[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2748 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 2748

To amend the Internal Revenue Code of 1986 to provide tax incentives to 
  promote energy production and conservation, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 4, 2006

 Mr. Bingaman (for himself, Mr. Bayh, Mr. Coleman, Mr. Lieberman, Mr. 
Lugar, Ms. Cantwell, Ms. Collins, Mr. Salazar, Mr. Kerry, Mrs. Clinton, 
  and Mr. Nelson of Florida) introduced the following bill; which was 
          read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide tax incentives to 
  promote energy production and conservation, and for other purposes.

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

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

    (a) Short Title.--This Act may be cited as the ``Enhanced Energy 
Security Tax Incentives Act of 2006''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; amendment of Code; table of contents.
                    TITLE I--EXTENSION OF INCENTIVES

Sec. 101. Extension of credit for electricity produced from certain 
                            renewable resources.
Sec. 102. Extension and expansion of credit to holders of clean 
                            renewable energy bonds.
Sec. 103. Extension of energy efficient commercial buildings deduction.
Sec. 104. Extension and expansion of new energy efficient home credit.
Sec. 105. Extension of nonbusiness energy property credit.
Sec. 106. Extension of residential energy efficient property credit.
Sec. 107. Extension of credit for business installation of qualified 
                            fuel cells and stationary microturbine 
                            power plants.
Sec. 108. Extension of business solar investment tax credit.
Sec. 109. Extension of alternative fuel excise tax provisions, income 
                            tax credits, and tariff duties.
Sec. 110. Extension of full credit for qualified electric vehicles.
           TITLE II--INCENTIVES FOR ALTERNATIVE FUEL VEHICLES

Sec. 201. Consumer incentives to purchase advanced technology vehicles.
Sec. 202. Advanced technology motor vehicles manufacturing credit.
Sec. 203. Tax incentives for private fleets.
Sec. 204. Modification of alternative vehicle refueling property 
                            credit.
Sec. 205. Inclusion of heavy vehicles in limitation on depreciation of 
                            certain luxury automobiles.
Sec. 206. Idling reduction tax credit.
                    TITLE III--ADDITIONAL INCENTIVES

Sec. 301. Energy credit for combined heat and power system property.
Sec. 302. Three-year applicable recovery period for depreciation of 
                            qualified energy management devices.
Sec. 303. Three-year applicable recovery period for depreciation of 
                            qualified water submetering devices.
                      TITLE IV--REVENUE PROVISIONS

Sec. 401. Revaluation of LIFO inventories of large integrated oil 
                            companies.
Sec. 402. Elimination of amortization of geological and geophysical 
                            expenditures for major integrated oil 
                            companies.
Sec. 403. Modifications of foreign tax credit rules applicable to large 
                            integrated oil companies which are dual 
                            capacity taxpayers.

                    TITLE I--EXTENSION OF INCENTIVES

SEC. 101. EXTENSION OF CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN 
              RENEWABLE RESOURCES.

    Section 45(d) (relating to qualified facilities) is amended by 
striking ``2008'' each place it appears and inserting ``2011''.

SEC. 102. EXTENSION AND EXPANSION OF CREDIT TO HOLDERS OF CLEAN 
              RENEWABLE ENERGY BONDS.

    (a) In General.--Section 54(m) (relating to termination) is amended 
by striking ``2007'' and inserting ``2010''.
    (b) Annual Volume Cap for Bonds Issued During Extension Period.--
Paragraph (1) of section 54(f) (relating to limitation on amount of 
bonds designated) is amended to read as follows:
            ``(1) National limitation.--
                    ``(A) Initial national limitation.--With respect to 
                bonds issued after December 31, 2005, and before 
                January 1, 2008, there is a national clean renewable 
                energy bond limitation of $800,000,000.
                    ``(B) Annual national limitation.--With respect to 
                bonds issued after December 31, 2007, and before 
                January 1, 2011, there is a national clean renewable 
                energy bond limitation for each calendar year of 
                $800,000,000.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.

SEC. 103. EXTENSION OF ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

    Section 179D(h) (relating to termination) is amended by striking 
``2007'' and inserting ``2010''.

SEC. 104. EXTENSION AND EXPANSION OF NEW ENERGY EFFICIENT HOME CREDIT.

    (a) Extension.--Section 45L(g) (relating to termination) is amended 
by striking ``2007'' and inserting ``2010''.
    (b) Inclusion of 30 Percent Homes.--
            (1) In general.--Section 45L(c) (relating to energy saving 
        requirements) is amended--
                    (A) by striking ``or'' at the end of paragraph (2),
                    (B) by redesignating paragraph (3) as paragraph 
                (4), and
                    (C) by inserting after paragraph (2) the following 
                new paragraph:
            ``(3) certified--
                    ``(A) to have a level of annual heating and cooling 
                energy consumption which is at least 30 percent below 
                the annual level described in paragraph (1), and
                    ``(B) to have building envelope component 
                improvements account for at least \1/3\ of such 30 
                percent, or''.
            (2) Applicable amount of credit.--Section 45L(a)(2) is 
        amended by striking ``paragraph (3)'' and inserting ``paragraph 
        (3) or (4)''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to qualified new energy efficient homes acquired 
        after the date of the enactment of this Act.

