[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2392 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 2392

   To amend the Internal Revenue Code of 1986 to provide, expand, or 
 extend tax incentives for renewable and alternative electric energy, 
alternative fuels and alternative fuel vehicles, energy efficiency and 
conservation, and demand management and distributive energy generation.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 28, 2001

 Mr. Inslee (for himself, Mr. Shays, Mr. Udall of Colorado, Mr. Wamp, 
Mr. Baird, Mr. Allen, Mr. Olver, Mr. Smith of Washington, and Mr. Holt) 
 introduced the following bill; which was referred to the Committee on 
                             Ways and Means

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to provide, expand, or 
 extend tax incentives for renewable and alternative electric energy, 
alternative fuels and alternative fuel vehicles, energy efficiency and 
conservation, and demand management and distributive energy generation.

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

SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Clean Energy 
Incentives Act''.
    (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 of this Act is as 
follows:

Sec. 1. Short title; references; table of contents.
           TITLE I--RENEWABLE AND ALTERNATIVE ELECTRIC ENERGY

Sec. 101. Five-year extension of qualified facilities for renewable 
                            resource credit.
Sec. 102. Expansion of renewable resource credit to include additional 
                            alternative resources.
Sec. 103. Tradable renewable resource credit for public utilities and 
                            other tax exempt organizations.
       TITLE II--ALTERNATIVE FUELS AND ENERGY EFFICIENT VEHICLES

Sec. 201. Credit for alternative motor vehicles and modification of 
                            credit for qualified electric vehicles.
Sec. 202. Credit for retail sale of alternative fuels as motor vehicle 
                            fuel.
Sec. 203. Extension of deduction for certain refueling property.
Sec. 204. Credit for installation of alternative fueling stations.
Sec. 205. Credit for property to convert waste to fuel.
             TITLE III--ENERGY EFFICIENCY AND CONSERVATION

Sec. 301. Energy-efficient commercial building property deduction.
Sec. 302. Credit for construction of new highly energy-efficient homes.
Sec. 303. Credit for energy efficient appliances.
Sec. 304. Credit for adjustable speed drives.
Sec. 305. Credit for energy efficient recycling or remanufacturing 
                            equipment.
     TITLE IV--DEMAND MANAGEMENT AND DISTRIBUTED ENERGY GENERATION

Sec. 401. Credit for distributed energy generation and demand 
                            management property used in business.
Sec. 402. Credit for distributed energy generation and demand 
                            management property used in residences.
Sec. 403. Credit for energy management systems using residential real 
                            time metering systems.
Sec. 404. Credit for flywheel property.

           TITLE I--RENEWABLE AND ALTERNATIVE ELECTRIC ENERGY

SEC. 101. FIVE-YEAR EXTENSION OF QUALIFIED FACILITIES FOR RENEWABLE 
              RESOURCE CREDIT.

    (a) Wind and Poultry Waste Facilities.--Subparagraphs (A) and (C) 
of section 45(c)(3) (relating to definitions) are each amended by 
striking ``2002'' and inserting ``2007''.
    (b) Closed-Loop Biomass Facilities.--Subparagraph (B) of section 
45(c)(3) is amended to read as follows:
                    ``(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--
                            ``(i) after December 31, 1992, and before 
                        January 1, 2007, or
                            ``(ii) before January 1, 1993, and modified 
                        to use closed-loop biomass to co-fire with coal 
                        after December 31, 1992, and before January 1, 
                        2007.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to electricity and other energy produced in taxable years 
beginning after the date of the enactment of this Act.

SEC. 102. EXPANSION OF RENEWABLE RESOURCE CREDIT TO INCLUDE ADDITIONAL 
              ALTERNATIVE RESOURCES.

    (a) In General.--Section 45(c)(1) (relating to qualified energy 
resources) is amended by striking ``and'' at the end of subparagraph 
(B), by striking the period at the end of subparagraph (C) and 
inserting ``, and'', and by adding at the end the following:
                    ``(D) alternative resources.''.
    (b) Definition of Alternative Resources.--Section 45(c) (relating 
to definitions) is amended by adding at the end the following:
            ``(5) Alternative resources.--
                    ``(A) In general.--The term `alternative resources' 
                means--
                            ``(i) solar,
                            ``(ii) biomass (other than closed loop 
                        biomass),
                            ``(iii) incremental hydropower,
                            ``(iv) incremental geothermal, and
                            ``(v) geothermal energy.
                    ``(B) Biomass.--The term `biomass' means any 
                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 or black liquor,
                            ``(ii) agriculture sources, including 
                        orchard tree crops, vineyard, grain, legumes, 
                        sugar, and other crop by-products or residues,
                            ``(iii) waste pallets, crates, dunnage, 
                        manufacturing and construction wood wastes 
                        (other than pressure-treated, chemically 
                        treated, or lead-painted wood wastes), and 
                        landscape or right-of-way tree trimmings, but 
                        not including--
                                    ``(I) unsegregated municipal solid 
                                waste (garbage), or
                                    ``(II) postconsumer wastepaper 
                                which can be recycled affordably,
                            ``(iv) landfill gas, or
                            ``(v) animal waste (other than poultry 
                        waste).
                    ``(C) Incremental hydropower.--The term 
                `incremental hydropower' means additional generating 
                capacity achieved from increased efficiency at a non-
                Federal hydroelectric facility in existence on January 
                1, 2001, and licensed by the Federal Energy Regulatory 
                Commission.
                    ``(D) Incremental geothermal.--The term 
                `incremental geothermal' means additional generating 
                capacity achieved from--
                            ``(i) increased efficiency, or
                            ``(ii) additions of new capacity,
                at a geothermal power plant originally placed in 
                service before the date of the enactment of this 
                paragraph.
                    ``(E) Landfill gas.--The term `landfill gas' means 
                gas generated from the decomposition of any household 
                solid waste, commercial solid waste, and industrial 
                solid waste disposed of in a municipal solid waste 
                landfill unit (as such terms are defined in regulations 
                promulgated under subtitle D of the Solid Waste 
                Disposal Act (42 U.S.C. 6941 et seq.)).''.
    (c) Qualified Facility.--
            (1) In general.--Section 45(c)(3) (defining qualified 
        facility) is amended by adding at the end the following:
                    ``(D) Alternative resources facility.--In the case 
                of a facility using alternative resources to produce 
                electricity, the term `qualified facility' means--
                            ``(i) any facility owned by the taxpayer 
                        which is originally placed in service after 
                        December 31, 2001, and before January 1, 2007,
                            ``(ii) in the case of incremental 
                        hydropower and incremental geothermal, any 
                        facility originally placed in service before 
                        December 31, 2001, and modified with 
                        incremental hydropower or incremental 
                        geothermal after that date and before January 
                        1, 2007, and
                            ``(iii) in the case of biomass (other than 
                        closed-loop biomass), any facility owned by the 
                        taxpayer which is originally placed in service 
                        before January 1, 2007, or any facility 
                        modified to use biomass to co-fire with coal 
                        after December 31, 2001, and before January 1, 
                        2007.''.
            (2) Special rule.--Section 45(d) (relating to definitions 
        and special rules) is amended by adding at the end the 
        following new paragraph:
            ``(8) Special rule relating to biomass facilities.--In the 
        case of a qualified facility described in subsection 
        (c)(3)(D)(iii)--
                    ``(A) subsection (b)(3) shall not apply to any such 
                facility originally placed in service before January 1, 
                1997, and
                    ``(B) if such facility is leased and the operator 
                thereof is the lessee, such lessee (and not the owner) 
                shall be treated for purposes of this section as owning 
                such facility.''.
    (d) Government-Owned Facility.--The text and heading of section 
45(d)(6) (relating to credit eligibility in the case of government-
owned facilities using poultry waste) is amended by inserting ``or 
alternative resources'' after ``poultry waste'' each place it appears.
    (e) Qualified Facilities With Co-Production.--Section 45(b) 
(relating to limitations and adjustments) is amended by adding at the 
end the following:
            ``(4) Increased credit for co-production facilities.--
                    ``(A) In general.--In the case of a qualified 
                facility described in subsection (c)(3)(D) which has a 
co-production facility or a qualified facility described in 
subparagraph (A), (B), or (C) of subsection (c)(3) which adds a co-
production facility after the date of the enactment of this paragraph, 
the amount in effect under subsection (a)(1) for an eligible taxable 
year of the taxpayer shall (after adjustment under paragraphs (1), (2), 
and (3)) be increased by .25 cents.
                    ``(B) Co-production facility.--For purposes of 
                subparagraph (A), the term `co-production facility' 
                means a facility which--
                            ``(i) enables a qualified facility to 
                        produce heat, mechanical power, or minerals 
                        from qualified energy resources in addition to 
                        electricity, and
                            ``(ii) produces such energy on a continuous 
                        basis.
                    ``(C) Eligible taxable year.--For purposes of 
                subparagraph (A), the term `eligible taxable year' 
                means any taxable year in which the amount of gross 
                receipts attributable to the co-production facility of 
                a qualified facility are at least 10 percent of the 
                amount of gross receipts attributable to electricity 
                produced by such facility.''.
    (f) Qualified Facilities Located Within Qualified Indian Lands.--
Section 45(b) (relating to limitations and adjustments), as amended by 
subsection (e), is amended by adding at the end the following:
            ``(5) Increased credit for qualified facility located 
        within qualified indian land.--In the case of a qualified 
        facility described in subsection (c)(3)(D) which--
                    ``(A) is located within--
                            ``(i) qualified Indian lands (as defined in 
                        section 7871(c)(3)), or
                            ``(ii) lands which are held in trust by a 
                        Native Corporation (as defined in section 3(m) 
                        of the Alaska Native Claims Settlement Act (43 
                        U.S.C. 1602(m))) for Alaska Natives, and
                    ``(B) is operated with the explicit written 
                approval of the Indian tribal government or Native 
                Corporation (as so defined) having jurisdiction over 
                such lands,
        the amount in effect under subsection (a)(1) for a taxable year 
        shall (after adjustment under paragraphs (1), (2), (3), and 
        (4)) be increased by .25 cents.''.
    (g) Electricity Produced From Biomass Co-fired in Coal Plants.--
Paragraph (1) of section 45(a) is amended by inserting ``(1.0 cents in 
the case of electricity produced from biomass, other than closed-loop 
biomass, co-fired in a facility which produced electricity from coal)'' 
after ``1.5 cents''.
    (h) Coordination With Other Credits.--Section 45(d) (relating to 
definitions and special rules), as amended by subsection (c), is 
amended by adding at the end the following:
            ``(9) Coordination with other credits.--This section shall 
        not apply to any qualified facility with respect to which a 
        credit under any other section is allowed for the taxable year 
        unless the taxpayer elects to waive application of such credit 
        to such facility.''.
    (i) Treatment of Qualified Facilities Not in Compliance With 
Pollution Laws.--Section 45(c)(3) (relating to qualified facilities), 
as amended by subsection (c), is amended by adding at the end the 
following:
                    ``(E) Noncompliance with pollution laws.--For 
                purposes of this paragraph, a facility which is not in 
                compliance with the applicable State and Federal 
                pollution prevention, control, and permit requirements 
                for any period of time shall not be considered to be a 
                qualified facility during such period.''.
    (j) Effective Date.--The amendments made by this section shall 
apply to electricity and other energy produced in taxable years 
beginning after the date of the enactment of this Act.

SEC. 103. TRADABLE RENEWABLE RESOURCE CREDIT FOR PUBLIC UTILITIES AND 
              OTHER TAX EXEMPT ORGANIZATIONS.

