I 

110TH CONGRESS 

1ST SESSION H. R. 2652 

To amend the Internal Revenue Code of 1986 to generate renewable energy 

and encourage novel technologies related to the production of energy, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 11, 2007 

Mr. ENGLISH of Pennsylvania 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 generate 

renewable energy and encourage novel technologies related to the production of energy, 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, ETC. 

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

5 ‘‘Generating Renewable Energy and Encouraging Novel 

6 Technologies Act of 2007’’. 

7 (b) AMENDMENT OF 1986 CODE.—Except as other8 wise expressly provided, whenever in this Act an amend9 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.—The table of contents for 

5 this Act is as follows: 

Sec. 1. Short title, etc. 

TITLE I—INVESTMENT INCENTIVES 

Sec. 101. Expensing for certain energy property. 

Sec. 102. Modifications relating to clean renewable energy bonds. 

Sec. 103. Extension and modification of investment tax credit with respect to 

solar energy property and qualified fuel cell property. 

Sec. 104. Extension and modification of credit for residential energy efficient 

property. 

Sec. 105. 15-year recovery period for property used in the transmission or distribution of electricity for sale. 

TITLE II—PRODUCTION INCENTIVES 

Sec. 201. Extension of production credit for wind, solar, and geothermal. 

Sec. 202. Electricity produced from ocean energy. 

TITLE III—INCENTIVES FOR ALTERNATIVE FUELS 

Sec. 301. Technology neutral diesel credit. 

Sec. 302. Extension of credit for alcohol used as fuel. 

Sec. 303. Extension of credit for alternative fuels. 

Sec. 304. Investment tax credit for cellulosic biomass ethanol plant property. 

TITLE IV—INCENTIVES TO CONSERVE ENERGY 

Sec. 401. Extension of nonbusiness energy property. 

Sec. 402. Modifications of energy efficient appliance credit for appliances produced after 2007. 

Sec. 403. Increase and extension of energy efficient commercial buildings deduction. 

TITLE V—CREDIT FOR OIL SHALE RECOVERY COSTS 

Sec. 501. Incentives for extraction and processing of oil shale. 

TITLE VI—PROVISIONS RELATING TO ADVANCED COAL AND 

NUCLEAR ENERGY 

Sec. 601. Alternative method for satisfying certain requirements relating to 

production of refined coal. 

Sec. 602. Advanced Nuclear Power Production. 

TITLE VII—COAL TO LIQUIDS TECHNOLOGY 

Sec. 701. Credit for investment in coal-to-liquid fuels projects. 


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Sec. 702. Temporary expensing for equipment used in coal-to-liquid fuels process. 

Sec. 703. Extension of alternative fuel credit for fuel derived from coal through 

the Fischer-Tropsch process. 

Sec. 704. Modifications to enhanced oil recovery credit. 

Sec. 705. Allowance of enhanced oil, natural gas, and coalbed methane recovery, and capture and sequestration credit against the alternative minimum tax. 

1 TITLE I—INVESTMENT 

2 INCENTIVES 

3 SEC. 101. EXPENSING FOR CERTAIN ENERGY PROPERTY. 

4 (a) IN GENERAL.—Part VI of subchapter B of chap5 ter 1 of is amended by inserting after section 179E the 

6 following new section: 

7 ‘‘SEC. 179F. ELECTION TO EXPENSE CERTAIN ENERGY 

8 PROPERTY. 

9 ‘‘(a) TREATMENT AS EXPENSES.—A taxpayer may 

10 elect to treat the cost of any qualified energy property as 

11 an expense which is not chargeable to capital account. Any 

12 cost so treated shall be allowed as a deduction for the tax13 able year in which the expense is incurred. 

14 ‘‘(b) ELECTION.— 

15 ‘‘(1) IN GENERAL.—An election under this sec16 tion for any taxable year shall be made on the tax17 payer’s return of the tax imposed by this chapter for 

18 the taxable year. Such election shall be made in such 

19 manner as the Secretary may by regulations pre20 scribe. 


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1 ‘‘(2) ELECTION IRREVOCABLE.—Any election 

2 made under this section may not be revoked except 

3 with the consent of the Secretary. 

4 ‘‘(c) QUALIFIED ENERGY PROPERTY.—For purposes 

5 of this section— 

6 ‘‘(1) The term ‘qualified energy property’ 

7 means any property located in the United States— 

8 ‘‘(A) which— 

9 ‘‘(i) is described in subparagraph (A) 

10 of section 48(a)(3) (or would be so de11 scribed if ‘solar or wind energy’ were sub12 stituted for ‘solar energy’ in clause (i) 

13 thereof and the last sentence of such sec14 tion did not apply to such subparagraph), 

15 ‘‘(ii) is described in paragraph (15) of 

16 section 48(l) (as in effect on the day before 

17 the date of the enactment of the Revenue 

18 Reconciliation Act of 1990) and is a quali19 fying small power production facility within 

20 the meaning of section 3(17)(C) of the 

21 Federal Power Act (16 U.S.C. 

22 796(17)(C)), as in effect on September 1, 

23 1986, 

24 ‘‘(iii) is described in section 

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1 fore the date of the enactment of the Rev2 enue Reconciliation Act of 1990), or 

3 ‘‘(iv) ocean energy property, 

4 ‘‘(B) the original use of which commences 

5 with the taxpayer, 

6 ‘‘(C) the construction of which— 

7 ‘‘(i) except as provided in subpara8 graph (B), is subject to a binding con9 struction contract entered into after the 

10 date of the enactment of this section and 

11 before January 1, 2011, but only if there 

12 was no written binding construction con13 tract entered into on or before such date of 

14 enactment, or 

15 ‘‘(ii) in the case of self-constructed 

16 property, began after the date of the enact17 ment of this section and before January 1, 

18 2011, and 

19 ‘‘(D) which is placed in service by the tax20 payer after the date of the enactment of this 

21 section and before January 1, 2016. 

22 ‘‘(2) OCEAN ENERGY PROPERTY.—The term 

23 ‘ocean energy property’ means property— 


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1 ‘‘(A) for hydro thermal energy generation 

2 through closed-cycle, open-cycle and hybrid 

3 processes, or 

4 ‘‘(B) for hydro mechanical energy genera5 tion through channel systems, float systems, 

6 and oscillating water column systems. 

7 ‘‘(3) SPECIAL RULE.—Nothing in any provision 

8 of law shall be construed to treat property as not 

9 being described in paragraph (1)(A)(i) (or the cor10 responding provisions of prior law) by reason of 

11 being public utility property (within the meaning of 

12 section 48(a)(3)). 

13 ‘‘(d) ELECTION TO ALLOCATE DEDUCTION TO COOP14 ERATIVE OWNER.—If— 

15 ‘‘(1) a taxpayer to which subsection (a) applies 

16 is an organization to which part I of subchapter T 

17 applies, and 

18 ‘‘(2) one or more persons directly holding an 

19 ownership interest in the taxpayer are organizations 

20 to which part I of subchapter T apply, 

21 the taxpayer may elect to allocate all or a portion of the 

22 deduction allowable under subsection (a) to such persons. 

23 Such allocation shall be equal to the person’s ratable share 

24 of the total amount allocated, determined on the basis of 

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1 able income of the taxpayer shall not be reduced under 

2 section 1382 by reason of any amount to which the pre3 ceding sentence applies. 

4 ‘‘(e) BASIS REDUCTION.— 

5 ‘‘(1) IN GENERAL.—For purposes of this title, 

6 if a deduction is allowed under this section with re7 spect to any qualified energy property, the basis of 

8 such property shall be reduced by the amount of the 

9 deduction so allowed. 

10 ‘‘(2) ORDINARY INCOME RECAPTURE.—For 

11 purposes of section 1245, the amount of the deduc12 tion allowable under subsection (a) with respect to 

13 any property which is of a character subject to the 

14 allowance for depreciation shall be treated as a de15 duction allowed for depreciation under section 167. 

16 ‘‘(f) APPLICATION WITH OTHER DEDUCTIONS AND

17 CREDITS.— 

18 ‘‘(1) OTHER DEDUCTIONS.—No deduction shall 

19 be allowed under any other provision of this chapter 

20 with respect to any expenditure with respect to 

21 which a deduction is allowed under subsection (a) to 

22 the taxpayer. 

23 ‘‘(2) CREDITS.—No credit shall be allowed 

24 under section 38 with respect to any amount for 

25 which a deduction is allowed under subsection (a). 


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1 ‘‘(g) REPORTING.—No deduction shall be allowed 

2 under subsection (a) to any taxpayer for any taxable year 

3 unless such taxpayer files with the Secretary a report con4 taining such information with respect to the operation of 

5 the property of the taxpayer as the Secretary shall re6 quire.’’. 

7 (b) CONFORMING AMENDMENTS.— 

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

9 ‘‘and’’ at the end of paragraph (36), by striking the 

10 period at the end of paragraph (37) and inserting ‘‘, 

11 and’’, and by adding at the end the following new 

12 paragraph: 

13 ‘‘(38) to the extent provided in section 

14 179F(e)(1).’’. 

15 (2) Section 1245(a) is amended by inserting 

16 ‘‘179F,’’ after ‘‘179D,’’ both places it appears in 

17 paragraphs (2)(C) and (3)(C). 

18 (3) Section 263(a)(1) is amended by striking 

19 ‘‘or’’ at the end of subparagraph (J), by striking the 

20 period at the end of subparagraph (K) and inserting 

21 ‘‘, or’’, and by inserting after subparagraph (K) the 

22 following new subparagraph: 

23 ‘‘(L) expenditures for which a deduction is 

24 allowed under section 179F.’’. 


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1 (4) Section 312(k)(3)(B) is amended by strik2 ing ‘‘or 179E’’ each place it appears in the heading 

3 and text and inserting ‘‘179E, or 179F’’. 

4 (5) Section 168(e)(B) is amended by inserting 

5 ‘‘and’’ after clause (iv), by striking ‘‘and’’ at the end 

6 of clause (v) and inserting a period, by striking 

7 clause (vi), and by striking the last sentence at the 

8 end. 

9 (6) The table of sections for part VI of sub10 chapter B of chapter 1 is amended by inserting after 

11 the item relating to section 179E the following new 

12 item: 

‘‘Sec. 179F. Election to expense certain energy property.’’. 

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

14 this section shall apply to properties placed in service after 

15 the date of the enactment of this Act. 

16 SEC. 102. MODIFICATIONS RELATING TO CLEAN RENEW17 ABLE ENERGY BONDS. 

18 (a) CLEAN RENEWABLE ENERGY BOND.—Paragraph 

19 (1) of section 54(d) (defining clean renewable energy 

20 bond) is amended— 

21 (1) in subparagraph (A) by striking ‘‘pursuant’’ 

22 and all that follows through ‘‘subsection (f)(2)’’, 

23 (2) in subparagraph (B) by striking ‘‘95 per24 cent or more of the proceeds’’ and inserting ‘‘90 per25 cent or more of the net proceeds’’, and 


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1 (3) in subparagraph (D) by striking ‘‘subsection 

2 (h)’’ and inserting ‘‘subsection (g)’’. 

