[Congressional Record Volume 150, Number 41 (Monday, March 29, 2004)]
[Senate]
[Pages S3300-S3312]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA 2937. Mr. GRASSLEY (for Ms. Snowe (for herself, Mr. Dodd, Mr. 
Hatch, Mr. Alexander, Mr. Carper, Mr. Bingaman, Mr. Rockefeller, Ms. 
Collins, Ms. Landrieu, Mrs. Murray, Mr. Jeffords, Mrs. Boxer, Mr. 
Chafee, Mrs. Lincoln, Mrs. Clinton, Ms. Mikulski, Mr. Coleman, Mr. 
Schumer, and Mr. Baucus)) proposed an amendment to the bill H.R. 4, to 
reauthorize and improve the program of block grants to States for 
temporary assistance for needy families, improve access to quality 
child care, and for other purposes; as follows:

       Beginning on page 255, strike line 18 and all that follows 
     through page 257, line 2, and insert the following:

     SEC. 116. FUNDING FOR CHILD CARE.

       (a) Increase in Mandatory Funding.--Section 418(a)(3) (42 
     U.S.C. 618(a)(3)), as amended by section 4 of the Welfare 
     Reform Extension Act of 2003 (Public Law 108-040, 117 Stat. 
     837), is amended--
       (1) by striking ``and'' at the end of subparagraph (E);
       (2) by striking the period at the end of subparagraph (F) 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(G) $2,917,000,000 for each of fiscal years 2005 through 
     2009.''.
       (b) Reservation of Child Care Funds.--
       (1) In general.--Section 418(a)(4) (42 U.S.C. 618(a)(4)) is 
     amended to read as follows:
       ``(4) Amounts reserved.--
       ``(A) Indian tribes.--
       ``(i) In general.--The Secretary shall reserve 2 percent of 
     the aggregate amount appropriated to carry out this section 
     for a fiscal year for payments to Indian tribes and tribal 
     organizations for such fiscal year for the purpose of 
     providing child care assistance.
       ``(ii) Application of ccdbg requirements.--Payments made 
     under this subparagraph shall be subject to the requirements 
     that apply to payments made to Indian tribes and tribal 
     organizations under the Child Care and Development Block 
     Grant Act of 1990.
       ``(B) Territories.--
       ``(i) Puerto rico.--The Secretary shall reserve 1.5 percent 
     of the amount appropriated under paragraph (5)(A)(i) for a 
     fiscal year for payments to the Commonwealth of Puerto Rico 
     for such fiscal year for the purpose of providing child care 
     assistance.
       ``(ii) Other territories.--The Secretary shall reserve 0.5 
     percent of the amount appropriated under paragraph (5)(A)(i) 
     for a fiscal year for payments to Guam, American Samoa, the 
     Virgin Islands of the United States, and the Commonwealth of 
     the Northern Mariana Islands in amounts which bear the same 
     ratio to such amount as the amounts allotted to such 
     territories under section 658O of the Child Care and 
     Development Block Grant Act of 1990 for the fiscal year bear 
     to the total amount reserved under such section for that 
     fiscal year.
       ``(iii) Application of ccdbg requirements.--Payments made 
     under this subparagraph shall be subject to the requirements 
     that apply to payments made to territories under the Child 
     Care and Development Block Grant Act of 1990.''.
       (2) Conforming amendment.--Section 1108(a)(2) (42 U.S.C. 
     1308(a)(2)), as amended by section 108(b)(3), is amended by 
     striking ``or 413(f)'' and inserting ``413(f), or 
     418(a)(4)(B)''.
       (c) Supplemental Grants.--Section 418(a) (42 U.S.C. 618(a)) 
     is amended--
       (1) by redesignating paragraph (5) as paragraph (7); and
       (2) by inserting after paragraph (4), the following:
       ``(5) Supplemental grants.--
       ``(A) Appropriation.--
       ``(i) In general.--For supplemental grants under this 
     section, there are appropriated--

       ``(I) $700,000,000 for fiscal year 2005;
       ``(II) $1,000,000,000 for fiscal year 2006;
       ``(III) $1,200,000,000 for fiscal year 2007;
       ``(IV) $1,400,000,000 for fiscal year 2008; and
       ``(V) $1,700,000,000 for fiscal year 2009.

       ``(ii) Availability.--Amounts appropriated under clause (i) 
     for a fiscal year shall be in addition to amounts 
     appropriated under paragraph (3) for such fiscal year and 
     shall remain available without fiscal year limitation.
       ``(B) Supplemental grant.--In addition to the grants paid 
     to a State under paragraphs (1) and (2) for each of fiscal 
     years 2005 through 2009, the Secretary, after reserving the 
     amounts described in subparagraphs (A) and (B) of paragraph 
     (4) and subject to the requirements described in paragraph 
     (6), shall pay each State an amount which bears the same 
     ratio to the amount specified in subparagraph (A)(i) for the 
     fiscal year (after such reservations), as the amount allotted 
     to the State under paragraph (2)(B) for fiscal year 2003 
     bears to the amount allotted to all States under that 
     paragraph for such fiscal year.
       ``(6) Requirements.--
       ``(A) Maintenance of effort.--A State may not be paid a 
     supplemental grant under paragraph (5) for a fiscal year 
     unless the State ensures that the level of State expenditures 
     for child care for such fiscal year is not less than the sum 
     of--
       ``(i) the level of State expenditures for child care that 
     were matched under a grant made to the State under paragraph 
     (2) for fiscal year 2003; and
       ``(ii) the level of State expenditures for child care that 
     the State reported as maintenance of effort expenditures for 
     purposes of paragraph (2) for fiscal year 2003.
       ``(B) Matching requirement for fiscal years 2008 and 
     2009.--With respect to the amount of the supplemental grant 
     made to a State under paragraph (5) for each of fiscal years 
     fiscal year 2008 and 2009 that is in excess of the amount of 
     the grant made to the State under paragraph (5) for fiscal 
     year 2007, subparagraph (C) of paragraph (2) shall apply to 
     such excess amount in the same manner as such subparagraph 
     applies to grants made under subparagraph (A) of paragraph 
     (2) for each of fiscal years 2008 and 2009, respectively.
       ``(C) Redistribution.--In the case of a State that fails to 
     satisfy the requirement of subparagraph (A) for a fiscal 
     year, the supplemental grant determined under paragraph (5) 
     for the State for that fiscal year shall be redistributed in 
     accordance with paragraph (2)(D).''.
       (d) Extension of Merchandise Processing Customs User 
     Fees.--Section 13031(j)(3) of the Consolidated Omnibus Budget 
     Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)), as amended 
     by section 201 of the Military Family Tax Relief Act of 2003 
     (Public Law 108-121; 117 Stat. 1343), is amended--
       (1) by striking ``Fees'' and inserting ``(A) Except as 
     provided in subparagraph (B), fees''; and
       (2) by adding at the end the following:
       ``(B) Fees may not be charged under paragraphs (9) and (10) 
     of subsection (a) after September 30, 2009.''.
                                 ______
                                 
  SA 2938. Mr. BINGAMAN submitted an amendment intended to be proposed 
by him to the bill S. 1637, to amend the Internal Revenue Code of 1986 
to comply with the World Trade Organization rulings on the FSC/ETI 
benefit in a manner that preserves jobs and production activities in 
the United States, to reform and simplify the international taxation 
rules of the United States, and for other purposes; which was ordered 
to lie on the table; as follows:

       At the end add the following:

                   TITLE VIII--ENERGY TAX INCENTIVES

       Subtitle A--Conservation and Energy Efficiency Provisions

     SEC. 801. 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. 45K. 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, $1,000, 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--

       ``(I) 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 
     qualifying new home constructed in accordance with the latest 
     standards of chapter 4 of the International Energy 
     Conservation Code approved by the Department of Energy before 
     the construction of such qualifying new home and any 
     applicable Federal minimum efficiency standards for 
     equipment, or
       ``(II) in the case of a qualifying new home which is a 
     manufactured home, a home which meets the applicable 
     standards required by the Administrator of the Environmental 
     Protection Agency under the Energy Star Labeled Homes 
     program.

