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HR 1133 IH

110th CONGRESS

1st Session

H. R. 1133

To provide for the energy independence of the United States.

IN THE HOUSE OF REPRESENTATIVES

February 16, 2007

Ms. BERKLEY introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Natural Resources, Energy and Commerce, and Science and Technology, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To provide for the energy independence of the United States.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Freedom through Renewable Energy Expansion (FREE) Act'.

SEC. 2. REPEAL OF NUCLEAR SUBSIDIES.

(a) Next Generation Nuclear Plant Project- Subtitle C of title VI of the Energy Policy Act of 2005 (42 U.S.C. 16021 et seq.) and the items relating thereto in the table of contents in section 1(b) of that Act are repealed.

(b) Standby Support for Certain Nuclear Plant Delays- Section 638 of the Energy Policy Act of 2005 (42 U.S.C. 16014) and the item relating thereto in the table of contents in section 1(b) of that Act are repealed.

(1) IN GENERAL- Subparagraph (B) of section 45J(d)(1) of the Internal Revenue Code of 1986 (relating to advanced nuclear power facility) is amended by striking `January 1, 2021' and inserting `the date of the enactment of the Freedom through Renewable Energy Expansion (FREE) Act'.

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to property placed in service after the date of the enactment of this Act.

SEC. 3. REPEAL OF CERTAIN TAX SUBSIDIES FOR THE OIL AND GAS INDUSTRY.

(a) Repeal of Election To Expense Certain Refineries-

(1) IN GENERAL- Subparagraph (B) of section 179C(c)(1) of the Internal Revenue Code of 1986 (relating to qualified refinery property) is amended by striking `January 1, 2012' and inserting `the date of the enactment of the Freedom through Renewable Energy Expansion (FREE) Act'.

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to property placed in service after the date of the enactment of this Act.

(b) Repeal of Treatment of Natural Gas Distribution Lines as 15-Year Property-

(1) IN GENERAL- Clause (viii) of section 168(e)(3)(E) of such Code (relating to 15-year property) is amended by striking `January 1, 2011' and inserting `the Freedom through Renewable Energy Expansion (FREE) Act'.

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to property placed in service after the date of the enactment of this Act.

(1) IN GENERAL- Clause (iv) of section 168(e)(3)(C) of such Code (relating to 7-year property) is amended by inserting `and which is placed in service before the date of the enactment of the Freedom through Renewable Energy Expansion (FREE) Act' after `April 11, 2005,'.

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to property placed in service after the date of the enactment of this Act.

(d) Repeal of New Rule for Determining Small Refiner Exception to Oil Depletion Deduction-

(1) IN GENERAL- Paragraph (4) of section 613A(d) of such Code (relating to certain refiners excluded) is amended to read as follows:

`(4) CERTAIN REFINERS EXCLUDED- If the taxpayer or a related person engages in the refining of crude oil, subsection (c) shall not apply to such taxpayer if on any day during the taxable year the refinery runs of the taxpayer and such person exceed 50,000 barrels.'.

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to taxable years beginning after the date of the enactment of this Act.

(e) Repeal of Amortization of Geological and Geophysical Expenditures-

(1) IN GENERAL- Section 167 of such Code (relating to depreciation) is amended by striking subsection (h) and redesignating subsection (i) as subsection (h).

(2) CONFORMING AMENDMENT- Section 263A(c)(3) of such Code is amended by striking `167(h),'.

(3) EFFECTIVE DATE- The amendments made by this subsection shall apply to amounts paid or incurred after the date of the enactment of this Act.

SEC. 4. REPEAL OF CERTAIN PROVISIONS OF THE ENERGY POLICY ACT OF 2005 AND OTHER LAWS PROVIDING INCENTIVES FOR OIL AND GAS PRODUCTION FROM FEDERAL LANDS.

(a) Repeals- The following provisions of the Energy Policy Act of 2005, and the items relating thereto in the table of contents in section 1(b) of that Act, are repealed:

(1) Section 343 (relating to marginal property production incentives).

(2) Section 344 (relating to incentives for natural gas production from deep wells in the shallow waters of the Gulf of Mexico).

(3) Section 345 (relating to royalty relief for deep water production).

(4) Section 357 (relating to comprehensive inventory of OCS oil and natural gas resources).

(5) Section 362 (relating to management of Federal oil and gas leasing programs, including expediting leases and permit applications).