    (a) Credits for Certain Tax Exempt Organizations and Governmental 
Units.--
            (1) In general.--Section 45(d) (relating to definitions and 
        special rules), as amended by section 102, is amended by adding 
        at the end the following:
            ``(10) Credits for certain tax exempt organizations and 
        governmental units.--
                    ``(A) Allowance of credit.--Any credit which would 
                be allowable under subsection (a) with respect to a 
                qualified facility of an entity if such entity were not 
                exempt from tax under this chapter shall be treated as 
                a credit allowable under subpart D to such entity if 
                such entity is--
                            ``(i) an organization described in section 
                        501(c)(12)(C) and exempt from tax under section 
                        501(a),
                            ``(ii) an organization described in section 
                        1381(a)(2)(C),
                            ``(iii) an entity the income of which is 
                        excludable from gross income under section 115, 
                        or
                            ``(iv) a State, the District of Columbia, 
                        any territory or possession of the United 
                        States, or any political subdivision thereof.
                    ``(B) Use of credit.--
                            ``(i) Transfer of credit.--An entity 
                        described in subparagraph (A) may assign, 
                        trade, sell, or otherwise transfer any credit 
                        allowable to such entity under subparagraph (A) 
                        to any taxpayer.
                            ``(ii) Use of credit as an offset.--
                        Notwithstanding any other provision of law, in 
                        the case of an entity described in clause (i) 
                        or (ii) of subparagraph (A), any credit 
                        allowable to such entity under subparagraph (A) 
                        may be applied by such entity, without penalty, 
                        as a prepayment of any loan, debt, or other 
obligation the entity has incurred under subchapter I of chapter 31 of 
title 7 of the Rural Electrification Act of 1936 (7 U.S.C. 901 et 
seq.).
                    ``(C) Credit not income.--Neither a transfer under 
                clause (i) nor a use under clause (ii) of subparagraph 
                (B) of any credit allowable under subparagraph (A) 
                shall result in income for purposes of section 
                501(c)(12).
                    ``(D) Transfer proceeds treated as arising from 
                essential government function.--Any proceeds derived by 
                an entity described in subparagraph (A)(iii) from the 
                transfer of any credit under subparagraph (B)(i) shall 
                be treated as arising from an essential government 
                function.
                    ``(E) Credits not reduced by tax-exempt bonds or 
                certain other subsidies.--Subsection (b)(3) shall not 
                apply to reduce any credit allowable under subparagraph 
                (A) with respect to--
                            ``(i) proceeds described in subparagraph 
                        (A)(ii) of such subsection, or
                            ``(ii) any loan, debt, or other obligation 
                        incurred under subchapter I of chapter 31 of 
                        title 7 of the Rural Electrification Act of 
                        1936 (7 U.S.C. 901 et seq.),
                used to provide financing for any qualified facility.
                    ``(F) Treatment of unrelated persons.--For purposes 
                of this paragraph, sales among and between entities 
                described in subparagraph (A) shall be treated as sales 
                between unrelated parties.''.
            (2) Inclusion of indian tribal governments.--Section 
        7871(a)(7) is amended by striking ``and'' at the end of 
        subparagraph (A), by striking the period at the end of 
        subparagraph (B), and by adding at the end the following:
                    ``(C) section 45 (relating to credit for 
                electricity produced from certain renewable 
                resources).''.
    (b) Credit Allowable Against Regular and Minimum Tax.--
            (1) In general.--Section 38(c) (relating to limitation 
        based on amount of tax) is amended by redesignating paragraph 
        (3) as paragraph (4) and inserting after paragraph (2) the 
        following:
            ``(3) Special rules for renewable electricity production 
        credit.--
                    ``(A) In general.--In the case of the renewable 
                electricity production credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to the credit, 
                        and
                            ``(ii) in applying paragraph (1) to the 
                        credit--
                                    ``(I) subparagraphs (A) and (B) 
                                thereof shall not apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the renewable 
                                electricity production credit).
                    ``(B) Renewable electricity production credit.--For 
                purposes of this subsection, the term `renewable 
                electricity production credit' means the credit 
                allowable under subsection (a) by reason of section 
                45(a).''.
            (2) Conforming amendment.--Subclause (II) of section 
        38(c)(2)(A)(ii) is amended by inserting ``or the renewable 
        electricity production credit'' after ``employment credit''.
    (c) Effective Date.--The amendments made by this section shall 
apply to electricity and other energy produced in taxable years 
beginning after the date of the enactment of this Act.

       TITLE II--ALTERNATIVE FUELS AND ENERGY EFFICIENT VEHICLES

SEC. 201. CREDIT FOR ALTERNATIVE MOTOR VEHICLES AND MODIFICATION OF 
              CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) Credit for Alternative Motor Vehicles.--
            (1) In general.--Subpart B of part IV of subchapter A of 
        chapter 1 (relating to foreign tax credit, etc.) is amended by 
        adding at the end the following:

``SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to the sum of--
            ``(1) the new qualified fuel cell motor vehicle credit 
        determined under subsection (b),
            ``(2) the new qualified hybrid motor vehicle credit 
        determined under subsection (c), and
            ``(3) the new qualified alternative fuel motor vehicle 
        credit determined under subsection (d).
    ``(b) New Qualified Fuel Cell Motor Vehicle Credit.--
            ``(1) In general.--For purposes of subsection (a), the new 
        qualified fuel cell motor vehicle credit determined under this 
        subsection with respect to a new qualified fuel cell motor 
        vehicle placed in service by the taxpayer during the taxable 
        year is--
                    ``(A) $4,000, if such vehicle has a gross vehicle 
                weight rating of not more than 8,500 pounds,
                    ``(B) $10,000, if such vehicle has a gross vehicle 
                weight rating of more than 8,500 pounds but not more 
                than 14,000 pounds,
                    ``(C) $20,000, if such vehicle has a gross vehicle 
                weight rating of more than 14,000 pounds but not more 
                than 26,000 pounds, and
                    ``(D) $40,000, if such vehicle has a gross vehicle 
                weight rating of more than 26,000 pounds.
            ``(2) Increase for fuel efficiency.--
                    ``(A) In general.--The amount determined under 
                paragraph (1)(A) with respect to a new qualified fuel 
                cell motor vehicle which is a passenger automobile or 
light truck shall be increased by--
                            ``(i) $1,000, if such vehicle achieves at 
                        least 150 percent but less than 175 percent of 
                        the 2000 model year city fuel economy,
                            ``(ii) $1,500, if such vehicle achieves at 
                        least 175 percent but less than 200 percent of 
                        the 2000 model year city fuel economy,
                            ``(iii) $2,000, if such vehicle achieves at 
                        least 200 percent but less than 225 percent of 
                        the 2000 model year city fuel economy,
                            ``(iv) $2,500, if such vehicle achieves at 
                        least 225 percent but less than 250 percent of 
                        the 2000 model year city fuel economy,
                            ``(v) $3,000, if such vehicle achieves at 
                        least 250 percent but less than 275 percent of 
                        the 2000 model year city fuel economy,
                            ``(vi) $3,500, if such vehicle achieves at 
                        least 275 percent but less than 300 percent of 
                        the 2000 model year city fuel economy, and
                            ``(vii) $4,000, if such vehicle achieves at 
                        least 300 percent of the 2000 model year city 
                        fuel economy.
                    ``(B) 2000 model year city fuel economy.--For 
                purposes of subparagraph (A), the 2000 model year city 
                fuel economy with respect to a vehicle shall be 
                determined in accordance with the following tables:
                            ``(i) In the case of a passenger 
                        automobile:

``If vehicle inertia weight class   The 2000 model year city fuel 
        is:                                 economy is:
    1,500 or 1,750 lbs............................            43.7 mpg 
    2,000 lbs.....................................            38.3 mpg 
    2,250 lbs.....................................            34.1 mpg 
    2,500 lbs.....................................            30.7 mpg 
    2,750 lbs.....................................            27.9 mpg 
    3,000 lbs.....................................            25.6 mpg 
    3,500 lbs.....................................            22.0 mpg 
    4,000 lbs.....................................            19.3 mpg 
    4,500 lbs.....................................            17.2 mpg 
    5,000 lbs.....................................            15.5 mpg 
    5,500 lbs.....................................            14.1 mpg 
    6,000 lbs.....................................            12.9 mpg 
    6,500 lbs.....................................            11.9 mpg 
    7,000 or 8,500 lbs............................            11.1 mpg.
                            ``(ii) In the case of a light truck:

``If vehicle inertia weight class   The 2000 model year city fuel 
        is:                                 economy is:
    1,500 or 1,750 lbs............................            37.6 mpg 
    2,000 lbs.....................................            33.7 mpg 
    2,250 lbs.....................................            30.6 mpg 
    2,500 lbs.....................................            28.0 mpg 
    2,750 lbs.....................................            25.9 mpg 
    3,000 lbs.....................................            24.1 mpg 
    3,500 lbs.....................................            21.3 mpg 
    4,000 lbs.....................................            19.0 mpg 
    4,500 lbs.....................................            17.3 mpg 
    5,000 lbs.....................................            15.8 mpg 
    5,500 lbs.....................................            14.6 mpg 
    6,000 lbs.....................................            13.6 mpg 
    6,500 lbs.....................................            12.8 mpg 
    7,000 or 8,500 lbs............................            12.0 mpg.
                    ``(C) Vehicle inertia weight class.--For purposes 
                of subparagraph (B), the term `vehicle inertia weight 
                class' has the same meaning as when defined in 
                regulations prescribed by the Administrator of the 
                Environmental Protection Agency for purposes of the 
                administration of title II of the Clean Air Act (42 
                U.S.C. 7521 et seq.).
            ``(3) New qualified fuel cell motor vehicle.--For purposes 
        of this subsection, the term `new qualified fuel cell motor 
        vehicle' means a motor vehicle--
                    ``(A) which is propelled by power derived from--
                            ``(i) one or more cells which convert 
                        chemical energy directly into electricity by 
                        combining oxygen with hydrogen fuel which is 
                        stored on board the vehicle in any form and may 
                        or may not require reformation prior to use, or
                            ``(ii) one or more cells described in 
                        clause (i) used in conjunction with a 
                        rechargeable energy storage system.
                    ``(B) which, in the case of a passenger automobile 
                or light truck--
                            ``(i) for 2002 and later model vehicles, 
                        has received a certificate of conformity under 
                        the Clean Air Act and meets or exceeds the 
                        equivalent qualifying California low emission 
                        vehicle standard under section 243(e)(2) of the 
                        Clean Air Act for that make and model year, and
                            ``(ii) for 2004 and later model vehicles, 
                        has received a certificate that such vehicle 
                        meets or exceeds the Bin 5 Tier II emission 
                        level established in regulations prescribed by 
                        the Administrator of the Environmental 
                        Protection Agency under section 202(i) of the 
                        Clean Air Act for that make and model year 
                        vehicle,
                    ``(C) the original use of which commences with the 
                taxpayer,
                    ``(D) which is acquired for use or lease by the 
                taxpayer and not for resale, and
                    ``(E) which is made by a manufacturer.
    ``(c) New Qualified Hybrid Motor Vehicle Credit.--
            ``(1) In general.--For purposes of subsection (a), the new 
        qualified hybrid motor vehicle credit determined under this 
        subsection with respect to a new qualified hybrid motor vehicle 
        placed in service by the taxpayer during the taxable year is 
        the credit amount determined under paragraph (2).
            ``(2) Credit amount.--
                    ``(A) In general.--The credit amount determined 
                under this paragraph shall be determined in accordance 
                with the following tables:
                            ``(i) In the case of a new qualified hybrid 
                        motor vehicle which is a passenger automobile 
                        or light truck and which provides the following 
                        percentage of the maximum available power:

``If percentage of the maximum                    The credit amount is:
        available power is:
    At least 5 percent but less than 10 percent...                $250 
    At least 10 percent but less than 20 percent..                $500 
    At least 20 percent but less than 30 percent..                $750 
    At least 30 percent...........................              $1,000.
                            ``(ii) In the case of a new qualified 
                        hybrid motor vehicle which is a heavy duty 
                        hybrid motor vehicle and which provides the 
                        following percentage of the maximum available 
                        power:
                                    ``(I) If such vehicle has a gross 
                                vehicle weight rating of not more than 
                                14,000 pounds:

``If percentage of the maximum                    The credit amount is:
        available power is:
    At least 20 percent but less than 30 percent..              $1,500 
    At least 30 percent but less than 40 percent..              $1,750 
    At least 40 percent but less than 50 percent..              $2,000 
    At least 50 percent but less than 60 percent..              $2,250 
    At least 60 percent...........................              $2,500.
                                    ``(II) If such vehicle has a gross 
                                vehicle weight rating of more than 
                                14,000 but not more than 26,000 pounds:

``If percentage of the maximum                    The credit amount is:
        available power is:
    At least 20 percent but less than 30 percent..              $4,000 
    At least 30 percent but less than 40 percent..              $4,500 
    At least 40 percent but less than 50 percent..              $5,000 
    At least 50 percent but less than 60 percent..              $5,500 
    At least 60 percent...........................              $6,000.
                                    ``(III) If such vehicle has a gross 
                                vehicle weight rating of more than 
                                26,000 pounds:

``If percentage of the maximum                    The credit amount is:
        available power is:
    At least 20 percent but less than 30 percent..              $6,000 
    At least 30 percent but less than 40 percent..              $7,000 
    At least 40 percent but less than 50 percent..              $8,000 
    At least 50 percent but less than 60 percent..              $9,000 
    At least 60 percent...........................             $10,000.
                    ``(B) Increase for fuel efficiency.--
                            ``(i) Amount.--The amount determined under 
                        subparagraph (A)(i) with respect to a passenger 
                        automobile or light truck shall be increased 
                        by--
                                    ``(I) $500, if such vehicle 
                                achieves at least 125 percent but less 
                                than 150 percent of the 2000 model year 
                                city fuel economy,
                                    ``(II) $1,000, if such vehicle 
                                achieves at least 150 percent but less 
                                than 175 percent of the 2000 model year 
                                city fuel economy,
                                    ``(III) $1,500, if such vehicle 
                                achieves at least 175 percent but less 
                                than 200 percent of the 2000 model year 
                                city fuel economy,
                                    ``(IV) $2,000, if such vehicle 
                                achieves at least 200 percent but less 
                                than 225 percent of the 2000 model year 
                                city fuel economy,
                                    ``(V) $2,500, if such vehicle 
                                achieves at least 225 percent but less 
                                than 250 percent of the 2000 model year 
                                city fuel economy, and
                                    ``(VI) $3,000, if such vehicle 
                                achieves at least 250 percent of the 
                                2000 model year city fuel economy.
                            ``(ii) 2000 model year city fuel economy.--
                        For purposes of clause (i), the 2000 model year 
                        city fuel economy with respect to a vehicle 
                        shall be determined using the tables provided 
                        in subsection (b)(2)(B) with respect to such 
                        vehicle.
                    ``(C) Increase for accelerated emissions 
                performance.--The amount determined under subparagraph 
                (A)(ii) with respect to an applicable heavy duty hybrid 
                motor vehicle shall be increased by the increase credit 
                amount determined in accordance with the following 
                tables:
                            ``(i) In the case of a vehicle which has a 
                        gross vehicle weight rating of not more than 
                        14,000 pounds:

``If the model year is:             The increase credit amount is:
    2002..........................................              $3,500 
    2003..........................................              $3,000 
    2004..........................................              $2,500 
    2005..........................................              $2,000 
    2006..........................................              $1,500.
                            ``(ii) In the case of a vehicle which has a 
                        gross vehicle weight rating of more than 14,000 
                        pounds but not more than 26,000 pounds:

``If the model year is:             The increase credit amount is:
    2002..........................................              $9,000 
    2003..........................................              $7,750 
    2004..........................................              $6,500 
    2005..........................................              $5,250 
    2006..........................................              $4,000.
                            ``(iii) In the case of a vehicle which has 
                        a gross vehicle weight rating of more than 
                        26,000 pounds:

``If the model year is:             The increase credit amount is:
    2002..........................................             $14,000 
    2003..........................................             $12,000 
    2004..........................................             $10,000 
    2005..........................................              $8,000 
    2006..........................................              $6,000.
                    ``(D) Definitions.--
                            ``(i) Applicable heavy duty hybrid motor 
                        vehicle.--For purposes of subparagraph (C), the 
                        term `applicable heavy duty hybrid motor 
                        vehicle' means a heavy duty hybrid motor 
                        vehicle which is powered by an internal 
                        combustion or heat engine which is certified as 
                        meeting the emission standards set in the 
                        regulations prescribed by the Administrator of 
                        the Environmental Protection Agency for 2007 
                        and later model year diesel heavy duty engines 
                        or 2008 and later model year ottocycle heavy 
                        duty engines, as applicable.
                            ``(ii) Heavy duty hybrid motor vehicle.--
                        For purposes of this paragraph, the term `heavy 
                        duty hybrid motor vehicle' means a new 
                        qualified hybrid motor vehicle which has a 
                        gross vehicle weight rating of more than 10,000 
                        pounds and draws propulsion energy from both of 
                        the following onboard sources of stored energy:
                                    ``(I) An internal combustion or 
                                heat engine using consumable fuel 
                                which, for 2002 and later model 
                                vehicles, has received a certificate of 
                                conformity under the Clean Air Act and 
                                meets or exceeds a level of not greater 
                                than 3.0 grams per brake horsepower-
                                hour of oxides of nitrogen and 0.01 per 
                                brake horsepower-hour of particulate 
                                matter.
                                    ``(II) A rechargeable energy 
                                storage system.
                            ``(iii) Maximum available power.--
                                    ``(I) Passenger automobile or light 
                                truck.--For purposes of subparagraph 
                                (A)(i), the term `maximum available 
                                power' means the maximum power 
                                available from the battery or other 
                                electrical storage device, during a 
                                standard 10 second pulse power test, 
                                divided by the sum of the battery or 
                                other electrical storage device and the 
                                SAE net power of the heat engine.
                                    ``(II) Heavy duty hybrid motor 
                                vehicle.--For purposes of subparagraph 
                                (A)(ii), the term `maximum available 
                                power' means the maximum power 
                                available from the battery or other 
                                electrical storage device, during a 
                                standard 10 second pulse power test, 
                                divided by the vehicle's total traction 
                                power. The term `total traction power' 
                                means the sum of the electric motor 
                                peak power and the heat engine peak 
                                power of the vehicle, except that if 
                                the electric motor is the sole means by 
                                which the vehicle can be driven, the 
                                total traction power is the peak 
                                electric motor power.
            ``(3) New qualified hybrid motor vehicle.--For purposes of 
        this subsection, the term `new qualified hybrid motor vehicle' 
        means a motor vehicle--
                    ``(A) which draws propulsion energy from onboard 
                sources of stored energy which are both--
                            ``(i) an internal combustion or heat engine 
                        using combustible fuel, and
                            ``(ii) a rechargeable energy storage 
                        system,
                    ``(B) which, in the case of a passenger automobile 
                or light truck--
                            ``(i) for 2002 and later model vehicles, 
                        has received a certificate of conformity under 
                        the Clean Air Act and meets or exceeds the 
                        equivalent qualifying California low emission 
                        vehicle standard under section 243(e)(2) of the 
                        Clean Air Act for that make and model year, and
                            ``(ii) for 2004 and later model vehicles, 
                        has received a certificate that such vehicle 
                        meets or exceeds the Bin 5 Tier II emission 
                        level established in regulations prescribed by 
                        the Administrator of the Environmental 
                        Protection Agency under section 202(i) of the 
                        Clean Air Act for that make and model year 
                        vehicle,
                    ``(C) the original use of which commences with the 
                taxpayer,
                    ``(D) which is acquired for use or lease by the 
                taxpayer and not for resale, and
                    ``(E) which is made by a manufacturer.
    ``(d) New Qualified Alternative Fuel Motor Vehicle Credit.--
            ``(1) Allowance of credit.--Except as provided in paragraph 
        (5), the credit determined under this subsection is an amount 
        equal to the applicable percentage of the incremental cost of 
        any new qualified alternative fuel motor vehicle placed in 
        service by the taxpayer during the taxable year.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage with respect to any new 
        qualified alternative fuel motor vehicle is--
                    ``(A) 50 percent, plus
                    ``(B) 30 percent, if such vehicle--
                            ``(i) has received a certificate of 
                        conformity under the Clean Air Act and meets or 
                        exceeds the most stringent standard available 
                        for certification under the Clean Air Act for 
                        that make and model year vehicle (other than a 
                        zero emission standard), or
                            ``(ii) has received an order from an 
                        applicable State certifying the vehicle for 
                        sale or lease in California and meets or 
                        exceeds the most stringent standard available 
                        for certification under the State laws of 
                        California (enacted in accordance with a waiver 
                        granted under section 209(b) of the Clean Air 
                        Act) for that make and model year vehicle 
                        (other than a zero emission standard).
            ``(3) Incremental cost.--For purposes of this subsection, 
        the incremental cost of any new qualified alternative fuel 
        motor vehicle is equal to the amount of the excess of the 
        manufacturer's suggested retail price for such vehicle over 
        such price for a gasoline or diesel fuel motor vehicle of the 
        same model, to the extent such amount does not exceed--
                    ``(A) $5,000, if such vehicle has a gross vehicle 
                weight rating of not more than 8,500 pounds,
                    ``(B) $10,000, if such vehicle has a gross vehicle 
                weight rating of more than 8,500 pounds but not more 
                than 14,000 pounds,
                    ``(C) $25,000, if such vehicle has a gross vehicle 
                weight rating of more than 14,000 pounds but not more 
                than 26,000 pounds, and
                    ``(D) $40,000, if such vehicle has a gross vehicle 
                weight rating of more than 26,000 pounds.
            ``(4) Qualified alternative fuel motor vehicle defined.--
        For purposes of this subsection--
                    ``(A) In general.--The term `qualified alternative 
                fuel motor vehicle' means any motor vehicle--
                            ``(i) which is only capable of operating on 
                        an alternative fuel,
                            ``(ii) the original use of which commences 
                        with the taxpayer,
                            ``(iii) which is acquired by the taxpayer 
                        for use or lease, but not for resale, and
                            ``(iv) which is made by a manufacturer.
                    ``(B) Alternative fuel.--The term `alternative 
                fuel' means compressed natural gas, liquefied natural 
                gas, liquefied petroleum gas, hydrogen, and any liquid 
                at least 85 percent of the volume of which consists of 
                methanol.
            ``(5) Credit for mixed-fuel vehicles.--
                    ``(A) In general.--In the case of a mixed-fuel 
                vehicle placed in service by the taxpayer during the 
                taxable year, the credit determined under this 
                subsection is an amount equal to--
                            ``(i) in the case of a 75/25 mixed-fuel 
                        vehicle, 70 percent of the credit which would 
                        have been allowed under this subsection if such 
                        vehicle was a qualified alternative fuel motor 
                        vehicle, and
                            ``(ii) in the case of a 95/5 mixed-fuel 
                        vehicle, 95 percent of the credit which would 
                        have been allowed under this subsection if such 
                        vehicle was a qualified alternative fuel motor 
                        vehicle.
                    ``(B) Mixed-fuel vehicle.--For purposes of this 
                subsection, the term `mixed-fuel vehicle' means any 
                motor vehicle described in subparagraph (C) or (D) of 
                paragraph (3), which--
                            ``(i) is certified by the manufacturer as 
                        being able to perform efficiently in normal 
                        operation on a combination of an alternative 
                        fuel and a petroleum-based fuel,
                            ``(ii) either--
                                    ``(I) has received a certificate of 
                                conformity under the Clean Air Act, or
                                    ``(II) has received an order from 
                                an applicable State certifying the 
                                vehicle for sale or lease in California 
                                and meets or exceeds the low emission 
                                vehicle standard under section 88.105-
                                94 of title 40, Code of Federal 
                                Regulations, for that make and model 
                                year vehicle,
                            ``(iii) the original use of which commences 
                        with the taxpayer,
                            ``(iv) which is acquired by the taxpayer 
                        for use or lease, but not for resale, and
                            ``(v) which is made by a manufacturer.
                    ``(C) 75/25 mixed-fuel vehicle.--For purposes of 
                this subsection, the term `75/25 mixed-fuel vehicle' 
                means a mixed-fuel vehicle which operates using at 
                least 75 percent alternative fuel and not more than 25 
                percent petroleum-based fuel.
                    ``(D) 95/5 mixed-fuel vehicle.--For purposes of 
                this subsection, the term `95/5 mixed-fuel vehicle' 
                means a mixed-fuel vehicle which operates using at 
                least 95 percent alternative fuel and not more than 5 
                percent petroleum-based fuel.
    ``(e) Application With Other Credits.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and sections 27, 
        29, and 30, over
            ``(2) the tentative minimum tax for the taxable year.
    ``(f) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Consumable fuel.--The term `consumable fuel' means 
        any solid, liquid, or gaseous matter which releases energy when 
        consumed by an auxiliary power unit.
            ``(2) Motor vehicle.--The term `motor vehicle' has the 
        meaning given such term by section 30(c)(2).
            ``(3) 2000 model year city fuel economy.--The 2000 model 
        year city fuel economy with respect to any vehicle shall be 
        measured under rules similar to the rules under section 
        4064(c).
            ``(4) Other terms.--The terms `automobile', `passenger 
        automobile', `light truck', and `manufacturer' have the 
        meanings given such terms in regulations prescribed by the 
        Administrator of the Environmental Protection Agency for 
        purposes of the administration of title II of the Clean Air Act 
        (42 U.S.C. 7521 et seq.).
            ``(5)  Reduction in basis.--For purposes of this subtitle, 
        the basis of any property for which a credit is allowable under 
        subsection (a) shall be reduced by the amount of such credit so 
        allowed (determined without regard to subsection (e)).
            ``(6) No double benefit.--The amount of any deduction or 
        credit allowable under this chapter--
                    ``(A) for any incremental cost taken into account 
                in computing the amount of the credit determined under 
                subsection (d) shall be reduced by the amount of such 
                credit attributable to such cost, and
                    ``(B) with respect to a vehicle described under 
                subsection (b) or (c), shall be reduced by the amount 
                of credit allowed under subsection (a) for such vehicle 
                for the taxable year.
            ``(7) Property used by tax-exempt entities.--In the case of 
        a credit amount which is allowable with respect to a motor 
        vehicle which is acquired by an entity exempt from tax under 
        this chapter, the person which sells or leases such vehicle to 
        the entity shall be treated as the taxpayer with respect to the 
        vehicle for purposes of this section and the credit shall be 
        allowed to such person, but only if the person clearly 
        discloses to the entity in any sale or lease document the 
        specific amount of any credit otherwise allowable to the entity 
        under this section and reduces the sale or lease price of such 
        vehicle by an equivalent amount of such credit.
            ``(8) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any property which ceases 
        to be property eligible for such credit (including recapture in 
        the case of a lease period of less than the economic life of a 
        vehicle).
            ``(9) Property used outside united states, etc., not 
        qualified.--No credit shall be allowed under subsection (a) 
        with respect to any property referred to in section 50(b) or 
        with respect to the portion of the cost of any property taken 
        into account under section 179.
            ``(10) Election to not take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects to not have this section apply to such vehicle.
            ``(11) Carryforward allowed.--
                    ``(A) In general.--If the credit amount allowable 
                under subsection (a) for a taxable year exceeds the 
                amount of the limitation under subsection (e) for such 
                taxable year (referred to as the `unused credit year' 
                in this paragraph), such excess shall be allowed as a 
                credit carryforward for each of the 20 taxable years 
                following the unused credit year.
                    ``(B) Rules.--Rules similar to the rules of section 
                39 shall apply with respect to the credit carryforward 
                under subparagraph (A).
            ``(12) Interaction with air quality and motor vehicle 
        safety standards.--Unless otherwise provided in this section, a 
        motor vehicle shall not be considered eligible for a credit 
        under this section unless such vehicle is in compliance with--
                    ``(A) the applicable provisions of the Clean Air 
                Act for the applicable make and model year of the 
                vehicle (or applicable air quality provisions of State 
                law in the case of a State which has adopted such 
                provision under a waiver under section 209(b) of the 
                Clean Air Act), and
                    ``(B) the motor vehicle safety provisions of 
                sections 30101 through 30169 of title 49, United States 
                Code.
    ``(g) Regulations.--
            ``(1) In general.--The Secretary shall promulgate such 
        regulations as necessary to carry out the provisions of this 
        section.
            ``(2) Administrator of environmental protection agency.--
        The Administrator of the Environmental Protection Agency, in 
        coordination with the Secretary of Transportation and the 
        Secretary of the Treasury, shall prescribe such regulations as 
        necessary to determine whether a motor vehicle meets the 
        requirements to be eligible for a credit under this section.
    ``(h) Termination.--This section shall not apply to any property 
placed in service after December 31, 2007.''.
            (2) Conforming amendments.--
                    (A) Section 1016(a) is amended by striking ``and'' 
                at the end of paragraph (27), by striking the period at 
                the end of paragraph (28) and inserting ``, and'', and 
                by adding at the end the following:
            ``(29) to the extent provided in section 30B(f)(4).''.
                    (B) Section 53(d)(1)(B)(iii) is amended by 
                inserting ``, or not allowed under section 30B solely 
                by reason of the application of section 30B(e)(2)'' 
                before the period.
                    (C) Section 55(c)(2) is amended by inserting 
                ``30B(e),'' after ``30(b)(3)''.
                    (D) Section 6501(m) is amended by inserting 
                ``30B(f)(9),'' after ``30(d)(4),''.
                    (E) The table of sections for subpart B of part IV 
                of subchapter A of chapter 1 is amended by inserting 
                after the item relating to section 30A the following:

        ``Sec. 30B. Alternative motor vehicle credit.''.
    (b) Modification of Credit for Qualified Electric Vehicles.--
            (1) Amount of credit.--
                    (A) In general.--Section 30(a) (relating to 
                allowance of credit) is amended by striking ``10 
                percent of''.
                    (B) Limitation of credit according to type of 
                vehicle.--Section 30(b) (relating to limitations) is 
                amended--
                            (i) by striking paragraphs (1) and (2) and 
                        inserting the following:
            ``(1) Limitation according to type of vehicle.--The amount 
        of the credit allowed under subsection (a) for any vehicle 
        shall not exceed the greatest of the following amounts 
        applicable to such vehicle:
                    ``(A) In the case of a vehicle which conforms to 
                the Motor Vehicle Safety Standard 500 prescribed by the 
                Secretary of Transportation, the lesser of--
                            ``(i) 10 percent of the manufacturer's 
                        suggested retail price of the vehicle, or
                            ``(ii) $4,000.
                    ``(B) In the case of a vehicle with a gross vehicle 
                weight rating not exceeding 8,500 pounds--
                            ``(i) $4,000, or
                            ``(ii) $6,000, if such vehicle is--
                                    ``(I) capable of a driving range of 
                                at least 100 miles on a single charge 
                                of the vehicle's rechargeable batteries 
                                and measured pursuant to the urban 
                                dynamometer schedules under appendix I 
                                to part 86 of title 40, Code of Federal 
                                Regulations, or
                                    ``(II) capable of a payload 
                                capacity of at least 1000 pounds.
                    ``(C) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 8,500 but not exceeding 14,000 
                pounds, $10,000.
                    ``(D) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 14,000 but not exceeding 26,000 
                pounds, $20,000.
                    ``(E) In the case of a vehicle with a gross vehicle 
                weight rating exceeding 26,000 pounds, $40,000.'', and
                            (ii) by redesignating paragraph (3) as 
                        paragraph (2).
                    (C) Conforming amendments.--
                            (i) Section 53(d)(1)(B)(iii) is amended by 
                        striking ``section 30(b)(3)(B)'' and inserting 
                        ``section 30(b)(2)(B)''.
                            (ii) Section 55(c)(2) is amended by 
                        striking ``30(b)(3)'' and inserting 
                        ``30(b)(2)''.
            (2) Qualified battery electric vehicle.--
                    (A) In general.--Section 30(c)(1)(A) (defining 
                qualified electric vehicle) is amended to read as 
                follows:
                    ``(A) which is--
                            ``(i) operated solely by use of a battery 
                        or battery pack, or
                            ``(ii) powered primarily through the use of 
                        an electric battery or battery pack using a 
                        flywheel or capacitor which stores energy 
                        produced by an electric motor through 
                        regenerative braking to assist in vehicle 
                        operation,''.
                    (B) Leased vehicles.--Section 30(c)(1)(C) is 
                amended by inserting ``or lease'' after ``use''.
                    (C) Conforming amendments.--
                            (i) Subsections (a), (b)(2), and (c) of 
                        section 30 are each amended by inserting 
                        ``battery'' after ``qualified'' each place it 
                        appears.
                            (ii) The heading of subsection (c) of 
                        section 30 is amended by inserting ``Battery'' 
                        after ``Qualified''.
                            (iii) The heading of section 30 is amended 
                        by inserting ``battery'' after ``qualified''.
                            (iv) The item relating to section 30 in the 
                        table of sections for subpart B of part IV of 
                        subchapter A of chapter 1 is amended by 
                        inserting ``battery'' after ``qualified''.
                            (v) Section 179A(c)(3) is amended by 
                        inserting ``battery'' before ``electric''.
                            (vi) The heading of paragraph (3) of 
                        section 179A(c) is amended by inserting 
                        ``battery'' before ``electric''.
            (3) Additional special rules.--Section 30(d) (relating to 
        special rules) is amended by adding at the end the following:
            ``(5) No double benefit.--The amount of any deduction or 
        credit allowable under this chapter for any cost taken into 
        account in computing the amount of the credit determined under 
        subsection (a) shall be reduced by the amount of such credit 
        attributable to such cost.
            ``(6) Property used by tax-exempt entities.--In the case of 
        a credit amount which is allowable with respect to a vehicle 
        which is acquired by an entity exempt from tax under this 
        chapter, the person which sells or leases such vehicle to the 
        entity shall be treated as the taxpayer with respect to the 
        vehicle for purposes of this section and the credit shall be 
        allowed to such person, but only if the person clearly 
        discloses to the entity in any sale or lease contract the 
        specific amount of any credit otherwise allowable to the entity 
        under this section and reduces the sale or lease price of such 
        vehicle by an equivalent amount of such credit.''.
            (4) Extension.--Section 30(e) (relating to termination) is 
        amended by striking ``2004'' and inserting ``2007''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001, in taxable 
years ending after such date.

SEC. 202. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS AS MOTOR VEHICLE 
              FUEL.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits) is amended by inserting after 
section 40 the following:

``SEC. 40A. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS AS MOTOR 
              VEHICLE FUEL.

    ``(a) General Rule.--For purposes of section 38, the alternative 
fuel retail sales credit for any taxable year is 25 cents for each 
gasoline gallon equivalent of alternative fuel sold at retail by the 
taxpayer during such year as a fuel to propel any qualified motor 
vehicle, but only if the taxpayer reduces the retail sales price of 
such fuel by an equivalent amount of such credit.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Alternative fuel.--The term `alternative fuel' means 
        compressed natural gas, liquefied natural gas, liquefied 
        petroleum gas, hydrogen, and any liquid at least 85 percent of 
        the volume of which consists of methanol.
            ``(2) Gasoline gallon equivalent.--The term `gasoline 
        gallon equivalent' means, with respect to any alternative fuel, 
        the amount (determined by the Secretary) of such fuel having a 
        Btu content of 114,000.
            ``(3) Qualified motor vehicle.--The term `qualified motor 
        vehicle' means any motor vehicle (as defined in section 
        30(c)(2)) which meets any applicable Federal or State emissions 
        standards with respect to each fuel by which such vehicle is 
        designed to be propelled.
            ``(4) Sold at retail.--
                    ``(A) In general.--The term `sold at retail' means 
                the sale, for a purpose other than resale, after 
                manufacture, production, or importation.
                    ``(B) Use treated as sale.--If any person uses 
                alternative fuel (including any use after importation) 
                as a fuel to propel any qualified alternative fuel 
                motor vehicle (as defined in section 30B(d)(4)) before 
                such fuel is sold at retail, then such use shall be 
                treated in the same manner as if such fuel were sold at 
                retail as a fuel to propel such a vehicle by such 
                person.
    ``(c) No Double Benefit.--The amount of any deduction or credit 
allowable under this chapter for any fuel taken into account in 
computing the amount of the credit determined under subsection (a) 
shall be reduced by the amount of such credit attributable to such 
fuel.
    ``(d) Pass-Thru in the Case of Estates and Trusts.--Under 
regulations prescribed by the Secretary, rules similar to the rules of 
subsection (d) of section 52 shall apply.
    ``(e) Termination.--This section shall not apply to any fuel sold 
at retail after December 31, 2007.''.
    (b) Credit Treated as Business Credit.--Section 38(b) (relating to 
current year business credit) 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 alternative fuel retail sales credit determined 
        under section 40A(a).''.
    (c) Transitional Rule.--Section 39(d) (relating to transitional 
rules) is amended by adding at the end the following:
            ``(11) No carryback of section 40a credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the alternative fuel retail sales 
        credit determined under section 40A(a) may be carried back to a 
        taxable year ending before January 1, 2002.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 40 the following:

        ``Sec. 40A. Credit for retail sale of alternative fuels as 
                            motor vehicle fuel.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to fuel sold at retail after December 31, 2001, in taxable years 
ending after such date.

SEC. 203. EXTENSION OF DEDUCTION FOR CERTAIN REFUELING PROPERTY.

    (a) In General.--Section 179A(f) (relating to termination) is 
amended by striking ``2004'' and inserting ``2007''.
    (b) Conforming Amendment.--Section 179A(c) (relating to qualified 
clean-fuel vehicle property defined) is amended by striking paragraph 
(3).
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001, in taxable 
years ending after such date.

SEC. 204. CREDIT FOR INSTALLATION OF ALTERNATIVE FUELING STATIONS.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
(relating to foreign tax credit, etc.), as amended by section 201, is 
amended by adding at the end the following:

``SEC. 30C. CLEAN-FUEL VEHICLE REFUELING PROPERTY CREDIT.

    ``(a) Credit Allowed.--There shall be allowed as a credit against 
the tax imposed by this chapter for the taxable year an amount equal 
to--
            ``(1) 50 percent, in the case of retail clean-fuel vehicle 
        refueling property, and
            ``(2) 50 percent, in the case of residential clean-fuel 
        vehicle refueling property,
of the amount paid or incurred by the taxpayer during the taxable year 
for the installation of clean-fuel vehicle refueling property.
    ``(b) Limitation.--The credit allowed under--
            ``(1) subsection (a)(1) with respect to clean-fuel vehicle 
        refueling property, shall not exceed $30,000, and
            ``(2) subsection (a)(2) with respect to clean-fuel vehicle 
        refueling property, shall not exceed $1,000.
    ``(c) Year Credit Allowed.--The credit allowed under subsection (a) 
shall be allowed in the taxable year in which the clean-fuel vehicle 
refueling property is placed in service by the taxpayer.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Clean-fuel vehicle refueling property.--The term 
        `clean-fuel vehicle refueling property' has the same meaning 
        given the term `qualified clean-fuel vehicle refueling 
        property' under section 179A.
            ``(2) Residential clean-fuel vehicle refueling property.--
        The term `residential clean-fuel vehicle refueling property' 
        means clean-fuel vehicle refueling property which is installed 
        on property which is used as the principal residence (within 
        the meaning of section 121) of the taxpayer.
            ``(3) Retail clean-fuel vehicle refueling property.--The 
        term `retail clean-fuel vehicle refueling property' means 
        clean-fuel vehicle refueling property--
                    ``(A) which is installed on property used in a 
                trade or business of the taxpayer, and
                    ``(B) if such refueling property--
                            ``(i) is--
                                    ``(I) available to the public 
                                during normal business hours, and
                                    ``(II) capable of serving at least 
                                3 motor vehicles at the same time, or
                            ``(ii) regularly serves at least 1 fleet of 
                        10 or more motor vehicles.
    ``(e) Application With Other Credits.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and sections 27, 
        29, 30, and 30B, over
            ``(2) the tentative minimum tax for the taxable year.
    ``(f) Basis Reduction.--For purposes of this title, the basis of 
any property shall be reduced by the portion of the cost of such 
property taken into account under subsection (a).
    ``(g) No Double Benefit.--No deduction shall be allowed under 
section 179A with respect to any property with respect to which a 
credit is allowed under subsection (a).
    ``(h) Refueling Property Installed for Tax-Exempt Entities.--In the 
case of clean-fuel vehicle refueling property installed on property 
owned or used by an entity exempt from tax under this chapter, the 
person which installs such refueling property for the entity shall be 
treated as the taxpayer with respect to the refueling property for 
purposes of this section (and such refueling property shall be treated 
as retail clean-fuel vehicle refueling property) and the credit shall 
be allowed to such person, but only if the person clearly discloses to 
the entity in any installation contract the specific amount of the 
credit allowable under this section and modifies the price of such 
contract to take into account the amount of such credit.
    ``(i) Carryforward Allowed.--
            ``(1) In general.--If the credit amount allowable under 
        subsection (a) for a taxable year exceeds the amount of the 
        limitation under subsection (b) for such taxable year (referred 
        to as the `unused credit year' in this subsection), such excess 
        shall be allowed as a credit carryforward for each of the 20 
        taxable years following the unused credit year.
            ``(2) Rules.--Rules similar to the rules of section 39 
        shall apply with respect to the credit carryforward under 
        paragraph (1).
    ``(j) Special Rules.--Rules similar to the rules of paragraphs (4) 
and (5) of section 179A(e) shall apply.
    ``(k) Regulations.--The Secretary shall prescribe such regulations 
as necessary to carry out the provisions of this section.
    ``(l) Termination.--This section shall not apply to any property 
placed in service after December 31, 2007.''.
    (b) Conforming Amendments.--
            (1) Section 1016(a), as amended by section 201, is amended 
        by striking ``and'' at the end of paragraph (28), by striking 
        the period at the end of paragraph (29) and inserting ``, 
        and'', and by adding at the end the following:
            ``(30) to the extent provided in section 30C(f).''.
            (2) Section 53(d)(1)(B)(iii), as amended by section 201, is 
        amended by inserting ``, or not allowed under section 30C 
solely by reason of the application of section 30C(e)(2)'' before the 
period.
            (3) Section 55(c)(2), as amended by section 201, is amended 
        by inserting ``30C(e),'' after ``30B(e)''.
            (4) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1, as amended by section 201, is 
        amended by inserting after the item relating to section 30B the 
        following:

        ``Sec. 30C. Clean-fuel vehicle refueling property credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001, in taxable 
years ending after such date.

