self-certification, self recertification or an
                application for Commission certification under 18 CFR
                292.207 prior to the date on which the Commission issues
                the final rule required by subsection (n).
            ``(3) Commission review.--Any electric utility may file an
        application with the Commission for relief from the mandatory
        purchase obligation pursuant to this subsection on a service
        territory-wide basis. Such application shall set forth the
        factual basis upon which relief is requested and describe why
        the conditions set forth in subparagraph (A), (B), or (C) of
        paragraph (1) of this subsection have been
        met. <<NOTE: Notice. Deadline.>> After notice, including
        sufficient notice to potentially affected qualifying
        cogeneration facilities and qualifying small power production
        facilities, and an opportunity for comment, the Commission shall
        make a final determination within 90 days of such application
        regarding whether the conditions set forth in subparagraph (A),
        (B), or (C) of paragraph (1) have been met.
            ``(4) Reinstatement of obligation to purchase.--At any time
        after the Commission makes a finding under paragraph (3)
        relieving an electric utility of its obligation to purchase
        electric energy, a qualifying cogeneration facility, a
        qualifying small power production facility, a State agency, or
        any other affected person may apply to the Commission for an
        order reinstating the electric utility's obligation to purchase
        electric energy under this section. Such application shall set
        forth the factual basis upon which the application is based and
        describe

[[Page 119 STAT. 969]]

        why the conditions set forth in subparagraph (A), (B), or (C) of
        paragraph (1) of this subsection are no longer
        met. <<NOTE: Notice. Deadline.>> After notice, including
        sufficient notice to potentially affected utilities, and
        opportunity for comment, the Commission shall issue an order
        within 90 days of such application reinstating the electric
        utility's obligation to purchase electric energy under this
        section if the Commission finds that the conditions set forth in
        subparagraphs (A), (B) or (C) of paragraph (1) which relieved
        the obligation to purchase, are no longer met.
            ``(5) Obligation to sell.--After the date of enactment of
        this subsection, no electric utility shall be required to enter
        into a new contract or obligation to sell electric energy to a
        qualifying cogeneration facility or a qualifying small power
        production facility under this section if the Commission finds
        that--
                    ``(A) competing retail electric suppliers are
                willing and able to sell and deliver electric energy to
                the qualifying cogeneration facility or qualifying small
                power production facility; and
                    ``(B) the electric utility is not required by State
                law to sell electric energy in its service territory.
            ``(6) No effect on existing rights and remedies.--Nothing in
        this subsection affects the rights or remedies of any party
        under any contract or obligation, in effect or pending approval
        before the appropriate State regulatory authority or non-
        regulated electric utility on the date of enactment of this
        subsection, to purchase electric energy or capacity from or to
        sell electric energy or capacity to a qualifying cogeneration
        facility or qualifying small power production facility under
        this Act (including the right to recover costs of purchasing
        electric energy or capacity).
            ``(7) Recovery of costs.--(A) The Commission shall issue and
        enforce such regulations as are necessary to ensure that an
        electric utility that purchases electric energy or capacity from
        a qualifying cogeneration facility or qualifying small power
        production facility in accordance with any legally enforceable
        obligation entered into or imposed under this section recovers
        all prudently incurred costs associated with the purchase.
            ``(B) A regulation under subparagraph (A) shall be
        enforceable in accordance with the provisions of law applicable
        to enforcement of regulations under the Federal Power Act (16
        U.S.C. 791a et seq.).

    ``(n) <<NOTE: Deadline.>> Rulemaking for New Qualifying
Facilities.--(1)(A) Not later than 180 days after the date of enactment
of this section, the Commission shall issue a rule revising the criteria
in 18 CFR 292.205 for new qualifying cogeneration facilities seeking to
sell electric energy pursuant to section 210 of this Act to ensure--
            ``(i) that the thermal energy output of a new qualifying
        cogeneration facility is used in a productive and beneficial
        manner;
            ``(ii) the electrical, thermal, and chemical output of the
        cogeneration facility is used fundamentally for industrial,
        commercial, or institutional purposes and is not intended
        fundamentally for sale to an electric utility, taking into
        account technological, efficiency, economic, and variable
        thermal energy requirements, as well as State laws applicable to
        sales of electric energy from a qualifying facility to its host
        facility; and

[[Page 119 STAT. 970]]

            ``(iii) continuing progress in the development of efficient
        electric energy generating technology.

    ``(B) <<NOTE: Applicability.>> The rule issued pursuant to paragraph
(1)(A) of this subsection shall be applicable only to facilities that
seek to sell electric energy pursuant to section 210 of this Act. For
all other purposes, except as specifically provided in subsection
(m)(2)(A), qualifying facility status shall be determined in accordance
with the rules and regulations of this Act.

    ``(2) <<NOTE: Applicability.>> Notwithstanding rule revisions under
paragraph (1), the Commission's criteria for qualifying cogeneration
facilities in effect prior to the date on which the Commission issues
the final rule required by paragraph (1) shall continue to apply to any
cogeneration facility that--
            ``(A) was a qualifying cogeneration facility on the date of
        enactment of subsection (m), or
            ``(B) had filed with the Commission a notice of self-
        certification, self-recertification or an application for
        Commission certification under 18 CFR 292.207 prior to the date
        on which the Commission issues the final rule required by
        paragraph (1).''.

    (b) Elimination of Ownership Limitations.--
            (1) Qualifying small power production facility.--Section
        3(17)(C) of the Federal Power Act (16 U.S.C. 796(17)(C)) is
        amended to read as follows:
                    ``(C) `qualifying small power production facility'
                means a small power production facility that the
                Commission determines, by rule, meets such requirements
                (including requirements respecting fuel use, fuel
                efficiency, and reliability) as the Commission may, by
                rule, prescribe;''.
            (2) Qualifying cogeneration facility.--Section 3(18)(B) of
        the Federal Power Act (16 U.S.C. 796(18)(B)) is amended to read
        as follows:
                    ``(B) `qualifying cogeneration facility' means a
                cogeneration facility that the Commission determines, by
                rule, meets such requirements (including requirements
                respecting minimum size, fuel use, and fuel efficiency)
                as the Commission may, by rule, prescribe;''.

SEC. 1254. INTERCONNECTION.

    (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:
            ``(15) Interconnection.--Each electric utility shall make
        available, upon request, interconnection service to any electric
        consumer that the electric utility serves. For purposes of this
        paragraph, the term `interconnection service' means service to
        an electric consumer under which an on-site generating facility
        on the consumer's premises shall be connected to the local
        distribution facilities. Interconnection services shall be
        offered based upon the standards developed by the Institute of
        Electrical and Electronics Engineers: IEEE Standard 1547 for
        Interconnecting Distributed Resources with Electric Power
        Systems, as they may be amended from time to time. In addition,
        agreements and procedures shall be established whereby the
        services are offered shall promote current best practices of
        interconnection for distributed generation, including but not
        limited to practices stipulated in model codes adopted by

[[Page 119 STAT. 971]]

        associations of state regulatory agencies. All such agreements
        and procedures shall be just and reasonable, and not unduly
        discriminatory or preferential.''.

    (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:
            ``(5)(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 utility shall commence the consideration referred
        to in section 111, or set a hearing date for consideration, with
        respect to the standard established by paragraph (15) of section
        111(d).
            ``(B) Not later than two years after the date of the
        enactment of the 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 paragraph (15) of section 111(d).''.
            (2) Failure to comply.--Section 112(d) 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 (15), 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 paragraph
        (15).''.
            (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:

    ``(f) Prior State Actions.--Subsections (b) and (c) of this section
shall not apply to the standard established by paragraph (15) 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 paragraph (15) of section 111(d), the reference
                contained in this subsection to the date of enactment of
                the Act shall be deemed to be a reference to the date of
                enactment of paragraph (15).''.

[[Page 119 STAT. 972]]

Subtitle <<NOTE: Public Utility Holding Company Act of 2005.>> F--Repeal
of PUHCA

SEC. 1261. <<NOTE: 42 USC 15801 note.>> SHORT TITLE.

    This subtitle may be cited as the ``Public Utility Holding Company
Act of 2005''.

SEC. 1262. <<NOTE: 42 USC 16451.>> DEFINITIONS.

    For purposes of this subtitle:
            (1) Affiliate.--The term ``affiliate'' of a company means
        any company, 5 percent or more of the outstanding voting
        securities of which are owned, controlled, or held with power to
        vote, directly or indirectly, by such company.
            (2) Associate company.--The term ``associate company'' of a
        company means any company in the same holding company system
        with such company.
            (3) Commission.--The term ``Commission'' means the Federal
        Energy Regulatory Commission.
            (4) Company.--The term ``company'' means a corporation,
        partnership, association, joint stock company, business trust,
        or any organized group of persons, whether incorporated or not,
        or a receiver, trustee, or other liquidating agent of any of the
        foregoing.
            (5) Electric utility company.--The term ``electric utility
        company'' means any company that owns or operates facilities
        used for the generation, transmission, or distribution of
        electric energy for sale.
            (6) Exempt wholesale generator and foreign utility
        company.--The terms ``exempt wholesale generator'' and ``foreign
        utility company'' have the same meanings as in sections 32 and
        33, respectively, of the Public Utility Holding Company Act of
        1935 (15 U.S.C. 79z-5a, 79z-5b), as those sections existed on
        the day before the effective date of this subtitle.
            (7) Gas utility company.--The term ``gas utility company''
        means any company that owns or operates facilities used for
        distribution at retail (other than the distribution only in
        enclosed portable containers or distribution to tenants or
        employees of the company operating such facilities for their own
        use and not for resale) of natural or manufactured gas for heat,
        light, or power.
            (8) Holding company.--
                    (A) In general.--The term ``holding company''
                means--
                          (i) any company that directly or indirectly
                      owns, controls, or holds, with power to vote, 10
                      percent or more of the outstanding voting
                      securities of a public-utility company or of a
                      holding company of any public-utility company; and
                          (ii) any person, determined by the Commission,
                      after notice and opportunity for hearing, to
                      exercise directly or indirectly (either alone or
                      pursuant to an arrangement or understanding with
                      one or more persons) such a controlling influence
                      over the management or policies of any public-
                      utility company or holding company as to make it
                      necessary or appropriate for the rate protection
                      of utility customers with respect to rates that
                      such person be subject to the obligations,

[[Page 119 STAT. 973]]

                      duties, and liabilities imposed by this subtitle
                      upon holding companies.
                    (B) Exclusions.--The term ``holding company'' shall
                not include--
                          (i) a bank, savings association, or trust
                      company, or their operating subsidiaries that own,
                      control, or hold, with the power to vote, public
                      utility or public utility holding company
                      securities so long as the securities are--
                                    (I) held as collateral for a loan;
                                    (II) held in the ordinary course of
                                business as a fiduciary; or
                                    (III) acquired solely for purposes
                                of liquidation and in connection with a
                                loan previously contracted for and owned
                                beneficially for a period of not more
                                than two years; or
                          (ii) a broker or dealer that owns, controls,
                      or holds with the power to vote public utility or
                      public utility holding company securities so long
                      as the securities are--
                                    (I) not beneficially owned by the
                                broker or dealer and are subject to any
                                voting instructions which may be given
                                by customers or their assigns; or
                                    (II) acquired within 12 months in
                                the ordinary course of business as a
                                broker, dealer, or underwriter with the
                                bona fide intention of effecting
                                distribution of the specific securities
                                so acquired.
            (9) Holding company system.--The term ``holding company
        system'' means a holding company, together with its subsidiary
        companies.
            (10) Jurisdictional rates.--The term ``jurisdictional
        rates'' means rates accepted or established by the Commission
        for the transmission of electric energy in interstate commerce,
        the sale of electric energy at wholesale in interstate commerce,
        the transportation of natural gas in interstate commerce, and
        the sale in interstate commerce of natural gas for resale for
        ultimate public consumption for domestic, commercial,
        industrial, or any other use.
            (11) Natural gas company.--The term ``natural gas company''
        means a person engaged in the transportation of natural gas in
        interstate commerce or the sale of such gas in interstate
        commerce for resale.
            (12) Person.--The term ``person'' means an individual or
        company.
            (13) Public utility.--The term ``public utility'' means any
        person who owns or operates facilities used for transmission of
        electric energy in interstate commerce or sales of electric
        energy at wholesale in interstate commerce.
            (14) Public-utility company.--The term ``public-utility
        company'' means an electric utility company or a gas utility
        company.
            (15) State commission.--The term ``State commission'' means
        any commission, board, agency, or officer, by whatever name
        designated, of a State, municipality, or other political
        subdivision of a State that, under the laws of such State, has
        jurisdiction to regulate public utility companies.

