[Congressional Record Volume 149, Number 39 (Tuesday, March 11, 2003)]
[Senate]
[Pages S3506-S3550]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. CORZINE:
S. 586. A bill to provide additional funding for the second round of
empowerment zones and enterprise communities; to the Committee on
Finance.
Mr. CORZINE. Mr. President, I rise today to introduce the Round II
EZ/EC Flexibility Act of 2003. This important legislation would secure
vital funding for Round II Empowerment Zones and Enterprise Communities
to ensure that communities throughout the country will be able to
continue the important work of economic revitalization.
This legislation promotes the continued economic development
throughout the EZ/EC program, particularly to the 15 Round II urban and
5 rural empowerment zones that were designated in 1999. Each of those
communities has implemented a host of strategic initiatives aimed at
economic growth and job creation in their respective communities.
The EZ/EC Act ensures that Round II communities EZs and ECs are
provided with funding they were promised upon designation. It also
authorizes the use of EZ/EC grants as a match for related Federal
programs, providing the EZ/EC program with maximum flexibility to
implement initiatives at the local level.
The Enterprise Zone/Enterprise Community program was created to
provide Federal assistance over ten years in designated urban and rural
communities that would fuel economic revitalization and job growth. The
program does so primarily by providing Federal grants to communities
and tax and regulatory relief to help communities attract and retain
businesses.
Unfortunately, an inequity now exists between the way Round I and
Round II EZs and ECs have been funded. Those communities that won EZ
designations in the initial round, in 1994, received full funding from
the Congress, which made all grant awards available for use within the
first two years of designation. However, EZs and ECs designated in
Round II did not receive this same funding authority.
Federal benefits promised to the Round IIs included funding grants of
$100 million for each urban zone, $40 million for each rural zone and
about $3 million for each Enterprise Community over a ten-year period
beginning in 1999. In reliance on those ``promised'' funds, Round II
zones prepared strategic plans for economic revitalization based on the
availability of that funding. However, unlike Round I designees, who
received a full funding up front, Round II zones have received a mere
fraction of the funding promise.
The lack of a certain, predictable funding stream will ultimately
undermine the ability of Round II EZs/ECs to effectively implement
their economic growth strategies in their designated communities. And
that's a shame, because the EZ/EC initiative has produced real results.
[[Page S3507]]
In fact, I'm proud to say that one of the best Round II EZs is
located in Cumberland County, NJ. The Cumberland County Empowerment
Zone, a collaborative effort of the communities of Bridgeton,
Millville, Vineland and Port Norris, has been a model EZ, and committed
all the funds made available to it by HUD.
Since the creation of the EZ, Cumberland County has witnessed more
than 100 housing units rehabbed, renovated or newly built. A $4 million
loan pool has been created to fund community and small business
reinvestment. The EZ also has led to the funding for over 60 economic
development initiatives, utilizing more than $11 million in funding to
leverage $120 million in private, public and tax exempt bond financing.
These are real results. In fact, over 1,100 new jobs will be created
in the County over the next year and a half alone if the Federal
Government were to maintain its commitment to the EZ/EC program.
Cumberland County is just one example of how the EZ/EC initiative has
brought hope and promise to communities throughout America. We need to
do more to support and build on these initiatives. Now is the time for
Congress to fulfill the promise made to Round II EZs and ECs.
I urge my colleagues to cosponsor this bill that will allow
communities throughout the country to continue their work of economic
revitalization. I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 586
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Round II EZ/EC Flexibility
Act of 2003''.
SEC. 2. CORRECTION OF INEQUITIES IN THE SECOND ROUND OF
EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES.
(a) Grant Authority.--There are authorized to be
appropriated--
(1) to the Secretary of Housing and Urban Development, such
sums as may be necessary to make grant awards totaling
$100,000,000 to each of 15 urban empowerment zones designated
pursuant to section 1391(g) of the Internal Revenue Code of
1986, taking into account any amount made available pursuant
to any prior appropriation made for such zones; and
(2) to the Secretary of Agriculture, such sums as may be
necessary to make--
(A) grant awards totaling $40,000,000 to each of 5 rural
empowerment zones designated pursuant to section 1391(g) of
the Internal Revenue Code of 1986, taking into account any
amount made available pursuant to any prior appropriation
made for such zones; and
(B) grant awards totaling $3,000,000 to each of 20 rural
enterprise communities designated pursuant to section 766 of
the Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies Appropriations Act,
1999, taking into account any amount made available pursuant
to any prior appropriation made for such communities.
(b) Authority to Use Funds to Implement Strategic Plan.--
Funds appropriated under Federal law for an empowerment zone
or an enterprise community referred to in subsection (a) may
be used to implement the strategic plan for the zone or
community, including--
(1) economic development;
(2) infrastructure development;
(3) workforce development; and
(4) community development activities.
(c) No Loss of Federal Funds by Reason of Reclassification
as Renewal Community.--An area that, by reason of section
1400E(e) of the Internal Revenue Code of 1986, ceases to be
designated as an empowerment zone or enterprise community
under section 1391(g) of such Code shall not lose any Federal
funds by reason of the cessation.
(d) Authority to Use Funds to Pay Non-Federal Share of
Matching Grants.--Funds appropriated under any Federal law
for an empowerment zone or an enterprise community referred
to in subsection (a) may be used to pay the non-Federal share
required in connection with another Federal grant-in-aid
program undertaken as part of activities assisted under this
section.
______
By Mr. WYDEN:
S. 587. A bill to promote the use of hydrogen fuel cell vehicles, and
for other purposes; to the Committee on Finance.
Mr. WYDEN. Mr. President, today, I am introducing the Hydrogen
Transportation Wins Over Growing Reliance on Oil, H2 GROW, Act to
accelerate getting cars and trucks powered by hydrogen on our roads as
a way to reduce our Nation's dependence on foreign oil. In the House,
Congressman Chris Cox will also be introducing the H2 GROW Act, so we
will have the first bipartisan, bicameral bill to provide incentives
for commercialing hydrogen-powered cars and the fueling stations needed
for hydrogen cars to have widespread acceptance.
Our legislation has the support of a diverse coalition of interest
groups, ranging from the Natural Resources Defense Council to the
automobile industry. It is not a coalition that naturally flocks
together. In fact, on many environmental issues, these groups are
skirmishing, not coalescing.
Just as these groups have come together, Congressman Cox and I have
felt, on a bipartisan basis, that he and I could find common ground on
the critical issue of hydrogen fuel cells. Unlike some other proposals
to promote hydrogen fuel cell vehicles, the H2 GROW Act goes beyond
researching hydrogen to kickstart the market for hydrogen fuel cell
vehicles and fueling equipment. Legislation he and I will introduce
today, the H2 GROW Act, uses marketplace incentives so that a
significant number of fuel cell vehicles can hit American streets in
the next decade. In effect, our legislation goes beyond the popular
wisdom that you can't do much to actually get these vehicles on the
street anytime soon.
Our legislation stipulates that when someone opens a fueling station,
sells fueling equipment, sells hydrogen fuel for use in vehicles, or
buys a hydrogen fuel cell vehicle, the tax man won't cometh for the
next 10 years. By creating incentives this way, our legislation, can
catalyze commercialization of fuel cell vehicles. Tax holidays and tax
incentives will stimulate a private market for everything from creating
the infrastructure needed for fuel cell vehicles, to direct incentives
for American consumers.
By using this approach, our legislation only pays for performance. It
does not subsidize research that may or may not advance the goal of
getting hydrogen-powered cars on the road. The tax credits and other
incentives only reward actions that actually put cars on the road or
fueling equipment in use.
Best of all, the price tag is minimal. The government isn't expecting
any significant revenue from fuel cell vehicles anyway in the next 10
years--and that's the life of our bill. So there's no enormous cost to
the government.
Congress has a clear choice between taking 20 years to get a
significant number of hydrogen vehicles on the road and making real,
measurable progress in the next 10 years. In my view, reducing this
country's dependence on foreign oil is a national security priority. At
a time when more than half our energy is imported, enacting policies
that promote energy independence is a true act of patriotism. Our
legislation would promote that energy independence.
Here are two examples of how our legislation provides critically
needed incentives for the fuel cell market:
Congressman Cox and I want to make it worth the consumer's while to
buy a fuel cell vehicle in the first place. So a tax credit will help
make up the difference between the cost of a gasoline-powered vehicle
and a fuel cell car. For example, if in 2009, a consumer buys a fuel
cell car for $25,000, the consumer can write $3,750 off his or her
taxes to make the fuel cell car more affordable.
To help gasoline stations begin to shift to serving consumers with
hydrogen fuel cell vehicles, our bill provides a 20-percent tax credit
for every unit of hydrogen fuel sold equivalent to a gallon of
gasoline.
The bill also helps taxpayers get the most of the fuel cell vehicle
in terms of convenience and ease of use. With hydrogen fuel cells,
filling up your car could be something you do at your home or your
office as well as a retail filling station. So our bill gives taxpayers
who install hydrogen fueling equipment in their homes a tax credit for
up to 50 percent of the cost of the refueling equipment.
In my view, these are practical steps away from our reliance on
foreign oil and toward better, cleaner transportation for all
Americans. I also believe this plan is the best, most effective use of
taxpayer dollars on this issue.
Companies like GM and Toyota--two car companies that are endorsing
the H2 GROW Act--are already developing the technology to improve the
performance and reduce the cost of fuel cell vehicles with more
reliable, affordable
[[Page S3508]]
materials. These companies are already putting the money and time into
that effort. What Congress needs to do is help the American people and
American businesses take advantage of these new products as they're
perfected, and help them hit the streets as quickly as possible.
I firmly believe the H2 GROW Act is a strong step toward helping
consumers to shore up this Nation's economic and environmental
stability for future generations. I know Congressman Cox feels the same
way, and I encourage my colleagues to support our bipartisan
legislation to accelerate commercialization of hydrogen fuel cell cars
and help reduce our Nation's dependence on foreign oil.
______
By Mr. ROCKEFELLER (for himself, Mr. Corzine, Mr. Inouye, Ms.
Landrieu, Mr. Levin, Mr. Reed, and Mr. Sarbanes):
S. 588. A bill to amend the Social Security Act to guarantee
comprehensive health care coverage for all children born after 2004; to
the Committee on Finance.
Mr. ROCKEFELLER. Mr. President, I am pleased and proud to introduce
the MediKids Health Insurance Act of 2003. Congressman Stark is
introducing a companion bill in the House.
This legislation is, without a doubt, ambitious. It is a deliberate
effort to try to ignite a national commitment to the goal of insuring
all of our children. For some, that is an idealistic proposition that
does not seem achievable. With this bill, I want to call on the public
and my colleagues to consider once again the clear and convincing case
for investing the necessary resources in the health of our children--
and therefore, in the well-being of their families and our entire
country. The President and Congress continue to talk about their
commitment to America's health. This bill challenges them to take
action on their rhetoric.
Our children are not only our future, they are also our present. What
we do for them today will greatly affect what happens tomorrow. Yet
even though we recognize these facts, we still have not found a way to
guarantee health coverage for children. Without health insurance, many
of these children go without health care all together.
Children are the least expensive segment of our population to insure.
They are also the least able to have control over whether or not they
have health insurance. Yet we now have over 9 million uninsured
children in this country. And with the downturn in the economy and the
rising costs of health care, this number will continue rising.
Our success in expanding Medicaid and passing the State Children's
Health Insurance Program was a meaningful, significant start at closing
the tragic gap represented by millions of uninsured children. However,
Congress cannot point to these programs and declare that our work is
done. We still have much more to do. The percent of children in low-
income families without health insurance has not changed in recent
years. Even with perfect enrollment in S-CHIP and Medicaid, there would
still be a great number of children without health insurance.
This is partially due to our increasingly mobile society, where
parents frequently change jobs and families often move from State to
State. When this occurs there is often a lapse in health coverage.
Also, families working their way out of welfare fluctuate between
eligibility and ineligibility for means-tested assistance programs.
Another reason for the number of uninsured children is that the cost of
health insurance continues to increase, leaving many working parents
unable to afford coverage for themselves or their families. All of this
adds up to the fact that many of our children do not have the
consistent and regular access to health care which they need to grow up
healthy.
That is why I am re-introducing the MediKids Health Insurance Act.
This bill would automatically enroll every child at birth into a new,
comprehensive Federal safety net health insurance program beginning in
2004. The benefits would be tailored to the needs of children and would
be similar to those currently available to children under Medicaid. A
small monthly premium would be collected from parents at tax filing,
with discounts to low-income families phasing out at 300 percent of
poverty. The children would remain enrolled in MediKids throughout
childhood. When they are covered by another health insurance program,
their parents would be exempt from the premium. The key to our program
is that whenever other sources of health insurance fail, MediKids would
stand ready to cover the health needs of our next generation. By the
year 2020, every child in America would be able to grow up with
consistent, continuous health insurance coverage.
Like Medicare, MediKids would be independently financed, would cover
benefits tailored to the needs of its target population, and would have
the goal of achieving nearly 100 percent health insurance coverage for
the children of this country--just as Medicare has done for our
Nation's seniors and disabled population. It's time we make this
investment in the future of America by guaranteeing all children the
health coverage they need to make a healthy start in life.
The MediKids Health Insurance Act would offer guaranteed, automatic
health coverage for every child with the simplest of enrollment
procedures and no challenging outreach, paperwork, or re-determination
hoops to jump through. It would be able to follow children across state
lines, or tide them over in a new location until their parents can
enroll them in a new insurance program. Between jobs or during family
crises such as divorce or the death of a parent, it would offer extra
security and ensure continuous health coverage to the Nation's
children. During that critical period when a family is just climbing
out of poverty and out of the eligibility range for means-tested
assistance programs, it would provide an extra boost with health
insurance for the children until the parents can move into jobs that
provide reliable health insurance coverage. And every child would
automatically be enrolled upon birth, along with the issuance of the
birth certificate or immigration card.
As we all know, an ounce of prevention is worth a pound of cure.
Providing health care coverage to children affects much more than their
health--it affects their ability to learn, their ability to thrive, and
their ability to become a productive member of society. I look forward
to working with my colleagues and supporting organizations for the
passage of the MediKids Health Insurance Act of 2003 to guarantee every
child in America the health coverage they need to grow up healthy.
I stand before you today to deliver a message. That it is time to
rekindle the discussion about how we are going to provide health
insurance for all Americans. The bill I am introducing today--the
MediKids Health Insurance Act of 2003--is a step toward eliminating the
irrational and tragic lack of health insurance for so many children and
adults in our country.
Partial solutions to America's ``uninsured crisis'' lie before
Congress, and I recognize the sense of realism and care that are the
basis for proposing incremental steps towards universal coverage. As
someone involved in the tough battles in years past to achieve
universal coverage, I will continue to do all I can to make whatever
progress can be made each and every year.
But I also believe it is important to not lose sight of the ideal--
and our capacity to reach that ideal--of the United States of America
joining every other industrialized nation by ensuring that its citizens
have basic health insurance. Until we succeed, millions of children and
adults will suffer human and financial costs that are preventable.
Therefore, I offer this legislation to both enlist my colleagues in
an effort to insist that all of our Nation's children are insured as
quickly as possible and to lay out the steps that would achieve that
goal. Some may say that we cannot afford this level of commitment to
America's children in a time of war and economic downturn. I strongly
disagree. We can fully fund MediKids with the more than $388 billion
the President's budget proposes to spend on the dividend tax cut. I
believe that choice is clear between providing 100 percent of our
children with health care coverage and giving tax breaks to the
wealthiest 2 percent of people in our country. I hope this bill will
help to build the will and momentum so desperately needed by our
children for action that will change their lives and
[[Page S3509]]
strengthen our Nation. I ask my colleagues from both sides of the aisle
to join as co-sponsors.
I ask unanimous consent that the text of this bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 588
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS; FINDINGS.
(a) Short Title.--This Act may be cited as the ``MediKids
Health Insurance Act of 2003''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents; findings.
Sec. 2. Benefits for all children born after 2004.
``TITLE XXII--MEDIKIDS PROGRAM
``Sec. 2201. Eligibility.
``Sec. 2202. Benefits.
``Sec. 2203. Premiums.
``Sec. 2204. MediKids Trust Fund.
``Sec. 2205. Oversight and accountability.
``Sec. 2206. Addition of care coordination services.
``Sec. 2207. Administration and miscellaneous.
Sec. 3. MediKids premium.
Sec. 4. Refundable credit for cost-sharing expenses under MediKids
program.
Sec. 5. Report on long-term revenues.
(c) Findings.--Congress finds the following:
(1) More than 9 million American children are uninsured.
(2) Children who are uninsured receive less medical care
and less preventive care and have a poorer level of health,
which result in lifetime costs to themselves and to the
entire American economy.
(3) Although SCHIP and Medicaid are successfully extending
a health coverage safety net to a growing portion of the
vulnerable low-income population of uninsured children, they
alone cannot achieve 100 percent health insurance coverage
for our nation's children due to inevitable gaps during
outreach and enrollment, fluctuations in eligibility,
variations in access to private insurance at all income
levels, and variations in States' ability to provide required
matching funds.
(4) As all segments of society continue to become more
transient, with many changes in employment over the working
lifetime of parents, the need for a reliable safety net of
health insurance which follows children across State lines,
already a major problem for the children of migrant and
seasonal farmworkers, will become a major concern for all
families in the United States.
(5) The medicare program has successfully evolved over the
years to provide a stable, universal source of health
insurance for the nation's disabled and those over age 65,
and provides a tested model for designing a program to reach
out to America's children
(6) The problem of insuring 100 percent of all American
children could be gradually solved by automatically enrolling
all children born after December 31, 2004, in a program
modeled after Medicare (and to be known as ``MediKids''), and
allowing those children to be transferred into other
equivalent or better insurance programs, including either
private insurance, SCHIP, or Medicaid, if they are eligible
to do so, but maintaining the child's default enrollment in
MediKids for any times when the child's access to other
sources of insurance is lost.
(7) A family's freedom of choice to use other insurers to
cover children would not be interfered with in any way, and
children eligible for SCHIP and Medicaid would continue to be
enrolled in those programs, but the underlying safety net of
MediKids would always be available to cover any gaps in
insurance due to changes in medical condition, employment,
income, or marital status, or other changes affecting a
child's access to alternate forms of insurance.
(8) The MediKids program can be administered without
impacting the finances or status of the existing Medicare
program.
(9) The MediKids benefit package can be tailored to the
special needs of children and updated over time.
(10) The financing of the program can be administered
without difficulty by a yearly payment of affordable premiums
through a family's tax filing (or adjustment of a family's
earned income tax credit).
(11) The cost of the program will gradually rise as the
number of children using MediKids as the insurer of last
resort increases, and a future Congress always can accelerate
or slow down the enrollment process as desired, while the
societal costs for emergency room usage, lost productivity
and work days, and poor health status for the next generation
of Americans will decline.
(12) Over time 100 percent of American children will always
have basic health insurance, and we can therefore expect a
healthier, more equitable, and more productive society.
SEC. 2. BENEFITS FOR ALL CHILDREN BORN AFTER 2004.
(a) In General.--The Social Security Act is amended by
adding at the end the following new title:
``TITLE XXII--MEDIKIDS PROGRAM
``SEC. 2201. ELIGIBILITY.
``(a) Eligibility of Individuals Born After December 31,
2004; All Children Under 23 Years of Age in Sixth Year.--An
individual who meets the following requirements with respect
to a month is eligible to enroll under this title with
respect to such month:
``(1) Age.--
``(A) First year.--During the first year in which this
title is effective, the individual has not attained 6 years
of age.
``(B) Second year.--During the second year in which this
title is effective, the individual has not attained 11 years
of age.
``(C) Third year.--During the third year in which this
title is effective, the individual has not attained 16 years
of age.
``(D) Fourth year.--During the fourth year in which this
title is effective, the individual has not attained 21 years
of age.
``(E) Fifth and subsequent years.--During the fifth year in
which this title is effective and each subsequent year, the
individual has not attained 23 years of age.
``(2) Citizenship.--The individual is a citizen or national
of the United States or is permanently residing in the United
States under color of law.
``(b) Enrollment Process.--An individual may enroll in the
program established under this title only in such manner and
form as may be prescribed by regulations, and only during an
enrollment period prescribed by the Secretary consistent with
the provisions of this section. Such regulations shall
provide a process under which--
``(1) individuals who are born in the United States after
December 31, 2004, are deemed to be enrolled at the time of
birth and a parent or guardian of such an individual is
permitted to pre-enroll in the month prior to the expected
month of birth;
``(2) individuals who are born outside the United States
after such date and who become eligible to enroll by virtue
of immigration into (or an adjustment of immigration status
in) the United States are deemed enrolled at the time of
entry or adjustment of status;
``(3) eligible individuals may otherwise be enrolled at
such other times and manner as the Secretary shall specify,
including the use of outstationed eligibility sites as
described in section 1902(a)(55)(A) and the use of
presumptive eligibility provisions like those described in
section 1920A; and
``(4) at the time of automatic enrollment of a child, the
Secretary provides for issuance to a parent or custodian of
the individual a card evidencing coverage under this title
and for a description of such coverage.
The provisions of section 1837(h) apply with respect to
enrollment under this title in the same manner as they apply
to enrollment under part B of title XVIII.
``(c) Date Coverage Begins.--
``(1) In general.--The period during which an individual is
entitled to benefits under this title shall begin as follows,
but in no case earlier than January 1, 2005:
``(A) In the case of an individual who is enrolled under
paragraph (1) or (2) of subsection (b), the date of birth or
date of obtaining appropriate citizenship or immigration
status, as the case may be.
``(B) In the case of an another individual who enrolls
(including pre-enrolls) before the month in which the
individual satisfies eligibility for enrollment under
subsection (a), the first day of such month of eligibility.
``(C) In the case of an another individual who enrolls
during or after the month in which the individual first
satisfies eligibility for enrollment under such subsection,
the first day of the following month.
``(2) Authority to provide for partial months of
coverage.--Under regulations, the Secretary may, in the
Secretary's discretion, provide for coverage periods that
include portions of a month in order to avoid lapses of
coverage.
``(3) Limitation on payments.--No payments may be made
under this title with respect to the expenses of an
individual enrolled under this title unless such expenses
were incurred by such individual during a period which, with
respect to the individual, is a coverage period under this
section.
``(d) Expiration of Eligibility.--An individual's coverage
period under this part shall continue until the individual's
enrollment has been terminated because the individual no
longer meets the requirements of subsection (a) (whether
because of age or change in immigration status).
``(e) Entitlement to MediKids Benefits For Enrolled
Individuals.--An individual enrolled under this section is
entitled to the benefits described in section 2202.
``(f) Low-Income Information.--At the time of enrollment of
a child under this title, the Secretary shall make an inquiry
as to whether or not the family income of the family that
includes the child is less than 150 percent of the poverty
line for a family of the size involved. If the family income
is below such level, the Secretary shall encode in the
identification card issued in connection with eligibility
under this title a code indicating such fact. The Secretary
also shall provide for a toll-free telephone line at which
providers can verify whether or not such a child is in a
family the income of which is below such level.
``(g) Construction.--Nothing in this title shall be
construed as requiring (or preventing) an individual who is
enrolled under this section from seeking medical assistance
under a State medicaid plan under title XIX or child health
assistance under a State child health plan under title XXI.
[[Page S3510]]
``SEC. 2202. BENEFITS.
``(a) Secretarial Specification of Benefit Package.--
``(1) In general.--The Secretary shall specify the benefits
to be made available under this title consistent with the
provisions of this section and in a manner designed to meet
the health needs of enrollees.
``(2) Updating.--The Secretary shall update the
specification of benefits over time to ensure the inclusion
of age-appropriate benefits to reflect the enrollee
population.
``(3) Annual updating.--The Secretary shall establish
procedures for the annual review and updating of such
benefits to account for changes in medical practice, new
information from medical research, and other relevant
developments in health science.
``(4) Input.--The Secretary shall seek the input of the
pediatric community in specifying and updating such benefits.
``(5) Limitation on updating.--In no case shall updating of
benefits under this subsection result in a failure to provide
benefits required under subsection (b).
``(b) Inclusion of Certain Benefits.--
``(1) Medicare core benefits.--Such benefits shall include
(to the extent consistent with other provisions of this
section) at least the same benefits (including coverage,
access, availability, duration, and beneficiary rights) that
are available under parts A and B of title XVIII.
``(2) All required medicaid benefits.--Such benefits shall
also include all items and services for which medical
assistance is required to be provided under section
1902(a)(10)(A) to individuals described in such section,
including early and periodic screening, diagnostic services,
and treatment services.
``(3) Inclusion of prescription drugs.--Such benefits also
shall include (as specified by the Secretary) prescription
drugs and biologicals.
``(4) Cost-sharing.--
``(A) In general.--Subject to subparagraph (B), such
benefits also shall include the cost-sharing (in the form of
deductibles, coinsurance, and copayments) applicable under
title XVIII with respect to comparable items and services,
except that no cost-sharing shall be imposed with respect to
early and periodic screening and diagnostic services included
under paragraph (2).
``(B) No cost-sharing for lowest income children.--Such
benefits shall not include any cost-sharing for children in
families the income of which (as determined for purposes of
section 1905(p)) does not exceed 150 percent of the official
income poverty line (referred to in such section) applicable
to a family of the size involved.
``(C) Refundable credit for cost-sharing for other low-
income children.--For a refundable credit for cost-sharing in
the case of children in certain families, see section 35 of
the Internal Revenue Code of 1986.
``(c) Payment Schedule.--The Secretary, with the assistance
of the Medicare Payment Advisory Commission, shall develop
and implement a payment schedule for benefits covered under
this title. To the extent feasible, such payment schedule
shall be consistent with comparable payment schedules and
reimbursement methodologies applied under parts A and B of
title XVIII.
``(d) Input.--The Secretary shall specify such benefits and
payment schedules only after obtaining input from appropriate
child health providers and experts.
``(e) Enrollment in Health Plans.--The Secretary shall
provide for the offering of benefits under this title through
enrollment in a health benefit plan that meets the same (or
similar) requirements as the requirements that apply to
Medicare+Choice plans under part C of title XVIII. In the
case of individuals enrolled under this title in such a plan,
the Medicare+Choice capitation rate described in section
1853(c) shall be adjusted in an appropriate manner to reflect
differences between the population served under this title
and the population under title XVIII.
``SEC. 2203. PREMIUMS.
``(a) Amount of Monthly Premiums.--
``(1) In general.--The Secretary shall, during September of
each year (beginning with 2004), establish a monthly MediKids
premium for the following year. Subject to paragraph (2), the
monthly MediKids premium for a year is equal to \1/12\ of the
annual premium rate computed under subsection (b).
``(2) Elimination of monthly premium for demonstration of
equivalent coverage (including coverage under low-income
programs).--The amount of the monthly premium imposed under
this section for an individual for a month shall be zero in
the case of an individual who demonstrates to the
satisfaction of the Secretary that the individual has basic
health insurance coverage for that month. For purposes of the
previous sentence enrollment in a medicaid plan under title
XIX, a State child health insurance plan under title XXI, or
under the medicare program under title XVIII is deemed to
constitute basic health insurance coverage described in such
sentence.
``(b) Annual Premium.--
``(1) National, per capita average.--The Secretary shall
estimate the average, annual per capita amount that would be
payable under this title with respect to individuals residing
in the United States who meet the requirement of section
2201(a)(1) as if all such individuals were eligible for (and
enrolled) under this title during the entire year (and
assuming that section 1862(b)(2)(A)(i) did not apply).
``(2) Annual premium.--Subject to subsection (d), the
annual premium under this subsection for months in a year is
equal to 25 percent of the average, annual per capita amount
estimated under paragraph (1) for the year.
``(c) Payment of Monthly Premium.--
``(1) Period of payment.--In the case of an individual who
participates in the program established by this title,
subject to subsection (d), the monthly premium shall be
payable for the period commencing with the first month of the
individual's coverage period and ending with the month in
which the individual's coverage under this title terminates.
``(2) Collection through tax return.--For provisions
providing for the payment of monthly premiums under this
subsection, see section 59B of the Internal Revenue Code of
1986.
``(3) Protections against fraud and abuse.--The Secretary
shall develop, in coordination with States and other health
insurance issuers, administrative systems to ensure that
claims which are submitted to more than one payor are
coordinated and duplicate payments are not made.
``(d) Reduction in Premium for Certain Low-Income
Families.--For provisions reducing the premium under this
section for certain low-income families, see section 59B(c)
of the Internal Revenue Code of 1986.
``SEC. 2204. MEDIKIDS TRUST FUND.
``(a) Establishment of Trust Fund.--
``(1) In general.--There is hereby created on the books of
the Treasury of the United States a trust fund to be known as
the `MediKids Trust Fund' (in this section referred to as the
`Trust Fund'). The Trust Fund shall consist of such gifts and
bequests as may be made as provided in section 201(i)(1) and
such amounts as may be deposited in, or appropriated to, such
fund as provided in this title.
``(2) Premiums.--Premiums collected under section 2203
shall be transferred to the Trust Fund.
``(b) Incorporation of Provisions.--
``(1) In general.--Subject to paragraph (2), subsections
(b) through (i) of section 1841 shall apply with respect to
the Trust Fund and this title in the same manner as they
apply with respect to the Federal Supplementary Medical
Insurance Trust Fund and part B, respectively.
``(2) Miscellaneous references.--In applying provisions of
section 1841 under paragraph (1)--
``(A) any reference in such section to `this part' is
construed to refer to title XXII;
``(B) any reference in section 1841(h) to section 1840(d)
and in section 1841(i) to sections 1840(b)(1) and 1842(g) are
deemed references to comparable authority exercised under
this title;
``(C) payments may be made under section 1841(g) to the
Trust Funds under sections 1817 and 1841 as reimbursement to
such funds for payments they made for benefits provided under
this title; and
``(D) the Board of Trustees of the MediKids Trust Fund
shall be the same as the Board of Trustees of the Federal
Supplementary Medical Insurance Trust Fund.
``SEC. 2205. OVERSIGHT AND ACCOUNTABILITY.
``(a) Through Annual Reports of Trustees.--The Board of
Trustees of the MediKids Trust Fund under section 2204(b)(1)
shall report on an annual basis to Congress concerning the
status of the Trust Fund and the need for adjustments in the
program under this title to maintain financial solvency of
the program under this title.
``(b) Periodic GAO Reports.--The Comptroller General of the
United States shall periodically submit to Congress reports
on the adequacy of the financing of coverage provided under
this title. The Comptroller General shall include in such
report such recommendations for adjustments in such financing
and coverage as the Comptroller General deems appropriate in
order to maintain financial solvency of the program under
this title.
``SEC. 2206. INCLUSION OF CARE COORDINATION SERVICES.
``(a) In General.--
``(1) Program authority.--The Secretary, beginning in 2005,
may implement a care coordination services program in
accordance with the provisions of this section under which,
in appropriate circumstances, eligible individuals may elect
to have health care services covered under this title managed
and coordinated by a designated care coordinator.
``(2) Administration by contract.--The Secretary may
administer the program under this section through a contract
with an appropriate program administrator.
``(3) Coverage.--Care coordination services furnished in
accordance with this section shall be treated under this
title as if they were included in the definition of medical
and other health services under section 1861(s) and benefits
shall be available under this title with respect to such
services without the application of any deductible or
coinsurance.
``(b) Eligibility Criteria; Identification and Notification
of Eligible Individuals.--
``(1) Individual eligibility criteria.--The Secretary shall
specify criteria to be used in making a determination as to
whether an individual may appropriately be enrolled in the
care coordination services program under this section, which
shall include at least a finding by the Secretary that for
cohorts of individuals with characteristics
[[Page S3511]]
identified by the Secretary, professional management and
coordination of care can reasonably be expected to improve
processes or outcomes of health care and to reduce aggregate
costs to the programs under this title.
``(2) Procedures to facilitate enrollment.--The Secretary
shall develop and implement procedures designed to facilitate
enrollment of eligible individuals in the program under this
section.
``(c) Enrollment of Individuals.--
``(1) Secretary's determination of eligibility.--The
Secretary shall determine the eligibility for services under
this section of individuals who are enrolled in the program
under this section and who make application for such services
in such form and manner as the Secretary may prescribe.
``(2) Enrollment period.--
``(A) Effective date and duration.--Enrollment of an
individual in the program under this section shall be
effective as of the first day of the month following the
month in which the Secretary approves the individual's
application under paragraph (1), shall remain in effect for
one month (or such longer period as the Secretary may
specify), and shall be automatically renewed for additional
periods, unless terminated in accordance with such procedures
as the Secretary shall establish by regulation. Such
procedures shall permit an individual to disenroll for cause
at any time and without cause at re-enrollment intervals.
``(B) Limitation on reenrollment.--The Secretary may
establish limits on an individual's eligibility to reenroll
in the program under this section if the individual has
disenrolled from the program more than once during a
specified time period.
``(d) Program.--The care coordination services program
under this section shall include the following elements:
``(1) Basic care coordination services.--
``(A) In general.--Subject to the cost-effectiveness
criteria specified in subsection (b)(1), except as otherwise
provided in this section, enrolled individuals shall receive
services described in section 1905(t)(1) and may receive
additional items and services as described in subparagraph
(B).
``(B) Additional benefits.--The Secretary may specify
additional benefits for which payment would not otherwise be
made under this title that may be available to individuals
enrolled in the program under this section (subject to an
assessment by the care coordinator of an individual's
circumstance and need for such benefits) in order to
encourage enrollment in, or to improve the effectiveness of,
such program.
``(2) Care coordination requirement.--Notwithstanding any
other provision of this title, the Secretary may provide that
an individual enrolled in the program under this section may
be entitled to payment under this title for any specified
health care items or services only if the items or services
have been furnished by the care coordinator, or coordinated
through the care coordination services program. Under such
provision, the Secretary shall prescribe exceptions for
emergency medical services as described in section
1852(d)(3), and other exceptions determined by the Secretary
for the delivery of timely and needed care.
``(e) Care Coordinators.--
``(1) Conditions of participation.--In order to be
qualified to furnish care coordination services under this
section, an individual or entity shall--
``(A) be a health care professional or entity (which may
include physicians, physician group practices, or other
health care professionals or entities the Secretary may find
appropriate) meeting such conditions as the Secretary may
specify;
``(B) have entered into a care coordination agreement; and
``(C) meet such criteria as the Secretary may establish
(which may include experience in the provision of care
coordination or primary care physician's services).
``(2) Agreement term; payment.--
``(A) Duration and renewal.--A care coordination agreement
under this subsection shall be for one year and may be
renewed if the Secretary is satisfied that the care
coordinator continues to meet the conditions of participation
specified in paragraph (1).
``(B) Payment for services.--The Secretary may negotiate or
otherwise establish payment terms and rates for services
described in subsection (d)(1).
``(C) Liability.--Case coordinators shall be subject to
liability for actual health damages which may be suffered by
recipients as a result of the care coordinator's decisions,
failure or delay in making decisions, or other actions as a
care coordinator.
``(D) Terms.--In addition to such other terms as the
Secretary may require, an agreement under this section shall
include the terms specified in subparagraphs (A) through (C)
of section 1905(t)(3).
``SEC. 2207. ADMINISTRATION AND MISCELLANEOUS.
``(a) In General.--Except as otherwise provided in this
title--
``(1) the Secretary shall enter into appropriate contracts
with providers of services, other health care providers,
carriers, and fiscal intermediaries, taking into account the
types of contracts used under title XVIII with respect to
such entities, to administer the program under this title;
``(2) individuals enrolled under this title shall be
treated for purposes of title XVIII as though the individual
were entitled to benefits under part A and enrolled under
part B of such title;
``(3) benefits described in section 2202 that are payable
under this title to such individuals shall be paid in a
manner specified by the Secretary (taking into account, and
based to the greatest extent practicable upon, the manner in
which they are provided under title XVIII);
``(4) provider participation agreements under title XVIII
shall apply to enrollees and benefits under this title in the
same manner as they apply to enrollees and benefits under
title XVIII; and
``(5) individuals entitled to benefits under this title may
elect to receive such benefits under health plans in a
manner, specified by the Secretary, similar to the manner
provided under part C of title XVIII.
``(b) Coordination With Medicaid and SCHIP.--
Notwithstanding any other provision of law, individuals
entitled to benefits for items and services under this title
who also qualify for benefits under title XIX or XXI or any
other Federally funded program may continue to qualify and
obtain benefits under such other title or program, and in
such case such an individual shall elect either--
``(1) such other title or program to be primary payor to
benefits under this title, in which case no benefits shall be
payable under this title and the monthly premium under
section 2203 shall be zero; or
``(2) benefits under this title shall be primary payor to
benefits provided under such program or title, in which case
the Secretary shall enter into agreements with States as may
be appropriate to provide that, in the case of such
individuals, the benefits under titles XIX and XXI or such
other program (including reduction of cost-sharing) are
provided on a `wrap-around' basis to the benefits under this
title.''.
(b) Conforming Amendments to Social Security Act
Provisions.--
(1) Section 201(i)(1) of the Social Security Act (42 U.S.C.
401(i)(1)) is amended by striking ``or the Federal
Supplementary Medical Insurance Trust Fund'' and inserting
``the Federal Supplementary Medical Insurance Trust Fund, and
the MediKids Trust Fund''.
(2) Section 201(g)(1)(A) of such Act (42 U.S.C.
401(g)(1)(A)) is amended by striking `` and the Federal
Supplementary Medical Insurance Trust Fund established by
title XVIII'' and inserting ``, the Federal Supplementary
Medical Insurance Trust Fund, and the MediKids Trust Fund
established by title XVIII''.
(3) Section 1853(c) of such Act (42 U.S.C. 1395w-23(c)) is
amended--
(A) in paragraph (1), by striking ``or (7)'' and inserting
``, (7), or (8)'', and
(B) by adding at the end the following:
``(8) Adjustment for medikids.--In applying this subsection
with respect to individuals entitled to benefits under title
XXII, the Secretary shall provide for an appropriate
adjustment in the Medicare+Choice capitation rate as may be
appropriate to reflect differences between the population
served under such title and the population under parts A and
B.''.
