# Energy Policy Act of 2005: Summary and Analysis of Enacted Provisions

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URL: https://www.frixlaw.com/law-library/documents/crs%3ARL33302

## Record

- **Collection:** Congressional research report
- **Document type:** CRS Report
- **Published:** March 8, 2006
- **Citation:** RL33302

## Text

Order Code RL33302

CRS Report for Congress
Received through the CRS Web

Energy Policy Act of 2005: Summary and Analysis
of Enacted Provisions

March 8, 2006

name redacted and name redacted, Coordinators
Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

Energy Policy Act of 2005: Summary and Analysis
of Enacted Provisions
Summary
The Energy Policy Act of 2005 (P.L. 109-58), signed by President Bush on
August 8, 2005, was the first omnibus energy legislation enacted in more than a
decade. Spurred by rising energy prices and growing dependence on foreign oil, the
new energy law was shaped by competing concerns about energy security,
environmental quality, and economic growth. Major provisions in the bill include:
Electricity. The Federal Energy Regulatory Commission (FERC) is authorized
to certify a national electric reliability organization (ERO) to enforce mandatory
reliability standards for the bulk-power system. Federal power of eminent domain
may be used to acquire electric transmission rights-of-way in areas designated as
congested by the Secretary of Energy. The act repeals a requirement under the Public
Utility Regulatory Policies Act (PURPA) that utilities must purchase power from all
qualifying facilities and small power producers at a rate based on the utilities’
avoided cost. Also repealed is the Public Utility Holding Company Act of 1935
(PUHCA), which restricted the structure of holding companies of investor-owned
utilities.
Renewable Fuels Standard. Gasoline sold in the United States must contain an
increasing amount of renewable fuel, such as ethanol or biodiesel. Motor fuels must
contain at least 4.0 billion gallons of renewables in 2006, a level that increases by
700 million gallons each year through 2011 before reaching a level of 7.5 billion
gallons in 2012.
Tax Incentives. Tax reductions of $14.5 billion over 11 years are provided to
encourage domestic energy production and energy efficiency, including about $1.3
billion for energy efficiency and conservation, about $4.5 billion for renewable
energy, a $2.6 billion package of oil and gas incentives, nearly $3.0 billion for coal,
and more than $3.0 billion in electricity incentives (which includes a new production
tax credit for nuclear power).
Energy Efficiency. Improved national energy efficiency is encouraged through
new statutory standards, requirements for federal action, and incentives for voluntary
improvements.
Domestic Energy Production. The act encourages production on federal lands
through royalty reductions for marginal oil and gas wells on public lands and the
outer continental shelf. Provisions are also included to increase access to federal
lands for drilling activities and other energy projects.
Several proposals that were intensely debated during consideration of the energy
bill did not make it into the enacted legislation. The most prominent of these
defeated provisions would have allowed oil and gas production in the Arctic National
Wildlife Refuge (ANWR), increased corporate average fuel economy (CAFE)
standards, and established stronger federal efforts to reduce greenhouse gases. This
report will not be updated.

Key CRS Policy Staff
Name

Subject

Telephone

(name redacted)

Electric utilities

7-....)(

*redacted*@crs.loc.gov

(name redacted)

Nuclear security;
Department of Energy
management

(7-....)

*redacted*@crs.loc.gov

(name redacted) Energy security

(7-....)

E-mail

*redacted*@crs.loc.gov

Carl Behrens

Nuclear nonproliferation

(7-....)

*redacted*@crs.loc.gov

(name redacted)

Federal Water Pollution
Control Act

(7-....)

*redacted*@crs.loc.gov

(name redacted)

ANWR

Bernard Gelb

Gasoline industry

(7-....)

*redacted*@crs.loc.gov

(name redacted)

Native American energy;
general authorizations

(7-....)

*redacted*@crs.loc.gov

(name redacted)

Nuclear energy

(name redacted)

Federal energy leasing; coal

(7-....)

*redacted*@crs.loc.gov

Larry Kumins

Oil and gas

(7-....)

*redacted*@crs.loc.gov

(name redacted)

(7-....)

*redacted*@crs.loc.gov

(7-....)

Hydropower

*redacted*@crs.loc.gov

(7-....)

*redacted*@crs.loc.gov

(name redacted)

Taxes

(7-....)

*redacted*@crs.loc.gov

Jim McCarthy

Clean Air Act; MTBE

(7-....)

*redacted*@crs.loc.gov

Dan Morgan

Science programs

(7-....)

*redacted*@crs.loc.gov

(name redacted)

Conservation and renewable
energy

(7-....)

*redacted*@crs.loc.gov

(name redacted)

Underground storage tanks;
drinking water

(7-....)

*redacted*@crs.loc.gov

Brent Yacobucci

Motor fuels; vehicles;
hydrogen

(7-....)

*redacted*@crs.loc.gov

Jeff Zinn

Coastal Zone Management
Act

(7-....)

*redacted*@crs.loc.gov

Contents
Key CRS Policy Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Major Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Electricity Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Renewable Fuel Standard and MTBE . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Energy Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Nuclear Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . 4
Domestic Energy Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Hydrogen and Fuel Cells . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Organization of Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Title I — Energy Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Subtitle A — Federal Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Subtitle B — Energy Assistance and State Programs . . . . . . . . . . . . . . . . . . 8
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Subtitle C — Energy Efficient Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Subtitle D — Public Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Title II — Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Subtitle A — General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Subtitle B — Geothermal Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Subtitle C — Hydroelectric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Subtitle D — Insular Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Title III — Oil and Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Subtitle A — Petroleum Reserve and Home Heating Oil . . . . . . . . . . . . . . 19
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Subtitle B — Natural Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Subtitle C — Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Subtitle D — Naval Petroleum Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Subtitle E — Production Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Subtitle F — Access to Federal Lands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Subtitle G — Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Subtitle H — Refinery Revitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Title IV — Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Subtitle A — Clean Coal Power Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Subtitle B — Clean Power Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Subtitle C — Coal and Related Programs . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Subtitle D — Federal Coal Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Title V — Indian Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Title VI — Nuclear Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Subtitle A — Price-Anderson Act Amendments . . . . . . . . . . . . . . . . . . . . . 38
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Subtitle B — General Nuclear Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Background and Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Subtitle C — Next Generation Nuclear Plant Project . . . . . . . . . . . . . . . . . 44
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Subtitle D — Nuclear Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Background and Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Title VII — Vehicles and Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Subtitle A — Existing Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Subtitle B — Hybrid Vehicles, Advanced Vehicles, and Fuel Cell Buses . 51
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Subtitle C — Clean School Buses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Subtitle D — Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Subtitle E — Automobile Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Subtitle F — Federal and State Procurement . . . . . . . . . . . . . . . . . . . . . . . . 54
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Subtitle G — Diesel Emissions Reduction . . . . . . . . . . . . . . . . . . . . . . . . . 55
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Title VIII — Hydrogen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Title IX — Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Subtitle A — Energy Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Subtitle B — Distributed Energy and Electric Energy Systems . . . . . . . . . 59
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Subtitle C — Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Subtitle D — Agricultural Biomass Research and
Development Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Subtitle E — Nuclear Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Subtitle F — Fossil Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Subtitle G — Science . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Subtitle H — International Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Subtitle I — Research Administration and Operations . . . . . . . . . . . . . . . . 69
Subtitle J — Ultra-Deepwater and Unconventional Natural
Gas and Other Petroleum Resources . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Title X — Department of Energy Management . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Title XI — Personnel and Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Title XII — Electricity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Short Title (Sec. 1201) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Subtitle A — Reliability Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Subtitle B — Transmission Infrastructure Modernization . . . . . . . . . . . . . . 76
Siting of Interstate Electric Transmission Facilities (Sec. 1221) . . . . . 76
Third-Party Finance (Sec. 1222) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Advanced Transmission Technologies (Sec. 1223) . . . . . . . . . . . . . . . 77
Advanced Power System Technology Incentive
Program (Sec. 1224) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Subtitle C — Transmission Operation Improvements . . . . . . . . . . . . . . . . . 77
Open Nondiscriminatory Access (Sec. 1231) . . . . . . . . . . . . . . . . . . . 77
Federal Utility Participation in Regional Transmission
Organizations (Sec. 1232) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Native Load Service Obligation (Sec. 1233) . . . . . . . . . . . . . . . . . . . . 78
Study on the Benefits of Economic Dispatch (Sec. 1234) . . . . . . . . . . 78
Protection of Transmission Contracts in the Pacific
Northwest (Sec. 1235) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Sense of Congress Regarding Locational Installed
Capacity Mechanism (Sec. 1236) . . . . . . . . . . . . . . . . . . . . . . . . 78
Subtitle D — Transmission Rate Reform . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Transmission Infrastructure Investment (Sec. 1241) . . . . . . . . . . . . . . 79
Funding New Interconnection and Transmission Upgrades
(Sec. 1242) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Subtitle E — Amendments to PURPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Net Metering and Additional Standards (Sec. 1251) . . . . . . . . . . . . . . 79
Smart Metering (Sec. 1252) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Cogeneration and Small Power Production Purchase
and Sale Requirements (Sec. 1253) . . . . . . . . . . . . . . . . . . . . . . . 80
Interconnection (Sec. 1254) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Subtitle F — Repeal of PUHCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Short Title (Sec. 1261) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Definitions (Sec. 1262) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Repeal of the Public Utility Holding Company Act of
1935 (Sec. 1263) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Federal Access to Books and Records (Sec. 1264) . . . . . . . . . . . . . . . 84
State Access to Books and Records (Sec. 1265) . . . . . . . . . . . . . . . . . 84
Exemption Authority (Sec. 1266) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Affiliate Transactions (Sec. 1267) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Applicability (Sec. 1268) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Effect on Other Regulations (Sec. 1269) . . . . . . . . . . . . . . . . . . . . . . . 85
Enforcement (Sec. 1270) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Savings Provisions (Sec. 1271) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Implementation (Sec. 1272) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Transfer of Resources (Sec. 1273) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

Effective Date (Sec. 1274) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Service Allocation (Sec. 1275) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Authorization of Appropriations (Sec. 1276) . . . . . . . . . . . . . . . . . . . 86
Conforming Amendments to the Federal Power Act (Sec. 1277) . . . . 86
Subtitle G — Market Transparency, Enforcement, and
Consumer Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Electricity Market Transparency (Sec. 1281) . . . . . . . . . . . . . . . . . . . 86
False Statements (Sec. 1282) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Market Manipulation (Sec. 1283) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Enforcement (Sec. 1284) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Refund Effective Date (Sec. 1285) . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Refund Authority (Sec. 1286) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Consumer Privacy and Unfair Trade Practices (Sec. 1287) . . . . . . . . . 88
Authority of Court to Prohibit Individuals from
Serving As Officers, Directors, and Energy
Traders (Sec. 1288) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Merger Review Reform (Sec. 1289) . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Relief for Extraordinary Violations (Sec. 1290) . . . . . . . . . . . . . . . . . 88
Subtitle H — Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Definitions (Sec. 1291) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Subtitle I — Technical and Conforming Amendments . . . . . . . . . . . . . . . . 89
Conforming Amendments (Sec. 1295) . . . . . . . . . . . . . . . . . . . . . . . . 89
Subtitle J — Economic Dispatch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Economic Dispatch (Sec. 1298) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Title XIII — Energy Policy Tax Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Subtitle A — Electricity Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Background and Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Subtitle B — Domestic Fossil Fuel Security . . . . . . . . . . . . . . . . . . . . . . . 94
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Background and Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Subtitle C — Conservation and Energy Efficiency Provisions . . . . . . . . . . 97
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Subtitle D — Alternative Motor Vehicles and Fuel Incentives . . . . . . . . . 100
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Background and Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Subtitle E — Additional Energy Tax Incentives . . . . . . . . . . . . . . . . . . . . 106
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Subtitle F — Revenue Raising Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 107
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Title XIV — Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Subtitle A — In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Subtitle B — Set America Free . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