SEC. 105. EXTENSION OF NONBUSINESS ENERGY PROPERTY CREDIT.

    Section 25C(g) (relating to termination) is amended by striking 
``2007'' and inserting ``2010''.

SEC. 106. EXTENSION OF RESIDENTIAL ENERGY EFFICIENT PROPERTY CREDIT.

    Section 25D(g) (relating to termination) is amended by striking 
``2007'' and inserting ``2010''.

SEC. 107. EXTENSION OF CREDIT FOR BUSINESS INSTALLATION OF QUALIFIED 
              FUEL CELLS AND STATIONARY MICROTURBINE POWER PLANTS.

    Sections 48(c)(1)(E) and 48(c)(2)(E) (relating to termination) are 
each amended by striking ``2007'' and inserting ``2010''.

SEC. 108. EXTENSION OF BUSINESS SOLAR INVESTMENT TAX CREDIT.

    Sections 48(a)(2)(A)(i)(II) and 48(a)(3)(A)(ii) (relating to 
termination) are each amended by striking ``2008'' and inserting 
``2011''.

SEC. 109. EXTENSION OF ALTERNATIVE FUEL EXCISE TAX PROVISIONS, INCOME 
              TAX CREDITS, AND TARIFF DUTIES.

    (a) Biodiesel.--Sections 40A(g), 6426(c)(6), and 6427(e)(5)(B) are 
each amended by striking ``2008'' and inserting ``2010''.
    (b) Alternative Fuel.--
            (1) Fuels.--Sections 6426(d)(4) and 6427(e)(5)(C) are each 
        amended by striking ``September 30, 2009'' and inserting 
        ``December 31, 2010''.
            (2) Refueling property.--Section 30C(g) is amended by 
        striking ``2009'' and inserting ``2010''.
    (c) Ethanol Tariff Schedule.--Headings 9901.00.50 and 9901.00.52 of 
the Harmonized Tariff Schedule of the United States (19 U.S.C. 3007) 
are each amended in the effective period column by striking ``10/1/
2007'' each place it appears and inserting ``1/1/2011''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2007.

SEC. 110. EXTENSION OF FULL CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) In General.--Section 30(e) is amended by striking ``2006'' and 
inserting ``2010''.
    (b) Repeal of Phaseout.--Section 30(b) (relating to limitations) is 
amended by striking paragraph (2) and by redesignating paragraph (3) as 
paragraph (2).
    (c) Credit Allowable Against Alternative Minimum Tax.--Paragraph 
(2) of section 30(b), as redesignated by subsection (b), is amended to 
read as follows:
            ``(2) Application with other credits.--The credit allowed 
        by subsection (a) for any taxable year shall not exceed the 
        excess (if any) of--
                    ``(A) the sum of the regular tax for the taxable 
                year plus the tax imposed by section 55, over
                    ``(B) the sum of the credits allowable under 
                subpart A and section 27.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

           TITLE II--INCENTIVES FOR ALTERNATIVE FUEL VEHICLES

SEC. 201. CONSUMER INCENTIVES TO PURCHASE ADVANCED TECHNOLOGY VEHICLES.

    (a) Elimination on Number of New Qualified Hybrid and Advanced Lean 
Burn Technology Vehicles Eligible for Alternative Motor Vehicle 
Credit.--
            (1) In general.--Section 30B is amended by striking 
        subsection (f) and by redesignating subsections (g) through (j) 
        as subsections (f) through (i), respectively.
            (2) Conforming amendments.--
                    (A) Paragraphs (4) and (6) of section 30B(h) are 
                each amended by striking ``(determined without regard 
                to subsection (g))'' and inserting ``determined without 
                regard to subsection (f))''.
                    (B) Section 38(b)(25) is amended by striking 
                ``section 30B(g)(1)'' and inserting ``section 
                30B(f)(1)''.
                    (C) Section 55(c)(2) is amended by striking 
                ``section 30B(g)(2)'' and inserting ``section 
                30B(f)(2)''.
                    (D) Section 1016(a)(36) is amended by striking 
                ``section 30B(h)(4)'' and inserting ``section 
                30B(g)(4)''.
                    (E) Section 6501(m) is amended by striking 
                ``section 30B(h)(9)'' and inserting ``section 
                30B(g)(9)''.
    (b) Extension of Alternative Vehicle Credit for New Qualified 
Hybrid Motor Vehicles.--Paragraph (3) of section 30B(i) (as 
redesignated by subsection (a)) is amended by striking ``December 31, 
2009'' and inserting ``December 31, 2010''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2005, in taxable 
years ending after such date.

