[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1833 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1833

To amend the Internal Revenue Code of 1986 to provide tax incentives to 
 encourage the production and use of efficient energy sources, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 29, 1999

   Mr. Daschle (for himself, Mr. Bingaman, Mr. Baucus, Mr. Byrd, Mr. 
 Kerrey, and Mr. Inouye) introduced the following bill; which was read 
             twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide tax incentives to 
 encourage the production and use of efficient energy sources, and for 
                            other purposes.

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

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Energy Security 
Tax Act of 1999''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.
          TITLE I--ENERGY-EFFICIENT PROPERTY USED IN BUSINESS

Sec. 101. Credit for certain energy-efficient property used in 
                            business.
                  TITLE II--NONBUSINESS ENERGY SYSTEMS

Sec. 201. Credit for certain nonbusiness energy systems.
                      TITLE III--ALTERNATIVE FUELS

Sec. 301. Allocation of alcohol fuels credit to patrons of a 
                            cooperative.
                         TITLE IV--AUTOMOBILES

Sec. 401. Extension of credit for qualified electric vehicles.
                    TITLE V--CLEAN COAL TECHNOLOGIES

Sec. 501. Credit for investment in qualifying clean coal technology.
Sec. 502. Credit for production from qualifying clean coal technology.
Sec. 503. Risk pool for qualifying clean coal technology.
                       TITLE VI--METHANE RECOVERY

Sec. 601. Credit for capture of coalbed methane gas.
                   TITLE VII--OIL AND GAS PRODUCTION

Sec. 701. Credit for production of re-refined lubricating oil.
Sec. 702. 5-year net operating loss carryback for losses attributable 
                            to operating mineral interests of 
                            independent oil and gas producers.
Sec. 703. Deduction for delay rental payments.
Sec. 704. Election to expense geological and geophysical expenditures.
Sec. 705. Elimination of limitation based on 65 percent of taxable 
                            income.
Sec. 706. Taxable income limit on percentage depletion for marginal 
                            production.
                 TITLE VIII--RENEWABLE POWER GENERATION

Sec. 801. Modifications to credit for electricity produced from 
                            renewable resources.
Sec. 802. Credit for capital costs of qualified biomass-based 
                            generating system.
Sec. 803. Treatment of facilities using bagasse to produce energy as 
                            solid waste disposal facilities eligible 
                            for tax-exempt financing.
                         TITLE IX--STEELMAKING

Sec. 901. Credit for investment in energy-efficient steelmaking 
                            facilities.
Sec. 902. Extension of credit for electricity to production from steel 
                            cogeneration.
                          TITLE X--AGRICULTURE

Sec. 1001. Agricultural conservation tax credit.

          TITLE I--ENERGY-EFFICIENT PROPERTY USED IN BUSINESS

SEC. 101. CREDIT FOR CERTAIN ENERGY-EFFICIENT PROPERTY USED IN 
              BUSINESS.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
(relating to rules for computing investment credit) is amended by 
inserting after section 48 the following:

``SEC. 48A. ENERGY CREDIT.

    ``(a) In General.--For purposes of section 46, the energy credit 
for any taxable year is the sum of--
            ``(1) the amount equal to the energy percentage of the 
        basis of each energy property placed in service during such 
        taxable year, and
            ``(2) the credit amount for each qualified hybrid vehicle 
        placed in service during the taxable year.
    ``(b) Energy Percentage.--
            ``(1) In general.--The energy percentage is--
                    ``(A) except as otherwise provided in this 
                subparagraph, 10 percent,
                    ``(B) in the case of energy property described in 
                clauses (i), (iii), (vi), and (vii) of subsection 
                (c)(1)(A), 20 percent,
                    ``(C) in the case of energy property described in 
                subsection (c)(1)(A)(v), 15 percent, and
                    ``(D) in the case of energy property described in 
                subsection (c)(1)(A)(ii) relating to a high risk 
                geothermal well, 20 percent.
            ``(2) Coordination with rehabilitation.--The energy 
        percentage shall not apply to that portion of the basis of any 
        property which is attributable to qualified rehabilitation 
        expenditures.
    ``(c) Energy Property Defined.--
            ``(1) In general.--For purposes of this subpart, the term 
        `energy property' means any property--
                    ``(A) which is--
                            ``(i) solar energy property,
                            ``(ii) geothermal energy property,
                            ``(iii) energy-efficient building property,
                            ``(iv) combined heat and power system 
                        property,
                            ``(v) low core loss distribution 
                        transformer property,
                            ``(vi) qualified anaerobic digester 
                        property, or
                            ``(vii) qualified wind energy systems 
                        equipment property,
                    ``(B)(i) the construction, reconstruction, or 
                erection of which is completed by the taxpayer, or
                    ``(ii) which is acquired by the taxpayer if the 
                original use of such property commences with the 
                taxpayer,
                    ``(C) which can reasonably be expected to remain in 
                operation for at least 5 years,
                    ``(D) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable, and
                    ``(E) which meets the performance and quality 
                standards (if any) which--
                            ``(i) have been prescribed by the Secretary 
                        by regulations (after consultation with the 
                        Secretary of Energy), and
                            ``(ii) are in effect at the time of the 
                        acquisition of the property.
            ``(2) Exceptions.--
                    ``(A) Public utility property.--Such term shall not 
                include any property which is public utility property 
                (as defined in section 46(f)(5) as in effect on the day 
                before the date of the enactment of the Revenue 
                Reconciliation Act of 1990), except for property 
                described in paragraph (1)(A)(iv).
                    ``(B) Certain wind equipment.--Such term shall not 
                include equipment described in paragraph (1)(A)(vii) 
                which is taken into account for purposes of section 45 
                for the taxable year.
    ``(d) Definitions Relating to Types of Energy Property.--For 
purposes of this section--
            ``(1) Solar energy property.--
                    ``(A) In general.--The term `solar energy property' 
                means equipment which uses solar energy to generate 
                electricity, to heat or cool (or provide hot water for 
                use in) a structure, or to provide solar process heat.
                    ``(B) Swimming pools, etc., used as storage 
                medium.--The term `solar energy property' shall not 
                include property with respect to which expenditures are 
                properly allocable to a swimming pool, hot tub, or any 
                other energy storage medium which has a function other 
                than the function of such storage.
                    ``(C) Solar panels.--No solar panel or other 
                property installed as a roof (or portion thereof) shall 
                fail to be treated as solar energy property solely 
                because it constitutes a structural component of the 
                structure on which it is installed.
            ``(2) Geothermal energy property.--
                    ``(A) In general.--The term `geothermal energy 
                property' means equipment used to produce, distribute, 
                or use energy derived from a geothermal deposit (within 
                the meaning of section 613(e)(2)), but only, in the 
                case of electricity generated by geothermal power, up 
                to (but not including) the electrical transmission 
                stage.
                    ``(B) High risk geothermal well.--The term `high 
                risk geothermal well' means a geothermal deposit 
                (within the meaning of section 613(e)(2)) which 
                requires high risk drilling techniques. Such deposit 
                may not be located in a State or national park or in an 
                area in which the relevant State park authority or the 
                National Park Service determines the development of 
                such a deposit will negatively impact on a State or 
                national park.
            ``(3) Energy-efficient building property.--
                    ``(A) In general.--The term `energy-efficient 
                building property' means--
                            ``(i) a fuel cell that--
                                    ``(I) generates electricity and 
                                heat using an electrochemical process,
                                    ``(II) has an electricity-only 
                                generation efficiency greater than 35 
                                percent, and
                                    ``(III) has a minimum generating 
                                capacity of 5 kilowatts,
                            ``(ii) an electric heat pump hot water 
                        heater that yields an energy factor of 1.7 or 
                        greater under standards prescribed by the 
                        Secretary of Energy,
                            ``(iii) an electric heat pump that has a 
                        heating system performance factor (HSPF) of 9 
                        or greater and a cooling seasonal energy 
                        efficiency ratio (SEER) of 13.5 or greater,
                            ``(iv) a natural gas heat pump that has a 
                        coefficient of performance of not less than 
                        1.25 for heating and not less than 0.60 for 
                        cooling,
                            ``(v) a central air conditioner that has a 
                        cooling seasonal energy efficiency ratio (SEER) 
                        of 13.5 or greater,
                            ``(vi) an advanced natural gas water heater 
                        that--
                                    ``(I) increases steady state 
                                efficiency and reduces standby and vent 
                                losses, and
                                    ``(II) has an energy factor of at 
                                least 0.65,
                            ``(vii) an advanced natural gas furnace 
                        that achieves a 95 percent AFUE, and
                            ``(viii) natural gas cooling equipment--
                                    ``(I) that has a coefficient of 
                                performance of not less than .60, or
                                    ``(II) that uses desiccant 
                                technology and has an efficiency rating 
                                of 40 percent.
                    ``(B) Limitations.--The credit under subsection 
                (a)(1) for the taxable year may not exceed--
                            ``(i) $500 in the case of property 
                        described in subparagraph (A) other than 
                        clauses (i) and (iv) thereof,
                            ``(ii) $500 for each kilowatt of capacity 
                        in the case of a fuel cell described in 
                        subparagraph (A)(i), and
                            ``(iii) $1,000 in the case of a natural gas 
                        heat pump described in subparagraph (A)(iv).
            ``(4) Combined heat and power system property.--
                    ``(A) In general.--The term `combined heat and 
                power system property' means property--
                            ``(i) comprising a system for using the 
                        same energy source for the sequential 
                        generation of electrical power, mechanical 
                        shaft power, or both, in combination with 
                        steam, heat, or other forms of useful energy,
                            ``(ii) that has an electrical capacity of 
                        more than 50 kilowatts, and
                            ``(iii) that produces at least 20 percent 
                        of its total useful energy in the form of both 
thermal energy and electrical or mechanical power.
                    ``(B) Accounting rule for public utility 
                property.--In the case that combined heat and power 
                system property is public utility property (as defined 
                in section 46(f)(5) as in effect on the day before the 
                date of the enactment of the Revenue Reconciliation Act 
                of 1990), the taxpayer may only claim the credit under 
                subsection (a)(1) if, with respect to such property, 
                the taxpayer uses a normalization method of accounting.
            ``(5) Low core loss distribution transformer property.--The 
        term `low core loss distribution transformer property' means a 
        distribution transformer which has energy savings from a highly 
        efficient core of at least 20 percent more than the average for 
        power ratings reported by studies required under section 124 of 
        the Energy Policy Act of 1992.
            ``(6) Qualified anaerobic digester property.--The term 
        `qualified anaerobic digester property' means an anaerobic 
        digester for manure or crop waste that achieves at least 65 
        percent efficiency measured in terms of the fraction of energy 
        input converted to electricity and useful thermal energy.
            ``(7) Qualified wind energy systems equipment property.--
        The term `qualified wind energy systems equipment property' 
        means wind energy systems equipment with a turbine size of not 
        more than 50 kilowatts rated capacity.
    ``(e) Qualified Hybrid Vehicles.--For purposes of subsection 
(a)(2)--
            ``(1) Credit amount.--
                    ``(A) In general.--The credit amount for each 
                qualified hybrid vehicle with a rechargeable energy 
                storage system that provides the applicable percentage 
                of the maximum available power shall be the amount 
                specified in the following table:
      