[[Page 119 STAT. 974]]

            (16) Subsidiary company.--The term ``subsidiary company'' of
        a holding company means--
                    (A) any company, 10 percent or more of the
                outstanding voting securities of which are directly or
                indirectly owned, controlled, or held with power to
                vote, by such holding company; and
                    (B) any person, the management or policies of which
                the Commission, after notice and opportunity for
                hearing, determines to be subject to a controlling
                influence, directly or indirectly, by such holding
                company (either alone or pursuant to an arrangement or
                understanding with one or more other persons) so as to
                make it necessary for the rate protection of utility
                customers with respect to rates that such person be
                subject to the obligations, duties, and liabilities
                imposed by this subtitle upon subsidiary companies of
                holding companies.
            (17) Voting security.--The term ``voting security'' means
        any security presently entitling the owner or holder thereof to
        vote in the direction or management of the affairs of a company.

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

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

SEC. 1264. <<NOTE: 42 USC 16452.>> FEDERAL ACCESS TO BOOKS AND RECORDS.

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

[[Page 119 STAT. 975]]

SEC. 1265. <<NOTE: 42 USC 16453.>> STATE ACCESS TO BOOKS AND RECORDS.

    (a) In General.--Upon the written request of a State commission
having jurisdiction to regulate a public-utility company in a holding
company system, the holding company or any associate company or
affiliate thereof, other than such public-utility company, wherever
located, shall produce for inspection books, accounts, memoranda, and
other records that--
            (1) have been identified in reasonable detail in a
        proceeding before the State commission;
            (2) the State commission determines are relevant to costs
        incurred by such public-utility company; and
            (3) are necessary for the effective discharge of the
        responsibilities of the State commission with respect to such
        proceeding.

    (b) Limitation.--Subsection (a) does not apply to any person that is
a holding company solely by reason of ownership of one or more
qualifying facilities under the Public Utility Regulatory Policies Act
of 1978 (16 U.S.C. 2601 et seq.).
    (c) Confidentiality of Information.--The production of books,
accounts, memoranda, and other records under subsection (a) shall be
subject to such terms and conditions as may be necessary and appropriate
to safeguard against unwarranted disclosure to the public of any trade
secrets or sensitive commercial information.
    (d) Effect on State Law.--Nothing in this section shall preempt
applicable State law concerning the provision of books, accounts,
memoranda, and other records, or in any way limit the rights of any
State to obtain books, accounts, memoranda, and other records under any
other Federal law, contract, or otherwise.
    (e) Court Jurisdiction.--Any United States district court located in
the State in which the State commission referred to in subsection (a) is
located shall have jurisdiction to enforce compliance with this section.

SEC. 1266. <<NOTE: 42 USC 16454.>> EXEMPTION AUTHORITY.

    (a) <<NOTE: Deadline.>> Rulemaking.--Not later than 90 days after
the effective date of this subtitle, the Commission shall issue a final
rule to exempt from the requirements of section 1264 (relating to
Federal access to books and records) any person that is a holding
company, solely with respect to one or more--
            (1) qualifying facilities under the Public Utility
        Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.);
            (2) exempt wholesale generators; or
            (3) foreign utility companies.

    (b) Other Authority.--The Commission shall exempt a person or
transaction from the requirements of section 1264 (relating to Federal
access to books and records) if, upon application or upon the motion of
the Commission--
            (1) the Commission finds that the books, accounts,
        memoranda, and other records of any person are not relevant to
        the jurisdictional rates of a public utility or natural gas
        company; or
            (2) the Commission finds that any class of transactions is
        not relevant to the jurisdictional rates of a public utility or
        natural gas company.

[[Page 119 STAT. 976]]

SEC. 1267. <<NOTE: 42 USC 16455.>> AFFILIATE TRANSACTIONS.

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

SEC. 1268. <<NOTE: 42 USC 16456.>> APPLICABILITY.

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

SEC. 1269. <<NOTE: 42 USC 16457.>> EFFECT ON OTHER REGULATIONS.

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

SEC. 1270. <<NOTE: 42 USC 16458.>> ENFORCEMENT.

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

SEC. 1271. <<NOTE: 42 USC 16459.>> SAVINGS PROVISIONS.

    (a) In General.--Nothing in this subtitle, or otherwise in the
Public Utility Holding Company Act of 1935, or rules, regulations, or
orders thereunder, prohibits a person from engaging in or continuing to
engage in activities or transactions in which it is legally engaged or
authorized to engage on the date of enactment of this Act, if that
person continues to comply with the terms (other than an expiration date
or termination date) of any such authorization, whether by rule or by
order.
    (b) Effect on Other Commission Authority.--Nothing in this subtitle
limits the authority of the Commission under the Federal Power Act (16
U.S.C. 791a et seq.) or the Natural Gas Act (15 U.S.C. 717 et seq.).
    (c) Tax Treatment.--Tax treatment under section 1081 of the Internal
Revenue Code of 1986 as a result of transactions ordered in compliance
with the Public Utility Holding Company Act of 1935 (15 U.S.C. 79 et
seq.) shall not be affected in any manner due to the repeal of that Act
and the enactment of the Public Utility Holding Company Act of 2005.

[[Page 119 STAT. 977]]

SEC. 1272. <<NOTE: Deadline. 42 USC 16460.>> IMPLEMENTATION.

    Not later than 4 months after the date of enactment of this
subtitle, the Commission shall--
            (1) <<NOTE: Regulations.>> issue such regulations as may be
        necessary or appropriate to implement this subtitle (other than
        section 1265, relating to State access to books and records);
        and
            (2) submit to Congress detailed recommendations on technical
        and conforming amendments to Federal law necessary to carry out
        this subtitle and the amendments made by this subtitle.

SEC. 1273. TRANSFER <<NOTE: Records. 42 USC 16461.>> OF RESOURCES.

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

SEC. 1274. <<NOTE: 42 USC 16451 note.>> EFFECTIVE DATE.

    (a) In General.--Except for section 1272 (relating to
implementation), this subtitle shall take effect 6 months after the date
of enactment of this subtitle.
    (b) Compliance With Certain Rules.--If the Commission approves and
makes effective any final rulemaking modifying the standards of conduct
governing entities that own, operate, or control facilities for
transmission of electricity in interstate commerce or transportation of
natural gas in interstate commerce prior to the effective date of this
subtitle, any action taken by a public-utility company or utility
holding company to comply with the requirements of such rulemaking shall
not subject such public-utility company or utility holding company to
any regulatory requirement applicable to a holding company under the
Public Utility Holding Company Act of 1935 (15 U.S.C. 79 et seq.).

SEC. 1275. <<NOTE: 42 USC 16462.>> SERVICE ALLOCATION.

    (a) Definition of Public Utility.--In this section, the term
``public utility'' has the meaning given the term in section 201(e) of
the Federal Power Act (16 U.S.C. 824(e)).
    (b) FERC Review.--In the case of non-power goods or administrative
or management services provided by an associate company organized
specifically for the purpose of providing such goods or services to any
public utility in the same holding company system, at the election of
the system or a State commission having jurisdiction over the public
utility, the Commission, after the effective date of this subtitle,
shall review and authorize the allocation of the costs for such goods or
services to the extent relevant to that associate company.
    (c) Effect on Federal and State Law.--Nothing in this section shall
affect the authority of the Commission or a State commission under other
applicable law.
    (d) <<NOTE: Deadline.>> Rules.--Not later than 4 months after the
date of enactment of this Act, the Commission shall issue rules (which
rules shall be effective no earlier than the effective date of this
subtitle) to exempt from the requirements of this section any company in
a holding company system whose public utility operations are confined
substantially to a single State and any other class of transactions that
the Commission finds is not relevant to the jurisdictional rates of a
public utility.

[[Page 119 STAT. 978]]

SEC. 1276. <<NOTE: 42 USC 16463.>> AUTHORIZATION OF APPROPRIATIONS.

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

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

    (a) Conflict of Jurisdiction.--Section 318 of the Federal Power Act
(16 U.S.C. 825q) is repealed.
    (b) Definitions.--(1) Section 201(g)(5) of the Federal Power Act (16
U.S.C. 824(g)(5)) is amended by striking ``1935'' and inserting
``2005''.
    (2) Section 214 of the Federal Power Act (16 U.S.C. 824m) is amended
by striking ``1935'' and inserting ``2005''.

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

SEC. 1281. ELECTRICITY MARKET TRANSPARENCY.

    Part II of the Federal Power Act is amended by adding at the end the
following:

``SEC. 220. <<NOTE: 16 USC 824t.>> ELECTRICITY MARKET TRANSPARENCY
            RULES.

    ``(a)(1) The Commission is directed to facilitate price transparency
in markets for the sale and transmission of electric energy in
interstate commerce, having due regard for the public interest, the
integrity of those markets, fair competition, and the protection of
consumers.
    ``(2) The Commission may prescribe such rules as the Commission
determines necessary and appropriate to carry out the purposes of this
section. The rules shall provide for the dissemination, on a timely
basis, of information about the availability and prices of wholesale
electric energy and transmission service to the Commission, State
commissions, buyers and sellers of wholesale electric energy, users of
transmission services, and the public.
    ``(3) The Commission may--
            ``(A) obtain the information described in paragraph (2) from
        any market participant; and
            ``(B) rely on entities other than the Commission to receive
        and make public the information, subject to the disclosure rules
        in subsection (b).

    ``(4) In carrying out this section, the Commission shall consider
the degree of price transparency provided by existing price publishers
and providers of trade processing services, and shall rely on such
publishers and services to the maximum extent possible. The Commission
may establish an electronic information system if it determines that
existing price publications are not adequately providing price discovery
or market transparency. Nothing in this section, however, shall affect
any electronic information filing requirements in effect under this Act
as of the date of enactment of this section.
    ``(b)(1) Rules described in subsection (a)(2), if adopted, shall
exempt from disclosure information the Commission determines would, if
disclosed, be detrimental to the operation of an effective market or
jeopardize system security.
    ``(2) In determining the information to be made available under this
section and time to make the information available, the Commission shall
seek to ensure that consumers and competitive

[[Page 119 STAT. 979]]

markets are protected from the adverse effects of potential collusion or
other anticompetitive behaviors that can be facilitated by untimely
public disclosure of transaction-specific information.
    ``(c)(1) <<NOTE: Deadline.>> Within 180 days of enactment of this
section, the Commission shall conclude a memorandum of understanding
with the Commodity Futures Trading Commission relating to information
sharing, which shall include, among other things, provisions ensuring
that information requests to markets within the respective jurisdiction
of each agency are properly coordinated to minimize duplicative
information requests, and provisions regarding the treatment of
proprietary trading information.

