is entitled
to use the firm transmission rights, or, equivalent tradable or
financial transmission rights, in order to deliver the output or
purchased energy, or the output of other generating facilities or
purchased energy to the extent deliverable using the rights, to the
extent required to meet the service obligation of the load-serving
entity.
    ``(3)(A) To the extent that all or a portion of the service
obligation covered by the firm transmission rights or equivalent
tradable or financial transmission rights is transferred to another
load-serving entity, the successor load-serving entity shall be entitled
to use the firm transmission rights or equivalent tradable or financial
transmission rights associated with the transferred service obligation.
    ``(B) Subsequent transfers to another load-serving entity, or back
to the original load-serving entity, shall be entitled to the same
rights.
    ``(4) The Commission shall exercise the authority of the Commission
under this Act in a manner that facilitates the planning and expansion
of transmission facilities to meet the reasonable needs of load-serving
entities to satisfy the service obligations of the load-serving
entities, and enables load-serving entities to secure firm transmission
rights (or equivalent tradable or financial rights) on a long-term basis
for long-term power supply arrangements made, or planned, to meet such
needs.
    ``(c) Allocation of Transmission Rights.--Nothing in subsections
(b)(1), (b)(2), and (b)(3) of this section shall affect any existing or
future methodology employed by a Transmission Organization for
allocating or auctioning transmission rights if such Transmission
Organization was authorized by the Commission to allocate or auction
financial transmission rights on its system as of January 1, 2005, and
the Commission determines that any future allocation or auction is just,
reasonable and not unduly discriminatory or preferential, provided,
however, that if such a Transmission

[[Page 119 STAT. 959]]

Organization never allocated financial transmission rights on its system
that pertained to a period before January 1, 2005, with respect to any
application by such Transmission Organization that would change its
methodology the Commission shall exercise its authority in a manner
consistent with the Act and that takes into account the policies
expressed in subsections (b)(1), (b)(2), and (b)(3) as applied to firm
transmission rights held by a load-serving entity as of January 1, 2005,
to the extent the associated generation ownership or power purchase
arrangements remain in effect.
    ``(d) Certain Transmission Rights.--The Commission may exercise
authority under this Act to make transmission rights not used to meet an
obligation covered by subsection (b) available to other entities in a
manner determined by the Commission to be just, reasonable, and not
unduly discriminatory or preferential.
    ``(e) Obligation to Build.--Nothing in this Act relieves a load-
serving entity from any obligation under State or local law to build
transmission or distribution facilities adequate to meet the service
obligations of the load-serving entity.
    ``(f) Contracts.--Nothing in this section shall provide a basis for
abrogating any contract or service agreement for firm transmission
service or rights in effect as of the date of the enactment of this
subsection. If an ISO in the Western Interconnection had allocated
financial transmission rights prior to the date of enactment of this
section but had not done so with respect to one or more load-serving
entities' firm transmission rights held under contracts to which the
preceding sentence applies (or held by reason of ownership or future
ownership of transmission facilities), such load-serving entities may
not be required, without their consent, to convert such firm
transmission rights to tradable or financial rights, except where the
load-serving entity has voluntarily joined the ISO as a participating
transmission owner (or its successor) in accordance with the ISO tariff.
    ``(g) Water Pumping Facilities.--The Commission shall ensure that
any entity described in section 201(f) that owns transmission facilities
used predominately to support its own water pumping facilities shall
have, with respect to the facilities, protections for transmission
service comparable to those provided to load-serving entities pursuant
to this section.
    ``(h) ERCOT.--This section shall not apply within the area referred
to in section 212(k)(2)(A).
    ``(i) Jurisdiction.--This section does not authorize the Commission
to take any action not otherwise within the jurisdiction of the
Commission.
    ``(j) TVA Area.--(1) Subject to paragraphs (2) and (3), for purposes
of subsection (b)(1)(B), a load-serving entity that is located within
the service area of the Tennessee Valley Authority and that has a firm
wholesale power supply contract with the Tennessee Valley Authority
shall be considered to hold firm transmission rights for the
transmission of the power provided.
    ``(2) Nothing in this subsection affects the requirements of section
212(j).
    ``(3) The Commission shall not issue an order on the basis of this
subsection that is contrary to the purposes of section 212(j).
    ``(k) Effect of Exercising Rights.--An entity that to the extent
required to meet its service obligations exercises rights