(c) Maintenance of Medicaid Eligibility and Benefits for
Children.--
(1) In general.--In order for a State to continue to be
eligible for payments under section 1903(a) of the Social
Security Act (42 U.S.C. 1396b(a))--
(A) the State may not reduce standards of eligibility, or
benefits, provided under its State medicaid plan under title
XIX of the Social Security Act or under its State child
health plan under title XXI of such Act for individuals under
23 years of age below such standards of eligibility, and
benefits, in effect on the date of the enactment of this Act;
and
(B) the State shall demonstrate to the satisfaction of the
Secretary of Health and Human Services that any savings in
State expenditures under title XIX or XXI of the Social
Security Act that results from children from enrolling under
title XXII of such Act shall be used in a manner that
improves services to beneficiaries under title XIX of such
Act, such as through increases in provider payment rates,
expansion of eligibility, improved nurse and nurse aide
staffing and improved inspections of nursing facilities, and
coverage of additional services.
(2) Medikids as primary payor.--In applying title XIX of
the Social Security Act, the MediKids program under title
XXII of such Act shall be treated as a primary payor in cases
in which the election described in section 2207(b)(2) of such
Act, as added by subsection (a), has been made.
(d) Expansion of MedPAC Membership to 19.--
(1) In general.--Section 1805(c) of the Social Security Act
(42 U.S.C. 1395b-6(c)) is amended--
(A) in paragraph (1), by striking ``17'' and inserting
``19''; and
(B) in paragraph (2)(B), by inserting ``experts in
children's health,'' after ``other health professionals,''.
(2) Initial terms of additional members.--
(A) In general.--For purposes of staggering the initial
terms of members of the Medicare Payment Advisory Commission
under section 1805(c)(3) of the Social Security Act (42
U.S.C. 1395b-6(c)(3)), the initial terms of the 2 additional
members of the Commission provided for by the amendment under
subsection (a)(1) are as follows:
(i) One member shall be appointed for 1 year.
(ii) One member shall be appointed for 2 years.
[[Page S3512]]
(B) Commencement of terms.--Such terms shall begin on
January 1, 2004.
SEC. 3. MEDIKIDS PREMIUM.
(a) General Rule.--Subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to determination of
tax liability) is amended by adding at the end the following
new part:
``PART VIII--MEDIKIDS PREMIUM
``Sec. 59B. MediKids premium.
``SEC. 59B. MEDIKIDS PREMIUM.
``(a) Imposition of Tax.--In the case of an individual to
whom this section applies, there is hereby imposed (in
addition to any other tax imposed by this subtitle) a
MediKids premium for the taxable year.
``(b) Individuals Subject to Premium.--
``(1) In general.--This section shall apply to an
individual if the taxpayer has a MediKid at any time during
the taxable year.
``(2) Medikid.--For purposes of this section, the term
`MediKid' means, with respect to a taxpayer, any individual
with respect to whom the taxpayer is required to pay a
premium under section 2203(c) of the Social Security Act for
any month of the taxable year.
``(c) Amount of Premium.--For purposes of this section, the
MediKids premium for a taxable year is the sum of the monthly
premiums under section 2203 of the Social Security Act for
months in the taxable year.
``(d) Exceptions Based on Adjusted Gross Income.--
``(1) Exemption for very low-income taxpayers.--
``(A) In general.--No premium shall be imposed by this
section on any taxpayer having an adjusted gross income not
in excess of the exemption amount.
``(B) Exemption amount.--For purposes of this paragraph,
the exemption amount is--
``(i) $17,910 in the case of a taxpayer having 1 MediKid,
``(ii) $22,530 in the case of a taxpayer having 2 MediKids,
``(iii) $27,150 in the case of a taxpayer having 3
MediKids, and
``(iv) $31,770 in the case of a taxpayer having 4 or more
MediKids.
``(C) Phaseout of exemption.--In the case of a taxpayer
having an adjusted gross income which exceeds the exemption
amount but does not exceed twice the exemption amount, the
premium shall be the amount which bears the same ratio to the
premium which would (but for this subparagraph) apply to the
taxpayer as such excess bears to the exemption amount.
``(D) Inflation adjustment of exemption amounts.--In the
case of any taxable year beginning in a calendar year after
2002, each dollar amount contained in subparagraph (C) shall
be increased by an amount equal to the product of--
``(i) such dollar amount, and
``(ii) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting `calendar year 2001'
for `calendar year 1992' in subparagraph (B) thereof.
If any increase determined under the preceding sentence is
not a multiple of $50, such increase shall be rounded to the
nearest multiple of $50.
``(2) Premium limited to 5 percent of adjusted gross
income.--In no event shall any taxpayer be required to pay a
premium under this section in excess of an amount equal to 5
percent of the taxpayer's adjusted gross income.
``(e) Coordination With Other Provisions.--
``(1) Not treated as medical expense.--For purposes of this
chapter, any premium paid under this section shall not be
treated as expense for medical care.
``(2) Not treated as tax for certain purposes.--The premium
paid under this section shall not be treated as a tax imposed
by this chapter for purposes of determining--
``(A) the amount of any credit allowable under this
chapter, or
``(B) the amount of the minimum tax imposed by section 55.
``(3) Treatment under subtitle f.--For purposes of subtitle
F, the premium paid under this section shall be treated as if
it were a tax imposed by section 1.''.
(b) Technical Amendments.--
(1) Subsection (a) of section 6012 of such Code is amended
by inserting after paragraph (9) the following new paragraph:
``(10) Every individual liable for a premium under section
59B.''.
(2) The table of parts for subchapter A of chapter 1 of
such Code is amended by adding at the end the following new
item:
``Part VIII. MediKids premium.''.
(c) Effective Date.--The amendments made by this section
shall apply to months beginning after December 2004, in
taxable years ending after such date.
SEC. 4. REFUNDABLE CREDIT FOR COST-SHARING EXPENSES UNDER
MEDIKIDS PROGRAM.
(a) In General.--Subpart C of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating to
refundable credits) is amended by redesignating section 36 as
section 37 and by inserting after section 35 the following
new section:
``SEC. 36. COST-SHARING EXPENSES UNDER MEDIKIDS PROGRAM.
``(a) Allowance of Credit.--In the case of an individual
who has a MediKid (as defined in section 59B) at any time
during the taxable year, there shall be allowed as a credit
against the tax imposed by this subtitle an amount equal to
50 percent of the amount paid by the taxpayer during the
taxable year as cost-sharing under section 2202(b)(4) of the
Social Security Act.
``(b) Limitation Based on Adjusted Gross Income.--The
amount of the credit which would (but for this subsection) be
allowed under this section for the taxable year shall be
reduced (but not below zero) by an amount which bears the
same ratio to such amount of credit as the excess of the
taxpayer's adjusted gross income for such taxable year over
the exemption amount (as defined in section 59B(d)) bears to
such exemption amount.''.
(b) Technical Amendments.--
(1) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting before the period ``or
from section 36 of such Code''.
(2) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of such Code is amended by striking
the last item and inserting the following new items:
``Sec. 36. Cost-sharing expenses under MediKids program.
``Sec. 37. Overpayments of tax.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2004.
SEC. 5. REPORT ON LONG-TERM REVENUES.
Within one year after the date of the enactment of this
Act, the Secretary of the Treasury shall propose a gradual
schedule of progressive tax changes to fund the program under
title XXII of the Social Security Act, as the number of
enrollees grows in the out-years.
______
By Mr. AKAKA (for himself, Mr. Durbin, Mr. Allen, and Mr.
Voinovich):
S. 589. A bill to strengthen and improve the management of national
security, encourage Government service in areas of critical national
security, and to assist government agencies in addressing deficiencies
in personal possessing specialized skills important to national
security and incorporating the goals and strategies for recruitment and
retention for such skilled personnel into the strategic and performance
management systems of Federal agencies; to the Committee on
Governmental Affairs.
Mr. AKAKA. Mr. President. Today I rise on behalf of myself and
Senators Durbin, Allen and Voinovich to reintroduce the Homeland
Security Federal Workforce Act. This is similar to legislation Senator
Durbin, Senator Thompson, and I introduced in the 107th Congress. Like
S. 1800, this bill is designed to strengthen the Federal Government's
recruitment and retention efforts in the areas of science, mathematics,
and foreign language where there is a growing absence of qualified
personnel.
In the weeks following the terrorist attacks of September 11, FBI
Director Mueller made a plea on national television for speakers of
Arabic and Farsi to help the FBI and national security agencies
translate documents that were in our possession but which were left
untranslated due to a shortage of employees with proficiency in those
languages. The General Accounting Office has reported that agencies
have shortages in translators and interpreters and an overall shortfall
in the language proficiency levels needed to carry out their missions.
The Federal Government also lacks personnel with scientific and
engineering skills. On February 25, 2003, William Wulf, president of
the National Academy of Engineering, noted that the supply of talented
engineers in government is not keeping pace with growing demand. A
recent poll found that a mere 24 percent of job seekers believe that
the best engineering job opportunities are in the Federal Government
compared to 52 percent for the private sector. In another example, a
1999 report of the National Research Council found significant science
and technology weaknesses throughout the Department of State. These
shortfalls have real consequences that hamper our ability to monitor
exports of military-sensitive technology and preventing proliferation
of biological warfare expertise from the former Soviet Union.
Now more than ever, we must make sure we have the right people with
the right skills in the right place. On January 9, 2003, the Washington
Post reported that six major agencies moving into the Department of
Homeland Security could lose roughly a quarter to one-half of their
employees to retirement over the next five years. The data shows that
about twice as many employees at these six agencies will be eligible to
retire by the end of 2008 than
[[Page S3513]]
are currently eligible. According to the data, the following
percentages of employees will be eligible to retire: 59 percent at the
Federal Emergency Management Agency; 54 percent of the Coast Guard; 46
percent of the U.S. Customs Service; 44 percent of the Animal and Plant
Health Inspection Service; 32 percent of the Immigration and
Naturalization Service; and 22 percent of the Secret Service.
An alarming 26,363 employees out of 67,166 in the six agencies would
be eligible to retire in 2008. Unfortunately, the numbers for other
Federal agencies are not any better.
We need programs to recruit personnel with the skills necessary to
protect our country. The Homeland Security Federal Workforce Act will
do just that. Today, agencies are forced to decide between funding
programs and investing in their workforce. This is a no-win situation
and has prevented many agencies from fully utilizing the Federal
student loan repayment program which is intended to be a powerful
recruitment and retention tool. The Homeland Security Federal Workforce
Act expands the existing student loan repayment program by authorizing
funds for key national security agencies. The Act establishes a
separate fund to be administered by the Office of Personnel Management,
OPM, to repay student loans for employees in national security
positions who pledge to serve in the government for a minimum of three
years.
In addition, our legislation would establish a National Security
Service Board to oversee and implement the new National Security
Fellowship Program and the National Security Service Corps. The
National Security Fellowship Program is designed to fund graduate
education for selected students learning skills critical to national
security who agree to enter federal service on the completion of their
degree.
Current employees would not be neglected. Twenty percent of
fellowship slots would be reserved for Federal employees to enhance
their education and training. In addition, more training opportunities
would be provided to current federal employees through the National
Security Service Corps. This program is designed to provide
opportunities for mid-level federal employees in agencies with national
security responsibilities to serve in rotational assignments to build
experience and widen perspectives within the national security
community.
Last March I chaired a hearing in the Subcommittee on International
Security, Proliferation, and Federal Services of the Governmental
Affairs Committee on this bill. Witnesses commented on the additional
benefits this legislation could have on the ability of government
recruitment and retention efforts. My former colleague, Representative
Lee Hamilton, now the Director of the Woodrow Wilson International
Center for Scholars, noted that, ``Enactment of these proposals would
encourage more people to enter national security positions by easing
the financial sacrifices often associated with graduate study and with
government service.''
The creation of the Department of Homeland Security once again raised
concerns over the recruitment and retention of skilled employees in
national security positions. To address these needs, Senator Voinovich
and I successfully added an amendment to the Homeland Security Act to
help alleviate problems associated with the workforce crisis facing the
Federal Government. However, we must focus our efforts on recruiting
and retaining employees with the technical and language skills the
federal government needs the most. This legislation helps fill the
holes in our recruitment and retention efforts.
As the United States Commission on National Security/21st Century,
also known as the Hart-Rudman Commission, concluded in 2001, `` . . .
the maintenance of American power in the world depends upon the quality
of U.S. government personnel, civil and military, at all levels . . .
The U.S. faces a broader range of national security challenges today,
requiring policy analysts and intelligence personnel with expertise in
more countries, regions, and issues.'' The Homeland Security Federal
Workforce Act will meet this challenge.
I look forward to working with my colleagues to ensure that the
Federal Government has the tools to put the right people with the right
skills in the right place to protect our great Nation.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 589
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Homeland Security Federal
Workforce Act''.
SEC. 2. FINDINGS, PURPOSE, AND EFFECT OF LAW.
(a) Findings.--Congress makes the following findings:
(1) The security of the United States requires the fullest
development of the intellectual resources and technical
skills of its young men and women.
(2) The security of the United States depends upon the
mastery of modern techniques developed from complex
scientific principles. It depends as well upon the discovery
and development of new principles, new techniques, and new
knowledge.
(3) The United States finds itself on the brink of an
unprecedented human capital crisis in Government. Due to
increasing competition from the private sector in recruiting
high-caliber individuals, Government departments and
agencies, particularly those involved in national security
affairs, are finding it hard to attract and retain talent.
(4) The United States must strengthen Federal civilian and
military personnel systems in order to improve recruitment,
retention, and effectiveness at all levels.
(5) The ability of the United States to exercise
international leadership is, and will increasingly continue
to be, based on the political and economic strength of the
United States, as well as on United States military strength
around the world.
(6) The Federal Government has an interest in ensuring that
the employees of its departments and agencies with national
security responsibilities are prepared to meet the challenges
of this changing international environment.
(7) In January 2001, the General Accounting Office reported
that, at the Department of Defense ``attrition among first-
time enlistees has reached an all-time high. The services
face shortages among junior officers, and problems in
retaining intelligence analysts, computer programmers, and
pilots.'' The General Accounting Office also warned of the
Immigration and Naturalization Service's ``lack of staff to
perform intelligence functions and unclear guidance for
retrieving and analyzing information.''
(8) The United States Commission on National Security also
cautioned that ``the U.S. need for the highest quality human
capital in science, mathematics, and engineering is not being
met.'' The Commission wrote, ``we must ensure the highest
caliber human capital in public service. U.S. national
security depends on the quality of the people, both civilian
and military, serving within the ranks of government.''
(9) The events on and after September 11th have highlighted
the weaknesses in the Federal and State government's human
capital and its personnel management practices, especially as
it relates to our national security.
(b) Purposes.--It is the purpose of this Act to--
(1) provide attractive incentives to recruit capable
individuals for Government and military service; and
(2) provide the necessary resources, accountability, and
flexibility to meet the national security educational needs
of the United States, especially as such needs change over
time.
(c) Effect of Law.--Nothing in this Act, or an amendment
made by this Act, shall be construed to affect the collective
bargaining unit status or rights of any Federal employee.
TITLE I--PILOT PROGRAM FOR STUDENT LOAN REPAYMENT FOR FEDERAL EMPLOYEES
IN AREAS OF CRITICAL IMPORTANCE
SEC. 101. STUDENT LOAN REPAYMENTS.
Subchapter VII of chapter 53 of title 5, United States
Code, is amended by inserting after section 5379, the
following:
``Sec. 5379A. Pilot program for student loan repayment for
Federal employees in areas of critical importance
``(a) Definitions.--In this section:
``(1) Agency.--The term `agency' means an agency of the
Department of Defense, the Department of Homeland Security,
the Department of State, the Department of Energy, the
Department of the Treasury, the Department of Justice, the
National Security Agency, and the Central Intelligence
Agency.
``(2) National security position.--The term `national
security position' means an employment position determined by
the Director of the Office of Personnel Management, in
consultation with an agency, for the purposes of the Pilot
Program for Student Loan Forgiveness in Areas of Critical
Importance established under this section, to involve
important homeland security applications.
``(3) Student loan.--The term `student loan' means--
[[Page S3514]]
``(A) a loan made, insured, or guaranteed under part B of
title IV of the Higher Education Act of 1965 (20 U.S.C. 1071
et seq.);
``(B) a loan made under part D or E of title IV of the
Higher Education Act of 1965 (20 U.S.C. 1087a et seq., 1087aa
et seq.); and
``(C) a health education assistance loan made or insured
under part A of title VII of the Public Health Service Act
(42 U.S.C. 292 et seq.) or under part E of title VIII of such
Act (42 U.S.C. 297a et seq.).
``(b) Establishment and Operation.--
``(1) In general.--The Director of the Office of Personnel
Management shall, in order to recruit or retain highly
qualified professional personnel, establish a pilot program
under which the head of an agency may agree to repay (by
direct payments on behalf of the employee) any student loan
previously taken out by such employee if the employee is
employed by the agency in a national security position.
``(2) Terms and conditions of payment.--Payments under this
section shall be made subject to such terms, limitations, or
conditions as may be mutually agreed to by the agency and
employee concerned.
``(3) Payments.--The amount paid by the agency on behalf of
an employee under this section may not exceed $10,000 towards
the remaining balance of the student loan for each year that
the employee remains in service in the position, except that
the employee must remain in such position for at least 3
years. The maximum amount that may be paid on behalf of an
employee under this paragraph shall be $80,000.
``(4) Limitation.--Nothing in this section shall be
considered to authorize an agency to pay any amount to
reimburse an employee for any repayments made by such
employee prior to the agency's entering into an agreement
under this section with such employee.
``(5) Rule of construction.--Nothing in this section shall
be construed--
``(A) to affect student loan repayment programs existing on
the date of enactment of this section;
``(B) to revoke or rescind any existing law, collective
bargaining agreement, or recognition of a labor organization;
``(C) to authorize the Office of Personnel Management to
determine national security positions for any other purpose
other than to make such determinations as are required by
this section in order to carry out the purposes of this
section; or
``(D) as a basis for determining the exemption of any
position from inclusion in a bargaining unit pursuant to
chapter 71 of title 5, United States Code, or from the right
of any incumbent of a national security position determined
by the Office of Personnel Management pursuant to this
section, from entitlement to all rights and benefits under
such chapter.
``(6) Fund.--As part of the program established under
paragraph (1), the Director shall establish a fund within the
Office of Personnel Management to be used by agencies to
provide the repayments authorized under the program.
``(c) General Provisions.--
``(1) Coordination.--The Director of the Office of
Personnel Management shall coordinate the program established
under this section with the heads of agencies to recruit
employees to serve in national security positions.
``(2) Reports.--
``(A) Allocation and implementation.--Not later than 6
months after the date of enactment of this section, the
Director of the Office of Personnel Management shall report
to the appropriate committees of Congress on the manner in
which the Director will allocate funds and implement the
program under this section.
``(B) Status and success.--Not later than 4 years after the
date of enactment of this section, the Director of the Office
of Personnel Management shall report to the appropriate
Committees on Congress on the status of the program and its
success in recruiting and retaining employees for national
security positions, including an assessment as to whether the
program should be expanded to other agencies or to non-
national security positions to improve overall Federal
workforce recruitment and retention.
``(d) Ineligible Employees.--An employee shall not be
eligible for benefits under this section if such employee--
``(1) occupies a position that is excepted from the
competitive service because of its confidential, policy-
determining, policy-making, or policy-advocating
character; or
``(2) does not occupy a national security position.
``(e) Terms of Agreement.--
``(1) In general.--An employee selected to receive benefits
under this section shall agree in writing, before receiving
any such benefit, that the employee will--
``(A) remain in the service of the agency in a national
security position for a period to be specified in the
agreement, but not less than 3 years, unless involuntarily
separated; and
``(B) if separated involuntarily on account of misconduct,
or voluntarily, before the end of the period specified in the
agreement, repay to the Government the amount of any benefits
received by such employee from that agency under this
section.
``(2) Service with other agency.--The repayment provided
for under paragraph (1)(B) may not be required of an employee
who leaves the service of such employee's agency voluntarily
to enter into the service of any other agency unless the head
of the agency that authorized the benefits notifies the
employee before the effective date of such employee's
entrance into the service of the other agency that repayment
will be required under this subsection.
``(3) Recovery of amounts.--If an employee who is
involuntarily separated on account of misconduct or who
(excluding any employee relieved of liability under paragraph
(2)) is voluntarily separated before completing the required
period of service fails to repay the amount provided for
under paragraph (1)(B), a sum equal to the amount outstanding
is recoverable by the Government from the employee (or such
employee's estate, if applicable) by--
``(A) setoff against accrued pay, compensation, amount of
retirement credit, or other amount due the employee from the
Government; and
``(B) such other method as is provided for by law for the
recovery of amounts owing to the Government.
``(4) Waiver.--The head of the agency concerned may waive,
in whole or in part, a right of recovery under this
subsection if it is shown that recovery would be against
equity and good conscience or against the public interest.
``(5) Crediting of account.--Any amount repaid by, or
recovered from, an individual (or an estate) under this
subsection shall be credited to the fund under subsection
(b)(6). Any amount so credited shall be merged with other
sums in such fund and shall be available for the same
purposes and period, and subject to the same limitations (if
any), as the sums with which merged.
``(f) Termination of Repayment.--An employee receiving
benefits under this section from an agency shall be
ineligible for continued benefits under this section from
such agency if the employee--
``(1) separates from such agency; or
``(2) does not maintain an acceptable level of performance,
as determined under standards and procedures which the agency
head shall by regulation prescribe.
``(g) Equal Employment.--In selecting employees to receive
benefits under this section, an agency shall, consistent with
the merit system principles set forth in paragraphs (1) and
(2) of section 2301(b) of this title, take into consideration
the need to maintain a balanced workforce in which women and
members of racial and ethnic minority groups are
appropriately represented in Government service.
``(h) Additional Benefit.--Any benefit under this section
shall be in addition to basic pay and any other form of
compensation otherwise payable to the employee involved.
``(i) Appropriations Authorized.--For the purpose of
enabling the Federal Government to recruit and retain
employees critical to our national security pursuant to this
section, there are authorized to be appropriated such sums as
may be necessary to carry out this section for each fiscal
year.
``(j) Length of Program.--The program under this section
shall remain in effect for the 8-year period beginning on the
date of enactment of this section. The program shall continue
to pay employees recruited under this program who are in
compliance with this section their benefits through their
commitment period regardless of the preceding sentence.
``(k) Regulations.--Not later than 2 months after the date
of enactment of this section, the Director of the Office of
Personnel Management shall propose regulations to carry out
this section. Not later than 6 months after the date on which
the comment period for the regulations proposed under the
preceding sentence ends, the Secretary shall promulgate final
regulations to carry out this section.''.
TITLE II--FELLOWSHIPS FOR GRADUATE STUDENTS TO ENTER FEDERAL SERVICE
SEC. 201. FELLOWSHIPS FOR GRADUATE STUDENTS TO ENTER FEDERAL
SERVICE.
Subchapter VII of chapter 53 of title 5, United States
Code, as amended by section 101, is further amended by
inserting after section 5379A, the following:
``Sec. 5379B. Fellowships for graduate students to enter
federal service
``(a) Definitions.--In this section:
``(1) Agency.--The term `agency' means an agency of the
Department of Defense, the Department of Homeland Security,
the Department of State, the Department of Energy, the
Department of the Treasury, the Department of Justice, the
National Security Agency, and the Central Intelligence
Agency, and other Federal Government agencies as determined
by the National Security Service Board under subsection (f).
``(2) Director.--The term `Director' means the Director of
the Office of Personnel Management.
``(3) Institution of higher education.--The term
`institution of higher education' has the meaning given to
such term in section 101 of the Higher Education Act of 1965
(20 U.S.C. 1001).
``(4) National security position.--The term `national
security position' means an employment position determined by
the Director of the Office of Personnel Management, in
consultation with an agency, for the purposes of a program
established for Fellowships for Graduate Students to Enter
Federal Services as established under this section, to
involve important homeland security applications.
``(5) Science.--The term `science' means any of the natural
and physical sciences including chemistry, biology, physics,
and
[[Page S3515]]
computer science. Such term does not include any of the
social sciences.''.
``(b) In General.--The Director shall establish and
implement a program for the awarding of fellowships (to be
known as `National Security Fellowships') to graduate
students who, in exchange for receipt of the fellowship,
agree to employment with the Federal Government in a national
security position.
``(c) Eligibility.--To be eligible to participate in the
program established under subsection (b), a student shall--
``(1) have been accepted into a graduate school program at
an accredited institution of higher education within the
United States and be pursuing or intend to pursue graduate
education in the United States in the disciplines of foreign
languages, science, mathematics, engineering,
nonproliferation education, or other international fields
that are critical areas of national security (as determined
by the Director);
``(2) be a United States citizen, United States national,
permanent legal resident, or citizen of the Freely Associated
States; and
``(3) agree to employment with an agency or office of the
Federal Government in a national security position.
``(d) Service Agreement.--In awarding a fellowship under
the program under this section, the Director shall require
the recipient to enter into an agreement under which, in
exchange for such assistance, the recipient--
``(1) will maintain satisfactory academic progress (as
determined in accordance with regulations issued by the
Director) and provide regularly scheduled updates to the
Director on the progress of their education and how their
employment continues to relate to a national security
objective of the Federal Government;
``(2) will, upon completion of such education, be employed
by the agency for which the fellowship was awarded for a
period of at least 3 years as specified by the Director; and
``(3) agrees that if the recipient is unable to meet either
of the requirements described in paragraph (1) or (2), the
recipient will reimburse the United States for the amount of
the assistance provided to the recipient under the
fellowship, together with interest at a rate determined in
accordance with regulations issued by the Director, but not
higher than the rate generally applied in connection with
other Federal education loans.
``(e) Federal Employment Eligibility.--If a recipient of a
fellowship under this section demonstrates to the
satisfaction of the Director that, after completing their
education, the recipient is unable to obtain a national
security position in the Federal Government because such
recipient is not eligible for a security clearance or other
applicable clearance necessary for such position, the
Director may permit the recipient to fulfill the service
obligation under the agreement under subsection (d) by
working in another office or agency in the Federal Government
for which their skills are appropriate, by teaching math,
science, or foreign languages, or by performing research, at
an institution of higher education, for a period of not less
than 3 years, in the area of study for which the fellowship
was awarded.
``(f) Fellowship Selection.--
``(1) In general.--The Director shall consult and cooperate
with the National Security Service Board established under
paragraph (2) in the selection and placement of national
security fellows under this section.
``(2) National security service board.--
``(A) Establishment of board.--There is established the
National Security Service Board.
``(B) Membership.--The Board shall be composed of--
``(i) the Director of the Office of Personnel Management,
who shall serve as the chairperson of the Board;
``(ii) the Secretary of Defense;
``(iii) the Secretary of Homeland Security;
``(iv) the Secretary of State;
``(v) the Secretary of the Treasury;
``(vi) the Attorney General;
``(vii) the Director of the Central Intelligence Agency;
``(viii) the Director of the Federal Bureau of
Investigations;
``(ix) the Director of the National Security Agency;
``(x) the Secretary of Energy;
``(xi) the Director of the Office of Science and Technology
Policy; and
``(xii) 2 employees, to be appointed by each of the
officials described in clauses (ii) through (ix), of each
Department for which such officials have responsibility for
administering, of whom--
``(I) 1 shall perform senior level policy functions; and
``(II) 1 shall perform human resources functions.
``(C) Functions.--The Board shall carry out the following
functions:
``(i) Develop criteria for awarding fellowships under this
section.
``(ii) Provide for the wide dissemination of information
regarding the activities assisted under this section.
``(iii) Establish qualifications for students desiring
fellowships under this section, including a requirement that
the student have a demonstrated commitment to the study of
the discipline for which the fellowship is to be awarded.
``(iv) Provide the Director semi-annually with a list of
fellowship recipients, including an identification of their
skills, who are available to work in a national security
position.
``(v) Not later than 30 days after a fellowship recipient
completes the study or education for which assistance was
provided under this section, work in conjunction with the
Director to make reasonable efforts to hire and place the
fellow in an appropriate national security position.
``(vi) Review the administration of the program established
under this section.
``(vii) Develop and provide to Congress a strategic plan
that identifies the skills needed by the Federal national
security workforce and how the provisions of this Act, and
related laws, regulations, and policies will be used to
address such needs.
``(viii) Carry out additional functions under section 301
of the Homeland Security Federal Workforce Act.
``(g) Special Consideration for Current Federal
Employees.--
``(1) Set aside of fellowships.--Twenty percent of the
fellowships awarded under this section shall be set aside for
Federal employees who are working in national security
positions on the date of enactment of this section to enhance
the education and training of such employees in areas
important to national security.
``(2) Full- or part-time education.--Federal employees who
are awarded fellowships under paragraph (1) shall be
permitted to obtain advanced education under the fellowship
on a full-time or part-time basis.
``(3) Part-time education.--A Federal employee who pursues
education or training under a fellowship under paragraph (1)
on a part-time basis shall be eligible for a stipend in an
amount which, when added to the employee's part-time
compensation, does not exceed the amount described in
subsection (i)(2).
``(h) Fellowship Service.--Any individual under this
section who is employed by the Federal Government in a
national security position shall be able to count the time
that the individual spent in the fellowship program towards
the time requirement for a reduction in student loans as
described in section 5379A.
``(i) Amount of Award.--A National Security Fellow who
complies with the requirements of this section may receive
funding under the fellowship for up to 3 years at an amount
determined appropriate by the Director, but not to exceed the
sum of--
``(1) the amount of tuition paid by the fellow; and
``(2) a stipend in an amount equal to the maximum stipend
available to recipients of fellowships under section 10 of
the National Science Foundation Act of 1950 (42 U.S.C. 1869)
for the year involved.
``(j) Appropriations Authorized.--For the purpose of
enabling the Director to recruit and retain highly qualified
employees in national security positions, there are
authorized to be appropriated $100,000,000 for fiscal year
2004, and such sums as may be necessary for each subsequent
fiscal year.
``(k) Rule of Construction.--Noting in this section shall
be construed--
``(1) to authorize the Office of Personnel Management to
determine national security positions for any other purpose
other than to make such determinations as are required by
this section in order to carry out the purposes of this
section; and
``(2) as a basis for determining the exemption of any
position from inclusion in a bargaining unit pursuant to
chapter 71 of title 5, United States Code, or from the right
of any incumbent of a national security position determined
by the Office of Personnel Management pursuant to this
section, from entitlement to all rights and benefits under
such chapter.''.
TITLE III--NATIONAL SECURITY SERVICE CORPS
SEC. 301. NATIONAL SECURITY SERVICE CORPS.
(a) Findings and Purposes.--
(1) Findings.--Congress finds that--
(A) a proficient national security workforce requires
certain skills and knowledge, and effective professional
relationships; and
(B) a national security workforce will benefit from the
establishment of a National Security Service Corps.
(2) Purposes.--The purposes of this section are to--
(A) provide mid-level employees in national security
positions within agencies the opportunity to broaden their
knowledge through exposure to other agencies;
(B) expand the knowledge base of national security agencies
by providing for rotational assignments of their employees at
other agencies;
(C) build professional relationships and contacts among the
employees and agencies of the national security community;
and
(D) invigorate the national security community with
exciting and professionally rewarding opportunities.
(b) Definitions.--In this section:
(1) Agency.--The term ``agency'' means an agency of the
Department of Defense, the Department of Homeland Security,
the Department of State, the Department of Energy, the
Department of the Treasury, the Department of Justice, and
the National Security Agency.
(2) Board.--The term ``Board'' means the National Security
Service Board established under section 5379B(f)(2) of title
5, United States Code.
(3) Corps.--The term ``Corps'' means the National Security
Service Corps.
(4) Corps position.--The term ``corps position'' means a
position that--
(A) is a position--
(i) at or above GS-12 of the General Schedule; or
[[Page S3516]]
(ii) in the Senior Executive Service;
(B) the duties of which do not relate to intelligence
support for policy; and
(C) is designated by the head of an agency as a Corps
position.
(c) Goals and Administration.--The Board shall--
(1) formulate the goals of the Corps;
(2) resolve any issues regarding the feasibility of
implementing this section;
(3) evaluate relevant civil service rules and regulations
to determine the desirability of seeking legislative changes
to facilitate application of the General Schedule and Senior
Executive Service personnel systems to the Corps;
(4) create specific provisions for agencies regarding
rotational programs;
(5) formulate interagency compacts and cooperative
agreements between and among agencies relating to--
(A) the establishment and function of the Corps;
(B) incentives for individuals to participate in the Corps;
(C) professional education and training;
(D)(i) the process for competition for a Corps position;
(ii) which individuals may compete for Corps positions; and
(iii) any employment preferences an individual
participating in the Corps may have when returning to the
employing agency of that individual; and
(E) any other issues relevant to the establishment and
continued operation of the Corps; and
(6) not later than 180 days after the date of enactment of
this section, submit a report to the Office of Personnel
Management on all findings and relevant information on the
establishment of the Corps.
(d) Corps.--
(1) Proposed regulations.--Not later than 180 days after
the date on which the report is submitted under subsection
(c)(6), the Office of Personnel Management shall publish in
the Federal Register, proposed regulations describing the
purpose, and providing for the establishment and operation of
the Corps.
(2) Comment period.--The Office of Personnel Management
shall provide for--
(A) a period of 60 days for comments from all stakeholders
on the proposed regulations; and
(B) a period of 180 days following the comment period for
making modifications to the regulations.
(3) Final regulations.--After the 180-day period described
under paragraph (2)(B), the Office of Personnel Management
shall promulgate final regulations that--
(A) establish the Corps;
(B) provide guidance to agencies to designate Corps
positions;
(C) provide for individuals to perform periods of service
of not more than 2 years at a Corps position within agencies
on a rotational basis;
(D) establish eligibility for individuals to participate in
the Corps;
(E) enhance career opportunities for individuals
participating in the Corps;
(F) provide for the Corps to develop a group of policy
experts with broad-based experience throughout the executive
branch; and
(G) provide for greater interaction among agencies with
traditional national security functions.
(4) Actions by agencies.--Not later than 180 days after the
promulgation of final regulations under paragraph (3), each
agency shall--
(A) designate Corps positions;
(B) establish procedures for implementing this section; and
(C) begin active participation in the operation of the
Corps.
(e) Allowances, Privileges, etc.--An employee serving on a
rotational basis with another agency pursuant to this section
is deemed to be detailed and, for the purpose of preserving
allowances, privileges, rights, seniority, and other benefits
with respect to the employee, is deemed to be an employee of
the original employing agency and is entitled to the pay,
allowances, and benefits from funds available to that agency.
(f) Authorization of Appropriations.--There are authorized
to be appropriated to the Office of Personnel Management such
sums as may be necessary to carry out this section.
TITLE IV--MISCELLANEOUS PROVISIONS
SEC. 401. CONTENT OF STRATEGIC PLANS.
Section 306(a)(3) of title 5, United States Code, is
amended by inserting before the semicolon the following: ``,
a discussion of the extent to which specific skills in the
agency's human capital are needed to achieve the mission,
goals and objectives of the agency, especially to the extent
the agency's mission, goals and objectives are critical to
ensuring the national security''.
SEC. 402. PERFORMANCE PLANS.
Section 1115(a) of title 31, United States Code, is
amended--
(1) by redesignating paragraphs (4) through (6) as
paragraphs (5) through (7), respectively; and
(2) by inserting after paragraph (3) the following:
``(4) pursuant to paragraph (3), give special attention to
the extent to which specific skills are needed to accomplish
the performance goals and indicators that are critical to
ensuring the national security;''.
SEC. 403. GOVERNMENTWIDE PROGRAM PERFORMANCE REPORTS.
Section 1116 of title 31, United States Code, is amended--
(1) in subsection (b)(1), by inserting before the period
the following: ``, and shall specify which performance goals
and indicators are critical to ensuring the national
security''; and
(2) in subsection (d)(3)--
(A) in subparagraph (B), by striking ``and'' at the end;
(B) in subparagraph (C), by adding ``and'' after the
semicolon; and
(C) by adding at the end the following:
``(D) whether human capital deficiencies in any way
contributed to the failure of the agency to achieve the
goal;''.
______
By Mr. HOLLINGS:
S. 592. A bill to establish an Office of Manufacturing in the
Department of Commerce, and for other purposes; to the Committee on
Finance.
Mr. HOLLINGS. Mr. President, the Department of Labor, recently
released the latest unemployment results and at first blush, the 5.8
percent figure, while certainly too high, does not seem overly
alarming. It is only with a look behind the numbers that some
disturbing trends become apparent.
February marked the 31st consecutive month, since July 2000, that
manufacturing employment has declined. This is the longest consecutive
monthly decline in the post World War II era. Already, more than 2
million manufacturing jobs are gone. A generation ago, in 1974,
manufacturing workers were 26 percent of the workforce, today they
account for only 12.5 percent of the workforce.
For all of 2002, industrial production fell 0.6 percent following a
3.5 percent decline in 2001. That represented the first back-to-back
annual declines in industrial output since 1974-1975.
Unfortunately, no end is in sight. By some measures, the
manufacturing job loss is twice as bad as the last recession in the
early Nineties. The 2002 Producer Price Index revealed the worst
deflation in producer prices since 1949, suggesting that there is
little incentive to restart the shuttered factories.
Prices for manufactured goods were down 1.5 percent in December from
a year earlier. Next to a 1.6 percent year-to-year drop in November, it
was the largest decline of such prices on record going back to 1958.
And all this has occurred against the backdrop of 2 years of
substantial fiscal stimulus and the most aggressive monetary policy in
anyone's memory.
But this wasn't suppose to happen. Globalization was going to create
a gentle prosperity that would create jobs, lift our standard of living
and improve our communities. During the Clinton era, we entered into a
series of international trade agreements, most notably NAFTA, WTO and
China's entrance into the WTO, designed to increase trade and stimulate
manufacturing job creation.
The second Bush administration continues this policy, trotting around
the globe negotiating, free-trade agreements within every region of the
world. Recently, the administration concluded agreements with Singapore
and Chile.
After nearly a decade of the NAFTA/WTO free-trade experiment and
after a year of ``recovery'', it seems appropriate to review whether
this free trade era is working? The answer is clearly no.
Our factories have been swamped by a flood of imports. Each month
seems to bring a record trade deficit and more stories of plants
closing and moving offshore.
Our communities, particularly the rural ones, are quite literally
emptying out. During the nineties, imports soared by more than 107
percent. Our trade surplus with Mexico dissolved soon after NAFTA went
into effect. From 1991 to 2001, our trade deficit went from $77 billion
to $427 billion, costing us hundreds of thousands of jobs.
Essentially, our trading partners are exporting their unemployment to
us. Recently, Ed Yardeni, chief investment strategist of Prudential
Securities, noted that while the United States currently has 16.3
million manufacturing jobs, some 20 million rural Chinese move to seek
better-paying manufacturing and construction jobs in the cities, each
year.