Title XV — Ethanol and Motor Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Subtitle A — General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Subtitle B — Underground Storage Tank Compliance . . . . . . . . . . . . . . . 115
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Subtitle C — Boutique Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Title XVI — Climate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Subtitle A — National Climate Change Technology Deployment . . . . . . 116
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Subtitle B — Climate Change Technology Deployment
in Developing Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Title XVII — Incentives for Innovative Technologies . . . . . . . . . . . . . . . . . . . 120
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Background and Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Title XVIII — Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Summary of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

List of Tables
Table 1. Fuel Economy Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Table 2. Conservation Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Table 3. Authorizations in the Energy Policy Act of 2005,
as Enacted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128

Energy Policy Act of 2005: Summary and
Analysis of Enacted Provisions
Introduction
The Energy Policy Act of 2005 (P.L. 109-58), signed by President Bush August
8, 2005, was the first omnibus energy legislation enacted in more than a decade.
Major provisions include tax incentives for domestic energy production and energy
efficiency, a mandate to double the nation’s use of biofuels, repeal of restrictions on
interstate utility holding companies, faster procedures for energy production on
federal lands, and authorization of numerous federal energy research and
development programs.
Spurred by rising energy prices and growing dependence on foreign oil, the new
energy law was shaped by competing concerns about energy security, environmental
quality, and economic growth. For example, efforts to enhance energy security by
allowing oil and gas production in the Arctic National Wildlife Refuge (ANWR)
were blocked by environmental concerns. Conversely, efforts to address
environmental quality by restricting carbon dioxide and other greenhouse gases were
stymied largely because of their potential effect on the U.S. economy, as were
proposals to increase automobile fuel economy standards.
Soon after the Energy Policy Act was enacted, disruption from Hurricanes
Katrina and Rita contributed to a surge in U.S. gasoline prices, prompting widespread
criticism that the new law did not adequately address the nation’s gasoline supply.1
As with most energy legislation since the 1970s, the new energy law has few
provisions aimed at near-term problems in the energy market, being focused
primarily on the mid- to long term.

Major Provisions
Electricity Regulation. Title XII authorizes the Federal Energy Regulatory
Commission (FERC) to certify a national electric reliability organization (ERO) to
enforce mandatory reliability standards for the bulk-power system. All ERO
standards must be approved by FERC. The ERO can impose penalties on a user,
owner, or operator of the bulk-power system for violations of any FERC-approved
reliability standard.
The Secretary of Energy is required to conduct a study of electric transmission
congestion every three years and may designate a geographic area as being congested.
1

The House subsequently passed legislation to encourage the expansion of U.S. oil refinery
capacity (H.R. 3893, passed October 7, 2005).

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Under certain conditions, FERC is authorized to issue construction permits in
congested areas. Permit holders may petition in U.S. District Court to acquire rightsof-way through eminent domain. An applicant for federal authorization to site
transmission facilities on federal lands could request that the Department of Energy
be the lead agency to coordinate environmental review and other federal
authorization. If a federal agency has denied an authorization required by a
transmission or distribution facility, the denial could be appealed by the applicant or
relevant state to the President.
Section 210 of the Public Utility Regulatory Policies Act (PURPA, P.L. 95-617)
had required utilities to purchase power from all qualifying facilities and small power
producers at a rate based on the utilities’ avoided cost. The Energy Policy Act
repeals the PURPA mandatory purchase requirement for new contracts if FERC finds
that a competitive electricity market exists and a qualifying facility has adequate
access to wholesale markets.
Also repealed is the Public Utility Holding Company Act of 1935 (PUHCA, 15
U.S.C. 79 et seq.), which restricted the structure of holding companies of investorowned utilities, and provided for Securities and Exchange Commission (SEC)
regulation of mergers and diversification proposals. FERC and state regulatory
bodies must be given access to utility books and records.
FERC is directed to facilitate price transparency in wholesale electric markets,
relying on existing price publishers and providers of trade processing services to the
maximum extent possible. However, FERC may establish an electronic information
system if it determines that existing price information is not adequate. FERC is
given approval authority over the acquisition of securities and the merger, sale, lease,
or disposition of facilities under FERC’s jurisdiction with a value in excess of $10
million.
(For additional discussion on these issues, see CRS Report RL32728, Electric
Utility Regulatory Reform: Issues for the 109th Congress, by (name redacted) ; and CRS
Report RL32133, Federal Merger Review Authority, by (name redacted), (name red
acted), and (name redacted).)
Renewable Fuel Standard and MTBE. Title XV contains several
provisions addressing the gasoline additives methyl tertiary butyl ether (MTBE) and
ethanol.
Under the Clean Air Act Amendments of 1990, reformulated gasoline (RFG)
sold in many areas of the country with poor air quality was required to contain an
oxygenate (MTBE, ethanol, or other substances containing oxygen) to improve
combustion and reduce emissions of ozone-forming compounds and carbon
monoxide. Title XV repeals the Clean Air Act requirement to use oxygenates in
RFG, eliminating a key incentive for refiners to use MTBE. In place of the oxygen
requirement, the energy law establishes a new requirement that gasoline contain an
increasing amount of renewable fuel such as ethanol or biodiesel. The law requires
that motor fuels contain at least 4.0 billion gallons of renewables in 2006, and
requires an increase of 700 million gallons each year through 2011, before reaching
a level of 7.5 billion gallons in 2012. (In 2004, about 3.4 billion gallons of ethanol

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were used in motor fuels.) The law also authorizes funds to clean up MTBE
contamination in groundwater.
The enacted law also contains “anti-backsliding” provisions, to preserve the
reductions in emissions of toxic substances achieved by the RFG program. The
baseline emissions are set as the quantity emitted in 2001 and 2002.
The most controversial of the MTBE provisions was dropped in conference: a
“safe harbor” that the House version would have provided for fuels containing
renewable fuel or MTBE. The safe harbor from liability would have meant that such
fuels could not be deemed defective in design or manufacture by virtue of the fact
that they contained MTBE or renewable fuel. The effect of this provision would have
been to protect anyone in the product chain, from manufacturers to retailers, from
liability for cleanup of contamination or for personal injury or property damage based
on the nature of the product.
(For additional information, see CRS Report RL32865, Renewable Fuels and
MTBE: A Comparison of Selected Legislative Initiatives, by (name redacted),
(name redacted), (name redacted), a nd (name redacted); CRS Report RL30369,
Fuel Ethanol: Background and Public Policy Issues, by (name redacted) and
(name redacted); and CRS Report RL32787, MTBE in Gasoline: Clean Air and
Drinking Water Issues, by (name redacted) and (name redacted).)
Energy Taxes. Title XIII provides about $14.5 billion in tax reductions over
11 years to encourage domestic energy production and energy efficiency. Tax
incentives of about $1.3 billion are provided for energy efficiency and conservation,
including a deduction for energy-efficient commercial property, fuel cells, and
micro-turbines. About $4.5 billion is provided in renewable energy incentives,
including a two-year extension of the §45 renewable electricity tax credit, renewable
energy bonds, and business credits for solar. A $2.6 billion package of oil and gas
incentives includes seven-year depreciation for natural gas gathering lines, a refinery
expensing (one-year writeoff) provision, and a small refiner provision.
A nearly $3.0 billion coal package would provide 84-month amortization for
pollution control facilities and treatment of the §29 production tax credit as a general
business credit. More than $3.0 billion in electricity incentives include provisions
providing 15-year depreciation for transmission property, nuclear decommissioning
provisions, and a nuclear electricity production tax credit. It also provides for the
five-year carry-back of net operating losses of certain electric utility companies.
(For more background, see CRS Issue Brief IB10054, Energy Tax Policy, by
(name redacted).)
Nuclear Energy. Strong incentives for building new commercial nuclear
power plants are included in Title VI, including tax credits, loan guarantees, and
regulatory delay compensation. The law also reauthorizes the Price-Anderson Act
nuclear liability system for 20 years and authorizes the Department of Energy (DOE)
to build an advanced reactor in Idaho.

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The strongest nuclear incentive is a 1.8-cents/kilowatt-hour tax credit for
electricity produced by nuclear reactors. The credit is available for up to 6,000
megawatts of new capacity — the equivalent of about five or six new reactors — for
the first eight years of operation. The nuclear production tax credit also had been
included in the energy bill conference report in the 108th Congress, and the Energy
Information Administration concluded then that the credit would provide sufficient
incentives for new commercial reactors to be built.2
The Secretary of Energy is authorized to help pay the cost of regulatory delays
at up to six new commercial nuclear reactors. Up to $500 million is authorized for
each of the first two reactors that begin construction, plus up to $250 million for each
of the next four. Delays caused by the failure of a reactor owner to comply with laws
or regulations would not be covered.
Reauthorization of the Price-Anderson Act was generally considered to be a
prerequisite for new reactors. Under Price-Anderson, commercial reactor accident
damages are paid through a combination of private-sector insurance and a nuclear
industry self-insurance system. Liability is capped at the maximum coverage
available under the system, currently about $10.7 billion. Title VI provides a 20-year
extension of Price-Anderson, to the end of 2025.
The law also addresses concerns about nuclear power plant security. The
Nuclear Regulatory Commission (NRC) within 18 months is required to revise the
“design basis threat” (DBT) that nuclear plant security forces must be able to
overcome, each nuclear plant must undergo a force-on-force security evaluation at
least every three years, and each NRC region must have a federal security
coordinator.
(For more information, see CRS Issue Brief IB88090, Nuclear Energy Policy,
by (name redacted).)
Energy Efficiency and Renewable Energy. Improved national energy
efficiency is encouraged through new statutory standards, requirements for federal
action, and incentives for voluntary improvements. The law’s energy conservation
provisions (Title I) deal almost entirely with energy consumption by buildings,
industrial processes, appliances and commercial equipment, and other stationary
activities. Highly controversial efficiency standards for motor vehicles are excluded
from the act.
New efficiency standards for appliances and commercial equipment may have
the most certain impact, with the effectiveness of many of the title’s other provisions
depending largely on appropriations and implementation. The law addresses energy
efficiency standards, water-use standards, and labeling rules for a variety of products.
Some efficiency standards are explicitly set in the law, while others are to be
determined by DOE. Measures aimed at the federal government’s own energy
efficiency and water consumption range from the treatment of energy costs in the

2

U.S. Department of Energy. Energy Information Administration. Analysis of Five Selected
Tax Provision of the Conference Energy Bill of 2003. SR/OIAF/2004-01. February 2004.