SEC. 202. ADVANCED TECHNOLOGY MOTOR VEHICLES MANUFACTURING CREDIT.

    (a) 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 new section:

``SEC. 30D. ADVANCED TECHNOLOGY MOTOR VEHICLES MANUFACTURING 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 
35 percent of so much of the qualified investment of an eligible 
taxpayer for such taxable year as does not exceed $75,000,000.
    ``(b) Qualified Investment.--For purposes of this section--
            ``(1) In general.--The qualified investment for any taxable 
        year is equal to the incremental costs incurred during such 
        taxable year--
                    ``(A) to re-equip, expand, or establish any 
                manufacturing facility in the United States of the 
                eligible taxpayer to produce advanced technology motor 
                vehicles or to produce eligible components,
                    ``(B) for engineering integration performed in the 
                United States of such vehicles and components as 
                described in subsection (d),
                    ``(C) for research and development performed in the 
                United States related to advanced technology motor 
                vehicles and eligible components, and
                    ``(D) for employee retraining with respect to the 
                manufacturing of such vehicles or components 
                (determined without regard to wages or salaries of such 
                retrained employees).
            ``(2) Attribution rules.--In the event a facility of the 
        eligible taxpayer produces both advanced technology motor 
        vehicles and conventional motor vehicles, or eligible and non-
        eligible components, only the qualified investment attributable 
        to production of advanced technology motor vehicles and 
        eligible components shall be taken into account.
    ``(c) Advanced Technology Motor Vehicles and Eligible Components.--
For purposes of this section--
            ``(1) Advanced technology motor vehicle.--The term 
        `advanced technology motor vehicle' means--
                    ``(A) any qualified electric vehicle (as defined in 
                section 30(c)(1)),
                    ``(B) any new qualified fuel cell motor vehicle (as 
                defined in section 30B(b)(3)),
                    ``(C) any new advanced lean burn technology motor 
                vehicle (as defined in section 30B(c)(3)),
                    ``(D) any new qualified hybrid motor vehicle (as 
                defined in section 30B(d)(2)(A) and determined without 
                regard to any gross vehicle weight rating),
                    ``(E) any new qualified alternative fuel motor 
                vehicle (as defined in section 30B(e)(4), including any 
                mixed-fuel vehicle (as defined in section 
                30B(e)(5)(B)), and
                    ``(F) any other motor vehicle using electric drive 
                transportation technology (as defined in paragraph 
                (3)).
            ``(2) Eligible components.--The term `eligible component' 
        means any component inherent to any advanced technology motor 
        vehicle, including--
                    ``(A) with respect to any gasoline or diesel-
                electric new qualified hybrid motor vehicle--
                            ``(i) electric motor or generator,
                            ``(ii) power split device,
                            ``(iii) power control unit,
                            ``(iv) power controls,
                            ``(v) integrated starter generator, or
                            ``(vi) battery,
                    ``(B) with respect to any hydraulic new qualified 
                hybrid motor vehicle--
                            ``(i) hydraulic accumulator vessel,
                            ``(ii) hydraulic pump, or
                            ``(iii) hydraulic pump-motor assembly,
                    ``(C) with respect to any new advanced lean burn 
                technology motor vehicle--
                            ``(i) diesel engine,
                            ``(ii) turbocharger,
                            ``(iii) fuel injection system, or
                            ``(iv) after-treatment system, such as a 
                        particle filter or NOx absorber, and
                    ``(D) with respect to any advanced technology motor 
                vehicle, any other component submitted for approval by 
                the Secretary.
            ``(3) Electric drive transportation technology.--The term 
        `electric drive transportation technology' means technology 
        used by vehicles that use an electric motor for all or part of 
        their motive power and that may or may not use off-board 
        electricity, such as battery electric vehicles, fuel cell 
        vehicles, engine dominant hybrid electric vehicles, plug-in 
        hybrid electric vehicles, and plug-in hybrid fuel cell 
        vehicles.
    ``(d) Engineering Integration Costs.--For purposes of subsection 
(b)(1)(B), costs for engineering integration are costs incurred prior 
to the market introduction of advanced technology vehicles for 
engineering tasks related to--
            ``(1) establishing functional, structural, and performance 
        requirements for component and subsystems to meet overall 
        vehicle objectives for a specific application,
            ``(2) designing interfaces for components and subsystems 
        with mating systems within a specific vehicle application,
            ``(3) designing cost effective, efficient, and reliable 
        manufacturing processes to produce components and subsystems 
        for a specific vehicle application, and
            ``(4) validating functionality and performance of 
        components and subsystems for a specific vehicle application.
    ``(e) Eligible Taxpayer.--For purposes of this section, the term 
`eligible taxpayer' means any taxpayer if more than 50 percent of its 
gross receipts for the taxable year is derived from the manufacture of 
motor vehicles or any component parts of such vehicles.
    ``(f) Limitation Based on Amount of Tax.--The credit allowed under 
subsection (a) for the taxable year shall not exceed the excess of--
            ``(1) the sum of--
                    ``(A) the regular tax liability (as defined in 
                section 26(b)) for such taxable year, plus
                    ``(B) the tax imposed by section 55 for such 
                taxable year and any prior taxable year beginning after 
                1986 and not taken into account under section 53 for 
                any prior taxable year, over
            ``(2) the sum of the credits allowable under subpart A and 
        sections 27, 30, and 30B for the taxable year.
    ``(g) Reduction in Basis.--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 paragraph) result from such expenditure shall be reduced 
by the amount of the credit so allowed.
    ``(h) No Double Benefit.--
            ``(1) Coordination with other deductions and credits.--
        Except as provided in paragraph (2), the amount of any 
        deduction or other credit allowable under this chapter for any 
        cost taken into account in determining the amount of the credit 
        under subsection (a) shall be reduced by the amount of such 
        credit attributable to such cost.
            ``(2) Research and development costs.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), any amount described in subsection 
                (b)(1)(C) taken into account in determining the amount 
                of the credit under subsection (a) for any taxable year 
                shall not be taken into account for purposes of 
                determining the credit under section 41 for such 
                taxable year.
                    ``(B) Costs taken into account in determining base 
                period research expenses.--Any amounts described in 
                subsection (b)(1)(C) taken into account in determining 
                the amount of the credit under subsection (a) for any 
                taxable year which are qualified research expenses 
                (within the meaning of section 41(b)) shall be taken 
                into account in determining base period research 
                expenses for purposes of applying section 41 to 
                subsequent taxable years.
    ``(i) Business Carryovers Allowed.--If the credit allowable under 
subsection (a) for a taxable year exceeds the limitation under 
subsection (f) for such taxable year, such excess (to the extent of the 
credit allowable with respect to property subject to the allowance for 
depreciation) shall be allowed as a credit carryback and carryforward 
under rules similar to the rules of section 39.
    ``(j) Special Rules.--For purposes of this section, rules similar 
to the rules of section 179A(e)(4) and paragraphs (1) and (2) of 
section 41(f) shall apply
    ``(k) Election Not to Take Credit.--No credit shall be allowed 
under subsection (a) for any property if the taxpayer elects not to 
have this section apply to such property.
    ``(l) Regulations.--The Secretary shall prescribe such regulations 
as necessary to carry out the provisions of this section.
    ``(m) Termination.--This section shall not apply to any qualified 
investment after December 31, 2010.''.
    (b) Conforming Amendments.--
            (1) Section 1016(a) is amended by striking ``and'' at the 
        end of paragraph (36), by striking the period at the end of 
        paragraph (37) and inserting ``, and'', and by adding at the 
        end the following new paragraph:
            ``(38) to the extent provided in section 30D(g).''.
            (2) Section 6501(m) is amended by inserting ``30D(k),'' 
        after ``30C(e)(5),''.
            (3) 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 30C the following new item:

``Sec. 30D. Advanced technology motor vehicles manufacturing credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts incurred in taxable years beginning after December 31, 
2005.

SEC. 203. TAX INCENTIVES FOR PRIVATE FLEETS.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
is amended by inserting after section 48B the following new section:

``SEC. 48C. FUEL-EFFICIENT FLEET CREDIT.

    ``(a) General Rule.--For purposes of section 46, the fuel-efficient 
fleet credit for any taxable year is 15 percent of the qualified fuel-
efficient vehicle investment amount of an eligible taxpayer for such 
taxable year.
    ``(b) Vehicle Purchase Requirement.--In the case of any eligible 
taxpayer which places less than 10 qualified fuel-efficient vehicles in 
service during the taxable year, the qualified fuel-efficient vehicle 
investment amount shall be zero.
    ``(c) Qualified Fuel-Efficient Vehicle Investment Amount.--For 
purposes of this section--
            ``(1) In general.--The term `qualified fuel-efficient 
        vehicle investment amount' means the basis of any qualified 
        fuel-efficient vehicle placed in service by an eligible 
        taxpayer during the taxable year.
            ``(2) Qualified fuel-efficient vehicle.--The term 
        `qualified fuel-efficient vehicle' means an automobile which 
        has a fuel economy which is at least 125 percent greater than 
        the average fuel economy standard for an automobile of the same 
        class and model year.
            ``(3) Other terms.--The terms `automobile', `average fuel 
        economy standard', `fuel economy', and `model year' have the 
        meanings given to such terms under section 32901 of title 49, 
        United States Code.
    ``(d) Eligible Taxpayer.--The term `eligible taxpayer' means, with 
respect to any taxable year, a taxpayer who owns a fleet of 100 or more 
vehicles which are used in the trade or business of the taxpayer on the 
first day of such taxable year.
    ``(e) Termination.--This section shall not apply to any vehicle 
placed in service after December 31, 2010.''.
    (b) Credit Treated as Part of Investment Credit.--Section 46 is 
amended by striking ``and'' at the end of paragraph (3), by striking 
the period at the end of paragraph (4) and inserting ``, and'', and by 
adding at the end the following new paragraph:
            ``(5) the fuel-efficient fleet credit.''.
    (c) Conforming Amendments.--
            (1) Section 49(a)(1)(C) is amended by striking ``and'' at 
        the end of clause (iii), by striking the period at the end of 
        clause (iv) and inserting ``, and'', and by adding at the end 
        the following new clause:
                            ``(v) the basis of any qualified fuel-
                        efficient vehicle which is taken into account 
                        under section 48C.''.
            (2) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 48 the following new item:

``Sec. 48C. Fuel-efficient fleet credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2005, in taxable years ending after 
such date, 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. 204. MODIFICATION OF ALTERNATIVE VEHICLE REFUELING PROPERTY 
              CREDIT.

    (a) Increase in Credit Amount.--Subsection (a) of section 30C is 
amended by striking ``30 percent'' and inserting ``50 percent''.
    (b) Credit Allowable Against Alternative Minimum Tax.--Paragraph 
(2) of section 30C is amended to read as follows:
            ``(2) Personal credit.--The credit allowed under subsection 
        (a) (after the application of paragraph (1)) for any taxable 
        year shall not exceed the excess (if any) of--
                    ``(A) the sum of the regular tax for the taxable 
                year plus the tax imposed by section 55, over
                    ``(B) the sum of the credits allowable under 
                subpart A and sections 27, 30, and 30B.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 205. INCLUSION OF HEAVY VEHICLES IN LIMITATION ON DEPRECIATION OF 
              CERTAIN LUXURY AUTOMOBILES.

    (a) In General.--Section 280F(d)(5)(A) (defining passenger 
automobile) is amended--
            (1) by striking clause (ii) and inserting the following new 
        clause:
                            ``(ii)(I) which is rated at 6,000 pounds 
                        unloaded gross vehicle weight or less, or
                            ``(II) which is rated at more than 6,000 
                        pounds but not more than 14,000 pounds gross 
                        vehicle weight.'',
            (2) by striking ``clause (ii)'' in the second sentence and 
        inserting ``clause (ii)(I)''.
    (b) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act.

SEC. 206. IDLING REDUCTION TAX CREDIT.

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

``SEC. 45N. IDLING REDUCTION CREDIT.

    ``(a) General Rule.--For purposes of section 38, the idling 
reduction tax credit determined under this section for the taxable year 
is an amount equal to 25 percent of the amount paid or incurred for 
each qualifying idling reduction device placed in service by the 
taxpayer during the taxable year.
    ``(b) Limitation.--The maximum amount allowed as a credit under 
subsection (a) shall not exceed $1,000 per device.
    ``(c) Definitions.--For purposes of subsection (a)--
            ``(1) Qualifying idling reduction device.--The term 
        `qualifying idling reduction device' means any device or system 
        of devices that--
                    ``(A) is installed on a heavy-duty diesel-powered 
                on-highway vehicle,
                    ``(B) is designed to provide to such vehicle those 
                services (such as heat, air conditioning, or 
                electricity) that would otherwise require the operation 
                of the main drive engine while the vehicle is 
                temporarily parked or remains stationary,
                    ``(C) the original use of which commences with the 
                taxpayer,
                    ``(D) is acquired for use by the taxpayer and not 
                for resale, and
                    ``(E) is certified by the Secretary of Energy, in 
                consultation with the Administrator of the 
                Environmental Protection Agency and the Secretary of 
                Transportation, to reduce long-duration idling of such 
                vehicle at a motor vehicle rest stop or other location 
                where such vehicles are temporarily parked or remain 
                stationary.
            ``(2) Heavy-duty diesel-powered on-highway vehicle.--The 
        term `heavy-duty diesel-powered on-highway vehicle' means any 
        vehicle, machine, tractor, trailer, or semi-trailer propelled 
        or drawn by mechanical power and used upon the highways in the 
        transportation of passengers or property, or any combination 
        thereof determined by the Federal Highway Administration.
            ``(3) Long-duration idling.--The term `long-duration 
        idling' means the operation of a main drive engine, for a 
        period greater than 15 consecutive minutes, where the main 
        drive engine is not engaged in gear. Such term does not apply 
        to routine stoppages associated with traffic movement or 
        congestion.
    ``(d) No Double Benefit.--For purposes of this section--
            ``(1) Reduction in basis.--If a credit is determined under 
        this section with respect to any property by reason of 
        expenditures described in subsection (a), the basis of such 
        property shall be reduced by the amount of the credit so 
        determined.
            ``(2) Other deductions and credits.--No deduction or credit 
        shall be allowed under any other provision of this chapter with 
        respect to the amount of the credit determined under this 
        section.
    ``(e) Election Not To Claim Credit.--This section shall not apply 
to a taxpayer for any taxable year if such taxpayer elects to have this 
section not apply for such taxable year.
    ``(f) Termination.--This section shall not apply to any property 
placed in service after December 31, 2010.''.
    (b) Credit to Be Part of General Business Credit.--Subsection (b) 
of section 38 (relating to general business credit) is amended by 
striking ``and'' at the end of paragraph (29), by striking the period 
at the end of paragraph (30) and inserting ``, plus'' , and by adding 
at the end the following new paragraph:
            ``(31) the idling reduction tax credit determined under 
        section 45N(a).''.
    (c) Conforming Amendments.--
            (1) 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 45M the following new item:

``Sec. 45N. Idling reduction credit.''.
            (2) Section 1016(a), as amended by this Act, is amended by 
        striking ``and'' at the end of paragraph (37), by striking the 
        period at the end of paragraph (38) and inserting ``, and'', 
        and by adding at the end the following:
            ``(39) in the case of a facility with respect to which a 
        credit was allowed under section 45N, to the extent provided in 
        section 45N(d)(A).''.
            (3) Section 6501(m) is amended by inserting ``45N(e),'' 
        after ``45D(c)(4),''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2006.
    (e) Determination of Certification Standards by Secretary of Energy 
for Certifying Idling Reduction Devices.--Not later than 6 months after 
the date of the enactment of this Act and in order to reduce air 
pollution and fuel consumption, the Secretary of Energy, in 
consultation with the Administrator of the Environmental Protection 
Agency and the Secretary of Transportation, shall publish the standards 
under which the Secretary, in consultation with the Administrator of 
the Environmental Protection Agency and the Secretary of 
Transportation, will, for purposes of section 45N of the Internal 
Revenue Code of 1986 (as added by this section), certify the idling 
reduction devices which will reduce long-duration idling of vehicles at 
motor vehicle rest stops or other locations where such vehicles are 
temporarily parked or remain stationary in order to reduce air 
pollution and fuel consumption.

                    TITLE III--ADDITIONAL INCENTIVES

SEC. 301. ENERGY CREDIT FOR COMBINED HEAT AND POWER SYSTEM PROPERTY.

    (a) In General.--Section 48(a)(3)(A) (defining energy property) is 
by striking ``or'' at the end of clause (iii), by inserting ``or'' at 
the end of clause (iv), and by adding at the end the following new 
clause:
                            ``(v) combined heat and power system 
                        property,''.
    (b) Combined Heat and Power System Property.--Section 48 is amended 
by adding at the end the following new subsection:
    ``(d) Combined Heat and Power System Property.--For purposes of 
subsection (a)(3)(A)(v)--
            ``(1) Combined heat and power system property.--The term 
        `combined heat and power system property' means property 
        comprising a system--
                    ``(A) which uses the same energy source for the 
                simultaneous or sequential generation of electrical 
                power, mechanical shaft power, or both, in combination 
                with the generation of steam or other forms of useful 
                thermal energy (including heating and cooling 
                applications),
                    ``(B) which has an electrical capacity of not more 
                than 15 megawatts or a mechanical energy capacity of 
                not more than 2,000 horsepower or an equivalent 
                combination of electrical and mechanical energy 
                capacities,
                    ``(C) which produces--
                            ``(i) at least 20 percent of its total 
                        useful energy in the form of thermal energy 
                        which is not used to produce electrical or 
                        mechanical power (or combination thereof), and
                            ``(ii) at least 20 percent of its total 
                        useful energy in the form of electrical or 
                        mechanical power (or combination thereof),
                    ``(D) the energy efficiency percentage of which 
                exceeds 60 percent, and
                    ``(E) which is placed in service before January 1, 
                2011.
            ``(2) Special rules.--
                    ``(A) Energy efficiency percentage.--For purposes 
                of this subsection, 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 expected to be consumed in 
                        its normal application, and
                            ``(ii) the denominator of which is the 
                        higher heating value of the primary fuel 
                        sources for the system.
                    ``(B) Determinations made on btu basis.--The energy 
                efficiency percentage and the percentages under 
                paragraph (1)(C) shall be determined on a Btu basis.
                    ``(C) 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.
                    ``(D) Certain exception not to apply.--The first 
                sentence of the matter in subsection (a)(3) which 
                follows subparagraph (D) thereof shall not apply to 
                combined heat and power system property.
            ``(3) Systems using bagasse.--If a system is designed to 
        use bagasse for at least 90 percent of the energy source--
                    ``(A) paragraph (1)(D) shall not apply, but
                    ``(B) the amount of credit determined under 
                subsection (a) with respect to such system shall not 
                exceed the amount which bears the same ratio to such 
                amount of credit (determined without regard to this 
                paragraph) as the energy efficiency percentage of such 
                system bears to 60 percent.
            ``(4) Nonapplication of certain rules.--For purposes of 
        determining if the term `combined heat and power system 
        property' includes technologies which generate electricity or 
        mechanical power using back-pressure steam turbines in place of 
        existing pressure-reducing valves or which make use of waste 
        heat from industrial processes such as by using organic rankin, 
        stirling, or kalina heat engine systems, paragraph (1) shall be 
        applied without regard to subparagraphs (C) and (D) thereof 
        .''.
    (c) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2006, in taxable years ending after 
such date, 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. 302. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR DEPRECIATION OF 
              QUALIFIED ENERGY MANAGEMENT DEVICES.

