[Congressional Record (Bound Edition), Volume 151 (2005), Part 10]
[Senate]
[Pages 13156-13192]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA 797. Mrs. FEINSTEIN (for herself, Ms. Snowe, Ms. Cantwell, Mr. 
Jeffords, Mr. Corzine, Mr. Schumer, Ms. Collins, Mr. Reed, Mr. Durbin, 
and Mrs. Murray) submitted an amendment intended to be proposed by her 
to the bill H.R. 6, Reserved; which was ordered to lie on the table; as 
follows:

       On page 424, line 9, strike ``SEC. 711'' and insert the 
     following:

     SEC. 711. SHORT TITLE.

       This subtitle may be cited as the ``Automobile Fuel Economy 
     Act of 2005''.

     SEC. 712. INCREASED AVERAGE FUEL ECONOMY STANDARD FOR LIGHT 
                   TRUCKS.

       (a) Definition of Light Truck.--Section 32901(a) of title 
     49, United States Code, is amended--
       (1) in each of paragraphs (1) through (14), by striking the 
     period at the end and inserting a semicolon;
       (2) in paragraph (15), by striking the period at the end 
     and inserting ``; and'';
       (3) by redesignating paragraphs (12) through (16) as 
     paragraphs (13) through (17), respectively; and
       (4) by inserting after paragraph (11) the following:
       ``(12) `light truck' has the meaning given that term in 
     regulations prescribed by the Secretary of Transportation in 
     the administration of this chapter;''.
       (b) Requirement for Increased Standard.--Section 32902(a) 
     of title 49, United States Code, is amended--
       (1) by inserting ``(1)'' after ``AUTOMOBILES.--'';
       (2) by striking ``The Secretary'' and inserting ``Subject 
     to paragraph (2), the Secretary''; and

[[Page 13157]]

       (3) by adding at the end the following:
       ``(2) The average fuel economy standard for light trucks 
     manufactured by a manufacturer may not be less than--
       ``(A) 23.5 miles per gallon for model year 2008;
       ``(B) 24.8 miles per gallon for model year 2009;
       ``(C) 26.1 miles per gallon for model year 2010; and
       ``(D) 27.5 miles per gallon for model year 2011 and each 
     model year thereafter.''.
       (c) Applicability.--Section 32902(a)(2) of title 49, United 
     States Code, as added by subsection (b)(3), shall not apply 
     with respect to light trucks manufactured before model year 
     2008.

     SEC. 713. FUEL ECONOMY STANDARDS FOR AUTOMOBILES UP TO 10,000 
                   POUNDS GROSS VEHICLE WEIGHT.

       (a) Vehicles Defined as Automobiles.--Section 32901(a)(3) 
     of title 49, United States Code, is amended by striking 
     ``rated at--'' and all that follows and inserting ``rated at 
     not more than 10,000 pounds gross vehicle weight.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on January 1, 2011.

     SEC. 714. FUEL ECONOMY OF THE FEDERAL FLEET OF VEHICLES.

       (a) Definitions.--In this section--
       (1) the term ``class of vehicles'' means a class of 
     vehicles for which an average fuel economy standard is in 
     effect under chapter 329 of title 49, United States Code;
       (2) the term ``executive agency'' has the meaning given the 
     term in section 4(1) of the Office of Federal Procurement 
     Policy Act (41 U.S.C. 403(1)); and
       (3) the term ``new vehicle'', with respect to the fleet of 
     vehicles of an executive agency, means a vehicle procured by 
     or for the agency after September 30, 2007.
       (b) Baseline Average Fuel Economy.--The head of each 
     executive agency shall determine the average fuel economy for 
     all of the vehicles in each class of vehicles in the agency's 
     fleet of vehicles in fiscal year 2006.
       (c) Increase of Average Fuel Economy.--The head of each 
     executive agency shall manage the procurement of vehicles in 
     each class of vehicles for that agency to ensure that--
       (1) not later than September 30, 2008, the average fuel 
     economy of the new vehicles in the agency's fleet of vehicles 
     in each class of vehicles is not less than 3 miles per gallon 
     higher than the baseline average fuel economy determined for 
     that class; and
       (2) not later than September 30, 2011, the average fuel 
     economy of the new vehicles in the agency's fleet of vehicles 
     in each class of vehicles is not less than 6 miles per gallon 
     higher than the baseline average fuel economy determined for 
     that class.
       (d) Calculation of Average Fuel Economy.--For purposes of 
     this section--
       (1) average fuel economy shall be calculated in accordance 
     with guidance prescribed by the Secretary of Transportation 
     for the implementation of this section; and
       (2) average fuel economy calculated under subsection (b) 
     for an agency's vehicles in a class of vehicles shall be the 
     baseline average fuel economy for the agency's fleet of 
     vehicles in that class.

     SEC. 715.

                                 ______
                                 
  SA 798. Mr. PRYOR submitted an amendment intended to be proposed by 
him to the bill H.R. 6, Reserved; which was ordered to lie on the 
table; as follows:

       On page 755, after line 25, add the following:

     SEC. 13__. ALTERNATIVE FUELS REPORTS.

       (a) In General.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary shall submit to Congress 
     reports on the potential for each of biodiesel and hythane to 
     become major, sustainable, alternative fuels.
       (b) Biodiesel Report.--The report relating to biodiesel 
     submitted under subsection (a) shall--
       (1) provide a detailed assessment of--
       (A) potential biodiesel markets and manufacturing capacity; 
     and
       (B) environmental and energy security benefits with respect 
     to the use of biodiesel;
       (2) identify any impediments, especially in infrastructure 
     needed for production, distribution, and storage, to 
     biodiesel becoming a substantial source of fuel for 
     conventional diesel and heating oil applications;
       (3) identify strategies to enhance the commercial 
     deployment of biodiesel; and
       (4) include an examination and recommendations, as 
     appropriate, of the ways in which biodiesel may be modified 
     to be a cleaner-burning fuel.
       (c) Hythane Report.--The report relating to hythane 
     submitted under subsection (a) shall--
       (1) provide a detailed assessment of potential hythane 
     markets and the research and development activities that are 
     necessary to facilitate the commercialization of hythane as a 
     competitive, environmentally-friendly transportation fuel;
       (2) address--
       (A) the infrastructure necessary to produce, blend, 
     distribute, and store hythane for widespread commercial 
     purposes; and
       (B) other potential market barriers to the 
     commercialization of hythane;
       (3) examine the viability of producing hydrogen using 
     energy-efficient, environmentally friendly methods so that 
     the hydrogen can be blended with natural gas to produce 
     hythane; and
       (4) include an assessment of the modifications that would 
     be required to convert compressed natural gas vehicle engines 
     to engines that use hythane as fuel.
       (d) Grants for Report Completion.--The Secretary may use 
     such sums as are available to the Secretary to provide, to 1 
     or more colleges or universities selected by the Secretary, 
     grants for use in carrying out research to assist the 
     Secretary in preparing the reports required to be submitted 
     under subsection (a).
                                 ______
                                 
  SA 799. Mr. VOINOVICH (for himself, Mr. Carper, and Mrs. Feinstein) 
proposed an amendment to the bill H.R. 6, Reserved; as follows:

       On page 446, between lines 18 and 19, insert the following:

                 Subtitle E--Diesel Emissions Reduction

     SEC. 741. DEFINITIONS.

       In this subtitle:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the Environmental Protection Agency.
       (2) Certified engine configuration.--The term ``certified 
     engine configuration'' means a new, rebuilt, or 
     remanufactured engine configuration--
       (A) that has been certified or verified by--
       (i) the Administrator; or
       (ii) the California Air Resources Board;
       (B) that meets or is rebuilt or remanufactured to a more 
     stringent set of engine emission standards, as determined by 
     the Administrator; and
       (C) in the case of a certified engine configuration 
     involving the replacement of an existing engine or vehicle, 
     an engine configuration that replaced an engine that was--
       (i) removed from the vehicle; and
       (ii) returned to the supplier for remanufacturing to a more 
     stringent set of engine emissions standards or for scrappage.
       (3) Eligible entity.--The term ``eligible entity'' means--
       (A) a regional, State, local, or tribal agency with 
     jurisdiction over transportation or air quality; and
       (B) a nonprofit organization or institution that--
       (i) represents organizations that own or operate diesel 
     fleets; or
       (ii) has, as its principal purpose, the promotion of 
     transportation or air quality.
       (4) Emerging technology.--The term ``emerging technology'' 
     means a technology that is not certified or verified by the 
     Administrator or the California Air Resources Board but for 
     which an approvable application and test plan has been 
     submitted for verification to the Administrator or the 
     California Air Resources Board.
       (5) Heavy-duty truck.--The term ``heavy-duty truck'' has 
     the meaning given the term ``heavy duty vehicle'' in section 
     202 of the Clean Air Act (42 U.S.C. 7521).
       (6) Medium-duty truck.--The term ``medium-duty truck'' has 
     such meaning as shall be determined by the Administrator, by 
     regulation.
       (7) Verified technology.--The term ``verified technology'' 
     means a pollution control technology, including a retrofit 
     technology, that has been verified by--
       (A) the Administrator; or
       (B) the California Air Resources Board.

     SEC. 742. NATIONAL GRANT AND LOAN PROGRAMS.

       (a) In General.--The Administrator shall use 70 percent of 
     the funds made available to carry out this subtitle for each 
     fiscal year to provide grants and low-cost revolving loans, 
     as determined by the Administrator, on a competitive basis, 
     to eligible entities to achieve significant reductions in 
     diesel emissions in terms of--
       (1) tons of pollution produced; and
       (2) diesel emissions exposure, particularly from fleets 
     operating in areas designated by the Administrator as poor 
     air quality areas.
       (b) Distribution.--
       (1) In general.--The Administrator shall distribute funds 
     made available for a fiscal year under this subtitle in 
     accordance with this section.
       (2) Fleets.--The Administrator shall provide not less than 
     50 percent of funds available for a fiscal year under this 
     section to eligible entities for the benefit of public 
     fleets.
       (3) Engine configurations and technologies.--
       (A) Certified engine configurations and verified 
     technologies.--The Administrator shall provide not less than 
     90 percent of funds available for a fiscal year under this 
     section to eligible entities for projects using--
       (i) a certified engine configuration; or
       (ii) a verified technology.
       (B) Emerging technologies.--
       (i) In general.--The Administrator shall provide not more 
     than 10 percent of funds available for a fiscal year under 
     this section to eligible entities for the development and 
     commercialization of emerging technologies.
       (ii) Application and test plan.--To receive funds under 
     clause (i), a manufacturer, in consultation with an eligible 
     entity, shall submit for verification to the Administrator

[[Page 13158]]

     or the California Air Resources Board a test plan for the 
     emerging technology, together with the application under 
     subsection (c).
       (c) Applications.--
       (1) In general.--To receive a grant or loan under this 
     section, an eligible entity shall submit to the Administrator 
     an application at a time, in a manner, and including such 
     information as the Administrator may require.
       (2) Inclusions.--An application under this subsection shall 
     include--
       (A) a description of the air quality of the area served by 
     the eligible entity;
       (B) the quantity of air pollution produced by the diesel 
     fleet in the area served by the eligible entity;
       (C) a description of the project proposed by the eligible 
     entity, including--
       (i) any certified engine configuration, verified 
     technology, or emerging technology to be used by the eligible 
     entity; and
       (ii) the means by which the project will achieve a 
     significant reduction in diesel emissions;
       (D) an evaluation (using methodology approved by the 
     Administrator or the National Academy of Sciences) of the 
     quantifiable and unquantifiable benefits of the emissions 
     reductions of the proposed project;
       (E) an estimate of the cost of the proposed project;
       (F) a description of the age and expected lifetime control 
     of the equipment used by the eligible entity;
       (G) a description of the diesel fuel available to the 
     eligible entity, including the sulfur content of the fuel; 
     and
       (H) provisions for the monitoring and verification of the 
     project.
       (3) Priority.--In providing a grant or loan under this 
     section, the Administrator shall give priority to proposed 
     projects that, as determined by the Administrator--
       (A) maximize public health benefits;
       (B) are the most cost-effective;
       (C) serve areas--
       (i) with the highest population density;
       (ii) that are poor air quality areas, including areas 
     identified by the Administrator as--

       (I) in nonattainment or maintenance of national ambient air 
     quality standards for a criteria pollutant;
       (II) Federal Class I areas; or
       (III) areas with toxic air pollutant concerns;

       (iii) that receive a disproportionate quantity of air 
     pollution from a diesel fleet, including ports, rail yards, 
     and distribution centers; or
       (iv) that use a community-based multistakeholder 
     collaborative process to reduce toxic emissions;
       (D) include a certified engine configuration, verified 
     technology, or emerging technology that has a long expected 
     useful life;
       (E) will maximize the useful life of any retrofit 
     technology used by the eligible entity; and
       (F) use diesel fuel with a sulfur content of less than or 
     equal to 15 parts per million, as the Administrator 
     determines to be appropriate.
       (d) Use of Funds.--
       (1) In general.--An eligible entity may use a grant or loan 
     provided under this section to fund the costs of--
       (A) a retrofit technology (including any incremental costs 
     of a repowered or new diesel engine) that significantly 
     reduces emissions through development and implementation of a 
     certified engine configuration, verified technology, or 
     emerging technology for--
       (i) a bus;
       (ii) a medium-duty truck or a heavy-duty truck;
       (iii) a marine engine;
       (iv) a locomotive; or
       (v) a nonroad engine or vehicle used in--

       (I) construction;
       (II) handling of cargo (including at a port or airport);
       (III) agriculture;
       (IV) mining; or
       (V) energy production; or

       (B) an idle-reduction program involving a vehicle or 
     equipment described in subparagraph (A).
       (2) Regulatory programs.--
       (A) In general.--Notwithstanding paragraph (1), no grant or 
     loan provided under this section shall be used to fund the 
     costs of emissions reductions that are mandated under 
     Federal, State or local law.
       (B) Mandated.--For purposes of subparagraph (A), voluntary 
     or elective emission reduction measures shall not be 
     considered ``mandated'', regardless of whether the reductions 
     are included in the State implementation plan of a State.

     SEC. 743. STATE GRANT AND LOAN PROGRAMS.

       (a) In General.--Subject to the availability of adequate 
     appropriations, the Administrator shall use 30 percent of the 
     funds made available for a fiscal year under this subtitle to 
     support grant and loan programs administered by States that 
     are designed to achieve significant reductions in diesel 
     emissions.
       (b) Applications.--The Administrator shall--
       (1) provide to States guidance for use in applying for 
     grant or loan funds under this section, including information 
     regarding--
       (A) the process and forms for applications;
       (B) permissible uses of funds received; and
       (C) the cost-effectiveness of various emission reduction 
     technologies eligible to be carried out using funds provided 
     under this section; and
       (2) establish, for applications described in paragraph 
     (1)--
       (A) an annual deadline for submission of the applications;
       (B) a process by which the Administrator shall approve or 
     disapprove each application; and
       (C) a streamlined process by which a State may renew an 
     application described in paragraph (1) for subsequent fiscal 
     years.
       (c) Allocation of Funds.--
       (1) In general.--For each fiscal year, the Administrator 
     shall allocate among States for which applications are 
     approved by the Administrator under subsection (b)(2)(B) 
     funds made available to carry out this section for the fiscal 
     year.
       (2) Allocation.--Using not more than 20 percent of the 
     funds made available to carry out this subtitle for a fiscal 
     year, the Administrator shall provide to each State described 
     in paragraph (1) for the fiscal year an allocation of funds 
     that is equal to--
       (A) if each of the 50 States qualifies for an allocation, 
     an amount equal to 2 percent of the funds made available to 
     carry out this section; or
       (B) if fewer than 50 States qualifies for an allocation, an 
     amount equal to the amount described in subparagraph (A), 
     plus an additional amount equal to the product obtained by 
     multiplying--
       (i) the proportion that--

       (I) the population of the State; bears to
       (II) the population of all States described in paragraph 
     (1); by

       (ii) the amount of funds remaining after each State 
     described in paragraph (1) receives the 2-percent allocation 
     under this paragraph.
       (3) State matching incentive.--
       (A) In general.--If a State agrees to match the allocation 
     provided to the State under paragraph (2) for a fiscal year, 
     the Administrator shall provide to the State for the fiscal 
     year an additional amount equal to 50 percent of the 
     allocation of the State under paragraph (2).
       (B) Requirements.--A State--
       (i) may not use funds received under this subtitle to pay a 
     matching share required under this subsection; and
       (ii) shall not be required to provide a matching share for 
     any additional amount received under subparagraph (A).
       (4) Unclaimed funds.--Any funds that are not claimed by a 
     State for a fiscal year under this subsection shall be used 
     to carry out section 742.
       (d) Administration.--
       (1) In general.--Subject to paragraphs (2) and (3) and, to 
     the extent practicable, the priority areas listed in section 
     742(c)(3), a State shall use any funds provided under this 
     section to develop and implement such grant and low-cost 
     revolving loan programs in the State as are appropriate to 
     meet State needs and goals relating to the reduction of 
     diesel emissions.
       (2) Apportionment of funds.--The Governor of a State that 
     receives funding under this section may determine the portion 
     of funds to be provided as grants or loans.
       (3) Use of funds.--A grant or loan provided under this 
     section may be used for a project relating to--
       (A) a certified engine configuration; or
       (B) a verified technology.

     SEC. 744. EVALUATION AND REPORT.

       (a) In General.--Not later than 2 years after the date of 
     enactment of this Act, and biennially thereafter, the 
     Administrator shall submit to Congress a report evaluating 
     the implementation of the programs under this subtitle.
       (b) Inclusions.--The report shall include a description 
     of--
       (1) the total number of grant applications received;
       (2) each grant or loan made under this subtitle, including 
     the amount of the grant or loan;
       (3) each project for which a grant or loan is provided 
     under this subtitle, including the criteria used to select 
     the grant or loan recipients;
       (4) the estimated air quality benefits, cost-effectiveness, 
     and cost-benefits of the grant and loan programs under this 
     subtitle;
       (5) the problems encountered by projects for which a grant 
     or loan is provided under this subtitle; and
       (6) any other information the Administrator considers to be 
     appropriate.

     SEC. 745. OUTREACH AND INCENTIVES.

       (a) Definition of Eligible Technology.--In this section, 
     the term ``eligible technology'' means--
       (1) a verified technology; or
       (2) an emerging technology.
       (b) Technology Transfer Program.--
       (1) In general.--The Administrator shall establish a 
     program under which the Administrator--
       (A) informs stakeholders of the benefits of eligible 
     technologies; and
       (B) develops nonfinancial incentives to promote the use of 
     eligible technologies.
       (2) Eligible stakeholders.--Eligible stakeholders under 
     this section include--
       (A) equipment owners and operators;
       (B) emission control technology manufacturers;

[[Page 13159]]

       (C) engine and equipment manufacturers;
       (D) State and local officials responsible for air quality 
     management;
       (E) community organizations; and
       (F) public health and environmental organizations.
       (c) State Implementation Plans.--The Administrator shall 
     develop appropriate guidance to provide credit to a State for 
     emission reductions in the State created by the use of 
     eligible technologies through a State implementation plan 
     under section 110 of the Clean Air Act (42 U.S.C. 7410).
       (d) International Markets.--The Administrator, in 
     coordination with the Department of Commerce and industry 
     stakeholders, shall inform foreign countries with air quality 
     problems of the potential of technology developed or used in 
     the United States to provide emission reductions in those 
     countries.

     SEC. 746. EFFECT OF SUBTITLE.

       Nothing in this subtitle affects any authority under the 
     Clean Air Act (42 U.S.C. 7401 et seq.) in existence on the 
     day before the date of enactment of this Act.

     SEC. 747. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated to carry out this 
     subtitle $200,000,000 for each of fiscal years 2006 through 
     2010, to remain available until expended.
                                 ______
                                 
  SA 800. Mr. GRASSLEY (for himself and Mr. Baucus) submitted an 
amendment intended to be proposed by him to the bill H.R. 6, Reserved; 
as follows:

       At the end add the following:

                 TITLE XV--ENERGY POLICY TAX INCENTIVES

     SEC. 1500. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF 
                   CONTENTS.

       (a) Short Title.--This title may be cited as the ``Energy 
     Policy Tax Incentives Act of 2005''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this title an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this 
     title is as follows:

                 TITLE XV--ENERGY POLICY TAX INCENTIVES

Sec. 1500. Short title; amendment of 1986 Code; table of contents.

                 Subtitle A--Electricity Infrastructure

Sec. 1501. Extension and modification of renewable electricity 
              production credit.
Sec. 1502. Clean renewable energy bonds.
Sec. 1503. Treatment of income of certain electric cooperatives.
Sec. 1504. Dispositions of transmission property to implement FERC 
              restructuring policy.
Sec. 1505. Credit for production from advanced nuclear power 
              facilities.
Sec. 1506. Credit for investment in clean coal facilities.
Sec. 1507. Clean energy coal bonds.

               Subtitle B--Domestic Fossil Fuel Security

Sec. 1511. Credit for investment in clean coke/cogeneration 
              manufacturing facilities.
Sec. 1512. Temporary expensing for equipment used in refining of liquid 
              fuels.
Sec. 1513. Pass through to patrons of deduction for capital costs 
              incurred by small refiner cooperatives in complying with 
              Environmental Protection Agency sulfur regulations.
Sec. 1514. Modifications to enhanced oil recovery credit.
Sec. 1515. Natural gas distribution lines treated as 15-year property.

       Subtitle C--Conservation and Energy Efficiency Provisions

Sec. 1521. Energy efficient commercial buildings deduction.
Sec. 1522. Credit for construction of new energy efficient homes.
Sec. 1523. Deduction for business energy property.
Sec. 1524. Credit for certain nonbusiness energy property.
Sec. 1525. Energy credit for combined heat and power system property.
Sec. 1526. Credit for energy efficient appliances.
Sec. 1527. Credit for residential energy efficient property.
Sec. 1528. Credit for business installation of qualified fuel cells and 
              stationary microturbine power plants.
Sec. 1529. Business solar investment tax credit.

      Subtitle D--Alternative motor Vehicles and Fuels Incentives

Sec. 1531. Alternative motor vehicle credit.
Sec. 1532. Modification of credit for qualified electric vehicles.
Sec. 1533. Credit for installation of alternative fueling stations.
Sec. 1534. Volumetric excise tax credit for alternative fuels.
Sec. 1535. Extension of excise tax provisions and income tax credit for 
              biodiesel.

              Subtitle E--Additional Energy Tax Incentives

Sec. 1541. Ten-year recovery period for underground natural gas storage 
              facility property.
Sec. 1542. Expansion of research credit.
Sec. 1543. Small agri-biodiesel producer credit.
Sec. 1544. Improvements to small ethanol producer credit.
Sec. 1545. Credit for equipment for processing or sorting materials 
              gathered through recycling.
Sec. 1546. 5-year net operating loss carryover if any resulting refund 
              is used for electric transmission equipment.
Sec. 1547. Credit for qualifying pollution control equipment.
Sec. 1548. Credit for production of Indian Country coal.
Sec. 1549. Credit for replacement wood stoves meeting environmental 
              standards in non-attainment areas.
Sec. 1550. Exemption for equipment for transporting bulk beds of farm 
              crops from excise tax on retail sale of heavy trucks and 
              trailers.
Sec. 1551. National Academy of Sciences study and report.

                 Subtitle F--Revenue Raising Provisions

Sec. 1561. Treatment of kerosene for use in aviation.
Sec. 1562. Repeal of ultimate vendor refund claims with respect to 
              farming.
Sec. 1563. Refunds of excise taxes on exempt sales of fuel by credit 
              card.
Sec. 1564. Additional requirement for exempt purchases.
Sec. 1565. Reregistration in event of change in ownership.
Sec. 1566. Treatment of deep-draft vessels.
Sec. 1567. Reconciliation of on-loaded cargo to entered cargo.
Sec. 1568. Taxation of gasoline blendstocks and kerosene.
Sec. 1569. Nonapplication of export exemption to delivery of fuel to 
              motor vehicles removed from United States.
Sec. 1570. Penalty with respect to certain adulterated fuels.
Sec. 1571. Oil Spill Liability Trust Fund financing rate.
Sec. 1572. Extension of Leaking Underground Storage Tank Trust Fund 
              financing rate.

                 Subtitle A--Electricity Infrastructure

     SEC. 1501. EXTENSION AND MODIFICATION OF RENEWABLE 
                   ELECTRICITY PRODUCTION CREDIT.

       (a) 3-Year Extension for Certain Facilities.--Section 45(d) 
     (relating to qualified facilities) is amended--
       (1) by striking ``January 1, 2006'' each place it appears 
     in paragraphs (1), (2), (3), (5), (6), and (7) and inserting 
     ``January 1, 2009'', and
       (2) by striking ``January 1, 2006'' in paragraph (4) and 
     inserting ``January 1, 2009 (January 1, 2006, in the case of 
     a facility using solar energy)''.
       (b) Increase in Credit Period.--Section 45(b)(4)(B) 
     (relating to credit period) is amended--
       (1) by inserting ``or clause (iii)'' after ``clause (ii)'' 
     in clause (i), and
       (2) by adding at the end the following:
       ``(iii) Termination.--Clause (i) shall not apply to any 
     facility placed in service after the date of the enactment of 
     this clause.''.
       (c) Expansion of Qualified Resources To Include Fuel 
     Cells.--
       (1) In general.--Section 45(c)(1) (defining qualified 
     energy resources) is amended by striking ``and'' at the end 
     of subparagraph (F), by striking the period at the end of 
     subparagraph (G) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(H) fuel cells.''.
       (2) Fuel cell facility.--Section 45(d) (relating to 
     qualified facilities) is amended by adding at the end the 
     following new paragraph:
       ``(9) Fuel cell facility.--In the case of a facility using 
     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, the term 
     `qualified facility' means any facility owned by the taxpayer 
     which--
       ``(A) is originally placed in service after December 31, 
     2005, and before January 1, 2009,
       ``(B) has a nameplate capacity rating of at least 0.5 
     megawatt of electricity, and
       ``(C) has an electricity-only generation efficiency greater 
     than 30 percent.''.
       (3) Conforming amendments relating to coordination with 
     energy credit.--
       (A) In general.--Section 45(e) (relating to definitions and 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(10) Coordination with energy credit.--The term 
     `qualified facility' shall not include any property described 
     in section 48(a)(3) the basis of which is taken into account 
     by the taxpayer for purposes of determining the energy credit 
     under section 48.''.

[[Page 13160]]

       (B) Conforming amendment.--Section 45(d)(4) is amended by 
     striking the last sentence.
       (d) Expansion of Qualified Resources To Certain 
     Hydropower.--
       (1) In general.--Section 45(c)(1) (defining qualified 
     energy resources), as amended by this Act, is amended by 
     striking ``and'' at the end of subparagraph (G), by striking 
     the period at the end of subparagraph (H) and inserting ``, 
     and'', and by adding at the end the following new 
     subparagraph:
       ``(I) qualified hydropower production.''.
       (2) Credit rate.--Section 45(b)(4)(A) (relating to credit 
     rate) is amended by striking ``or (7)'' and inserting ``(7), 
     or (10)''.
       (3) Definition of resources.--Section 45(c) (relating to 
     qualified energy resources and refined coal) is amended by 
     adding at the end the following new paragraph:
       ``(8) Qualified hydropower production.--
       ``(A) In general.--The term `qualified hydropower 
     production' means--
       ``(i) in the case of any hydroelectric dam which was placed 
     in service on or before the date of the enactment of this 
     paragraph, the incremental hydropower production for the 
     taxable year, and
       ``(ii) in the case of any low-head hydroelectric facility 
     or nonhydroelectric dam described in subparagraph (C), the 
     hydropower production from the facility for the taxable year.
       ``(B) Determination of incremental hydropower production.--
       ``(i) In general.--For purposes of subparagraph (A), 
     incremental hydropower production for any taxable year shall 
     be equal to the percentage of average annual hydropower 
     production at the facility attributable to the efficiency 
     improvements or additions of capacity placed in service after 
     the date of the enactment of this paragraph, determined by 
     using the same water flow information used to determine an 
     historic average annual hydropower production baseline for 
     such facility. Such percentage and baseline shall be 
     certified by the Federal Energy Regulatory Commission.
       ``(ii) Operational changes disregarded.--For purposes of 
     clause (i), the determination of incremental hydropower 
     production shall not be based on any operational changes at 
     such facility not directly associated with the efficiency 
     improvements or additions of capacity.
       ``(C) Low-head hydroelectric facility or nonhydroelectric 
     dam.--For purposes of subparagraph (A), a facility is 
     described in this subparagraph if--
       ``(i) the facility is licensed by the Federal Energy 
     Regulatory Commission and meets all other applicable 
     environmental, licensing, and regulatory requirements,
       ``(ii) the facility did not produce hydroelectric power on 
     the date of the enactment of this paragraph, and
       ``(iii) turbines or other generating devices are to be 
     added to the facility after such date to produce 
     hydroelectric power, but only if the installation of the 
     turbine or other generating device does not require any 
     enlargement of the diversion structure or the impoundment or 
     any withholding of any additional water from the natural 
     stream channel.
       ``(D) Low-head hydroelectric facility defined.--For 
     purposes of this paragraph, the term `low-head hydroelectric 
     facility' means a minor diversion structure which is less 
     than 10 feet in height.''.
       (3) Facilities.--Section 45(d) (relating to qualified 
     facilities), as amended by this Act, is amended by adding at 
     the end the following new paragraph:
       ``(10) Qualified hydropower facility.--In the case of a 
     facility producing qualified hydroelectric production 
     described in subsection (c)(8), the term `qualified facility' 
     means--
       ``(A) in the case of any facility producing incremental 
     hydropower production, such facility but only to the extent 
     of its incremental hydropower production attributable to 
     efficiency improvements or additions to capacity described in 
     subsection (c)(8)(B) placed in service after the date of the 
     enactment of this paragraph and before January 1, 2009, and
       ``(B) any other facility placed in service after the date 
     of the enactment of this paragraph and before January 1, 
     2009.
       ``(C) Credit period.--In the case of a qualified facility 
     described in subparagraph (A), the 10-year period referred to 
     in subsection (a) shall be treated as beginning on the date 
     the efficiency improvements or additions to capacity are 
     placed in service.''.
       (e) Technical Amendment Related To Trash Combustion 
     Facilities.--Section 45(d)(7) (relating to trash combustion 
     facilities) is amended by adding at the end the following: 
     ``Such term shall include a new unit placed in service in 
     connection with a facility placed in service on or before the 
     date of the enactment of this paragraph, but only to the 
     extent of the increased amount of electricity produced at the 
     facility by reason of such new unit.''.
       (f) Additional Technical Amendments Related To Section 710 
     of the American Jobs Creation Act of 2004.--
       (1) Clause (ii) of section 45(b)(4)(B) is amended by 
     striking ``the date of the enactment of this Act'' and 
     inserting ``January 1, 2005,''.
       (2) Clause (ii) of section 45(c)(3)(A) is amended by 
     inserting ``or any nonhazardous lignin waste material'' after 
     ``cellulosic waste material''.
       (3) Subsection (e) of section 45 is amended by striking 
     paragraph (6).
       (4)(A) Paragraph (9) of section 45(e) is amended to read as 
     follows:
       ``(9) Coordination with credit for producing fuel from a 
     nonconventional source.--
       ``(A) In general.--The term `qualified facility' shall not 
     include any facility which produces electricity from gas 
     derived from the biodegradation of municipal solid waste if 
     such biodegradation occurred in a facility (within the 
     meaning of section 29) the production from which is allowed 
     as a credit under section 29 for the taxable year or any 
     prior taxable year.
       ``(B) Refined coal facilities.--The term `refined coal 
     production facility' shall not include any facility the 
     production from which is allowed as a credit under section 29 
     for the taxable year or any prior taxable year.''.
       (B) Subparagraph (C) of section 45(e)(8) is amended by 
     striking ``and (9)''.
       (5) Subclause (I) of section 168(e)(3)(B)(vi) is amended to 
     read as follows:

       ``(I) is described in subparagraph (A) of section 48(a)(3) 
     (or would be so described if `solar and wind' were 
     substituted for `solar' in clause (i) thereof and the last 
     sentence of such section did not apply to such 
     subparagraph),''.

       (6) Paragraph (4) of section 710(g) of the American Jobs 
     Creation Act of 2004 is amended by striking ``January 1, 
     2004'' and inserting ``January 1, 2005''.
       (g) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall take effect of the date 
     of the enactment of this Act.
       (2) Technical amendments.--The amendments made by 
     subsections (e) and (f) shall take effect as if included in 
     the amendments made by section 710 of the American Jobs 
     Creation Act of 2004.

     SEC. 1502. CLEAN RENEWABLE ENERGY BONDS.

       (a) In General.--Part IV of subchapter A of chapter 1 
     (relating to credits against tax) is amended by adding at the 
     end the following new subpart:

     ``Subpart H--Nonrefundable Credit to Holders of Certain Bonds

``Sec. 54. Credit to holders of clean renewable energy bonds.

     ``SEC. 54. CREDIT TO HOLDERS OF CLEAN RENEWABLE ENERGY BONDS.

       ``(a) Allowance of Credit.--If a taxpayer holds a clean 
     renewable energy bond on 1 or more credit allowance dates of 
     the bond occurring during any taxable year, 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 the 
     credits determined under subsection (b) with respect to such 
     dates.
       ``(b) Amount of Credit.--
       ``(1) In general.--The amount of the credit determined 
     under this subsection with respect to any credit allowance 
     date for a clean renewable energy bond is 25 percent of the 
     annual credit determined with respect to such bond.
       ``(2) Annual credit.--The annual credit determined with 
     respect to any clean renewable energy bond is the product 
     of--
       ``(A) the credit rate determined by the Secretary under 
     paragraph (3) for the day on which such bond was sold, 
     multiplied by
       ``(B) the outstanding face amount of the bond.
       ``(3) Determination.--For purposes of paragraph (2), with 
     respect to any clean renewable energy bond, the Secretary 
     shall determine daily or cause to be determined daily a 
     credit rate which shall apply to the first day on which there 
     is a binding, written contract for the sale or exchange of 
     the bond. The credit rate for any day is the credit rate 
     which the Secretary or the Secretary's designee estimates 
     will permit the issuance of clean renewable energy bonds with 
     a specified maturity or redemption date without discount and 
     without interest cost to the qualified issuer.
       ``(4) Credit allowance date.--For purposes of this section, 
     the term `credit allowance date' means--
       ``(A) March 15,
       ``(B) June 15,
       ``(C) September 15, and
       ``(D) December 15.

