I 

108TH CONGRESS 

1ST SESSION H. R. 1436

To amend the Internal Revenue Code of 1986 to enhance energy conservation, 

research, and development and to provide for security and diversity 

in the energy supply for the American people. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 25, 2003

Mr. SANDLIN 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 enhance 

energy conservation, research, and development and to 

provide for security and diversity in the energy supply 

for the American people.

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

3 SECTION 1. SHORT TITLE, ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Energy Independence and Security Act of 2003’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment 
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1 to, or repeal of, a section or other provision, the reference 

2 shall be considered to be made to a section or other provi3 sion of the Internal Revenue Code of 1986. 

4 (c) TABLE OF CONTENTS.—

Sec. 1. Short title, etc. 

Sec. 2. Credit for residential solar energy property. 

Sec. 3. Credit for energy efficiency improvements to existing homes. 

Sec. 4. Alternative motor vehicle credit. 

Sec. 5. Extension and expansion of credit for electricity produced from renewable resources. 

Sec. 6. Credit for production from qualifying advanced clean coal technology. 

Sec. 7. Oil and gas from marginal wells. 

Sec. 8. Natural gas gathering lines treated as 7-year property. 

Sec. 9. Temporary suspension of limitation based on 65 percent of taxable income and extension of suspension of taxable income limit with 

respect to marginal production. 

Sec. 10. Election to expense geological and geophysical expenditures. 

Sec. 11. Five-year net operating loss carryback for losses attributable to operating mineral interests of oil and gas producers. 

Sec. 12. Extension and modification of credit for producing fuel from a nonconventional source.

5 SEC. 2. CREDIT FOR RESIDENTIAL SOLAR ENERGY PROP6 ERTY. 

7 (a) IN GENERAL.—Subpart A of part IV of sub8 chapter A of chapter 1 (relating to nonrefundable personal 

9 credits) is amended by inserting after section 25B the fol10 lowing new section: 

11 ‘‘SEC. 25C. RESIDENTIAL SOLAR ENERGY PROPERTY. 

12 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in13 dividual, there shall be allowed as a credit against the tax 

14 imposed by this chapter for the taxable year an amount 

15 equal to the sum of—
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1 ‘‘(1) 15 percent of the qualified photovoltaic 

2 property expenditures made by the taxpayer during 

3 such year, and 

4 ‘‘(2) 15 percent of the qualified solar water 

5 heating property expenditures made by the taxpayer 

6 during the taxable year. 

7 ‘‘(b) LIMITATIONS.—

8 ‘‘(1) MAXIMUM CREDIT.—The credit allowed 

9 under subsection (a) shall not exceed—

10 ‘‘(A) $2,000 for each system of property 

11 described in subsection (c)(1), and 

12 ‘‘(B) $2,000 for each system of property 

13 described in subsection (c)(2). 

14 ‘‘(2) SAFETY CERTIFICATIONS.—No credit shall 

15 be allowed under this section for an item of property 

16 unless—

17 ‘‘(A) in the case of solar water heating 

18 equipment, such equipment is certified for per19 formance and safety by the non-profit Solar 

20 Rating Certification Corporation or a com21 parable entity endorsed by the government of 

22 the State in which such property is installed, 

23 and 
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1 ‘‘(B) in the case of a photovoltaic system, 

2 such system meets appropriate fire and electric 

3 code requirements. 

4 ‘‘(3) LIMITATION BASED ON AMOUNT OF

5 TAX.—The credit allowed under subsection (a) for 

6 the taxable year shall not exceed the excess of—

7 ‘‘(A) the sum of the regular tax liability 

8 (as defined in section 26(b)) plus the tax im9 posed by section 55, over 

10 ‘‘(B) the sum of the credits allowable 

11 under this subpart (other than this section and 

12 sections 23 and 25D) and section 27 for the 

13 taxable year. 

14 ‘‘(c) DEFINITIONS.—For purposes of this section—

15 ‘‘(1) QUALIFIED SOLAR WATER HEATING PROP16 ERTY EXPENDITURE.—The term ‘qualified solar 

17 water heating property expenditure’ means an ex18 penditure for property to heat water for use in a 

19 dwelling unit located in the United States and used 

20 as a residence if at least half of the energy used by 

21 such property for such purpose is derived from the 

22 sun. 

23 ‘‘(2) QUALIFIED PHOTOVOLTAIC PROPERTY EX24 PENDITURE.—The term ‘qualified photovoltaic prop25 erty expenditure’ means an expenditure for property 
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1 that uses solar energy to generate electricity for use 

2 in a dwelling unit. 

3 ‘‘(3) SOLAR PANELS.—No expenditure relating 

4 to a solar panel or other property installed as a roof 

5 (or portion thereof) shall fail to be treated as prop6 erty described in paragraph (1) or (2) solely because 

7 it constitutes a structural component of the struc8 ture on which it is installed. 

9 ‘‘(4) LABOR COSTS.—Expenditures for labor 

10 costs properly allocable to the onsite preparation, as11 sembly, or original installation of the property de12 scribed in paragraph (1) or (2) and for piping or 

13 wiring to interconnect such property to the dwelling 

14 unit shall be taken into account for purposes of this 

15 section. 

16 ‘‘(5) SWIMMING POOLS, ETC., USED AS STOR17 AGE MEDIUM.—Expenditures which are properly al18 locable to a swimming pool, hot tub, or any other 

19 energy storage medium which has a function other 

20 than the function of such storage shall not be taken 

21 into account for purposes of this section. 

22 ‘‘(d) SPECIAL RULES.—

23 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC24 CUPANCY.—In the case of any dwelling unit which is 

25 jointly occupied and used during any calendar year
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1 as a residence by 2 or more individuals the following 

2 shall apply: 

3 ‘‘(A) The amount of the credit allowable 

4 under subsection (a) by reason of expenditures 

5 (as the case may be) made during such cal6 endar year by any of such individuals with re7 spect to such dwelling unit shall be determined 

8 by treating all of such individuals as 1 taxpayer 

9 whose taxable year is such calendar year. 

10 ‘‘(B) There shall be allowable with respect 

11 to such expenditures to each of such individ12 uals, a credit under subsection (a) for the tax13 able year in which such calendar year ends in 

14 an amount which bears the same ratio to the 

15 amount determined under subparagraph (A) as 

16 the amount of such expenditures made by such 

17 individual during such calendar year bears to 

18 the aggregate of such expenditures made by all 

19 of such individuals during such calendar year. 

20 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

21 HOUSING CORPORATION.—In the case of an indi22 vidual who is a tenant-stockholder (as defined in sec23 tion 216) in a cooperative housing corporation (as 

24 defined in such section), such individual shall be 

25 treated as having made his tenant-stockholder’s pro-
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1 portionate share (as defined in section 216(b)(3)) of 

2 any expenditures of such corporation. 

3 ‘‘(3) CONDOMINIUMS.—

4 ‘‘(A) IN GENERAL.—In the case of an indi5 vidual who is a member of a condominium man6 agement association with respect to a condo7 minium which he owns, such individual shall be 

8 treated as having made his proportionate share 

9 of any expenditures of such association. 

10 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO11 CIATION.—For purposes of this paragraph, the 

12 term ‘condominium management association’ 

13 means an organization which meets the require14 ments of paragraph (1) of section 528(c) (other 

15 than subparagraph (E) thereof) with respect to 

16 a condominium project substantially all of the 

17 units of which are used as residences. 

18 ‘‘(4) ALLOCATION IN CERTAIN CASES.—If less 

19 than 80 percent of the use of an item is for nonbusi20 ness purposes, only that portion of the expenditures 

21 for such item which is properly allocable to use for 

22 nonbusiness purposes shall be taken into account. 

23 ‘‘(5) WHEN EXPENDITURE MADE; AMOUNT OF

24 EXPENDITURE.—
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1 ‘‘(A) IN GENERAL.—Except as provided in 

2 subparagraph (B), an expenditure with respect 

3 to an item shall be treated as made when the 

4 original installation of the item is completed. 

5 ‘‘(B) EXPENDITURES PART OF BUILDING

6 CONSTRUCTION.—In the case of an expenditure 

7 in connection with the construction or recon8 struction of a structure, such expenditure shall 

9 be treated as made when the original use of the 

10 constructed or reconstructed structure by the 

11 taxpayer begins. 

12 ‘‘(C) AMOUNT.—The amount of any ex13 penditure shall be the cost thereof. 

14 ‘‘(6) PROPERTY FINANCED BY SUBSIDIZED EN15 ERGY FINANCING.—For purposes of determining the 

16 amount of expenditures made by any individual with 

17 respect to any dwelling unit, there shall not be taken 

18 in to account expenditures which are made from 

19 subsidized energy financing (as defined in section 

20 48(a)(4)(A)). 

21 ‘‘(e) BASIS ADJUSTMENTS.—For purposes of this 

22 subtitle, if a credit is allowed under this section for any 

23 expenditure with respect to any property, the increase in 

24 the basis of such property which would (but for this sub-
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1 section) result from such expenditure shall be reduced by 

2 the amount of the credit so allowed. 

3 ‘‘(f) TERMINATION.—The credit allowed under this 

4 section shall not apply to taxable years beginning after 

5 December 31, 2008 (December 31, 2009, with respect to 

6 qualified photovoltaic property expenditures).’’. 

