Modifications relating to clean renewable energy bonds

(a)

Clean renewable energy bond

Paragraph (1) of section 54(d) of the Internal Revenue Code of 1986 (defining clean renewable energy bond) is amended— (1)in subparagraph (A) by striking pursuant and all that follows through subsection (f)(2), (2)in subparagraph (B) by striking 95 percent or more of the proceeds and inserting 90 percent or more of the net proceeds, and (3)in subparagraph (D) by striking subsection (h) and inserting subsection (g). (b)

Qualified project

Subparagraph (A) of section 54(d)(2) of such Code (defining qualified project) is amended to read as follows:

(A)

In general

The term qualified project means any qualified facility (as determined under section 45(d) without regard to paragraphs (8) and (10) thereof and to any placed in service requirement) owned by a qualified borrower and also without regard to the following— (i)in the case of a qualified facility described in section 45(d)(9) (regarding incremental hydropower production), any determination of incremental hydropower production and related calculations shall be determined by the qualified borrower based on a methodology that meets Federal Energy Regulatory Commission standards; and (ii)in the case of a qualified facility described in section 45(d)(9) (regarding non-hydropower production), the facility need not be licensed by the Federal Energy Regulation Commission if the facility, when constructed, will meet Federal Energy Regulatory Commission licensing requirements and other applicable environmental, licensing, and regulatory requirements.

(c)

Reimbursement

Subparagraph (C) of section 54(d)(2) of such Code (relating to reimbursement) is amended to read as follows:

(C)

Reimbursement

For purposes of paragraph (1)(B), proceeds of a clean renewable energy bond may be issued to reimburse a qualified borrower for amounts paid after the date of the enactment of this section in the same manner as proceeds of State and local government obligations the interest upon which is exempt from tax under section 103.

(d)

Change in use

Subparagraph (D) of section 54(d)(2) of such Code (relating to treatment of changes in use) is amended by striking or qualified issuer. (e)

Maximum term

Paragraph (2) of section 54(e) of such Code (relating to maximum term) is amended by striking without regard to the requirements of subsection (1)(6) and. (f)

Repeal of limitation on amount of bonds designated

Section 54 of such Code is amended by striking subsection (f) (relating to repeal of limitation on amount of bonds designated). (g)

Special rules relating to expenditures

Subsection (h) of section 54 of such Code (relating to special rules relating to expenditures) is amended— (1)in paragraph (1)(A) by striking 95 percent of the proceeds and inserting 90 percent of the net proceeds, (2)in paragraph (1)(B)— (A)by striking 10 percent of the proceeds and inserting 5 percent of the net proceeds, and (B)by striking the 6-month period beginning on both places it appears and inserting 1 year of, and (3)in paragraph (1)(C) by inserting net before proceeds, (4)in paragraph (3) by striking 95 percent of the proceeds and inserting 90 percent of the net proceeds. (h)

Repeal of special rules relating to arbitrage

Section 54 of such Code is amended by striking subsection (i) (relating to repeal of special rules relating to arbitrage). (i)

Public power entity

Subsection (j) of section 54 of such Code (defining Cooperative electric company; qualified energy tax credit bond lender; governmental body; qualified borrower) is amended— (1)by redesignating paragraphs (4) and (5) as paragraph (5) and (6) and by inserting after paragraph (3) the following new paragraph:

(4)

Public Power Entity

The term public power entity means a State utility with a service obligation, as such terms are defined in section 217 of the Federal Power Act (as in effect on the date of enactment of this paragraph).

(2)in paragraph (5), as so redesignated, by striking or at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting , or, and by adding at the end the following:

(D)a public power entity.

, and

(3)in paragraph (6), as so redesignated, by striking or at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting , or, and by adding at the end the following:

(C)a public power entity.

(j)

Repeal of ratable principal amortization requirement

Subsection (l) of section 54 of such Code (relating to other definitions and special rules) is amended by striking paragraph (5) and redesignating paragraph (6) as paragraph (5). (k)

Net proceeds

Subsection (i) of section 54 of such Code (relating to other definitions and special rules), as amended by subsection (j), is amended by redesignating paragraphs (2), (3), (4), and (5) as paragraphs (4), (5), (6), and (7), respectively, and by inserting after paragraph (1) the following new paragraphs:

(2)

Net Proceeds

The term net proceeds means, with respect to an issue, the proceeds of such issue reduced by amounts in a reasonably required reserve or replacement fund. (3)

Limitation on amount in reserve or replacement fund which may be financed by issue

A bond issued as part of an issue shall not be treated as a clean renewable energy bond if the amount of the proceeds from the sale of such issue which is part of any reserve or replacement fund exceeds 10 percent of the proceeds of the issue (or such higher amount which the issuer establishes is necessary to the satisfaction of the Secretary).

(l)

Other special rules

Subsection (i) of section 54 of such Code ((relating to other definitions and special rules), as amended by subsections (j) and (k)) is amended by adding at the end the following new paragraphs:

(8)

Credits may be separated

There may be a separation (including at issuance) of the ownership of a clean renewable energy bond and the entitlement to the credit under this section with respect to such bond. In case of any such separation, the credit under this section shall be allowed to the person who on the credit allowance date holds the instrument evidencing the entitlement to the credit and not to the holder of the bond. (9)

Treatment for estimated tax purposes

Solely for the purposes of sections 6654 and 6655, the credit allowed by this section to a taxpayer by reason of holding a qualified energy tax credit bond on a credit allowance date (or the credit in the case of a separation as provided in paragraph (8)) shall be treated as if it were a payment of estimated tax made by the taxpayer on such date. (10)

Carryback and carryforward of unused credits

If the sum of the credit exceeds the limitation imposed by subsection (c) for any taxable year, any credits may be applied in a manner similar to the rules set forth in section 39.

(m)

Termination

Subsection (m) of section 54 of such Code (relating to termination) is amended by striking 2008 and inserting 2013. (n)

Clerical redesignations

Section 54 of such Code, as amended by the preceding provisions of this section, is amended by redesignating subsections (g), (h), (j), (k), (l), and (m) as subsections (f), (g), (h), (i), (j), and (k), respectively. (o)

Effective date

The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.