There seems to be no end in sight to pain being experienced by our
manufacturing sector. Even a declining dollar is not improving our
trade situation, as our factories race to re-establish overseas. It
seems like recognizing
[[Page S3517]]
where our problem is coming from would be a good first step toward
solving it.
So today I introduce legislation designed to help get American
manufacturing off the canvas. It is broad and wide ranging.
The legislation would eliminate the tax benefits associated with off-
shore production, whether its by a United States or foreign-based
company. It would eliminate the incentives for companies to move their
headquarters outside of the United States. It would prevent the Export
Import Bank or the Overseas Private Investment Corporation from funding
any project that did not contain at least 80 percent U.S. content. It
would eliminate the International Trade Commission. It would provide
for an additional 500 Customs agents to enforce the tariff and quota
rules associated with the textile trade. It would prohibit the sale in
interstate commerce of any manufactured product made by anyone under
twelve. It would reform WTO dispute settlement by establishing a panel
of Federal judges to review the determinations that these dispute
panels are reaching. It would express the Senate's strong support for
the Byrd amendment which returns anti-dumping monies to injured
parties. Finally, the legislation would extend the Buy America
provisions for the Defense Department contained in the Berry amendment
to the newly formed Department of Homeland Security.
It's just a start, but we have to begin the process of rejuvenating
the American manufacturer.
______
By Mr. DURBIN (for himself, Ms. Mikulski, Mr. Leahy, Mr.
Sarbanes, Mr. Bingaman, Mr. Lautenberg, and Ms. Landrieu):
S. 593. A bill to ensure that a Federal employee who takes leave
without pay in order to perform service as a member of the uniformed
services or member of the National Guard shall continue to receive pay
in an amount which, when taken together with the pay and allowances
such individual is receiving for such service, will be no less than the
basic pay such individual would then be receiving if no interruption in
employment has occurred; to the Committee on Governmental Affairs.
Mr. DURBIN. Mr. President, today, with war looming with Iraq and
hundreds of thousands of our troops poised for battle overseas, I would
like to discuss the financial burden faced by many of the men and women
who serve in the military Reserves or National Guard and who are forced
to take unpaid leave from their jobs when called to active duty.
Currently, there are nearly 170,000 Guard and Reservists mobilized and
serving on active duty in our armed forces. While these individuals
receive pay for the time they are on active duty, the salary gap
between military duty and civilian work can be considerable. It is
unfair to ask the men and women who have volunteered to serve their
country, often in dangerous situations, to also face a financial strain
on their families.
A number of employers have wisely acted to remedy this hardship by
establishing financial compensation plans for their employees in the
Reserves and National Guard. Many companies and State and local
governments, including Ford, IBM, the State of California, Los Angeles
County, and Austin, TX, recognize this burden and voluntarily pay the
difference between the active duty military salary and civilian salary
for these reservists. In my State of Illinois, Boeing Aerospace, State
Farm Insurance, Sears, Roebuck & Company, the State of Illinois, the
City of Chicago, and many other Illinois companies, local governments,
and institutions cover the pay differential for Reserve and National
Guard members called to active duty.
We should take similar action in Washington and set an example for
employers throughout the country. Today, I am introducing with my
colleague from Maryland, Senator Barbara Mikulski, the Reservist Pay
Security Act of 2003, legislation that will help alleviate the
financial problems faced by many Federal employees who serve in the
Reserves and must take time off from their jobs when our Nation calls.
This bill would allow these citizen-soldiers to maintain their normal
salary when called to active service by requiring Federal agencies to
make up the difference between their military pay and what they would
have earned on their Federal job.
As the symbol of American values and ideals, the Federal Government
should give these special employees of our government more than just
words of support. We should not encourage Americans to protect their
country and then punish those who enlist in the armed forces by taking
away a large portion of their salaries. We must provide our reservist
employees with financial support so they can leave their civilian lives
to serve our country without the added burden of worrying about the
financial well-being of their families. They are doing so much for us;
we should do no less for them.
I urge my colleagues to join me in cosponsoring this important
legislation.
Ms. MIKULSKI. Mr. President, yesterday I spoke on the floor about
supporting our armed forces. Support for our troops is particularly
important today as our soldiers, sailors, airmen and marines are
deployed for possible war with Iraq. We must express our support not
only with words, but with deeds. We owe that to our armed forces.
Our brave men and women of the National Guard and Reserves are
experiencing hardships as a result of recent mobilizations. I believe
we should do everything we can to reduce unnecessary financial burdens
on members of the military, especially when they are putting themselves
in harm's way to protect our great Nation.
We must stand up for our military; we must also stand up for their
families. Our troops will face grave danger. They should not have to
face fear for their families, and particularly they should not have to
worry about their families' finances.
Though America is on the brink of war, American military families
must never be on the brink of bankruptcy. That is why we, in the
Senate, must take immediate steps to support military families.
Today, I am proud to cosponsor the Reservists Pay Security Act with
my colleague Senator Dick Durbin. Senator Durbin introduced a similar
bill in the House, and I introduced it in the Senate during Desert
Storm in 1991. It was the right thing to do then, and it is the right
thing to do now. I'm proud to work together again on this worthy cause.
The Reservists Pay Security Act of 2003 would ensure that Federal
employees who take leave to serve in our military reserves receive the
same pay as if no interruption in their employment occurred. Why start
with Federal employees? Well, many large companies and local
governments continue to pay the full salary of their employees when
they are activated. I applaud those excellent corporate citizens and
those local governments. Some of the largest employers in my own State
are also meeting that responsibility. The Federal Government should be
a model employer and set the example for large businesses. This should
be a first step.
I believe we should move quickly to pass this bill because many
members of the Guard and Reserves do work for the Federal Government in
highly specialized areas. But the Federal Government needs to do more
than that. We need to take a look at those who work for small business
and those who are self-employed. A call for duty will be responded to,
but a call for duty time and time again in a single-year period places
the responsibility on the family. American families should never
subsidize our war effort. We should be looking out for those families.
We owe reservists our support and a debt of gratitude. This bill is a
step toward achieving that. I urge my colleagues to join us and enact
this important legislation for the men and women of our National Guard
and Reserves.
______
By Mr. JOHNSON (for himself, Mr. Daschle, Mr. Campbell, Mr.
Cochran, and Mrs. Murray):
S. 594. A bill to provide for the issuance of bonds to provide
funding for the construction of schools of the Bureau of Indian
Affairs, and for other purposes; to the Committee on the Indian
Affairs.
Mr. JOHNSON. Mr. President, I, along with Senators Daschle, Campbell,
Cochran, and Murray introduce the Indian School Construction Act. This
legislation establishes an innovative funding mechanism to enhance the
[[Page S3518]]
ability of Indian tribes to construct, repair, and maintain quality
educational facilities.
For education construction in fiscal year 2004, President Bush
proposes a total of $292.6 million, the same level as was requested in
FY 2003. Of this total, $131.4 million is for new school construction
to replace seven trial schools on the BIA Priority List, one of those
is in my home state of South Dakota. While I am pleased that seven
schools will be replaced this year, there are literally dozens of
schools that are in desperate need of replacement and repair. Simply,
the process for replacing schools does not meet the need.
American Indians have been, and continue to be disproportionately
affected by both poverty and low educational achievement. The fact that
children are expected to learn despite inadequate educational
facilities undoubtedly contributes to this disparity.
This bill provides a mechanism whereby an escrow account will be set
up with a one time appropriation. Money would be placed in the escrow
account and the tribal governments could use that account to issue
bonds for purposes of constructing elementary and secondary schools.
This allows tribal governments an opportunity to construct schools,
even if the schools are low on the BIA priority list and are not slated
for immediate construction under the direct appropriation process.
Ultimately, this would mean that our children can learn in a better
environment more quickly.
I urge my colleagues to closely examine the Indian School
Construction Act and join me in working to make this innovative funding
mechanism a reality.
______
By Mr. HATCH (for himself, Mr. Breaux, Mr. Allard, Ms. Collins,
Mr. Sununu, and Ms. Snowe):
S. 595. A bill to amend the Internal Revenue Code of 1986 to repeal
the required use of certain principal repayments on mortgage subsidy
bond financings to redeem bonds, to modify the purchase price
limitation under mortgage subsidy bond rules based on median family
income, and for other purposes; to the Committee on Finance.
Mr. HATCH. Mr. President, on behalf of myself and Senator Breaux, I
rise today to introduce the Housing Bond and Credit Modernization and
Fairness Act of 2003. We are joined in this legislation by Senators
Allard, Collins, Sununu, and Snowe.
This bill will bring about important modifications to two important
and popular Federal affordable housing programs--Housing Bonds, or
single family Mortgage Revenue Bonds, MRBs, as they are commonly known,
and the Low Income Housing Tax Credit. My long-time partnership on
these issues with Senator Breaux is one indication of the broad
bipartisan support enjoyed by these programs. Another is the fact that
our identical bill in the 107th Congress attracted 79 members of this
body as cosponsors.
These programs are popular because they are state-administered,
federal tax incentives designed to encourage private investment in
first-time homebuyer mortgages for low and moderate-income families and
privately developed and owned apartments for low-income renters.
Moreover, they have a proven track record of being effective in
providing housing to families who need it.
As with most things, however, these programs could use some
improvements. Specifically, the current law governing these two housing
programs includes some obsolete provisions that act as barriers and
limit their effectiveness. The legislation we are introducing today
would modernize these programs and remove these barriers.
The Housing Bond and Credit Modernization and Fairness Act does three
things.
First, it repeals the so-called ``Ten-Year Rule,'' a provision added
to the MRB program in 1988 that prevents States from using homeowner
payments on such mortgages to make new mortgages to additional
qualified purchasers. For each day the Ten-Year Rule is in effect,
States lose millions of dollars in financing for first-time homebuyer
mortgages, amounting to more than $14 billion in mortgage authority
between 2001 and 2005. This barrier keeps tens of thousands of
additional qualified lower income homebuyers from getting an affordable
MRB-financed mortgage, including many in my home State of Utah. Our
bill eliminates the Ten-Year Rule to allow States to use mortgage
payments to finance additional lower income mortgages.
Second, it replaces the present unworkable price limit for homes
these mortgages can finance with a simple limit that works. Let me
explain. Current law limits the price of homes purchased with MRB-
financed mortgages to 90 percent of the average area home price. States
have the option of determining their own purchase price limits or
relying on Treasury-published safe harbor limits.
Most States have relied on the Treasury limits because it is costly
and burdensome to collect accurate and comprehensive sales price data.
The problem is that the Treasury Department has not been providing
recent data. This has especially been a problem for states, such as
Utah, with many rural areas. In fact, Treasury last issued safe harbor
limits in 1994, based on 1993 data. Home prices have risen
significantly in the past ten years. This means that the MRB program
simply cannot work in many parts of many states because qualified
buyers cannot find homes priced below the outdated limits. To have an
outdated and unworkable requirement that holds back the families that
this program is designed to help is poor public policy that cries out
for remedy.
The answer, which is included in our bill, is to replace the present
limit, set in Washington, by a simple formula limiting the purchase
price to three and a half times the qualifying income under the
program.
Finally, the bill makes Housing Credit apartment production viable in
rural areas by allowing States to use statewide median incomes as the
basis for the income limits in that program. This change would apply
the same methodology for determining qualifying income levels used in
the MRB Program. HUD data shows that current income limits inhibit
Housing Credit development in more than 1,300 nonmetropolitan counties
across the country.
I am pleased to tell my colleagues that the changes proposed by the
Housing Bond and Credit Modernization and Fairness Act have been
endorsed by the bipartisan National Governors Association, the National
Council of State Housing Agencies, and nearly every major national
housing organization. These groups know how important the Housing Bond
and Housing Credit programs are in giving States the ability to meet
the housing needs of low and moderate-income families.
The Housing Credit and the MRB programs work and they are important
to each State. This bill gives the Congress a golden opportunity to
create new housing opportunities for tens of thousands of low and
moderate-income families every year, simply by improving these existing
and proven programs. I encourage my colleagues to join this bipartisan
effort.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 595
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Housing Bond and Credit
Modernization and Fairness Act of 2003''.
SEC. 2. REPEAL OF REQUIRED USE OF CERTAIN PRINCIPAL
REPAYMENTS ON MORTGAGE SUBSIDY BOND FINANCINGS
TO REDEEM BONDS.
(a) In General.--Subparagraph (A) of section 143(a)(2) of
the Internal Revenue Code of 1986 (defining qualified
mortgage issue) is amended by adding ``and'' at the end of
clause (ii), by striking ``, and'' at the end of clause (iii)
and inserting a period, and by striking clause (iv) and the
last sentence.
(b) Conforming Amendment.--Clause (ii) of section
143(a)(2)(D) of such Code is amended by striking ``(and
clause (iv) of subparagraph (A))''.
(c) Effective Date.--The amendments made by this section
shall apply to repayments received after the date of the
enactment of this Act.
SEC. 3. MODIFICATION OF PURCHASE PRICE LIMITATION UNDER
MORTGAGE SUBSIDY BOND RULES BASED ON MEDIAN
FAMILY INCOME.
(a) In General.--Paragraph (1) of section 143(e) of the
Internal Revenue Code of 1986
[[Page S3519]]
(relating to purchase price requirement) is amended to read
as follows:
``(1) In general.--An issue meets the requirements of this
subsection only if the acquisition cost of each residence the
owner-financing of which is provided under the issue does not
exceed the greater of--
``(A) 90 percent of the average area purchase price
applicable to the residence, or
``(B) 3.5 times the applicable median family income (as
defined in subsection (f)).''
(b) Effective Date.--The amendment made by this section
shall apply to financing provided, and mortgage credit
certificates issued, after the date of the enactment of this
Act.
SEC. 4. DETERMINATION OF AREA MEDIAN GROSS INCOME FOR LOW-
INCOME HOUSING CREDIT PROJECTS.
(a) In General.--Paragraph (4) of section 42(g) of the
Internal Revenue Code of 1986 (relating to certain rules made
applicable) is amended by striking the period at the end and
inserting ``and the term `area median gross income' means the
amount equal to the greater of--
``(A) the area median gross income determined under section
142(d)(2)(B), or
``(B) the statewide median gross income for the State in
which the project is located.''
(b) Effective Date.--The amendment made by this section
shall apply to--
(1) housing credit dollar amounts allocated after the date
of the enactment of this Act, and
(2) buildings placed in service after such date to the
extent paragraph (1) of section 42(h) of the Internal Revenue
Code of 1986 does not apply to any building by reason of
paragraph (4) thereof.
______
By Mr. ENSIGN (for himself, Mrs. Boxer, Mr. Smith, Mr. Allen, Mr.
Enzi, and Mr. Bayh):
S. 596. A bill to amend the Internal Revenue Code of 1986 to
encourage the investment of foreign earnings within the United States
for productive business investments and job creation; to the Committee
on Finance.
Mr. ENSIGN. Mr. President. I rise today with my colleagues Senator
Boxer, Senator Smith, Senator Allen, Senator Enzi and Senator Bayh to
introduce The Invest in the U.S.A. Act of 2003 to stimulate job growth
and investment in the American economy.
Under current tax law, American companies doing business overseas are
discouraged from bringing their earnings back home because those
earnings are subject to up to a 35-percent rate of taxation.
Specifically, our government imposes taxes on American companies when
its foreign subsidiary earnings are brought back to the United States,
to the extent of any shortfall in the tax paid abroad and the 35-
percent U.S. tax rate. Therefore, many businesses do the math and
conclude that it would be more beneficial to invest 100 percent of
those earnings abroad than it would be to bring the funds home to be
reinvested in the American economy.
Our proposal is a sensible, fiscally responsible way to provide
immediate investment in the American economy. Specifically, the Invest
in the U.S.A. Act bill will allow domestic corporations doing business
abroad to bring their foreign earnings home by imposing a 5.25-percent
toll tax on dividends in excess of normal distributions for only one
year. Companies must reinvest these funds in the United States in an
approved investment plan to take advantage of the lowered rate.
Finally, domestic shareholders would permanently surrender the right to
claim foreign tax credits for 85 percent of foreign income taxes
associated with dividends subject to the 5.25-percent tax, as well as
exclude 85 percent of income subject to the 5.25-percent tax from the
calculation of the foreign tax credit limitation ensuring that no
American company will be taxed less than 5.25 percent.
Lowering the tax burden on foreign subsidiary income for a limited
time will open the floodgates for privately held foreign funds to be
brought back into the American economy to provide immediate economic
stimulus. According to the Joint Committee on Taxation, the Invest in
the U.S.A. Act will not only increase receipts to the U.S. Treasury in
the first year by $4.1 billion but also inject an additional $135
billion of privately held funds into the U.S. economy that will be an
immediate stimulus to our economy at a cost of only $3.9 billion over
10 years--less than 3 percent of the overall gain this legislation will
have to the American economy.
These funds can be used to create more jobs for American workers,
solidify corporate pension and retirement funds, invest in
manufacturing equipment and research and development, and reduce
domestic debt loads thereby increasing employee and shareholder
dividends. American jobs depend on American companies, and this
proposal will accomplish that objective. I ask unanimous consent that
the text of the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 596
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Invest in the U.S.A. Act of
2003''.
SEC. 2. TOLL TAX ON EXCESS QUALIFIED FOREIGN DISTRIBUTION
AMOUNT.
(a) In General.--Subpart F of part III of subchapter N of
chapter 1 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new section:
``SEC. 965. TOLL TAX IMPOSED ON EXCESS QUALIFIED FOREIGN
DISTRIBUTION AMOUNT.
``(a) Toll Tax Imposed on Excess Qualified Foreign
Distribution Amount.--If a corporation elects the application
of this section for any taxable year, a tax shall be imposed
for such taxable year in an amount equal to 5.25 percent of--
``(1) the taxpayer's excess qualified foreign distribution
amount for such taxable year, plus
``(2) the amount determined under section 78 which is
attributable to such excess qualified foreign distribution
amount.
Such tax shall be imposed in lieu of the tax imposed under
section 11 or 55 on the amounts described in paragraphs (1)
and (2) for such taxable year.
``(b) Excess Qualified Foreign Distribution Amount.--For
purposes of this section--
``(1) In general.--The term `excess qualified foreign
distribution amount' means the excess (if any) of--
``(A) dividends received by the taxpayer during the taxable
year which are--
``(i) from 1 or more corporations which are controlled
foreign corporations in which the taxpayer is a United States
shareholder on the date such dividends are paid, and
``(ii) described in a domestic reinvestment plan approved
by the taxpayer's president, chief executive officer, or
comparable official before the payment of such dividends and
subsequently approved by the taxpayer's board of directors,
management committee, executive committee, or similar body,
which plan shall provide for the reinvestment of such
dividends in the United States, such as for the funding of
worker hiring and training; infrastructure; research and
development; capital investments; or the financial
stabilization of the corporation for the purposes of job
retention or creation, over
``(B) the base dividend amount.
``(2) Base dividend amount.--The term `base dividend
amount' means an amount designated under subsection (c)(7),
but not less than the average amount of dividends received
during the fixed base period from 1 or more corporations
which are controlled foreign corporations in which the
taxpayer is a United States shareholder on the date such
dividends are paid.
``(3) Fixed base period.--
``(A) In general.--The term `fixed base period' means each
of 3 taxable years which are among the 5 most recent taxable
years of the taxpayer ending on or before December 31, 2002,
determined by disregarding--
``(i) the 1 taxable year for which the taxpayer had the
highest amount of dividends from 1 or more corporations which
are controlled foreign corporations relative to the other 4
taxable years, and
``(ii) the 1 taxable year for which the taxpayer had the
lowest amount of dividends from such corporations relative to
the other 4 taxable years.
``(B) Shorter period.--If the taxpayer has fewer than 5
taxable years ending on or before December 31, 2002, then in
lieu of applying subparagraph (A), the fixed base period
shall mean such shorter period representing all of the
taxable years of the taxpayer ending on or before December
31, 2002.
``(c) Definitions and Special Rules.--For purposes of this
section--
``(1) Dividends.--The term `dividend' means a dividend as
defined in section 316, except that the term shall also
include amounts described in section 951(a)(1)(B), and shall
exclude amounts described in sections 78 and 959.
``(2) Controlled foreign corporations and united states
shareholders.--The term `controlled foreign corporation'
shall have the same meaning as under section 957(a) and the
term `United States shareholder' shall have the same meaning
as under section 951(b).
``(3) Foreign tax credits.--The amount of any income, war,
profits, or excess profit taxes paid (or deemed paid under
sections 902 and 960) or accrued by the taxpayer with respect
to the excess qualified foreign distribution amount for which
a credit would be allowable under section 901 in the absence
of this section, shall be reduced by 85 percent.
``(4) Foreign tax credit limitation.--For all purposes of
section 904, there shall be disregarded 85 percent of--
``(A) the excess qualified foreign distribution amount,
``(B) the amount determined under section 78 which is
attributable to such excess qualified foreign distribution
amount, and
[[Page S3520]]
``(C) the amounts (including assets, gross income, and
other relevant bases of apportionment) which are attributable
to the excess qualified foreign distribution amount which
would, determined without regard to this section, be used to
apportion the expenses, losses, and deductions of the
taxpayer under section 861 and 864 in determining its taxable
income from sources without the United States.
For purposes of applying subparagraph (C), the principles of
section 864(e)(3)(A) shall apply.
``(5) Treatment of acquisitions and dispositions.--Rules
similar to the rules of section 41(f)(3) shall apply in the
case of acquisitions or dispositions of controlled foreign
corporations occurring on or after the first day of the
earliest taxable year taken into account in determining the
fixed base period.
``(6) Treatment of consolidated groups.--Members of an
affiliated group of corporations filing a consolidated return
under section 1501 shall be treated as a single taxpayer in
applying the rules of this section.
``(7) Designation of dividends.--Subject to subsection
(b)(2), the taxpayer shall designate the particular dividends
received during the taxable year from 1 or more corporations
which are controlled foreign corporations in which it is a
United States shareholder which are dividends excluded from
the excess qualified foreign distribution amount. The total
amount of such designated dividends shall equal the base
dividend amount.
``(8) Treatment of expenses, losses, and deductions.--Any
expenses, losses, or deductions of the taxpayer allowable
under subchapter B--
``(A) shall not be applied to reduce the amounts described
in subsection (a)(1), and
``(B) shall be applied to reduce other income of the
taxpayer (determined without regard to the amounts described
in subsection (a)(1)).
``(d) Election.--
``(1) In general.--An election under this section shall be
made on the timely filed income tax return for the taxpayer's
first taxable year (determined by taking extensions into
account) ending 120 days or more after the date of the
enactment of this section, and, once made, may be revoked
only with the consent of the Secretary.
``(2) All controlled foreign corporations.--The election
shall apply to all corporations which are controlled foreign
corporations in which the taxpayer is a United States
shareholder during the taxable year.
``(3) Consolidated groups.--If a taxpayer is a member of an
affiliated group of corporations filing a consolidated return
under section 1501 for the taxable year, an election under
this section shall be made by the common parent of the
affiliated group which includes the taxpayer, and shall apply
to all members of the affiliated group.
``(e) Regulations.--The Secretary shall prescribe such
regulations as may be necessary and appropriate to carry out
the purposes of this section, including regulations under
section 55 and regulations addressing corporations which,
during the fixed base period or thereafter, join or leave an
affiliated group of corporations filing a consolidated
return.''.
(b) Conforming Amendment.--The table of sections for
subpart F of part III of subchapter N of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new item:
``Sec. 965. Toll tax imposed on excess qualified foreign distribution
amount.''.
(c) Effective Date.--The amendment made by this section
shall apply only to the first taxable year of the electing
taxpayer ending 120 days or more after the date of the
enactment of this Act.
Mrs. BOXER. Today, Senator Ensign and I are introducing the Invest in
the U.S.A. Act of 2003 along with Senators Smith, Allen, Enzi, and
Bayh. This economic stimulus legislation would create a one-year
incentive for corporations to bring the profits they have made overseas
back to the United States and invest them in creating jobs.
The act lowers the effective corporate tax rate on the foreign
earnings of American companies from 35 percent to 5.25 percent for one
year. By lowering that rate for one year, we will encourage companies
to bring an estimated $135 billion from abroad back home to invest in
the United States. Getting this capital into the domestic economy is
particularly necessary in light of the difficulties firms are having
raising money in this tough economy. By making this capital available
for domestic investment, we will minimize the spending cuts that
companies have been announcing for the coming year.
The Invest in the U.S.A. Act would constitute a true economic
stimulus by encouraging investment and job creation right away in such
activities as worker hiring and training, research and development, and
new plants.
Our proposal is also fiscally responsible, unlike other proposals
that fail to give the economy the shot in the arm it needs. It will
result in job creation rather than deficit creation by enabling a
tremendous amount of investment in our economy in the short term with
only a small cost in the long term. For Government, the funds brought
back to the United States will generate $4.1 billion in revenues in the
first year and is expected to cost $3.9 billion over 10 years.
I want to thank Senator Ensign for his active, engaged leadership on
this legislation. I particularly appreciate Senator Ensign's focus on
ensuring that these funds will be targeted at creating jobs and
stimulating our economy right away.
Mr. President, we will work hard to ensure that the provisions in
this act are included in any economic growth package that the Senate
considers because our workers need the opportunities it would create
and our economy needs the capital it would generate.
______
By Mr. GRASSLEY (for himself, Mr. Baucus, Mr. Domenici, and Mr.
Bingaman):
S. 597. A bill to amend the Internal Revenue Code of 1986 to provide
energy tax incentives; to the Committee on Finance.
Mr. GRASSLEY. Mr. President, I am pleased that today we offer a
bipartisan energy tax incentives package for the 108th Congress. I have
been joined in this introduction by not only Ranking Member of the
Finance Committee, Senator Baucus, but also the Chairman and the
Ranking Member of the Energy and Natural Resources Committee, Senators
Domenici and Bingaman as original sponsors of the Energy Tax Incentives
Act of 2003, which we are introducing today.
This bill is substantially similar to the Energy Tax Incentives Bill
which won overwhelming support on the floor of the Senate last April.
It continues to represent a balanced package of alternative energy,
traditional energy production and energy efficiency incentives. As we
move forward towards a Mark-up of an energy tax bill by the Finance
Committee, this bill represents a starting point. We hope over the next
few weeks to be able to incorporate some of the new and improved
versions of some of the provisions that we developed over the many
months of conference during the last Congress.
I remain committed to diverse sources of energy and electricity, to
include the production of electricity for wind and agricultural waste
nutrients. In addition this bill reflects my continued interest in
biodiesel and provisions to support small ethanol producers. I look
forward to working with the Sponsors to craft a responsive bipartisan
energy tax package.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 597
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Energy Tax
Incentives Act of 2003''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this division 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; etc.
TITLE I--EXTENSION AND MODIFICATION OF RENEWABLE ELECTRICITY PRODUCTION
TAX CREDIT
Sec. 101. Three-year extension of credit for producing electricity from
wind and poultry waste.
Sec. 102. Credit for electricity produced from biomass.
Sec. 103. Credit for electricity produced from swine and bovine waste
nutrients, geothermal energy, and solar energy.
Sec. 104. Treatment of persons not able to use entire credit.
Sec. 105. Credit for electricity produced from small irrigation power.
Sec. 106. Credit for electricity produced from municipal biosolids and
recycled sludge.
TITLE II--ALTERNATIVE MOTOR VEHICLES AND FUELS INCENTIVES
Sec. 201. Alternative motor vehicle credit.
Sec. 202. Modification of credit for qualified electric vehicles.
Sec. 203. Credit for installation of alternative fueling stations.
[[Page S3521]]
Sec. 204. Credit for retail sale of alternative fuels as motor vehicle
fuel.
Sec. 205. Small ethanol producer credit.
Sec. 206. All alcohol fuels taxes transferred to Highway Trust Fund.
Sec. 207. Increased flexibility in alcohol fuels tax credit.
Sec. 208. Incentives for biodiesel.
Sec. 209. Credit for taxpayers owning commercial power takeoff
vehicles.
TITLE III--CONSERVATION AND ENERGY EFFICIENCY PROVISIONS
Sec. 301. Credit for construction of new energy efficient home.
Sec. 302. Credit for energy efficient appliances.
Sec. 303. Credit for residential energy efficient property.
Sec. 304. Credit for business installation of qualified fuel cells and
stationary microturbine power plants.
Sec. 305. Energy efficient commercial buildings deduction.
Sec. 306. Allowance of deduction for qualified new or retrofitted
energy management devices.
Sec. 307. Three-year applicable recovery period for depreciation of
qualified energy management devices.
Sec. 308. Energy credit for combined heat and power system property.
Sec. 309. Credit for energy efficiency improvements to existing homes.
Sec. 310. Allowance of deduction for qualified new or retrofitted water
submetering devices.
Sec. 311. Three-year applicable recovery period for depreciation of
qualified water submetering devices.
TITLE IV--CLEAN COAL INCENTIVES
Subtitle A--Credit for Emission Reductions and Efficiency Improvements
in Existing Coal-Based Electricity Generation Facilities
Sec. 401. Credit for production from a qualifying clean coal technology
unit.
Subtitle B--Incentives for Early Commercial Applications of Advanced
Clean Coal Technologies
Sec. 411. Credit for investment in qualifying advanced clean coal
technology.
Sec. 412. Credit for production from a qualifying advanced clean coal
technology unit.
Subtitle C--Treatment of Persons Not Able To Use Entire Credit
Sec. 421. Treatment of persons not able to use entire credit.
TITLE V--OIL AND GAS PROVISIONS
Sec. 501. Oil and gas from marginal wells.
Sec. 502. Natural gas gathering lines treated as 7-year property.
Sec. 503. Expensing of capital costs incurred in complying with
Environmental Protection Agency sulfur regulations.
Sec. 504. Environmental tax credit.
Sec. 505. Determination of small refiner exception to oil depletion
deduction.
Sec. 506. Marginal production income limit extension.
Sec. 507. Amortization of geological and geophysical expenditures.
Sec. 508. Amortization of delay rental payments.
Sec. 509. Study of coal bed methane.
Sec. 510. Extension and modification of credit for producing fuel from
a nonconventional source.
Sec. 511. Natural gas distribution lines treated as 15-year property.
TITLE VI--ELECTRIC UTILITY RESTRUCTURING PROVISIONS
Sec. 601. Ongoing study and reports regarding tax issues resulting from
future restructuring decisions.
Sec. 602. Modifications to special rules for nuclear decommissioning
costs.
Sec. 603. Treatment of certain income of cooperatives.
Sec. 604. Sales or dispositions to implement Federal Energy Regulatory
Commission or State electric restructuring policy.
Sec. 605. Treatment of certain development income of cooperatives.
TITLE VII--ADDITIONAL PROVISIONS
Sec. 701. Extension of accelerated depreciation and wage credit
benefits on Indian reservations.
Sec. 702. Study of effectiveness of certain provisions by GAO.
Sec. 703. Credit for production of Alaska natural gas.
Sec. 704. Sale of gasoline and diesel fuel at duty-free sales
enterprises.
Sec. 705. Clarification of excise tax exemptions for agricultural
aerial applicators.
Sec. 706. Modification of rural airport definition.
Sec. 707. Exemption from ticket taxes for transportation provided by
seaplanes.
TITLE I--EXTENSION AND MODIFICATION OF RENEWABLE ELECTRICITY PRODUCTION
TAX CREDIT
SEC. 101. THREE-YEAR EXTENSION OF CREDIT FOR PRODUCING
ELECTRICITY FROM WIND AND POULTRY WASTE.
(a) In General.--Subparagraphs (A) and (C) of section
45(c)(3) (relating to qualified facility), as amended by
section 603(a) of the Job Creation and Worker Assistance Act
of 2002, are each amended by striking ``January 1, 2004'' and
inserting ``January 1, 2007''.
(b) Effective Date.--The amendments made by this section
shall apply to electricity sold after the date of the
enactment of this Act, in taxable years ending after such
date.
SEC. 102. CREDIT FOR ELECTRICITY PRODUCED FROM BIOMASS.
(a) Extension and Modification of Placed-In-Service
Rules.--Paragraph (3) of section 45(c) is amended--
(1) by striking subparagraph (B) and inserting the
following new subparagraph:
``(B) Closed-loop biomass facility.--
``(i) In general.--In the case of a facility using closed-
loop biomass to produce electricity, the term `qualified
facility' means any facility--
``(I) owned by the taxpayer which is originally placed in
service after December 31, 1992, and before January 1, 2007,
or
``(II) owned by the taxpayer which is originally placed in
service before January 1, 1993, and modified to use closed-
loop biomass to co-fire with coal or other biomass before
January 1, 2007, as approved under the Biomass Power for
Rural Development Programs or under a pilot project of the
Commodity Credit Corporation as described in 65 Fed. Reg.
63052.
``(ii) Special rules.--In the case of a qualified facility
described in clause (i)(II)--
``(I) the 10-year period referred to in subsection (a)
shall be treated as beginning no earlier than the date of the
enactment of this subclause, and
``(II) if the owner of such facility is not the producer of
the electricity, the person eligible for the credit allowable
under subsection (a) is the lessee or the operator of such
facility.'', and
(2) by adding at the end the following new subparagraph:
``(D) Biomass facility.--
``(i) In general.--In the case of a facility using biomass
(other than closed-loop biomass) to produce electricity, the
term `qualified facility' means any facility owned by the
taxpayer which is originally placed in service before January
1, 2005.
``(ii) Special rule for posteffective date facilities.--In
the case of any facility described in clause (i) which is
placed in service after the date of the enactment of this
clause, the 3-year period beginning on the date the facility
is originally placed in service shall be substituted for the
10-year period in subsection (a)(2)(A)(ii).
``(iii) Special rules for preeffective date facilities.--In
the case of any facility described in clause (i) which is
placed in service before the date of the enactment of this
clause--
``(I) subsection (a)(1) shall be applied by substituting
`1.0 cents' for `1.5 cents', and
``(II) the 3-year period beginning after the date of the
enactment of this subparagraph, shall be substituted for the
10-year period in subsection (a)(2)(A)(ii).
``(iv) Credit eligibility.--In the case of any facility
described in clause (i), if the owner of such facility is not
the producer of the electricity, the person eligible for the
credit allowable under subsection (a) is the lessee or the
operator of such facility.''.
(b) Definition of Biomass.--
(1) In general.--Section 45(c)(1) (defining qualified
energy resources) is amended--
(A) by striking ``and'' at the end of subparagraph (B),
(B) by striking the period at the end of subparagraph (C)
and inserting ``, and'', and
(C) by adding at the end the following new subparagraph:
``(D) biomass (other than closed-loop biomass).''.
(2) Biomass defined.--Section 45(c) (relating to
definitions) is amended by adding at the end the following
new paragraph:
``(5) Biomass.--The term `biomass' means any solid,
nonhazardous, cellulosic waste material which is segregated
from other waste materials and which is derived from--
``(A) any of the following forest-related resources: mill
residues, precommercial thinnings, slash, and brush, but not
including old-growth timber (other than old-growth timber
which has been permitted or contracted for removal by any
appropriate Federal authority through the National
Environmental Policy Act or by any appropriate State
authority),
``(B) solid wood waste materials, including waste pallets,
crates, dunnage, manufacturing and construction wood wastes
(other than pressure-treated, chemically-treated, or painted
wood wastes), and landscape or right-of-way tree trimmings,
but not including municipal solid waste (garbage), gas
derived from the biodegradation of solid waste, or paper that
is commonly recycled, or
``(C) agriculture sources, including orchard tree crops,
vineyard, grain, legumes, sugar, and other crop by-products
or residues.''.
(c) Coordination With Section 29.--Section 45(c) (relating
to definitions) is amended by adding at the end the following
new paragraph:
``(6) Coordination with section 29.--The term `qualified
facility' shall not include any facility the production from
which is taken into account in determining any credit under
section 29 for the taxable year or any prior taxable year.''.
(d) Clerical Amendments.--
(1) The heading for subsection (c) of section 45 is amended
by inserting ``and Special Rules'' after ``Definitions''.
(2) The heading for subsection (d) of section 45 is amended
by inserting ``Additional'' before ``Definitions''.
[[Page S3522]]
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to electricity
sold after the date of the enactment of this Act, in taxable
years ending after such date.
(2) Certain biomass facilities.--With respect to any
facility described in section 45(c)(3)(D)(i) of the Internal
Revenue Code of 1986, as added by this section, which is
placed in service before the date of the enactment of this
Act, the amendments made by this section shall apply to
electricity sold after the date of the enactment of this Act,
in taxable years ending after such date.
SEC. 103. CREDIT FOR ELECTRICITY PRODUCED FROM SWINE AND
BOVINE WASTE NUTRIENTS, GEOTHERMAL ENERGY, AND
SOLAR ENERGY.
(a) Expansion of Qualified Energy Resources.--
(1) In general.--Section 45(c)(1) (defining qualified
energy resources), as amended by this Act, is amended by
striking ``and'' at the end of subparagraph (C), by striking
the period at the end of subparagraph (D) and inserting a
comma, and by adding at the end the following new
subparagraphs:
``(E) swine and bovine waste nutrients,
``(F) geothermal energy, and
``(G) solar energy.''.
(2) Definitions.--Section 45(c) (relating to definitions
and special rules), as amended by this Act, is amended by
redesignating paragraph (6) as paragraph (8) and by inserting
after paragraph (5) the following new paragraphs:
``(6) Swine and bovine waste nutrients.--The term `swine
and bovine waste nutrients' means swine and bovine manure and
litter, including bedding material for the disposition of
manure.
``(7) Geothermal energy.--The term `geothermal energy'
means energy derived from a geothermal deposit (within the
meaning of section 613(e)(2)).''.
(b) Extension and Modification of Placed-In-Service
Rules.--Section 45(c)(3) (relating to qualified facility), as
amended by this Act, is amended by adding at the end the
following new subparagraphs:
``(E) Swine and bovine waste nutrients facility.--In the
case of a facility using swine and bovine waste nutrients to
produce electricity, the term `qualified facility' means any
facility owned by the taxpayer which is originally placed in
service after the date of the enactment of this subparagraph
and before January 1, 2007.
``(F) Geothermal or solar energy facility.--
``(i) In general.--In the case of a facility using
geothermal or solar energy to produce electricity, the term
`qualified facility' means any facility owned by the taxpayer
which is originally placed in service after the date of the
enactment of this clause and before January 1, 2007.
``(ii) Special rule.--In the case of any facility described
in clause (i), the 5-year period beginning on the date the
facility was originally placed in service shall be
substituted for the 10-year period in subsection
(a)(2)(A)(ii).''.