    ``(2) Nothing in this section may be construed to limit or affect
the exclusive jurisdiction of the Commodity Futures Trading Commission
under the Commodity Exchange Act (7 U.S.C. 1 et seq.).
    ``(d) The Commission shall not require entities who have a de
minimis market presence to comply with the reporting requirements of
this section.
    ``(e)(1) Except as provided in paragraph (2), no person shall be
subject to any civil penalty under this section with respect to any
violation occurring more than 3 years before the date on which the
person is provided notice of the proposed penalty under section 316A.
    ``(2) Paragraph (1) shall not apply in any case in which the
Commission finds that a seller that has entered into a contract for the
sale of electric energy at wholesale or transmission service subject to
the jurisdiction of the Commission has engaged in fraudulent market
manipulation activities materially affecting the contract in violation
of section 222.
    ``(f) This section shall not apply to a transaction for the purchase
or sale of wholesale electric energy or transmission services within the
area described in section 212(k)(2)(A).''.

SEC. 1282. FALSE STATEMENTS.

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

``SEC. 221. <<NOTE: 16 USC 824u.>> PROHIBITION ON FILING FALSE
            INFORMATION.

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

SEC. 1283. MARKET MANIPULATION.

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

``SEC. 222. <<NOTE: 16 USC 824v.>> PROHIBITION OF ENERGY MARKET
            MANIPULATION.

    ``(a) In General.--It shall be unlawful for any entity (including an
entity described in section 201(f)), directly or indirectly, to use or
employ, in connection with the purchase or sale of electric energy or
the purchase or sale of transmission services subject to the
jurisdiction of the Commission, any manipulative or deceptive device or
contrivance (as those terms are used in section 10(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78j(b))), in contravention

[[Page 119 STAT. 980]]

of such rules and regulations as the Commission may prescribe as
necessary or appropriate in the public interest or for the protection of
electric ratepayers.
    ``(b) No Private Right of Action.--Nothing in this section shall be
construed to create a private right of action.''.

SEC. 1284. ENFORCEMENT.

    (a) Complaints.--Section 306 of the Federal Power Act (16 U.S.C.
825e) is amended--
            (1) by inserting ``electric utility,'' after ``Any
        person,''; and
            (2) by inserting ``, transmitting utility,'' after
        ``licensee'' each place it appears.

    (b) Investigations.--Section 307(a) of the Federal Power Act (16
U.S.C. 825f(a)) is amended--
            (1) by inserting ``, electric utility, transmitting utility,
        or other entity'' after ``person'' each place it appears; and
            (2) in the first sentence, by inserting before the period at
        the end the following: ``, or in obtaining information about the
        sale of electric energy at wholesale in interstate commerce and
        the transmission of electric energy in interstate commerce''.

    (c) Review of Commission Orders.--Section 313(a) of the Federal
Power Act (16 U.S.C. 825l) is amended by inserting ``electric utility,''
after ``person,'' in the first 2 places it appears and by striking ``any
person unless such person'' and inserting ``any entity unless such
entity''.
    (d) Criminal Penalties.--Section 316 of the Federal Power Act (16
U.S.C. 825o) is amended--
            (1) in subsection (a)--
                    (A) by striking ``$5,000'' and inserting
                ``$1,000,000''; and
                    (B) by striking ``two years'' and inserting ``5
                years'';
            (2) in subsection (b), by striking ``$500'' and inserting
        ``$25,000''; and
            (3) by striking subsection (c).

    (e) Civil Penalties.--Section 316A of the Federal Power Act (16
U.S.C. 825o-1) is amended--
            (1) by striking ``section 211, 212, 213, or 214'' each place
        it appears and inserting ``part II''; and
            (2) in subsection (b), by striking ``$10,000'' and inserting
        ``$1,000,000''.

SEC. 1285. REFUND EFFECTIVE DATE.

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

[[Page 119 STAT. 981]]

        why it has failed to do so and shall state its best estimate as
        to when it reasonably expects to make such decision.''.

SEC. 1286. REFUND AUTHORITY.

    Section 206 of the Federal Power Act (16 U.S.C. 824e) is amended by
adding at the end the following:
    ``(e)(1) In this subsection:
            ``(A) The term `short-term sale' means an agreement for the
        sale of electric energy at wholesale in interstate commerce that
        is for a period of 31 days or less (excluding monthly contracts
        subject to automatic renewal).
            ``(B) The term `applicable Commission rule' means a
        Commission rule applicable to sales at wholesale by public
        utilities that the Commission determines after notice and
        comment should also be applicable to entities subject to this
        subsection.

    ``(2) If an entity described in section 201(f) voluntarily makes a
short-term sale of electric energy through an organized market in which
the rates for the sale are established by Commission-approved tariff
(rather than by contract) and the sale violates the terms of the tariff
or applicable Commission rules in effect at the time of the sale, the
entity shall be subject to the refund authority of the Commission under
this section with respect to the violation.
    ``(3) This section shall not apply to--
            ``(A) any entity that sells in total (including affiliates
        of the entity) less than 8,000,000 megawatt hours of electricity
        per year; or
            ``(B) an electric cooperative.

    ``(4)(A) The Commission shall have refund authority under paragraph
(2) with respect to a voluntary short term sale of electric energy by
the Bonneville Power Administration only if the sale is at an unjust and
unreasonable rate.
    ``(B) The Commission may order a refund under subparagraph (A) only
for short-term sales made by the Bonneville Power Administration at
rates that are higher than the highest just and reasonable rate charged
by any other entity for a short-term sale of electric energy in the same
geographic market for the same, or most nearly comparable, period as the
sale by the Bonneville Power Administration.
    ``(C) In the case of any Federal power marketing agency or the
Tennessee Valley Authority, the Commission shall not assert or exercise
any regulatory authority or power under paragraph (2) other than the
ordering of refunds to achieve a just and reasonable rate.''.

SEC. 1287. <<NOTE: 42 USC 16471.>> CONSUMER PRIVACY AND UNFAIR TRADE
            PRACTICES.

    (a) Privacy.--The Federal Trade Commission may issue rules
protecting the privacy of electric consumers from the disclosure of
consumer information obtained in connection with the sale or delivery of
electric energy to electric consumers.
    (b) Slamming.--The Federal Trade Commission may issue rules
prohibiting the change of selection of an electric utility except with
the informed consent of the electric consumer or if approved by the
appropriate State regulatory authority.
    (c) Cramming.--The Federal Trade Commission may issue rules
prohibiting the sale of goods and services to an electric consumer
unless expressly authorized by law or the electric consumer.

[[Page 119 STAT. 982]]

    (d) Rulemaking.--The Federal Trade Commission shall proceed in
accordance with section 553 of title 5, United States Code, when
prescribing a rule under this section.
    (e) State Authority.--If the Federal Trade Commission determines
that a State's regulations provide equivalent or greater protection than
the provisions of this section, such State regulations shall apply in
that State in lieu of the regulations issued by the Commission under
this section.
    (f) Definitions.--For purposes of this section:
            (1) State regulatory authority.--The term ``State regulatory
        authority'' has the meaning given that term in section 3(21) of
        the Federal Power Act (16 U.S.C. 796(21)).
            (2) Electric consumer and electric utility.--The terms
        ``electric consumer'' and ``electric utility'' have the meanings
        given those terms in section 3 of the Public Utility Regulatory
        Policies Act of 1978 (16 U.S.C. 2602).

SEC. 1288. AUTHORITY OF COURT TO PROHIBIT INDIVIDUALS FROM SERVING AS
            OFFICERS, DIRECTORS, AND ENERGY TRADERS.

    Section 314 of the Federal Power Act (16 U.S.C. 825m) is amended by
adding at the end the following:
    ``(d) In any proceedings under subsection (a), the court may
prohibit, conditionally or unconditionally, and permanently or for such
period of time as the court determines, any individual who is engaged or
has engaged in practices constituting a violation of section 221 (and
related rules and regulations) from--
            ``(1) acting as an officer or director of an electric
        utility; or
            ``(2) engaging in the business of purchasing or selling--
                    ``(A) electric energy; or
                    ``(B) transmission services subject to the
                jurisdiction of the Commission.''.

SEC. 1289. MERGER REVIEW REFORM.

    (a) In General.--Section 203(a) of the Federal Power Act (16 U.S.C.
824b(a)) is amended to read as follows:
    ``(a)(1) No public utility shall, without first having secured an
order of the Commission authorizing it to do so--
                    ``(A) sell, lease, or otherwise dispose of the whole
                of its facilities subject to the jurisdiction of the
                Commission, or any part thereof of a value in excess of
                $10,000,000;
                    ``(B) merge or consolidate, directly or indirectly,
                such facilities or any part thereof with those of any
                other person, by any means whatsoever;
                    ``(C) purchase, acquire, or take any security with a
                value in excess of $10,000,000 of any other public
                utility; or
                    ``(D) purchase, lease, or otherwise acquire an
                existing generation facility--
                          ``(i) that has a value in excess of
                      $10,000,000; and
                          ``(ii) that is used for interstate wholesale
                      sales and over which the Commission has
                      jurisdiction for ratemaking purposes.
            ``(2) No holding company in a holding company system that
        includes a transmitting utility or an electric utility shall
        purchase, acquire, or take any security with a value in excess

[[Page 119 STAT. 983]]

        of $10,000,000 of, or, by any means whatsoever, directly or
        indirectly, merge or consolidate with, a transmitting utility,
        an electric utility company, or a holding company in a holding
        company system that includes a transmitting utility, or an
        electric utility company, with a value in excess of $10,000,000
        without first having secured an order of the Commission
        authorizing it to do so.
            ``(3) <<NOTE: Notice.>> Upon receipt of an application for
        such approval the Commission shall give reasonable notice in
        writing to the Governor and State commission of each of the
        States in which the physical property affected, or any part
        thereof, is situated, and to such other persons as it may deem
        advisable.
            ``(4) After notice and opportunity for hearing, the
        Commission shall approve the proposed disposition,
        consolidation, acquisition, or change in control, if it finds
        that the proposed transaction will be consistent with the public
        interest, and will not result in cross-subsidization of a non-
        utility associate company or the pledge or encumbrance of
        utility assets for the benefit of an associate company, unless
        the Commission determines that the cross-subsidization, pledge,
        or encumbrance will be consistent with the public interest.
            ``(5) <<NOTE: Regulations. Procedures.>> The Commission
        shall, by rule, adopt procedures for the expeditious
        consideration of applications for the approval of dispositions,
        consolidations, or acquisitions, under this section. Such rules
        shall identify classes of transactions, or specify criteria for
        transactions, that normally meet the standards established in
        paragraph (4). The Commission shall provide expedited review for
        such transactions. <<NOTE: Deadlines.>> The Commission shall
        grant or deny any other application for approval of a
        transaction not later than 180 days after the application is
        filed. If the Commission does not act within 180 days, such
        application shall be deemed granted unless the Commission finds,
        based on good cause, that further consideration is required to
        determine whether the proposed transaction meets the standards
        of paragraph (4) and issues an order tolling the time for acting
        on the application for not more than 180 days, at the end of
        which additional period the Commission shall grant or deny the
        application.
            ``(6) For purposes of this subsection, the terms `associate
        company', `holding company', and `holding company system' have
        the meaning given those terms in the Public Utility Holding
        Company Act of 2005.''.