    (a) In General.--Section 168(e)(3)(A) (defining 3-year property) is 
amended by striking ``and'' at the end of clause (ii), by striking the 
period at the end of clause (iii) and inserting ``, and'', and by 
adding at the end the following new clause:
                            ``(iv) any qualified energy management 
                        device.''.
    (b) Definition of Qualified Energy Management Device.--Section 
168(i) (relating to definitions and special rules) is amended by 
inserting at the end the following new paragraph:
            ``(18) Qualified energy management device.--
                    ``(A) In general.--The term `qualified energy 
                management device' means any energy management device 
                which is placed in service before January 1, 2011, by a 
                taxpayer who is a supplier of electric energy or a 
                provider of electric energy services.
                    ``(B) Energy management device.--For purposes of 
                subparagraph (A), the term `energy management device' 
                means any meter or metering device which is used by the 
                taxpayer--
                            ``(i) to measure and record electricity 
                        usage data on a time-differentiated basis in at 
                        least 4 separate time segments per day, and
                            ``(ii) to provide such data on at least a 
                        monthly basis to both consumers and the 
                        taxpayer.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act, in taxable years ending after such date.

SEC. 303. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR DEPRECIATION OF 
              QUALIFIED WATER SUBMETERING DEVICES.

    (a) In General.--Section 168(e)(3)(A) (defining 3-year property), 
as amended by this Act, is amended by striking ``and'' at the end of 
clause (iii), by striking the period at the end of clause (iv) and 
inserting ``, and'', and by adding at the end the following new clause:
                            ``(v) any qualified water submetering 
                        device.''.
    (b) Definition of Qualified Water Submetering Device.--Section 
168(i) (relating to definitions and special rules), as amended by this 
Act, is amended by inserting at the end the following new paragraph:
            ``(19) Qualified water submetering device.--
                    ``(A) In general.--The term `qualified water 
                submetering device' means any water submetering device 
                which is placed in service before January 1, 2011, by a 
                taxpayer who is an eligible resupplier with respect to 
                the unit for which the device is placed in service.
                    ``(B) Water submetering device.--For purposes of 
                this paragraph, the term `water submetering device' 
                means any submetering device which is used by the 
                taxpayer--
                            ``(i) to measure and record water usage 
                        data, and
                            ``(ii) to provide such data on at least a 
                        monthly basis to both consumers and the 
                        taxpayer.
                    ``(C) Eligible resupplier.--For purposes of 
                subparagraph (A), the term `eligible resupplier' means 
                any taxpayer who purchases and installs qualified water 
                submetering devices in every unit in any multi-unit 
                property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act, in taxable years ending after such date.

                      TITLE IV--REVENUE PROVISIONS

SEC. 401. REVALUATION OF LIFO INVENTORIES OF LARGE INTEGRATED OIL 
              COMPANIES.

    (a) General Rule.--Notwithstanding any other provision of law, if a 
taxpayer is an applicable integrated oil company for its last taxable 
year ending in calendar year 2005, the taxpayer shall--
            (1) increase, effective as of the close of such taxable 
        year, the value of each historic LIFO layer of inventories of 
        crude oil, natural gas, or any other petroleum product (within 
        the meaning of section 4611) by the layer adjustment amount, 
        and
            (2) decrease its cost of goods sold for such taxable year 
        by the aggregate amount of the increases under paragraph (1).
If the aggregate amount of the increases under paragraph (1) exceed the 
taxpayer's cost of goods sold for such taxable year, the taxpayer's 
gross income for such taxable year shall be increased by the amount of 
such excess.
    (b) Layer Adjustment Amount.--For purposes of this section--
            (1) In general.--The term ``layer adjustment amount'' 
        means, with respect to any historic LIFO layer, the product 
        of--
                    (A) $18.75, and
                    (B) the number of barrels of crude oil (or in the 
                case of natural gas or other petroleum products, the 
                number of barrel-of-oil equivalents) represented by the 
                layer.
            (2) Barrel-of-oil equivalent.--The term ``barrel-of-oil 
        equivalent'' has the meaning given such term by section 
        29(d)(5) (as in effect before its redesignation by the Energy 
        Tax Incentives Act of 2005).
    (c) Application of Requirement.--
            (1) No change in method of accounting.--Any adjustment 
        required by this section shall not be treated as a change in 
        method of accounting.
            (2) Underpayments of estimated tax.--No addition to the tax 
        shall be made under section 6655 of the Internal Revenue Code 
        of 1986 (relating to failure by corporation to pay estimated 
        tax) with respect to any underpayment of an installment 
        required to be paid with respect to the taxable year described 
        in subsection (a) to the extent such underpayment was created 
        or increased by this section.
    (d) Applicable Integrated Oil Company.--For purposes of this 
section, the term ``applicable integrated oil company'' means an 
integrated oil company (as defined in section 291(b)(4) of the Internal 
Revenue Code of 1986) which has an average daily worldwide production 
of crude oil of at least 500,000 barrels for the taxable year and which 
had gross receipts in excess of $1,000,000,000 for its last taxable 
year ending during calendar year 2005. For purposes of this subsection 
all persons treated as a single employer under subsections (a) and (b) 
of section 52 of the Internal Revenue Code of 1986 shall be treated as 
1 person and, in the case of a short taxable year, the rule under 
section 448(c)(3)(B) shall apply.