(6) Section 965 (relating to oil and gas research programs).

(7) Section 966 (relating to low-volume oil and gas reservoir research program).

(8) Subtitle J of title IX (relating to ultra-deepwater and unconventional natural gas and other petroleum resources).

(b) Repeal of Alaska Offshore Royalty Suspension- Section 8(a)(3)(B) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(B)) is amended by striking `and in the Planning Areas offshore Alaska'.

(c) Repeal of Royalty Suspension With Respect to National Petroleum Reserve in Alaska- Section 107 of the Naval Petroleum Reserves Production Act of 1976 (as amended by section 347(b)(11) of the Energy Policy Act of 2005 (119 Stat. 706)) is amended by repealing subsection (k).

(d) Conforming Amendment- Section 961(c) of the Energy Policy Act of 2005 (42 U.S.C. 16291(c)) is amended by striking paragraph (3) and redesignating paragraph (4) as paragraph (3).

SEC. 5. PRICE THRESHOLDS FOR ROYALTY SUSPENSION PROVISIONS.

The Secretary of the Interior shall agree to a request by any lessee to amend any lease issued for any Central and Western Gulf of Mexico tract during the period of January 1, 1998, through December 31, 1999, to incorporate price thresholds applicable to royalty suspension provisions, that are equal to or less than the price thresholds described in clauses (v) through (vii) of section 8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)). Any amended lease shall impose the new or revised price thresholds effective October 1, 2006. Existing lease provisions shall prevail through September 30, 2006.

SEC. 6. CLARIFICATION OF AUTHORITY TO IMPOSE PRICE THRESHOLDS FOR CERTAIN LEASE SALES.

Congress reaffirms the authority of the Secretary of the Interior under section 8(a)(1)(H) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(1)(H)) to vary, based on the price of production from a lease, the suspension of royalties under any lease subject to section 304 of the Outer Continental Shelf Deep Water Royalty Relief Act (Public Law 104-58; 43 U.S.C. 1337 note).

SEC. 7. ELIGIBILITY FOR NEW LEASES AND THE TRANSFER OF LEASES; CONSERVATION OF RESOURCES FEES.

(a) Issuance of New Leases-

(1) IN GENERAL- The Secretary shall not issue any new lease that authorizes the production of oil or natural gas in the Gulf of Mexico under the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) to a person described in paragraph (2) unless--

(A) the person has renegotiated each covered lease with respect to which the person is a lessee, to modify the payment responsibilities of the person to include price thresholds that are equal to or less than the price thresholds described in clauses (v) through (vii) of section 8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)); or

(B) the person has--

(i) paid all fees established by the Secretary under subsection (b) that are due with respect to each covered lease for which the person is a lessee; or

(ii) entered into an agreement with the Secretary under which the person is obligated to pay such fees.

(2) PERSONS DESCRIBED- A person referred to in paragraph (1) is a person that--

(A) is a lessee that--

(i) holds a covered lease on the date on which the Secretary considers the issuance of the new lease; or

(ii) was issued a covered lease before the date of enactment of this Act, but transferred the covered lease to another person or entity (including a subsidiary or affiliate of the lessee) after the date of enactment of this Act; or

(B) any other person or entity who has any direct or indirect interest in, or who derives any benefit from, a covered lease;

(3) MULTIPLE LESSEES-

(A) IN GENERAL- For purposes of paragraph (1), if there are multiple lessees that own a share of a covered lease, the Secretary may implement separate agreements with any lessee with a share of the covered lease that modifies the payment responsibilities with respect to the share of the lessee to include price thresholds that are equal to or less than the price thresholds described in clauses (v) through (vii) of section 8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)).

(B) TREATMENT OF SHARE AS COVERED LEASE- Beginning on the effective date of an agreement under subparagraph (A), any share subject to the agreement shall not constitute a covered lease with respect to any lessees that entered into the agreement.

(b) Conservation of Resources Fees-

(1) IN GENERAL- Not later than 60 days after the date of enactment of this Act, the Secretary of the Interior by regulation shall establish--

(A) a conservation of resources fee for producing Federal oil and gas leases in the Gulf of Mexico; and

(B) a conservation of resources fee for nonproducing Federal oil and gas leases in the Gulf of Mexico.

