Text of H.R. 5351 (110th): Renewable Energy and Energy Conservation Tax Act of 2008 (Introduced version)

110th CONGRESS

2d Session

H. R. 5351

IN THE HOUSE OF REPRESENTATIVES

February 12, 2008

Mr. Rangel (for himself, Mr. Stark, Mr. Levin, Mr. McDermott, Mr. Lewis of Georgia, Mr. Neal of Massachusetts, Mr. Becerra, Mr. Doggett, Mr. Pomeroy, Mrs. Jones of Ohio, Mr. Larson of Connecticut, Mr. Emanuel, Mr. Blumenauer, Mr. Kind, Mr. Pascrell, Mr. Crowley, Mr. Van Hollen, Ms. Schwartz, Ms. Castor, Mr. Cohen, Mr. Ellison, Ms. Giffords, Mr. Hall of New York, Mr. Hill, Mr. Hodes, Ms. Hirono, Mr. Johnson of Georgia, Mr. Klein of Florida, Mr. McNerney, Mr. Sarbanes, Mr. Sires, Ms. Tsongas, and Mr. Welch of Vermont) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide tax incentives for the production of renewable energy and energy conservation.

(a)

This Act may be cited as the Renewable Energy and Energy Conservation Tax Act of 2008.

(b)

Except as otherwise expressly provided, whenever in this Act 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)

The table of contents of this Act is as follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.

Title I—Production incentives

Sec. 101. Extension and modification of renewable energy credit.

Sec. 102. Production credit for electricity produced from marine renewables.

Sec. 103. Extension and modification of energy credit.

Sec. 104. New clean renewable energy bonds.

Sec. 105. Extension and modification of special rule to implement FERC and State electric restructuring policy.

Sec. 106. Extension and modification of credit for residential energy efficient property.

Title II—Conservation

Subtitle A—Transportation

Part 1—Vehicles

Sec. 201. Credit for plug-in hybrid vehicles.

Sec. 202. Extension and modification of alternative fuel vehicle refueling property credit.

Sec. 203. Modification of limitation on automobile depreciation.

Part 2—Fuels

Sec. 211. Extension and modification of credits for biodiesel and renewable diesel.

Sec. 212. Clarification that credits for fuel are designed to provide an incentive for United States production.

Sec. 213. Credit for production of cellulosic alcohol.

Part 3—Other transportation incentives

Sec. 221. Extension of transportation fringe benefit to bicycle commuters.

Sec. 222. Restructuring of New York Liberty Zone tax credits.

Subtitle B—Other conservation provisions

Sec. 231. Qualified energy conservation bonds.

Sec. 232. Extension and modification of credit for nonbusiness energy property.

Sec. 233. Extension of energy efficient commercial buildings deduction.

Sec. 234. Modifications of energy efficient appliance credit for appliances produced after 2007.

Sec. 235. Five-year applicable recovery period for depreciation of qualified energy management devices.

Title III—Revenue provisions

Sec. 301. Limitation of deduction for income attributable to domestic production of oil, gas, or primary products thereof.

Sec. 302. Clarification of determination of foreign oil and gas extraction income.

Sec. 303. Time for payment of corporate estimated taxes.

Title IV—Other provisions

Subtitle A—Studies

Sec. 401. Carbon audit of the tax code.

Sec. 402. Comprehensive study of biofuels.

Subtitle B—Application of certain labor standards on projects financed under tax credit bonds

Sec. 411. Application of certain labor standards on projects financed under tax credit bonds.

101.

(a)

Each of the following provisions of section 45(d) (relating to qualified facilities) is amended by striking January 1, 2009 and inserting January 1, 2012:

(1)

Paragraph (1).

(2)

Clauses (i) and (ii) of paragraph (2)(A).

(3)

Clauses (i)(I) and (ii) of paragraph (3)(A).

(4)

Paragraph (4).

(5)

Paragraph (5).

(6)

Paragraph (6).

(7)

Paragraph (7).

(8)

Subparagraphs (A) and (B) of paragraph (9).

(b)

(1)

Subsection (b) of section 45 is amended—

(A)

by striking paragraph (1), and

(B)

by striking the 8 cent amount in paragraph (1), in paragraph (2) thereof.

(2)

Subsection (b) of section 45 is amended by inserting before paragraph (2) the following new paragraph:

(1)

(A)

In the case of any qualified facility originally placed in service after December 31, 2009, the amount of the credit determined under subsection (a) for any taxable year with respect to electricity produced at such facility shall not exceed the product of—

(i)

the applicable percentage with respect to such facility, multiplied by

(ii)

the eligible basis of such facility.

(B)

(i)

If the limitation imposed under subparagraph (A) with respect to any facility for any taxable year exceeds the prelimitation credit for such facility for such taxable year, the limitation imposed under subparagraph (A) with respect to such facility for the succeeding taxable year shall be increased by the amount of such excess.

(ii)

If the prelimitation credit with respect to any facility for any taxable year exceeds the limitation imposed under subparagraph (A) with respect to such facility for such taxable year, the credit determined under subsection (a) with respect to such facility for the succeeding taxable year (determined before the application of subparagraph (A) for such succeeding taxable year) shall be increased by the amount of such excess. With respect to any facility, no amount may be carried forward under this clause to any taxable year beginning after the 10-year period described in subsection (a)(2)(A)(ii) with respect to such facility.

(iii)

The term prelimitation credit with respect to any facility for a taxable year means the credit determined under subsection (a) with respect to such facility for such taxable year, determined without regard to subparagraph (A) and after taking into account any increase for such taxable year under clause (ii).

(C)

For purposes of this paragraph—

(i)

The term applicable percentage means, with respect to any facility, the appropriate percentage prescribed by the Secretary for the month in which such facility is originally placed in service.

(ii)

The applicable percentages prescribed by the Secretary for any month under clause (i) shall be percentages which yield over a 10-year period amounts of limitation under subparagraph (A) which have a present value equal to 35 percent of the eligible basis of the facility.

(iii)

The present value under clause (ii) shall be determined—

(I)

as of the last day of the 1st year of the 10-year period referred to in clause (ii),

(II)

by using a discount rate equal to the greater of 110 percent of the Federal long-term rate as in effect under section 1274(d) for the month preceding the month for which the applicable percentage is being prescribed, or 4.5 percent, and

(III)

by taking into account the limitation under subparagraph (A) for any year on the last day of such year.

(D)

For purposes of this paragraph—

(i)

The term eligible basis means, with respect to any facility, the sum of—

(I)

the basis of such facility determined as of the time that such facility is originally placed in service, and

(II)

the portion of the basis of any shared qualified property which is properly allocable to such facility under clause (ii).

(ii)

For purposes of subclause (II) of clause (i), the basis of shared qualified property shall be allocated among all qualified facilities which are projected to be placed in service and which require utilization of such property in proportion to projected generation from such facilities.

(iii)

For purposes of this paragraph, the term shared qualified property means, with respect to any facility, any property described in section 168(e)(3)(B)(vi)—

(I)

which a qualified facility will require for utilization of such facility, and

(II)

which is not a qualified facility.

(iv)

In the case of any qualified facility using geothermal energy to produce electricity, the basis of such facility for purposes of this paragraph shall be determined as though intangible drilling and development costs described in section 263(c) were capitalized rather than expensed.

(E)

In the case of any taxable year any portion of which is not within the 10-year period described in subsection (a)(2)(A)(ii) with respect to any facility, the amount of the limitation under subparagraph (A) with respect to such facility shall be reduced by an amount which bears the same ratio to the amount of such limitation (determined without regard to this subparagraph) as such portion of the taxable year which is not within such period bears to the entire taxable year.

(F)

At the election of the taxpayer, all qualified facilities which are part of the same project and which are placed in service during the same calendar year shall be treated for purposes of this section as 1 facility which is placed in service at the mid-point of such year or the first day of the following calendar year.

(c)

Paragraph (7) of section 45(d) is amended—

(1)

by striking facility which burns and inserting facility (other than a facility described in paragraph (6)) which uses, and

(2)

by striking combustion.

(d)

(1)

Paragraph (3) of section 45(d) is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:

(B)

Such term shall include a new unit placed in service after the date of the enactment of this subparagraph in connection with a facility described in subparagraph (A), but only to the extent of the increased amount of electricity produced at the facility by reason of such new unit.