     Such term also includes the last day on which the bond is 
     outstanding.
       ``(5) Special rule for issuance and redemption.--In the 
     case of a bond which is issued during the 3-month period 
     ending on a credit allowance date, the amount of the credit 
     determined under this subsection with respect to such credit 
     allowance date shall be a ratable portion of the credit 
     otherwise determined based on the portion of the 3-month 
     period during which the bond is outstanding. A similar rule 
     shall apply when the bond is redeemed or matures.
       ``(c) Limitation Based on Amount of Tax.--The credit 
     allowed under subsection (a) for any taxable year shall not 
     exceed the excess of--
       ``(1) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over

[[Page 13161]]

       ``(2) the sum of the credits allowable under this part 
     (other than subpart C thereof (relating to refundable 
     credits) and this subpart) and section 1397E.
       ``(d) Clean Renewable Energy Bond.--For purposes of this 
     section--
       ``(1) In general.--The term `clean renewable energy bond' 
     means any bond issued as part of an issue if--
       ``(A) the bond is issued by a qualified issuer pursuant to 
     an allocation by the Secretary to such issuer of a portion of 
     the national clean renewable energy bond limitation under 
     subsection (f)(2),
       ``(B) 95 percent or more of the proceeds from the sale of 
     such issue are to be used for capital expenditures incurred 
     by qualified borrowers for 1 or more qualified projects,
       ``(C) the qualified issuer designates such bond for 
     purposes of this section and the bond is in registered form, 
     and
       ``(D) the issue meets the requirements of subsection (h).
       ``(2) Qualified project; special use rules.--
       ``(A) In general.--The term `qualified project' means any 
     qualified facility (as determined under section 45(d) without 
     regard to any placed in service date) owned by a qualified 
     borrower.
       ``(B) Refinancing rules.--For purposes of paragraph (1)(B), 
     a qualified project may be refinanced with proceeds of a 
     clean renewable energy bond only if the indebtedness being 
     refinanced (including any obligation directly or indirectly 
     refinanced by such indebtedness) was originally incurred by a 
     qualified borrower after the date of the enactment of this 
     section.
       ``(C) Reimbursement.--For purposes of paragraph (1)(B), a 
     clean renewable energy bond may be issued to reimburse a 
     qualified borrower for amounts paid after the date of the 
     enactment of this section with respect to a qualified 
     project, but only if--
       ``(i) prior to the payment of the original expenditure, the 
     qualified borrower declared its intent to reimburse such 
     expenditure with the proceeds of a clean renewable energy 
     bond,
       ``(ii) not later than 60 days after payment of the original 
     expenditure, the qualified issuer adopts an official intent 
     to reimburse the original expenditure with such proceeds, and
       ``(iii) the reimbursement is made not later than 18 months 
     after the date the original expenditure is paid.
       ``(D) Treatment of changes in use.--For purposes of 
     paragraph (1)(B), the proceeds of an issue shall not be 
     treated as used for a qualified project to the extent that a 
     qualified borrower takes any action within its control which 
     causes such proceeds not to be used for a qualified project. 
     The Secretary shall prescribe regulations specifying remedial 
     actions that may be taken (including conditions to taking 
     such remedial actions) to prevent an action described in the 
     preceding sentence from causing a bond to fail to be a clean 
     renewable energy bond.
       ``(e) Maturity Limitations.--
       ``(1) Duration of term.--A bond shall not be treated as a 
     clean renewable energy bond if the maturity of such bond 
     exceeds the maximum term determined by the Secretary under 
     paragraph (2) with respect to such bond.
       ``(2) Maximum term.--During each calendar month, the 
     Secretary shall determine the maximum term permitted under 
     this paragraph for bonds issued during the following calendar 
     month. Such maximum term shall be the term which the 
     Secretary estimates will result in the present value of the 
     obligation to repay the principal on the bond being equal to 
     50 percent of the face amount of such bond. Such present 
     value shall be determined using as a discount rate the 
     average annual interest rate of tax of tax-exempt obligations 
     having a term of 10 years or more which are issued during the 
     month. If the term as so determined is not a multiple of a 
     whole year, such term shall be rounded to the next highest 
     whole year.
       ``(3) Ratable principal amortization required.--A bond 
     shall not be treated as a clean renewable energy bond unless 
     it is part of an issue which provides for an equal amount of 
     principal to be paid by the qualified issuer during each 
     calendar year that the issue is outstanding.
       ``(f) Limitation on Amount of Bonds Designated.--
       ``(1) National limitation.--There is a national clean 
     renewable energy bond limitation of $1,000,000,000.
       ``(2) Allocation by secretary.--The Secretary shall 
     allocate the amount described in paragraph (1) among 
     qualified projects in such manner as the Secretary determines 
     appropriate.
       ``(g) Credit Included in Gross Income.--Gross income 
     includes the amount of the credit allowed to the taxpayer 
     under this section (determined without regard to subsection 
     (c)) and the amount so included shall be treated as interest 
     income.
       ``(h) Special Rules Relating to Expenditures.--
       ``(1) In general.--An issue shall be treated as meeting the 
     requirements of this subsection if, as of the date of 
     issuance, the qualified issuer reasonably expects--
       ``(A) at least 95 percent of the proceeds from the sale of 
     the issue are to be spent for 1 or more qualified projects 
     within the 5-year period beginning on the date of issuance of 
     the clean energy bond,
       ``(B) a binding commitment with a third party to spend at 
     least 10 percent of the proceeds from the sale of the issue 
     will be incurred within the 6-month period beginning on the 
     date of issuance of the clean energy bond or, in the case of 
     a clean energy bond the proceeds of which are to be loaned to 
     2 or more qualified borrowers, such binding commitment will 
     be incurred within the 6-month period beginning on the date 
     of the loan of such proceeds to a qualified borrower, and
       ``(C) such projects will be completed with due diligence 
     and the proceeds from the sale of the issue will be spent 
     with due diligence.
       ``(2) Extension of period.--Upon submission of a request 
     prior to the expiration of the period described in paragraph 
     (1)(A), the Secretary may extend such period if the qualified 
     issuer establishes that the failure to satisfy the 5-year 
     requirement is due to reasonable cause and the related 
     projects will continue to proceed with due diligence.
       ``(3) Failure to spend required amount of bond proceeds 
     within 5 years.--To the extent that less than 95 percent of 
     the proceeds of such issue are expended by the close of the 
     5-year period beginning on the date of issuance (or if an 
     extension has been obtained under paragraph (2), by the close 
     of the extended period), the qualified issuer shall redeem 
     all of the nonqualified bonds within 90 days after the end of 
     such period. For purposes of this paragraph, the amount of 
     the nonqualified bonds required to be redeemed shall be 
     determined in the same manner as under section 142.
       ``(i) Special Rules Relating to Arbitrage.--A bond which is 
     part of an issue shall not be treated as a clean renewable 
     energy bond unless, with respect to the issue of which the 
     bond is a part, the qualified issuer satisfies the arbitrage 
     requirements of section 148 with respect to proceeds of the 
     issue.
       ``(j) Cooperative Electric Company; Qualified Energy Tax 
     Credit Bond Lender; Governmental Body; Qualified Borrower.--
     For purposes of this section--
       ``(1) Cooperative electric company.--The term `cooperative 
     electric company' means a mutual or cooperative electric 
     company described in section 501(c)(12) or section 
     1381(a)(2)(C), or a not-for-profit electric utility which has 
     received a loan or loan guarantee under the Rural 
     Electrification Act.
       ``(2) Clean renewable energy bond lender.--The term `clean 
     renewable energy bond lender' means a lender which is a 
     cooperative which is owned by, or has outstanding loans to, 
     100 or more cooperative electric companies and is in 
     existence on February 1, 2002, and shall include any 
     affiliated entity which is controlled by such lender.
       ``(3) Governmental body.--The term `governmental body' 
     means any State, territory, possession of the United States, 
     the District of Columbia, Indian tribal government, and any 
     political subdivision thereof.
       ``(4) Qualified issuer.--The term `qualified issuer' 
     means--
       ``(A) a clean renewable energy bond lender,
       ``(B) a cooperative electric company,
       ``(C) a governmental body, or
       ``(D) the Tennessee Valley Authority.
       ``(5) Qualified borrower.--The term `qualified borrower' 
     means--
       ``(A) a mutual or cooperative electric company described in 
     section 501(c)(12) or 1381(a)(2)(C),
       ``(B) a governmental body, or
       ``(C) the Tennessee Valley Authority.
       ``(k) Special Rules Relating to Pool Bonds.--No portion of 
     a pooled financing bond may be allocable to any loan unless 
     the borrower has entered into a written loan commitment for 
     such portion prior to the issue date of such issue.
       ``(l) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Bond.--The term `bond' includes any obligation.
       ``(2) Pooled financing bond.--The term `pooled financing 
     bond' shall have the meaning given such term by section 
     149(f)(4)(A).
       ``(3) Partnership; s corporation; and other pass-thru 
     entities.--
       ``(A) In general.--Under regulations prescribed by the 
     Secretary, in the case of a partnership, trust, S 
     corporation, or other pass-thru entity, rules similar to the 
     rules of section 41(g) shall apply with respect to the credit 
     allowable under subsection (a).
       ``(B) No basis adjustment.--Rules similar to the rules 
     under section 1397E(i)(2) shall apply.
       ``(4) Bonds held by regulated investment companies.--If any 
     clean renewable energy bond is held by a regulated investment 
     company, the credit determined under subsection (a) shall be 
     allowed to shareholders of such company under procedures 
     prescribed by the Secretary.
       ``(5) Treatment for estimated tax purposes.--Solely for 
     purposes of sections 6654 and 6655, the credit allowed by 
     this section to a taxpayer by reason of holding a clean 
     renewable energy bond on a credit allowance date shall be 
     treated as if it were a payment of estimated tax made by the 
     taxpayer on such date.
       ``(6) Reporting.--Issuers of clean renewable energy bonds 
     shall submit reports similar to the reports required under 
     section 149(e).

[[Page 13162]]

       ``(m) Termination.--This section shall not apply with 
     respect to any bond issued after December 31, 2008.''.
       (b) Reporting.--Subsection (d) of section 6049 (relating to 
     returns regarding payments of interest) is amended by adding 
     at the end the following new paragraph:
       ``(8) Reporting of credit on clean renewable energy 
     bonds.--
       ``(A) In general.--For purposes of subsection (a), the term 
     `interest' includes amounts includible in gross income under 
     section 54(g) and such amounts shall be treated as paid on 
     the credit allowance date (as defined in section 54(b)(4)).
       ``(B) Reporting to corporations, etc.--Except as otherwise 
     provided in regulations, in the case of any interest 
     described in subparagraph (A), subsection (b)(4) shall be 
     applied without regard to subparagraphs (A), (H), (I), (J), 
     (K), and (L)(i) of such subsection.
       ``(C) Regulatory authority.--The Secretary may prescribe 
     such regulations as are necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations which 
     require more frequent or more detailed reporting.''.
       (c) Conforming Amendments.--
       (1) The table of subparts for part IV of subchapter A of 
     chapter 1 is amended by adding at the end the following new 
     item:

   ``SUBPART H. NONREFUNDABLE CREDIT TO HOLDERS OF CERTAIN BONDS.''.

       (2) Section 1397E(c)(2) is amended by inserting ``and H'' 
     after ``subpart C''.
       (3) Section 6401(b)(1) is amended by striking ``and G'' and 
     inserting ``G, and H''.
       (d) Issuance of Regulations.--The Secretary of Treasury 
     shall issue regulations required under section 54 of the 
     Internal Revenue Code of 1986 (as added by this section) not 
     later than 120 days after the date of the enactment of this 
     Act.
       (e) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after December 31, 2005.

     SEC. 1503. TREATMENT OF INCOME OF CERTAIN ELECTRIC 
                   COOPERATIVES.

       (a) Elimination of Sunset on Treatment of Income From Open 
     Access and Nuclear Decommissioning Transactions.--Section 
     501(c)(12)(C) is amended by striking the last sentence.
       (b) Elimination of Sunset on Treatment of Income From Load 
     Loss Transactions.--Section 501(c)(12)(H) is amended by 
     striking clause (x).
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 1504. DISPOSITIONS OF TRANSMISSION PROPERTY TO IMPLEMENT 
                   FERC RESTRUCTURING POLICY.

       (a) In General.--Section 451(i)(3) (defining qualifying 
     electric transmission transaction) is amended by striking 
     ``2007'' and inserting ``2008''.
       (b) Technical Amendment Related To Section 909 of the 
     American Jobs Creation Act of 2004.--Clause (ii) of section 
     451(i)(4)(B) is amended by striking ``the close of the period 
     applicable under subsection (a)(2)(B) as extended under 
     paragraph (2)'' and inserting ``December 31, 2007''.
       (c) Effective Dates.--
       (1) In general.--The amendment made by subsection (a) shall 
     apply to transactions occurring after the date of the 
     enactment of this Act.
       (2) Technical amendment.--The amendment made by subsection 
     (b) shall take effect as if included in the amendments made 
     by section 909 of the American Jobs Creation Act of 2004.

     SEC. 1505. CREDIT FOR PRODUCTION FROM ADVANCED NUCLEAR POWER 
                   FACILITIES.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits) is amended 
     by adding after section 45I the following new section:

     ``SEC. 45J. CREDIT FOR PRODUCTION FROM ADVANCED NUCLEAR POWER 
                   FACILITIES.

       ``(a) General Rule.--For purposes of section 38, the 
     advanced nuclear power facility production credit of any 
     taxpayer for any taxable year is equal to the product of--
       ``(1) 1.8 cents, multiplied by
       ``(2) the kilowatt hours of electricity--
       ``(A) produced by the taxpayer at an advanced nuclear power 
     facility during the 8-year period beginning on the date the 
     facility was originally placed in service, and
       ``(B) sold by the taxpayer to an unrelated person during 
     the taxable year.
       ``(b) National Limitation.--
       ``(1) In general.--The amount of credit which would (but 
     for this subsection and subsection (c)) be allowed with 
     respect to any facility for any taxable year shall not exceed 
     the amount which bears the same ratio to such amount of 
     credit as--
       ``(A) the national megawatt capacity limitation allocated 
     to the facility, bears to
       ``(B) the total megawatt nameplate capacity of such 
     facility.
       ``(2) Amount of national limitation.--The national megawatt 
     capacity limitation shall be 6,000 megawatts.
       ``(3) Allocation of limitation.--The Secretary shall 
     allocate the national megawatt capacity limitation in such 
     manner as the Secretary may prescribe.
       ``(4) Regulations.--Not later than 6 months after the date 
     of the enactment of this section, the Secretary shall 
     prescribe such regulations as may be necessary or appropriate 
     to carry out the purposes of this subsection. Such 
     regulations shall provide a certification process under which 
     the Secretary, after consultation with the Secretary of 
     Energy, shall approve and allocate the national megawatt 
     capacity limitation.
       ``(c) Other Limitations.--
       ``(1) Annual limitation.--The amount of the credit 
     allowable under subsection (a) (after the application of 
     subsection (b)) for any taxable year with respect to any 
     facility shall not exceed an amount which bears the same 
     ratio to $125,000,000 as--
       ``(A) the national megawatt capacity limitation allocated 
     under subsection (b) to the facility, bears to
       ``(B) 1,000.
       ``(2) Other limitations.--Rules similar to the rules of 
     section 45(b)(1) shall apply for purposes of this section.
       ``(d) Advanced Nuclear Power Facility.--For purposes of 
     this section--
       ``(1) In general.--The term `advanced nuclear power 
     facility' means any advanced nuclear facility--
       ``(A) which is owned by the taxpayer and which uses nuclear 
     energy to produce electricity, and
       ``(B) which is placed in service after the date of the 
     enactment of this paragraph and before January 1, 2021.
       ``(2) Advanced nuclear facility.--For purposes of paragraph 
     (1), the term `advanced nuclear facility' means any nuclear 
     facility the reactor design for which is approved after 
     December 31, 1993, by the Nuclear Regulatory Commission (and 
     such design or a substantially similar design of comparable 
     capacity was not approved on or before such date).
       ``(e) Other Rules To Apply.--Rules similar to the rules of 
     paragraphs (1), (2), (3), (4), and (5) of section 45(e) shall 
     apply for purposes of this section.''
       (b) Credit Treated as Business Credit.--Section 38(b) is 
     amended by striking ``plus'' at the end of paragraph (18), by 
     striking the period at the end of paragraph (19) and 
     inserting ``, plus'', and by adding at the end the following:
       ``(20) the advanced nuclear power facility production 
     credit determined under section 45J(a).''.
       (c) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 is amended by 
     adding at the end the following:

``Sec. 45J. Credit for production from advanced nuclear power 
              facilities.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to production in taxable years beginning after 
     the date of the enactment of this Act.

     SEC. 1506. CREDIT FOR INVESTMENT IN CLEAN COAL FACILITIES.

       (a) In general.--Section 46 (relating to amount of credit) 
     is amended by striking ``and'' at the end of paragraph (1), 
     by striking the period at the end of paragraph (2), and by 
     adding at the end the following new paragraphs:
       ``(3) the qualifying advanced coal project credit, and
       ``(4) the qualifying gasification project credit.''.
       (b) Amount of Credits.--Subpart E of part IV of subchapter 
     A of chapter 1 (relating to rules for computing investment 
     credit) is amended by inserting after section 48 the 
     following new sections:

     ``SEC. 48A. QUALIFYING ADVANCED COAL PROJECT CREDIT.

       ``(a) In General.--For purposes of section 46, the 
     qualifying advanced coal project credit for any taxable year 
     is an amount equal to 20 percent of the qualified investment 
     for such taxable year.
       ``(b) Qualified Investment.--
       ``(1) In general.--For purposes of subsection (a), the 
     qualified investment for any taxable year is the basis of 
     property placed in service by the taxpayer during such 
     taxable year which is part of a qualifying advanced coal 
     project--
       ``(A)(i) the construction, reconstruction, or erection of 
     which is completed by the taxpayer, or
       ``(ii) which is acquired by the taxpayer if the original 
     use of such property commences with the taxpayer, and
       ``(B) with respect to which depreciation (or amortization 
     in lieu of depreciation) is allowable.
       ``(2) Applicable rules.--For purposes of this section, 
     rules similar to the rules of subsection (a)(4) and (b) of 
     section 48 shall apply.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Qualifying advanced coal project.--The term 
     `qualifying advanced coal project' means a project which 
     meets the requirements of subsection (e).
       ``(2) Advanced coal-based generation technology.--The term 
     `advanced coal-based generation technology' means a 
     technology which meets the requirements of subsection (g).
       ``(3) Coal.--The term `coal' means any carbonized or 
     semicarbonized matter, including peat.
       ``(4) Greenhouse gas capture capability.--The term 
     `greenhouse gas capture

[[Page 13163]]

     capability' means an integrated gasification combined cycle 
     technology facility capable of adding components which can 
     capture, separate on a long-term basis, isolate, remove, and 
     sequester greenhouse gases which result from the generation 
     of electricity.
       ``(5) Electric generation unit.--The term `electric 
     generation unit' means any facility at least 50 percent of 
     the total annual net output of which is electrical power, 
     including an otherwise eligible facility which is used in an 
     industrial application.
       ``(6) Integrated gasification combined cycle.--The term 
     `integrated gasification combined cycle' means an electric 
     generation unit which produces electricity by converting coal 
     to synthesis gas which is used to fuel a combined-cycle plant 
     which produces electricity from both a combustion turbine 
     (including a combustion turbine/fuel cell hybrid) and a steam 
     turbine.
       ``(d) Qualifying Advanced Coal Project Program.--
       ``(1) Establishment.--Not later than 180 days after the 
     date of enactment of this section, the Secretary, in 
     consultation with the Secretary of Energy, shall establish a 
     qualifying advanced coal project program for the deployment 
     of advanced coal-based generation technologies.
       ``(2) Certification.--
       ``(A) In general.--The Secretary may certify a qualifying 
     advanced coal project as eligible for a credit under this 
     section.
       ``(B) Period of issuance.--A certificate of eligibility 
     under this paragraph may be issued only during the 10-fiscal 
     year period beginning on October 1, 2005.
       ``(3) Aggregate generating capacity.--
       ``(A) In general.--The aggregate generating capacity of 
     projects certified by the Secretary under paragraph (2) may 
     not exceed 7,500 megawatts.
       ``(B) Particular projects.--Of the total megawatts of 
     capacity which the Secretary is authorized to certify--
       ``(i) 4,125 megawatts shall be available only for use for 
     integrated gasification combined cycle projects, and
       ``(ii) 3,375 megawatts shall be available only for use for 
     projects which use other advanced coal-based generation 
     technologies.
       ``(C) Determination of capacity.--In determining capacity 
     under this paragraph in the case of a retrofitted or 
     repowered plant, capacity shall be determined based on total 
     design capacity after the retrofit or repowering of the 
     existing facility is accomplished.
       ``(4) Applications.--The Secretary shall act on 
     applications for certification as the applications are 
     received.
       ``(5) Determination.--In determining whether to certify a 
     qualifying advanced coal project, the Secretary shall take 
     into account any written statement from the Governor of the 
     State in which the project is to be sited that the 
     construction and operation of the project is consistent with 
     State environmental and energy policy and requirements.
       ``(6) Review and redistribution.--
       ``(A) Review.--Not later than 6 years after the date of 
     enactment of this section, the Secretary shall review the 
     projects certified and megawatts allocated under this section 
     as of the date which is 6 years after the date of enactment 
     of this section.
       ``(B) Redistribution.--The Secretary may reallocate the 
     megawatts available under clauses (i) and (ii) of paragraph 
     (3)(B) if the Secretary determines that--
       ``(i) capacity cannot be used because there is an 
     insufficient quantity of qualifying applications for 
     certification pending for any available capacity at the time 
     of the review, or
       ``(ii) any certification commitment made pursuant to 
     subsection (e)(4)(B) has not been revoked pursuant to 
     subsection (f)(2)(B)(ii) because the project subject to the 
     certification commitment has been delayed as a result of 
     third party opposition or litigation to the proposed project.
       ``(e) Qualifying Advanced Coal Projects.--
       ``(1) Requirements.--For purposes of subsection (c)(1), a 
     project shall be considered a qualifying advanced coal 
     project that the Secretary may certify under subsection 
     (d)(2) if the Secretary determines that, at a minimum--
       ``(A) the project uses an advanced coal-based generation 
     technology--
       ``(i) to power a new electric generation or polygeneration 
     unit, or
       ``(ii) to retrofit or repower an existing electric 
     generation unit (including an existing natural gas-fired 
     combined cycle unit),
       ``(B) the fuel input for the project, when completed, is at 
     least 75 percent coal,
       ``(C) the applicant provides an assurance satisfactory to 
     the Secretary that--
       ``(i) the project is technologically feasible, and
       ``(ii) the project is not financially feasible without the 
     Federal financial incentives, after taking into account--

       ``(I) regulatory approvals or power purchase contracts 
     referred to in subparagraph (D),
       ``(II) arrangements for the supply of fuel to the project,
       ``(III) contracts or other arrangements for construction of 
     the project facilities,
       ``(IV) any performance guarantees to be provided by 
     contractors and equipment vendors, and
       ``(V) evidence of the availability of funds to develop and 
     construct the project,

       ``(D) the applicant demonstrates that the applicant has 
     obtained--
       ``(i) approval by the appropriate regulatory commission of 
     the recovery of the cost of the project, or
       ``(ii) a power purchase agreement (or letter of intent, 
     subject to paragraph (3)) which has been approved by the 
     board of directors of, and executed by, a creditworthy 
     purchasing party,
       ``(E) except as provided in subsection (f)(2), the 
     applicant demonstrates that the applicant has, or will, 
     obtain all project agreements and approvals, and
       ``(F) the project will be located in the United States.
       ``(2) Priority for integrated gasification combined cycle 
     projects.--In determining which qualifying advanced coal 
     projects to certify under subsection (d)(3)(B)(i), the 
     Secretary shall--
       ``(A) certify capacity to--
       ``(i) projects using bituminous coal as a primary 
     feedstock,
       ``(ii) projects using subbituminous coal as a primary 
     feedstock, and
       ``(iii) projects using lignite as a primary feedstock, and
       ``(B) give high priority to projects which include, as 
     determined by the Secretary--
       ``(i) greenhouse gas capture capability,
       ``(ii) increased by-product utilization, and
       ``(iii) other benefits.
       ``(3) Letter of intent.--A letter of intent described in 
     paragraph (1)(D)(ii) shall be replaced by a binding contract 
     before a certificate may be issued.
       ``(f) Project Agreements and Approvals.--
       ``(1) Definition of project agreements and approvals.--For 
     purposes of this subsection, the term `project agreements and 
     approvals' means--
       ``(A) all necessary power purchase agreements, and all 
     other contracts, which the Secretary determines are necessary 
     to construct, finance, and operate a project, and
       ``(B) all authorizations by Federal, State, and local 
     agencies which are required to construct, operate, and 
     recover the cost of the project.
       ``(2) Certification commitment.--
       ``(A) In general.--If the applicant has not obtained all 
     agreements and approvals prior to application, the Secretary 
     may issue a certification commitment.
       ``(B) Requirements.--
       ``(i) In general.--An applicant which receives a 
     certification commitment shall obtain any remaining project 
     agreements and approvals not later than 4 years after the 
     issuance of the certification commitment.
       ``(ii) Revocation.--If all project agreements and approvals 
     are not obtained during the 4-year period described in clause 
     (i), the certification commitment is terminated without any 
     other action by the Secretary.
       ``(iii) Final certificate.--No certificate may be issued 
     until all project agreements and approvals are obtained.
       ``(g) Advanced Coal-Based Generation Technology.--
       ``(1) In general.--For the purpose of this section, an 
     electric generation unit uses advanced coal-based generation 
     technology if--
       ``(A) the unit--
       ``(i) uses integrated gasification combined cycle 
     technology, or
       ``(ii) except as provided in paragraph (3), has a design 
     net heat rate of 8530 Btu/kWh (40 percent efficiency), and
       ``(B) the vendor warrants that the unit is designed to meet 
     the performance requirements in the following table:

Performance                                 Design level for project:
characteristic:
  SO2 (percent removal)...................  99 percent
  NOx (emissions).........................  0.07 lbs/MMBTU
  PM* (emissions).........................  0.015 lbs/MMBTU
  Hg (percent removal)....................  90 percent
 

       ``(2) Design net heat rate.--For purposes of this 
     subsection, design net heat rate with respect to an electric 
     generation unit shall--
       ``(A) be measured in Btu per kilowatt hour (higher heating 
     value),
       ``(B) be based on the design annual heat input to the unit 
     and the rated net electrical power, fuels, and chemicals 
     output of the unit (determined without regard to the 
     cogeneration of steam by the unit),
       ``(C) be adjusted for the heat content of the design coal 
     to be used by the unit--
       ``(i) if the heat content is less than 13,500 Btu per 
     pound, but greater than 7,000 Btu per pound, according to the 
     following formula: design net heat rate = unit net heat rate 
     x [1-{((13,500-design coal heat content, Btu per pound)/
     1,000)* 0.013}], and
       ``(ii) if the heat content is less than or equal to 7,000 
     Btu per pound, according to the following formula: design net 
     heat rate = unit net heat rate x [1-{((13,500-design coal 
     heat content, Btu per pound)/1,000)* 0.018}], and
       ``(D) be corrected for the site reference conditions of--
       ``(i) elevation above sea level of 500 feet,
       ``(ii) air pressure of 14.4 pounds per square inch 
     absolute,
       ``(iii) temperature, dry bulb of 63/o/F,
       ``(iv) temperature, wet bulb of 54/o/F, and

[[Page 13164]]

       ``(v) relative humidity of 55 percent.
       (3) Existing units.--In the case of any electric generation 
     unit in existence on the date of the enactment of this 
     section, such unit uses advanced coal-based generation 
     technology if, in lieu of the requirements under paragraph 
     (1)(A)(ii), such unit achieves a minimum efficiency of 35 
     percent and an overall thermal design efficiency improvement, 
     compared to the efficiency of the unit as operated, of not 
     less than--
       (A) 7 percentage points for coal of more than 9,000 Btu,
       (B) 6 percentage points for coal of 7,000 to 9,000 Btu, or
       (C) 4 percentage points for coal of less than 7,000 Btu.

     ``SEC. 48B. QUALIFYING GASIFICATION PROJECT CREDIT.

       ``(a) In General.--For purposes of section 46, the 
     qualifying gasification project credit for any taxable year 
     is an amount equal to 20 percent of the qualified investment 
     for such taxable year.
       ``(b) Qualified Investment.--
       ``(1) In general.--For purposes of subsection (a), the 
     qualified investment for any taxable year is the basis of 
     property placed in service by the taxpayer during such 
     taxable year which is part of a qualifying gasification 
     project--
       ``(A)(i) the construction, reconstruction, or erection of 
     which is completed by the taxpayer, or
       ``(ii) which is acquired by the taxpayer if the original 
     use of such property commences with the taxpayer, and
       ``(B) with respect to which depreciation (or amortization 
     in lieu of depreciation) is allowable.
       ``(2) Applicable rules.--For purposes of this section, 
     rules similar to the rules of subsection (a)(4) and (b) of 
     section 48 shall apply.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Qualifying gasification project.--The term 
     `qualifying gasification project' means any project which--
       ``(A) employs gasification technology,
       ``(B) will be carried out by an eligible entity, and
       ``(C) any portion of the qualified investment in which is 
     certified under the qualifying gasification program as 
     eligible for credit under this section in an amount (not to 
     exceed $1,000,000,000) determined by the Secretary.
       ``(2) Gasification technology.--The term `gasification 
     technology' means any process which converts a solid or 
     liquid product from coal, petroleum residue, biomass, or 
     other materials which are recovered for their energy or 
     feedstock value into a synthesis gas composed primarily of 
     carbon monoxide and hydrogen for direct use or subsequent 
     chemical or physical conversion.
       ``(3) Biomass.--
       ``(A) In general.--The term `biomass' means any--
       ``(i) agricultural or plant waste,
       ``(ii) byproduct of wood or paper mill operations, 
     including lignin in spent pulping liquors, and
       ``(iii) other products of forestry maintenance.
       ``(B) Exclusion.--The term `biomass' does not include paper 
     which is commonly recycled.
       ``(4) Carbon capture capability.--The term `carbon capture 
     capability' means a gasification plant design which is 
     determined by the Secretary to reflect reasonable 
     consideration for, and be capable of, accommodating the 
     equipment likely to be necessary to capture carbon dioxide 
     from the gaseous stream, for later use or sequestration, 
     which would otherwise be emitted in the flue gas from a 
     project which uses a nonrenewable fuel.
       ``(5) Coal.--The term `coal' means any carbonized or 
     semicarbonized matter, including peat.
       ``(6) Eligible entity.--The term `eligible entity' means 
     any person whose application for certification is principally 
     intended for use in a domestic project which employs domestic 
     gasification applications related to--
       ``(A) chemicals,
       ``(B) fertilizers,
       ``(C) glass,
       ``(D) steel,
       ``(E) petroleum residues,
       ``(F) forest products, and
       ``(G) agriculture, including feedlots and dairy operations.
       ``(7) Petroleum residue.--The term `petroleum residue' 
     means the carbonized product of high-boiling hydrocarbon 
     fractions obtained in petroleum processing.
       ``(d) Qualifying Gasification Project Program.--
       ``(1) In general.--The Secretary, in consultation with the 
     Secretary of Energy, shall establish a qualifying 
     gasification project program to consider and award 
     certifications for qualified investment eligible for credits 
     under this section to qualifying gasification project 
     sponsors under this section. The total qualified investment 
     which may be awarded eligibility for credit under the program 
     shall not exceed $4,000,000,000.
       ``(2) Period of issuance.--A certificate of eligibility 
     under paragraph (1) may be issued only during the 10-fiscal 
     year period beginning on October 1, 2005.
       ``(3) Selection criteria.--The Secretary shall not make a 
     competitive certification award for qualified investment for 
     credit eligibility under this section unless the recipient 
     has documented to the satisfaction of the Secretary that--
       ``(A) the award recipient is financially viable without the 
     receipt of additional Federal funding associated with the 
     proposed project,
       ``(B) the recipient will provide sufficient information to 
     the Secretary for the Secretary to ensure that the qualified 
     investment is spent efficiently and effectively,
       ``(C) a market exists for the products of the proposed 
     project as evidenced by contracts or written statements of 
     intent from potential customers,
       ``(D) the fuels identified with respect to the gasification 
     technology for such project will comprise at least 90 percent 
     of the fuels required by the project for the production of 
     chemical feedstocks, liquid transportation fuels, or 
     coproduction of electricity,
       ``(E) the award recipient's project team is competent in 
     the construction and operation of the gasification technology 
     proposed, with preference given to those recipients with 
     experience which demonstrates successful and reliable 
     operations of the technology on domestic fuels so identified, 
     and
       ``(F) the award recipient has met other criteria 
     established and published by the Secretary.''.
       (c) Conforming Amendments.--
       (1) Section 49(a)(1)(C) is amended by striking ``and'' at 
     the end of clause (ii), by striking clause (iii), and by 
     adding after clause (ii) the following new clauses:
       ``(iii) the basis of any property which is part of a 
     qualifying advanced coal project under section 48A, and
       ``(iv) the basis of any property which is part of a 
     qualifying gasification project under section 48B.''.
       (2) The table of sections for subpart E of part IV of 
     subchapter A of chapter 1 is amended by inserting after the 
     item relating to section 48 the following new items:

``48A. Qualifying advanced coal project credit.
``48B. Qualifying gasification project credit.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to periods after the date of the enactment of 
     this Act, under rules similar to the rules of section 48(m) 
     of the Internal Revenue Code of 1986 (as in effect on the day 
     before the date of the enactment of the Revenue 
     Reconciliation Act of 1990).

     SEC. 1507. CLEAN ENERGY COAL BONDS.

       (a) In General.--Subpart H of part IV of subchapter A of 
     chapter 1 (relating to credits against tax), as added by this 
     Act, is amended by adding at the end the following new 
     section:

     ``SEC. 54A. CREDIT TO HOLDERS OF CLEAN ENERGY COAL BONDS.

       ``(a) Allowance of Credit.--If a taxpayer holds a clean 
     energy coal bond on 1 or more credit allowance dates of the 
     bond occurring during any taxable year, 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 the 
     credits determined under subsection (b) with respect to such 
     dates.
       ``(b) Amount of Credit.--
       ``(1) In general.--The amount of the credit determined 
     under this subsection with respect to any credit allowance 
     date for a clean energy coal bond is 25 percent of the annual 
     credit determined with respect to such bond.
       ``(2) Annual credit.--The annual credit determined with 
     respect to any clean energy coal bond is the product of--
       ``(A) the credit rate determined by the Secretary under 
     paragraph (3) for the day on which such bond was sold, 
     multiplied by
       ``(B) the outstanding face amount of the bond.
       ``(3) Determination.--For purposes of paragraph (2), with 
     respect to any clean energy coal bond, the Secretary shall 
     determine daily or cause to be determined daily a credit rate 
     which shall apply to the first day on which there is a 
     binding, written contract for the sale or exchange of the 
     bond. The credit rate for any day is the credit rate which 
     the Secretary or the Secretary's designee estimates will 
     permit the issuance of clean energy coal bonds with a 
     specified maturity or redemption date without discount and 
     without interest cost to the qualified issuer.
       ``(4) Credit allowance date.--For purposes of this section, 
     the term `credit allowance date' means--
       ``(A) March 15,
       ``(B) June 15,
       ``(C) September 15, and
       ``(D) December 15.