CRS-5
federal budget and procurement processes to specific requirements for upgrading
equipment in congressional office buildings.
Renewable energy provisions in Title II are intended to increase production and
use, advance technology development, and promote commercial development.
Potentially the largest impact could come from a broadening of the renewable energy
production incentive (REPI) payment for electricity generated by renewable energy
facilities, although funding is subject to appropriations. Other provisions establish
resource assessments, federal purchases of equipment and electricity, federal land
leasing, and grants, all of which are also subject to appropriations.
(For additional information, see CRS Issue Brief IB10020, Energy Efficiency:
Budget, Oil Conservation and Electricity Conservation Issues, by (name redacted), and
CRS Issue Brief IB10041, Renewable Energy: Tax Credit, Budget, and Electricity
Production Issues, by (name redacted).)
Domestic Energy Production. The Department of the Interior (DOI) has
estimated that roughly a quarter of oil resources and less than one-fifth of gas
resources on Indian lands have been developed. The Energy Policy Act encourages
production on federal lands through royalty reductions for marginal oil and gas wells
on public lands and the outer continental shelf. Provisions are also included to
increase access to federal lands by energy projects — such as drilling activities,
electric transmission lines, and gas pipelines. In addition, the law prevents the
Environmental Protection Agency (EPA) from regulating hydraulic fracturing to
protect drinking water sources.
(For additional information, see CRS Report RL32873, Key Environmental
Issues in the Energy Policy Act of 2005, coordinated by (name redacted), and
CRS Report RL32262, Selected Legal and Policy Issues Related to Coalbed Methane
Development, by (name redacted).)
Hydrogen and Fuel Cells. Title VIII establishes a hydrogen and fuel cell
program with a goal of producing commercial fuel cell vehicles and developing
hydrogen infrastructure by 2020. Critics of the Administration suggest that the
hydrogen program is intended to forestall any attempts to significantly raise vehicle
Corporate Average Fuel Economy (CAFE) standards, and that it relieves the
automotive industry of assuming more initiative in pursuing technological
innovations. On the other hand, some contend that it is appropriate for government
to become involved in the development of technologies that could address national
environmental and energy goals but are too risky to draw private-sector investment.
(For additional information, see CRS Report RS21442, Hydrogen and Fuel Cell
R&D: FreedomCAR and the President’s Hydrogen Fuel Initiative, by (name re
dacted), and CRS Report RL32196,
A Hydrogen Economy and Fuel Cells: An
Overview, by (name redacted) and Aimee E. Curtright.)

Organization of Report
The remainder of this report provides a section-by-section summary of the
provisions of the Energy Policy Act of 2005. Discussions of legislative background

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and policy implications are provided for bill titles and subtitles that address unified
programs or policy areas. Some of the most controversial sections are discussed in
greater detail. Funding authorizations are shown in Table 3 at the end of the report.

Title I — Energy Efficiency
Improved national energy efficiency is encouraged through new statutory
standards, requirements for federal action, and incentives for voluntary
improvements. This title deals almost entirely with energy used by buildings,
industrial processes, appliances and commercial equipment, and other stationary
activities. Highly controversial efficiency standards for motor vehicles are excluded
from the act. New efficiency standards for appliances and commercial equipment in
Subtitle C may have the most certain impact, with the effectiveness of many of the
title’s other provisions depending largely on appropriations and implementation.

Subtitle A — Federal Programs
Summary of Provisions. Measures aimed at the federal government’s own
energy efficiency and water consumption range from the treatment of energy costs
in the federal budget and procurement processes to specific requirements for
upgrading equipment in congressional office buildings.
Energy and Water Saving Measures in Congressional Buildings
(Sec. 101). The Architect of the Capitol is required to plan and implement an
energy and water conservation strategy for congressional buildings that is consistent
with that required of other federal buildings. An annual report is required.
Energy Management Requirements (Sec. 102). The baseline for federal
energy savings is updated from FY1985 to FY2003, and a new 20% reduction goal
is set for FY2015. By the end of 2014, DOE is to assess progress and set a new goal
for FY2016 through FY2025. Standards for exclusion are set, which empower DOE
to exempt, under certain conditions, buildings that serve a national security function
or for which achieving the target would be impracticable. Further, agencies are
allowed to retain appropriations for energy expenses that are saved by the energy
efficiency measures. A report to Congress is required.
Energy Use Measurement and Accountability (Sec. 103). Federal
buildings are required to be metered or sub-metered by October 1, 2012, to help
reduce energy costs and promote energy savings. Further, the Secretary of Energy
is required to prepare guidelines for agency energy managers to facilitate
implementation of metering. After guidelines are established, each agency is
required to submit an implementation plan to DOE.
Procurement of Energy Efficient Products (Sec. 104). Federal
agencies are required to purchase products certified as energy-efficient under the
Energy Star program or energy-efficient products designated by the Federal Energy
Management Program (FEMP), provided that the products are found to be
“cost-effective” and “reasonably available.”

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Energy Savings Performance Contracts (Sec. 105). The authority to
enter into energy savings performance contracts — in which private-sector
contractors install energy conservation measures in federal buildings in exchange for
a specified share of any resulting energy cost savings — is extended from 2006 to
2016. Any energy savings performance contract entered into after October 1, 2003,
and before the date of enactment of this act, is considered as extended by this section.
Voluntary Commitments to Reduce Industrial Energy Intensity (Sec.
106). DOE is authorized to form voluntary agreements with industry sectors or
companies to reduce energy use per unit of production by 2.5% annually from 2007
through 2016. Participants are eligible for technical assistance and grants. A report
to Congress with an evaluation of energy-savings impacts is required by June 30,
2012, and by June 30, 2017.
Advanced Building Efficiency Testbed (Sec. 107). DOE is required to
create a program to develop, test, and demonstrate advanced federal and private
building efficiency technologies. Appropriations of $6.0 million per year for FY2006
through FY2008 are authorized.
Increased Use of Recovered Mineral Component in Federally
Funded Projects Involving Procurement of Cement or Concrete (Sec.
108). DOT and other agencies that regularly procure or provide federal funds to
procure material for cement or concrete projects are directed to fully implement all
procurement requirements and incentives that provide for incorporating recovered
mineral components, such as blast furnace slag and coal combustion fly ash. A
report to Congress on the energy savings and environmental benefits is required 30
months after enactment.
Federal Building Performance Standards (Sec. 109). DOE is directed
to set revised energy efficiency standards for new federal buildings at a level 30%
stricter than industry or international standards — provided the standards would be
“life-cycle cost-effective.” Each agency’s annual budget request is required to list
all new federal buildings and whether each one meets these standards.
Daylight Savings (Sec. 110). Starting in 2007, daylight saving time will
begin three or four weeks earlier (the second Sunday in March) and end one week
later (the first Sunday in November). This is expected to reduce energy used for
night-time electric lighting. A report to Congress on energy savings is required nine
months after implementation begins.
Enhancing Energy Efficiency in Management of Federal Lands
(Sec. 111). National parks, forests, and wildlife refuges are required to employ
energy efficiency measures in buildings and energy-efficient vehicles (including
biodiesel and hybrid engines) “to the extent practicable.”
Background. These provisions were motivated by a desire to save energy
costs and to set a good example, given the requirements imposed on the private
sector. The provisions of this subtitle are intended to overcome institutional barriers.
Some measures will not require large financial commitments up front, but the success
of others will depend on the amount appropriated for energy-saving equipment in

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future budget cycles. Some measures may have an impact outside the government,
such as through the influence of federal procurement on manufacturers, and in setting
an example for the private sector to reduce energy consumption.
Policy Context. The provision for extending daylight saving time and the
extension of goals for energy savings in federal executive branch agencies are
noteworthy provisions in this subtitle. Also, the requirement for energy efficiency
measures in congressional facilities is a significant expansion of the requirements for
the federal government in its effort to “lead by example.”

Subtitle B — Energy Assistance and State Programs
Summary of Provisions. Several existing programs to help state and local
governments improve energy efficiency are strengthened, and additional funding is
authorized. Energy savings may be modest, however.
Low Income Home Energy Assistance Program (Sec. 121). Funding
at $5.1 billion per year is authorized for the LIHEAP grant program for FY2005
through FY2007. (Department of Health and Human Services funding for LIHEAP
had been authorized through FY2003.) Also, states and their designees are allowed
to use renewable fuels (including biomass) to carry out the purposes of this section.
DOE is required to report to Congress on the use of renewable fuels under LIHEAP.
Weatherization Assistance (Sec. 122). Funding is authorized for the
DOE weatherization grant program in the amounts of $500 million for FY2006, $600
million for FY2007, and $700 million for FY2008. Also, eligibility for assistance is
raised from 125% to 150% of the poverty level.
State Energy Programs (Sec. 123). New requirements are set for state
energy conservation goals and plans, including a 25% energy efficiency improvement
in 2012 over 1990. Also, funding for the DOE state energy grant program is
authorized at $100 million for FY2006, $100 million for FY2007, and $125 million
for FY2008.
Energy Efficient Appliance Rebate Program (Sec. 124). DOE is
authorized to fund rebate programs in eligible states to support residential end-user
purchases of Energy Star products. Funding of $50 million per year is authorized for
FY2006 through FY2010.
Energy Efficient Public Buildings (Sec. 125). A grant program is created
for energy-efficient renovation and construction of local government buildings.
Grants may be used for construction of new buildings that use 30% less energy than
comparable public buildings that meet existing conservation standards and for
renovations that reduce energy consumption by 30% over the pre-renovation
baseline. DOE funding of $30 million per year is authorized for FY2006 through
FY2010.
Low Income Community Energy Efficiency Pilot Program (Sec.
126). A pilot energy efficiency and renewable energy grant program is created for
local governments, private companies, community development corporations, and

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Native American economic development entities. Funding at $20 million per year
is authorized for FY2006 through FY2008.
State Technologies Advancement Collaborative (Sec. 127). A
cooperative program is created that links DOE with the states. It is focused on
research, development, demonstration, and deployment of technologies in which
there is a common federal and state energy efficiency, renewable energy, and fossil
energy interest. Such sums as necessary are authorized for FY2006 through FY2010.
State Building Energy Efficiency Codes Incentives (Sec. 128). A
grant program is created for states that DOE determines have achieved a least a 90%
rate of compliance with the most recent model building energy codes. Funds may be
used to implement building energy codes and practices that exceed efficiency
requirements of the most recent model building codes. Funding at $25 million per
year is authorized for FY2006 through FY2010 and such sums as necessary for
FY2011 and each fiscal year thereafter.
Background.
The weatherization portion of LIHEAP, the DOE
weatherization program, and DOE state energy programs are the major programs in
this subtitle and have been in place for nearly 30 years. Modest energy savings are
expected from these measures, depending largely on available funding. The other
grant programs are new, relatively limited in scope, and will depend on funding to
have any significant effect.
Policy Context. The weatherization grant programs (under both LIHEAP and
DOE) are the primary energy conservation programs for low-income households.
Funding for them has been relatively steady, and is not usually the subject of major
debate. The state energy program grants are key to the operation of state energy
offices, especially in smaller states.

