II

106TH CONGRESS

1ST SESSION S. 1351

To amend the Internal Revenue Code of 1986 to extend and modify the

credit for electricity produced from renewable resources.

IN THE SENATE OF THE UNITED STATES

JULY 12, 1999

Mr. GRASSLEY (for himself, Mr. MURKOWSKI, and Mr. HARKIN) introduced

the following bill; which was read twice and referred to the Committee

on Finance

A BILL

To amend the Internal Revenue Code of 1986 to extend

and modify the credit for electricity produced from renewable resources.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. CREDIT FOR ELECTRICITY PRODUCED FROM

4 RENEWABLE RESOURCES.

5 (a) EXTENSION AND MODIFICATION OF PLACED-IN6 SERVICE RULES.—Paragraph (3) of section 45(c) of the

7 Internal Revenue Code of 1986 is amended to read as fol8 lows:

9 ‘‘(3) QUALIFIED FACILITY.—
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1 ‘‘(A) WIND FACILITIES.—In the case of a

2 facility using wind to produce electricity, the

3 term ‘qualified facility’ means any facility

4 owned by the taxpayer which is originally

5 placed in service after December 31, 1993, and

6 before July 1, 2004.

7 ‘‘(B) BIOMASS FACILITIES.—In the case of

8 a facility using biomass to produce electricity,

9 the term ‘qualified facility’ means, with respect

10 to any month, any facility owned, leased, or op11 erated by the taxpayer which is originally

12 placed in service before July 1, 2004, if, for

13 such month—

14 ‘‘(i) biomass comprises not less than

15 75 percent (on a Btu basis) of the average

16 monthly fuel input of the facility for the

17 taxable year which includes such month, or

18 ‘‘(ii) in the case of a facility prin19 cipally using coal to produce electricity,

20 biomass comprises not more than 25 per21 cent (on a Btu basis) of the average

22 monthly fuel input of the facility for the

23 taxable year which includes such month.

24 ‘‘(C) SPECIAL RULES.—
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1 ‘‘(i) In the case of a qualified facility

2 described in subparagraph (B)(i)—

3 ‘‘(I) the 10-year period referred

4 to in subsection (a) shall be treated as

5 beginning no earlier than the date of

6 the enactment of this paragraph, and

7 ‘‘(II) subsection (b)(3) shall not

8 apply to any such facility originally

9 placed in service before January 1,

10 1997.

11 ‘‘(ii) In the case of a qualified facility

12 described in subparagraph (B)(ii)—

13 ‘‘(I) the 10-year period referred

14 to in subsection (a) shall be treated as

15 beginning no earlier than the date of

16 the enactment of this paragraph, and

17 ‘‘(II) the amount of the credit

18 determined under subsection (a) with

19 respect to any project for any taxable

20 year shall be adjusted by multiplying

21 such amount (determined without re22 gard to this clause) by 0.59.’’.

23 (b) CREDIT NOT TO APPLY TO ELECTRICITY SOLD

24 TO UTILITIES UNDER CERTAIN CONTRACTS.—Section

25 45(b) of the Internal Revenue Code of 1986 (relating to
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1 limitations and adjustments) is amended by adding at the

2 end the following:

3 ‘‘(4) CREDIT NOT TO APPLY TO ELECTRICITY

4 SOLD TO UTILITIES UNDER CERTAIN CONTRACTS.—

5 ‘‘(A) IN GENERAL.—The credit determined

6 under subsection (a) shall not apply to

7 electricity—

8 ‘‘(i) produced at a qualified facility

9 placed in service by the taxpayer after

10 June 30, 1999, and

11 ‘‘(ii) sold to a utility pursuant to a

12 contract originally entered into before Jan13 uary 1, 1987 (whether or not amended or

14 restated after that date).

15 ‘‘(B) EXCEPTION.—Subparagraph (A)

16 shall not apply if—

17 ‘‘(i) the prices for energy and capacity

18 from such facility are established pursuant

19 to an amendment to the contract referred

20 to in subparagraph (A)(ii);

21 ‘‘(ii) such amendment provides that

22 the prices set forth in the contract which

23 exceed avoided cost prices determined at

24 the time of delivery shall apply only to an25 nual quantities of electricity (prorated for
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1 partial years) which do not exceed the

2 greater of—

3 ‘‘(I) the average annual quantity

4 of electricity sold to the utility under

5 the contract during calendar years

6 1994, 1995, 1996, 1997, and 1998,

7 or

8 ‘‘(II) the estimate of the annual

9 electricity production set forth in the

10 contract, or, if there is no such esti11 mate, the greatest annual quantity of

12 electricity sold to the utility under the

13 contract in any of the calendar years

14 1996, 1997, or 1998; and

15 ‘‘(iii) such amendment provides that

16 energy and capacity in excess of the limita17 tion in clause (ii) may be—

18 ‘‘(I) sold to the utility only at

19 prices that do not exceed avoided cost

20 prices determined at the time of deliv21 ery, or

22 ‘‘(II) sold to a third party subject

23 to a mutually agreed upon advance

24 notice to the utility.
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1 For purposes of this subparagraph, avoided cost

2 prices shall be determined as provided for in 18

3 CFR 292.304(d)(1) or any successor regula4 tion.’’.

5 (c) QUALIFIED FACILITIES INCLUDE ALL BIOMASS

6 FACILITIES.—

7 (1) IN GENERAL.—Subparagraph (B) of section

8 45(c)(1) of the Internal Revenue Code of 1986 (de9 fining qualified energy resources) is amended to read

10 as follows:

11 ‘‘(B) biomass.’’.

12 (2) BIOMASS DEFINED.—Paragraph (2) of sec13 tion 45(c) of such Code (relating to definitions) is

14 amended to read as follows:

15 ‘‘(2) BIOMASS.—The term ‘biomass’ means—

16 ‘‘(A) any organic material from a plant

17 which is planted exclusively for purposes of

18 being used at a qualified facility to produce

19 electricity, or

20 ‘‘(B) any solid, nonhazardous, cellulosic

21 waste material which is segregated from other

22 waste materials and which is derived from—

23 ‘‘(i) any of the following forest-related

24 resources: mill residues, precommercial
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1 thinnings, slash, and brush, but not includ2 ing old-growth timber,

3 ‘‘(ii) poultry waste,

4 ‘‘(iii) urban sources, including waste

5 pallets, crates, and dunnage, manufac6 turing and construction wood wastes, and

7 landscape or right-of-way tree trimmings,

8 but not including unsegregated municipal

9 solid waste (garbage) or paper that is com10 monly recycled, or

11 ‘‘(iv) agriculture sources, including or12 chard tree crops, vineyard, grain, legumes,

13 sugar, and other crop by-products or resi14 dues.’’.

15 (d) EFFECTIVE DATE.—The amendments made by

16 this section shall apply to electricity produced after the

17 date of the enactment of this Act.

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