     Such term also includes the last day on which the bond is 
     outstanding.
       ``(5) Special rule for issuance and redemption.--In the 
     case of a bond which is issued during the 3-month period 
     ending on a credit allowance date, the amount of the credit 
     determined under this subsection with respect to such credit 
     allowance date shall be a ratable portion of the credit 
     otherwise determined based on the portion of the 3-

[[Page 13165]]

     month period during which the bond is outstanding. A similar 
     rule shall apply when the bond is redeemed or matures.
       ``(c) Limitation Based on Amount of Tax.--The credit 
     allowed under subsection (a) for any taxable year shall not 
     exceed the excess of--
       ``(1) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(2) the sum of the credits allowable under this part 
     (other than subpart C thereof (relating to refundable 
     credits) and this section) and section 1397E.
       ``(d) Clean Energy Coal Bond.--For purposes of this 
     section--
       ``(1) In general.--The term `clean energy coal bond' means 
     any bond issued as part of an issue if--
       ``(A) the bond is issued by a qualified issuer pursuant to 
     an allocation by the Secretary to such issuer of a portion of 
     the national clean energy coal bond limitation under 
     subsection (f)(2),
       ``(B) 95 percent or more of the proceeds from the sale of 
     such issue are to be used for capital expenditures incurred 
     by qualified borrowers for 1 or more qualified projects,
       ``(C) the qualified issuer designates such bond for 
     purposes of this section and the bond is in registered form, 
     and
       ``(D) the issue meets the requirements of subsection (h).
       ``(2) Qualified project; special use rules.--
       ``(A) In general.--The term `qualified project' means a 
     qualifying advanced coal project (as defined in section 
     48A(c)(1)) placed in service by a qualified borrower.
       ``(B) Refinancing rules.--For purposes of paragraph (1)(B), 
     a qualified project may be refinanced with proceeds of a 
     clean energy coal bond only if the indebtedness being 
     refinanced (including any obligation directly or indirectly 
     refinanced by such indebtedness) was originally incurred by a 
     qualified borrower after the date of the enactment of this 
     section.
       ``(C) Reimbursement.--For purposes of paragraph (1)(B), a 
     clean energy coal bond may be issued to reimburse a qualified 
     borrower for amounts paid after the date of the enactment of 
     this section with respect to a qualified project, but only 
     if--
       ``(i) prior to the payment of the original expenditure, the 
     qualified borrower declared its intent to reimburse such 
     expenditure with the proceeds of a clean energy coal bond,
       ``(ii) not later than 60 days after payment of the original 
     expenditure, the qualified issuer adopts an official intent 
     to reimburse the original expenditure with such proceeds, and
       ``(iii) the reimbursement is made not later than 18 months 
     after the date the original expenditure is paid.
       ``(D) Treatment of changes in use.--For purposes of 
     paragraph (1)(B), the proceeds of an issue shall not be 
     treated as used for a qualified project to the extent that a 
     qualified borrower takes any action within its control which 
     causes such proceeds not to be used for a qualified project. 
     The Secretary shall prescribe regulations specifying remedial 
     actions that may be taken (including conditions to taking 
     such remedial actions) to prevent an action described in the 
     preceding sentence from causing a bond to fail to be a clean 
     energy coal bond.
       ``(e) Maturity Limitations.--
       ``(1) Duration of term.--A bond shall not be treated as a 
     clean energy coal bond if the maturity of such bond exceeds 
     the maximum term determined by the Secretary under paragraph 
     (2) with respect to such bond.
       ``(2) Maximum term.--During each calendar month, the 
     Secretary shall determine the maximum term permitted under 
     this paragraph for bonds issued during the following calendar 
     month. Such maximum term shall be the term which the 
     Secretary estimates will result in the present value of the 
     obligation to repay the principal on the bond being equal to 
     50 percent of the face amount of such bond. Such present 
     value shall be determined using as a discount rate the 
     average annual interest rate of tax of tax-exempt obligations 
     having a term of 10 years or more which are issued during the 
     month. If the term as so determined is not a multiple of a 
     whole year, such term shall be rounded to the next highest 
     whole year.
       ``(3) Ratable principal amortization required.--A bond 
     shall not be treated as a clean energy coal bond unless it is 
     part of an issue which provides for an equal amount of 
     principal to be paid by the qualified issuer during each 
     calendar year that the issue is outstanding.
       ``(f) Limitation on Amount of Bonds Designated.--
       ``(1) National limitation.--There is a national clean 
     energy coal bond limitation of $1,000,000,000.
       ``(2) Allocation by secretary.--The Secretary shall 
     allocate the amount described in paragraph (1) among 
     qualified projects in such manner as the Secretary determines 
     appropriate.
       ``(g) Credit Included in Gross Income.--Gross income 
     includes the amount of the credit allowed to the taxpayer 
     under this section (determined without regard to subsection 
     (c)) and the amount so included shall be treated as interest 
     income.
       ``(h) Special Rules Relating to Expenditures.--
       ``(1) In general.--An issue shall be treated as meeting the 
     requirements of this subsection if, as of the date of 
     issuance, the qualified issuer reasonably expects--
       ``(A) at least 95 percent of the proceeds from the sale of 
     the issue are to be spent for 1 or more qualified projects 
     within the 5-year period beginning on the date of issuance of 
     the clean energy bond,
       ``(B) a binding commitment with a third party to spend at 
     least 10 percent of the proceeds from the sale of the issue 
     will be incurred within the 6-month period beginning on the 
     date of issuance of the clean energy bond or, in the case of 
     a clean energy bond the proceeds of which are to be loaned to 
     2 or more qualified borrowers, such binding commitment will 
     be incurred within the 6-month period beginning on the date 
     of the loan of such proceeds to a qualified borrower, and
       ``(C) such projects will be completed with due diligence 
     and the proceeds from the sale of the issue will be spent 
     with due diligence.
       ``(2) Extension of period.--Upon submission of a request 
     prior to the expiration of the period described in paragraph 
     (1)(A), the Secretary may extend such period if the qualified 
     issuer establishes that the failure to satisfy the 5-year 
     requirement is due to reasonable cause and the related 
     projects will continue to proceed with due diligence.
       ``(3) Failure to spend required amount of bond proceeds 
     within 5 years.--To the extent that less than 95 percent of 
     the proceeds of such issue are expended by the close of the 
     5-year period beginning on the date of issuance (or if an 
     extension has been obtained under paragraph (2), by the close 
     of the extended period), the qualified issuer shall redeem 
     all of the nonqualified bonds within 90 days after the end of 
     such period. For purposes of this paragraph, the amount of 
     the nonqualified bonds required to be redeemed shall be 
     determined in the same manner as under section 142.
       ``(i) Special Rules Relating to Arbitrage.--A bond which is 
     part of an issue shall not be treated as a clean energy coal 
     bond unless, with respect to the issue of which the bond is a 
     part, the qualified issuer satisfies the arbitrage 
     requirements of section 148 with respect to proceeds of the 
     issue.
       ``(j) Cooperative Electric Company; Qualified Energy Tax 
     Credit Bond Lender; Governmental Body; Qualified Borrower.--
     For purposes of this section--
       ``(1) Cooperative electric company.--The term `cooperative 
     electric company' means a mutual or cooperative electric 
     company described in section 501(c)(12) or section 
     1381(a)(2)(C), or a not-for-profit electric utility which has 
     received a loan or loan guarantee under the Rural 
     Electrification Act.
       ``(2) Clean energy bond lender.--The term `clean energy 
     bond lender' means a lender which is a cooperative which is 
     owned by, or has outstanding loans to, 100 or more 
     cooperative electric companies and is in existence on 
     February 1, 2002, and shall include any affiliated entity 
     which is controlled by such lender.
       ``(3) Governmental body.--The term `governmental body' 
     means any State, territory, possession of the United States, 
     the District of Columbia, Indian tribal government, and any 
     political subdivision thereof.
       ``(4) Qualified issuer.--The term `qualified issuer' 
     means--
       ``(A) a clean energy bond lender,
       ``(B) a cooperative electric company,
       ``(C) a governmental body, or
       ``(D) the Tennessee Valley Authority.
       ``(5) Qualified borrower.--The term `qualified borrower' 
     means--
       ``(A) a mutual or cooperative electric company described in 
     section 501(c)(12) or 1381(a)(2)(C),
       ``(B) a governmental body, or
       ``(C) the Tennessee Valley Authority.
       ``(k) Special Rules Relating to Pool Bonds.--No portion of 
     a pooled financing bond may be allocable to any loan unless 
     the borrower has entered into a written loan commitment for 
     such portion prior to the issue date of such issue.
       ``(l) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Bond.--The term `bond' includes any obligation.
       ``(2) Pooled financing bond.--The term `pooled financing 
     bond' shall have the meaning given such term by section 
     149(f)(4)(A).
       ``(3) Partnership; s corporation; and other pass-thru 
     entities.--
       ``(A) In general.--Under regulations prescribed by the 
     Secretary, in the case of a partnership, trust, S 
     corporation, or other pass-thru entity, rules similar to the 
     rules of section 41(g) shall apply with respect to the credit 
     allowable under subsection (a).
       ``(B) No basis adjustment.--Rules similar to the rules 
     under section 1397E(i)(2) shall apply.
       ``(4) Bonds held by regulated investment companies.--If any 
     clean energy coal bond is held by a regulated investment 
     company, the credit determined under subsection (a) shall be 
     allowed to shareholders of such company under procedures 
     prescribed by the Secretary.
       ``(5) Treatment for estimated tax purposes.--Solely for 
     purposes of sections 6654 and 6655, the credit allowed by 
     this section to a taxpayer by reason of holding a clean

[[Page 13166]]

     energy coal bond on a credit allowance date shall be treated 
     as if it were a payment of estimated tax made by the taxpayer 
     on such date.
       ``(6) Reporting.--Issuers of clean energy coal bonds shall 
     submit reports similar to the reports required under section 
     149(e).
       ``(m) Termination.--This section shall not apply with 
     respect to any bond issued after December 31, 2010.''.
       (b) Reporting.--Subsection (d) of section 6049 (relating to 
     returns regarding payments of interest), as amended by this 
     Act, is amended by adding at the end the following new 
     paragraph:
       ``(9) Reporting of credit on clean energy coal bonds.--
       ``(A) In general.--For purposes of subsection (a), the term 
     `interest' includes amounts includible in gross income under 
     section 54A(g) and such amounts shall be treated as paid on 
     the credit allowance date (as defined in section 54A(b)(4)).
       ``(B) Reporting to corporations, etc.--Except as otherwise 
     provided in regulations, in the case of any interest 
     described in subparagraph (A), subsection (b)(4) shall be 
     applied without regard to subparagraphs (A), (H), (I), (J), 
     (K), and (L)(i) of such subsection.
       ``(C) Regulatory authority.--The Secretary may prescribe 
     such regulations as are necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations which 
     require more frequent or more detailed reporting.''.
       (c) Clerical Amendment.--The table of sections for subpart 
     H of part IV of subchapter A of chapter 1, as added by this 
     Act, is amended by adding at the end the following new item:

``Sec. 54A. Credit to holders of clean energy coal bonds.''.

       (d) Issuance of Regulations.--The Secretary of Treasury 
     shall issue regulations required under section 54A of the 
     Internal Revenue Code of 1986 (as added by this section) not 
     later than 120 days after the date of the enactment of this 
     Act.
       (e) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after December 31, 2005.

               Subtitle B--Domestic Fossil Fuel Security

     SEC. 1511. CREDIT FOR INVESTMENT IN CLEAN COKE/COGENERATION 
                   MANUFACTURING FACILITIES.

       (a) Allowance of Clean Coke/Cogeneration Manufacturing 
     Facilities Credit.--Section 46 (relating to amount of 
     credit), as amended by this Act, is amended by striking 
     ``and'' at the end of paragraph (3), by striking the period 
     at the end of paragraph (4), and inserting ``, and'', and by 
     adding at the end the following new paragraph:
       ``(5) the clean coke/cogeneration manufacturing facilities 
     credit.''.
       (b) Amount of Clean Coke/Cogeneration Manufacturing 
     Facilities Credit.--Subpart E of part IV of subchapter A of 
     chapter 1 (relating to rules for computing investment 
     credit), as amended by this Act, is amended by inserting 
     after section 48B the following new section:

     ``SEC. 48C. CLEAN COKE/COGENERATION MANUFACTURING FACILITIES 
                   CREDIT.

       ``(a) In General.--For purposes of section 46, the clean 
     coke/cogeneration manufacturing facilities credit for any 
     taxable year is an amount equal to 20 percent of the 
     qualified investment for such taxable year.
       ``(b) Qualified Investment.--
       ``(1) In general.--For purposes of subsection (a), the 
     qualified investment for any taxable year is the basis of 
     each clean coke/cogeneration manufacturing facilities 
     property placed in service by the taxpayer during such 
     taxable year.
       ``(2) Clean coke/cogeneration manufacturing facilities 
     property.--For purposes of this section, the term `clean 
     coke/cogeneration manufacturing facilities property' means 
     real and tangible personal property which--
       ``(A) is depreciable under section 167,
       ``(B) is located in the United States,
       ``(C) is used for the manufacture of metallurgical coke or 
     for the production of steam or electricity from waste heat 
     generated during the production of metallurgical coke, and
       ``(D) does not exceed any of the following emission 
     limitations--
       ``(i) 0.0 percent leaking for any coke oven doors unless 
     the operation of ovens is under negative pressure,
       ``(ii) 0.0 percent leaking for any topside port lids,
       ``(iii) 0.0 percent leaking for any offtake system,

     determined as provided for in section 63.303(b)(1)(ii) or 
     63.309(d)(1) of title 40, Code of Federal Regulations.
       ``(c) Termination.--This subsection shall not apply to 
     property for periods after December 31, 2009.''.
       (c) Technical Amendment.--Section 50(c) is amended by 
     adding at the end the following new paragraph:
       ``(6) Special rule for coke/cogeneration facilities.--
     Paragraphs (1) and (2) shall not apply to any property with 
     respect to the credit determined under section 48C.''.
       (d) Conforming Amendments.--
       (1) Section 49(a)(1)(C), 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) the basis of any clean coke/cogeneration 
     manufacturing facilities property.''
       (2) The table of sections for subpart E of part IV of 
     subchapter A of chapter 1, as amended by this Act, is amended 
     by inserting after the item relating to section 48B the 
     following new item:


``48C. Clean coke/cogeneration manufacturing facilities credit.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to periods after the date of the enactment of 
     this Act, under rules similar to the rules of section 48(m) 
     of the Internal Revenue Code of 1986 (as in effect on the day 
     before the date of the enactment of the Revenue 
     Reconciliation Act of 1990).

     SEC. 1512. TEMPORARY EXPENSING FOR EQUIPMENT USED IN REFINING 
                   OF LIQUID FUELS.

       (A) In General.--Part VI of subchapter B of chapter 1 is 
     amended by inserting after section 179B the following new 
     section:

     ``SEC. 179C. ELECTION TO EXPENSE CERTAIN REFINERIES.

       ``(a) Treatment as Expenses.--A taxpayer may elect to treat 
     the cost of any qualified refinery property as an expense 
     which is not chargeable to capital account. Any cost so 
     treated shall be allowed as a deduction for the taxable year 
     in which the qualified refinery is placed in service.
       ``(b) Election.--
       ``(1) In general.--An election under this section for any 
     taxable year shall be made on the taxpayer's return of the 
     tax imposed by this chapter for the taxable year. Such 
     election shall be made in such manner as the Secretary may by 
     regulations prescribe.
       ``(2) Election irrevocable.--Any election made under this 
     section may not be revoked except with the consent of the 
     Secretary.
       ``(c) Qualified Refinery Property.--The term `qualified 
     refinery property' means any refinery or portion of a 
     refinery--
       ``(1) the original use of which commences with the 
     taxpayer,
       ``(2) the construction of which--
       ``(A) except as provided in subparagraph (B), is subject to 
     a binding construction contract entered into after June 14, 
     2005, and before January 1, 2008, but only if there was no 
     written binding construction contract entered into on or 
     before June 14, 2005, or
       ``(B) in the case of self-constructed property, began after 
     June 14, 2005,
       ``(3) which is placed in service by the taxpayer after the 
     date of the enactment of this section and before January 1, 
     2012,
       ``(4) in the case of any portion of a refinery, which meets 
     the requirements of subsection (d), and
       ``(5) which meets all applicable environmental laws in 
     effect on the date such refinery or portion thereof was 
     placed in service.
     A waiver under the Clean Air Act shall not be taken into 
     account in determining whether the requirements of paragraph 
     (5) are met.
       ``(d) Production Capacity.--The requirements of this 
     subsection are met if the portion of the refinery--
       ``(1) increases the rated capacity of the existing refinery 
     by 5 percent or more over the capacity of such refinery as 
     reported by the Energy Information Agency on January 1, 2005, 
     or
       ``(2) enables the existing refinery to process qualified 
     fuels (as defined in section 29(c)) at a rate which is equal 
     to or greater than 25 percent of the total throughput of such 
     refinery on an average daily basis.
       ``(e) Election To Allocate Deduction to Cooperative 
     Owner.--If--
       ``(1) a taxpayer to which subsection (a) applies is an 
     organization to which part I of subchapter T applies, and
       ``(2) one or more persons directly holding an ownership 
     interest in the taxpayer are organizations to which part I of 
     subchapter T apply,

     the taxpayer may elect to allocate all or a portion of the 
     deduction allowable under subsection (a) to such persons. 
     Such allocation shall be equal to the person's ratable share 
     of the total amount allocated, determined on the basis of the 
     person's ownership interest in the taxpayer. The taxable 
     income of the taxpayer shall not be reduced under section 
     1382 by reason of any amount to which the preceding sentence 
     applies.
       ``(f) Ineligible Refineries.--No deduction shall be allowed 
     under subsection (a) for any qualified refinery property--
       ``(1) the primary purpose of which is for use as a topping 
     plant, asphalt plant, lube oil facility, crude or product 
     terminal, or blending facility, or
       ``(2) which is built solely to comply with Federally 
     mandated projects or consent decrees.
       ``(g) Reporting.--No deduction shall be allowed under 
     subsection (a) to any taxpayer for any taxable year unless 
     such taxpayer files with the Secretary a report containing 
     such information with respect to the operation of the 
     refineries of the taxpayer as the Secretary shall require.''.
       (b) Conforming Amendments.--
       (1) Section 1245(a) is amended by inserting ``179C,'' after 
     ``179B,'' both places it appears in paragraphs (2)(C) and 
     (3)(C).
       (2) Section 263(a)(1) is amended by striking ``or'' at the 
     end of subparagraph (H), by

[[Page 13167]]

     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.''.
       (3) Section 312(k)(3)(B) is amended by striking ``179 179A, 
     or 179B'' each place it appears in the heading and text and 
     inserting ``179, 179A, 179B, or 179C''.
       (4) The table of sections for part VI of subchapter B of 
     chapter 1 is amended by inserting after the item relating to 
     section 179B the following new item:

``Sec. 179C. Election to expense certain refineries.''.

       (c) Effective Date.-- The amendments made by this section 
     shall apply to properties placed in service after the date of 
     the enactment of this Act.

     SEC. 1513. PASS THROUGH TO PATRONS OF DEDUCTION FOR CAPITAL 
                   COSTS INCURRED BY SMALL REFINER COOPERATIVES IN 
                   COMPLYING WITH ENVIRONMENTAL PROTECTION AGENCY 
                   SULFUR REGULATIONS .

       (a) In General.--Section 179B (relating to deduction for 
     capital costs incurred in complying with Environmental 
     Protection Agency sulfur regulations) is amended by adding at 
     the end the following new subsection:
       ``(e) Election To Allocate Deduction to Cooperative 
     Owner.--If--
       ``(1) a small business refiner to which subsection (a) 
     applies is an organization to which part I of subchapter T 
     applies, and
       ``(2) one or more persons directly holding an ownership 
     interest in the refiner are organizations to which part I of 
     subchapter T apply,

     the refiner may elect to allocate all or a portion of the 
     deduction allowable under subsection (a) to such persons. 
     Such allocation shall be equal to the person's ratable share 
     of the total amount allocated, determined on the basis of the 
     person's ownership interest in the taxpayer. The taxable 
     income of the refiner shall not be reduced under section 1382 
     by reason of any amount to which the preceding sentence 
     applies.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the amendment made by 
     section 338(a) of the American Jobs Creation Act of 2004.

     SEC. 1514. MODIFICATIONS TO ENHANCED OIL RECOVERY CREDIT.

       (a) Enhanced Credit for Carbon Dioxide Injections.--Section 
     43 is amended by adding at the end the following new 
     subsection:
       ``(f) Enhanced Credit for Projects Using Qualified Carbon 
     Dioxide.--
       ``(1) In general.--In the case of any qualified enhanced 
     oil recovery project described in paragraph (2), subsection 
     (a) shall be applied by substituting `20 percent' for `15 
     percent'.
       ``(2) Specified qualified enhanced oil recovery project.--
       ``(A) In general.--A qualified enhanced oil recovery 
     project is described in this paragraph if--
       ``(i) the project begins or is substantially expanded after 
     December 31, 2005, and
       ``(ii) the project uses qualified carbon dioxide in an oil 
     recovery method which involves flooding or injection.
       ``(B) qualified carbon dioxide.--For purposes of this 
     subsection, the term `qualified carbon dioxide' means carbon 
     dioxide that is--
       ``(i) from an industrial source, or
       ``(ii) separated from natural gas and natural gas liquids 
     at a natural gas processing plant.
       ``(3) Termination.--This subsection shall not apply to 
     costs paid or incurred for any qualified enhanced oil 
     recovery project after December 31, 2009.''.
       (b) Deep Gas Well Projects.--Section 43(c) is amended by 
     adding at the end the following new paragraph:
       ``(6) Application of section to qualified deep gas well 
     projects.--
       ``(A) In general.--For purposes of this section, the 
     taxpayer's qualified deep gas well project costs for any 
     taxable year shall be treated in the same manner as if they 
     were qualified enhanced oil recovery costs.
       ``(B) Qualified deep gas well project costs.--For purposes 
     of this paragraph, the term `qualified deep gas well project 
     costs' shall be the costs determined under paragraph (1) by 
     substituting `qualified deep gas well project' for `qualified 
     enhanced oil recovery project' each place it appears.
       ``(C) Qualified deep gas well project.--For purposes of 
     this paragraph, the term `qualified deep gas well project' 
     means any project--
       ``(i) which involves the production of natural gas from 
     onshore formations deeper than 20,000 feet, and
       ``(ii) which is located in the United States.
       ``(D) Termination.--This paragraph shall not apply to 
     qualified deep gas well project costs paid or incurred after 
     December 31, 2009.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to costs paid or incurred in taxable years ending 
     after December 31, 2005.

     SEC. 1515. NATURAL GAS DISTRIBUTION LINES TREATED AS 15-YEAR 
                   PROPERTY.

       (a) In General.--Section 168(e)(3)(E) (defining 15-year 
     property) is amended by striking ``and'' at the end of clause 
     (v), by striking the period at the end of clause (vi) and by 
     inserting ``, and'', and by adding at the end the following 
     new clause:
       ``(vii) any natural gas distribution line the original use 
     of which commences with the taxpayer and which is placed in 
     service before January 1, 2008.''.
       (b) Alternative System.--The table contained in section 
     168(g)(3)(B) (relating to special rule for certain property 
     assigned to classes) is amended by adding after the item 
     relating to subparagraph (E)(vi) the following new item:

``(E)(vii)........................................................35''.

       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to property placed in service after the date of the 
     enactment of this Act.
       (2) Exception.--The amendments made by this section shall 
     not apply to any property with respect to which the taxpayer 
     or a related party has entered into a binding contract for 
     the construction thereof on or before June 14, 2005, or, in 
     the case of self-constructed property, has started 
     construction on or before such date.

       Subtitle C--Conservation and Energy Efficiency Provisions

     SEC. 1521. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

       (a) In General.--Part VI of subchapter B of chapter 1 
     (relating to itemized deductions for individuals and 
     corporations), as amended by this Act, is amended by 
     inserting after section 179C the following new section:

     ``SEC. 179D. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

       ``(a) In General.--There shall be allowed as a deduction an 
     amount equal to the cost of energy efficient commercial 
     building property placed in service during the taxable year.
       ``(b) Maximum Amount of Deduction.--The deduction under 
     subsection (a) with respect to any building for any taxable 
     year shall not exceed the excess (if any) of--
       ``(1) the product of--
       ``(A) $2.25, and
       ``(B) the square footage of the building, over
       ``(2) the aggregate amount of the deductions under 
     subsection (a) with respect to the building for all prior 
     taxable years.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Energy efficient commercial building property.--The 
     term `energy efficient commercial building property' means 
     property--
       ``(A) with respect to which depreciation (or amortization 
     in lieu of depreciation) is allowable,
       ``(B) which is installed on or in any building which is--
       ``(i) located in the United States, and
       ``(ii) within the scope of Standard 90.1-2001,
       ``(C) which is installed as part of--
       ``(i) the interior lighting systems,
       ``(ii) the heating, cooling, ventilation, and hot water 
     systems, or
       ``(iii) the building envelope, and
       ``(D) which is certified in accordance with subsection 
     (d)(6) as being installed as part of a plan designed to 
     reduce the total annual energy and power costs with respect 
     to the interior lighting systems, heating, cooling, 
     ventilation, and hot water systems of the building by 50 
     percent or more in comparison to a reference building which 
     meets the minimum requirements of Standard 90.1-2001 using 
     methods of calculation under subsection (d)(2).
       ``(2) Standard 90.1-2001.--The term `Standard 90.1-2001' 
     means Standard 90.1-2001 of the American Society of Heating, 
     Refrigerating, and Air Conditioning Engineers and the 
     Illuminating Engineering Society of North America (as in 
     effect on April 2, 2003).
       ``(d) Special Rules.--
       ``(1) Partial allowance.--
       ``(A) In general.--Except as provided in subsection (f), 
     if--
       ``(i) the requirement of subsection (c)(1)(D) is not met, 
     but
       ``(ii) there is a certification in accordance with 
     paragraph (6) that any system referred to in subsection 
     (c)(1)(C) satisfies the energy-savings targets established by 
     the Secretary under subparagraph (B) with respect to such 
     system,

     then the requirement of subsection (c)(1)(D) shall be treated 
     as met with respect to such system, and the deduction under 
     subsection (a) shall be allowed with respect to energy 
     efficient commercial building property installed as part of 
     such system and as part of a plan to meet such targets, 
     except that subsection (b) shall be applied to such property 
     by substituting `$.75' for `$2.25'.
       ``(B) Regulations.--The Secretary, after consultation with 
     the Secretary of Energy, shall establish a target for each 
     system described in subsection (c)(1)(C) which, if such 
     targets were met for all such systems, the building would 
     meet the requirements of subsection (c)(1)(D).
       ``(2) Methods of calculation.--The Secretary, after 
     consultation with the Secretary of Energy, shall promulgate 
     regulations which describe in detail methods for calculating 
     and verifying energy and power consumption and cost, based on 
     the provisions of the 2005 California Nonresidential 
     Alternative Calculation Method Approval Manual.

[[Page 13168]]

       ``(3) Computer software.--
       ``(A) In general.--Any calculation under paragraph (2) 
     shall be prepared by qualified computer software.
       ``(B) Qualified computer software.--For purposes of this 
     paragraph, the term `qualified computer software' means 
     software--
       ``(i) for which the software designer has certified that 
     the software meets all procedures and detailed methods for 
     calculating energy and power consumption and costs as 
     required by the Secretary,
       ``(ii) which provides such forms as required to be filed by 
     the Secretary in connection with energy efficiency of 
     property and the deduction allowed under this section, and
       ``(iii) which provides a notice form which documents the 
     energy efficiency features of the building and its projected 
     annual energy costs.
       ``(4) Allocation of deduction for public property.--In the 
     case of energy efficient commercial building property 
     installed on or in property owned by a Federal, State, or 
     local government or a political subdivision thereof, the 
     Secretary shall promulgate a regulation to allow the 
     allocation of the deduction to the person primarily 
     responsible for designing the property in lieu of the owner 
     of such property. Such person shall be treated as the 
     taxpayer for purposes of this section.
       ``(5) Notice to owner.--Each certification required under 
     this section shall include an explanation to the building 
     owner regarding the energy efficiency features of the 
     building and its projected annual energy costs as provided in 
     the notice under paragraph (3)(B)(iii).
       ``(6) Certification.--
       ``(A) In general.--The Secretary shall prescribe the manner 
     and method for the making of certifications under this 
     section.
       ``(B) Procedures.--The Secretary shall include as part of 
     the certification process procedures for inspection and 
     testing by qualified individuals described in subparagraph 
     (C) to ensure compliance of buildings with energy-savings 
     plans and targets. Such procedures shall be comparable, given 
     the difference between commercial and residential buildings, 
     to the requirements in the Mortgage Industry National 
     Accreditation Procedures for Home Energy Rating Systems.
       ``(C) Qualified individuals.--Individuals qualified to 
     determine compliance shall be only those individuals who are 
     recognized by an organization certified by the Secretary for 
     such purposes.
       ``(e) Basis Reduction.--For purposes of this subtitle, if a 
     deduction is allowed under this section with respect to any 
     energy efficient commercial building property, the basis of 
     such property shall be reduced by the amount of the deduction 
     so allowed.
       ``(f) Interim Rules for Lighting Systems.--Until such time 
     as the Secretary issues final regulations under subsection 
     (d)(1)(B) with respect to property which is part of a 
     lighting system--
       ``(1) In general.--The lighting system target under 
     subsection (d)(1)(A)(ii) shall be a reduction in lighting 
     power density of 25 percent (50 percent in the case of a 
     warehouse) of the minimum requirements in Table 9.3.1.1 or 
     Table 9.3.1.2 (not including additional interior lighting 
     power allowances) of Standard 90.1-2001.
       ``(2) Reduction in deduction if reduction less than 40 
     percent.--
       ``(A) In general.--If, with respect to the lighting system 
     of any building other than a warehouse, the reduction in 
     lighting power density of the lighting system is not at least 
     40 percent, only the applicable percentage of the amount of 
     deduction otherwise allowable under this section with respect 
     to such property shall be allowed.
       ``(B) Applicable percentage.--For purposes of subparagraph 
     (A), the applicable percentage is the number of percentage 
     points (not greater than 100) equal to the sum of--
       ``(i) 50, and
       ``(ii) the amount which bears the same ratio to 50 as the 
     excess of the reduction of lighting power density of the 
     lighting system over 25 percentage points bears to 15.
       ``(C) Exceptions.--This subsection shall not apply to any 
     system--
       ``(i) the controls and circuiting of which do not comply 
     fully with the mandatory and prescriptive requirements of 
     Standard 90.1-2001 and which do not include provision for 
     bilevel switching in all occupancies except hotel and motel 
     guest rooms, store rooms, restrooms, and public lobbies, or
       ``(ii) which does not meet the minimum requirements for 
     calculated lighting levels as set forth in the Illuminating 
     Engineering Society of North America Lighting Handbook, 
     Performance and Application, Ninth Edition, 2000.
       ``(g) Coordination With Other Tax Benefits.--In any case in 
     which a deduction under section 200 or a credit under section 
     25C has been allowed with respect to property in connection 
     with a building for which a deduction is allowable under 
     subsection (a)--
       ``(1) the annual energy and power costs of the reference 
     building referred to in subsection (c)(1)(D) shall be 
     determined assuming such reference building contains the 
     property for which such deduction or credit has been allowed, 
     and
       ``(2) any cost of such property taken into account under 
     such sections shall not be taken into account under this 
     section.
       ``(h) Regulations.--The Secretary shall promulgate such 
     regulations as necessary--
       ``(1) to take into account new technologies regarding 
     energy efficiency and renewable energy for purposes of 
     determining energy efficiency and savings under this section, 
     and
       ``(2) to provide for a recapture of the deduction allowed 
     under this section if the plan described in subsection 
     (c)(1)(D) or (d)(1)(A) is not fully implemented.
       ``(i) Termination.--This section shall not apply with 
     respect to property placed in service after December 31, 
     2009.''.
       (b) Conforming Amendments.--
       (1) Section 1016(a) is amended by striking ``and'' at the 
     end of paragraph (30), by striking the period at the end of 
     paragraph (31) and inserting ``, and'', and by adding at the 
     end the following new paragraph:
       ``(32) to the extent provided in section 179D(e).''.
       (2) Section 1245(a), as amended by this Act, is amended by 
     inserting ``179D,'' after ``179C,'' both places it appears in 
     paragraphs (2)(C) and (3)(C).
       (3) Section 1250(b)(3) is amended by inserting before the 
     period at the end of the first sentence ``or by section 
     179D''.
       (4) Section 263(a)(1), as amended by this Act, is amended 
     by striking ``or'' at the end of subparagraph (I), by 
     striking the period at the end of subparagraph (J) and 
     inserting ``, or'', and by inserting after subparagraph (J) 
     the following new subparagraph:
       ``(K) expenditures for which a deduction is allowed under 
     section 179D.''.
       (5) Section 312(k)(3)(B), as amended by this Act, is 
     amended by striking ``179, 179A, 179B, or 179C'' each place 
     it appears in the heading and text and inserting ``179, 179A, 
     179B, 179C, or 179D''.
       (c) Clerical Amendment.--The table of sections for part VI 
     of subchapter B of chapter 1, as amended by this Act, is 
     amended by inserting after section 179C the following new 
     item:

``Sec. 179D. Energy efficient commercial buildings deduction.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act in taxable years ending after such 
     date.

     SEC. 1522. CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT 
                   HOMES.

       (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) Allowance of Credit.--
       ``(1) In general.--For purposes of section 38, in the case 
     of an eligible contractor, the new energy efficient home 
     credit for the taxable year is the applicable amount for each 
     qualified new energy efficient home which is--
       ``(A) constructed by the eligible contractor, and
       ``(B) acquired by a person from such eligible contractor 
     for use as a residence during the taxable year.
       ``(2) Applicable amount.--For purposes of paragraph (1), 
     the applicable amount is an amount equal to--
       ``(i) in the case of a dwelling unit described in paragraph 
     (1) or (3) of subsection (c), $1,000, and
       ``(ii) in the case of a dwelling unit described in 
     paragraph (2) or (4) of subsection (c), $2,000.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Eligible contractor.--The term `eligible contractor' 
     means--
       ``(A) the person who constructed the qualified new energy 
     efficient home, or
       ``(B) in the case of a qualified new energy efficient 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 qualified new energy efficient home, such 
     term means the person designated as such by the owner of such 
     home.
       ``(2) Qualified new energy efficient home.--The term 
     `qualified new energy efficient home' means a dwelling unit--
       ``(A) located in the United States,
       ``(B) the construction of which is substantially completed 
     after the date of the enactment of this section, and
       ``(C) which meets the energy saving requirements of 
     subsection (c).
       ``(3) Construction.--The term `construction' includes 
     substantial reconstruction and rehabilitation.
       ``(4) Acquire.--The term `acquire' includes purchase and, 
     in the case of reconstruction and rehabilitation, such term 
     includes a binding written contract for such reconstruction 
     or rehabilitation.
       ``(c) Energy Saving Requirements.--A dwelling unit meets 
     the energy saving requirements of this subsection if such 
     unit is--
       ``(1) certified--
       ``(A) to have a level of annual heating and cooling energy 
     consumption which is at least

[[Page 13169]]

     30 percent below the annual level of heating and cooling 
     energy consumption of a comparable dwelling unit--
       ``(i) which is constructed in accordance with the standards 
     of chapter 4 of the 2003 International Energy Conservation 
     Code, as such Code (including supplements) is in effect on 
     the date of the enactment of this section, and
       ``(ii) for which the heating and cooling equipment 
     efficiencies correspond to the minimum allowed under the 
     regulations established by the Department of Energy pursuant 
     to the National Appliance Energy Conservation Act of 1987 and 
     in effect at the time of construction, and
       ``(B) to have building envelope component improvements 
     account for at least \1/3\ of such 30 percent,
       ``(2) certified--
       ``(A) to have a level of annual heating and cooling energy 
     consumption which is at least 50 percent below such annual 
     level, and
       ``(B) to have building envelope component improvements 
     account for at least \1/5\ of such 50 percent,
       ``(3) a manufactured home which conforms to Federal 
     Manufactured Home Construction and Safety Standards (section 
     3280 of title 24, Code of Federal Regulations) and which--
       ``(A) meets the requirements of clause (i), or
       ``(B) meets the requirements established by the 
     Administrator of the Environmental Protection Agency under 
     the Energy Star Labeled Homes program, or
       ``(4) a manufactured home which conforms to Federal 
     Manufactured Home Construction and Safety Standards (section 
     3280 of title 24, Code of Federal Regulations) and which 
     meets the requirements of clause (ii).
       ``(d) Certification.--
       ``(1) Method of certification.--A certification described 
     in paragraphs (1) and (2) of subsection (c) shall be made in 
     accordance with guidance prescribed by the Secretary, after 
     consultation with the Secretary of Energy. Such guidance 
     shall specify procedures and methods for calculating energy 
     and cost savings.
       ``(2) Form.--Any certification described in subsection (c) 
     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.
       ``(e) Basis Adjustment.--For purposes of this subtitle, if 
     a credit is allowed under this section in connection with any 
     expenditure for 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 determined.
       ``(f) Coordination With Other Credits and Deductions.--
       ``(1) Special rule with respect to buildings with energy 
     efficient property.--In the case of property which is 
     described in section 200 which is installed in connection 
     with a dwelling unit, the level of annual heating and cooling 
     energy consumption of the comparable dwelling unit referred 
     to in paragraphs (1) and (2) of subsection (c) shall be 
     determined assuming such comparable dwelling unit contains 
     the property for which such deduction or credit has been 
     allowed.
       ``(2) Coordination with investment credit.--For purposes of 
     this section, expenditures taken into account under section 
     47 or 48(a) shall not be taken into account under this 
     section.
       ``(g) Application of Section.--
       ``(1) 50 percent homes.--In the case of any dwelling unit 
     described in paragraph (2) or (4) of subsection (c), 
     subsection (a) shall apply to qualified new energy efficient 
     homes acquired during the period beginning on the date of the 
     enactment of this section and ending on December 31, 2009.
       ``(2) 30 percent homes.--In the case of any dwelling unit 
     described in paragraph (1) or (3) of subsection (c), 
     subsection (a) shall apply to qualified new energy efficient 
     homes acquired during the period beginning on the date of the 
     enactment of this section and ending on December 31, 2007.''.
       (b) Credit Made Part of General Business Credit.--Section 
     38(b) (relating to current year business credit), as amended 
     by this Act, is amended by striking ``plus'' at the end of 
     paragraph (19), by striking the period at the end of 
     paragraph (20) and inserting ``, plus'', and by adding at the 
     end the following new paragraph:
       ``(21) the new energy efficient home credit determined 
     under section 45K(a).''.
       (c) Basis Adjustment.--Subsection (a) of section 1016, 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 45K(e), in the 
     case of amounts with respect to which a credit has been 
     allowed under section 45K.''.
       (d) Deduction for Certain Unused Business Credits.--Section 
     196(c) (defining qualified business credits) is amended by 
     striking ``and'' at the end of paragraph (11), by striking 
     the period at the end of paragraph (12) and inserting ``, 
     and'', and by adding after paragraph (12) the following new 
     paragraph:
       ``(13) the new energy efficient home credit determined 
     under section 45K(a).''.
       (e) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1, as amended by this 
     Act, is amended by adding at the end the following new item:

``Sec. 45K. New energy efficient home credit.''.

       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 1523. DEDUCTION FOR BUSINESS ENERGY PROPERTY.

       (a) In General.--Part VI of subchapter B of chapter 1 is 
     amended by adding at the end the following new section:

     ``SEC. 200. ENERGY PROPERTY DEDUCTION.