       ``(ii) 50-percent home.--The term `50-percent home' means a 
     qualifying new home which would be described in clause (i)(I) 
     if 50 percent were substituted for 30 percent.
       ``(C) Prior credit amounts on same home taken into 
     account.--The amount of the credit otherwise allowable for 
     the taxable year with respect to a qualifying new home under 
     clause (i) or (ii) of subparagraph (A) shall be reduced by 
     the sum of the credits allowed under subsection (a) to any 
     taxpayer with respect to the home for all preceding taxable 
     years.

[[Page S3301]]

       ``(2) Coordination with certain 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 credit 
     (as determined under section 48(a)), and
       ``(B) expenditures taken into account under section 25D, 
     47, or 48(a) shall not be taken into account under this 
     section.
       ``(3) Provider limitation.--Any eligible contractor who 
     directly or indirectly provides the guarantee of energy 
     savings under a guarantee-based method of certification 
     described in subsection (d)(1)(D) shall not be eligible to 
     receive the credit allowed by this section.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Eligible contractor.--The term `eligible contractor' 
     means--
       ``(A) the person who constructed the qualifying new home, 
     or
       ``(B) in the case of a qualifying new home which is a 
     manufactured home, the manufactured home producer of such 
     home.
     If more than 1 person is described in subparagraph (A) or (B) 
     with respect to any qualifying new home, such term means the 
     person designated as such by the owner 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 or system which can, individually or in 
     combination with other components, meet the requirements of 
     this section.
       ``(3) Qualifying new home.--
       ``(A) In general.--The term `qualifying new home' means a 
     dwelling--
       ``(i) located in the United States,
       ``(ii) the construction of which is substantially completed 
     after September 30, 2004, and
       ``(iii) the first use of which after construction is as a 
     principal residence (within the meaning of section 121).
       ``(B) 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).
       ``(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,
       ``(B) exterior windows (including skylights), and
       ``(C) exterior doors.
       ``(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, a performance-based method, or a guarantee-based 
     method, or, in the case of a qualifying new home which is a 
     manufactured home, by a method prescribed by the 
     Administrator of the Environmental Protection Agency under 
     the Energy Star Labeled Homes program.
       ``(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 which are equivalent in 
     energy performance to properties which 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 new home--

       ``(I) heated by the same fuel type, and
       ``(II) constructed in accordance with the latest standards 
     of chapter 4 of the International Energy Conservation Code 
     approved by the Department of Energy before the construction 
     of such qualifying new home and any applicable Federal 
     minimum efficiency standards for equipment.

       ``(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.
       ``(D) Guarantee-based method.--
       ``(i) In general.--A guarantee-based method is a method 
     which guarantees in writing to the homeowner energy savings 
     of either 30 percent or 50 percent over the 2000 
     International Energy Conservation Code for heating and 
     cooling costs. The guarantee shall be provided for a minimum 
     of 2 years and shall fully reimburse the homeowner any 
     heating and cooling costs in excess of the guaranteed amount.
       ``(ii) Computer software.--Computer software shall be 
     selected by the provider to support the guarantee-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.
       ``(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, or a home energy 
     rating organization,
       ``(B) in the case of a performance-based method or a 
     guarantee-based method, an individual recognized by an 
     organization designated by the Secretary for such purposes, 
     or
       ``(C) in the case of a qualifying new home which is a 
     manufactured home, a manufactured home primary inspection 
     agency.
       ``(3) Form.--
       ``(A) In general.--A certification described in subsection 
     (b)(1)(B) shall be made in writing in a manner which 
     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
       ``(i) 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, and
       ``(ii) in the case of a qualifying new home which is a 
     manufactured home, accompanied by such documentation as 
     required by the Administrator of the Environmental Protection 
     Agency under the Energy Star Labeled Homes program.
       ``(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 annual fuel utilization 
     efficiency (AFUE) ratings for furnaces and boilers, labeled 
     heating seasonal performance factor (HSPF) ratings for 
     electric heat pumps, and labeled seasonal energy efficiency 
     ratio (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 and guarantee-based 
     certification methods, the Secretary 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 Home Energy Rating Standards.
       ``(e) Application.--Subsection (a) shall apply to 
     qualifying new homes the construction of which is 
     substantially completed after September 30, 2004, and 
     purchased during the period beginning on such date and ending 
     on--
       ``(1) in the case of any 30-percent home, December 31, 
     2005, and
       ``(2) in the case of any 50-percent home, December 31, 
     2007.''.
       (b) Credit Made Part of General Business Credit.--Section 
     38(b) (relating to current year business credit), 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 new energy efficient home credit determined 
     under section 45K(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 45K(a).''.
       (d) 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:
       ``(16) 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 45K may be carried back to 
     any taxable year ending before October 1, 2004.''.
       (e) Deduction for Certain Unused Business Credits.--Section 
     196(c) (defining qualified business credits) is amended by 
     striking ``and'' at the end of paragraph (9),

[[Page S3302]]

     by striking the period at the end of paragraph (10) and 
     inserting ``, and'', and by adding after paragraph (10) the 
     following new paragraph:
       ``(11) the new energy efficient home credit determined 
     under section 45K(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. 45K. New energy efficient home credit.''.

       (g) Effective Date.--The amendments made by this section 
     shall apply to homes the construction of which is 
     substantially completed after September 30, 2004.

     SEC. 802. 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. 45L. ENERGY EFFICIENT APPLIANCE CREDIT.

       ``(a) Allowance of Credit.--
       ``(1) In general.--For purposes of section 38, the energy 
     efficient appliance credit determined under this section for 
     the taxable year is an amount equal to the sum of the amounts 
     determined under paragraph (2) for qualified energy efficient 
     appliances produced by the taxpayer during the calendar year 
     ending with or within the taxable year.
       ``(2) Amount.--The amount determined under this paragraph 
     for any category described in subsection (b)(2)(B) shall be 
     the product of the applicable amount for appliances in the 
     category and the eligible production for the category.
       ``(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 1.42 MEF, or
       ``(ii) a refrigerator which consumes at least 10 percent 
     less kilowatt hours per year than the energy conservation 
     standards for refrigerators promulgated by the Department of 
     Energy and effective on July 1, 2001,
       ``(B) $100, in the case of--
       ``(i) a clothes washer which is manufactured with at least 
     a 1.50 MEF, or
       ``(ii) a refrigerator which consumes at least 15 percent 
     (20 percent in the case of a refrigerator manufactured after 
     2006) less kilowatt hours per year than such energy 
     conservation standards, and
       ``(C) $150, in the case of a refrigerator manufactured 
     before 2007 which consumes at least 20 percent less kilowatt 
     hours 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),
       ``(iv) refrigerators described in paragraph (1)(B)(ii), and
       ``(v) refrigerators described in paragraph (1)(C).
       ``(c) Limitation on Maximum Credit.--
       ``(1) In general.--The amount of credit allowed under 
     subsection (a) with respect to a taxpayer for all taxable 
     years shall not exceed $60,000,000, of which not more than 
     $30,000,000 may be allowed with respect to the credit 
     determined by using the applicable amount under subsection 
     (b)(1)(A).
       ``(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), 
     (B)(ii), or (C) 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, 2007.''.
       (b) Credit Made Part of General Business Credit.--Section 
     38(b) (relating to current year 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) the energy efficient appliance credit determined 
     under section 45L(a).''.
       (c) 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:
       ``(17) 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 
     45L may be carried to a taxable year ending before October 1, 
     2004.''.
       (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. Energy efficient appliance credit.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to appliances produced after September 30, 2004, 
     in taxable years ending after such date.