[[Page 119 STAT. 960]]

described in subsection (b) shall not be considered by such action as
engaging in undue discrimination or preference under this Act.''.
    (b) <<NOTE: Deadline. 16 USC 824q note.>> FERC Rulemaking on Long-
Term Transmission Rights in Organized Markets.--Within 1 year after the
date of enactment of this section and after notice and an opportunity
for comment, the Commission shall by rule or order, implement section
217(b)(4) of the Federal Power Act in Transmission Organizations, as
defined by that Act with organized electricity markets.

SEC. 1234. <<NOTE: 42 USC 16432.>> STUDY ON THE BENEFITS OF ECONOMIC
            DISPATCH.

    (a) Study.--The Secretary, in coordination and consultation with the
States, shall conduct a study on--
            (1) the procedures currently used by electric utilities to
        perform economic dispatch;
            (2) identifying possible revisions to those procedures to
        improve the ability of nonutility generation resources to offer
        their output for sale for the purpose of inclusion in economic
        dispatch; and
            (3) the potential benefits to residential, commercial, and
        industrial electricity consumers nationally and in each State if
        economic dispatch procedures were revised to improve the ability
        of nonutility generation resources to offer their output for
        inclusion in economic dispatch.

    (b) Definition.--The term ``economic dispatch'' when used in this
section means the operation of generation facilities to produce energy
at the lowest cost to reliably serve consumers, recognizing any
operational limits of generation and transmission facilities.
    (c) Report to Congress and the States.--Not later than 90 days after
the date of enactment of this Act, and on a yearly basis following, the
Secretary shall submit a report to Congress and the States on the
results of the study conducted under subsection (a), including
recommendations to Congress and the States for any suggested legislative
or regulatory changes.

SEC. 1235. PROTECTION OF TRANSMISSION CONTRACTS IN THE PACIFIC
            NORTHWEST.

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

``SEC. 218. <<NOTE: 16 USC 824r.>> PROTECTION OF TRANSMISSION CONTRACTS
            IN THE PACIFIC NORTHWEST.

    ``(a) Definition of Electric Utility or Person.--In this section,
the term `electric utility or person' means an electric utility or
person that--
            ``(1) as of the date of enactment of the Energy Policy Act
        of 2005 holds firm transmission rights pursuant to contract or
        by reason of ownership of transmission facilities; and
            ``(2) is located--
                    ``(A) in the Pacific Northwest, as that region is
                defined in section 3 of the Pacific Northwest Electric
                Power Planning and Conservation Act (16 U.S.C. 839a); or
                    ``(B) in that portion of a State included in the
                geographic area proposed for a regional transmission
                organization in Commission Docket Number RT01-35 on the
                date on which that docket was opened.

    ``(b) Protection of Transmission Contracts.--Nothing in this Act
confers on the Commission the authority to require an electric utility
or person to convert to tradable or financial rights--

[[Page 119 STAT. 961]]

            ``(1) firm transmission rights described in subsection (a);
        or
            ``(2) firm transmission rights obtained by exercising
        contract or tariff rights associated with the firm transmission
        rights described in subsection (a).''.

SEC. 1236. SENSE OF CONGRESS REGARDING LOCATIONAL INSTALLED CAPACITY
            MECHANISM.

    (a) Findings.--Congress finds that--
            (1) in regard to a proposal to develop and implement a
        specific type of locational installed capacity mechanism in New
        England pending before the Federal Energy Regulatory Commission;
        and
            (2) the Governors of the States have objected to the
        proposed mechanism, arguing that the mechanism--
                    (A) would not provide adequate assurance that
                necessary electric generation capacity or reliability
                will be provided; and
                    (B) would impose a high cost on consumers and have a
                significant negative economic impact.

    (b) Sense of Congress.--Congress--
            (1) notes the concerns of the New England States to the
        proposed mechanism; and
            (2) declares that it is the sense of Congress that the
        Federal Energy Regulatory Commission should carefully consider
        the States' objections.