    (b) <<NOTE: 16 USC 824b note.>> Effective Date.--The amendments made
by this section shall take effect 6 months after the date of enactment
of this Act.

    (c) Transition Provision.--The amendments made by subsection (a)
shall not apply to any application under section 203 of the Federal
Power Act (16 U.S.C. 824b) that was filed on or before the date of
enactment of this Act.

SEC. 1290. RELIEF FOR EXTRAORDINARY VIOLATIONS.

    (a) Application.--This section applies to any contract entered into
the Western Interconnection prior to June 20, 2001, with a seller of
wholesale electricity that the Commission has--
            (1) found to have manipulated the electricity market
        resulting in unjust and unreasonable rates; and

[[Page 119 STAT. 984]]

            (2) revoked the seller's authority to sell any electricity
        at market-based rates.

    (b) Relief.--Notwithstanding section 222 of the Federal Power Act
(as added by section 1262), any provision of title 11, United States
Code, or any other provision of law, in the case of a contract described
in subsection (a), the Commission shall have exclusive jurisdiction
under the Federal Power Act (16 U.S.C. 791a et seq.) to determine
whether a requirement to make termination payments for power not
delivered by the seller, or any successor in interest of the seller, is
not permitted under a rate schedule (or contract under such a schedule)
or is otherwise unlawful on the grounds that the contract is unjust and
unreasonable or contrary to the public interest.
    (c) Applicability.--This section applies to any proceeding pending
on the date of enactment of this section involving a seller described in
subsection (a) in which there is not a final, nonappealable order by the
Commission or any other jurisdiction determining the respective rights
of the seller.

                         Subtitle H--Definitions

SEC. 1291. DEFINITIONS.

    (a) <<NOTE: 42 USC 16481.>> Commission.--In this title, the term
``Commission'' means the Federal Energy Regulatory Commission.

    (b) Amendment.--Section 3 of the Federal Power Act (16 U.S.C. 796)
is amended--
            (1) by striking paragraphs (22) and (23) and inserting the
        following:
            ``(22) Electric utility.--(A) The term `electric utility'
        means a person or Federal or State agency (including an entity
        described in section 201(f)) that sells electric energy.
            ``(B) The term `electric utility' includes the Tennessee
        Valley Authority and each Federal power marketing
        administration.
            ``(23) Transmitting utility.--The term `transmitting
        utility' means an entity (including an entity described in
        section 201(f)) that owns, operates, or controls facilities used
        for the transmission of electric energy--
                    ``(A) in interstate commerce;
                    ``(B) for the sale of electric energy at
                wholesale.''; and
            (2) by adding at the end the following:
            ``(26) Electric cooperative.--The term `electric
        cooperative' means a cooperatively owned electric utility.
            ``(27) RTO.--The term `Regional Transmission Organization'
        or `RTO' means an entity of sufficient regional scope approved
        by the Commission--
                    ``(A) to exercise operational or functional control
                of facilities used for the transmission of electric
                energy in interstate commerce; and
                    ``(B) to ensure nondiscriminatory access to the
                facilities.
            ``(28) ISO.--The term `Independent System Operator' or `ISO'
        means an entity approved by the Commission--
                    ``(A) to exercise operational or functional control
                of facilities used for the transmission of electric
                energy in interstate commerce; and
                    ``(B) to ensure nondiscriminatory access to the
                facilities.

[[Page 119 STAT. 985]]

            ``(29) Transmission organization.--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.''.

    (c) Applicability.--Section 201(f) of the Federal Power Act (16
U.S.C. 824(f)) is amended by striking ``political subdivision of a
state,'' and inserting ``political subdivision of a State, an electric
cooperative that receives financing under the Rural Electrification Act
of 1936 (7 U.S.C. 901 et seq.) or that sells less than 4,000,000
megawatt hours of electricity per year,''.

             Subtitle I--Technical and Conforming Amendments

SEC. 1295. CONFORMING AMENDMENTS.

    (a) Section 201 of the Federal Power Act (16 U.S.C. 824) is
amended--
            (1) in subsection (b)(2)--
                    (A) in the first sentence--
                          (i) by striking ``The'' and inserting
                      ``Notwithstanding section 201(f), the''; and
                          (ii) by striking ``210, 211, and 212'' and
                      inserting ``203(a)(2), 206(e), 210, 211, 211A,
                      212, 215, 216, 217, 218, 219, 220, 221, and 222'';
                      and
                    (B) in the second sentence--
                          (i) by inserting ``or rule'' after ``any
                      order''; and
                          (ii) by striking ``210 or 211'' and inserting
                      ``203(a)(2), 206(e), 210, 211, 211A, 212, 215,
                      216, 217, 218, 219, 220, 221, or 222''; and
            (2) in subsection (e), by striking ``210, 211, or 212'' and
        inserting ``206(e), 206(f), 210, 211, 211A, 212, 215, 216, 217,
        218, 219, 220, 221, or 222''.

    (b) Section 206 of the Federal Power Act (16 U.S.C. 824e) is
amended--
            (1) in the first sentence of subsection (a), by striking
        ``hearing had'' and inserting ``hearing held''; and
            (2) in the seventh sentence of subsection (b), by striking
        ``the public utility to make''.

    (c) Section 211 of the Federal Power Act (16 U.S.C. 824j) is
amended--
            (1) in subsection (c)--
                    (A) by striking ``(2)'';
                    (B) by striking ``(A)'' and inserting ``(1)''
                    (C) by striking ``(B)'' and inserting ``(2)''; and
                    (D) by striking ``termination of modification'' and
                inserting ``termination or modification''; and
            (2) in the second sentence of subsection (d)(1), by striking
        ``electric utility'' the second place it appears and inserting
        ``transmitting utility''.

    (d) Section 315(c) of the Federal Power Act (16 U.S.C. 825n(c)) is
amended by striking ``subsection'' and inserting ``section''.

[[Page 119 STAT. 986]]

                      Subtitle J--Economic Dispatch

SEC. 1298. ECONOMIC DISPATCH.

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

``SEC. 223. <<NOTE: 16 USC 824w.>> JOINT BOARDS ON ECONOMIC DISPATCH.

    ``(a) <<NOTE: Establishment.>> In General.--The Commission shall
convene joint boards on a regional basis pursuant to section 209 of this
Act to study the issue of security constrained economic dispatch for the
various market regions. The Commission shall designate the appropriate
regions to be covered by each such joint board for purposes of this
section.

    ``(b) Membership.--The Commission shall request each State to
nominate a representative for the appropriate regional joint board, and
shall designate a member of the Commission to chair and participate as a
member of each such board.
    ``(c) Powers.--The sole authority of each joint board convened under
this section shall be to consider issues relevant to what constitutes
`security constrained economic dispatch' and how such a mode of
operating an electric energy system affects or enhances the reliability
and affordability of service to customers in the region concerned and to
make recommendations to the Commission regarding such issues.
    ``(d) Report to the Congress.--Within 1 year after enactment of this
section, the Commission shall issue a report and submit such report to
the Congress regarding the recommendations of the joint boards under
this section and the Commission may consolidate the recommendations of
more than one such regional joint board, including any consensus
recommendations for statutory or regulatory reform.''.

 TITLE <<NOTE: Energy Tax Incentives Act of 2005.>> XIII--ENERGY POLICY
TAX INCENTIVES

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

    (a) <<NOTE: 26 USC 1 note.>> Short Title.--This title may be cited
as the ``Energy Tax Incentives Act of 2005''.

    (b) <<NOTE: 26 USC 1 et seq.>> Amendment of 1986 Code.--Except as
otherwise expressly provided, whenever in this title an amendment or
repeal is expressed in terms of an amendment to, or repeal of, a section
or other provision, the reference shall be considered to be made to a
section or other provision of the Internal Revenue Code of 1986.

                 Subtitle A--Electricity Infrastructure

SEC. 1301. EXTENSION AND MODIFICATION OF RENEWABLE ELECTRICITY
            PRODUCTION CREDIT.

    (a) <<NOTE: 26 USC 45.>> 2-Year Extension for Certain Facilities.--
Section 45(d) (relating to qualified facilities) is amended--
            (1) by striking ``January 1, 2006'' each place it appears in
        paragraphs (1), (2), (3), (5), (6), and (7) and inserting
        ``January 1, 2008'', and

[[Page 119 STAT. 987]]

            (2) by striking ``January 1, 2006'' in paragraph (4) and
        inserting ``January 1, 2008 (January 1, 2006, in the case of a
        facility using solar energy)''.

    (b) <<NOTE: 26 USC 45.>> Increase in Credit Period.--Section
45(b)(4)(B) (relating to credit period) is amended--
            (1) by inserting ``or clause (iii)'' after ``clause (ii)''
        in clause (i), and
            (2) by adding at the end the following:
                          ``(iii) Termination.--Clause (i) shall not
                      apply to any facility placed in service after the
                      date of the enactment of this clause.''.

    (c) Expansion of Qualified Resources to Certain Hydropower.--
            (1) In general.--Section 45(c)(1) (defining qualified energy
        resources) is amended by striking ``and'' at the end of
        subparagraph (F), by striking the period at the end of
        subparagraph (G) and inserting ``, and'', and by adding at the
        end the following new subparagraph:
                    ``(H) qualified hydropower production.''.
            (2) Credit rate.--Section 45(b)(4)(A) (relating to credit
        rate) is amended by striking ``or (7)'' and inserting ``(7), or
        (9)''.
            (3) Definition of resources.--Section 45(c) (relating to
        qualified energy resources and refined coal) is amended by
        adding at the end the following new paragraph:
            ``(8) Qualified hydropower production.--
                    ``(A) In general.--The term `qualified hydropower
                production' means--
                          ``(i) in the case of any hydroelectric dam
                      which was placed in service on or before the date
                      of the enactment of this paragraph, the
                      incremental hydropower production for the taxable
                      year, and
                          ``(ii) in the case of any nonhydroelectric dam
                      described in subparagraph (C), the hydropower
                      production from the facility for the taxable year.
                    ``(B) Determination of incremental hydropower
                production.--
                          ``(i) In general.--For purposes of
                      subparagraph (A), incremental hydropower
                      production for any taxable year shall be equal to
                      the percentage of average annual hydropower
                      production at the facility attributable to the
                      efficiency improvements or additions of capacity
                      placed in service after the date of the enactment
                      of this paragraph, determined by using the same
                      water flow information used to determine an
                      historic average annual hydropower production
                      baseline for such facility. Such percentage and
                      baseline shall be certified by the Federal Energy
                      Regulatory Commission.
                          ``(ii) Operational changes disregarded.--For
                      purposes of clause (i), the determination of
                      incremental hydropower production shall not be
                      based on any operational changes at such facility
                      not directly associated with the efficiency
                      improvements or additions of capacity.
                    ``(C) Nonhydroelectric dam.--For purposes of
                subparagraph (A), a facility is described in this
                subparagraph if--

[[Page 119 STAT. 988]]

                          ``(i) the facility is licensed by the Federal
                      Energy Regulatory Commission and meets all other
                      applicable environmental, licensing, and
                      regulatory requirements,
                          ``(ii) the facility was placed in service
                      before the date of the enactment of this paragraph
                      and did not produce hydroelectric power on the
                      date of the enactment of this paragraph, and
                          ``(iii) turbines or other generating devices
                      are to be added to the facility after such date to
                      produce hydroelectric power, but only if there is
                      not any enlargement of the diversion structure, or
                      construction or enlargement of a bypass channel,
                      or the impoundment or any withholding of any
                      additional water from the natural stream
                      channel.''.
            (4) Facilities.--Section 45(d) <<NOTE: 26 USC
        45.>> (relating to qualified facilities) is amended by adding at
        the end the following new paragraph:
            ``(9) Qualified hydropower facility.--In the case of a
        facility producing qualified hydroelectric production described
        in subsection (c)(8), the term `qualified facility' means--
                    ``(A) in the case of any facility producing
                incremental hydropower production, such facility but
                only to the extent of its incremental hydropower
                production attributable to efficiency improvements or
                additions to capacity described in subsection (c)(8)(B)
                placed in service after the date of the enactment of
                this paragraph and before January 1, 2008, and
                    ``(B) any other facility placed in service after the
                date of the enactment of this paragraph and before
                January 1, 2008.
                    ``(C) Credit period.--In the case of a qualified
                facility described in subparagraph (A), the 10-year
                period referred to in subsection (a) shall be treated as
                beginning on the date the efficiency improvements or
                additions to capacity are placed in service.''.