     SEC. 803. 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 paragraph (1), (2), 
     or (5) of subsection (d),
       ``(B) $500 for each 0.5 kilowatt of capacity of property 
     described in subsection (d)(4), and
       ``(C) for property described in subsection (d)(6)--
       ``(i) $150 for each electric heat pump water heater,
       ``(ii) $125 for each advanced natural gas, oil, propane 
     furnace, or hot water boiler,
       ``(iii) $150 for each advanced natural gas, oil, or propane 
     water heater,
       ``(iv) $50 for each natural gas, oil, or propane water 
     heater,
       ``(v) $50 for an advanced main air circulating fan,
       ``(vi) $150 for each advanced combination space and water 
     heating system,
       ``(vii) $50 for each combination space and water heating 
     system, and
       ``(viii) $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) for 
     property described in subsection (d)(6)(B)(viii)--

[[Page S3303]]

       ``(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 which uses solar energy to generate 
     electricity for use in a dwelling unit located in the United 
     States and used as a residence by the taxpayer.
       ``(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 a 
     dwelling unit located in the United States and used as a 
     principal residence (within the meaning of section 121) by 
     the taxpayer.
       ``(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 a dwelling unit located in the United 
     States and used as a residence by the taxpayer.
       ``(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 advanced natural gas, oil, propane furnace, or 
     hot water boiler which achieves at least 95 percent annual 
     fuel utilization efficiency (AFUE),
       ``(iii) an advanced natural gas, oil, or propane water 
     heater which has an energy factor of at least 0.80 in the 
     standard Department of Energy test procedure,
       ``(iv) a natural gas, oil, or propane water heater which 
     has an energy factor of at least 0.65 but less than 0.80 in 
     the standard Department of Energy test procedure,
       ``(v) an advanced main air circulating fan used in a new 
     natural gas, propane, or oil-fired furnace, including main 
     air circulating fans that use a brushless permanent magnet 
     motor or another type of motor which achieves similar or 
     higher efficiency at half and full speed, as determined by 
     the Secretary,
       ``(vi) an advanced combination space and water heating 
     system which has a combined energy factor of at least 0.80 
     and a combined annual fuel utilization efficiency (AFUE) of 
     at least 78 percent in the standard Department of Energy test 
     procedure,
       ``(vii) a combination space and water heating system which 
     has a combined energy factor of at least 0.65 but less than 
     0.80 and a combined annual fuel utilization efficiency (AFUE) 
     of at least 78 percent in the standard Department of Energy 
     test procedure, and
       ``(viii) 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 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 rules 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 into 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 1016(a), as amended by this Act, is amended by 
     striking ``and'' at the end of paragraph (30), by striking 
     the period at the

[[Page S3304]]

     end of paragraph (31) and inserting ``, and'', and by adding 
     at the end the following new paragraph:
       ``(32) 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.''.
       (2) The table of sections for subpart A of part IV of 
     subchapter A of chapter 1 is amended by inserting after the 
     item relating to section 25B the following 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 September 30, 2004, in taxable years ending after such 
     date.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply to taxable years beginning after September 30, 
     2004.

     SEC. 804. CREDIT FOR BUSINESS INSTALLATION OF QUALIFIED FUEL 
                   CELLS AND STATIONARY MICROTURBINE POWER PLANTS.

       (a) In General.--Section 48(a)(3)(A) (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.--Section 48(a) (relating to energy credit) 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 which--

       ``(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 otherwise determined under paragraph (1) for such year 
     with respect to such property shall not exceed an amount 
     equal to $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 
     which converts a fuel into electricity using electrochemical 
     means.
       ``(iv) Termination.--The term `qualified fuel cell 
     property' 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--

       ``(I) has a capacity of less than 2,000 kilowatts, and
       ``(II) has an electricity-only generation efficiency of 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 otherwise determined under paragraph (1) for such year 
     with respect to such property shall not exceed an amount 
     equal $200 for each kilowatt of capacity of such property.
       ``(iii) Stationary microturbine power plant.--The term 
     `stationary microturbine power plant' means an integrated 
     system comprised of a gas turbine engine, a combustor, a 
     recuperator or regenerator, a generator or alternator, and 
     associated balance of plant components which converts a fuel 
     into electricity and thermal energy. Such term also 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.--The term `qualified microturbine 
     property' shall not include any property placed in service 
     after December 31, 2006.''.
       (c) Energy Percentage.--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 section 
     shall apply to property placed in service after September 30, 
     2004, 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. 805. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

       (a) In General.--Part VI of subchapter B of chapter 1 
     (relating to itemized deductions for individuals and 
     corporations) 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 in which a building is placed in service 
     by a taxpayer, an amount equal to the energy efficient 
     commercial building property expenditures made by such 
     taxpayer with respect to the construction or reconstruction 
     of such building for the taxable year or any preceding 
     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) Energy Efficient Commercial Building Property 
     Expenditures.--For purposes of this section--
       ``(1) In general.--The term `energy efficient commercial 
     building property expenditures' means amounts paid or 
     incurred for energy efficient property installed on or in 
     connection with the construction or reconstruction of a 
     building--
       ``(A) for which depreciation is allowable under section 
     167,
       ``(B) which is located in the United States, and
       ``(C) which is the type of structure to which the Standard 
     90.1-2001 of the American Society of Heating, Refrigerating, 
     and Air Conditioning Engineers and the Illuminating 
     Engineering Society of North America is applicable.

     Such term includes expenditures for labor costs properly 
     allocable to the onsite preparation, assembly, or original 
     installation of the property.
       ``(2) Energy efficient property.--For purposes of paragraph 
     (1)--
       ``(A) In general.--The term `energy efficient 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 building which meets 
     the minimum requirements of Standard 90.1-2001 of the 
     American Society of Heating, Refrigerating, and Air 
     Conditioning Engineers and the Illuminating Engineering 
     Society of North America, using methods of calculation 
     described in subparagraph (B) and certified by qualified 
     individuals 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 costs.
       ``(C) Computer software.--
       ``(i) In general.--Any calculation described in 
     subparagraph (B) 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 costs as required by the 
     Secretary,
       ``(II) which provides such forms as required to be filed by 
     the Secretary in connection with energy efficiency of 
     property and the deduction allowed under this section, and
       ``(III) which provides a notice form which summarizes the 
     energy efficiency features of the building and its projected 
     annual energy costs.