Subtitle C — Energy Efficient Products
Summary of Provisions. This subtitle deals with energy efficiency
standards, water-use standards, and labeling rules for a variety of products. Some
efficiency standards in sections 135 and 136 are explicitly set in the law, while others
are to be determined by DOE.
Energy Star Program (Sec. 131). DOE and EPA are given statutory
authority to carry out the Energy Star program, which identifies and promotes energy
efficient products and buildings. Also, DOE is directed to establish new qualifying
energy efficiency levels for clothes washers and dishwashers.
HVAC Maintenance Consumer Education Program (Sec. 132). DOE
is required to implement a public education program for homeowners and small
businesses that explains the energy-saving benefits of improved maintenance of
heating, ventilating, and air conditioning equipment. Also, the Small Business
Administration is directed to assist small businesses in becoming more
energy-efficient. Such sums as necessary are authorized.

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Public Energy Education Program (Sec. 133). DOE is required to
convene a conference with representatives from industry, education, professional
societies, trade associations, and government agencies to design and establish an
ongoing national public education program focused on energy efficiency and other
topics. DOE is directed to provide guidance and technical assistance. Such sums as
necessary are authorized.
Energy Efficiency Public Information Initiative (Sec. 134). DOE is
required to conduct an advertising and public outreach program about the need to
reduce energy use, the consumer benefits of reduced use, the relationship to jobs and
economic growth, and cost-effective consumer measures to reduce energy use.
Funding at $90 million per year is authorized for FY2006 through FY2010.
Energy Conservation Standards for Additional Products (Sec. 135).
Energy efficiency standards, test procedures, and labeling requirements are set by
statute for exit signs, traffic signals, pedestrian crossing signals, compact fluorescent
lamps (CFLs), torchieres (floor lamps), fluorescent lamp ballasts, mercury vapor
lamp ballasts, residential ceiling fans, residential dehumidifiers, building
transformers (electric utility equipment), commercial unit heaters (fan-type heaters,
usually portable), and commercial pre-rinse spray valves (used in restaurants).
Further, DOE is directed to issue a rule that prescribes efficiency standards and
labeling requirements for external power supplies, battery chargers, and refrigerated
vending machines.
Energy Conservation Standards for Commercial Equipment (Sec.
136). Energy efficiency standards, test procedures, and labeling requirements are set
by statute for commercial refrigerators, freezers, and refrigerator-freezers; large
commercial air conditioners and heaters; commercial (automated) ice-makers; and
commercial clothes washers.
Energy Labeling (Sec. 137). The Federal Trade Commission (FTC) is
required to consider improvements in the effectiveness of energy labels for consumer
products. Also, DOE or FTC is directed to consider prescribing labeling
requirements for many of the products listed in section 135. However, certain types
of dehumidifiers are exempted from labeling requirements.
Intermittent Escalator Study (Sec. 138). The Administrator of the
General Services Administration (GSA) is required to conduct a study on the
advantages and disadvantages, including energy cost savings, of using intermittent
(on-demand) escalators in the United States. A report to Congress is required within
one year of enactment.
Energy Efficient Electric and Natural Gas Utilities Studies (Sec.
139). DOE is required to conduct a study of state and regional policies that promote
cost-effective programs to reduce energy use (including energy efficiency programs)
that are operated by utilities subject to state regulation and by non-regulated utilities.
A report to Congress is required within one year of enactment.
Energy Efficiency Pilot Program (Sec. 140). DOE is required to
establish a pilot program that provides financial assistance to at least three, but not

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more than seven, states to encourage energy efficiency and energy use reductions.
Funding at $5 million per year is authorized for FY2006 through FY2010.
Report on Failure to Comply with Deadlines for New or Revised
Energy Conservation Standards (Sec. 141). DOE is required to report
regularly (within six months of enactment and every six months thereafter) to
Congress when efficiency standard rulemakings (including those following from
Sections 135 and 136) are behind schedule, including steps being taken to get back
on schedule.
Background. Under previous authority, DOE established minimum energy
efficiency standards for several consumer and commercial products, including
household appliances such as clothes washers and refrigerators. Sections 135 and
136 of the new energy law set a variety of energy efficiency standards for consumer
appliances and commercial equipment. Most of the standards are statutory, but some
are at the discretion of a DOE rulemaking. The American Council for an EnergyEfficient Economy (ACEEE) estimates that these new standards will save more
energy than any other efficiency provisions in the bill. Further, §141 requires that
DOE report regularly to Congress when efficiency standard rulemakings are behind
schedule, including steps being taken to get back on schedule. Other provisions for
Energy Star, public education and outreach, and labeling are designed to help support
consumer use of more efficient equipment.
Policy Context. DOE is several years behind previous target dates to
implement higher energy efficiency standards for certain consumer products and
equipment. In 2001, the incoming Bush Administration sought to roll back
efficiency standards for central air conditioners and heat pumps (from SEER 13 to
SEER 12) that DOE had issued late in the Clinton Administration. In response to
litigation by several states (including California and New York) and environmental
groups, the U.S. Second Circuit Court of Appeals upheld the higher standards.3
Standards set in the past for several other types of equipment, such as refrigerators,
are widely considered to have been successful at increasing average efficiency.

Subtitle D — Public Housing
Summary of Provisions. Parallel to the policies set forth above for federal
agencies, this subtitle aims to make similar improvements in energy efficiency for
federally supported public housing. The provisions cover appliances and equipment,
building codes, a financial mechanism, and a requirement to create an energy
conservation strategy.
Public Housing Capital Fund (Sec. 151). The Public Housing Capital
Fund at the Department of Housing and Urban Development (HUD) is modified to
include coverage of certain energy- and water-use efficiency improvements.

3

U.S. Court of Appeals for the Second Circuit. Natural Resources Defense Council et al
v. U.S. Department of Energy et al. (Docket Nos. 01-4102, 01-4103, 02-4160, 02-4189,
02-6139). Decided January 13, 2004. 66 p.

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Energy-Efficient Appliances (Sec. 152). Public housing agencies are
required to purchase cost-effective Energy Star and FEMP-designated appliances and
products.
Energy Efficiency Standards (Sec. 153). The energy efficiency standards
and codes that the federal government encourages states to use are changed from the
codes set by the Council of American Building Officials (CABO) to the 2003
International Energy Conservation Code (IECC).
Energy Strategy for HUD (Sec. 154). The Secretary of Housing and Urban
Development is required to implement an energy conservation strategy to reduce
utility expenses through cost-effective energy efficient design and construction of
public and assisted housing. A report to Congress is required within one year of
enactment.
Background. The previous Energy Policy Act of 1992 (P.L. 102-486)
contained mortgage-related provisions for energy efficiency in housing. This subtitle
extends some similar energy efficiency measures to public housing.
Policy Context. Four additional provisions for public housing were proposed
in the House version of the bill, but were dropped in conference. The provisions
covered capacity building, use of Community Development Block Grants, grants for
assisted housing, and Federal Housing Authority mortgage insurance.

Title II — Renewable Energy
Subtitle A — General Provisions
Summary of Provisions. The major purposes of this title are to increase
production and use, advance technology development, and promote commercial
development of renewable energy. Potentially significant effects could come from
a broadening of the renewable energy production incentive (REPI) payment for
electricity generated by renewable energy facilities, depending on the amount of
future appropriations. Other provisions establish resource assessments, federal
purchases of equipment and electricity, federal land leasing, and grants, all of which
are also subject to appropriations.
Assessment of Renewable Energy Resources (Sec. 201). DOE is
required to report annually on the resource development potential of solar, wind,
biomass, ocean (tidal, wave, current, and thermal), geothermal, and hydroelectric
energy resources. Further, DOE is required to review available assessments and
undertake new assessments as necessary, accounting for changes in market
conditions, available technologies, and other relevant factors. Funding at $10 million
per year is authorized for FY2006 through FY2010.
Renewable Energy Production Incentive (Sec. 202). Eligibility for the
existing incentive is extended through 2026 and expanded to include electric
cooperatives and tribal governments. Qualifying resources are expanded to include

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landfill gas, livestock methane, and ocean (tidal, wave, current, and thermal) energy.
The provision authorizes such sums as are necessary for each fiscal year from
FY2006 through FY2026.
Federal Purchase Requirement (Sec. 203). Federal agencies are
required, to the extent “economically feasible and technically practicable,” to
purchase power produced from renewable sources. The requirement for federal
renewables use, as a share of total federal electric energy use, starts at 3.0% in
FY2007, rises to 5.0% in FY2010, and then reaches 7.5% in 2013 and all subsequent
years. Renewable energy produced at a federal site, on federal lands, or on Indian
lands is eligible for double credit toward the purchase requirement. A report to
Congress is required every two years.
Use of Photovoltaic Energy in Public Buildings (Sec. 204). The
General Services Administration (GSA) is authorized to encourage the use of solar
photovoltaic energy systems in new and existing federal buildings. For FY2006
through FY2010, funding at $50 million per year is authorized for commercialization
and $10 million per year is authorized for systems evaluation.
Biobased Products (Sec. 205). This provision amends the previously
existing requirement that federal agencies give procurement preference to items
composed of the highest percentage of biobased products practicable by adding “or
such items that comply with the regulations issued under section 103 of Public Law
100-556 (42 U.S.C. 6914b — 1),” which refers to degradable plastic six-pack rings.
Renewable Energy Security (Sec. 206). For the DOE weatherization
grant program, this section increases the limit on support for renewable energy
equipment from $2,500 to $3,000 per dwelling unit. Also, it creates a consumer
rebate for renewable energy equipment installed in a dwelling or small business. The
maximum rebate is the lesser of 25% of equipment cost or $3,000. Funding is
authorized at $150 million for FY2006 and FY2007, $200 million for FY2008, and
$250 million for FY2009 and FY2010.
Installation of Photovoltaic System (Sec. 207). This provision
authorizes $20 million in FY2006 for the Administrator of GSA to proceed with the
Sun Wall Design Project, the winning entry in a national design competition
sponsored jointly by DOE and the National Renewable Energy Laboratory, to install
a photovoltaic solar electric system on the headquarters building of DOE.
Sugar Cane Ethanol Program (Sec. 208). A program is established at the
Environmental Protection Agency to study the production of ethanol from cane sugar,
sugarcane, and sugarcane byproducts. The program is restricted to projects in
Florida, Louisiana, Texas, and Hawaii. A total of $36 million is authorized.
Rural and Remote Community Electrification Grants (Sec. 209). A
grant program is established at DOE for “increasing energy efficiency, siting or
upgrading transmission and distribution lines serving rural areas; or providing or
modernizing electric generation facilities that serve rural areas.” Grant applications
for development of renewable energy sources will be extended “preference.”
Funding at $20 million annually is provided for FY2006 through FY2012.