------------------------------------------------------------------------
               ``Applicable percentage
------------------------------------------------------ Credit amount is:
    Greater than or equal to--         Less than--
------------------------------------------------------------------------
5 percent.........................      10 percent            $500
10 percent........................      20 percent           $1,000
20 percent........................      30 percent           $1,500
30 percent........................                           $2,000
------------------------------------------------------------------------

                    ``(B) Increase in credit amount for regenerative 
                braking system.--In the case of a qualified hybrid 
                vehicle that actively employs a regenerative braking 
                system which supplies to the rechargeable energy 
                storage system the applicable percentage of the energy 
                available from braking in a typical 60 miles per hour 
                to 0 miles per hour braking event, the credit amount 
                determined under subparagraph (A) shall be increased by 
                the amount specified in the following table:
      

------------------------------------------------------------------------
               ``Applicable percentage
------------------------------------------------------   Credit amount
    Greater than or equal to--         Less than--        increase is:
------------------------------------------------------------------------
20 percent........................      40 percent            $250
40 percent........................      60 percent            $500
60 percent........................                           $1,000
------------------------------------------------------------------------

            ``(2) Qualified hybrid vehicle.--The term `qualified hybrid 
        vehicle, means an automobile that meets all applicable 
        regulatory requirements and that can draw propulsion energy 
        from both of the following on-board sources of stored energy:
                    ``(A) A consumable fuel.
                    ``(B) A rechargeable energy storage system.
            ``(3) Maximum available power.--The term `maximum available 
        power' means the maximum value of the sum of the heat engine 
        and electric drive system power or other non-heat energy 
        conversion devices available for a driver's command for maximum 
        acceleration at vehicle speeds under 75 miles per hour.
            ``(4) Automobile.--The term `automobile' has the meaning 
        given such term by section 4064(b)(1) (without regard to 
        subparagraphs (B) and (C) thereof). A vehicle shall not fail to 
        be treated as an automobile solely by reason of weight if such 
        vehicle is rated at 8,500 pounds gross vehicle weight rating or 
        less.
            ``(5) Double benefit; property used outside united states, 
        etc., not qualified.--No credit shall be allowed under 
        subsection (a)(2) with respect to--
                    ``(A) any property for which a credit is allowed 
                under section 25B or 30,
                    ``(B) any property referred to in section 50(b), 
                and
                    ``(C) the portion of the cost of any property taken 
                into account under section 179 or 179A.
            ``(6) Regulations.--
                    ``(A) Treasury.--The Secretary shall prescribe such 
                regulations as may be necessary or appropriate to carry 
                out the purposes of this subsection.
                    ``(B) Environmental protection agency.--The 
                Administrator of the Environmental Protection Agency 
                shall prescribe such regulations as may be necessary or 
                appropriate to specify the testing and calculation 
                procedures that would be used to determine whether a 
                vehicle meets the qualifications for a credit under 
                this subsection.
            ``(7) Termination.--Paragraph (2) shall not apply with 
        respect to any vehicle placed in service during a calendar year 
        ending before January 1, 2003, or after December 31, 2006.
    ``(f) Special Rules.--For purposes of this section--
            ``(1) Special rule for property financed by subsidized 
        energy financing or industrial development bonds.--
                    ``(A) Reduction of basis.--For purposes of applying 
                the energy percentage to any property, if such property 
                is financed in whole or in part by--
                            ``(i) subsidized energy financing, or
                            ``(ii) the proceeds of a private activity 
                        bond (within the meaning of section 141) the 
                        interest on which is exempt from tax under 
                        section 103,
                the amount taken into account as the basis of such 
                property shall not exceed the amount which (but for 
                this subparagraph) would be so taken into account 
                multiplied by the fraction determined under 
                subparagraph (B).
                    ``(B) Determination of fraction.--For purposes of 
                subparagraph (A), the fraction determined under this 
                subparagraph is 1 reduced by a fraction--
                            ``(i) the numerator of which is that 
                        portion of the basis of the property which is 
                        allocable to such financing or proceeds, and
                            ``(ii) the denominator of which is the 
                        basis of the property.
                    ``(C) Subsidized energy financing.--For purposes of 
                subparagraph (A), the term `subsidized energy 
                financing' means financing provided under a Federal, 
                State, or local program a principal purpose of which is 
                to provide subsidized financing for projects designed 
                to conserve or produce energy.
            ``(2) Certain progress expenditure rules made applicable.--
        Rules similar to the rules of subsections (c)(4) and (d) of 
        section 46 (as in effect on the day before the date of the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this section.
    ``(g) Application of Section.--
            ``(1) In general.--Except as provided by paragraph (2) and 
        subsection (e), this section shall apply to property placed in 
        service after December 31, 1999, and before January 1, 2004.
            ``(2) Exceptions.--
                    ``(A) Solar energy and geothermal energy 
                property.--Paragraph (1) shall not apply to solar 
                energy property or geothermal energy property.
                    ``(B) Fuel cell property.--In the case of property 
                that is a fuel cell described in subsection 
                (d)(3)(A)(i), this section shall apply to property 
                placed in service after December 31, 1999, and before 
                January 1, 2005.''
    (b) Conforming Amendments.--
            (1) Section 48 is amended to read as follows:

``SEC. 48. REFORESTATION CREDIT.

    ``(a) In General.--For purposes of section 46, the reforestation 
credit for any taxable year is 20 percent of the portion of the 
amortizable basis of any qualified timber property which was acquired 
during such taxable year and which is taken into account under section 
194 (after the application of section 194(b)(1)).
    ``(b) Definitions.--For purposes of this subpart, the terms 
`amortizable basis' and `qualified timber property' have the respective 
meanings given to such terms by section 194.''
            (2) Section 39(d) is amended by adding at the end the 
        following:
            ``(9) No carryback of energy credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the energy credit determined 
        under section 48A may be carried back to a taxable year ending 
        before the date of the enactment of section 48A.''
            (3) Section 280C is amended by adding at the end the 
        following:
    ``(d) Credit for Energy Property Expenses.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the expenses for energy property (as defined in 
        section 48A(c)) otherwise allowable as a deduction for the 
        taxable year which is equal to the amount of the credit 
        determined for such taxable year under section 48A(a).
            ``(2) Similar rule where taxpayer capitalizes rather than 
        deducts expenses.--If--
                    ``(A) the amount of the credit allowable for the 
                taxable year under section 48A (determined without 
                regard to section 38(c)), exceeds
                    ``(B) the amount allowable as a deduction for the 
                taxable year for expenses for energy property 
                (determined without regard to paragraph (1)),
        the amount chargeable to capital account for the taxable year 
        for such expenses shall be reduced by the amount of such 
        excess.
            ``(3) Controlled groups.--Paragraph (3) of subsection (b) 
        shall apply for purposes of this subsection.''
            (4) Section 29(b)(3)(A)(i)(III) is amended by striking 
        ``section 48(a)(4)(C)'' and inserting ``section 48A(f)(1)(C)''.
            (5) Section 50(a)(2)(E) is amended by striking ``section 
        48(a)(5)'' and inserting ``section 48A(f)(2)''.
            (6) Section 168(e)(3)(B) is amended--
                    (A) by striking clause (vi)(I) and inserting the 
                following:
                                    ``(I) is described in paragraph (1) 
                                or (2) of section 48A(d) (or would be 
                                so described if `solar and wind' were 
                                substituted for `solar' in paragraph 
                                (1)(B)),'', and
                    (B) in the last sentence by striking ``section 
                48(a)(3)'' and inserting ``section 48A(c)(2)(A)''.
    (c) Clerical Amendment.--The table of sections for subpart E of 
part IV of subchapter A of chapter 1 is amended by striking the item 
relating to section 48 and inserting the following:

                              ``Sec. 48. Reforestation credit.
                              ``Sec. 48A. Energy credit.''
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 1999, under 
rules similar to the rules of section 48(m) of the Internal Revenue 
Code of 1986 (as in effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990).

                  TITLE II--NONBUSINESS ENERGY SYSTEMS

SEC. 201. CREDIT FOR CERTAIN NONBUSINESS ENERGY SYSTEMS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
(relating to nonrefundable personal credits) is amended by inserting 
after section 25A the following:

``SEC. 25B. NONBUSINESS ENERGY PROPERTY.

    ``(a) Allowance of Credit.--
            ``(1) In general.--In the case of an individual, there 
        shall be allowed as a credit against the tax imposed by this 
        chapter for the taxable year an amount equal to the sum of--
                    ``(A) the applicable percentage of residential 
                energy property expenditures made by the taxpayer 
                during such year,
                    ``(B) the credit amount (determined under section 
                48A(e)) for each vehicle purchased during the taxable 
                year which is a qualified hybrid vehicle (as defined in 
                section 48A(e)(2)), and
                    ``(C) the credit amount specified in the following 
                table for a new, highly energy-efficient principal 
                residence:
      

----------------------------------------------------------------------------------------------------------------
       ``Column A--Description           Column B--Credit Amount                  Column C--Period
----------------------------------------------------------------------------------------------------------------
                                                                                   For the period:
           In the case of:                The credit amount is:    ---------------------------------------------
                                                                        Beginning on:            Ending on:
----------------------------------------------------------------------------------------------------------------
30 percent property.................  $1,000                         1/1/2000              12/31/2001
40 percent property.................  $1,500                         1/1/2000              12/31/2002
50 percent property.................  $2,000                         1/1/2000              12/31/2003.
----------------------------------------------------------------------------------------------------------------

        In the case of any new, highly energy-efficient principal 
        residence, the credit amount shall be zero for any period for 
        which a credit amount is not specified for such property in the 
        table under subparagraph (C).
            ``(2) Applicable percentage.--
                    ``(A) In general.--The applicable percentage shall 
                be determined in accordance with the following table:
      

----------------------------------------------------------------------------------------------------------------
       ``Column A--Description            Column B-- Applicable                   Column C--Period
-------------------------------------          Percentage          ---------------------------------------------
                                     ------------------------------                For the period:
           In the case of:              The applicable percentage  ---------------------------------------------
                                                   is:                  Beginning on:            Ending on:
----------------------------------------------------------------------------------------------------------------
20 percent energy-efficient building  20 percent                     1/1/2000              12/31/2003
 property...........................
10 percent energy-efficient building  10 percent                     1/1/2000              12/31/2001
 property...........................
Solar water heating property........  15 percent                     1/1/2000              12/31/2006
Photovoltaic property...............  15 percent                     1/1/2000              12/31/2006.
----------------------------------------------------------------------------------------------------------------

                    ``(B) Periods for which percentage not specified.--
                In the case of any residential energy property, the 
                applicable percentage shall be zero for any period for 
                which an applicable percentage is not specified for 
                such property under subparagraph (A).
    ``(b) Maximum Credit.--
            ``(1) In general.--In the case of property described in the 
        following table, the amount of the credit allowed under 
        subsection (a)(1)(A) for the taxable year for each item of such 
        property with respect to a dwelling unit shall not exceed the 
        amount specified for such property in such table:

      

------------------------------------------------------------------------
  ``Description of property item:    Maximum allowable credit amount is:
------------------------------------------------------------------------
20 percent energy-efficient             $500.
 building property (other than a
 fuel cell or natural gas heat
 pump).
20 percent energy-efficient         ....................................
 building property:
  fuel cell described in section        $500 per each kw/hr of capacity.
   48A(d)(3)(A)(i).
  natural gas heat pump described       $1,000.
   in section 48A(d)(3)(D)(iv).
10 percent energy-efficient             $250.
 building property.
Solar water heating property......      $1,000.
Photovoltaic property.............      $2,000.
------------------------------------------------------------------------

