SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Private Activity Renewable Energy 
Bonds Act''.

SEC. 2. TREATMENT OF BONDS ISSUED TO FINANCE RENEWABLE ENERGY RESOURCE 
              FACILITIES AND CONSERVATION AND EFFICIENCY FACILITIES AND 
              OTHER SPECIFIED GREENHOUSE GAS EMISSION TECHNOLOGIES.

    (a) In General.--Section 142(a) of the Internal Revenue Code of 
1986 is amended by striking ``or'' at the end of paragraph (14), by 
striking the period at the end of paragraph (15) and inserting a comma, 
and by inserting after paragraph (15) the following new paragraphs:
            ``(16) renewable energy resource facilities,
            ``(17) conservation and efficiency facilities and projects, 
        or
            ``(18) high efficiency vehicles and related facilities or 
        projects.''.
    (b) Renewable Energy Resource Facility.--Section 142 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subsection:
    ``(n) Renewable Energy Resource Facilities.--For purposes of 
subsection (a)(16)--
            ``(1) In general.--The term `renewable energy resource 
        facility' means--
                    ``(A) any facility used to produce electric or 
                thermal energy (including a distributed generation 
                facility) from--
                            ``(i) solar, wind, or geothermal energy,
                            ``(ii) marine and hydrokinetic renewable 
                        energy,
                            ``(iii) incremental hydropower,
                            ``(iv) biogas and solids produced in the 
                        wastewater treatment process, or
                            ``(v) biomass (as defined in section 
                        203(b)(1) of the Energy Policy Act of 2005 (42 
                        U.S.C. 15852(b)(1))),
                    ``(B) any facility used to produce biogas, or
                    ``(C) any facility or project used for the 
                manufacture of facilities referred to in subparagraph 
                (A) or (B).
            ``(2) Special requirements for facilities producing 
        biogas.--
                    ``(A) In general.--A facility shall not be treated 
                as described in paragraph (1)(B), unless the biogas 
                produced--
                            ``(i) is of pipeline quality and 
                        distributed into a vehicle for transportation 
                        or into an intrastate, interstate, or LDC 
                        pipeline system, or
                            ``(ii) is used to produce onsite 
                        electricity or hydrogen fuel for use in 
                        vehicular or stationary fuel cell applications 
                        and has a British thermal unit content of at 
                        least 500 per cubic foot.
                    ``(B) Pipeline quality.--For purposes of 
                subparagraph (A)(i), with respect to biogas, the term 
                `pipeline quality' means biogas with a British thermal 
                unit content of at least 930 per cubic foot.
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) Geothermal energy.--The term `geothermal 
                energy' means energy derived from a geothermal deposit 
                (within the meaning of section 613(e)(2)) or from 
                geothermal heat pumps.
                    ``(B) Marine and hydrokinetic renewable energy.--
                The term `marine and hydrokinetic renewable energy' has 
                the meaning given such term in section 45(c)(10).
                    ``(C) Incremental hydropower.--The term 
                `incremental hydropower' means additional energy 
                generated as a result of efficiency improvements or 
                capacity additions to existing hydropower facilities 
                made on or after the date of enactment of this 
                subsection. The term `incremental hydropower' does not 
                include additional energy generated as a result of 
                operational changes not directly associated with 
                efficiency improvements or capacity additions.
                    ``(D) Biogas.--The term `biogas' means a gaseous 
                fuel derived from landfill, municipal solid waste, food 
                waste, wastewater or biosolids, or biomass (as defined 
                in section 203(b)(1) of the Energy Policy Act of 2005 
                (42 U.S.C. 15852(b))).
            ``(4) Special rules for energy loan tax assessment 
        financing.--
                    ``(A) In general.--In the case of any renewable 
                recovery energy resource facility provided from the 
                proceeds of a bond secured by any tax assessment loan 
                upon real property, the term `facility' in paragraph 
                (1) includes--
                            ``(i) a prepayment for the principal 
                        purpose of purchasing electricity from 
                        renewable energy resource property, and
                            ``(ii) a prepayment of a lease or license 
                        of such property, but only if the prepayment 
                        agreement provides that it shall not be 
                        canceled prior to the expiration of the tax 
                        assessment loan.