3 (b) QUALIFIED PROJECT.—Subparagraph (A) of sec4 tion 54(d)(2) (defining qualified project) is amended to 

5 read as follows: 

6 ‘‘(A) IN GENERAL.—The term ‘qualified 

7 project’ means any qualified facility (as deter8 mined under section 45(d) without regard to 

9 paragraphs (8) and (10) thereof and to any 

10 placed in service requirement) owned by a 

11 qualified borrower and also without regard to 

12 the following— 

13 ‘‘(i) in the case of a qualified facility 

14 described in section 45(d)(9) (regarding in15 cremental hydropower production), any de16 termination of incremental hydropower 

17 production and related calculations shall be 

18 determined by the qualified borrower based 

19 on a methodology that meets Federal En20 ergy Regulatory Commission standards; 

21 and 

22 ‘‘(ii) in the case of a qualified facility 

23 described in section 45(d)(9) (regarding 

24 non-hydropower production), the facility 

25 need not be licensed by the Federal Energy 


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1 Regulation Commission if the facility, 

2 when constructed, will meet Federal En3 ergy Regulatory Commission licensing re4 quirements and other applicable environ5 mental, licensing, and regulatory require6 ments.’’. 

7 (c) REIMBURSEMENT.—Subparagraph (C) of section 

8 54(d)(2) (relating to reimbursement) is amended to read 

9 as follows: 

10 ‘‘(C) REIMBURSEMENT.—For purposes of 

11 paragraph (1)(B), proceeds of a clean renew12 able energy bond may be issued to reimburse a 

13 qualified borrower for amounts paid after the 

14 date of the enactment of this section in the 

15 same manner as proceeds of State and local 

16 government obligations the interest upon which 

17 is exempt from tax under section 103.’’. 

18 (d) CHANGE IN USE.—Subparagraph (D) of section 

19 54(d)(2) (relating to treatment of changes in use) is 

20 amended by striking ‘‘or qualified issuer’’. 

21 (e) MAXIMUM TERM.—Paragraph (2) of section 

22 54(e) (relating to maximum term) is amended by striking 

23 ‘‘without regard to the requirements of subsection (1)(6) 

24 and’’. 


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1 (f) REPEAL OF LIMITATION ON AMOUNT OF BONDS

2 DESIGNATED.—Section 54 is amended by striking sub3 section (f) (relating to repeal of limitation on amount of 

4 bonds designated). 

5 (g) SPECIAL RULES RELATING TO EXPENDI6 TURES.—Subsection (h) of section 54 (relating to special 

7 rules relating to expenditures) is amended— 

8 (1) in paragraph (1)(A) by striking ‘‘95 percent 

9 of the proceeds’’ and inserting ‘‘90 percent of the 

10 net proceeds’’, 

11 (2) in paragraph (1)(B)— 

12 (A) by striking ‘‘10 percent of the pro13 ceeds’’ and inserting ‘‘5 percent of the net pro14 ceeds’’, and 

15 (B) by striking ‘‘the 6-month period begin16 ning on’’ both places it appears and inserting 

17 ‘‘1 year of’’, and 

18 (3) in paragraph (1)(C) by inserting ‘‘net’’ be19 fore ‘‘proceeds’’, 

20 (4) in paragraph (3) by striking ‘‘95 percent of 

21 the proceeds’’ and inserting ‘‘90 percent of the net 

22 proceeds’’. 

23 (h) REPEAL OF SPECIAL RULES RELATING TO ARBI24 TRAGE.—Section 54 is amended by striking subsection (i) 

25 (relating to repeal of special rules relating to arbitrage). 


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1 (i) PUBLIC POWER ENTITY.—Subsection (j) of sec2 tion 54 (defining cooperative electric company; qualified 

3 energy tax credit bond lender; governmental body; quali4 fied borrower) is amended— 

5 (1) by redesignating paragraphs (4) and (5) as 

6 paragraph (5) and (6) and by inserting after para7 graph (3) the following new paragraph: 

8 ‘‘(4) PUBLIC POWER ENTITY.—The term ‘public 

9 power entity’ means a State utility with a service ob10 ligation, as such terms are defined in section 217 of 

11 the Federal Power Act (as in effect on the date of 

12 enactment of this paragraph).’’, 

13 (2) in paragraph (5), as so redesignated, by 

14 striking ‘‘or’’ at the end of subparagraph (B), by 

15 striking the period at the end of subparagraph (C) 

16 and inserting ‘‘, or’’, and by adding at the end the 

17 following: 

18 ‘‘(D) a public power entity.’’, and 

19 (3) in paragraph (6), as so redesignated, by 

20 striking ‘‘or’’ at the end of subparagraph (A), by 

21 striking the period at the end of subparagraph (B) 

22 and inserting ‘‘, or’’, and by adding at the end the 

23 following: 

24 ‘‘(C) a public power entity.’’. 


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1 (j) REPEAL OF RATABLE PRINCIPAL AMORTIZATION

2 REQUIREMENT.—Subsection (l) of section 54 (relating to 

3 other definitions and special rules) is amended by striking 

4 paragraph (5) and redesignating paragraph (6) as para5 graph (5). 

6 (k) NET PROCEEDS.—Subsection (i) of section 54 

7 (relating to other definitions and special rules), as amend8 ed by subsection (j), is amended by redesignating para9 graphs (2), (3), (4), and (5) as paragraphs (4), (5), (6), 

10 and (7), respectively, and by inserting after paragraph (1) 

11 the following new paragraphs: 

12 ‘‘(2) NET PROCEEDS.—The term ‘net proceeds’ 

13 means, with respect to an issue, the proceeds of such 

14 issue reduced by amounts in a reasonably required 

15 reserve or replacement fund. 

16 ‘‘(3) LIMITATION ON AMOUNT IN RESERVE OR

17 REPLACEMENT FUND WHICH MAY BE FINANCED BY

18 ISSUE.—A bond issued as part of an issue shall not 

19 be treated as a clean renewable energy bond if the 

20 amount of the proceeds from the sale of such issue 

21 which is part of any reserve or replacement fund ex22 ceeds 10 percent of the proceeds of the issue (or 

23 such higher amount which the issuer establishes is 

24 necessary to the satisfaction of the Secretary).’’. 


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1 (l) OTHER SPECIAL RULES.—Subsection (i) of sec2 tion 54 ((relating to other definitions and special rules), 

3 as amended by subsections (j) and (k)) is amended by add4 ing at the end the following new paragraphs: 

5 ‘‘(8) CREDITS MAY BE SEPARATED.—There 

6 may be a separation (including at issuance) of the 

7 ownership of a clean renewable energy bond and the 

8 entitlement to the credit under this section with re9 spect to such bond. In case of any such separation, 

10 the credit under this section shall be allowed to the 

11 person who on the credit allowance date holds the 

12 instrument evidencing the entitlement to the credit 

13 and not to the holder of the bond. 

14 ‘‘(9) TREATMENT FOR ESTIMATED TAX PUR15 POSES.—Solely for the purposes of sections 6654 

16 and 6655, the credit allowed by this section to a tax17 payer by reason of holding a qualified energy tax 

18 credit bond on a credit allowance date (or the credit 

19 in the case of a separation as provided in paragraph 

20 (8)) shall be treated as if it were a payment of esti21 mated tax made by the taxpayer on such date. 

22 ‘‘(10) CARRYBACK AND CARRYFORWARD OF UN23 USED CREDITS.—If the sum of the credit exceeds 

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1 able year, any credits may be applied in a manner 

2 similar to the rules set forth in section 39.’’. 

3 (m) TERMINATION.—Subsection (m) of section 54 

4 (relating to termination) is amended by striking ‘‘2008’’ 

5 and inserting ‘‘2018’’. 

6 (n) CLERICAL REDESIGNATIONS.—Section 54, as 

7 amended by the preceding provisions of this section, is 

8 amended by redesignating subsections (g), (h), (j), (k), (l), 

9 and (m) as subsections (f), (g), (h), (i), (j), and (k), re10 spectively. 

11 (o) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to obligations issued after the date 

13 of the enactment of this Act. 

14 SEC. 103. EXTENSION AND MODIFICATION OF INVESTMENT 

15 TAX CREDIT WITH RESPECT TO SOLAR EN16 ERGY PROPERTY AND QUALIFIED FUEL CELL 

17 PROPERTY. 

18 (a) SOLAR ENERGY PROPERTY.—Paragraphs 

19 (2)(A)(i)(II) and (3)(A)(ii) of section 48(a) are each 

20 amended by striking ‘‘2008’’ and inserting ‘‘2019’’. 

21 (b) ELIGIBLE FUEL CELL PROPERTY.—Paragraph 

22 (1)(E) of section 48(c) is amended by striking ‘‘2007’’ and 

23 inserting ‘‘2018’’. 


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1 (c) ENERGY PROPERTY TO INCLUDE EXCESS EN2 ERGY STORAGE DEVICE.—Clause (i) of section 

3 48(a)(3)(A) is amended to read as follows: 

4 ‘‘(i) equipment which uses solar en5 ergy to generate electricity, to heat or cool 

6 (or provide hot water for use in) a struc7 ture, or to provide solar process heat, or 

8 advanced energy storage systems installed 

9 as an integrated component of the fore10 going, excepting property used to generate 

11 energy for purposes of heating a swimming 

12 pool,’’. 

13 (d) SOLAR LIGHTING EQUIPMENT TO INCLUDE

14 SOLAR HYBRID LIGHTING SYSTEMS.—Clause (ii) of sec15 tion 48(a)(3)(A) is amended to read as follows: 

16 ‘‘(ii) equipment which uses solar en17 ergy to illuminate the inside of a structure 

18 using fiber-optic distributed sunlight,’’. 

19 (e) MODIFICATIONS.— 

20 (1) SOLAR PHOTOVOLTAIC ENERGY PROPERTY

21 CREDIT DETERMINED SOLELY BY KILOWATT CAPAC22 ITY.— 

23 (A) IN GENERAL.—Subsection (a) of sec24 tion 48 is amended by redesignating paragraph 


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1 (4) as paragraph (5) and by inserting after 

2 paragraph (3) the following new paragraph: 

3 ‘‘(4) SPECIAL RULE FOR ENERGY CREDIT FOR

4 SOLAR PHOTOVOLTAIC ENERGY PROPERTY.— 

5 ‘‘(A) IN GENERAL.—For purposes of sec6 tion 46, the energy credit for any taxable year 

7 for solar photovoltaic energy property described 

8 in paragraph (3)(A)(i) which is used to gen9 erate electricity and which is placed in service 

10 during the taxable year is $1,500 with respect 

11 to each half kilowatt of capacity of such prop12 erty. Paragraph (2)(A)(ii) shall not apply to 

13 property to which the preceding sentence ap14 plies. 

15 ‘‘(B) APPLICATION OF SPECIAL RULES FOR

16 REHABILITATED OR SUBSIDIZED PROPERTY.— 

17 Rules similar to the rules of paragraphs (2)(B) 

18 and (5) shall apply to property to which this 

19 paragraph applies.’’. 

20 (B) CONFORMING AMENDMENT.—Sub21 clause (II) of section 48(a)(2)(A)(i) is amended 

22 by striking ‘‘described in paragraph (3)(A)(i)’’ 

23 and inserting ‘‘which is described in paragraph 

24 (3)(A)(i) and to which paragraph (4) does not 

25 apply’’. 


