II 

109TH CONGRESS 

1ST SESSION S. 1093 

To reauthorize and revise the Renewable Energy Production Incentive 

program, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 20, 2005 

Mr. SALAZAR introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL

To reauthorize and revise the Renewable Energy Production 

Incentive program, and for other purposes.

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. 

4 This Act may be cited as the ‘‘Research and Develop5 ment Investment Act’’. 

6 SEC. 2. REAUTHORIZE AND REVISE THE RENEWABLE EN7 ERGY PRODUCTION INCENTIVE PROGRAM. 

8 (a) INCENTIVE PAYMENTS.—Section 1212(a) of the 

9 Energy Policy Act of 1992 (42 U.S.C. 13317(a)) is 

10 amended by striking ‘‘and which satisfies’’ and all that 
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1 follows through ‘‘Secretary shall establish.’’ and inserting 

2 ‘‘. If there are insufficient appropriations to make full pay3 ments for electric production from all qualified renewable 

4 energy facilities in any given year, the Secretary shall as5 sign 60 percent of appropriated funds for that year to fa6 cilities that use solar, wind, geothermal, or closed-loop 

7 (dedicated energy crops) biomass technologies to generate 

8 electricity, and assign the remaining 40 percent to other 

9 projects. The Secretary may, after transmitting to the 

10 Congress an explanation of the reasons therefor, alter the 

11 percentage requirements of the preceding sentence.’’. 

12 (b) QUALIFIED RENEWABLE ENERGY FACILITY.—

13 Section 1212(b) of the Energy Policy Act of 1992 (42 

14 U.S.C. 13317(b)) is amended— 

15 (1) by striking ‘‘a State or any political’’ and 

16 all that follows through ‘‘nonprofit electrical cooper17 ative’’ and inserting ‘‘a not-for-profit electric cooper18 ative, a public utility described in section 115 of the 

19 Internal Revenue Code of 1986, a State, Common20 wealth, territory, or possession of the United States 

21 or the District of Columbia, or a political subdivision 

22 thereof, or an Indian tribal government of subdivi23 sion thereof,’’; and 

24 (2) by inserting ‘‘landfill gas,’’ after ‘‘wind, bio25 mass,’’. 
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1 (c) ELIGIBILITY WINDOW.—Section 1212(c) of the 

2 Energy Policy Act of 1992 (42 U.S.C. 13317(c)) is 

3 amended by striking ‘‘during the 10-fiscal year period be4 ginning with the first full fiscal year occurring after the 

5 enactment of this section’’ and inserting ‘‘after October 

6 1, 2005, and before October 1, 2015’’. 

7 (d) AMOUNT OF PAYMENT.—Section 1212(e)(1) of 

8 the Energy Policy Act of 1992 (42 U.S.C. 13317(e)(1)) 

9 is amended by inserting ‘‘landfill gas,’’ after ‘‘wind, bio10 mass,’’. 

11 (e) SUNSET.—Section 1212(f) of the Energy Policy 

12 Act of 1992 (42 U.S.C. 13317(f)) is amended by striking 

13 ‘‘the expiration of’’ and all that follows through ‘‘of this 

14 section’’ and inserting ‘‘September 30, 2025’’. 

15 (f) AUTHORIZATION OF APPROPRIATIONS.—Section 

16 1212(g) of the Energy Policy Act of 1992 (42 U.S.C. 

17 13317(g)) is amended to read as follows: 

18 ‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There 

19 are authorized to be appropriated to carry out this section 

20 $20,000,000 for each of fiscal years 2005 through 2025, 

21 to remain available until expended.’’. 
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1 SEC. 3. EXTENSION AND EXPANSION OF CREDIT FOR ELEC2 TRICITY PRODUCED FROM CERTAIN RENEW3 ABLE RESOURCES. 

4 (a) EXTENSION.—Section 45(d) of the Internal Rev5 enue Code of 1986 (relating to qualified facilities) is 

6 amended by striking ‘‘2006’’ and inserting ‘‘2011’’. 