(c) Effective Date.--The amendments made by this section
shall apply to electricity sold after the date of the
enactment of this Act, in taxable years ending after such
date.
SEC. 104. TREATMENT OF PERSONS NOT ABLE TO USE ENTIRE CREDIT.
(a) In General.--Section 45(d) (relating to additional
definitions and special rules), as amended by this Act, is
amended by adding at the end the following new paragraph:
``(8) Treatment of persons not able to use entire credit.--
``(A) Allowance of credit.--
``(i) In general.--Except as otherwise provided in this
subsection--
``(I) any credit allowable under subsection (a) with
respect to a qualified facility owned by a person described
in clause (ii) may be transferred or used as provided in this
paragraph, and
``(II) the determination as to whether the credit is
allowable shall be made without regard to the tax-exempt
status of the person.
``(ii) Persons described.--A person is described in this
clause if the person 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) a public utility (as defined in section
136(c)(2)(B)), which is exempt from income tax under this
subtitle,
``(IV) any State or political subdivision thereof, the
District of Columbia, any possession of the United States, or
any agency or instrumentality of any of the foregoing, or
``(V) any Indian tribal government (within the meaning of
section 7871) or any agency or instrumentality thereof.
``(B) Transfer of credit.--
``(i) In general.--A person described in subparagraph
(A)(ii) may transfer any credit to which subparagraph (A)(i)
applies through an assignment to any other person not
described in subparagraph (A)(ii). Such transfer may be
revoked only with the consent of the Secretary.
``(ii) Regulations.--The Secretary shall prescribe such
regulations as necessary to ensure that any credit described
in clause (i) is claimed once and not reassigned by such
other person.
``(iii) Transfer proceeds treated as arising from essential
government function.--Any proceeds derived by a person
described in subclause (III), (IV), or (V) of subparagraph
(A)(ii) from the transfer of any credit under clause (i)
shall be treated as arising from the exercise of an essential
government function.
``(C) Use of credit as an offset.--Notwithstanding any
other provision of law, in the case of a person described in
subclause (I), (II), or (V) of subparagraph (A)(ii), any
credit to which subparagraph (A)(i) applies may be applied by
such person, to the extent provided by the Secretary of
Agriculture, 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.), as in effect on the date of the
enactment of the Energy Tax Incentives Act of 2003.
``(D) Credit not income.--Any transfer under subparagraph
(B) or use under subparagraph (C) of any credit to which
subparagraph (A)(i) applies shall not be treated as income
for purposes of section 501(c)(12).
``(E) Treatment of unrelated persons.--For purposes of
subsection (a)(2)(B), sales among and between persons
described in subparagraph (A)(ii) shall be treated as sales
between unrelated parties.''.
(b) Credits Not Reduced by Tax-Exempt Bonds or Certain
Other Subsidies.--Section 45(b)(3) (relating to credit
reduced for grants, tax-exempt bonds, subsidized energy
financing, and other credits) is amended--
(1) by striking clause (ii),
(2) by redesignating clauses (iii) and (iv) as clauses (ii)
and (iii),
(3) by inserting ``(other than 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.), as in effect on the date of the enactment of the
Energy Tax Incentives Act of 2003)'' after ``project'' in
clause (ii) (as so redesignated),
(4) by adding at the end the following new sentence: ``This
paragraph shall not apply with respect to any facility
described in subsection (c)(3)(B)(i)(II).'', and
(5) by striking ``tax-exempt bonds,'' in the heading and
inserting ``certain''.
(c) Effective Date.--The amendments made by this section
shall apply to electricity sold after the date of the
enactment of this Act, in taxable years ending after such
date.
SEC. 105. CREDIT FOR ELECTRICITY PRODUCED FROM SMALL
IRRIGATION POWER.
(a) In General.--Section 45(c)(1) (defining qualified
energy resources), as amended by this Act, is amended by
striking ``and'' at the end of subparagraph (F), by striking
the period at the end of subparagraph (G) and inserting ``,
and'', and by adding at the end the following new
subparagraph:
``(H) small irrigation power.''.
(b) Qualified Facility.--Section 45(c)(3) (relating to
qualified facility), as amended by this Act, is amended by
adding at the end the following new subparagraph:
``(G) Small irrigation power facility.--In the case of a
facility using small irrigation power to produce electricity,
the term `qualified facility' means any facility owned by the
taxpayer which is originally placed in service after date of
the enactment of this subparagraph and before January 1,
2007.''.
(c) Definition.--Section 45(c), as amended by this Act, is
amended by redesignating paragraph (8) as paragraph (9) and
by inserting after paragraph (7) the following new paragraph:
``(8) Small irrigation power.--The term `small irrigation
power' means power--
``(A) generated without any dam or impoundment of water
through an irrigation system canal or ditch, and
``(B) the installed capacity of which is less than 5
megawatts.''.
(d) Effective Date.--The amendments made by this section
shall apply to electricity sold after the date of the
enactment of this Act, in taxable years ending after such
date.
SEC. 106. CREDIT FOR ELECTRICITY PRODUCED FROM MUNICIPAL
BIOSOLIDS AND RECYCLED SLUDGE.
(a) In General.--Section 45(c)(1) (defining qualified
energy resources), as amended by this Act, is amended by
striking ``and'' at the end of subparagraph (G), by striking
the period at the end of subparagraph (H), and by adding at
the end the following new subparagraphs:
``(I) municipal biosolids, and
``(J) recycled sludge.''.
(b) Qualified Facilities.--Section 45(c)(3) (relating to
qualified facility), as amended by this Act, is amended by
adding at the end the following new subparagraphs:
``(H) Municipal biosolids facility.--In the case of a
facility using municipal biosolids to produce electricity,
the term `qualified facility' means any facility owned by the
taxpayer which is originally placed in service after the date
of the enactment of this subparagraph and before January 1,
2007.
``(I) Recycled sludge facility.--
``(i) In general.--In the case of a facility using recycled
sludge to produce electricity, the term `qualified facility'
means any facility owned by the taxpayer which is originally
placed in service before January 1, 2007.
``(ii) Special rule.--In the case of a qualified facility
described in clause (i), the 10-year period referred to in
subsection (a) shall be treated as beginning no earlier than
the date of the enactment of this subparagraph.''.
(c) Definitions.--Section 45(c), as amended by this Act, is
amended by redesignating
[[Page S3523]]
paragraph (9) as paragraph (11) and by inserting after
paragraph (8) the following new paragraphs:
``(9) Municipal biosolids.--The term `municipal biosolids'
means the residue or solids removed by a municipal wastewater
treatment facility.
``(10) Recycled sludge.--
``(A) In general.--The term `recycled sludge' means the
recycled residue byproduct created in the treatment of
commercial, industrial, municipal, or navigational
wastewater.
``(B) Recycled.--The term `recycled' means the processing
of residue into a marketable product, but does not include
incineration for the purpose of volume reduction.''.
(d) Effective Date.--The amendments made by this section
shall apply to electricity sold after the date of the
enactment of this Act, in taxable years ending after such
date.
TITLE II--ALTERNATIVE MOTOR VEHICLES AND FUELS INCENTIVES
SEC. 201. ALTERNATIVE MOTOR VEHICLE 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. 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 2002 model year city fuel
economy,
``(ii) $1,500, if such vehicle achieves at least 175
percent but less than 200 percent of the 2002 model year city
fuel economy,
``(iii) $2,000, if such vehicle achieves at least 200
percent but less than 225 percent of the 2002 model year city
fuel economy,
``(iv) $2,500, if such vehicle achieves at least 225
percent but less than 250 percent of the 2002 model year city
fuel economy,
``(v) $3,000, if such vehicle achieves at least 250 percent
but less than 275 percent of the 2002 model year city fuel
economy,
``(vi) $3,500, if such vehicle achieves at least 275
percent but less than 300 percent of the 2002 model year city
fuel economy, and
``(vii) $4,000, if such vehicle achieves at least 300
percent of the 2002 model year city fuel economy.
``(B) 2002 model year city fuel economy.--For purposes of
subparagraph (A), the 2002 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:
The 0000 model year city
``If vehicle inertia weight class is: fuel economy is:
1,500 or 1,750 lbs......................................45.2 mpg ....
2,000 lbs...............................................39.6 mpg ....
2,250 lbs...............................................35.2 mpg ....
2,500 lbs...............................................31.7 mpg ....
2,750 lbs...............................................28.8 mpg ....
3,000 lbs...............................................26.4 mpg ....
3,500 lbs...............................................22.6 mpg ....
4,000 lbs...............................................19.8 mpg ....
4,500 lbs...............................................17.6 mpg ....
5,000 lbs...............................................15.9 mpg ....
5,500 lbs...............................................14.4 mpg ....
6,000 lbs...............................................13.2 mpg ....
6,500 lbs...............................................12.2 mpg ....
7,000 to 8,500 lbs......................................11.3 mpg.....
``(ii) In the case of a light truck:
The 0000 model year city
``If vehicle inertia weight class is: fuel economy is:
1,500 or 1,750 lbs......................................39.4 mpg ....
2,000 lbs...............................................35.2 mpg ....
2,250 lbs...............................................31.8 mpg ....
2,500 lbs...............................................29.0 mpg ....
2,750 lbs...............................................26.8 mpg ....
3,000 lbs...............................................24.9 mpg ....
3,500 lbs...............................................21.8 mpg ....
4,000 lbs...............................................19.4 mpg ....
4,500 lbs...............................................17.6 mpg ....
5,000 lbs...............................................16.1 mpg ....
5,500 lbs...............................................14.8 mpg ....
6,000 lbs...............................................13.7 mpg ....
6,500 lbs...............................................12.8 mpg ....
7,000 to 8,500 lbs......................................12.1 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 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,
``(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
available power is: The credit amount is:
At least 4 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
available power is: The credit amount is:
At least 20 percent but less than 30 percent..............$1,000 ....
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
available power is: The credit amount 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 ....
[[Page S3524]]
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
available power is: The credit amount 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 new qualified hybrid motor vehicle
which is 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 2002 model year city fuel
economy,
``(II) $1,000, if such vehicle achieves at least 150
percent but less than 175 percent of the 2002 model year city
fuel economy,
``(III) $1,500, if such vehicle achieves at least 175
percent but less than 200 percent of the 2002 model year city
fuel economy,
``(IV) $2,000, if such vehicle achieves at least 200
percent but less than 225 percent of the 2002 model year city
fuel economy,
``(V) $2,500, if such vehicle achieves at least 225 percent
but less than 250 percent of the 2002 model year city fuel
economy, and
``(VI) $3,000, if such vehicle achieves at least 250
percent of the 2002 model year city fuel economy.
``(ii) 2002 model year city fuel economy.--For purposes of
clause (i), the 2002 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 increased 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:
The increased credit amount is:
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:
The increased credit amount is:
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:
The increased credit amount is:
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 for 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 rechargeable energy
storage system, during a standard 10 second pulse power or
equivalent test, divided by such maximum power 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 rechargeable
energy storage system, during a standard 10 second pulse
power or equivalent test, divided by the vehicle's total
traction power. The term `total traction power' means the sum
of the peak power from the rechargeable energy storage system
and the heat engine peak power of the vehicle, except that if
such storage system is the sole means by which the vehicle
can be driven, the total traction power is the peak power of
such storage system.
``(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 new qualified alternative fuel motor vehicle 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) 40 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 certifying the vehicle as
meeting the same requirements as vehicles which may be sold
or leased 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)New qualified alternative fuel motor vehicle.--For
purposes of this subsection--
``(A) In general.--The term `new 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 90/10 mixed-fuel vehicle, 90
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'
[[Page S3525]]
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 certifying the vehicle as
meeting the same requirements as vehicles which may be sold
or leased 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) 90/10 mixed-fuel vehicle.--For purposes of this
subsection, the term `90/10 mixed-fuel vehicle' means a
mixed-fuel vehicle which operates using at least 90 percent
alternative fuel and not more than 10 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) City fuel economy.--The city fuel economy with
respect to any vehicle shall be measured in a manner which is
substantially similar to the manner city fuel economy is
measured in accordance with procedures under part 600 of
subchapter Q of chapter I of title 40, Code of Federal
Regulations, as in effect on the date of the enactment of
this section.
``(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
other 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 at the time of any sale or
lease the specific amount of any credit otherwise allowable
to the entity under this section.
``(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) Carryback and 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 (in
this paragraph referred to as the `unused credit year'), such
excess shall be allowed as a credit carryback for each of the
3 taxable years beginning after the date of the enactment of
this paragraph, which precede the unused credit year and a
credit carryforward for each of the 20 taxable years which
succeed the unused credit year.
``(B) Rules.--Rules similar to the rules of section 39
shall apply with respect to the credit carryback and 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.--Except as provided in paragraph (2), the
Secretary shall promulgate such regulations as necessary to
carry out the provisions of this section.
``(2) Coordination in prescription of certain
regulations.--The Secretary of the Treasury, in coordination
with the Secretary of Transportation and the Administrator of
the Environmental Protection Agency, 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 purchased after--
``(1) in the case of a new qualified fuel cell motor
vehicle (as described in subsection (b)), December 31, 2011,
and
``(2) in the case of any other property, December 31,
2006.''.
(b) Conforming Amendments.--
(1) 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 new paragraph:
``(29) to the extent provided in section 30B(f)(5).''.
(2) Section 55(c)(2) is amended by inserting ``30B(e),''
after ``30(b)(3)''.
(3) Section 6501(m) is amended by inserting ``30B(f)(10),''
after ``30(d)(4),''.
(4) 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 new item:
``Sec. 30B. Alternative motor vehicle credit.''.
(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. 202. MODIFICATION OF CREDIT FOR QUALIFIED ELECTRIC
VEHICLES.
(a) Amount of Credit.--
(1) In general.--Section 30(a) (relating to allowance of
credit) is amended by striking ``10 percent of''.
(2) Limitation of credit according to type of vehicle.--
Section 30(b) (relating to limitations) is amended--
(A) by striking paragraphs (1) and (2) and inserting the
following new paragraph:
``(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, as in effect on the date of the enactment of
the Energy Tax Incentives Act of 2003, the lesser of--
``(i) 10 percent of the manufacturer's suggested retail
price of the vehicle, or
``(ii) $1,500.
``(B) In the case of a vehicle not described in
subparagraph (A) with a gross vehicle weight rating not
exceeding 8,500 pounds--
``(i) $3,500, 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 as
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 1,000
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
(B) by redesignating paragraph (3) as paragraph (2).
(3) Conforming amendments.--
(A) Section 53(d)(1)(B)(iii) is amended by striking
``section 30(b)(3)(B)'' and inserting ``section
30(b)(2)(B)''.
(3) Section 55(c)(2), as amended by this Act, is amended by
striking ``30(b)(3)'' and inserting ``30(b)(2)''.
(b) Qualified Battery Electric Vehicle.--
(1) In general.--Section 30(c)(1)(A) (defining qualified
electric vehicle) is amended to read as follows:
``(A) which is--
[[Page S3526]]
``(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,''.
(2) Leased vehicles.--Section 30(c)(1)(C) is amended by
inserting ``or lease'' after ``use''.
(3) Conforming amendments.--
(A) Subsections (a), (b)(2), and (c) of section 30 are each
amended by inserting ``battery'' after ``qualified'' each
place it appears.
(B) The heading of subsection (c) of section 30 is amended
by inserting ``Battery'' after ``Qualified''.
(C) The heading of section 30 is amended by inserting
``BATTERY'' after ``QUALIFIED''.
(D) 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''.
(E) Section 179A(c)(3) is amended by inserting ``battery''
before ``electric''.
(F) The heading of paragraph (3) of section 179A(c) is
amended by inserting ``battery'' before ``electric''.
(c) Additional Special Rules.--Section 30(d) (relating to
special rules) is amended by adding at the end the following
new paragraphs:
``(5) No double benefit.--The amount of any deduction or
other 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 at the time of any sale or lease the
specific amount of any credit otherwise allowable to the
entity under this section.
``(7) Carryback and 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 (b)(2) for such taxable year (in
this paragraph referred to as the `unused credit year'), such
excess shall be allowed as a credit carryback for each of the
3 taxable years beginning after the date of the enactment of
this paragraph, which precede the unused credit year and a
credit carryforward for each of the 20 taxable years which
succeed the unused credit year.
``(B) Rules.--Rules similar to the rules of section 39
shall apply with respect to the credit carryback and credit
carryforward under subparagraph (A).''.
(d) Effective Date.--The amendments made by this section
shall apply to property placed in service after the date of
the enactment of this Act, in taxable years ending after such
date.
SEC. 203. 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 this Act, is amended by adding at the end the following
new section:
``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 50 percent of the amount paid or incurred
by the taxpayer during the taxable year for the installation
of qualified clean-fuel vehicle refueling property.
``(b) Limitation.--The credit allowed under subsection
(a)--
``(1) with respect to any retail clean-fuel vehicle
refueling property, shall not exceed $30,000, and
``(2) with respect to any residential 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 qualified clean-fuel vehicle refueling property is placed
in service by the taxpayer.
``(d) Definitions.--For purposes of this section--
``(1) Qualified clean-fuel vehicle refueling property.--The
term `qualified clean-fuel vehicle refueling property' has
the same meaning given such term by section 179A(d).
``(2) Residential clean-fuel vehicle refueling property.--
The term `residential clean-fuel vehicle refueling property'
means qualified 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
qualified clean-fuel vehicle refueling property which is
installed on property (other than property described in
paragraph (2)) used in a trade or business of the taxpayer.
``(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 qualified 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.
``(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 (e) 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--
``(1) in the case of property relating to hydrogen, after
December 31, 2011, and
``(2) in the case of any other property, after December 31,
2007.''.
(b) Modifications to Extension of Deduction for Certain
Refueling Property.--
(1) In general.--Subsection (f) of section 179A is amended
to read as follows:
``(f) Termination.--This section shall not apply to any
property placed in service--
``(1) in the case of property relating to hydrogen, after
December 31, 2011, and
``(2) in the case of any other property, after December 31,
2007.''.
(2) Extension of phaseout.--Section 179A(b)(1)(B), as
amended by section 606(a) of the Job Creation and Worker
Assistance Act of 2002, is amended--
(A) by striking ``calendar year 2004'' in clause (i) and
inserting ``calendar years 2004 and 2005 (calendar years 2004
through 2009 in the case of property relating to hydrogen)
'',
(B) by striking ``2005'' in clause (ii) and inserting
``2006 (calendar year 2010 in the case of property relating
to hydrogen)'', and
(C) by striking ``2006'' in clause (iii) and inserting
``2007 (calendar year 2011 in the case of property relating
to hydrogen)''.
(c) Incentive for Production of Hydrogen at Qualified
Clean-Fuel Vehicle Refueling Property.--Section 179A(d)
(defining qualified clean-fuel vehicle refueling property) is
amended by adding at the end the following new flush
sentence:
``In the case of clean-burning fuel which is hydrogen
produced from another clean-burning fuel, paragraph (3)(A)
shall be applied by substituting `production, storage, or
dispensing' for `storage or dispensing' both places it
appears.''.
(d) Conforming Amendments.--(1) Section 1016(a), as amended
by this Act, 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 new paragraph:
``(30) to the extent provided in section 30C(f).''.
(2) Section 55(c)(2), as amended by this Act, is amended by
inserting ``30C(e),'' after ``30B(e)''.
(3) The table of sections for subpart B of part IV of
subchapter A of chapter 1, as amended by this Act, is amended
by inserting after the item relating to section 30B the
following new item:
``Sec. 30C. Clean-fuel vehicle refueling property credit.''.
(e) 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. 204. 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 new section:
``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
the applicable amount 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.
``(b) Definitions.--For purposes of this section--
[[Page S3527]]
``(1) Applicable amount.--The term `applicable amount'
means the amount determined in accordance with the following
table:
``In the case of any taxable year
ending in-- The applicable amount is--
2003....................................................30 cents ....
2004....................................................40 cents ....
2005 and 2006...........................................50 cents.....
``(2) 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 or ethanol.
``(3) 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.
``(4) 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.
``(5) 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
other 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, 2006.''.
(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 new paragraph:
``(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 new paragraph:
``(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 on or before the date
of the enactment of such section.''.
(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
new item:
``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 the date of the
enactment of this Act, in taxable years ending after such
date.
SEC. 205. SMALL ETHANOL PRODUCER CREDIT.
(a) Allocation of Alcohol Fuels Credit to Patrons of a
Cooperative.--Section 40(g) (relating to alcohol used as
fuel) is amended by adding at the end the following new
paragraph:
``(6) Allocation of small ethanol producer credit to
patrons of cooperative.--
``(A) Election to allocate.--
``(i) In general.--In the case of a cooperative
organization described in section 1381(a), any portion of the
credit determined under subsection (a)(3) for the taxable
year may, at the election of the organization, be apportioned
pro rata among patrons of the organization on the basis of
the quantity or value of business done with or for such
patrons for the taxable year.
``(ii) Form and effect of election.--An election under
clause (i) for any taxable year shall be made on a timely
filed return for such year. Such election, once made, shall
be irrevocable for such taxable year.
``(B) Treatment of organizations and patrons.--The amount
of the credit apportioned to patrons under subparagraph (A)--
``(i) shall not be included in the amount determined under
subsection (a) with respect to the organization for the
taxable year,
``(ii) shall be included in the amount determined under
subsection (a) for the taxable year of each patron for which
the patronage dividends for the taxable year described in
subparagraph (A) are included in gross income, and
``(iii) shall be included in gross income of such patrons
for the taxable year in the manner and to the extent provided
in section 87.
``(C) Special rules for decrease in credits for taxable
year.--If the amount of the credit of a cooperative
organization determined under subsection (a)(3) for a taxable
year is less than the amount of such credit shown on the
return of the cooperative organization for such year, an
amount equal to the excess of--
``(i) such reduction, over
``(ii) the amount not apportioned to such patrons under
subparagraph (A) for the taxable year,
shall be treated as an increase in tax imposed by this
chapter on the organization. Such increase shall not be
treated as tax imposed by this chapter for purposes of
determining the amount of any credit under this chapter or
for purposes of section 55.''.
(b) Improvements to Small Ethanol Producer Credit.--
(1) Definition of small ethanol producer.--Section 40(g)
(relating to definitions and special rules for eligible small
ethanol producer credit) is amended by striking
``30,000,000'' each place it appears and inserting
``60,000,000''.
(2) Small ethanol producer credit not a passive activity
credit.--Clause (i) of section 469(d)(2)(A) is amended by
striking ``subpart D'' and inserting ``subpart D, other than
section 40(a)(3),''.
(3) Allowing credit against entire regular tax and minimum
tax.--
(A) In general.--Subsection (c) of section 38 (relating to
limitation based on amount of tax), as amended by section
301(b) of the Job Creation and Worker Assistance Act of 2002,
is amended by redesignating paragraph (4) as paragraph (5)
and by inserting after paragraph (3) the following new
paragraph:
``(4) Special rules for small ethanol producer credit.--
``(A) In general.--In the case of the small ethanol
producer 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) the amounts in subparagraphs (A) and (B) thereof
shall be treated as being zero, 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 small
ethanol producer credit).
``(B) Small ethanol producer credit.--For purposes of this
subsection, the term `small ethanol producer credit' means
the credit allowable under subsection (a) by reason of
section 40(a)(3).''.
(B) Conforming amendments.--Subclause (II) of section
38(c)(2)(A)(ii), as amended by section 301(b)(2) of the Job
Creation and Worker Assistance Act of 2002, and subclause
(II) of section 38(c)(3)(A)(ii), as added by section
301(b)(1) of such Act, are each amended by inserting ``or the
small ethanol producer credit'' after ``employee credit''.
(4) Small ethanol producer credit not added back to income
under section 87.--Section 87 (relating to income inclusion
of alcohol fuel credit) is amended to read as follows:
``SEC. 87. ALCOHOL FUEL CREDIT.
``Gross income includes an amount equal to the sum of--
``(1) the amount of the alcohol mixture credit determined
with respect to the taxpayer for the taxable year under
section 40(a)(1), and
``(2) the alcohol credit determined with respect to the
taxpayer for the taxable year under section 40(a)(2).''.
(c) Conforming Amendment.--Section 1388 (relating to
definitions and special rules for cooperative organizations)
is amended by adding at the end the following new subsection:
``(k) Cross Reference.--For provisions relating to the
apportionment of the alcohol fuels credit between cooperative
organizations and their patrons, see section 40(g)(6).''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 206. ALL ALCOHOL FUELS TAXES TRANSFERRED TO HIGHWAY
TRUST FUND.
(a) In General.--Section 9503(b)(4) (relating to certain
taxes not transferred to Highway Trust Fund) is amended--
(1) by adding ``or'' at the end of subparagraph (C),
(2) by striking the comma at the end of subparagraph
(D)(iii) and inserting a period, and
(3) by striking subparagraphs (E) and (F).
(b) Effective Date.--The amendments made by this section
shall apply to taxes imposed after September 30, 2003.
SEC. 207. INCREASED FLEXIBILITY IN ALCOHOL FUELS TAX CREDIT.
(a) Alcohol Fuels Credit May Be Transferred.--Section 40
(relating to alcohol used as fuel) is amended by adding at
the end the following new subsection:
``(i) Credit May Be Transferred.--
``(1) In general.--A taxpayer may transfer any credit
allowable under paragraph (1) or (2) of subsection (a) with
respect to alcohol used in the production of ethyl tertiary
butyl ether through an assignment to a qualified assignee.
Such transfer may be revoked only with the consent of the
Secretary.
``(2) Qualified assignee.--For purposes of this subsection,
the term `qualified assignee' means any person who--
``(A) is liable for taxes imposed under section 4081,
[[Page S3528]]
``(B) is required to register under section 4101, and
``(C) obtains a certificate from the taxpayer described in
paragraph (1) which identifies the amount of alcohol used in
such production.
``(3) Regulations.--The Secretary shall prescribe such
regulations as necessary to insure that any credit described
in paragraph (1) is claimed once and not reassigned by a
qualified assignee.''.
(b) Alcohol Fuels Credit May Be Taken Against Motor Fuels
Tax Liability.--
(1) In general.--Subpart C of part III of subchapter A of
chapter 32 (relating to special provisions applicable to
petroleum products) is amended by adding at the end the
following new section:
``SEC. 4104. CREDIT AGAINST MOTOR FUELS TAXES.
``(a) Election To Use Credit Against Motor Fuels Taxes.--
There is hereby allowed as a credit against the taxes imposed
by section 4081, any credit allowed under paragraph (1) or
(2) of section 40(a) with respect to alcohol used in the
production of ethyl tertiary butyl ether to the extent--
``(1) such credit is not claimed by the taxpayer or the
qualified assignee under section 40(i) as a credit under
section 40, and
``(2) the taxpayer or qualified assignee elects to claim
such credit under this section.
``(b) Election Irrevocable.--Any election under subsection
(a) shall be irrevocable.
``(c) Required Statement.--Any return claiming a credit
pursuant to an election under this section shall be
accompanied by a statement that the credit was not, and will
not, be claimed on an income tax return.
``(d) Regulations.--The Secretary shall prescribe such
regulations as necessary to avoid the claiming of double
benefits and to prescribe the taxable periods with respect to
which the credit may be claimed.''.
(2) Conforming amendment.--Section 40(c) is amended by
striking ``or section 4091(c)'' and inserting ``section
4091(c), or section 4104''.
(3) Clerical amendment.--The table of sections for subpart
C of part III of subchapter A of chapter 32 is amended by
adding at the end the following new item:
``Sec. 4104. Credit against motor fuels taxes.''.
(c) Effective Date.--The amendments made by this section
shall take effect on and after the date of the enactment of
this Act.
SEC. 208. INCENTIVES FOR BIODIESEL.
(a) Credit for Biodiesel Used as a Fuel.--
(1) In general.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits), as amended
by this Act, is amended by inserting after section 40A the
following new section:
``SEC. 40B. BIODIESEL USED AS FUEL.
``(a) General Rule.--For purposes of section 38, the
biodiesel fuels credit determined under this section for the
taxable year is an amount equal to the biodiesel mixture
credit.
``(b) Definition of Biodiesel Mixture Credit.--For purposes
of this section--
``(1) Biodiesel mixture credit.--
``(A) In general.--The biodiesel mixture credit of any
taxpayer for any taxable year is the sum of the products of
the biodiesel mixture rate for each qualified biodiesel
mixture and the number of gallons of such mixture of the
taxpayer for the taxable year.
``(B) Biodiesel mixture rate.--For purposes of subparagraph
(A), the biodiesel mixture rate for each qualified biodiesel
mixture shall be--
``(i) in the case of a mixture with only biodiesel V, 1
cent for each whole percentage point (not exceeding 20
percentage points) of biodiesel V in such mixture, and
``(ii) in the case of a mixture with biodiesel NV, or a
combination of biodiesel V and biodiesel NV, 0.5 cent for
each whole percentage point (not exceeding 20 percentage
points) of such biodiesel in such mixture.
``(2) Qualified biodiesel mixture.--
``(A) In general.--The term `qualified biodiesel mixture'
means a mixture of diesel and biodiesel V or biodiesel NV
which--
``(i) is sold by the taxpayer producing such mixture to any
person for use as a fuel, or
``(ii) is used as a fuel by the taxpayer producing such
mixture.
``(B) Sale or use must be in trade or business, etc.--
``(i) In general.--Biodiesel V or biodiesel NV used in the
production of a qualified biodiesel mixture shall be taken
into account--
``(I) only if the sale or use described in subparagraph (A)
is in a trade or business of the taxpayer, and
``(II) for the taxable year in which such sale or use
occurs.
``(ii) Certification for biodiesel v.--Biodiesel V used in
the production of a qualified biodiesel mixture shall be
taken into account only if the taxpayer described in
subparagraph (A) obtains a certification from the producer of
the biodiesel V which identifies the product produced.
``(C) Casual off-farm production not eligible.--No credit
shall be allowed under this section with respect to any
casual off-farm production of a qualified biodiesel mixture.
``(c) Coordination With Exemption From Excise Tax.--The
amount of the credit determined under this section with
respect to any biodiesel V shall, under regulations
prescribed by the Secretary, be properly reduced to take into
account any benefit provided with respect to such biodiesel V
solely by reason of the application of section 4041(n) or
section 4081(f).
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Biodiesel v defined.--The term `biodiesel V' means
the monoalkyl esters of long chain fatty acids derived solely
from virgin vegetable oils for use in compressional-ignition
(diesel) engines. Such term shall include esters derived from
vegetable oils from corn, soybeans, sunflower seeds,
cottonseeds, canola, crambe, rapeseeds, safflowers,
flaxseeds, rice bran, and mustard seeds.
``(2) Biodiesel nv defined.--The term `biodiesel nv' means
the monoalkyl esters of long chain fatty acids derived from
nonvirgin vegetable oils or animal fats for use in
compressional-ignition (diesel) engines.
``(3) Registration requirements.--The terms `biodiesel V'
and `biodiesel NV' shall only include a biodiesel which
meets--
``(i) the registration requirements for fuels and fuel
additives established by the Environmental Protection Agency
under section 211 of the Clean Air Act (42 U.S.C. 7545), and
``(ii) the requirements of the American Society of Testing
and Materials D6751.
``(2) Biodiesel mixture not used as a fuel, etc.--
``(A) Imposition of tax.--If--
``(i) any credit was determined under this section with
respect to biodiesel V or biodiesel NV used in the production
of any qualified biodiesel mixture, and
``(ii) any person--
``(I) separates such biodiesel from the mixture, or
``(II) without separation, uses the mixture other than as a
fuel,
then there is hereby imposed on such person a tax equal to
the product of the biodiesel mixture rate applicable under
subsection (b)(1)(B) and the number of gallons of the
mixture.
``(B) Applicable laws.--All provisions of law, including
penalties, shall, insofar as applicable and not inconsistent
with this section, apply in respect of any tax imposed under
subparagraph (A) as if such tax were imposed by section 4081
and not by this chapter.
``(3) 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) Election To Have Biodiesel Fuels Credit Not Apply.--
``(1) In general.--A taxpayer may elect to have this
section not apply for any taxable year.
``(2) Time for making election.--An election under
paragraph (1) for any taxable year may be made (or revoked)
at any time before the expiration of the 3-year period
beginning on the last date prescribed by law for filing the
return for such taxable year (determined without regard to
extensions).
``(3) Manner of making election.--An election under
paragraph (1) (or revocation thereof) shall be made in such
manner as the Secretary may by regulations prescribe.''.
``(f) Termination.--This section shall not apply to any
fuel sold after December 31, 2005.''.
(2) Credit treated as part of general business credit.--
Section 38(b), as amended by this Act, 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 new paragraph:
``(17) the biodiesel fuels credit determined under section
40B(a).''.
(3) Conforming amendments.--
(A) Section 39(d), as amended by this Act, is amended by
adding at the end the following new paragraph:
``(12) No carryback of biodiesel fuels credit before
january 1, 2003.--No portion of the unused business credit
for any taxable year which is attributable to the biodiesel
fuels credit determined under section 40B may be carried back
to a taxable year beginning before January 1, 2003.''.
(B) Section 196(c) is amended by striking ``and'' at the
end of paragraph (9), by striking the period at the end of
paragraph (10), and by adding at the end the following new
paragraph:
``(11) the biodiesel fuels credit determined under section
40B(a).''.
(C) Section 6501(m), as amended by this Act, is amended by
inserting ``40B(e),'' after ``40(f),''.
(D) The table of sections for subpart D of part IV of
subchapter A of chapter 1, as amended by this Act, is amended
by adding after the item relating to section 40A the
following new item:
``Sec. 40B. Biodiesel used as fuel.''.
(4) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31,
2002.
(b) Reduction of Motor Fuel Excise Taxes on Biodiesel V
Mixtures.--
(1) In general.--Section 4081 (relating to manufacturers
tax on petroleum products) is amended by adding at the end
the following new subsection:
``(f) Biodiesel V Mixtures.--Under regulations prescribed
by the Secretary--
``(1) In general.--In the case of the removal or entry of a
qualified biodiesel mixture with biodiesel V, the rate of tax
under subsection (a) shall be the otherwise applicable rate
reduced by the biodiesel mixture rate (if any) applicable to
the mixture.
``(2) Tax prior to mixing.--
``(A) In general.--In the case of the removal or entry of
diesel fuel for use in producing at the time of such removal
or entry
[[Page S3529]]
a qualified biodiesel mixture with biodiesel V, the rate of
tax under subsection (a) shall be the rate determined under
subparagraph (B).
``(B) Determination of rate.--For purposes of subparagraph
(A), the rate determined under this subparagraph is the rate
determined under paragraph (1), divided by a percentage equal
to 100 percent minus the percentage of biodiesel V which will
be in the mixture.
``(3) Definitions.--For purposes of this subsection, any
term used in this subsection which is also used in section
40B shall have the meaning given such term by section 40B.
``(4) Certain rules to apply.--Rules similar to the rules
of paragraphs (6) and (7) of subsection (c) shall apply for
purposes of this subsection.''.
(2) Conforming amendments.--
(A) Section 4041 is amended by adding at the end the
following new subsection:
``(n) Biodiesel V Mixtures.--Under regulations prescribed
by the Secretary, in the case of the sale or use of a
qualified biodiesel mixture (as defined in section 40B(b)(2))
with biodiesel V, the rates under paragraphs (1) and (2) of
subsection (a) shall be the otherwise applicable rates,
reduced by any applicable biodiesel mixture rate (as defined
in section 40B(b)(1)(B)).''.
(B) Section 6427 is amended by redesignating subsection (p)
as subsection (q) and by inserting after subsection (o) the
following new subsection:
``(p) Biodiesel V Mixtures.--Except as provided in
subsection (k), if any diesel fuel on which tax was imposed
by section 4081 at a rate not determined under section
4081(f) is used by any person in producing a qualified
biodiesel mixture (as defined in section 40B(b)(2)) with
biodiesel V which is sold or used in such person's trade or
business, the Secretary shall pay (without interest) to such
person an amount equal to the per gallon applicable biodiesel
mixture rate (as defined in section 40B(b)(1)(B)) with
respect to such fuel.''.
(3) Effective date.--The amendments made by this subsection
shall apply to any fuel sold after the date of the enactment
of this Act, and before January 1, 2006.
(c) Highway Trust Fund Held Harmless.--There are hereby
transferred (from time to time) from the funds of the
Commodity Credit Corporation amounts determined by the
Secretary of the Treasury to be equivalent to the reductions
that would occur (but for this subsection) in the receipts of
the Highway Trust Fund by reason of the amendments made by
this section.
SEC. 209. CREDIT FOR TAXPAYERS OWNING COMMERCIAL POWER
TAKEOFF VEHICLES.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business-related credits), as amended
by section 703, is amended by adding at the end the following
new section:
``SEC. 45N. COMMERCIAL POWER TAKEOFF VEHICLES CREDIT.
``(a) General Rule.--For purposes of section 38, the amount
of the commercial power takeoff vehicles credit determined
under this section for the taxable year is $250 for each
qualified commercial power takeoff vehicle owned by the
taxpayer as of the close of the calendar year in which or
with which the taxable year of the taxpayer ends.
``(b) Definitions.--For purposes of this section--
``(1) Qualified commercial power takeoff vehicle.--The term
`qualified commercial power takeoff vehicle' means any
highway vehicle described in paragraph (2) which is propelled
by any fuel subject to tax under section 4041 or 4081 if such
vehicle is used in a trade or business or for the production
of income (and is licensed and insured for such use).
``(2) Highway vehicle described.--A highway vehicle is
described in this paragraph if such vehicle is--
``(A) designed to engage in the daily collection of refuse
or recyclables from homes or businesses and is equipped with
a mechanism under which the vehicle's propulsion engine
provides the power to operate a load compactor, or
``(B) designed to deliver ready mixed concrete on a daily
basis and is equipped with a mechanism under which the
vehicle's propulsion engine provides the power to operate a
mixer drum to agitate and mix the product en route to the
delivery site.
``(c) Exception for Vehicles Used by Governments, Etc.--No
credit shall be allowed under this section for any vehicle
owned by any person at the close of a calendar year if such
vehicle is used at any time during such year by--
``(1) the United States or an agency or instrumentality
thereof, a State, a political subdivision of a State, or an
agency or instrumentality of one or more States or political
subdivisions, or
``(2) an organization exempt from tax under section 501(a).
``(d) Denial of Double Benefit.--The amount of any
deduction under this subtitle for any tax imposed by
subchapter B of chapter 31 or part III of subchapter A of
chapter 32 for any taxable year shall be reduced (but not
below zero) by the amount of the credit determined under this
subsection for such taxable year.