(2) PRODUCING LEASE FEE TERMS- The fee under paragraph (1)(A)--

(A) subject to subparagraph (C), shall apply to covered leases that are producing leases;

(B) shall be set at $9 per barrel for oil and $1.25 per million Btu for gas, respectively, in 2005 dollars; and

(i) in any calendar year in which the arithmetic average of the daily closing prices for light sweet crude oil on the New York Mercantile Exchange (NYMEX) exceeds $34.73 per barrel for oil and $4.34 per million Btu for gas in 2005 dollars; and

(ii) on or after October 1, 2006.

(3) NONPRODUCING LEASE FEE TERMS- The fee under paragraph (1)(B)--

(A) subject to subparagraph (C), shall apply to leases that are nonproducing leases;

(B) shall be set at $3.75 per acre per year in 2005 dollars; and

(4) TREATMENT OF RECEIPTS- Amounts received by the United States as fees under this subsection shall be treated as offsetting receipts.

(c) Transfers- A lessee or any other person who has any direct or indirect interest in, or who derives a benefit from, a lease shall not be eligible to obtain by sale or other transfer (including through a swap, spinoff, servicing, or other agreement) any covered lease, the economic benefit of any covered lease, or any other lease for the production of oil or natural gas in the Gulf of Mexico under the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.), unless--

(1) the lessee or other person has--

(A) renegotiated all covered leases of the lessee or other person; and

(B) entered into an agreement with the Secretary to modify the terms of all covered leases of the lessee or other person to include limitations on royalty relief based on market prices that are equal to or less than the price thresholds described in clauses (v) through (vii) of section 8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)); or

(2) the lessee or other person has--

(A) paid all fees established by the Secretary under subsection (b) that are due with respect to each covered lease for which the person is a lessee; or

(B) entered into an agreement with the Secretary under which the person is obligated to pay such fees.

(d) Definitions- In this section--

(1) COVERED LEASE- The term `covered lease' means a lease for oil or gas production in the Gulf of Mexico that is--

(A) in existence on the date of enactment of this Act;

(B) issued by the Department of the Interior under section 304 of the Outer Continental Shelf Deep Water Royalty Relief Act (43 U.S.C. 1337 note; Public Law 104-58); and

(C) not subject to limitations on royalty relief based on market price that are equal to or less than the price thresholds described in clauses (v) through (vii) of section 8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)).

(2) LESSEE- The term `lessee' includes any person or other entity that controls, is controlled by, or is in or under common control with, a lessee.

(3) SECRETARY- The term `Secretary' means the Secretary of the Interior.

SEC. 8. AVERAGE FUEL ECONOMY STANDARDS.

(a) In General- Section 32902 of title 49, United States Code, is amended--

(1) in subsection (c)--

(A) by striking `(1) Subject to paragraph (2) of this subsection, the' and inserting `The'; and

(B) by striking paragraph (2); and

(2) by redesignating subsections (i) and (j) as subsections (j) and (k), respectively, and by inserting after subsection (h) the following:

`(i) Standards for Model Years After 2009- The Secretary of Transportation shall prescribe by regulation average fuel economy standards for passenger automobiles manufactured by a manufacturer in model years after model year 2009, that shall--

`(1) ensure that the average fuel economy achieved by passenger automobiles manufactured by a manufacturer in model years after 2016 is no less than 33 miles per gallon;

`(2) ensure that improvements to fuel economy standards do not degrade the safety of passenger automobiles manufactured by a manufacturer; and

`(3) maximize the retention of jobs in the automobile manufacturing sector of the United States.'.

(b) Conforming Amendments- Section 32902 of title 49, United States Code, is further amended--

(1) in subsection (g)(2), by striking `(and submit the amendment to Congress when required under subsection (c)(2) of this section)'; and

(2) in subsection (k) (as so redesignated) by striking `or (g)' and inserting `(g), or (i)'.

SEC. 9. RENEWABLE ELECTRICITY PRODUCTION CREDIT.

(a) In General- Section 45(d) of the Internal Revenue Code of 1986 (relating to qualified facilities) is amended by striking `January 1, 2009' each place it appears in paragraphs (1), (2), (3), (4), (5), (6), and (7) and inserting `January 1, 2016'.

(b) Effective Date- The amendments made by subsection (a) shall apply to property placed in service after the date of the enactment of this Act.

SEC. 10. EXTENSION AND MODIFICATION OF INVESTMENT TAX CREDIT WITH RESPECT TO SOLAR ENERGY PROPERTY, QUALIFIED FUEL CELL PROPERTY, AND GEOTHERMAL PROPERTY.