SEC. 205. CREDIT FOR PROPERTY TO CONVERT WASTE TO FUEL.

    (a) In General.--Subparagraph (A) of section 48A(c)(1) (defining 
energy property), as added by section 401, is amended by striking 
``or'' at the end of clause (vi), by adding ``or'' at the end of clause 
(vii), and by inserting after clause (vii) the following new clause:
                            ``(viii) waste conversion property,''.
    (b) Waste Conversion Property.--Subsection (d) of section 48A, as 
so added, is amended by adding at the end the following new paragraph:
            ``(8) Waste conversion property.--The term `waste 
        conversion property' means equipment used to produce a usable 
        liquid or gaseous synthetic fuel derived from a waste feedstock 
        (including plastic waste and biomass (as defined in section 
        29(c)).''.
    (c) Energy Percentage is 15 Percent.--Subsection (b) of section 
48A, as so added, is amended in paragraph (1)(C) by striking 
``subsection (c)(1)(A)(v)'' and inserting ``clauses (v) and (viii) of 
subsection (c)(1)(A)''.

             TITLE III--ENERGY EFFICIENCY AND CONSERVATION

SEC. 301. ENERGY-EFFICIENT COMMERCIAL BUILDING PROPERTY DEDUCTION.

    (a) In General.--Part VI of subchapter B of chapter 1 (relating to 
itemized deductions for individuals and corporations) is amended by 
adding at the end the following:

``SEC. 199. ENERGY-EFFICIENT COMMERCIAL BUILDING PROPERTY.

    ``(a) In General.--There shall be allowed as a deduction for the 
taxable year an amount equal to the energy-efficient commercial 
building property expenditures made by a taxpayer for the taxable year.
    ``(b) Maximum Amount of Deduction.--The amount of energy-efficient 
commercial building property expenditures taken into account under 
subsection (a) shall not exceed an amount equal to the product of--
            ``(1) $2.25, and
            ``(2) the square footage of the building with respect to 
        which the expenditures are made.
    ``(c) Year Deduction Allowed.--The deduction under subsection (a) 
shall be allowed in the taxable year in which the construction of the 
building is completed.
    ``(d) Energy-Efficient Commercial Building Property Expenditures.--
For purposes of this section--
            ``(1) In general.--The term `energy-efficient commercial 
        building property expenditures' means an amount paid or 
        incurred for energy-efficient commercial building property 
        installed on or in connection with new construction or 
        reconstruction of property--
                    ``(A) for which depreciation is allowable under 
                section 167,
                    ``(B) which is located in the United States, and
                    ``(C) the construction or erection of which is 
                completed by the taxpayer.
        Such property includes all residential rental property, 
        including low-rise multifamily structures and single family 
        housing property which is not within the scope of Standard 
        90.1-1999 (described in paragraph (3)).
            ``(2) Labor costs included.--Such term includes 
        expenditures for labor costs properly allocable to the onsite 
        preparation, assembly, or original installation of the 
        property.
            ``(3) Energy expenditures excluded.--Such term does not 
        include any expenditures taken into account in determining any 
        credit allowed under section 48A.
    ``(e) Energy-Efficient Commercial Building Property.--For purposes 
of subsection (d)--
            ``(1) In general.--The term `energy-efficient commercial 
        building property' means any property which reduces total 
        annual energy and power costs with respect to the lighting, 
        heating, cooling, ventilation, and hot water supply systems of 
        the building by 50 percent or more in comparison to a reference 
        building which meets the requirements of Standard 90.1-1999 of 
        the American Society of Heating, Refrigerating, and Air 
        Conditioning Engineers and the Illuminating Engineering Society 
        of North America using methods of calculation under 
        subparagraph (B) and certified by qualified professionals as 
        provided under paragraph (6).
            ``(2) Methods of calculation.--The Secretary, in 
        consultation with the Secretary of Energy, shall promulgate 
        regulations which describe in detail methods for calculating 
        and verifying energy and power consumption and cost, taking 
        into consideration the provisions of the 1998 California 
        Nonresidential ACM Manual. These procedures shall meet the 
        following requirements:
                    ``(A) In calculating tradeoffs and energy 
                performance, the regulations shall prescribe the costs 
                per unit of energy and power, such as kilowatt hour, 
                kilowatt, gallon of fuel oil, and cubic foot or Btu of 
                natural gas, which may be dependent on time of usage.
                    ``(B) The calculational methodology shall require 
                that compliance be demonstrated for a whole building. 
                If some systems of the building, such as lighting, are 
                designed later than other systems of the building, the 
                method shall provide that either--
                            ``(i) the expenses taken into account under 
                        paragraph (1) shall not occur until the date 
designs for all energy-using systems of the building are completed, or
                            ``(ii) the expenses taken into account 
                        under paragraph (1) shall be a fraction of such 
                        expenses based on the performance of less than 
                        all energy-using systems in accordance with 
                        subparagraph (C), and the energy performance of 
                        all systems and components not yet designed 
                        shall be assumed to comply minimally with the 
                        requirements of such Standard 90.1-1999.
                    ``(C) The expenditures in connection with the 
                design of subsystems in the building, such as the 
                envelope, the heating, ventilation, air conditioning 
                and water heating system, and the lighting system shall 
                be allocated to the appropriate building subsystem 
                based on system-specific energy cost savings targets in 
                regulations promulgated by the Secretary of Energy 
                which are equivalent, using the calculation 
                methodology, to the whole building requirement of 50 
                percent savings.
                    ``(D) The calculational methods under this 
                paragraph need not comply fully with section 11 of such 
                Standard 90.1-1999.
                    ``(E) The calculational methods shall be fuel 
                neutral, such that the same energy efficiency features 
                shall qualify a building for the deduction under this 
                section regardless of whether the heating source is a 
                gas or oil furnace or an electric heat pump.
                    ``(F) The calculational methods shall provide 
                appropriate calculated energy savings for design 
                methods and technologies not otherwise credited in 
                either such Standard 90.1-1999 or in the 1998 
                California Nonresidential ACM Manual, including the 
                following:
                            ``(i) Natural ventilation.
                            ``(ii) Evaporative cooling.
                            ``(iii) Automatic lighting controls such as 
                        occupancy sensors, photocells, and timeclocks.
                            ``(iv) Daylighting.
                            ``(v) Designs utilizing semi-conditioned 
                        spaces which maintain adequate comfort 
                        conditions without air conditioning or without 
                        heating.
                            ``(vi) Improved fan system efficiency, 
                        including reductions in static pressure.
                            ``(vii) Advanced unloading mechanisms for 
                        mechanical cooling, such as multiple or 
                        variable speed compressors.
                            ``(viii) The calculational methods may take 
                        into account the extent of commissioning in the 
                        building, and allow the taxpayer to take into 
                        account measured performance which exceeds 
                        typical performance.
            ``(3) Computer software.--
                    ``(A) In general.--Any calculation under this 
                subsection shall be prepared by qualified computer 
                software.
                    ``(B) Qualified computer software.--For purposes of 
                this paragraph, the term `qualified computer software' 
                means software--
                            ``(i) for which the software designer has 
                        certified that the software meets all 
                        procedures and detailed methods for calculating 
                        energy and power consumption and costs as 
                        required by the Secretary,
                            ``(ii) which provides such forms as 
                        required to be filed by the Secretary in 
                        connection with energy efficiency of property 
                        and the deduction allowed under this section, 
                        and
                            ``(iii) which provides a notice form which 
                        summarizes the energy efficiency features of 
                        the building and its projected annual energy 
                        costs.
            ``(4) Allocation of deduction for public property.--In the 
        case of energy-efficient commercial building property installed 
        on or in public property, the Secretary shall promulgate a 
        regulation to allow the allocation of the deduction to the 
        person primarily responsible for designing the property in lieu 
        of the public entity which is the owner of such property. Such 
        person shall be treated as the taxpayer for purposes of this 
        section.
            ``(5) Notice to owner.--The qualified individual shall 
        provide an explanation to the owner of the building regarding 
        the energy efficiency features of the building and its 
        projected annual energy costs as provided in the notice under 
        paragraph (3)(B)(iii).
            ``(6) Certification.--
                    ``(A) In general.--Except as provided in this 
                paragraph, the Secretary, in consultation with the 
                Secretary of Energy, shall establish requirements for 
                certification and compliance procedures similar to the 
                procedures under section 45E(d).
                  ``(B) Qualified individuals.--Individuals qualified 
                to determine compliance shall be only those individuals 
                who are recognized by an organization certified by the 
                Secretary for such purposes.
                  ``(C) Proficiency of qualified individuals.--The 
                Secretary shall consult with nonprofit organizations 
                and State agencies with expertise in energy efficiency 
                calculations and inspections to develop proficiency 
                tests and training programs to qualify individuals to 
                determine compliance.
    ``(f) Regulations.--The Secretary shall promulgate such regulations 
as necessary to take into account new technologies regarding energy 
efficiency and renewable energy for purposes of determining energy 
efficiency and savings under this section.
    ``(g) Termination.--This section shall not apply with respect to 
any energy-efficient commercial building property expenditures in 
connection with property--
            ``(1) the plans for which are not certified under 
        subsection (e)(6) on or before December 31, 2007, and
            ``(2) the construction of which is not completed on or 
        before December 31, 2009.''.
    (b) Conforming Amendments.--Section 1016(a), as amended by section 
203(b), is amended by striking ``and'' at the end of paragraph (29), by 
striking the period at the end of paragraph (30) and inserting ``, 
and'', and by inserting the following:
            ``(31) for amounts allowed as a deduction under section 
        199(a).''.
    (c) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 is amended by adding at the end the 
following:

``Sec. 199. Energy-efficient commercial building property.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 302. CREDIT FOR CONSTRUCTION OF NEW HIGHLY ENERGY-EFFICIENT HOMES.

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

``SEC. 45E. NEW HIGHLY ENERGY-EFFICIENT HOME CREDIT.