                  Subtitle D--Transmission Rate Reform

SEC. 1241. TRANSMISSION INFRASTRUCTURE INVESTMENT.

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

``SEC. 219. <<NOTE: 16 USC 824s.>> TRANSMISSION INFRASTRUCTURE
            INVESTMENT.

    ``(a) <<NOTE: Deadline.>> Rulemaking Requirement.--Not later than 1
year after the date of enactment of this section, the Commission shall
establish, by rule, incentive-based (including performance-based) rate
treatments for the transmission of electric energy in interstate
commerce by public utilities for the purpose of benefitting consumers by
ensuring reliability and reducing the cost of delivered power by
reducing transmission congestion.

    ``(b) Contents.--The rule shall--
            ``(1) promote reliable and economically efficient
        transmission and generation of electricity by promoting capital
        investment in the enlargement, improvement, maintenance, and
        operation of all facilities for the transmission of electric
        energy in interstate commerce, regardless of the ownership of
        the facilities;
            ``(2) provide a return on equity that attracts new
        investment in transmission facilities (including related
        transmission technologies);
            ``(3) encourage deployment of transmission technologies and
        other measures to increase the capacity and efficiency of
        existing transmission facilities and improve the operation of
        the facilities; and
            ``(4) allow recovery of--

[[Page 119 STAT. 962]]

                    ``(A) all prudently incurred costs necessary to
                comply with mandatory reliability standards issued
                pursuant to section 215; and
                    ``(B) all prudently incurred costs related to
                transmission infrastructure development pursuant to
                section 216.

    ``(c) Incentives.--In the rule issued under this section, the
Commission shall, to the extent within its jurisdiction, provide for
incentives to each transmitting utility or electric utility that joins a
Transmission Organization. The Commission shall ensure that any costs
recoverable pursuant to this subsection may be recovered by such utility
through the transmission rates charged by such utility or through the
transmission rates charged by the Transmission Organization that
provides transmission service to such utility.
    ``(d) Just and Reasonable Rates.--All rates approved under the rules
adopted pursuant to this section, including any revisions to the rules,
are subject to the requirements of sections 205 and 206 that all rates,
charges, terms, and conditions be just and reasonable and not unduly
discriminatory or preferential.''.

SEC. 1242. <<NOTE: 42 USC 16441.>> FUNDING NEW INTERCONNECTION AND
            TRANSMISSION UPGRADES.

    The Commission may approve a participant funding plan that allocates
costs related to transmission upgrades or new generator interconnection,
without regard to whether an applicant is a member of a Commission-
approved Transmission Organization, if the plan results in rates that--
            (1) are just and reasonable;
            (2) are not unduly discriminatory or preferential; and
            (3) are otherwise consistent with sections 205 and 206 of
        the Federal Power Act (16 U.S.C. 824d, 824e).

                     Subtitle E--Amendments to PURPA

SEC. 1251. NET METERING AND ADDITIONAL STANDARDS.

    (a) Adoption of Standards.--Section 111(d) of the Public Utility
Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) is amended by adding
at the end the following:
            ``(11) Net metering.--Each electric utility shall make
        available upon request net metering service to any electric
        consumer that the electric utility serves. For purposes of this
        paragraph, the term `net metering service' means service to an
        electric consumer under which electric energy generated by that
        electric consumer from an eligible on-site generating facility
        and delivered to the local distribution facilities may be used
        to offset electric energy provided by the electric utility to
        the electric consumer during the applicable billing period.
            ``(12) Fuel sources.--Each electric utility shall develop a
        plan to minimize dependence on 1 fuel source and to ensure that
        the electric energy it sells to consumers is generated using a
        diverse range of fuels and technologies, including renewable
        technologies.
            ``(13) Fossil fuel generation efficiency.--Each electric
        utility shall develop and implement a 10-year plan to increase
        the efficiency of its fossil fuel generation.''.