(2)

Paragraph (2) of section 45(d) is amended by redesignating subparagraph (B) as subparagraph (C) and inserting after subparagraph (A) the following new subparagraph:

(B)

Such term shall include a new unit placed in service after the date of the enactment of this subparagraph in connection with a facility described in subparagraph (A)(i), but only to the extent of the increased amount of electricity produced at the facility by reason of such new unit.

(e)

(1)

Except as otherwise provided in this subsection, the amendments made by this section shall apply to property originally placed in service after December 31, 2008.

(2)

The amendments made by subsection (b)(1) shall apply to taxable years ending after December 31, 2008.

(3)

The amendment made by subsection (b)(2) shall apply to property originally placed in service after December 31, 2009.

(4)

The amendments made by subsection (c) shall apply to electricity produced and sold after the date of the enactment of this Act.

(5)

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

102.

(a)

Paragraph (1) of section 45(c) (relating to resources) 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)

marine and hydrokinetic renewable energy.

(b)

Subsection (c) of section 45 is amended by adding at the end the following new paragraph:

(10)

(A)

The term marine and hydrokinetic renewable energy means energy derived from—

(i)

waves, tides, and currents in oceans, estuaries, and tidal areas,

(ii)

free flowing water in rivers, lakes, and streams,

(iii)

free flowing water in an irrigation system, canal, or other man-made channel, including projects that utilize nonmechanical structures to accelerate the flow of water for electric power production purposes, or

(iv)

differentials in ocean temperature (ocean thermal energy conversion).

(B)

Such term shall not include any energy which is derived from any source which utilizes a dam, diversionary structure (except as provided in subparagraph (A)(iii)), or impoundment for electric power production purposes.

(c)

Subsection (d) of section 45 is amended by adding at the end the following new paragraph:

(11)

In the case of a facility producing electricity from marine and hydrokinetic renewable energy, the term qualified facility means any facility owned by the taxpayer—

(A)

which has a nameplate capacity rating of at least 150 kilowatts, and

(B)

which is originally placed in service on or after the date of the enactment of this paragraph and before January 1, 2012.

(d)

Subparagraph (A) of section 45(b)(4) is amended by striking or (9) and inserting (9), or (11).

(e)

Paragraph (5) of section 45(d), as amended by section 101(a), is amended by striking January 1, 2012 and inserting the date of the enactment of paragraph (11).

(f)

The amendments made by this section shall apply to electricity produced and sold after the date of the enactment of this Act, in taxable years ending after such date.

103.

(a)

(1)

Paragraphs (2)(A)(i)(II) and (3)(A)(ii) of section 48(a) (relating to energy credit) are each amended by striking January 1, 2009 and inserting January 1, 2017.

(2)

Subparagraph (E) of section 48(c)(1) (relating to qualified fuel cell property) is amended by striking December 31, 2008 and inserting December 31, 2016.

(b)

Subparagraph (B) of section 38(c)(4) (relating to specified credits) 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 credit determined under section 46 to the extent that such credit is attributable to the energy credit determined under section 48.

(c)

Subparagraph (B) of section 48(c)(1) is amended by striking $500 and inserting $1,500.

(d)

(1)

Paragraph (3) of section 48(a) is amended by striking the second sentence thereof.

(2)

(A)

Paragraph (1) of section 48(c) is amended by striking subparagraph (D) and redesignating subparagraph (E) as subparagraph (D).

(B)

Paragraph (2) of section 48(c) is amended by striking subparagraph (D) and redesignating subparagraph (E) as subparagraph (D).

(e)

(1)

Except as otherwise provided in this subsection, the amendments made by this section shall take effect on the date of the enactment of this Act.

(2)

The amendments made by subsection (b) shall apply to credits determined under section 46 of the Internal Revenue Code of 1986 in taxable years beginning after the date of the enactment of this Act and to carrybacks of such credits.

(3)

The amendment made by subsection (c) 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).

(4)

The amendments made by subsection (d) shall apply to periods after February 13, 2008, 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).

104.

(a)

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

Sec. 54A. Credit to holders of qualified tax credit bonds.

Sec. 54B. New clean renewable energy bonds.

54A.

(a)

If a taxpayer holds a qualified tax credit bond on one or more credit allowance dates of the bond 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)

(1)

The amount of the credit determined under this subsection with respect to any credit allowance date for a qualified tax credit bond is 25 percent of the annual credit determined with respect to such bond.

(2)

The annual credit determined with respect to any qualified tax credit bond is the product of—

(A)

the applicable credit rate, multiplied by

(B)

the outstanding face amount of the bond.

(3)

For purposes of paragraph (2), the applicable credit rate is the rate which the Secretary estimates will permit the issuance of qualified tax credit bonds with a specified maturity or redemption date without discount and without interest cost to the qualified issuer. The applicable credit rate with respect to any qualified tax credit bond shall be determined as of the first day on which there is a binding, written contract for the sale or exchange of the bond.

(4)

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)

(1)

The credit allowed under subsection (a) for any taxable year shall not exceed the excess of—

(A)

the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

(B)

the sum of the credits allowable under this part (other than subpart C and this subpart).

(2)

If the credit allowable under subsection (a) exceeds the limitation imposed by paragraph (1) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year (determined before the application of paragraph (1) for such succeeding taxable year).

(d)

For purposes of this section—

(1)

The term qualified tax credit bond means a new clean renewable energy bond which is part of an issue that meets the requirements of paragraphs (2), (3), (4), (5), and (6).

(2)

(A)

An issue shall be treated as meeting the requirements of this paragraph if, as of the date of issuance, the issuer reasonably expects—

(i)

100 percent or more of the available project proceeds to be spent for 1 or more qualified purposes within the 3-year period beginning on such date of issuance, and

(ii)

a binding commitment with a third party to spend at least 10 percent of such available project proceeds will be incurred within the 6-month period beginning on such date of issuance.

(B)

(i)

To the extent that less than 100 percent of the available project proceeds of the issue are expended by the close of the expenditure period for 1 or more qualified purposes, the 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.

(ii)

For purposes of this subpart, the term expenditure period means, with respect to any issue, the 3-year period beginning on the date of issuance. Such term shall include any extension of such period under clause (iii).

(iii)

Upon submission of a request prior to the expiration of the expenditure period (determined without regard to any extension under this clause), the Secretary may extend such period if the issuer establishes that the failure to expend the proceeds within the original expenditure period is due to reasonable cause and the expenditures for qualified purposes will continue to proceed with due diligence.

(C)

For purposes of this paragraph, the term qualified purpose means a purpose specified in section 54B(a)(1).

(D)

For purposes of this subtitle, available project proceeds of an issue shall be treated as spent for a qualified purpose if such proceeds are used to reimburse the issuer for amounts paid for a qualified purpose after the date that the Secretary makes an allocation of bond limitation with respect to such issue, but only if—

(i)

prior to the payment of the original expenditure, the issuer declared its intent to reimburse such expenditure with the proceeds of a qualified tax credit bond,

(ii)

not later than 60 days after payment of the original expenditure, the 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.

(3)

An issue shall be treated as meeting the requirements of this paragraph if the issuer of qualified tax credit bonds submits reports similar to the reports required under section 149(e).

(4)

(A)

An issue shall be treated as meeting the requirements of this paragraph if the issuer satisfies the requirements of section 148 with respect to the proceeds of the issue.

(B)

An issue shall not be treated as failing to meet the requirements of subparagraph (A) by reason of any investment of available project proceeds during the expenditure period.

(C)

An issue shall not be treated as failing to meet the requirements of subparagraph (A) by reason of any fund which is expected to be used to repay such issue if—

(i)

such fund is funded at a rate not more rapid than equal annual installments,

(ii)

such fund is funded in a manner reasonably expected to result in an amount not greater than an amount necessary to repay the issue, and

(iii)

the yield on such fund is not greater than the discount rate determined under paragraph (5)(B) with respect to the issue.

(5)

(A)

An issue shall not be treated as meeting the requirements of this paragraph if the maturity of any bond which is part of such issue exceeds the maximum term determined by the Secretary under subparagraph (B).

(B)

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-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.