                    ``(B) Tax assessment loan.--For purposes of 
                subparagraph (A), the term `tax assessment loan' shall 
                mean a governmental assessment, special tax, or similar 
                charge upon real property.''.
    (c) Conservation and Efficiency Facility or Project.--Section 142 
of the Internal Revenue Code of 1986, as amended by subsection (b), is 
amended by adding at the end the following new subsection:
    ``(o) Conservation and Efficiency Facilities and Projects.--
            ``(1) In general.--For purposes of subsection (a)(17), the 
        term `conservation and efficiency facility or project' means--
                    ``(A) any facility used for the conservation or the 
                efficient use of energy, including energy efficient 
                retrofitting of existing buildings, or for the 
                efficient storage, transmission, or distribution of 
                energy, including any facility or project designed to 
                implement smart grid technologies (as described in 
                title XIII of the Energy Independence and Security Act 
                of 2007, or individual components of such technologies 
                as listed in section 1301 of such Act),
                    ``(B) any facility used for the conservation of or 
                the efficient use of water, including--
                            ``(i) any facility or project designed to--
                                    ``(I) reduce the demand for water,
                                    ``(II) improve efficiency in use 
                                and reduce losses and waste of water, 
                                including water reuse, and
                                    ``(III) improve land management 
                                practices to conserve water, or
                            ``(ii) any individual component of a 
                        facility or project referred to in clause (i), 
                        or
                    ``(C) any facility or project used for the 
                manufacture of facilities referred to in subparagraphs 
                (A) and (B).
        For purposes of subparagraph (B)(i), facility or project does 
        not include any facility or project that stores water.
            ``(2) Special rules for energy loan tax assessment 
        financing.--
                    ``(A) In general.--In the case of any conservation 
                and efficiency facility or project provided from the 
                proceeds of a bond secured by any tax assessment loan 
                upon real property, the term `facility' in paragraph 
                (1)(A) includes--
                            ``(i) a prepayment for the principal 
                        purpose of purchasing electricity from 
                        conservation and efficiency property, and
                            ``(ii) a prepayment of a lease or license 
                        of such property, but only if the prepayment 
                        agreement provides that it shall not be 
                        canceled prior to the expiration of the tax 
                        assessment loan.
                    ``(B) Tax assessment loan.--For purposes of 
                subparagraph (A), the term `tax assessment loan' shall 
                mean a governmental assessment, special tax or similar 
                charge upon real property.''.
    (d) High Efficiency Vehicles and Related Facilities or Projects.--
Section 142 of the Internal Revenue Code of 1986, as amended by 
subsections (b) and (c), is amended by adding at the end the following 
new subsection:
    ``(p) High Efficiency Vehicles and Related Facilities or 
Projects.--For purposes of subsection (a)(18)--
            ``(1) High efficiency vehicles.--The term `high efficiency 
        vehicle' means any vehicle that will exceed by at least 150 
        percent the average combined fuel economy for vehicles with 
        substantially similar attributes in the model year in which the 
        production of such vehicle is expected to begin at the 
        facility.
            ``(2) Facilities related to high efficiency vehicles.--A 
        facility or project is related to a high efficiency vehicle if 
        the facility is any real or personal property to be used in the 
        design, technology transfer, manufacture, production, assembly, 
        distribution, recharging or refueling, or service of high 
        efficiency vehicles.''.
    (e) National Limitation on Amount of Renewable Energy Bonds.--
Section 142 of the Internal Revenue Code of 1986, as amended by 
subsections (b), (c), and (d), is amended by adding at the end the 
following new subsection:
    ``(q) National Limitation on Amount of Renewable Energy Bonds.--
            ``(1) In general.--An issue shall not be treated as an 
        issue described in paragraph (16), (17), or (18) of subsection 
        (a) if the aggregate face amount of bonds issued by the State 
        pursuant thereto (when added to the aggregate face amount of 
        bonds previously so issued during the calendar year) exceeds 
        the amount allocated to the State by the Secretary under 
        paragraph (2) for such calendar year.