7 (b) CONFORMING AMENDMENTS.—

8 (1) Subsection (a) of section 1016 is amended 

9 by striking ‘‘and’’ at the end of paragraph (27), by 

10 striking the period at the end of paragraph (28) and 

11 inserting ‘‘, and’’, and by adding at the end the fol12 lowing new paragraph: 

13 ‘‘(29) to the extent provided in section 25C(e), 

14 in the case of amounts with respect to which a credit 

15 has been allowed under section 25C.’’. 

16 (2) The table of sections for subpart A of part 

17 IV of subchapter A of chapter 1 is amended by in18 serting after the item relating to section 25B the fol19 lowing new item:

‘‘Sec. 25C. Residential solar energy property.’’.

20 (c) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to taxable years ending after De22 cember 31, 2003. 
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1 SEC. 3. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS 

2 TO EXISTING HOMES. 

3 (a) IN GENERAL.—Subpart A of part IV of sub4 chapter A of chapter 1 (relating to nonrefundable personal 

5 credits) is amended by inserting after section 25C the fol6 lowing new section: 

7 ‘‘SEC. 25D. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST8 ING HOMES. 

9 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in10 dividual, there shall be allowed as a credit against the tax 

11 imposed by this chapter for the taxable year an amount 

12 equal to 20 percent of the amount paid or incurred by 

13 the taxpayer for qualified energy efficiency improvements 

14 installed during such taxable year. 

15 ‘‘(b) LIMITATIONS.—

16 ‘‘(1) MAXIMUM CREDIT.—The credit allowed by 

17 this section with respect to a dwelling shall not ex18 ceed $2,000. 

19 ‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER

20 ON SAME DWELLING TAKEN INTO ACCOUNT.—If a 

21 credit was allowed to the taxpayer under subsection 

22 (a) with respect to a dwelling in 1 or more prior tax23 able years, the amount of the credit otherwise allow24 able for the taxable year with respect to that dwell25 ing shall not exceed the amount of $2,000 reduced 

26 by the sum of the credits allowed under subsection
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1 (a) to the taxpayer with respect to the dwelling for 

2 all prior taxable years. 

3 ‘‘(3) LIMITATION BASED ON AMOUNT OF

4 TAX.—The credit allowed under subsection (a) for 

5 the taxable year shall not exceed the excess of—

6 ‘‘(A) the sum of the regular tax liability 

7 (as defined in section 26(b)) plus the tax im8 posed by section 55, over 

9 ‘‘(B) the sum of the credits allowable 

10 under this subpart (other than this section and 

11 section 23) and section 27 for the taxable year. 

12 ‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the 

13 credit allowable under subsection (a) exceeds the limita14 tion imposed by subsection (b)(3) for such taxable year, 

15 such excess shall be carried to the succeeding taxable year 

16 and added to the credit allowable under subsection (a) for 

17 such succeeding taxable year. 

18 ‘‘(d) QUALIFIED ENERGY EFFICIENCY IMPROVE19 MENTS.—For purposes of this section, the term ‘qualified 

20 energy efficiency improvements’ means any energy effi21 cient building envelope component which meets the pre22 scriptive criteria for such component established by the 

23 1998 International Energy Conservation Code, if—

24 ‘‘(1) such component is installed in or on a 

25 dwelling—
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1 ‘‘(A) located in the United States, and 

2 ‘‘(B) owned and used by the taxpayer as 

3 the taxpayer’s principal residence (within the 

4 meaning of section 121), 

5 ‘‘(2) the original use of such component com6 mences with the taxpayer, and 

7 ‘‘(3) such component reasonably can be ex8 pected to remain in use for at least 5 years. 

9 If the aggregate cost of such components with respect to 

10 any dwelling exceeds $1,000, such components shall be 

11 treated as qualified energy efficiency improvements only 

12 if such components are also certified in accordance with 

13 subsection (e) as meeting such criteria. 

14 ‘‘(e) CERTIFICATION.—The certification described in 

15 subsection (d) shall be—

16 ‘‘(1) determined on the basis of the technical 

17 specifications or applicable ratings (including prod18 uct labeling requirements) for the measurement of 

19 energy efficiency, based upon energy use or building 

20 envelope component performance, for the energy effi21 cient building envelope component, 

22 ‘‘(2) provided by a local building regulatory au23 thority, a utility, a manufactured home production 

24 inspection primary inspection agency (IPIA), or an 

25 accredited home energy rating system provider who 
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1 is accredited by or otherwise authorized to use ap2 proved energy performance measurement methods by 

3 the Home Energy Ratings Systems Council or the 

4 National Association of State Energy Officials, and 

5 ‘‘(3) made in writing in a manner that specifies 

6 in readily verifiable fashion the energy efficient 

7 building envelope components installed and their re8 spective energy efficiency levels. 

9 ‘‘(f) DEFINITIONS AND SPECIAL RULES.—

10 ‘‘(1) TENANT-STOCKHOLDER IN COOPERATIVE

11 HOUSING CORPORATION.—In the case of an indi12 vidual who is a tenant-stockholder (as defined in sec13 tion 216) in a cooperative housing corporation (as 

14 defined in such section), such individual shall be 

15 treated as having paid his tenant-stockholder’s pro16 portionate share (as defined in section 216(b)(3)) of 

17 the cost of qualified energy efficiency improvements 

18 made by such corporation. 

19 ‘‘(2) CONDOMINIUMS.—

20 ‘‘(A) IN GENERAL.—In the case of an indi21 vidual who is a member of a condominium man22 agement association with respect to a condo23 minium which he owns, such individual shall be 

24 treated as having paid his proportionate share 
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1 of the cost of qualified energy efficiency im2 provements made by such association. 

3 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO4 CIATION.—For purposes of this paragraph, the 

5 term ‘condominium management association’ 

6 means an organization which meets the require7 ments of paragraph (1) of section 528(c) (other 

8 than subparagraph (E) thereof) with respect to 

9 a condominium project substantially all of the 

10 units of which are used as residences. 

11 ‘‘(3) BUILDING ENVELOPE COMPONENT.—The 

12 term ‘building envelope component’ means insulation 

13 material or system which is specifically and pri14 marily designed to reduce the heat loss or gain of a 

15 dwelling when installed in or on such dwelling, exte16 rior windows (including skylights) and doors, and 

17 metal roofs with appropriate pigmented coatings 

18 which are specifically and primarily designed to re19 duce the heat gain of a dwelling when installed in 

20 or on such dwelling. 

21 ‘‘(4) MANUFACTURED HOMES INCLUDED.—For 

22 purposes of this section, the term ‘dwelling’ includes 

23 a manufactured home which conforms to Federal 

24 Manufactured Home Construction and Safety Stand25 ards (24 CFR 3280). 
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1 ‘‘(g) BASIS ADJUSTMENT.—For purposes of this sub2 title, if a credit is allowed under this section for any ex3 penditure with respect to any property, the increase in the 

4 basis of such property which would (but for this sub5 section) result from such expenditure shall be reduced by 

6 the amount of the credit so allowed. 

7 ‘‘(h) APPLICATION OF SECTION.—This section shall 

8 apply to qualified energy efficiency improvements installed 

9 after December 31, 2003 and before January 1, 2009.’’. 

10 (b) CONFORMING AMENDMENTS.—

11 (1) Subsection (a) of section 1016 is amended 

12 by striking ‘‘and’’ at the end of paragraph (28), by 

13 striking the period at the end of paragraph (29) and 

14 inserting ‘‘, and’’, and by adding at the end the fol15 lowing new paragraph: 

16 ‘‘(30) to the extent provided in section 25D(g), 

17 in the case of amounts with respect to which a credit 

18 has been allowed under section 25D.’’. 

19 (2) The table of sections for subpart A of part 

20 IV of subchapter A of chapter 1 is amended by in21 serting after the item relating to section 25C the fol22 lowing new item:

‘‘Sec. 25D. Energy efficiency improvements to existing homes.’’.

23 (c) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to taxable years ending after De25 cember 31, 2003.
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1 SEC. 4. ALTERNATIVE MOTOR VEHICLE CREDIT. 

2 (a) IN GENERAL.—Subpart B of part IV of sub3 chapter A of chapter 1 (relating to other credits) is 

4 amended by adding at the end the following: 

5 ‘‘SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT. 

6 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al7 lowed as a credit against the tax imposed by this chapter 

8 for the taxable year an amount equal to the sum of—

9 ‘‘(1) the new qualified fuel cell motor vehicle 

10 credit determined under subsection (b), and 

11 ‘‘(2) the new qualified hybrid motor vehicle 

12 credit determined under subsection (c). 

13 ‘‘(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE

14 CREDIT.—

15 ‘‘(1) IN GENERAL.—For purposes of subsection 

16 (a), the new qualified fuel cell motor vehicle credit 

17 determined under this subsection with respect to a 

18 new qualified fuel cell motor vehicle placed in service 

19 by the taxpayer during the taxable year is—

20 ‘‘(A) $4,000, if such vehicle has a gross ve21 hicle weight rating of not more than 8,500 

22 pounds, 

23 ‘‘(B) $10,000, if such vehicle has a gross 

24 vehicle weight rating of more than 8,500 

25 pounds but not more than 14,000 pounds, 
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1 ‘‘(C) $20,000, if such vehicle has a gross 

2 vehicle weight rating of more than 14,000 

3 pounds but not more than 26,000 pounds, and 

4 ‘‘(D) $40,000, if such vehicle has a gross 

5 vehicle weight rating of more than 26,000 

6 pounds. 