``(e) Termination.--This section shall not apply with
respect to any calendar year after 2004.''.
(b) Credit Made Part of General Business Credit.--
Subsection (b) of section 38 (relating to general business
credit), as amended by section 703, is amended by striking
``plus'' at the end of paragraph (23), by striking the period
at the end of paragraph (24) and inserting ``, plus'', and by
adding at the end the following new paragraph:
``(25) the commercial power takeoff vehicles credit under
section 45N(a).''.
(c) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1, as amended by
section 703, is amended by adding at the end the following
new item:
``Sec. 45N. Commercial power takeoff vehicles credit.''.
(d) Regulations.--Not later than January 1, 2005, the
Secretary of the Treasury, in consultation with the Secretary
of Energy, shall by regulation provide for the method of
determining the exemption from any excise tax imposed under
section 4041 or 4081 of the Internal Revenue Code of 1986 on
fuel used through a mechanism to power equipment attached to
a highway vehicle as described in section 45N(b)(2) of such
Code, as added by subsection (a).
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
TITLE III--CONSERVATION AND ENERGY EFFICIENCY PROVISIONS
SEC. 301. CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT
HOME.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits), as amended
by this Act, is amended by adding at the end the following
new section:
``SEC. 45G. NEW 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
aggregate adjusted bases of all energy efficient property
installed in a qualifying new home during construction of
such home.
``(b) Limitations.--
``(1) Maximum credit.--
``(A) In general.--The credit allowed by this section with
respect to a qualifying new home shall not exceed--
``(i) in the case of a 30-percent home, $1,250, and
``(ii) in the case of a 50-percent home, $2,000.
``(B) 30- or 50-percent home.--For purposes of subparagraph
(A)--
``(i) 30-percent home.--The term `30-percent home' means a
qualifying new home which is certified to have a projected
level of annual heating and cooling energy consumption,
measured in terms of average annual energy cost to the
homeowner, which is at least 30 percent less than the annual
level of heating and cooling energy consumption of a
reference qualifying new home constructed in accordance with
the standards of chapter 4 of the 2000 International Energy
Conservation Code, or a qualifying new home which is a
manufactured home which meets the applicable standards of the
Energy Star program managed jointly by the Environmental
Protection Agency and the Department of Energy.
``(ii) 50-percent home.--The term `50-percent home' means a
qualifying new home which is certified to have a projected
level of annual heating and cooling energy consumption,
measured in terms of average annual energy cost to the
homeowner, which is at least 50 percent less than such annual
level of heating and cooling energy consumption.
``(C) Prior credit amounts on same home taken into
account.--If a credit was allowed under subsection (a) with
respect to a qualifying new home in 1 or more prior taxable
years, the amount of the credit otherwise allowable for the
taxable year with respect to that home shall not exceed the
amount under clause (i) or (ii) of subparagraph (A) (as the
case may be), reduced by the sum of the credits allowed under
subsection (a) with respect to the home for all prior taxable
years.
``(2) Coordination with rehabilitation and energy
credits.--For purposes of this section--
``(A) the basis of any property referred to in subsection
(a) shall be reduced by that portion of the basis of any
property which is attributable to the rehabilitation credit
(as determined under section 47(a)) or to the energy
percentage of energy property (as determined under section
48(a)), and
``(B) expenditures taken into account under either section
47 or 48(a) shall not be taken into account under this
section.
``(c) Definitions.--For purposes of this section--
``(1) Eligible contractor.--The term `eligible contractor'
means the person who constructed the qualifying new 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) Energy efficient property.--The term `energy
efficient property' means any energy efficient building
envelope component, and any energy efficient heating or
cooling equipment which can, individually or in combination
with other components, meet the requirements of this section.
``(3) Qualifying new home.--The term `qualifying new home'
means a dwelling--
``(A) located in the United States,
[[Page S3530]]
``(B) the construction of which is substantially completed
after the date of the enactment of this section, and
``(C) the first use of which after construction is as a
principal residence (within the meaning of section 121).
``(4) Construction.--The term `construction' includes
reconstruction and rehabilitation.
``(5) Building envelope component.--The term `building
envelope component' means--
``(A) any insulation material or system which is
specifically and primarily designed to reduce the heat loss
or gain of a qualifying new home when installed in or on such
home, and
``(B) exterior windows (including skylights) and doors.
``(6) Manufactured home included.--The term `qualifying new
home' includes a manufactured home conforming to Federal
Manufactured Home Construction and Safety Standards (24
C.F.R. 3280).
``(d) Certification.--
``(1) Method of certification.--
``(A) In general.--A certification described in subsection
(b)(1)(B) shall be determined either by a component-based
method or a performance-based method.
``(B) Component-based method.--A component-based method is
a method which uses the applicable technical energy
efficiency specifications or ratings (including product
labeling requirements) for the energy efficient building
envelope component or energy efficient heating or cooling
equipment. The Secretary shall, in consultation with the
Administrator of the Environmental Protection Agency, develop
prescriptive component-based packages that are equivalent in
energy performance to properties that qualify under
subparagraph (C).
``(C) Performance-based method.--
``(i) In general.--A performance-based method is a method
which calculates projected energy usage and cost reductions
in the qualifying new home in relation to a reference
qualifying new home--
``(I) heated by the same energy source and heating system
type, and
``(II) constructed in accordance with the standards of
chapter 4 of the 2000 International Energy Conservation Code.
``(ii) Computer software.--Computer software shall be used
in support of a performance-based method certification under
clause (i). Such software shall meet procedures and methods
for calculating energy and cost savings in regulations
promulgated by the Secretary of Energy. Such regulations on
the specifications for software and verification protocols
shall be based on the 2001 California Residential Alternative
Calculation Method Approval Manual.
``(2) Provider.--A certification described in subsection
(b)(1)(B) shall be provided by--
``(A) in the case of a component-based method, a local
building regulatory authority, a utility, a manufactured home
production inspection primary inspection agency (IPIA), or a
home energy rating organization, or
``(B) in the case of a performance-based method, an
individual recognized by an organization designated by the
Secretary for such purposes.
``(3) Form.--
``(A) In general.--A certification described in subsection
(b)(1)(B) shall be made in writing in a manner that specifies
in readily verifiable fashion the energy efficient building
envelope components and energy efficient heating or cooling
equipment installed and their respective rated energy
efficiency performance, and in the case of a performance-
based method, accompanied by a written analysis documenting
the proper application of a permissible energy performance
calculation method to the specific circumstances of such
qualifying new home.
``(B) Form provided to buyer.--A form documenting the
energy efficient building envelope components and energy
efficient heating or cooling equipment installed and their
rated energy efficiency performance shall be provided to the
buyer of the qualifying new home. 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.
``(C) Ratings label affixed in dwelling.--A permanent label
documenting the ratings in subparagraph (B) shall be affixed
to the front of the electrical distribution panel of the
qualifying new home, or shall be otherwise permanently
displayed in a readily inspectable location in such home.
``(4) Regulations.--
``(A) In general.--In prescribing regulations under this
subsection for performance-based certification methods, the
Secretary, 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, shall prescribe procedures for
calculating annual energy usage and cost reductions for
heating and cooling and for the reporting of the results.
Such regulations shall--
``(i) provide that any calculation procedures be fuel
neutral such that the same energy efficiency measures allow a
qualifying new home to be eligible for the credit under this
section regardless of whether such home uses a gas or oil
furnace or boiler or an electric heat pump, and
``(ii) require that any computer software allow for the
printing of the Federal tax forms necessary for the credit
under this section and for the printing of forms for
disclosure to the homebuyer.
``(B) Providers.--For purposes of paragraph (2)(B), the
Secretary shall establish requirements for the designation of
individuals based on the requirements for energy consultants
and home energy raters specified by the Mortgage Industry
National Accreditation Procedures for Home Energy Rating
Systems.
``(e) Termination.--Subsection (a) shall apply to
qualifying new homes purchased during the period beginning on
the date of the enactment of this section and ending on
December 31, 2007.''.
(b) Credit Made Part of General Business Credit.--
Subsection (b) of section 38 (relating to current year
business credit), as amended by this Act, 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 new energy efficient home credit determined
under section 45G(a).''.
(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 new subsection:
``(d) New Energy Efficient Home Expenses.--No deduction
shall be allowed for that portion of expenses for a
qualifying new 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 45G(a).''.
(d) Limitation on Carryback.--Subsection (d) of section 39,
as amended by this Act, is amended by adding at the end the
following new paragraph:
``(13) No carryback of new 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 45G may be carried back to
any taxable year ending on or before the date of the
enactment of such section.''.
(e) Deduction for Certain Unused Business Credits.--
Subsection (c) of section 196, as amended by this Act, is
amended by striking ``and'' at the end of paragraph (10), by
striking the period at the end of paragraph (11) and
inserting ``, and'', and by adding after paragraph (11) the
following new paragraph:
``(12) the new energy efficient home credit determined
under section 45G(a).''.
(f) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1, as amended by this
Act, is amended by adding at the end the following new item:
``Sec. 45G. New energy efficient home credit.''.
(g) Effective Date.--The amendments made by this section
shall apply to taxable years ending after the date of the
enactment of this Act.
SEC. 302. 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 this Act, is amended by adding at the end the following
new section:
``SEC. 45H. 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 the eligible
production of qualified energy efficient appliances produced
by the taxpayer during the calendar year ending with or
within the taxable year.
``(b) Applicable Amount; Eligible Production.--For purposes
of subsection (a)--
``(1) Applicable amount.--The applicable amount is--
``(A) $50, in the case of--
``(i) a clothes washer which is manufactured with at least
a 1.26 MEF, or
``(ii) a refrigerator which consumes at least 10 percent
less kWh per year than the energy conservation standards for
refrigerators promulgated by the Department of Energy
effective July 1, 2001, and
``(B) $100, in the case of--
``(i) a clothes washer which is manufactured with at least
a 1.42 MEF (at least 1.5 MEF for washers produced after
2004), or
``(ii) a refrigerator which consumes at least 15 percent
less kWh per year than such energy conservation standards.
``(2) Eligible production.--
``(A) In general.--The eligible production of each category
of qualified energy efficient appliances is the excess of--
``(i) the number of appliances in such category which are
produced by the taxpayer during such calendar year, over
``(ii) the average number of appliances in such category
which were produced by the taxpayer during calendar years
2000, 2001, and 2002.
``(B) Categories.--For purposes of subparagraph (A), the
categories are--
``(i) clothes washers described in paragraph (1)(A)(i),
``(ii) clothes washers described in paragraph (1)(B)(i),
``(iii) refrigerators described in paragraph (1)(A)(ii),
and
``(iv) refrigerators described in paragraph (1)(B)(ii).
``(c) Limitation on Maximum Credit.--
[[Page S3531]]
``(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)(A), and
``(B) $30,000,000 with respect to the credit determined
under subsection (b)(1)(B).
``(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) Definitions.--For purposes of this section--
``(1) Qualified energy efficient appliance.--The term
`qualified energy efficient appliance' means--
``(A) a clothes washer described in subparagraph (A)(i) or
(B)(i) of subsection (b)(1), or
``(B) a refrigerator described in subparagraph (A)(ii) or
(B)(ii) of subsection (b)(1).
``(2) Clothes washer.--The term `clothes washer' means a
residential clothes washer, including a residential style
coin operated washer.
``(3) Refrigerator.--The term `refrigerator' means an
automatic defrost refrigerator-freezer which has an internal
volume of at least 16.5 cubic feet.
``(4) MEF.--The term `MEF' means Modified Energy Factor (as
determined by the Secretary of Energy).
``(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 1
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--
``(1) with respect to refrigerators described in subsection
(b)(1)(A)(ii) produced after December 31, 2004, and
``(2) with respect to all other qualified energy efficient
appliances produced after December 31, 2006.''.
(b) Limitation on Carryback.--Section 39(d) (relating to
transition rules), as amended by this Act, is amended by
adding at the end the following new paragraph:
``(14) 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
45H may be carried to a taxable year ending on or before the
date of the enactment of such section.''.
(c) Conforming Amendment.--Section 38(b) (relating to
general business credit), as amended by this Act, is amended
by striking ``plus'' at the end of paragraph (17), by
striking the period at the end of paragraph (18) and
inserting ``, plus'', and by adding at the end the following
new paragraph:
``(19) the energy efficient appliance credit determined
under section 45H(a).''.
(d) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1, as amended by this
Act, is amended by adding at the end the following new item:
``Sec. 45H. Energy efficient appliance credit.''.
(e) Effective Date.--The amendments made by this section
shall apply to appliances produced after the date of the
enactment of this Act, in taxable years ending after such
date.
SEC. 303. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.
(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 new
section:
``SEC. 25C. RESIDENTIAL ENERGY EFFICIENT 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 made by the taxpayer during such year,
``(2) 15 percent of the qualified solar water heating
property expenditures made by the taxpayer during such year,
``(3) 30 percent of the qualified fuel cell property
expenditures made by the taxpayer during such year,
``(4) 30 percent of the qualified wind energy property
expenditures made by the taxpayer during such year, and
``(5) the sum of the qualified Tier 2 energy efficient
building property expenditures made by the taxpayer during
such year.
``(b) Limitations.--
``(1) Maximum credit.--The credit allowed under subsection
(a) shall not exceed--
``(A) $2,000 for property described in subsection (d)(1),
``(B) $2,000 for property described in subsection (d)(2),
``(C) $1,000 for each kilowatt of capacity of property
described in subsection (d)(4),
``(D) $2,000 for property described in subsection (d)(5),
and
``(E) for property described in subsection (d)(6)--
``(i) $75 for each electric heat pump water heater,
``(ii) $250 for each electric heat pump,
``(iii) $250 for each advanced natural gas furnace,
``(iv) $250 for each central air conditioner,
``(v) $75 for each natural gas water heater, and
``(vi) $250 for each geothermal heat pump.
``(2) 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,
``(B) in the case of a photovoltaic property, a fuel cell
property, or a wind energy property, such property meets
appropriate fire and electric code requirements, and
``(C) in the case of property described in subsection
(d)(6), such property meets the performance and quality
standards, and the certification requirements (if any),
which--
``(i) have been prescribed by the Secretary by regulations
(after consultation with the Secretary of Energy or the
Administrator of the Environmental Protection Agency, as
appropriate),
``(ii) in the case of the energy efficiency ratio (EER)--
``(I) require measurements to be based on published data
which is tested by manufacturers at 95 degrees Fahrenheit,
and
``(II) do not require ratings to be based on certified data
of the Air Conditioning and Refrigeration Institute, and
``(iii) are in effect at the time of the acquisition of the
property.
``(c) Carryforward of Unused Credit.--If the credit
allowable under subsection (a) exceeds the limitation imposed
by section 26(a) for such taxable year reduced by the sum of
the credits allowable under this subpart (other than this
section and section 25D), such excess shall be carried to the
succeeding taxable year and added to the credit allowable
under subsection (a) for such succeeding taxable year.
``(d) Definitions.--For purposes of this section--
``(1) Qualified solar water heating property expenditure.--
The term `qualified solar water heating property expenditure'
means an expenditure for property to heat water for use in a
dwelling unit located in the United States and used as a
residence by the taxpayer if at least half of the energy used
by such property for such purpose is derived from the sun.
``(2) Qualified photovoltaic property expenditure.--The
term `qualified photovoltaic property expenditure' means an
expenditure for property that uses solar energy to generate
electricity for use in such a dwelling unit.
``(3) 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.
``(4) Qualified fuel cell property expenditure.--The term
`qualified fuel cell property expenditure' means an
expenditure for qualified fuel cell property (as defined in
section 48(a)(4)) installed on or in connection with such a
dwelling unit.
``(5) 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 such a dwelling unit.
``(6) Qualified tier 2 energy efficient building property
expenditure.--
``(A) In general.--The term `qualified Tier 2 energy
efficient building property expenditure' means an expenditure
for any Tier 2 energy efficient building property.
``(B) Tier 2 energy efficient building property.--The term
`Tier 2 energy efficient building property' means--
``(i) an electric heat pump water heater which yields an
energy factor of at least 1.7 in the standard Department of
Energy test procedure,
``(ii) an electric heat pump which has a heating seasonal
performance factor (HSPF) of at least 9, a seasonal energy
efficiency ratio (SEER) of at least 15, and an energy
efficiency ratio (EER) of at least 12.5,
``(iii) an advanced natural gas furnace which achieves at
least 95 percent annual fuel utilization efficiency (AFUE),
``(iv) a central air conditioner which has a seasonal
energy efficiency ratio (SEER) of at least 15 and an energy
efficiency ratio (EER) of at least 12.5,
``(v) a natural gas water heater which has an energy factor
of at least 0.80 in the standard Department of Energy test
procedure, and
``(vi) a geothermal heat pump which has an energy
efficiency ratio (EER) of at least 21.
``(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),
(4), (5), or (6) and for piping or wiring to interconnect
such property to the dwelling
[[Page S3532]]
unit shall be taken into account for purposes of this
section.
``(8) Swimming pools, etc., used as 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.
``(e) 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 the individual owns, such individual
shall be treated as having made the individual's
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) Allocation in certain cases.--Except in the case of
qualified wind energy property expenditures, if less than 80
percent of the use of an item is for nonbusiness purposes,
only that portion of the expenditures for such item which is
properly allocable to use for nonbusiness purposes shall be
taken into account.
``(5) 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.
``(6) Property financed by subsidized energy financing.--
For purposes of determining the amount of expenditures made
by any individual with respect to any dwelling unit, there
shall not be taken in to account expenditures which are made
from subsidized energy financing (as defined in section
48(a)(5)(C)).
``(f) 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.
``(g) Termination.--The credit allowed under this section
shall not apply to expenditures after December 31, 2007.''.
(b) Credit Allowed Against Regular Tax and Alternative
Minimum Tax.--
(1) In general.--Section 25C(b), as added by subsection
(a), is amended by adding at the end the following new
paragraph:
``(3) Limitation based on amount of tax.--The credit
allowed under subsection (a) for the taxable year shall not
exceed the excess of--
``(A) the sum of the regular tax liability (as defined in
section 26(b)) plus the tax imposed by section 55, over
``(B) the sum of the credits allowable under this subpart
(other than this section and section 25D) and section 27 for
the taxable year.''.
(2) Conforming amendments.--
(A) Section 25C(c), as added by subsection (a), is amended
by striking ``section 26(a) for such taxable year reduced by
the sum of the credits allowable under this subpart (other
than this section and section 25D)'' and inserting
``subsection (b)(3)''.
(B) Section 23(b)(4)(B) is amended by inserting ``and
section 25C'' after ``this section''.
(C) Section 24(b)(3)(B) is amended by striking ``23 and
25B'' and inserting ``23, 25B, and 25C''.
(D) Section 25(e)(1)(C) is amended by inserting ``25C,''
after ``25B,''.
(E) Section 25B(g)(2) is amended by striking ``section 23''
and inserting ``sections 23 and 25C''.
(F) Section 26(a)(1) is amended by striking ``and 25B'' and
inserting ``25B, and 25C''.
(G) Section 904(h) is amended by striking ``and 25B'' and
inserting ``25B, and 25C''.
(H) Section 1400C(d) is amended by striking ``and 25B'' and
inserting ``25B, and 25C''.
(c) Additional Conforming Amendments.--
(1) Section 23(c), as in effect for taxable years beginning
before January 1, 2004, is amended by striking ``section
1400C'' and inserting ``sections 25C and 1400C''.
(2) Section 25(e)(1)(C), as in effect for taxable years
beginning before January 1, 2004, is amended by inserting ``,
25Cs,'' after ``sections 23''.
(3) Subsection (a) of section 1016, as amended by this Act,
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 adding at the end the following
new paragraph:
``(31) to the extent provided in section 25C(f), in the
case of amounts with respect to which a credit has been
allowed under section 25C.''.
(4) Section 1400C(d), as in effect for taxable years
beginning before January 1, 2004, is amended by inserting
``and section 25C'' after ``this section''.
(5) 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 new item:
``Sec. 25C. Residential energy efficient property.''.
(d) Effective Dates.--
(1) In general.--Except as provided by paragraph (2), the
amendments made by this section shall apply to expenditures
after the date of the enactment of this Act, in taxable years
ending after such date.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to taxable years beginning after December 31,
2003.
SEC. 304. CREDIT FOR BUSINESS INSTALLATION OF QUALIFIED FUEL
CELLS AND STATIONARY MICROTURBINE POWER PLANTS.
(a) In General.--Subparagraph (A) of section 48(a)(3)
(defining energy property) is amended by striking ``or'' at
the end of clause (i), by adding ``or'' at the end of clause
(ii), and by inserting after clause (ii) the following new
clause:
``(iii) qualified fuel cell property or qualified
microturbine property,''.
(b) Qualified Fuel Cell Property; Qualified Microturbine
Property.--Subsection (a) of section 48 is amended by
redesignating paragraphs (4) and (5) as paragraphs (5) and
(6), respectively, and by inserting after paragraph (3) the
following new paragraph:
``(4) Qualified fuel cell property; qualified microturbine
property.--For purposes of this subsection--
``(A) Qualified fuel cell property.--
``(i) In general.--The term `qualified fuel cell property'
means a fuel cell power plant that--
``(I) generates at least 0.5 kilowatt of electricity using
an electrochemical process, and
``(II) has an electricity-only generation efficiency
greater than 30 percent.
``(ii) Limitation.--In the case of qualified fuel cell
property placed in service during the taxable year, the
credit determined under paragraph (1) for such year with
respect to such property shall not exceed an amount equal to
the lesser of--
``(I) 30 percent of the basis of such property, or
``(II) $500 for each 0.5 kilowatt of capacity of such
property.
``(iii) Fuel cell power plant.--The term `fuel cell power
plant' means an integrated system comprised of a fuel cell
stack assembly and associated balance of plant components
that converts a fuel into electricity using electrochemical
means.
``(iv) Termination.--Such term shall not include any
property placed in service after December 31, 2007.
``(B) Qualified microturbine property.--
``(i) In general.--The term ``qualified microturbine
property' means a stationary microturbine power plant which
has an electricity-only generation efficiency not less than
26 percent at International Standard Organization conditions.
``(ii) Limitation.--In the case of qualified microturbine
property placed in service during the taxable year, the
credit determined under paragraph (1) for such year with
respect to such property shall not exceed an amount equal to
the lesser of--
``(I) 10 percent of the basis of such property, or
``(II) $200 for each kilowatt of capacity of such property.
``(iii) Stationary microturbine power plant.--The term
`stationary microturbine power plant means a system
comprising of a rotary engine which is actuated by the
aerodynamic reaction or impulse or both on radial or axial
curved full-circumferential-admission airfoils on a central
axial rotating spindle. Such system--
``(I) commonly includes an air compressor, combustor, gas
pathways which lead compressed air to the combustor and which
lead hot combusted gases from the combustor to 1 or more
rotating turbine spools, which in turn drive the compressor
and power output shaft,
[[Page S3533]]
``(II) includes a fuel compressor, recuperator/regenerator,
generator or alternator, integrated combined cycle equipment,
cooling-heating-and-power equipment, sound attenuation
apparatus, and power conditioning equipment, and
``(III) includes all secondary components located between
the existing infrastructure for fuel delivery and the
existing infrastructure for power distribution, including
equipment and controls for meeting relevant power standards,
such as voltage, frequency, and power factors.
``(iv) Termination.--Such term shall not include any
property placed in service after December 31, 2006.''.
(c) Limitation.--Section 48(a)(2)(A) (relating to energy
percentage) is amended to read as follows:
``(A) In general.--The energy percentage is--
``(i) in the case of qualified fuel cell property, 30
percent, and
``(ii) in the case of any other energy property, 10
percent.''.
(d) Conforming Amendments.--
(A) Section 29(b)(3)(A)(i)(III) is amended by striking
``section 48(a)(4)(C)'' and inserting ``section
48(a)(5)(C)''.
(B) Section 48(a)(1) is amended by inserting ``except as
provided in subparagraph (A)(ii) or (B)(ii) of paragraph
(4),'' before ``the energy''.
(e) Effective Date.--The amendments made by this subsection
shall apply to property placed in service after the date of
the enactment of this Act, 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. 305. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
(a) In General.--Part VI of subchapter B of chapter 1 is
amended by inserting after section 179A the following new
section:
``SEC. 179B. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.
``(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 (2)). Such term includes
expenditures for labor costs properly allocable to the onsite
preparation, assembly, or original installation of the
property.
``(2) Energy efficient commercial building property.--For
purposes of paragraph (1)--
``(A) 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 (5).
``(B) 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 2001 California
Nonresidential Alternative Calculation Method Approval
Manual. These regulations shall meet the following
requirements:
``(i) 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.
``(ii) 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,
``(II) 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, or
``(III) 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
clause (iii).
``(iii) 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.
``(iv) The calculational methods under this subparagraph
need not comply fully with section 11 of such Standard 90.1-
1999.
``(v) The calculational methods shall be fuel neutral, such
that the same energy efficiency features shall qualify a
building for the deduction under this subsection regardless
of whether the heating source is a gas or oil furnace or an
electric heat pump.
``(vi) 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 2001 California Nonresidential Alternative Calculation
Method Approval 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 that
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 that
exceeds typical performance.
``(C) Computer software.--
``(i) In general.--Any calculation under this paragraph
shall be prepared by qualified computer software.
``(ii) Qualified computer software.--For purposes of this
subparagraph, 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 subsection, and
``(III) which provides a notice form which summarizes the
energy efficiency features of the building and its projected
annual energy costs.
``(3) 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 subsection.
``(4) 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 (2)(C)(ii)(III).
``(5) Certification.--
``(A) In general.--Except as provided in this paragraph,
the Secretary shall prescribe procedures for the inspection
and testing for compliance of buildings that are comparable,
given the difference between commercial and residential
buildings, to the requirements in the Mortgage Industry
National Accreditation Procedures for Home Energy Rating
Systems.
``(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. The Secretary may qualify a Home Ratings
Systems Organization, a local building code agency, a State
or local energy office, a utility, or any other organization
which meets the requirements prescribed under this section.
``(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.
``(e) Basis Reduction.--For purposes of this subtitle, if a
deduction is allowed under this section with respect to any
energy efficient commercial building property, the
[[Page S3534]]
basis of such property shall be reduced by the amount of the
deduction so allowed.
``(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 (d)(5) on or before December 31, 2007, and
``(2) the construction of which is not completed on or
before December 31, 2009.''.
(b) Conforming Amendments.--
(1) Section 1016(a), as amended by this Act, 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 new paragraph:
``(32) to the extent provided in section 179B(e).''.
(2) Section 1245(a) is amended by inserting ``179B,'' after
``179A,'' both places it appears in paragraphs (2)(C) and
(3)(C).
(3) Section 1250(b)(3) is amended by inserting before the
period at the end of the first sentence ``or by section
179B''.
(4) Section 263(a)(1) is amended by striking ``or'' at the
end of subparagraph (G), by striking the period at the end of
subparagraph (H) and inserting ``, or'', and by inserting
after subparagraph (H) the following new subparagraph:
``(I) expenditures for which a deduction is allowed under
section 179B.''.
(5) Section 312(k)(3)(B) is amended by striking ``or 179A''
each place it appears in the heading and text and inserting
``, 179A, or 179B''.
(c) Clerical Amendment.--The table of sections for part VI
of subchapter B of chapter 1 is amended by inserting after
section 179A the following new item:
``Sec. 179B. Energy efficient commercial buildings deduction.''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 306. ALLOWANCE OF DEDUCTION FOR QUALIFIED NEW OR
RETROFITTED ENERGY MANAGEMENT DEVICES.
(a) In General.--Part VI of subchapter B of chapter 1
(relating to itemized deductions for individuals and
corporations), as amended by this Act, is amended by
inserting after section 179B the following new section:
``SEC. 179C. DEDUCTION FOR QUALIFIED NEW OR RETROFITTED
ENERGY MANAGEMENT DEVICES.
``(a) Allowance of Deduction.--In the case of a taxpayer
who is a supplier of electric energy or natural gas or a
provider of electric energy or natural gas services, there
shall be allowed as a deduction an amount equal to the cost
of each qualified energy management device placed in service
during the taxable year.
``(b) Maximum Deduction.--The deduction allowed by this
section with respect to each qualified energy management
device shall not exceed $30.
``(c) Qualified Energy Management Device.--The term
`qualified energy management device' means any tangible
property to which section 168 applies if such property is a
meter or metering device--
``(1) which is acquired and used by the taxpayer to enable
consumers to manage their purchase or use of electricity or
natural gas in response to energy price and usage signals,
and
``(2) which permits reading of energy price and usage
signals on at least a daily basis.
``(d) Property Used Outside the United States Not
Qualified.--No deduction shall be allowed under subsection
(a) with respect to property which is used predominantly
outside the United States or with respect to the portion of
the cost of any property taken into account under section
179.
``(e) Basis Reduction.--
``(1) In general.--For purposes of this title, the basis of
any property shall be reduced by the amount of the deduction
with respect to such property which is allowed by subsection
(a).
``(2) Ordinary income recapture.--For purposes of section
1245, the amount of the deduction allowable under subsection
(a) with respect to any property that is of a character
subject to the allowance for depreciation shall be treated as
a deduction allowed for depreciation under section 167.''.
(b) Conforming Amendments.--
(1) Section 263(a)(1), as amended by this Act, is amended
by striking ``or'' at the end of subparagraph (H), by
striking the period at the end of subparagraph (I) and
inserting ``, or'', and by inserting after subparagraph (I)
the following new subparagraph:
``(J) expenditures for which a deduction is allowed under
section 179C.''.
(2) Section 312(k)(3)(B), as amended by this Act, is
amended by striking ``or 179B'' each place it appears in the
heading and text and inserting ``, 179B, or 179C''.
(3) Section 1016(a), as amended by this Act, 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 179C(e)(1).''.
(4) Section 1245(a), as amended by this Act, is amended by
inserting ``179C,'' after ``179B,'' both places it appears in
paragraphs (2)(C) and (3)(C).
(5) The table of contents for subpart B of part IV of
subchapter A of chapter 1, as amended by this Act, is amended
by inserting after the item relating to section 179B the
following new item:
``Sec. 179C. Deduction for qualified new or retrofitted energy
management devices.''.
(c) Effective Date.--The amendments made by this section
shall apply to qualified energy management devices placed in
service after the date of the enactment of this Act, in
taxable years ending after such date.
SEC. 307. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR
DEPRECIATION OF QUALIFIED ENERGY MANAGEMENT
DEVICES.
(a) In General.--Subparagraph (A) of section 168(e)(3)
(relating to classification of 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:
``(15) Qualified energy management device.--The term
`qualified energy management device' means any qualified
energy management device as defined in section 179C(c) which
is placed in service by a taxpayer who is a supplier of
electric energy or natural gas or a provider of electric
energy or natural gas services.''.
(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. 308. ENERGY CREDIT FOR COMBINED HEAT AND POWER SYSTEM
PROPERTY.
(a) In General.--Subparagraph (A) of section 48(a)(3)
(defining energy property), as amended by this Act, is
amended by striking ``or'' at the end of clause (ii), by
adding ``or'' at the end of clause (iii), and by inserting
after clause (iii) the following new clause:
``(iv) combined heat and power system property,''.
(b) Combined Heat and Power System Property.--Subsection
(a) of section 48, as amended by this Act, is amended by
redesignating paragraphs (5) and (6) as paragraphs (6) and
(7), respectively, and by inserting after paragraph (4) the
following new paragraph:
``(5) Combined heat and power system property.--For
purposes of this subsection--
``(A) Combined heat and power system property.--The term
`combined heat and power system property' means property
comprising a system--
``(i) 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),
``(ii) which has an electrical capacity of more than 50
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 combination
thereof),
``(iv) the energy efficiency percentage of which exceeds 60
percent (70 percent in the case of a system with an
electrical capacity in excess of 50 megawatts or a mechanical
energy capacity in excess of 67,000 horsepower, or an
equivalent combination of electrical and mechanical energy
capacities), and
``(v) which is placed in service after the date of the
enactment of this paragraph, and before January 1, 2007.
``(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 expected to be consumed
in its normal application, 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 and the percentages under subparagraph
(A)(iii) 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) Public utility property.--
``(I) Accounting rule for public utility property.--If the
combined heat and power system property is public utility
property (as defined in section 168(i)(10)), the taxpayer may
only claim the credit under the subsection if, with respect
to such property, the taxpayer uses a normalization method of
accounting.
[[Page S3535]]
``(II) Certain exception not to apply.--The matter
following paragraph (3)(D) shall not apply to combined heat
and power system property.
``(v) 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, subparagraph
(A) shall be applied without regard to clauses (iii) and (iv)
thereof.
``(C) Extension of depreciation recovery period.--If a
taxpayer is allowed credit under this section for combined
heat and power system property and such property would (but
for this subparagraph) have a class life of 15 years or less
under section 168, such property shall be treated as having a
22-year class life for purposes of section 168.''.
(c) No Carryback of Energy Credit Before Effective Date.--
Subsection (d) of section 39, as amended by this Act, is
amended by adding at the end the following new paragraph:
``(15) 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 with
respect to property described in section 48(a)(5) may be
carried back to a taxable year ending on or before the date
of the enactment of such section.''.
(d) Conforming Amendments.--
(A) Section 25C(e)(6), as added by this Act, is amended by
striking ``section 48(a)(5)(C)'' and inserting ``section
48(a)(6)(C)''.
(B) Section 29(b)(3)(A)(i)(III), as amended by this Act, is
amended by striking ``section 48(a)(5)(C)'' and inserting
``section 48(a)(6)(C)''.
(e) 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. 309. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS TO
EXISTING HOMES.
(a) In General.--Subpart A of part IV of subchapter A of
chapter 1 (relating to nonrefundable personal credits), as
amended by this Act, is amended by inserting after section
25C the following new section:
``SEC. 25D. ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.
``(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 10
percent of the amount paid or incurred by the taxpayer for
qualified energy efficiency improvements installed during
such taxable year.
``(b) Limitations.--
``(1) Maximum credit.--The credit allowed by this section
with respect to a dwelling shall not exceed $300.
``(2) Prior credit amounts for taxpayer on same dwelling
taken into account.--If a credit was allowed to the taxpayer
under subsection (a) with respect to a dwelling in 1 or more
prior taxable years, the amount of the credit otherwise
allowable for the taxable year with respect to that dwelling
shall not exceed the amount of $300 reduced by the sum of the
credits allowed under subsection (a) to the taxpayer with
respect to the dwelling for all prior taxable years.
``(c) Carryforward of Unused Credit.--If the credit
allowable under subsection (a) exceeds the limitation imposed
by section 26(a) for such taxable year reduced by the sum of
the credits allowable under this subpart (other than this
section) for any taxable year, such excess shall be carried
to the succeeding taxable year and added to the credit
allowable under subsection (a) for such succeeding taxable
year.
``(d) Qualified Energy Efficiency Improvements.--For
purposes of this section, the term `qualified energy
efficiency improvements' means any energy efficient building
envelope component which is certified to meet or exceed the
prescriptive criteria for such component in the 2000
International Energy Conservation Code, any energy efficient
building envelope component which is described in subsection
(f)(4)(B) and is certified by the Energy Star program managed
jointly by the Environmental Protection Agency and the
Department of Energy, or any combination of energy efficiency
measures which are certified as achieving at least a 30
percent reduction in heating and cooling energy usage for the
dwelling (as measured in terms of energy cost to the
taxpayer), if--
``(1) such component or combination of measures is
installed in or on a dwelling--
``(A) located in the United States, and
``(B) owned and used by the taxpayer as the taxpayer's
principal residence (within the meaning of section 121),
``(2) the original use of such component or combination of
measures commences with the taxpayer, and
``(3) such component or combination of measures reasonably
can be expected to remain in use for at least 5 years.
``(e) Certification.--
``(1) Methods of certification.--
``(A) Component-based method.--The certification described
in subsection (d) for any component described in such
subsection shall be determined on the basis of applicable
energy efficiency ratings (including product labeling
requirements) for affected building envelope components.
``(B) Performance-based method.--
``(i) In general.--The certification described in
subsection (d) for any combination of measures described in
such subsection shall be--
``(I) determined by comparing the projected heating and
cooling energy usage for the dwelling to such usage for such
dwelling in its original condition, and
``(II) accompanied by a written analysis documenting the
proper application of a permissible energy performance
calculation method to the specific circumstances of such
dwelling.
``(ii) Computer software.--Computer software shall be used
in support of a performance-based method certification under
clause (i). Such software shall meet procedures and methods
for calculating energy and cost savings in regulations
promulgated by the Secretary of Energy. Such regulations on
the specifications for software and verification protocols
shall be based on the 2001 California Residential Alternative
Calculation Method Approval Manual.
``(2) Provider.--A certification described in subsection
(d) shall be provided by--
``(A) in the case of the method described in paragraph
(1)(A), by a third party, such as a local building regulatory
authority, a utility, a manufactured home production
inspection primary inspection agency (IPIA), or a home energy
rating organization, or
``(B) in the case of the method described in paragraph
(1)(B), an individual recognized by an organization
designated by the Secretary for such purposes.
``(3) Form.--A certification described in subsection (d)
shall be made in writing on forms which specify in readily
inspectable fashion the energy efficient components and other
measures and their respective efficiency ratings, and which
include a permanent label affixed to the electrical
distribution panel of the dwelling.
``(4) Regulations.--
``(A) In general.--In prescribing regulations under this
subsection for certification methods described in paragraph
(1)(B), the Secretary, 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, shall prescribe
procedures for calculating annual energy usage and cost
reductions for heating and cooling and for the reporting of
the results. Such regulations shall--
``(i) provide that any calculation procedures be fuel
neutral such that the same energy efficiency measures allow a
dwelling to be eligible for the credit under this section
regardless of whether such dwelling uses a gas or oil furnace
or boiler or an electric heat pump, and
``(ii) require that any computer software allow for the
printing of the Federal tax forms necessary for the credit
under this section and for the printing of forms for
disclosure to the owner of the dwelling.
``(B) Providers.--For purposes of paragraph (2)(B), the
Secretary shall establish requirements for the designation of
individuals based on the requirements for energy consultants
and home energy raters specified by the Mortgage Industry
National Accreditation Procedures for Home Energy Rating
Systems.
``(f) Definitions and 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 for the qualified energy
efficiency improvements 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 paid his tenant-
stockholder's proportionate share (as defined in section
216(b)(3)) of the cost of qualified energy efficiency
improvements made by such corporation.