(6)

An issue shall be treated as meeting the requirements of this paragraph if the issuer certifies that—

(A)

applicable State and local law requirements governing conflicts of interest are satisfied with respect to such issue, and

(B)

if the Secretary prescribes additional conflicts of interest rules governing the appropriate Members of Congress, Federal, State, and local officials, and their spouses, such additional rules are satisfied with respect to such issue.

(e)

For purposes of this subchapter—

(1)

The term credit allowance date means—

(A)

March 15,

(B)

June 15,

(C)

September 15, and

(D)

December 15.

Such term includes the last day on which the bond is outstanding.

(2)

The term bond includes any obligation.

(3)

The term State includes the District of Columbia and any possession of the United States.

(4)

The term available project proceeds means—

(A)

the excess of—

(i)

the proceeds from the sale of an issue, over

(ii)

the issuance costs financed by the issue (to the extent that such costs do not exceed 2 percent of such proceeds), and

(B)

the proceeds from any investment of the excess described in subparagraph (A).

(f)

For purposes of this subtitle, the credit determined under subsection (a) shall be treated as interest which is includible in gross income.

(g)

In the case of a tax credit bond held by an S corporation or partnership, the allocation of the credit allowed by this section to the shareholders of such corporation or partners of such partnership shall be treated as a distribution.

(h)

If any qualified tax credit bond is held by a regulated investment company or a real estate investment trust, the credit determined under subsection (a) shall be allowed to shareholders of such company or beneficiaries of such trust (and any gross income included under subsection (f) with respect to such credit shall be treated as distributed to such shareholders or beneficiaries) under procedures prescribed by the Secretary.

(i)

Under regulations prescribed by the Secretary—

(1)

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

(2)

In the case of a separation described in paragraph (1), the rules of section 1286 shall apply to the qualified tax credit bond as if it were a stripped bond and to the credit under this section as if it were a stripped coupon.

54B.

(a)

For purposes of this subpart, the term new clean renewable energy bond means any bond issued as part of an issue if—

(1)

100 percent of the available project proceeds of such issue are to be used for capital expenditures incurred by public power providers or cooperative electric companies for one or more qualified renewable energy facilities,

(2)

the bond is issued by a qualified issuer, and

(3)

the issuer designates such bond for purposes of this section.

(b)

The annual credit determined under section 54A(b) with respect to any new clean renewable energy bond shall be 70 percent of the amount so determined without regard to this subsection.

(c)

(1)

The maximum aggregate face amount of bonds which may be designated under subsection (a) by any issuer shall not exceed the limitation amount allocated under this subsection to such issuer.

(2)

There is a national new clean renewable energy bond limitation of $2,000,000,000 which shall be allocated by the Secretary as provided in paragraph (3), except that—

(A)

not more than 60 percent thereof may be allocated to qualified projects of public power providers, and

(B)

not more than 40 percent thereof may be allocated to qualified projects of cooperative electric companies.

(3)

(A)

After the Secretary determines the qualified projects of public power providers which are appropriate for receiving an allocation of the national new clean renewable energy bond limitation, the Secretary shall, to the maximum extent practicable, make allocations among such projects in such manner that the amount allocated to each such project bears the same ratio to the cost of such project as the limitation under subparagraph (2)(A) bears to the cost of all such projects.

(B)

The Secretary shall make allocations of the amount of the national new clean renewable energy bond limitation described in paragraph (2)(B) among qualified projects of cooperative electric companies in such manner as the Secretary determines appropriate.

(d)

For purposes of this section—

(1)

The term qualified renewable energy facility means a qualified facility (as determined under section 45(d) without regard to paragraphs (8) and (10) thereof and to any placed in service date) owned by a public power provider or a cooperative electric company.

(2)

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

(3)

The term cooperative electric company means a mutual or cooperative electric company described in section 501(c)(12) or section 1381(a)(2)(C).

(4)

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.

(5)

The term qualified issuer means a public power provider, a cooperative electric company, a clean renewable energy bond lender, or a not-for-profit electric utility which has received a loan or loan guarantee under the Rural Electrification Act.

(b)

Subsection (d) of section 6049 (relating to returns regarding payments of interest) is amended by adding at the end the following new paragraph:

(9)

(A)

For purposes of subsection (a), the term interest includes amounts includible in gross income under section 54A and such amounts shall be treated as paid on the credit allowance date (as defined in section 54A(e)(1)).

(B)

Except as otherwise provided in regulations, in the case of any interest described in subparagraph (A) of this paragraph, subsection (b)(4) of this section shall be applied without regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i).

(C)

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)

(1)

Sections 54(c)(2) and 1400N(l)(3)(B) are each amended by striking subpart C and inserting subparts C and I.

(2)

Section 1397E(c)(2) is amended by striking subpart H and inserting subparts H and I.

(3)

Section 6401(b)(1) is amended by striking and H and inserting H, and I.

(4)

The heading of subpart H of part IV of subchapter A of chapter 1 is amended by striking certain bonds and inserting clean renewable energy bonds.

(5)

The table of subparts for part IV of subchapter A of chapter 1 is amended by striking the item relating to subpart H and inserting the following new items:

Subpart H. Nonrefundable credit to holders of clean renewable energy bonds.

Subpart I. Qualified tax credit bonds.

(d)

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

105.

(a)

(1)

Paragraph (3) of section 451(i) (relating to special rule for sales or dispositions to implement Federal Energy Regulatory Commission or State electric restructuring policy) is amended by inserting (before January 1, 2010, in the case of a qualified electric utility) after January 1, 2008.

(2)

Subsection (i) of section 451 is amended by redesignating paragraphs (6) through (10) as paragraphs (7) through (11), respectively, and by inserting after paragraph (5) the following new paragraph:

(6)

For purposes of this subsection, the term qualified electric utility means a person that, as of the date of the qualifying electric transmission transaction, is vertically integrated, in that it is both—

(A)

a transmitting utility (as defined in section 3(23) of the Federal Power Act (16 U.S.C. 796(23))) with respect to the transmission facilities to which the election under this subsection applies, and

(B)

an electric utility (as defined in section 3(22) of the Federal Power Act (16 U.S.C. 796(22))).

(b)

Clause (ii) of section 451(i)(4)(B) is amended by striking December 31, 2007 and inserting the date which is 4 years after the close of the taxable year in which the transaction occurs.

(c)

Paragraph (5) of section 451(i) is amended by adding at the end the following new subparagraph:

(C)

The term exempt utility property shall not include any property which is located outside the United States.

(d)

(1)

The amendments made by subsection (a) shall apply to transactions after December 31, 2007.

(2)

The amendment made by subsection (b) shall take effect as if included in section 909 of the American Jobs Creation Act of 2004.

(3)

The amendment made by subsection (c) shall apply to transactions after the date of the enactment of this Act.

106.

(a)

Section 25D(g) (relating to termination) is amended by striking December 31, 2008 and inserting December 31, 2014.

(b)

(1)

Section 25D(b)(1)(A) (relating to maximum credit) is amended by striking $2,000 and inserting $4,000.

(2)

Section 25D(e)(4)(A)(i) is amended by striking $6,667 and inserting $13,333.

(c)

(1)

Section 25D(a) (relating to allowance of credit) is amended by striking and at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting , and, and by adding at the end the following new paragraph:

(4)

30 percent of the qualified small wind energy property expenditures made by the taxpayer during such year.

(2)

Section 25D(b)(1) (relating to maximum credit) is amended by striking and at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting , and, and by adding at the end the following new subparagraph:

(D)

$500 with respect to each half kilowatt of capacity (not to exceed $4,000) of wind turbines for which qualified small wind energy property expenditures are made.

(3)

(A)

Section 25D(d) (relating to definitions) is amended by adding at the end the following new paragraph:

(4)

The term qualified small wind energy property expenditure means an expenditure for property which uses a wind turbine to generate electricity for use in connection with a dwelling unit located in the United States and used as a residence by the taxpayer.

(B)

Section 45(d)(1) (relating to wind facility) is amended by adding at the end the following new sentence: Such term shall not include any facility with respect to which any qualified small wind energy property expenditure (as defined in subsection (d)(4) of section 25D) is taken into account in determining the credit under such section..

(4)

Section 25D(e)(4)(A) (relating to maximum expenditures) is amended by striking and at the end of clause (ii), by striking the period at the end of clause (iii) and inserting , and, and by adding at the end the following new clause:

(iv)

$1,667 in the case of each half kilowatt of capacity (not to exceed $13,333) of wind turbines for which qualified small wind energy property expenditures are made.