7 ‘‘(2) INCREASE FOR FUEL EFFICIENCY.—

8 ‘‘(A) IN GENERAL.—The amount deter9 mined under paragraph (1)(A) with respect to 

10 a new qualified fuel cell motor vehicle which is 

11 a passenger automobile or light truck shall be 

12 increased by—

13 ‘‘(i) $1,000, if such vehicle achieves at 

14 least 150 percent but less than 175 per15 cent of the 2002 model year city fuel econ16 omy, 

17 ‘‘(ii) $1,500, if such vehicle achieves 

18 at least 175 percent but less than 200 per19 cent of the 2002 model year city fuel econ20 omy, 

21 ‘‘(iii) $2,000, if such vehicle achieves 

22 at least 200 percent but less than 225 per23 cent of the 2002 model year city fuel econ24 omy, 
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1 ‘‘(iv) $2,500, if such vehicle achieves 

2 at least 225 percent but less than 250 per3 cent of the 2002 model year city fuel econ4 omy, 

5 ‘‘(v) $3,000, if such vehicle achieves 

6 at least 250 percent but less than 275 per7 cent of the 2002 model year city fuel econ8 omy, 

9 ‘‘(vi) $3,500, if such vehicle achieves 

10 at least 275 percent but less than 300 per11 cent of the 2002 model year city fuel econ12 omy, and 

13 ‘‘(vii) $4,000, if such vehicle achieves 

14 at least 300 percent of the 2002 model 

15 year city fuel economy. 

16 ‘‘(B) 2002 MODEL YEAR CITY FUEL ECON17 OMY.—For purposes of subparagraph (A), the 

18 2002 model year city fuel economy with respect 

19 to a vehicle shall be determined in accordance 

20 with the following tables: 

21 ‘‘(i) In the case of a passenger auto22 mobile:

‘‘If vehicle inertia weight 

class is: 

The 2002 model year city fuel 

economy is: 

1,500 or 1,750 lbs .................................................................... 43.7 mpg

2,000 lbs .................................................................................. 38.3 mpg

2,250 lbs .................................................................................. 34.1 mpg

2,500 lbs .................................................................................. 30.7 mpg

2,750 lbs .................................................................................. 27.9 mpg
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‘‘If vehicle inertia weight 

class is: 

The 2002 model year city fuel 

economy is: 

3,000 lbs .................................................................................. 25.6 mpg

3,500 lbs .................................................................................. 22.0 mpg

4,000 lbs .................................................................................. 19.3 mpg

4,500 lbs .................................................................................. 17.2 mpg

5,000 lbs .................................................................................. 15.5 mpg

5,500 lbs .................................................................................. 14.1 mpg

6,000 lbs .................................................................................. 12.9 mpg

6,500 lbs .................................................................................. 11.9 mpg

7,000 or 8,500 lbs .................................................................... 11.1 mpg.

1 ‘‘(ii) In the case of a light truck:

‘‘If vehicle inertia weight 

class is: 

The 2002 model year city fuel 

economy is: 

1,500 or 1,750 lbs .................................................................... 37.6 mpg

2,000 lbs .................................................................................. 33.7 mpg

2,250 lbs .................................................................................. 30.6 mpg

2,500 lbs .................................................................................. 28.0 mpg

2,750 lbs .................................................................................. 25.9 mpg

3,000 lbs .................................................................................. 24.1 mpg

3,500 lbs .................................................................................. 21.3 mpg

4,000 lbs .................................................................................. 19.0 mpg

4,500 lbs .................................................................................. 17.3 mpg

5,000 lbs .................................................................................. 15.8 mpg

5,500 lbs .................................................................................. 14.6 mpg

6,000 lbs .................................................................................. 13.6 mpg

6,500 lbs .................................................................................. 12.8 mpg

7,000 or 8,500 lbs .................................................................... 12.0 mpg.

2 ‘‘(C) VEHICLE INERTIA WEIGHT CLASS.—

3 For purposes of subparagraph (B), the term 

4 ‘vehicle inertia weight class’ has the same 

5 meaning as when defined in regulations pre6 scribed by the Administrator of the Environ7 mental Protection Agency for purposes of the 

8 administration of title II of the Clean Air Act 

9 (42 U.S.C. 7521 et seq.). 

10 ‘‘(3) NEW QUALIFIED FUEL CELL MOTOR VEHI11 CLE.—For purposes of this subsection, the term 
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1 ‘new qualified fuel cell motor vehicle’ means a motor 

2 vehicle—

3 ‘‘(A) which is propelled by power derived 

4 from one or more cells which convert chemical 

5 energy directly into electricity by combining ox6 ygen with hydrogen fuel which is stored on 

7 board the vehicle in any form and may or may 

8 not require reformation prior to use, 

9 ‘‘(B) which, in the case of a passenger 

10 automobile or light truck—

11 ‘‘(i) for 2004 and later model vehicles, 

12 has received a certificate of conformity 

13 under the Clean Air Act and meets or ex14 ceeds the equivalent qualifying California 

15 low emission vehicle standard under sec16 tion 243(e)(2) of the Clean Air Act for 

17 that make and model year, and 

18 ‘‘(ii) for 2006 and later model vehi19 cles, has received a certificate that such ve20 hicle meets or exceeds the Tier II emission 

21 level established in regulations prescribed 

22 by the Administrator of the Environmental 

23 Protection Agency under section 202(i) of 

24 the Clean Air Act for that make and model 

25 year vehicle, 
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1 ‘‘(C) the original use of which commences 

2 with the taxpayer,

3 ‘‘(D) which is acquired for use or lease by 

4 the taxpayer and not for resale, and 

5 ‘‘(E) which is made by a manufacturer. 

6 ‘‘(c) NEW QUALIFIED HYBRID MOTOR VEHICLE

7 CREDIT.—

8 ‘‘(1) IN GENERAL.—For purposes of subsection 

9 (a), the new qualified hybrid motor vehicle credit de10 termined under this subsection with respect to a new 

11 qualified hybrid motor vehicle placed in service by 

12 the taxpayer during the taxable year is the credit 

13 amount determined under paragraph (2). 

14 ‘‘(2) CREDIT AMOUNT.—

15 ‘‘(A) IN GENERAL.—The credit amount de16 termined under this paragraph shall be deter17 mined in accordance with the following tables: 

18 ‘‘(i) In the case of a new qualified hy19 brid motor vehicle which is a passenger 

20 automobile or light truck and which pro21 vides the following percentage of the max22 imum available power:

‘‘If percentage of the maximum available power is: The credit amount is: 

At least 2.5 percent but less than 10 percent ......................... $250

At least 10 percent but less than 20 percent .......................... $500

At least 20 percent but less than 30 percent .......................... $750

At least 30 percent .................................................................. $1,000.
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1 ‘‘(ii) In the case of a new qualified hy2 brid motor vehicle which is a heavy duty 

3 hybrid motor vehicle and which provides 

4 the following percentage of the maximum 

5 available power: 

6 ‘‘(I) If such vehicle has a gross 

7 vehicle weight rating of not more than 

8 14,000 pounds:

‘‘If percentage of the maximum available power is: The credit amount is: 

At least 20 percent but less than 30 percent .......................... $1,500

At least 30 percent but less than 40 percent .......................... $1,750

At least 40 percent but less than 50 percent .......................... $2,000

At least 50 percent but less than 60 percent .......................... $2,250

At least 60 percent .................................................................. $2,500.

9 ‘‘(II) If such vehicle has a gross 

10 vehicle weight rating of more than 

11 14,000 but not more than 26,000 

12 pounds:

‘‘If percentage of the maximum available power is: The credit amount is: 

At least 20 percent but less than 30 percent .......................... $4,000

At least 30 percent but less than 40 percent .......................... $4,500

At least 40 percent but less than 50 percent .......................... $5,000

At least 50 percent but less than 60 percent .......................... $5,500

At least 60 percent .................................................................. $6,000.

13 ‘‘(III) If such vehicle has a gross 

14 vehicle weight rating of more than 

15 26,000 pounds:

‘‘If percentage of the maximum available power is: The credit amount is: 

At least 20 percent but less than 30 percent .......................... $6,000

At least 30 percent but less than 40 percent .......................... $7,000

At least 40 percent but less than 50 percent .......................... $8,000

At least 50 percent but less than 60 percent .......................... $9,000

At least 60 percent .................................................................. $10,000.
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1 ‘‘(B) INCREASE FOR FUEL EFFICIENCY.—

2 ‘‘(i) AMOUNT.—The amount deter3 mined under subparagraph (A)(i) with re4 spect to a passenger automobile or light 

5 truck shall be increased by—

6 ‘‘(I) $1,000, if such vehicle 

7 achieves at least 125 percent but less 

8 than 150 percent of the 2002 model 

9 year city fuel economy, 

10 ‘‘(II) $1,500, if such vehicle 

11 achieves at least 150 percent but less 

12 than 175 percent of the 2002 model 

13 year city fuel economy, 

14 ‘‘(III) $2,000, if such vehicle 

15 achieves at least 175 percent but less 

16 than 200 percent of the 2002 model 

17 year city fuel economy, 

18 ‘‘(IV) $2,500, if such vehicle 

19 achieves at least 200 percent but less 

20 than 225 percent of the 2002 model 

21 year city fuel economy, 

22 ‘‘(V) $3,000, if such vehicle 

23 achieves at least 225 percent but less 

24 than 250 percent of the 2002 model 

25 year city fuel economy, and 
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1 ‘‘(VI) $3,500, if such vehicle 

2 achieves at least 250 percent of the 

3 2002 model year city fuel economy. 