       ``(3) Allocation of deduction for public property.--In the 
     case of energy efficient commercial building property 
     expenditures made by a public entity with respect to the 
     construction or reconstruction of a public building, the 
     Secretary shall promulgate regulations under which the value 
     of the deduction with respect to such expenditures which 
     would be allowable to the public entity under this section 
     (determined without regard to the tax-exempt status of such 
     entity) may be allocated to the person primarily responsible 
     for designing the energy efficient property. Such person 
     shall be treated as the taxpayer for purposes of this 
     section.
       ``(4) Notice to owner.--Any qualified individual providing 
     a certification under paragraph (5) 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.--The Secretary shall prescribe procedures 
     for the inspection and testing for compliance of buildings by 
     qualified individuals described in subparagraph (B). Such 
     procedures shall be--
       ``(i) comparable, given the difference between commercial 
     and residential buildings, to the requirements in the 
     Mortgage Industry National Home Energy Rating Standards, and
       ``(ii) fuel neutral such that the same energy efficiency 
     measures allow a building to be eligible for the credit under 
     this section regardless of whether such building uses a gas 
     or oil furnace or boiler or an electric heat pump.
       ``(B) Qualified individuals.--Individuals qualified to 
     determine compliance shall be

[[Page S3305]]

     only those individuals who are recognized by an organization 
     certified by the Secretary for such purposes. The Secretary 
     may qualify a home energy ratings organization, a local 
     building regulatory authority, a State or local energy 
     office, a utility, or any other organization which meets the 
     requirements prescribed under this paragraph.
       ``(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.
       ``(d) Basis Reduction.--For purposes of this subtitle, if a 
     deduction is allowed under this section with respect to any 
     energy efficient property, the basis of such property shall 
     be reduced by the amount of the deduction so allowed.
       ``(e) 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.
       ``(f) Termination.--This section shall not apply with 
     respect to any energy efficient commercial building property 
     expenditures in connection with a building 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 (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 179B(d).''.
       (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 September 30, 
     2004.

     SEC. 806. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR 
                   DEPRECIATION OF QUALIFIED ENERGY MANAGEMENT 
                   DEVICES.

       (a) In General.--Section 168(e)(3)(A) (defining 3-year 
     property) is amended by striking ``and'' at the end of clause 
     (ii), by striking the period at the end of clause (iii) and 
     inserting ``, and'', and by adding at the end the following 
     new clause:
       ``(iv) any qualified energy management device.''.
       (b) Definition of Qualified Energy Management Device.--
     Section 168(i) (relating to definitions and special rules) is 
     amended by inserting at the end the following new paragraph:
       ``(15) Qualified energy management device.--
       ``(A) In general.--The term `qualified energy management 
     device' means any energy management device which is placed in 
     service before January 1, 2008, by a taxpayer who is a 
     supplier of electric energy or a provider of electric energy 
     services.
       ``(B) Energy management device.--For purposes of 
     subparagraph (A), the term `energy management device' means 
     any meter or metering device which is used by the taxpayer--
       ``(i) to measure and record electricity usage data on a 
     time-differentiated basis in at least 4 separate time 
     segments per day, and
       ``(ii) to provide such data on at least a monthly basis to 
     both consumers and the taxpayer.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after September 30, 
     2004, in taxable years ending after such date.

     SEC. 807. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR 
                   DEPRECIATION OF QUALIFIED WATER SUBMETERING 
                   DEVICES.

       (a) In General.--Section 168(e)(3)(A) (defining 3-year 
     property), as amended by this Act, is amended by striking 
     ``and'' at the end of clause (iii), by striking the period at 
     the end of clause (iv) and inserting ``, and'', and by adding 
     at the end the following new clause:
       ``(v) any qualified water submetering device.''.
       (b) Definition of Qualified Water Submetering Device.--
     Section 168(i) (relating to definitions and special rules), 
     as amended by this Act, is amended by inserting at the end 
     the following new paragraph:
       ``(16) Qualified water submetering device.--
       ``(A) In general.--The term `qualified water submetering 
     device' means any water submetering device which is placed in 
     service before January 1, 2008, by a taxpayer who is an 
     eligible resupplier with respect to the unit for which the 
     device is placed in service.
       ``(B) Water submetering device.--For purposes of this 
     paragraph, the term `water submetering device' means any 
     submetering device which is used by the taxpayer--
       ``(i) to measure and record water usage data, and
       ``(ii) to provide such data on at least a monthly basis to 
     both consumers and the taxpayer.
       ``(C) Eligible resupplier.--For purposes of subparagraph 
     (A), the term `eligible resupplier' means any taxpayer who 
     purchases and installs qualified water submetering devices in 
     every unit in any multi-unit property.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after September 30, 
     2004, in taxable years ending after such date.

     SEC. 808. ENERGY CREDIT FOR COMBINED HEAT AND POWER SYSTEM 
                   PROPERTY.

       (a) In General.--Section 48(a)(3)(A) (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.--Section 48(a) 
     (relating to energy credit), 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 which is not used to produce 
     electrical or mechanical power (or combination thereof), and
       ``(II) at least 20 percent of its total useful energy in 
     the form of electrical or mechanical power (or combination 
     thereof),

       ``(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 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 this subsection if, with respect 
     to such property, the taxpayer uses a normalization method of 
     accounting.
       ``(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 (i), (iii), 
     and (iv) thereof.
       ``(C) Extension of depreciation recovery period.--If a 
     taxpayer is allowed a credit under this section for a 
     combined heat and power system property which has 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.''.

[[Page S3306]]

       (c) 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:
       ``(18) 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 before October 1, 
     2004.''.
       (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 subsection 
     shall apply to property placed in service after September 30, 
     2004, 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. 809. 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) Limitation.--The credit allowed by this section with 
     respect to a dwelling for any taxable year shall not exceed 
     $300, reduced (but not below zero) by the sum of the credits 
     allowed under subsection (a) to the taxpayer with respect to 
     the dwelling for all preceding 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 such 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 
     latest prescriptive criteria for such component in the 
     International Energy Conservation Code approved by the 
     Department of Energy before the installation of such 
     component, 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 which--
       ``(A) is located in the United States,
       ``(B) has not been treated as a qualifying new home for 
     purposes of any credit allowed under section 45K, and
       ``(C) is 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.
       ``(2) Provider.--A certification described in subsection 
     (d) shall be provided by--
       ``(A) in the case of the method described in paragraph 
     (1)(A), a third party, such as a local building regulatory 
     authority, a utility, a manufactured home primary inspection 
     agency, 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 Home Energy 
     Rating Standards, 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 Home Energy Rating Standards.
       ``(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 rules 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) 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) any 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) Termination.--Subsection (a) shall not apply to 
     qualified energy efficiency improvements installed after 
     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--
       (A) by striking ``The credit'' and inserting the following:

[[Page S3307]]

       ``(1) Dollar amount.--The credit'', and
       (B) by adding at the end the following new paragraph:
       ``(2) 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)(2)''.
       (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 1016(a), 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(g), in the 
     case of amounts with respect to which a credit has been 
     allowed under section 25D.''.
       (2) 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 property 
     installed after September 30, 2004, in taxable years ending 
     after such date.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply to taxable years beginning after September 30, 
     2004.

                   Subtitle B--Oil and Gas Provisions

     SEC. 811. 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. 45M. 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 crude oil production and the qualified 
     natural gas production which is attributable to the taxpayer.
       ``(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.--
       ``(i) In general.--In the case of any taxable year 
     beginning in a calendar year after 2004, 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.
       ``(ii) Inflation adjustment factor.--For purposes of clause 
     (i)--

       ``(I) 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.
       ``(II) GDP implicit price deflator.--The term `GDP implicit 
     price deflator' means, for any calendar year, the most recent 
     revision of the implicit price deflator for the gross 
     domestic product as of June 30 of such calendar year as 
     computed by the Department of Commerce before October 1 of 
     such calendar year.

       ``(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 domestic 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) Noncompliance with pollution laws.--Production from 
     any well during any period in which such well is not in 
     compliance with applicable Federal pollution prevention, 
     control, and permit requirements shall not be treated as 
     qualified crude oil production or qualified natural gas 
     production.
       ``(4) 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 1 
     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.''.
       (b) Credit Treated as Business Credit.--Section 38(b) 
     (relating to current year business credit), 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 marginal oil and gas well production credit 
     determined under section 45M(a).''.
       (c) No Carryback of Marginal Oil and Gas Well Production 
     Credit Before Effective Date.--Section 39(d) (relating to 
     transition rules), 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 45M may be carried back to a taxable year 
     ending before October 1, 2004.''.
       (d) Coordination With Section 29.--Section 29(a) (relating 
     to allowance of credit) 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

[[Page S3308]]

     Act, is amended by adding at the end the following new item:

``Sec. 45M. 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 
     September 30, 2004.