    ``(a) In General.--For purposes of section 38, in the case of an 
eligible contractor, the credit determined under this section for the 
taxable year is an amount equal to the credit amount specified in the 
following table for a new, highly energy-efficient principal residence:

``New, highly energy-efficient                           Credit amount:
        principal residence:
        30 percent property.................................... $1,250 
        50 percent property.................................... $2,500.
    ``(b) Highly Energy-Efficient Principal Residence.--For purposes of 
this section--
            ``(1) In general.--The term `highly energy-efficient 
        principal residence' means a dwelling--
                    ``(A) located in the United States,
                    ``(B) the construction of which is substantially 
                completed after December 31, 2001,
                    ``(C) the original use of which is as a principal 
                residence (within the meaning of section 121) which 
                commences with the person who acquires such dwelling 
                from the eligible contractor, and
                    ``(D) which is certified before such use commences 
                as being 50 percent property or 30 percent property.
            ``(2) 50 or 30 percent property.--
                    ``(A) In general.--For purposes of paragraph (1), 
                property is 50 percent property or 30 percent property 
                if the projected heating and cooling energy usage of 
                such property, measured in terms of average annual 
                energy cost to taxpayer, is reduced by 50 percent, or 
                30 percent, respectively, in comparison to the energy 
                usage of the standard design reference house as 
                determined using the procedures under subparagraph (D).
                    ``(B) Standard design reference house.--For 
                purposes of this subsection, the term `standard design 
                reference house' means a dwelling which conforms with 
                the standards of chapter 4 of the 2000 International 
                Energy Conservation Code of the International Code 
                Council and the minimum equipment efficiency standards 
                promulgated by the Department of Energy under the 
                National Appliance Energy Conservation Act.
                    ``(C) Energy efficient reference house.--For 
                purposes of this paragraph, the term `energy efficient 
                reference house' means a design of a dwelling which 
                uses the same heating fuel type as the proposed design 
                and which uses minimum standards equipment, as required 
                by the Department of Energy under the National 
                Appliance Energy Conservation Act and which achieves, 
                on average over fuel type and house geometry, the 
                required 30 percent or 50 percent reductions in annual 
                energy cost as calculated using the procedures under 
                subparagraph (D).
                    ``(D) Procedures.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), 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, for the strong majority of 
                        houses which can use this method, to the 
                        results of using the performance-based approach 
                        of clause (iii) to achieve the required 
                        reduction in energy usage.
                            ``(iii) Performance-based approach.--
                        Performance-based compliance shall be 
                        demonstrated in terms of equivalent or less 
                        energy usage when compared to the energy 
                        efficient reference house of the same heating 
                        fuel type as the dwelling concerned or through 
                        an alternate method prescribed by the Secretary 
                        which yields equivalent results.
                            ``(iv) Computer software.--Computer 
                        software shall be used in support of 
                        performance-based compliance under clause (iii) 
                        and such software shall 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 and verification 
                        protocols shall be based on the 1998 California 
                        Residential Alternative Calculation Method 
                        Approval Manual.
                            ``(v) Fuel parity.--In the case of both the 
                        component and the performance-based approaches, 
                        and any software used in support of either such 
                        approach, the Secretary shall assure fuel 
                        parity by requiring both the energy efficient 
                        reference house and the prescriptive package 
                        under clause (ii) to employ the same envelope 
                        energy efficiency measures for a house heated 
                        by a gas furnace as for a house heated by an 
                        electric air source heat pump or by an oil 
                        furnace or boiler; and, for equipment 
                        efficiency, to employ electric, oil, or gas 
                        equipment efficiency of corresponding 
                        efficiency improvement. Such determination of 
                        corresponding efficiency improvement shall be 
                        made on a linear scale between the minimum 
                        standard equipment efficiency and the best 
                        available marketplace technology efficiency as 
                        determined by the Secretary after considering 
                        the information provided by the Air 
                        Conditioning and Refrigeration Institute (ARI) 
                        and the Gas Appliance Manufacturers Association 
                        (GAMA) guides for the respective electric, oil, 
                        and natural gas equipment of such type (such as 
                        heating and cooling).
                            ``(vi) Approval of software submissions.--
                        The Secretary shall approve software 
                        submissions that comply with the calculation 
                        requirements of clause (iv).
                            ``(vii) Procedures for inspection and 
                        testing of homes.--The Secretary shall ensure 
                        that procedures for the inspection and testing 
                        for compliance comply with the calculation 
                        requirements under clause (iv).
            ``(3) Determinations of compliance.--A determination of 
        compliance made for the purposes of this subsection shall be 
        filed with the Secretary within 1 year after 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 shall be 
        available for inspection by the Secretary of Energy.
            ``(4) Compliance.--
                    ``(A) In general.--The Secretary, in consultation 
                with the Secretary of Energy 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.
                    ``(B) 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 for such purposes. The Secretary may qualify 
                a Home Energy Rating Systems Organization, a local 
                building code agency, a State or local energy office, a 
                utility, or other organizations which meet the 
                requirements prescribed under this section.
            ``(5) Form provided to buyer.--
                    ``(A) In general.--A form documenting the energy-
                efficiency of the dwelling, including the rated energy 
                efficiency performance of equipment installed in the 
                dwelling, shall be provided to the buyer of the 
                dwelling. The form shall include labeled R-value for 
                insulation products, NFRC-labeled U-factor and Solar 
                Heat Gain Coefficient for windows, skylights, and 
                doors, labeled AFUE ratings for furnaces and boilers, 
                labeled HSPF ratings for electric heat pumps, and 
                labeled SEER ratings for air conditioners.
                    ``(B) Ratings label affixed in dwelling.--A 
                permanent label documenting the ratings in subparagraph 
                (A) shall be affixed to the front of the electrical 
                distribution panel of the dwelling, or shall be 
                otherwise permanently displayed in a readily 
                inspectable location in the dwelling.
    ``(c) Additional Definitions.--For purposes of this section--
            ``(1) Eligible contractor.--The term `eligible contractor' 
        means the person who constructed the new energy-efficient home, 
        or in the case of a manufactured home which conforms to Federal 
        Manufactured Home Construction and Safety Standards (24 C.F.R. 
        3280), the manufactured home producer of such home.
            ``(2) Construction.--The term `construction' includes 
        reconstruction and rehabilitation.
            ``(3) Acquire.--The term `acquire' includes purchase and, 
        in the case of reconstruction and rehabilitation, such term 
        includes a binding written contract for such reconstruction or 
        rehabilitation.
            ``(4) Manufactured home included.--The term `dwelling' 
        includes a manufactured home conforming to Federal Manufactured 
        Home Construction and Safety Standards (24 C.F.R. 3280).
    ``(d) Coordination With Other Credits.--Property which would, but 
for this paragraph, be eligible for credit under more than one 
provision of this section shall be eligible only under one such 
provision, the provision specified by the taxpayer.
    ``(e) Basis Adjustment.--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.
    ``(f) Termination.--Subsection (a) shall apply to dwellings 
purchased during the period beginning on January 1, 2001, and ending on 
December 31, 2005.''.
    (b) Credit Made Part of General Business Credit.--Section 38(b) 
(relating to current year business credit), as amended by section 202, 
is amended by striking ``plus'' at the end of paragraph (15), by 
striking the period at the end of paragraph (16) and inserting ``, 
plus'', and by adding at the end the following:
            ``(17) the new highly energy-efficient home credit 
        determined under section 45E.''.
    (c) Denial of Double Benefit.--Section 280C (relating to certain 
expenses for which credits are allowable) is amended by adding at the 
end the following:
    ``(d) New Energy-Efficient Home Expenses.--No deduction shall be 
allowed for that portion of expenses for a new highly energy-efficient 
home 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 45E.''.
    (d) Credit Allowed Against Regular and Minimum Tax.--
            (1) In general.--Section 38(c) (relating to limitation 
        based on amount of tax), as amended by section 102, is amended 
        by redesignating paragraph (4) as paragraph (5) and by 
        inserting after paragraph (3) the following new paragraph:
            ``(4) Special rules for new energy efficient home credit.--
                    ``(A) In general.--In the case of the new energy 
                efficient home credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to the credit, 
                        and
                            ``(ii) in applying paragraph (1) to the 
                        credit--
                                    ``(I) subparagraphs (A) and (B) 
                                thereof shall not apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the new energy 
                                efficient home credit).
                    ``(B) New highly energy efficient home credit.--For 
                purposes of this subsection, the term `new highly 
                energy efficient home credit' means the credit 
                allowable under subsection (a) by reason of section 
                45E.''.
            (2) Conforming amendment.--Subclause (II) of section 
        38(c)(2)(A)(ii) is amended by inserting ``or the new highly 
        energy efficient home credit'' after ``employment credit''.
    (e) Limitation on Carryback.--Section 39(d) (relating to transition 
rules), as amended by section 202, is amended by adding at the end the 
following:
            ``(12) No carryback of new highly energy-efficient home 
        credit before effective date.--No portion of the unused 
        business credit for any taxable year which is attributable to 
        the credit determined under section 45E may be carried back to 
        any taxable year ending before January 1, 2001.''.
    (f) Deduction for Certain Unused Business Credits.--Subsection (c) 
of section 196 is amended by striking ``and'' at the end of paragraph 
(7), by striking the period at the end of paragraph (8) and inserting 
``, and'', and by adding after paragraph (8) the following:
            ``(9) the new highly energy-efficient home credit 
        determined under section 45E.''.
    (g) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 45D the following:

                              ``Sec. 45E. New highly energy-efficient 
                                        home credit.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2001.

SEC. 303. CREDIT FOR ENERGY EFFICIENT APPLIANCES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business-related credits), as amended by section 302, is 
amended by adding at the end the following new section:

``SEC. 45F. ENERGY EFFICIENT APPLIANCE CREDIT.

    ``(a) General Rule.--For purposes of section 38, the energy 
efficient appliance credit determined under this section for the 
taxable year is an amount equal to the applicable amount determined 
under subsection (b) with respect to qualified energy efficient 
appliances produced by the taxpayer during the calendar year ending 
with or within the taxable year.
    ``(b) Applicable Amount.--For purposes of subsection (a), the 
applicable amount determined under this subsection with respect to a 
taxpayer is the sum of--
            ``(1) in the case of an energy efficient clothes washer 
        described in subsection (d)(2)(A) or an energy efficient 
        refrigerator described in subsection (d)(3)(B)(i), an amount 
        equal to--
                    ``(A) $50, multiplied by
                    ``(B) the number of such washers and refrigerators 
                produced by the taxpayer during such calendar year, and
            ``(2) in the case of an energy efficient clothes washer 
        described in subsection (d)(2)(B) or an energy efficient 
        refrigerator described in subsection (d)(3)(B)(ii), an amount 
        equal to--
                    ``(A) $100, multiplied by
                    ``(B) the number of such washers and refrigerators 
                produced by the taxpayer during such calendar year.
    ``(c) Limitation on Maximum Credit.--
            ``(1) In general.--The maximum amount of credit allowed 
        under subsection (a) with respect to a taxpayer for all taxable 
        years shall be--
                    ``(A) $30,000,000 with respect to the credit 
                determined under subsection (b)(1), and
                    ``(B) $30,000,000 with respect to the credit 
                determined under subsection (b)(2).
            ``(2) Limitation based on gross receipts.--The credit 
        allowed under subsection (a) with respect to a taxpayer for the 
        taxable year shall not exceed an amount equal to 2 percent of 
        the average annual gross receipts of the taxpayer for the 3 
        taxable years preceding the taxable year in which the credit is 
        determined.
            ``(3) Gross receipts.--For purposes of this subsection, the 
        rules of paragraphs (2) and (3) of section 448(c) shall apply.
    ``(d) Qualified Energy Efficient Appliance.--For purposes of this 
section--
            ``(1) In general.--The term `qualified energy efficient 
        appliance' means--
                    ``(A) an energy efficient clothes washer, or
                    ``(B) an energy efficient refrigerator.
            ``(2) Energy efficient clothes washer.--The term `energy 
        efficient clothes washer' means a residential clothes washer, 
        including a residential style coin operated washer, which is 
        manufactured with--
                    ``(A) a 1.26 Modified Energy Factor (referred to in 
                this paragraph as `MEF') (as determined by the 
                Secretary of Energy), or
                    ``(B) a 1.42 MEF (as determined by the Secretary of 
                Energy) (1.5 MEF for calendar years beginning after 
                2004).
            ``(3) Energy efficient refrigerator.--The term `energy 
        efficient refrigerator' means an automatic defrost 
        refrigerator-freezer which--
                    ``(A) has an internal volume of at least 16.5 cubic 
                feet, and
                    ``(B) consumes--
                            ``(i) 10 percent less kw/hr/yr than the 
                        energy conservation standards promulgated by 
                        the Department of Energy for such refrigerator 
                        for 2001, or
                            ``(ii) 15 percent less kw/hr/yr than such 
                        energy conservation standards.
    ``(e) Special Rules.--
            ``(1) In general.--Rules similar to the rules of 
        subsections (c), (d), and (e) of section 52 shall apply for 
        purposes of this section.
            ``(2) Aggregation rules.--All persons treated as a single 
        employer under subsection (a) or (b) of section 52 or 
        subsection (m) or (o) of section 414 shall be treated as one 
        person for purposes of subsection (a).
    ``(f) Verification.--The taxpayer shall submit such information or 
certification as the Secretary, in consultation with the Secretary of 
Energy, determines necessary to claim the credit amount under 
subsection (a).
    ``(g) Termination.--This section shall not apply to qualified 
energy efficient appliances produced in calendar years beginning after 
2006.''.
    (b) Limitation on Carryback.--Section 39(d) (relating to transition 
rules), as amended by section 302, is amended by adding at the end the 
following new paragraph:
            ``(13) No carryback of energy efficient appliance credit 
        before effective date.--No portion of the unused business 
        credit for any taxable year which is attributable to the energy 
        efficient appliance credit determined under section 45F may be 
        carried to a taxable year ending before the date of the 
        enactment of section 45F.''.
    (c) Conforming Amendment.--Section 38(b) (relating to general 
business credit), as amended by section 302, is amended by striking 
``plus'' at the end of paragraph (16), by striking the period at the 
end of paragraph (17) and inserting ``, plus'', and by adding at the 
end the following new paragraph:
            ``(18) the energy efficient appliance credit determined 
        under section 45F(a).''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1, as amended by section 302, is 
amended by inserting after the item relating to section 45E the 
following new item:

                              ``Sec. 45F. Energy efficient appliance 
                                        credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 304. CREDIT FOR ADJUSTABLE SPEED DRIVES.