4 ‘‘(ii) 2002 MODEL YEAR CITY FUEL

5 ECONOMY.—For purposes of clause (i), the 

6 2002 model year city fuel economy with re7 spect to a vehicle shall be determined using 

8 the tables provided in subsection (b)(2)(B) 

9 with respect to such vehicle. 

10 ‘‘(iii) OPTION TO USE LIKE VEHI11 CLE.—For purposes of clause (i), at the 

12 option of the vehicle manufacturer, the in13 crease for fuel efficiency may be calculated 

14 by comparing the new qualified hybrid 

15 motor vehicle to a ‘like vehicle’. 

16 ‘‘(C) INCREASE FOR ACCELERATED EMIS17 SIONS PERFORMANCE.—The amount deter18 mined under subparagraph (A)(ii) with respect 

19 to an applicable heavy duty hybrid motor vehi20 cle shall be increased by the increase credit 

21 amount determined in accordance with the fol22 lowing tables: 

23 ‘‘(i) In the case of a vehicle which has 

24 a gross vehicle weight rating of not more 

25 than 14,000 pounds:
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‘‘If the model year is: The increase credit amount is: 

2004 ......................................................................................... $3,500

2005 ......................................................................................... $3,000

2006 ......................................................................................... $2,500

2007 ......................................................................................... $2,000

2008 ......................................................................................... $1,500.

1 ‘‘(ii) In the case of a vehicle which 

2 has a gross vehicle weight rating of more 

3 than 14,000 pounds but not more than 

4 26,000 pounds:

‘‘If the model year is: The increase credit amount is: 

2004 ......................................................................................... $9,000

2005 ......................................................................................... $7,750

2006 ......................................................................................... $6,500

2007 ......................................................................................... $5,250

2008 ......................................................................................... $4,000.

5 ‘‘(iii) In the case of a vehicle which 

6 has a gross vehicle weight rating of more 

7 than 26,000 pounds:

‘‘If the model year is: The increase credit amount is: 

2004 ......................................................................................... $14,000

2005 ......................................................................................... $12,000

2006 ......................................................................................... $10,000

2007 ......................................................................................... $8,000

2008 ......................................................................................... $6,000.

8 ‘‘(D) CONSERVATION CREDIT.—

9 ‘‘(i) AMOUNT.—The amount deter10 mined under subparagraph (A)(i) with re11 spect to a passenger automobile or light 

12 truck shall be increased by—

13 ‘‘(I) $250, if such vehicle 

14 achieves a lifetime fuel savings of at 

15 least 1,500 gallons of gasoline, and
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•HR 1436 IH 

1 ‘‘(II) $500, if such vehicle 

2 achieves a lifetime fuel savings of at 

3 least 2,500 gallons of gasoline. 

4 ‘‘(ii) LIFETIME FUEL SAVINGS FOR

5 LIKE VEHICLE.—For purposes of clause 

6 (i), at the option of the vehicle manufac7 turer, the lifetime fuel savings fuel may be 

8 calculated by comparing the new qualified 

9 hybrid motor vehicle to a ‘like vehicle’. 

10 ‘‘(E) DEFINITIONS.—

11 ‘‘(i) APPLICABLE HEAVY DUTY HY12 BRID MOTOR VEHICLE.—For purposes of 

13 subparagraph (C), the term ‘applicable 

14 heavy duty hybrid motor vehicle’ means a 

15 heavy duty hybrid motor vehicle which is 

16 powered by an internal combustion or heat 

17 engine which is certified as meeting the 

18 emission standards set in the regulations 

19 prescribed by the Administrator of the En20 vironmental Protection Agency for 2009 

21 and later model year diesel heavy duty en22 gines or 2010 and later model year 

23 ottocycle heavy duty engines, as applicable. 

24 ‘‘(ii) HEAVY DUTY HYBRID MOTOR VE25 HICLE.—For purposes of this paragraph, 
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1 the term ‘heavy duty hybrid motor vehicle’ 

2 means a new qualified hybrid motor vehicle 

3 which has a gross vehicle weight rating of 

4 more than 10,000 pounds and draws pro5 pulsion energy from both of the following 

6 onboard sources of stored energy: 

7 ‘‘(I) An internal combustion or 

8 heat engine using consumable fuel 

9 which, for 2004 and later model vehi10 cles, has received a certificate of con11 formity under the Clean Air Act and 

12 meets or exceeds a level of not greater 

13 than 3.0 grams per brake horsepower14 hour of oxides of nitrogen and 0.01 

15 per brake horsepower-hour of particu16 late matter. 

17 ‘‘(II) A rechargeable energy stor18 age system. 

19 ‘‘(iii) MAXIMUM AVAILABLE POWER.—

20 ‘‘(I) PASSENGER AUTOMOBILE

21 OR LIGHT TRUCK.—For purposes of 

22 subparagraph (A)(i), the term ‘max23 imum available power’ means the 

24 maximum power available from the 

25 battery or other electrical storage de-
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•HR 1436 IH 

1 vice, during a standard 10 second 

2 pulse power test, divided by the sum 

3 of the battery or other electrical stor4 age device and the SAE net power of 

5 the heat engine. 

6 ‘‘(II) HEAVY DUTY HYBRID

7 MOTOR VEHICLE.—For purposes of 

8 subparagraph (A)(ii), the term ‘max9 imum available power’ means the 

10 maximum power available from the 

11 battery or other electrical storage de12 vice, during a standard 10 second 

13 pulse power test, divided by the vehi14 cle’s total traction power. The term 

15 ‘total traction power’ means the sum 

16 of the electric motor peak power and 

17 the heat engine peak power of the ve18 hicle, except that if the electric motor 

19 is the sole means by which the vehicle 

20 can be driven, the total traction power 

21 is the peak electric motor power. 

22 ‘‘(iv) LIKE VEHICLE.—For purposes 

23 of subparagraph (B)(iii), the term ‘like ve24 hicle’ for a new qualified hybrid motor ve25 hicle derived from a conventional produc-
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•HR 1436 IH 

1 tion vehicle produced in the same model 

2 year means a model that is equivalent in 

3 the following areas: 

4 ‘‘(I) Body style (2-door or 4-

5 door). 

6 ‘‘(II) Transmission (automatic or 

7 manual). 

8 ‘‘(III) Acceleration performance 

9 (± 0.05 seconds). 

10 ‘‘(IV) Drivetrain (2-wheel drive 

11 or 4-wheel drive). 

12 ‘‘(V) Certification by the Admin13 istrator of the Environmental Protec14 tion Agency. 

15 ‘‘(v) LIFETIME FUEL SAVINGS.—For 

16 purposes of subsection (c)(2)(D), the term 

17 ‘lifetime fuel savings’ shall be calculated by 

18 dividing 120,000 by the difference between 

19 the 2002 model year city fuel economy for 

20 the vehicle inertia weight class and the city 

21 fuel economy for the new qualified hybrid 

22 motor vehicle. 

23 ‘‘(3) NEW QUALIFIED HYBRID MOTOR VEHI24 CLE.—For purposes of this subsection, the term 
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•HR 1436 IH 

1 ‘new qualified hybrid motor vehicle’ means a motor 

2 vehicle—

3 ‘‘(A) which draws propulsion energy from 

4 onboard sources of stored energy which are 

5 both—

6 ‘‘(i) an internal combustion or heat 

7 engine using combustible fuel, and 

8 ‘‘(ii) a rechargeable energy storage 

9 system, 

10 ‘‘(B) which, in the case of a passenger 

11 automobile or light truck, for 2004 and later 

12 model vehicles, has received a certificate of con13 formity under the Clean Air Act and meets or 

14 exceeds the equivalent qualifying California low 

15 emission vehicle standard under section 

16 243(e)(2) of the Clean Air Act for that make 

17 and model year, 

18 ‘‘(C) the original use of which commences 

19 with the taxpayer, 

20 ‘‘(D) which is acquired for use or lease by 

21 the taxpayer and not for resale, and 

22 ‘‘(E) which is made by a manufacturer. 

23 ‘‘(d) LIMITATION BASED ON AMOUNT OF TAX.—The 

24 credit allowed under subsection (a) for the taxable year 

25 shall not exceed the excess of—
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1 ‘‘(1) the sum of the regular tax liability (as de2 fined in section 26(b)) plus the tax imposed by sec3 tion 55, over 

4 ‘‘(2) the sum of the credits allowable under sub5 part A and sections 27, 29, and 30A for the taxable 

6 year. 

7 ‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—

8 For purposes of this section—

9 ‘‘(1) CONSUMABLE FUEL.—The term 

10 ‘consumable fuel’ means any solid, liquid, or gaseous 

11 matter which releases energy when consumed by an 

12 auxiliary power unit. 

13 ‘‘(2) MOTOR VEHICLE.—The term ‘motor vehi14 cle’ has the meaning given such term by section 

15 30(c)(2). 