       ``(a) In General.--There shall be allowed as a deduction 
     for the taxable year an amount equal to the greater of--
       ``(1) the amount determined under subsection (b) for each 
     energy property of the taxpayer placed in service during such 
     taxable year, or
       ``(2) the energy efficient residential rental building 
     property deduction determined under subsection (e).
       ``(b) Amount for Energy Property.--The amount determined 
     under this subsection for the taxable year shall be--
       ``(1) $150 for any advanced main air circulating fan,
       ``(2) $450 for any qualified natural gas, propane, or oil 
     furnace or hot water boiler, and
       ``(2) $900 for any energy efficient building property.
       ``(c) Energy Property Defined.--
       ``(1) In general.--For purposes of this part, the term 
     `energy property' means any property--
       ``(A) which is--
       ``(i) energy-efficient building property,
       ``(ii) a qualified natural gas, propane, or oil furnace or 
     hot water boiler, or
       ``(iii) an advanced main air circulating fan,
       ``(B)(i) the construction, reconstruction, or erection of 
     which is completed by the taxpayer, or
       ``(ii) which is acquired by the taxpayer if the original 
     use of such property commences with the taxpayer,
       ``(C) with respect to which depreciation (or amortization 
     in lieu of depreciation) is allowable, and
       ``(D) which 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 
     central air conditioners and electric heat pumps--

       ``(I) require measurements to be based on published data 
     which is tested by manufacturers at 95 degrees Fahrenheit, 
     and
       ``(II) may be based on the certified data of the Air 
     Conditioning and Refrigeration Institute that are prepared in 
     partnership with the Consortium for Energy Efficiency,

       ``(iii) in the case of geothermal heat pumps--

       ``(I) shall be based on testing under the conditions of 
     ARI/ISO Standard 13256-1 for Water Source Heat Pumps or ARI 
     870 for Direct Expansion GeoExchange Heat Pumps (DX), as 
     appropriate, and
       ``(II) shall include evidence that water heating services 
     have been provided through a desuperheater or integrated 
     water heating system connected to the storage water heater 
     tank, and

       ``(iv) are in effect at the time of the acquisition of the 
     property, or at the time of the completion of the 
     construction, reconstruction, or erection of the property, as 
     the case may be.
       ``(2) Exception.--Such term shall not include any property 
     which is public utility property (as defined in section 
     46(f)(5) as in effect on the day before the date of the 
     enactment of the Revenue Reconciliation Act of 1990).
       ``(d) Definitions Relating to Types of Energy Property.--
     For purposes of this section--
       ``(1) Energy-efficient building property.--The term 
     `energy-efficient building property' means--
       ``(A) an electric heat pump water heater which yields an 
     energy factor of at least 2.0 in the standard Department of 
     Energy test procedure,
       ``(B) an electric heat pump which has a heating seasonal 
     performance factor (HSPF) of at least 9, a seasonal energy 
     efficiency ratio (SEER) of at least 15, and an energy 
     efficiency ratio (EER) of at least 13,
       ``(C) a geothermal heat pump which--
       ``(i) in the case of a closed loop product, has an energy 
     efficiency ratio (EER) of at least 14.1 and a heating 
     coefficient of performance (COP) of at least 3.3,
       ``(ii) in the case of an open loop product, has an energy 
     efficiency ratio (EER) of at least 16.2 and a heating 
     coefficient of performance (COP) of at least 3.6, and
       ``(iii) in the case of a direct expansion (DX) product, has 
     an energy efficiency ratio (EER)

[[Page 13170]]

     of at least 15 and a heating coefficient of performance (COP) 
     of at least 3.5,
       ``(D) a central air conditioner which has a seasonal energy 
     efficiency ratio (SEER) of at least 15 and an energy 
     efficiency ratio (EER) of at least 13, and
       ``(E) a natural gas, propane, or oil water heater which has 
     an energy factor of at least 0.80.
       ``(2) Qualified natural gas, propane, or oil furnace or hot 
     water boiler.--The term `qualified natural gas, propane, or 
     oil furnace or hot water boiler' means a natural gas, 
     propane, or oil furnace or hot water boiler which achieves an 
     annual fuel utilization efficiency rate of not less than 95.
       ``(3) Advanced main air circulating fan.--The term 
     `advanced main air circulating fan' means a fan used in a 
     natural gas, propane, or oil furnace originally placed in 
     service by the taxpayer during the taxable year and which has 
     an annual electricity use of no more than 2 percent of the 
     total annual energy use of the furnace (as determined in the 
     standard Department of Energy test procedures).
       ``(e) Energy Efficient Residential Rental Building Property 
     Deduction.--
       ``(1) Deduction allowed.--For purposes of subsection (a)--
       ``(A) In general.--The energy efficient residential rental 
     building property deduction determined under this subsection 
     is an amount equal to energy efficient residential rental 
     building property expenditures made by a taxpayer for the 
     taxable year.
       ``(B) Maximum amount of deduction.--The amount of energy 
     efficient residential rental building property expenditures 
     taken into account under subparagraph (A) with respect to 
     each dwelling unit shall not exceed--
       ``(i) $6,000 in the case of a percentage reduction of 50 
     percent or more as determined under paragraph (2)(B)(ii), and
       ``(ii) $12,000 times the percentage reduction in the case 
     of a percentage reduction which is less than 50 percent as 
     determined under paragraph (2)(B)(ii).
       ``(C) Year deduction allowed.--The deduction under 
     subparagraph (A) shall be allowed in the taxable year in 
     which the construction, reconstruction, erection, or 
     rehabilitation of the property is completed.
       ``(2) Energy efficient residential rental building property 
     expenditures.--For purposes of this subsection--
       ``(A) In general.--The term `energy efficient residential 
     rental building property expenditures' means an amount paid 
     or incurred for energy efficient residential rental building 
     property--
       ``(i) in connection with construction, reconstruction, 
     erection, or rehabilitation of residential rental property 
     (as defined in section 168(e)(2)(A)) other than property for 
     which a deduction is allowable under section 179D,
       ``(ii) for which depreciation is allowable under section 
     167,
       ``(iii) which is located in the United States, and
       ``(iv) the construction, reconstruction, erection, or 
     rehabilitation of which is completed by the taxpayer.

     Such term includes expenditures for labor costs properly 
     allocable to the onsite preparation, assembly, or original 
     installation of the property.
       ``(B) Energy efficient residential rental building 
     property.--
       ``(i) In general.--The term `energy efficient residential 
     rental building property' means any property which, 
     individually or in combination with other property, reduces 
     total annual energy and power costs with respect to heating 
     and cooling of the building by 20 percent or more when 
     compared to--

       ``(I) in the case of an existing building, the original 
     condition of the building, and
       ``(II) in the case of a new building, the standards for 
     residential buildings of the same type which are built in 
     compliance with the applicable building construction codes.

       ``(ii) Procedures.--

       ``(I) In general.--For purposes of clause (i), energy usage 
     and costs shall be demonstrated by performance-based 
     compliance in accordance with the requirements of clause 
     (iv).
       ``(II) Computer software.--Computer software shall be used 
     in support of performance-based compliance under subclause 
     (I) and such software shall meet all of the procedures and 
     methods for calculating energy savings reductions which are 
     promulgated by the Secretary of Energy. Such regulations on 
     the specifications for software and verification protocols 
     shall be based on the 2005 California Residential Alternative 
     Calculation Method Approval Manual.

       ``(III) Calculation requirements.--In calculating tradeoffs 
     and energy performance, the regulations prescribed under this 
     clause shall prescribe for the taxable year the costs per 
     unit of energy and power, such as kilowatt hour, kilowatt, 
     gallon of fuel oil, and cubic foot or Btu of natural gas, 
     which may be dependent on time of usage. If a State has 
     developed annual energy usage and cost calculation procedures 
     based on time of usage costs for use in the performance 
     standards of the State's building energy code prior to the 
     effective date of this section, the State may use those 
     annual energy usage and cost calculation procedures in lieu 
     of those adopted by the Secretary.
       ``(IV) Approval of software submissions.--The Secretary 
     shall approve software submissions which comply with the 
     requirements of subclause (II).
       ``(V) Procedures for inspection and testing of homes.--The 
     Secretary shall ensure that procedures for the inspection and 
     testing for compliance comply with the calculation 
     requirements under subclause (III) of this clause and clause 
     (iv).

       ``(iii) Determinations of compliance.--A determination of 
     compliance with respect to energy efficient residential 
     rental building property made for the purposes of this 
     subparagraph shall be filed with the Secretary not later than 
     1 year after the date of such determination and shall include 
     the TIN of the certifier, the address of the building in 
     compliance, and the identity of the person for whom such 
     determination was performed. Determinations of compliance 
     filed with the Secretary shall be available for inspection by 
     the Secretary of Energy.
       ``(iv) Compliance.--

       ``(I) In general.--The Secretary, after consultation with 
     the Secretary of Energy, shall establish requirements for 
     certification and compliance procedures after examining the 
     requirements for energy consultants and home energy ratings 
     providers specified by the Mortgage Industry National Home 
     Energy Rating Standards.
       ``(II) Individuals qualified to determine compliance.--The 
     determination of compliance may be provided by a local 
     building regulatory authority, a utility, a manufactured home 
     production inspection primary inspection agency (IPIA), or an 
     accredited home energy rating system provider. All providers 
     shall be accredited, or otherwise authorized to use approved 
     energy performance measurement methods, by the Residential 
     Energy Services Network (RESNET).

       ``(C) Allocation of deduction for public property.--In the 
     case of energy efficient residential rental building property 
     which is property owned by a Federal, State, or local 
     government or a political subdivision thereof, the Secretary 
     shall promulgate a regulation to allow the allocation of the 
     deduction to the person primarily responsible for designing 
     the improvements to the property in lieu of the owner of such 
     property. Such person shall be treated as the taxpayer for 
     purposes of this subsection.
       ``(f) Basis Reduction.--For purposes of this subtitle, if a 
     deduction is allowed under this section with respect to any 
     property, the basis of such property shall be reduced by the 
     amount of the deduction so allowed.
       ``(g) 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.
       ``(h) Termination.--This section shall not apply with 
     respect to any property placed in service after December 31, 
     2008.''.
       (b) Conforming Amendment.--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 inserting the 
     following new paragraph:
       ``(34) for amounts allowed as a deduction under section 
     200(a).''.
       (c) Clerical Amendment.--The table of sections for part VI 
     of subchapter B of chapter 1 is amended by adding at the end 
     the following new item:

``Sec. 200. Energy property deduction.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act.

     SEC. 1524. CREDIT FOR CERTAIN NONBUSINESS ENERGY 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. NONBUSINESS ENERGY PROPERTY.

       ``(a) Allowance of Credit.--
       ``(1) In general.--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 greater 
     of--
       ``(A) the amount of residential energy property 
     expenditures made by the taxpayer during such taxable year, 
     or
       ``(B) the amount specified in paragraph (2) for any 
     building owned by the taxpayer which is certified as a highly 
     energy-efficient principal residence during such taxable 
     year.
       ``(2) Credit amount.--For purposes of paragraph (1)(B), the 
     credit amount with respect to a highly energy-efficient 
     principal residence is--
       ``(A) $2,000 in the case of a percentage reduction of 50 
     percent or more as determined under subsection (c)(4)(C), and
       ``(B) $4,000 times the percentage reduction in the case of 
     a percentage reduction which is 20 percent or more but less 
     than 50 percent as determined under subsection (c)(4)(C).
       ``(b) Limitation.--The amount of the credit allowed under 
     this section by reason of subsection (a)(1)(A) shall not 
     exceed--
       ``(1) $50 for any advanced main air circulating fan,

[[Page 13171]]

       ``(2) $150 for any qualified natural gas, propane, or oil 
     furnace or hot water boiler, and
         ``(2) $300 for any item of energy efficient property.
       ``(c) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Residential energy property expenditures.--The term 
     `residential energy property expenditures' means expenditures 
     made by the taxpayer for qualified energy property installed 
     on or in connection with a dwelling unit which--
       ``(A) is located in the United States, and
       ``(B) is used as a principal residence.

     Such term includes expenditures for labor costs properly 
     allocable to the onsite preparation, assembly, or original 
     installation of the property.
       ``(2) Qualified energy property.--
       ``(A) In general.--The term `qualified energy property' 
     means--
       ``(i) energy-efficient building property,
       ``(ii) a qualified natural gas, propane, or oil furnace or 
     hot water boiler, or
       ``(iii) an advanced main air circulating fan.
       ``(B) Required standards.--Property described under 
     subparagraph (A) shall meet the performance and quality 
     standards and certification standards of section 
     200(c)(1)(D).
       ``(3) Energy-efficient building property; qualified natural 
     gas, propane, or oil furnace or hot water boiler; advanced 
     main air circulating fan.--The terms `energy-efficient 
     building property', `qualified natural gas, propane, or oil 
     furnace or hot water boiler', and `advanced main air 
     circulating fan' have the meanings given such terms in 
     section 200.
       ``(4) Highly energy-efficient principal residence.--
       ``(A) In general.--A building is a highly energy-efficient 
     principal residence if--
       ``(i) such building is located in the United States,
       ``(ii) the building is used as a principal residence,
       ``(iii) in the case of a new building, the building is not 
     acquired from an eligible contractor (within the meaning of 
     section 45K(b)(1)), and
       ``(iv) the building is certified in accordance with 
     subparagraph (D) as meeting the requirements of subparagraph 
     (C).
       ``(B) Principal residence.--
       ``(i) In general.--The term `principal residence' has the 
     same meaning as when used in section 121, except that--

       ``(I) no ownership requirement shall be imposed, and
       ``(II) the period for which a building is treated as used 
     as a principal residence shall also include the 60-day period 
     ending on the 1st day on which it would (but for this 
     subparagraph) first be treated as used as a principal 
     residence.

       ``(ii) Manufactured housing.--The term `residence' shall 
     include a dwelling unit which is a manufactured home 
     conforming to Federal Manufactured Home Construction and 
     Safety Standards (24 C.F.R. 3280).
       ``(C) Requirements.--The requirements of this subparagraph 
     are met if the projected heating and cooling energy usage of 
     the building, measured in terms of average annual energy cost 
     to taxpayer, is reduced by 20 percent or more in comparison 
     to--
       ``(i) in the case of an existing building, the original 
     condition of the building, and
       ``(ii) in the case of a new building, a comparable 
     building--

       ``(I) which is constructed in accordance with the standards 
     of chapter 4 of the 2003 International Energy Conservation 
     Code, as such Code (including supplements) is in effect on 
     the date of the enactment of this section, and
       ``(II) for which the heating and cooling equipment 
     efficiencies correspond to the minimum allowed under the 
     regulations established by the Department of Energy pursuant 
     to the National Appliance Energy Conservation Act of 1987 and 
     in effect at the time of construction.

       ``(D) Certification procedures.--
       ``(i) In general.--For purposes of subparagraph (A)(iv), 
     energy usage shall be demonstrated by performance-based 
     compliance in accordance with the requirements of subsection 
     (d)(2).
       ``(ii) Computer software.--Computer software shall be used 
     in support of performance-based compliance under clause (i) 
     and such software shall meet all of the procedures and 
     methods for calculating energy savings reductions which are 
     promulgated by the Secretary of Energy. Such regulations on 
     the specifications for software and verification protocols 
     shall be based on the 2005 California Residential Alternative 
     Calculation Method Approval Manual.
       ``(iii) Calculation requirements.--In calculating tradeoffs 
     and energy performance, the regulations shall prescribe the 
     costs per unit of energy and power, such as kilowatt hour, 
     kilowatt, gallon of fuel oil, and cubic foot or Btu of 
     natural gas, which may be dependent on time of usage. If a 
     State has developed annual energy usage and cost calculation 
     procedures based on time of usage costs for use in the 
     performance standards of the State's building energy code 
     before the effective date of this section, the State may use 
     those annual energy usage and cost calculation procedures in 
     lieu of those adopted by the Secretary.
       ``(iv) Approval of software submissions.--The Secretary 
     shall approve software submissions which comply with the 
     calculation requirements of clause (ii).
       ``(v) Procedures for inspection and testing of dwelling 
     units.--The Secretary shall ensure that procedures for the 
     inspection and testing for compliance comply with the 
     calculation requirements under clause (iii) and subsection 
     (d)(2).
       ``(d) Special Rules.--For purposes of this section--
       ``(1) Determinations of compliance.--A determination of 
     compliance made for the purposes of this section shall be 
     filed with the Secretary within 1 year of the date of such 
     determination and shall include the TIN of the certifier, the 
     address of the building in compliance, and the identity of 
     the person for whom such determination was performed. 
     Determinations of compliance filed with the Secretary shall 
     be available for inspection by the Secretary of Energy.
       ``(2) Compliance.--
       ``(A) In general.--The Secretary, after consultation with 
     the Secretary of Energy, shall establish requirements for 
     certification and compliance procedures after examining the 
     requirements for energy consultants and home energy ratings 
     providers specified by the Mortgage Industry National Home 
     Energy Rating Standards.
       ``(B) Individuals qualified to determine compliance.--The 
     determination of compliance may be provided by a local 
     building regulatory authority, a utility, a manufactured home 
     production inspection primary inspection agency (IPIA), or an 
     accredited home energy rating system provider. All providers 
     shall be accredited, or otherwise authorized to use approved 
     energy performance measurement methods, by the Residential 
     Energy Services Network (RESNET).
       ``(3) 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 principal 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 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.
       ``(4) 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 and such 
     credit shall be allocated pro rata to such individual.
       ``(5) 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 he owns, such individual shall be 
     treated as having made his proportionate share of any 
     expenditures of such association and any credit shall be 
     allocated appropriately.
       ``(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 principal residences.
       ``(6) Joint ownership of energy items.--
       ``(A) In general.--Any expenditure otherwise qualifying as 
     an expenditure under this section shall not be treated as 
     failing to so qualify merely because such expenditure was 
     made with respect to 2 or more dwelling units.
       ``(B) Limits applied separately.--In the case of any 
     expenditure described in subparagraph (A), the amount of the 
     credit allowable under subsection (a) shall (subject to 
     paragraph (1)) be computed separately with respect to the 
     amount of the expenditure made for each dwelling unit.
       ``(7) Allocation in certain cases.--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.
       ``(8) Year credit allowed.--The credit under subsection 
     (a)(2) shall be allowed in the taxable year in which the 
     percentage reduction with respect to the principal residence 
     is certified.
       ``(9) 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.

[[Page 13172]]

       ``(B) Expenditures part of building construction.--In the 
     case of an expenditure in connection with the construction of 
     a structure, such expenditure shall be treated as made when 
     the original use of the constructed structure by the taxpayer 
     begins.
       ``(10) Property financed by subsidized energy financing.--
       ``(A) Reduction of expenditures.--
       ``(i) In general.--Except as provided in subparagraph (C), 
     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.
       ``(ii) Subsidized energy financing.--For purposes of clause 
     (i), the term `subsidized energy financing' has the same 
     meaning given such term in section 48(a)(4)(C).
       ``(B) Dollar limits reduced.--The dollar amounts in 
     subsection (b)(3) with respect to each property purchased for 
     such dwelling unit for any taxable year of such taxpayer 
     shall be reduced proportionately by an amount equal to the 
     sum of--
       ``(i) the amount of the expenditures made by the taxpayer 
     during such taxable year with respect to such dwelling unit 
     and not taken into account by reason of subparagraph (A), and
       ``(ii) the amount of any Federal, State, or local grant 
     received by the taxpayer during such taxable year which is 
     used to make residential energy property expenditures with 
     respect to the dwelling unit and is not included in the gross 
     income of such taxpayer.
       ``(C) Exception for state programs.--Subparagraphs (A) and 
     (B) shall not apply to expenditures made with respect to 
     property for which the taxpayer has received a loan, State 
     tax credit, or grant under any State energy program.
       ``(11) Coordination with section 25D.--In any case in which 
     a credit under section 25D has been allowed with respect to 
     property in connection with a building for which a credit is 
     allowable under this section by reason of subsection 
     (a)(1)(B)--
       ``(A) for purposes of subsection (c)(4)(C), the average 
     annual energy cost with respect to heating and cooling of--
       ``(i) for purposes of subsection (c)(4)(C)(i), the original 
     condition of the building, and
       ``(ii) for purposes of subsection (c)(4)(C)(ii), the 
     comparable building,

     shall be determined assuming such building contains the 
     property for which such credit has been allowed, and
       ``(B) any cost of such property taken into account under 
     such section shall not be taken into account under this 
     section.
       ``(e) 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.
       ``(f) Regulations.--The Secretary shall promulgate such 
     regulations as necessary to take into account new 
     technologies regarding energy efficiency and renewable energy 
     for purposes of determining energy efficiency and savings 
     under this section.
       ``(g) Termination.--This section shall not apply with 
     respect to any property placed in service after December 31, 
     2008.''.
       (b) Conforming Amendments.--
       (1) Subsection (a) of section 1016, 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 25C(e), 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. Nonbusiness energy property.''.

       (c) Effective Dates.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2005.

     SEC. 1525. ENERGY CREDIT FOR COMBINED HEAT AND POWER SYSTEM 
                   PROPERTY.

       (a) In General.--Section 48(a)(3)(A) (defining energy 
     property) is by striking ``or'' at the end of clause (i), by 
     inserting ``or'' at the end of clause (ii), and by adding at 
     the end the following new clause:
       ``(iii) combined heat and power system property,''.
       (b) Combined Heat and Power System Property.--Section 48 
     (relating to energy credit; reforestation credit) is amended 
     by adding at the end the following new subsection:
       ``(c) Combined Heat and Power System Property.--For 
     purposes of subsection (a)(3)(A)(iii)--
       ``(1) Combined heat and power system property.--The term 
     `combined heat and power system property' means property 
     comprising a system--
       ``(A) which uses the same energy source for the 
     simultaneous or sequential generation of electrical power, 
     mechanical shaft power, or both, in combination with the 
     generation of steam or other forms of useful thermal energy 
     (including heating and cooling applications),
       ``(B) which has an electrical capacity of not more than 15 
     megawatts or a mechanical energy capacity of not more than 
     2,000 horsepower or an equivalent combination of electrical 
     and mechanical energy capacities,
       ``(C) which produces--
       ``(i) at least 20 percent of its total useful energy in the 
     form of thermal energy which is not used to produce 
     electrical or mechanical power (or combination thereof), and
       ``(ii) at least 20 percent of its total useful energy in 
     the form of electrical or mechanical power (or combination 
     thereof),
       ``(D) the energy efficiency percentage of which exceeds 60 
     percent, and
       ``(E) which is placed in service before January 1, 2008.
       ``(2) Special rules.--
       ``(A) Energy efficiency percentage.--For purposes of this 
     subsection, the energy efficiency percentage of a system is 
     the fraction--
       ``(i) the numerator of which is the total useful 
     electrical, thermal, and mechanical power produced by the 
     system at normal operating rates, and expected to be consumed 
     in its normal application, and
       ``(ii) the denominator of which is the lower heating value 
     of the fuel sources for the system.
       ``(B) Determinations made on btu basis.--The energy 
     efficiency percentage and the percentages under paragraph 
     (1)(C) shall be determined on a Btu basis.
       ``(C) Input and output property not included.--The term 
     `combined heat and power system property' does not include 
     property used to transport the energy source to the facility 
     or to distribute energy produced by the facility.
       ``(D) Certain exception not to apply.--The first sentence 
     of the matter in subsection (a)(3) which follows subparagraph 
     (D) thereof shall not apply to combined heat and power system 
     property.
       ``(3) Systems using bagasse.--If a system is designed to 
     use bagasse for at least 90 percent of the energy source--
       ``(A) paragraph (1)(D) shall not apply, but
       ``(B) the amount of credit determined under subsection (a) 
     with respect to such system shall not exceed the amount which 
     bears the same ratio to such amount of credit (determined 
     without regard to this paragraph) as the energy efficiency 
     percentage of such system bears to 60 percent.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to periods after the date of the enactment of 
     this Act, in taxable years ending after such date, under 
     rules similar to the rules of section 48(m) of the Internal 
     Revenue Code of 1986 (as in effect on the day before the date 
     of the enactment of the Revenue Reconciliation Act of 1990).

     SEC. 1526. 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) General Rule.--
       ``(1) In general.--For purposes of section 38, the energy 
     efficient appliance credit determined under this section for 
     any taxable year is an amount equal to the sum of the credit 
     amounts determined under paragraph (2) for each type of 
     qualified energy efficient appliance produced by the taxpayer 
     during the calendar year ending with or within the taxable 
     year.
       ``(2) Credit amounts.--The credit amount determined for any 
     type of qualified energy efficient appliance is--
       ``(A) the applicable amount determined under subsection (b) 
     with respect to such type, multiplied by
       ``(B) the eligible production for such type.
       ``(b) Applicable Amount.--
       ``(1) In general.--For purposes of subsection (a)--
       ``(A) Dishwashers.--The applicable amount is the energy 
     savings amount in the case of a dishwasher which--
       ``(i) is manufactured in calendar year 2006 or 2007, and
       ``(ii) meets the requirements of the Energy Star program 
     which are in effect for dishwashers in 2007.
       ``(B) Clothes washers.--The applicable amount is--
       ``(i) $50, in the case of a clothes washer which--

       ``(I) is manufactured in calendar year 2005, and
       ``(II) has an MEF of at least 1.42,

       ``(ii) $100, in the case of a clothes washer which--

       ``(I) is manufactured in calendar year 2005, 2006, or 2007, 
     and
       ``(II) meets the requirements of the Energy Star program 
     which are in effect for clothes washers in 2007, and

       ``(iii) the energy and water savings amount, in the case of 
     a clothes washer which--

       ``(I) is manufactured in calendar year 2008, 2009, or 2010, 
     and
       ``(II) meets the requirements of the Energy Star program 
     which are in effect for clothes washers in 2010.

       ``(C) Refrigerators.--

[[Page 13173]]

       ``(i) 15 percent savings.--The applicable amount is $75 in 
     the case of a refrigerator which--

       ``(I) is manufactured in calendar year 2005 or 2006, and
       ``(II) consumes at least 15 percent but not more than 20 
     percent less kilowatt hours per year than the 2001 energy 
     conservation standard.

       ``(ii) 20 percent savings.--In the case of a refrigerator 
     which consumes at least 20 percent but not more than 25 
     percent less kilowatt hours per year than the 2001 energy 
     conservation standards, the applicable amount is--

       ``(I) $125 for a refrigerator which is manufactured in 
     calendar year 2005, 2006, or 2007, and
       ``(II) $100 for a refrigerator which is manufactured in 
     calendar year 2008.

       ``(iii) 25 percent savings.--In the case of a refrigerator 
     which consumes at least 25 percent less kilowatt hours per 
     year than the 2001 energy conservation standards, the 
     applicable amount is--

       ``(I) $175 for a refrigerator which is manufactured in 
     calendar year 2005, 2006, or 2007, and
       ``(II) $150 for a refrigerator which is manufactured in 
     calendar year 2008, 2009, or 2010.

       ``(2) Energy savings amount.--For purposes of paragraph 
     (1)(A)--
       ``(A) In general.--The energy savings amount is the lesser 
     of--
       ``(i) the product of--

       ``(I) $3, and
       ``(II) 100 multiplied by the energy savings percentage, or

       ``(ii) $100.
       ``(B) Energy savings percentage.--For purposes of 
     subparagraph (A), the energy savings percentage is the ratio 
     of--
       ``(i) the EF required by the Energy Star program for 
     dishwashers in 2007 minus the EF required by the Energy Star 
     program for dishwashers in 2005, to
       ``(ii) the EF required by the Energy Star program for 
     dishwashers in 2007.
       ``(3) Energy and water savings amount.--For purposes of 
     paragraph (1)(B)(iii)--
       ``(A) In general.--The energy and water savings amount is 
     the lesser of--
       ``(i) the product of--

       ``(I) $10, and
       ``(II) 100 multiplied by the energy and water savings 
     percentage, or

       ``(ii) $200.
       ``(B) Energy and water savings percentage.--For purposes of 
     subparagraph (A), the energy and water savings percentage is 
     the average of the MEF savings percentage and the WF savings 
     percentage.
       ``(C) MEF savings percentage.--For purposes of this 
     paragraph, the MEF savings percentage is the ratio of--
       ``(i) the MEF required by the Energy Star program for 
     clothes washers in 2010 minus the MEF required by the Energy 
     Star program for clothes washers in 2007, to
       ``(ii) the MEF required by the Energy Star program for 
     clothes washers in 2010.
       ``(D) WF savings percentage.--For purposes of this 
     paragraph, the WF savings percentage is the ratio of--
       ``(i) the WF required by the Energy Star program for 
     clothes washers in 2007 minus the WF required by the Energy 
     Star program for clothes washers in 2010, to
       ``(ii) the WF required by the Energy Star program for 
     clothes washers in 2007.
       ``(c) Eligible Production.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the eligible production in a calendar year with respect 
     to each type of energy efficient appliance is the excess of--
       ``(A) the number of appliances of such type which are 
     produced by the taxpayer in the United States during such 
     calendar year, over
       ``(B) the average number of appliances of such type which 
     were produced by the taxpayer (or any predecessor) in the 
     United States during the preceding 3-calendar year period.
       ``(2) Special rule for refrigerators.--The eligible 
     production in a calendar year with respect to each type of 
     refrigerator described in subsection (b)(1)(C) is the excess 
     of--
       ``(A) the number of appliances of such type which are 
     produced by the taxpayer in the United States during such 
     calendar year, over
       ``(B) 110 percent of the average number of appliances of 
     such type which were produced by the taxpayer (or any 
     predecessor) in the United States during the preceding 3-
     calendar year period.
       ``(3) Special rule for 2005 production.--For purposes of 
     determining eligible production for calendar year 2005--
       ``(A) only production after the date of enactment of this 
     section shall be taken into account under paragraphs (1)(A) 
     and (2)(A), and
       ``(B) the amount taken into account under paragraphs (1)(B) 
     and (2)(B) shall be an amount which bears the same ratio to 
     the amount which would (but for this paragraph) be taken into 
     account under such paragraph as--
       ``(i) the number of days in calendar year 2005 after the 
     date of enactment of this section, bears to
       ``(ii) 365.
       ``(d) Types of Energy Efficient Appliance.--For purposes of 
     this section, the types of energy efficient appliances are--
       ``(1) dishwashers described in subsection (b)(1)(A),
       ``(2) clothes washers described in subsection (b)(1)(B)(i),
       ``(3) clothes washers described in subsection 
     (b)(1)(B)(ii),
       ``(4) clothes washers described in subsection 
     (b)(1)(B)(iii),
       ``(5) refrigerators described in subsection (b)(1)(C)(i),
       ``(6) refrigerators described in subsection 
     (b)(1)(C)(ii)(I),
       ``(7) refrigerators described in subsection 
     (b)(1)(C)(ii)(II),
       ``(8) refrigerators described in subsection 
     (b)(1)(C)(iii)(I), and
       ``(9) refrigerators described in subsection 
     (b)(1)(C)(iii)(II).
       ``(e) Limitations.--
       ``(1) Aggregate credit amount allowed.--The aggregate 
     amount of credit allowed under subsection (a) with respect to 
     a taxpayer for any taxable year shall not exceed $75,000,000 
     reduced by the amount of the credit allowed under subsection 
     (a) to the taxpayer (or any predecessor) for all prior 
     taxable years.
       ``(2) Amount allowed for certain appliances.--
       ``(A) In general.--In the case of appliances described in 
     subparagraph (C), the aggregate amount of the credit allowed 
     under subsection (a) with respect to a taxpayer for any 
     taxable year shall not exceed $20,000,000 reduced by the 
     amount of the credit allowed under subsection (a) to the 
     taxpayer (or any predecessor) for all prior taxable years 
     with respect to such appliances.
       ``(B) Election to increase allowable credit.--In the case 
     of any taxpayer who makes an election under this 
     subparagraph--
       ``(i) subparagraph (A) shall be applied by substituting 
     `$25,000,000' for `$20,000,000', and
       ``(ii) the aggregate amount of the credit allowed under 
     subsection (a) with respect to such taxpayer for any taxable 
     year for appliances described in subparagraph (C) and the 
     additional appliances described in subparagraph (D) shall not 
     exceed $50,000,000 reduced by the amount of the credit 
     allowed under subsection (a) to the taxpayer (or any 
     predecessor) for all prior taxable years with respect to such 
     appliances.
       ``(C) Appliances described.--The appliances described in 
     this subparagraph are--
       ``(i) clothes washers described in subsection (b)(1)(B)(i), 
     and
       ``(ii) refrigerators described in subsection (b)(1)(C)(i).
       ``(D) Additional appliances.--The additional appliances 
     described in this subparagraph are--
       ``(i) refrigerators described in subsection 
     (b)(1)(C)(ii)(I), and
       ``(ii) refrigerators described in subsection 
     (b)(1)(C)(ii)(II).
       ``(3) 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.
       ``(4) Gross receipts.--For purposes of this subsection, the 
     rules of paragraphs (2) and (3) of section 448(c) shall 
     apply.
       ``(f) Definitions.--For purposes of this section--
       ``(1) Qualified energy efficient appliance.--The term 
     `qualified energy efficient appliance' means--
       ``(A) any dishwasher described in subsection (b)(1)(A),
       ``(B) any clothes washer described in subsection (b)(1)(B), 
     and
       ``(C) any refrigerator described in subsection (b)(1)(C).
       ``(2) Dishwasher.--The term `dishwasher' means a 
     residential dishwasher subject to the energy conservation 
     standards established by the Department of Energy.
       ``(3) Clothes washer.--The term `clothes washer' means a 
     residential model clothes washer, including a residential 
     style coin operated washer.
       ``(4) Refrigerator.--The term `refrigerator' means a 
     residential model automatic defrost refrigerator-freezer 
     which has an internal volume of at least 16.5 cubic feet.
       ``(5) MEF.--The term `MEF' means the modified energy factor 
     established by the Department of Energy for compliance with 
     the Federal energy conservation standards.
       ``(6) EF.--The term `EF' means the energy factor 
     established by the Department of Energy for compliance with 
     the Federal energy conservation standards.
       ``(7) WF.--The term `WF' means Water Factor (as determined 
     by the Secretary of Energy).
       ``(8) Produced.--The term `produced' includes manufactured.
       ``(9) 2001 energy conservation standard.--The term `2001 
     energy conservation standard' means the energy conservation 
     standards promulgated by the Department of Energy and 
     effective July 1, 2001.
       ``(g) Special Rules.--For purposes of this section--
       ``(1) In general.--Rules similar to the rules of 
     subsections (c), (d), and (e) of section 52 shall apply.

[[Page 13174]]

       ``(2) Controlled group.--
       ``(A) In general.--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 a single producer.
       ``(B) Inclusion of foreign corporations.--For purposes of 
     subparagraph (A), in applying subsections (a) and (b) of 
     section 52 to this section, section 1563 shall be applied 
     without regard to subsection (b)(2)(C) thereof.
       ``(3) Verification.--No amount shall be allowed as a credit 
     under subsection (a) with respect to which the taxpayer has 
     not submitted such information or certification as the 
     Secretary, in consultation with the Secretary of Energy, 
     determines necessary.''.
       (b) Conforming Amendment.--Section 38(b) (relating to 
     general business credit), as amended by this Act, is amended 
     by striking ``plus'' at the end of paragraph (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 energy efficient appliance credit determined 
     under section 45L(a).''.
       (c) 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''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to appliances produced after the date of the 
     enactment of this Act, in taxable years ending after such 
     date.

     SEC. 1527. 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), as 
     amended by this Act, is amended by inserting after section 
     25C the following new section:

     ``SEC. 25D. 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) 30 percent of the qualified photovoltaic property 
     expenditures made by the taxpayer during such year,
       ``(2) 30 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,
       ``(b) Limitations.--
       ``(1) Maximum credit.--The credit allowed under subsection 
     (a) shall not exceed--
       ``(A) $2,000 for property described in paragraph (1) or (2) 
     of subsection (d), and
       ``(B) $500 for each 0.5 kilowatt of capacity of property 
     described in subsection (d)(4).
       ``(2) 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 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, and
       ``(B) in the case of a photovoltaic property or a fuel cell 
     property such property meets appropriate fire and electric 
     code requirements.
       ``(c) Carryforward of Unused Credit.--If the credit 
     allowable under subsection (a) exceeds the limitation imposed 
     by section 26(a) for such taxable year reduced by the sum of 
     the credits allowable under this subpart (other than this 
     section), such excess shall be carried to the succeeding 
     taxable year and added to the credit allowable under 
     subsection (a) for such succeeding taxable year.
       ``(d) 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(d)(1)) 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) 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.
       ``(6) 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.--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)(4)(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 property placed in service after 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 (34), by striking 
     the period at the end of paragraph (35) and inserting ``, 
     and'', and by adding at the end the following new paragraph:
       ``(36) to the extent provided in section 25D(f), 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. Residential energy efficient property.''.


[[Page 13175]]


       (c) Effective Dates.--Except as provided by paragraph (2), 
     the amendments made by this section shall apply to property 
     placed in service after December 31, 2005, in taxable years 
     ending after such date.

     SEC. 1528. CREDIT FOR BUSINESS INSTALLATION OF QUALIFIED FUEL 
                   CELLS AND STATIONARY MICROTURBINE POWER PLANTS.

       (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) qualified fuel cell property or qualified 
     microturbine property,''.
       (b) Qualified Fuel Cell Property; Qualified Microturbine 
     Property.--Section 48 (relating to energy credit) is amended 
     by adding at the end the following new subsection:
       ``(d) Qualified Fuel Cell Property; Qualified Microturbine 
     Property.--For purposes of this subsection--
       ``(1) Qualified fuel cell property.--
       ``(A) In general.--The term `qualified fuel cell property' 
     means a fuel cell power plant which--
       ``(i) has a nameplate capacity of at least 0.5 kilowatt of 
     electricity using an electrochemical process, and
       ``(ii) has an electricity-only generation efficiency 
     greater than 30 percent.
       ``(B) 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.
       ``(C) 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.
       ``(D) Special rule.--The first sentence of the matter in 
     subsection (a)(3) which follows subparagraph (D) thereof 
     shall not apply to qualified fuel cell property which is used 
     predominantly in the trade or business of the furnishing or 
     sale of telephone service, telegraph service by means of 
     domestic telegraph operations, or other telegraph services 
     (other than international telegraph services).
       ``(E) Termination.--The term `qualified fuel cell property' 
     shall not include any property for any period after December 
     31, 2009.
       ``(2) Qualified microturbine property.--
       ``(A) In general.--The term `qualified microturbine 
     property' means a stationary microturbine power plant which--
       ``(i) has a nameplate 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.
       ``(B) 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.
       ``(C) 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.
       ``(D) Special rule.--The first sentence of the matter in 
     subsection (a)(3) which follows subparagraph (D) thereof 
     shall not apply to qualified microturbine property which is 
     used predominantly in the trade or business of the furnishing 
     or sale of telephone service, telegraph service by means of 
     domestic telegraph operations, or other telegraph services 
     (other than international telegraph services).
       ``(E) Termination.--The term `qualified microturbine 
     property' shall not include any property for any period after 
     December 31, 2008.''.
       (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 Amendment.-- Section 48(a)(1) is amended by 
     inserting ``except as provided in paragraph (1)(B) or (2)(B) 
     of subsection (d),'' before ``the energy''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to periods after December 31, 2005, in taxable 
     years ending after such date, under rules similar to the 
     rules of section 48(m) of the Internal Revenue Code of 1986 
     (as in effect on the day before the date of the enactment of 
     the Revenue Reconciliation Act of 1990).

     SEC. 1529. BUSINESS SOLAR INVESTMENT TAX CREDIT.

       (a) Increase in Energy Percentage.--Section 48(a)(2)(A) 
     (relating to energy percentage), as amended by this Act, is 
     amended to read as follows:
       ``(A) In general.--The energy percentage is--
       ``(i) in the case of energy property described in paragraph 
     (3)(A)(i) and qualified fuel cell property, 30 percent, and
       ``(ii) in the case of any other energy property, 10 
     percent.''.
       (b) Hybrid Solar Lighting Systems.--Clause (i) of section 
     48(a)(3)(A) is amended to read as follows:
       ``(i) equipment which uses solar energy to generate 
     electricity for use in a structure, to heat or cool (or 
     provide hot water for use in) a structure, to illuminate the 
     inside of a structure using fiber-optic distributed sunlight 
     or to provide solar process heat, excepting property used to 
     generate energy for the purposes of heating a swimming 
     pool,''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to periods after December 31, 2005, in taxable 
     years ending after such date, and before January 1, 2010, 
     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).