    (d) Indian Coal.--
            (1) Production facilities.--Subsection (e) of section 45
        (relating to definitions and special rules) is amended by adding
        at the end the following new paragraph:
            ``(10) Indian coal production facilities.--
                    ``(A) Determination of credit amount.--In the case
                of a producer of Indian coal, the credit determined
                under this section (without regard to this paragraph)
                for any taxable year shall be increased by an amount
                equal to the applicable dollar amount per ton of Indian
                coal--
                          ``(i) produced by the taxpayer at an Indian
                      coal production facility during the 7-year period
                      beginning on January 1, 2006, and
                          ``(ii) sold by the taxpayer--
                                    ``(I) to an unrelated person, and
                                    ``(II) during such 7-year period and
                                such taxable year.
                    ``(B) Applicable dollar amount.--
                          ``(i) In general.--The term `applicable dollar
                      amount' for any taxable year beginning in a
                      calendar year means--

[[Page 119 STAT. 989]]

                                    ``(I) $1.50 in the case of calendar
                                years 2006 through 2009, and
                                    ``(II) $2.00 in the case of calendar
                                years beginning after 2009.
                          ``(ii) Inflation adjustment.--In the case of
                      any calendar year after 2006, each of the dollar
                      amounts under clause (i) shall be equal to the
                      product of such dollar amount and the inflation
                      adjustment factor determined under paragraph
                      (2)(B) for the calendar year, except that such
                      paragraph shall be applied by substituting `2005'
                      for `1992'.
                    ``(C) Application of rules.--Rules similar to the
                rules of the subsection (b)(3) and paragraphs (1), (3),
                (4), and (5) of this subsection shall apply for purposes
                of determining the amount of any increase under this
                paragraph.
                    ``(D) <<NOTE: Effective date.>> Treatment as
                specified credit.--The increase in the credit determined
                under subsection (a) by reason of this paragraph with
                respect to any facility shall be treated as a specified
                credit for purposes of section 38(c)(4)(A) during the 4-
                year period beginning on the later of January 1, 2006,
                or the date on which such facility is placed in service
                by the taxpayer.''.
            (2) <<NOTE: 26 USC 45.>> Resource.--Subsection (c) of
        section 45 (relating to qualified energy resources and refined
        coal), as amended by this Act, is amended by adding at the end
        the following new paragraph:
            ``(9) Indian coal.--
                    ``(A) In general.--The term `Indian coal' means coal
                which is produced from coal reserves which, on June 14,
                2005--
                          ``(i) were owned by an Indian tribe, or
                          ``(ii) were held in trust by the United States
                      for the benefit of an Indian tribe or its members.
                    ``(B) Indian tribe.--For purposes of this paragraph,
                the term `Indian tribe' has the meaning given such term
                by section 7871(c)(3)(E)(ii).''.
            (3) Indian coal production facility.--Subsection (d) of
        section 45, as amended by this Act, is amended by adding at the
        end the following new paragraph:
            ``(10) Indian coal production facility.--The term `Indian
        coal production facility' means a facility which is placed in
        service before January 1, 2009.''.
            (4) Conforming amendment.--The heading for section 45(c) is
        amended by striking ``Qualified Energy Resources and Refined
        Coal'' and inserting ``Resources''.

    (e) Technical Amendment Related to Trash Combustion Facilities.--
Section 45(d)(7) (relating to trash combustion facilities) is amended by
adding at the end the following: ``Such term shall include a new unit
placed in service in connection with a facility placed in service on or
before the date of the enactment of this paragraph, but only to the
extent of the increased amount of electricity produced at the facility
by reason of such new unit.''.
    (f) Additional Technical Amendments Related to Section 710 of the
American Jobs Creation Act of 2004.--
            (1) Clause (ii) of section 45(b)(4)(B) is amended by
        striking ``the date of the enactment of this Act'' and inserting
        ``January 1, 2005,''.

[[Page 119 STAT. 990]]

            (2) <<NOTE: 26 USC 45.>> Clause (ii) of section 45(c)(3)(A)
        is amended by inserting ``or any nonhazardous lignin waste
        material'' after ``cellulosic waste material''.
            (3) Subsection (e) of section 45 is amended by striking
        paragraph (6).
            (4)(A) Paragraph (9) of section 45(e) is amended to read as
        follows:
            ``(9) Coordination with credit for producing fuel from a
        nonconventional source.--
                    ``(A) In general.--The term `qualified facility'
                shall not include any facility which produces
                electricity from gas derived from the biodegradation of
                municipal solid waste if such biodegradation occurred in
                a facility (within the meaning of section 29) the
                production from which is allowed as a credit under
                section 29 for the taxable year or any prior taxable
                year.
                    ``(B) Refined coal facilities.--The term `refined
                coal production facility' shall not include any facility
                the production from which is allowed as a credit under
                section 29 for the taxable year or any prior taxable
                year.''.
            (B) Subparagraph (C) of section 45(e)(8) is amended by
        striking ``and (9)''.
            (5) <<NOTE: 26 USC 168.>> Subclause (I) of section
        168(e)(3)(B)(vi) is amended to read as follows:
                                    ``(I) is described in subparagraph
                                (A) of section 48(a)(3) (or would be so
                                described if `solar and wind' were
                                substituted for `solar' in clause (i)
                                thereof and the last sentence of such
                                section did not apply to such
                                subparagraph),''.
            (6) Paragraph (4) of section 710(g) of the American Jobs
        Creation Act of 2004 <<NOTE: 26 USC 45 note.>>  is amended by
        striking ``January 1, 2004'' and inserting ``January 1, 2005''.

    (g) <<NOTE: 26 USC 45 note.>> Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the
        amendments made by this section shall take effect of the date of
        the enactment of this Act.
            (2) Technical amendments.--The amendments made by
        subsections (e) and (f) shall take effect as if included in the
        amendments made by section 710 of the American Jobs Creation Act
        of 2004.

SEC. 1302. APPLICATION OF SECTION 45 CREDIT TO AGRICULTURAL
            COOPERATIVES.

    (a) In General.--Section 45(e) (relating to definitions and special
rules), as amended by this Act, is amended by adding at the end the
following:
            ``(11) Allocation of credit to patrons of agricultural
        cooperative.--
                    ``(A) Election to allocate.--
                          ``(i) In general.--In the case of an eligible
                      cooperative organization, any portion of the
                      credit determined under subsection (a) for the
                      taxable year may, at the election of the
                      organization, be apportioned among patrons of the
                      organization on the basis of the amount of
                      business done by the patrons during the taxable
                      year.

[[Page 119 STAT. 991]]

                          ``(ii) Form and effect of election.--An
                      election under clause (i) for any taxable year
                      shall be made on a timely filed return for such
                      year. Such election, once made, shall be
                      irrevocable for such taxable year. Such election
                      shall not take effect unless the organization
                      designates the apportionment as such in a written
                      notice mailed to its patrons during the payment
                      period described in section 1382(d).
                    ``(B) Treatment of organizations and patrons.--The
                amount of the credit apportioned to any patrons under
                subparagraph (A)--
                          ``(i) shall not be included in the amount
                      determined under subsection (a) with respect to
                      the organization for the taxable year, and
                          ``(ii) shall be included in the amount
                      determined under subsection (a) for the first
                      taxable year of each patron ending on or after the
                      last day of the payment period (as defined in
                      section 1382(d)) for the taxable year of the
                      organization or, if earlier, for the taxable year
                      of each patron ending on or after the date on
                      which the patron receives notice from the
                      cooperative of the apportionment.
                    ``(C) Special rules for decrease in credits for
                taxable year.--If the amount of the credit of a
                cooperative organization determined under subsection (a)
                for a taxable year is less than the amount of such
                credit shown on the return of the cooperative
                organization for such year, an amount equal to the
                excess of--
                          ``(i) such reduction, over
                          ``(ii) the amount not apportioned to such
                      patrons under subparagraph (A) for the taxable
                      year,
                shall be treated as an increase in tax imposed by this
                chapter on the organization. Such increase shall not be
                treated as tax imposed by this chapter for purposes of
                determining the amount of any credit under this chapter.
                    ``(D) Eligible cooperative defined.--For purposes of
                this section the term `eligible cooperative' means a
                cooperative organization described in section 1381(a)
                which is owned more than 50 percent by agricultural
                producers or by entities owned by agricultural
                producers. For this purpose an entity owned by an
                agricultural producer is one that is more than 50
                percent owned by agricultural producers.''.

    (b) Conforming Amendment.--The last sentence of section 55(c)(1)
is <<NOTE: 26 USC 55.>> amended by inserting ``45(e)(11)(C),'' after
``section''.

    (c) <<NOTE: 26 USC 45 note.>> Effective Date.--The amendments made
by this section shall apply to taxable years of cooperative
organizations ending after the date of the enactment of this Act.

SEC. 1303. CLEAN RENEWABLE ENERGY BONDS.

    (a) In General.--Part IV of subchapter A of chapter 1 (relating to
credits against tax) is amended by adding at the end the following new
subpart:

[[Page 119 STAT. 992]]

      ``Subpart H--Nonrefundable Credit to Holders of Certain Bonds

``Sec. 54. Credit to holders of clean renewable energy bonds.

``SEC. 54. CREDIT TO HOLDERS OF CLEAN RENEWABLE ENERGY BONDS.