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Grants to Improve the Commercial Value of Forest Biomass for
Electric Energy, Useful Heat, Transportation Fuels, and Other
Commercial Purposes (Sec. 210). This provision creates a grant program at the
Department of Agriculture to subsidize biomass purchases for use in an energy
production facility. The purpose is to encourage the removal of slash, brush,
pre-commercial thinning material, and other non-merchantable forest biomass from
federal lands and Indian reservations for biomass energy production. Grants are
limited to $500,000. Funding is authorized at $50 million per year for FY2006
through FY2016. By the end of FY2010, a report to Congress is required that
describes the types of biomass, transport distances, and economic impacts.
Sense of Congress Regarding Generation Capacity of Electricity
From Renewable Energy Resources on Public Lands (Sec. 211). For the
Secretary of the Interior, this provision sets a goal of having 10,000 megawatts of
non-hydropower renewable energy generation capacity installed on public lands
within 10 years from the date of enactment.
Background. Since the early 1980s, the main policies promoting commercial
development of renewables have been the power purchase requirement in Section
210 of the Public Utility Regulatory Policies Act (PURPA, P.L. 98-617) and tax
credits. Under certain conditions, Section 1253 of the Energy Policy Act of 2005
terminates PURPA Section 210. A generous investment tax credit expired in 1985.
A few years later, a renewable energy production tax credit (PTC) was created and
renewed several times. The renewable energy industry says the PTC is an
appropriate credit, but its effectiveness has been limited by its short-term durations,
and subsequent lapses, when it sunsets before Congress has passed extensions. In the
past few years, several states (currently about 20) have enacted a Renewable Portfolio
Standard (RPS) to work with the PTC in providing a strong base of encouragement
for renewables.
Policy Context. The Senate version of H.R. 6 (the bill that became the
Energy Policy Act of 2005) included a Renewable Energy Portfolio Standard (RPS),
which would have required retail electricity suppliers to provide 10% of their
electricity (attained by direct generation, power purchases, or purchases of tradable
credits) from renewable sources by 2020. Proponents noted that there were a
growing number of states with an RPS and that Energy Information Administration
reports showed an RPS could reduce electricity bills. Opponents raised concerns
about the exclusion of existing hydropower facilities and resource limits for the
southeastern United States. There was no RPS provision in the House version of
H.R. 6. During the conference, there were discussions about compromising by
including nuclear and hydropower facilities. Nevertheless, RPS was dropped in
conference.

Subtitle B — Geothermal Energy
Summary of Provisions. Much of the nation’s geothermal energy potential
is located on federal lands. Reducing delays in the federal geothermal leasing
process and reducing royalties could increase geothermal energy production although
the environmental impact of greater geothermal development is also at issue.

CRS-15
Short Title (Sec. 221). This subtitle may be cited as the “John Rishel
Geothermal Steam Act Amendments of 2005.”
Competitive Lease Sale Requirements (Sec. 222). The amendments
to the Geothermal Steam Act change the lease procedures for competitive and noncompetitive lease sales. Competitive lease sales will be held every two years. If there
were no competitive bids, then lands would be made available for two years under
a non-competitive process.
Direct Use (Sec. 223). A fee schedule in lieu of any royalty or rental
payments shall be established for lessees of geothermal resources that are not sold or
used commercially.
Royalties and Near-term Production Incentives (Sec. 224). Royalties
on electricity produced from geothermal resources are not less than 1% and not more
than 2.5% of the gross proceeds from geothermal electricity sales in the first 10 years
of production and not less than 2% and more than 5% of the gross proceeds from
geothermal electricity sales each year after the 10-year period. A state shall receive
50% of the mineral revenue generated within its borders and the county will receive
25%. Other near-term production incentives are applicable to certain existing leases.
Coordination of Geothermal Leasing and Permitting on Federal
Lands (Sec. 225). A memorandum of understanding (MOU) between the
Secretaries of the Interior and Agriculture should include provisions that would
identify known geothermal areas on public lands within the National Forest system
and establish an administrative procedure that would include time frames for
processing lease applications. This section also establishes a five-year program for
leasing geothermal energy in the National Forest and a program for reducing the
backlog of geothermal lease applications.
Assessment of Geothermal Energy Potential (Sec. 226). The U.S.
Geological Survey (USGS) shall provide Congress with an assessment of current
geothermal resources within three years of enactment of the Energy Policy Act of
2005.
Cooperative or Unit Plans (Sec. 227). Cooperative or unit plans for
geothermal development shall be promoted.
Royalty on Byproducts (Sec. 228). Leasable minerals produced as a
byproduct of a geothermal lease are subject to royalties under the Mineral Leasing
Act (30 U.S.C. 181).
Authorities of Secretary to Readjust Terms, Conditions, Rentals,
and Royalties (Sec. 229). Sections 8(a) and (b) of the Geothermal Steam Act are
repealed, eliminating the Secretary’s authority to readjust geothermal rental and
royalty rates at “not less than 20 year intervals beginning 35 years after the date
geothermal steam is produced.”
Crediting of Rental Towards Royalty (Sec. 230). Annual rentals are
credited towards the royalty of the same lease.

CRS-16
Lease Duration and Work Commitment Requirements (Sec. 231).
The primary lease term is 10 years and can be extended for two additional five-year
terms if work commitments are met.
Advanced Royalties Required for Cessation of Production (Sec.
232). If production from a geothermal lease were suspended during a period in
which a royalty was required, royalties would be paid in advance until production
resumed.
Annual Rental (Sec. 233). The act establishes rental rates for competitive
and non-competitive lease sales.
Deposit and Use of Geothermal Lease Revenues for 5 Fiscal Years
(Sec. 234). For the first five years after the enactment of this act, a separate account
shall be established for revenue receipts from leases under the Geothermal Steam Act
of 1970, excluding money necessary for payments to states and county governments.
Funds may be transferred to the Forest Service.
Acreage Limitations (Sec. 235). Section 7 of the Geothermal Steam Act
on acreage limitations is repealed (30 U.S.C. 1006).
Technical Amendments (Sec. 236).
amendments are included.

About two dozen technical

Intermountain West Geothermal Consortium (Sec. 237). The
Intermountain West Geothermal Consortium shall be established to focus on
expanded use of geothermal energy. The consortium would involve the participation
of the Secretary of Energy, universities in the region, and state agencies.
Background. Competitive geothermal lease sales are based on whether lands
are within a known geothermal resource area (Geothermal Steam Act of 1970, 30
U.S.C. 1003). Geothermal production on federal lands is charged a royalty of 10%15% under section 5 of the Geothermal Steam Act. The royalty is imposed on the
amount or value of steam or other form of heat derived from production under a
geothermal lease.
The Secretary of the Interior can withdraw public lands from leasing or other
public use and modify, extend, or revoke withdrawals under provisions in the Federal
Land Policy and Management Act of 1976 (FLPMA, 43 U.S.C. 1714). At certain
intervals the Secretary may readjust terms and conditions of a geothermal lease,
including rental and royalty rates. Annual rental fees of not less than $1 per acre on
geothermal leases are paid in advance. The primary lease term is 10 years and shall
continue as long as geothermal steam is produced or used in commercial quantities.
Rents are $1 per acre or fraction thereof for each year of a geothermal lease.
Policy Context. Much of the nation’s geothermal energy potential is located
on federal lands. Reducing delays in the federal geothermal leasing process and
reducing royalties could increase geothermal energy production, although the
environmental impact of greater geothermal production is an issue. This section also
prohibits the Secretary from making future adjustments to the initial lease.

CRS-17

Subtitle C — Hydroelectric
Summary of Provisions. This subtitle encourages hydroelectric production
at non-federal dams. It makes it more difficult for a federal agency to establish a
fisheries requirement as part of the hydropower licensing process, if it would
decrease hydroelectric production. Furthermore, the subtitle establishes a process
through which the State of Alaska may decline to adopt federal agencies’ fish and
wildlife recommendations for the dams it regulates. The subtitle also authorizes $20
million to increase energy efficiency and expand hydroelectric production at existing
non-federal dams.
Alternative Conditions and Fishways (Sec. 241). This provision gives
applicants for hydroelectric licenses increased flexibility in complying with
conditions imposed by federal agencies. Currently, the Federal Power Act (16 U.S.C.
791 et al.) gives certain federal agencies (conditioning agencies) the authority to
attach conditions to Federal Energy Regulatory Commission (FERC) licenses. For
example, federal agencies may require applicants to build passageways through
which fish can travel around a dam, schedule periodic water releases for recreation,
release minimum flows of water for fish migration, control water release rates to
reduce erosion, or limit reservoir fluctuations to protect a reservoir’s shoreline
habitat. Once an agency issues such conditions, FERC must include them in its
license. While these conditions often generate environmental or recreational benefits,
they may also require construction expenditures and may increase power generation
costs by reducing operational flexibility.
This provision allows entities to propose alternative license conditions and
requires federal agencies to consider the alternatives proposed by license applicants
and other parties to the license proceeding. An agency shall accept a proposed
alternative, if it finds that the alternative (1) provides for the adequate protection and
utilization of the federal reservation, or is no less protective of the fish resource than
the fishway initially prescribed, and (2) costs significantly less to implement than the
original condition, and/or will improve operation of the project for electricity
production. Agencies that are issuing conditions must provide FERC with a written
statement demonstrating that the relevant Secretary gave “equal consideration” to the
effects of the conditions on factors such as energy supply, flood control, navigation,
water supply, and air quality. It remains to be seen how this equal consideration
clause will affect agencies’ resources and whether it will alter their responsibilities
to fish and wildlife.
Hydroelectric Production Incentives (Sec. 242). The Secretary of
Energy shall make incentive payments to non-federal owners or operators of
hydroelectric facilities for power that is first produced within 10 years of the date of
enactment by generating equipment added to existing facilities. Payments of 1.8
cents per kilowatt-hour (kWh), up to a total of $750,000/year, may be made for up
to 10 years from the first year after the facility begins operating. Authorizes $10
million per year from FY2006 through FY2015.
Hydroelectric Efficiency Improvement (Sec. 243). The Secretary of
Energy shall make incentive payments to the owners or operators of hydroelectric
facilities who make capital improvements on existing facilities that improve

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efficiency by at least 3%. Payments are not to exceed 10% of the improvement cost
and may not exceed $750,000 at any single facility. Appropriations of $10 million
per year for FY2006 through FY2015 are authorized.
Alaska State Jurisdiction Over Small Hydroelectric Projects (Sec.
244). This provision amends the requirement under which the State of Alaska may
regulate its small hydroelectric dams. Under this provision, the State of Alaska may
decide against issuing a recommended condition on a hydroelectric project if it finds
that the recommendation is inconsistent with protection of the public interest as
described in a November 2000 amendment to the Federal Power Act (16 U.S.C.
823c).
Flint Creek Hydroelectric Project (Sec. 245). This provision allows the
Federal Energy Regulatory Commission to extend, by three years, a preliminary
licensing permit for the Flint Creek Hydroelectric Project in Montana.
Small Hydroelectric Projects (Sec. 246). This provision amends the
Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2708), to change the date
on or before which a dam must be constructed to qualify as an existing dam, from
April 20, 1977, to July 22, 2005.