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1 (f) CREDITS ALLOWED AGAINST THE ALTERNATIVE

2 MINIMUM TAX.—Section 38(c)(4)(B) (defining specified 

3 credits) is amended by striking the period at the end of 

4 clause (ii)(II) and inserting ‘‘, and’’, and by adding at the 

5 end the following new clause: 

6 ‘‘(iii) the portion of the investment 

7 credit under section 46(2) as determined 

8 under clauses (i) and (ii) of section 

9 48(a)(2)(A).’’. 

10 (g) EFFECTIVE DATES.— 

11 (1) Except as provided in paragraph (2), the 

12 amendments made by this section shall take effect 

13 on January 1, 2007. 

14 (2) The amendments made by subsection (c) 

15 shall apply to property placed in service after De16 cember 31, 2006. 

17 SEC. 104. EXTENSION AND MODIFICATION OF CREDIT FOR 

18 RESIDENTIAL ENERGY EFFICIENT PROP19 ERTY. 

20 (a) EXTENSION.—Subsection (g) of section 25D of 

21 the Internal Revenue Code of 1986 (relating to termi22 nation) is amended by striking ‘‘2008’’ and inserting 

23 ‘‘2016’’. 


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1 (b) SOLAR ELECTRIC PROPERTY.—Paragraph (1) of 

2 section 25D(a) of such Code (relating to allowance of cred3 it) is amended by striking ‘‘30 percent of’’. 

4 (c) MODIFICATION OF MAXIMUM CREDIT.—Para5 graph (1) of section 25D(b) of the Internal Revenue Code 

6 of 1986 (relating to limitations) is amended to read as 

7 follows: 

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

9 under subsection (a) for any taxable year shall not 

10 exceed— 

11 ‘‘(A) $1,500 with respect to each half kilo12 watt of installed capacity of qualified solar elec13 tric property for which qualified solar electric 

14 property expenditures are made, 

15 ‘‘(B) $2,000 with respect to any qualified 

16 solar water heating property expenditures, and 

17 ‘‘(C) $500 with respect to each half kilo18 watt of capacity of qualified fuel cell property 

19 (as defined in section 48(c)(1)) for which quali20 fied fuel cell property expenditures are made.’’. 

21 (d) DEFINITION OF QUALIFIED SOLAR WATER

22 HEATING PROPERTY EXPENDITURE.—Paragraph (1) of 

23 section 25D(d) of such Code is amended by striking ‘‘to 

24 heat water for use in’’ and inserting ‘‘to heat or cool (or 

25 provide hot water for use in)’’. 


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1 (e) DEFINITION OF QUALIFIED PHOTOVOLTAIC

2 PROPERTY EXPENDITURE.—Paragraph (2) of section 

3 25D(d) of such Code is amended by inserting ‘‘, including 

4 advanced energy storage systems installed as an inte5 grated component of the foregoing’’ after ‘‘taxpayer’’. 

6 (f) CREDIT ALLOWED AGAINST ALTERNATIVE MIN7 IMUM TAX.— 

8 (1) IN GENERAL.—Section 25D(b) of the Inter9 nal Revenue Code of 1986 (as amended by sub10 section (b)) is amended by adding at the end the fol11 lowing new paragraph: 

12 ‘‘(3) CREDIT ALLOWED AGAINST ALTERNATIVE

13 MINIMUM TAX.—The credit allowed under subsection 

14 (a) for the taxable year shall not exceed the excess 

15 of— 

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

17 (as defined in section 26(b)) plus the tax im18 posed by section 55, over 

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

20 under subpart A of part IV of subchapter A 

21 (other than this section) and section 27 for the 

22 taxable year.’’. 

23 (2) CONFORMING AMENDMENTS.— 

24 (A) Subsection (c) of section 25D of such 

25 Code is amended to read as follows: 


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

2 credit allowable under subsection (a) for any taxable year 

3 exceeds the limitation imposed by subsection (b)(3) for 

4 such taxable year, such excess shall be carried to the suc5 ceeding taxable year and added to the credit allowable 

6 under subsection (a) for such succeeding taxable year.’’. 

7 (B) Section 23(b)(4)(B) of such Code is 

8 amended by inserting ‘‘and section 25D’’ after 

9 ‘‘this section’’. 

10 (C) Section 24(b)(3)(B) of such Code is 

11 amended by striking ‘‘sections 23 and 25B’’ 

12 and inserting ‘‘sections 23, 25B, and 25D’’. 

13 (D) Section 26(a)(1) of such Code is 

14 amended by striking ‘‘and 25B’’ and inserting 

15 ‘‘25B, and 25D’’. 

16 (g) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to expenditures made in taxable 

18 years beginning after December 31, 2006. 

19 SEC. 105. 15-YEAR RECOVERY PERIOD FOR PROPERTY 

20 USED IN THE TRANSMISSION OR DISTRIBU21 TION OF ELECTRICITY FOR SALE. 

22 (a) IN GENERAL.—Subparagraph (E) of section 

23 168(e)(3) is amended by striking clause (vii), by redesig24 nating clause (viii) as clause (ix), and by inserting after 

25 clause (vi) the following new clauses: 


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1 ‘‘(vii) any section 1245 property (as 

2 defined in section 1245(a)(3))— 

3 ‘‘(I) used in the transmission at 

4 69 or more kilovolts of electricity for 

5 sale and the original use of which 

6 commences with the taxpayer after 

7 April 11, 2005, or 

8 ‘‘(II) used in the transmission or 

9 distribution of electricity for sale and 

10 which is originally placed in service 

11 after the date of the enactment of this 

12 subclause, 

13 ‘‘(viii) initial clearing and grading 

14 land improvements with respect to any 

15 electric utility transmission and distribu16 tion plant, and’’. 

17 (b) CONFORMING AMENDMENTS.— 

18 (1) Paragraph (3) of section 168(e) is amended 

19 by striking subparagraph (F). 

20 (2) The table contained in section 168(g)(3)(B) 

21 is amended by striking the items relating to sub22 paragraphs (E)(viii) and (F) and inserting the fol23 lowing new items: 

‘‘(E)(viii) .............................................. 25 

(E)(ix) .................................................. 35’’. 


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

2 this section shall apply to property placed in service after 

3 the date of the enactment of this Act. 

4 TITLE II—PRODUCTION 

5 INCENTIVES 

6 SEC. 201. EXTENSION OF PRODUCTION CREDIT FOR WIND, 

7 SOLAR, AND GEOTHERMAL. 

8 Subsection (d) of section 45 is amended— 

9 (1) in paragraph (1) by striking ‘‘January 1, 

10 2009’’ and inserting ‘‘January 1, 2018’’, and 

11 (2) in paragraph (4) by striking ‘‘January 1, 

12 2009 (January 1, 2006, in the case of a facility 

13 using solar energy)’’ and inserting ‘‘January 1, 

14 2018’’. 

15 SEC. 202. ELECTRICITY PRODUCED FROM OCEAN ENERGY. 

16 (a) IN GENERAL.—Section 45(c)(1) (defining quali17 fied energy resources) is amended by striking ‘‘and’’ at 

18 the end of subparagraph (G), by striking the period at 

19 the end of subparagraph (H) and inserting ‘‘, and’’, and 

20 by adding at the end the following new subparagraph: 

21 ‘‘(I) ocean energy.’’. 

22 (b) DEFINITION OF RESOURCES.—Section 45(c) is 

23 amended by adding at the end the following new para24 graph: 


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1 ‘‘(10) OCEAN ENERGY.—The term ‘ocean en2 ergy’ means energy derived— 

3 ‘‘(A) in the case of ocean thermal energy, 

4 generation through closed-cycle, open-cycle and 

5 hybrid processes, and 

6 ‘‘(B) in the case of ocean mechanical en7 ergy, generation through channel systems, float 

8 systems, and oscillating water column sys9 tems.’’. 

10 (c) FACILITIES.—Section 45(d) is amended by add11 ing at the end the following new paragraph: 

12 ‘‘(11) OCEAN ENERGY FACILITY.—In the case 

13 of a facility using ocean energy to produce elec14 tricity, the term ‘qualified facility’ means any facility 

15 owned by the taxpayer which is originally placed in 

16 service after the date of the enactment of this para17 graph and before January 1, 2018.’’. 

18 (d) CREDIT RATE.— 

19 (1) IN GENERAL.—Section 45(b) is amended by 

20 adding at the end the following new paragraph: 

21 ‘‘(5) CREDIT RATE FOR ELECTRICITY PRO22 DUCED AND SOLD FROM OCEAN ENERGY FACIL23 ITY.—In the case of electricity produced and sold in 

24 any calendar year after the date of the enactment of 


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1 this paragraph at any qualified facility described in 

2 subsection (d)(11)— 

3 ‘‘(A) subsection (a)(1) shall be applied for 

4 such calendar year by substituting ‘1.9 cents’ 

5 for ‘1.5 cents’, and 

6 ‘‘(B) paragraph (2) shall be applied by 

7 substituting ‘2005’ for ‘2002’.’’. 

8 (2) ADJUSTMENT FOR INFLATION.—Section 

9 45(b)(2) is amended by inserting ‘‘the 1.9 cent 

10 amount in paragraph (5)’’. 

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

12 this section shall apply to electricity produced after the 

13 date of the enactment of this Act. 

14 TITLE III—INCENTIVES FOR 

15 ALTERNATIVE FUELS 

16 SEC. 301. TECHNOLOGY NEUTRAL DIESEL CREDIT. 

17 (a) IN GENERAL.—Section 40A is amended to read 

18 as follows: 

19 ‘‘SEC. 40A. QUALIFIED DIESEL USED AS FUEL. 

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

21 the qualified diesel fuels credit determined under this sec22 tion for the taxable year is an amount equal to the sum 

23 of— 

24 ‘‘(1) the qualified diesel mixture credit, plus 

25 ‘‘(2) the qualified diesel credit. 


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1 ‘‘(b) DEFINITION OF QUALIFIED DIESEL MIXTURE

2 CREDIT AND QUALIFIED DIESEL CREDIT.—For purposes 

3 of this section— 

4 ‘‘(1) QUALIFIED DIESEL MIXTURE CREDIT.— 

5 ‘‘(A) IN GENERAL.—The qualified diesel 

6 mixture credit of any taxpayer for any taxable 

7 year is $1.00 for each gallon of biodiesel used 

8 by the taxpayer in the production of a qualified 

9 biodiesel mixture. 

10 ‘‘(B) QUALIFIED DIESEL MIXTURE.—The 

11 term ‘qualified biodiesel mixture’ means a mix12 ture of qualified diesel and diesel fuel (as de13 fined in section 4083(a)(3)), determined with14 out regard to any use of kerosene, which— 

15 ‘‘(i) is sold by the taxpayer producing 

16 such mixture to any person for use as a 

17 fuel, or 

18 ‘‘(ii) is used as a fuel by the taxpayer 

19 producing such mixture. 