      Subtitle D--Alternative Motor Vehicles and Fuels Incentives

     SEC. 1531. ALTERNATIVE MOTOR VEHICLE CREDIT.

       (a) In General.--Subpart B of part IV of subchapter A of 
     chapter 1 (relating to foreign tax credit, etc.) is amended 
     by adding at the end the following new section:

     ``SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.

       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter for the 
     taxable year an amount equal to the sum of--
       ``(1) the new qualified fuel cell motor vehicle credit 
     determined under subsection (b),
       ``(2) the new qualified hybrid motor vehicle credit 
     determined under subsection (c), and
       ``(3) the new qualified alternative fuel motor vehicle 
     credit determined under subsection (d).
       ``(b) New Qualified Fuel Cell Motor Vehicle Credit.--
       ``(1) In general.--For purposes of subsection (a), the new 
     qualified fuel cell motor vehicle credit determined under 
     this subsection with respect to a new qualified fuel cell 
     motor vehicle placed in service by the taxpayer during the 
     taxable year is--
       ``(A) $8,000 ($4,000 in the case of a vehicle placed in 
     service after December 31, 2009), if such vehicle has a gross 
     vehicle weight rating of not more than 8,500 pounds,
       ``(B) $10,000, if such vehicle has a gross vehicle weight 
     rating of more than 8,500 pounds but not more than 14,000 
     pounds,
       ``(C) $20,000, if such vehicle has a gross vehicle weight 
     rating of more than 14,000 pounds but not more than 26,000 
     pounds, and
       ``(D) $40,000, if such vehicle has a gross vehicle weight 
     rating of more than 26,000 pounds.
       ``(2) Increase for fuel efficiency.--
       ``(A) In general.--The amount determined under paragraph 
     (1)(A) with respect to a new qualified fuel cell motor 
     vehicle which is a passenger automobile or light truck shall 
     be increased by--
       ``(i) $1,000, if such vehicle achieves at least 150 percent 
     but less than 175 percent of the 2002 model year city fuel 
     economy,
       ``(ii) $1,500, if such vehicle achieves at least 175 
     percent but less than 200 percent of the 2002 model year city 
     fuel economy,
       ``(iii) $2,000, if such vehicle achieves at least 200 
     percent but less than 225 percent of the 2002 model year city 
     fuel economy,
       ``(iv) $2,500, if such vehicle achieves at least 225 
     percent but less than 250 percent of the 2002 model year city 
     fuel economy,
       ``(v) $3,000, if such vehicle achieves at least 250 percent 
     but less than 275 percent of the 2002 model year city fuel 
     economy,
       ``(vi) $3,500, if such vehicle achieves at least 275 
     percent but less than 300 percent of the 2002 model year city 
     fuel economy, and
       ``(vii) $4,000, if such vehicle achieves at least 300 
     percent of the 2002 model year city fuel economy.
       ``(B) 2002 model year city fuel economy.--For purposes of 
     subparagraph (A), the 2002 model year city fuel economy with 
     respect to a vehicle shall be determined in accordance with 
     the following tables:
       ``(i) In the case of a passenger automobile:
``If vehicle inertia weight clThe 2002 model year city fuel economy is:
1,500 or 1,750 lbs............................................45.2 mpg 
2,000 lbs.....................................................39.6 mpg 
2,250 lbs.....................................................35.2 mpg 
2,500 lbs.....................................................31.7 mpg 
2,750 lbs.....................................................28.8 mpg 
3,000 lbs.....................................................26.4 mpg 
3,500 lbs.....................................................22.6 mpg 
4,000 lbs.....................................................19.8 mpg 
4,500 lbs.....................................................17.6 mpg 
5,000 lbs.....................................................15.9 mpg 
5,500 lbs.....................................................14.4 mpg 
6,000 lbs.....................................................13.2 mpg 
6,500 lbs.....................................................12.2 mpg 
7,000 to 8,500 lbs............................................11.3 mpg.

       ``(ii) In the case of a light truck:


[[Page 13176]]


``If vehicle inertia weight clThe 2002 model year city fuel economy is:
1,500 or 1,750 lbs............................................39.4 mpg 
2,000 lbs.....................................................35.2 mpg 
2,250 lbs.....................................................31.8 mpg 
2,500 lbs.....................................................29.0 mpg 
2,750 lbs.....................................................26.8 mpg 
3,000 lbs.....................................................24.9 mpg 
3,500 lbs.....................................................21.8 mpg 
4,000 lbs.....................................................19.4 mpg 
4,500 lbs.....................................................17.6 mpg 
5,000 lbs.....................................................16.1 mpg 
5,500 lbs.....................................................14.8 mpg 
6,000 lbs.....................................................13.7 mpg 
6,500 lbs.....................................................12.8 mpg 
7,000 to 8,500 lbs............................................12.1 mpg.

       ``(C) Vehicle inertia weight class.--For purposes of 
     subparagraph (B), the term `vehicle inertia weight class' has 
     the same meaning as when defined in regulations prescribed by 
     the Administrator of the Environmental Protection Agency for 
     purposes of the administration of title II of the Clean Air 
     Act (42 U.S.C. 7521 et seq.).
       ``(3) New qualified fuel cell motor vehicle.--For purposes 
     of this subsection, the term `new qualified fuel cell motor 
     vehicle' means a motor vehicle--
       ``(A) which is propelled by power derived from 1 or more 
     cells which convert chemical energy directly into electricity 
     by combining oxygen with hydrogen fuel which is stored on 
     board the vehicle in any form and may or may not require 
     reformation prior to use,
       ``(B) which, in the case of a passenger automobile or light 
     truck, has received on or after the date of the enactment of 
     this section a certificate that such vehicle meets or exceeds 
     the Bin 5 Tier II emission level established in regulations 
     prescribed by the Administrator of the Environmental 
     Protection Agency under section 202(i) of the Clean Air Act 
     for that make and model year vehicle,
       ``(C) the original use of which commences with the 
     taxpayer,
       ``(D) which is acquired for use or lease by the taxpayer 
     and not for resale, and
       ``(E) which is made by a manufacturer.
       ``(c) New Qualified Hybrid Motor Vehicle Credit.--
       ``(1) In general.--For purposes of subsection (a), the new 
     qualified hybrid motor vehicle credit determined under this 
     subsection with respect to a new qualified hybrid motor 
     vehicle placed in service by the taxpayer during the taxable 
     year is the credit amount determined under paragraph (2) or 
     (3).
       ``(2) Credit amount for lighter vehicles.--
       ``(A) In general.--In the case of a new qualified hybrid 
     motor vehicle which is a passenger automobile, medium duty 
     passenger vehicle, or light truck, the credit amount 
     determined under this paragraph shall be--
       ``(i) $400, if such vehicle achieves at least 125 percent 
     but less than 150 percent of the 2002 model year city fuel 
     economy,
       ``(ii) $800, if such vehicle achieves at least 150 percent 
     but less than 175 percent of the 2002 model year city fuel 
     economy,
       ``(iii) $1,200, if such vehicle achieves at least 175 
     percent but less than 200 percent of the 2002 model year city 
     fuel economy,
       ``(iv) $1,600, if such vehicle achieves at least 200 
     percent but less than 225 percent of the 2002 model year city 
     fuel economy,
       ``(v) $2,000, if such vehicle achieves at least 225 percent 
     but less than 250 percent of the 2002 model year city fuel 
     economy, and
       ``(vi) $2,400, if such vehicle achieves at least 250 
     percent of the 2002 model year city fuel economy.
       ``(B) 2002 model year city fuel economy.--For purposes of 
     subparagraph (A), the 2002 model year city fuel economy with 
     respect to a vehicle shall be determined on a gasoline gallon 
     equivalent basis as determined by the Administrator of the 
     Environmental Protection Agency using the tables provided in 
     subsection (b)(2)(B) with respect to such vehicle.
       ``(3) Credit amount for heavier vehicles.--
       ``(A) In general.--In the case of a new qualified hybrid 
     motor vehicle which is a heavy duty hybrid motor vehicle, the 
     credit amount determined under this paragraph is an amount 
     equal to the applicable percentage of the incremental cost of 
     such vehicle placed in service by the taxpayer during the 
     taxable year.
       ``(B) Incremental cost.--For purposes of this paragraph, 
     the incremental cost of any heavy duty hybrid motor vehicle 
     is equal to the amount of the excess of the manufacturer's 
     suggested retail price for such vehicle over such price for a 
     comparable gasoline or diesel fuel motor vehicle of the same 
     model, to the extent such amount does not exceed--
       ``(i) $7,500, if such vehicle has a gross vehicle weight 
     rating of more than 8,500 pounds but not more than 14,000 
     pounds,
       ``(ii) $15,000, if such vehicle has a gross vehicle weight 
     rating of more than 14,000 pounds but not more than 26,000 
     pounds, and
       ``(iii) $30,000, if such vehicle has a gross vehicle weight 
     rating of more than 26,000 pounds.
       ``(C) Applicable percentage.--For purposes of subparagraph 
     (A), the applicable percentage shall be determined in 
     accordance with the following table:
``If percent increase in fuel economy of hybrid over comparable vehicle 
  is:                                     The applicable percentage is:
At least 30 but less than 40 percent........................20 percent.
At least 40 but less than 50 percent........................30 percent.
At least 50 percent.........................................40 percent.

       ``(4) New qualified hybrid motor vehicle.--For purposes of 
     this subsection--
       ``(A) In general.--The term `new qualified hybrid motor 
     vehicle' means a motor vehicle--
       ``(i) which draws propulsion energy from onboard sources of 
     stored energy which are both--

       ``(I) an internal combustion or heat engine using 
     consumable fuel, and
       ``(II) a rechargeable energy storage system,

       ``(ii) which, in the case of a passenger automobile, medium 
     duty passenger vehicle, or light truck--

       ``(I) has received a certificate that such vehicle meets or 
     exceeds the Bin 5 Tier II emission level established in 
     regulations prescribed by the Administrator of the 
     Environmental Protection Agency under section 202(i) of the 
     Clean Air Act for that make and model year vehicle, and
       ``(II) has a maximum available power of at least 5 percent,

       ``(iii) which, in the case of a heavy duty hybrid motor 
     vehicle--

       ``(I) which has a gross vehicle weight rating of more than 
     8,500 but not more than 14,000 pounds, has a maximum 
     available power of at least 10 percent, and
       ``(II) which has a gross vehicle weight rating of more than 
     14,000 pounds, has a maximum available power of at least 15 
     percent,

       ``(iv) the original use of which commences with the 
     taxpayer,
       ``(v) which is acquired for use or lease by the taxpayer 
     and not for resale, and
       ``(vi) which is made by a manufacturer.
       ``(B) Consumable fuel.--For purposes of subparagraph 
     (A)(i)(I), the term `consumable fuel' means any solid, 
     liquid, or gaseous matter which releases energy when consumed 
     by an auxiliary power unit.
       ``(C) Maximum available power.--
       ``(i) Passenger automobile, medium duty passenger vehicle, 
     or light truck.--For purposes of subparagraph (A)(ii)(II), 
     the term `maximum available power' means the maximum power 
     available from the rechargeable energy storage system, during 
     a standard 10 second pulse power or equivalent test, divided 
     by such maximum power and the SAE net power of the heat 
     engine.
       ``(ii) Heavy duty hybrid motor vehicle.--For purposes of 
     subparagraph (A)(iii), the term `maximum available power' 
     means the maximum power available from the rechargeable 
     energy storage system, during a standard 10 second pulse 
     power or equivalent test, divided by the vehicle's total 
     traction power. The term `total traction power' means the sum 
     of the peak power from the rechargeable energy storage system 
     and the heat engine peak power of the vehicle, except that if 
     such storage system is the sole means by which the vehicle 
     can be driven, the total traction power is the peak power of 
     such storage system.
       ``(4) Heavy duty hybrid motor vehicle.--For purposes of 
     this subsection, the term `heavy duty hybrid motor vehicle' 
     means a new qualified hybrid motor vehicle which has a gross 
     vehicle weight rating of more than 8,500 pounds. Such term 
     does not include a medium duty passenger vehicle.
       ``(d) New Qualified Alternative Fuel Motor Vehicle 
     Credit.--
       ``(1) Allowance of credit.--Except as provided in paragraph 
     (5), the new qualified alternative fuel motor vehicle credit 
     determined under this subsection is an amount equal to the 
     applicable percentage of the incremental cost of any new 
     qualified alternative fuel motor vehicle placed in service by 
     the taxpayer during the taxable year.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage with respect to any new 
     qualified alternative fuel motor vehicle is--
       ``(A) 50 percent, plus
       ``(B) 30 percent, if such vehicle--
       ``(i) has received a certificate of conformity under the 
     Clean Air Act and meets or exceeds the most stringent 
     standard available for certification under the Clean Air Act 
     for that make and model year vehicle (other than a zero 
     emission standard), or
       ``(ii) has received an order certifying the vehicle as 
     meeting the same requirements as vehicles which may be sold 
     or leased in California and meets or exceeds the most 
     stringent standard available for certification under the 
     State laws of California (enacted in accordance with a waiver 
     granted under section 209(b) of the Clean Air Act) for that 
     make and model year vehicle (other than a zero emission 
     standard).

     For purposes of the preceding sentence, in the case of any 
     new qualified alternative fuel motor vehicle which weighs 
     more than 14,000 pounds gross vehicle weight rating, the most 
     stringent standard available shall be such standard available 
     for certification on the date of the enactment of the Energy 
     Tax Incentives Act.
       ``(3) Incremental cost.--For purposes of this subsection, 
     the incremental cost of any new qualified alternative fuel 
     motor vehicle is equal to the amount of the excess of the

[[Page 13177]]

     manufacturer's suggested retail price for such vehicle over 
     such price for a gasoline or diesel fuel motor vehicle of the 
     same model, to the extent such amount does not exceed--
       ``(A) $5,000, if such vehicle has a gross vehicle weight 
     rating of not more than 8,500 pounds,
       ``(B) $10,000, if such vehicle has a gross vehicle weight 
     rating of more than 8,500 pounds but not more than 14,000 
     pounds,
       ``(C) $25,000, if such vehicle has a gross vehicle weight 
     rating of more than 14,000 pounds but not more than 26,000 
     pounds, and
       ``(D) $40,000, if such vehicle has a gross vehicle weight 
     rating of more than 26,000 pounds.
       ``(4) New qualified alternative fuel motor vehicle.--For 
     purposes of this subsection--
       ``(A) In general.--The term `new qualified alternative fuel 
     motor vehicle' means any motor vehicle--
       ``(i) which is only capable of operating on an alternative 
     fuel,
       ``(ii) the original use of which commences with the 
     taxpayer,
       ``(iii) which is acquired by the taxpayer for use or lease, 
     but not for resale, and
       ``(iv) which is made by a manufacturer.
       ``(B) Alternative fuel.--The term `alternative fuel' means 
     compressed natural gas, liquefied natural gas, liquefied 
     petroleum gas, hydrogen, and any liquid at least 85 percent 
     of the volume of which consists of methanol.
       ``(5) Credit for mixed-fuel vehicles.--
       ``(A) In general.--In the case of a mixed-fuel vehicle 
     placed in service by the taxpayer during the taxable year, 
     the credit determined under this subsection is an amount 
     equal to--
       ``(i) in the case of a 75/25 mixed-fuel vehicle, 70 percent 
     of the credit which would have been allowed under this 
     subsection if such vehicle was a qualified alternative fuel 
     motor vehicle, and
       ``(ii) in the case of a 90/10 mixed-fuel vehicle, 90 
     percent of the credit which would have been allowed under 
     this subsection if such vehicle was a qualified alternative 
     fuel motor vehicle.
       ``(B) Mixed-fuel vehicle.--For purposes of this subsection, 
     the term `mixed-fuel vehicle' means any motor vehicle 
     described in subparagraph (C) or (D) of paragraph (3), 
     which--
       ``(i) is certified by the manufacturer as being able to 
     perform efficiently in normal operation on a combination of 
     an alternative fuel and a petroleum-based fuel,
       ``(ii) either--

       ``(I) has received a certificate of conformity under the 
     Clean Air Act, or
       ``(II) has received an order certifying the vehicle as 
     meeting the same requirements as vehicles which may be sold 
     or leased in California and meets or exceeds the low emission 
     vehicle standard under section 88.105-94 of title 40, Code of 
     Federal Regulations, for that make and model year vehicle,

       ``(iii) the original use of which commences with the 
     taxpayer,
       ``(iv) which is acquired by the taxpayer for use or lease, 
     but not for resale, and
       ``(v) which is made by a manufacturer.
       ``(C) 75/25 mixed-fuel vehicle.--For purposes of this 
     subsection, the term `75/25 mixed-fuel vehicle' means a 
     mixed-fuel vehicle which operates using at least 75 percent 
     alternative fuel and not more than 25 percent petroleum-based 
     fuel.
       ``(D) 90/10 mixed-fuel vehicle.--For purposes of this 
     subsection, the term `90/10 mixed-fuel vehicle' means a 
     mixed-fuel vehicle which operates using at least 90 percent 
     alternative fuel and not more than 10 percent petroleum-based 
     fuel.
       ``(e) Application With Other Credits.--The credit allowed 
     under subsection (a) for any taxable year shall not exceed 
     the excess (if any) of--
       ``(1) the regular tax for the taxable year reduced by the 
     sum of the credits allowable under subpart A and sections 27, 
     29, and 30, over
       ``(2) the tentative minimum tax for the taxable year.
       ``(f) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Motor vehicle.--The term `motor vehicle' has the 
     meaning given such term by section 30(c)(2).
       ``(2) City fuel economy.--The city fuel economy with 
     respect to any vehicle shall be measured in a manner which is 
     substantially similar to the manner city fuel economy is 
     measured in accordance with procedures under part 600 of 
     subchapter Q of chapter I of title 40, Code of Federal 
     Regulations, as in effect on the date of the enactment of 
     this section.
       ``(3) Other terms.--The terms `automobile', `passenger 
     automobile', `medium duty passenger vehicle', `light truck', 
     and `manufacturer' have the meanings given such terms in 
     regulations prescribed by the Administrator of the 
     Environmental Protection Agency for purposes of the 
     administration of title II of the Clean Air Act (42 U.S.C. 
     7071 et seq.).
       ``(4)  Reduction in basis.--For purposes of this subtitle, 
     the basis of any property for which a credit is allowable 
     under subsection (a) shall be reduced by the amount of such 
     credit so allowed (determined without regard to subsection 
     (e)).
       ``(5) No double benefit.--The amount of any deduction or 
     other credit allowable under this chapter--
       ``(A) for any incremental cost taken into account in 
     computing the amount of the credit determined under 
     subsection (d) shall be reduced by the amount of such credit 
     attributable to such cost, and
       ``(B) with respect to a vehicle described under subsection 
     (b) or (c), shall be reduced by the amount of credit allowed 
     under subsection (a) for such vehicle for the taxable year.
       ``(6) Property used by tax-exempt entity.--In the case of a 
     vehicle whose use is described in paragraph (3) or (4) of 
     section 50(b) and which is not subject to a lease, the person 
     who sold such vehicle to the person or entity using such 
     vehicle shall be treated as the taxpayer that placed such 
     vehicle in service, but only if such person clearly discloses 
     to such person or entity in a document the amount of any 
     credit allowable under subsection (a) with respect to such 
     vehicle (determined without regard to subsection (e)).
       ``(7) Property used outside united states, etc., not 
     qualified.--No credit shall be allowable under subsection (a) 
     with respect to any property referred to in section 50(b)(1) 
     or with respect to the portion of the cost of any property 
     taken into account under section 179.
       ``(8) Recapture.--The Secretary shall, by regulations, 
     provide for recapturing the benefit of any credit allowable 
     under subsection (a) with respect to any property which 
     ceases to be property eligible for such credit (including 
     recapture in the case of a lease period of less than the 
     economic life of a vehicle).
       ``(9) Election to not take credit.--No credit shall be 
     allowed under subsection (a) for any vehicle if the taxpayer 
     elects to not have this section apply to such vehicle.
       ``(10) Carryback and carryforward allowed.--
       ``(A) In general.--If the credit allowable under subsection 
     (a) for a taxable year exceeds the amount of the limitation 
     under subsection (e) for such taxable year (in this paragraph 
     referred to as the `unused credit year'), such excess shall 
     be a credit carryback to each of the 3 taxable years 
     preceding the unused credit year and a credit carryforward to 
     each of the 20 taxable years following the unused credit 
     year, except that no excess may be carried to a taxable year 
     beginning before the date of the enactment of this section. 
     The preceding sentence shall not apply to any credit 
     carryback if such credit carryback is attributable to 
     property for which a deduction for depreciation is not 
     allowable.
       ``(B) Rules.--Rules similar to the rules of section 39 
     shall apply with respect to the credit carryback and credit 
     carryforward under subparagraph (A).
       ``(11) Interaction with air quality and motor vehicle 
     safety standards.--Unless otherwise provided in this section, 
     a motor vehicle shall not be considered eligible for a credit 
     under this section unless such vehicle is in compliance 
     with--
       ``(A) the applicable provisions of the Clean Air Act for 
     the applicable make and model year of the vehicle (or 
     applicable air quality provisions of State law in the case of 
     a State which has adopted such provision under a waiver under 
     section 209(b) of the Clean Air Act), and
       ``(B) the motor vehicle safety provisions of sections 30101 
     through 30169 of title 49, United States Code.
       ``(g) Regulations.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     Secretary shall promulgate such regulations as necessary to 
     carry out the provisions of this section.
       ``(2) Coordination in prescription of certain 
     regulations.--The Secretary of the Treasury, in coordination 
     with the Secretary of Transportation and the Administrator of 
     the Environmental Protection Agency, shall prescribe such 
     regulations as necessary to determine whether a motor vehicle 
     meets the requirements to be eligible for a credit under this 
     section.
       ``(h) Termination.--This section shall not apply to any 
     property purchased after--
       ``(1) in the case of a new qualified fuel cell motor 
     vehicle (as described in subsection (b)), December 31, 2014,
       ``(2) in the case of a new qualified hybrid motor vehicle 
     (as described in subsection (c)), December 31, 2009, and
       ``(3) in the case of a new qualified alternative fuel 
     vehicle (as described in subsection (d)), December 31, 
     2010.''.
       (b) Conforming Amendments.--
       (1) Section 1016(a), as amended by this Act, is amended by 
     striking ``and'' at the end of paragraph (35), by striking 
     the period at the end of paragraph (36) and inserting ``, 
     and'', and by adding at the end the following new paragraph:
       ``(37) to the extent provided in section 30B(f)(4).''.
       (2) Section 55(c)(2), as amended by this Act, is amended by 
     inserting ``30B(e),'' after ``30(b)(2),''.
       (3) Section 6501(m) is amended by inserting ``30B(f)(9),'' 
     after ``30(d)(4),''.
       (4) The table of sections for subpart B of part IV of 
     subchapter A of chapter 1 is amended by inserting after the 
     item relating to section 30A the following new item:


[[Page 13178]]


``Sec. 30B. Alternative motor vehicle credit.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act, in taxable years ending after such 
     date.

     SEC. 1532. MODIFICATION OF CREDIT FOR QUALIFIED ELECTRIC 
                   VEHICLES.

       (a) Amount of Credit.--
       (1) In general.--Section 30(a) (relating to allowance of 
     credit) is amended by striking ``10 percent of''.
       (2) Limitation of credit according to type of vehicle.--
     Paragraph (1) of section 30(b) (relating to limitations) is 
     amended to read as follows:
       ``(1) Limitation according to type of vehicle.--The amount 
     of the credit allowed under subsection (a) for any vehicle 
     shall not exceed the greatest of the following amounts 
     applicable to such vehicle:
       ``(A) In the case of a vehicle with a gross vehicle weight 
     rating not exceeding 8,500 pounds--
       ``(i) except as provided in clause (ii) or (iii), $4,000,
       ``(ii) $6,000, if such vehicle is--

       ``(I) capable of a driving range of at least 100 miles on a 
     single charge of the vehicle's rechargeable batteries as 
     measured pursuant to the urban dynamometer schedules under 
     appendix I to part 86 of title 40, Code of Federal 
     Regulations, or
       ``(II) capable of a payload capacity of at least 1,000 
     pounds, and

       ``(iii) if such vehicle is a low-speed vehicle which 
     conforms to Standard 500 prescribed by the Secretary of 
     Transportation (49 C.F.R. 571.500), as in effect on the date 
     of the enactment of the Energy Tax Incentives Act, the lesser 
     of--

       ``(I) 10 percent of the manufacturer's suggested retail 
     price of the vehicle, or
       ``(II) $1,500.

       ``(B) In the case of a vehicle with a gross vehicle weight 
     rating exceeding 8,500 but not exceeding 14,000 pounds, 
     $10,000.
       ``(C) In the case of a vehicle with a gross vehicle weight 
     rating exceeding 14,000 but not exceeding 26,000 pounds, 
     $20,000.
       ``(D) In the case of a vehicle with a gross vehicle weight 
     rating exceeding 26,000 pounds, $40,000.''.
       (b) Qualified Battery Electric Vehicle.--
       (1) In general.--Section 30(c)(1)(A) (defining qualified 
     electric vehicle) is amended to read as follows:
       ``(A) which is--
       ``(i) operated solely by use of a battery or battery pack, 
     or
       ``(ii) powered primarily through the use of an electric 
     battery or battery pack using a flywheel or capacitor which 
     stores energy produced by an electric motor through 
     regenerative braking to assist in vehicle operation,''.
       (2) Leased vehicles.--Section 30(c)(1)(C) is amended by 
     inserting ``or lease'' after ``use''.
       (3) Conforming amendments.--
       (A) Subsections (a), (b)(2), and (c) of section 30 are each 
     amended by inserting ``battery'' after ``qualified'' each 
     place it appears.
       (B) The heading of subsection (c) of section 30 is amended 
     by inserting ``Battery'' after ``Qualified''.
       (C) The heading of section 30 is amended by inserting 
     ``BATTERY'' after ``QUALIFIED''.
       (D) The item relating to section 30 in the table of 
     sections for subpart B of part IV of subchapter A of chapter 
     1 is amended by inserting ``battery'' after ``qualified''.
       (E) Section 179A(c)(3) is amended by inserting ``battery'' 
     before ``electric''.
       (F) The heading of paragraph (3) of section 179A(c) is 
     amended by inserting ``battery'' before ``electric''.
       (c) Additional Special Rules.--
       (1) In general.--Section 30(d) (relating to special rules) 
     is amended by adding at the end the following new paragraphs:
       ``(5) No double benefit.--The amount of any deduction or 
     other credit allowable under this chapter for any cost taken 
     into account in computing the amount of the credit determined 
     under subsection (a) shall be reduced by the amount of such 
     credit attributable to such cost.
       ``(6) Property used by tax-exempt entity.--In the case of a 
     vehicle whose use is described in paragraph (3) or (4) of 
     section 50(b) and which is not subject to a lease, the person 
     who sold such vehicle to the person or entity using such 
     vehicle shall be treated as the taxpayer that placed such 
     vehicle in service, but only if such person clearly discloses 
     to such person or entity in a document the amount of any 
     credit allowable under subsection (a) with respect to such 
     vehicle (determined without regard to subsection (b)(3)).
       ``(7) Carryback and carryforward allowed.--
       ``(A) In general.--If the credit allowable under subsection 
     (a) for a taxable year exceeds the amount of the limitation 
     under subsection (b)(2) for such taxable year (in this 
     paragraph referred to as the `unused credit year'), such 
     excess shall be a credit carryback to each of the 3 taxable 
     years preceding the unused credit year and a credit 
     carryforward to each of the 20 taxable years following the 
     unused credit year, except that no excess may be carried to a 
     taxable year beginning before the date of the enactment of 
     this paragraph. The preceding sentence shall not apply to any 
     credit carryback if such credit carryback is attributable to 
     property for which a deduction for depreciation is not 
     allowable.
       ``(B) Rules.--Rules similar to the rules of section 39 
     shall apply with respect to the credit carryback and credit 
     carryforward under subparagraph (A).''.
       (2) Conforming amendments.--Section 30(d)(3) is amended--
       (A) by striking ``section 50(b)'' and inserting ``section 
     50(b)(1)'', and
       (B) by striking ``, etc.,'' in the heading thereof.
       (d) Termination.--Section 30(e) (relating to termination) 
     is amended by striking ``2006'' and inserting ``2009''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act, in taxable years ending after such 
     date.

     SEC. 1533. CREDIT FOR INSTALLATION OF ALTERNATIVE FUELING 
                   STATIONS.

       (a) In General.--Subpart B of part IV of subchapter A of 
     chapter 1 (relating to other credits), as amended by this 
     Act, is amended by adding at the end the following new 
     section:

     ``SEC. 30C. ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY 
                   CREDIT.

       ``(a) Credit Allowed.--There shall be allowed as a credit 
     against the tax imposed by this chapter for the taxable year 
     an amount equal to 50 percent of the cost of any qualified 
     alternative fuel vehicle refueling property placed in service 
     by the taxpayer during the taxable year.
       ``(b) Limitation.--The credit allowed under subsection (a) 
     with respect to any alternative fuel vehicle refueling 
     property shall not exceed--
       ``(1) $30,000 in the case of a property of a character 
     subject to an allowance for depreciation, and
       ``(2) $1,000 in any other case.
       ``(c) Qualified Alternative Fuel Vehicle Refueling 
     Property.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     term `qualified alternative fuel vehicle refueling property' 
     has the meaning given to such term by section 179A(d), but 
     only with respect to any fuel at least 85 percent of the 
     volume of which consists of ethanol, natural gas, compressed 
     natural gas, liquefied natural gas, liquefied petroleum gas, 
     and hydrogen.
       ``(2) Residential property.--In the case of any property 
     installed on property which is used as the principal 
     residence (within the meaning of section 121) of the 
     taxpayer, paragraph (1) of section 179A(d) shall not apply.
       ``(d) Application With Other Credits.--The credit allowed 
     under subsection (a) for any taxable year shall not exceed 
     the excess (if any) of--
       ``(1) the regular tax for the taxable year reduced by the 
     sum of the credits allowable under subpart A and sections 27, 
     29, 30, and 30B, over
       ``(2) the tentative minimum tax for the taxable year.
       ``(e) Carryforward Allowed.--
       ``(1) In general.--If the credit amount allowable under 
     subsection (a) for a taxable year exceeds the amount of the 
     limitation under subsection (d) for such taxable year, such 
     excess shall be allowed as a credit carryforward for each of 
     the 20 taxable years following the unused credit year.
       ``(2) Rules.--Rules similar to the rules of section 39 
     shall apply with respect to the credit carryforward under 
     paragraph (1).
       ``(f) Special Rules.--For purposes of this section--
       ``(1) Basis reduction.--The basis of any property shall be 
     reduced by the portion of the cost of such property taken 
     into account under subsection (a).
       ``(2) No double benefit.--No deduction shall be allowed 
     under section 179A with respect to any property with respect 
     to which a credit is allowed under subsection (a).
       ``(3) Property used by tax-exempt entity.--In the case of 
     any qualified alternative fuel vehicle refueling property the 
     use of which is described in paragraph (3) or (4) of section 
     50(b) and which is not subject to a lease, the person who 
     sold such property to the person or entity using such 
     property shall be treated as the taxpayer that placed such 
     property in service, but only if such person clearly 
     discloses to such person or entity in a document the amount 
     of any credit allowable under subsection (a) with respect to 
     such property (determined without regard to subsection (d)).
       ``(4) Property used outside united states not qualified.--
     No credit shall be allowable under subsection (a) with 
     respect to any property referred to in section 50(b)(1) or 
     with respect to the portion of the cost of any property taken 
     into account under section 179.
       ``(5) Election not to take credit.--No credit shall be 
     allowed under subsection (a) for any property if the taxpayer 
     elects not to have this section apply to such property.
       ``(6) Recapture rules.--Rules similar to the rules of 
     section 179A(e)(4) shall apply.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as necessary to carry out the provisions of this 
     section.
       ``(h) Termination.--This section shall not apply to any 
     property placed in service--

[[Page 13179]]

       ``(1) in the case of property relating to hydrogen, after 
     December 31, 2014, and
       ``(2) in the case of any other property, after 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 (36), by striking 
     the period at the end of paragraph (37) and inserting ``, 
     and'', and by adding at the end the following new paragraph:
       ``(38) to the extent provided in section 30C(f).''.
       (2) Section 55(c)(2), as amended by this Act, is amended by 
     inserting ``30C(e),'' after ``30B(e),''.
       (3) Section 6501(m) is amended by inserting ``30C(f)(5),'' 
     after ``30B(f)(9),''.
       (4) The table of sections for subpart B of part IV of 
     subchapter A of chapter 1, as amended by this Act, is amended 
     by inserting after the item relating to section 30B the 
     following new item:

``Sec. 30C. Clean-fuel vehicle refueling property credit.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2005, in taxable years ending after such date.

     SEC. 1534. VOLUMETRIC EXCISE TAX CREDIT FOR ALTERNATIVE 
                   FUELS.

       (a) Imposition of Tax.--
       (1) In general.--Section 4041(a)(2)(B) (relating to rate of 
     tax) is amended--
       (A) by adding ``and'' at the end of clause (i),
       (B) by striking clauses (ii) and (iii),
       (C) by striking the last sentence, and
       (D) by adding after clause (i) the following new clause:
       ``(ii) in the case of liquefied natural gas, any liquid 
     fuel (other than ethanol and methanol) derived from coal 
     (including peat), and liquid hydrocarbons derived from 
     biomass (as defined in section 29(c)(3)), 24.3 cents per 
     gallon.''.
       (2) Treatment of compressed natural gas.--Section 
     4041(a)(3) (relating to compressed natural gas) is amended--
       (A) by striking ``48.54 cents per MCF (determined at 
     standard temperature and pressure)'' in subparagraph (A) and 
     inserting ``18.3 cents per energy equivalent of a gallon of 
     gasoline'', and
       (B) by striking ``MCF'' in subparagraph (C) and inserting 
     ``energy equivalent of a gallon of gasoline''.
       (3) Zero rate for hydrogen.--Section 4041(a)(2)(A) is 
     amended by inserting ``liquefied hydrogen,'' after ``fuel 
     oil,''.
       (4) New reference.--The heading for paragraph (2) of 
     section 4041(a) is amended by striking ``Special motor 
     fuels'' and inserting ``Alternative fuels''.
       (b) Credit for Alternative Fuel and Alternative Fuel 
     Mixtures.--
       (1) In general.--Section 6426(a) (relating to allowance of 
     credits) is amended to read as follows:
       ``(a) Allowance of Credits.--There shall be allowed as a 
     credit--
       ``(1) against the tax imposed by section 4081 an amount 
     equal to the sum of the credits described in subsections (b), 
     (c), and (e), and
       ``(2) against the tax imposed by section 4041 an amount 
     equal to the sum of the credits described in subsection (d).

     No credit shall be allowed in the case of the credits 
     described in subsections (d) and (e) unless the taxpayer is 
     registered under section 4101.
       (2) Alternative fuel and alternative fuel mixture credit.--
     Section 6426 (relating to credit for alcohol fuel and 
     biodiesel mixtures) is amended by redesignating subsections 
     (d) and (e) as subsections (f) and (g) and by inserting after 
     subsection (c) the following new subsections:
       ``(d) Alternative Fuel Credit.--
       ``(1) In general.--For purposes of this section, the 
     alternative fuel credit is the product of 50 cents and the 
     number of gallons of an alternative fuel or gasoline gallon 
     equivalents of a nonliquid alternative fuel sold by the 
     taxpayer for use as a fuel in a motor vehicle or motorboat, 
     or so used by the taxpayer.
       ``(2) Alternative fuel.--For purposes of this section, the 
     term `alternative fuel' means--
       ``(A) liquefied petroleum gas,
       ``(B) P Series Fuels (as defined by the Secretary of Energy 
     under section 13211(2) of title 42, United States Code),
       ``(C) compressed or liquefied natural gas,
       ``(D) hydrogen,
       ``(E) any liquid fuel derived from coal (including peat) 
     through the Fischer-Tropsch process,
       ``(F) liquid hydrocarbons derived from biomass (as defined 
     in section 29(c)(3)).