Subtitle D — Insular Energy
Summary of Provisions. This subtitle seeks to improve the reliability of
insular area energy systems and to update plans put forth in the 1982 Territorial
Energy Assessment. Also, grants are provided to help with feasibility studies for
demonstration projects. In general, the aims are to improve energy efficiency and to
increase use of indigenous energy resources.
Insular Areas Energy Security (Sec. 251). This section includes
congressional findings that electric power transmission and distribution lines in
insular areas are not adequate to withstand hurricane and typhoon damage, and that
an assessment is needed of energy production, consumption, infrastructure, reliance
on imported energy, and indigenous sources of energy in insular areas. Further, it
requires the Secretary of the Interior, in consultation with the Secretary of Energy and
the head of government of each insular area, to update insular area energy plans
within one year of enactment to reflect these findings, with the goals of reducing
energy imports by 2012, increasing energy conservation and energy efficiency, and
maximizing the use of indigenous resources. Funding at $6 million per year is
authorized that would, in part, be used for matching grants (federal share maximum
is 75%) for projects designed to protect electric power transmission distribution lines
in one or more of the territories of the United States from damage caused by
hurricanes and typhoons.
Projects Enhancing Insular Energy Independence (Sec. 252). The
Secretary of Energy, in consultation with the Secretary of the Interior, is required to
assess and report to Congress on projects with the greatest potential for reducing
dependence on fossil fuels used to generate electricity, and to promote distributed
energy, in the insular areas. DOE would be authorized to provide technical and
financial assistance, on a matching basis with local utilities, for feasibility studies and

CRS-19
for implementation of projects the Secretary of Energy determines are feasible and
appropriate. Funding is authorized at $500,000 per year for feasibility studies and
$44 million per year for project implementation. No local match is required for
assistance.
Background. In general, insular areas face much higher energy costs than the
continental United States, because most fuels must be imported. This is especially
true for oil, which often costs twice as much as it does on the mainland. Also, such
areas rely mainly on diesel generators for power production and relatively often
experience brown-outs and black-outs. The 1982 Territorial Energy Assessment
sought to lay out a strategy that emphasized greater energy efficiency and increased
reliance on indigenous energy sources, particularly solar, wind, and biomass.
Policy Context. The insular areas provide strategic locations for U.S. military
installations in the Pacific Ocean and Caribbean Sea.

Title III — Oil and Gas
Subtitle A — Petroleum Reserve and Home Heating Oil
Summary of Provisions. This subtitle permanently authorizes the Strategic
Petroleum Reserve (SPR) and Northeast Heating Oil Reserve (NHOR), thereby
avoiding awkward periods such as occurred in 2000 when there was a period of
several months when the authorities were not in force. Storage sites are to be
identified for expansion of the SPR to one billion barrels, and conditions are set out
for adding oil to the SPR during periods when oil supply is tight and prices elevated,
or when acquiring oil will spur or exacerbate those conditions. Other provisions are
intended to provide guidelines for acquiring oil for the SPR in the future in a manner
that minimizes any consequences on oil prices and markets.
Permanent Authority to Operate the Strategic Petroleum Reserve
and Other Energy Programs (Sec. 301). Authority for the SPR program is
made permanent, as are authorities that permit U.S. oil companies to participate,
without risk of anti-trust violations, in the International Energy Agency (IEA) oilsharing agreement.
National Oilheat Research Alliance (Sec. 302). The law extends the
authorization for NORA until nine years (2010) after the date on which the Alliance
was established.
Site Selection (Sec. 303). The Secretary of Energy is required, within one
year of enactment, to select sites — giving preference to sites that have been
previously studied — for expansion of the SPR to its fully authorized volume of one
billion barrels.
Background. Congress authorized the Strategic Petroleum Reserve (SPR) in
the Energy Policy and Conservation Act (EPCA, P.L. 94-163) to help prevent a
repetition of the economic dislocation caused by the 1973-74 Arab oil embargo.

CRS-20
Physically, the SPR comprises five underground storage facilities, hollowed out from
naturally occurring salt domes, located in Texas and Louisiana. In 2000, Congress
also authorized establishment of a Northeast Heating Oil Reserve (NHOR) where
two million barrels of home heating oil is kept in leased, above-ground storage, to be
released if the price of heating oil exceeds a calculated historic average. The
authorities governing the SPR and NHOR are included in the Energy Policy and
Conservation Act (EPCA, P.L. 94-163) and are currently authorized through FY2008
by the Consolidated Appropriations Resolution for FY2003 (P.L. 108-7). These
authorities also provide for U.S. participation in emergency activities of the
International Energy Agency (IEA) without risking violation of antitrust law and
regulation.
The National Oilheat Research Alliance (NORA) was established by the Energy
Policy Act of 2000 (P.L. 106-460), and assesses a fee of $.002 per gallon on home
heating oil sold by retail distributors. The proceeds, among other purposes, are
dedicated to research on improving the efficiency of furnaces and boilers, and
providing education and training resources to professionals in the industry.
Producers of offshore leases in the Gulf of Mexico pay a royalty to the U.S.
Treasury based upon production at their sites. Since 1999 and until August 2005,
most new fill of the SPR was achieved by the acceptance of royalty-in-kind (RIK) oil
from these producers in lieu of cash paid to the Treasury. Some have objected to RIK
deliveries, arguing that diverting any oil from the markets was contributing to rising
crude prices. The Administration argued that the volumes involved, never more than
200,000 b/d and often less, was not large enough to have the effect on prices that
some alleged.
Policy Context. There have been occasions in the past when the authorities
expired for the SPR program and antitrust protection for U.S. participation in the
international oil-sharing agreement of the International Energy Agency (IEA). The
Energy Policy Act of 2005 eliminates the possibility of this occurring in the future.
The provisions in the energy act will probably preclude any new acquisitions for the
SPR until petroleum product stocks recover from the effects of Hurricanes Rita and
Katrina, and oil and energy markets calm considerably.

Subtitle B — Natural Gas
Summary of Provisions. Streamlined permitting processes and NEPA
reviews4 are provided for the siting of liquefied natural gas (LNG) facilities and
conventional natural gas storage facilities. Expedited judicial review is also provided
by designating exclusive jurisdiction for civil action to the U.S. Court of Appeals for
the circuit in which the facility would be located. Other provisions relate to
improvements in the performance of natural gas markets, prohibiting of market
manipulation, and ensuring that prices are determined in a clear-cut way with full
disclosure of all relevant information.

4

Environmental impact reviews required by the National Environmental Policy Act (NEPA,
P.L. 91-190).

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Exportation or Importation of Natural Gas (Sec. 311). The Natural Gas
Act (NGA, 15 U.S.C. 717) is amended to unequivocally establish exclusive FERC
jurisdiction over siting LNG terminals for exportation and importation of natural gas.
The language specifies that the rights of states are not changed under the Coastal
Zone Management Act (CZMA, 16 U.S.C. 1451 et seq.), the Clean Air Act (42
U.S.C. 7401 et seq.), and the Federal Water Pollution Control Act (33 U.S.C. 1251
et seq.). Before January 1, 2015, FERC shall not deny approval solely for the reason
that the applicant would use the gas himself, wholly or in part. Approval shall not be
conditioned on a requirement to offer service to others, a directive to file rates or
tariffs with FERC, or any other regulation of rates and service. These provisions shall
cease to exist after January 1, 2030.
FERC shall obtain the concurrence of the Secretary of Defense before
authorizing an LNG facility impacting a military installation. The governor of a state
with a proposed LNG site will designate the appropriate state agency to consult with
FERC on safety issues, including the nature of the facility, population characteristics,
and physical characteristics. The state agency shall issue an advisory report to FERC
on safety issues. Any authorization of an LNG facility shall require the operator, in
consultation with the designated state agency and the U.S. Coast Guard, to develop
an Emergency Preparedness Plan to be approved by FERC.
New Natural Gas Storage Facilities (Sec. 312). Section 4 of the NGA
is amended to allow FERC to permit new natural gas storage facilities to charge
market based prices, if it determines that they are in the public interest and reasonable
consumer protections exist. FERC shall review these rates periodically.
Process Coordination; Hearings; Rules of Procedure (Sec. 313).
This section defines a “federal authorization” as the complete package of permits and
regulatory rulings needed to obtain an authorization or a certificate of convenience
and necessity. FERC is designated the lead agency in the federal authorization
process, setting the schedule for other state and federal agencies to ensure expeditious
completion of necessary proceedings and comply with applicable schedules
established by federal law. FERC is tasked with keeping the consolidated record of
all decisions made and actions taken by all parties, which shall also be the record for
CZMA and judicial review.
Judicial review of an order from any federal (other than FERC) or state agency
shall be in the U.S. Court of Appeals for the circuit in which the project would be
constructed. The U.S. Court of Appeals for the District of Columbia is to hear cases
involving failure to act by an agency or denial of permit under federal law. These
cases shall be heard on an expedited schedule.
Penalties (Sec. 314). This section raises the penalties for violating FERC
orders. It raises the maximum prison term from two to five years and the maximum
fine from $500 per violation to $50,000 for each day the violation took place.
Violations of emergency orders are subject to fines of up to $1 million per day. Civil
penalties are also raised to a maximum of $1 million per day.
Market Manipulation (Sec. 315). This section prohibits anyone from using
any manipulative or deceptive contrivance (as defined by the Securities and

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Exchange Commission) in connection with the purchase or sale of natural gas or
related transport services, in contravention of FERC rules. Essentially, it bars false
reporting of terms and condition of natural gas trades.
Natural Gas Market Transparency Rules (Sec. 316). This creates a new
section in the NGA (Sec. 23), calling on FERC to prescribe such rules as necessary
to provide for the timely dissemination of information about price and supply of gas
sold at wholesale. FERC may obtain this information from any market participant,
or rely on private parties to make this information available. FERC shall seek to
assure that consumers are protected from the adverse effects of anti-competitive
behavior on the part of market participants. Within 180 days of enactment, FERC
shall conclude a memorandum of understanding with the Commodity Futures
Trading Commission regarding data sharing, ensuring that duplicative information
requests are minimized. Market participants having de minimus transactions are
exempted from any reporting requirements that might originate under this act.
Federal-State Liquified Natural Gas Forums (Sec. 317). Within one
year of enactment, the Secretary of Energy is directed to convene at least three
forums on LNG in areas where facilities are under consideration. These are to be
undertaken with the participation of the Secretaries of Transportation, Homeland
Security, and coastal state governors. Their goal would be to create dialogue among
stakeholders regarding such issues as safety and environmental risks, and siting and
permitting, and general education. Their purpose would be to identify and develop
best practices for dealing with LNG issues. Funds are authorized to be appropriated
as needed.
Prohibition of Trading and Serving By Certain Individuals (Sec.
318). This amends §20 of NGA to allow a court to prohibit a person convicted of
violating FERC rules from acting as an officer of a natural gas company or from
trading natural gas or transportation services.