20 ‘‘(C) SALE OR USE MUST BE IN TRADE OR

21 BUSINESS, ETC.—Biodiesel used in the produc22 tion of a qualified diesel mixture shall be taken 

23 into account— 


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1 ‘‘(i) only if the sale or use described 

2 in subparagraph (B) is in a trade or busi3 ness of the taxpayer, and 

4 ‘‘(ii) for the taxable year in which 

5 such sale or use occurs. 

6 ‘‘(D) CASUAL OFF-FARM PRODUCTION NOT

7 ELIGIBLE.—No credit shall be allowed under 

8 this section with respect to any casual off-farm 

9 production of a qualified diesel mixture. 

10 ‘‘(2) BIODIESEL CREDIT.— 

11 ‘‘(A) IN GENERAL.—The diesel credit of 

12 any taxpayer for any taxable year is $1.00 for 

13 each gallon of diesel which is not in a mixture 

14 with diesel fuel and which during the taxable 

15 year— 

16 ‘‘(i) is used by the taxpayer as a fuel 

17 in a trade or business, or 

18 ‘‘(ii) is sold by the taxpayer at retail 

19 to a person and placed in the fuel tank of 

20 such person’s vehicle. 

21 ‘‘(B) USER CREDIT NOT TO APPLY TO DIE22 SEL SOLD AT RETAIL.—No credit shall be al23 lowed under subparagraph (A)(i) with respect 

24 to any diesel which was sold in a retail sale de25 scribed in subparagraph (A)(ii). 


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1 ‘‘(3) CERTIFICATION FOR DIESEL.—No credit 

2 shall be allowed under paragraph (1) or (2) of sub3 section (a) unless the taxpayer obtains a certification 

4 (in such form and manner as prescribed by the Sec5 retary) from the producer or importer of the bio6 diesel which identifies the product produced and the 

7 percentage of biodiesel and agri-biodiesel in the 

8 product. 

9 ‘‘(4) SMALL QUALIFIED DIESEL PRODUCER

10 CREDIT.— 

11 ‘‘(A) IN GENERAL.—The small qualified 

12 diesel producer credit of any eligible small 

13 qualified diesel producer for any taxable year is 

14 10 cents for each gallon of qualified diesel pro15 duction of such producer. 

16 ‘‘(B) QUALIFIED DIESEL PRODUCTION.— 

17 For purposes of this paragraph, the term 

18 ‘qualified agri-biodiesel production’ means any 

19 qualified diesel which is produced by an eligible 

20 small qualified diesel producer, and which dur21 ing the taxable year— 

22 ‘‘(i) is sold by such producer to an23 other person— 

24 ‘‘(I) for use by such other person 

25 in the production of a qualified diesel 


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1 mixture in such other person’s trade 

2 or business (other than casual off3 farm production), 

4 ‘‘(II) for use by such other per5 son as a fuel in a trade or business, 

6 or 

7 ‘‘(III) who sells such qualified 

8 diesel at retail to another person and 

9 places such qualified diesel in the fuel 

10 tank of such other person, or 

11 ‘‘(ii) is used or sold by such producer 

12 for any purpose described in clause (i). 

13 ‘‘(C) LIMITATION.—The qualified diesel 

14 production of any producer for any taxable year 

15 shall not exceed 15,000,000 gallons. 

16 ‘‘(c) COORDINATION WITH CREDIT AGAINST EXCISE

17 TAX.—The amount of the credit determined under this 

18 section with respect to any biodiesel shall be properly re19 duced to take into account any benefit provided with re20 spect to such biodiesel solely by reason of the application 

21 of section 6426 or 6427(e). 

22 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur23 poses of this section— 

24 ‘‘(1) QUALIFIED DIESEL.— 


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1 ‘‘(A) IN GENERAL.—The term ‘qualified 

2 diesel’ means any diesel made from a renewable 

3 source, as certified by the Secretary of Energy. 

4 ‘‘(B) PROCEDURE FOR CERTIFICATION.— 

5 For purposes of subparagraph (A), not later 

6 than 90 days after the date on which a request 

7 for certification is submitted to the Secretary of 

8 Energy (in accordance with regulations promul9 gated by the Secretary of Energy), the Sec10 retary of Energy shall make a determination on 

11 such request. 

12 ‘‘(C) TRANSITIONAL RULE.—Any diesel 

13 product eligible for the credit under this section 

14 on the day before the date of the enactment of 

15 the Generating Renewable Energy and Encour16 aging Novel Technologies Act of 2007 shall be 

17 deemed to be qualified diesel for purposes of 

18 this section after such date. 

19 ‘‘(2) MIXTURE OR BIODIESEL NOT USED AS A

20 FUEL, ETC.— 

21 ‘‘(A) MIXTURES.—If— 

22 ‘‘(i) any credit was determined under 

23 this section with respect to diesel used in 

24 the production of any qualified diesel mix25 ture, and 


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1 ‘‘(ii) any person— 

2 ‘‘(I) separates the biodiesel from 

3 the mixture, or 

4 ‘‘(II) without separation, uses the 

5 mixture other than as a fuel, 

6 then there is hereby imposed on such per7 son a tax equal to the product of the rate 

8 applicable under subsection (b)(1)(A) and 

9 the number of gallons of such diesel in 

10 such mixture. 

11 ‘‘(B) DIESEL.—If— 

12 ‘‘(i) any credit was determined under 

13 this section with respect to the retail sale 

14 of any diesel, and 

15 ‘‘(ii) any person mixes such diesel or 

16 uses such diesel other than as a fuel, 

17 then there is hereby imposed on such person a 

18 tax equal to the product of the rate applicable 

19 under subsection (b)(2)(A) and the number of 

20 gallons of such diesel. 

21 ‘‘(C) PRODUCER CREDIT.—If— 

22 ‘‘(i) any credit was determined under 

23 subsection (a)(3), and 


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1 ‘‘(ii) any person does not use such 

2 fuel for a purpose described in subsection 

3 (b)(5)(B), 

4 then there is hereby imposed on such person a 

5 tax equal to 10 cents a gallon for each gallon 

6 of such diesel. 

7 ‘‘(D) APPLICABLE LAWS.—All provisions 

8 of law, including penalties, shall, insofar as ap9 plicable and not inconsistent with this section, 

10 apply in respect of any tax imposed under sub11 paragraph (A) or (B) as if such tax were im12 posed by section 4081 and not by this chapter. 

13 ‘‘(3) PASS-THRU IN THE CASE OF ESTATES AND

14 TRUSTS.—Under regulations prescribed by the Sec15 retary, rules similar to the rules of subsection (d) of 

16 section 52 shall apply. 

17 ‘‘(e) DEFINITIONS AND SPECIAL RULES FOR SMALL

18 QUALIFIED DIESEL PRODUCER CREDIT.—For purposes 

19 of this section— 

20 ‘‘(1) ELIGIBLE SMALL QUALIFIED DIESEL PRO21 DUCER.—The term ‘eligible small qualified diesel 

22 producer’ means a person who, at all times during 

23 the taxable year, has a productive capacity for quali24 fied diesel not in excess of 60,000,000 gallons. 


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1 ‘‘(2) AGGREGATION RULE.—For purposes of 

2 the 15,000,000 gallon limitation under subsection 

3 (b)(5)(C) and the 60,000,000 gallon limitation 

4 under paragraph (1), all members of the same con5 trolled group of corporations (within the meaning of 

6 section 267(f)) and all persons under common con7 trol (within the meaning of section 52(b) but deter8 mined by treating an interest of more than 50 per9 cent as a controlling interest) shall be treated as 1 

10 person. 

11 ‘‘(3) PARTNERSHIP, S CORPORATION, AND

12 OTHER PASS-THRU ENTITIES.—In the case of a 

13 partnership, trust, S corporation, or other pass-thru 

14 entity, the limitations contained in subsection 

15 (b)(5)(C) and paragraph (1) shall be applied at the 

16 entity level and at the partner or similar level. 

17 ‘‘(4) ALLOCATION.—For purposes of this sub18 section, in the case of a facility in which more than 

19 1 person has an interest, productive capacity shall 

20 be allocated among such persons in such manner as 

21 the Secretary may prescribe. 

22 ‘‘(5) REGULATIONS.—The Secretary may pre23 scribe such regulations as may be necessary— 

24 ‘‘(A) to prevent the credit provided for in 

25 subsection (a)(3) from directly or indirectly 


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1 benefitting any person with a direct or indirect 

2 productive capacity of more than 60,000,000 

3 gallons of agri-biodiesel during the taxable year, 

4 or 

5 ‘‘(B) to prevent any person from directly 

6 or indirectly benefitting with respect to more 

7 than 15,000,000 gallons during the taxable 

8 year. 

9 ‘‘(6) ALLOCATION OF SMALL QUALIFIED DIE10 SEL CREDIT TO PATRONS OF COOPERATIVE.— 

11 ‘‘(A) ELECTION TO ALLOCATE.— 

12 ‘‘(i) IN GENERAL.—In the case of a 

13 cooperative organization described in sec14 tion 1381(a), any portion of the credit de15 termined under subsection (a)(3) for the 

16 taxable year may, at the election of the or17 ganization, be apportioned pro rata among 

18 patrons of the organization on the basis of 

19 the quantity or value of business done with 

20 or for such patrons for the taxable year. 

21 ‘‘(ii) FORM AND EFFECT OF ELEC22 TION.—An election under clause (i) for any 

23 taxable year shall be made on a timely 

24 filed return for such year. Such election, 

25 once made, shall be irrevocable for such 


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1 taxable year. Such election shall not take 

2 effect unless the organization designates 

3 the apportionment as such in a written no4 tice mailed to its patrons during the pay5 ment period described in section 1382(d). 

6 ‘‘(B) TREATMENT OF ORGANIZATIONS AND

7 PATRONS.— 

8 ‘‘(i) ORGANIZATIONS.—The amount of 

9 the credit not apportioned to patrons pur10 suant to subparagraph (A) shall be in11 cluded in the amount determined under 

12 subsection (a)(3) for the taxable year of 

13 the organization. 

14 ‘‘(ii) PATRONS.—The amount of the 

15 credit apportioned to patrons pursuant to 

16 subparagraph (A) shall be included in the 

17 amount determined under such subsection 

18 for the first taxable year of each patron 

19 ending on or after the last day of the pay20 ment period (as defined in section 

21 1382(d)) for the taxable year of the orga22 nization or, if earlier, for the taxable year 

23 of each patron ending on or after the date 

24 on which the patron receives notice from 

25 the cooperative of the apportionment. 


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1 ‘‘(iii) SPECIAL RULES FOR DECREASE

2 IN CREDITS FOR TAXABLE YEAR.—If the 

3 amount of the credit of the organization 

4 determined under such subsection for a 

5 taxable year is less than the amount of 

6 such credit shown on the return of the or7 ganization for such year, an amount equal 

8 to the excess of— 

9 ‘‘(I) such reduction, over 

10 ‘‘(II) the amount not apportioned 

11 to such patrons under subparagraph 

12 (A) for the taxable year, 

13 shall be treated as an increase in tax im14 posed by this chapter on the organization. 

15 Such increase shall not be treated as tax 

16 imposed by this chapter for purposes of de17 termining the amount of any credit under 

18 this chapter or for purposes of section 55. 