            ``(2) Coordination of limitations.--If a credit is allowed 
        to the taxpayer for any taxable year by reason of an 
        acquisition of a new, highly energy-efficient principal 
        residence, no other credit shall be allowed under subsection 
        (a)(1)(A) with respect to such residence during the 1-taxable 
        year period beginning with such taxable year.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Residential Energy Property Expenditures.--The term 
        `residential energy property expenditures' means expenditures 
        made by the taxpayer for qualified energy property installed on 
        or in connection with a dwelling unit which--
                    ``(A) is located in the United States, and
                    ``(B) is used by the taxpayer as a residence.
        Such term includes expenditures for labor costs properly 
        allocable to the onsite preparation, assembly, or original 
        installation of the property.
            ``(2) Qualified energy property.--
                    ``(A) In general.--The term `qualified energy 
                property' means--
                            ``(i) energy-efficient building property,
                            ``(ii) solar water heating property, and
                            ``(iii) photovoltaic property.
                    ``(B) Swimming pool, etc., used as storage medium; 
                solar panels.--For purposes of this paragraph, the 
                provisions of subparagraphs (B) and (C) of section 
                48A(d)(1) shall apply.
            ``(3) Energy-efficient building property.--The term 
        `energy-efficient building property' has the meaning given to 
        such term by section 48A(e)(3).
            ``(4) Solar water heating property.--The term `solar water 
        heating property' means property which, when installed in 
        connection with a structure, uses solar energy for the purpose 
        of providing hot water for use within such structure.
            ``(5) Photovoltaic property.--The term `photovoltaic 
        property' means property which, when installed in connection 
        with a structure, uses a solar photovoltaic process to generate 
        electricity for use in such structure.
            ``(6) New, highly energy-efficient principal residence.--
                    ``(A) In general.--Property is a new, highly 
                energy-efficient principal residence if--
                            ``(i) such property is located in the 
                        United States,
                            ``(ii) the original use of such property 
                        commences with the taxpayer and is, at the time 
                        of such use, the principal residence of the 
                        taxpayer, and
                            ``(iii) such property is certified before 
                        such use commences as being 50 percent 
                        property, 40 percent property, or 30 percent 
                        property.
                    ``(B) 50, 40, or 30 percent property.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), property is 50 percent 
                        property, 40 percent property, or 30 percent 
                        property if the projected energy usage of such 
                        property is reduced by 50 percent, 40 percent, 
                        or 30 percent, respectively, compared to the 
                        energy usage of a reference house that complies 
                        with minimum standard practice, such as the 
                        1998 International Energy Conservation Code of 
                        the International Code Council, as determined 
                        according to the requirements specified in 
                        clause (ii).
                            ``(ii) Procedures.--
                                    ``(I) In general.--For purposes of 
                                clause (i), energy usage shall be 
                                demonstrated either by a component-
                                based approach or a performance-based 
                                approach.
                                    ``(II) Component approach.--
                                Compliance by the component approach is 
                                achieved when all of the components of 
                                the house comply with the requirements 
                                of prescriptive packages established by 
                                the Secretary of Energy, in 
                                consultation with the Administrator of 
                                the Environmental Protection Agency, 
                                such that they are equivalent to the 
                                results of using the performance-based 
                                approach of subclause (III) to achieve 
                                the required reduction in energy usage.
                                    ``(III) Performance-based 
                                approach.--Performance-based compliance 
                                shall be demonstrated in terms of the 
                                required percentage reductions in 
                                projected energy use. Computer software 
                                used in support of performance-based 
                                compliance must meet all of the 
                                procedures and methods for calculating 
                                energy savings reductions that are 
                                promulgated by the Secretary of Energy. 
                                Such regulations on the specifications 
                                for software shall be based in the 1998 
                                California Residential Alternative 
                                Calculation Method Approval Manual, 
                                except that the calculation procedures 
                                shall be developed such that the same 
                                energy efficiency measures qualify a 
                                home for tax credits regardless of 
                                whether the home uses a gas or oil 
                                furnace or boiler, or an electric heat 
                                pump.
                                    ``(IV) Approval of software 
                                submissions.--The Secretary of Energy 
                                shall approve software submissions that 
                                comply with the calculation 
                                requirements of subclause (III).
                    ``(C) Determinations of compliance.--A 
                determination of compliance made for the purposes of 
                this paragraph shall be filed with the Secretary of 
                Energy within 1 year of the date of such determination 
                and shall include the TIN of the certifier, the address 
                of the building in compliance, and the identity of the 
                person for whom such determination was performed. 
                Determinations of compliance filed with the Secretary 
                of Energy shall be available for inspection by the 
                Secretary.
                    ``(D) Compliance.--
                            ``(i) In general.--The Secretary of Energy 
                        in consultation with the Secretary of the 
                        Treasury shall establish requirements for 
                        certification and compliance procedures after 
                        examining the requirements for energy 
                        consultants and home energy ratings providers 
                        specified by the Mortgage Industry National 
                        Accreditation Procedures for Home Energy Rating 
                        Systems.
                            ``(ii) Individuals qualified to determine 
                        compliance.--Individuals qualified to determine 
                        compliance shall be only those individuals who 
                        are recognized by an organization certified by 
                        the Secretary of Energy for such purposes.
                    ``(E) Principal residence.--The term `principal 
                residence' has the same meaning as when used in section 
                121, except that the period for which a building is 
                treated as the principal residence of the taxpayer 
                shall also include the 60-day period ending on the 1st 
                day on which it would (but for this subparagraph) first 
                be treated as the taxpayer's principal residence.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Dollar amounts in case of joint occupancy.--In the 
        case of any dwelling unit which if jointly occupied and used 
        during any calendar year as a residence by 2 or more 
        individuals the following shall apply:
                    ``(A) The amount of the credit allowable under 
                subsection (a) by reason of expenditures made during 
                such calendar year by any of such individuals with 
                respect to such dwelling unit shall be determined by 
                treating all of such individuals as 1 taxpayer whose 
                taxable year is such calendar year.
                    ``(B) There shall be allowable with respect to such 
                expenditures to each of such individuals, a credit 
                under subsection (a) for the taxable year in which such 
                calendar year ends in an amount which bears the same 
                ratio to the amount determined under subparagraph (A) 
                as the amount of such expenditures made by such 
                individual during such calendar year bears to the 
                aggregate of such expenditures made by all of such 
                individuals during such calendar year.
            ``(2) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in section 216) in a cooperative 
        housing corporation (as defined in such section), such 
        individual shall be treated as having made his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of any expenditures of such corporation.
            ``(3) 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 the individual 
                owns, such individual shall be treated as having made 
                his proportionate share of any expenditures of such 
                association.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `condominium 
                management association' means an organization which 
                meets the requirements of paragraph (1) of section 
                528(c) (other than subparagraph (E) thereof) with 
                respect to a condominium project substantially all of 
the units of which are used as residences.
            ``(4) Joint ownership of energy items.--
                    ``(A) In general.--Any expenditure otherwise 
                qualifying as a residential energy property expenditure 
                shall not be treated as failing to so qualify merely 
                because such expenditure was made with respect to 2 or 
                more dwelling units.
                    ``(B) Limits applied separately.--In the case of 
                any expenditure described in subparagraph (A), the 
                amount of the credit allowable under subsection (a) 
                shall (subject to paragraph (1)) be computed separately 
                with respect to the amount of the expenditure made for 
                each dwelling unit.
            ``(5) Allocation in certain cases.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), if less than 80 percent of the use of 
                an item is for nonbusiness purposes, only that portion 
                of the expenditures for such item which is properly 
                allocable to use for nonbusiness purposes shall be 
                taken into account. For purposes of this paragraph, use 
                for a swimming pool shall be treated as use which is 
                not for nonbusiness purposes.
                    ``(B) Special rule for vehicles.--For purposes of 
                this section and section 48A, a vehicle shall be 
                treated as used entirely for business or nonbusiness 
                purposes if the majority of the use of such vehicle is 
                for business or nonbusiness purposes, as the case may 
                be.
            ``(6) Double benefit; property used outside United States, 
        etc., not qualified.--No credit shall be allowed under 
        subsection (a)(1)(B) with respect to--
                    ``(A) any property for which a credit is allowed 
                under section 30 or 48A,
                    ``(B) any property referred to in section 50(b), 
                and
                    ``(C) the portion of the cost of any property taken 
                into account under section 179 or 179A.
            ``(7) When expenditure made; amount of expenditure.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), an expenditure with respect to an 
                item shall be treated as made when the original 
                installation of the item is completed.
                    ``(B) Expenditures part of building construction.--
                In the case of an expenditure in connection with the 
                construction of a structure, such expenditure shall be 
                treated as made when the original use of the 
                constructed structure by the taxpayer begins.
                    ``(C) Amount.--The amount of any expenditure shall 
                be the cost thereof.
            ``(8) Property financed by subsidized energy financing.--
                    ``(A) Reduction of expenditures.--For purposes of 
                determining the amount of residential energy property 
                expenditures made by any individual with respect to any 
                dwelling unit, there shall not be taken in to account 
                expenditures which are made from subsidized energy 
                financing (as defined in section 48A(f)(1)(C)).
                    ``(B) Dollar limits reduced.--The dollar amounts in 
                the table contained in subsection (b)(1) with respect 
                to each property purchased for such dwelling unit for 
                any taxable year of such taxpayer shall be reduced 
                proportionately by an amount equal to the sum of--
                            ``(i) the amount of the expenditures made 
                        by the taxpayer during such taxable year with 
                        respect to such dwelling unit and not taken 
                        into account by reason of subparagraph (A), and
                            ``(ii) the amount of any Federal, State, or 
                        local grant received by the taxpayer during 
                        such taxable year which is used to make 
                        residential energy property expenditures with 
                        respect to the dwelling unit and is not 
                        included in the gross income of such taxpayer.
            ``(9) Safety certifications.--No credit shall be allowed 
        under this section for an item of property unless--
                    ``(A) in the case of solar water heating property, 
                such property is certified for performance and safety 
                by the non-profit Solar Rating Certification 
                Corporation or a comparable entity endorsed by the 
                government of the State in which such property is 
                installed, and
                    ``(B) in the case of photovoltaic property, such 
                property meets appropriate fire and electric code 
                requirements.
    ``(e) Basis Adjustments.--For purposes of this subtitle, if a 
credit is allowed under this section for any expenditure with respect 
to any property, the increase in the basis of such property which would 
(but for this subsection) result from such expenditure shall be reduced 
by the amount of the credit so allowed.''
    (b) Conforming Amendments.--
            (1) Section 1016(a) is amended by striking ``and'' at the 
        end of paragraph (26), by striking the period at the end of 
        paragraph (27) and inserting ``; and'', and by adding at the 
        end the following:
            ``(28) to the extent provided in section 25B(e), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25B.''
            (2) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 25A the following:

                              ``Sec. 25B. Nonbusiness energy 
                                        property.''
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures after December 31, 1999.

                      TITLE III--ALTERNATIVE FUELS

SEC. 301. ALLOCATION OF ALCOHOL FUELS CREDIT TO PATRONS OF A 
              COOPERATIVE.