16 ‘‘(3) 2002 MODEL YEAR CITY FUEL ECON17 OMY.—The 2002 model year city fuel economy with 

18 respect to any vehicle shall be measured under rules 

19 similar to the rules under section 4064(c). 

20 ‘‘(4) OTHER TERMS.—The terms ‘automobile’, 

21 ‘passenger automobile’, ‘light truck’, and ‘manufac22 turer’ have the meanings given such terms in regula23 tions prescribed by the Administrator of the Envi24 ronmental Protection Agency for purposes of the ad-
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•HR 1436 IH 

1 ministration of title II of the Clean Air Act (42 

2 U.S.C. 7521 et seq.). 

3 ‘‘(5) REDUCTION IN BASIS.—For purposes of 

4 this subtitle, the basis of any property for which a 

5 credit is allowable under subsection (a) shall be re6 duced by the amount of such credit so allowed. 

7 ‘‘(6) NO DOUBLE BENEFIT.—The amount of 

8 any deduction or credit allowable under this chapter 

9 (other than the credit allowable under this section) 

10 shall be reduced by the amount of credit allowed 

11 under subsection (a) for such vehicle for the taxable 

12 year. 

13 ‘‘(7) PROPERTY USED BY TAX-EXEMPT ENTI14 TIES.—In the case of a credit amount which is al15 lowable with respect to a motor vehicle which is ac16 quired by an entity exempt from tax under this 

17 chapter, the person which sells or leases such vehicle 

18 to the entity shall be treated as the taxpayer with 

19 respect to the vehicle for purposes of this section 

20 and the credit shall be allowed to such person, but 

21 only if the person clearly discloses to the entity in 

22 any sale or lease document the specific amount of 

23 any credit otherwise allowable to the entity under 

24 this section and reduces the sale or lease price of 

25 such vehicle by an equivalent amount of such credit. 
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1 ‘‘(8) RECAPTURE.—The Secretary shall, by reg2 ulations, provide for recapturing the benefit of any 

3 credit allowable under subsection (a) with respect to 

4 any property which ceases to be property eligible for 

5 such credit (including recapture in the case of a 

6 lease period of less than the economic life of a vehi7 cle). 

8 ‘‘(9) PROPERTY USED OUTSIDE UNITED

9 STATES, ETC., NOT QUALIFIED.—No credit shall be 

10 allowed under subsection (a) with respect to any 

11 property referred to in section 50(b) or with respect 

12 to the portion of the cost of any property taken into 

13 account under section 179. 

14 ‘‘(10) ELECTION TO NOT TAKE CREDIT.—No 

15 credit shall be allowed under subsection (a) for any 

16 vehicle if the taxpayer elects to not have this section 

17 apply to such vehicle. 

18 ‘‘(11) CARRYFORWARD ALLOWED.—

19 ‘‘(A) IN GENERAL.—If the credit amount 

20 allowable under subsection (a) for a taxable 

21 year exceeds the amount of the limitation under 

22 subsection (c) for such taxable year (referred to 

23 as the ‘unused credit year’ in this paragraph), 

24 such excess shall be allowed as a credit 
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1 carryforward for each of the 20 taxable years 

2 following the unused credit year. 

3 ‘‘(B) RULES.—Rules similar to the rules of 

4 section 39 shall apply with respect to the credit 

5 carryforward under subparagraph (A). 

6 ‘‘(12) INTERACTION WITH AIR QUALITY AND

7 MOTOR VEHICLE SAFETY STANDARDS.—Unless oth8 erwise provided in this section, a motor vehicle shall 

9 not be considered eligible for a credit under this sec10 tion unless such vehicle is in compliance with—

11 ‘‘(A) the applicable provisions of the Clean 

12 Air Act for the applicable make and model year 

13 of the vehicle (or applicable air quality provi14 sions of State law in the case of a State which 

15 has adopted such provision under a waiver 

16 under section 209(b) of the Clean Air Act), and 

17 ‘‘(B) the motor vehicle safety provisions of 

18 sections 30101 through 30169 of title 49, 

19 United States Code. 

20 ‘‘(f) REGULATIONS.—

21 ‘‘(1) IN GENERAL.—The Secretary shall pro22 mulgate such regulations as necessary to carry out 

23 the provisions of this section. 

24 ‘‘(2) ADMINISTRATOR OF ENVIRONMENTAL

25 PROTECTION AGENCY.—The Administrator of the
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•HR 1436 IH 

1 Environmental Protection Agency, in coordination 

2 with the Secretary of Transportation and the Sec3 retary of the Treasury, shall prescribe such regula4 tions as necessary to determine whether a motor ve5 hicle meets the requirements to be eligible for a 

6 credit under this section. 

7 ‘‘(g) TERMINATION.—This section shall not apply to 

8 any property placed in service after—

9 ‘‘(1) in the case of a new qualified fuel cell 

10 motor vehicle (as described in subsection (b)), De11 cember 31, 2013, and 

12 ‘‘(2) in the case of any other property, Decem13 ber 31, 2009.’’. 

14 (b) CONFORMING AMENDMENTS.—

15 (1) Section 1016(a) is amended by striking 

16 ‘‘and’’ at the end of paragraph (29), by striking the 

17 period at the end of paragraph (30) and inserting ‘‘, 

18 and’’, and by adding at the end the following: 

19 ‘‘(31) to the extent provided in section 

20 30B(e)(5).’’. 

21 (2) Section 6501(m) is amended by inserting 

22 ‘‘30B(e)(10),’’ after ‘‘30(d)(4),’’. 

23 (3) The table of sections for subpart B of part 

24 IV of subchapter A of chapter 1 is amended by in-
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•HR 1436 IH 

1 serting after the item relating to section 30A the fol2 lowing:

‘‘Sec. 30B. Alternative motor vehicle credit.’’.

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to property placed in service after 

5 December 31, 2003, in taxable years ending after such 

6 date. 

7 SEC. 5. EXTENSION AND EXPANSION OF CREDIT FOR ELEC8 TRICITY PRODUCED FROM RENEWABLE RE9 SOURCES. 

10 (a) EXTENSION OF CREDIT FOR WIND AND CLOSED11 LOOP BIOMASS FACILITIES.—Subparagraphs (A) and (B) 

12 of section 45(c)(3) are each amended by striking ‘‘2004’’ 

13 and inserting ‘‘2009’’. 

14 (b) EXPANSION OF CREDIT FOR OPEN-LOOP BIO15 MASS AND LANDFILL GAS FACILITIES.—Paragraph (3) of 

16 section 45(c) is amended by adding at the end the fol17 lowing new subparagraphs: 

18 ‘‘(D) OPEN-LOOP BIOMASS FACILITIES.—

19 In the case of a facility using open-loop biomass 

20 to produce electricity, the term ‘qualified facil21 ity’ means any facility owned by the taxpayer 

22 which is originally placed in service before Jan23 uary 1, 2009. 

24 ‘‘(E) LANDFILL GAS FACILITIES.—In the 

25 case of a facility producing electricity from gas 
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1 derived from the biodegradation of municipal 

2 solid waste, the term ‘qualified facility’ means 

3 any facility owned by the taxpayer which is 

4 originally placed in service before January 1, 

5 2009.’’. 

6 (c) DEFINITION AND SPECIAL RULES.—Subsection 

7 (c) of section 45 is amended by adding at the end the 

8 following new paragraphs: 

9 ‘‘(5) OPEN-LOOP BIOMASS.—The term ‘open10 loop biomass’ means any solid, nonhazardous, cel11 lulosic waste material which is segregated from other 

12 waste materials and which is derived from—

13 ‘‘(A) any of the following forest-related re14 sources: mill residues, precommercial thinnings, 

15 slash, and brush, but not including old-growth 

16 timber, 

17 ‘‘(B) solid wood waste materials, including 

18 waste pallets, crates, dunnage, manufacturing 

19 and construction wood wastes (other than pres20 sure-treated, chemically-treated, or painted 

21 wood wastes), and landscape or right-of-way 

22 tree trimmings, but not including municipal 

23 solid waste (garbage), gas derived from the bio24 degradation of solid waste, or paper that is 

25 commonly recycled, or 
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1 ‘‘(C) agriculture sources, including orchard 

2 tree crops, vineyard, grain, legumes, sugar, and 

3 other crop by-products or residues. 

4 Such term shall not include closed-loop biomass. 

5 ‘‘(6) REDUCED CREDIT FOR CERTAIN

6 PREEFFECTIVE DATE FACILITIES.—In the case of 

7 any facility described in subparagraph (D) or (E) of 

8 paragraph (3) which is placed in service before the 

9 date of the enactment of this subparagraph—

10 ‘‘(A) subsection (a)(1) shall be applied by 

11 substituting ‘1.0 cents’ for ‘1.5 cents’, and 

12 ‘‘(B) the 5-year period beginning on the 

13 date of the enactment of this paragraph shall 

14 be substituted in lieu of the 10-year period in 

15 subsection (a)(2)(A)(ii). 

16 ‘‘(7) LIMIT ON REDUCTIONS FOR GRANTS, ETC., 

17 FOR OPEN-LOOP BIOMASS FACILITIES.—If the 

18 amount of the credit determined under subsection 

19 (a) with respect to any open-loop biomass facility is 

20 required to be reduced under paragraph (3) of sub21 section (b), the fraction under such paragraph shall 

in no event be greater than 4 22 ⁄5. 