``(3) Condominiums.--
``(A) In general.--In the case of an individual who is a
member of a condominium management association with respect
to a condominium which the individual owns, such individual
shall be treated as having paid the individual's
proportionate share of the cost of qualified energy
efficiency improvements made by 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)
[[Page S3536]]
with respect to a condominium project substantially all of
the units of which are used as residences.
``(4) Building envelope component.--The term `building
envelope component' means--
``(A) insulation material or system which is specifically
and primarily designed to reduce the heat loss or gain or a
dwelling when installed in or on such dwelling,
``(B) exterior windows (including skylights), and
``(C) exterior doors.
``(5) Manufactured homes included.--For purposes of this
section, the term `dwelling' includes a manufactured home
which conforms to Federal Manufactured Home Construction and
Safety Standards (24 C.F.R. 3280).
``(g) 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.
``(h) Application of Section.--Subsection (a) shall apply
to qualified energy efficiency improvements installed during
the period beginning on the date of the enactment of this
section and ending on December 31, 2006.''.
(b) Credit Allowed Against Regular Tax and Alternative
Minimum Tax.--
(1) In general.--Section 25D(b), as added by subsection
(a), is amended by adding at the end the following new
paragraph:
``(3) Limitation based on amount of tax.--The credit
allowed under subsection (a) for the taxable year shall not
exceed the excess of--
``(A) the sum of the regular tax liability (as defined in
section 26(b)) plus the tax imposed by section 55, over
``(B) the sum of the credits allowable under this subpart
(other than this section) and section 27 for the taxable
year.''.
(2) Conforming amendments.--
(A) Section 25D(c), as added by subsection (a), is amended
by striking ``section 26(a) for such taxable year reduced by
the sum of the credits allowable under this subpart (other
than this section)'' and inserting ``subsection (b)(3)''.
(B) Section 23(b)(4)(B), as amended by this Act, is amended
by striking ``section 25C'' and inserting ``sections 25C and
25D''.
(C) Section 24(b)(3)(B), as amended by this Act, is amended
by striking ``and 25C'' and inserting ``25C, and 25D''.
(D) Section 25(e)(1)(C), as amended by this Act, is amended
by inserting ``25D,'' after ``25C,''.
(E) Section 25B(g)(2), as amended by this Act, is amended
by striking ``23 and 25C'' and inserting ``23, 25C, and
25D''.
(F) Section 26(a)(1), as amended by this Act, is amended by
striking ``and 25C'' and inserting ``25C, and 25D''.
(G) Section 904(h), as amended by this Act, is amended by
striking ``and 25C'' and inserting ``25C, and 25D''.
(H) Section 1400C(d), as amended by this Act, is amended by
striking ``and 25C'' and inserting ``25C, and 25D''.
(c) Additional Conforming Amendments.--
(1) Section 23(c), as in effect for taxable years beginning
before January 1, 2004, and as amended by this Act, is
amended by inserting ``, 25D,'' after ``sections 25C''.
(2) Section 25(e)(1)(C), as in effect for taxable years
beginning before January 1, 2004, and as amended by this Act,
is amended by inserting ``25D,'' after ``25C,''.
(3) Subsection (a) of section 1016, as amended by this Act,
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 25D(f), in the
case of amounts with respect to which a credit has been
allowed under section 25D.''.
(4) Section 1400C(d), as in effect for taxable years
beginning before January 1, 2004, and as amended by this Act,
is amended by striking ``section 25C'' and inserting
``sections 25C and 25D''.
(5) The table of sections for subpart A of part IV of
subchapter A of chapter 1, as amended by this Act, is amended
by inserting after the item relating to section 25C the
following new item:
``Sec. 25D. Energy efficiency improvements to existing homes.''.
(d) Effective Dates.--
(1) In general.--Except as provided by paragraph (2), the
amendments made by this section shall apply to expenditures
after the date of the enactment of this Act, in taxable years
ending after such date.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to taxable years beginning after December 31,
2003.
SEC. 310. ALLOWANCE OF DEDUCTION FOR QUALIFIED NEW OR
RETROFITTED WATER SUBMETERING DEVICES.
(a) In General.--Part VI of subchapter B of chapter 1
(relating to itemized deductions for individuals and
corporations), as amended by section 503, is amended by
inserting after section 179D the following new section:
``SEC. 179E. DEDUCTION FOR QUALIFIED NEW OR RETROFITTED WATER
SUBMETERING DEVICES.
``(a) Allowance of Deduction.--In the case of a taxpayer
who is an eligible resupplier, there shall be allowed as a
deduction an amount equal to the cost of each qualified water
submetering device placed in service during the taxable year.
``(b) Maximum Deduction.--The deduction allowed by this
section with respect to each qualified water submetering
device shall not exceed $30.
``(c) Eligible Resupplier.--For purposes of this section,
the term `eligible resupplier' means any taxpayer who
purchases and installs qualified water submetering devices in
every unit in any multi-unit property.
``(d) Qualified Water Submetering Device.--The term
`qualified water submetering device' means any tangible
property to which section 168 applies if such property is a
submetering device (including ancillary equipment)--
``(1) which is purchased and installed by the taxpayer to
enable consumers to manage their purchase or use of water in
response to water price and usage signals, and
``(2) which permits reading of water price and usage
signals on at least a daily basis.
``(e) Property Used Outside the United States Not
Qualified.--No deduction shall be allowed under subsection
(a) with respect to property which is used predominantly
outside the United States or with respect to the portion of
the cost of any property taken into account under section
179.
``(f) Basis Reduction.--
``(1) In general.--For purposes of this title, the basis of
any property shall be reduced by the amount of the deduction
with respect to such property which is allowed by subsection
(a).
``(2) Ordinary income recapture.--For purposes of section
1245, the amount of the deduction allowable under subsection
(a) with respect to any property that is of a character
subject to the allowance for depreciation shall be treated as
a deduction allowed for depreciation under section 167.
``(g) Termination.--This section shall not apply to any
property placed in service after December 31, 2007.''.
(b) Conforming Amendments.--
(1) Section 263(a)(1), as amended by section 503, is
amended by striking ``or'' at the end of subparagraph (J), by
striking the period at the end of subparagraph (K) and
inserting ``, or'', and by inserting after subparagraph (K)
the following new subparagraph:
``(L) expenditures for which a deduction is allowed under
section 179E.''.
(2) Section 312(k)(3)(B), as amended by section 503, is
amended by striking ``or 179D'' each place it appears in the
heading and text and inserting ``, 179D, or 179E''.
(3) Section 1016(a), as amended by section 503, is amended
by striking ``and'' at the end of paragraph (34), by striking
the period at the end of paragraph (35) and inserting ``,
and'', and by adding at the end the following new paragraph:
``(36) to the extent provided in section 179E(f)(1).''.
(4) Section 1245(a), as amended by section 503, is amended
by inserting ``179E,'' after ``179D,'' both places it appears
in paragraphs (2)(C) and (3)(C).
(5) The table of contents for subpart B of part IV of
subchapter A of chapter 1, as amended by section 503, is
amended by inserting after the item relating to section 179D
the following new item:
``Sec. 179E. Deduction for qualified new or retrofitted water
submetering devices.''.
(c) Effective Date.--The amendments made by this section
shall apply to qualified water submetering devices placed in
service after the date of the enactment of this Act, in
taxable years ending after such date.
SEC. 311. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR
DEPRECIATION OF QUALIFIED WATER SUBMETERING
DEVICES.
(a) In General.--Subparagraph (A) of section 168(e)(3)
(relating to classification of 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:
``(16) Qualified water submetering device.--The term
`qualified water submetering device' means any qualified
water submetering device (as defined in section 179E(d))
which is placed in service before January 1, 2008, by a
taxpayer who is an eligible resupplier (as defined in section
179E(c)).''.
(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--CLEAN COAL INCENTIVES
Subtitle A--Credit for Emission Reductions and Efficiency Improvements
in Existing Coal-Based Electricity Generation Facilities
SEC. 401. CREDIT FOR PRODUCTION FROM A QUALIFYING CLEAN COAL
TECHNOLOGY UNIT.
(a) Credit for Production From a Qualifying Clean Coal
Technology Unit.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits), as amended
by this Act, is amended by adding at the end the following
new section:
``SEC. 45I. CREDIT FOR PRODUCTION FROM A QUALIFYING CLEAN
COAL TECHNOLOGY UNIT.
``(a) General Rule.--For purposes of section 38, the
qualifying clean coal technology
[[Page S3537]]
production credit of any taxpayer for any taxable year is
equal to the product of--
``(1) the applicable amount of clean coal technology
production credit, multiplied by
``(2) the applicable percentage of the kilowatt hours of
electricity produced by the taxpayer during such taxable year
at a qualifying clean coal technology unit, but only if such
production occurs during the 10-year period beginning on the
date the unit was returned to service after becoming a
qualifying clean coal technology unit.
``(b) Applicable Amount.--
``(1) In general.--For purposes of this section, the
applicable amount of clean coal technology production credit
is equal to $0.0034.
``(2) Inflation adjustment.--For calendar years after 2004,
the applicable amount of clean coal technology production
credit shall be adjusted by multiplying such amount by the
inflation adjustment factor for the calendar year in which
the amount is applied. If any amount as increased under the
preceding sentence is not a multiple of 0.01 cent, such
amount shall be rounded to the nearest multiple of 0.01 cent.
``(c) Applicable Percentage.--For purposes of this section,
with respect to any qualifying clean coal technology unit,
the applicable percentage is the percentage equal to the
ratio which the portion of the national megawatt capacity
limitation allocated to the taxpayer with respect to such
unit under subsection (e) bears to the total megawatt
capacity of such unit.
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Qualifying clean coal technology unit.--The term
`qualifying clean coal technology unit' means a clean coal
technology unit of the taxpayer which--
``(A) on the date of the enactment of this section was a
coal-based electricity generating steam generator-turbine
unit which was not a clean coal technology unit,
``(B) has a nameplate capacity rating of not more than
300,000 kilowatts,
``(C) becomes a clean coal technology unit as the result of
the retrofitting, repowering, or replacement of the unit with
clean coal technology during the 10-year period beginning on
the date of the enactment of this section,
``(D) is not receiving nor is scheduled to receive funding
under the Clean Coal Technology Program, the Power Plant
Improvement Initiative, or the Clean Coal Power Initiative
administered by the Secretary of Energy, and
``(E) receives an allocation of a portion of the national
megawatt capacity limitation under subsection (e).
``(2) Clean coal technology unit.--The term `clean coal
technology unit' means a unit which--
``(A) uses clean coal technology, including advanced
pulverized coal or atmospheric fluidized bed combustion,
pressurized fluidized bed combustion, integrated gasification
combined cycle, or any other technology for the production of
electricity,
``(B) uses coal to produce 75 percent or more of its
thermal output as electricity,
``(C) has a design net heat rate of at least 500 less than
that of such unit as described in paragraph (1)(A),
``(D) has a maximum design net heat rate of not more than
9,500, and
``(E) meets the pollution control requirements of paragraph
(3).
``(3) Pollution control requirements.--
``(A) In general.--A unit meets the requirements of this
paragraph if--
``(i) its emissions of sulfur dioxide, nitrogen oxide, or
particulates meet the lower of the emission levels for each
such emission specified in--
``(I) subparagraph (B), or
``(II) the new source performance standards of the Clean
Air Act (42 U.S.C. 7411) which are in effect for the category
of source at the time of the retrofitting, repowering, or
replacement of the unit, and
``(ii) its emissions do not exceed any relevant emission
level specified by regulation pursuant to the hazardous air
pollutant requirements of the Clean Air Act (42 U.S.C. 7412)
in effect at the time of the retrofitting, repowering, or
replacement.
``(B) Specific levels.--The levels specified in this
subparagraph are--
``(i) in the case of sulfur dioxide emissions, 50 percent
of the sulfur dioxide emission levels specified in the new
source performance standards of the Clean Air Act (42 U.S.C.
7411) in effect on the date of the enactment of this section
for the category of source,
``(ii) in the case of nitrogen oxide emissions--
``(I) 0.1 pound per million Btu of heat input if the unit
is not a cyclone-fired boiler, and
``(II) if the unit is a cyclone-fired boiler, 15 percent of
the uncontrolled nitrogen oxide emissions from such boilers,
and
``(iii) in the case of particulate emissions, 0.02 pound
per million Btu of heat input.
``(4) Design net heat rate.--The design net heat rate with
respect to any unit, measured in Btu per kilowatt hour
(HHV)--
``(A) shall be based on the design annual heat input to and
the design annual net electrical output from such unit
(determined without regard to such unit's co-generation of
steam),
``(B) shall be adjusted for the heat content of the design
coal to be used by the unit if it is less than 12,000 Btu per
pound according to the following formula:
Design net heat rate = Unit net heat rate X [l- {((12,000-
design coal heat content, Btu per pound)/1,000) X 0.013}],
and
``(C) shall be corrected for the site reference conditions
of--
``(i) elevation above sea level of 500 feet,
``(ii) air pressure of 14.4 pounds per square inch absolute
(psia),
``(iii) temperature, dry bulb of 63 deg.F,
``(iv) temperature, wet bulb of 54 deg.F, and
``(v) relative humidity of 55 percent.
``(5) HHV.--The term `HHV' means higher heating value.
``(6) Application of certain rules.--The rules of
paragraphs (3), (4), and (5) of section 45(d) shall apply.
``(7) Inflation adjustment factor.--
``(A) In general.--The term `inflation adjustment factor'
means, with respect to a calendar year, a fraction the
numerator of which is the GDP implicit price deflator for the
preceding calendar year and the denominator of which is the
GDP implicit price deflator for the calendar year 2003.
``(B) GDP implicit price deflator.--The term `GDP implicit
price deflator' means the most recent revision of the
implicit price deflator for the gross domestic product as
computed by the Department of Commerce before March 15 of the
calendar year.
``(8) Noncompliance with pollution laws.--For purposes of
this section, a unit 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 qualifying clean coal technology unit
during such period.
``(e) National Limitation on the Aggregate Capacity of
Qualifying Clean Coal Technology Units.--
``(1) In general.--For purposes of subsection (d)(1)(E),
the national megawatt capacity limitation for qualifying
clean coal technology units is 4,000 megawatts.
``(2) Allocation of limitation.--The Secretary shall
allocate the national megawatt capacity limitation for
qualifying clean coal technology units in such manner as the
Secretary may prescribe under the regulations under paragraph
(3).
``(3) Regulations.--Not later than 6 months after the date
of the enactment of this section, the Secretary shall
prescribe such regulations as may be necessary or
appropriate--
``(A) to carry out the purposes of this subsection,
``(B) to limit the capacity of any qualifying clean coal
technology unit to which this section applies so that the
combined megawatt capacity allocated to all such units under
this subsection when all such units are placed in service
during the 10-year period described in subsection (d)(1)(C),
does not exceed 4,000 megawatts,
``(C) to provide a certification process under which the
Secretary, in consultation with the Secretary of Energy,
shall approve and allocate the national megawatt capacity
limitation--
``(i) to encourage that units with the highest thermal
efficiencies, when adjusted for the heat content of the
design coal and site reference conditions described in
subsection (d)(4)(C), and environmental performance be placed
in service as soon as possible, and
``(ii) to allocate capacity to taxpayers that have a
definite and credible plan for placing into commercial
operation a qualifying clean coal technology unit,
including--
``(I) a site,
``(II) contractual commitments for procurement and
construction or, in the case of regulated utilities, the
agreement of the State utility commission,
``(III) filings for all necessary preconstruction
approvals,
``(IV) a demonstrated record of having successfully
completed comparable projects on a timely basis, and
``(V) such other factors that the Secretary determines are
appropriate,
``(D) to allocate the national megawatt capacity limitation
to a portion of the capacity of a qualifying clean coal
technology unit if the Secretary determines that such an
allocation would maximize the amount of efficient production
encouraged with the available tax credits,
``(E) to set progress requirements and conditional
approvals so that capacity allocations for clean coal
technology units that become unlikely to meet the necessary
conditions for qualifying can be reallocated by the Secretary
to other clean coal technology units, and
``(F) to provide taxpayers with opportunities to correct
administrative errors and omissions with respect to
allocations and record keeping within a reasonable period
after discovery, taking into account the availability of
regulations and other administrative guidance from the
Secretary.''.
(b) Credit Treated as Business Credit.--Section 38(b), as
amended by this Act, is amended by striking ``plus'' at the
end of paragraph (18), by striking the period at the end of
paragraph (19) and inserting ``, plus'', and by adding at the
end the following new paragraph:
``(20) the qualifying clean coal technology production
credit determined under section 45I(a).''.
(c) Transitional Rule.--Section 39(d) (relating to
transitional rules), as amended by this Act, is amended by
adding at the end the following new paragraph:
``(16) No carryback of section 45i credit before effective
date.--No portion of the unused business credit for any
taxable year which is attributable to the qualifying clean
coal technology production credit determined under section
45I may be carried back
[[Page S3538]]
to a taxable year ending on or before the date of the
enactment of such section.''.
(d) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1, as amended by this
Act, is amended by adding at the end the following new item:
``Sec. 45I. Credit for production from a qualifying clean coal
technology unit.''.
(e) Effective Date.--The amendments made by this section
shall apply to production after the date of the enactment of
this Act, in taxable years ending after such date.
Subtitle B--Incentives for Early Commercial Applications of Advanced
Clean Coal Technologies
SEC. 411. CREDIT FOR INVESTMENT IN QUALIFYING ADVANCED CLEAN
COAL TECHNOLOGY.
(a) Allowance of Qualifying Advanced Clean Coal Technology
Unit Credit.--Section 46 (relating to amount of credit) is
amended by striking ``and'' at the end of paragraph (2), by
striking the period at the end of paragraph (3) and inserting
``, and'', and by adding at the end the following new
paragraph:
``(4) the qualifying advanced clean coal technology unit
credit.''.
(b) Amount of Qualifying Advanced Clean Coal Technology
Unit Credit.--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 new
section:
``SEC. 48A. QUALIFYING ADVANCED CLEAN COAL TECHNOLOGY UNIT
CREDIT.
``(a) In General.--For purposes of section 46, the
qualifying advanced clean coal technology unit credit for any
taxable year is an amount equal to 10 percent of the
applicable percentage of the qualified investment in a
qualifying advanced clean coal technology unit for such
taxable year.
``(b) Qualifying Advanced Clean Coal Technology Unit.--
``(1) In general.--For purposes of subsection (a), the term
`qualifying advanced clean coal technology unit' means an
advanced clean coal technology unit of the taxpayer--
``(A)(i)(I) in the case of a unit first placed in service
after the date of the enactment of this section, the original
use of which commences with the taxpayer, or
``(II) in the case of the retrofitting or repowering of a
unit first placed in service before such date of enactment,
the retrofitting or repowering of which is completed by the
taxpayer after such date, or
``(ii) which is acquired through purchase (as defined by
section 179(d)(2)),
``(B) which is depreciable under section 167,
``(C) which has a useful life of not less than 4 years,
``(D) which is located in the United States,
``(E) which is not receiving nor is scheduled to receive
funding under the Clean Coal Technology Program, the Power
Plant Improvement Initiative, or the Clean Coal Power
Initiative administered by the Secretary of Energy,
``(F) which is not a qualifying clean coal technology unit,
and
``(G) which receives an allocation of a portion of the
national megawatt capacity limitation under subsection (f).
``(2) Special rule for sale-leasebacks.--For purposes of
subparagraph (A) of paragraph (1), in the case of a unit
which--
``(A) is originally placed in service by a person, and
``(B) is sold and leased back by such person, or is leased
to such person, within 3 months after the date such unit was
originally placed in service, for a period of not less than
12 years,
such unit shall be treated as originally placed in service
not earlier than the date on which such unit is used under
the leaseback (or lease) referred to in subparagraph (B). The
preceding sentence shall not apply to any property if the
lessee and lessor of such property make an election under
this sentence. Such an election, once made, may be revoked
only with the consent of the Secretary.
``(3) Noncompliance with pollution laws.--For purposes of
this subsection, a unit 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 qualifying advanced clean coal technology
unit during such period.
``(c) Applicable Percentage.--For purposes of this section,
with respect to any qualifying advanced clean coal technology
unit, the applicable percentage is the percentage equal to
the ratio which the portion of the national megawatt capacity
limitation allocated to the taxpayer with respect to such
unit under subsection (f) bears to the total megawatt
capacity of such unit.
``(d) Advanced Clean Coal Technology Unit.--For purposes of
this section--
``(1) In general.--The term `advanced clean coal technology
unit' means a new, retrofit, or repowering unit of the
taxpayer which--
``(A) is--
``(i) an eligible advanced pulverized coal or atmospheric
fluidized bed combustion technology unit,
``(ii) an eligible pressurized fluidized bed combustion
technology unit,
``(iii) an eligible integrated gasification combined cycle
technology unit, or
``(iv) an eligible other technology unit, and
``(B) meets the carbon emission rate requirements of
paragraph (6).
``(2) Eligible advanced pulverized coal or atmospheric
fluidized bed combustion technology unit.--The term `eligible
advanced pulverized coal or atmospheric fluidized bed
combustion technology unit' means a clean coal technology
unit using advanced pulverized coal or atmospheric fluidized
bed combustion technology which--
``(A) is placed in service after the date of the enactment
of this section and before January 1, 2013, and
``(B) has a design net heat rate of not more than 8,350
(8,750 in the case of units placed in service before 2009).
``(3) Eligible pressurized fluidized bed combustion
technology unit.--The term `eligible pressurized fluidized
bed combustion technology unit' means a clean coal technology
unit using pressurized fluidized bed combustion technology
which--
``(A) is placed in service after the date of the enactment
of this section and before January 1, 2017, and
``(B) has a design net heat rate of not more than 7,720
(8,750 in the case of units placed in service before 2009,
and 8,350 in the case of units placed in service after 2008
and before 2013).
``(4) Eligible integrated gasification combined cycle
technology unit.--The term `eligible integrated gasification
combined cycle technology unit' means a clean coal technology
unit using integrated gasification combined cycle technology,
with or without fuel or chemical co-production, which--
``(A) is placed in service after the date of the enactment
of this section and before January 1, 2017,
``(B) has a design net heat rate of not more than 7,720
(8,750 in the case of units placed in service before 2009,
and 8,350 in the case of units placed in service after 2008
and before 2013), and
``(C) has a net thermal efficiency (HHV) using coal with
fuel or chemical co-production of not less than 43.9 percent
(39 percent in the case of units placed in service before
2009, and 40.9 percent in the case of units placed in service
after 2008 and before 2013).
``(5) Eligible other technology unit.--The term `eligible
other technology unit' means a clean coal technology unit
using any other technology for the production of electricity
which is placed in service after the date of the enactment of
this section and before January 1, 2017.
``(6) Carbon emission rate requirements.--
``(A) In general.--Except as provided in subparagraph (B),
a unit meets the requirements of this paragraph if--
``(i) in the case of a unit using design coal with a heat
content of not more than 9,000 Btu per pound, the carbon
emission rate is less than 0.60 pound of carbon per kilowatt
hour, and
``(ii) in the case of a unit using design coal with a heat
content of more than 9,000 Btu per pound, the carbon emission
rate is less than 0.54 pound of carbon per kilowatt hour.
``(B) Eligible other technology unit.--In the case of an
eligible other technology unit, subparagraph (A) shall be
applied by substituting `0.51' and `0.459' for `0.60' and
`0.54', respectively.
``(e) General Definitions.--Any term used in this section
which is also used in section 45I shall have the meaning
given such term in section 45I.
``(f) National Limitation on the Aggregate Capacity of
Advanced Clean Coal Technology Units.--
``(1) In general.--For purposes of subsection (b)(1)(G),
the national megawatt capacity limitation is--
``(A) for qualifying advanced clean coal technology units
using advanced pulverized coal or atmospheric fluidized bed
combustion technology, not more than 1,000 megawatts (not
more than 500 megawatts in the case of units placed in
service before 2009),
``(B) for such units using pressurized fluidized bed
combustion technology, not more than 500 megawatts (not more
than 250 megawatts in the case of units placed in service
before 2009),
``(C) for such units using integrated gasification combined
cycle technology, with or without fuel or chemical co-
production, not more than 2,000 megawatts (not more than
1,000 megawatts in the case of units placed in service before
2009 and not more than 1,500 megawatts in the case of units
placed in service after 2008 and before 2013), and
``(D) for such units using other technology for the
production of electricity, not more than 500 megawatts (not
more than 250 megawatts in the case of units placed in
service before 2009).
``(2) Allocation of limitation.--The Secretary shall
allocate the national megawatt capacity limitation for
qualifying advanced clean coal technology units in such
manner as the Secretary may prescribe under the regulations
under paragraph (3).
``(3) Regulations.--Not later than 6 months after the date
of the enactment of this section, the Secretary shall
prescribe such regulations as may be necessary or
appropriate--
``(A) to carry out the purposes of this subsection and
section 45J,
``(B) to limit the capacity of any qualifying advanced
clean coal technology unit to which this section applies so
that the combined megawatt capacity of all such units to
which this section applies does not exceed 4,000 megawatts,
``(C) to provide a certification process described in
section 45I(e)(3)(C),
[[Page S3539]]
``(D) to carry out the purposes described in subparagraphs
(D), (E), and (F) of section 45I(e)(3), and
``(E) to reallocate capacity which is not allocated to any
technology described in subparagraphs (A) through (D) of
paragraph (1) because an insufficient number of qualifying
units request an allocation for such technology, to another
technology described in such subparagraphs in order to
maximize the amount of energy efficient production encouraged
with the available tax credits.
``(4) Selection criteria.--For purposes of paragraph
(3)(C), the selection criteria for allocating the national
megawatt capacity limitation to qualifying advanced clean
coal technology units--
``(A) shall be established by the Secretary of Energy as
part of a competitive solicitation,
``(B) shall include primary criteria of minimum design net
heat rate, maximum design thermal efficiency, environmental
performance, and lowest cost to the Government, and
``(C) shall include supplemental criteria as determined
appropriate by the Secretary of Energy.
``(g) Qualified Investment.--For purposes of subsection
(a), the term `qualified investment' means, with respect to
any taxable year, the basis of a qualifying advanced clean
coal technology unit placed in service by the taxpayer during
such taxable year (in the case of a unit described in
subsection (b)(1)(A)(i)(II), only that portion of the basis
of such unit which is properly attributable to the
retrofitting or repowering of such unit).
``(h) Qualified Progress Expenditures.--
``(1) Increase in qualified investment.--In the case of a
taxpayer who has made an election under paragraph (5), the
amount of the qualified investment of such taxpayer for the
taxable year (determined under subsection (g) without regard
to this subsection) shall be increased by an amount equal to
the aggregate of each qualified progress expenditure for the
taxable year with respect to progress expenditure property.
``(2) Progress expenditure property defined.--For purposes
of this subsection, the term `progress expenditure property'
means any property being constructed by or for the taxpayer
and which it is reasonable to believe will qualify as a
qualifying advanced clean coal technology unit which is being
constructed by or for the taxpayer when it is placed in
service.
``(3) Qualified progress expenditures defined.--For
purposes of this subsection--
``(A) Self-constructed property.--In the case of any self-
constructed property, the term `qualified progress
expenditures' means the amount which, for purposes of this
subpart, is properly chargeable (during such taxable year) to
capital account with respect to such property.
``(B) Nonself-constructed property.--In the case of
nonself-constructed property, the term `qualified progress
expenditures' means the amount paid during the taxable year
to another person for the construction of such property.
``(4) Other definitions.--For purposes of this subsection--
``(A) Self-constructed property.--The term `self-
constructed property' means property for which it is
reasonable to believe that more than half of the construction
expenditures will be made directly by the taxpayer.
``(B) Nonself-constructed property.--The term `nonself-
constructed property' means property which is not self-
constructed property.
``(C) Construction, etc.--The term `construction' includes
reconstruction and erection, and the term `constructed'
includes reconstructed and erected.
``(D) Only construction of qualifying advanced clean coal
technology unit to be taken into account.--Construction shall
be taken into account only if, for purposes of this subpart,
expenditures therefor are properly chargeable to capital
account with respect to the property.
``(5) Election.--An election under this subsection may be
made at such time and in such manner as the Secretary may by
regulations prescribe. Such an election shall apply to the
taxable year for which made and to all subsequent taxable
years. Such an election, once made, may not be revoked except
with the consent of the Secretary.
``(i) Coordination With Other Credits.--This section shall
not apply to any property with respect to which the
rehabilitation credit under section 47 or the energy credit
under section 48 is allowed unless the taxpayer elects to
waive the application of such credit to such property.''.
(c) Recapture.--Section 50(a) (relating to other special
rules) is amended by adding at the end the following new
paragraph:
``(6) Special rules relating to qualifying advanced clean
coal technology unit.--For purposes of applying this
subsection in the case of any credit allowable by reason of
section 48A, the following shall apply:
``(A) General rule.--In lieu of the amount of the increase
in tax under paragraph (1), the increase in tax shall be an
amount equal to the investment tax credit allowed under
section 38 for all prior taxable years with respect to a
qualifying advanced clean coal technology unit (as defined by
section 48A(b)(1)) multiplied by a fraction whose numerator
is the number of years remaining to fully depreciate under
this title the qualifying advanced clean coal technology unit
disposed of, and whose denominator is the total number of
years over which such unit would otherwise have been subject
to depreciation. For purposes of the preceding sentence, the
year of disposition of the qualifying advanced clean coal
technology unit shall be treated as a year of remaining
depreciation.
``(B) Property ceases to qualify for progress
expenditures.--Rules similar to the rules of paragraph (2)
shall apply in the case of qualified progress expenditures
for a qualifying advanced clean coal technology unit under
section 48A, except that the amount of the increase in tax
under subparagraph (A) of this paragraph shall be substituted
for the amount described in such paragraph (2).
``(C) Application of paragraph.--This paragraph shall be
applied separately with respect to the credit allowed under
section 38 regarding a qualifying advanced clean coal
technology unit.''.
(d) Transitional Rule.--Section 39(d) (relating to
transitional rules), as amended by this Act, is amended by
adding at the end the following new paragraph:
``(17) No carryback of section 48a credit before effective
date.--No portion of the unused business credit for any
taxable year which is attributable to the qualifying advanced
clean coal technology unit credit determined under section
48A may be carried back to a taxable year ending on or before
the date of the enactment of such section.''.
(e) Technical Amendments.--
(1) Section 49(a)(1)(C) is amended by striking ``and'' at
the end of clause (ii), by striking the period at the end of
clause (iii) and inserting ``, and'', and by adding at the
end the following new clause:
``(iv) the portion of the basis of any qualifying advanced
clean coal technology unit attributable to any qualified
investment (as defined by section 48A(g)).''.
(2) Section 50(a)(4) is amended by striking ``and (2)'' and
inserting ``(2), and (6)''.
(3) Section 50(c) is amended by adding at the end the
following new paragraph:
``(6) Nonapplication.--Paragraphs (1) and (2) shall not
apply to any qualifying advanced clean coal technology unit
credit under section 48A.''.
(4) 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. 48A. Qualifying advanced clean coal technology unit credit.''.
(f) Effective Date.--The amendments made by this section
shall apply to periods after the date of the enactment of
this Act, 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. 412. CREDIT FOR PRODUCTION FROM A QUALIFYING ADVANCED
CLEAN COAL TECHNOLOGY UNIT.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits), as amended
by this Act, is amended by adding at the end the following
new section:
``SEC. 45J. CREDIT FOR PRODUCTION FROM A QUALIFYING ADVANCED
CLEAN COAL TECHNOLOGY UNIT.
``(a) General Rule.--For purposes of section 38, the
qualifying advanced clean coal technology production credit
of any taxpayer for any taxable year is equal to--
``(1) the applicable amount of advanced clean coal
technology production credit, multiplied by
``(2) the applicable percentage (as determined under
section 48A(c)) of the sum of--
``(A) the kilowatt hours of electricity, plus
``(B) each 3,413 Btu of fuels or chemicals,
produced by the taxpayer during such taxable year at a
qualifying advanced clean coal technology unit during the 10-
year period beginning on the date the unit was originally
placed in service (or returned to service after becoming a
qualifying advanced clean coal technology unit).
``(b) Applicable Amount.--For purposes of this section, the
applicable amount of advanced clean coal technology
production credit with respect to production from a
qualifying advanced clean coal technology unit shall be
determined as follows:
``(1) Where the qualifying advanced clean coal technology
unit is producing electricity only:
``(A) In the case of a unit originally placed in service
before 2009, if--
------------------------------------------------------------------------
The applicable amount is:
--------------------------------------
``The design net heat rate is: For 1st 5 years of For 2d 5 years of
such service such service
------------------------------------------------------------------------
Not more than 8,400.............. $.0060 $.0038
More than 8,400 but not more than $.0025 $.0010
8,550.
More than 8,550 but less than $.0010 $.0010.
8,750.
------------------------------------------------------------------------
``(B) In the case of a unit originally placed in service
after 2008 and before 2013, if--
------------------------------------------------------------------------
The applicable amount is:
--------------------------------------
``The design net heat rate is: For 1st 5 years of For 2d 5 years of
such service such service
------------------------------------------------------------------------
Not more than 7,770.............. $.0105 $.0090
More than 7,770 but not more than $.0085 $.0068
8,125.
[[Page S3540]]
More than 8,125 but less than $.0075 $.0055.
8,350.
------------------------------------------------------------------------
``(C) In the case of a unit originally placed in service
after 2012 and before 2017, if--
------------------------------------------------------------------------
The applicable amount is:
--------------------------------------
``The design net heat rate is: For 1st 5 years of For 2d 5 years of
such service such service
------------------------------------------------------------------------
Not more than 7,380.............. $.0140 $.0115
More than 7,380 but not more than $.0120 $.0090.
7,720.
------------------------------------------------------------------------
``(2) Where the qualifying advanced clean coal technology
unit is producing fuel or chemicals:
``(A) In the case of a unit originally placed in service
before 2009, if--
------------------------------------------------------------------------
The applicable amount is:
``The unit design net thermal --------------------------------------
efficiency (HHV) is: For 1st 5 years of For 2d 5 years of
such service such service
------------------------------------------------------------------------
Not less than 40.6 percent....... $.0060 $.0038
Less than 40.6 but not less than $.0025 $.0010
40 percent.
Less than 40 but not less than 39 $.0010 $.0010.
percent.
------------------------------------------------------------------------
``(B) In the case of a unit originally placed in service
after 2008 and before 2013, if--
------------------------------------------------------------------------
The applicable amount is:
``The unit design net thermal --------------------------------------
efficiency (HHV) is: For 1st 5 years of For 2d 5 years of
such service such service
------------------------------------------------------------------------
Not less than 43.6 percent....... $.0105 $.0090
Less than 43.6 but not less than $.0085 $.0068
42 percent.
Less than 42 but not less than $.0075 $.0055.
40.9 percent.
------------------------------------------------------------------------
``(C) In the case of a unit originally placed in service
after 2012 and before 2017, if--
------------------------------------------------------------------------
The applicable amount is:
``The unit design net thermal --------------------------------------
efficiency (HHV) is: For 1st 5 years of For 2d 5 years of
such service such service
------------------------------------------------------------------------
Not less than 44.2 percent....... $.0140 $.0115
Less than 44.2 but not less than $.0120 $.0090.
43.9 percent.
------------------------------------------------------------------------
``(c) Inflation Adjustment.--For calendar years after 2004,
each amount in paragraphs (1) and (2) of subsection (b) shall
be adjusted by multiplying such amount by the inflation
adjustment factor for the calendar year in which the amount
is applied. If any amount as increased under the preceding
sentence is not a multiple of 0.01 cent, such amount shall be
rounded to the nearest multiple of 0.01 cent.
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) In general.--Any term used in this section which is
also used in section 45I or 48A shall have the meaning given
such term in such section.
``(2) Applicable rules.--The rules of paragraphs (3), (4),
and (5) of section 45(d) shall apply.''.
(b) Credit Treated as Business Credit.--Section 38(b), as
amended by this Act, is amended by striking ``plus'' at the
end of paragraph (19), by striking the period at the end of
paragraph (20) and inserting ``, plus'', and by adding at the
end the following new paragraph:
``(21) the qualifying advanced clean coal technology
production credit determined under section 45J(a).''.
(c) Transitional Rule.--Section 39(d) (relating to
transitional rules), as amended by this Act, is amended by
adding at the end the following new paragraph:
``(18) No carryback of section 45j credit before effective
date.--No portion of the unused business credit for any
taxable year which is attributable to the qualifying advanced
clean coal technology production credit determined under
section 45J may be carried back to a taxable year ending on
or before the date of the enactment of such section.''.
(d) Denial of Double Benefit.--Section 29(d) (relating to
other definitions and special rules) is amended by adding at
the end the following new paragraph:
``(9) Denial of double benefit.--This section shall not
apply with respect to any qualified fuel the production of
which may be taken into account for purposes of determining
the credit under section 45J.''.
(e) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1, as amended by this
Act, is amended by adding at the end the following new item:
``Sec. 45J. Credit for production from a qualifying advanced clean coal
technology unit.''.
(f) Effective Date.--The amendments made by this section
shall apply to production after the date of the enactment of
this Act, in taxable years ending after such date.
Subtitle C--Treatment of Persons Not Able To Use Entire Credit
SEC. 421. TREATMENT OF PERSONS NOT ABLE TO USE ENTIRE CREDIT.
(a) In General.--Section 45I, as added by this Act, is
amended by adding at the end the following new subsection:
``(f) Treatment of Person Not Able To Use Entire Credit.--
``(1) Allowance of credits.--
``(A) In general.--Any credit allowable under this section,
section 45J, or section 48A with respect to a facility owned
by a person described in subparagraph (B) may be transferred
or used as provided in this subsection, and the determination
as to whether the credit is allowable shall be made without
regard to the tax-exempt status of the person.
``(B) Persons described.--A person is described in this
subparagraph if the person 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) a public utility (as defined in section
136(c)(2)(B)),
``(iv) any State or political subdivision thereof, the
District of Columbia, or any agency or instrumentality of any
of the foregoing,
``(v) any Indian tribal government (within the meaning of
section 7871) or any agency or instrumentality thereof, or
``(vi) the Tennessee Valley Authority.
``(2) Transfer of credit.--
``(A) In general.--A person described in clause (i), (ii),
(iii), (iv), or (v) of paragraph (1)(B) may transfer any
credit to which paragraph (1)(A) applies through an
assignment to any other person not described in paragraph
(1)(B). Such transfer may be revoked only with the consent of
the Secretary.