            ``(2) Allocation rules.--
                    ``(A) Allocation among states by population.--The 
                Secretary shall allocate authority to issue bonds 
                described in paragraph (16), (17), or (18) of 
                subsection (a) to each State by population for each 
                calendar year in an aggregate amount to all States not 
                to exceed $2,500,000,000.
                    ``(B) State allocation.--The State may allocate the 
                amount allocated to the State under subparagraph (A) 
                for any calendar year among facilities or projects 
                described in paragraphs (16), (17), and (18) of 
                subsection (a) in such manner as the State determines 
                appropriate.
                    ``(C) Unused renewable energy bond carryover to be 
                allocated among qualified states.--
                            ``(i) In general.--Any unused bond 
                        allocation for any State for any calendar year 
                        under subparagraph (A) shall carryover to the 
                        succeeding calendar year and be assigned to the 
                        Secretary for allocation among qualified States 
                        for the succeeding calendar year.
                            ``(ii) Unused bond allocation carryover.--
                        For purposes of this subparagraph, unused bond 
                        allocations are bond allocations described in 
                        subparagraph (A) of any State which remain 
                        unused by November 1 of any calendar year.
                            ``(iii) Formula for allocation of unused 
                        bond allocation carryovers among qualified 
                        states.--The amount allocated under this 
                        subparagraph to a qualified State for any 
                        calendar year shall bear the same ratio to all 
                        States from the preceding calendar year under 
                        subparagraph (A), excluding States which are 
                        not a qualified State.
                            ``(iv) Timing of allocation.--The Secretary 
                        shall allocate the unused bond allocation 
                        carried over from the preceding year among 
                        qualified States not later than March 1 of the 
                        succeeding year.
                            ``(v) Qualified state.--For purposes of 
                        this subparagraph, the term `qualified State' 
                        means, with respect to a calendar year, any 
                        State--
                                    ``(I) which allocated its entire 
                                bond allocation under subparagraph (A) 
                                for the preceding calendar year, and
                                    ``(II) for which a request is made 
                                (not later than August 1 of the 
                                calendar year) to receive an allocation 
                                under clause (iii).
                            ``(vi) Reporting.--States shall report 
                        annually to the Secretary on their use of bonds 
                        described in paragraph (16), (17), and (18) of 
                        subsection (a), including description of 
                        projects, amount spent per project, total 
                        amount of unused bonds, and expected greenhouse 
                        gas or water savings per project with a 
                        description of how such savings were 
                        calculated. Such reporting shall be submitted 
                        not later than November 1 of any calendar 
                        year.''.
    (f) Coordination With Section 45.--Paragraph (3) of section 45(b) 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new sentence: ``Clause (ii) of subparagraph (A) shall not 
apply with respect to any facility described in paragraph (16), (17), 
or (18) of section 142(a).''.
    (g) Coordination With Section 45K.--Subparagraph (A) of section 
45K(b)(3) of the Internal Revenue Code of 1986 is amended by adding at 
the end the following flush sentence:
                ``Subclause (II) of clause (i) shall not apply with 
                respect to any facility described in paragraph (16), 
                (17), or (18) of section 142(a).''.
    (h) Coordination With Section 48.--Subparagraph (A) of section 
48(a)(4) of the Internal Revenue Code of 1986 is amended by adding at 
the end the following flush sentence:
                ``Clause (ii) shall not apply with respect to any 
                facility described in paragraph (16), (17), or (18) of 
                section 142(a).''.
    (i) Coordination With Section 146(g)(3).--Section 146(g)(3) of the 
Internal Revenue Code of 1986 is amended by striking ``or (15)'' and 
inserting ``(15), (16), (17), or (18)''.
    (j) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.
Private Activity Renewable Energy Bonds Act - Amends the Internal Revenue Code to expand the purposes for which tax-exempt facility bonds may be issued to include renewable energy resource facilities, conservation and efficiency facilities and projects, and high efficiency vehicles and related facilities or projects. Limits the allocation of such bonds to all states by population to not more than $2.5 billion annually.
A bill to amend the Internal Revenue Code of 1986 to provide for the treatment of bonds issued to finance renewable energy resources facilities, conservation and efficiency facilities, and other specified greenhouse gas emission technologies.