     Such term does not include ethanol, methanol, or biodiesel.
       ``(3) Gasoline gallon equivalent.--For purposes of this 
     subsection, the term `gasoline gallon equivalent' means, with 
     respect to any nonliquid alternative fuel, the amount of such 
     fuel having a Btu content of 124,800 (higher heating value).
       ``(4) Termination.--This subsection shall not apply to any 
     sale, use, or removal for any period after September 30, 
     2009.
       ``(e) Alternative Fuel Mixture Credit.--
       ``(1) In general.--For purposes of this section, the 
     alternative fuel mixture credit is the product of 50 cents 
     and the number of gallons of alternative fuel used by the 
     taxpayer in producing any alternative fuel mixture for sale 
     or use in a trade or business of the taxpayer.
       ``(2) Alternative fuel mixture.--For purposes of this 
     section, the term `alternative fuel mixture' means a mixture 
     of alternative fuel and taxable fuel (as defined in 
     subparagraph (A), (B), or (C) of section 4083(a)(1)) which--
       ``(A) is sold by the taxpayer producing such mixture to any 
     person for use as fuel, or
       ``(B) is used as a fuel by the taxpayer producing such 
     mixture.
       ``(3) Termination.--This subsection shall not apply to any 
     sale, use, or removal for any period after September 30, 
     2009.''.
       (3) Conforming amendments.--
       (A) The section heading for section 6426 is amended by 
     striking ``ALCOHOL FUEL AND BIODIESEL'' and inserting 
     ``ALCOHOL FUEL, BIODIESEL, AND ALTERNATIVE FUEL''.
       (B) The table of sections for subchapter B of chapter 65 is 
     amended by striking ``alcohol fuel and biodiesel'' in the 
     item relating to section 6426 and inserting ``alcohol fuel, 
     biodiesel, and alternative fuel''.
       (C) Section 6427(e) is amended--
       (i) by inserting ``or the alternative fuel mixture credit'' 
     after ``biodiesel mixture credit'' in paragraph (1),
       (ii) by redesignating paragraph (2) as paragraph (3) and 
     paragraph (4) as paragraph (5),
       (iii) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) Alternative fuel.--If any person sells or uses an 
     alternative fuel (as defined in section 6426(d)(2)) for a 
     purpose described in section 6426(d)(1) in such person's 
     trade or business, the Secretary shall pay (without interest) 
     to such person an amount equal to the alternative fuel credit 
     with respect to such fuel.'',
       (iv) by striking ``under paragraph (1) with respect to any 
     mixture'' in paragraph (3) (as redesignated by clause (ii)) 
     and inserting ``under paragraph (1) or (2) with respect to 
     any mixture or alternative fuel'',
       (v) by inserting after paragraph (3) (as so redesignated) 
     the following new paragraph:
       ``(4) Registration requirement for alternative fuels.--The 
     Secretary shall not make any payment under this subsection to 
     any person with respect to any alternative fuel credit or 
     alternative fuel mixture credit unless the person is 
     registered under section 4101.'',
       (vi) by striking ``and'' at the end of paragraph (5)(A) (as 
     redesignated by clause (ii)),
       (vii) by striking the period at the end of paragraph (5)(B) 
     (as so redesignated) and inserting a comma,
       (viii) by adding at the end of paragraph (4) (as so 
     redesignated) the following new subparagraphs:
       ``(C) except as provided in subparagraph (D), any 
     alternative fuel or alternative fuel mixture (as defined in 
     section 6426 (d)(2) or (e)(3)) sold or used after September 
     30, 2009, and
       ``(D) any alternative fuel or alternative fuel mixture (as 
     so defined) involving hydrogen sold or used after December 
     31, 2014.'', and
       (ix) by striking ``or Biodiesel Used To Produce Alcohol 
     Fuel and Biodiesel Mixtures'' in the heading and inserting 
     ``, Biodiesel, or Alternative Fuel''.
       (c) Additional Registration Requirements.--Section 
     4101(a)(1) (relating to registration) is amended--
       (1) by striking ``4041(a)(1)'' and inserting ``4041(a)'', 
     and
       (2) by inserting ``or hydrogen'' before ``shall register''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to any sale, use, or removal for any period after 
     September 30, 2006.

     SEC. 1535. EXTENSION OF EXCISE TAX PROVISIONS AND INCOME TAX 
                   CREDIT FOR BIODIESEL.

       (a) In General.--Sections 40A(e), 6426(c)(6), and 
     6427(e)(4)(B) are each amended by striking ``2006'' and 
     inserting ``2010''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

              Subtitle E--Additional Energy Tax Incentives

     SEC. 1541. TEN-YEAR RECOVERY PERIOD FOR UNDERGROUND NATURAL 
                   GAS STORAGE FACILITY PROPERTY.

       (a) In General.--Subparagraph (D) of section 168(e)(3) 
     (relating to 10-year property) is amended by striking ``and'' 
     at the end of clause (i), by striking the period at the end 
     of clause (ii) and inserting ``, and'', and by adding at the 
     end the following new clause:
       ``(iii) any qualified underground natural gas storage 
     facility property.''.
       (b) Definition.--Section 168(i) (relating to definitions 
     and special rules) is amended by adding at the end the 
     following new paragraph:
       ``(17) Qualified underground natural gas storage facility 
     property.--
       ``(A) In general.--The term `qualified underground natural 
     gas storage facility property' means any underground natural 
     gas storage facility and any equipment related to such 
     facility, including any nonrecoverable cushion gas, the 
     original use of which commences with the taxpayer.
       ``(B) Cushion gas.--The term `cushion gas' means the 
     minimum volume of natural gas

[[Page 13180]]

     necessary to provide the pressure to facilitate the flow of 
     natural gas from a storage reservoir, aquifer, or cavern to a 
     pipeline.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act.

     SEC. 1542. EXPANSION OF RESEARCH CREDIT.

       (a) Credit for Expenses Attributable to Certain 
     Collaborative Energy Research Consortia.--
       (1) In general.--Section 41(a) (relating to credit for 
     increasing research activities) is amended by striking 
     ``and'' at the end of paragraph (1), by striking the period 
     at the end of paragraph (2) and inserting ``, and'', and by 
     adding at the end the following new paragraph:
       ``(3) 20 percent of the amounts paid or incurred by the 
     taxpayer in carrying on any trade or business of the taxpayer 
     during the taxable year (including as contributions) to an 
     energy research consortium.''.
       (2) Energy research consortium defined.--Section 41(f) 
     (relating to special rules) is amended by adding at the end 
     the following new paragraph:
       ``(6) Energy research consortium.--
       ``(A) In general.--The term `energy research consortium' 
     means any organization--
       ``(i) which is--

       ``(I) described in section 501(c)(3) and is exempt from tax 
     under section 501(a) and is organized and operated primarily 
     to conduct energy research, or
       ``(II) organized and operated primarily to conduct energy 
     research in the public interest (within the meaning of 
     section 501(c)(3)),

       ``(ii) which is not a private foundation,
       ``(iii) to which at least 5 unrelated persons paid or 
     incurred during the calendar year in which the taxable year 
     of the organization begins amounts (including as 
     contributions) to such organization for energy research, and
       ``(iv) to which no single person paid or incurred 
     (including as contributions) during such calendar year an 
     amount equal to more than 50 percent of the total amounts 
     received by such organization during such calendar year for 
     energy research.
       ``(B) Treatment of persons.--All persons treated as a 
     single employer under subsection (a) or (b) of section 52 
     shall be treated as related persons for purposes of 
     subparagraph (A)(iii) and as a single person for purposes of 
     subparagraph (A)(iv).''.
       (3) Conforming amendment.--Section 41(b)(3)(C) is amended 
     by inserting ``(other than an energy research consortium)'' 
     after ``organization''.
       (b) Repeal of Limitation on Contract Research Expenses Paid 
     to Small Businesses, Universities, and Federal 
     Laboratories.--Section 41(b)(3) (relating to contract 
     research expenses) is amended by adding at the end the 
     following new subparagraph:
       ``(D) Amounts paid to eligible small businesses, 
     universities, and federal laboratories.--
       ``(i) In general.--In the case of amounts paid by the 
     taxpayer to--

       ``(I) an eligible small business,
       ``(II) an institution of higher education (as defined in 
     section 3304(f)), or
       ``(III) an organization which is a Federal laboratory,

     for qualified research which is energy research, subparagraph 
     (A) shall be applied by substituting `100 percent' for `65 
     percent'.
       ``(ii) Eligible small business.--For purposes of this 
     subparagraph, the term `eligible small business' means a 
     small business with respect to which the taxpayer does not 
     own (within the meaning of section 318) 50 percent or more 
     of--

       ``(I) in the case of a corporation, the outstanding stock 
     of the corporation (either by vote or value), and
       ``(II) in the case of a small business which is not a 
     corporation, the capital and profits interests of the small 
     business.

       ``(iii) Small business.--For purposes of this 
     subparagraph--

       ``(I) In general.--The term `small business' means, with 
     respect to any calendar year, any person if the annual 
     average number of employees employed by such person during 
     either of the 2 preceding calendar years was 500 or fewer. 
     For purposes of the preceding sentence, a preceding calendar 
     year may be taken into account only if the person was in 
     existence throughout the year.
       ``(II) Startups, controlled groups, and predecessors.--
     Rules similar to the rules of subparagraphs (B) and (D) of 
     section 220(c)(4) shall apply for purposes of this clause.

       ``(iv) Federal laboratory.--For purposes of this 
     subparagraph, the term `Federal laboratory' has the meaning 
     given such term by section 4(6) of the Stevenson-Wydler 
     Technology Innovation Act of 1980 (15 U.S.C. 3703(6)), as in 
     effect on the date of the enactment of the Energy Tax 
     Incentives Act.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred after the date of the 
     enactment of this Act, in taxable years ending after such 
     date.

     SEC. 1543. SMALL AGRI-BIODIESEL PRODUCER CREDIT.

       (a) In General.--Subsection (a) of section 40A (relating to 
     biodiesel used as a fuel) is amended to read as follows:
       ``(a) General Rule.--For purposes of section 38, the 
     biodiesel fuels credit determined under this section for the 
     taxable year is an amount equal to the sum of--
       ``(1) the biodiesel mixture credit, plus
       ``(2) the biodiesel credit, plus
       ``(3) in the case of an eligible small agri-biodiesel 
     producer, the small agri-biodiesel producer credit.''.
       (b) Small Agri-biodiesel Producer Credit Defined.--Section 
     40A(b) (relating to definition of biodiesel mixture credit 
     and biodiesel credit) is amended by adding at the end the 
     following new paragraph:
       ``(5) Small agri-biodiesel producer credit.--
       ``(A) In general.--The small agri-biodiesel producer credit 
     of any eligible small agri-biodiesel producer for any taxable 
     year is 10 cents for each gallon of qualified agri-biodiesel 
     production of such producer.
       ``(B) Qualified agri-biodiesel production.--For purposes of 
     this paragraph, the term `qualified agri-biodiesel 
     production' means any agri-biodiesel which is produced by an 
     eligible small agri-biodiesel producer, and which during the 
     taxable year--
       ``(i) is sold by such producer to another person--

       ``(I) for use by such other person in the production of a 
     qualified biodiesel mixture in such other person's trade or 
     business (other than casual off-farm production),
       ``(II) for use by such other person as a fuel in a trade or 
     business, or
       ``(III) who sells such agri-biodiesel at retail to another 
     person and places such agri-biodiesel in the fuel tank of 
     such other person, or

       ``(ii) is used or sold by such producer for any purpose 
     described in clause (i).
       ``(C) Limitation.--The qualified agri-biodiesel production 
     of any producer for any taxable year shall not exceed 
     15,000,000 gallons.''.
       (c) Definitions and Special Rules.--Section 40A is amended 
     by redesignating subsection (e) as subsection (f) and by 
     inserting after subsection (d) the following new subsection:
       ``(e) Definitions and Special Rules for Small Agri-
     biodiesel Producer Credit.--For purposes of this section--
       ``(1) Eligible small agri-biodiesel producer.--The term 
     `eligible small agri-biodiesel producer' means a person who, 
     at all times during the taxable year, has a productive 
     capacity for agri-biodiesel not in excess of 60,000,000 
     gallons.
       ``(2) Aggregation rule.--For purposes of the 15,000,000 
     gallon limitation under subsection (b)(5)(C) and the 
     60,000,000 gallon limitation under paragraph (1), all members 
     of the same controlled group of corporations (within the 
     meaning of section 267(f)) and all persons under common 
     control (within the meaning of section 52(b) but determined 
     by treating an interest of more than 50 percent as a 
     controlling interest) shall be treated as 1 person.
       ``(3) Partnership, s corporation, and other pass-thru 
     entities.--In the case of a partnership, trust, S 
     corporation, or other pass-thru entity, the limitations 
     contained in subsection (b)(5)(C) and paragraph (1) shall be 
     applied at the entity level and at the partner or similar 
     level.
       ``(4) Allocation.--For purposes of this subsection, in the 
     case of a facility in which more than 1 person has an 
     interest, productive capacity shall be allocated among such 
     persons in such manner as the Secretary may prescribe.
       ``(5) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary--
       ``(A) to prevent the credit provided for in subsection 
     (a)(3) from directly or indirectly benefiting any person with 
     a direct or indirect productive capacity of more than 
     60,000,000 gallons of agri-biodiesel during the taxable year, 
     or
       ``(B) to prevent any person from directly or indirectly 
     benefiting with respect to more than 15,000,000 gallons 
     during the taxable year.
       ``(6) Allocation of small agri-biodiesel credit to patrons 
     of cooperative.--
       ``(A) Election to allocate.--
       ``(i) In general.--In the case of a cooperative 
     organization described in section 1381(a), any portion of the 
     credit determined under subsection (a)(3) for the taxable 
     year may, at the election of the organization, be apportioned 
     pro rata among patrons of the organization on the basis of 
     the quantity or value of business done with or for such 
     patrons for the taxable year.
       ``(ii) Form and effect of election.--An election under 
     clause (i) for any taxable year shall be made on a timely 
     filed return for such year. Such election, once made, shall 
     be irrevocable for such taxable year. Such election shall not 
     take effect unless the organization designates the 
     apportionment as such in a written notice mailed to its 
     patrons during the payment period described in section 
     1382(d).
       ``(B) Treatment of organizations and patrons.--
       ``(i) Organizations.--The amount of the credit not 
     apportioned to patrons pursuant to subparagraph (A) shall be 
     included in the amount determined under subsection (a)(3) for 
     the taxable year of the organization.

[[Page 13181]]

       ``(ii) Patrons.--The amount of the credit apportioned to 
     patrons pursuant to subparagraph (A) shall be included in the 
     amount determined under such subsection 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.
       ``(iii) Special rules for decrease in credits for taxable 
     year.--If the amount of the credit of the organization 
     determined under such subsection for a taxable year is less 
     than the amount of such credit shown on the return of the 
     organization for such year, an amount equal to the excess 
     of--

       ``(I) such reduction, over
       ``(II) the amount not apportioned to such patrons under 
     subparagraph (A) for the taxable year,

     shall be treated as an increase in tax imposed by this 
     chapter on the organization. Such increase shall not be 
     treated as tax imposed by this chapter for purposes of 
     determining the amount of any credit under this chapter or 
     for purposes of section 55.''.
       (d) Conforming Amendments.--
       (1) Paragraph (4) of section 40A(b) is amended by striking 
     ``this section'' and inserting ``paragraph (1) or (2) of 
     subsection (a)''.
       (2) The heading of subsection (b) of section 40A is amended 
     by striking ``and Biodiesel Credit'' and inserting ``, 
     Biodiesel Credit, and Small Agri-biodiesel Producer Credit''.
       (3) Paragraph (3) of section 40A(d) is amended by 
     redesignating subparagraph (C) as subparagraph (D) and by 
     inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) Producer credit.--If--
       ``(i) any credit was determined under subsection (a)(3), 
     and
       ``(ii) any person does not use such fuel for a purpose 
     described in subsection (b)(5)(B),

     then there is hereby imposed on such person a tax equal to 10 
     cents a gallon for each gallon of such agri-biodiesel.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 1544. IMPROVEMENTS TO SMALL ETHANOL PRODUCER CREDIT.

       (a) Definition of Small Ethanol Producer.--Section 40(g) 
     (relating to definitions and special rules for eligible small 
     ethanol producer credit) is amended by striking 
     ``30,000,000'' each place it appears and inserting 
     ``60,000,000''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 1545. CREDIT FOR EQUIPMENT FOR PROCESSING OR SORTING 
                   MATERIALS GATHERED THROUGH RECYCLING.

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

     ``SEC. 45M. CREDIT FOR QUALIFIED RECYCLING EQUIPMENT.

       ``(a) Allowance of Credit.--For purposes of section 38, the 
     qualified recycling equipment credit determined under this 
     section for the taxable year is an amount equal to the amount 
     paid or incurred during the taxable year for the cost of 
     qualified recycling equipment placed in service or leased by 
     the taxpayer.
       ``(b) Limitation.--The amount allowable as a credit under 
     subsection (a) with respect to any qualified recycling 
     equipment shall not exceed 15 percent of the cost of such 
     qualified recycling equipment.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Qualified recycling equipment.--
       ``(A) In general.--The term `qualified recycling equipment' 
     means equipment, including connecting piping, employed in 
     sorting or processing residential and commercial qualified 
     recyclable materials for the purpose of converting such 
     materials for use in manufacturing tangible consumer 
     products, including packaging. Such term includes equipment 
     which is utilized at commercial or public venues, including 
     recycling collection centers, where the equipment is utilized 
     to sort or process qualified recyclable materials for such 
     purpose.
       ``(B) Exclusion.--Such term does not include rolling stock 
     or other equipment used to transport recyclable materials.
       ``(2) Qualified recyclable materials.--The term `qualified 
     recyclable materials' means any packaging or printed material 
     which is glass, paper, plastic, steel, or aluminum generated 
     by an individual or business and which has been separated 
     from solid waste for the purposes of collection and 
     recycling.
       ``(3) Processing.--The term `processing' means the 
     preparation of qualified recyclable materials into feedstock 
     for use in manufacturing tangible consumer products.
       ``(d) Amount Paid or Incurred.--For purposes of this 
     section--
       ``(1) In general.--The term `amount paid or incurred' 
     includes installation costs.
       ``(2) Lease payments.--In the case of the leasing of 
     qualified recycling equipment by the taxpayer, the term 
     `amount paid or incurred' means the amount of the lease 
     payments due to be paid during the term of the lease 
     occurring during the taxable year other than such portion of 
     such lease payments attributable to interest, insurance, and 
     taxes.
       ``(3) Grants, etc. excluded.--The term `amount paid or 
     incurred' shall not include any amount to the extent such 
     amount is funded by any grant, contract, or otherwise by 
     another person (or any governmental entity).
       ``(e) Other Tax Deductions and Credits Available for 
     Portion of Cost Not Taken Into Account for Credit Under This 
     Section.--No deduction or other credit under this chapter 
     shall be allowed with respect to the amount of the credit 
     determined under this section.
       ``(f) Basis Adjustments.--For purposes of this subtitle, if 
     a credit is allowed under this section for any amount paid or 
     incurred 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.''.
       (b) Conforming Amendments.--
       (1) Credit made part of general business credit.--
     Subsection (b) of section 38, 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 qualified recycling equipment credit determined 
     under section 45M(a).''.
       (2) Subsection (a) of section 1016, as amended by this Act, 
     is amended by striking ``and'' at the end of paragraph (37), 
     by striking the period at the end of paragraph (38) and 
     inserting ``; and'', and by adding at the end the following 
     new paragraph:
       ``(39) to the extent provided in section 45M(f), in the 
     case of amounts with respect to which a credit has been 
     allowed under section 45M.''.
       (3) The table of sections for subpart D of part IV of 
     subchapter A of chapter 1, as amended by this Act, is amended 
     by inserting after the item relating to section 45L the 
     following new item:

``Sec. 45M. Credit for qualified recycling equipment.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 1546. 5-YEAR NET OPERATING LOSS CARRYOVER IF ANY 
                   RESULTING REFUND IS USED FOR ELECTRIC 
                   TRANSMISSION EQUIPMENT.

       (a) In General.--Paragraph (1) of section 172(b) (relating 
     to net operating loss carrybacks and carryovers) is amended 
     by adding at the end the following new subparagraph:
       ``(I) Transmission property investment.--
       ``(i) In general.--In the case of a net operating loss in a 
     taxable year ending after December 31, 2002, and before 
     January 1, 2006, there shall be a net operating loss 
     carryback to each of the 5 years preceding the taxable year 
     of such loss to the extent that any refund resulting from 
     such carryback is used for electric transmission property 
     capital expenditures or pollution control facility capital 
     expenditures.
       ``(ii) Refund claim.--Any refund resulting from the 
     application of clause (i) may be claimed by the taxpayer for 
     any taxable year ending after December 31, 2005, and before 
     January 1, 2009, except that the portion of such refund which 
     may be claimed during any taxable year shall not exceed the 
     sum of the taxpayer's electric transmission property capital 
     expenditures and pollution control facility capital 
     expenditures made in the preceding taxable year.
       ``(iii) Carryover of excess refunds.--Any portion of such 
     refund that exceeds the sum of the taxpayer's electric 
     transmission property capital expenditures and pollution 
     control facility capital expenditures made during the 
     preceding taxable year shall, subject to clause (ii), be 
     considered a refund due to the taxpayer and claimed in the 
     succeeding taxable year if such taxable year begins before 
     January 1, 2009.
       ``(iv) Definitions.--For purposes of this subparagraph--

       ``(I) Electric transmission property capital 
     expenditures.--The term `electric transmission property 
     capital expenditures' means any expenditure, chargeable to 
     capital account, made by the taxpayer which is attributable 
     to electric transmission property used in the transmission at 
     69 or more kilovolts of electricity for sale.
       ``(II) Pollution control facility capital expenditures.--
     The term `pollution control facility capital expenditures' 
     means any expenditure, chargeable to capital account, made by 
     an electric utility company (as defined in section 2(3) of 
     the Public Utility Holding Company Act (15 U.S.C. 79b(3)) 
     which is attributable to a facility which will qualifiy as a 
     certified pollution control facility as determined under 
     section 169(d)(1) by striking `before January 1, 1976,' and 
     by substituting `an identifiable' for `a new identifiable'.''

       (b) Election to Disregard Carryback.--Section 172(j) 
     (relating to disregard 5-year carryback for certain net 
     operating losses) is

[[Page 13182]]

     amended by inserting ``or (b)(1)(I)'' after ``(b)(1)(H)'' 
     both places it appears.
       (c) Application.--In the case of a net operating loss 
     described in section 172(b)(1)(I) of the Internal Revenue 
     Code of 1986 (as added by subsection (a)) for a taxable year 
     ending in 2003, 2004, or 2005, any election made under 
     section 172(j) of such Code (as amended by subsection (b)) 
     shall be treated as timely made if made before January 1, 
     2009.

     SEC. 1547. CREDIT FOR QUALIFYING POLLUTION CONTROL EQUIPMENT.

       (a) Allowance of Qualifying Pollution Control Equipment 
     Credit.--Section 46 (relating to amount of credit), as 
     amended by this Act, is amended by striking ``and'' at the 
     end of paragraph (4), by striking the period at the end of 
     paragraph (5) and inserting ``, and'', and by adding at the 
     end the following new paragraph:
       ``(6) the qualifying pollution control equipment credit.''.
       (b) Amount of Qualifying Pollution Control Equipment 
     Credit.--Subpart E of part IV of subchapter A of chapter 1 
     (relating to rules for computing investment credit), as 
     amended by this Act, is amended by inserting after section 
     48C the following new section:

     ``SEC. 48D. QUALIFYING POLLUTION CONTROL EQUIPMENT CREDIT.

       ``(a) In General.--For purposes of section 46, the 
     qualifying pollution control equipment credit for any taxable 
     year is an amount equal to 15 percent of the basis of the 
     qualifying pollution control equipment placed in service at a 
     qualifying facility during such taxable year.
       ``(b) Qualifying Pollution Control Equipment.--For purposes 
     of this section, the term `qualifying pollution control 
     equipment' means any technology installed in or on a 
     qualifying facility to reduce air emissions of any pollutant 
     regulated by the Environmental Protection Agency under the 
     Clean Air Act, including thermal oxidizers, regenerative 
     thermal oxidizers, scrubber systems, evaporative control 
     systems, vapor recovery systems, flair systems, bag houses, 
     cyclones, continuous emissions monitoring systems, and low 
     nitric oxide burners.
       ``(c) Qualifying Facility.--For purposes of this section, 
     the term `qualifying facility' means any facility which 
     produces not less than 1,000,000 gallons of ethanol during 
     the taxable year.
       ``(d) Special Rule for Certain Subsidized Property.--Rules 
     similar to section 48(a)(4) shall apply for purposes of this 
     section.
       ``(e) Certain Qualified Progress Expenditures Rules Made 
     Applicable.--Rules similar to the rules of subsections (c)(4) 
     and (d) of section 46 (as in effect on the day before the 
     enactment of the Revenue Reconciliation Act of 1990) shall 
     apply for purposes of this subsection.''.
       (c) Recapture of Credit Where Emissions Reduction Offset is 
     Sold.--Paragraph (1) of section 50(a) is amended by 
     redesignating subparagraph (B) as subparagraph (C) and by 
     inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) Special rule for qualifying pollution control 
     equipment.--For purposes of subparagraph (A), any investment 
     property which is qualifying pollution control equipment (as 
     defined in section 48D(b)) shall cease to be investment 
     credit property with respect to a taxpayer if such taxpayer 
     receives a payment in exchange for a credit for emission 
     reductions attributable to such qualifying pollution control 
     equipment for purposes of an offset requirement under part D 
     of title I of the Clean Air Act.''.
       (d) Special Rule for Basis Reduction; Recapture of 
     Credit.--Paragraph (3) of section 50(c) (relating to basis 
     adjustment to investment credit property), as amended by this 
     Act, is amended by inserting ``or qualifying pollution 
     control equipment credit'' after ``energy credit''.
       (e) Conforming Amendments.--
       (1) Section 49(a)(1)(C), as amended by this Act, is amended 
     by striking ``and'' at the end of clause (iv), by striking 
     the period at the end of clause (v) and inserting ``, and'', 
     and by adding at the end the following new clause:
       ``(vi) the basis of any qualifying pollution control 
     equipment.''
       (2) The table of sections for subpart E of part IV of 
     subchapter A of chapter 1, as amended by this Act, is amended 
     by inserting after the item relating to section 48C the 
     following new item:

``48D. Qualifying pollution control equipment.''.

       (f) Effective Date.--The amendments made by this section 
     shall apply to periods after the date of the enactment of 
     this Act, in taxable years ending after such date, under 
     rules similar to the rules of section 48(m) of the Internal 
     Revenue Code of 1986 (as in effect on the day before the date 
     of the enactment of the Revenue Reconciliation Act of 1990).

     SEC. 1548. CREDIT FOR PRODUCTION OF COAL OWNED BY INDIAN 
                   TRIBES.

       (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. CREDIT FOR PRODUCTION OF COAL OWNED BY INDIAN 
                   TRIBES.

       ``(a) Allowance of Credit.--For purposes of section 38, the 
     Indian coal production credit determined under this section 
     for the taxable year is an amount equal to the product of--
       ``(1) the applicable dollar amount for the calendar year in 
     which the taxable year begins, and
       ``(2) the number of tons of Indian coal--
       ``(A) the production of which is attributable to the 
     taxpayer (determined under rules similar to the rules under 
     section 29(d)(3)), and
       ``(B) which is sold by the taxpayer to an unrelated person 
     during the taxable year.
       ``(b) Indian Coal.--For purposes of this section--
       ``(1) In general.--The term `Indian coal' means coal which 
     is produced from coal reserves which, on June 14, 2005--
       ``(A) were owned by an Indian tribe, or
       ``(B) were held in trust by the United States for the 
     benefit of an Indian tribe or its members.
       ``(2) Indian tribe.--For purposes of this subsection, the 
     term `Indian tribe' has the meaning given such term by 
     section 7871(c)(3)(E)(ii).
       ``(c) Other terms.--For purposes of this section--
       ``(1) Applicable dollar amount.--
       ``(A) In general.--The term `applicable dollar amount' 
     means--
       ``(i) $1.50 in the case of calendar years 2006 through 
     2009, and
       ``(ii) $2.00 in the case of calendar years beginning after 
     2009.
       ``(B) Inflation adjustment.--In the case of any calendar 
     year after 2006, each of the dollar amounts under 
     subparagraph (A) shall be equal to the product of such dollar 
     amount and the inflation adjustment factor determined under 
     section 45(e)(2)(B) for the calendar year, except that such 
     section shall be applied by substituting `2005' for `1992'.
       ``(2) Unrelated person.--The term `unrelated person' has 
     the same meaning as when such term is used in section 45.
       ``(d) Termination.--This section shall not apply to sales 
     after December 31, 2012.''
       (b) Credit Made Part of General Business Credit.--
     Subsection (b) of section 38, 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 Indian coal production credit determined under 
     section 45N(a).''.
       (c) Allowance Against Minimum Tax.--Section 38(c)(4) 
     (relating to specified credits) is amended by striking the 
     period at the end of clause (ii) and inserting ``, or'' and 
     by adding at the end the following:
       ``(iii) the credit determined under section 45N.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to sales after December 31, 2005.

     SEC. 1549. CREDIT FOR REPLACEMENT STOVES MEETING 
                   ENVIRONMENTAL STANDARDS IN NON-ATTAINMENT 
                   AREAS.

       (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 
     25D the following new section:

     ``SEC. 25E. REPLACEMENT STOVES IN AREAS WITH POOR AIR 
                   QUALITY.

       ``(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 
     lesser--
       ``(1) the qualified stove replacement expenditures of the 
     taxpayer for the taxable year, or
       ``(2) $500 multiplied by the number of noncompliant wood 
     stoves replaced by the taxpayer during the taxable year.
       ``(b) Qualified Stove Replacement Expenditures.--For 
     purposes of this section--
       ``(1) In general.--The term `qualified stove replacement 
     expenditures' means expenditures made by the taxpayer for the 
     installation of a compliant stove which--
       ``(A) is installed in a dwelling unit which--
       ``(i) is located in the United States in an area which, at 
     the time of the installation, is designated by the 
     Environmental Protection Agency as a non-attainment area for 
     particulate matter less than 2.5 micrometers in diameter or a 
     non-attainment area for particulate matter less than 10 
     micrometers in diameter, and
       ``(ii) is used as a residence, and
       ``(B) replaces a noncompliant wood stove used in the 
     dwelling unit.

     Such term includes expenditures for labor costs properly 
     allocable to the onsite preparation, assembly, or original 
     installation of the compliant stove.
       ``(2) Compliant stove.--The term `compliant stove' means a 
     solid fuel burning stove which meets the requirements set 
     forth in the `Standards of Performance for Residential Wood 
     Heaters' issued by the Environmental Protection Agency.
       ``(3) Noncompliant wood stove.--The term `noncompliant wood 
     stove' means any wood stove other than a compliant stove.
       ``(c) Other Rules.--Rules similar to the rules of 
     paragraphs (3) and (4) of section 25C(d) shall apply for 
     purposes of this section.
       ``(d) Basis Adjustment.--If an expenditure to which this 
     section applies results in an increase in basis in any 
     property, the increase

[[Page 13183]]

     shall be reduced by the amount of the credit allowed under 
     this section with respect to the expenditure.
       ``(e) Termination.--This section shall not apply to 
     expenditures made after December 31, 2008.''
       (b) Conforming Amendments.--
       (1) Subsection (a) of section 1016, as amended by this Act, 
     is amended by striking ``and'' at the end of paragraph (38), 
     by striking the period at the end of paragraph (39) and 
     inserting ``, and'', and by adding at the end the following 
     new paragraph:
       ``(40) to the extent provided in section 25E(e), in the 
     case of amounts with respect to which a credit has been 
     allowed under section 25E.''.
       (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 25D the 
     following new item:

``Sec. 25E. Replacement stoves in areas with poor air quality.''.

       (c) Effective Dates.--The amendments made by this section 
     shall apply to expenditures for stoves purchased after the 
     date of the enactment of this Act.

     SEC. 1550. EXEMPTION FOR EQUIPMENT FOR TRANSPORTING BULK BEDS 
                   OF FARM CROPS FROM EXCISE TAX ON RETAIL SALE OF 
                   HEAVY TRUCKS AND TRAILERS.

       (a) In General.--Section 4053 of the Internal Revenue Code 
     of 1986 (relating to exemptions) is amended by adding at the 
     end the following new paragraph:
       ``(9) Bulk beds for transporting farm crops.--Any box, 
     container, receptacle, bin, or other similar article the 
     length of which does not exceed 26 feet, which is mounted or 
     placed on an automobile truck, and which is sold to a person 
     who certifies to the seller that--
       ``(A) such person is actively engaged in the trade or 
     business of farming, and
       ``(B) the primary use of the article is to haul to farms 
     (and on farms) farm crops grown in connection with such trade 
     or business.''.
       (b) Recapture of Tax Upon Resale or Nonexempt Use.--Section 
     4052 (relating to definitions and special rules) is amended 
     by redesignating subsection (g) as subsection (h) and by 
     inserting after subsection (f) the following new subsection:
       ``(g) Imposition of Tax on Sales, Etc., Within 2 Years of 
     Bulk Beds for Transporting Farm Crops Purchased Tax-free.--
       ``(1) In general.--If--
       ``(A) no tax was imposed under section 4051 on the first 
     retail sale of any article described in section 4053(9) by 
     reason of its exempt use, and
       ``(B) within 2 years after the date of such first retail 
     sale, such article is resold by the purchaser or such 
     purchaser makes a substantial nonexempt use of such article, 
     then such sale or use of such article by such purchaser shall 
     be treated as the first retail sale of such article for a 
     price equal to its fair market value at the time of such sale 
     or use.
       ``(2) Exempt use.--For purposes of this subsection, the 
     term `exempt use' means any use of an article described in 
     section 4053(9) if the first retail sale of such article is 
     not taxable under section 4051 by reason of such use.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to sales after September 30, 2005.

     SEC. 1551. NATIONAL ACADEMY OF SCIENCES STUDY AND REPORT.

       (a) Study.--Not later than 60 days after the date of the 
     enactment of this Act, the Secretary of the Treasury shall 
     enter into an agreement with the National Academy of Sciences 
     under which the National Academy of Sciences shall conduct a 
     study to define and evaluate the health, environmental, 
     security, and infrastructure external costs and benefits 
     associated with the production and consumption of energy that 
     are not or may not be fully incorporated into the market 
     price of such energy, or into the Federal tax or fee or other 
     applicable revenue measure related to such production or 
     consumption.
       (b) Report.--Not later than 2 years after the date on which 
     the agreement under subsection (a) is entered into, the 
     National Academy of Sciences shall submit to Congress a 
     report on the study conducted under subsection (a).

                 Subtitle F--Revenue Raising Provisions

     SEC. 1561. TREATMENT OF KEROSENE FOR USE IN AVIATION.

       (a) All Kerosene Taxed at Highest Rate.--
       (1) In general.--Section 4081(a)(2)(A) (relating to rates 
     of tax) is amended by adding ``and'' at the end of clause 
     (ii), by striking ``, and'' at the end of clause (iii) and 
     inserting a period, and by striking clause (iv).
       (2) Exception for use in aviation.--Subparagraph (C) of 
     section 4081(a)(2) is amended to read as follows:
       ``(C) Taxes imposed on fuel used in aviation.--In the case 
     of kerosene which is removed from any refinery or terminal 
     directly into the fuel tank of an aircraft for use in 
     aviation, the rate of tax under subparagraph (A)(iii) shall 
     be--
       ``(i) in the case of use for commercial aviation by a 
     person registered for such use under section 4101, 4.3 cents 
     per gallon, and
       ``(ii) in the case of use for aviation not described in 
     clause (i), 21.8 cents per gallon.''.
       (3) Applicable rate in case of certain refueler trucks, 
     tankers, and tank wagons.--Section 4081(a)(3) (relating to 
     certain refueler trucks, tankers, and tank wagons treated as 
     terminals) is amended--
       (A) by striking ``a secured area of'' in subparagraph 
     (A)(i), and
       (B) by adding at the end the following new subparagraph:
       ``(D) Applicable rate.--For purposes of paragraph (2)(C), 
     in the case of any kerosene treated as removed from a 
     terminal by reason of this paragraph--
       ``(i) the rate of tax specified in paragraph (2)(C)(i) in 
     the case of use described in such paragraph shall apply if 
     such terminal is located within a secured area of an airport, 
     and
       ``(ii) the rate of tax specified in paragraph (2)(C)(ii) 
     shall apply in all other cases.''.
       (4) Conforming amendments.--
       (A) Sections 4081(a)(3)(A) and 4082(b) are amended by 
     striking ``aviation-grade'' each place it appears.
       (B) Section 4081(a)(4) is amended by striking ``paragraph 
     (2)(C)'' and inserting ``paragraph (2)(C)(i)''.
       (C) The heading for paragraph (4) of section 4081(a) is 
     amended by striking ``aviation-grade''.
       (D) Section 4081(d)(2) is amended by striking so much as 
     precedes subparagraph (A) and inserting the following:
       ``(2) Aviation fuels.--The rates of tax specified in 
     subsections (a)(2)(A)(ii) and (a)(2)(C)(ii) shall be 4.3 
     cents per gallon--''.
       (E) Subsection (e) of section 4082 is amended--
       (i) by striking ``aviation-grade'',
       (ii) by striking ``section 4081(a)(2)(A)(iv)'' and 
     inserting ``section 4081(a)(2)(A)(iii)'', and
       (iii) by striking ``Aviation-Grade Kerosene'' in the 
     heading thereof and inserting ``Kerosene Removed Into an 
     Aircraft''.
       (b) Reduced Rate for Use of Certain Liquids in Aviation.--
       (1) In general.--Subsection (c) of section 4041 (relating 
     to imposition of tax) is amended--
       (A) by striking ``aviation-grade kerosene'' in paragraph 
     (1) and inserting ``any liquid for use as a fuel other than 
     aviation gasoline'',
       (B) by striking ``aviation-grade kerosene'' in paragraph 
     (2) and inserting ``liquid for use as a fuel other than 
     aviation gasoline'',
       (C) by striking paragraph (3) and inserting the following 
     new paragraph:
       ``(3) Rate of tax.--The rate of tax imposed by this 
     subsection shall be 21.8 cents per gallon (4.3 cents per 
     gallon with respect to any sale or use for commercial 
     aviation).'', and
       (D) by striking ``Aviation-Grade Kerosene'' in the heading 
     thereof and inserting ``Certain Liquids Used as a Fuel in 
     Aviation''.
       (2) Partial refund of full rate.--
       (A) In general.--Paragraph (2) of section 6427(l) (relating 
     to nontaxable uses of diesel fuel, kerosene and aviation 
     fuel) is amended to read as follows:
       ``(2) Nontaxable use.--For purposes of this subsection, the 
     term `nontaxable use' means any use which is exempt from the 
     tax imposed by section 4041(a)(1) other than by reason of a 
     prior imposition of tax.''.
       (B) Refunds for noncommercial aviation.--Section 6427(l) 
     (relating to nontaxable uses of diesel fuel, kerosene and 
     aviation fuel) is amended by redesignating paragraph (5) as 
     paragraph (6) and by inserting after paragraph (4) the 
     following new paragraph:
       ``(5) Refunds for kerosene used in noncommercial 
     aviation.--
       ``(A) In general.--In the case of kerosene used in aviation 
     not described in paragraph (4)(A) (other than any use which 
     is exempt from the tax imposed by section 4041(c) other than 
     by reason of a prior imposition of tax), paragraph (1) shall 
     not apply to so much of the tax imposed by section 4081 as is 
     attributable to--
       ``(i) the Leaking Underground Storage Tank Trust Fund 
     financing rate imposed by such section, and
       ``(ii) so much of the rate of tax specified in section 
     4081(a)(2)(A)(iii) as does not exceed the rate specified in 
     section 4081(a)(2)(C)(ii).
       ``(B) Payment to ultimate, registered vendor.--The amount 
     which would be paid under paragraph (1) with respect to any 
     kerosene shall be paid only to the ultimate vendor of such 
     kerosene. A payment shall be made to such vendor if such 
     vendor--
       ``(i) is registered under section 4101, and
       ``(ii) meets the requirements of subparagraph (A), (B), or 
     (D) of section 6416(a)(1).''.
       (3) Conforming amendments.--
       (A) Section 4041(a)(1)(B) is amended by striking the last 
     sentence.
       (B) The heading for subsection (l) of section 6427 is 
     amended by striking ``, Kerosene and Aviation Fuel'' and 
     inserting ``and Kerosene''.
       (C) Section 4082(d)(2)(B) is amended by striking ``section 
     6427(l)(5)(B)'' and inserting ``section 6427(l)(6)(B)''.
       (D) Section 6427(i)(4)(A) is amended--
       (i) by striking ``paragraph (4)(B) or (5)'' both places it 
     appears and inserting ``paragraph (4)(B), (5), or (6)'', and
       (ii) by striking ``subsection (b)(4) and subsection 
     (l)(5)'' in the last sentence and inserting ``subsections 
     (b)(4), (l)(5), and (l)(6)''.
       (E) Paragraph (4) of section 6427(l) is amended--
       (i) by striking ``aviation-grade'' in subparagraph (A),

[[Page 13184]]

       (ii) by striking ``section 4081(a)(2)(A)(iv)'' and 
     inserting ``section 4081(a)(2)(iii)'',
       (iii) by striking ``aviation-grade kerosene'' in 
     subparagraph (B) and inserting ``kerosene used in commercial 
     aviation as described in subparagraph (A)'', and
       (iv) by striking ``aviation-grade kerosene'' in the heading 
     thereof and inserting ``kerosene used in commercial 
     aviation''.
       (F) Section 6427(l)(6)(B), as redesignated by paragraph 
     (2)(B), is amended by striking ``aviation-grade kerosene'' 
     and inserting ``kerosene used in aviation''.
       (c) Transfers From Highway Trust Fund of Taxes on Fuels 
     Used in Aviation to Airport and Airway Trust Fund.--
       (1) In general.--Section 9503(c) (relating to expenditures 
     from Highway Trust Fund) is amended by adding at the end the 
     following new paragraph:
       ``(7) Transfers from the trust fund for certain aviation 
     fuel taxes.--The Secretary shall pay at least monthly from 
     the Highway Trust Fund into the Airport and Airway Trust Fund 
     amounts (as determined by the Secretary) equivalent to the 
     taxes received on or after October 1, 2005, and before 
     October 1, 2011, under section 4081 with respect to so much 
     of the rate of tax as does not exceed--
       ``(A) 4.3 cents per gallon of kerosene with respect to 
     which a payment has been made by the Secretary under section 
     6427(l)(4), and
       ``(B) 21.8 cents per gallon of kerosene with respect to 
     which a payment has been made by the Secretary under section 
     6427(l)(5).