``(B) Regulations.--The Secretary shall prescribe such
regulations as necessary to insure that any credit described
in subparagraph (A) is claimed once and not reassigned by
such other person.
``(C) Transfer proceeds treated as arising from essential
government function.--Any proceeds derived by a person
described in clause (iii), (iv), or (v) of paragraph (1)(B)
from the transfer of any credit under subparagraph (A) shall
be treated as arising from the exercise of an essential
government function.
``(3) Use of credit as an offset.--Notwithstanding any
other provision of law, in the case of a person described in
clause (i), (ii), or (v) of paragraph (1)(B), any credit to
which paragraph (1)(A) applies may be applied by such person,
to the extent provided by the Secretary of Agriculture, 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.),
as in effect on the date of the enactment of this section.
``(4) Use by tva.--
``(A) In general.--Notwithstanding any other provision of
law, in the case of a person described in paragraph
(1)(B)(vi), any credit to which paragraph (1)(A) applies may
be applied as a credit against the payments required to be
made in any fiscal year under section 15d(e) of the Tennessee
Valley Authority Act of 1933 (16 U.S.C. 831n-4(e)) as an
annual return on the appropriations investment and an annual
repayment sum.
``(B) Treatment of credits.--The aggregate amount of
credits described in paragraph (1)(A) with respect to such
person shall be treated in the same manner and to the same
extent as if such credits were a payment in cash and shall be
applied first against the annual return on the appropriations
investment.
``(C) Credit carryover.--With respect to any fiscal year,
if the aggregate amount of credits described paragraph (1)(A)
with respect to such person exceeds the aggregate amount of
payment obligations described in subparagraph (A), the excess
amount shall remain available for application as credits
against the amounts of such payment obligations in succeeding
fiscal years in the same manner as described in this
paragraph.
``(5) Credit not income.--Any transfer under paragraph (2)
or use under paragraph (3) of any credit to which paragraph
(1)(A) applies shall not be treated as income for purposes of
section 501(c)(12).
``(6) Treatment of unrelated persons.--For purposes of this
subsection, sales among and between persons described in
clauses (i), (ii), (iii), (iv), and (v) of paragraph (1)(A)
shall be treated as sales between unrelated parties.''.
(b) Effective Date.--The amendment made by this section
shall apply to production after the date of the enactment of
this Act, in taxable years ending after such date.
TITLE V--OIL AND GAS PROVISIONS
SEC. 501. OIL AND GAS FROM MARGINAL WELLS.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business credits), as amended by this
Act, is amended by adding at the end the following new
section:
``SEC. 45K. CREDIT FOR PRODUCING OIL AND GAS FROM MARGINAL
WELLS.
``(a) General Rule.--For purposes of section 38, the
marginal well production credit for any taxable year is an
amount equal to the product of--
``(1) the credit amount, and
``(2) the qualified credit oil production and the qualified
natural gas production which is attributable to the taxpayer.
[[Page S3541]]
``(b) Credit Amount.--For purposes of this section--
``(1) In general.--The credit amount is--
``(A) $3 per barrel of qualified crude oil production, and
``(B) 50 cents per 1,000 cubic feet of qualified natural
gas production.
``(2) Reduction as oil and gas prices increase.--
``(A) In general.--The $3 and 50 cents amounts under
paragraph (1) shall each be reduced (but not below zero) by
an amount which bears the same ratio to such amount
(determined without regard to this paragraph) as--
``(i) the excess (if any) of the applicable reference price
over $15 ($1.67 for qualified natural gas production), bears
to
``(ii) $3 ($0.33 for qualified natural gas production).
The applicable reference price for a taxable year is the
reference price of the calendar year preceding the calendar
year in which the taxable year begins.
``(B) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2003, each of the
dollar amounts contained in subparagraph (A) shall be
increased to an amount equal to such dollar amount multiplied
by the inflation adjustment factor for such calendar year
(determined under section 43(b)(3)(B) by substituting `2002'
for `1990').
``(C) Reference price.--For purposes of this paragraph, the
term `reference price' means, with respect to any calendar
year--
``(i) in the case of qualified crude oil production, the
reference price determined under section 29(d)(2)(C), and
``(ii) in the case of qualified natural gas production, the
Secretary's estimate of the annual average wellhead price per
1,000 cubic feet for all domestic natural gas.
``(c) Qualified Crude Oil and Natural Gas Production.--For
purposes of this section--
``(1) In general.--The terms `qualified crude oil
production' and `qualified natural gas production' mean
domestic crude oil or natural gas which is produced from a
qualified marginal well.
``(2) Limitation on amount of production which may
qualify.--
``(A) In general.--Crude oil or natural gas produced during
any taxable year from any well shall not be treated as
qualified crude oil production or qualified natural gas
production to the extent production from the well during the
taxable year exceeds 1,095 barrels or barrel equivalents.
``(B) Proportionate reductions.--
``(i) Short taxable years.--In the case of a short taxable
year, the limitations under this paragraph shall be
proportionately reduced to reflect the ratio which the number
of days in such taxable year bears to 365.
``(ii) Wells not in production entire year.--In the case of
a well which is not capable of production during each day of
a taxable year, the limitations under this paragraph
applicable to the well shall be proportionately reduced to
reflect the ratio which the number of days of production
bears to the total number of days in the taxable year.
``(3) Definitions.--
``(A) Qualified marginal well.--The term `qualified
marginal well' means a domestic well--
``(i) the production from which during the taxable year is
treated as marginal production under section 613A(c)(6), or
``(ii) which, during the taxable year--
``(I) has average daily production of not more than 25
barrel equivalents, and
``(II) produces water at a rate not less than 95 percent of
total well effluent.
``(B) Crude oil, etc.--The terms `crude oil', `natural
gas', `domestic', and `barrel' have the meanings given such
terms by section 613A(e).
``(C) Barrel equivalent.--The term `barrel equivalent'
means, with respect to natural gas, a conversation ratio of
6,000 cubic feet of natural gas to 1 barrel of crude oil.
``(d) Other Rules.--
``(1) Production attributable to the taxpayer.--In the case
of a qualified marginal well in which there is more than one
owner of operating interests in the well and the crude oil or
natural gas production exceeds the limitation under
subsection (c)(2), qualifying crude oil production or
qualifying natural gas production attributable to the
taxpayer shall be determined on the basis of the ratio which
taxpayer's revenue interest in the production bears to the
aggregate of the revenue interests of all operating interest
owners in the production.
``(2) Operating interest required.--Any credit under this
section may be claimed only on production which is
attributable to the holder of an operating interest.
``(3) Production from nonconventional sources excluded.--In
the case of production from a qualified marginal well which
is eligible for the credit allowed under section 29 for the
taxable year, no credit shall be allowable under this section
unless the taxpayer elects not to claim the credit under
section 29 with respect to the well.
``(4) Noncompliance with pollution laws.--For purposes of
subsection (c)(3)(A), a marginal well 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 marginal
well during such period.''.
(b) Credit Treated as Business Credit.--Section 38(b), as
amended by this Act, is amended by striking ``plus'' at the
end of paragraph (20), by striking the period at the end of
paragraph (21) and inserting ``, plus'', and by adding at the
end the following new paragraph:
``(22) the marginal oil and gas well production credit
determined under section 45K(a).''.
(c) No Carryback of Marginal Oil and Gas Well Production
Credit Before Effective Date.--Subsection (d) of section 39,
as amended by this Act, is amended by adding at the end the
following new paragraph:
``(19) No carryback of marginal oil and gas well production
credit before effective date.--No portion of the unused
business credit for any taxable year which is attributable to
the marginal oil and gas well production credit determined
under section 45K may be carried back to a taxable year
ending on or before the date of the enactment of such
section.''.
(d) Coordination With Section 29.--Section 29(a) is amended
by striking ``There'' and inserting ``At the election of the
taxpayer, there''.
(e) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1, as amended by this
Act, is amended by adding at the end the following new item:
``Sec. 45K. Credit for producing oil and gas from marginal wells.''.
(f) Effective Date.--The amendments made by this section
shall apply to production in taxable years beginning after
the date of the enactment of this Act.
SEC. 502. NATURAL GAS GATHERING LINES TREATED AS 7-YEAR
PROPERTY.
(a) In General.--Subparagraph (C) of section 168(e)(3)
(relating to classification of certain property) is amended
by striking ``and'' at the end of clause (i), by
redesignating clause (ii) as clause (iii), and by inserting
after clause (i) the following new clause:
``(ii) any natural gas gathering line, and''.
(b) Natural Gas Gathering Line.--Subsection (i) of section
168, as amended by this Act, is amended by adding at the end
the following new paragraph:
``(16) Natural gas gathering line.--The term `natural gas
gathering line' means--
``(A) the pipe, equipment, and appurtenances determined to
be a gathering line by the Federal Energy Regulatory
Commission, or
``(B) the pipe, equipment, and appurtenances used to
deliver natural gas from the wellhead or a commonpoint to the
point at which such gas first reaches--
``(i) a gas processing plant,
``(ii) an interconnection with a transmission pipeline
certificated by the Federal Energy Regulatory Commission as
an interstate transmission pipeline,
``(iii) an interconnection with an intrastate transmission
pipeline, or
``(iv) a direct interconnection with a local distribution
company, a gas storage facility, or an industrial
consumer.''.
(c) Alternative System.--The table contained in section
168(g)(3)(B) is amended by inserting after the item relating
to subparagraph (C)(i) the following new item:
``(C)(ii).........................................................10''.
(d) Effective Date.--The amendments made by this section
shall apply to property placed in service after the date of
the enactment of this Act, in taxable years ending after such
date.
SEC. 503. EXPENSING OF CAPITAL COSTS INCURRED IN COMPLYING
WITH ENVIRONMENTAL PROTECTION AGENCY SULFUR
REGULATIONS.
(a) In General.--Part VI of subchapter B of chapter 1
(relating to itemized deductions for individuals and
corporations), as amended by this Act, is amended by
inserting after section 179C the following new section:
``SEC. 179D. DEDUCTION FOR CAPITAL COSTS INCURRED IN
COMPLYING WITH ENVIRONMENTAL PROTECTION AGENCY
SULFUR REGULATIONS.
``(a) Treatment as Expense.--
``(1) In general.--A small business refiner may elect to
treat any qualified capital costs as an expense which is not
chargeable to capital account. Any qualified cost which is so
treated shall be allowed as a deduction for the taxable year
in which the cost is paid or incurred.
``(2) Limitation.--
``(A) In general.--The aggregate costs which may be taken
into account under this subsection for any taxable year may
not exceed the applicable percentage of the qualified capital
costs paid or incurred for the taxable year.
``(B) Applicable percentage.--For purposes of subparagraph
(A)--
``(i) In general.--Except as provided in clause (ii), the
applicable percentage is 75 percent.
``(ii) Reduced percentage.--In the case of a small business
refiner with average daily refinery runs for the period
described in subsection (b)(2) in excess of 155,000 barrels,
the percentage described in clause (i) shall be reduced (not
below zero) by the product of such percentage (before the
application of this clause) and the ratio of such excess to
50,000 barrels.
``(b) Definitions.--For purposes of this section--
``(1) Qualified capital costs.--The term `qualified capital
costs' means any costs which--
``(A) are otherwise chargeable to capital account, and
``(B) are paid or incurred for the purpose of complying
with the Highway Diesel Fuel Sulfur Control Requirement of
the Environmental Protection Agency, as in effect on
[[Page S3542]]
the date of the enactment of this section, with respect to a
facility placed in service by the taxpayer before such date.
``(2) Small business refiner.--The term `small business
refiner' means, with respect to any taxable year, a refiner
of crude oil, which, within the refinery operations of the
business, employs not more than 1,500 employees on any day
during such taxable year and whose average daily refinery run
for the 1-year period ending on the date of the enactment of
this section did not exceed 205,000 barrels.
``(c) Coordination With Other Provisions.--Section 280B
shall not apply to amounts which are treated as expenses
under this section.
``(d) 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).
``(e) Controlled Groups.--For purposes of this section, all
persons treated as a single employer under subsection (b),
(c), (m), or (o) of section 414 shall be treated as a single
employer.''.
(b) Conforming Amendments.--
(1) Section 263(a)(1), as amended by this Act, is amended
by striking ``or'' at the end of subparagraph (I), by
striking the period at the end of subparagraph (J) and
inserting ``, or'', and by inserting after subparagraph (J)
the following new subparagraph:
``(K) expenditures for which a deduction is allowed under
section 179D.''.
(2) Section 263A(c)(3) is amended by inserting ``179C,''
after ``section''.
(3) Section 312(k)(3)(B), as amended by this Act, is
amended by striking ``or 179C'' each place it appears in the
heading and text and inserting ``, 179C, or 179D''.
(4) Section 1016(a), as amended by this Act, is amended by
striking ``and'' at the end of paragraph (33), by striking
the period at the end of paragraph (34) and inserting ``,
and'', and by adding at the end the following new paragraph:
``(35) to the extent provided in section 179D(d).''.
(5) Section 1245(a), as amended by this Act, is amended by
inserting ``179D,'' after ``179C,'' both places it appears in
paragraphs (2)(C) and (3)(C).
(6) The table of sections for part VI of subchapter B of
chapter 1, as amended by this Act, is amended by inserting
after section 179C the following new item:
``Sec. 179D. Deduction for capital costs incurred in complying with
Environmental Protection Agency sulfur regulations.''.
(c) Effective Date.--The amendment made by this section
shall apply to expenses paid or incurred after the date of
the enactment of this Act, in taxable years ending after such
date.
SEC. 504. ENVIRONMENTAL TAX CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business-related credits), as amended
by this Act, is amended by adding at the end the following
new section:
``SEC. 45L. ENVIRONMENTAL TAX CREDIT.
``(a) In General.--For purposes of section 38, the amount
of the environmental tax credit determined under this section
with respect to any small business refiner for any taxable
year is an amount equal to 5 cents for every gallon of 15
parts per million or less sulfur diesel produced at a
facility by such small business refiner during such taxable
year.
``(b) Maximum Credit.--
``(1) In general.--For any small business refiner, the
aggregate amount determined under subsection (a) for any
taxable year with respect to any facility shall not exceed
the applicable percentage of the qualified capital costs paid
or incurred by such small business refiner with respect to
such facility during the applicable period, reduced by the
credit allowed under subsection (a) for any preceding year.
``(2) Applicable percentage.--For purposes of paragraph
(1)--
``(A) In general.--Except as provided in subparagraph (B),
the applicable percentage is 25 percent.
``(B) Reduced percentage.--The percentage described in
subparagraph (A) shall be reduced in the same manner as under
section 179D(a)(2)(B)(ii).
``(c) Definitions.--For purposes of this section--
``(1) In general.--The terms `small business refiner' and
`qualified capital costs' have the same meaning as given in
section 179D.
``(2) Applicable period.--The term `applicable period'
means, with respect to any facility, the period beginning on
the day after the date which is 1 year after the date of the
enactment of this section and ending with the date which is 1
year after the date on which the taxpayer must comply with
the applicable EPA regulations with respect to such facility.
``(3) Applicable epa regulations.--The term `applicable EPA
regulations' means the Highway Diesel Fuel Sulfur Control
Requirements of the Environmental Protection Agency, as in
effect on the date of the enactment of this section.
``(d) Certification.--
``(1) Required.--Not later than the date which is 30 months
after the first day of the first taxable year in which the
environmental tax credit is allowed with respect to qualified
capital costs paid or incurred with respect to a facility,
the small business refiner shall obtain a certification from
the Secretary, in consultation with the Administrator of the
Environmental Protection Agency, that the taxpayer's
qualified capital costs with respect to such facility will
result in compliance with the applicable EPA regulations.
``(2) Contents of application.--An application for
certification shall include relevant information regarding
unit capacities and operating characteristics sufficient for
the Secretary, in consultation with the Administrator of the
Environmental Protection Agency, to determine that such
qualified capital costs are necessary for compliance with the
applicable EPA regulations.
``(3) Review period.--Any application shall be reviewed and
notice of certification, if applicable, shall be made within
60 days of receipt of such application. In the event the
Secretary does not notify the taxpayer of the results of such
certification within such period, the taxpayer may presume
the certification to be issued until so notified.
``(4) Statute of limitations.--With respect to the credit
allowed under this section--
``(A) the statutory period for the assessment of any
deficiency attributable to such credit shall not expire
before the end of the 3-year period ending on the date that
the review period described in paragraph (3) ends, and
``(B) such deficiency may be assessed before the expiration
of such 3-year period notwithstanding the provisions of any
other law or rule of law which would otherwise prevent such
assessment.
``(e) Controlled Groups.--For purposes of this section, all
persons treated as a single employer under subsection (b),
(c), (m), or (o) of section 414 shall be treated as a single
employer.
``(f) Cooperative Organizations.--
``(1) Apportionment of credit.--In the case of a
cooperative organization described in section 1381(a), any
portion of the credit determined under subsection (a) of this
section, for the taxable year may, at the election of the
organization, be apportioned among patrons eligible to share
in patronage dividends on the basis of the quantity or value
of business done with or for such patrons for the taxable
year. Such an election shall be irrevocable for such taxable
year.
``(2) Treatment of organizations and patrons.--
``(A) Organizations.--The amount of the credit not
apportioned to patrons pursuant to paragraph (1) shall be
included in the amount determined under subsection (a) for
the taxable year of the organization.
``(B) Patrons.--The amount of the credit apportioned to
patrons pursuant to paragraph (1) shall be included in the
amount determined under subsection (a) for the first taxable
year of each patron ending on or after the last day of the
payment period (as defined in section 1382(d)) for the
taxable year of the organization or, if earlier, for the
taxable year of each patron ending on or after the date on
which the patron receives notice from the cooperative of the
apportionment.''.
(b) Credit Made Part of General Business Credit.--
Subsection (b) of section 38 (relating to general business
credit), as amended by this Act, is amended by striking
``plus'' at the end of paragraph (21), by striking the period
at the end of paragraph (22) and inserting ``, plus'', and by
adding at the end the following new paragraph:
``(23) in the case of a small business refiner, the
environmental tax credit determined under section 45L(a).''.
(c) Denial of Double Benefit.--Section 280C (relating to
certain expenses for which credits are allowable), as amended
by this Act, is amended by adding after subsection (d) the
following new subsection:
``(e) Environmental Tax Credit.--No deduction shall be
allowed for that portion of the expenses otherwise allowable
as a deduction for the taxable year which is equal to the
amount of the credit determined for the taxable year under
section 45L(a).''.
(d) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1, as amended by this
Act, is amended by adding at the end the following new item:
``Sec. 45L. Environmental tax credit.''.
(e) Effective Date.--The amendments made by this section
shall apply to expenses paid or incurred after the date of
the enactment of this Act, in taxable years ending after such
date.
SEC. 505. DETERMINATION OF SMALL REFINER EXCEPTION TO OIL
DEPLETION DEDUCTION.
(a) In General.--Paragraph (4) of section 613A(d) (relating
to certain refiners excluded) is amended to read as follows:
``(4) Certain refiners excluded.--If the taxpayer or 1 or
more related persons engages in the refining of crude oil,
subsection (c) shall not apply to the taxpayer for a taxable
year if the average daily refinery runs of the taxpayer and
such persons for the taxable year exceed 60,000 barrels. For
purposes of this paragraph, the average daily refinery runs
for any taxable year shall be determined by dividing the
aggregate refinery runs for the taxable year by the number of
days in the taxable year.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
[[Page S3543]]
SEC. 506. MARGINAL PRODUCTION INCOME LIMIT EXTENSION.
Section 613A(c)(6)(H) (relating to temporary suspension of
taxable income limit with respect to marginal production) is
amended by striking ``2004'' and inserting ``2007''.
SEC. 507. AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL
EXPENDITURES.
(a) In General.--Part VI of subchapter B of chapter 1, as
amended by this Act, is amended by adding at the end the
following new section:
``SEC. 199. AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL
EXPENDITURES FOR DOMESTIC OIL AND GAS WELLS.
``A taxpayer shall be entitled to an amortization deduction
with respect to any geological and geophysical expenses
incurred in connection with the exploration for, or
development of, oil or gas within the United States (as
defined in section 638) based on a period of 24 months
beginning with the month in which such expenses were
incurred.''.
(b) Clerical Amendment.--The table of sections for part VI
of subchapter B of chapter 1, as amended by this Act, is
amended by adding at the end the following new item:
``Sec. 199. Amortization of geological and geophysical expenditures for
domestic oil and gas wells.''.
(c) Effective Date.--The amendments made by this section
shall apply to costs paid or incurred in taxable years
beginning after the date of the enactment of this Act.
SEC. 508. AMORTIZATION OF DELAY RENTAL PAYMENTS.
(a) In General.--Part VI of subchapter B of chapter 1, as
amended by this Act, is amended by adding at the end the
following new section:
``SEC. 199A. AMORTIZATION OF DELAY RENTAL PAYMENTS FOR
DOMESTIC OIL AND GAS WELLS.
``(a) In General.--A taxpayer shall be entitled to an
amortization deduction with respect to any delay rental
payments incurred in connection with the development of oil
or gas within the United States (as defined in section 638)
based on a period of 24 months beginning with the month in
which such payments were incurred.''.
``(b) Delay rental payments.--For purposes of this section,
the term `delay rental payment' means an amount paid for the
privilege of deferring development of an oil or gas well
under an oil or gas lease.''.
(b) Clerical Amendment.--The table of sections for part VI
of subchapter B of chapter 1, as amended by this Act, is
amended by adding at the end the following new item:
``Sec. 199A. Amortization of delay rental payments for domestic oil and
gas wells.''.
(c) Effective Date.--The amendments made by this section
shall apply to amounts paid or incurred in taxable years
beginning after the date of the enactment of this Act.
SEC. 509. STUDY OF COAL BED METHANE.
(a) In General.--The Secretary of the Treasury shall study
the effect of section 29 of the Internal Revenue Code of 1986
on the production of coal bed methane.
(b) Contents of Study.--The study under subsection (a)
shall estimate the total amount of credits under section 29
of the Internal Revenue Code of 1986 claimed annually and in
the aggregate which are related to the production of coal bed
methane since the date of the enactment of such section 29.
Such study shall report the annual value of such credits
allowable for coal bed methane compared to the average annual
wellhead price of natural gas (per thousand cubic feet of
natural gas). Such study shall also estimate the incremental
increase in production of coal bed methane that has resulted
from the enactment of such section 29, and the cost to the
Federal Government, in terms of the net tax benefits claimed,
per thousand cubic feet of incremental coal bed methane
produced annually and in the aggregate since such enactment.
SEC. 510. EXTENSION AND MODIFICATION OF CREDIT FOR PRODUCING
FUEL FROM A NONCONVENTIONAL SOURCE.
(a) In General.--Section 29 is amended by adding at the end
the following new subsection:
``(h) Extension for Other Facilities.--
``(1) Oil and gas.--In the case of a well or facility for
producing qualified fuels described in subparagraph (A) or
(B) of subsection (c)(1) which was drilled or placed in
service after the date of the enactment of this subsection
and before January 1, 2005, notwithstanding subsection (f),
this section shall apply with respect to such fuels produced
at such well or facility not later than the close of the 3-
year period beginning on the date that such well is drilled
or such facility is placed in service.
``(2) Facilities producing refined coal.--
``(A) In general.--In the case of a facility described in
subparagraph (C) for producing refined coal which was placed
in service after the date of the enactment of this subsection
and before January 1, 2007, this section shall apply with
respect to fuel produced at such facility not later than the
close of the 5-year period beginning on the date such
facility is placed in service.
``(B) Refined coal.--For purposes of this paragraph, the
term `refined coal' means a fuel which is a liquid, gaseous,
or solid synthetic fuel produced from coal (including
lignite) or high carbon fly ash, including such fuel used as
a feedstock.
``(C) Covered facilities.--
``(i) In general.--A facility is described in this
subparagraph if such facility produces refined coal using a
technology that results in--
``(I) a qualified emission reduction, and
``(II) a qualified enhanced value.
``(ii) Qualified emission reduction.--For purposes of this
subparagraph, the term `qualified emission reduction' means a
reduction of at least 20 percent of the emissions of nitrogen
oxide and either sulfur dioxide or mercury released when
burning the refined coal (excluding any dilution caused by
materials combined or added during the production process),
as compared to the emissions released when burning the
feedstock coal or comparable coal predominantly available in
the marketplace as of January 1, 2003.
``(iii) Qualified enhanced value.--For purposes of this
subparagraph, the term `qualified enhanced value' means an
increase of at least 50 percent in the market value of the
refined coal (excluding any increase caused by materials
combined or added during the production process), as compared
to the value of the feedstock coal.
``(iii) Qualifying advanced clean coal technology
facilities excluded.--A facility described in this
subparagraph shall not include a qualifying advanced clean
coal technology facility (as defined in section 48A(b)).
``(3) Wells producing viscous oil.--
``(A) In general.--In the case of a well for producing
viscous oil which was placed in service after the date of the
enactment of this subsection and before January 1, 2005, this
section shall apply with respect to fuel produced at such
well not later than the close of the 3-year period beginning
on the date such well is placed in service.
``(B) Viscous oil.--The term ``viscous oil' means heavy
oil, as defined in section 613A(c)(6), except that--
``(i) `22 degrees' shall be substituted for `20 degrees' in
applying subparagraph (F) thereof, and
``(ii) in all cases, the oil gravity shall be measured from
the initial well-head samples, drill cuttings, or down hole
samples.
``(C) Waiver of unrelated person requirement.--In the case
of viscous oil, the requirement under subsection (a)(1)(B)(i)
of a sale to an unrelated person shall not apply to any sale
to the extent that the viscous oil is not consumed in the
immediate vicinity of the wellhead.
``(4) Coalmine methane gas.--
``(A) In general.--This section shall apply to coalmine
methane gas--
``(i) captured or extracted by the taxpayer after the date
of the enactment of this subsection and before January 1,
2005, and
``(ii) utilized as a fuel source or sold by or on behalf of
the taxpayer to an unrelated person after the date of the
enactment of this subsection and before January 1, 2005.
``(B) Coalmine methane gas.--For purposes of this
paragraph, the term `coalmine methane gas' means any methane
gas which is--
``(i) liberated during qualified coal mining operations, or
``(ii) extracted up to 5 years in advance of qualified coal
mining operations as part of a specific plan to mine a coal
deposit.
``(C) Special rule for advanced extraction.--In the case of
coalmine methane gas which is captured in advance of
qualified coal mining operations, the credit under subsection
(a) shall be allowed only after the date the coal extraction
occurs in the immediate area where the coalmine methane gas
was removed.
``(D) Noncompliance with pollution laws.--For purposes of
subparagraphs (B) and (C), coal mining operations which are
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 qualified
coal mining operations during such period.
``(5) Facilities producing fuels from agricultural and
animal waste.--
``(A) In general.--In the case of facility for producing
liquid, gaseous, or solid fuels from qualified agricultural
and animal wastes, including such fuels when used as
feedstocks, which was placed in service after the date of the
enactment of this subsection and before January 1, 2005, this
section shall apply with respect to fuel produced at such
facility not later than the close of the 3-year period
beginning on the date such facility is placed in service.
``(B) Qualified agricultural and animal waste.--For
purposes of this paragraph, the term `qualified agricultural
and animal waste' means agriculture and animal waste,
including by-products, packaging, and any materials
associated with the processing, feeding, selling,
transporting, or disposal of agricultural or animal products
or wastes, including wood shavings, straw, rice hulls, and
other bedding for the disposition of manure.
``(6) Credit amount.--In determining the amount of credit
allowable under this section solely by reason of this
subsection, the dollar amount applicable under subsection
(a)(1) shall be $3 (without regard to subsection (b)(2)).''.
(b) Extension for certain fuel produced at existing
facilities.--Paragraph (2) of section 29(f) (relating to
application of section) is amended by inserting ``(January 1,
2005, in the case of any coke, coke gas, or natural gas and
byproducts produced by coal gasification from lignite in a
facility described in paragraph (1)(B))'' after ``January 1,
2003''.
[[Page S3544]]
(c) Effective Date.--The amendment made by this section
shall apply to fuel sold after the date of the enactment of
this Act, in taxable years ending after such date.
SEC. 511. NATURAL GAS DISTRIBUTION LINES TREATED AS 15-YEAR
PROPERTY.
(a) In General.--Subparagraph (E) of section 168(e)(3)
(relating to classification of certain property) is amended
by striking ``and'' at the end of clause (ii), by striking
the period at the end of clause (iii) and by inserting ``,
and'', and by adding at the end the following new clause:
``(iv) any natural gas distribution line.''.
(b) Alternative System.--The table contained in section
168(g)(3)(B), as amended by this Act, is amended by adding
after the item relating to subparagraph (E)(iii) the
following new item:
``(E)(iv).........................................................20''.
(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 VI--ELECTRIC UTILITY RESTRUCTURING PROVISIONS
SEC. 601. ONGOING STUDY AND REPORTS REGARDING TAX ISSUES
RESULTING FROM FUTURE RESTRUCTURING DECISIONS.
(a) Ongoing Study.--The Secretary of the Treasury, after
consultation with the Federal Energy Regulatory Commission,
shall undertake an ongoing study of Federal tax issues
resulting from nontax decisions on the restructuring of the
electric industry. In particular, the study shall focus on
the effect on tax-exempt bonding authority of public power
entities and on corporate restructuring which results from
the restructuring of the electric industry.
(b) Regulatory Relief.--In connection with the study
described in subsection (a), the Secretary of the Treasury
should exercise the Secretary's authority, as appropriate, to
modify or suspend regulations that may impede an electric
utility company's ability to reorganize its capital stock
structure to respond to a competitive marketplace.
(c) Reports.--The Secretary of the Treasury shall report to
the Committee on Finance of the Senate and the Committee on
Ways and Means of the House of Representatives not later than
December 31, 2003, regarding Federal tax issues identified
under the study described in subsection (a), and at least
annually thereafter, regarding such issues identified since
the preceding report. Such reports shall also include such
legislative recommendations regarding changes to the private
business use rules under subpart A of part IV of subchapter B
of chapter 1 of the Internal Revenue Code of 1986 as the
Secretary of the Treasury deems necessary. The reports shall
continue until such time as the Federal Energy Regulatory
Commission has completed the restructuring of the electric
industry.
SEC. 602. MODIFICATIONS TO SPECIAL RULES FOR NUCLEAR
DECOMMISSIONING COSTS.
(a) Repeal of Limitation on Deposits Into Fund Based on
Cost of Service; Contributions After Funding Period.--
Subsection (b) of section 468A is amended to read as follows:
``(b) Limitation on Amounts Paid Into Fund.--The amount
which a taxpayer may pay into the Fund for any taxable year
shall not exceed the ruling amount applicable to such taxable
year.''.
(b) Clarification of Treatment of Fund Transfers.--
Subsection (e) of section 468A is amended by adding at the
end the following new paragraph:
``(8) Treatment of fund transfers.--If, in connection with
the transfer of the taxpayer's interest in a nuclear power
plant, the taxpayer transfers the Fund with respect to such
power plant to the transferee of such interest and the
transferee elects to continue the application of this section
to such Fund--
``(A) the transfer of such Fund shall not cause such Fund
to be disqualified from the application of this section, and
``(B) no amount shall be treated as distributed from such
Fund, or be includible in gross income, by reason of such
transfer.''.
(c) Deduction for Nuclear Decommissioning Costs When
Paid.--Paragraph (2) of section 468A(c) is amended to read as
follows:
``(2) Deduction of nuclear decommissioning costs.--In
addition to any deduction under subsection (a), nuclear
decommissioning costs paid or incurred by the taxpayer during
any taxable year shall constitute ordinary and necessary
expenses in carrying on a trade or business under section
162.''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 603. TREATMENT OF CERTAIN INCOME OF COOPERATIVES.
(a) Income From Open Access and Nuclear Decommissioning
Transactions.--
(1) In general.--Subparagraph (C) of section 501(c)(12) is
amended by striking ``or'' at the end of clause (i), by
striking clause (ii), and by adding at the end the following
new clauses:
``(ii) from any open access transaction (other than income
received or accrued directly or indirectly from a member),
``(iii) from any nuclear decommissioning transaction,
``(iv) from any asset exchange or conversion transaction,
or
``(v) from the prepayment of any loan, debt, or obligation
made, insured, or guaranteed under the Rural Electrification
Act of 1936.''.
(2) Definitions and special rules.--Paragraph (12) of
section 501(c) is amended by adding at the end the following
new subparagraphs:
``(E) For purposes of subparagraph (C)(ii)--
``(i) The term `open access transaction' means any
transaction meeting the open access requirements of any of
the following subclauses with respect to a mutual or
cooperative electric company:
``(I) The provision or sale of transmission service or
ancillary services meets the open access requirements of this
subclause only if such services are provided on a
nondiscriminatory open access basis pursuant to an open
access transmission tariff filed with and approved by FERC,
including an acceptable reciprocity tariff, or under a
regional transmission organization agreement approved by
FERC.
``(II) The provision or sale of electric energy
distribution services or ancillary services meets the open
access requirements of this subclause only if such services
are provided on a nondiscriminatory open access basis to end-
users served by distribution facilities owned by the mutual
or cooperative electric company (or its members).
``(III) The delivery or sale of electric energy generated
by a generation facility meets the open access requirements
of this subclause only if such facility is directly connected
to distribution facilities owned by the mutual or cooperative
electric company (or its members) which owns the generation
facility, and such distribution facilities meet the open
access requirements of subclause (II).
``(ii) Clause (i)(I) shall apply in the case of a
voluntarily filed tariff only if the mutual or cooperative
electric company files a report with FERC within 90 days
after the date of the enactment of this subparagraph relating
to whether or not such company will join a regional
transmission organization.
``(iii) A mutual or cooperative electric company shall be
treated as meeting the open access requirements of clause
(i)(I) if a regional transmission organization controls the
transmission facilities.
``(iv) References to FERC in this subparagraph shall be
treated as including references to the Public Utility
Commission of Texas with respect to any ERCOT utility (as
defined in section 212(k)(2)(B) of the Federal Power Act (16
U.S.C. 824k(k)(2)(B))) or references to the Rural Utilities
Service with respect to any other facility not subject to
FERC jurisdiction.
``(v) For purposes of this subparagraph--
``(I) The term `transmission facility' means an electric
output facility (other than a generation facility) that
operates at an electric voltage of 69 kV or greater. To the
extent provided in regulations, such term includes any output
facility that FERC determines is a transmission facility
under standards applied by FERC under the Federal Power Act
(as in effect on the date of the enactment of the Energy Tax
Incentives Act of 2003).
``(II) The term `regional transmission organization'
includes an independent system operator.
``(III) The term `FERC' means the Federal Energy Regulatory
Commission.
``(F) The term `nuclear decommissioning transaction'
means--
``(i) any transfer into a trust, fund, or instrument
established to pay any nuclear decommissioning costs if the
transfer is in connection with the transfer of the mutual or
cooperative electric company's interest in a nuclear power
plant or nuclear power plant unit,
``(ii) any distribution from any trust, fund, or instrument
established to pay any nuclear decommissioning costs, or
``(iii) any earnings from any trust, fund, or instrument
established to pay any nuclear decommissioning costs.
``(G) The term `asset exchange or conversion transaction'
means any voluntary exchange or involuntary conversion of any
property related to generating, transmitting, distributing,
or selling electric energy by a mutual or cooperative
electric company, the gain from which qualifies for deferred
recognition under section 1031 or 1033, but only if the
replacement property acquired by such company pursuant to
such section constitutes property which is used, or to be
used, for--
``(i) generating, transmitting, distributing, or selling
electric energy, or
``(ii) producing, transmitting, distributing, or selling
natural gas.''.
(b) Treatment of Income From Load Loss Transactions.--
Paragraph (12) of section 501(c), as amended by subsection
(a)(2), is amended by adding after subparagraph (G) the
following new subparagraph:
``(H)(i) In the case of a mutual or cooperative electric
company described in this paragraph or an organization
described in section 1381(a)(2)(C), income received or
accrued from a load loss transaction shall be treated as an
amount collected from members for the sole purpose of meeting
losses and expenses.
``(ii) For purposes of clause (i), the term `load loss
transaction' means any wholesale or retail sale of electric
energy (other than to members) to the extent that the
aggregate sales during the recovery period does not exceed
the load loss mitigation sales limit for such period.
[[Page S3545]]
``(iii) For purposes of clause (ii), the load loss
mitigation sales limit for the recovery period is the sum of
the annual load losses for each year of such period.
``(iv) For purposes of clause (iii), a mutual or
cooperative electric company's annual load loss for each year
of the recovery period is the amount (if any) by which--
``(I) the megawatt hours of electric energy sold during
such year to members of such electric company are less than
``(II) the megawatt hours of electric energy sold during
the base year to such members.
``(v) For purposes of clause (iv)(II), the term `base year'
means--
``(I) the calendar year preceding the start-up year, or
``(II) at the election of the electric company, the second
or third calendar years preceding the start-up year.
``(vi) For purposes of this subparagraph, the recovery
period is the 7-year period beginning with the start-up year.
``(vii) For purposes of this subparagraph, the start-up
year is the calendar year which includes the date of the
enactment of this subparagraph or, if later, at the election
of the mutual or cooperative electric company--
``(I) the first year that such electric company offers
nondiscriminatory open access, or
``(II) the first year in which at least 10 percent of such
electric company's sales are not to members of such electric
company.
``(viii) A company shall not fail to be treated as a mutual
or cooperative company for purposes of this paragraph or as a
corporation operating on a cooperative basis for purposes of
section 1381(a)(2)(C) by reason of the treatment under clause
(i).
``(ix) In the case of a mutual or cooperative electric
company, income from any open access transaction received, or
accrued, indirectly from a member shall be treated as an
amount collected from members for the sole purpose of meeting
losses and expenses.''.
(c) Exception From Unrelated Business Taxable Income.--
Subsection (b) of section 512 (relating to modifications) is
amended by adding at the end the following new paragraph:
``(18) Treatment of mutual or cooperative electric
companies.--In the case of a mutual or cooperative electric
company described in section 501(c)(12), there shall be
excluded income which is treated as member income under
subparagraph (H) thereof.''.
(d) Cross Reference.--Section 1381 is amended by adding at
the end the following new subsection:
``(c) Cross Reference.--
``For treatment of income from load loss transactions of
organizations described in subsection (a)(2)(C), see section
501(c)(12)(H).''.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 604. SALES OR DISPOSITIONS TO IMPLEMENT FEDERAL ENERGY
REGULATORY COMMISSION OR STATE ELECTRIC
RESTRUCTURING POLICY.