    ``(a) Allowance of Credit.--If a taxpayer holds a clean renewable
energy bond on one or more credit allowance dates of the bond occurring
during any taxable year, there shall be allowed as a credit against the
tax imposed by this chapter for the taxable year an amount equal to the
sum of the credits determined under subsection (b) with respect to such
dates.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined under
        this subsection with respect to any credit allowance date for a
        clean renewable energy bond is 25 percent of the annual credit
        determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with
        respect to any clean renewable energy bond is the product of--
                    ``(A) the credit rate determined by the Secretary
                under paragraph (3) for the day on which such bond was
                sold, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Determination.--For purposes of paragraph (2), with
        respect to any clean renewable energy bond, the Secretary shall
        determine daily or cause to be determined daily a credit rate
        which shall apply to the first day on which there is a binding,
        written contract for the sale or exchange of the bond. The
        credit rate for any day is the credit rate which the Secretary
        or the Secretary's designee estimates will permit the issuance
        of clean renewable energy bonds with a specified maturity or
        redemption date without discount and without interest cost to
        the qualified issuer.
            ``(4) Credit allowance date.--For purposes of this section,
        the term `credit allowance date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term also includes the last day on which the bond is
        outstanding.
            ``(5) Special rule for issuance and redemption.--In the case
        of a bond which is issued during the 3-month period ending on a
        credit allowance date, the amount of the credit determined under
        this subsection with respect to such credit allowance date shall
        be a ratable portion of the credit otherwise determined based on
        the portion of the 3-month period during which the bond is
        outstanding. A similar rule shall apply when the bond is
        redeemed or matures.

    ``(c) Limitation Based on Amount of Tax.--The credit allowed under
subsection (a) for any taxable year shall not exceed the excess of--
            ``(1) the sum of the regular tax liability (as defined in
        section 26(b)) plus the tax imposed by section 55, over

[[Page 119 STAT. 993]]

            ``(2) the sum of the credits allowable under this part
        (other than subpart C and this section).

    ``(d) Clean Renewable Energy Bond.--For purposes of this section--
            ``(1) In general.--The term `clean renewable energy bond'
        means any bond issued as part of an issue if--
                    ``(A) the bond is issued by a qualified issuer
                pursuant to an allocation by the Secretary to such
                issuer of a portion of the national clean renewable
                energy bond limitation under subsection (f)(2),
                    ``(B) 95 percent or more of the proceeds of such
                issue are to be used for capital expenditures incurred
                by qualified borrowers for one or more qualified
                projects,
                    ``(C) the qualified issuer designates such bond for
                purposes of this section and the bond is in registered
                form, and
                    ``(D) the issue meets the requirements of subsection
                (h).
            ``(2) Qualified project; special use rules.--
                    ``(A) In general.--The term `qualified project'
                means any qualified facility (as determined under
                section 45(d) without regard to paragraph (10) and to
                any placed in service date) owned by a qualified
                borrower.
                    ``(B) Refinancing rules.--For purposes of paragraph
                (1)(B), a qualified project may be refinanced with
                proceeds of a clean renewable energy bond only if the
                indebtedness being refinanced (including any obligation
                directly or indirectly refinanced by such indebtedness)
                was originally incurred by a qualified borrower after
                the date of the enactment of this section.
                    ``(C) <<NOTE: Deadlines.>> Reimbursement.--For
                purposes of paragraph (1)(B), a clean renewable energy
                bond may be issued to reimburse a qualified borrower for
                amounts paid after the date of the enactment of this
                section with respect to a qualified project, but only
                if--
                          ``(i) prior to the payment of the original
                      expenditure, the qualified borrower declared its
                      intent to reimburse such expenditure with the
                      proceeds of a clean renewable energy bond,
                          ``(ii) not later than 60 days after payment of
                      the original expenditure, the qualified issuer
                      adopts an official intent to reimburse the
                      original expenditure with such proceeds, and
                          ``(iii) the reimbursement is made not later
                      than 18 months after the date the original
                      expenditure is paid.
                    ``(D) Treatment of changes in use.--For purposes of
                paragraph (1)(B), the proceeds of an issue shall not be
                treated as used for a qualified project to the extent
                that a qualified borrower or qualified issuer takes any
                action within its control which causes such proceeds not
                to be used for a qualified project. The Secretary shall
                prescribe regulations specifying remedial actions that
                may be taken (including conditions to taking such
                remedial actions) to prevent an action described in the
                preceding sentence from causing a bond to fail to be a
                clean renewable energy bond.

[[Page 119 STAT. 994]]

    ``(e) Maturity Limitations.--
            ``(1) Duration of term.--A bond shall not be treated as a
        clean renewable energy bond if the maturity of such bond exceeds
        the maximum term determined by the Secretary under paragraph (2)
        with respect to such bond.
            ``(2) Maximum term.--During each calendar month, the
        Secretary shall determine the maximum term permitted under this
        paragraph for bonds issued during the following calendar month.
        Such maximum term shall be the term which the Secretary
        estimates will result in the present value of the obligation to
        repay the principal on the bond being equal to 50 percent of the
        face amount of such bond. Such present value shall be determined
        without regard to the requirements of subsection (l)(6) and
        using as a discount rate the average annual interest rate of
        tax-exempt obligations having a term of 10 years or more which
        are issued during the month. If the term as so determined is not
        a multiple of a whole year, such term shall be rounded to the
        next highest whole year.

    ``(f) Limitation on Amount of Bonds Designated.--
            ``(1) National limitation.--There is a national clean
        renewable energy bond limitation of $800,000,000.
            ``(2) Allocation by secretary.--The Secretary shall allocate
        the amount described in paragraph (1) among qualified projects
        in such manner as the Secretary determines appropriate, except
        that the Secretary may not allocate more than $500,000,000 of
        the national clean renewable energy bond limitation to finance
        qualified projects of qualified borrowers which are governmental
        bodies.

    ``(g) Credit Included in Gross Income.--Gross income includes the
amount of the credit allowed to the taxpayer under this section
(determined without regard to subsection (c)) and the amount so included
shall be treated as interest income.
    ``(h) Special Rules Relating to Expenditures.--
            ``(1) In general.--An issue shall be treated as meeting the
        requirements of this subsection if, as of the date of issuance,
        the qualified issuer reasonably expects--
                    ``(A) at least 95 percent of the proceeds of such
                issue are to be spent for one or more qualified projects
                within the 5-year period beginning on the date of
                issuance of the clean energy bond,
                    ``(B) a binding commitment with a third party to
                spend at least 10 percent of the proceeds of such issue
                will be incurred within the 6-month period beginning on
                the date of issuance of the clean energy bond or, in the
                case of a clean energy bond the proceeds of which are to
                be loaned to two or more qualified borrowers, such
                binding commitment will be incurred within the 6-month
                period beginning on the date of the loan of such
                proceeds to a qualified borrower, and
                    ``(C) such projects will be completed with due
                diligence and the proceeds of such issue will be spent
                with due diligence.
            ``(2) Extension of period.--Upon submission of a request
        prior to the expiration of the period described in paragraph
        (1)(A), the Secretary may extend such period if the qualified

[[Page 119 STAT. 995]]

        issuer establishes that the failure to satisfy the 5-year
        requirement is due to reasonable cause and the related projects
        will continue to proceed with due diligence.
            ``(3) Failure to spend required amount of bond proceeds
        within 5 years.--To the extent that less than 95 percent of the
        proceeds of such issue are expended by the close of the 5-year
        period beginning on the date of issuance (or if an extension has
        been obtained under paragraph (2), by the close of the extended
        period), the qualified issuer shall redeem all of the
        nonqualified bonds within 90 days after the end of such period.
        For purposes of this paragraph, the amount of the nonqualified
        bonds required to be redeemed shall be determined in the same
        manner as under section 142.

    ``(i) Special Rules Relating to Arbitrage.--A bond which is part of
an issue shall not be treated as a clean renewable energy bond unless,
with respect to the issue of which the bond is a part, the qualified
issuer satisfies the arbitrage requirements of section 148 with respect
to proceeds of the issue.
    ``(j) Cooperative Electric Company; Qualified Energy Tax Credit Bond
Lender; Governmental Body; Qualified Borrower.--For purposes of this
section--
            ``(1) Cooperative electric company.--The term `cooperative
        electric company' means a mutual or cooperative electric company
        described in section 501(c)(12) or section 1381(a)(2)(C), or a
        not-for-profit electric utility which has received a loan or
        loan guarantee under the Rural Electrification Act.
            ``(2) Clean renewable energy bond lender.--The term `clean
        renewable energy bond lender' means a lender which is a
        cooperative which is owned by, or has outstanding loans to, 100
        or more cooperative electric companies and is in existence on
        February 1, 2002, and shall include any affiliated entity which
        is controlled by such lender.
            ``(3) Governmental body.--The term `governmental body' means
        any State, territory, possession of the United States, the
        District of Columbia, Indian tribal government, and any
        political subdivision thereof.
            ``(4) Qualified issuer.--The term `qualified issuer' means--
                    ``(A) a clean renewable energy bond lender,
                    ``(B) a cooperative electric company, or
                    ``(C) a governmental body.
            ``(5) Qualified borrower.--The term `qualified borrower'
        means--
                    ``(A) a mutual or cooperative electric company
                described in section 501(c)(12) or 1381(a)(2)(C), or
                    ``(B) a governmental body.

    ``(k) Special Rules Relating to Pool Bonds.--No portion of a pooled
financing bond may be allocable to any loan unless the borrower has
entered into a written loan commitment for such portion prior to the
issue date of such issue.
    ``(l) Other Definitions and Special Rules.--For purposes of this
section--
            ``(1) Bond.--The term `bond' includes any obligation.
            ``(2) Pooled financing bond.--The term `pooled financing
        bond' shall have the meaning given such term by section
        149(f)(4)(A).

[[Page 119 STAT. 996]]

            ``(3) Partnership; s <<NOTE: Applicability.>>  corporation;
        and other pass-thru entities.--
                    ``(A) In general.--
                Under <<NOTE: Regulations.>> regulations prescribed by
                the Secretary, in the case of a partnership, trust, S
                corporation, or other pass-thru entity, rules similar to
                the rules of section 41(g) shall apply with respect to
                the credit allowable under subsection (a).
                    ``(B) No basis adjustment.--In the case of a bond
                held by a partnership or an S corporation, rules similar
                to the rules under section 1397E(i) shall apply.
            ``(4) Bonds <<NOTE: Procedures.>> held by regulated
        investment companies.--If any clean renewable energy bond is
        held by a regulated investment company, the credit determined
        under subsection (a) shall be allowed to shareholders of such
        company under procedures prescribed by the Secretary.
            ``(5) Treatment for estimated tax purposes.--Solely for
        purposes of sections 6654 and 6655, the credit allowed by this
        section (determined without regard to subsection (c)) to a
        taxpayer by reason of holding a clean renewable energy bond on a
        credit allowance date shall be treated as if it were a payment
        of estimated tax made by the taxpayer on such date.
            ``(6) Ratable principal amortization required.--A bond shall
        not be treated as a clean renewable energy bond unless it is
        part of an issue which provides for an equal amount of principal
        to be paid by the qualified issuer during each calendar year
        that the issue is outstanding.
            ``(7) Reporting.--Issuers of clean renewable energy bonds
        shall submit reports similar to the reports required under
        section 149(e).

    ``(m) Termination.--This section shall not apply with respect to any
bond issued after December 31, 2007.''.
    (b) Reporting.--Subsection (d) of section 6049 (relating to returns
regarding payments of interest) is amended by adding at the end the
following new paragraph:
            ``(8) Reporting of credit on clean renewable energy bonds.--
                    ``(A) In general.--For purposes of subsection (a),
                the term `interest' includes amounts includible in gross
                income under section 54(g) and such amounts shall be
                treated as paid on the credit allowance date (as defined
                in section 54(b)(4)).
                    ``(B) Reporting to corporations, etc.--Except as
                otherwise provided in regulations, in the case of any
                interest described in subparagraph (A), subsection
                (b)(4) shall be applied without regard to subparagraphs
                (A), (H), (I), (J), (K), and (L)(i) of such subsection.
                    ``(C) Regulatory authority.--The Secretary may
                prescribe such regulations as are necessary or
                appropriate to carry out the purposes of this paragraph,
                including regulations which require more frequent or
                more detailed reporting.''.