(d)

(1)

Section 25D(a) (relating to allowance of credit), as amended by subsection (c), 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)

30 percent of the qualified geothermal heat pump property expenditures made by the taxpayer during such year.

(2)

Section 25D(b)(1) (relating to maximum credit), as amended by subsection (c), is amended by striking and at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting , and, and by adding at the end the following new subparagraph:

(E)

$2,000 with respect to any qualified geothermal heat pump property expenditures.

(3)

Section 25D(d) (relating to definitions), as amended by subsection (c), is amended by adding at the end the following new paragraph:

(5)

(A)

The term qualified geothermal heat pump property expenditure means an expenditure for qualified geothermal heat pump property installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer.

(B)

The term qualified geothermal heat pump property means any equipment which—

(i)

uses the ground or ground water as a thermal energy source to heat the dwelling unit referred to in subparagraph (A) or as a thermal energy sink to cool such dwelling unit, and

(ii)

meets the requirements of the Energy Star program which are in effect at the time that the expenditure for such equipment is made.

(4)

Section 25D(e)(4)(A) (relating to maximum expenditures), as amended by subsection (c), 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)

$6,667 in the case of any qualified geothermal heat pump property expenditures.

(e)

(1)

Subsection (c) of section 25D is amended to read as follows:

(c)

(1)

In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for the taxable year shall not exceed the excess of—

(A)

the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

(B)

the sum of the credits allowable under this subpart (other than this section) and section 27 for the taxable year.

(2)

(A)

In the case of a taxable year to which section 26(a)(2) applies, if the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a)(2) 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.

(B)

In the case of a taxable year to which section 26(a)(2) does not apply, if the credit allowable under subsection (a) exceeds the limitation imposed by paragraph (1) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.

(2)

(A)

Section 23(b)(4)(B) is amended by inserting and section 25D after this section.

(B)

Section 24(b)(3)(B) is amended by striking and 25B and inserting , 25B, and 25D.

(C)

Section 25B(g)(2) is amended by striking section 23 and inserting sections 23 and 25D.

(D)

Section 26(a)(1) is amended by striking and 25B and inserting 25B, and 25D.

(f)

(1)

The amendments made by this section shall apply to taxable years beginning after December 31, 2007.

(2)

The amendments made by subparagraphs (A) and (B) of subsection (e)(2) shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 in the same manner as the provisions of such Act to which such amendments relate.

201.

(a)

Subpart B of part IV of subchapter A of chapter 1 (relating to other credits) is amended by adding at the end the following new section:

30D.

(a)

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 credit amounts determined under subsection (b) with respect to each qualified plug-in hybrid vehicle placed in service by the taxpayer during the taxable year.

(b)

(1)

The amount determined under this subsection with respect to any qualified plug-in hybrid vehicle is the sum of the amounts determined under paragraphs (2) and (3) with respect to such vehicle.

(2)

The amount determined under this paragraph is $4,000.

(3)

In the case of vehicle which draws propulsion energy from a battery with not less than 5 kilowatt hours of capacity, the amount determined under this paragraph is $200, plus $200 for each kilowatt hour of capacity in excess of 5 kilowatt hours. The amount determined under this paragraph shall not exceed $2,000.

(c)

(1)

So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to property of a character subject to an allowance for depreciation shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)).

(2)

(A)

For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.

(B)

In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall not exceed the excess of—

(i)

the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

(ii)

the sum of the credits allowable under subpart A (other than this section and sections 23 and 25D) and section 27 for the taxable year.

(d)

For purposes of this section—

(1)

The term qualified plug-in hybrid vehicle means a motor vehicle (as defined in section 30(c)(2))—

(A)

the original use of which commences with the taxpayer,

(B)

which is acquired for use or lease by the taxpayer and not for resale,

(C)

which is made by a manufacturer,

(D)

which has a gross vehicle weight rating of less than 14,000 pounds,

(E)

which has received a certificate of conformity under the Clean Air Act and meets or exceeds the Bin 5 Tier II emission standard 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,

(F)

which is propelled to a significant extent by an electric motor which draws electricity from a battery which—

(i)

has a capacity of not less than 4 kilowatt hours, and

(ii)

is capable of being recharged from an external source of electricity, and

(G)

which either—

(i)

is also propelled to a significant extent by other than an electric motor, or

(ii)

has a significant onboard source of electricity which also recharges the battery referred to in subparagraph (F).

(2)

The term qualified plug-in hybrid vehicle shall not include any vehicle which is not a passenger automobile or light truck if such vehicle has a gross vehicle weight rating of less than 8,500 pounds.

(3)

The terms passenger automobile, light truck, and manufacturer have the meanings given such terms in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.).

(4)

The term capacity means, with respect to any battery, the quantity of electricity which the battery is capable of storing, expressed in kilowatt hours, as measured from a 100 percent state of charge to a 0 percent state of charge.

(e)

(1)

In the case of a qualified plug-in hybrid vehicle sold during the phaseout period, only the applicable percentage of the credit otherwise allowable under subsection (a) shall be allowed.

(2)

For purposes of this subsection, the phaseout period is the period beginning with the second calendar quarter following the calendar quarter which includes the first date on which the number of qualified plug-in hybrid vehicles manufactured by the manufacturer of the vehicle referred to in paragraph (1) sold for use in the United States after the date of the enactment of this section, is at least 60,000.

(3)

For purposes of paragraph (1), the applicable percentage is—

(A)

50 percent for the first 2 calendar quarters of the phaseout period,

(B)

25 percent for the 3d and 4th calendar quarters of the phaseout period, and

(C)

0 percent for each calendar quarter thereafter.

(4)

Rules similar to the rules of section 30B(f)(4) shall apply for purposes of this subsection.

(f)

(1)

The basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit (determined without regard to subsection (c)).

(2)

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.

(3)

No credit shall be allowed 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.

(4)

No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such vehicle.

(5)

Rules similar to the rules of paragraphs (6) and (10) of section 30B(h) shall apply for purposes of this section.

(b)

Section 30B(d)(3) is amended by adding at the end the following new subparagraph:

(D)

Any vehicle with respect to which a credit is allowable under section 30D (determined without regard to subsection (c) thereof) shall not be taken into account under this section.

(c)

Section 38(b) is amended—

(1)

by striking and each place it appears at the end of any paragraph,

(2)

by striking plus each place it appears at the end of any paragraph,

(3)

by striking the period at the end of paragraph (31) and inserting ‘‘, plus’’, and

(4)

by adding at the end the following new paragraph:

(32)

the portion of the plug-in hybrid vehicle credit to which section 30D(c)(1) applies.

(d)

(1)

(A)

Section 24(b)(3)(B), as amended by this Act, is amended by striking and 25D and inserting 25D, and 30D.

(B)

Section 25(e)(1)(C)(ii) is amended by inserting 30D, after 25D,.

(C)

Section 25B(g)(2), as amended by this Act, is amended by striking and 25D and inserting , 25D, and 30D.

(D)

Section 26(a)(1), as amended by this Act, is amended by striking and 25D and inserting 25D, and 30D.

(E)

Section 1400C(d)(2) is amended by striking and 25D and inserting 25D, and 30D.

(2)

Section 1016(a) 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 30D(f)(1).

(3)

Section 6501(m) is amended by inserting 30D(f)(4), after 30C(e)(5),.

(4)

The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

Sec. 30D. Plug-in hybrid vehicles.

(e)

(1)

Paragraph (2) of section 30B(g) is amended to read as follows:

(2)

The credit allowed under subsection (a) for any taxable year (after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.

(2)

(A)

Subparagraph (A) of section 30C(d)(2) is amended by striking sections 27, 30, and 30B and inserting sections 27 and 30.

(B)

Paragraph (3) of section 55(c) is amended by striking 30B(g)(2),.

(f)

(1)

Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning after December 31, 2008.

(2)

The amendments made by subsection (e) shall apply to taxable years beginning after December 31, 2007.

(g)

The amendment made by subsection (d)(1)(A) shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 in the same manner as the provision of such Act to which such amendment relates.

202.

(a)

Section 30C (relating to alternative fuel vehicle refueling property credit) is amended—

(1)

by striking 30 percent in subsection (a) and inserting 50 percent, and

(2)

by striking $30,000 in subsection (b)(1) and inserting $50,000.