[[Page 119 STAT. 963]]

    (b) Compliance.--
            (1) <<NOTE: Deadlines.>> Time limitations.--Section 112(b)
        of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C.
        2622(b)) is amended by adding at the end the following:

    ``(3)(A) Not later than 2 years after the enactment of this
paragraph, each State regulatory authority (with respect to each
electric utility for which it has ratemaking authority) and each
nonregulated electric utility shall commence the consideration referred
to in section 111, or set a hearing date for such consideration, with
respect to each standard established by paragraphs (11) through (13) of
section 111(d).
    ``(B) Not later than 3 years after the date of the enactment of this
paragraph, each State regulatory authority (with respect to each
electric utility for which it has ratemaking authority), and each
nonregulated electric utility, shall complete the consideration, and
shall make the determination, referred to in section 111 with respect to
each standard established by paragraphs (11) through (13) of section
111(d).''.
            (2) Failure to comply.--Section 112(c) of the Public Utility
        Regulatory Policies Act of 1978 (16 U.S.C. 2622(c)) is amended
        by adding at the end the following: ``In the case of each
        standard established by paragraphs (11) through (13) of section
        111(d), the reference contained in this subsection to the date
        of enactment of this Act shall be deemed to be a reference to
        the date of enactment of such paragraphs (11) through (13).''.
            (3) Prior state actions.--
                    (A) In general.--Section 112 of the Public Utility
                Regulatory Policies Act of 1978 (16 U.S.C. 2622) is
                amended by adding at the end the following:

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

SEC. 1252. SMART METERING.

    (a) In General.--Section 111(d) of the Public Utility Regulatory
Policies Act of 1978 (16 U.S.C. 2621(d)) is amended by adding at the end
the following:
            ``(14) <<NOTE: Deadline.>> Time-based metering and
        communications.--(A) Not later than 18 months after the date of
        enactment of this paragraph, each electric utility shall offer
        each of its customer

[[Page 119 STAT. 964]]

        classes, and provide individual customers upon customer request,
        a time-based rate schedule under which the rate charged by the
        electric utility varies during different time periods and
        reflects the variance, if any, in the utility's costs of
        generating and purchasing electricity at the wholesale level.
        The time-based rate schedule shall enable the electric consumer
        to manage energy use and cost through advanced metering and
        communications technology.
            ``(B) The types of time-based rate schedules that may be
        offered under the schedule referred to in subparagraph (A)
        include, among others--
                    ``(i) time-of-use pricing whereby electricity prices
                are set for a specific time period on an advance or
                forward basis, typically not changing more often than
                twice a year, based on the utility's cost of generating
                and/or purchasing such electricity at the wholesale
                level for the benefit of the consumer. Prices paid for
                energy consumed during these periods shall be pre-
                established and known to consumers in advance of such
                consumption, allowing them to vary their demand and
                usage in response to such prices and manage their energy
                costs by shifting usage to a lower cost period or
                reducing their consumption overall;
                    ``(ii) critical peak pricing whereby time-of-use
                prices are in effect except for certain peak days, when
                prices may reflect the costs of generating and/or
                purchasing electricity at the wholesale level and when
                consumers may receive additional discounts for reducing
                peak period energy consumption;
                    ``(iii) real-time pricing whereby electricity prices
                are set for a specific time period on an advanced or
                forward basis, reflecting the utility's cost of
                generating and/or purchasing electricity at the
                wholesale level, and may change as often as hourly; and
                    ``(iv) credits for consumers with large loads who
                enter into pre-established peak load reduction
                agreements that reduce a utility's planned capacity
                obligations.
            ``(C) Each electric utility subject to subparagraph (A)
        shall provide each customer requesting a time-based rate with a
        time-based meter capable of enabling the utility and customer to
        offer and receive such rate, respectively.
            ``(D) For purposes of implementing this paragraph, any
        reference contained in this section to the date of enactment of
        the Public Utility Regulatory Policies Act of 1978 shall be
        deemed to be a reference to the date of enactment of this
        paragraph.
            ``(E) In a State that permits third-party marketers to sell
        electric energy to retail electric consumers, such consumers
        shall be entitled to receive the same time-based metering and
        communications device and service as a retail electric consumer
        of the electric utility.
            ``(F) <<NOTE: Deadline.>> Notwithstanding subsections (b)
        and (c) of section 112, each State regulatory authority shall,
        not later than 18 months after the date of enactment of this
        paragraph conduct an investigation in accordance with section
        115(i) and issue a decision whether it is appropriate to
        implement the standards set out in subparagraphs (A) and (C).''.