     SEC. 812. NATURAL GAS GATHERING LINES TREATED AS 7-YEAR 
                   PROPERTY.

       (a) In General.--Section 168(e)(3)(C) (defining 7-year 
     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.--Section 168(i) (relating 
     to definitions and special rules), as amended by this Act, is 
     amended by adding at the end the following new paragraph:
       ``(17) Natural gas gathering line.--The term `natural gas 
     gathering line' means--
       ``(A) 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, 
     or
       ``(B) any other pipe, equipment, or appurtenances 
     determined to be a gathering line by the Federal Energy 
     Regulatory Commission.
       (c) Alternative System.--The table contained in section 
     168(g)(3)(B) (relating to special rule for certain property 
     assigned to classes) is amended by inserting after the item 
     relating to subparagraph (C)(i) the following new item:

``(C)(ii).........................................................14''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after September 30, 
     2004, in taxable years ending after such date.

     SEC. 813. 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 179B the following new section:

     ``SEC. 179C. 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 with 
     respect to any facility may not exceed the applicable 
     percentage of the qualified capital costs paid or incurred 
     for the taxable year with respect to such facility.
       ``(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 any facility 
     with average daily refinery runs or average retained 
     production for the period described in subsection (b)(2) in 
     excess of 155,000 barrels, the percentage described in clause 
     (i) shall be reduced (but not below zero) by the product of--

       ``(I) such percentage (before the application of this 
     clause), and
       ``(II) 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 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--
       ``(A) which, within the refinery operations of the 
     business, employs not more than 1,500 employees on any day 
     during such taxable year, and
       ``(B) the average daily refinery run or average retained 
     production of which for all facilities of the taxpayer for 
     the 1-year period ending on the date of the enactment of this 
     section did not exceed 410,000 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 (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 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 179B'' each place it appears in the 
     heading and text and inserting ``179B, or 179C''.
       (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 179C(d).''.
       (5) 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).
       (6) The table of sections for part VI of subchapter B 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 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 December 31, 
     2002, in taxable years ending after such date.

     SEC. 814. 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. 45N. 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 low-
     sulfur diesel fuel 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) with respect to such 
     facility 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 179C(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 179C.
       ``(2) Low-sulfur diesel fuel.--The term `low-sulfur diesel 
     fuel' means diesel fuel containing not more than 15 parts per 
     million of sulfur.
       ``(3) Applicable period.--The term `applicable period' 
     means, with respect to any facility, the period beginning on 
     the day 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.
       ``(4) 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 a 
     credit is allowed under this section 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

[[Page S3309]]

     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 period described in paragraph (3) ends with respect to 
     the taxpayer, 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.--
       ``(A) In general.--In the case of a cooperative 
     organization described in section 1381(a), any portion of the 
     credit determined under subsection (a) 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.
       ``(B) Form and effect of election.--An election under 
     subparagraph (A) 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.
       ``(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.
       ``(3) Special rules for decrease in credits for taxable 
     year.--If the amount of the credit of a cooperative 
     organization determined under subsection (a) 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--
       ``(A) such reduction, over
       ``(B) the amount not apportioned to such patrons under 
     paragraph (1) 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) Credit Made Part of General Business Credit.--Section 
     38(b) (relating to current year business credit), as amended 
     by this Act, 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) in the case of a small business refiner, the 
     environmental tax credit determined under section 45N(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 at the end 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 45N(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. 45N. Environmental tax credit.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to expenses paid or incurred after December 31, 
     2002, in taxable years ending after such date.

     SEC. 815. DETERMINATION OF SMALL REFINER EXCEPTION TO OIL 
                   DEPLETION DEDUCTION.

       (a) In General.--Paragraph (4) of section 613A(d) (relating 
     to limitations on application of subsection (c)) 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 ending after September 30, 2004.

     SEC. 816. 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 ``2005'' and inserting ``2007''.

     SEC. 817. AMORTIZATION OF DELAY RENTAL PAYMENTS.

       (a) In General.--Section 167 (relating to depreciation) is 
     amended by redesignating subsection (h) as subsection (i) and 
     by inserting after subsection (g) the following new 
     subsection:
       ``(h) Amortization of Delay Rental Payments for Domestic 
     Oil and Gas Wells.--
       ``(1) In general.--Any delay rental payment paid or 
     incurred in connection with the development of oil or gas 
     wells within the United States (as defined in section 638) 
     shall be allowed as a deduction ratably over the 24-month 
     period beginning on the date that such payment was paid or 
     incurred.
       ``(2) Half-year convention.--For purposes of paragraph (1), 
     any payment paid or incurred during the taxable year shall be 
     treated as paid or incurred on the mid-point of such taxable 
     year.
       ``(3) Exclusive method.--Except as provided in this 
     subsection, no depreciation or amortization deduction shall 
     be allowed with respect to such payments.
       ``(4) Treatment upon abandonment.--If any property to which 
     a delay rental payment relates is retired or abandoned during 
     the 24-month period described in paragraph (1), no deduction 
     shall be allowed on account of such retirement or abandonment 
     and the amortization deduction under this subsection shall 
     continue with respect to such payment.
       ``(5) Delay rental payments.--For purposes of this 
     subsection, 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) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after September 30, 2004.

     SEC. 818. AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL 
                   EXPENDITURES.

       (a) In General.--Section 167 (relating to depreciation), as 
     amended by this Act, is amended by redesignating subsection 
     (i) as subsection (j) and by inserting after subsection (h) 
     the following new subsection:
       ``(i) Amortization of Geological and Geophysical 
     Expenditures.--
       ``(1) In general.--Any geological and geophysical expenses 
     paid or incurred in connection with the exploration for, or 
     development of, oil or gas within the United States (as 
     defined in section 638) shall be allowed as a deduction 
     ratably over the 24-month period beginning on the date that 
     such expense was paid or incurred.
       ``(2) Special rules.--For purposes of this subsection, 
     rules similar to the rules of paragraphs (2), (3), and (4) of 
     subsection (h) shall apply.''.
       (b) Conforming Amendment.--Section 263A(c)(3) is amended by 
     inserting ``167(h), 167(i),'' after ``under section''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to costs paid or incurred in taxable years 
     beginning after September 30, 2004.

     SEC. 819. EXTENSION AND MODIFICATION OF CREDIT FOR PRODUCING 
                   FUEL FROM A NONCONVENTIONAL SOURCE.