(b)

Paragraph (2) of section 30C(g) (relating to termination) is amended by striking December 31, 2009 and inserting December 31, 2010.

(c)

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.

203.

(a)

Paragraph (5) of section 280F(d) (defining passenger automobile) is amended to read as follows:

(5)

(A)

Except as provided in subparagraph (B), the term passenger automobile means any 4-wheeled vehicle—

(i)

which is primarily designed or which can be used to carry passengers over public streets, roads, or highways (except any vehicle operated exclusively on a rail or rails), and

(ii)

which is rated at not more than 14,000 pounds gross vehicle weight.

(B)

The term passenger automobile shall not include—

(i)

any exempt-design vehicle, and

(ii)

any exempt-use vehicle.

(C)

The term exempt-design vehicle means—

(i)

any vehicle which, by reason of its nature or design, is not likely to be used more than a de minimis amount for personal purposes, and

(ii)

any vehicle—

(I)

which is designed to have a seating capacity of more than 9 persons behind the driver’s seat,

(II)

which is equipped with a cargo area of at least 5 feet in interior length which is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment, or

(III)

has an integral enclosure, fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver’s seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.

(D)

The term exempt-use vehicle means—

(i)

any ambulance, hearse, or combination ambulance-hearse used by the taxpayer directly in a trade or business,

(ii)

any vehicle used by the taxpayer directly in the trade or business of transporting persons or property for compensation or hire, and

(iii)

any truck or van if substantially all of the use of such vehicle by the taxpayer is directly in—

(I)

a farming business (within the meaning of section 263A(e)(4)),

(II)

the transportation of a substantial amount of equipment, supplies, or inventory, or

(III)

the moving or delivery of property which requires substantial cargo capacity.

(E)

In the case of any vehicle which is not a passenger automobile by reason of being an exempt-use vehicle, if such vehicle ceases to be an exempt-use vehicle in any taxable year after the taxable year in which such vehicle is placed in service, a rule similar to the rule of subsection (b) shall apply.

(b)

Section 179(b) (relating to limitations) is amended by striking paragraph (6).

(c)

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

211.

(a)

Sections 40A(g), 6426(c)(6), and 6427(e)(5)(B) are each amended by striking December 31, 2008 and inserting December 31, 2010.

(b)

Paragraph (3) of section 40A(f) is amended—

(1)

by striking diesel fuel and inserting liquid fuel,

(2)

by striking using a thermal depolymerization process, and

(3)

by striking or D396 in subparagraph (B) and inserting or other equivalent standard approved by the Secretary for fuels to be used in diesel-powered highway vehicles.

(c)

(1)

Paragraph (3) of section 40A(f) (defining renewable diesel) is amended by adding at the end the following flush sentence:

Such term does not include any fuel derived from coprocessing biomass with a feedstock which is not biomass. For purposes of this paragraph, the term biomass has the meaning given such term by section 45K(c)(3).

(2)

Paragraph (3) of section 40A(f) is amended by striking (as defined in section 45K(c)(3)).

(d)

(1)

Except as otherwise provided in this subsection, the amendments made by this section shall apply to fuel produced, and sold or used, after December 31, 2008.

(2)

The amendments made by subsection (c) shall apply to fuel produced, and sold or used, after February 13, 2008.

212.

(a)

Paragraph (5) of section 40A(d), as added by subsection (c), is amended to read as follows:

(5)

No credit shall be determined under this section with respect to any biodiesel unless—

(A)

such biodiesel is produced in the United States for use as a fuel in the United States, and

(B)

the taxpayer obtains a certification (in such form and manner as prescribed by the Secretary) from the producer of the biodiesel which identifies the product produced and the location of such production.

For purposes of this paragraph, the term United States includes any possession of the United States.

(b)

Paragraph (2) of section 6426(h), as added by subsection (c), is amended to read as follows:

(2)

No credit shall be determined under this section with respect to any biodiesel or alternative fuel unless—

(A)

such biodiesel or alternative fuel is produced in the United States for use as a fuel in the United States, and

(B)

the taxpayer obtains a certification (in such form and manner as prescribed by the Secretary) from the producer of such biodiesel or alternative fuel which identifies the product produced and the location of such production.

(c)

(1)

Subsection (d) of section 40 is amended by adding at the end the following new paragraph:

(6)

No credit shall be determined under this section with respect to any alcohol which is produced outside the United States for use as a fuel outside the United States. For purposes of this paragraph, the term United States includes any possession of the United States.

(2)

Subsection (d) of section 40A is amended by adding at the end the following new paragraph:

(5)

No credit shall be determined under this section with respect to any biodiesel which is produced outside the United States for use as a fuel outside the United States. For purposes of this paragraph, the term United States includes any possession of the United States.

(3)

(A)

Section 6426 is amended by adding at the end the following new subsection:

(h)

(1)

No credit shall be determined under this section with respect to any alcohol which is produced outside the United States for use as a fuel outside the United States.

(2)

No credit shall be determined under this section with respect to any biodiesel or alternative fuel which is produced outside the United States for use as a fuel outside the United States.

For purposes of this subsection, the term United States includes any possession of the United States.

(B)

Subsection (e) of section 6427 is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph:

(5)

No amount shall be payable under paragraph (1) or (2) with respect to any mixture or alternative fuel if credit is not allowed with respect to such mixture or alternative fuel by reason of section 6426(h).

(d)

(1)

Except as provided in paragraph (2), the amendments made by this section shall apply to fuel produced, and sold or used, after December 31, 2008.

(2)

(A)

Except as otherwise provided in this paragraph, the amendments made by subsection (c) shall take effect as if included in section 301 of the American Jobs Creation Act of 2004.

(B)

So much of the amendments made by subsection (c) as relate to the alternative fuel credit or the alternative fuel mixture credit shall take effect as if included in section 11113 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users.

(C)

So much of the amendments made by subsection (c) as relate to renewable diesel shall take effect as if included in section 1346 of the Energy Policy Act of 2005.

213.

(a)

Subsection (b) of section 40 is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph:

(5)

(A)

The cellulosic alcohol fuel producer credit of any cellulosic alcohol fuel producer for any taxable year is 50 cents for each gallon of qualified cellulosic fuel production of such producer.

(B)

For purposes of this paragraph, the term qualified cellulosic fuel production means any cellulosic alcohol which is produced by a cellulosic alcohol fuel 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 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 alcohol at retail to another person and places such alcohol 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)

For purposes of this paragraph, the term cellulosic alcohol means any alcohol which—

(i)

is produced in the United States for use as a fuel in the United States, and

(ii)

is derived from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis.

For purposes of this subparagraph, the term United States includes any possession of the United States.

(D)

For purposes of this paragraph, the term cellulosic alcohol fuel producer means any person who produces cellulosic alcohol in a trade or business and is registered with the Secretary as a cellulosic alcohol fuel producer.

(E)

The qualified cellulosic fuel production of any producer for any taxable year shall not include any alcohol which is purchased by the producer and with respect to which such producer increases the proof of the alcohol by additional distillation.

(b)

(1)

Subsection (a) of section 40 is amended by striking plus at the end of paragraph (1), by striking plus at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting , plus, and by adding at the end the following new paragraph:

(4)

in the case of a cellulosic alcohol fuel producer, the cellulosic alcohol fuel producer credit.

(2)

Clause (ii) of section 40(d)(3)(C) is amended by striking subsection (b)(4)(B) and inserting paragraph (4)(B) or (5)(B) of subsection (b).

(c)

The amendments made by this section shall apply to alcohol produced after December 31, 2008.

221.

(a)

Paragraph (1) of section 132(f) (relating to general rule for qualified transportation fringe) is amended by adding at the end the following:

(D)

Any qualified bicycle commuting reimbursement.

(b)

Paragraph (2) of section 132(f) is amended by striking and at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting , and, and by adding at the end the following new subparagraph:

(C)

the applicable annual limitation in the case of any qualified bicycle commuting reimbursement.

(c)

Paragraph (5) of section 132(f) (relating to definitions) is amended by adding at the end the following:

(F)

(i)

The term qualified bicycle commuting reimbursement means, with respect to any calendar year, any employer reimbursement during the 15-month period beginning with the first day of such calendar year for reasonable expenses incurred by the employee during such calendar year for the purchase of a bicycle and bicycle improvements, repair, and storage, if such bicycle is regularly used for travel between the employee’s residence and place of employment.