[[Page 119 STAT. 965]]

    (b) State Investigation of Demand Response and Time-Based
Metering.--Section 115 of the Public Utility Regulatory Policies Act of
1978 (16 U.S.C. 2625) is amended as follows:
            (1) By inserting in subsection (b) after the phrase ``the
        standard for time-of-day rates established by section
        111(d)(3)'' the following: ``and the standard for time-based
        metering and communications established by section 111(d)(14)''.
            (2) By inserting in subsection (b) after the phrase ``are
        likely to exceed the metering'' the following: ``and
        communications''.
            (3) By adding at the end the following:

    ``(i) Time-Based Metering and Communications.--In making a
determination with respect to the standard established by section
111(d)(14), the investigation requirement of section 111(d)(14)(F) shall
be as follows: Each State regulatory authority shall conduct an
investigation and issue a decision whether or not it is appropriate for
electric utilities to provide and install time-based meters and
communications devices for each of their customers which enable such
customers to participate in time-based pricing rate schedules and other
demand response programs.''.
    (c) Federal Assistance on Demand Response.--Section 132(a) of the
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2642(a)) is
amended by striking ``and'' at the end of paragraph (3), striking the
period at the end of paragraph (4) and inserting ``; and'', and by
adding the following at the end thereof:
            ``(5) technologies, techniques, and rate-making methods
        related to advanced metering and communications and the use of
        these technologies, techniques and methods in demand response
        programs.''.

    (d) Federal Guidance.--Section 132 of the Public Utility Regulatory
Policies Act of 1978 (16 U.S.C. 2642) is amended by adding the following
at the end thereof:
    ``(d) Demand Response.--The Secretary shall be responsible for--
            ``(1) educating consumers on the availability, advantages,
        and benefits of advanced metering and communications
        technologies, including the funding of demonstration or pilot
        projects;
            ``(2) working with States, utilities, other energy providers
        and advanced metering and communications experts to identify and
        address barriers to the adoption of demand response programs;
        and
            ``(3) <<NOTE: Deadline. Reports.>> not later than 180 days
        after the date of enactment of the Energy Policy Act of 2005,
        providing Congress with a report that identifies and quantifies
        the national benefits of demand response and makes a
        recommendation on achieving specific levels of such benefits by
        January 1, 2007.''.

    (e) <<NOTE: 16 USC 2642 note.>> Demand Response and Regional
Coordination.--
            (1) In general.--It is the policy of the United States to
        encourage States to coordinate, on a regional basis, State
        energy policies to provide reliable and affordable demand
        response services to the public.
            (2) Technical assistance.--The Secretary shall provide
        technical assistance to States and regional organizations formed
        by two or more States to assist them in--
                    (A) identifying the areas with the greatest demand
                response potential;

[[Page 119 STAT. 966]]

                    (B) identifying and resolving problems in
                transmission and distribution networks, including
                through the use of demand response;
                    (C) developing plans and programs to use demand
                response to respond to peak demand or emergency needs;
                and
                    (D) identifying specific measures consumers can take
                to participate in these demand response programs.
            (3) Report.--Not later than 1 year after the date of
        enactment of the Energy Policy Act of 2005, the Commission shall
        prepare and publish an annual report, by appropriate region,
        that assesses demand response resources, including those
        available from all consumer classes, and which identifies and
        reviews--
                    (A) saturation and penetration rate of advanced
                meters and communications technologies, devices and
                systems;
                    (B) existing demand response programs and time-based
                rate programs;
                    (C) the annual resource contribution of demand
                resources;
                    (D) the potential for demand response as a
                quantifiable, reliable resource for regional planning
                purposes;
                    (E) steps taken to ensure that, in regional
                transmission planning and operations, demand resources
                are provided equitable treatment as a quantifiable,
                reliable resource relative to the resource obligations
                of any load-serving entity, transmission provider, or
                transmitting party; and
                    (F) regulatory barriers to improve customer
                participation in demand response, peak reduction and
                critical period pricing programs.