19 ‘‘(f) TERMINATION.—This section shall not apply to 

20 any sale or use after December 31, 2018.’’. 

21 (b) CLERICAL AMENDMENT.—The item relating to 

22 section 40A in the table of sections for subpart D of part 

23 IV of subchapter A of chapter 1 is amended to read as 

24 follows: 

‘‘Sec. 40A. Qualified diesel used as fuel.’’. 


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

2 this section shall apply to fuel produced after the date of 

3 the enactment of this Act. 

4 SEC. 302. EXTENSION OF CREDIT FOR ALCOHOL USED AS 

5 FUEL. 

6 (a) INCOME TAX CREDIT.—Paragraph (1) of section 

7 40(e) is amended— 

8 (1) in subparagraph (A) by striking ‘‘December 

9 31, 2010’’ and inserting ‘‘December 31, 2018’’, and 

10 (2) in subparagraph (B) by striking ‘‘January 

11 1, 2011’’ and inserting ‘‘January 1, 2019’’. 

12 (b) EXCISE TAX CREDIT.—Section 6426(b)(5) is 

13 amended by striking ‘‘December 31, 2010’’ and inserting 

14 ‘‘December 31, 2018’’. 

15 (c) FUELS NOT USED FOR TAXABLE PURPOSES.— 

16 Section 6427(e)(5)(A) is amended by striking ‘‘December 

17 31, 2010’’ and inserting ‘‘December 31, 2018’’. 

18 SEC. 303. EXTENSION OF CREDIT FOR ALTERNATIVE 

19 FUELS. 

20 (a) ALTERNATIVE FUEL.—Paragraph (4) of section 

21 6426(d) is amended to read as follows: 

22 ‘‘(4) TERMINATION.—This subsection shall not 

23 apply to any sale or use for any period after Decem24 ber 31, 2018.’’. 


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1 (b) ALTERNATIVE FUEL MIXTURE.—Paragraph (3) 

2 of section 6426(e) is amended to read as follows: 

3 ‘‘(3) TERMINATION.—This subsection shall not 

4 apply to any sale or use for any period after Decem5 ber 31, 2018.’’. 

6 (c) FUELS NOT USED FOR TAXABLE PURPOSES.— 

7 Section 6427(e)(5)(C) is amended by striking ‘‘September 

8 30, 2009’’ and inserting ‘‘December 31, 2018’’. 

9 SEC. 304. INVESTMENT TAX CREDIT FOR CELLULOSIC BIO10 MASS ETHANOL PLANT PROPERTY. 

11 (a) ALLOWANCE OF CREDIT.—Subpart E of part IV 

12 of subchapter A of chapter 1 is amended by inserting after 

13 section 48B the following new section: 

14 ‘‘SEC. 48C. CELLULOSIC BIOMASS ETHANOL PLANT FACIL15 ITY. 

16 ‘‘(a) GENERAL RULE.—For purposes of section 46, 

17 the cellulosic biomass ethanol plant credit for any taxable 

18 year is 30 percent of the cost of any qualified cellulosic 

19 biomass ethanol plant property. 

20 ‘‘(b) QUALIFIED CELLULOSIC BIOMASS ETHANOL

21 PLANT PROPERTY.—The term ‘qualified cellulosic bio22 mass ethanol plant property’ means property of a char23 acter subject to the allowance for depreciation— 

24 ‘‘(1) which is used in the United States solely 

25 to produce cellulosic biomass ethanol, 


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1 ‘‘(2) the original use of which commences with 

2 the taxpayer after the date of the enactment of this 

3 section, 

4 ‘‘(3) which is acquired by the taxpayer by pur5 chase (as defined in section 179(d)) after the date 

6 of the enactment of this subsection, but only if no 

7 written binding contract for the acquisition was in 

8 effect on or before the date of the enactment of this 

9 subsection, and 

10 ‘‘(4) which is placed in service by the taxpayer 

11 before January 1, 2019. 

12 ‘‘(c) CELLULOSIC BIOMASS ETHANOL.—For pur13 poses of this section, the term ‘cellulosic biomass ethanol’ 

14 means ethanol produced from any lignocellulosic or 

15 hemicellulosic matter that is available on a renewable or 

16 recurring basis. 

17 ‘‘(d) SPECIAL RULE FOR CERTAIN SUBSIDIZED

18 PROPERTY.—For purposes of this section, rules similar to 

19 the rules of section 48(a)(4) shall apply. 

20 ‘‘(e) DENIAL OF DOUBLE BENEFIT.—A deduction or 

21 credit shall not be allowed under any other provision of 

22 this chapter for the cost taken into account under sub23 section (a).’’. 

24 (b) CREDIT TREATED AS PART OF INVESTMENT

25 CREDIT.—Section 46 is amended by striking ‘‘and’’ at the 


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1 end of paragraph (3), by striking the period at the end 

2 of paragraph (4) and inserting ‘‘, and’’, and by adding 

3 at the end the following new paragraph: 

4 ‘‘(5) the cellulosic biomass ethanol plant cred5 it.’’. 

6 (c) CONFORMING AMENDMENTS.— 

7 (1) Section 49(a)(1)(C) is amended by striking 

8 ‘‘and’’ at the end of clause (iii), by striking the pe9 riod at the end of clause (iv) and inserting ‘‘, and’’, 

10 and by adding at the end the following new clause: 

11 ‘‘(v) the basis of any qualified cel12 lulosic biomass ethanol plant property.’’. 

13 (2) Section 168 is amended by striking sub14 section (l). 

15 (3) The table of sections for subpart E of part 

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

17 amended by inserting after the item relating to sec18 tion 48B the following new item: 

‘‘Sec. 48C. Cellulosic biomass ethanol plant facility.’’. 

19 TITLE IV—INCENTIVES TO 

20 CONSERVE ENERGY 

21 SEC. 401. EXTENSION OF NONBUSINESS ENERGY PROP22 ERTY. 

23 Subsection (g) of section 25C is amended by striking 

24 ‘‘December 31, 2007’’ and inserting ‘‘December 31, 

25 2018’’. 


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1 SEC. 402. MODIFICATIONS OF ENERGY EFFICIENT APPLI2 ANCE CREDIT FOR APPLIANCES PRODUCED 

3 AFTER 2007. 

4 (a) IN GENERAL.—Subsection (b) of section 45M (re5 lating to applicable amount) is amended to read as follows: 

6 ‘‘(b) APPLICABLE AMOUNT.—For purposes of sub7 section (a)— 

8 ‘‘(1) DISHWASHERS.—The applicable amount 

9 is— 

10 ‘‘(A) $45 in the case of a dishwasher which 

11 is manufactured in calendar year 2008 or 2009 

12 and which uses no more than 324 kilowatt 

13 hours per year and 5.8 gallons per cycle, and 

14 ‘‘(B) $75 in the case of a dishwasher 

15 which is manufactured in calendar year 2008, 

16 2009, or 2010 and which uses no more than 

17 307 kilowatt hours per year and 5.0 gallons per 

18 cycle (5.5 gallons per cycle for dishwashers de19 signed for greater than 12 place settings). 

20 ‘‘(2) CLOTHES WASHERS.—The applicable 

21 amount is— 

22 ‘‘(A) $75 in the case of a residential top23 loading clothes washer manufactured in cal24 endar year 2008 which meets or exceeds a 1.72 

25 modified energy factor and does not exceed a 

26 8.0 water consumption factor, 


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1 ‘‘(B) $125 in the case of a residential top2 loading clothes washer manufactured in cal3 endar year 2008 or 2009 which meets or ex4 ceeds a 1.8 modified energy factor and does not 

5 exceed a 7.5 water consumption factor, 

6 ‘‘(C) $150 in the case of a residential or 

7 commercial clothes washer manufactured in cal8 endar year 2008, 2009 or 2010 which meets or 

9 exceeds 2.0 modified energy factor and does not 

10 exceed a 6.0 water consumption factor, and 

11 ‘‘(D) $250 in the case of a residential or 

12 commercial clothes washer manufactured in cal13 endar year 2008, 2009, or 2010 which meets or 

14 exceeds 2.2 modified energy factor and does not 

15 exceed a 4.5 water consumption factor. 

16 ‘‘(3) REFRIGERATORS.—The applicable amount 

17 is— 

18 ‘‘(A) $50 in the case of a refrigerator 

19 which is manufactured in calendar year 2008, 

20 and consumes at least 20 percent but not more 

21 than 22.9 percent less kilowatt hours per year 

22 than the 2001 energy conservation standards, 

23 ‘‘(B) $75 in the case of a refrigerator 

24 which is manufactured in calendar year 2008 or 

25 2009, and consumes at least 23 percent but no 


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1 more than 24.9 percent less kilowatt hours per 

2 year than the 2001 energy conservation stand3 ards, 

4 ‘‘(C) $100 in the case of a refrigerator 

5 which is manufactured in calendar year 2008, 

6 2009 or 2010, and consumes at least 25 per7 cent but not more than 29.9 percent less kilo8 watt hours per year than the 2001 energy con9 servation standards, and 

10 ‘‘(D) $200 in the case of a refrigerator 

11 manufactured in calendar year 2008, 2009 or 

12 2010 and which consumes at least 30 percent 

13 less energy than the 2001 energy conservation 

14 standards. 

15 ‘‘(4) DEHUMIDIFIERS.—The applicable amount 

16 is— 

17 ‘‘(A) $15 in the case of a dehumidifier 

18 manufactured in calendar year 2008 that has a 

19 capacity less than or equal to 45 pints per day 

20 and is 7.5 percent more efficient than the appli21 cable Department of Energy energy conserva22 tion standard effective October 2012, and 

23 ‘‘(B) $25 in the case of a dehumidifier 

24 manufactured in calendar year 2008 that has a 

25 capacity greater than 45 pints per day and is 


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1 7.5 percent more efficient than the applicable 

2 Department of Energy energy conservation 

3 standard effective October 2012.’’. 

4 (b) ELIGIBLE PRODUCTION.— 

5 (1) SIMILAR TREATMENT FOR ALL APPLI6 ANCES.—Subsection (c) of section 45M (relating to 

7 eligible production) is amended— 

8 (A) by striking paragraph (2), 

9 (B) by striking ‘‘(1) IN GENERAL’’ and all 

10 that follows through ‘‘the eligible’’ and inserting 

11 ‘‘The eligible’’, and 

12 (C) by moving the text of such subsection 

13 in line with the subsection heading and redesig14 nating subparagraphs (A) and (B) as para15 graphs (1) and (2), respectively. 

16 (2) MODIFICATION OF BASE PERIOD.—Para17 graph (2) of section 45M(c), as amended by para18 graph (1) of this section, is amended by striking ‘‘3- 

19 calendar year’’ and inserting ‘‘2-calendar year’’. 

20 (c) TYPES OF ENERGY EFFICIENT APPLIANCES.— 

21 Subsection (d) of section 45M (defining types of energy 

22 efficient appliances) is amended to read as follows: 

23 ‘‘(d) TYPES OF ENERGY EFFICIENT APPLIANCE.— 

24 For purposes of this section, the types of energy efficient 

25 appliances are— 


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1 ‘‘(1) dishwashers described in subsection (b)(1), 

2 ‘‘(2) clothes washers described in subsection 

3 (b)(2), 

4 ‘‘(3) refrigerators described in subsection 

5 (b)(3), and 

6 ‘‘(4) dehumidifiers described in subsection 

7 (b)(4).’’. 