(a) Solar Energy Property- Paragraphs (2)(A)(i)(II) and (3)(A)(ii) of section 48(a) of the Internal Revenue Code of 1986 are each amended by striking `January 1, 2009' and inserting `January 1, 2016'.

(b) Eligible Fuel Cell Property- Paragraph (1)(E) of section 48(c) of such Code is amended by striking `December 31, 2008' and inserting `December 31, 2015'.

(c) Geothermal Property- Paragraph (2)(A)(i) of section 48(a) of such Code is amended by striking `and' at the end of subclause (II) and by adding at the end the following new subclause:

`(IV) energy property described in paragraph (3)(A)(iii) but only with respect to periods ending before January 1, 2016, and'.

(d) Effective Date- The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

SEC. 11. EXTENSION OF CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

(a) Extension- Subsection (g) of section 25D of the Internal Revenue Code of 1986 (relating to termination) is amended by striking `December 31, 2008' and inserting `December 31, 2015'.

(b) Effective Date- The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

SEC. 12. CREDIT FOR WIND ENERGY PROPERTY INSTALLED IN RESIDENCES AND BUSINESSES.

(a) In General- Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 30C the following new section:

`SEC. 30D. WIND ENERGY PROPERTY.

`(a) Allowance of Credit- There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 30 percent (10 percent after December 31, 2015) of the amount paid or incurred by the taxpayer for qualified wind energy property placed in service or installed during such taxable year.

`(b) Limitation- No credit shall be allowed under subsection (a) unless at least 50 percent of the energy produced annually by the qualified wind energy property is consumed on the site on which the property is placed in service or installed.

`(c) Qualified Wind Energy Property- For purposes of this section, the term qualified wind energy property means a qualifying wind turbine if--

`(1) such turbine is placed in service or installed on or in connection with property located in the United States,

`(2) in the case of an individual, the property on or in connection with which such turbine is installed is a dwelling unit which is located in the United States,

`(3) the original use of such turbine commences with the taxpayer, and

`(4) such turbine carries at least a 5-year limited warranty covering defects in design, material, or workmanship, and, for property that is not installed by the taxpayer, at least a 5-year limited warranty covering defects in installation.

`(d) Other Definitions- For purposes of this section:

`(1) QUALIFYING WIND TURBINE- The term qualifying wind turbine means a wind turbine of 100 kilowatts of rated capacity or less which meets the latest performance rating standards published by the American Wind Energy Association and which is used to generate electricity.

`(2) PRINCIPAL RESIDENCE- The term principal residence shall have the same meaning as when used in section 121.

`(e) Limitation Based on Amount of Tax-

`(1) IN GENERAL- The credit allowed under subsection (a) for any taxable year shall not exceed the excess of--

`(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

`(B) the sum of the credits allowable under this part (other than under this section and subpart C thereof, relating to refundable credits) and section 1397E.

`(2) CARRYOVER OF UNUSED CREDIT- If the credit allowable under subsection (a) exceeds the limitation imposed by paragraph (1) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.

`(f) Special Rules- For purposes of this section:

`(1) TENANT-STOCKHOLDER IN COOPERATIVE HOUSING CORPORATION- In the case of an individual who is a tenant-stockholder (as defined in section 216(b)(2)) in a cooperative housing corporation (as defined in section 216(b)(1)), such individual shall be treated as having paid his tenant-stockholder's proportionate share (as defined in section 216(b)(3)) of any expenditures paid or incurred for qualified wind energy property by such corporation, and such credit shall be allocated appropriately to such individual.

`(2) CONDOMINIUMS-

`(A) IN GENERAL- In the case of an individual who is a member of a condominium management association with respect to a condominium which he owns, such individual shall be treated as having paid his proportionate share of expenditures paid or incurred for qualified wind energy property by such association, and such credit shall be allocated appropriately to such individual.

`(B) CONDOMINIUM MANAGEMENT ASSOCIATION- For purposes of this paragraph, the term condominium management association means an organization which meets the requirements of section 528(c)(2) with respect to a condominium project of which substantially all of the units are used by individuals as residences.

`(g) Basis Adjustment- For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to a residence or other property, the basis of such residence or other property shall be reduced by the amount of the credit so allowed.'.