7 (b) INCREMENTAL GEOTHERMAL ENERGY AND IN8 CREMENTAL HYDROPOWER PRODUCTION.— 

9 (1) IN GENERAL.—Section 45(c)(1) of the In10 ternal Revenue Code of 1986 (defining qualified en11 ergy resources) is amended by striking ‘‘and’’ at the 

12 end of subparagraph (F), by striking the period at 

13 the end of subparagraph (G) and inserting a comma, 

14 and by adding at the end the following new subpara15 graphs: 

16 ‘‘(H) incremental geothermal energy pro17 duction, and 

18 ‘‘(I) incremental hydropower production.’’. 

19 (2) DEFINITION OF RESOURCES.—Section 45(c) 

20 of such Code is amended by adding at the end the 

21 following new paragraphs: 

22 ‘‘(8) INCREMENTAL GEOTHERMAL PRODUC23 TION.— 

24 ‘‘(A) IN GENERAL.—The term ‘incremental 

25 geothermal production’ means for any taxable 

26 year the excess of— 
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1 ‘‘(i) the total kilowatt hours of elec2 tricity produced from an incremental geo3 thermal facility described in subsection 

4 (d)(9), over 

5 ‘‘(ii) the average annual kilowatt 

6 hours produced at such facility for 5 of the 

7 previous 7 calendar years before the date 

8 of the enactment of this paragraph after 

9 eliminating the highest and the lowest kilo10 watt hour production years in such 7-year 

11 period. 

12 ‘‘(B) SPECIAL RULE.—A facility described 

13 in subsection (d)(9) which was placed in service 

14 at least 7 years before the date of the enact15 ment of this paragraph shall commencing with 

16 the year in which such date of enactment oc17 curs, reduce the amount calculated under sub18 paragraph (A)(ii) each year, on a cumulative 

19 basis, by the average percentage decrease in the 

20 annual kilowatt hour production for the 7-year 

21 period described in subparagraph (A)(ii) with 

22 such cumulative sum not to exceed 30 percent. 

23 ‘‘(9) INCREMENTAL HYDROPOWER PRODUC24 TION.— 
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1 ‘‘(A) IN GENERAL.—The term ‘incremental 

2 hydropower production’ means for any taxable 

3 year an amount equal to the percentage of total 

4 kilowatt hours of electricity produced from an 

5 incremental hydropower facility described in 

6 subsection (d)(10) attributable to efficiency im7 provements or additions of capacity as deter8 mined under subparagraph (B). 

9 ‘‘(B) DETERMINATION OF INCREMENTAL

10 HYDROPOWER PRODUCTION.—For purposes of 

11 subparagraph (A), incremental hydropower pro12 duction for any incremental hydropower facility 

13 for any taxable year shall be determined by es14 tablishing a percentage of average annual hy15 dropower production at the facility attributable 

16 to the efficiency improvements or additions of 

17 capacity using the same water flow information 

18 used to determine an historic average annual 

19 hydropower production baseline for such facil20 ity. Such percentage and baseline shall be cer21 tified by the Federal Energy Regulatory Com22 mission. For purposes of the preceding sen23 tence, the determination of incremental hydro24 power production shall not be based on any 

25 operational changes at such facility not directly 
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1 associated with the efficiency improvements or 

2 additions of capacity.’’. 

3 (3) FACILITIES.—Section 45(d) of such Code 

4 (relating to qualified facilities) is amended by adding 

5 at the end the following new paragraphs: 

6 ‘‘(9) INCREMENTAL GEOTHERMAL FACILITY.—

7 In the case of a facility using incremental geo8 thermal to produce electricity, the term ‘qualified fa9 cility’ means any facility owned by the taxpayer 

10 which is originally placed in service before the date 

11 of the enactment of this paragraph, but only to the 

12 extent of its incremental geothermal production. In 

13 the case of a qualified facility described in the pre14 ceding sentence, the 10-year period referred to in 

15 subsection (a) shall be treated as beginning not ear16 lier than such date of enactment. Such term shall 

17 not include any property described in section 

18 48(a)(3) the basis of which is taken into account by 

19 the taxpayer for purposes of determining the energy 

20 credit under section 48. 