    (a) In General.--Section 40(d) (relating to alcohol used as fuel) 
is amended by adding at the end the following:
            ``(6) Allocation of small ethanol producer credit to 
        patrons of cooperative.--
                    ``(A) In general.--In the case of a cooperative 
                organization described in section 1381(a), any portion 
                of the credit determined under subsection (a)(3) for 
                the taxable year may, at the election of the 
                organization made on a timely filed return (including 
                extensions) for such year, be apportioned pro rata 
                among patrons of the organization on the basis of the 
                quantity or value of business done with or for such 
                patrons for the taxable year. Such an election, once 
                made, shall be irrevocable for such taxable year.
                    ``(B) Treatment of organizations and patrons.--The 
                amount of the credit apportioned to patrons pursuant to 
                subparagraph (A)--
                            ``(i) shall not be included in the amount 
                        determined under subsection (a) for the taxable 
                        year of the organization, and
                            ``(ii) shall be included in the amount 
                        determined under subsection (a) for the taxable 
                        year of each patron in which the patronage 
                        dividend for the taxable year referred to in 
                        subparagraph (A) is includible in gross income.
                    ``(C) Special rule for decreasing credit for 
                taxable year.--If the amount of the credit of a 
                cooperative organization determined under subsection 
                (a)(3) for a taxable year is less than the amount of 
                such credit shown on the cooperative organization's 
                return for such year, an amount equal to the excess of 
                such reduction over the amount not apportioned to the 
                patrons under subparagraph (A) for the taxable year 
                shall be treated as an increase in tax imposed by this 
                chapter on the organization. Any such increase shall 
                not be treated as tax imposed by this chapter for 
                purposes of determining the amount of any credit under 
                this subpart or subpart A, B, E, or G of this part.''
    (b) Technical Amendment.--Section 1388 (relating to definitions and 
special rules for cooperative organizations) is amended by adding at 
the end the following:
    ``(k) Cross Reference.--

                                ``For provisions relating to the 
apportionment of the alcohol fuels credit between cooperative 
organizations and their patrons, see section 40(d)(6).''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

                         TITLE IV--AUTOMOBILES

SEC. 401. EXTENSION OF CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) Extension of Credit for Qualified Electric Vehicles.--
Subsection (f) of section 30 (relating to termination) is amended by 
striking ``December 31, 2004'' and inserting ``December 31, 2006''.
    (b) Repeal of Phaseout.--Subsection (b) of section 30 (relating to 
limitations) is amended by striking paragraph (2) and redesignating 
paragraph (3) as paragraph (2).
    (c) No Double Benefit.--
            (1) Subsection (d) of section 30 (relating to special 
        rules) is amended by adding at the end the following:
            ``(5) No double benefit.--No credit shall be allowed under 
        subsection (a) with respect to any vehicle if the taxpayer 
        claims a credit for such vehicle under section 25B(a)(1)(B) or 
        48A(a)(2).''
            (2) Paragraph (3) of section 30(d) (relating to property 
        used outside United States, etc., not qualified) is amended by 
        striking ``section 50(b)'' and inserting ``section 25B, 48A, or 
        50(b)''.
            (3) Paragraph (5) of section 179A(e) (relating to property 
        used outside United States, etc., not qualified) is amended by 
        striking ``section 50(b)'' and inserting ``section 25B, 48A, or 
        50(b)''.
    (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.

                    TITLE V--CLEAN COAL TECHNOLOGIES

SEC. 501. CREDIT FOR INVESTMENT IN QUALIFYING CLEAN COAL TECHNOLOGY.

    (a) Allowance of Qualifying Clean Coal Technology Facility 
Credit.--Section 46 (relating to amount of credit) is amended by 
striking ``and'' at the end of paragraph (2), by striking the period at 
the end of paragraph (3) and inserting ``, and'', and by adding at the 
end the following:
            ``(4) the qualifying clean coal technology facility 
        credit.''
    (b) Amount of Qualifying Clean Coal Technology Facility Credit.--
Subpart E of part IV of subchapter A of chapter 1 (relating to rules 
for computing investment credit), as amended by section 101(a), is 
amended by inserting after section 48A the following:

``SEC. 48B. QUALIFYING CLEAN COAL TECHNOLOGY FACILITY CREDIT.

    ``(a) In General.--For purposes of section 46, the qualifying clean 
coal technology facility credit for any taxable year is an amount equal 
to 10 percent of the qualified investment in a qualifying clean coal 
technology facility for such taxable year.
    ``(b) Qualifying Clean Coal Technology Facility.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `qualifying clean coal technology facility' means a facility of 
        the taxpayer--
                    ``(A)(i)(I) which replaces a conventional 
                technology facility of the taxpayer and the original 
                use of which commences with the taxpayer, or
                    ``(II) which is a retrofitted or repowered 
                conventional technology facility, the retrofitting or 
                repowering of which is completed by the taxpayer (but 
                only with respect to that portion of the basis which is 
                properly attributable to such retrofitting or 
                repowering), or
                    ``(ii) that is acquired through purchase (as 
                defined by section 179(d)(2)),
                    ``(B) that is depreciable under section 167,
                    ``(C) that has a useful life of not less than 4 
                years,
                    ``(D) that is located in the United States, and
                    ``(E) that uses qualifying clean coal technology.
            ``(2) Special rule for sale-leasebacks.--For purposes of 
        subparagraph (A) of paragraph (1), in the case of a facility 
        that--
                    ``(A) is originally placed in service by a person, 
                and
                    ``(B) is sold and leased back by such person, or is 
                leased to such person, within 3 months after the date 
                such facility was originally placed in service, for a 
                period of not less than 12 years,
        such facility shall be treated as originally placed in service 
        not earlier than the date on which such property is used under 
        the leaseback (or lease) referred to in subparagraph (B). The 
        preceding sentence shall not apply to any property if the 
        lessee and lessor of such property make an election under this 
        sentence. Such an election, once made, may be revoked only with 
        the consent of the Secretary.
            ``(3) Qualifying clean coal technology.--For purposes of 
        paragraph (1)(A)--
                    ``(A) In general.--The term `qualifying clean coal 
                technology' means, with respect to clean coal 
                technology--
                            ``(i) applications totaling 1,000 megawatts 
                        of advanced pulverized coal or atmospheric 
                        fluidized bed combustion technology installed 
                        as a new, retrofit, or repowering application 
                        and operated between 2000 and 2014 that has a 
                        design average net heat rate of not more than 
                        8,750 Btu's per kilowatt hour,
                            ``(ii) applications totaling 1,500 
                        megawatts of pressurized fluidized bed 
                        combustion technology installed as a new, 
                        retrofit, or repowering application and 
                        operated between 2000 and 2014 that has a 
                        design average net heat rate of not more than 
                        8,400 Btu's per kilowatt hour,
                            ``(iii) applications totaling 1,500 
                        megawatts of integrated gasification combined 
                        cycle technology installed as a new, retrofit, 
                        or repowering application and operated between 
                        2000 and 2014 that has a design average net 
                        heat rate of not more than 8,550 Btu's per 
                        kilowatt hour, and
                            ``(iv) applications totaling 2,000 
                        megawatts or equivalent of technology for the 
                        production of electricity installed as a new, 
                        retrofit, or repowering application and 
                        operated between 2000 and 2014 that has a 
                        carbon emission rate that is not more than 85 
                        percent of conventional technology.
                    ``(B) Exceptions.--Such term shall not include 
                clean coal technology projects receiving or scheduled 
                to receive funding under the Clean Coal Technology 
                Program of the Department of Energy.
                    ``(C) Clean coal technology.--The term `clean coal 
                technology' means advanced technology that utilizes 
                coal to produce 50 percent or more of its thermal 
                output as electricity including advanced pulverized 
                coal or atmospheric fluidized bed combustion, 
                pressurized fluidized bed combustion, integrated 
                gasification combined cycle, and any other technology 
                for the production of electricity that exceeds the 
                performance of conventional technology.
                    ``(D) Conventional coal technology.--The term 
                `conventional technology' means--
                            ``(i) coal-fired combustion technology with 
                        a design average net heat rate of not less than 
                        9,300 Btu's per kilowatt hour (HHV) and a 
                        carbon equivalents emission rate of not more 
                        than 0.53 pounds of carbon per kilowatt hour; 
                        or
                            ``(ii) natural gas-fired combustion 
                        technology with a design average net heat rate 
                        of not less than 7,500 Btu's per kilowatt hour 
                        (HHV) and a carbon equivalents emission rate of 
                        not more than 0.24 pound of carbon per kilowatt 
                        hour.
                    ``(E) Design average net heat rate.--The term 
                `design average net heat rate' shall be based on the 
                design average annual heat input to and the design 
                average annual net electrical output from the 
                qualifying clean coal technology (determined without 
                regard to such technology's co-generation of steam).
                    ``(F) Selection criteria.--Selection criteria for 
                clean coal technology facilities--
                            ``(i) shall be established by the Secretary 
                        of Energy as part of a competitive 
                        solicitation,
                            ``(ii) shall include primary criteria of 
                        minimum design average net heat rate, maximum 
                        design average thermal efficiency, and lowest 
                        cost to the government, and
                            ``(iii) shall include supplemental criteria 
                        as determined appropriate by the Secretary of 
                        Energy.
    ``(c) Qualified Investment.--For purposes of subsection (a), the 
term `qualified investment' means, with respect to any taxable year, 
the basis of a qualifying clean coal technology facility placed in 
service by the taxpayer during such taxable year.
    ``(d) Qualified Progress Expenditures.--
            ``(1) Increase in qualified investment.--In the case of a 
        taxpayer who has made an election under paragraph (5), the 
        amount of the qualified investment of such taxpayer for the 
        taxable year (determined under subsection (c) without regard to 
        this section) shall be increased by an amount equal to the 
aggregate of each qualified progress expenditure for the taxable year 
with respect to progress expenditure property.
            ``(2) Progress expenditure property defined.--For purposes 
        of this subsection, the term `progress expenditure property' 
        means any property being constructed by or for the taxpayer and 
        which it is reasonable to believe will qualify as a qualifying 
        clean coal technology facility which is being constructed by or 
        for the taxpayer when it is placed in service.
            ``(3) Qualified progress expenditures defined.--For 
        purposes of this subsection--
                    ``(A) Self-constructed property.--In the case of 
                any self-constructed property, the term `qualified 
                progress expenditures' means the amount which, for 
                purposes of this subpart, is properly chargeable 
                (during such taxable year) to capital account with 
                respect to such property.
                    ``(B) Non-self-constructed property.--In the case 
                of non-self-constructed property, the term `qualified 
                progress expenditures' means the amount paid during the 
                taxable year to another person for the construction of 
                such property.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) Self-constructed property.--The term `self-
                constructed property' means property for which it is 
                reasonable to believe that more than half of the 
                construction expenditures will be made directly by the 
                taxpayer.
                    ``(B) Non-self-constructed property.--The term 
                `non-self-constructed property' means property which is 
                not self-constructed property.
                    ``(C) Construction, etc.--The term `construction' 
                includes reconstruction and erection, and the term 
                `constructed' includes reconstructed and erected.
                    ``(D) Only construction of qualifying clean coal 
                technology facility to be taken into account.--
                Construction shall be taken into account only if, for 
                purposes of this subpart, expenditures therefor are 
                properly chargeable to capital account with respect to 
                the property.
            ``(5) Election.--An election under this subsection may be 
        made at such time and in such manner as the Secretary may by 
        regulations prescribe. Such an election shall apply to the 
        taxable year for which made and to all subsequent taxable 
        years. Such an election, once made, may not be revoked except 
        with the consent of the Secretary.
    ``(e) Coordination with other credits.--This section shall not 
apply to any property with respect to which the rehabilitation credit 
under section 47 or the energy credit under section 48A is allowed 
unless the taxpayer elects to waive the application of such credit to 
such property.
    ``(f) Termination.--This section shall not apply with respect to 
any qualified investment after December 31, 2014.''
    (c) Recapture.--Section 50(a) (relating to other special rules) is 
amended by adding at the end the following:
            ``(6) Special rules relating to qualifying clean coal 
        technology facility.--For purposes of applying this subsection 
        in the case of any credit allowable by reason of section 48B, 
        the following shall apply:
                    ``(A) General rule.--In lieu of the amount of the 
                increase in tax under paragraph (1), the increase in 
                tax shall be an amount equal to the investment tax 
                credit allowed under section 38 for all prior taxable 
                years with respect to a qualifying clean coal 
                technology facility (as defined by section 48B(b)(1)) 
                multiplied by a fraction whose numerator is the number 
                of years remaining to fully depreciate under this title 
                the qualifying clean coal technology facility disposed 
                of, and whose denominator is the total number of years 
                over which such facility would otherwise have been 
                subject to depreciation. For purposes of the preceding 
                sentence, the year of disposition of the qualifying 
                clean coal technology facility property shall be 
                treated as a year of remaining depreciation.
                    ``(B) Property ceases to qualify for progress 
                expenditures.--Rules similar to the rules of paragraph 
                (2) shall apply in the case of qualified progress 
                expenditures for a qualifying clean coal technology 
                facility under section 48B, except that the amount of 
                the increase in tax under subparagraph (A) of 
this paragraph shall be substituted in lieu of the amount described in 
such paragraph (2).
                    ``(C) Application of paragraph.--This paragraph 
                shall be applied separately with respect to the credit 
                allowed under section 38 regarding a qualifying clean 
                coal technology facility.''
    (d) Transitional Rule.--Section 39(d) of the Internal Revenue Code 
of 1986 (relating to transitional rules), as amended by section 
101(b)(2), is amended by adding at the end the following:
            ``(10) No carryback of section 48B credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying clean coal 
        technology facility credit determined under section 48B may be 
        carried back to a taxable year ending before the date of the 
        enactment of section 48B.''
    (e) Technical Amendments.--
            (1) Section 49(a)(1)(C) is amended by striking ``and'' at 
        the end of clause (ii), by striking the period at the end of 
        clause (iii) and inserting ``, and'', and by adding at the end 
        the following:
                            ``(iv) the portion of the basis of any 
                        qualifying clean coal technology facility 
                        attributable to any qualified investment (as 
                        defined by section 48B(c)).''
            (2) Section 50(a)(4) is amended by striking ``and (2)'' and 
        inserting ``, (2), and (6)''.
            (3) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1, as amended by section 101(d), is 
        amended by inserting after the item relating to section 48A the 
        following:

                              ``Sec. 48B. Qualifying clean coal 
                                        technology facility credit.''
    (f) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 1999, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 502. CREDIT FOR PRODUCTION FROM QUALIFYING CLEAN COAL TECHNOLOGY.

    (a) Credit for Production From Qualifying Clean Coal Technology.--
Subpart D of part IV of subchapter A of chapter 1 (relating to business 
related credits) is amended by adding at the end the following:

``SEC. 45D. CREDIT FOR PRODUCTION FROM QUALIFYING CLEAN COAL 
              TECHNOLOGY.

    ``(a) General Rule.--For purposes of section 38, the qualifying 
clean coal technology production credit of any taxpayer for any taxable 
year is equal to the applicable amount for each kilowatt hour--
            ``(1) produced by the taxpayer at a qualifying clean coal 
        technology facility during the 10-year period beginning on the 
        date the facility was originally placed in service, and
            ``(2) sold by the taxpayer to an unrelated person during 
        such taxable year.
    ``(b) Applicable amount.--For purposes of this section, the 
applicable amount with respect to production from a qualifying clean 
coal technology facility shall be determined as follows:
            ``(1) In the case of a facility originally placed in 
        service before 2007, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
    ``The facility design    -------------------------------------------
 average net heat rate, Btu/   For 1st 5 years of     For 2d 5 years of
   kWh (HHV) is equal to:         such service          such service
------------------------------------------------------------------------
Not more than 8400..........         $.0130                $.0110
More than 8400 but not more          $.0100                $.0085
 than 8550.
More than 8550 but not more          $.0090                $.0070.
 than 8750.
------------------------------------------------------------------------

            ``(2) In the case of a facility originally placed in 
        service after 2006 and before 2011, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
    ``The facility design    -------------------------------------------
 average net heat rate, Btu/   For 1st 5 years of     For 2d 5 years of
   kWh (HHV) is equal to:         such service          such service
------------------------------------------------------------------------
Not more than 7770..........         $.0100                $.0080
More than 7770 but not more          $.0080                $.0065
 than 8125.
More than 8125 but not more          $.0070                $.0055.
 than 8350.
------------------------------------------------------------------------

            ``(3) In the case of a facility originally placed in 
        service after 2010 and before 2015, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
    ``The facility design    -------------------------------------------
 average net heat rate, Btu/   For 1st 5 years of     For 2d 5 years of
   kWh (HHV) is equal to:         such service          such service
------------------------------------------------------------------------
Not more than 7720..........         $.0085                $.0070
More than 7720 but not more          $.0070                $.0045.
 than 7380.
------------------------------------------------------------------------

    ``(c) Inflation Adjustment Factor.--Each amount in paragraphs (1), 
(2), and (3) shall each be adjusted by multiplying such amount by the 
inflation adjustment factor for the calendar year in which the amount 
is applied. If any amount as increased under the preceding sentence is 
not a multiple of 0.01 cent, such amount shall be rounded to the 
nearest multiple of 0.01 cent.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) any term used in this section which is also used in 
        section 48B shall have the meaning given such term in section 
        48B,
            ``(2) the rules of paragraphs (3), (4), and (5) of section 
        45 shall apply,
            ``(3) the term `inflation adjustment factor' means, with 
        respect to a calendar year, a fraction the numerator of which 
        is the GDP implicit price deflator for the preceding calendar 
        year and the denominator of which is the GDP implicit price 
        deflator for the calendar year 1998, and
            ``(4) the term `GDP implicit price deflator' means the most 
        recent revision of the implicit price deflator for the gross 
        domestic product as computed by the Department of Commerce 
        before March 15 of the calendar year.''
    (b) Credit Treated as Business Credit.--Section 38(b) is amended by 
striking ``plus'' at the end of paragraph (11), by striking the period 
at the end of paragraph (12) and inserting ``, plus'', and by adding at 
the end the following:
            ``(13) the qualifying clean coal technology production 
        credit determined under section 45D(a).''
    (c) Transitional Rule.--Section 39(d) (relating to transitional 
rules), as amended by section 501(d), is amended by adding at the end 
the following:
            ``(11) No carryback of certain credits before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the credits allowable under any 
        section added to this subpart by the amendments made by the 
        Energy Security Tax Act of 1999 may be carried back to a 
        taxable year ending before the date of the enactment of such 
        Act.''
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following:

                              ``Sec. 45D. Credit for production from 
                                        qualifying clean coal 
                                        technology.''
    (e) Effective Date.--The amendments made by this section shall 
apply to production after the date of the enactment of this Act.

SEC. 503. RISK POOL FOR QUALIFYING CLEAN COAL TECHNOLOGY.

    (a) Establishment.--The Secretary of the Treasury shall establish a 
financial risk pool which shall be available to any United States owner 
of qualifying clean coal technology (as defined in section 48B(b)(3) of 
the Internal Revenue Code of 1986) to offset for the first 3 three 
years of the operation of such technology the costs (not to exceed 5 
percent of the total cost of installation) for modifications resulting 
from the technology's failure to achieve its design performance.
    (b) Authorization of Appropriations.--There is authorized to be 
appropriated such sums as are necessary to carry out the purposes of 
this section.

                       TITLE VI--METHANE RECOVERY

SEC. 601. CREDIT FOR CAPTURE OF COALBED METHANE GAS.

    (a) Credit for Capture of Coalbed Methane Gas.--Subpart D of part 
IV of subchapter A of chapter 1 (relating to business related credits), 
as amended by section 502(a), is amended by adding at the end the 
following:

``SEC. 45E. CREDIT FOR CAPTURE OF COALBED METHANE GAS.

    ``For purposes of section 38, the coalbed methane gas capture 
credit of any taxpayer for any taxable year is $10 for each ton of 
carbon-equivalent coalbed methane gas captured by the taxpayer and sold 
by the taxpayer to an unrelated person during such taxable year (within 
the meaning of section 45).''
    (b) Credit Treated as Business Credit.--Section 38(b), as amended 
by section 502(b), is amended by striking ``plus'' at the end of 
paragraph (12), by striking the period at the end of paragraph (13) and 
inserting ``, plus'', and by adding at the end the following:
            ``(14) the coalbed methane gas capture credit determined 
        under section 45E(a).''
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by section 502(d), is 
amended by adding at the end the following:

                              ``Sec. 45E. Credit for capture of coalbed 
                                        methane gas.''
    (d) Effective Date.--The amendments made by this section shall 
apply to production after the date of the enactment of this Act.

                   TITLE VII--OIL AND GAS PRODUCTION

SEC. 701. CREDIT FOR PRODUCTION OF RE-REFINED LUBRICATING OIL.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits), as amended by section 601(a), 
is amended by adding at the end the following:

``SEC. 45F. CREDIT FOR PRODUCING RE-REFINED LUBRICATING OIL.

    ``(a) General Rule.--For purposes of section 38, the re-refined 
lubricating oil production credit of any taxpayer for any taxable year 
is equal to $4.05 per barrel of qualified re-refined lubricating oil 
production which is attributable to the taxpayer (within the meaning of 
section 29(d)(3)).
    ``(b) Qualified Re-Refined Lubricating Oil Production.--For 
purposes of this section--
            ``(1) In general.--The term `qualified re-refined 
        lubricating oil production' means a base oil manufactured from 
        at least 95 percent used oil and not more than 2 percent of 
        previously unused oil by a re-refining process which 
        effectively removes physical and chemical impurities and spent 
        and unspent additives to the extent that such base oil meets 
        industry standards for engine oil as defined by the American 
        Petroleum Institute document API 1509 as in effect on the date 
        of the enactment of this section.
            ``(2) Limitation on amount of production which may 
        qualify.--Re-refined lubricating oil produced during any 
        taxable year shall not be treated as qualified re-refined 
        lubricating oil production but only to the extent average daily 
        production during the taxable year exceeds 7,000 barrels.
            ``(3) Barrel.--The term `barrel' has the meaning given such 
        term by section 613A(e)(4).
    ``(c) Inflation Adjustment.--In the case of any taxable year 
beginning in a calendar year after 1999, the dollar amount contained in 
subsection (a) shall be increased to an amount equal to such dollar 
amount multiplied by the inflation adjustment factor for such calendar 
year (determined under section 29(d)(2)(B) by substituting `1998' for 
`1979').''
    (b) Credit Treated as Business Credit.--Section 38(b) (relating to 
current year business credit), as amended by section 601(b), is amended 
by striking ``plus'' at the end of paragraph (13), by striking the 
period at the end of paragraph (14) and inserting ``, plus'', and by 
adding at the end the following:
            ``(15) the re-refined lubricating oil production credit 
        determined under section 45F(a).''
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by section 601(c), is 
amended by adding at the end the following:

                              ``Sec. 45F. Credit for producing re-
                                        refined lubricating oil.''
    (d) Effective Date.--The amendments made by this section shall 
apply to production after the date of the enactment of this Act.