(b) Conforming Amendment- Subsection (a) of section 1016 of such Code (relating to general rule for adjustments to basis) is amended by striking `and' at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting `, and', and by adding at the end the following new paragraph:

`(38) in the case of a residence or other property with respect to which a credit was allowed under section 30D, to the extent provided in section 30D(g).'.

(c) Clerical Amendment- The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 30C the following new item:

`Sec. 30D. Wind energy property.'.

(d) Effective Date- The amendments made by this section shall apply to property placed in service or installed after December 31, 2006, in taxable years ending after such date.

SEC. 13. GEOTHERMAL RESEARCH.

There are authorized to be appropriated to the Secretary of Energy $32,500,000 for geothermal research.

SEC. 14. RENEWABLE PORTFOLIO STANDARD.

Title VI of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 et seq.) is amended by adding at the end the following:

`SEC. 610. FEDERAL RENEWABLE PORTFOLIO STANDARD.

`(a) Renewable Energy Requirement-

`(1) IN GENERAL- Each electric utility that sells electricity to electric consumers shall obtain a percentage of the base amount of electricity it sells to electric consumers in any calendar year from new renewable energy or existing renewable energy. The percentage obtained in a calendar year shall not be less than the amount specified in the following table:

`Calendar year:

Minimum annual percentage:

2008 through 2009

5.0

2010 through 2011

8.0

2012 through 2013

11.0

2014 through 2015

15.0

2016 and thereafter

20.0.

`(2) MEANS OF COMPLIANCE- An electric utility shall meet the requirements of paragraph (1) by--

`(A) generating electric energy using new renewable energy or existing renewable energy;

`(B) purchasing electric energy generated by new renewable energy or existing renewable energy;

`(C) purchasing renewable energy credits issued under subsection (b); or

`(D) a combination of the foregoing.

`(b) Renewable Energy Credit Trading Program- Not later than January 1 of the first calendar year beginning after the enactment of this Act, the Secretary shall establish a renewable energy credit trading program to permit an electric utility that does not generate or purchase enough electric energy from renewable energy to meet its obligations under subsection (a)(1) to satisfy such requirements by purchasing sufficient renewable energy credits.

`(c) Enforcement-

`(1) CIVIL PENALTIES- Any electric utility that fails to meet the renewable energy requirements of subsection (a) shall be subject to a civil penalty.

`(2) AMOUNT OF PENALTY- The amount of the civil penalty shall be determined by multiplying the number of kilowatt-hours of electric energy sold to electric consumers in violation of subsection (a) by the greater of 1.5 cents (adjusted for inflation under subsection (f)) or 200 percent of the average market value of renewable energy credits during the year in which the violation occurred.

`(3) MITIGATION OR WAIVER- The Secretary may mitigate or waive a civil penalty under this subsection if the electric utility was unable to comply with subsection (a) for reasons outside of the reasonable control of the utility. The Secretary shall reduce the amount of any penalty determined under paragraph (2) by an amount paid by the electric utility to a State for failure to comply with the requirement of a State renewable energy program if the State requirement is greater than the applicable requirement of subsection (a).

`(4) PROCEDURE FOR ASSESSING PENALTY- The Secretary shall assess a civil penalty under this subsection in accordance with the procedures prescribed by section 333(d) of the Energy Policy and Conservation Act (42 U.S.C. 6303(d)).

`(d) Rules- The Secretary shall issue rules implementing this section not later than 1 year after the date of enactment of this section.

`(e) Exemptions- This section shall not apply in any calendar year to an electric utility--

`(1) that sold less than 4,000,000 megawatt-hours of electric energy to electric consumers during the preceding calendar year; or

`(2) in Hawaii.

`(f) Inflation Adjustment- Not later than December 31 of each year beginning in 2009, the Secretary shall adjust for inflation the amount of the civil penalty per kilowatt-hour under subsection (c)(2).

`(g) State Programs- Nothing in this section shall diminish any authority of a State or political subdivision thereof to adopt or enforce any law or regulation respecting renewable energy, but, except as provided in subsection (c)(3), no such law or regulation shall relieve any person of any requirement otherwise applicable under this section. The Secretary, in consultation with States having such renewable energy programs, shall, to the maximum extent practicable, facilitate coordination between the Federal program and State programs.