8 (d) AGGREGATE CREDIT AMOUNT ALLOWED.— 

9 (1) INCREASE IN LIMIT.—Paragraph (1) of sec10 tion 45M(e) (relating to aggregate credit amount al11 lowed) is amended to read as follows: 

12 ‘‘(1) AGGREGATE CREDIT AMOUNT ALLOWED.— 

13 The aggregate amount of credit allowed under sub14 section (a) with respect to a taxpayer for any tax15 able year shall not exceed $100,000,000 reduced by 

16 the amount of the credit allowed under subsection 

17 (a) to the taxpayer (or any predecessor) for all prior 

18 taxable years beginning after December 31, 2007.’’. 

19 (2) EXCEPTION FOR CERTAIN REFRIGERATOR

20 AND CLOTHES WASHERS.—Paragraph (2) of section 

21 45M(e) is amended to read as follows: 

22 ‘‘(2) AMOUNT ALLOWED FOR CERTAIN REFRIG23 ERATORS AND CLOTHES WASHERS.—Refrigerators 

24 described in subsection (b)(3)(D) and clothes washVerDate Aug 31 2005 01:26 Jun 14, 2007 Jkt 059200 PO 00000 Frm 00046 Fmt 6652 Sfmt 6201 E:\BILLS\H2652.IH H2652

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1 ers described in subsection (b)(2)(D) shall not be 

2 taken into account under paragraph (1).’’. 

3 (e) QUALIFIED ENERGY EFFICIENT APPLIANCES.— 

4 (1) IN GENERAL.—Paragraph (1) of section 

5 45M(f) (defining qualified energy efficient appliance) 

6 is amended to read as follows: 

7 ‘‘(1) QUALIFIED ENERGY EFFICIENT APPLI8 ANCE.—The term ‘qualified energy efficient appli9 ance’ means— 

10 ‘‘(A) any dishwasher described in sub11 section (b)(1), 

12 ‘‘(B) any clothes washer described in sub13 section (b)(2), 

14 ‘‘(C) any refrigerator described in sub15 section (b)(3), and 

16 ‘‘(D) any dehumidifier described in sub17 section (b)(4).’’. 

18 (2) CLOTHES WASHER.—Section 45M(f)(3) (de19 fining clothes washer) is amended by inserting 

20 ‘‘commercial’’ before ‘‘residential’’ the second place 

21 it appears. 

22 (3) TOP-LOADING CLOTHES WASHER.—Sub23 section (f) of section 45M (relating to definitions) is 

24 amended by redesignating paragraphs (4), (5), (6), 

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1 tively, and by inserting after paragraph (3) the fol2 lowing new paragraph: 

3 ‘‘(4) TOP-LOADING CLOTHES WASHER.—The 

4 term ‘‘top-loading clothes washer’’ means a clothes 

5 washer which has the clothes container compartment 

6 access located on the top of the machine and which 

7 operates on a vertical axis.’’. 

8 (4) DEHUMIDIFIER.—Subsection (f) of section 

9 45M, as amended by paragraph (3), is amended by 

10 redesignating paragraphs (6), (7), and (8) as para11 graphs (7), (8) and (9), respectively, and by insert12 ing after paragraph (5) the following new para13 graph: 

14 ‘‘(6) DEHUMIDIFIER.—The term ‘dehumidifier’ 

15 means a self-contained, electrically operated, and 

16 mechanically refrigerated encased assembly con17 sisting of— 

18 ‘‘(A) a refrigerated surface that condenses 

19 moisture from the atmosphere, 

20 ‘‘(B) a refrigerating system, including an 

21 electric motor, 

22 ‘‘(C) an air-circulating fan, and 

23 ‘‘(D) means for collecting or disposing of 

24 condensate.’’. 


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1 (5) REPLACEMENT OF ENERGY FACTOR.—Sec2 tion 45M(f)(7), as amended by paragraph (4), is 

3 amended to read as follows: 

4 ‘‘(7) MODIFIED ENERGY FACTOR.—The term 

5 ‘modified energy factor’ means the modified energy 

6 factor established by the Department of Energy for 

7 compliance with the Federal energy conservation 

8 standard.’’. 

9 (6) GALLONS PER CYCLE; WATER CONSUMP10 TION FACTOR.—Section 45M(f) (relating to defini11 tions) is amended by adding at the end the fol12 lowing: 

13 ‘‘(10) GALLONS PER CYCLE.—The term ‘gallons 

14 per cycle’ means, with respect to a dishwasher, the 

15 amount of water, expressed in gallons, required to 

16 complete a normal cycle of a dishwasher. 

17 ‘‘(11) WATER CONSUMPTION FACTOR.—The 

18 term ‘water consumption factor’ means, with respect 

19 to a clothes washer, the quotient of the total weight20 ed per-cycle water consumption divided by the cubic 

21 foot (or liter) capacity of the clothes washer.’’. 

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

23 this section shall apply to appliances produced after De24 cember 31, 2007. 


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1 SEC. 403. INCREASE AND EXTENSION OF ENERGY EFFI2 CIENT COMMERCIAL BUILDINGS DEDUCTION. 

3 (a) INCREASE IN AMOUNT OF DEDUCTION.—Section 

4 179D (relating to energy efficient commercial buildings 

5 deduction) is amended— 

6 (1) in subsection (b)(1)(A) by striking ‘‘$1.80’’ 

7 and inserting ‘‘$2.25’’, and 

8 (2) in subsection (d)(1)(A) by striking ‘‘$.60 

9 for $1.80’’ and inserting ‘‘$.75 for $2.25’’. 

10 (b) EXTENSION.—Subsection (h) of section 179D 

11 (relating to termination) is amended by striking ‘‘Decem12 ber 31, 2008’’ and inserting ‘‘December 31, 2018’’. 

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

14 this section shall apply to property placed in service in 

15 taxable years beginning after December 31, 2006. 

16 TITLE V—CREDIT FOR OIL 

17 SHALE RECOVERY COSTS 

18 SEC. 501. INCENTIVES FOR EXTRACTION AND PROCESSING 

19 OF OIL SHALE. 

20 (a) INVESTMENT TAX CREDIT FOR EXTRACTION AND

21 PROCESSING OF OIL SHALE USING IN-SITU CONVERSION

22 TECHNOLOGY.— 

23 (1) IN GENERAL.—Subpart E of part IV of 

24 subchapter A of chapter 1 is amended by inserting 

25 after section 48C the following new section: 


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1 ‘‘SEC. 48D. OIL SHALE EXTRACTION AND PROCESSING FA2 CILITY. 

3 ‘‘(a) GENERAL RULE.—For purposes of section 46, 

4 the oil shale extraction and processing credit for any tax5 able year is 30 percent of the cost of any qualified oil shale 

6 extraction and processing property. 

7 ‘‘(b) QUALIFIED OIL SHALE EXTRACTION AND

8 PROCESSING PROPERTY.—The term ‘qualified oil shale 

9 extraction and processing property’ means property of a 

10 character subject to the allowance for depreciation— 

11 ‘‘(1) which is used in the United States solely 

12 to extract and process oil shale using in-situ conver13 sion technology, 

14 ‘‘(2) the original use of which commences with 

15 the taxpayer after the date of the enactment of this 

16 section, 

17 ‘‘(3) which is acquired by the taxpayer by pur18 chase (as defined in section 179(d)) after the date 

19 of the enactment of this subsection, but only if no 

20 written binding contract for the acquisition was in 

21 effect on or before the date of the enactment of this 

22 subsection, and 

23 ‘‘(4) which is placed in service by the taxpayer 

24 before January 1, 2019. 


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1 ‘‘(c) SPECIAL RULE FOR CERTAIN SUBSIDIZED

2 PROPERTY.—For purposes of this section, rules similar to 

3 the rules of section 48(a)(4) shall apply. 

4 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—A deduction or 

5 credit shall not be allowed under any other provision of 

6 this chapter for the cost taken into account under sub7 section (a).’’. 

8 (2) CREDIT TREATED AS PART OF INVESTMENT

9 CREDIT.—Section 46 is amended by striking ‘‘and’’ 

10 at the end of paragraph (4), by striking the period 

11 at the end of paragraph (5) and inserting ‘‘, and’’, 

12 and by adding at the end the following new para13 graph: 

14 ‘‘(6) the oil shale extraction and processing 

15 credit.’’. 

16 (3) CONFORMING AMENDMENTS.— 

17 (A) Section 49(a)(1)(C) is amended by 

18 striking ‘‘and’’ at the end of clause (iv), by 

19 striking the period at the end of clause (v) and 

20 inserting ‘‘, and’’, and by adding at the end the 

21 following new clause: 

22 ‘‘(vi) the basis of any qualified oil 

23 shale extraction and processing property.’’. 

24 (B) The table of sections for subpart E of 

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1 ed by inserting after the item relating to section 

2 48C the following new item: 

‘‘Sec. 48D. Oil shale extraction and processing facility.’’. 

3 (b) EXPENSING OIL SHALE EXTRACTION AND PROC4 ESSING PROPERTY.—Part VI of subchapter B of chapter 

5 1 of is amended by inserting after section 179F the fol6 lowing new section: 

7 ‘‘SEC. 179G. ELECTION TO EXPENSE CERTAIN OIL SHALE 

8 EXTRACTION AND PROCESSING PROPERTY. 

9 ‘‘(a) TREATMENT AS EXPENSES.—A taxpayer may 

10 elect to treat the cost of any qualified oil shale extraction 

11 and processing property as an expense which is not 

12 chargeable to capital account. Any cost so treated shall 

13 be allowed as a deduction for the taxable year in which 

14 the expense is incurred. 

15 ‘‘(b) ELECTION.— 

16 ‘‘(1) IN GENERAL.—An election under this sec17 tion for any taxable year shall be made on the tax18 payer’s return of the tax imposed by this chapter for 

19 the taxable year. Such election shall be made in such 

20 manner as the Secretary may by regulations pre21 scribe. 

22 ‘‘(2) ELECTION IRREVOCABLE.—Any election 

23 made under this section may not be revoked except 

24 with the consent of the Secretary. 


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1 ‘‘(c) QUALIFIED OIL SHALE EXTRACTION AND PROC2 ESSING PROPERTY.—For purposes of this section— 

3 ‘‘(1) The term ‘qualified oil shale extraction 

4 and processing property’ means any property located 

5 in the United States— 

6 ‘‘(A) the original use of which commences 

7 with the taxpayer and which original use is 

8 solely to extract or process oil shale, and 

9 ‘‘(B) which is placed in service by the tax10 payer after the date of the enactment of this 

11 section and before January 1, 2019. 

12 ‘‘(d) ELECTION TO ALLOCATE DEDUCTION TO COOP13 ERATIVE OWNER.—If— 

14 ‘‘(1) a taxpayer to which subsection (a) applies 

15 is an organization to which part I of subchapter T 

16 applies, and 

17 ‘‘(2) one or more persons directly holding an 

18 ownership interest in the taxpayer are organizations 

19 to which part I of subchapter T apply, 

20 the taxpayer may elect to allocate all or a portion of the 

21 deduction allowable under subsection (a) to such persons. 