SEC. 702. 5-YEAR NET OPERATING LOSS CARRYBACK FOR LOSSES ATTRIBUTABLE 
              TO OPERATING MINERAL INTERESTS OF INDEPENDENT OIL AND GAS 
              PRODUCERS.

    (a) In General.--Paragraph (1) of section 172(b) (relating to years 
to which loss may be carried) is amended by adding at the end the 
following new subparagraph:
                    ``(H) Losses on operating mineral interests of 
                independent oil and gas producers.--In the case of a 
                taxpayer--
                            ``(i) which has an eligible oil and gas 
                        loss (as defined in subsection (j)) for a 
                        taxable year, and
                            ``(ii) which is not an integrated oil 
                        company (as defined in section 291(b)(4)),
                such eligible oil and gas loss shall be a net operating 
                loss carryback to each of the 5 taxable years preceding 
                the taxable year of such loss.''
    (b) Eligible Oil and Gas Loss.--Section 172 is amended by 
redesignating subsection (j) as subsection (k) and by inserting after 
subsection (i) the following new subsection:
    ``(j) Eligible Oil and Gas Loss.--For purposes of this section--
            ``(1) In general.--The term `eligible oil and gas loss' 
        means the lesser of--
                    ``(A) the amount which would be the net operating 
                loss for the taxable year if only income and deductions 
                attributable to operating mineral interests (as defined 
                in section 614(d)) in oil and gas wells are taken into 
                account, or
                    ``(B) the amount of the net operating loss for such 
                taxable year.
            ``(2) Coordination with subsection (b)(2).--For purposes of 
        applying subsection (b)(2), an eligible oil and gas loss for 
        any taxable year shall be treated in a manner similar to the 
        manner in which a specified liability loss is treated.
            ``(3) Election.--Any taxpayer entitled to a 5-year 
        carryback under subsection (b)(1)(H) from any loss year may 
        elect to have the carryback period with respect to such loss 
        year determined without regard to subsection (b)(1)(H).''
    (c) Effective Date.--The amendments made by this section shall 
apply to net operating losses for taxable years beginning after 
December 31, 1998.

SEC. 703. DEDUCTION FOR DELAY RENTAL PAYMENTS.

    (a) In General.--Section 263 (relating to capital expenditures) is 
amended by adding after subsection (i) the following new subsection:
    ``(j) Delay Rental Payments for Domestic Oil and Gas Wells.--
            ``(1) In general.--Notwithstanding subsection (a), a 
        taxpayer may elect to treat delay rental payments incurred in 
        connection with the development of oil or gas within the United 
        States (as defined in section 638) as payments which are not 
        chargeable to capital account. Any payments so treated shall be 
        allowed as a deduction in the taxable year in which paid or 
        incurred.
            ``(2) Delay rental payments.--For purposes of paragraph 
        (1), the term `delay rental payment' means an amount paid for 
        the privilege of deferring development of an oil or gas well.''
    (b) Conforming Amendment.--Section 263A(c)(3) is amended by 
inserting ``263(j),'' after ``263(i),''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after 
December 31, 1999.

SEC. 704. ELECTION TO EXPENSE GEOLOGICAL AND GEOPHYSICAL EXPENDITURES.

    (a) In General.--Section 263 (relating to capital expenditures) is 
amended by adding after subsection (j) the following new subsection:
    ``(k) Geological and Geophysical Expenditures for Domestic Oil and 
Gas Wells.--Notwithstanding subsection (a), a taxpayer may elect to 
treat geological and geophysical expenses incurred in connection with 
the exploration for, or development of, oil or gas within the United 
States (as defined in section 638) as expenses which are not chargeable 
to capital account. Any expenses so treated shall be allowed as a 
deduction in the taxable year in which paid or incurred.''
    (b) Conforming Amendment.--Section 263A(c)(3) is amended by 
inserting ``263(k),'' after ``263(j),''.
    (c) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred in taxable years beginning after 
December 31, 1999.

SEC. 705. ELIMINATION OF LIMITATION BASED ON 65 PERCENT OF TAXABLE 
              INCOME.

    (a) In General.--Section 613A(d) (relating to limitation on 
percentage depletion in case of oil and gas wells) is amended by 
striking paragraph (1) and by redesignating paragraphs (2), (3), (4), 
and (5) as paragraphs (1), (2), (3), and (4), respectively.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

SEC. 706. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR MARGINAL 
              PRODUCTION.

    (a) In General.--Subparagraph (H) of section 613A(c)(6) is 
amended--
            (1) by striking ``, and before January 1, 2000'', and
            (2) by striking ``Temporary suspension'' in the heading and 
        inserting ``Nonapplication''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

                 TITLE VIII--RENEWABLE POWER GENERATION

SEC. 801. MODIFICATIONS TO CREDIT FOR ELECTRICITY PRODUCED FROM 
              RENEWABLE RESOURCES.

    (a) Expansion of Qualified Energy Resources.--
            (1) In general.--Section 45(c)(1) (defining qualified 
        energy resources) is amended by striking ``and'' at the end of 
        subparagraph (A), by striking the period at the end of 
        subparagraph (B) and inserting a comma, and by adding at the 
        end the following:
                    ``(C) biomass (other than closed-loop biomass), and
                    ``(D) poultry waste.''
            (2) Definitions.--Section 45(c) is amended by redesignating 
        paragraph (3) as paragraph (4) and by striking paragraph (2) 
        and inserting the following:
            ``(2) Biomass.--
                    ``(A) In general.--The term `biomass' means--
                            ``(i) closed-loop biomass, and
                            ``(ii) any solid, nonhazardous, cellulosic 
                        waste material, which is segregated from other 
waste materials, and which is derived from--
                                    ``(I) any of the following forest-
                                related resources: mill residues, 
                                precommercial thinnings, slash, and 
                                brush, but not including old-growth 
                                timber,
                                    ``(II) waste pallets, crates, and 
                                dunnage, and landscape or right-of-way 
                                tree trimmings, but not including 
                                unsegregated municipal solid waste 
                                (garbage) and post-consumer wastepaper, 
                                or
                                    ``(III) agriculture sources, 
                                including orchard tree crops, vineyard, 
                                grain, legumes, sugar, and other crop 
                                by-products or residues.
                    ``(B) Closed-loop biomass.--The term `closed-loop 
                biomass' means any organic material from a plant which 
                is planted exclusively for purposes of being used at a 
                qualified facility to produce electricity.
            ``(3) Poultry waste.--The term `poultry waste' means 
        poultry manure and litter, including wood shavings, straw, rice 
        hulls, and other bedding material for the disposition of 
        manure.''
    (b) Extension and Modification of Placed-in-Service Rules.--
Paragraph (4) of section 45(c), as redesignated by subsection (a), is 
amended to read as follows:
            ``(4) Qualified facility.--
                    ``(A) Wind facility.--In the case of a facility 
                using wind to produce electricity, the term `qualified 
                facility' means any facility owned by the taxpayer 
                which is originally placed in service after December 
                31, 1993, and before January 1, 2004.
                    ``(B) Closed-loop biomass facility.--In the case of 
                a facility using closed-loop biomass to produce 
                electricity, the term `qualified facility' means any 
                facility owned by the taxpayer which is originally 
                placed in service after December 31, 1992, and before 
                January 1, 2004.
                    ``(C) Biomass facility.--In the case of a facility 
                using biomass (other than closed-loop biomass) to 
                produce electricity, the term `qualified facility' 
                means any facility owned by the taxpayer which is 
                originally placed in service after the date of the 
                enactment of this paragraph and before January 1, 2004.
                    ``(D) Poultry waste facility.--In the case of a 
                facility using poultry waste to produce electricity, 
                the term `qualified facility' means any facility of the 
                taxpayer which is originally placed in service after 
                the date of the enactment of this paragraph and before 
                January 1, 2004.
                    ``(E) Special rules.--
                            ``(i) Combined production facilities 
                        included.--For purposes of this paragraph, the 
                        term `qualified facility' shall include a 
                        facility using biomass or poultry waste to 
                        produce electricity and ethanol.
                            ``(ii) Special rules.--In the case of a 
                        qualified facility described in subparagraph 
                        (C) or (D)--
                                    ``(I) the 10-year period referred 
                                to in subsection (a) shall be treated 
                                as beginning no earlier than the date 
                                of the enactment of this paragraph, and
                                    ``(II) subsection (b)(3) shall not 
                                apply to any such facility originally 
                                placed in service before January 1, 
                                1997.''
    (c) Electricity Produced From Biomass Co-fired in Coal Plants.--
Paragraph (1) of section 45(a) (relating to general rule) is amended by 
inserting ``(1.0 cents in the case of electricity produced from biomass 
co-fired in a facility which produces electricity from coal) after 
``1.5 cents''.
    (d) Coordination With Other Credits.--Section 45(d) (relating to 
definitions and special rules) is amended by adding at the end the 
following:
            ``(6) Coordination with other credits.--This section shall 
        not apply to any production with respect to which the clean 
        coal technology production credit under section 45B is allowed 
        unless the taxpayer elects to waive the application of such 
        credit to such production.''
    (e) Effective Date.--The amendments made by this section shall 
apply to electricity produced after the date of the enactment of this 
Act.

SEC. 802. CREDIT FOR CAPITAL COSTS OF QUALIFIED BIOMASS-BASED 
              GENERATING SYSTEM.

    (a) Allowance of Qualified Biomass-Based Generating System Facility 
Credit.--Section 46 (relating to amount of credit), as amended by 
section 501(a), is amended by striking ``and'' at the end of paragraph 
(3), by striking the period at the end of paragraph (4) and inserting 
``, and'', and by adding at the end the following:
            ``(5) the qualified biomass-based generating system 
        facility credit.''
    (b) Amount of Credit.--Subpart E of part IV of subchapter A of 
chapter 1 (relating to rules for computing investment credit), as 
amended by section 501(b), is amended by inserting after section 48C 
the following:

``SEC. 48C. QUALIFIED BIOMASS-BASED GENERATING SYSTEM FACILITY CREDIT.