SEC. 402. ELIMINATION OF AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL 
              EXPENDITURES FOR MAJOR INTEGRATED OIL COMPANIES.

    (a) In General.--Section 167(h) is amended by adding at the end the 
following new paragraph:
            ``(5) Nonapplication to major integrated oil companies.--
        This subsection shall not apply with respect to any expenses 
        paid or incurred for any taxable year by any integrated oil 
        company (as defined in section 291(b)(4)) which has an average 
        daily worldwide production of crude oil of at least 500,000 
        barrels for such taxable year.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in the amendment made by section 1329(a) of the 
Energy Policy Act of 2005.

SEC. 403. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE TO LARGE 
              INTEGRATED OIL COMPANIES WHICH ARE DUAL CAPACITY 
              TAXPAYERS.

    (a) In General.--Section 901 (relating to credit for taxes of 
foreign countries and of possessions of the United States) is amended 
by redesignating subsection (m) as (n) and by inserting after 
subsection (l) the following new subsection:
    ``(m) Special Rules Relating to Large Integrated Oil Companies 
Which Are Dual Capacity Taxpayers.--
            ``(1) General rule.--Notwithstanding any other provision of 
        this chapter, any amount paid or accrued by a dual capacity 
        taxpayer which is a large integrated oil company to a foreign 
        country or possession of the United States for any period shall 
        not be considered a tax--
                    ``(A) if, for such period, the foreign country or 
                possession does not impose a generally applicable 
                income tax, or
                    ``(B) to the extent such amount exceeds the amount 
                (determined in accordance with regulations) which--
                            ``(i) is paid by such dual capacity 
                        taxpayer pursuant to the generally applicable 
                        income tax imposed by the country or 
                        possession, or
                            ``(ii) would be paid if the generally 
                        applicable income tax imposed by the country or 
                        possession were applicable to such dual 
                        capacity taxpayer.
                Nothing in this paragraph shall be construed to imply 
                the proper treatment of any such amount not in excess 
                of the amount determined under subparagraph (B).
            ``(2) Dual capacity taxpayer.--For purposes of this 
        subsection, the term `dual capacity taxpayer' means, with 
        respect to any foreign country or possession of the United 
        States, a person who--
                    ``(A) is subject to a levy of such country or 
                possession, and
                    ``(B) receives (or will receive) directly or 
                indirectly a specific economic benefit (as determined 
                in accordance with regulations) from such country or 
                possession.
            ``(3) Generally applicable income tax.--For purposes of 
        this subsection--
                    ``(A) In general.--The term `generally applicable 
                income tax' means an income tax (or a series of income 
                taxes) which is generally imposed under the laws of a 
                foreign country or possession on income derived from 
                the conduct of a trade or business within such country 
                or possession.
                    ``(B) Exceptions.--Such term shall not include a 
                tax unless it has substantial application, by its terms 
                and in practice, to--
                            ``(i) persons who are not dual capacity 
                        taxpayers, and
                            ``(ii) persons who are citizens or 
                        residents of the foreign country or possession.
            ``(4) Large integrated oil company.--For purposes of this 
        subsection, the term `large integrated oil company' means, with 
        respect to any taxable year, an integrated oil company (as 
        defined in section 291(b)(4)) which--
                    ``(A) had gross receipts in excess of 
                $1,000,000,000 for such taxable year, and
                    ``(B) has an average daily worldwide production of 
                crude oil of at least 500,000 barrels for such taxable 
                year.''
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxes paid or accrued in taxable years beginning after 
        the date of the enactment of this Act.
            (2) Contrary treaty obligations upheld.--The amendments 
        made by this section shall not apply to the extent contrary to 
        any treaty obligation of the United States.
                                 <all>