       (a) In General.--Section 29 (relating to credit for 
     producing fuel from a nonconventional source) 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 September 30, 2004, and before January 1, 2007, 
     notwithstanding subsection (f), this section shall apply with 
     respect to such fuels produced at such well or facility 
     before 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 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 September 30, 
     2004, and before January 1, 2007, this section shall apply 
     with respect to fuel produced at such facility before 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.
       ``(3) Wells producing viscous oil.--
       ``(A) In general.--In the case of a well for producing 
     viscous oil which was placed in service after September 30, 
     2004, and before January 1, 2007, this section shall apply 
     with respect to fuel produced at such well before 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

[[Page S3310]]

       ``(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)(2)(A) 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) 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 September 30, 2004, and before January 1, 
     2007, this section shall apply with respect to fuel produced 
     at such facility before 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 which 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.
       ``(iv) Qualifying advanced clean coal technology units 
     excluded.--A facility described in this subparagraph shall 
     not include a qualifying advanced clean coal technology unit 
     (as defined in section 48A(b)).
       ``(5) Coalmine gas.--
       ``(A) In general.--This section shall apply to coalmine 
     gas--
       ``(i) captured or extracted by the taxpayer during the 
     period beginning after September 30, 2004, and ending before 
     January 1, 2007, and
       ``(ii) utilized as a fuel source or sold by or on behalf of 
     the taxpayer to an unrelated person during such period.
       ``(B) Coalmine gas.--For purposes of this paragraph, the 
     term `coalmine gas' means any methane gas which is--
       ``(i) liberated during or as a result of coal mining 
     operations, or
       ``(ii) extracted up to 10 years in advance of 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 gas which is captured in advance of 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 gas was removed.
       ``(D) Noncompliance with pollution laws.--This paragraph 
     shall not apply to the capture or extraction of coalmine gas 
     from coal mining operations with respect to any period in 
     which such coal mining operations are not in compliance with 
     applicable State and Federal pollution prevention, control, 
     and permit requirements.
       ``(6) Special rules.--In determining the amount of credit 
     allowable under this section solely by reason of this 
     subsection--
       ``(A) Fuels treated as qualified fuels.--Any fuel described 
     in paragraph (2), (3), (4), or (5) shall be treated as a 
     qualified fuel for purposes of this section.
       ``(B) Daily limit.--The amount of qualified fuels sold 
     during any taxable year which may be taken into account by 
     reason of this subsection with respect to any project shall 
     not exceed an average barrel-of-oil equivalent of 200,000 
     cubic feet of natural gas per day. Days before the date the 
     project is placed in service shall not be taken into account 
     in determining such average.
       ``(C) Credit amount.--The dollar amount applicable under 
     subsection (a)(1) shall be $3 (and the inflation adjustment 
     under subsection (b)(2) shall not apply to such amount).''.
       (b) Clarification of Placed in Service Date for Certain 
     Landfill Gas Facilities.--Section 29(d) (relating to other 
     definitions and special rules), as amended by this Act, is 
     amended by adding at the end the following new paragraph:
       ``(10) Clarification of placed in service date for certain 
     landfill gas facilities.--
       ``(A) In general.--In the case of a landfill placed in 
     service on or before the date of the enactment of this 
     paragraph--
       ``(i) a facility for producing qualified fuel from such 
     landfill shall include all wells, pipes, and related 
     components used to collect landfill gas, and
       ``(ii) production of landfill gas from such landfill 
     attributable to wells, pipes, and related components placed 
     in service after such date of enactment shall be treated as 
     produced from a facility placed in service on the date such 
     wells, pipes, and related components were placed in service.
       ``(B) Landfill gas.--The term `landfill gas' means gas 
     described in subsection (c)(1)(B)(ii) and derived from the 
     biodegradation of municipal solid waste.''.
       (c) Extension for certain fuel produced at existing 
     facilities.--Section 29(f)(2) (relating to application of 
     section) is amended by inserting ``(January 1, 2006, 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''.
       (d) Study of Coalbed Methane.--
       (1) In general.--The Secretary of the Treasury shall 
     conduct a study regarding the effect of section 29 of the 
     Internal Revenue Code of 1986 on the production of coalbed 
     methane.
       (2) Contents of study.--The study under paragraph (1) 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 coalbed 
     methane since the date of the enactment of such section 29. 
     Such study shall report the annual value of such credits 
     allowable for coalbed 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 coalbed methane which 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 coalbed methane 
     produced annually and in the aggregate since such enactment.
       (e) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to fuel sold 
     after September 30, 2004, in taxable years ending after such 
     date.
       (2) Existing facilities.--The amendments made by subsection 
     (c) shall apply to fuel sold after December 31, 2002, in 
     taxable years ending after such date.
                                 ______
                                 
  SA 2939. Mr. KENNEDY (for himself and Mr. Daschle) submitted an 
amendment intended to be proposed by him to the bill H.R. 4, to 
reauthorize and improve the program of block grants to States for 
temporary assistance for needy families, improve access to quality 
child care, and for other purposes; which was ordered to lie on the 
table; as follows:

       At the appropriate place, insert the following:

     SEC. __. FAIR MINIMUM WAGE.

       (a) Short Title.--This section may be cited as the ``Fair 
     Minimum Wage Act of 2004''.
       (b) Increase in the Minimum Wage.--
       (1) In general.--Section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to 
     read as follows:
       ``(1) except as otherwise provided in this section, not 
     less than--
       ``(A) $5.85 an hour, beginning on the 60th day after the 
     date of enactment of the Fair Minimum Wage Act of 2004;
       ``(B) $6.45 an hour, beginning 12 months after that 60th 
     day; and
       ``(C) $7.00 an hour, beginning 24 months after that 60th 
     day;''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect 60 days after the date of enactment of this 
     Act.
       (c) Applicability of Minimum Wage to the Commonwealth of 
     the Northern Mariana Islands.--
       (1) In general.--Section 6 of the Fair Labor Standards Act 
     of 1938 (29 U.S.C. 206) shall apply to the Commonwealth of 
     the Northern Mariana Islands.
       (2) Transition.--Notwithstanding paragraph (1), the minimum 
     wage applicable to the Commonwealth of the Northern Mariana 
     Islands under section 6(a)(1) of the Fair Labor Standards Act 
     of 1938 (29 U.S.C. 206(a)(1)) shall be--
       (A) $3.55 an hour, beginning on the 60th day after the date 
     of enactment of this Act; and
       (B) increased by $0.50 an hour (or such lesser amount as 
     may be necessary to equal the minimum wage under section 
     6(a)(1) of such Act), beginning 6 months after the date of 
     enactment of this Act and every 6 months thereafter until the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under this subsection is equal to the minimum 
     wage set forth in such section.
                                 ______
                                 
  SA 2940. Ms. CANTWELL submitted an amendment intended to be proposed 
by her to the bill H.R. 4, to reauthorize and improve the program of 
block grants to States for temporary assistance for needy families, 
improve access to quality child care, and for other purposes; which was 
ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

                  TITLE __--UNEMPLOYMENT COMPENSATION

     SEC. __01. EXTENSION OF THE TEMPORARY EXTENDED UNEMPLOYMENT 
                   COMPENSATION ACT OF 2002.

       (a) In General.--Section 208 of the Temporary Extended 
     Unemployment Compensation Act of 2002 (Public Law 107-147; 
     116 Stat.

[[Page S3311]]

     30), as amended by Public Law 108-1 (117 Stat. 3) and the 
     Unemployment Compensation Amendments of 2003 (Public Law 108-
     26; 117 Stat. 751), is amended--
       (1) in subsection (a)(2), by striking ``December 31, 2003'' 
     and inserting ``June 30, 2004'';
       (2) in subsection (b)(1), by striking ``December 31, 2003'' 
     and inserting ``June 30, 2004'';
       (3) in subsection (b)(2)--
       (A) in the heading, by striking ``december 31, 2003'' and 
     inserting ``june 30, 2004''; and
       (B) by striking ``December 31, 2003'' and inserting ``June 
     30, 2004''; and
       (4) in subsection (b)(3), by striking ``March 31, 2004'' 
     and inserting ``September 30, 2004''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of the 
     Temporary Extended Unemployment Compensation Act of 2002 
     (Public Law 107-147; 116 Stat. 21) and shall apply with 
     respect to payments for weeks of unemployment beginning on or 
     after the date of enactment this Act.

     SEC. __02. ADDITIONAL REVISION TO CURRENT TEUC-X TRIGGER.