(ii)

The term applicable annual limitation means, with respect to any employee for any calendar year, the product of $20 multiplied by the number of qualified bicycle commuting months during such year.

(iii)

The term qualified bicycle commuting month means, with respect to any employee, any month during which such employee—

(I)

regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment, and

(II)

does not receive any benefit described in subparagraph (A), (B), or (C) of paragraph (1).

(d)

Paragraph (4) of section 132(f) is amended by inserting (other than a qualified bicycle commuting reimbursement) after qualified transportation fringe.

(e)

The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

222.

(a)

Part I of subchapter Y of chapter 1 is amended by redesignating section 1400L as section 1400K and by adding at the end the following new section:

1400L.

(a)

In the case of a New York Liberty Zone governmental unit, there shall be allowed as a credit against any taxes imposed for any payroll period by section 3402 for which such governmental unit is liable under section 3403 an amount equal to so much of the portion of the qualifying project expenditure amount allocated under subsection (b)(3) to such governmental unit for the calendar year as is allocated by such governmental unit to such period under subsection (b)(4).

(b)

For purposes of this section—

(1)

The term qualifying project expenditure amount means, with respect to any calendar year, the sum of—

(A)

the total expenditures paid or incurred during such calendar year by all New York Liberty Zone governmental units and the Port Authority of New York and New Jersey for any portion of qualifying projects located wholly within the City of New York, New York, and

(B)

any such expenditures—

(i)

paid or incurred in any preceding calendar year which begins after the date of enactment of this section, and

(ii)

not previously allocated under paragraph (3).

(2)

The term qualifying project means any transportation infrastructure project, including highways, mass transit systems, railroads, airports, ports, and waterways, in or connecting with the New York Liberty Zone (as defined in section 1400K(h)), which is designated as a qualifying project under this section jointly by the Governor of the State of New York and the Mayor of the City of New York, New York.

(3)

(A)

The Governor of the State of New York and the Mayor of the City of New York, New York, shall jointly allocate to each New York Liberty Zone governmental unit the portion of the qualifying project expenditure amount which may be taken into account by such governmental unit under subsection (a) for any calendar year in the credit period.

(B)

The aggregate amount which may be allocated under subparagraph (A) for all calendar years in the credit period shall not exceed $2,000,000,000.

(C)

The aggregate amount which may be allocated under subparagraph (A) for any calendar year in the credit period shall not exceed the sum of—

(i)

$169,000,000, plus

(ii)

the aggregate amount authorized to be allocated under this paragraph for all preceding calendar years in the credit period which was not so allocated.

(D)

If, as of the close of the credit period, the amount under subparagraph (B) exceeds the aggregate amount allocated under subparagraph (A) for all calendar years in the credit period, the Governor of the State of New York and the Mayor of the City of New York, New York, may jointly allocate to New York Liberty Zone governmental units for any calendar year in the 5-year period following the credit period an amount equal to—

(i)

the lesser of—

(I)

such excess, or

(II)

the qualifying project expenditure amount for such calendar year, reduced by

(ii)

the aggregate amount allocated under this subparagraph for all preceding calendar years.

(4)

Each New York Liberty Zone governmental unit which has been allocated a portion of the qualifying project expenditure amount under paragraph (3) for a calendar year may allocate such portion to payroll periods beginning in such calendar year as such governmental unit determines appropriate.

(c)

(1)

Except as provided in paragraph (2), if the amount allocated under subsection (b)(3) to a New York Liberty Zone governmental unit for any calendar year exceeds the aggregate taxes imposed by section 3402 for which such governmental unit is liable under section 3403 for periods beginning in such year, such excess shall be carried to the succeeding calendar year and added to the allocation of such governmental unit for such succeeding calendar year.

(2)

If a New York Liberty Zone governmental unit does not use an amount allocated to it under subsection (b)(3) within the time prescribed by the Governor of the State of New York and the Mayor of the City of New York, New York, then such amount shall after such time be treated for purposes of subsection (b)(3) in the same manner as if it had never been allocated.

(d)

For purposes of this section—

(1)

The term credit period means the 12-year period beginning on January 1, 2008.

(2)

The term New York Liberty Zone governmental unit means—

(A)

the State of New York,

(B)

the City of New York, New York, and

(C)

any agency or instrumentality of such State or City.

(3)

Any expenditure for a qualifying project taken into account for purposes of the credit under this section shall be considered State and local funds for the purpose of any Federal program.

(4)

For purposes of this title, a New York Liberty Zone governmental unit shall be treated as having paid to the Secretary, on the day on which wages are paid to employees, an amount equal to the amount of the credit allowed to such entity under subsection (a) with respect to such wages, but only if such governmental unit deducts and withholds wages for such payroll period under section 3401 (relating to wage withholding).

(e)

The Governor of the State of New York and the Mayor of the City of New York, New York, shall jointly submit to the Secretary an annual report—

(1)

which certifies—

(A)

the qualifying project expenditure amount for the calendar year, and

(B)

the amount allocated to each New York Liberty Zone governmental unit under subsection (b)(3) for the calendar year, and

(2)

includes such other information as the Secretary may require to carry out this section.

(f)

The Secretary may prescribe such guidance as may be necessary or appropriate to ensure compliance with the purposes of this section.

(b)

Subparagraph (A) of section 1400K(b)(2), as redesignated by subsection (a), is amended by striking the parenthetical in the flush language after clause (v) thereof and inserting (in the case of nonresidential real property and residential rental property, the date of the enactment of the Renewable Energy and Energy Conservation Tax Act of 2008 or, if acquired pursuant to a binding contract in effect on such enactment date, December 31, 2009).

(c)

(1)

Section 38(c)(3)(B) is amended by striking section 1400L(a) and inserting section 1400K(a).

(2)

Section 168(k)(2)(D)(ii) is amended by striking section 1400L(c)(2) and inserting section 1400K(c)(2).

(3)

The table of sections for part I of subchapter Y of chapter 1 is amended by redesignating the item relating to section 1400L as an item relating to section 1400K and by inserting after such item the following new item:

Sec. 1400L. New York Liberty Zone tax credits.

(d)

The amendments made by this section shall take effect on the date of the enactment of this Act.

231.

(a)

Subpart I of part IV of subchapter A of chapter 1, as added by section 104, is amended by adding at the end the following new section:

54C.

(a)

For purposes of this subchapter, the term qualified energy conservation bond means any bond issued as part of an issue if—

(1)

100 percent of the available project proceeds of such issue are to be used for one or more qualified conservation purposes,

(2)

the bond is issued by a State or local government, and

(3)

the issuer designates such bond for purposes of this section.

(b)

The maximum aggregate face amount of bonds which may be designated under subsection (a) by any issuer shall not exceed the limitation amount allocated to such issuer under subsection (d).

(c)

There is a national qualified energy conservation bond limitation of $3,600,000,000.

(d)

(1)

The limitation applicable under subsection (c) shall be allocated by the Secretary among the States in proportion to the population of the States.

(2)

(A)

In the case of any State in which there is a large local government, each such local government shall be allocated a portion of such State’s allocation which bears the same ratio to the State’s allocation (determined without regard to this subparagraph) as the population of such large local government bears to the population of such State.

(B)

The amount allocated under this subsection to a large local government may be reallocated by such local government to the State in which such local government is located.

(C)

For purposes of this section, the term large local government means any municipality or county if such municipality or county has a population of 100,000 or more.

(3)

Any allocation under this subsection to a State or large local government shall be allocated by such State or large local government to issuers within the State in a manner that results in not less than 70 percent of the allocation to such State or large local government being used to designate bonds which are not private activity bonds.

(e)

For purposes of this section—

(1)

The term qualified conservation purpose means any of the following:

(A)

Capital expenditures incurred for purposes of—

(i)

reducing energy consumption in publicly-owned buildings by at least 20 percent,

(ii)

implementing green community programs,

(iii)

rural development involving the production of electricity from renewable energy resources, or

(iv)

any qualified facility (as determined under section 45(d) without regard to paragraphs (8) and (10) thereof and without regard to any placed in service date).