22 Such allocation shall be equal to the person’s ratable share 

23 of the total amount allocated, determined on the basis of 

24 the person’s ownership interest in the taxpayer. The tax25 able income of the taxpayer shall not be reduced under 


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1 section 1382 by reason of any amount to which the pre2 ceding sentence applies. 

3 ‘‘(e) BASIS REDUCTION.— 

4 ‘‘(1) IN GENERAL.—For purposes of this title, 

5 if a deduction is allowed under this section with re6 spect to any qualified oil shale extraction and proc7 essing property, the basis of such property shall be 

8 reduced by the amount of the deduction so allowed. 

9 ‘‘(2) ORDINARY INCOME RECAPTURE.—For 

10 purposes of section 1245, the amount of the deduc11 tion allowable under subsection (a) with respect to 

12 any property which is of a character subject to the 

13 allowance for depreciation shall be treated as a de14 duction allowed for depreciation under section 167. 

15 ‘‘(f) APPLICATION WITH OTHER DEDUCTIONS AND

16 CREDITS.— 

17 ‘‘(1) OTHER DEDUCTIONS.—No deduction shall 

18 be allowed under any other provision of this chapter 

19 with respect to any expenditure with respect to 

20 which a deduction is allowed under subsection (a) to 

21 the taxpayer. 

22 ‘‘(2) CREDITS.—No credit shall be allowed 

23 under section 38 with respect to any amount for 

24 which a deduction is allowed under subsection (a). 


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1 ‘‘(g) REPORTING.—No deduction shall be allowed 

2 under subsection (a) to any taxpayer for any taxable year 

3 unless such taxpayer files with the Secretary a report con4 taining such information with respect to the operation of 

5 the property of the taxpayer as the Secretary shall re6 quire.’’. 

7 (c) CONFORMING AMENDMENTS.— 

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

9 ‘‘and’’ at the end of paragraph (37), by striking the 

10 period at the end of paragraph (38) and inserting ‘‘, 

11 and’’, and by adding at the end the following new 

12 paragraph: 

13 ‘‘(39) to the extent provided in section 

14 179F(e)(1).’’. 

15 (2) Section 1245(a) is amended by inserting 

16 ‘‘179F,’’ after ‘‘179E,’’ both places it appears in 

17 paragraphs (2)(C) and (3)(C). 

18 (3) Section 263(a)(1) is amended by striking 

19 ‘‘or’’ at the end of subparagraph (K), by striking the 

20 period at the end of subparagraph (L) and inserting 

21 ‘‘, or’’, and by inserting after subparagraph (L) the 

22 following new subparagraph: 

23 ‘‘(M) expenditures for which a deduction is 

24 allowed under section 179F.’’. 


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1 (4) Section 312(k)(3)(B) is amended by strik2 ing ‘‘or 179E’’ each place it appears in the heading 

3 and text and inserting ‘‘179E, or 179F’’. 

4 (5) The table of sections for part VI of sub5 chapter B of chapter 1 is amended by inserting after 

6 the item relating to section 179F the following new 

7 item: 

‘‘Sec. 179F. Election to expense certain oil shale extraction and processing 

property.’’. 

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

9 this section shall apply to properties placed in service after 

10 the date of the enactment of this Act. 

11 TITLE VI—PROVISIONS RELAT12 ING TO ADVANCED COAL AND 

13 NUCLEAR ENERGY 

14 SEC. 601. ALTERNATIVE METHOD FOR SATISFYING CER15 TAIN REQUIREMENTS RELATING TO PRODUC16 TION OF REFINED COAL. 

17 (a) IN GENERAL.—Subparagraph (A) of section 

18 45(c)(7) is amended by inserting ‘‘and’’ at the end of 

19 clause (ii) and by amending clause (iii) to read as follows: 

20 ‘‘(iii)(I) is certified by the taxpayer as 

21 resulting (when used in the production of 

22 steam) in a qualified emission reduction 

23 and is produced in such a manner as to re24 sult in an increase of at least 50 percent 


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1 in the market value of the refined coal (ex2 cluding any increase caused by materials 

3 combined or added during the production 

4 process), as compared to the value of feed5 stock coal, or 

6 ‘‘(II) is certified by the taxpayer as 

7 resulting (when used in the production of 

8 steam) in a double emission reduction.’’. 

9 (b) DOUBLE EMISSION REDUCTION.—Paragraph (7) 

10 of section 45(c) is amended by adding at the end the fol11 lowing new subparagraph: 

12 ‘‘(C) DOUBLE EMISSION REDUCTION.—The 

13 term ‘double emission reduction’ means an ag14 gregate reduction totaling at least 80 percent of 

15 the sum of the individual emission reductions of 

16 nitrogen oxide, sulfur dioxide and mercury re17 leased when burning the refined coal (excluding 

18 any dilution caused by materials combined or 

19 added during the production process), as com20 pared to the emissions released when burning 

21 the feedstock coal or comparable coal predomi22 nantly available in the marketplace as of Janu23 ary 1, 2003.’’. 


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

2 this section shall apply to facilities placed in service after 

3 June 11, 2007. 

4 SEC. 602. ADVANCED NUCLEAR POWER PRODUCTION. 

5 (a) INCREASE IN RATE.—Section 45J(a)(1) is 

6 amended by striking ‘‘1.8 cents’’ and inserting ‘‘2.25 

7 cents’’. 

8 (b) INCREASE IN NATIONAL LIMITATION.—Section 

9 45J(b)(2) is amended by striking ‘‘6,000 megawatts’’ and 

10 inserting ‘‘12,000 megawatts’’. 

11 (c) INCREASE IN ANNUAL LIMITATION.—Section 

12 45J(c)(1) is amended by striking ‘‘$125,000,000’’ and in13 serting ‘‘$160,000,000’’. 

14 (d) EXTENSION OF PLACED IN SERVICE DATE.— 

15 Section 45J(d)(1)(B) is amended by striking ‘‘January 1, 

16 2021’’ and inserting ‘‘January 1, 2041’’. 

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

18 this section shall apply to taxable years beginning after 

19 the date of the enactment of this Act. 

20 TITLE VII—COAL TO LIQUIDS 

21 TECHNOLOGY 

22 SEC. 701. CREDIT FOR INVESTMENT IN COAL-TO-LIQUID 

23 FUELS PROJECTS. 

24 (a) IN GENERAL.—Section 46 (relating to amount of 

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1 graph (3), by striking the period at the end of paragraph 

2 (4) and inserting ‘‘, and’’, and by adding at the end the 

3 following new paragraph: 

4 ‘‘(5) the qualifying coal-to-liquid fuels project 

5 credit.’’. 

6 (b) AMOUNT OF CREDIT.—Subpart E of part IV of 

7 subchapter A of chapter 1 (relating to rules for computing 

8 investment credit) is amended by inserting after section 

9 48D the following new section: 

10 ‘‘SEC. 48E. QUALIFYING COAL-TO-LIQUID FUELS PROJECT 

11 CREDIT. 

12 ‘‘(a) IN GENERAL.—For purposes of section 46, the 

13 qualifying coal-to-liquid fuels project credit for any taxable 

14 year is an amount equal to 20 percent of the qualified 

15 investment for such taxable year. 

16 ‘‘(b) QUALIFIED INVESTMENT.— 

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

18 (a), the qualified investment for any taxable year is 

19 the basis of property placed in service by the tax20 payer during such taxable year which is part of a 

21 qualifying coal-to-liquid fuels project— 

22 ‘‘(A)(i) the construction, reconstruction, or 

23 erection of which is completed by the taxpayer, 

24 or 


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1 ‘‘(ii) which is acquired by the taxpayer if 

2 the original use of such property commences 

3 with the taxpayer, and 

4 ‘‘(B) with respect to which depreciation (or 

5 amortization in lieu of depreciation) is allow6 able. 

7 ‘‘(2) APPLICABLE RULES.—For purposes of this 

8 section, rules similar to the rules of subsection 

9 (a)(4) and (b) of section 48 shall apply. 

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

11 ‘‘(1) QUALIFYING COAL-TO-LIQUID FUELS

12 PROJECT.—The term ‘qualifying coal-to-liquid fuels 

13 project’ means any domestic project which— 

14 ‘‘(A) employs the class of reactions known 

15 as Fischer-Tropsch to produce at least 10,000 

16 barrels per day of transportation grade liquid 

17 fuels from a feedstock that is primarily domes18 tic coal (including any property which allows for 

19 the capture, transportation, or sequestration of 

20 by-products resulting from such process, includ21 ing carbon emissions), and 

22 ‘‘(B) any portion of the qualified invest23 ment in which is certified under the qualifying 

24 coal-to-liquid program as eligible for credit 


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1 under this section in an amount (not to exceed 

2 $200,000,000) determined by the Secretary. 

3 ‘‘(2) COAL.—The term ‘coal’ means any carbon4 ized or semicarbonized matter, including peat. 

5 ‘‘(d) QUALIFYING COAL-TO-LIQUID FUELS PROJECT

6 PROGRAM.— 

7 ‘‘(1) IN GENERAL.—The Secretary, in consulta8 tion with the Secretary of Energy, shall establish a 

9 qualifying coal-to-liquid fuels project program to 

10 consider and award certifications for qualified in11 vestment eligible for credits under this section to 10 

12 qualifying coal-to-liquid fuels project sponsors under 

13 this section. The total qualified investment which 

14 may be awarded eligibility for credit under the pro15 gram shall not exceed $2,000,000,000. 

16 ‘‘(2) PERIOD OF ISSUANCE.—A certificate of 

17 eligibility under paragraph (1) may be issued only 

18 during the 10-fiscal year period beginning on Octo19 ber 1, 2007. 

20 ‘‘(3) SELECTION CRITERIA.—The Secretary 

21 shall not make a competitive certification award for 

22 qualified investment for credit eligibility under this 

23 section unless the recipient has documented to the 

24 satisfaction of the Secretary that— 


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1 ‘‘(A) the proposal of the award recipient is 

2 financially viable, 

3 ‘‘(B) the recipient will provide sufficient 

4 information to the Secretary for the Secretary 

5 to ensure that the qualified investment is spent 

6 efficiently and effectively, 

7 ‘‘(C) the fuels identified with respect to the 

8 gasification technology for such project will 

9 comprise at least 90 percent of the fuels re10 quired by the project for the production of 

11 transportation grade liquid fuels, 

12 ‘‘(D) the award recipient’s project team is 

13 competent in the planning and construction of 

14 coal gasification facilities and familiar with op15 eration of the Fischer-Tropsch process, with 

16 preference given to those recipients with experi17 ence which demonstrates successful and reliable 

18 operations of such process, and 

19 ‘‘(E) the award recipient has met other cri20 teria established and published by the Sec21 retary. 

22 ‘‘(e) DENIAL OF DOUBLE BENEFIT.—No deduction 

23 or other credit shall be allowed with respect to the basis 

24 of any property taken into account in determining the 

25 credit allowed under this section.’’. 