       (a) In General.--Section 203(c)(2)(B) of the Temporary 
     Extended Unemployment Compensation Act of 2002 (Public Law 
     107-147; 116 Stat. 30) is amended to read as follows:
       ``(B) such a period would then be in effect for such State 
     under such Act if--
       ``(i) section 203(d) of such Act were applied as if it had 
     been amended by striking `5' each place it appears and 
     inserting `4'; and
       ``(ii) with respect to weeks of unemployment beginning 
     after December 27, 2003--

       ``(I) paragraph (1)(A) of such section 203(d) did not 
     apply; and
       ``(II) clause (ii) of section 203(f)(1)(A) of such Act did 
     not apply.''.

       (b) Application.--Section 203(c)(2)(B)(ii) of the Temporary 
     Extended Unemployment Compensation Act of 2002 (Public Law 
     107-147; 116 Stat. 30), as added by subsection (a), shall 
     apply with respect to payments for weeks of unemployment 
     beginning on or after the date of enactment this Act.

     SEC. __03. TEMPORARY STATE AUTHORITY TO WAIVE APPLICATION OF 
                   LOOKBACKS UNDER THE FEDERAL-STATE EXTENDED 
                   UNEMPLOYMENT COMPENSATION ACT OF 1970.

       For purposes of conforming with the provisions of the 
     Federal-State Extended Unemployment Compensation Act of 1970 
     (26 U.S.C. 3304 note), a State may, during the period 
     beginning on the date of enactment of this Act and ending on 
     June 30, 2004, waive the application of either subsection 
     (d)(1)(A) of section 203 of such Act or subsection 
     (f)(1)(A)(ii) of such section, or both.
                                 ______
                                 
  SA 2941. Mr. BAUCUS (for himself and Mr. Thomas) submitted an 
amendment intended to be proposed by him to the bill H.R. 1637, to 
amend the Internal Revenue Code of 1986 to comply with the World Trade 
Organization rulings on the FSC/ETI benefit in a manner that preserves 
jobs and production activities in the United States, to reform and 
simplify the international taxation rules of the United States, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of the bill, add the following:

                        TITLE V--WOOL TRUST FUND

     SEC. 501. EXTENSION AND MODIFICATION OF PROVISIONS RELATING 
                   TO THE WOOL RESEARCH, DEVELOPMENT, AND 
                   PROMOTION TRUST FUND.

       (a) Extension of Temporary Duty Reductions.--
       (1) Heading 9902.51.11.--Heading 9902.51.11 of the 
     Harmonized Tariff Schedule of the United States is amended--
       (A) by striking ``2005'' and inserting ``2010''; and
       (B) by striking ``17.5 %'' and inserting ``10 %''.
       (2) Heading 9902.51.12.--Heading 9902.51.12 of the 
     Harmonized Tariff Schedule of the United States is amended by 
     striking ``2005'' and inserting ``2010''.
       (3) Heading 9902.51.13.--Heading 9902.51.13 of the 
     Harmonized Tariff Schedule of the United States is amended by 
     striking ``2005'' and inserting ``2010''.
       (4) Heading 9902.51.14.--Heading 9902.51.14 of the 
     Harmonized Tariff Schedule of the United States is amended by 
     striking ``2005'' and inserting ``2010''.
       (b) Modification of limitation on Quantity of Imports.--
       (1) Note 15.--U.S. Note 15 to subchapter II of chapter 99 
     of the Harmonized Tariff Schedule of the United States is 
     amended--
       (A) by striking ``and'' after ``2002'';
       (B) by striking ``year 2003'' and all that follows through 
     the end period and inserting the following: ``years 2003 and 
     2004, and 5,500,000 square meter equivalents in calendar year 
     2005 and each calendar year thereafter for the benefit of 
     manufacturers of men's and boys' suits.''.
       (2) Note 16.--U.S. Note 16 to subchapter II of chapter 99 
     of the Harmonized Tariff Schedule of the United States is 
     amended--
       (A) by striking ``and'' after ``2002''; and
       (B) by striking ``year 2003'' and all that follows through 
     the end period and inserting the following: ``years 2003 and 
     2004, and 5,000,000 square meter equivalents in calendar year 
     2005 and each calendar year thereafter for the benefit of 
     manufacturers of men's and boys' suits, and 2,000,000 square 
     meter equivalents in calendar year 2005 and each calendar 
     year thereafter for the benefit of manufacturers of worsted 
     wool fabric suitable for use in men's and boys' suits.''.
       (3) Conforming amendments.--
       (A) Sunset staged reduction requirement.--Paragraph (2) of 
     section 501(a) of the Trade and Development Act of 2000 
     (Public Law 106-200; 114 Stat. 299) is amended by adding 
     before the period ``for goods entered, or withdrawn from 
     warehouse for consumption, before January 1, 2005''.
       (B) Allocation of tariff-rate quotas.--Subsection (e) of 
     section 501 of the Trade and Development Act of 2000 (Public 
     Law 106-200; 114 Stat. 200) is amended--
       (i) by inserting ``for manufacturers of men's and boys' 
     suits'' after ``implementing the limitation''; and
       (ii) by inserting at the end the following new sentence: 
     ``In implementing the limitation for manufacturers of worsted 
     wool fabric on the quantity of worsted wool fabrics under 
     heading 9902.51.12 of the Harmonized Tariff Schedule of the 
     United States, as required by U.S. Note 16 of subchapter II 
     of chapter 99 of such Schedule, for the entry, or withdrawal 
     from warehouse for consumption, the Secretary of Commerce 
     shall prescribe regulations to allocate fairly the quantity 
     of worsted wool fabrics required under United States note 16 
     of such schedule to manufacturers who weave worsted wool 
     fabric in the United States.''.
       (C) Sunset authority to modify limitation on quantity.--
     Subsection (b) of section 504 of the Trade and Development 
     Act of 2000 (Public Law 106-200; 114 Stat. 301) is repealed 
     effective January 1, 2005.
       (c) Extension of Duty Refunds and Wool Research Trust 
     Fund.--
       (1) In general.--The United States Customs Service shall 
     make 5 additional payments to each manufacturer that receives 
     a payment under section 505 of the Trade and Development Act 
     of 2000 (Public Law 106-200; 114 Stat. 303) during calendar 
     year 2005, and that, not later than March 1 of each year of 
     an additional payment, provides an affidavit that it remains 
     a manufacturer in the United States as of January 1 of the 
     year of that payment. Each payment shall be equal to the 
     amount of the payment received for calendar year 2005 as 
     follows:
       (A) The first payment to be made after January 1, 2006, but 
     on or before April 15, 2006.
       (B) The second, third, fourth, and fifth payments to be 
     made after January 1, but on or before April 15, of each of 
     the following 4 calendar years.
       (2) Extension of wool research, development, and promotion 
     trust fund.--Section 506(f) of the Trade and Development Act 
     of 2000 (Public Law 106-200; 114 Stat. 304) is amended by 
     striking ``2006'' and inserting ``2011''.
       (3) Commerce authority to promote domestic employment.--The 
     Secretary of Commerce shall provide grants through December 
     31, 2010 to manufacturers of worsted wool fabric in the 
     amount of $2,666,000 annually to manufacturers of worsted 
     wool fabric of the kind described in heading 9902.51.12 of 
     the Harmonized Tariff Schedule of the United States during 
     calendar years 1999, 2000, and 2001, and $2,666,000 annually 
     to manufacturers of worsted wool fabric of the kind described 
     in heading 9902.51.11 of the Harmonized Tariff Schedule of 
     the United States during such calendar years, allocated based 
     on the percentage of each manufacturer's production of the 
     fabric described in such heading for such 3 years compared to 
     the production of such fabric for all such applicants who 
     qualify under this paragraph for such grant category. Any 
     grant awarded by the Secretary under this section shall be 
     final and not subject to appeal or protest.
       (4) Special rule for successor-in-interest.--
       (A) In general.--Any person that becomes a successor-in-
     interest to a manufacturer entitled to payment, under title V 
     of the Trade and Development Act of 2002 (Public Law 106-200; 
     114 Stat. 299) or this title, shall be eligible to claim 
     payments as if the successor-in-interest was the original 
     claimant without regard to section 3727 of title 31, United 
     States Code. The right to claim payment as a successor-in-
     interest under the preceding sentence shall be effective as 
     if the right was included in section 505 of the Trade and 
     Development Act of 2000.
       (B) Status as successor-in-interest.--A person may become a 
     successor-in-interest for purposes of subparagraph (A) 
     pursuant to--
       (i) an assignment of the claim for payment under title V of 
     the Trade and Development Act of 2002;
       (ii) an assignment of the original claimant's right to 
     manufacture under the same trade name as the original 
     claimant;
       (iii) a reorganization; or
       (iv) some other legally recognized manner.
       (5) Authorization.--There is authorized to be appropriated 
     and is hereby appropriated out of amounts in the general fund 
     of the Treasury not otherwise appropriated such sums as are 
     necessary to carry out the provisions of this subsection.
       (6) Effective date.--The grants described in paragraph (3) 
     shall commence on or after January 1, 2005, and before 
     December 31, 2010.
       (d) Effective Date.--The amendment made by subsection 
     (a)(1)(B) shall apply to goods entered, or withdrawn from 
     warehouse for consumption, on or after January 1, 2005.