21 ‘‘(10) INCREMENTAL HYDROPOWER FACIL22 ITY.—In the case of a facility using incremental hy23 dropower to produce electricity, the term ‘qualified 

24 facility’ means any non-Federal hydroelectric facility 

25 owned by the taxpayer which is originally placed in 
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1 service before the date of the enactment of this 

2 paragraph, but only to the extent of its incremental 

3 hydropower production. In the case of a qualified fa4 cility described in the preceding sentence, the 10-

5 year period referred to in subsection (a) shall be 

6 treated as beginning not earlier than such date of 

7 enactment.’’. 

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

9 this section shall apply to facilities placed in service after 

10 December 31, 2005. 

11 SEC. 4. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT 

12 PROPERTY. 

13 (a) IN GENERAL.—Subpart A of part IV of sub14 chapter A of chapter 1 of the Internal Revenue Code of 

15 1986 (relating to nonrefundable personal credits) is 

16 amended by inserting after section 25B the following new 

17 section: 

18 ‘‘SEC. 25C. RESIDENTIAL SOLAR AND GEOTHERMAL PROP19 ERTY. 

20 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in21 dividual, there shall be allowed as a credit against the tax 

22 imposed by this chapter for the taxable year an amount 

23 equal to 10 percent of the qualified energy property ex24 penditures made by the taxpayer during such year. 
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1 ‘‘(b) LIMITATIONS.—No credit shall be allowed under 

2 this section for an item of property unless— 

3 ‘‘(1) the original use of such property com4 mences with the taxpayer, 

5 ‘‘(2) such property reasonably can be expected 

6 to remain in use for at least 5 years, and 

7 ‘‘(3) such property is installed on or in connec8 tion with a dwelling unit located in the United 

9 States and used as a residence by the taxpayer. 

10 ‘‘(c) QUALIFIED ENERGY PROPERTY EXPENDI11 TURES.—For purposes of this section, the term ‘qualified 

12 energy property expenditure’ means an expenditure for en13 ergy property (as defined in paragraph (3) of section 48(a) 

14 (determined without regard to subparagraphs (B) and (C) 

15 thereof). 

16 ‘‘(d) SPECIAL RULES.—For purposes of this sec17 tion— 

18 ‘‘(1) SOLAR PANELS.—No expenditure relating 

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

20 (or portion thereof) shall fail to be treated as prop21 erty described in subsection (c) solely because it con22 stitutes a structural component of the structure on 

23 which it is installed. 

24 ‘‘(2) SWIMMING POOLS, ETC., USED AS STOR25 AGE MEDIUM.—Expenditures which are properly al-
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1 locable to a swimming pool, hot tub, or any other 

2 energy storage medium which has a function other 

3 than the function of such storage shall not be taken 

4 into account for purposes of this section. 

5 ‘‘(3) DOLLAR AMOUNTS IN CASE OF JOINT OC6 CUPANCY.—In the case of any dwelling unit which is 

7 jointly occupied and used during any calendar year 

8 as a residence by 2 or more individuals, the fol9 lowing rules shall apply: 

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

11 under subsection (a) by reason of expenditures 

12 made during such calendar year by any of such 

13 individuals with respect to such dwelling unit 

14 shall be determined by treating all of such indi15 viduals as 1 taxpayer whose taxable year is 

16 such calendar year. 

17 ‘‘(B) There shall be allowable, with respect 

18 to such expenditures to each of such individ19 uals, a credit under subsection (a) for the tax20 able year in which such calendar year ends in 

21 an amount which bears the same ratio to the 

22 amount determined under subparagraph (A) as 

23 the amount of such expenditures made by such 

24 individual during such calendar year bears to 
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1 the aggregate of such expenditures made by all 

2 of such individuals during such calendar year. 