Subtitle C — Production
Summary of Provisions. This subtitle facilitates the storage of imported
liquefied natural gas at offshore terminals and excludes injection of hydraulic
fracturing fluids, except diesel fuel, from regulation under the Safe Drinking Water
Act (42 U.S.C. 300f et seq.). The legislation also gives a permanent exemption from
Clean Water Act stormwater runoff rules for the construction of exploration and
production facilities by oil and gas companies and the roads that service those sites.
Outer Continental Shelf Provisions (Sec. 321). This section allows
subsurface storage on the outer continental shelf of oil and natural gas (including
natural gas liquids, liquefied petroleum gas, and natural gas condensate) from any
source. A key effect of this provision would be to facilitate the storage and
processing of imported liquefied natural gas at offshore terminals.
Hydraulic Fracturing (Sec. 322). This section amends the Safe Drinking
Water Act (SDWA), Section 1421(d), to specify that the definition of “underground
injection” excludes the injection of fluids or propping agents (other than diesel fuel)
used in hydraulic fracturing operations related to oil, gas, or geothermal production

CRS-23
activities. This provision removes EPA’s current authority to regulate the
underground injection of fluids (other than diesel fuel) used in hydraulic fracturing,
as needed to protect drinking water.
Before 1997, EPA had not considered regulating hydraulic fracturing for oil and
gas development, because it did not view this well-production process as an activity
subject to regulation under SDWA’s underground injection control (UIC) program.
In 1997, the 11th Circuit Court of Appeals ruled that the injection of fluids for the
purpose of hydraulic fracturing constituted underground injection, that all
underground injection must be regulated, and that hydraulic fracturing of coalbed
methane (CBM) wells in Alabama must be regulated under the state’s UIC program
(LEAF v. EPA, 118 F. 3d 1467).
Hydraulic fracturing involves the high-pressure injection of fluids into coal beds
to enhance the recovery of oil and natural gas from underground formations. Waterbased fluids are typically used as fracturing fluids; however, diesel fuel often is used
instead of water, and various chemicals are added to fracturing fluids.5 While
hydraulic fracturing has been used in the recovery of conventional oil and gas since
the 1950s, this practice has been used for CBM recovery mainly since the 1990s.
A growing concern is that, in many CBM-producing regions, the target coal
beds occur within underground sources of drinking water, and the fracturing process
injects fluids directly into the drinking water sources; EPA has determined that the
use of diesel fuel as a fracturing fluid introduces benzene and other toxic substances
directly into underground sources of drinking water.6 Also, because the process
fractures rock, fracturing can create new pathways for natural gas (primarily
methane) to enter drinking water aquifers. As the number of coalbed methane (CBM)
wells and the use of hydraulic fracturing have increased rapidly in recent years, so has
concern over the potential impact on water resources, particularly in the water-scarce
West. Very few studies have been done to evaluate these impacts.
A study by the National Academy of Sciences is required under §1811 on the
effect of coalbed natural gas production on surface and ground water resources,
including drinking water, in Montana, Wyoming, Colorado, New Mexico, North
Dakota, and Utah.
Oil and Gas Exploration and Production Defined (Sec. 323). The
definitions provision of the Clean Water Act (CWA, §502) is amended to give a
permanent exemption from CWA stormwater runoff rules for the construction of

5

Environmental Protection Agency, Evaluation of Impacts to Underground Sources of
Drinking Water by Hydraulic Fracturing of Coalbed Methane Reservoirs, Washington,
D.C., June 2004, pp. 4-3 - 4-4.
6

Ibid., pp. 1-6. According to EPA, hydraulic fracturing of oil and gas found in conventional
geologic traps is well established; however, hydraulic fracturing of coal beds is relatively
new. Conventional sites are usually very deep and involve saline groundwater that is
unsuitable for drinking water. In contrast, formations that contain coal bed methane can be
near the surface where groundwater may be used as a source of drinking water supplies. pp.
4-9 - 4-10.

CRS-24
exploration and production facilities by oil and gas companies and the roads that
service those sites.
Background. Previously under the CWA (33 U.S.C. 1251 et seq.), the
operation of facilities involved in oil and gas exploration, production, processing,
transmission, or treatment generally was exempt from stormwater runoff regulations
(so long as the runoff was uncontaminated by pollutants), but the construction of
these facilities and associated roads was not. Section 323 modifies CWA to
specifically include construction activities in the types of oil and gas facilities that are
covered by the act’s statutory exemption from stormwater rules.
The issue arises from CWA stormwater permitting rules for small construction
sites and municipal separate storm sewer systems that were issued by the
Environmental Protection Agency (EPA) in 1999 and became effective March 10,
2003. Those rules, known as Phase II of the CWA stormwater program, require most
small construction sites disturbing one to five acres and municipal separate storm
sewer systems serving populations of up to 100,000 people to have a CWA discharge
permit. The permits require pollution-prevention plans describing practices for
curbing sediment and other pollutants from being washed by stormwater runoff into
local water bodies. Phase I of the stormwater program required construction sites
larger than five acres (including oil and gas facilities) and larger municipal separate
storm sewer systems to obtain discharge permits beginning in 1991.
EPA had initially assumed that most oil and gas facilities would be smaller than
one acre in size and thus excluded from the Phase II rules, but newer data indicate
that up to 30,000 new sites per year would be of sizes subject to the rule. As the
March 2003 compliance deadline approached, EPA authorized a two-year extension
of the Phase II rules for small oil and gas construction sites to allow the agency to
assess the economic impact of the rule on that industry. In March 2005, EPA
extended the exemption until June 2006 and said it would propose a specific rule for
small oil and gas construction sites by September 12, 2005, and issue a final rule in
June 2006.
Policy Context. Section 323 makes EPA’s regulatory delay permanent and
makes it applicable to construction activities at all oil and gas development and
production sites, regardless of size, including those previously covered by Phase I
rules. Industry had argued that the stormwater rule creates time-consuming
permitting requirements, even though the short construction period for drilling sites
carries little potential for stormwater runoff pollution. Supporters said the
amendment was intended to clarify existing CWA language. Opponents argued that
there is no evidence that construction at oil and gas sites causes less pollution than
other construction activities, which are regulated under EPA’s stormwater program.
As a result of the amendment, which is intended to exempt from the CWA all
uncontaminated stormwater discharges that occur while setting up drilling operations,
EPA proposed in December 2005 a new rule for discharges of stormwater from oil
and gas operations, making construction activities at all oil and gas sites eligible for
the exemption. EPA still intends to issue a final rule by June 2006.

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Subtitle D — Naval Petroleum Reserves
Summary of Provisions. This subtitle continues a process of divesting or
transferring responsibility for management of Naval Petroleum Reserve oil fields
outside of the Department of Energy.
Transfer of Administrative Jurisdiction and Environmental
Remediation (Sec. 331-334). Administration of public domain lands within the
Naval Petroleum Reserve No. 2 (NPR-2), located in Kern County, CA, will be
transferred to the Secretary of the Interior. The Secretary is instructed to manage oil
production from these tracts in a manner consistent with maximizing production over
the lifetime of the field. Surface rights, title and interest in a roughly 220 acre parcel
of Naval Petroleum Reserve No. 2 is transferred to the city of Taft, CA. The federal
government will retain rights to all fossil fuel and mineral resources for itself or its
lessees, but yields all surface rights and responsibilities for care of the surface. The
Executive Order of December 13, 1912, establishing NPR-2 is revoked.
Background. The National Defense Authorization Act for FY1996 (P.L. 104106) authorized sale of the federal interest in the oil field at Elk Hills, CA (Naval
Petroleum Reserve-1 (NPR-1)). Transfers of other NPR sites have followed in
subsequent years. This has left in the Naval Petroleum Reserves program two small
oil fields in California and Wyoming, which will generate estimated revenue to the
government of roughly $7.2 million during FY2005. The Kern County site (NPR-2)
comprises a “checkerboard” pattern of governmentally and privately owned tracts
adjacent to the Elk Hills field. Of the 50 tracts owned by the government, nearly 90%
are leased by private oil companies with royalty payments deposited in the U.S.
Treasury.

Subtitle E — Production Incentives
Summary of Provisions. Royalty relief provisions are provided to
encourage further offshore oil and gas development. An inventory of offshore
resources is included. The royalty in-kind program is codified, along with a program
for royalty relief for marginal oil and gas properties and a program to remediate
orphaned and abandoned wells.
Definition of Secretary (Sec. 341). In this subtitle, “Secretary” means
Secretary of the Interior.
Program on Oil and Gas Royalties In-Kind (Sec. 342). The federal
government is authorized to continue to receive physical quantities of oil and gas as
royalty-in-kind payments if it can receive market value for the product and revenues
greater than or equal to the revenues it would have received under a comparable cashpayment royalty. The royalty product would have to be placed in marketable
condition (as defined in the law) at no cost to the United States. Small refineries
would receive preferential treatment if supplies on the market were insufficient. A
report to Congress in each year from FY2006-FY2015 must explain, among other
things, how the Secretary determined whether the amount received was at least the