[[Page S3312]]

     SEC. 502. LABELING OF WOOL PRODUCTS TO FACILITATE COMPLIANCE 
                   AND PROTECT CONSUMERS.

       (a) In General.--Section 4 of the Wool Products Labeling 
     Act of 1939 (15 U.S.C. 68b(a)) is amended by adding at the 
     end the following new paragraph:
       ``(5) In the case of a wool product stamped, tagged, 
     labeled, or otherwise identified in any one of the following 
     subparagraphs, the average fiber diameter may be subject to a 
     variation of 0.25 microns, and may be subject to such other 
     standards or deviations as prescribed by regulation by the 
     Commission:
       ``(A) `Super 80's' or `80's' if the average fiber diameter 
     thereof does not average 19.5 microns or finer.
       ``(B) `Super 90's' or `90's' if the average fiber diameter 
     thereof does not average 19.0 microns or finer.
       ``(C) `Super 100's' or `100's' if the average fiber 
     diameter thereof does not average 18.5 microns or finer.
       ``(D) `Super 110's' or `110's' if the average diameter of 
     wool fiber thereof does not average 18.0 microns or finer.
       ``(E) `Super 120's' or `120's' if the average diameter of 
     wool fiber thereof does not average 17.5 microns or finer.
       ``(F) `Super 130's' or `130's' if the average diameter of 
     wool fiber thereof does not average 17.0 microns or finer.
       ``(G) `Super 140's' or `140's' if the average diameter of 
     wool fiber thereof does not average 16.5 microns or finer.
       ``(H) `Super 150's' or `150's' if the average diameter of 
     wool fiber thereof does not average 16.0 microns or finer.
       ``(I) `Super 160's' or `160's' if the average diameter of 
     wool fiber thereof does not average 15.5 microns or finer.
       ``(J) `Super 170's' or `170's' if the average diameter of 
     wool fiber thereof does not average 15.0 microns or finer.
       ``(K) `Super 180's' or `180's' if the average diameter of 
     wool fiber thereof does not average 14.5 microns or finer.
       ``(L) `Super 190's' or `190's' if the average diameter of 
     wool fiber thereof does not average 14.0 microns or finer.
       ``(M) `Super 200's' or `200's' if the average diameter of 
     wool fiber thereof does not average 13.5 microns or finer.
       ``(N) `Super 210's' or `210's' if the average diameter of 
     wool fiber thereof does not average 13.0 microns or finer.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to wool products manufactured on or after January 
     1, 2005.
                                 ______
                                 
  SA 2942. Mr. CORNYN submitted an amendment intended to be proposed by 
him to the bill H.R. 4, to reauthorize and improve the program of block 
grants to States for temporary assistance for needy families, improve 
access to quality child care, and for other purposes; which was ordered 
to lie on the table; as follows:

       On page 341, between lines 8 and 9, insert the following:

     SEC. __. ELECTRONIC DISBURSEMENT OF CHILD SUPPORT PAYMENTS TO 
                   FAMILIES.

       Section 454A(g) (42 U.S.C. 654a(g)) is amended by inserting 
     at the end the following:
       ``(3) Electronic disbursement requirement.--
       ``(A) In general.--Not later than October 1, 2008, each 
     State disbursement unit operated under section 454B shall 
     implement a system to electronically disburse, through direct 
     deposit or a widely accessible card-based system, all child 
     support collections disbursed to families under that section.
       ``(B) State option to require card-based payment.--A State 
     may require a payment recipient to accept payment through a 
     card-based system if the recipient has declined to accept 
     payment by direct deposit or does not have an account to 
     which payment may be made by direct deposit.
       ``(C) Opt-out.--Notwithstanding subparagraph (A), a State 
     disbursement unit may maintain a nonelectronic system for 
     disbursing child support collections to custodial parents 
     under section 454B after October 1, 2008, if the State 
     notifies the Secretary in writing by October 1, 2008, that 
     the State intends to maintain such a system.''.

     SEC. __. OPTIONAL EXPANSION OF STATE DISBURSEMENT UNIT TO 
                   CREATE A CENTRALIZED PAYMENT LOCATION FOR ALL 
                   CHILD SUPPORT WAGE WITHHOLDING.

       Section 454B(a)(1)(B) (42 U.S.C. 654b(a)(1)(B)) is amended 
     by inserting ``or, at State option, all support orders, 
     regardless of date issued,'' after ``in which the support 
     order is initially issued in the State on or after January 1, 
     1994,''.
                                 ______
                                 
  SA 2943. Mr. CORNYN (for himself and Mr. Bingaman) submitted an 
amendment intended to be proposed by him to the bill H.R. 4, to 
reauthorize and improve the program of block grants to States for 
temporary assistance for needy families, improve access to quality 
child care, and for other purposes; which was ordered to lie on the 
table; as follows:

       On page 355, between lines 3 and 4, insert the following:

     SEC. 603. CLARIFICATION OF AUTHORITY OF STATES AND LOCAL 
                   AUTHORITIES TO PROVIDE HEALTH CARE TO 
                   IMMIGRANTS.

       (a) In General.--Section 411 of the Personal Responsibility 
     and Work Opportunity Reconciliation Act of 1996 (8 U.S.C. 
     1621) is amended--
       (1) in subsection (b)--
       (A) by striking paragraphs (1) and (3); and
       (B) by redesignating paragraphs (2) and (4) as paragraphs 
     (1) and (2), respectively;
       (2) in subsection (c)--
       (A) in paragraph (1)--
       (i) in the matter preceding subparagraph (A), by striking 
     ``(2) and (3)'' and inserting ``(2), (3), and (4)''; and
       (ii) in subparagraph (B), by striking ``health,''; and
       (B) by adding at the end the following new paragraph
       ``(4) Such term does not include any health benefit for 
     which payments or assistance are provided to an individual, 
     household, or family eligibility unit by an agency of a State 
     or local government or by appropriated funds of a State or 
     local government.''; and
       (3) in subsection (d), by inserting ``or who otherwise is 
     not a qualified alien (as defined in subsections (b) and (c) 
     of section 431)'' after ``United States''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to health care furnished before, on, or after the 
     date of enactment of this Act.

                          ____________________