    (f) Federal Encouragement of Demand Response Devices.--It is the
policy of the United States that time-based pricing and other forms of
demand response, whereby electricity customers are provided with
electricity price signals and the ability to benefit by responding to
them, shall be encouraged, the deployment of such technology and devices
that enable electricity customers to participate in such pricing and
demand response systems shall be facilitated, and unnecessary barriers
to demand response participation in energy, capacity and ancillary
service markets shall be eliminated. It is further the policy of the
United States that the benefits of such demand response that accrue to
those not deploying such technology and devices, but who are part of the
same regional electricity entity, shall be recognized.
    (g) <<NOTE: Deadlines.>> Time Limitations.--Section 112(b) of the
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2622(b)) is
amended by adding at the end the following:
            ``(4)(A) Not later than 1 year after the enactment of this
        paragraph, each State regulatory authority (with respect to each
        electric utility for which it has ratemaking authority) and each
        nonregulated electric utility shall commence the consideration
        referred to in section 111, or set a hearing date for such
        consideration, with respect to the standard established by
        paragraph (14) of section 111(d).
            ``(B) Not later than 2 years after the date of the enactment
        of this paragraph, each State regulatory authority (with respect
        to each electric utility for which it has ratemaking authority),

[[Page 119 STAT. 967]]

        and each nonregulated electric utility, shall complete the
        consideration, and shall make the determination, referred to in
        section 111 with respect to the standard established by
        paragraph (14) of section 111(d).''.

    (h) Failure to Comply.--Section 112(c) of the Public Utility
Regulatory Policies Act of 1978 (16 U.S.C. 2622(c)) is amended by adding
at the end the following:
    ``In the case of the standard established by paragraph (14) of
section 111(d), the reference contained in this subsection to the date
of enactment of this Act shall be deemed to be a reference to the date
of enactment of such paragraph (14).''.
    (i) Prior State Actions Regarding Smart Metering Standards.--
            (1) In general.--Section 112 of the Public Utility
        Regulatory Policies Act of 1978 (16 U.S.C. 2622) is amended by
        adding at the end the following:

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

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

    (a) Termination of Mandatory Purchase and Sale Requirements.--
Section 210 of the Public Utility Regulatory Policies Act of 1978 (16
U.S.C. 824a-3) is amended by adding at the end the following:
    ``(m) Termination of Mandatory Purchase and Sale Requirements.--
            ``(1) Obligation to purchase.--After the date of enactment
        of this subsection, no electric utility shall be required to
        enter into a new contract or obligation to purchase electric
        energy from a qualifying cogeneration facility or a qualifying
        small power production facility under this section if the
        Commission finds that the qualifying cogeneration facility or
        qualifying small power production facility has nondiscriminatory
        access to--
                    ``(A)(i) independently administered, auction-based
                day ahead and real time wholesale markets for the sale
                of electric energy; and (ii) wholesale markets for long-
                term sales of capacity and electric energy; or

[[Page 119 STAT. 968]]

                    ``(B)(i) transmission and interconnection services
                that are provided by a Commission-approved regional
                transmission entity and administered pursuant to an open
                access transmission tariff that affords
                nondiscriminatory treatment to all customers; and (ii)
                competitive wholesale markets that provide a meaningful
                opportunity to sell capacity, including long-term and
                short-term sales, and electric energy, including long-
                term, short-term and real-time sales, to buyers other
                than the utility to which the qualifying facility is
                interconnected. In determining whether a meaningful
                opportunity to sell exists, the Commission shall
                consider, among other factors, evidence of transactions
                within the relevant market; or
                    ``(C) wholesale markets for the sale of capacity and
                electric energy that are, at a minimum, of comparable
                competitive quality as markets described in
                subparagraphs (A) and (B).
            ``(2) Revised purchase and sale obligation for new
        facilities.--(A) After the date of enactment of this subsection,
        no electric utility shall be required pursuant to this section
        to enter into a new contract or obligation to purchase from or
        sell electric energy to a facility that is not an existing
        qualifying cogeneration facility unless the facility meets the
        criteria for qualifying cogeneration facilities established by
        the Commission pursuant to the rulemaking required by subsection
        (n).
            ``(B) For the purposes of this paragraph, the term `existing
        qualifying cogeneration facility' means a facility that--
                    ``(i) was a qualifying cogeneration facility on the
                date of enactment of subsection (m); or
                    ``(ii) had filed with the Commission a notice of