     Transfers under the preceding sentence shall be made on the 
     basis of estimates by the Secretary, and proper adjustments 
     shall be made in the amounts subsequently transferred to the 
     extent prior estimates were in excess of or less than the 
     amounts required to be transferred.''.
       (2) Conforming amendments.--
       (A) Section 9502(a) is amended by striking ``appropriated 
     or credited to the Airport and Airway Trust Fund as provided 
     in this section or section 9602(b)'' and inserting 
     ``appropriated, credited, or paid into the Airport and Airway 
     Trust Fund as provided in this section, section 9503(c)(7), 
     or section 9602(b)''.
       (B) Section 9502(b)(1) is amended--
       (i) by striking ``subsections (c) and (e) of section 4041'' 
     in subparagraph (A) and inserting ``section 4041(c)'', and
       (ii) by striking ``and aviation-grade kerosene'' in 
     subparagraph (C) and inserting ``and kerosene to the extent 
     attributable to the rate specified in section 
     4081(a)(2)(C)''.
       (C) Section 9503(b) is amended by striking paragraph (3).
       (d) Certain Refunds Not Transferred From Airport and Airway 
     Trust Fund.--Section 9502(d)(2) (relating to transfers from 
     Airport and Airway Trust Fund on account of certain refunds) 
     is amended by inserting ``(other than subsections (l)(4) and 
     (l)(5) thereof)'' after ``or 6427 (relating to fuels not used 
     for taxable purposes)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to fuels or liquids removed, entered, or sold 
     after September 30, 2005.

     SEC. 1562. REPEAL OF ULTIMATE VENDOR REFUND CLAIMS WITH 
                   RESPECT TO FARMING.

       (a) In General.--Subparagraph (A) of section 6427(l)(6) 
     (relating to registered vendors to administer claims for 
     refund of diesel fuel or kerosene sold to farmers and State 
     and local governments), as redesignated by section 1561, is 
     amended to read as follows:
       ``(A) In general.--Paragraph (1) shall not apply to diesel 
     fuel or kerosene used by a State or local government.''.
       (b) Conforming Amendment.--The heading of paragraph (6) of 
     section 6427(l), as so redesignated, is amended by striking 
     ``farmers and''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to sales after September 30, 2005.

     SEC. 1563. REFUNDS OF EXCISE TAXES ON EXEMPT SALES OF FUEL BY 
                   CREDIT CARD.

       (a) Registration of Person Extending Credit on Certain 
     Exempt sales of Fuel.--Section 4101(a) (relating to 
     registration) is amended by adding at the end the following 
     new paragraph:
       ``(4) Registration of persons extending credit on certain 
     exempt sales of fuel.--The Secretary shall require 
     registration by any person which--
       ``(A) extends credit by credit card to any ultimate 
     purchaser described in subparagraph (C) or (D) of section 
     6416(b)(2) for the purchase of taxable fuel upon which tax 
     has been imposed under section 4041 or 4081, and
       ``(B) does not collect the amount of such tax from such 
     ultimate purchaser.''.
       (b) Refunds of Tax on Gasoline.--
       (1) In general.--Paragraph (4) of section 6416(a) (relating 
     to condition to allowance) is amended--
       (A) by inserting ``except as provided in subparagraph 
     (B),'' after ``For purposes of this subsection,'' in 
     subparagraph (A),
       (B) by redesignating subparagraph (B) as subparagraph (C) 
     and by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) Credit card issuer.--For purposes of this subsection, 
     if the purchase of gasoline described in subparagraph (A) 
     (determined without regard to the registration status of the 
     ultimate vendor) is made by means of a credit card issued to 
     the ultimate purchaser, paragraph (1) shall not apply and the 
     person extending the credit to the ultimate purchaser shall 
     be treated as the person (and the only person) who paid the 
     tax, but only if such person--
       ``(i) is registered under section 4101(a)(4), and
       ``(ii) has established, under regulations prescribed by the 
     Secretary, that such person--

       ``(I) has not collected the amount of the tax from the 
     person who purchased such article, or
       ``(II) has obtained the written consent from the ultimate 
     purchaser to the allowance of the credit or refund, and

       ``(iii) has so established that such person--

       ``(I) has repaid or agreed to repay the amount of the tax 
     to the ultimate vendor,

       ``(II) has obtained the written consent of the ultimate 
     vendor to the allowance of the credit or refund, or
       ``(III) has otherwise made arrangements which directly or 
     indirectly assure the ultimate vendor of reimbursement of 
     such tax.

     If clause (i), (ii), or (iii) is not met by such person 
     extending the credit to the ultimate purchaser, then such 
     person shall collect an amount equal to the tax from the 
     ultimate purchaser and only such ultimate purchaser may claim 
     such credit or refund.'',
       (C) by striking ``subparagraph (A)'' in subparagraph (C), 
     as redesignated by paragraph (2), and inserting 
     ``subparagraph (A) or (B)'',
       (D) by inserting ``or credit card issuer'' after ``vendor'' 
     in subparagraph (C), as so redesignated, and
       (E) by inserting ``or credit card issuer'' after ``vendor'' 
     in the heading thereof.
       (2) Conforming amendment.--Section 6416(b)(2) is amended by 
     adding at the end the following new sentence: ``Subparagraphs 
     (C) and (D) shall not apply in the case of any tax imposed on 
     gasoline under section 4081 if the requirements of subsection 
     (a)(4) are not met.''
       (c) Diesel Fuel or Kerosene.--Paragraph (6) of section 
     6427(l) (relating to nontaxable uses of diesel fuel and 
     kerosene), as redesignated by section 1561, is amended--
       (1) by striking ``The amount'' in subparagraph (C) and 
     inserting ``Except as provided in subparagraph (D), the 
     amount'', and
       (2) by adding at the end the following new subparagraph:
       ``(D) Credit card issuer.--For purposes of this paragraph, 
     if the purchase of any fuel described in subparagraph (A) 
     (determined without regard to the registration status of the 
     ultimate vendor) is made by means of a credit card issued to 
     the ultimate purchaser, the Secretary shall pay to the person 
     extending the credit to the ultimate purchaser the amount 
     which would have been paid under paragraph (1) (but for 
     subparagraph (A)), but only if such person meets the 
     requirements of clauses (i), (ii), and (iii) of section 
     6416(a)(4)(B). If such clause (i), (ii), or (iii) is not met 
     by such person extending the credit to the ultimate 
     purchaser, then such person shall collect an amount equal to 
     the tax from the ultimate purchaser and only such ultimate 
     purchaser may claim such amount.''.
       (d) Conforming Penalty Amendments.--
       (1) Section 6206 (relating to special rules applicable to 
     excessive claims under sections 6420, 6421, and 6427) is 
     amended--
       (A) by striking ``Any portion'' in the first sentence and 
     inserting ``Any portion of a refund made under section 
     6416(a)(4) and any portion'',
       (B) by striking ``payments under sections 6420'' in the 
     first sentence and inserting ``refunds under section 
     6416(a)(4) and payments under sections 6420'',
       (C) by striking ``section 6420'' in the second sentence and 
     inserting ``section 6416(a)(4), 6420'', and
       (D) by striking ``SECTIONS 6420, 6421, and 6427'' in the 
     heading thereof and inserting ``CERTAIN SECTIONS''.
       (2) Section 6675(a) is amended by inserting ``section 
     6416(a)(4) (relating to certain sales of gasoline),'' after 
     ``made under''.
       (3) Section 6675(b)(1) is amended by inserting 
     ``6416(a)(4),'' after ``under section''.
       (4) The item relating to section 6206 in the table of 
     sections for subchapter A of chapter 63 is amended by 
     striking ``sections 6420, 6421, and 6427'' and inserting 
     ``certain sections''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to sales after December 31, 2005.

     SEC. 1564. ADDITIONAL REQUIREMENT FOR EXEMPT PURCHASES.

       (a) State and Local Governments.--
       (1) Subparagraph (C) of section 6416(b)(2) (relating to 
     specified uses and resales) is amended to read as follows:
       ``(C) sold to a State or local government for the exclusive 
     use of a State or local government (as defined in section 
     4221(d)(4) and certified as such by the State) or sold to a 
     qualified volunteer fire department (as defined in section 
     150(e)(2) and certified as such by the State) for its 
     exclusive use;''.
       (2) Section 4041(g)(2) (relating to other exemptions) is 
     amended by striking ``or the District of Columbia'' and 
     inserting ``the District of Columbia, or a qualified 
     volunteer fire department (as defined in section 150(e)(2)) 
     (and certified as such by the State or the District of 
     Columbia)''.

[[Page 13185]]

       (b) Nonprofit Educational Organizations.--
       (1) Section 6416(b)(2)(D) is amended by inserting ``(as 
     defined in section 4221(d)(5) and certified to be in good 
     standing by the State in which such organization is providing 
     educational services)'' after ``organization''.
       (2) Section 4041(g)(4) is amended--
       (A) by inserting ``(certified to be in good standing by the 
     State in which such organization is providing educational 
     services)'' after ``organization'' the first place it 
     appears, and
       (B) by striking ``use by a'' and inserting ``use by such 
     a''.
       (c) Nonapplication of certification requirements for the 
     refund of certain taxes.--Section 6416(b)(2) is amended by 
     adding at the end the following new sentence: ``With respect 
     to any tax paid under subchapter D of chapter 32, the 
     certification requirements under subparagraphs (C) and (D) 
     shall not apply.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to sales after December 31, 2005.

     SEC. 1565. REREGISTRATION IN EVENT OF CHANGE IN OWNERSHIP.

       (a) In General.--Section 4101(a) (relating to registration) 
     is amended by adding at the end the following new paragraph:
       ``(4) Reregistration in event of change in ownership.--
     Under regulations prescribed by the Secretary, a person 
     (other than a corporation the stock of which is regularly 
     traded on an established securities market) shall be required 
     to reregister under this section if after a transaction (or 
     series of related transactions) more than 50 percent of 
     ownership interests in, or assets of, such person are held by 
     persons other than persons (or persons related thereto) who 
     held more than 50 percent of such interests or assets before 
     the transaction (or series of related transactions).''.
       (b) Conforming Amendments.--
       (1) Civil penalty.--Section 6719 (relating to failure to 
     register) is amended--
       (A) by inserting ``or reregister'' after ``register'' each 
     place it appears,
       (B) by inserting ``or Reregister'' after ``Register'' in 
     the heading for subsection (a), and
       (C) by inserting ``OR REREGISTER'' after ``REGISTER'' in 
     the heading thereof.
       (2) Criminal penalty.--Section 7232 (relating to failure to 
     register under section 4101, false representations of 
     registration status, etc.) is amended--
       (A) by inserting ``or reregister'' after ``register'',
       (B) by inserting ``or reregistration'' after 
     ``registration'', and
       (C) by inserting ``OR REREGISTER'' after ``REGISTER'' in 
     the heading thereof.
       (3) Additional civil penalty.--Section 7272 (relating to 
     penalty for failure to register) is amended--
       (A) by inserting ``or reregister'' after ``failure to 
     register'' in subsection (a),
       (B) by inserting ``OR REREGISTER'' after ``REGISTER'' in 
     the heading thereof.
       (3) Clerical amendments.--The item relating to section 6719 
     in the table of sections for part I of subchapter B of 
     chapter 68, the item relating to section 7232 in the table of 
     sections for part II of subchapter A of chapter 75, and the 
     item relating to section 7272 in the table of sections for 
     subchapter B of chapter 75 are each amended by inserting ``or 
     reregister'' after ``register''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to actions, or failures to act, after the date of 
     the enactment of this Act.

     SEC. 1566. TREATMENT OF DEEP-DRAFT VESSELS.

       (a) In General.--On and after the date of the enactment of 
     this Act, the Secretary of the Treasury shall require that a 
     vessel described in section 4042(c)(1) of the Internal 
     Revenue Code of 1986 be considered a vessel for purposes of 
     the registration of the operator of such vessel under section 
     4101 of such Code, unless such operator uses such vessel 
     exclusively for purposes of the entry of taxable fuel.
       (b) Exemption for Domestic Bulk Transfers by Deep-Draft 
     Vessels.--
       (1) In general.--Subparagraph (B) of section 4081(a)(1) 
     (relating to tax on removal, entry, or sale) is amended to 
     read as follows:
       ``(B) Exemption for bulk transfers to registered terminals 
     or refineries.--
       ``(i) In general.--The tax imposed by this paragraph shall 
     not apply to any removal or entry of a taxable fuel 
     transferred in bulk by pipeline or vessel to a terminal or 
     refinery if the person removing or entering the taxable fuel, 
     the operator of such pipeline or vessel (except as provided 
     in clause (ii)), and the operator of such terminal or 
     refinery are registered under section 4101.
       ``(ii) Nonapplication of registration to vessel operators 
     entering by deep-draft vessel.--For purposes of clause (i), a 
     vessel operator is not required to be registered with respect 
     to the entry of a taxable fuel transferred in bulk by a 
     vessel described in section 4042(c)(1).''.
       (2) Effective date.--The amendment made by this subsection 
     shall take effect on the date of the enactment of this Act.

     SEC. 1567. RECONCILIATION OF ON-LOADED CARGO TO ENTERED 
                   CARGO.

       (a) In General.--Subsection (a) of section 343 of the Trade 
     Act of 2002 is amended by inserting at the end the following 
     new paragraph:
       ``(4) Transmission of data.--Pursuant to paragraph (2), not 
     later than 1 year after the date of enactment of this 
     paragraph, the Secretary of Homeland Security, after 
     consultation with the Secretary of the Treasury, shall 
     establish an electronic data interchange system through which 
     the United States Customs and Border Protection shall 
     transmit to the Internal Revenue Service information 
     pertaining to cargoes of any taxable fuel (as defined in 
     section 4083 of the Internal Revenue Code of 1986) that the 
     United States Customs and Border Protection has obtained 
     electronically under its regulations adopted in accordance 
     with paragraph (1). For this purpose, not later than 1 year 
     after the date of enactment of this paragraph, all filers of 
     required cargo information for such taxable fuels (as so 
     defined) must provide such information to the United States 
     Customs and Border Protection through such electronic data 
     interchange system.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 1568. TAXATION OF GASOLINE BLEND-
                   STOCKS AND KEROSENE.

       With respect to fuel entered or removed after September 30, 
     2005, the Secretary of the Treasury shall, in applying 
     section 4083 of the Internal Revenue Code of 1986--
       (1) prohibit the nonbulk entry or removal of any gasoline 
     blend stock without the imposition of tax under section 4081 
     of such Code, and
       (2) shall not exclude mineral spirits from the definition 
     of kerosene.

     SEC. 1569. NONAPPLICATION OF EXPORT EXEMPTION TO DELIVERY OF 
                   FUEL TO MOTOR VEHICLES REMOVED FROM UNITED 
                   STATES.

       (a) In General.--Section 4221(d)(2) (defining export) is 
     amended by adding at the end the following new sentence: 
     ``Such term does not include the delivery of a taxable fuel 
     (as defined in section 4083(a)(1)) into a fuel tank of a 
     motor vehicle which is shipped or driven out of the United 
     States.''.
       (b) Conforming Amendments.--
       (1) Section 4041(g) (relating to other exemptions) is 
     amended by adding at the end the following new sentence: 
     ``Paragraph (3) shall not apply to the sale of a liquid for 
     delivery into a fuel tank of a motor vehicle which is shipped 
     or driven out of the United States.''.
       (2) Clause (iv) of section 4081(a)(1)(A) (relating to tax 
     on removal, entry, or sale) is amended by inserting ``or at a 
     duty-free sales enterprise (as defined in section 555(b)(8) 
     of the Tariff Act of 1930)'' after ``section 4101''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to sales or deliveries made after the date of the 
     enactment of this Act.

     SEC. 1570. PENALTY WITH RESPECT TO CERTAIN ADULTERATED FUELS.

       (a) In General.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by adding at 
     the end the following new section:

     ``SEC. 6720A. PENALTY WITH RESPECT TO CERTAIN ADULTERATED 
                   FUELS.

       ``(a) In General.--Any person who knowingly transfers for 
     resale, sells for resale, or holds out for resale any liquid 
     for use in a diesel-powered highway vehicle or a diesel-
     powered train which does not meet applicable EPA regulations 
     (as defined in section 45H(c)(3)), shall pay a penalty of 
     $10,000 for each such transfer, sale, or holding out for 
     resale, in addition to the tax on such liquid (if any).
       ``(b) Penalty in the Case of Retailers.--Any person who 
     knowingly holds out for sale (other than for resale) any 
     liquid described in subsection (a), shall pay a penalty of 
     $10,000 for each such holding out for sale, in addition to 
     the tax on such liquid (if any).''.
       (b) Dedication of Revenue.--Paragraph (5) of section 
     9503(b) (relating to certain penalties) is amended by 
     inserting ``6720A,'' after ``6719,''.
       (c) Clerical Amendment.--The table of sections for part I 
     of subchapter B of chapter 68 is amended by adding at the end 
     the following new item:

``Sec. 6720A. Penalty with respect to certain adulterated fuels.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to any transfer, sale, or holding out for sale or 
     resale occurring after the date of the enactment of this Act.

     SEC. 1571. OIL SPILL LIABILITY TRUST FUND FINANCING RATE.

       Section 4611(f) (relating to application of oil spill 
     liability trust fund financing rate) is amended to read as 
     follows:
       ``(f) Application of Oil Spill Liability Trust Fund 
     Financing Rate.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the Oil Spill Liability Trust Fund financing rate under 
     subsection (c) shall apply on and after April 1, 2007, or if 
     later, the date which is 30 days after the last day of any 
     calendar quarter for which the Secretary estimates that, as 
     of the close of that quarter, the unobligated balance in the 
     Oil Spill Liability Trust Fund is less than $2,000,000,000.

[[Page 13186]]

       ``(2) Fund balance.--The Oil Spill Liability Trust Fund 
     financing rate shall not apply during a calendar quarter if 
     the Secretary estimates that, as of the close of the 
     preceding calendar quarter, the unobligated balance in the 
     Oil Spill Liability Trust Fund exceeds $3,000,000,000.
       ``(3) Termination.--The Oil Spill Liability Trust Fund 
     financing rate shall not apply after December 31, 2014.''.

     SEC. 1572. EXTENSION OF LEAKING UNDERGROUND STORAGE TANK 
                   TRUST FUND FINANCING RATE.

       (a) In General.--Paragraph (3) of section 4081(d) (relating 
     to Leaking Underground Storage Tank Trust Fund financing 
     rate) is amended by striking ``2005'' and inserting ``2011''.
       (b) Application of tax on dyed fuel.--
       (1) In general.--Section 4082(a) (relating to exemptions 
     for diesel fuel and kerosene) is amended by inserting 
     ``(other than such tax at the Leaking Underground Storage 
     Tank Trust Fund financing rate)'' after ``section 4081''.
       (2) No refund.--Section 6427(l)(1) is amended by adding at 
     the end the following new sentence: ``The preceding sentence 
     shall not apply to so much of the tax imposed by section 4081 
     on dyed fuel described in section 4082(a) as is attributable 
     to the Leaking Underground Storage Tank Trust Fund financing 
     rate imposed by such section.''.
       (c) Certain Refunds and Credits Not Charged to LUST Trust 
     Fund.--Subsection (c) of section 9508 (relating to Leaking 
     Underground Storage Tank Trust Fund) is amended to read as 
     follows:
       ``(c) Expenditures.--Amounts in the Leaking Underground 
     Storage Tank Trust Fund shall be available, as provided in 
     appropriation Acts, only for purposes of making expenditures 
     to carry out section 9003(h) of the Solid Waste Disposal Act 
     as in effect on the date of the enactment of the Superfund 
     Amendments and Reauthorization Act of 1986.''.
       (d) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall take effect on October 
     1, 2005.
       (2) Application of tax on dyed fuel.--The amendment made by 
     subsection (b) shall apply to fuel entered, removed, or sold 
     after December 31, 2005.
                                 ______
                                 
  SA 801. Mrs. LINCOLN submitted an amendment intended to be proposed 
to amendment SA 800 submitted by Mr. Grassley (for himself and Mr. 
Baucus) to the bill H.R. 6, Reserved; which was ordered to lie on the 
table; as follows:

       At the end of subtitle E of title XV (relating to energy 
     policy tax incentives) add the following:

     SEC. __. RENEWABLE LIQUID FUELS EXCISE TAX CREDIT.

       (a) In General.--Subchapter B of chapter 65 (relating to 
     rules of special application) is amended by inserting after 
     section 6426 the following new section:

     ``SEC. 6426A. CREDIT FOR RENEWABLE LIQUID FUELS.

       ``(a) Allowance of Credits.--There shall be allowed as a 
     credit against the tax imposed by section 4081 an amount 
     equal to the renewable liquid mixture credit.
       ``(b) Renewable Liquid Mixture Credit.--
       ``(1) In general.--For purposes of this section, the 
     renewable liquid mixture credit is the product of the 
     applicable amount and the number of gallons of renewable 
     liquid used by the taxpayer in producing any renewable liquid 
     mixture for sale or use in a trade or business of the 
     taxpayer.
       ``(2) Applicable amount.--For purposes of this section, the 
     applicable amount is $1.00.
       ``(3) Renewable liquid mixture.--For purposes of this 
     section, the term `renewable liquid mixture' means a mixture 
     of renewable liquid and taxable fuel which--
       ``(A) is sold by the taxpayer producing such mixture to any 
     person for use as a fuel or feedstock, or
       ``(B) is used as a fuel or feedstock by the taxpayer 
     producing such mixture.

     For purposes of subparagraph (A), a mixture produced by any 
     person at a refinery prior to a taxable event which includes 
     renewable liquid shall be treated as sold at the time of its 
     removal from the refinery (and only at such time) or sold to 
     another person for use as a fuel or feedstock.
       ``(c) Other Definitions.--For purposes of this subsection:
       ``(1) Renewable liquid.--The term `renewable liquid' means 
     liquid fuels derived from waste and byproduct streams 
     including; agricultural byproducts and wastes, aqua-culture 
     products produced from waste streams, food processing plant 
     byproducts, municipal solid and semi-solid waste streams, 
     industrial waste streams, automotive scrap waste streams, and 
     as further provided by regulations.
       ``(2) Taxable fuel.--The term `taxable fuel' has the 
     meaning given such term by section 4083(a)(1).
       ``(3) Feedstock.--The term `feedstock' means any precursor 
     material subject to further processing to make a 
     petrochemical, solvent, or other fuel which has the effect of 
     displacing conventional fuels, or products produced from 
     conventional fuels.
       ``(4) Additional definitions.--Any term used in this 
     section which is also used in section 40B shall have the 
     meaning given such term by section 40B.
       ``(d) Certification for Renewable Liquid Fuel.--No credit 
     shall be allowed under this section unless the taxpayer 
     obtains a certification (in such form and manner as 
     prescribed by the Secretary) from the producer of the 
     renewable liquid fuel, which identifies the product produced.
       ``(e) Mixture Not Used as Fuel, Etc.--
       ``(1) Imposition of tax.--If--
       ``(A) any credit was determined under this section with 
     respect to renewable liquid used in the production of any 
     renewable liquid mixture, and
       ``(B) any person--
       ``(i) separates the renewable liquid from the mixture, or
       ``(ii) without separation, uses the mixture other than as a 
     fuel,

     then there is hereby imposed on such person a tax equal to 
     the product of the applicable amount and the number of 
     gallons of such renewable liquid.
       ``(2) Applicable laws.--All provisions of law, including 
     penalties, shall, insofar as applicable and not inconsistent 
     with this section, apply in respect of any tax imposed under 
     paragraph (1) as if such tax were imposed by section 4081 and 
     not by this section.
       ``(f) Coordination With Exemption From Excise Tax.--Rules 
     similar to the rules under section 40 (c) shall apply for 
     purposes of this section.
       ``(g) Termination.--This section shall not apply to any 
     sale, use, or removal for any period after December 31, 
     2010.''.
       (b) Registration Requirement.--Section 4101(a)(1) (relating 
     to registration), as amended by this Act, is amended by 
     inserting ``and every person producing or importing renewable 
     liquid as defined in section 6426A(c)(1)'' before ``shall 
     register with the Secretary''.
       (c) Payments.--Section 6427 is amended by inserting after 
     subsection (f) the following new subsection:
       ``(g) Renewable Liquid Used to Produce Mixture.--
       ``(1) Used to produce a mixture.--If any person produces a 
     mixture described in section 6426A in such person's trade or 
     business, the Secretary shall pay (without interest) to such 
     person an amount equal to the renewable liquid mixture credit 
     with respect to such mixture.
       ``(2) Coordination with other repayment provisions.--No 
     amount shall be payable under paragraph (1) with respect to 
     any mixture with respect to which an amount is allowed as a 
     credit under section 6426A.
       ``(3) Termination.--This subsection shall not apply with 
     respect to any renewable liquid fuel mixture (as defined in 
     section 6426A(b)(3) sold or used after December 31, 2010.''.
       (d) Conforming Amendment.--The last sentence of section 
     9503(b)(1) is amended by striking ``section 6426'' and 
     inserting ``sections 6426 and 6426A''.
       (e) Clerical Amendment.--The table of sections for 
     subchapter B of chapter 65 is amended by inserting after the 
     item relating to section 6426 the following new item:

``Sec. 6426A. Credit for renewable liquid fuels.''.

       (f) Effective Dates.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to fuel sold or used on or after January 1, 2005.
       (2) Registration requirement.--The amendment made by 
     subsection (b) shall take effect on the date of the enactment 
     of this Act.

     SEC. __. RENEWABLE LIQUID INCOME TAX CREDIT.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits) is amended 
     by inserting after section 40A the following new section:

     ``SEC. 40B. RENEWABLE LIQUID USED AS FUEL.

       ``(a) General Rule.--For purposes of section 38, the 
     renewable liquid credit determined under this section for the 
     taxable year is an amount equal to the sum of--
       ``(1) the renewable liquid mixture credit, plus
       ``(2) the renewable liquid credit.
       ``(b) Definition of Renewable Liquid Mixture Credit and 
     Renewable Liquid Credit.--For purposes of this section--
       ``(1) Renewable liquid mixture credit.--
       ``(A) In general.--The renewable liquid mixture credit of 
     any taxpayer for any taxable year is $1.00 for each gallon of 
     renewable liquid fuel used by the taxpayer in the production 
     of a qualified renewable liquid fuel mixture.
       ``(B) Qualified renewable liquid mixture.--The term 
     `qualified renewable liquid mixture' means a mixture of 
     renewable liquid and taxable fuel (as defined in section 
     4083(a)(1)), which--
       ``(i) is sold by the taxpayer producing such a mixture to 
     any person for use as a fuel or feedstock, or
       ``(ii) is used as a fuel or feedstock by the taxpayer 
     producing such mixture.
       ``(C) Sale or use must be in trade or business, etc.--
     Renewable liquid used in the production of a qualified 
     renewable liquid fuel mixture shall be taken into account--
       ``(i) only if the sale or use described in subparagraph (B) 
     is in a trade or business of the taxpayer, and

[[Page 13187]]

       ``(ii) for the taxable year in which such sale or use 
     occurs.
       ``(2) Renewable liquid credit.--
       ``(A) In general.--The renewable liquid credit of any 
     taxpayer for any taxable year is $1.00 for each gallon of 
     renewable liquid which is not in a mixture with taxable fuel 
     and which during the taxable year--
       ``(i) is used by the taxpayer as a fuel or feedstock in a 
     trade or business, or
       ``(ii) is sold by the taxpayer at retail to a person and 
     placed in the fuel tank of such person's vehicle.
       ``(B) User credit not to apply to renewable liquid sold at 
     retail.--No credit shall be allowed under subparagraph (A)(i) 
     with respect to any renewable liquid which was sold in a 
     retail sale described in subparagraph (A)(ii).
       ``(c) Certification for Renewable Liquid.--No credit shall 
     be allowed under this section unless the taxpayer obtains a 
     certification (in such form and manner as prescribed by the 
     Secretary) from the producer or importer of the renewable 
     liquid fuel which identifies the product produced and 
     percentage of renewable liquid fuel in the product.
       ``(d) Coordination With Credit Against Excise Tax.--The 
     amount of the credit determined under this section with 
     respect to any renewable liquid fuel shall be properly 
     reduced to take into account any benefit provided with 
     respect to such renewable liquid fuel solely by reason of the 
     application of section 6426A or 6427(g).
       ``(e) Definitions and Special Rules.--For purposes of this 
     section, the term `renewable liquid' means liquid fuels 
     derived from waste and byproduct streams including; 
     agricultural byproducts and wastes, agriculture materials 
     produced from waste streams, food processing plant 
     byproducts, municipal solid and semi-solid waste streams, 
     industrial waste streams, automotive scrap waste streams, as 
     further provided by regulations.
       ``(f) Mixture or Renewable Liquid Not Used as a Fuel, 
     Etc.--
       ``(1) Mixtures.--If--
       ``(A) any credit was determined under this section with 
     respect to renewable liquid used in the production of any 
     qualified renewable liquid mixture, and
       ``(B) any person--
       ``(i) separates the renewable liquid from the mixture, or
       ``(ii) without separation, uses the mixture other than as a 
     fuel,

     then there is hereby imposed on such person a tax equal to 
     the product of the rate applicable under subsection (b)(1)(A) 
     and the number of gallons of such renewable liquid in such 
     mixture.
       ``(2) Renewable liquid.--If--
       ``(A) any credit was determined under this section with 
     respect to the retail sale of any renewable liquid, and
       ``(B) any person mixes such renewable liquid or uses such 
     renewable liquid other than as a fuel, then there is hereby 
     imposed on such person a tax equal to the product of the rate 
     applicable under subsection (b)(2)(A) and the number of 
     gallons of such renewable liquid.
       ``(3) Applicable laws.--All provisions of law, including 
     penalties, shall, insofar as applicable and not inconsistent 
     with this section, apply in respect of any tax imposed under 
     subparagraph (A) or (B) as if such tax were imposed by 
     section 4081 and not by this chapter.
       ``(g) Pass-Thru in the Case of Estates and Trusts.--Under 
     regulations prescribed by the Secretary, rules similar to the 
     rules of subsection (d) of section 52 shall apply.
       ``(h) Termination.--This section shall not apply to any 
     sale or use after December 31, 2010.''.
       (b) Credit Treated as Part of General Business Credit.--
     Section 38(b) of the Internal Revenue Code of 1986 (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 inserting after paragraph (24) 
     the following new paragraph:
       ``(25) The renewable liquid credit determined under section 
     40B.''.
       (c) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter I of the Internal 
     Revenue Code of 1986 is amended by inserting after the item 
     relating to section 40A the following new item:

``Sec. 40B. Renewable liquid used as fuel.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to fuel produced, and sold as used, on or after 
     January 1, 2005.
                                 ______
                                 
  SA 802. Mr. VITTER submitted an amendment intended to be proposed by 
him to the bill H.R. 6, Reserved; which was ordered to lie on the 
table; as follows:

       Beginning on page 245, strike line 7 and all that follows 
     through page 250, line 11, and insert the following:
       (a) Amendment.--
       (1) In general.--Section 8 of the Outer Continental Shelf 
     Lands Act (43 U.S.C. 1337) is amended by adding at the end 
     the following:
       ``(p)(1) The Secretary, in consultation with the Secretary 
     of the Department in which the Coast Guard is operating and 
     other relevant departments and agencies of the Federal 
     Government, may grant a lease, easement, right-of-way, 
     license, or permit on the outer Continental Shelf for 
     activities not otherwise authorized under this Act, the 
     Deepwater Port Act of 1974 (33 U.S.C. 1501 et seq.), the 
     Ocean Thermal Energy Conversion Act of 1980 (42 U.S.C. 9101 
     et seq.), or other applicable law, if those activities 
     support or promote--
       ``(A) exploration, development, production, transportation, 
     or storage of oil, natural gas, or other minerals;
       ``(B) production, transportation, or transmission of energy 
     from sources other than oil and gas; or
       ``(C) use, for energy-related or marine-related purposes, 
     of facilities in use on or before the date of enactment of 
     this subsection for activities authorized under this Act.
       ``(2)(A)(i) Subject to paragraph (3), the Secretary shall 
     establish reasonable forms of payment for any lease, 
     easement, right-of-way, license, or permit under this 
     subsection, including a royalty, fee, rental, bonus, or other 
     payment, as the Secretary determines to be appropriate.
       ``(ii) The Secretary may establish a form of payment 
     described in clause (i) by rule or by agreement with the 
     holder of the lease, easement, right-of-way, license, or 
     permit.
       ``(B) In establishing a form of, or schedule relating to, a 
     payment under subparagraph (A), the Secretary shall take into 
     consideration the economic viability of a proposed activity.
       ``(C) The Secretary may, by rule, provide for relief from 
     or reduction of a payment under subparagraph (A)--
       ``(i) if, without the relief or reduction, an activity 
     relating to a lease, easement, right-of-way, license, or 
     permit under this subsection would be uneconomical;
       ``(ii) to encourage a particular activity; or
       ``(iii) for another reason, as the Secretary determines to 
     be appropriate.
       ``(D) If the holder of a lease, easement, right-of-way, 
     license, or permit under this subsection fails to make a 
     payment by the date required under a rule or term of the 
     lease, easement, right-of-way, license, or permit, the 
     Secretary may require the holder to pay interest on the 
     payment in accordance with the underpayment rate established 
     under section 6621(a)(2) of the Internal Revenue Code of 
     1986, for the period--
       ``(i) beginning on the date on which the payment was due; 
     and
       ``(ii) ending on the date on which the payment is made.
       ``(E)(i) The Secretary may allow a credit in the amount of 
     any excess payment made by the holder of a lease, easement, 
     right-of-way, license, or permit under this subsection or 
     provide a refund in the amount of the excess payment from the 
     account to or in which the excess payment was paid or 
     deposited.
       ``(ii) The Secretary shall pay, or allow the holder of a 
     lease, easement, right-of-way, license, or permit under this 
     subsection a credit in the amount of, any interest on an 
     amount refunded or credited under clause (i) in accordance 
     with the overpayment rate established under section 
     6621(a)(1) of the Internal Revenue Code of 1986, for the 
     period--
       ``(I) beginning on the date on which the Secretary received 
     the excess payment; and
       ``(II) ending on the date on which the refund or credit is 
     provided.
       ``(F)(i) The Secretary, in coordination with the 
     Administrator of the National Oceanic and Atmospheric 
     Administration, may establish reasonable forms of payment, as 
     determined by the Secretary, for a license issued under the 
     Ocean Thermal Energy Conversion Act of 1980 (42 U.S.C. 9101 
     et seq.), including a royalty, fee, rental, bonus, or other 
     payment, as the Secretary determines to be appropriate, in 
     addition to the administrative fee under section 102(h) of 
     that Act (42 U.S.C. 9112(h)).
       ``(ii) A form of payment under clause (i) may be 
     established by rule or by agreement with the holder of the 
     lease, easement, right-of-way, license, or permit.
       ``(3)(A) Any funds received by the Secretary from a holder 
     of a lease, easement, right-of-way, license, or permit under 
     this subsection shall be distributed in accordance with this 
     paragraph.
       ``(B)(i) If a lease, easement, right-of-way, license, or 
     permit under this subsection covers a specific tract of, or 
     regards a facility located on, the outer Continental Shelf 
     and is not an easement or right-of-way for transmission or 
     transportation of energy, minerals, or other natural 
     resources, the Secretary shall pay 50 percent of any amount 
     received from the holder of the lease, easement, right-of-
     way, license, or permit to the State off the shore of which 
     the geographic center of the area covered by the lease, 
     easement, right-of-way, license, permit, or facility is 
     located, in accordance with Federal law determining the 
     seaward lateral boundaries of the coastal States.
       ``(ii) Not later than the last day of the month after the 
     month during which the Secretary receives a payment from the 
     holder of a lease, easement, right-of-way, license, or permit 
     described in clause (i), the Secretary shall make payments in 
     accordance with clause (i).
       ``(C)(i) The Secretary shall deposit 20 percent of the 
     funds described in subparagraph