`(h) Definitions- For purposes of this section:

`(1) BASE AMOUNT OF ELECTRICITY- The term `base amount of electricity' means the total amount of electricity sold by an electric utility to electric consumers in a calendar year, excluding--

`(A) electricity generated by a hydroelectric facility (including a pumped storage facility but excluding incremental hydropower); and

`(B) electricity generated through the incineration of municipal solid waste.

`(2) DISTRIBUTED GENERATION FACILITY- The term `distributed generation facility' means a facility at a customer site.

`(3) EXISTING RENEWABLE ENERGY- The term `existing renewable energy' means, except as provided in paragraph (7)(B), electric energy generated at a facility (including a distributed generation facility) placed in service prior to the date of enactment of this section from solar, wind, or geothermal energy; ocean energy; biomass (as defined in section 203(a) of the Energy Policy Act of 2005); or landfill gas.

`(4) GEOTHERMAL ENERGY- The term `geothermal energy' means energy derived from a geothermal deposit (within the meaning of section 613(e)(2) of the Internal Revenue Code of 1986).

`(5) INCREMENTAL GEOTHERMAL PRODUCTION-

`(A) IN GENERAL- The term `incremental geothermal production' means for any year the excess of--

`(i) the total kilowatt hours of electricity produced from a facility (including a distributed generation facility) using geothermal energy, over

`(ii) the average annual kilowatt hours produced at such facility for 5 of the previous 7 calendar years before the date of enactment of this section after eliminating the highest and the lowest kilowatt hour production years in such 7-year period.

`(B) SPECIAL RULE- A facility described in subparagraph (A) which was placed in service at least 7 years before the date of enactment of this section shall commencing with the year in which such date of enactment occurs, reduce the amount calculated under subparagraph (A)(ii) each year, on a cumulative basis, by the average percentage decrease in the annual kilowatt hour production for the 7-year period described in subparagraph (A)(ii) with such cumulative sum not to exceed 30 percent.

`(6) INCREMENTAL HYDROPOWER- The term `incremental hydropower' means additional energy generated as a result of efficiency improvements or capacity additions made on or after the date of enactment of this section or the effective date of an existing applicable State renewable portfolio standard program at a hydroelectric facility that was placed in service before that date. The term does not include additional energy generated as a result of operational changes not directly associated with efficiency improvements or capacity additions. Efficiency improvements and capacity additions shall be measured on the basis of the same water flow information used to determine a historic average annual generation baseline for the hydroelectric facility and certified by the Secretary or the Federal Energy Regulatory Commission.

`(7) NEW RENEWABLE ENERGY- The term `new renewable energy' means--

`(A) electric energy generated at a facility (including a distributed generation facility) placed in service on or after January 1, 2003, from--

`(i) solar, wind, or geothermal energy or ocean energy;

`(ii) biomass (as defined in section 203(a) of the Energy Policy Act of 2005);

`(iii) landfill gas; or

`(iv) incremental hydropower; and

`(B) for electric energy generated at a facility (including a distributed generation facility) placed in service prior to the date of enactment of this section--

`(i) the additional energy above the average generation in the 3 years preceding the date of enactment of this section at the facility from--

`(I) solar or wind energy or ocean energy;

`(II) biomass (as defined in section 203(a) of the Energy Policy Act of 2005);

`(III) landfill gas; or

`(IV) incremental hydropower.

`(ii) the incremental geothermal production.

`(8) OCEAN ENERGY- The term `ocean energy' includes current, wave, tidal, and thermal energy.

`(i) Sunset- This section expires on December 31, 2031.'.

SEC. 15. FEDERAL ENERGY PURCHASE REQUIREMENT.

Section 203(a) of the Energy Policy Act of 2005 (42 U.S.C. 15852(a)) is amended--

(1) by striking `seek to ensure that, to the extent economically feasible and technically practicable' and inserting `ensure that';

(2) in paragraph (1), by striking `3 percent in fiscal years 2007 through 2009' and inserting `3 percent in fiscal year 2007 and 5 percent in fiscal years 2008 through 2010';

(3) in paragraph (2), by striking `5 percent in fiscal years 2010 through 2012' and inserting `11 percent in fiscal years 2011 through 2014'; and

(4) in paragraph (3), by striking `7.5 percent in fiscal year 2013' and inserting `20 percent in fiscal year 2015'.

SEC. 16. SCHOOL RENEWABLE ENERGY USE.

The Secretary of Energy shall establish a program to make grants to local schools and school districts to promote and facilitate the use of renewable energy sources in school facilities.

END