    (a) In General.--Subparagraph (A) of section 48A(c)(1) (defining 
energy property), as added by section 401 and amended by section 206, 
is amended by striking ``or'' at the end of clause (vii), by adding 
``or'' at the end of clause (viii), and by inserting after clause 
(viii) the following new clause:
                            ``(ix) adjustable speed drive property,''.
    (b) Adjustable Speed Drive Property.--Subsection (d) of section 
48A, as so added, is amended by adding at the end the following new 
paragraph:
            ``(9) Adjustable speed drive property.--
                    ``(A) In general.--The term `adjustable speed drive 
                property' means equipment installed as part of an 
                electric motor driven system of 10 horsepower or 
                greater--
                            ``(i) that is used to adjust the speed of 
                        the electric motor drive output to the 
                        requirements of a fluctuating load, and
                            ``(ii) that achieves an energy savings of 
                        at least 20 percent during a complete cycle of 
                        operation.
                    ``(B) Limitation.--In the case of adjustable speed 
                drive property placed in service during the taxable 
                year, the credit under subsection (a) for such year may 
                not exceed $10,000 for each item of such property.
                    ``(C) Coordination with deduction for energy-
                efficient commercial building property.--The energy 
                percentage shall apply to the basis of adjustable speed 
                drive property after adjustment under section 
                1016(a)(31).''.

SEC. 305. CREDIT FOR ENERGY EFFICIENT RECYCLING OR REMANUFACTURING 
              EQUIPMENT.

    (a) In General.--Section 46 (relating to amount of investment 
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 new paragraph:
            ``(4) the reclamation credit.''
    (b) Reclamation Credit.--Section 48 (relating to energy credit and 
reforestation credit), as amended by section 401, is amended by adding 
at the end the following new subsection:
    ``(c) Reclamation Credit.--
            ``(1) In general.--For purposes of section 46, the 
        reclamation credit for any taxable year is 20 percent of the 
        basis of each qualified reclamation property placed in service 
        during the taxable year.
            ``(2) Qualified reclamation property.--
                    ``(A) In general.--For purposes of this section, 
                the term `qualified reclamation property' means 
                property--
                            ``(i) which is qualified recycling property 
                        or qualified remanufacturing property,
                            ``(ii) which is tangible property (not 
                        including a building and its structural 
                        components),
                            ``(iii) with respect to which depreciation 
                        (or amortization in lieu of depreciation) is 
                        allowable,
                            ``(iv) which has a useful life of at least 
                        5 years, and
                            ``(v) which is--
                                    ``(I) acquired by purchase (as 
                                defined in section 179(d)(2)) by the 
                                taxpayer if the original use of such 
                                property commences with the taxpayer, 
                                or
                                    ``(II) constructed by or for the 
                                taxpayer.
                    ``(B) Dollar Limitation.--
                            ``(i) In general.--The basis of qualified 
                        reclamation property taken into account under 
                        paragraph (1) for any taxable year shall not 
                        exceed $10,000,000 for a taxpayer.
                            ``(ii) Treatment of controlled group.--For 
                        purposes of clause (i)--
                                    ``(I) all component members of a 
                                controlled group shall be treated as 
                                one taxpayer, and
                                    ``(II) the Secretary shall 
                                apportion the dollar limitation in such 
                                clause among the component members of 
                                such controlled group in such manner as 
                                he shall by regulation prescribe.
                            ``(iii) Treatment of partnerships and s 
                        corporations.--In the case of a partnership, 
                        the dollar limitation in clause (i) shall apply 
                        with respect to the partnership and with 
                        respect to each partner. A similar rule shall 
                        apply in the case of an S corporation and its 
                        shareholders.
                            ``(iv) Controlled group defined.--For 
                        purposes of clause (ii), the term `controlled 
                        group' has the meaning given such term by 
                        section 1563(a), except that `more than 50 
                        percent' shall be substituted for `at least 80 
                        percent' each place it appears in section 
                        1563(a)(1).
            ``(3) 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 subsection.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) Qualified recycling property.--The term 
                `qualified recycling property' means equipment used 
                exclusively to collect, distribute, or sort used 
                ferrous or nonferrous metals. The term does not include 
                equipment used to collect, distribute, or sort precious 
                metals such as gold, silver, or platinum unless such 
                use is coincidental to the collection, distribution, or 
                sorting of other used ferrous or nonferrous metals.
                    ``(B) Qualified remanufacturing property.--The term 
                `qualified remanufacturing property' means equipment 
                used primarily by the taxpayer in the business of 
                rebuilding or remanufacturing a used product or part, 
                but only if--
                            ``(i) the rebuilt or remanufactured product 
                        or part includes 50 percent or less virgin 
                        material, and
                            ``(ii) the equipment is not used primarily 
                        in a process occurring after the product or 
                        part is rebuilt or remanufactured.
            ``(5) Coordination with rehabilitation and energy 
        credits.--For purposes of this section--
                    ``(A) the basis of any qualified reclamation 
                property shall be reduced by that portion of the basis 
                of any property which is attributable to qualified 
                rehabilitation expenditures (as defined in section 
                47(c)(2)) or to the energy percentage of energy 
                property (as determined under section 48A), and
                    ``(B) expenditures taken into account under either 
                section 47 or 48A shall not be taken into account under 
                this section.''.
    (c) Special Basis Adjustment Rule.--Paragraph (3) of section 50(c) 
(relating to basis adjustment to investment credit property) is amended 
by striking ``energy credit or reforestation credit'' and inserting 
``energy credit, reforestation credit, or reclamation credit''.
    (d) Clerical Amendments.--
            (1) The section heading for section 48, as amended by 
        section 401, is amended to read as follows:

``SEC. 48. REFORESTATION CREDIT; RECLAMATION CREDIT.''

            (2) The item relating to section 48 in the table of 
        sections for subpart E of part IV of subchapter A of chapter 1 
        is amended to read as follows:

                              ``Sec. 48. Reforestation credit; 
                                        reclamation credit.''
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001.

     TITLE IV--DEMAND MANAGEMENT AND DISTRIBUTED ENERGY GENERATION

SEC. 401. CREDIT FOR DISTRIBUTED ENERGY GENERATION AND DEMAND 
              MANAGEMENT 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 energy percentage of the basis of each 
energy property placed in service during such 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), and (vi) 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 
                        other than property described in clauses 
                        (iii)(I) and (v)(I) of subsection (d)(3)(A),
                            ``(iv) combined heat and power system 
                        property,
                            ``(v) low core loss distribution 
                        transformer property, or
                            ``(vi) qualified anaerobic digester 
                        property, or
                    ``(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) Exception for 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).
    ``(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 which--
                                    ``(I) generates electricity using 
                                an electrochemical process,
                                    ``(II) has an electricity-only 
                                generation efficiency greater than 30 
                                percent, and
                                    ``(III) has a minimum generating 
                                capacity of 1 kilowatt,
                            ``(ii) an electric heat pump hot water 
                        heater which yields an energy factor of 1.7 or 
                        greater under test procedures prescribed by the 
                        Secretary of Energy,
                            ``(iii)(I) an electric heat pump which has 
                        a heating system performance factor (HSPF) of 
                        at least 8.5 but less than 9 and a cooling 
                        seasonal energy efficiency ratio (SEER) of at 
                        least 13.5 but less than 15 and an energy 
                        efficiency ratio (EER) of at least 11.5,
                            ``(II) an electric heat pump which has a 
                        heating system performance factor (HSPF) of 9 
                        or greater and a cooling seasonal energy 
                        efficiency ratio (SEER) of 15 or greater and an 
                        energy efficiency ratio (EER) of at least 12.5,
                            ``(iv) a natural gas heat pump which has a 
                        coefficient of performance of not less than 
                        1.25 for heating and not less than 0.70 for 
                        cooling,
                            ``(v)(I) a central air conditioner which 
                        has a cooling seasonal energy efficiency ratio 
                        (SEER) of at least 13.5 but less than 15 and an 
                        energy efficiency ratio (EER) of at least 11.5,
                            ``(II) a central air conditioner which has 
                        a cooling seasonal energy efficiency ratio 
                        (SEER) of 15 or greater and an energy 
                        efficiency ratio (EER) of at least 12.5,
                            ``(vi) an advanced natural gas water heater 
                        which--
                                    ``(I) increases steady state 
                                efficiency and reduces standby and vent 
                                losses, and
                                    ``(II) has an energy factor of at 
                                least 0.65, and
                            ``(vii) an advanced natural gas furnace 
                        which achieves a 90 percent AFUE and rated for 
                        seasonal electricity use of less than 300 kWh 
                        per year.
                    ``(B) Limitations.--The credit under subsection (a) 
                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 any fuel cell described in 
                        subparagraph (A)(i), and
                            ``(iii) $3,000 in the case of any 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 the same 
                        energy source for the simultaneous or 
                        sequential generation of electrical power, 
                        mechanical shaft power, or both, in combination 
                        with steam, heat, or other forms of useful 
                        energy,
                            ``(ii) which has an electrical capacity of 
                        more than 20 kilowatts or a mechanical energy 
                        capacity of more than 67 horsepower or an 
                        equivalent combination of electrical and 
                        mechanical energy capacities,
                            ``(iii) which produces--
                                    ``(I) at least 20 percent of its 
                                total useful energy in the form of 
                                thermal energy, and
                                    ``(II) at least 20 percent of its 
                                total useful energy in the form of 
                                electrical or mechanical power (or a 
                                combination thereof), and
                            ``(iv) the energy efficiency percentage of 
                        which exceeds--
                                    ``(I) 60 percent in the case of a 
                                system with an electrical capacity of 
                                less than 1 megawatt),
                                    ``(II) 65 percent in the case of a 
                                system with an electrical capacity of 
                                not less than 1 megawatt and not in 
                                excess of 50 megawatts), and
                                    ``(III) 70 percent in the case of a 
                                system with an electrical capacity in 
                                excess of 50 megawatts).
                    ``(B) Special rules.--
                            ``(i) Energy efficiency percentage.--For 
                        purposes of subparagraph (A)(iv), the energy 
                        efficiency percentage of a system is the 
                        fraction--
                                    ``(I) the numerator of which is the 
                                total useful electrical, thermal, and 
                                mechanical power produced by the system 
                                at normal operating rates, and
                                    ``(II) the denominator of which is 
                                the lower heating value of the primary 
                                fuel source for the system.
                            ``(ii) Determinations made on btu basis.--
                        The energy efficiency percentage shall be 
                        determined on a Btu basis.
                            ``(iii) Input and output property not 
                        included.--The term `combined heat and power 
                        system property' does not include property used 
                        to transport the energy source to the facility 
                        or to distribute energy produced by the 
                        facility.
                            ``(iv) Accounting rule for public utility 
                        property.--If the 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 that has an efficiency rating based on 
        the National Electrical Manufacturers Association (NEMA) TP-2 
        test procedure equal to or exceeding--
                    ``(A) the NEMA TP-1 efficiency standard for the 
                type of transformer concerned, plus
                    ``(B) 0.5 percent of the NEMA TP-1 efficiency 
                standard.
            ``(6) Qualified anaerobic digester property.--The term 
        `qualified anaerobic digester property' means an anaerobic 
        digester for manure or crop waste which achieves at least 65 
        percent efficiency measured in terms of the fraction of energy 
        input converted to electricity and useful thermal energy.
    ``(e) 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.
    ``(f) Application of Section.--This section shall apply to property 
placed in service after December 31, 2001, and before January 1, 
2007.''.
    (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), as amended by section 303, is amended by 
        adding at the end the following:
            ``(14) 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 January 1, 2002.''.
            (3) Section 280C, as amended by section 302, is amended by 
        adding at the end the following:
    ``(e) 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(e)(1)(C)'.
            (5) Section 50(a)(2)(E) is amended by striking `section 
        48(a)(5)' and inserting `section 48A(e)(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.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001, 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. 402. CREDIT FOR DISTRIBUTED ENERGY GENERATION AND DEMAND 
              MANAGEMENT PROPERTY USED IN RESIDENCES.

    (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 25B the following:

``SEC. 25C. RESIDENTIAL DISTRIBUTED ENERGY GENERATION AND DEMAND 
              MANAGEMENT PROPERTY.