    ``(a) In General.--For purposes of section 46, the qualified 
biomass-based generating system facility credit for any taxable year is 
an amount equal to 20 percent of the qualified investment in a 
qualified biomass-based generating system facility for such taxable 
year.
    ``(b) Qualified Biomass-Based Generating System Facility.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `qualified biomass-based generating system facility' means a 
        facility of the taxpayer--
                    ``(A)(i) the original use of which commences with 
                the taxpayer or the reconstruction of which is 
                completed by the taxpayer (but only with respect to 
that portion of the basis which is properly attributable to such 
reconstruction), or
                    ``(ii) that is acquired through purchase (as 
                defined by section 179(d)(2)),
                    ``(B) that is depreciable under section 167,
                    ``(C) that has a useful life of not less than 4 
                years, and
                    ``(D) that uses a qualified biomass-based 
                generating system.
            ``(2) Special rule for sale-leasebacks.--For purposes of 
        subparagraph (A) of paragraph (1), in the case of a facility 
        that--
                    ``(A) is originally placed in service by a person, 
                and
                    ``(B) is sold and leased back by such person, or is 
                leased to such person, within 3 months after the date 
                such facility was originally placed in service, for a 
                period of not less than 12 years,
        such facility shall be treated as originally placed in service 
        not earlier than the date on which such property is used under 
        the leaseback (or lease) referred to in subparagraph (B). The 
        preceding sentence shall not apply to any property if the 
        lessee and lessor of such property make an election under this 
        sentence. Such an election, once made, may be revoked only with 
        the consent of the Secretary.
            ``(3) Qualified biomass-based generating system.--For 
        purposes of paragraph (1)(D), the term `qualified biomass-based 
        generating system' means a biomass-based integrated 
        gasification combined cycle (IGCC) generating system which has 
        an electricity-only generation efficiency greater than 40 
        percent.
    ``(c) Qualified Investment.--For purposes of subsection (a), the 
term `qualified investment' means, with respect to any taxable year, 
the basis of a qualified biomass-based generating system facility 
placed in service by the taxpayer during such taxable year.
    ``(d) Qualified Progress Expenditures.--
            ``(1) Increase in qualified investment.--In the case of a 
        taxpayer who has made an election under paragraph (5), the 
        amount of the qualified investment of such taxpayer for the 
        taxable year (determined under subsection (c) without regard to 
        this section) shall be increased by an amount equal to the 
        aggregate of each qualified progress expenditure for the 
        taxable year with respect to progress expenditure property.
            ``(2) Progress expenditure property defined.--For purposes 
        of this subsection, the term `progress expenditure property' 
        means any property being constructed by or for the taxpayer and 
        which--
                    ``(A) cannot reasonably be expected to be completed 
                in less than 18 months, and
                    ``(B) it is reasonable to believe will qualify as a 
                qualified biomass-based generating system facility 
                which is being constructed by or for the taxpayer when 
                it is placed in service.
            ``(3) Qualified progress expenditures defined.--For 
        purposes of this subsection--
                    ``(A) Self-constructed property.--In the case of 
                any self-constructed property, the term `qualified 
                progress expenditures' means the amount which, for 
                purposes of this subpart, is properly chargeable 
                (during such taxable year) to capital account with 
                respect to such property.
                    ``(B) Non-self-constructed property.--In the case 
                of non-self-constructed property, the term `qualified 
                progress expenditures' means the amount paid during the 
                taxable year to another person for the construction of 
                such property.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) Self-constructed property.--The term `self-
                constructed property' means property for which it is 
                reasonable to believe that more than half of the 
                construction expenditures will be made directly by the 
                taxpayer.
                    ``(B) Non-self-constructed property.--The term 
                `non-self-constructed property' means property which is 
                not self-constructed property.
                    ``(C) Construction, etc.--The term `construction' 
                includes reconstruction and erection, and the term 
                `constructed' includes reconstructed and erected.
                    ``(D) Only construction of qualified biomass-based 
                generating system facility to be taken into account.--
                Construction shall be taken into account only if, for 
                purposes of this subpart, expenditures therefor are 
                properly chargeable to capital account with respect to 
                the property.
            ``(5) Election.--An election under this subsection may be 
        made at such time and in such manner as the Secretary may by 
        regulations prescribe. Such an election shall apply to the 
        taxable year for which made and to all subsequent taxable 
        years. Such an election, once made, may not be revoked except 
        with the consent of the Secretary.
    ``(e) Coordination with other credits.--This section shall not 
apply to any property with respect to which the rehabilitation credit 
under section 47 or the energy credit under section 48A is allowed 
unless the taxpayer elects to waive the application of such credits to 
such property.''
    (c) Recapture.--Section 50(a) (relating to other special rules), as 
amended by section 501(c), is amended by adding at the end the 
following:
            ``(7) Special rules relating to qualified biomass-based 
        generating system facility.--For purposes of applying this 
        subsection in the case of any credit allowable by reason of 
        section 48C, the following shall apply:
                    ``(A) General rule.--In lieu of the amount of the 
                increase in tax under paragraph (1), the increase in 
                tax shall be an amount equal to the investment tax 
                credit allowed under section 38 for all prior taxable 
years with respect to a qualified biomass-based generating system 
facility (as defined by section 48C(b)) multiplied by a fraction whose 
numerator is the number of years remaining to fully depreciate under 
this title the qualified biomass-based generating system facility 
disposed of, and whose denominator is the total number of years over 
which such facility would otherwise have been subject to depreciation. 
For purposes of the preceding sentence, the year of disposition of the 
qualified biomass-based generating system facility shall be treated as 
a year of remaining depreciation.
                    ``(B) Property ceases to qualify for progress 
                expenditures.--Rules similar to the rules of paragraph 
                (2) shall apply in the case of qualified progress 
                expenditures for a qualified biomass-based generating 
                system facility under section 48C, except that the 
                amount of the increase in tax under subparagraph (A) of 
                this paragraph shall be substituted in lieu of the 
                amount described in such paragraph (2).
                    ``(C) Application of paragraph.--This paragraph 
                shall be applied separately with respect to the credit 
                allowed under section 38 regarding a qualified biomass-
                based generating system facility.''
    (d) Transitional Rule.--Section 39(d) of the Internal Revenue Code 
of 1986 (relating to transitional rules), as amended by section 501(d), 
is amended by adding at the end the following:
            ``(11) No carryback of section 48c credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualified biomass-based 
        generating system facility credit determined under section 48C 
        may be carried back to a taxable year ending before the date of 
        the enactment of section 48C.''
    (e) Technical Amendments.--
            (1) Section 49(a)(1)(C), as amended by section 501(e), is 
        amended by striking ``and'' at the end of clause (iii), by 
        striking the period at the end of clause (iv) and inserting ``, 
        and'', and by adding at the end the following:
                            ``(v) the portion of the basis of any 
                        qualified biomass-based generating system 
                        facility attributable to any qualified 
                        investment (as defined by section 48C(c)).''
            (2) Section 50(a)(4), as amended by section 501(e), is 
        amended by striking ``and (6)'' and inserting ``, (6), and 
        (7)''.
            (3) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1, as amended by section 501(e), is 
        amended by inserting after the item relating to section 48B the 
        following:

                              ``Sec. 48C. Qualified biomass-based 
                                        generating system facility 
                                        credit.''
    (f) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 1999, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 803. TREATMENT OF FACILITIES USING BAGASSE TO PRODUCE ENERGY AS 
              SOLID WASTE DISPOSAL FACILITIES ELIGIBLE FOR TAX-EXEMPT 
              FINANCING.

    (a) In General.--Section 142 (relating to exempt facility bond) is 
amended by adding at the end the following:
    ``(k) Solid Waste Disposal Facilities.--For purposes of subsection 
(a)(6), the term `solid waste disposal facilities' includes property 
located in Hawaii and used for the collection, storage, treatment, 
utilization, processing, or final disposal of bagasse in the 
manufacture of ethanol.''
    (b) Effective Date.--The amendment made by this section shall apply 
to bonds issued after the date of the enactment of this Act.

                         TITLE IX--STEELMAKING

SEC. 901. CREDIT FOR INVESTMENT IN ENERGY-EFFICIENT STEELMAKING 
              FACILITIES.

    (a) Allowance of Energy-Efficient Steelmaking Facility Credit.--
Section 46 (relating to amount of credit), as amended by section 
802(a), is amended by striking ``and'' at the end of paragraph (4), by 
striking the period at the end of paragraph (5) and inserting ``, 
and'', and by adding at the end the following:
            ``(6) the energy-efficient steelmaking facility credit.''
    (b) Amount of Energy-Efficient Steelmaking Facility Credit.--
Subpart E of part IV of subchapter A of chapter 1 (relating to rules 
for computing investment credit), as amended by section 802(b), is 
amended by inserting after section 48C the following:

``SEC. 48D. ENERGY-EFFICIENT STEELMAKING FACILITY CREDIT.