[[Page 13188]]

     (A) to a special account maintained and administered by the 
     Secretary to provide research and development grants for 
     improving energy technologies.
       ``(ii) An amount deposited under clause (i) shall remain 
     available until expended, without further appropriation.
       ``(D) The Secretary shall credit 5 percent of the funds 
     described in subparagraph (A) to the annual operating 
     appropriation of the Minerals Management Service.
       ``(E) The Secretary shall deposit any funds described in 
     subparagraph (A) that are not deposited or credited under 
     subparagraphs (B) through (D) in the general fund of the 
     Treasury.
       ``(F) This paragraph does not apply to any amount received 
     by the Secretary under section 9701 of title 31, United 
     States Code, or any other law (including regulations) under 
     which the Secretary may recover the costs of administering 
     this subsection.
       ``(4) Before carrying out this subsection, the Secretary 
     shall consult with the Secretary of Defense and other 
     appropriate Federal agencies regarding the effect of this 
     subsection on national security and navigational obstruction.
       ``(5)(A) The Secretary may issue a lease, easement, right-
     of-way, license, or permit under paragraph (1) on a 
     competitive or noncompetitive basis.
       ``(B) In determining whether a lease, easement right-of-
     way, license, or permit shall be granted competitively or 
     noncompetitively, the Secretary shall consider factors 
     including--
       ``(i) prevention of waste and conservation of natural 
     resources;
       ``(ii) the economic viability of a project;
       ``(iii) protection of the environment;
       ``(iv) the national interest and national security;
       ``(v) human safety;
       ``(vi) protection of correlative rights; and
       ``(vii) the potential return of the lease, easement, right-
     of-way, license, or permit.
       ``(6) The Secretary, in consultation with the Secretary of 
     the Department in which the Coast Guard is operating, other 
     relevant Federal agencies, and affected States, as the 
     Secretary determines appropriate, shall promulgate any 
     regulation the Secretary determines to be necessary to 
     administer this subsection to achieve the goals of--
       ``(A) ensuring public safety;
       ``(B) protecting the environment;
       ``(C) preventing waste;
       ``(D) conserving the natural resources of, and protecting 
     correlative rights in, the outer Continental Shelf;
       ``(E) protecting national security interests;
       ``(F) auditing and reconciling payments made and owed by 
     each holder of a lease, easement, right-of-way, license, or 
     permit under this subsection to ensure a correct accounting 
     and collection of the payments; and
       ``(G) requiring each holder of a lease, easement, right-of-
     way, license, or permit under this subsection to--
       ``(i) establish such records as the Secretary determines to 
     be necessary;
       ``(ii) retain all records relating to an activity under a 
     lease, easement, right-of-way, license, or permit under this 
     subsection for such period as the Secretary may prescribe; 
     and
       ``(iii) produce the records on receipt of a request from 
     the Secretary.
       ``(7) Section 22 shall apply to any activity relating to a 
     lease, easement, right-of-way, license, or permit under this 
     subsection.
       ``(8) The Secretary shall require the holder of a lease, 
     easement, right-of-way, license, or permit under this 
     subsection to--
       ``(A) submit to the Secretary a surety bond or other form 
     of security, as determined by the Secretary; and
       ``(B) comply with any other requirement the Secretary 
     determines to be necessary to protect the interests of the 
     United States.
       ``(9) Nothing in this subsection displaces, supersedes, 
     limits, or modifies the jurisdiction, responsibility, or 
     authority of any Federal or State agency under any other 
     Federal law.
       ``(10) This subsection does not apply to any area on the 
     outer Continental Shelf designated as a National Marine 
     Sanctuary.''.
       (2) Conforming amendment.--Section 8 of the Outer 
     Continental Shelf Lands Act (43 U.S.C. 1337) is amended in 
     the section heading by striking ``LEASING'' and all that 
     follows and inserting ``LEASES, EASEMENTS, AND RIGHTS-OF-WAY 
     ON THE OUTER CONTINENTAL SHELF.''.
       (3) Savings provision.--Nothing in the amendment made by 
     paragraph (1) requires any resubmission of documents 
     previously submitted or any reauthorization of actions 
     previously authorized with respect to any project--
       (A) for which offshore test facilities have been 
     constructed before the date of enactment of this Act; or
       (B) for which a request for proposals has been issued by a 
     public authority.
                                 ______
                                 
  SA 803. Mr. VITTER submitted an amendment intended to be proposed by 
him to the bill H.R. 6, Reserved; which was ordered to lie on the 
table; as follows:

     SECTION 1. DOMESTIC OFFSHORE ENERGY REINVESTMENT.

       (a) In General.--The Outer Continental Shelf Lands Act (43 
     U.S.C. 1331 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 32. COASTAL IMPACT ASSISTANCE PROGRAM.

       ``(a) In this section:
       ``( 1) The term `approved plan' means a secure energy 
     reinvestment plan approved by the Secretary under this 
     section.
       ``(2) The term `coastal energy State' means a coastal State 
     off the coastline of which, within the seaward lateral 
     boundary, an outer Continental Shelf bonus bid or royalty is 
     generated.
       ``(3) The term `coastal political subdivision' means a 
     county, parish, or other equivalent subdivision of a coastal 
     energy State, all or part of which, on the date of the 
     enactment of this section, lies wthin the boundaries of the 
     coastal zone of the State, as identified in the coastal zone 
     management program of the State approved under the Coastal 
     Zone Management Act of 1972 (16 U.S.C. 1451 et seq.).
       ``(4) The term `coastal population' means the population of 
     a coastal political subdivision, as determined by the most 
     recent official data of the Census Bureau.
       ``(5) The term `coastline' has the meaning given the term 
     `coast line' in section 2(c) of the Submerged Lands Act (43 
     U.S.C. 1301(c)).
       ``(6) The term `Fund' means the Secure Energy Reinvestment 
     Fund established by subsection (b)(1).
       ``(7) The term `leased tract' means a tract maintained 
     under section 6 or leased under section 8 for the purpose of 
     drilling for, developing, and producing oil and natural gas 
     resources.
       ``(8) The term `qualified outer Continental Shelf revenues' 
     means all amounts received by the United States on or after 
     October 1, 2005, from each leased tract or portion of a 
     leased tract lying seaward of the zone defined and governed 
     by section 8(g) (or lying within that zone but to which 
     section 8(g) does not apply), including bonus bids, rents, 
     royalties (including payments for royalties taken in kind and 
     sold), net profit share payments, and related interest.
       ``(9) The term `Secretary' means the Secretary of the 
     Interior.
       ``(b)(1)(A) There is established in the Treasury of the 
     United States a separate account to be known as the `Secure 
     Energy Reinvestment Fund'.
       ``(B) The Fund shall consist of--
       ``(i) any amount deposited under paragraph (2); and
       ``(ii) any other amounts that are appropriated to the Fund.
       ``(2) For each fiscal year 2006 through 2009, the Secretary 
     of the Treasury shall deposit into the Fund $300,000,000.
       ``(B) All repayments made under subsection (f).
       ``(3) For each of fiscal years 2006 through 2020, in 
     addition to the amounts deposited into the Fund under 
     paragraph (2), there are authorized to be appropriated to the 
     Fund an amount equal to 27 percent of the qualified outer 
     Continental Shelf revenues received by the United Stated 
     during the preceding fiscal year.
       ``(c)(1)(A) The Secretary shall use any amount remaining in 
     the Fund after the application of subsection (h) to pay to 
     each coastal energy State, and any coastal political 
     subdivision of a State, the secure energy reinvestment plan 
     of which is approved by the Secretary under this section, the 
     amount allocated to the State or coastal political 
     subdivision, respectively, under this subsection.
       ``(B) During December 2006, and each December thereafter, 
     the Secretary shall make any payment under this paragraph 
     from revenues received in the Fund by the United States 
     during the preceding fiscal year.
       ``(2) The Secretary shall allocate any amount deposited 
     into the Fund for a fiscal year, and any other amount 
     determined by the Secretary to be available, among coastal 
     energy States, and coastal political subdivisions of those 
     States, that have a plan approved by the Secretary under this 
     section as follows:
       ``(A)(i) Of the amounts made available for each fical year 
     for which amounts are available for allocation under this 
     paragraph, the allocation for each coastal energy State shall 
     be calculated based on qualified Outer Continental Shelf 
     revenues from each leased tract or portion of a leased tract 
     the geographic center of which is within a distance (to the 
     nearest whole mile) of 200 miles from the coastline of the 
     State and shall be inversely proportional to the distance 
     between point nearest point on the coastline of such coastal 
     energy State and the geographic center of each such leased 
     tract or portion of a leased tract, as determined by the 
     Secretary.
       ``(ii) For the purposes of this subparagraph, qualified 
     outer Continental Shelf revenues shall be considered to be 
     generated off the coastline of a coastal energy State if the 
     geographic center of the lease tract from which the revenues 
     are generated is located within the area formed by the 
     extension of the seaward lateral boundaries of the State, 
     calculated using the conventions established to delimit 
     international lateral boundaries under the Law of the Sea.
       ``(B) 35 percent of the allocable share of each coastal 
     energy State, as determined under subparagraph (A), shall be 
     allocated among and paid directly to the coastal political 
     subdivisions of the State by the Secretary based on the 
     following formula:

[[Page 13189]]

       ``(i) 25 percent shall be allocated based on the ratio 
     that--
       ``(I) the coastal population of each coastal political 
     subdivision; bears to
       ``(II) the coastal population of all coastal political 
     subdivisions of the coastal energy State.
       ``(ii)(I) 25 percent shall be allocated based on the ratio 
     that--
       ``(aa) the length, in miles, of the coastal of each coastal 
     political subdivision; bears to
       ``(bb) the length, in miles, of the coastline of all 
     coastal political subdivisions of the State.--
       ``(II) For purposes of this clause, in the case of a 
     coastal political subdivision in Louisiana without a 
     coastline, the coastline of the political subdivision shall 
     be considered as \1/3\ the average length of the coastline of 
     the other coastal political subdivisions of the State.
       (III) Exception for the State of Alaska.-- For the purposes 
     of carrying out subparagraph (c)(2)(B) in the State of 
     Alaska, the amounts allocated shall be divided equally among 
     the 2 coastal political subdivisions that are closest to the 
     geographic center of a leased tract.
       ``(iii) 50 percent shall be allocated based on a formula 
     that allocates--
       ``(I) 75 percent of the funds based on the relative 
     distance of the coastal political subdivision from any leased 
     tract used to calculate the allocation to that State; and
       ``(II) 25 percent of the funds based on the relative level 
     of outer Continental Shelf oil and gas activities in a 
     coastal political subdivision to the level of outer 
     Continental Shelf oil and gas activities in all coastal 
     political subdivisions in the State, as determined by the 
     Secretary.
       ``(3) Any amount allocated to a coastal energy State or 
     coastal political subdivision that is not disbursed because 
     of a failure of a Coastal energy State to have an approved 
     plan shall be reallocated by the Secretary among all other 
     coastal energy States in a manner consistent with this 
     subsection, except that the Secretary--
       ``(A) shall hold the amount in escrow within the Fund until 
     the earlier of--
       ``(i) the end of the next fiscal year during Which the 
     allocation is made; or
       ``(ii) the date on which a final resolution of an appeal 
     regarding the disapproval of a plan submitted by the State 
     under this section is filed; and
       ``(B) shall continue to hold the amount in escrow until the 
     end of the subsequent fiscal year, if the Secretary 
     determines that a State is making a good faith effort to 
     develop and submit, or update, a secure energy reinvestment 
     plan under subsection (d).
       ``(4) Notwithstanding any other provision of this 
     subsection, the amount allocated under this subsection to 
     each coastal energy State during a fiscal year shall be not 
     less than 5 percent of the total amount available for that 
     fiscal year for allocation under this subsection to coastal 
     energy States.
       ``(5) If the allocation to 1 or more coastal energy States 
     under paragraph (4) during any fiscal year is greater than 
     the amount that would be allocated to those States under this 
     subsection if paragraph (4) did not apply, the allocations 
     under this subsection to all other coastal energy States 
     shall be--
       ``(A) paid from the amount remaining after the amounts 
     allocated under paragraph (4) are deducted; and
       ``(B) reduced on a pro rata basis by the sum of the 
     allocations under paragraph (4) so that not more than 100 
     percent of the funds available in the Fund for allocation 
     with respect to that fiscal year is allocated.
       ``(d)(1)(A) The Governor of a State seeking to receive 
     funds under this section shall prepare, and submit to the 
     Secretary, a secure energy reinvestment plan describing 
     planned expenditures of funds received under this section.
       ``(B) The Governor shall include in the State plan any plan 
     prepared by a coastal political subdivision of the State.
       ``(C) In the development of the State plan, the Governor 
     and the coastal political subdivision shall--
       ``(i) solicit local input;
       ``(ii) provide for public participation; and
       ``(iii) in describing the planned expenditures, include 
     only uses of funds described in subsection (e).
       ``(2)(A)(i) The Secretary shall not disburse funds to a 
     State or coastal political subdivision under this section 
     before the date on which the plan of the State is approved 
     under this subsection.
       ``(ii) The Secretary shall approve a plan submitted by a 
     State under paragraph (1) if the Secretary determines that--
       ``(I) each expenditures provided for in the plan is an 
     authorized use under subsection (e); and
       ``(II) the plan contains--
       ``(aa) the name of the State agency that will have the 
     authority to represent and act for the State in dealing with 
     the Secretary for purposes of this section;
       ``(bb) goals including improving the environment and 
     addressing the impacts of oil and gas production from the 
     outer Continental Shelf;
       ``(cc) a description of how the State and coastal political 
     subdivisions of the State will evaluate the effectiveness of 
     the plan;
       ``(dd) a certification by the Governor that ample 
     opportunity has been accorded for public participation in the 
     development and revision of the plan;
       ``(ee) measures for taking into account other relevant 
     Federal resources and programs;
       ``(ff) assurance that the plan is correlated as much as 
     practicable with other State, regional, and local plans;
       ``(gg) for any State for which the ratio determined under 
     clause (i) or (ii) of subsection (c)(2)(A), expressed as a 
     percentage, exceeds 25 percent, a plan to spend not less than 
     30 percent of the total funds provided to that State and 
     appropriate coastal political subdivisions under this section 
     during any fiscal year to address the socioeconomic or 
     environmental impacts identified in the plan that remain 
     significant or progressive after implementation of mitigation 
     measures identified in the most current environmental impact 
     statement as of the date of enactment of this section 
     required under the National Environmental Policy Act of 1969 
     (42 U.S.C. 4321 et seq.) for lease sales under his Act; and
       ``(hh) a plan to use at least \1/2\ of the funds provided 
     pursuant to subsection (c)(2)(B), and a portion of other 
     funds provided to a State under this section, on programs or 
     projects that are coordinated and conducted by a partnership 
     between the State and a coastal political subdivision.
       ``(B) Not later than 90 days after a plan of a State is 
     submitted under this subsection, the Secretary shall approve 
     or disapprove the Plan.
       ``(3) Any amendment to or revision of a plan approved under 
     this section shall be--
       ``(A) prepared and submitted in accordance with the 
     requirements of this paragraph; and
       ``(B) approved or disapproved by the Secretary in 
     accordance with paragraph (2)(B).
       ``(e) A coastal energy State, and a coastal political 
     subdivision, shall use any amount paid under this section 
     (including any amounts deposited into a trust fund 
     administered by the State or coastal political subdivision 
     consistent with this subsection), consistent with Federal and 
     State law and the approved plan of the State--
       ``(1) to carry out a project or activity for the 
     conservation, protection, or restoration of coastal areas 
     including wetlands;
       ``(2) to mitigate damage to, or protect, fish, wildlife, or 
     natural resources;
       ``(3) to implement a federally approved plan or program 
     for--
       ``(A) marine, coastal, subsidence, or conservation 
     management; or
       ``(B) protection of resources from natural disasters; and
       ``(4) to mitigate the effect of an outer Continental Shelf 
     activity by addressing impacts identified in an environmental 
     impact statement as of the date of enactment of this section 
     required under the National Environmental Policy Act of 1969 
     (42 V.S.C. 432 et seq.) for lease sales under this Act.
       ``(f) If the Secretary determines that an expenditure made 
     by a coastal energy State or coastal political subdivision is 
     not in accordance with the approved plan of the State 
     (including any plan of a coastal political subdivisionl 
     included in the plan of the State), the Secretary shall not 
     disburse any additional amount under this section to that 
     coastal energy State or coastal political subdivision until--
       ``(1) the amount of the expenditure is repaid to the 
     Secretary; or
       ``(2) the Secretary approves an amendment to the plan that 
     authorizes the expenditure.
       ``(g) The Secretary may require, as a condition of any 
     payment under this section, that a State or coastal political 
     subdivision shall submit to arbitration--
       ``(1) any dispute between the State or coastal political 
     subdivision and the Secretary regarding implementation of 
     this section and
       ``(2) any dispute between the State and political 
     subdivision regarding implementation of this section, 
     including any failure to include in the plan submitted by the 
     State under subsection (d) any spending plan of the coastal 
     political subdivision.
       ``(h) The Secretary may use not more than \1/2\ of 1 
     percent of the amount in the Fund during a fiscal year to pay 
     the administrative costs of implementing this section.
       ``(i) A coastal energy State or coastal political 
     subdivision may use funds provided to that State or coastal 
     political subdivision under this section for any payment that 
     is eligible to be made with funds provided to States under 
     section 35 of the Mineral Leasing Act (30 U.S.C. 191) to 
     carry out approved plan activities under subsection (e).
       ``(j)(1) The Governor of a coastal energy State, in 
     coordination with the coastal political subdivisions of that 
     State, shall account for all funds received under this 
     section during the previous fiscal year in a written report 
     to the Secretary.
       ``(2) The report shall include, in accordance with 
     regulations prescribed by the Secretary, a description of all 
     projects and activities that received funds under this 
     section.
       ``(3) The report may incorporate by reference any other 
     report required to be submitted under another provision of 
     law.
       ``(k) The Secretary shall require, as a condition of any 
     allocation of funds provided under this section, that a State 
     or coastal political subdivision shall include on any

[[Page 13190]]

     sign installed at a site at or near an entrance or public use 
     area for which funds provided under this section are used a 
     statement that the existence or development of the site is a 
     product of those funds.''.
                                 ______
                                 
  SA 804. Mr. VITTER submitted an amendment intended to be proposed by 
him to the bill H.R. 6, Reserved; which was ordered to lie on the 
table; as follows:

       At the end of subtitle B of title III, add the following:

     SEC. 3__. SEAWARD BOUNDARY EXTENSION.

       (a) Purposes.--The purposes of this section are--
       (1) to provide equity to the States of Louisiana, 
     Mississippi, and Alabama with respect to the seaward 
     boundaries of the States in the Gulf of Mexico by extending 
     the seaward boundaries from 3 geographical miles to 3 marine 
     leagues if the State meets certain conditions not later than 
     5 years after the date of enactment of this Act;
       (2) to convey to the States of Louisiana, Mississippi, and 
     Alabama the interest of the United States in the submerged 
     land of the outer Continental Shelf that is located in the 
     extended seaward boundaries of the States;
       (3) to provide that any mineral leases, easements, rights-
     of-use, and rights-of-way issued by the Secretary of the 
     Interior with respect to the submerged land to be conveyed 
     shall remain in full force and effect; and
       (4) in conveying the submerged land, to ensure that the 
     rights of lessees, operators, and holders of easements, 
     rights-of-use, and rights-of-way on the submerged land are 
     protected.
       (b) Extension.--Title II of the Submerged Lands Act (43 
     U.S.C. 1311 et seq.) is amended--
       (1) by redesignating section 11 as section 12; and
       (2) by inserting after section 10 the following:

     ``SEC. 11. EXTENSION OF SEAWARD BOUNDARIES OF THE STATES OF 
                   LOUISIANA, MISSISSIPPI, AND ALABAMA.

       ``(a) Definitions.--In this section:
       ``(1) Existing interest.--The term `existing interest' 
     means any lease, easement, right-of-use, or right-of-way on, 
     or for any natural resource or minerals underlying, the 
     expanded submerged land that is in existence on the date of 
     the conveyance of the expanded submerged land to the State 
     under subsection (b)(1).
       ``(2) Expanded seaward boundary.--The term `expanded 
     seaward boundary' means the seaward boundary of the State 
     that is 3 marine leagues seaward of the coast line of the 
     State as of the day before the date of enactment of this 
     section.
       ``(3) Expanded submerged land.--The term `expanded 
     submerged land' means the area of the outer Continental Shelf 
     that is located between 3 geographical miles and 3 marine 
     leagues seaward of the coast line of the State as of the day 
     before the date of enactment of this section.
       ``(4) Interest owner.--The term `interest owner' means any 
     person that owns or holds an existing interest in the 
     expanded submerged land or portion of an existing interest in 
     the expanded submerged land.
       ``(5) Secretary.--The term `Secretary' means the Secretary 
     of the Interior.
       ``(6) State.--The term `State' means each of the States of 
     Louisiana, Mississippi, and Alabama.
       ``(b) Conveyance of Expanded Submerged Land.--
       ``(1) In general.--Effective beginning on the date that is 
     10 years after the date of enactment of the Energy Policy Act 
     of 2005, if a State demonstrates to the satisfaction of the 
     Secretary that the conditions described in paragraph (2) will 
     be met, the Secretary shall, subject to valid existing rights 
     and subsection (c), convey to the State the interest of the 
     United States in the expanded submerged land of the State.
       ``(2) Conditions.--A conveyance under paragraph (1) shall 
     be subject to the condition that--
       ``(A) on conveyance of the interest of the United States in 
     the expanded submerged land to the State under paragraph 
     (1)--
       ``(i) the Governor of the State (or a delegate of the 
     Governor) shall exercise the powers and duties of the 
     Secretary under the terms of any existing interest, subject 
     to the requirement that the State and the officers of the 
     State may not exercise the powers to impose any burden or 
     requirement on any interest owner that is more onerous or 
     strict than the burdens or requirements imposed under 
     applicable Federal law (including regulations) on owners or 
     holders of the same type of lease, easement, right-of-use, or 
     right-of-way on the outer Continental Shelf seaward of the 
     expanded submerged land; and
       ``(ii) the State shall not impose any administrative or 
     judicial penalty or sanction on any interest owner that is 
     more severe than the penalty or sanction under Federal law 
     (including regulations) applicable to owners or holders of 
     leases, easements, rights-of-use, or rights-of-way on the 
     outer Continental Shelf seaward of the expanded submerged 
     lands for the same act, omission, or violation;
       ``(B) not later than 10 years after the date of enactment 
     of this section--
       ``(i) the State shall enact laws or promulgate regulations 
     with respect to the environmental protection, safety, and 
     operations of any platform pipeline in existence on the date 
     of conveyance to the State under paragraph (1) that is 
     affixed to or above the expanded submerged land that impose 
     the same requirements as Federal law (including regulations) 
     applicable to a platform pipeline on the outer Continental 
     Shelf seaward of the expanded submerged land; and
       ``(ii) the State shall enact laws or promulgate regulations 
     for determining the value of oil, gas, or other mineral 
     production from existing interests for royalty purposes that 
     establish the same requirements as the requirements under 
     Federal law (including regulations) applicable to Federal 
     leases for the same minerals on the outer Continental Shelf 
     seaward of the expanded submerged land; and
       ``(C) the State laws and regulations enacted or promulgated 
     under subparagraph (B) shall provide that if Federal law 
     (including regulations) applicable to leases, easements, 
     rights-of-use, or rights-of-way on the outer Continental 
     Shelf seaward of the expanded submerged land are modified 
     after the date on which the State laws and regulations are 
     enacted or promulgated, the State laws and regulations 
     applicable to existing interests will be modified to reflect 
     the change in Federal laws (including regulations).
       ``(c) Exceptions.--
       ``(1) Mineral lease or unit divided.--
       ``(A) In general.--If any existing Federal oil and gas or 
     other mineral lease or unit would be divided by the expanded 
     seaward boundary of a State, the interest of the United 
     States in the leased minerals underlying the portion of the 
     lease or unit that lies within the expanded submerged 
     boundary shall not be considered to be conveyed to the State 
     until the date on which the lease or unit expires or is 
     relinquished by the United States.
       ``(B) Applicability for other purposes.--Notwithstanding 
     subparagraph (A), the expanded seaward boundary of a State 
     shall be the seaward boundary of the State for all other 
     purposes, including the distribution of revenues under 
     section 8(g)(2) of the Outer Continental Shelf Lands Act (43 
     U.S.C. 1337(g)(2)).
       ``(2) Laws and regulations not sufficient.--If the 
     Secretary determines that any law or regulation enacted or 
     promulgated by a State under subparagraph (B) of subsection 
     (b)(2) does not meet the requirements of that subparagraph, 
     the Secretary shall not convey the expanded submerged land to 
     the State.
       ``(d) Interest Issued or Granted by the State.--This 
     section does not apply to any interest in the expanded 
     submerged land that a State issues or grants after the date 
     of conveyance of the expanded submerged land to the State 
     under subsection (b)(1).
       ``(e) Liability.--
       ``(1) In general.--By accepting conveyance of the expanded 
     submerged land, the State agrees to indemnify the United 
     States for any liability to any interest owner for the taking 
     of any property interest or breach of contract from--
       ``(A) the conveyance of the expanded submerged land to the 
     State; or
       ``(B) the State's administration of any existing interest 
     under subsection (b)(2)(A)(i).
       ``(2) Deduction from oil and gas leasing revenues.--The 
     Secretary may deduct from the amounts otherwise payable to 
     the State under section 8(g)(2) of the Outer Continental 
     Shelf Lands Act (43 U.S.C. 1337(g)(2)) the amount of any 
     final nonappealable judgment for a taking or breach of 
     contract described in paragraph (1).''.
       (c) Conforming Amendment.--Section 2(b) of the Submerged 
     Lands Act (43 U.S.C. 1301(b)) is amended by striking 
     ``section 4 hereof'' and inserting ``section 4 or 11''.
                                 ______
                                 
  SA 805. Mr. SCHUMER proposed an amendment to the bill H.R. 6, 
Reserved; as follows:

       On page 208, after line 24, add the following:

     SEC. 303. SENSE OF THE SENATE REGARDING MANAGEMENT OF SPR.

       (a) Findings.--Congress finds that--
       (1) the prices of gasoline and crude oil have a direct and 
     substantial impact on the financial well-being of families of 
     the United States, the potential for national economic 
     recovery, and the economic security of the United States;
       (2) on June 13, 2005, crude oil prices closed at the 
     exceedingly high level of $55.62 per barrel, the price of 
     crude oil has remained above $50 per barrel since May 25, 
     2005, and the price of crude oil has exceeded $50 per barrel 
     for approximately \1/3\ of calendar year 2005;
       (3) on June 6, 2005, the Energy Information Administration 
     announced that the national price of gasoline, at $2.12 per 
     gallon, could reach even higher levels in the near future;
       (4) despite the severely high, sustained price of crude 
     oil--
       (A) the Organization of Petroleum Exporting Countries 
     (referred to in this section as ``OPEC'') has refused to 
     adequately increase production to calm global oil markets and

[[Page 13191]]

     officially abandoned its $22-$28 price target; and
       (B) officials of OPEC member nations have publicly 
     indicated support for maintaining oil prices of $40-$50 per 
     barrel;
       (5) the Strategic Petroleum Reserve (referred to in this 
     section as ``SPR'') was created to enhance the physical and 
     economic security of the United States;
       (6) the law allows the SPR to be used to provide relief 
     when oil and gasoline supply shortages cause economic 
     hardship;
       (7) the proper management of the resources of the SPR could 
     provide gasoline price relief to families of the United 
     States and provide the United States with a tool to 
     counterbalance OPEC supply management policies;
       (8) the Administration's policy of filling the SPR despite 
     the fact that the SPR is nearly full has exacerbated the 
     rising price of crude oil and record high retail price of 
     gasoline;
       (9) in order to combat high gasoline prices during the 
     summer and fall of 2000, President Clinton released 
     30,000,000 barrels of oil from the SPR, stabilizing the 
     retail price of gasoline;
       (10) increasing vertical integration has allowed--
       (A) the 5 largest oil companies in the United States to 
     control almost as much crude oil production as the Middle 
     Eastern members of OPEC, over \1/2\ of domestic refiner 
     capacity, and over 60 percent of the retail gasoline market; 
     and
       (B) Exxon/Mobil, BP, Royal Dutch Shell Group, Conoco/
     Philips, and Chevron/Texaco to increase first quarter profits 
     of 2005 over first quarter profits of 2004 by 36 percent, for 
     total first quarter profits of over $25,000,000,000;
       (11) the Administration has failed to manage the SPR in a 
     manner that would provide gasoline price relief to working 
     families; and
       (12) the Administration has failed to adequately demand 
     that OPEC immediately increase oil production in order to 
     lower crude oil prices and safeguard the world economy.
       (b) Sense of Congress.--It is the sense of Congress that 
     the President should--
       (1) directly confront OPEC and challenge OPEC to 
     immediately increase oil production; and
       (2) direct the Federal Trade Commission and Attorney 
     General to exercise vigorous oversight over the oil markets 
     to protect the people of the United States from price gouging 
     and unfair practices at the gasoline pump.
       (c) Release of Oil From SPR.--
       (1) In general.--For the period beginning on the date of 
     enactment of this Act and ending on the date that is 30 days 
     after the date of enactment of this Act, 1,000,000 barrels of 
     oil per day shall be released from the SPR.
       (2) Additional release.--If necessary to lower the burden 
     of gasoline prices on the economy of the United States and to 
     circumvent the efforts of OPEC to reap windfall crude oil 
     profits, 1,000,000 barrels of oil per day shall be released 
     from the Strategic Petroleum Reserve for an additional 30 
     days.
                                 ______
                                 
  SA 806. Mrs. HUTCHISON submitted an amendment intended to be proposed 
by her to the bill H.R. 6, Reserved; which was ordered to lie on the 
table; as follows:

       On page 767, between lines 21 and 22, insert the following:
       (3) Petroleum coke gasification projects.--At least 5 
     petroleum coke gasification projects.
                                 ______
                                 
  SA 807. Mr. OBAMA submitted an amendment intended to be proposed by 
him to the bill H.R. 6, Reserved; which was ordered to lie on the 
table; as follows:

       On page 37, between the matter following line 12 and line 
     13, insert the following:

     SEC. 109. INDUSTRIAL NATURAL GAS EFFICIENCY PILOT PROGRAM.

       (a) In General.--The Secretary shall establish a 2-year 
     pilot program (referred to in this section as the 
     ``program'') to demonstrate the effectiveness of energy 
     efficiency improvements that reduce natural gas usage in the 
     industrial sector.
       (b) Program Coordinator.--
       (1) In general.--The program shall be administered by a 
     program coordinator, to be designated by the Secretary in 
     accordance with paragraph (2).
       (2) Designation.--As soon as practicable after the date of 
     enactment this Act, the Secretary shall designate as program 
     coordinator an energy resource center that is--
       (1) located in the midwestern United States;
       (2) affiliated with a major land-grant university; and
       (3) certified by a State board of higher education.
       (c) Grants.--
       (1) In general.--In carrying out the program, the Secretary 
     shall provide, in accordance with the guidelines established 
     under paragraph (2), grants to eligible entities from the 
     industrial sector to pay the Federal share of the costs of 
     eligible projects to reduce natural gas usage by implementing 
     energy efficiency improvements.
       (2) Requirements.--Grants shall be provided under paragraph 
     (1) on a competitive basis, in accordance with guidelines 
     established by the program coordinator.
       (3) Eligible energy efficiency improvements.--A project for 
     which assistance may be provided a grant under this 
     subsection includes a project for--
       (A) steam production and distribution;
       (B) efficiency upgrades and heat recovery for process 
     heating and cooling project;
       (C) compressed air technologies;
       (D) combined heat and power applications; and
       (E) improvements in motor technologies.
       (4) Federal share.--The Federal share of the cost of 
     carrying out a project under this subsection shall be not 
     more than 30 percent.
       (d) Education.--In carrying out the program, the Secretary 
     and the program coordinator shall make available to 
     industries information on energy-efficient technologies that 
     reduce industrial natural gas usage to encourage industries 
     to invest in the energy-efficient technologies.
       (e) Report.--On completion of the program, the program 
     coordinator shall submit to Congress a report that--
       (1) describes the results and successes of the program; and
       (2) makes recommendations for any appropriate actions that 
     would encourage industrial energy-efficiency investments.
       (f) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $10,000,000 for 
     the period of fiscal years 2006 through 2008, of which 
     $8,000,000 shall be made available to carry out subsection 
     (c).
                                 ______
                                 
  SA 808. Mr. OBAMA (for himself and Mr. Lugar) submitted an amendment 
intended to be proposed by him to the bill H.R. 6, Reserved; which was 
ordered to lie on the table; as follows:

       On page 346, between lines 9 and 10, insert the following:

     SEC. 4__. DEPARTMENT OF ENERGY TRANSPORTATION FUELS FROM 
                   ILLINOIS BASIN COAL.

       (a) In General.--The Secretary shall carry out a program to 
     evaluate the commercial and technical viability of advanced 
     technologies for the production of Fischer-Tropsch 
     transportation fuels, and other transportation fuels, 
     manufactured from Illinois basin coal, including the capital 
     modification of existing facilities and the construction of 
     testing facilities under subsection (b).
       (b) Facilities.--For the purpose of evaluating the 
     commercial and technical viability of different processes for 
     producing Fischer-Tropsch transportation fuels, and other 
     transportation fuels, from Illinois basin coal, the Secretary 
     shall support the use and capital modification of existing 
     facilities and the construction of new facilities at--
       (1) Southern Illinois University Coal Research Center;
       (2) University of Kentucky Center for Applied Energy 
     Research; and
       (3) Energy Center at Purdue University.
       (c) Gasification Products Test Center.--In conjunction with 
     the activities described in subsections (a) and (b), the 
     Secretary shall construct a test center to evaluate and 
     confirm liquid and gas products from syngas catalysis in 
     order that the system has an output of at least 500 gallons 
     of Fischer-Tropsch transportation fuel per day in a 24-hour 
     operation.
       (d) Milestones.--
       (1) Selection of processes.--Not later than 180 days after 
     the date of enactment of this Act, the Secretary shall select 
     processes for evaluating the commercial and technical 
     viability of different processes of producing Fischer-Tropsch 
     transportation fuels, and other transportation fuels, from 
     Illinois basin coal.
       (2) Agreements.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary shall offer to enter 
     into agreements--
       (A) to carry out the activities described in this section, 
     at the facilities described in subsection (b); and
       (B) for the capital modifications or construction of the 
     facilities at the locations described in subsection (b).
       (3) Evaluations.--Not later than 3 years after the date of 
     enactment of the Act, the Secretary shall begin, at the 
     facilities described in subsection (b), evaluation of the 
     technical and commercial viability of different processes of 
     producing Fischer-Tropsch transportation fuels, and other 
     transportation fuels, from Illinois basin coal.
       (4) Construction of facilities.--
       (A) In general.--The Secretary shall construct the 
     facilities described in subsection (b) at the lowest cost 
     practicable.
       (B) Grants or agreements.--The Secretary may make grants or 
     enter into agreements or contracts with the institutions of 
     higher education described in subsection (b).
       (e) Cost Sharing.--The cost of making grants under this 
     section shall be shared in accordance with section 1002.
       (f) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $85,000,000 for 
     the period of fiscal years 2006 through 2010.

[[Page 13192]]



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