(B)

Expenditures with respect to research facilities, and research grants, to support research in—

(i)

development of cellulosic ethanol or other nonfossil fuels,

(ii)

technologies for the capture and sequestration of carbon dioxide produced through the use of fossil fuels,

(iii)

increasing the efficiency of existing technologies for producing nonfossil fuels,

(iv)

automobile battery technologies and other technologies to reduce fossil fuel consumption in transportation, or

(v)

technologies to reduce energy use in buildings.

(C)

Mass commuting facilities and related facilities that reduce the consumption of energy, including expenditures to reduce pollution from vehicles used for mass commuting.

(D)

Demonstration projects designed to promote the commercialization of—

(i)

green building technology,

(ii)

conversion of agricultural waste for use in the production of fuel or otherwise,

(iii)

advanced battery manufacturing technologies,

(iv)

technologies to reduce peak use of electricity, or

(v)

technologies for the capture and sequestration of carbon dioxide emitted from combusting fossil fuels in order to produce electricity.

(E)

Public education campaigns to promote energy efficiency.

(2)

For purposes of this section, in the case of any private activity bond, the term qualified conservation purposes shall not include any expenditure which is not a capital expenditure.

(f)

(1)

The population of any State or local government shall be determined for purposes of this section as provided in section 146(j) for the calendar year which includes the date of the enactment of this section.

(2)

In determining the population of any county for purposes of this section, any population of such county which is taken into account in determining the population of any municipality which is a large local government shall not be taken into account in determining the population of such county.

(g)

An Indian tribal government shall be treated for purposes of this section in the same manner as a large local government, except that—

(1)

an Indian tribal government shall be treated for purposes of subsection (d) as located within a State to the extent of so much of the population of such government as resides within such State, and

(2)

any bond issued by an Indian tribal government shall be treated as a qualified energy conservation bond only if issued as part of an issue the available project proceeds of which are used for purposes for which such Indian tribal government could issue bonds to which section 103(a) applies.

(b)

(1)

Paragraph (1) of section 54A(d), as added by section 104, is amended to read as follows:

(1)

The term qualified tax credit bond means—

(A)

a new clean renewable energy bond, or

(B)

a qualified energy conservation bond,

which is part of an issue that meets requirements of paragraphs (2), (3), (4), (5), and (6).

(2)

Subparagraph (C) of section 54A(d)(2), as added by section 104, is amended to read as follows:

(C)

For purposes of this paragraph, the term qualified purpose means—

(i)

in the case of a new clean renewable energy bond, a purpose specified in section 54B(a)(1), and

(ii)

in the case of a qualified energy conservation bond, a purpose specified in section 54C(a)(1).

(3)

The table of sections for subpart I of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

Sec. 54C. Qualified energy conservation bonds.

(c)

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

232.

(a)

Section 25C(g) (relating to termination) is amended by striking December 31, 2007 and inserting December 31, 2009.

(b)

(1)

Section 25C(d)(3) is amended—

(A)

by striking and at the end of subparagraph (D),

(B)

by striking the period at the end of subparagraph (E) and inserting , and, and

(C)

by adding at the end the following new subparagraph:

(F)

a stove which uses the burning of biomass fuel to heat a dwelling unit located in the United States and used as a residence by the taxpayer, or to heat water for use in such a dwelling unit, and which has a thermal efficiency rating of at least 75 percent.

(2)

Section 25C(d) (relating to residential energy property expenditures) is amended by adding at the end the following new paragraph:

(6)

The term biomass fuel means any plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers.

(c)

(1)

Paragraph (3) of section 25C(d) is amended by striking subparagraph (C) and by redesignating subparagraphs (D) and (E) as subparagraphs (C) and (D), respectively.

(2)

Subparagraph (C) of section 25C(d)(2) is amended to read as follows:

(C)

The standards and requirements prescribed by the Secretary under subparagraph (B) with respect to the energy efficiency ratio (EER) for central air conditioners and electric heat pumps—

(i)

shall 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.

(d)

The amendments made this section shall apply to expenditures made after December 31, 2007.

233.

Subsection (h) of section 179D (relating to termination) is amended by striking December 31, 2008 and inserting December 31, 2013.

234.

(a)

Subsection (b) of section 45M (relating to applicable amount) is amended to read as follows:

(b)

For purposes of subsection (a)—

(1)

The applicable amount is—

(A)

$45 in the case of a dishwasher which is manufactured in calendar year 2008 or 2009 and which uses no more than 324 kilowatt hours per year and 5.8 gallons per cycle, and

(B)

$75 in the case of a dishwasher which is manufactured in calendar year 2008, 2009, or 2010 and which uses no more than 307 kilowatt hours per year and 5.0 gallons per cycle (5.5 gallons per cycle for dishwashers designed for greater than 12 place settings).

(2)

The applicable amount is—

(A)

$75 in the case of a residential top-loading clothes washer manufactured in calendar year 2008 which meets or exceeds a 1.72 modified energy factor and does not exceed a 8.0 water consumption factor,

(B)

$125 in the case of a residential top-loading clothes washer manufactured in calendar year 2008 or 2009 which meets or exceeds a 1.8 modified energy factor and does not exceed a 7.5 water consumption factor,

(C)

$150 in the case of a residential or commercial clothes washer manufactured in calendar year 2008, 2009, or 2010 which meets or exceeds 2.0 modified energy factor and does not exceed a 6.0 water consumption factor, and

(D)

$250 in the case of a residential or commercial clothes washer manufactured in calendar year 2008, 2009, or 2010 which meets or exceeds 2.2 modified energy factor and does not exceed a 4.5 water consumption factor.

(3)

The applicable amount is—

(A)

$50 in the case of a refrigerator which is manufactured in calendar year 2008, and consumes at least 20 percent but not more than 22.9 percent less kilowatt hours per year than the 2001 energy conservation standards,

(B)

$75 in the case of a refrigerator which is manufactured in calendar year 2008 or 2009, and consumes at least 23 percent but no more than 24.9 percent less kilowatt hours per year than the 2001 energy conservation standards,

(C)

$100 in the case of a refrigerator which is manufactured in calendar year 2008, 2009, or 2010, and consumes at least 25 percent but not more than 29.9 percent less kilowatt hours per year than the 2001 energy conservation standards, and

(D)

$200 in the case of a refrigerator manufactured in calendar year 2008, 2009, or 2010 and which consumes at least 30 percent less energy than the 2001 energy conservation standards.

(b)

(1)

Subsection (c) of section 45M (relating to eligible production) is amended—

(A)

by striking paragraph (2),

(B)

by striking (1) In general and all that follows through the eligible and inserting The eligible, and

(C)

by moving the text of such subsection in line with the subsection heading and redesignating subparagraphs (A) and (B) as paragraphs (1) and (2), respectively.

(2)

Paragraph (2) of section 45M(c), as amended by paragraph (1) of this section, is amended by striking 3-calendar year and inserting 2-calendar year.

(c)

Subsection (d) of section 45M (defining types of energy efficient appliances) is amended to read as follows:

(d)

For purposes of this section, the types of energy efficient appliances are—

(1)

dishwashers described in subsection (b)(1),

(2)

clothes washers described in subsection (b)(2), and

(3)

refrigerators described in subsection (b)(3).

(d)

(1)

Paragraph (1) of section 45M(e) (relating to aggregate credit amount allowed) is amended to read as follows:

(1)

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 beginning after December 31, 2007.

(2)

Paragraph (2) of section 45M(e) is amended to read as follows:

(2)

Refrigerators described in subsection (b)(3)(D) and clothes washers described in subsection (b)(2)(D) shall not be taken into account under paragraph (1).

(e)

(1)

Paragraph (1) of section 45M(f) (defining qualified energy efficient appliance) is amended to read as follows:

(1)

The term qualified energy efficient appliance means—

(A)

any dishwasher described in subsection (b)(1),

(B)

any clothes washer described in subsection (b)(2), and

(C)

any refrigerator described in subsection (b)(3).

(2)

Section 45M(f)(3) (defining clothes washer) is amended by inserting commercial before residential the second place it appears.

(3)

Subsection (f) of section 45M (relating to definitions) is amended by redesignating paragraphs (4), (5), (6), and (7) as paragraphs (5), (6), (7), and (8), respectively, and by inserting after paragraph (3) the following new paragraph:

(4)

The term top-loading clothes washer means a clothes washer which has the clothes container compartment access located on the top of the machine and which operates on a vertical axis.