23 ‘‘(8) COORDINATION WITH SECTION 29.—The 

24 term ‘qualified facility’ shall not include any facility 

25 the production from which is allowed as a credit
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1 under section 29 for the taxable year or any prior 

2 taxable year.’’. 

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

4 this section shall apply to electricity sold after the date 

5 of the enactment of this Act. 

6 SEC. 6. CREDIT FOR PRODUCTION FROM QUALIFYING AD7 VANCED CLEAN COAL TECHNOLOGY. 

8 (a) CREDIT FOR PRODUCTION FROM QUALIFYING

9 ADVANCED CLEAN COAL TECHNOLOGY.—Subpart D of 

10 part IV of subchapter A of chapter 1 (relating to business 

11 related credits) is amended by adding after section 45F 

12 the following: 

13 ‘‘SEC. 45G. CREDIT FOR PRODUCTION FROM QUALIFYING 

14 ADVANCED CLEAN COAL TECHNOLOGY. 

15 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

16 the qualifying advanced clean coal technology production 

17 credit of any taxpayer for any taxable year is equal to—

18 ‘‘(1) the applicable amount of advanced clean 

19 coal technology production credit, multiplied by 

20 ‘‘(2) the sum of—

21 ‘‘(A) the kilowatt hours of electricity, plus 

22 ‘‘(B) each 3,413 Btu of fuels or chemicals, 

23 produced by the taxpayer during such taxable year 

24 at a qualifying advanced clean coal technology facil-
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1 ity during the 10-year period beginning on the date 

2 the facility was originally placed in service. 

3 ‘‘(b) APPLICABLE AMOUNT.—For purposes of this 

4 section, the applicable amount of advanced clean coal tech5 nology production credit with respect to production from 

6 a qualifying advanced clean coal technology facility shall 

7 be determined as follows: 

8 ‘‘(1) Where the design coal has a heat content 

9 of more than 9,000 Btu per pound: 

10 ‘‘(A) In the case of a facility originally 

11 placed in service before 2009, if—

‘‘The facility design net heat rate, Btu/kWh (HHV) is 

equal to: 

The applicable amount is: 

For 1st 5 years 

of such service 

For 2d 5 years of 

such service 

Not more than 8,400 ............................................................ $.0060 $.0038

More than 8,400 but not more than 8,550 .......................... $.0025 $.0010

More than 8,550 but not more than 8,750 .......................... $.0010 $.0010. 

12 ‘‘(B) In the case of a facility originally 

13 placed in service after 2008 and before 2013, 

14 if—

‘‘The facility design net heat rate, Btu/kWh (HHV) is 

equal to: 

The applicable amount is: 

For 1st 5 years 

of such service 

For 2d 5 years of 

such service 

Not more than 7,770 ............................................................ $.0105 $.0090

More than 7,770 but not more than 8,125 .......................... $.0085 $.0068

More than 8,125 but not more than 8,350 .......................... $.0075 $.0055. 

15 ‘‘(C) In the case of a facility originally 

16 placed in service after 2012 and before 2017, 

17 if—
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‘‘The facility design net heat rate, Btu/kWh (HHV) is 

equal to: 

The applicable amount is: 

For 1st 5 years 

of such service 

For 2d 5 years of 

such service 

Not more than 7,380 ............................................................ $.0140 $.01

More than 7,380 but not more than 7,720 .......................... $.0120 $.0090. 

1 ‘‘(2) Where the design coal has a heat content 

2 of not more than 9,000 Btu per pound: 

3 ‘‘(A) In the case of a facility originally 

4 placed in service before 2009, if—

‘‘The facility design net heat rate, Btu/kWh (HHV) is 

equal to: 

The applicable amount is: 

For 1st 5 years 

of such service 

For 2d 5 years of 

such service 

Not more than 8,500 ............................................................ $.0060 $.0038

More than 8,500 but not more than 8,650 .......................... $.0025 $.0010

More than 8,650 but not more than 8,750 .......................... $.0010 $.0010. 

5 ‘‘(B) In the case of a facility originally 

6 placed in service after 2008 and before 2013, 

7 if—

‘‘The facility design net heat rate, Btu/kWh (HHV) is 

equal to: 

The applicable amount is: 

For 1st 5 years 

of such service 

For 2d 5 years of 

such service 

Not more than 8,000 ............................................................ $.0105 $.009

More than 8,000 but not more than 8,250 .......................... $.0085 $.0068

More than 8,250 but not more than 8,400 .......................... $.0075 $.0055. 

8 ‘‘(C) In the case of a facility originally 

9 placed in service after 2012 and before 2017, 

10 if—

‘‘The facility design net heat rate, Btu/kWh (HHV) is 

equal to: 

The applicable amount is: 

For 1st 5 years 

of such service 

For 2d 5 years of 

such service 

Not more than 7,800 ............................................................ $.0140 $.0115

More than 7,800 but not more than 7,950 .......................... $.0120 $.0090. 

11 ‘‘(3) Where the clean coal technology facility is 

12 producing fuel or chemicals: 
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1 ‘‘(A) In the case of a facility originally 

2 placed in service before 2009, if—

‘‘The facility design net thermal efficiency (HHV) is equal 

to: 

The applicable amount is: 

For 1st 5 years 

of such service 

For 2d 5 years of 

such service 

Not less than 40.6 percent ................................................... $.0060 $.0038

Less than 40.6 but not less than 40 percent ....................... $.0025 $.0010

Less than 40 but not less than 39 percent .......................... $.0010 $.0010. 

3 ‘‘(B) In the case of a facility originally 

4 placed in service after 2008 and before 2013, 

5 if—

‘‘The facility design net thermal efficiency (HHV) is equal 

to: 

The applicable amount is: 

For 1st 5 years 

of such service 

For 2d 5 years of 

such service 

Not less than 43.9 percent ................................................... $.0105 $.009

Less than 43.9 but not less than 42 percent ....................... $.0085 $.0068

Less than 42 but not less than 40.9 percent ....................... $.0075 $.0055. 

6 ‘‘(C) In the case of a facility originally 

7 placed in service after 2012 and before 2017, 

8 if—

‘‘The facility design net thermal efficiency (HHV) is equal 

to: 

The applicable amount is: 

For 1st 5 years 

of such service 

For 2d 5 years of 

such service 

Not less than 44.2 percent ................................................... $.0140 $.0115

Less than 44.2 but not less than 43.6 percent .................... $.0120 $.0090. 

9 ‘‘(c) INFLATION ADJUSTMENT FACTOR.—For cal10 endar years after 2003, each amount in paragraphs (1), 

11 (2), and (3) of subsection (b) shall be adjusted by multi12 plying such amount by the inflation adjustment factor for 

13 the calendar year in which the amount is applied. If any 

14 amount as increased under the preceding sentence is not
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1 a multiple of 0.01 cent, such amount shall be rounded to 

2 the nearest multiple of 0.01 cent. 

3 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur4 poses of this section—

5 ‘‘(1) IN GENERAL.—Any term used in this sec6 tion which is also used in section 48A shall have the 

7 meaning given such term in section 48A. 

8 ‘‘(2) APPLICABLE RULES.—The rules of para9 graphs (3), (4), and (5) of section 45 shall apply. 

10 ‘‘(3) INFLATION ADJUSTMENT FACTOR.—The 

11 term ‘inflation adjustment factor’ means, with re12 spect to a calendar year, a fraction the numerator 

13 of which is the GDP implicit price deflator for the 

14 preceding calendar year and the denominator of 

15 which is the GDP implicit price deflator for the cal16 endar year 2003. 

17 ‘‘(4) GDP IMPLICIT PRICE DEFLATOR.—The 

18 term ‘GDP implicit price deflator’ means the most 

19 recent revision of the implicit price deflator for the 

20 gross domestic product as computed by the Depart21 ment of Commerce before March 15 of the calendar 

22 year.’’. 

23 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec24 tion 38(b) is amended by striking ‘‘plus’’ at the end of 

25 paragraph (14), by striking the period at the end of para-
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1 graph (15) and inserting ‘‘, plus’’, and by adding at the 

2 end the following: 

3 ‘‘(16) the qualifying advanced clean coal tech4 nology production credit determined under section 

5 45G(a).’’. 

6 (c) TRANSITIONAL RULE.—Section 39(d) (relating to 

7 transitional rules) is amended by adding after paragraph 

8 (10) the following: 

9 ‘‘(11) NO CARRYBACK OF SECTION 45G CREDIT

10 BEFORE EFFECTIVE DATE.—No portion of the un11 used business credit for any taxable year which is 

12 attributable to the qualifying advanced clean coal 

13 technology production credit determined under sec14 tion 45G may be carried back to a taxable year end15 ing before the date of the enactment of section 

16 45G.’’. 

17 (d) CLERICAL AMENDMENT.—The table of sections 

18 for subpart D of part IV of subchapter A of chapter 1 

19 is amended by adding at the end the following:

‘‘Sec. 45G. Credit for production from qualifying advanced clean 

coal technology.’’.

20 (e) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to production after the date of the 

22 enactment of this Act. 
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1 SEC. 7. OIL AND GAS FROM MARGINAL WELLS. 