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amount that would have been taken in cash and how a lease was evaluated as to
whether royalty in kind were taken.
Marginal property production incentives (Sec. 343). The Secretary of
the Interior has the authority to reduce or terminate royalties for independent
producers under certain conditions. The Secretary is authorized to prescribe different
standards for marginal properties in lieu of those in this section.
Incentives for Natural Gas Production from Deep Wells in the
Shallow Waters of the Gulf of Mexico (Sec. 344). Royalty reductions are
provided for shallow water production at certain depths not later than180 days after
enactment. An “ultra-deep” well and “sidetrack” well are defined in this section.
Royalty Relief for Deep Water Production (Sec. 345). Royalty
reductions are provided for deepwater areas at fixed production levels at certain
depths.
Alaska Offshore Royalty Suspension (Sec. 346). Planning areas in
offshore Alaska are included under section 8(a)(3)(B) of the Outer Continental Shelf
Lands Act (OCSLA, 43 U.S.C. 1337(a)(3)(B)). At the Secretary’s discretion, leases
in this area are eligible for royalty relief in an effort to promote development and
encourage production.
Oil and Gas Leasing in the National Petroleum Reserve in Alaska
(Sec. 347). These provisions direct the Department of the Interior (DOI) to begin
“an expeditious program” for competitive leasing in the National Petroleum ReserveAlaska (NPR-A). Leases will be initially for 10 years; leases will be lost if, after 30
years, there has been no oil or gas production on the lease site.
North Slope Science Initiative (Sec. 348). The Secretary of the Interior
shall establish a long-term initiative to coordinate collection of ecosystem data on
Alaska’s North Slope. A technical advisory panel shall the established, and the
Secretary shall publish annual reports on the initiative beginning three years after
enactment.
Orphaned, Abandoned, or Idled Wells on Federal Land (Sec. 349).
Within a year after enactment, the Secretary shall establish a technical assistance
program to help states remediate and close abandoned or idled wells. Technical and
financial assistance will be made available over a 10-year period to quantify and
mitigate environmental dangers. A program will be established for reimbursing the
private sector with credits against federal royalties for reclaiming, remediating, and
closing orphaned wells.
Combined Hydrocarbon Leasing (Sec. 350). The Mineral Leasing Act
(30 U.S.C. 181 et seq.) is amended to allow separate leases for tar sands and for oil
and gas in the same area. Tar sands will be leased under the same system as for oil
and gas and require a minimum acceptable bid of $2 per acre.
Preservation of Geological and Geophysical Data (Sec. 351). The
Secretary of the Interior shall establish a program to preserve and archive geologic,

CRS-27
geophysical, and engineering data, including maps, well logs, and samples. Financial
assistance is authorized for up to 50% of the costs incurred by state agencies that
provide archiving facilities and conduct studies under this program.
Oil and Gas Lease Acreage Limitations (Sec. 352). Lease acreage
limits are altered so that additional federal lands would not fall under the Mineral
Leasing Act’s single-state ownership limitations.
Gas Hydrate Production Incentive (Sec. 353). Royalties are suspended
for the first 30 billion cubic feet of natural gas produced from gas hydrate resources
per lease, in addition to any other applicable royalty relief.
Enhanced Oil and Natural Gas Production Through Carbon Dioxide
Injection (Sec. 354). Royalty relief will be available for the purposes of enhancing
oil and natural gas recovery from specified leases. DOE shall establish a carbon
dioxide sequestration demonstration program that injects carbon dioxide to enhance
recovery of oil and gas.
Assessment of Dependence of State of Hawaii on Oil (Sec. 355).
The Secretary of Energy shall study the economic implications of Hawaii’s
dependence on oil and submit a report to Congress within 300 days of enactment.
The study must evaluate the vulnerability of Hawaii to oil disruptions, and assess,
island-by-island, the technical and economic feasibility of displacing oil consumption
with other sources of energy, including renewables, liquefied natural gas, and
hydrogen.
Denali Commission (Sec. 356). Funding is authorized for the Denali
Commission to carry out energy programs in Alaska, including development of
alternative energy, construction of electricity transmission infrastructure, replacement
and cleanup of fuel tanks, and coal gasification.
Comprehensive Inventory of OCS Oil and Natural Gas Resources
(Sec. 357). The Secretary shall conduct an inventory and analysis including 3-D
seismic technology but not drilling of oil and natural gas beneath all water of the
United States outer continental shelf (OCS). Also, the Secretary must issue a report
to Congress within six months of enactment that includes a discussion of restrictions,
impediments, and recommendations.
Background. OCSLA currently provides a mechanism for the Secretary of
the Interior to reduce or eliminate royalty or net profit share established in leases for
oil and gas production in Gulf of Mexico planning areas. According to the Minerals
Management Service (MMS), the Deep Water Royalty Relief Act of 1995 has led to
a significant increase of leases in the deepwater Gulf of Mexico.
Policy Context. There is strong interest among the major oil firms in this
region because of the resource potential and the improvement of deepwater
technology. U.S. offshore oil and gas production has become a larger component of
U.S. domestic supply as production from onshore federal leases has declined 19%
over the past 10 years. Opponents of continued royalty relief contend that deepwater
technology has advanced enough to ensure the economic viability of deepwater

CRS-28
reserves, thus there is no need for further royalty relief. Continued royalty relief has
also faced criticism during a period of record high oil prices and oil industry profits.
The comprehensive inventory of the OCS is designed to provide an updated and
accurate assessment of oil and gas resources, with particular interest in highlighting
resources in areas now off-limits to exploration and development. Some opponents
have argued that the inventory is a first step in a larger effort to open more of the
OCS for exploration and development.

Subtitle F — Access to Federal Lands
Summary of Provisions. These provisions address concerns over delays in
the permitting process for oil and gas development on federal lands after leases are
granted. Some lease stipulations are considered by the Administration to be
impediments to domestic oil and gas development. However, concerns have also
been raised that faster permitting could bypass important environmental protections.
Federal Onshore Oil and Gas Leasing and Permitting Practices
(Sec. 361). The Department of the Interior along with the Forest Service shall
review current onshore oil and gas leasing and permitting practices and report on
actions taken to improve the program.
Management of Federal Oil and Gas Leasing Programs (Sec. 362).
The Secretaries of Agriculture and of the Interior are required to ensure expeditious
compliance with applicable environmental and cultural resource laws. “Best
management practices” to ensure timely action on oil and gas leases and drilling
permits must be implemented. Funds would be authorized for FY2006-FY2010.
Consultation Regarding Oil and Gas Leasing on Public Land (Sec.
363). The Secretary of the Interior and the Secretary of Agriculture will enter into
a memorandum of understanding to ensure timely processing of oil and gas lease
applications, elimination of duplication of effort, and establishment of joint data
retrieval and mapping systems.
Estimates of Oil and Gas Resources Underlying Onshore Federal
Land (Sec. 364). The U.S. Geological Survey is required to estimate onshore oil
and gas resources and identify impediments and restrictions that might delay permits.
The Department of Energy is required to make regular assessments of economic
reserves.
Pilot Project to Improve Federal Permit Coordination (Sec. 365). A
federal permit streamlining pilot project will be established to demonstrate energy
development on federal land in accordance with the multiple-use mandate; Wyoming,
Montana, Colorado, Utah, and New Mexico may be asked to participate. A Bureau
of Land Management Permit Processing Improvement Fund is established. Half of
rental revenue will be deposited into the Fund and made available to the pilot project
for FY2006-FY2015 without further appropriation.
Deadline for Consideration for Applications for Permits (Sec. 366).
The Secretary of the Interior will have 10 days after receiving an application for a

CRS-29
permit to drill (APD) to notify the applicant whether the APD was complete. The
Secretary will have 30 days after a complete APD was submitted to issue or defer a
permit with correcting measures. If deferred, the applicant would have a two-year
window to complete the application, as specified by the Secretary. If the applicant
met the requirements within that period, then the Secretary must issue a permit within
10 days. The Secretary shall deny the permit if the criteria were not met within the
two-year period.
Fair Market Value Determinations for Linear Rights-of-way Across
Public Lands and National Forests (Sec. 367). The Secretaries of the Interior
and Agriculture will annually revise and update rental fees for land encumbered by
linear rights-of-way to reflect fair market value.
Energy Right-of-Way Corridors on Federal Land (Sec. 368). Not later
than two years after enactment, the Secretaries of the Interior and Agriculture, in
consultation with the Secretaries of Defense, Commerce, and Energy and FERC, will
submit to Congress a report addressing the location of existing rights-of-way on
federal land for oil and gas pipelines and electric transmission and distribution
facilities.
Oil Shale, Tar Sands, and Other Strategic Unconventional Fuels
(Sec. 369). The Secretary of the Interior will develop an oil shale and tar sands
leasing program as soon as practicable and publish a final regulation to implement
the program by December 31, 2006. A task force is set up to coordinate and
accelerate commercial development of strategic unconventional fuels. An Office of
Petroleum Reserves will be established to coordinate federal development of strategic
fuels. The Secretary shall carry out an assessment of U.S. oil shale and oil sands. The
Department of Defense is authorized to procure unconventional fuels to meet its fuel
needs. The leasing program will be for conducting research and development
activities related to the production of oil shale and oil sands. A programmatic
environmental impact statement will be prepared.
Finger Lakes Withdrawal (Sec. 370). All federal land within the boundary
of Finger Lakes National Forest, New York, is withdrawn from potential energy
development under the public land laws.
Reinstatement of Leases (Sec. 371). This section establishes conditions
for reinstating an oil and gas lease if it was terminated for nonpayment of rental fees
between September 1, 2001, and June 30, 2004.
Consultation Regarding Energy Rights-of-Way on Public Land (Sec.
372). Within six months after enactment, the Secretaries of the Interior and of
Agriculture will be required to enter into an MOU to coordinate environmental
compliance and processing of rights-of-way applications.
Sense of Congress Regarding Development of Minerals Under
Padre Island National Seashore (Sec. 373). In recognition of the split estate
on Padre Island National Seashore, it is the sense of Congress that the federal
government owns the surface rights while the mineral rights are held privately and
also by the state of Texas.

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Livingston Parish Mineral Rights Transfer (Sec. 374). Section 102 of
P.L. 102-562 is amended by striking the “Conveyance of Lands” provision, which
maintains the reservation of mineral rights held by the United States in specific areas
of Livingston Parish, Louisiana.
Background. The federal oil and gas leasing program is governed by the
Mineral Leasing Act of 1920, as amended (30 U.S.C. 181 et. Seq.). Bureau of Land
Management (BLM) procedures for an application for a permit to drill (APD) are
contained in 43 CFR 3162.3-1. The Bush Administration has taken some action to
reduce the time needed to consider APDs, including processing and conducting
environmental analyses on multiple permit applications with similar characteristics,
implementing geographic area development planning for oil and gas fields or areas
within a field, and allowing for block surveys of cultural resources.

Subtitle G — Miscellaneous
Deadline for Decision on Appeals of Consistency Determination
Under the Coastal Zone Management Act of 1972 (Sec. 381). These
provisions establish three deadlines for the appeals process by amending section 319
of the Coastal Zone Management Act (CZMA). They will limit the overall length of
this appeals process to a total of 270 days from the date when an appeal is filed (with
options that can extend the process for up to an additional 75 days). The first
deadline is for the Secretary of Commerce to publish an initial notice of an appeal in
the Federal Register within 30 days of when it is filed. The second deadline is that
the administrative record is closed after 160 days from the date of that publication.
During that time period, the Secretary can receive filings related to the appeal. The
Secretary has the discretion to extend this period for up to 60 days under certain
circumstances. The final deadline gives the Secretary up to 60 days to issue a
decision after the administrative recor

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3ARL33302. Public record. Not legal advice.