(4)

Section 45M(f)(6), as redesignated by paragraph (3), is amended to read as follows:

(6)

The term modified energy factor means the modified energy factor established by the Department of Energy for compliance with the Federal energy conservation standard.

(5)

Section 45M(f) (relating to definitions), as amended by paragraph (3), is amended by adding at the end the following:

(9)

The term gallons per cycle means, with respect to a dishwasher, the amount of water, expressed in gallons, required to complete a normal cycle of a dishwasher.

(10)

The term water consumption factor means, with respect to a clothes washer, the quotient of the total weighted per-cycle water consumption divided by the cubic foot (or liter) capacity of the clothes washer.

(f)

The amendments made by this section shall apply to appliances produced after December 31, 2007.

235.

(a)

Section 168(e)(3)(B) (relating to 5-year property) is amended by striking and at the end of clause (v), by striking the period at the end of clause (vi) and inserting , and, and by inserting after clause (vi) the following new clause:

(vii)

any qualified energy management device.

(b)

Section 168(i) (relating to definitions and special rules) is amended by inserting at the end the following new paragraph:

(18)

(A)

The term qualified energy management device means any energy management device which is installed on real property of a customer of the taxpayer and is placed in service by a taxpayer who—

(i)

is a supplier of electric energy or a provider of electric energy services, and

(ii)

provides all commercial and residential customers of such supplier or provider with net metering upon the request of such customer.

(B)

For purposes of subparagraph (A), the term energy management device means any time-based meter and related communication equipment which is capable of being used by the taxpayer as part of a system that—

(i)

measures and records electricity usage data on a time-differentiated basis in at least 24 separate time segments per day,

(ii)

provides for the exchange of information between supplier or provider and the customer’s energy management device in support of time-based rates or other forms of demand response, and

(iii)

provides data to such supplier or provider so that the supplier or provider can provide energy usage information to customers electronically.

(C)

For purposes of subparagraph (A), the term net metering means allowing customers a credit for providing electricity to the supplier or provider.

(c)

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

III

301.

(a)

(1)

Subparagraph (B) of section 199(c)(4) (relating to exceptions) is amended by striking or at the end of clause (ii), by striking the period at the end of clause (iii) and inserting , or, and by inserting after clause (iii) the following new clause:

(iv)

in the case of any major integrated oil company (as defined in section 167(h)(5)(B)), the production, refining, processing, transportation, or distribution of oil, gas, or any primary product thereof during any taxable year described in section 167(h)(5)(B).

(2)

Section 199(c)(4)(B) is amended by adding at the end the following flush sentence:

For purposes of clause (iv), the term primary product has the same meaning as when used in section 927(a)(2)(C), as in effect before its repeal.

(b)

(1)

Section 199(d) is amended by redesignating paragraph (9) as paragraph (10) and by inserting after paragraph (8) the following new paragraph:

(9)

(A)

If a taxpayer (other than a major integrated oil company (as defined in section 167(h)(5)(B))) has oil related qualified production activities income for any taxable year beginning after 2009, the amount of the deduction under subsection (a) shall be reduced by 3 percent of the least of—

(i)

the oil related qualified production activities income of the taxpayer for the taxable year,

(ii)

the qualified production activities income of the taxpayer for the taxable year, or

(iii)

taxable income (determined without regard to this section).

(B)

The term oil related qualified production activities income means for any taxable year the qualified production activities income which is attributable to the production, refining, processing, transportation, or distribution of oil, gas, or any primary product thereof during such taxable year.

(2)

Section 199(d)(2) (relating to application to individuals) is amended by striking subsection (a)(1)(B) and inserting subsections (a)(1)(B) and (d)(9)(A)(iii).

(c)

The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

302.

(a)

Paragraph (1) of section 907(c) is amended by redesignating subparagraph (B) as subparagraph (C), by striking or at the end of subparagraph (A), and by inserting after subparagraph (A) the following new subparagraph:

(B)

so much of any transportation of such minerals as occurs before the fair market value event, or

(b)

Subsection (c) of section 907 is amended by adding at the end the following new paragraph:

(6)

For purposes of this section, the term fair market value event means, with respect to any mineral, the first point in time at which such mineral—

(A)

has a fair market value which can be determined on the basis of a transfer, which is an arm’s length transaction, of such mineral from the taxpayer to a person who is not related (within the meaning of section 482) to such taxpayer, or

(B)

is at a location at which the fair market value is readily ascertainable by reason of transactions among unrelated third parties with respect to the same mineral (taking into account source, location, quality, and chemical composition).

(c)

Subsection (c) of section 907, as amended by subsection (b), is amended to by adding at the end the following new paragraph:

(7)

In the case of any tax imposed by a foreign country which is limited in its application to taxpayers engaged in oil or gas activities—

(A)

the term oil and gas extraction taxes shall include such tax,

(B)

the term foreign oil and gas extraction income shall include any taxable income which is taken into account in determining such tax (or is directly attributable to the activity to which such tax relates), and

(C)

the term foreign oil related income shall not include any taxable income which is treated as foreign oil and gas extraction income under subparagraph (B).

(d)

(1)

Subparagraph (C) of section 907(c)(1), as redesignated by this section, is amended by inserting or used by the taxpayer in the activity described in subparagraph (B) before the period at the end.

(2)

Subparagraph (B) of section 907(c)(2) is amended to read as follows:

(B)

so much of the transportation of such minerals or primary products as is not taken into account under paragraph (1)(B),

(e)

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

303.

The percentage under subparagraph (C) of section 401(1) of the Tax Increase Prevention and Reconciliation Act of 2005 in effect on the date of the enactment of this Act is increased by 3.00 percentage points.

401.

(a)

The Secretary of the Treasury shall enter into an agreement with the National Academy of Sciences to undertake a comprehensive review of the Internal Revenue Code of 1986 to identify the types of and specific tax provisions that have the largest effects on carbon and other greenhouse gas emissions and to estimate the magnitude of those effects.

(b)

Not later than 2 years after the date of enactment of this Act, the National Academy of Sciences shall submit to Congress a report containing the results of study authorized under this section.

(c)

There is authorized to be appropriated to carry out this section $1,500,000 for the period of fiscal years 2008 and 2009.

402.

(a)

The Secretary of the Treasury, in consultation with the Secretary of Agriculture, the Secretary of Energy, and the Administrator of the Environmental Protection Agency, shall enter into an agreement with the National Academy of Sciences to produce an analysis of current scientific findings to determine—

(1)

current biofuels production, as well as projections for future production,

(2)

the maximum amount of biofuels production capable on United States farmland,

(3)

the domestic effects of a dramatic increase in biofuels production on, for example—

(A)

the price of fuel,

(B)

the price of land in rural and suburban communities,

(C)

crop acreage and other land use,

(D)

the environment, due to changes in crop acreage, fertilizer use, runoff, water use, emissions from vehicles utilizing biofuels, and other factors,

(E)

the price of feed,

(F)

the selling price of grain crops,

(G)

exports and imports of grains,

(H)

taxpayers, through cost or savings to commodity crop payments, and

(I)

the expansion of refinery capacity,

(4)

the ability to convert corn ethanol plants for other uses, such as cellulosic ethanol or biodiesel,

(5)

a comparative analysis of corn ethanol versus other biofuels and renewable energy sources, considering cost, energy output, and ease of implementation, and

(6)

the need for additional scientific inquiry, and specific areas of interest for future research.

(b)

The National Academy of Sciences shall submit an initial report of the findings of the report required under subsection (a) to the Congress not later than 3 months after the date of the enactment of this Act, and a final report not later than 6 months after such date of enactment.

411.

Subchapter IV of chapter 31 of title 40, United States Code, shall apply to projects financed with the proceeds of any tax credit bond (as defined in section 54A of the Internal Revenue Code of 1986).

H.R. 5351 (110^th): Renewable Energy and Energy Conservation Tax Act of 2008

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H.R. 5351 (110th): Renewable Energy and Energy Conservation Tax Act of 2008

This bill has 3 versions. Select a version to view: Feb 12, 2008: Introduced Feb 27, 2008: Passed the House Feb 28, 2008: Referred to Senate Committee

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H.R. 5351 (110^th): Renewable Energy and Energy Conservation Tax Act of 2008

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