    (c) Conforming Amendments.--
            (1) The table of subparts for part IV of subchapter A of
        chapter 1 is amended by adding at the end the following new
        item:

[[Page 119 STAT. 997]]

    ``subpart h. nonrefundable credit to holders of certain bonds.''.

            (2) Section 1397E(c)(2) is amended by inserting ``, and
        subpart H thereof'' after ``refundable credits''.
            (3) Subsection (h) of section 1397E is amended to read as
        follows:

    ``(h) Credit Treated as Nonrefundable Bondholder Credit.--For
purposes of this title, the credit allowed by this section shall be
treated as a credit allowable under subpart H of part IV of subchapter A
of this chapter.''.
            (4) Section 6401(b)(1) is amended by striking ``and G'' and
        inserting ``G, and H''.

    (d) Issuance of Regulations.--The <<NOTE: Deadline. 26 USC 54
note.>> Secretary of the Treasury shall issue regulations required under
section 54 of the Internal Revenue Code of 1986 (as added by this
section) not later than 120 days after the date of the enactment of this
Act.

    (e) Effective Date.--The <<NOTE: 26 USC 54 note.>> amendments made
by this section shall apply to bonds issued after December 31, 2005.

SEC. 1304. TREATMENT OF INCOME OF CERTAIN ELECTRIC COOPERATIVES.

    (a) Elimination of Sunset on Treatment of Income From Open Access
and Nuclear Decommissioning Transactions.--Section 501(c)(12)(C) is
amended by striking the last sentence.
    (b) Elimination of Sunset on Treatment of Income From Load Loss
Transactions.--Section 501(c)(12)(H) is amended by striking clause (x).
    (c) Effective Date.--The <<NOTE: 26 USC 501 note.>> amendments made
by this section shall take effect on the date of the enactment of this
Act.

SEC. 1305. DISPOSITIONS OF TRANSMISSION PROPERTY TO IMPLEMENT FERC
            RESTRUCTURING POLICY.

    (a) In General.--Section 451(i)(3) (defining qualifying electric
transmission transaction) is amended by striking ``2007'' and inserting
``2008''.
    (b) Technical Amendment Related to Section 909 of the American Jobs
Creation Act of 2004.--Clause (ii) of section 451(i)(4)(B) is amended by
striking ``the close of the period applicable under subsection (a)(2)(B)
as extended under paragraph (2)'' and inserting ``December 31, 2007''.
    (c) Effective <<NOTE: 26 USC 451 note.>> Dates.--
            (1) In general.--The amendment made by subsection (a) shall
        apply to transactions occurring after the date of the enactment
        of this Act.
            (2) Technical amendment.--The amendment made by subsection
        (b) shall take effect as if included in the amendments made by
        section 909 of the American Jobs Creation Act of 2004.

SEC. 1306. CREDIT FOR PRODUCTION FROM ADVANCED NUCLEAR POWER FACILITIES.

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

[[Page 119 STAT. 998]]

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

    ``(a) General Rule.--For purposes of section 38, the advanced
nuclear power facility production credit of any taxpayer for any taxable
year is equal to the product of--
            ``(1) 1.8 cents, multiplied by
            ``(2) the kilowatt hours of electricity--
                    ``(A) produced by the taxpayer at an advanced
                nuclear power facility during the 8-year period
                beginning on the date the facility was originally placed
                in service, and
                    ``(B) sold by the taxpayer to an unrelated person
                during the taxable year.

    ``(b) National Limitation.--
            ``(1) In general.--The amount of credit which would (but for
        this subsection and subsection (c)) be allowed with respect to
        any facility for any taxable year shall not exceed the amount
        which bears the same ratio to such amount of credit as--
                    ``(A) the national megawatt capacity limitation
                allocated to the facility, bears to
                    ``(B) the total megawatt nameplate capacity of such
                facility.
            ``(2) Amount of national limitation.--The national megawatt
        capacity limitation shall be 6,000 megawatts.
            ``(3) Allocation of limitation.--The Secretary shall
        allocate the national megawatt capacity limitation in such
        manner as the Secretary may prescribe.
            ``(4) Regulations.--Not <<NOTE: Deadline.>> later than 6
        months after the date of the enactment of this section, the
        Secretary shall prescribe such regulations as may be necessary
        or appropriate to carry out the purposes of this subsection.
        Such regulations shall provide a certification process under
        which the Secretary, after consultation with the Secretary of
        Energy, shall approve and allocate the national megawatt
        capacity limitation.

    ``(c) Other Limitations.--
            ``(1) Annual limitation.--The amount of the credit allowable
        under subsection (a) (after the application of subsection (b))
        for any taxable year with respect to any facility shall not
        exceed an amount which bears the same ratio to $125,000,000 as--
                    ``(A) the national megawatt capacity limitation
                allocated under subsection (b) to the facility, bears to
                    ``(B) 1,000.
            ``(2) Other limitations.--Rules similar to the rules of
        section 45(b)(1) shall apply for purposes of this section.

    ``(d) Advanced Nuclear Power Facility.--For purposes of this
section--
            ``(1) In general.--The term `advanced nuclear power
        facility' means any advanced nuclear facility--
                    ``(A) which is owned by the taxpayer and which uses
                nuclear energy to produce electricity, and
                    ``(B) which is placed in service after the date of
                the enactment of this paragraph and before January 1,
                2021.
            ``(2) Advanced nuclear facility.--For purposes of paragraph
        (1), the term `advanced nuclear facility' means any nuclear
        facility the reactor design for which is approved after December
        31, 1993, by the Nuclear Regulatory Commission

[[Page 119 STAT. 999]]

        (and such design or a substantially similar design of comparable
        capacity was not approved on or before such date).

    ``(e) Other Rules To Apply.--Rules similar to the rules of
paragraphs (1), (2), (3), (4), and (5) of section 45(e) shall apply for
purposes of this section.''.
    (b) Credit Treated as Business Credit.--Section 38(b), as amended by
the Transportation Equity Act: A Legacy for Users, is amended by
striking ``plus'' at the end of paragraph (19), by striking the period
at the end of paragraph (20) and inserting ``, plus'', and by adding at
the end the following:
            ``(21) the advanced nuclear power facility production credit
        determined under section 45J(a).''.

    (c) Clerical Amendment.--The table of sections for subpart D of part
IV of subchapter A of chapter 1 is amended by adding at the end the
following:

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

    (d) Effective Date.--The <<NOTE: 26 USC 38 note.>> amendments made
by this section shall apply to production in taxable years beginning
after the date of the enactment of this Act.

SEC. 1307. CREDIT FOR INVESTMENT IN CLEAN COAL FACILITIES.

    (a) In General.--Section 46 (relating to amount of credit) is
amended by striking ``and'' at the end of paragraph (1), by striking the
period at the end of paragraph (2), and by adding at the end the
following new paragraphs:
            ``(3) the qualifying advanced coal project credit, and
            ``(4) the qualifying gasification project credit.''.

    (b) Amount of Credits.--Subpart E of part IV of subchapter A of
chapter 1 (relating to rules for computing investment credit) is amended
by inserting after section 48 the following new sections:

``SEC. 48A. QUALIFYING ADVANCED COAL PROJECT CREDIT.

    ``(a) In General.--For purposes of section 46, the qualifying
advanced coal project credit for any taxable year is an amount equal
to--
            ``(1) 20 percent of the qualified investment for such
        taxable year in the case of projects described in subsection
        (d)(3)(B)(i), and
            ``(2) 15 percent of the qualified investment for such
        taxable year in the case of projects described in subsection
        (d)(3)(B)(ii).

    ``(b) Qualified Investment.--
            ``(1) In general.--For purposes of subsection (a), the
        qualified investment for any taxable year is the basis of
        eligible property placed in service by the taxpayer during such
        taxable year which is part of a qualifying advanced coal
        project--
                    ``(A)(i) the construction, reconstruction, or
                erection of which is completed by the taxpayer, or
                    ``(ii) which is acquired by the taxpayer if the
                original use of such property commences with the
                taxpayer, and
                    ``(B) with respect to which depreciation (or
                amortization in lieu of depreciation) is allowable.
            ``(2) Special rule for certain subsidized property.--Rules
        similar to section 48(a)(4) shall apply for purposes of this
        section.
            ``(3) Certain qualified progress expenditures rules made
        applicable.--Rules similar to the rules of subsections (c)(4)
        and (d) of section 46 (as in effect on the day before

[[Page 119 STAT. 1000]]

        the enactment of the Revenue Reconciliation Act of 1990) shall
        apply for purposes of this section.

    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualifying advanced coal project.--The term
        `qualifying advanced coal project' means a project which meets
        the requirements of subsection (e).
            ``(2) Advanced coal-based generation technology.--The term
        `advanced coal-based generation technology' means a technology
        which meets the requirements of subsection (f).
            ``(3) Eligible property.--The term `eligible property'
        means--
                    ``(A) in the case of any qualifying advanced coal
                project using an integrated gasification combined cycle,
                any property which is a part of such project and is
                necessary for the gasification of coal, including any
                coal handling and gas separation equipment, and
                    ``(B) in the case of any other qualifying advanced
                coal project, any property which is a part of such
                project.
            ``(4) Coal.--The term `coal' means anthracite, bituminous
        coal, subbituminous coal, lignite, and peat.
            ``(5) Greenhouse gas capture capability.--The term
        `greenhouse gas capture capability' means an integrated
        gasification combined cycle technology facility capable of
        adding components which can capture, separate on a long-term
        basis, isolate, remove, and sequester greenhouse gases which
        result from the generation of electricity.
            ``(6) Electric generation unit.--The term `electric
        generation unit' means any facility at least 50 percent of the
        total annual net output of which is electrical power, including
        an otherwise eligible facility which is used in an industrial
        application.
            ``(7) Integrated gasification combined cycle.--The term
        `integrated gasification combined cycle' means an electric
        generation unit which produces electricity by converting coal to
        synthesis gas which is used to fuel a combined-cycle plant which
        produces electricity from both a combustion turbine (including a
        combustion turbine/fuel cell hybrid) and a steam turbine.