    ``(a) Allowance of Credit.--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--
            ``(1) 15 percent of the qualified photovoltaic property 
        expenditures,
            ``(2) 15 percent of the qualified solar water heating 
        property expenditures,
            ``(3) 25 percent of the qualified wind energy property 
        expenditures, and
            ``(4) 20 percent for the qualified fuel cell property 
        expenditures,
            ``(5) 20 percent for qualified energy-efficient building 
        property expenditures (10 percent for expenditures described in 
        subsection (c)(5)(B)),
made by the taxpayer during the taxable year.
    ``(b) Limitations.--
            ``(1) Maximum credit.--
                    ``(A) Solar.--The credit allowed under subsection 
                (a)(2) shall not exceed $2,000 for each system of solar 
                energy property.
                    ``(B) Wind.--The credit allowed under subsection 
                (a)(3) shall not exceed $5,000 for each system of wind 
                energy property.
                    ``(C) Energy-efficient building property.--The 
                credit allowed under subsection (a)(5) shall not exceed 
                $500 for each item of energy-efficient building 
                property.
            ``(2) Type of property.--No expenditure may be taken into 
        account under this section unless such expenditure is made by 
        the taxpayer for property installed on or in connection with a 
        dwelling unit which is located in the United States and which 
        is used as a residence.
            ``(3) 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 a photovoltaic, wind energy, 
                or fuel cell property, such property meets appropriate 
                fire and electric code requirements.
    ``(c) Definitions and Special Rules Relating to Expenditures.--For 
purposes of this section--
            ``(1) Qualified photovoltaic property expenditure.--The 
        term `qualified photovoltaic property expenditure' means an 
        expenditure for property which uses solar energy to generate 
        electricity for use in a dwelling unit.
            ``(2) Qualified solar water heating property expenditure.--
        The term `qualified solar water heating property expenditure' 
        means an expenditure for property which uses solar energy to 
        heat water for use in a dwelling unit with respect to which a 
        majority of the energy is derived from the sun.
            ``(3) Qualified wind energy property expenditure.--The term 
        `qualified wind energy property expenditure' means an 
        expenditure for property which uses wind energy to generate 
        electricity for use in a dwelling unit.
            ``(4) Qualified fuel cell property expenditure.--The term 
        `qualified fuel cell property expenditure' means an expenditure 
        for property which uses an electrochemical fuel cell system to 
        generate electricity for use in a dwelling unit.
            ``(5) Qualified energy-efficient building property 
        expenditure.--
                    ``(A) In general.--The term `qualified energy-
                efficient building property expenditure' means an 
                expenditure for energy efficient building property 
                defined in clauses (ii), (iii), (iv), (v), (vi), and 
                (vii) of section 48A(d)(3)(A).
                    ``(B) 10 percent credit for certain property.--For 
                purposes of subsection (a)(5), the expenditures 
                described in this subparagraph are expenditures for 
                energy efficient building property defined in clauses 
                (iii)(II) and (iv)(II) of section 48A(d)(3)(A).
            ``(6) Solar panels.--No expenditure relating to a solar 
        panel or other property installed as a roof (or portion 
        thereof) shall fail to be treated as property described in 
        paragraph (1) or (2) solely because it constitutes a structural 
component of the structure on which it is installed.
            ``(7) Labor costs.--Expenditures for labor costs properly 
        allocable to the onsite preparation, assembly, or original 
        installation of the property described in paragraph (1), (2), 
        (3), (4), or (5) and for piping or wiring to interconnect such 
        property to the dwelling unit shall be taken into account for 
        purposes of this section.
            ``(8) Energy storage medium.--Expenditures which 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 shall not be taken into account for 
        purposes of this section.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Dollar amounts in case of joint occupancy.--In the 
        case of any dwelling unit which is 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 (as the case 
                may be) 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 such 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 items of solar or wind energy 
        property.--
                    ``(A) In general.--Any expenditure otherwise 
                qualifying as an expenditure described in paragraph 
                (1), (2), or (3) of subsection (c) 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.--If less than 80 percent 
        of the use of an item is for nonbusiness residential purposes, 
        only that portion of the expenditures for such item which is 
        properly allocable to use for nonbusiness residential 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 residential purposes.
            ``(6) 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 or reconstruction of a structure, such 
                expenditure shall be treated as made when the original 
                use of the constructed or reconstructed structure by 
                the taxpayer begins.
                    ``(C) Amount.--The amount of any expenditure shall 
                be the cost thereof.
            ``(7) Reduction of credit for grants, tax-exempt bonds, and 
        subsidized energy financing.--The rules of section 29(b)(3) 
        shall apply for purposes of this section.
    ``(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.
    ``(f) Termination.--The credit allowed under this section shall not 
apply to taxable years beginning after December 31, 2006.''.
    (b) Conforming Amendments.--
            (1) Section 1016(a), as amended by section 301(b), is 
        amended by striking ``and'' at the end of paragraph (30), by 
        striking the period at the end of paragraph (31) and inserting 
        ``; and'', and by adding at the end the following:
            ``(32) to the extent provided in section 25C(e), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25C.''.
            (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 25B the following:

                              ``Sec. 25C. Residential solar, wind, and 
                                        fuel cell energy property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures made after the date of the enactment of this Act, 
in taxable years ending after such date.

SEC. 403. CREDIT FOR ENERGY MANAGEMENT SYSTEMS USING RESIDENTIAL REAL 
              TIME METERING SYSTEMS.

    (a) Credit for Energy Management Systems.--
            (1) In general.--Subpart B of part IV of subchapter A of 
        chapter 1 (relating to foreign tax credits, etc.), as amended 
        by section 204, is amended by inserting after section 30C the 
        following new section:

``SEC. 30D. CREDIT FOR ENERGY MANAGEMENT SYSTEMS.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year--
            ``(1) an amount equal to $20 for each qualified energy 
        management device originally placed in service during the 
        taxable year, and
            ``(2) for each qualified retrofitted meter originally 
        placed in service during the taxable year, an amount equal to 
        the lesser of--
                    ``(A) $20, or
                    ``(B) the adjusted basis of such meter.
    ``(b) Definitions.--
            ``(1) Qualified energy management device.--For purposes of 
        this section, the term `qualified energy management device' 
        means any meter or metering device acquired and used by an 
        electric energy or natural gas supplier or service provider to 
        enable consumers or others to manage their purchase, sale, or 
        use of electricity or natural gas in response to energy price 
        and usage signals.
            ``(2) Qualified retrofitted meter.--For purposes of this 
        section, the term `qualified retrofitted meter' means an 
        electric energy or natural gas meter or metering device that 
        has been modified by the addition of equipment designed to 
        enable users to manage the purchase, sale, or use of 
        electricity and natural gas in response to energy price and 
        usage signals.
            ``(3) Placed in service.--For purposes of this section, the 
        term `placed in service' means interconnected with other 
        devices in a manner that permits reading of energy price and 
        usage signals on at least a daily basis.
            ``(4) Cost of meters includes cost of installation.--The 
        cost of any qualified energy management device or qualified 
        retrofitted meter referred to in paragraph (1) or (2) shall 
        include the cost of the original installation of such property.
    ``(c) Special Rules.--
            ``(1) Basis reduction.--The basis of any property for which 
        a credit is allowed under subsection (a) shall be reduced by 
        the amount of such credit.
            ``(2) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any property that ceases 
        to be property eligible for such credit.
            ``(3) Property used outside the united states, etc., not 
        qualified.--No credit shall be allowed under subsection (a) 
        with respect to any property referred to in section 50(b)(1) or 
        with respect to the portion of the cost of any property taken 
        into account under section 179.
            ``(4) Election to not take credit.--No credit shall be 
        allowed under subsection (a) for any energy management device 
        if the taxpayer elects to not have this section apply to such 
        device.
            ``(5) Credits for certain tax exempt organizations and 
        governmental units.--
                    ``(A) Allowance of credit.--Any credit which would 
                be allowable under subsection (a) with respect to a 
                qualified energy management device or a qualified 
                retrofitted meter placed in service by an entity if 
                such entity were not exempt from tax under this chapter 
                shall be treated as a credit allowable under subpart B 
                to such entity if such entity is--
                            ``(i) an organization described in section 
                        501(c)(12)(C) and exempt from tax under section 
                        501(a),
                            ``(ii) an organization described in section 
                        1381(a)(2)(C),
                            ``(iii) an entity the income of which is 
                        excludable from gross income under section 115, 
                        or
                            ``(iv) a State, the District of Columbia, 
                        any territory or possession of the United 
                        States, or any political subdivision thereof.
                    ``(B) Use of credit.--
                            ``(i) Transfer of credit.--An entity 
                        described in subparagraph (A) may assign, 
                        trade, sell, or otherwise transfer any credit 
                        allowable to such entity under subparagraph (A) 
                        to any taxpayer.
                            ``(ii) Use of credit as an offset.--
                        Notwithstanding any other provision of law, in 
                        the case of an entity described in clause (i) 
                        or (ii) of subparagraph (A), any credit 
                        allowable to such entity under subparagraph (A) 
                        may be applied by such entity, without penalty, 
                        as a prepayment of any loan, debt, or other 
                        obligation the entity has incurred under 
                        subchapter I of chapter 31 of title 7 of the 
                        Rural Electrification Act of 1936 (7 U.S.C. 901 
                        et seq.).
                    ``(C) Credit not income.--Neither a transfer under 
                clause (i) nor a use under clause (ii) of subparagraph 
                (B) of any credit allowable under subparagraph (A) 
                shall result in income for purposes of section 
                501(c)(12).
                    ``(D) Transfer proceeds treated as arising from 
                essential government function.--Any proceeds derived by 
                an entity described in subparagraph (A)(iii) from the 
                transfer of any credit under subparagraph (B)(i) shall 
                be treated as arising from an essential government 
                function.
    ``(d) Termination.--This section shall not apply to any property 
placed in service after December 31, 2007.''.
            (2) Inclusion of indian tribal governments.--Section 
        7871(a)(7), as amended by section 103, is amended by striking 
        ``and'' at the end of subparagraph (B), by striking the period 
        at the end of subparagraph (C), and by adding at the end the 
        following:
                    ``(D) section 30D (relating to credit for energy 
                management systems).''.
            (3) Conforming amendments.--
                    (A) The table of contents for subpart B of part IV 
                of subchapter A of chapter 1 is amended by inserting 
                after the item relating to section 30C the following 
                new item:

                              ``Sec. 30D. Credit for energy management 
                                        systems.''.
                    (B) Section 1016(a), as amended by section 402, is 
                amended by striking ``and'' at the end of paragraph 
                (31), by striking the period at the end of paragraph 
                (32) and inserting ``, and'', and by adding at the end 
                the following new paragraph:
            ``(33) to the extent provided in section 30D(c)(1).''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to qualified energy management devices placed in 
        service after the date of the enactment of this Act and to 
        qualified retrofitted meters that are placed in service on or 
        after, or that are in use as of, January 1, 2002.
    (b) 5-Year Applicable Recovery Period for Depreciation of Qualified 
Energy Management Devices.--
            (1) In general.--Subparagraph (B) of section 168(e)(3) of 
        the Internal Revenue Code of 1986 (relating to classification 
        of property) is amended by striking ``and'' at the end of 
        clause (v), by striking the period at the end of clause (vi) 
        and inserting ``, and'', and by adding at the end the following 
        new clause:
                            ``(vii) any qualified energy management 
                        device.''.
            (2) Definition of qualified energy management device.--
        Section 168(i) of such Code (relating to definitions and 
        special rules) is amended by inserting at the end the following 
        new paragraph:
            ``(15) Qualified energy management device.--The term 
        `qualified energy management device' means a meter or metering 
        device that is acquired and used by an electric energy or 
        natural gas supplier or service provider to enable consumers 
        and others to manage their purchase, sale, and use of 
        electricity or natural gas in response to energy price and 
        usage signals that are readable on at least a daily basis. For 
        purposes of the preceding sentence, the cost of any qualified 
        energy management device shall (at the election of the 
        taxpayer) include the cost of the original installation of such 
        property.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to property placed in service after December 31, 
        2000, and before January 1, 2007.

SEC. 404. CREDIT FOR FLYWHEEL PROPERTY.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
(relating to foreign tax credits, etc.), as amended by section 403, is 
amended by inserting after section 30D the following new section:

``SEC. 30E. CREDIT FOR FLYWHEEL PROPERTY.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to 10 percent of the cost of any qualified flywheel property 
placed in service by the taxpayer during the taxable year.
    ``(b) Limitation.--The credit allowed under subsection (a) shall 
not exceed $2,000 for a taxable year.
    ``(c) Qualified Flywheel Property.--For purposes of this section, 
the term `qualified flywheel property' means a flywheel designed 
exclusively to store energy that is used to generate electricity.
    ``(d) Special Rules.--
            ``(1) Basis reduction.--The basis of any property for which 
        a credit is allowable under subsection (a) shall be reduced by 
        the amount of such credit.
            ``(2) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any property that ceases 
        to be property eligible for such credit.
            ``(3) Property used outside the united states, etc., not 
        qualified.--No credit shall be allowed under subsection (a) 
        with respect to any property referred to in section 50(b)(1) or 
        with respect to the portion of the cost of any property taken 
        into account under section 179.
            ``(4) Election to not take credit.--No credit shall be 
        allowed under subsection (a) for any qualified flywheel 
        property if the taxpayer elects to not have this section apply 
        to such property.
    ``(d) Termination.--This section shall not apply to any property 
placed in service after December 31, 2007.''.
    (b) Conforming Amendments.--
            (1) The table of contents for subpart B of part IV of 
        subchapter A of chapter 1, as amended by section 403, is 
        amended by inserting after the item relating to section 30D the 
        following new item:

                              ``Sec. 30E. Credit for qualified flywheel 
                                        property.''.
            (2) Section 1016(a), as amended by section 403, is amended 
        by striking ``and'' at the end of paragraph (32), by striking 
        the period at the end of paragraph (33) and inserting ``, 
        and'', and by adding at the end the following new paragraph:
            ``(34) to the extent provided in section 30E(c)(1).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001, in taxable 
years ending after such date.
                                 <all>