(a) In General.--Section 451 (relating to general rule for
taxable year of inclusion) is amended by adding at the end
the following new subsection:
``(i) Special Rule for Sales or Dispositions To Implement
Federal Energy Regulatory Commission or State Electric
Restructuring Policy.--
``(1) In general.--For purposes of this subtitle, if a
taxpayer elects the application of this subsection to a
qualifying electric transmission transaction in any taxable
year--
``(A) any ordinary income derived from such transaction
which would be required to be recognized under section 1245
or 1250 for such taxable year (determined without regard to
this subsection), and
``(B) any income derived from such transaction in excess of
such ordinary income which is required to be included in
gross income for such taxable year,
shall be so recognized and included ratably over the 8-
taxable year period beginning with such taxable year.
``(2) Qualifying electric transmission transaction.--For
purposes of this subsection, the term `qualifying electric
transmission transaction' means any sale or other disposition
before January 1, 2007, of--
``(A) property used by the taxpayer in the trade or
business of providing electric transmission services, or
``(B) any stock or partnership interest in a corporation or
partnership, as the case may be, whose principal trade or
business consists of providing electric transmission
services,
but only if such sale or disposition is to an independent
transmission company.
``(3) Independent transmission company.--For purposes of
this subsection, the term `independent transmission company'
means--
``(A) a regional transmission organization approved by the
Federal Energy Regulatory Commission,
``(B) a person--
``(i) who the Federal Energy Regulatory Commission
determines in its authorization of the transaction under
section 203 of the Federal Power Act (16 U.S.C. 824b) is not
a market participant within the meaning of such Commission's
rules applicable to regional transmission organizations, and
``(ii) whose transmission facilities to which the election
under this subsection applies are under the operational
control of a Federal Energy Regulatory Commission-approved
regional transmission organization before the close of the
period specified in such authorization, but not later than
the close of the period applicable under paragraph (1), or
``(C) in the case of facilities subject to the exclusive
jurisdiction of the Public Utility Commission of Texas, a
person which is approved by that Commission as consistent
with Texas State law regarding an independent transmission
organization.
``(4) Election.--An election under paragraph (1), once
made, shall be irrevocable.
``(5) Nonapplication of installment sales treatment.--
Section 453 shall not apply to any qualifying electric
transmission transaction with respect to which an election to
apply this subsection is made.''.
(b) Effective Date.--The amendment made by this section
shall apply to transactions occurring after the date of the
enactment of this Act.
SEC. 605. TREATMENT OF CERTAIN DEVELOPMENT INCOME OF
COOPERATIVES.
(a) In General.--Subparagraph (C) of section 501(c)(12), as
amended by this Act, is amended by striking ``or'' at the end
of clause (iv), by striking the period at the end of clause
(v) and insert ``, or'', and by adding at the end the
following new clause:
``(vi) from the receipt before January 1, 2007, of any
money, property, capital, or any other contribution in aid of
construction or connection charge intended to facilitate the
provision of electric service for the purpose of developing
qualified fuels from nonconventional sources (within the
meaning of section 29).''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
TITLE VII--ADDITIONAL PROVISIONS
SEC. 701. EXTENSION OF ACCELERATED DEPRECIATION AND WAGE
CREDIT BENEFITS ON INDIAN RESERVATIONS.
(a) Special Recovery Period for Property on Indian
Reservations.--Section 168(j)(8) (relating to termination),
as amended by section 613(b) of the Job Creation and Worker
Assistance Act of 2002, is amended by striking ``2004'' and
inserting ``2005''.
(b) Indian Employment Credit.--Section 45A(f) (relating to
termination), as amended by section 613(a) of the Job
Creation and Worker Assistance Act of 2002, is amended by
striking ``2004'' and inserting ``2005''.
SEC. 702. STUDY OF EFFECTIVENESS OF CERTAIN PROVISIONS BY
GAO.
(a) Study.--The Comptroller General of the United States
shall undertake an ongoing analysis of--
(1) the effectiveness of the alternative motor vehicles and
fuel incentives provisions under title II and the
conservation and energy efficiency provisions under title
III, and
(2) the recipients of the tax benefits contained in such
provisions, including an identification of such recipients by
income and other appropriate measurements.
Such analysis shall quantify the effectiveness of such
provisions by examining and comparing the Federal
Government's forgone revenue to the aggregate amount of
energy actually conserved and tangible environmental benefits
gained as a result of such provisions.
(b) Reports.--The Comptroller General of the United States
shall report the analysis required under subsection (a) to
Congress not later than December 31, 2003, and annually
thereafter.
SEC. 703. CREDIT FOR PRODUCTION OF ALASKA NATURAL GAS.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits), as amended
by this Act, is amended by adding at the end the following
new section:
``SEC. 45M. ALASKA NATURAL GAS.
``(a) In General.--For purposes of section 38, the Alaska
natural gas credit of any taxpayer for any taxable year is
the credit amount per 1,000,000 Btu of Alaska natural gas
entering any intake or tie-in point which was derived from an
area of the State of Alaska lying north of 64 degrees North
latitude, which is attributable to the taxpayer and sold by
or on behalf of the taxpayer to an unrelated person during
such taxable year (within the meaning of section 45).
``(b) Credit Amount.--For purposes of this section--
``(1) In general.--The credit amount per 1,000,000 Btu of
Alaska natural gas entering any intake or tie-in point which
was derived from an area of the State of Alaska lying north
of 64 degrees North latitude (determined in United States
dollars), is the excess of--
``(A) $3.25, over
``(B) the average monthly price at the AECO C Hub in
Alberta, Canada, for Alaska natural gas for the month in
which occurs the date of such entering.
``(2) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after the first calendar
year ending after the date described in subsection (g)(1),
the dollar amount contained in paragraph (1)(A) shall be
increased to an amount equal to such dollar amount multiplied
by the inflation adjustment factor for such calendar year
(determined under section 43(b)(3)(B) by substituting `the
calendar year ending before the date described in section
45M(g)(1)' for `1990').
``(c) Alaska Natural Gas.--For purposes of this section,
the term `Alaska natural gas'
[[Page S3546]]
means natural gas entering any intake or tie-in point which
was derived from an area of the State of Alaska lying north
of 64 degrees North latitude produced in compliance with the
applicable State and Federal pollution prevention, control,
and permit requirements from the area generally known as the
North Slope of Alaska (including the continental shelf
thereof within the meaning of section 638(l)), determined
without regard to the area of the Alaska National Wildlife
Refuge (including the continental shelf thereof within the
meaning of section 638(l)).
``(d) Recapture.--
``(1) In general.--With respect to each 1,000,000 Btu of
Alaska natural gas entering any intake or tie-in point which
was derived from an area of the State of Alaska lying north
of 64 degrees North latitude after the date which is 3 years
after the date described in subsection (g)(1), if the average
monthly price described in subsection (b)(1)(B) exceeds 150
percent of the amount described in subsection (b)(1)(A) for
the month in which occurs the date of such entering, the
taxpayer's tax under this chapter for the taxable year shall
be increased by an amount equal to the lesser of--
``(A) such excess, or
``(B) the aggregate decrease in the credits allowed under
section 38 for all prior taxable years which would have
resulted if the Alaska natural gas credit received by the
taxpayer for such years had been zero.
``(2) Special rules.--
``(A) Tax benefit rule.--The tax for the taxable year shall
be increased under paragraph (1) only with respect to credits
allowed by reason of this section which were used to reduce
tax liability. In the case of credits not so used to reduce
tax liability, the carryforwards and carrybacks under section
39 shall be appropriately adjusted.
``(B) No credits against tax.--Any increase in tax under
this subsection shall not be treated as a tax imposed by this
chapter for purposes of determining the amount of any credit
under this chapter or for purposes of section 55.
``(e) Application of Rules.--For purposes of this section,
rules similar to the rules of paragraphs (3), (4), and (5) of
section 45(d) shall apply.
``(f) No Double Benefit.--The amount of any deduction or
other 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.
``(g) Application of Section.--This section shall apply to
Alaska natural gas entering any intake or tie-in point which
was derived from an area of the State of Alaska lying north
of 64 degrees North latitude for the period--
``(1) beginning with the later of--
``(A) January 1, 2010, or
``(B) the initial date for the interstate transportation of
such Alaska natural gas, and
``(2) except with respect to subsection (d), ending with
the date which is 15 years after the date described in
paragraph (1).''.
(b) Credit Treated as Business Credit.--Section 38(b), as
amended by this Act, is amended by striking ``plus'' at the
end of paragraph (22), by striking the period at the end of
paragraph (23) and inserting ``, plus'', and by adding at the
end the following new paragraph:
``(24) The Alaska natural gas credit determined under
section 45M(a).''.
(c) Allowing Credit Against Entire Regular Tax and Minimum
Tax.--
(1) In general.--Subsection (c) of section 38 (relating to
limitation based on amount of tax), as amended by this Act,
is amended by redesignating paragraph (5) as paragraph (6)
and by inserting after paragraph (4) the following new
paragraph:
``(5) Special rules for alaska natural gas credit.--
``(A) In general.--In the case of the Alaska natural gas
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) the amounts in subparagraphs (A) and (B) thereof
shall be treated as being zero, 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 Alaska
natural gas credit).
``(B) Alaska Natural Gas Credit.--For purposes of this
subsection, the term `Alaska natural gas credit' means the
credit allowable under subsection (a) by reason of section
45M(a).''.
(2) Conforming amendments.--Subclause (II) of section
38(c)(2)(A)(ii), as amended by this Act, subclause (II) of
section 38(c)(3)(A)(ii), as amended by this Act, and
subclause (II) of section 38(c)(4)(A)(ii), as added by this
Act, are each amended by inserting ``or the Alaska natural
gas credit'' after ``producer credit''.
(d) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1, as amended by this
Act, is amended by adding at the end the following new item:
``Sec. 45M. Alaska natural gas.''.
SEC. 704. SALE OF GASOLINE AND DIESEL FUEL AT DUTY-FREE SALES
ENTERPRISES.
(a) Prohibition.--Section 555(b) of the Tariff Act of 1930
(19 U.S.C. 1555(b)) is amended--
(1) by redesignating paragraphs (6) through (8) as
paragraphs (7) through (9), respectively; and
(2) by inserting after paragraph (5) the following:
``(6) Any gasoline or diesel fuel sold at a duty-free sales
enterprise shall be considered to be entered for consumption
into the customs territory of the United States.''.
(b) Construction.--The amendments made by this section
shall not be construed to create any inference with respect
to the interpretation of any provision of law as such
provision was in effect on the day before the date of
enactment of this Act.
(c) Effective date.--The amendments made by this section
shall take effect on the date of enactment of this Act.
SEC. 705. CLARIFICATION OF EXCISE TAX EXEMPTIONS FOR
AGRICULTURAL AERIAL APPLICATORS.
(a) No Waiver by Farm Owner, Tenant, or Operator
Necessary.--Subparagraph (B) of section 6420(c)(4) (relating
to certain farming use other than by owner, etc.) is amended
to read as follows:
``(B) if the person so using the gasoline is an aerial or
other applicator of fertilizers or other substances and is
the ultimate purchaser of the gasoline, then subparagraph (A)
of this paragraph shall not apply and the aerial or other
applicator shall be treated as having used such gasoline on a
farm for farming purposes.''.
(b) Exemption Includes Fuel Used Between Airfield and
Farm.--Section 6420(c)(4), as amended by subsection (a), is
amended by adding at the end the following new flush
sentence:
``For purposes of this paragraph, in the case of an aerial
applicator, gasoline shall be treated as used on a farm for
farming purposes if the gasoline is used for the direct
flight between the airfield and 1 or more farms.''.
(c) Exemption from Tax on Air Transportation of Persons for
Forestry Purposes Extended to Fixed-Wing Aircraft.--
Subsection (f) of section 4261 (relating to tax on air
transportation of persons) is amended to read as follows:
``(f) Exemption for Certain Uses.--No tax shall be imposed
under subsection (a) or (b) on air transportation--
``(1) by helicopter for the purpose of transporting
individuals, equipment, or supplies in the exploration for,
or the development or removal of, hard minerals, oil, or gas,
or
``(2) by helicopter or by fixed-wing aircraft for the
purpose of the planting, cultivation, cutting, or
transportation of, or caring for, trees (including logging
operations),
but only if the helicopter or fixed-wing aircraft does not
take off from, or land at, a facility eligible for assistance
under the Airport and Airway Development Act of 1970, or
otherwise use services provided pursuant to section 44509 or
44913(b) or subchapter I of chapter 471 of title 49, United
States Code, during such use. In the case of helicopter
transportation described in paragraph (1), this subsection
shall be applied by treating each flight segment as a
distinct flight.''.
(d) Effective Date.--The amendments made by this section
shall apply to fuel use or air transportation after December
31, 2002, and before January 1, 2004.
SEC. 706. MODIFICATION OF RURAL AIRPORT DEFINITION.
(a) In General.--Clause (ii) of section 4261(e)(1)(B)
(defining rural airport) is amended by striking the period at
the end of subclause (II) and inserting ``, or'' and by
adding at the end the following new subclause:
``(III) is not connected by paved roads to another
airport.''.
(b) Effective Date.--The amendments made by this section
shall apply to calendar years beginning after 2003.
SEC. 707. EXEMPTION FROM TICKET TAXES FOR TRANSPORTATION
PROVIDED BY SEAPLANES.
(a) In General.--The taxes imposed by sections 4261 and
4271 shall not apply to transportation by a seaplane with
respect to any segment consisting of a takeoff from, and a
landing on, water.
(b) Effective Date.--The amendments made by this section
shall apply to calendar years beginning after 2003.
Mr. BINGAMAN. Mr. President, I am pleased to join the Chairman and
Ranking Member of the Finance Committee and the Chairman of the Energy
and Natural Resources Committee as a sponsor of the Energy Tax
Incentives Act of 2003, which we are introducing today.
The tax incentives we introduce today are designed to encourage
commercial activities that will increase and diversify our energy
supplies and help us to use those energy supplies more efficiently and
productively. Our demand for energy continues to grow and we will need
a broad portfolio of energy sources, including improved efficiency, to
meet this demand. The energy tax package encompasses many of the
diverse components that make up a comprehensive energy strategy. These
include incentives for renewable resources, alternative transportation
fuels and alternative fuel vehicles, energy efficient appliances and
buildings, clean coal, domestic oil and gas production and
infrastructure, as well as removing impediments to an integrated
electric grid.
[[Page S3547]]
This bill reflects the work of the Finance Committee last year to
develop a balanced package of energy tax provisions to complement the
energy policy legislation developed by the Senate. The language of the
bill is virtually identical to the tax sections of the Energy bill
passed by the Senate last April. While new or improved versions of some
of the provisions have been developed in the intervening months, this
version provides a common starting point for any further refinements of
the text. I look forward to participating in the Finance Committee's
consideration of the energy tax package this year.
Mr. BAUCUS. Mr. President, I am pleased to join Chairman Grassley in
introducing the Energy Tax Incentives Act of 2003. The chairman and the
ranking member of the Energy and Natural Resources Committee, Senators
Domenici and Bingaman, are also original sponsors of this legislation.
This legislation is very similar to the energy tax incentives bill
which won overwhelming support on the Senate floor last April and
provides a strong starting point for the Senate Finance Committee
towards a mark-up of an energy tax bill.
The urgency for this legislation at this point in time is
particularly critical. Gasoline prices in the U.S. are at record
levels. Low inventories, high crude oil prices, recent cold weather and
continuing industry concern about a possible war with Iraq have raised
gas prices close to the highest price ever recorded. This situation is
not expected to improve in the near future.
To help alleviate this situation, this bill proposes a balanced
package of alternative energy, traditional energy production and energy
efficiency incentives. This legislation begins from the premise that we
may accomplish energy policy goals by targeting market incentives--in
the form of tax deductions and credits--at certain investments. The
bill would accomplish this in three ways. First, we create incentives
for new production, especially production from important renewable
sources. Second, we create incentives for the development of new
technology. Third, we create incentives for energy conservation.
Through targeted market incentives we hope to encourage the
development of alternative sources of production and technologies,
thereby boosting our overall energy resources. This will help promote
energy independence in the United States, which will contribute to both
greater economic growth and national security. At the same time, by
encouraging development of sources of renewable energy and energy
efficiency, we will also encourage pollution reduction and improve
human health and the environment.
I look forward to working with my colleagues on this important piece
of legislation.
______
By Ms. COLLINS (for herself, Mr. Miller, Mrs. Dole, Mr. McCain,
Mr. Kerry, Mr. Chambiss, and Mr. Specter):
S. 598. A bill to amend title XVIII of the Social Security Act to
provide for a clarification of the definition of homebound for purposes
of determining eligibility for home health services under the medicare
program; to the Committee on Finance.
Ms. COLLINS. Mr. President, I am pleased to join with Senators
Miller, Dole, McCain, Kerry, Chambliss and Specter in introducing the
David Jayne Medicare Homebound Modernization Act of 2003 to modernize
Medicare's outdated ``homebound'' requirement that has impeded access
to needed home health services for many of our Nation's elderly and
disabled Medicare beneficiaries.
Health care in America has gone full circle. People are spending less
time in institutions, and recovery and care for patients with chronic
diseases and conditions have increasingly been taking place in the
home. The highly skilled and often technically complex care that our
home health agencies provide has enabled millions of our most
vulnerable older and disabled individuals to avoid hospitals and
nursing homes and stay just where they belong--in the comfort and
security of their own homes.
Under current law, a Medicare patient must be considered
``homebound'' if he or she is to be eligible for home health services.
While an individual is not actually required to be bedridden to qualify
for benefits, his or her condition must be such that ``there exists a
normal inability to leave home.'' The statute does allow for absences
from the home that are ``infrequent'' or of ``relatively short
duration.'' It also gives specific permission for the individual to
leave home to attend medical appointments, adult day care or religious
services.
Unfortunately, however, the statute does not define precisely what
``infrequent'' or ``relatively short duration'' means. It leaves it to
the fiscal intermediaries to interpret just how many absences qualify
as ``frequent'' and just how short those absences must be.
Interpretations of this definition have therefore varied widely.
As a consequence, there have been far too many instances where an
overzealous or arbitrary interpretation of the definition has turned
elderly or disabled Medicare beneficiaries--who are dependent upon
Medicare home health services and medical equipment for survival--into
virtual prisoners in their own home.
The current homebound requirement is particularly hard on younger,
disabled Medicare patients. For example, last year I met with David
Jayne, a 41-year-old man with Lou Gehrig's disease, who is confined to
a wheelchair and cannot swallow, speak or even breathe on his own. Mr.
Jayne needs skilled nursing visits each week to enable him to remain
independent and out of an inpatient facility. Despite his disability,
Mr. Jayne meets frequently with youth and church groups. Speaking
through a computerized voice synthesizer, he gives inspirational talks
about how the human spirit can endure and even overcome great hardship.
The Atlanta Journal Constitution ran a feature article on Mr. Jayne
and his activities, including a report about how he had, with the help
of family and friends, attended a football game to root for the
University of Georgia Bulldogs. A few days later, at the direction of
the fiscal intermediary, his home health agency--which had been sending
a health care worker to his home for two hours, four mornings a week--
notified him that he could no longer be considered homebound, and that
his benefits were being cut off. While his benefits were subsequently
reinstated due to the media attention given the case, this experience
motivated him to launch a crusade to modernize the homebound definition
and led him to found the National Coalition to Amend the Medicare
Homebound Restriction.
The fact is that the current requirement reflects an outmoded view of
life for persons who live with serious disabilities. The homebound
criteria may have made sense thirty years ago, when an elderly or
disabled person might have expected to live in the confines of their
home--perhaps cared for by an extended family. The current definition,
however, fails to reflect the technological and medical advances that
have been made in supporting individuals with significant disabilities
and mobility challenges. It also fails to reflect advances in treatment
for seriously ill individuals that allow them brief periods of relative
wellness.
It also fails to recognize that an individual's mental acuity and
physical stamina can only be maintained by use, and that the use of the
body and mind is encouraged by social interactions outside the four
walls of a home.
The David Jayne Medicare Homebound Modernization Act of 2003 will
create an exception to the homebound restriction based on the severity
of the patient's functional limitations and clinical condition. The
specific, limited exception to the homebound rule would apply to
individuals who: one, have been certified by a physician as having a
permanent and severe condition that will not improve; two, who will
need assistance with three or more of the five activities of daily
living, such as eating, dressing and bathing, for the rest of their
lives; three, who require technological and/or personal assistance with
the act of leaving home; and four, who are only able to leave home
because the services provided through the home health benefit makes it
possible for them to do so.
We believe that our legislation is budget neutral because it is
specifically limited to individuals who are already eligible for
Medicare and whose conditions require the assistance of a skilled
nurse, therapist or home health
[[Page S3548]]
aide to make it functionally possible for them to leave the home. Our
legislation does not expand Medicare eligibility--it simply gives
people who are already eligible for the benefit their freedom.
This issue was first brought to my attention by former Senator Bob
Dole, who has long been a vigorous advocate for people with
disabilities, and I ask unanimous consent that the editorial Senator
Dole wrote for the Washington Post last summer entitled ``Imprisoned by
Medicare'' be printed in the Congressional Record at the conclusion of
my remarks.
Our proposal is also supported by the Consortium of Citizens with
Disabilities, the Visiting Nurse Associations of America, the National
Association for Home Care, Advancing Independence: Modernizing Medicare
and Medicaid, AIMM, the National Coalition to Amend the Medicare
Homebound Restriction, the Paralyzed Veterans of America, and the Half
the Planet Foundation.
Moreover, the David Jayne Medicare Homebound Modernization Act of
2003 is consistent with President Bush's ``New Freedom Initiative''
which has, as its goal, the removal of barriers that impede
opportunities for those with disabilities to integrate more fully into
the community. By allowing reasonable absences from the home, our
legislation will bring the Medicare home health benefit into the 21st
Century, and I look forward to working with my colleagues to get it
done.
There being no objection, the editorial was ordered to be printed in
the Record, as follows:
[From the Washington Post, June 27, 2002]
Imprisoned by Medicare
(Bob Dole)
Heroes inspire us to achieve the unachievable, to leave
America a better place for future generations. They remind us
that contributing to family and community is our highest
priority. I am fortunate to know such a hero, and his story
has inspired me to help achieve his one simple wish before he
dies--to change a Medicare restriction so that he and
thousands of others who live with permanent and severe
disabilities can leave their homes to see their children grow
up and contribute to their community without losing life-
sustaining home health services.
David Jayne was diagnosed with Lou Gehrig's disease at age
27. Otherwise known as amyotrophic lateral sclerosis (ALS),
this degenerative neuromuscular condition causes his muscles
to atrophy, leaving him unable to eat, breathe or move on his
own. Though his mobility is limited to moving three fingers,
Jayne, now 41, has demonstrated to everyone who knows him or
has read about him that the human spirit is indomitable.
I met David Jayne by chance at Reagan National Airport
about a year ago. Attached to life support equipment and a
computerized voice simulator because of his body's
deterioration at the hand of ALS, Jayne had traveled with the
help of friends from his home in Rex, Ga., to meet with his
elected members of Congress. He came to urge them to amend
the Medicare homebound restriction.
The homebound rule was intended to deter abuse of the home
health benefit by limiting services to only those individuals
whose illnesses and disabilities are so severe that leaving
the home would require ``a considerable and taxing effort.''
In the 1960s, when this rule was created, it reflected the
limits of health care and technology at the time. It was
incomprehensible then to think that someone with ALS or any
severe and permanent disability could leave the home.
While the homebound restriction has not changed, the role
of physicians and home health providers has. Nurses, doctors
and home health administrators have been turned into
watchdogs and given the responsibility to report any
knowledge of their patients leaving their homes. And the
awful reality of those receiving these services is that they
must either lie or cheat just to enjoy fundamental liberties.
This nearly 40-year-old policy reflects an outmoded view of
life for persons with disabilities. Thanks to advances in
technology and greater community accessibility through the
passage of the Americans with Disabilities Act (ADA), people
with the most severe disabilities are able to leave their
homes to go to work, volunteer in their communities and enjoy
their family and friends. Unfortunately, Medicare policy has
not kept pace with our times and is now punishing the very
people it was intended to benefit. While Medicare has
developed other and better policies to deter abuse, it has
kept this outdated policy.
The Medicare statute does allow for absences from the home
of ``infrequent'' or ``relatively short duration.'' But the
vagueness of this allowance leaves it to Medicare contractors
to interpret just how many absences qualify as ``frequent''
and just how short those absences might be. To err on the
conservative side, contractors have stripped home health
coverage from those most needing it, including David Jayne,
whose life depends on a ventilator, intravenous feeding and
daily care from a home health aide. Because Jayne's story
went public, his home health agency discontinued these life-
sustaining services. They were only reinstated after members
of Congress became involved and Jayne agreed to pay his home
health provider for any claim denied by Medicare. But
thousands of others live in fear of leaving their homes
because of the stories that have been reported. In two
heartbreaking cases, one mother's services were cut off after
she attended the funeral for her child, while another mother
did not attend the funeral of her child because of fear of
losing her home health care.
For millions of Americans, Medicare-covered home health
services provide a less costly alternative to nursing home or
hospital care. There are abuses that should be corrected, but
not by extracting a price that no law-abiding American should
ever have to pay.
David Jayne has inspired many people with his love and
determination and his simple words, ``Always wait another day
because the next day will be better.'' He inspired me to
volunteer to try to help.
I urge the House of Representatives to amend this harsh
restriction on individual freedom by including in the
Medicare reform bill the David Jayne Amendment, carefully
drafted by Rep. Ed Markey (D-Mass.) and Sen. Susan Collins
(R-Maine), to do what we all know in our hearts is right,
including all the appropriate safeguards to prevent abuse.
And if this is not possible because of cost concerns, to
adopt an amendment to provide for those who are severely and
permanently disabled and who require the assistance of an
attendant or a skilled nursing facility.
The amendment should give the Health and Human Services
Department six months to address the homebound rule and make
recommendations on how to bring it up to date with today's
technology. Make no mistake, David Jayne is a prisoner--a
prisoner in his specially designed wheelchair. His illness
has robbed him of the ability to do anything without the aid
of technology. Medicare shouldn't act as jailer too.
Thousands of David Jaynes across America are looking to the
president, Congress and the Department of Health and Human
Services for help.
______
By Mrs. LINCOLN (for herself, Ms. Collins, and Mr. Bingaman):
S. 599. A bill to amend title XVIII of the Social Security Act to
provide coverage under the medicare program for diabetes laboratory
diagnostic tests and other services to screen for diabetes; to the
Committee on Finance.
Mrs. LINCOLN. Mr. President, I rise today to introduce the ``Access
to Diabetes Screening Services Act of 2003'' with my friends Senators
Collins and Bingaman. This bill will help to bring the epidemic of
diabetes under control by providing Medicare coverage for laboratory
diagnostic tests and other services which are used to screen for
diabetes. Medicare cannot currently provide these screening services
because they are prohibited to do so by Federal law.
Diabetes has reached epidemic proportions among adults in the United
States. The latest figures published by the Centers for Disease
Control, CDC, in the January 1, 2003, edition of the ``Journal of the
American Medical Association'' show that 7.9 percent of the American
population has diabetes. The CDC believes that if trends continue, more
than 10 percent of all Americans will have diabetes by the year 2010.
Even today our Nation is feeling the effects of this disease--diabetes
is the Nation's sixth leading cause of death.
Diabetes strikes even harder in our nation's minority and emerging
majority populations. Today, the CDC estimates that 11.9 percent of the
African American population and nine percent of the Hispanic population
has diabetes. Without a doubt, diabetes is now truly the epidemic of
our time.
These rising rates are especially evident among our Nation's aging
population. Currently almost seven million Americans age 65 and older,
or over 20 percent of seniors, have diabetes. Roughly 20 percent of
seniors age 65 and older have a newly identified condition called pre-
diabetes, which if left untreated will develop into diabetes. An
additional 40,000 people living with diabetes and end-stage renal
disease under the age of 65 participate in the Medicare program.
Even more distressing is the fact that approximately one third of the
7 million seniors with diabetes, or 2.3 million people, are
undiagnosed. They simply do not know that they have this very serious
condition--a condition whose complications include heart disease,
stroke, vision loss and blindness, amputations, and kidney disease.
My own home State of Arkansas has had first-hand experience with the
rising diabetes rates. Arkansas ranks
[[Page S3549]]
fifth in the Nation for diabetes incidence. Recent studies show that
8.9 percent of all Arkansas adults had diagnosed diabetes, and over one
million Arkansans are at risk for undiagnosed diabetes.
Our Nation is not yet doing enough to manage this preventable and
controllable disease. Last week, the National Institutes of Health, the
CDC and the American Diabetes Association announced that the direct
costs of treating diabetes grew by more than 50 percent between 1997
and 2002, from $44 billion to $91.8 billion. One of every ten dollars
spent on healthcare in America is now spent on diabetes, and the
average per capita cost of healthcare for a person living with diabetes
is $13,243 versus $2,560 for a typical American without diabetes.
Those in the medical community and the federal government are only
too aware of the rising prevalence and serious nature of diabetes. The
Centers for Disease Control, National Institutes of Health, and the
Department of Health and Human Services recently joined together in a
national education campaign to inform people about diabetes and
encourage people age 45 and older to get screened for diabetes.
Unfortunately, current law does not allow Medicare to reimburse for
diabetes testing, even if a patient presents serious risk factors for
diabetes such as obesity, high blood pressure, or high cholesterol.
Most shockingly, even if a patient is experiencing early evidence of
diabetes complications, such as blindness or kidney disease, Medicare
still cannot reimburse a physician for diabetes testing.
This nonsensical omission of diabetes screening coverage is even more
shocking in light of the fact that about 25 percent of the Medicare
budget currently is devoted to providing medical care to seniors living
with diabetes. In 1999, Arkansas spent $1.6 billion on direct and
indirect costs of diabetes. The amount Arkansas spent on diabetes in
2002 is undoubtedly higher in light of the cost data available. Why are
we continuing to react to diabetes and its complications instead of
proactively screening our Medicare beneficiaries for this common and
costly disease? This screening can identify the disease, even before
any symptoms have appeared, and has the potential to save and improve
thousands of lives. In addition, this screening will potentially help
prevent countless cases of end-stage renal disease, blindness and
amputations--preventable complications of the diabetes that are
draining Medicare of vital resources.
The American Association of Clinical Endocrinologists strongly
believes that patients with diabetes should be identified as early as
possible in their illness. We have the technology to do this through
screening.
I cannot overstate the need for this legislation. When faced with the
rising prevalence of diabetes, the high percentage of seniors who
already have the disease, the alarmingly high number of seniors who
have diabetes but do not know it yet, the growing number of seniors
living with preventable diabetes complications, and the high cost
associated with diabetes treatment, it is obvious that Medicare should
provide coverage for diabetes screening.
Our Nation must do more to battle the epidemic of diabetes through
prevention, detection and treatment. This legislation will make
detection of a deadly disease available to all Medicare enrollees. The
American Diabetes Association has identified Medicare screening
coverage as a top legislative priority, and I have worked closely with
them to craft this legislation. I urge all of my colleagues to give
serious consideration to cosponsoring and actively supporting the
Diabetes Screening Act of 2003.
Ms. COLLINS. Mr. President, I am pleased to join my colleague from
Arkansas, Senator Lincoln, in introducing this important bill to
provide Medicare coverage for laboratory diagnostic tests and other
services used to screen for diabetes.
As the founder and co-chair of the Senate Diabetes Caucus, I have
learned a great deal about this serious disease and the difficulties
and heartbreak that it causes for so many Americans and their families.
Diabetes is a devastating, lifelong condition that disproportionately
affects the elderly, children and minorities. It is one of our Nation's
most costly diseases in both human and economic terms, and is the
leading cause of kidney failure, blindness in adults, and amputations
not related to injury. Moreover, it is a major risk factor for stroke,
heart disease and other chronic conditions. According to a new study
released by the American Diabetes Association, diabetes cost our Nation
$132 billion last year, and health care spending for people with
diabetes is almost double what it would be if they did not have
diabetes.
Unfortunately, diabetes frequently goes undiagnosed. Of the more than
17 million Americans who have diabetes, 7 million of whom are 65 and
older, it is estimated that as many as one third don't know it. They
simply do not know that they have this very serious condition that
places them at increased risk of developing devastating and costly
complications such as blindness, kidney failure and amputations.
Moreover, an additional 16 million Americans have a newly identified
condition known as ``pre-diabetes,'' an increasingly common condition
in which blood glucose levels are higher than normal, but not yet
diabetic. Pre-diabetes dramatically raises the risk for developing Type
2 diabetes and increases the risk of heart disease by 50 percent.
According to research supported by the Department of Health and Human
Services, most people with pre-diabetes are likely to develop diabetes
within a decade unless their condition is diagnosed and they make the
lifestyle changes necessary to reduce their risks for the disease.
Secretary of Health and Human Services Tommy Thompson has made
diabetes prevention and management a key part of the Bush
Administration's broader efforts to encourage a healthier America. As a
part of this effort, the Centers for Disease Control and Prevention,
the National Institutes of Health and the Department of Health and
Human Services have joined together in a national education campaign to
inform people about diabetes and encourage people age forty-five and
older to get screened for diabetes.
Unfortunately, however, current law does not allow Medicare to pay
for diabetes testing, even for patients with serious risk factors for
diabetes, such as obesity, high blood pressure, or high cholesterol.
Astoundingly, even if a patient is experiencing early evidence of
diabetes complications such as blindness or kidney disease, Medicare
will not pay for diabetes testing.
This coverage omission is particularly irrational given the fact that
one out of every four Medicare dollars is currently spent on medical
care for seniors who are living with diabetes.
Early detection and treatment are essential if we are to improve the
quality of life for people with diabetes and prevent or delay the onset
of the costly and sometimes deadly complications associated with the
disease. We have the technology to identify diabetes even before the
onset of any symptoms. These tests have the potential of improving and
saving thousands of lives, not to mention countless Medicare dollars.
It only makes sense that Medicare should cover them.
Both the American Diabetes Association and the American Association
of Clinical Endocrinologists support our legislation, and I encourage
all of our colleagues to join us as cosponsors.
______
By Mr. CRAIG (for himself and Mrs. Feinstein):
S. 600. A bill to authorize the Secretary of Energy to cooperate in
the international magnetic fusion burning plasma experiment, or
alternatively to develop a plan for a domestic burning plasma
experiment, for the purpose of accelerating the scientific
understanding and development of fusion as a long term energy source;
to the Committee on Energy and Natural Resources.
Mr. CRAIG. Mr. President, there should be no doubt that energy is
vital to our economy and that it contributes to our wealth and strength
as a nation. While it is true that human intelligence, a skilled
workforce, and the human spirit are essential to our economy and to our
future, without useable energy, these virtues are not, of themselves,
tools to make a physical difference.
As we look out decades and centuries into the future, determining
whether we will have enough energy and finding
[[Page S3550]]
the sources from which we will get it are extremely important
endeavors. Will we get our energy from oil or from coal? Will it come
from solar collectors and wind farms? Will it come from nuclear
fission? I submit that the answer we work to provide to this question
today will have a profound effect on the future quality of life for our
children and grandchildren. This is part of the reason why energy
policy is so controversial. It is because the stakes are so high.
Although fossil fuels will last for many decades yet--perhaps
centuries--the reality is that we must begin to plan for the time when
fossil fuels might not be so plentiful. Taken together, fossil fuels
provide us with well over 70 percent of the energy we consume in this
country. Much of that energy is imported. When you take oil, coal and
natural gas out of the equation, what are our options for the long term
future?
The significant potential contributors to our energy picture that are
not fossil fuels are likely to be nuclear, hydropower, renewables such
as solar, wind and geothermal, and fusion energy. We must pursue all of
these options as if our future depended on it, because it does. It is
in this context, that I want to focus my colleagues' attention today on
the subject of fusion energy.
Fusion energy is the power of the sun and the stars and has been the
subject of a decades-long research effort in the United States and
around the world. The bad news is that the ultimate goal of practical
fusion energy here on earth has proven to be far more difficult than
the early pioneers of fusion research ever envisioned. But the good
news is that there has been fantastic progress in the past decade, to
the point where now there is almost no doubt that large excess amounts
of fusion energy can be created in the laboratory. The question is: Can
fusion energy be made practical and affordable?
When proven practical, fusion will be capable of producing huge
amounts of base-load energy for our cities and our economy with no air
or water pollution. Its fuel is virtually inexhaustible. It cannot blow
up or melt down. Perhaps most tantalizingly, given our present
circumstances, no nation or region will have a monopoly because
everyone will have the fuel--a common component of water.
I am very proud today to stand with my good friend from California,
Senator Feinstein and introduce the Fusion Development Act of 2003. The
Fusion Development Act of 2003 is meant to hasten the day when we can
answer the question of practical and affordable fusion energy in the
affirmative.
Last month, President Bush announced that the United States would be
joining international negotiations on a major next step experiment on
the road to fusion energy, known as the ITER project. One of the
primary purposes of this bill is to authorize the Secretary of Energy
to participate fully in this international magnetic fusion burning
plasma experiment called ITER.
ITER is intended to establish once and for all that magnetically-
controlled fusion energy reactions can produce power plant-sized
amounts of fusion energy and establish the scientific basis for doing
so. Further, ITER will demonstrate some of the technologies necessary
to construct a fusion power plant such as large superconducting magnets
and plasma control systems. ITER will be an international science
experiment of a scale and importance second to none.
The siting and financing of ITER are currently being negotiated
between Europe, Japan, Russia, Canada and China. This bill will help
give the Administration the license it needs to move forward and stake
out a good place at the table of the ITER experiment. The importance of
the ITER experiment dictates that the United States must have a strong
position as the project moves forward.
In addition, our bill sets as a goal that the United States should
develop the scientific, engineering and commercial infrastructure
necessary to be competitive with other nations in this new frontier of
energy. In this regard, it requires the Secretary of Energy to submit
to Congress a plan to strengthen our existing fusion research efforts
and to address the critically important issues of fusion materials and
technology.
I ask that my colleagues devote their time to the extraordinarily
important subject of our present and future energy supply. The deeper
one delves into this subject, the more self-evident it becomes that
fusion is a must-have technology for the future.
The bill we are introducing today will help bring us closer to the
time when energy is less of a global political issue and energy
production has minimal impact on our natural environment. Fusion is an
important part of this vision and this goal. I therefore urge my
colleagues to support this legislation.
____________________