    ``(d) Qualifying <<NOTE: Deadlines.>> Advanced Coal Project
Program.--
            ``(1) Establishment.--Not later than 180 days after the date
        of enactment of this section, the Secretary, in consultation
        with the Secretary of Energy, shall establish a qualifying
        advanced coal project program for the deployment of advanced
        coal-based generation technologies.
            ``(2) Certification.--
                    ``(A) Application period.--Each applicant for
                certification under this paragraph shall submit an
                application meeting the requirements of subparagraph
                (B). An applicant may only submit an application during
                the 3-year period beginning on the date the Secretary
                establishes the program under paragraph (1).
                    ``(B) Requirements for applications for
                certification.--An application under subparagraph (A)
                shall contain such information as the Secretary may
                require in order to make a determination to accept or
                reject an application for certification as meeting the
                requirements under subsection (e)(1). <<NOTE: Trade
                secrets. Confidential information.>> Any information
                contained in the

[[Page 119 STAT. 1001]]

                application shall be protected as provided in section
                552(b)(4) of title 5, United States Code.
                    ``(C) Time to act upon applications for
                certification.--The Secretary shall issue a
                determination as to whether an applicant has met the
                requirements under subsection (e)(1) within 60 days
                following the date of submittal of the application for
                certification.
                    ``(D) Time to meet criteria for certification.--Each
                applicant for certification shall have 2 years from the
                date of acceptance by the Secretary of the application
                during which to provide to the Secretary evidence that
                the criteria set forth in subsection (e)(2) have been
                met.
                    ``(E) Period of issuance.--An applicant which
                receives a certification shall have 5 years from the
                date of issuance of the certification in order to place
                the project in service and if such project is not placed
                in service by that time period then the certification
                shall no longer be valid.
            ``(3) Aggregate credits.--
                    ``(A) In general.--The aggregate credits allowed
                under subsection (a) for projects certified by the
                Secretary under paragraph (2) may not exceed
                $1,300,000,000.
                    ``(B) Particular projects.--Of the dollar amount in
                subparagraph (A), the Secretary is authorized to
                certify--
                          ``(i) $800,000,000 for integrated gasification
                      combined cycle projects, and
                          ``(ii) $500,000,000 for projects which use
                      other advanced coal-based generation technologies.
            ``(4) Review and redistribution.--
                    ``(A) Review.--Not later than 6 years after the date
                of enactment of this section, the Secretary shall review
                the credits allocated under this section as of the date
                which is 6 years after the date of enactment of this
                section.
                    ``(B) Redistribution.--The Secretary may reallocate
                credits available under clauses (i) and (ii) of
                paragraph (3)(B) if the Secretary determines that--
                          ``(i) there is an insufficient quantity of
                      qualifying applications for certification pending
                      at the time of the review, or
                          ``(ii) any certification made pursuant to
                      subsection paragraph (2) has been revoked pursuant
                      to subsection paragraph (2)(D) because the project
                      subject to the certification has been delayed as a
                      result of third party opposition or litigation to
                      the proposed project.
                    ``(C) Reallocation.--If the Secretary determines
                that credits under clause (i) or (ii) of paragraph
                (3)(B) are available for reallocation pursuant to the
                requirements set forth in paragraph (2), the Secretary
                is authorized to conduct an additional program for
                applications for certification.

    ``(e) Qualifying Advanced Coal Projects.--
            ``(1) Requirements.--For purposes of subsection (c)(1), a
        project shall be considered a qualifying advanced coal project
        that the Secretary may certify under subsection (d)(2) if the
        Secretary determines that, at a minimum--
                    ``(A) the project uses an advanced coal-based
                generation technology--
                          ``(i) to power a new electric generation unit;
                      or

[[Page 119 STAT. 1002]]

                          ``(ii) to retrofit or repower an existing
                      electric generation unit (including an existing
                      natural gas-fired combined cycle unit);
                    ``(B) the fuel input for the project, when
                completed, is at least 75 percent coal;
                    ``(C) the project, consisting of one or more
                electric generation units at one site, will have a total
                nameplate generating capacity of at least 400 megawatts;
                    ``(D) the applicant provides evidence that a
                majority of the output of the project is reasonably
                expected to be acquired or utilized;
                    ``(E) the applicant provides evidence of ownership
                or control of a site of sufficient size to allow the
                proposed project to be constructed and to operate on a
                long-term basis; and
                    ``(F) the project will be located in the United
                States.
            ``(2) Requirements for certification.--For the purpose of
        subsection (d)(2)(D), a project shall be eligible for
        certification only if the Secretary determines that--
                    ``(A) the applicant for certification has received
                all Federal and State environmental authorizations or
                reviews necessary to commence construction of the
                project; and
                    ``(B) the applicant for certification, except in the
                case of a retrofit or repower of an existing electric
                generation unit, has purchased or entered into a binding
                contract for the purchase of the main steam turbine or
                turbines for the project, except that such contract may
                be contingent upon receipt of a certification under
                subsection (d)(2).
            ``(3) Priority for integrated gasification combined cycle
        projects.--In determining which qualifying advanced coal
        projects to certify under subsection (d)(2), the Secretary
        shall--
                    ``(A) certify capacity, in accordance with the
                procedures set forth in subsection (d), in relatively
                equal amounts to--
                          ``(i) projects using bituminous coal as a
                      primary feedstock,
                          ``(ii) projects using subbituminous coal as a
                      primary feedstock, and
                          ``(iii) projects using lignite as a primary
                      feedstock, and
                    ``(B) give high priority to projects which include,
                as determined by the Secretary--
                          ``(i) greenhouse gas capture capability,
                          ``(ii) increased by-product utilization, and
                          ``(iii) other benefits.

    ``(f) Advanced Coal-Based Generation Technology.--
            ``(1) In general.--For the purpose of this section, an
        electric generation unit uses advanced coal-based generation
        technology if--
                    ``(A) the unit--
                          ``(i) uses integrated gasification combined
                      cycle technology, or
                          ``(ii) except as provided in paragraph (3),
                      has a design net heat rate of 8530 Btu/kWh (40
                      percent efficiency), and

[[Page 119 STAT. 1003]]

                    ``(B) the unit is designed to meet the performance
                requirements in the following table:

Performance characteristic:         Design level for project:
  SO2 (percent removal)...........  99 percent
  NOx (emissions).................  0.07 lbs/MMBTU
  PM* (emissions).................  0.015 lbs/MMBTU
  Hg (percent removal)............  90 percent

            ``(2) Design net heat rate.--For purposes of this
        subsection, design net heat rate with respect to an electric
        generation unit shall--
                    ``(A) be measured in Btu per kilowatt hour (higher
                heating value),
                    ``(B) be based on the design annual heat input to
                the unit and the rated net electrical power, fuels, and
                chemicals output of the unit (determined without regard
                to the cogeneration of steam by the unit),
                    ``(C) be adjusted for the heat content of the design
                coal to be used by the unit--
                          ``(i) if the heat content is less than 13,500
                      Btu per pound, but greater than 7,000 Btu per
                      pound, according to the following formula: design
                      net heat rate = unit net heat rate x [1-[((13,500-
                      design coal heat content, Btu per pound)/1,000)*
                      0.013]], and
                          ``(ii) if the heat content is less than or
                      equal to 7,000 Btu per pound, according to the
                      following formula: design net heat rate = unit net
                      heat rate x [1-[((13,500-design coal heat content,
                      Btu per pound)/1,000)* 0.018]], and
                    ``(D) be corrected for the site reference conditions
                of--
                          ``(i) elevation above sea level of 500 feet,
                          ``(ii) air pressure of 14.4 pounds per square
                      inch absolute,
                          ``(iii) temperature, dry bulb of 63F,
                          ``(iv) temperature, wet bulb of 54F, and
                          ``(v) relative humidity of 55 percent.
            ``(3) Existing units.--In the case of any electric
        generation unit in existence on the date of the enactment of
        this section, such unit uses advanced coal-based generation
        technology if, in lieu of the requirements under paragraph
        (1)(A)(ii), such unit achieves a minimum efficiency of 35
        percent and an overall thermal design efficiency improvement,
        compared to the efficiency of the unit as operated, of not less
        than--
                    ``(A) 7 percentage points for coal of more than
                9,000 Btu,
                    ``(B) 6 percentage points for coal of 7,000 to 9,000
                Btu, or
                    ``(C) 4 percentage points for coal of less than
                7,000 Btu.

    ``(g) Applicability.--No use of technology (or level of emission
reduction solely by reason of the use of the technology), and no
achievement of any emission reduction by the demonstration of any
technology or performance level, by or at one or more facilities with
respect to which a credit is allowed under this section, shall

[[Page 119 STAT. 1004]]

be considered to indicate that the technology or performance level is--
            ``(1) adequately demonstrated for purposes of section 111 of
        the Clean Air Act (42 U.S.C. 7411);
            ``(2) achievable for purposes of section 169 of that Act (42
        U.S.C. 7479); or
            ``(3) achievable in practice for purposes of section 171 of
        such Act (42 U.S.C. 7501).

``SEC. 48B. QUALIFYING GASIFICATION PROJECT CREDIT.

    ``(a) In General.--For purposes of section 46, the qualifying
gasification project credit for any taxable year is an amount equal to
20 percent of the qualified investment for such taxable year.
    ``(b) Qualified Investment.--
            ``(1) In general.--For purposes of subsection (a), the
        qualified investment for any taxable year is the basis of
        eligible property placed in service by the taxpayer during such
        taxable year which is part of a qualifying gasification
        project--
                    ``(A)(i) the construction, reconstruction, or
                erection of which is completed by the taxpayer, or
                    ``(ii) which is acquired by the taxpayer if the
                original use of such property commences with the
                taxpayer, and
                    ``(B) with respect to which depreciation (or
                amortization in lieu of depreciation) is allowable.
            ``(2) Special rule for certain subsidized property.--Rules
        similar to section 48(a)(4) shall apply for purposes of this
        section.
            ``(3) Certain qualified progress expenditures rules made
        applicable.--Rules similar to the rules of subsections (c)(4)
        and (d) of section 46 (as in effect on the day before the
        enactment of the Revenue Reconciliation Act of 1990) shall apply
        for purposes of this section.

    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualifying gasification project.--The term `qualifying
        gasification project' means any project which--
                    ``(A) employs gasification technology,
                    ``(B) will be carried out by an eligible entity, and
                    ``(C) any portion of the qualified investment of
                which is certified under the qualifying gasification
                program as eligible for credit under this section in an
                amount (not to exceed $650,000,000) determined by the
                Secretary.
            ``(2) Gasification technology.--The term `gasification
        technology' means any process which converts a solid or liquid
        product from coal, petroleum residue, biomass, or other
        materials which are recovered for their energy or feedstock
        value into a synthesis gas composed primarily of carbon monoxide
        and hydrogen for direct use or subsequent chemical or physical
        conversion.
            ``(3) Eligible property.--The term `eligible property' means
        any property which is a part of a qualifying gasification
        project and is necessary for the gasification technology of such
        project.
            ``(4) Biomass.--
                    ``(A) In general.--The term `biomass' means any--
                          ``(i) agricultural or plant waste,
                          ``(ii) byproduct of wood or paper mill
                      operations, including lignin in spent pulping
                      liquors, and

[[Page 119 STAT. 1005]]

                          ``(iii) other products of forestry
                      maintenance.
                    ``(B) Exclusion.--The term `biomass' does not
                include paper which is commonly recycled.
            ``(5) Carbon capture capability.--The term `carbon capture
        capability' means a gasification plant design which is
        determined by the Secretary to reflect reasonable consideration
        for, and be capable of, accommodating the equipment likely to be
        necessary to capture carbon dioxide from the gaseous stream, for
        later use or sequestration, which would otherwise be emitted in
        the flue gas from a project which uses a nonrenewable fuel.
            ``(6) Coal.--The term `coal' means anthracite, bituminous
        coal, subbituminous coal, lignite, and peat.
            ``(7) Eligible entity.--The term `eligible entity' means any
        person whose application for certification is principally
        intended for use in a domestic project which employs domestic
        gasification applications related to--
                    ``(A) chemicals,
                    ``(B) fertilizers,
                    ``(C) glass,
                    ``(D) steel,
                    ``(E) petroleum residues,
                    ``(F) forest products, and