SECTION 1. FINDINGS.

    Congress finds the following:
            (1) There are new and emerging opportunities for producing 
        renewable energy fuel products, which will be of benefit to the 
        United States and its citizens.
            (2) Disposal of animal and agricultural wastes can be a 
        major problem and new technologies should be promoted to 
        utilize these wastes.
            (3) New technologies can be developed and implemented that 
        will utilize animal and agricultural wastes to produce 
        significant quantities of marketable alternative fuels.
            (4) Investment in renewable energy will--
                    (A) enhance the energy security and independence of 
                the United States,
                    (B) provide significant environmental benefits and 
                reduce wastes,
                    (C) improve electrical reliability and security, 
                and
                    (D) promote sustainable development opportunities.
            (5) Alternative fuels should be a major part of the 
        strategy to increase domestic production of motor fuels.
            (6) The Federal Government should take all measures to 
        provide incentives to assure the implementation of technologies 
        to produce alternative fuels.

SEC. 2. MODIFICATION OF CREDIT FOR PRODUCTION OF ELECTRICITY FROM 
              RENEWABLE RESOURCES.

    (a) Credit Allowed for Producers of Certain Energy.--Section 
45(a)(2) of the Internal Revenue Code of 1986 (relating to electricity 
produced from certain renewable resources) is amended to read as 
follows:
            ``(2) the--
                    ``(A) kilowatt hours of electricity--
                            ``(i) produced by the taxpayer--
                                    ``(I) from qualified energy 
                                resources (other than qualified waste), 
                                and
                                    ``(II) at a qualified facility 
                                during the 10-year period beginning on 
                                the date the facility was originally 
                                placed in service, and
                            ``(ii) sold by the taxpayer to an unrelated 
                        person during the taxable year, or
                    ``(B) amount of kilowatt hours of electricity 
                equivalent which is equal to the Btu of any fuel or 
                feedstock--
                            ``(i) produced by the taxpayer--
                                    ``(I) from qualified waste or 
                                poultry waste, and
                                    ``(II) at a qualified facility 
                                during the 10-year period beginning on 
                                the date the facility was originally 
                                placed in service, and
                            ``(ii) sold by the taxpayer to an unrelated 
                        person during the taxable year.''.
    (b) Qualified Energy Resources.--
            (1) In general.--Section 45(c)(1) of the Internal Revenue 
        Code of 1986 (defining qualified energy resources) 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:
                    ``(D) qualified waste.''.
            (2) Qualified waste.--Section 45(c) of such Code (relating 
        to definitions) is amended by adding at the end the following:
            ``(5) Qualified waste.--The term `qualified waste' means 
        agriculture and animal waste (other than poultry waste), 
        including by-products, packaging, and any materials associated 
        with the processing, raising, feeding, selling, transporting, 
        or disposal of agricultural or animal products.''.
    (c) Qualified Facility.--Section 45(c)(3) of the Internal Revenue 
Code of 1986 (defining qualified facility) is amended by adding at the 
end the following:
                    ``(D) Qualified waste facility.--In the case of a 
                facility using qualified waste or poultry waste to 
                produce alternative fuel feedstock, the term `qualified 
                facility' means any facility of the taxpayer which is 
                originally placed in service by the taxpayer after 
                December 31, 2001, and before January 1, 2007.''.
    (d) Government-Owned Facilities.--Section 45(d)(6) of the Internal 
Revenue Code of 1986 (relating to credit eligibility in the case of 
government-owned facilities using poultry waste) is amended by 
inserting ``or using poultry waste or qualified waste to produce 
alternative fuel feedstock'' after ``electricity''.
    (e) Limit on Carryback of Credit.--Section 39(d)(3) of the Internal 
Revenue Code of 1986 (relating to no carryback of renewable electricity 
production credit before effective date) is amended by inserting ``and 
before January 1, 2002, to the extent such credit is attributable to 
energy (other than electricity) produced from qualified waste or 
poultry waste'' after ``energy resource''.
    (f) Conforming Amendments.--
            (1) Section 38(b)(8) of the Internal Revenue Code of 1986 
        is amended by inserting ``and other energy'' after 
        ``electricity''.
            (2) The heading for section 45 of such Code is amended by 
        inserting ``and other energy produced from waste products'' 
        after ``resources''.
            (3) The item relating to section 45 in the table of 
        sections for subpart D of part IV of subchapter A of chapter 1 
        of such Code is amended by inserting ``and other energy 
        produced from waste products'' after ``resources''.
            (4) The heading of section 45(d)(6) of such Code is amended 
        by inserting ``or qualified waste'' after ``poultry waste''.
    (g) Effective Date.--The amendments made by this section shall 
apply to energy produced after the date of the enactment of this Act.
Amends the Internal Revenue Code to modify the credit for production of electricity from renewable resources to include production of energy from agricultural and animal waste, including by-products and associated materials. Limits such credit to facilities placed in service after 2001 and before 2007.
A bill to amend the Internal Revenue Code of 1986 to modify the credit for the production of electricity from renewable resources to include production of energy from agricultural and animal waste.