2 (a) IN GENERAL.—Subpart D of part IV of sub3 chapter A of chapter 1 (relating to business credits) is 

4 amended by adding at the end the following: 

5 ‘‘SEC. 45H. CREDIT FOR PRODUCING OIL AND GAS FROM 

6 MARGINAL WELLS. 

7 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

8 the marginal well production credit for any taxable year 

9 is an amount equal to the product of—

10 ‘‘(1) the credit amount, and 

11 ‘‘(2) the qualified credit oil production and the 

12 qualified natural gas production which is attrib13 utable to the taxpayer. 

14 ‘‘(b) CREDIT AMOUNT.—For purposes of this sec15 tion—

16 ‘‘(1) IN GENERAL.—The credit amount is—

17 ‘‘(A) $3 per barrel of qualified crude oil 

18 production, and 

19 ‘‘(B) 50 cents per 1,000 cubic feet of 

20 qualified natural gas production. 

21 ‘‘(2) REDUCTION AS OIL AND GAS PRICES IN22 CREASE.—

23 ‘‘(A) IN GENERAL.—The $3 and 50 cents 

24 amounts under paragraph (1) shall each be re25 duced (but not below zero) by an amount which 
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•HR 1436 IH 

1 bears the same ratio to such amount (deter2 mined without regard to this paragraph) as—

3 ‘‘(i) the excess (if any) of the applica4 ble reference price over $15 ($1.67 for 

5 qualified natural gas production), bears to 

6 ‘‘(ii) $3 ($0.33 for qualified natural 

7 gas production). 

8 The applicable reference price for a taxable 

9 year is the reference price of the calendar year 

10 preceding the calendar year in which the tax11 able year begins. 

12 ‘‘(B) INFLATION ADJUSTMENT.—In the 

13 case of any taxable year beginning in a calendar 

14 year after 2003, each of the dollar amounts 

15 contained in subparagraph (A) shall be in16 creased to an amount equal to such dollar 

17 amount multiplied by the inflation adjustment 

18 factor for such calendar year (determined under 

19 section 43(b)(3)(B) by substituting ‘2002’ for 

20 ‘1990’). 

21 ‘‘(C) REFERENCE PRICE.—For purposes of 

22 this paragraph, the term ‘reference price’ 

23 means, with respect to any calendar year—
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1 ‘‘(i) in the case of qualified crude oil 

2 production, the reference price determined 

3 under section 29(d)(2)(C), and 

4 ‘‘(ii) in the case of qualified natural 

5 gas production, the Secretary’s estimate of 

6 the annual average wellhead price per 

7 1,000 cubic feet for all domestic natural 

8 gas. 

9 ‘‘(c) QUALIFIED CRUDE OIL AND NATURAL GAS

10 PRODUCTION.—For purposes of this section—

11 ‘‘(1) IN GENERAL.—The terms ‘qualified crude 

12 oil production’ and ‘qualified natural gas production’ 

13 mean domestic crude oil or natural gas which is pro14 duced from a qualified marginal well. 

15 ‘‘(2) LIMITATION ON AMOUNT OF PRODUCTION

16 WHICH MAY QUALIFY.—

17 ‘‘(A) IN GENERAL.—Crude oil or natural 

18 gas produced during any taxable year from any 

19 well shall not be treated or qualified crude oil 

20 production or qualified natural gas production 

21 to the extent production from the well during 

22 the taxable year exceeds 1,095 barrels or barrel 

23 equivalents. 

24 ‘‘(B) PROPORTIONATE REDUCTIONS.—
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1 ‘‘(i) SHORT TAXABLE YEARS.—In the 

2 case of a short taxable year, the limitations 

3 under this paragraph shall be proportion4 ately reduced to reflect the ratio which the 

5 number of days in such taxable year bears 

6 to 365. 

7 ‘‘(ii) WELLS NOT IN PRODUCTION EN8 TIRE YEAR.—In the case of a well which is 

9 not capable of production during each day 

10 of a taxable year, the limitations under 

11 this paragraph applicable to the well shall 

12 be proportionately reduced to reflect the 

13 ratio which the number of days of produc14 tion bears to the total number of days in 

15 the taxable year. 

16 ‘‘(3) DEFINITIONS.—

17 ‘‘(A) QUALIFIED MARGINAL WELL.—The 

18 term ‘qualified marginal well’ means a domestic 

19 well—

20 ‘‘(i) the production from which during 

21 the taxable year is treated as marginal 

22 production under section 613A(c)(6), or 

23 ‘‘(ii) which, during the taxable year—
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1 ‘‘(I) has average daily production 

2 of not more than 25 barrel equiva3 lents, and 

4 ‘‘(II) produces water at a rate 

5 not less than 95 percent of total well 

6 effluent. 

7 ‘‘(B) CRUDE OIL, ETC.—The terms ‘crude 

8 oil’, ‘natural gas’, ‘domestic’, and ‘barrel’ have 

9 the meanings given such terms by section 

10 613A(e). 

11 ‘‘(C) BARREL EQUIVALENT.—The term 

12 ‘barrel equivalent’ means, with respect to nat13 ural gas, a conversation ratio of 6,000 cubic 

14 feet of natural gas to 1 barrel of crude oil. 

15 ‘‘(d) OTHER RULES.—

16 ‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX17 PAYER.—In the case of a qualified marginal well in 

18 which there is more than one owner of operating in19 terests in the well and the crude oil or natural gas 

20 production exceeds the limitation under subsection 

21 (c)(2), qualifying crude oil production or qualifying 

22 natural gas production attributable to the taxpayer 

23 shall be determined on the basis of the ratio which 

24 taxpayer’s revenue interest in the production bears 
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1 to the aggregate of the revenue interests of all oper2 ating interest owners in the production. 

3 ‘‘(2) OPERATING INTEREST REQUIRED.—Any 

4 credit under this section may be claimed only on 

5 production which is attributable to the holder of an 

6 operating interest. 

7 ‘‘(3) PRODUCTION FROM NONCONVENTIONAL

8 SOURCES EXCLUDED.—In the case of production 

9 from a qualified marginal well which is eligible for 

10 the credit allowed under section 29 for the taxable 

11 year, no credit shall be allowable under this section 

12 unless the taxpayer elects not to claim the credit 

13 under section 29 with respect to the well. 

14 ‘‘(4) NONCOMPLIANCE WITH POLLUTION

15 LAWS.—For purposes of subsection (c)(3)(A), a 

16 marginal well which is not in compliance with the 

17 applicable State and Federal pollution prevention, 

18 control, and permit requirements for any period of 

19 time shall not be considered to be a qualified mar20 ginal well during such period.’’. 

21 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec22 tion 38(b) is amended by striking ‘‘plus’’ at the end of 

23 paragraph (15), by striking the period at the end of para24 graph (16) and inserting ‘‘, plus’’, and by adding at the 

25 end the following: 
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1 ‘‘(17) the marginal oil and gas well production 

2 credit determined under section 45H(a).’’. 

3 (c) CARRYBACK.—Subsection (a) of section 39 (relat4 ing to carryback and carryforward of unused credits gen5 erally) is amended by adding at the end the following: 

6 ‘‘(3) 10-YEAR CARRYBACK FOR MARGINAL OIL

7 AND GAS WELL PRODUCTION CREDIT.—In the case 

8 of the marginal oil and gas well production credit—

9 ‘‘(A) this section shall be applied sepa10 rately from the business credit (other than the 

11 marginal oil and gas well production credit), 

12 ‘‘(B) paragraph (1) shall be applied by 

13 substituting ‘10 taxable years’ for ‘1 taxable 

14 years’ in subparagraph (A) thereof, and 

15 ‘‘(C) paragraph (2) shall be applied—

16 ‘‘(i) by substituting ‘31 taxable years’ 

17 for ‘21 taxable years’ in subparagraph (A) 

18 thereof, and 

19 ‘‘(ii) by substituting ‘30 taxable years’ 

20 for ‘20 taxable years’ in subparagraph (A) 

21 thereof.’’. 

22 (d) COORDINATION WITH SECTION 29.—Section 

23 29(a) is amended by striking ‘‘There’’ and inserting ‘‘At 

24 the election of the taxpayer, there’’. 
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1 (e) CLERICAL AMENDMENT.—The table of sections 

2 for subpart D of part IV of subchapter A of chapter I 

3 is amended by adding at the end the following:

‘‘Sec. 45H. Credit for producing oil and gas from marginal 

wells.’’.

4 (f) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to production in taxable years be6 ginning after December 31, 2003. 

7 SEC. 8. NATURAL GAS GATHERING LINES TREATED AS 7-

8 YEAR PROPERTY. 

9 (a) IN GENERAL.—Subparagraph (C) of section 

10 168(e)(3) (relating to classification of certain property) is 

11 amended by striking ‘‘and’’ at the end of clause (i), by 

12 redesignating clause (ii) as clause (iii), and by inserting 

13 after clause (i) the following new clause: 

14 ‘‘(ii) any natural gas gathering line, 

15 and’’. 

