[Congressional Record Volume 149, Number 52 (Tuesday, April 1, 2003)]
[Senate]
[Pages S4641-S4643]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DURBIN (for himself, Mr. Allard, Mr. Conrad, Mr. Harkin, 
        Mr. Johnson, Mr. Leahy, Mr. Dorgan, and Mr. Jeffords):
  S. 759. A bill to amend the Internal Revenue Code of 1986 to provide 
a tax credit for individuals and businesses for the installation of 
certain wind energy property; to the Committee on Finance.
  Mr. DURBIN. Mr. President, I rise today to introduce the Residential, 
Farm, Ranch and Small Business Energy Systems Act of 2003, also known 
as the Small Wind Energy Systems Act. I am honored to be joined by 
Senators Allard, Conrad, Harkin, Johnson, Leahy and Dorgan in 
introducing this legislation.
  In order to foster a forward-looking energy policy, the United States 
needs to broaden its energy portfolio beyond fossil fuels, which are a 
finite energy source. Any serious attempt to create a

[[Page S4642]]

national energy policy must include innovative proposals for exploring 
and developing the use of alternative and renewable energy sources. The 
legislation I am introducing today would help spur the production of 
electricity from a limitless source--wind.
  This bill, similar to legislation I introduced last year, offers a 
tax credit to help defray the cost of installing a small wind energy 
system to generate electricity for individual homes, farms, ranches and 
businesses. The credit can be applied only to systems up to 75 kW, and 
is equal to 30 percent of the cost of installation, up to $1,000 per 
kilowatt. I am offering this legislation in the hope that this tax 
credit will help make it economical for people to invest in small wind 
systems, thereby reducing pressures on the national power grid and 
increasing America's energy independence one family and business at a 
time.
  Small wind systems are the most cost-competitive home-sized renewable 
energy technology, but the high up-front cost has been a barrier. A 
typical small, rural wind system rated at 10 kW costs $30,000-$35,000 
to install. A 30 percent business investment credit would make wind 
energy more viable for rural America. In addition, farmers and ranchers 
can utilize a small wind energy system while simultaneously continuing 
to use their land for crop growing or grazing. Facilitating the 
production of renewable energy on land that is already being worked for 
other purposes would be a boon to our economy, environment, and 
national security. Finally, the tax credit would help us promote a 
healthier environment. A typical small system can offset seven tons of 
carbon dioxide per year; carbon dioxide is the most significant 
contributor to climate change.

  I am pleased to see that others in the Senate are working to promote 
renewable energy. In the context of our deliberations on energy policy, 
I hope to work with Senators Grassley and Baucus, and others, in order 
to build on these efforts. In particular, I hope we can expand the 
residential credit provided for wind energy systems in the Energy Tax 
Incentives Act of 2003, S. 597, so that the cap is raised to $1,000 per 
kilowatt. In addition, I hope to add wind to the business investment 
credit section of the tax code. Although there is currently in law a 
business investment credit for solar and geothermal power, there is 
currently no Federal program to support small wind systems being 
installed by farmers and ranchers. The Energy Tax Incentives Act of 
2003 would add fuel cells to this section of the code. I hope I can 
work with my colleagues to also add wind to this section, because we 
need to encourage investments in this source of energy.
  Last year, a portion of this legislation was included in the Senate 
energy bill by unanimous consent. I hope to build on this success this 
year, by securing passage of the full measure.
  For the good of our rural economy, homeowners and business owners, 
the environment and energy security, I encourage my colleagues to 
support this legislation. I ask unanimous consent that the legislation 
be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 759

       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 ``Residential, Farm, Ranch, 
     and Small Business Wind Energy Systems Act of 2003'' or the 
     ``Small Wind Energy Systems Act of 2003''.

     SEC. 2. CREDIT FOR RESIDENTIAL WIND ENERGY PROPERTY.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     nonrefundable personal credits) is amended by inserting after 
     section 25B the following new section:

     ``SEC. 25C. RESIDENTIAL SMALL WIND ENERGY SYSTEMS.

       ``(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 30 
     percent of the qualified wind energy property expenditures 
     made by the taxpayer during such year.
       ``(b) Limitations.--
       ``(1) Maximum credit.--The credit allowed under subsection 
     (a) shall not exceed $1,000 for each kilowatt of capacity.
       ``(2) Safety certifications.--No credit shall be allowed 
     under this section for an item of property unless such 
     property meets appropriate fire and electric code 
     requirements.
       ``(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), 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 Wind Energy Property Expenditure.--For 
     purposes of this section--
       ``(1) Qualified wind energy property expenditure defined.--
       ``(A) In general.--The term `qualified wind energy property 
     expenditure' means an expenditure for qualified wind energy 
     property installed on or in connection with a dwelling unit 
     located in the United States and used as a residence by the 
     taxpayer, including all necessary installation fees and 
     charges.
       ``(B) Qualified wind energy property.--The term `qualified 
     wind energy property' means a qualifying wind turbine--
       ``(i) the original use of which commences with the 
     taxpayer, and
       ``(ii) which carries at least a 5-year limited warranty 
     covering defects in design, material, or workmanship, and, 
     for any qualifying wind turbine that is not installed by the 
     taxpayer, at least a 5-year limited warranty covering defects 
     in installation.
       ``(C) Qualifying wind turbine.--The term `qualifying wind 
     turbine' means a wind turbine of 75 kilowatts of rated 
     capacity or less which at the time of manufacture and not 
     more than one year from the date of purchase meets the latest 
     performance rating standards published by the American Wind 
     Energy Association or the International Electrotechnical 
     Commission and which is used to generate electricity.
       ``(2) Labor costs.--Expenditures for labor costs properly 
     allocable to the onsite preparation, assembly, or original 
     installation of qualified wind energy property and for piping 
     or wiring to interconnect such property to the dwelling unit 
     or to the local energy grid shall be taken into account for 
     purposes of this section.
       ``(3) 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 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.--If less than 80 percent 
     of the use of a qualified wind energy property is for 
     nonbusiness purposes and for generation of energy to be sold 
     to others, only that portion of the expenditures for such 
     property which is properly allocable to use for nonbusiness 
     purposes and for generation of energy to be sold to others 
     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 any qualified wind energy 
     property shall be treated as made when the original 
     installation of such property is completed and the property 
     has begun to be used to generate energy.
       ``(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