3 ‘‘(4) TENANT-STOCKHOLDER IN COOPERATIVE

4 HOUSING CORPORATION.—In the case of an indi5 vidual who is a tenant-stockholder (as defined in sec6 tion 216) in a cooperative housing corporation (as 

7 defined in such section), such individual shall be 

8 treated as having made the individual’s tenant-stock9 holder’s proportionate share (as defined in section 

10 216(b)(3)) of any expenditures of such corporation. 

11 ‘‘(5) CONDOMINIUMS.— 

12 ‘‘(A) IN GENERAL.—In the case of an indi13 vidual who is a member of a condominium man14 agement association with respect to a condo15 minium which the individual owns, such indi16 vidual shall be treated as having made the indi17 vidual’s proportionate share of any expenditures 

18 of such association. 

19 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO20 CIATION.—For purposes of this paragraph, the 

21 term ‘condominium management association’ 

22 means an organization which meets the require23 ments of paragraph (1) of section 528(c) (other 

24 than subparagraph (E) thereof) with respect to 
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1 a condominium project substantially all of the 

2 units of which are used as residences. 

3 ‘‘(6) ALLOCATION IN CERTAIN CASES.—If less 

4 than 80 percent of the use of an item is for nonbusi5 ness purposes, only that portion of the expenditures 

6 for such item which is properly allocable to use for 

7 nonbusiness purposes shall be taken into account. 

8 ‘‘(7) WHEN EXPENDITURE MADE; AMOUNT OF

9 EXPENDITURE.— 

10 ‘‘(A) IN GENERAL.—Except as provided in 

11 subparagraph (B), an expenditure with respect 

12 to an item shall be treated as made when the 

13 original installation of the item is completed. 

14 ‘‘(B) EXPENDITURES PART OF BUILDING

15 CONSTRUCTION.—In the case of an expenditure 

16 in connection with the construction or recon17 struction of a structure, such expenditure shall 

18 be treated as made when the original use of the 

19 constructed or reconstructed structure by the 

20 taxpayer begins. 

21 ‘‘(C) AMOUNT.—The amount of any ex22 penditure shall be the cost thereof. 

23 ‘‘(8) PROPERTY FINANCED BY SUBSIDIZED EN24 ERGY FINANCING.—For purposes of determining the 

25 amount of expenditures made by any individual with 
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1 respect to any dwelling unit, there shall not be taken 

2 into account expenditures which are made from sub3 sidized energy financing (as defined in section 

4 48(a)(4)(C)). 

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

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

7 expenditure with respect to any property, the increase in 

8 the basis of such property which would (but for this sub9 section) result from such expenditure shall be reduced by 

10 the amount of the credit so allowed.’’. 

11 (b) CONFORMING AMENDMENTS.— 

12 (1) Section 1016(a) of the Internal Revenue 

13 Code of 1986 is amended by striking ‘‘and’’ at the 

14 end of paragraph (30), by striking the period at the 

15 end of paragraph (31) and inserting ‘‘, and’’, and by 

16 adding at the end the following new paragraph: 

17 ‘‘(32) to the extent provided in section 25C(e), 

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

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

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

21 IV of subchapter A of chapter 1 of such Code is 

22 amended by inserting after the item relating to sec23 tion 25B the following new item:

‘‘Sec. 25C. Residential solar and geothermal property.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years ending after De3 cember 31, 2004. 

4 SEC. 5. DELAY IN PHASEOUT OF DEDUCTION FOR CLEAN5 FUEL VEHICLES. 

6 (a) IN GENERAL.—Section 179A(b)(1)(B) of the In7 ternal Revenue Code of 1986 (relating to phaseout) is 

8 amended by striking ‘‘2005’’ and inserting ‘‘2006’’. 

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

10 this section shall apply to property placed in service after 

11 December 31, 2005. 

12 SEC. 6. DELAY IN PHASEOUT OF CREDIT FOR QUALIFIED 

13 ELECTRIC VEHICLES. 

14 (a) IN GENERAL.—Section 30(b)(2) of the Internal 

15 Revenue Code of 1986 (relating to phaseout) is amended 

16 by striking ‘‘2005’’ and inserting ‘‘2006’’. 

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

18 this section shall apply to property placed in service after 

19 December 31, 2005.

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