16 (b) NATURAL GAS GATHERING LINE.—Subsection (i) 

17 of section 168 is amended by adding after paragraph (14) 

18 the following new paragraph: 

19 ‘‘(15) NATURAL GAS GATHERING LINE.—The 

20 term ‘natural gas gathering line’ means—

21 ‘‘(A) the pipe, equipment, and appur22 tenances determined to be a gathering line by 

23 the Federal Energy Regulatory Commission, or
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1 ‘‘(B) the pipe, equipment, and appur2 tenances used to deliver natural gas from the 

3 wellhead or a commonpoint to the point at 

4 which such gas first reaches—

5 ‘‘(i) a gas processing plant, 

6 ‘‘(ii) an interconnection with a trans7 mission pipeline certificated by the Federal 

8 Energy Regulatory Commission as an 

9 interstate transmission pipeline, 

10 ‘‘(iii) an interconnection with an 

11 intrastate transmission pipeline, or 

12 ‘‘(iv) a direct interconnection with a 

13 local distribution company, a gas storage 

14 facility, or an industrial consumer.’’. 

15 (c) ALTERNATIVE SYSTEM.—The table contained in 

16 section 168(g)(3)(B) is amended by inserting after the 

17 item relating to subparagraph (C)(i) the following:

‘‘(C)(ii) ....................................................................................................... 10’’.

18 (d) ALTERNATIVE MINIMUM TAX EXCEPTION.—Sub19 paragraph (B) of section 56(a)(1) is amended by inserting 

20 before the period the following: ‘‘or in clause (ii) of section 

21 168(e)(3)(C)’’. 

22 (e) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to property placed in service after 

24 the date of the enactment of this Act. 
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1 SEC. 9. TEMPORARY SUSPENSION OF LIMITATION BASED 

2 ON 65 PERCENT OF TAXABLE INCOME AND 

3 EXTENSION OF SUSPENSION OF TAXABLE IN4 COME LIMIT WITH RESPECT TO MARGINAL 

5 PRODUCTION. 

6 (a) LIMITATION BASED ON 65 PERCENT OF TAX7 ABLE INCOME.—Subsection (d) of section 613A (relating 

8 to limitation on percentage depletion in case of oil and 

9 gas wells) is amended by adding at the end the following 

10 new paragraph: 

11 ‘‘(6) TEMPORARY SUSPENSION OF TAXABLE IN12 COME LIMIT.—Paragraph (1) shall not apply to tax13 able years beginning after December 31, 2003, and 

14 before January 1, 2009, including with respect to 

15 amounts carried under the second sentence of para16 graph (1) to such taxable years.’’. 

17 (b) EXTENSION OF SUSPENSION OF TAXABLE IN18 COME LIMIT WITH RESPECT TO MARGINAL PRODUC19 TION.—Subparagraph (H) of section 613A(c)(6) (relating 

20 to temporary suspension of taxable income limit with re21 spect to marginal production) is amended by striking 

22 ‘‘2004’’ and inserting ‘‘2009’’. 

23 (c) EFFECTIVE DATE.—The amendment made by 

24 subsection (a) shall apply to taxable years beginning after 

25 December 31, 2003. 
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1 SEC. 10. ELECTION TO EXPENSE GEOLOGICAL AND GEO2 PHYSICAL EXPENDITURES. 

3 (a) IN GENERAL.—Section 263 (relating to capital 

4 expenditures) is amended by adding after subsection (i) 

5 the following: 

6 ‘‘(j) GEOLOGICAL AND GEOPHYSICAL EXPENDI7 TURES FOR DOMESTIC OIL AND GAS WELLS.—Notwith8 standing subsection (a), a taxpayer may elect to treat geo9 logical and geophysical expenses incurred in connection 

10 with the exploration for, or development of, oil or gas with11 in the United States (as defined in section 638) as ex12 penses which are not chargeable to capital account. Any 

13 expenses so treated shall be allowed as a deduction in the 

14 taxable year in which paid or incurred.’’. 

15 (b) CONFORMING AMENDMENT.—Section 263A(c)(3) 

16 is amended by inserting ‘‘263(j),’’ after ‘‘263(i),’’. 

17 (c) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to costs paid or incurred in taxable 

19 years beginning after December 31, 2003. 

20 SEC. 11. FIVE-YEAR NET OPERATING LOSS CARRYBACK 

21 FOR LOSSES ATTRIBUTABLE TO OPERATING 

22 MINERAL INTERESTS OF OIL AND GAS PRO23 DUCERS. 

24 (a) IN GENERAL.—Paragraph (1) of section 172(b) 

25 (relating to years to which loss may be carried) is amended 

26 by adding at the end the following new subparagraph: 
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1 ‘‘(I) LOSSES ON OPERATING MINERAL IN2 TERESTS OF OIL AND GAS PRODUCERS.—In the 

3 case of a taxpayer which has an eligible oil and 

4 gas loss (as defined in subsection (k)) for a tax5 able year, such eligible oil and gas loss shall be 

6 a net operating loss carryback to each of the 5 

7 taxable years preceding the taxable year of such 

8 loss.’’. 

9 (b) ELIGIBLE OIL AND GAS LOSS.—Section 172 is 

10 amended by redesignating subsection (k) as subsection (l) 

11 and by inserting after subsection (j) the following new sub12 section: 

13 ‘‘(k) ELIGIBLE OIL AND GAS LOSS.—For purposes 

14 of this section—

15 ‘‘(1) IN GENERAL.—The term ‘eligible oil and 

16 gas loss’ means the lesser of—

17 ‘‘(A) the amount which would be the net 

18 operating loss for the taxable year if only in19 come and deductions attributable to operating 

20 mineral interests (as defined in section 614(d)) 

21 in oil and gas wells are taken into account, or 

22 ‘‘(B) the amount of the net operating loss 

23 for such taxable year. 

24 ‘‘(2) COORDINATION WITH SUBSECTION

25 (b)(2).—For purposes of applying subsection (b)(2), 
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1 an eligible oil and gas loss for any taxable year shall 

2 be treated in a manner similar to the manner in 

3 which a specified liability loss is treated. 

4 ‘‘(3) ELECTION.—Any taxpayer entitled to a 5-

5 year carryback under subsection (b)(1)(H) from any 

6 loss year may elect to have the carryback period 

7 with respect to such loss year determined without re8 gard to subsection (b)(1)(H).’’. 

9 (c) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to net operating losses for taxable 

11 years beginning after December 31, 2003. 

12 SEC. 12. EXTENSION AND MODIFICATION OF CREDIT FOR 

13 PRODUCING FUEL FROM A NONCONVEN14 TIONAL SOURCE. 

15 (a) IN GENERAL.—Section 29 is amended by adding 

16 at the end the following new subsection: 

17 ‘‘(h) EXTENSION FOR OTHER FACILITIES.—

18 ‘‘(1) EXTENSION FOR OIL AND CERTAIN GAS.—

19 In the case of a well for producing qualified fuels de20 scribed in subparagraph (A) or (B)(i) of subsection 

21 (c)(1)—

22 ‘‘(A) APPLICATION OF CREDIT FOR NEW

23 WELLS.—Notwithstanding subsection (f), this 

24 section shall apply with respect to such fuels—
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1 ‘‘(i) which are produced from a well 

2 drilled after the date of the enactment of 

3 this subsection and before January 1, 

4 2014, and 

5 ‘‘(ii) which are sold not later than the 

6 close of the 4-year period beginning on the 

7 date that such well is drilled. 

8 ‘‘(B) EXTENSION OF CREDIT FOR OLD

9 WELLS.—Subsection (f)(2) shall be applied by 

10 substituting ‘2009’ for ‘2003’ with respect to 

11 wells described in subsection (f)(1)(A) with re12 spect to such fuels. 

13 ‘‘(2) EXTENSION FOR FACILITIES PRODUCING

14 QUALIFIED FUEL FROM LANDFILL GAS.—

15 ‘‘(A) IN GENERAL.—In the case of a facil16 ity for producing qualified fuel from landfill gas 

17 which was placed in service after June 30, 

18 1998, and before January 1, 2009, this section 

19 shall apply to fuel produced at such facility dur20 ing the 5-year period beginning on the later 

21 of—

22 ‘‘(i) the date such facility was placed 

23 in service, or 

24 ‘‘(ii) the date of the enactment of this 

25 subsection. 
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1 ‘‘(B) REDUCTION OF CREDIT FOR CERTAIN

2 LANDFILL FACILITIES.—In the case of a facility 

3 to which paragraph (1) applies and which is 

4 subject to the 1996 New Source Performance 

5 Standards/Emissions Guidelines of the Environ6 mental Protection Agency, subsection (a)(1) 

7 shall be applied by substituting ‘$2’ for ‘$3’. 

8 ‘‘(3) SPECIAL RULES.—In determining the 

9 amount of credit allowable under this section solely 

10 by reason of this subsection—

11 ‘‘(A) DAILY LIMIT.—The amount of quali12 fied fuels sold during any taxable year which 

13 may be taken into account by reason of this 

14 subsection with respect to any project shall not 

15 exceed an average barrel-of-oil equivalent of 

16 200,000 cubic feet of natural gas per day. Days 

17 before the date the project is placed in service 

18 shall not be taken into account in determining 

19 such average. 

20 ‘‘(B) EXTENSION PERIOD TO COMMENCE

21 WITH UNADJUSTED CREDIT AMOUNT.—In the 

22 case of fuels sold during 2003 and 2004, the 

23 dollar amount applicable under subsection 

24 (a)(1) shall be $3 (without regard to subsection 

25 (b)(2)). In the case of fuels sold after 2004, 
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1 subparagraph (B) of subsection (d)(2) shall be 

2 applied by substituting ‘2004’ for ‘1979’.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply to fuel sold after the date of the 

5 enactment of this Act.

Æ