[[Page S4643]]

     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 qualified wind energy 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.--This section shall not apply to 
     property installed in taxable years beginning after December 
     31, 2008.''.
       (b) Credit Allowed Against Regular Tax and Alternative 
     Minimum Tax.--
       (1) In general.--Section 25C(b) of the Internal Revenue 
     Code of 1986, 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 25C(c) of such Code, 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) of such Code is amended by 
     inserting ``and section 25C'' after ``this section''.
       (C) Section 24(b)(3)(B) of such Code is amended by striking 
     ``23 and 25B'' and inserting ``23, 25B, and 25C''.
       (D) Section 25(e)(1)(C) of such Code is amended by 
     inserting ``25C,'' after ``25B,''.
       (E) Section 25B(g)(2) of such Code is amended by striking 
     ``section 23'' and inserting ``sections 23 and 25C''.
       (F) Section 26(a)(1) of such Code is amended by striking 
     ``and 25B'' and inserting ``25B, and 25C''.
       (G) Section 904(h) of such Code is amended by striking 
     ``and 25B'' and inserting ``25B, and 25C''.
       (H) Section 1400C(d) of such Code is amended by striking 
     ``and 25B'' and inserting ``25B, and 25C''.
       (c) Additional Conforming Amendments.--
       (1) Section 23(c) of the Internal Revenue Code of 1986, 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) of such Code, as in effect for 
     taxable years beginning before January 1, 2004, is amended by 
     inserting ``, 25C,'' after ``sections 23''.
       (3) Subsection (a) of section 1016 of such Code 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 25C(f), in the 
     case of amounts with respect to which a credit has been 
     allowed under section 25C.''.
       (4) Section 1400C(d) of such Code, 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 of such Code is amended by 
     inserting after the item relating to section 25B the 
     following new item:

``Sec. 25C. Residential wind energy property.''.

       (d) Effective Dates.--
       (1) In general.--Except as provided by paragraph (2), the 
     amendments made by this section shall apply to expenditures 
     after December 31, 2002, 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. 3. CREDIT FOR BUSINESS INSTALLATION OF SMALL WIND ENERGY 
                   PROPERTY.

       (a) In General.--Subparagraph (A) of section 48(a)(3) of 
     the Internal Revenue Code of 1986 (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 wind energy property installed before 
     January 1, 2009,''.
       (b) Qualified Wind Energy 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 wind energy property.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified wind energy 
     property' means a qualifying wind turbine--
       ``(i) installed on or in connection with a farm (as defined 
     in section 6420(c)), a ranch, or an establishment of an 
     eligible small business (as defined in section 44(b)) which 
     is located in the United States and which is owned and used 
     by the taxpayer,
       ``(ii) the original use of which commences with the 
     taxpayer, and
       ``(iii) which carries at least a 5-year limited warranty 
     covering defects in design, material, or workmanship, and, 
     for any qualifying wind turbine that is not installed by the 
     taxpayer, at least a 5-year limited warranty covering defects 
     in installation.
       ``(B) Limitation.--In the case of any qualified wind energy 
     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, including 
     all necessary installation fees and charges, or
       ``(ii) $1,000 for each kilowatt of capacity of such 
     property.
       ``(C) Qualifying wind turbine.--For purposes of this 
     paragraph the term `qualifying wind turbine' means a wind 
     turbine of 75 kilowatts of rated capacity or less which at 
     the time of manufacture and not more than one year from the 
     date of purchase meets the latest performance rating 
     standards published by the American Wind Energy Association 
     or the International Electrotechnical Commission and which is 
     used to generate electricity.
       ``(D) Safety certifications.--No credit shall be allowed 
     under this section for any qualified wind energy property 
     unless such property meets appropriate fire and electric code 
     requirements.''.
       (c) Limitation.--Section 48(a)(2)(A) of the Internal 
     Revenue Code of 1986 (relating to energy percentage) is 
     amended to read as follows:
       ``(A) In general.--The energy percentage is--
       ``(i) in the case of qualified wind energy property, 30 
     percent, and
       ``(ii) in the case of any other energy property, 10 
     percent.''.
       (d) Conforming Amendment.--Section 29(b)(3)(A)(i)(III) of 
     the Internal Revenue Code of 1986 is amended by striking 
     ``section 48(a)(4)(C)'' and inserting ``section 
     48(a)(5)(C)''.
       (e) Effective Date.--The amendments made by this subsection 
     shall apply to property placed in service after December 31, 
     2003, 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).
                                 ______