    ``(a) In General.--For purposes of section 46, the energy-efficient 
steelmaking facility credit for any taxable year is an amount equal to 
10 percent of the qualified investment in an energy-efficient 
steelmaking facility for such taxable year.
    ``(b) Energy-Efficient Steelmaking Facility.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `energy-efficient steelmaking facility' means a facility of the 
        taxpayer--
                    ``(A)(i) which--
                            ``(I) with respect to a facility the 
                        original use of which commences with the 
                        taxpayer, improves steelmaking energy 
                        efficiency by 20 percent over the energy 
                        efficiency norm of the industry as determined 
                        by the Secretary for the year in which such 
                        facility is placed in service, or
                            ``(II) with respect to a facility which 
                        replaces an existing steelmaking facility and 
                        the original use of which commences with the 
                        taxpayer, improves steelmaking energy 
                        efficiency by 20 percent over the average 
                        energy efficiency of the replaced facility for 
                        the 2 taxable years preceding the year in which 
                        the replacing facility is placed in service 
                        (but only with respect to that portion of the 
basis which is properly attributable to such replacement), or
                    ``(ii) that is acquired through purchase (as 
                defined by section 179(d)(2)),
                    ``(B) that is depreciable under section 167, and
                    ``(C) that has a useful life of not less than 4 
                years.
            ``(2) Special rule for sale-leasebacks.--For purposes of 
        subparagraph (A) of paragraph (1), in the case of a facility 
        that--
                    ``(A) is originally placed in service by a person, 
                and
                    ``(B) is sold and leased back by such person, or is 
                leased to such person, within 3 months after the date 
                such facility was originally placed in service, for a 
                period of not less than 12 years,
        such facility shall be treated as originally placed in service 
        not earlier than the date on which such property is used under 
        the leaseback (or lease) referred to in subparagraph (B). The 
        preceding sentence shall not apply to any property if the 
        lessee and lessor of such property make an election under this 
        sentence. Such an election, once made, may be revoked only with 
        the consent of the Secretary.
            ``(3) Steelmaking energy efficiency.--For purposes of 
        paragraph (1)(A), steelmaking energy efficiency shall be 
        measured in BTu's per ton of raw steel produced.
    ``(c) Qualified Investment.--For purposes of subsection (a), the 
term `qualified investment' means, with respect to any taxable year, 
the basis of an energy-efficient steelmaking facility placed in service 
by the taxpayer during such taxable year.
    ``(d) Qualified Progress Expenditures.--
            ``(1) Increase in qualified investment.--In the case of a 
        taxpayer who has made an election under paragraph (5), the 
        amount of the qualified investment of such taxpayer for the 
        taxable year (determined under subsection (c) without regard to 
        this section) shall be increased by an amount equal to the 
        aggregate of each qualified progress expenditure for the 
        taxable year with respect to progress expenditure property.
            ``(2) Progress expenditure property defined.--For purposes 
        of this subsection, the term `progress expenditure property' 
        means any property being constructed by or for the taxpayer and 
        which it is reasonable to believe will qualify as an energy-
        efficient steelmaking facility which is being constructed by or 
        for the taxpayer when it is placed in service.
            ``(3) Qualified progress expenditures defined.--For 
        purposes of this subsection--
                    ``(A) Self-constructed property.--In the case of 
                any self-constructed property, the term `qualified 
                progress expenditures' means the amount which, for 
                purposes of this subpart, is properly chargeable 
                (during such taxable year) to capital account with 
                respect to such property.
                    ``(B) Non-self-constructed property.--In the case 
                of non-self-constructed property, the term `qualified 
                progress expenditures' means the amount paid during the 
                taxable year to another person for the construction of 
                such property.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) Self-constructed property.--The term `self-
                constructed property' means property for which it is 
                reasonable to believe that more than half of the 
                construction expenditures will be made directly by the 
                taxpayer.
                    ``(B) Non-self-constructed property.--The term 
                `non-self-constructed property' means property which is 
                not self-constructed property.
                    ``(C) Construction, etc.--The term `construction' 
                includes reconstruction and erection, and the term 
                `constructed' includes reconstructed and erected.
                    ``(D) Only construction of energy-efficient 
                steelmaking facility to be taken into account.--
                Construction shall be taken into account only if, for 
                purposes of this subpart, expenditures therefor are 
                properly chargeable to capital account with respect to 
                the property.
            ``(5) Election.--An election under this subsection may be 
        made at such time and in such manner as the Secretary may by 
        regulations prescribe. Such an election shall apply to the 
        taxable year for which made and to all subsequent taxable 
        years. Such an election, once made, may not be revoked except 
        with the consent of the Secretary.
    ``(e) Coordination with other credits.--This section shall not 
apply to any property with respect to which the rehabilitation credit 
under section 47 or the energy credit under section 48A is allowed 
unless the taxpayer elects to waive the application of such credits to 
such property.
    ``(f) Termination.--This section shall not apply with respect to 
any qualified investment after December 31, 2004.''
    (c) Recapture.--Section 50(a) (relating to other special rules), as 
amended by section 802(c), is amended by adding at the end the 
following:
            ``(8) Special rules relating to energy-efficient 
        steelmaking facility.--For purposes of applying this subsection 
        in the case of any credit allowable by reason of section 48D, 
        the following shall apply:
                    ``(A) General rule.--In lieu of the amount of the 
                increase in tax under paragraph (1), the increase in 
                tax shall be an amount equal to the investment tax 
                credit allowed under section 38 for all prior taxable 
                years with respect to an energy-efficient steelmaking 
                facility (as defined by section 48D(b)) multiplied by a 
                fraction whose numerator is the number of years 
remaining to fully depreciate under this title the energy-efficient 
steelmaking facility disposed of, and whose denominator is the total 
number of years over which such facility would otherwise have been 
subject to depreciation. For purposes of the preceding sentence, the 
year of disposition of the energy-efficient steelmaking facility 
property shall be treated as a year of remaining depreciation.
                    ``(B) Property ceases to qualify for progress 
                expenditures.--Rules similar to the rules of paragraph 
                (2) shall apply in the case of qualified progress 
                expenditures for an energy-efficient steelmaking 
                facility under section 48D, except that the amount of 
                the increase in tax under subparagraph (A) of this 
                paragraph shall be substituted in lieu of the amount 
                described in such paragraph (2).
                    ``(C) Application of paragraph.--This paragraph 
                shall be applied separately with respect to the credit 
                allowed under section 38 regarding an energy-efficient 
                steelmaking facility.''
    (d) Transitional Rule.--Section 39(d) of the Internal Revenue Code 
of 1986 (relating to transitional rules), as amended by section 802(d), 
is amended by adding at the end the following:
            ``(12) No carryback of section 48D credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the energy-efficient steelmaking 
        facility credit determined under section 48D may be carried 
        back to a taxable year ending before the date of the enactment 
        of section 48D.''
    (e) Technical Amendments.--
            (1) Section 49(a)(1)(C), as amended by section 802(e), is 
        amended by striking ``and'' at the end of clause (iv), by 
        striking the period at the end of clause (v) and inserting ``, 
        and'', and by adding at the end the following:
                            ``(vi) the portion of the basis of any 
                        energy-efficient steelmaking facility 
                        attributable to any qualified investment (as 
                        defined by section 48D(c)).''
            (2) Section 50(a)(4), as amended by section 802(e), is 
        amended by striking ``and (7)'' and inserting ``, (7), and 
        (8)''.
            (3) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1, as amended by section 802(e), is 
        amended by inserting after the item relating to section 48C the 
        following:

                              ``Sec. 48D. Energy-efficient steelmaking 
                                        facility credit.''
    (f) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 1999, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 902. EXTENSION OF CREDIT FOR ELECTRICITY TO PRODUCTION FROM STEEL 
              COGENERATION.

    (a) Extension of Credit for Coke Production and Steel Manufacturing 
Facilities.--Section 45(c)(1) (defining qualified energy resources), as 
amended by section 801(a)(1), is amended by striking ``and'' at the end 
of subparagraph (C), by striking the period at the end of subparagraph 
(D) and inserting ``, and'', and by adding at the end the following:
                    ``(E) steel cogeneration.''
    (b) Steel Cogeneration.--Section 45(c), as amended by subsections 
(a)(2) and (b) of section 801, is amended by redesignating paragraph 
(4) as paragraph (5) and by inserting after paragraph (3) the 
following:
            ``(4) Steel cogeneration.--
                    ``(A) In general.--The term `steel cogeneration' 
                means the production of steam or other form of thermal 
                energy of at least 20 percent of total production and 
                the production of electricity or mechanical energy (or 
                both) of at least 20 percent of total production if the 
                cogeneration meets regulatory energy-efficiency 
                standards established by the Secretary and only to the 
                extent that such energy is produced from--
                            ``(i) gases or heat generated during the 
                        production of coke,
                            ``(ii) blast furnace gases or heat 
                        generated during the production of iron ore or 
                        iron, or
                            ``(iii) waste gases or heat generated from 
                        the manufacture of steel that uses at least 20 
                        percent recycled material.
                    ``(B) Total production.--For purposes of 
                subparagraph (A), the term `total production' means, 
                with respect to any facility which produces coke, iron 
                ore, iron, or steel, production from all waste sources 
                described in clauses (i), (ii), and (iii) of 
                subparagraph (A) (whichever applicable) from the entire 
                facility.''
    (c) Modification of Placed in Service Rules for Steel Cogeneration 
Facilities.--Section 45(c)(5) (defining qualified facility), as amended 
by section 801(b) and redesignated by subsection (b), is amended by 
redesignating subparagraph (E) as subparagraph (F) and by inserting 
after subparagraph (D) the following:
                    ``(E) Steel cogeneration facilities.--In the case 
                of a facility using steel cogeneration to produce 
                electricity, the term `qualified facility' means any 
                facility permitted to operate under the environmental 
                requirements of the Clean Air Act Amendments of 1990 
                which is owned by the taxpayer and originally placed in 
                service after December 31, 1999, and before January 1, 
                2005. Such a facility may be treated as originally 
                placed in service when such facility was last upgraded 
                to increase efficiency or generation capability. 
                However, no facility shall be allowed a credit under 
                this section for more than 10 years of production.''
    (d) Conforming Amendments.--
            (1) The heading for section 45 is amended by inserting 
        ``and waste energy'' after ``renewable''.
            (2) The item relating to section 45 in the table of 
        sections subpart D of part IV of subchapter A of chapter 1 is 
amended by inserting ``and waste energy'' after ``renewable''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001, and before 
January 1, 2005.

                          TITLE X--AGRICULTURE

SEC. 1001. AGRICULTURAL CONSERVATION TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits), as amended by section 701(a), 
is amended by adding at the end the following:

``SEC. 45G. AGRICULTURAL CONSERVATION CREDIT.

    ``(a) In General.--For purposes of section 38, in the case of an 
eligible person, the agricultural conservation credit determined under 
this section for the taxable year is an amount equal to--
            ``(1) 10 percent of the eligible conservation tillage 
        equipment expenses, and
            ``(2) 10 percent of the eligible irrigation equipment 
        expenses,
paid or incurred by such person in connection with the active conduct 
of the trade or business of farming for the taxable year.
    ``(b) Eligible Person.--For purposes of this section, the term 
`eligible person' means, with respect to any taxable year, any person 
if the average annual gross receipts of such person for the 3 preceding 
taxable years do not exceed $1,000,000. For purposes of the preceding 
sentence, rules similar to the rules of section 448(c)(3) shall apply.
    ``(c) Limitation.--The amount of the credit allowed under 
subsection (a) for any taxable year shall not exceed $2,500 for each 
credit determined under paragraph (1) or (2) of such subsection.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Eligible conservation tillage equipment expenses.--
                    ``(A) In general.--The term `eligible conservation 
                tillage equipment expenses' means amounts paid or 
                incurred by a taxpayer to purchase and install 
                conservation tillage equipment for use in the trade or 
                business of the taxpayer.
                    ``(B) Conservation tillage equipment.--The term 
                `conservation tillage equipment' means a no-till 
                planter or drill designed to minimize the disturbance 
                of the soil in planting crops, including such planters 
                or drills which may be attached to equipment already 
                owned by the taxpayer.
            ``(2) Eligible irrigation equipment expenses.--The term 
        `eligible irrigation equipment expenses' means amounts paid or 
        incurred by a taxpayer--
                    ``(A) to purchase and install on currently 
                irrigated lands new or upgraded equipment which will 
                improve the efficiency of existing irrigation systems 
                used in the trade or business of the taxpayer, 
                including--
                            ``(i) spray jets or nozzles which improve 
                        water distribution efficiency,
                            ``(ii) irrigation well meters,
                            ``(iii) surge valves and surge irrigation 
                        systems, and
                            ``(iv) conversion of equipment from gravity 
                        irrigation to sprinkler or drip irrigation, 
                        including center pivot systems, and
                    ``(B) for service required to schedule the use of 
                such irrigation equipment as necessary to manage water 
                application to the crop requirement based on local 
                evaporation and transpiration rates or soil moisture.
    ``(e) Special Rules.--
            ``(1) Reduction in basis.--For purposes of this subtitle, 
        if a credit is determined under this section with respect to 
        any property, the basis of such property shall be reduced by 
        the amount of the credit so determined.
            ``(2) Pass-thru in the case of estates and trusts.--For 
        purposes of this section, under regulations prescribed by the 
        Secretary, rules similar to the rules of subsection (d) of 
        section 52 shall apply.
            ``(3) Allocation in the case of partnerships.--For purposes 
        of this section, in the case of partnerships, the credit shall 
        be allocated among partners under regulations prescribed by the 
        Secretary.
            ``(4) Denial of double benefit.--No other deduction or 
        credit shall be allowed to the taxpayer under this chapter for 
        any amount taken into account in determining the credit under 
        this section.''
    (b) Conforming Amendments.--
            (1) Section 38(b), as amended by section 701(b), is amended 
        by striking ``plus'' at the end of paragraph (14), by striking 
        the period at the end of paragraph (15), and inserting ``, 
        plus'', and by adding at the end the following:
            ``(16) the agricultural conservation credit determined 
        under section 45G.''
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1, as amended by section 701(c), is 
        amended by adding at the end the following:

                              ``Sec. 45G. Agricultural conservation 
                                        credit.''
            (3) Section 1016(a), as amended by section 201(b)(1), is 
        amended by striking ``and'' at the end of paragraph (27), 
        striking the period at the end of paragraph (28) and inserting 
        ``; and'', and adding at the end the following:
            ``(29) in the case of property with respect to which a 
        credit was allowed under section 45G, to the extent provided in 
        section 45G(d)(1).''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.
                                 <all>