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1 (c) CONFORMING AMENDMENTS.— 

2 (1) Section 49(a)(1)(C) is amended by striking 

3 ‘‘and’’ at the end of clause (v), by striking the pe4 riod at the end of clause (vi) and inserting ‘‘, and’’, 

5 and by adding after clause (vi) the following new 

6 clause: 

7 ‘‘(vii) the basis of any property which 

8 is part of a qualifying coal-to-liquid fuels 

9 project under section 48E.’’. 

10 (2) The table of sections for subpart E of part 

11 IV of subchapter A of chapter 1 is amended by in12 serting after the item relating to section 48D the 

13 following new item: 

‘‘Sec. 48E. Qualifying coal-to-liquid fuels project credit.’’. 

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

15 this section shall apply to periods after the date of the 

16 enactment of this Act, under rules similar to the rules of 

17 section 48(m) of the Internal Revenue Code of 1986 (as 

18 in effect on the day before the date of the enactment of 

19 the Revenue Reconciliation Act of 1990). 

20 SEC. 702. TEMPORARY EXPENSING FOR EQUIPMENT USED 

21 IN COAL-TO-LIQUID FUELS PROCESS. 

22 (a) IN GENERAL.—Part VI of subchapter B of chap23 ter 1 is amended by inserting after section 179F the fol24 lowing new section: 


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1 ‘‘SEC. 179G. ELECTION TO EXPENSE CERTAIN COAL-TO-LIQ2 UID FUELS FACILITIES. 

3 ‘‘(a) TREATMENT AS EXPENSES.—A taxpayer may 

4 elect to treat the cost of any qualified coal-to-liquid fuels 

5 process property as an expense which is not chargeable 

6 to capital account. Any cost so treated shall be allowed 

7 as a deduction for the taxable year in which the expense 

8 is incurred. 

9 ‘‘(b) ELECTION.— 

10 ‘‘(1) IN GENERAL.—An election under this sec11 tion for any taxable year shall be made on the tax12 payer’s return of the tax imposed by this chapter for 

13 the taxable year. Such election shall be made in such 

14 manner as the Secretary may by regulations pre15 scribe. 

16 ‘‘(2) ELECTION IRREVOCABLE.—Any election 

17 made under this section may not be revoked except 

18 with the consent of the Secretary. 

19 ‘‘(c) QUALIFIED COAL-TO-LIQUID FUELS PROCESS

20 PROPERTY.—The term ‘qualified coal-to-liquid fuels proc21 ess property’ means any property located in the United 

22 States— 

23 ‘‘(1) which employs the Fischer-Tropsch process 

24 to produce transportation grade liquid fuels from a 

25 feedstock that is primarily domestic coal (including 

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1 tation, or sequestration of by-products resulting 

2 from such process, including carbon emissions), 

3 ‘‘(2) the original use of which commences with 

4 the taxpayer, 

5 ‘‘(3) the construction of which— 

6 ‘‘(A) except as provided in subparagraph 

7 (B), is subject to a binding construction con8 tract entered into after the date of the enact9 ment of this section and before January 1, 

10 2011, but only if there was no written binding 

11 construction contract entered into on or before 

12 such date of enactment, or 

13 ‘‘(B) in the case of self-constructed prop14 erty, began after the date of the enactment of 

15 this section and before January 1, 2011, and 

16 ‘‘(4) which is placed in service by the taxpayer 

17 after the date of the enactment of this section and 

18 before January 1, 2016. 

19 ‘‘(d) ELECTION TO ALLOCATE DEDUCTION TO COOP20 ERATIVE OWNER.—If— 

21 ‘‘(1) a taxpayer to which subsection (a) applies 

22 is an organization to which part I of subchapter T 

23 applies, and 


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1 ‘‘(2) one or more persons directly holding an 

2 ownership interest in the taxpayer are organizations 

3 to which part I of subchapter T apply, 

4 the taxpayer may elect to allocate all or a portion of the 

5 deduction allowable under subsection (a) to such persons. 

6 Such allocation shall be equal to the person’s ratable share 

7 of the total amount allocated, determined on the basis of 

8 the person’s ownership interest in the taxpayer. The tax9 able income of the taxpayer shall not be reduced under 

10 section 1382 by reason of any amount to which the pre11 ceding sentence applies. 

12 ‘‘(e) BASIS REDUCTION.— 

13 ‘‘(1) IN GENERAL.—For purposes of this title, 

14 if a deduction is allowed under this section with re15 spect to any qualified coal-to-liquid fuels process 

16 property, the basis of such property shall be reduced 

17 by the amount of the deduction so allowed. 

18 ‘‘(2) ORDINARY INCOME RECAPTURE.—For 

19 purposes of section 1245, the amount of the deduc20 tion allowable under subsection (a) with respect to 

21 any property which is of a character subject to the 

22 allowance for depreciation shall be treated as a de23 duction allowed for depreciation under section 167. 

24 ‘‘(f) APPLICATION WITH OTHER DEDUCTIONS AND

25 CREDITS.— 


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1 ‘‘(1) OTHER DEDUCTIONS.—No deduction shall 

2 be allowed under any other provision of this chapter 

3 with respect to any expenditure with respect to 

4 which a deduction is allowed under subsection (a) to 

5 the taxpayer. 

6 ‘‘(2) CREDITS.—No credit shall be allowed 

7 under section 38 with respect to any amount for 

8 which a deduction is allowed under subsection (a). 

9 ‘‘(g) REPORTING.—No deduction shall be allowed 

10 under subsection (a) to any taxpayer for any taxable year 

11 unless such taxpayer files with the Secretary a report con12 taining such information with respect to the operation of 

13 the property of the taxpayer as the Secretary shall re14 quire.’’. 

15 (b) CONFORMING AMENDMENTS.— 

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

17 ‘‘and’’ at the end of paragraph (38), by striking the 

18 period at the end of paragraph (39) and inserting ‘‘, 

19 and’’, and by adding at the end the following new 

20 paragraph: 

21 ‘‘(40) to the extent provided in section 

22 179G(e)(1).’’. 

23 (2) Section 1245(a) is amended by inserting 

24 ‘‘179G,’’ after ‘‘179F,’’ both places it appears in 

25 paragraphs (2)(C) and (3)(C). 


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1 (3) Section 263(a)(1) is amended by striking 

2 ‘‘or’’ at the end of subparagraph (L), by striking the 

3 period at the end of subparagraph (M) and inserting 

4 ‘‘, or’’, and by inserting after subparagraph (M) the 

5 following new subparagraph: 

6 ‘‘(N) expenditures for which a deduction is 

7 allowed under section 179G.’’. 

8 (4) Section 312(k)(3)(B) is amended by strik9 ing ‘‘or 179G’’ each place it appears in the heading 

10 and text and inserting ‘‘179F, or 179G’’. 

11 (5) The table of sections for part VI of sub12 chapter B of chapter 1 is amended by inserting after 

13 the item relating to section 179F the following new 

14 item: 

‘‘Sec. 179G. Election to expense certain coal-to-liquid fuels facilities.’’. 

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

16 this section shall apply to properties placed in service after 

17 the date of the enactment of this Act. 

18 SEC. 703. EXTENSION OF ALTERNATIVE FUEL CREDIT FOR 

19 FUEL DERIVED FROM COAL THROUGH THE 

20 FISCHER-TROPSCH PROCESS. 

21 (a) ALTERNATIVE FUEL CREDIT.—Paragraph (4) of 

22 section 6426(d) is amended to read as follows: 

23 ‘‘(4) TERMINATION.—This subsection shall not 

24 apply to— 


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1 ‘‘(A) any sale or use involving liquid fuel 

2 derived from a feedstock that is primarily do3 mestic coal (including peat) through the Fisch4 er-Tropsch process for any period after Sep5 tember 30, 2020, 

6 ‘‘(B) any sale or use involving liquified hy7 drogen for any period after September 30, 

8 2014, and 

9 ‘‘(C) any other sale or use for any period 

10 after September 30, 2009.’’. 

11 (b) PAYMENTS.— 

12 (1) IN GENERAL.—Paragraph (5) of section 

13 6427(e) is amended by striking ‘‘and’’ and the end 

14 of subparagraph (C), by striking the period at the 

15 end of subparagraph (D) and inserting ‘‘, and’’, and 

16 by adding at the end the following new subpara17 graph: 

18 ‘‘(E) any alternative fuel or alternative fuel 

19 mixture (as so defined) involving liquid fuel de20 rived from coal (including peat) through the 

21 Fischer-Tropsch process sold or used after Sep22 tember 30, 2020.’’. 

23 (2) CONFORMING AMENDMENT.—Section 

24 6427(e)(5)(C) is amended by striking ‘‘subparaVerDate Aug 31 2005 01:26 Jun 14, 2007 Jkt 059200 PO 00000 Frm 00070 Fmt 6652 Sfmt 6201 E:\BILLS\H2652.IH H2652

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1 graph (D)’’ and inserting ‘‘subparagraphs (D) and 

2 (E)’’. 

3 SEC. 704. MODIFICATIONS TO ENHANCED OIL RECOVERY 

4 CREDIT. 

5 (a) ENHANCED CREDIT FOR CARBON DIOXIDE IN6 JECTIONS.—Section 43 is amended by adding at the end 

7 the following new subsection: 

8 ‘‘(f) ENHANCED CREDIT FOR PROJECTS USING

9 QUALIFIED CARBON DIOXIDE.— 

10 ‘‘(1) IN GENERAL.—For purposes of this sec11 tion— 

12 ‘‘(A) the term ‘qualified project’ includes a 

13 project described in paragraph (2), and 

14 ‘‘(B) in the case of a project described in 

15 paragraph (2), subsection (a) shall be applied 

16 by substituting ‘50 percent’ for ‘15 percent’. 

17 ‘‘(2) PROJECTS DESCRIBED.—A project is de18 scribed in this paragraph if it begins or is substan19 tially expanded after December 31, 2007, and 

20 ‘‘(A) uses qualified carbon dioxide in an 

21 enhanced oil, natural gas, or coalbed methane 

22 recovery method, which involves flooding or in23 jection, or 

24 ‘‘(B) enables the capture or sequestration 

25 of qualified carbon dioxide. 


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1 ‘‘(3) DEFINITIONS.—For purposes of this sub2 section— 

3 ‘‘(A) ENHANCED OIL RECOVERY.—The 

4 term ‘enhanced oil recovery’ means recovery of 

5 oil by injecting or flooding with qualified carbon 

6 dioxide. 

7 ‘‘(B) ENHANCED NATURAL GAS RECOV8 ERY.—The term ‘enhanced natural gas recov9 ery’ means recovery of natural gas by injecting 

10 or flooding with qualified carbon dioxide. 

11 ‘‘(C) ENHANCED COALBED METHANE RE12 COVERY.—The term ‘enhanced coalbed methane 

13 recovery’ means recovery of coalbed methane by 

14 injecting or flooding with qualified carbon diox15 ide. 

16 ‘‘(D) QUALIFIED CARBON DIOXIDE.—The 

17 term ‘qualified carbon dioxide’ means carbon di18 oxide which is produced from the gasification 

19 and subsequent refinement of a feedstock which 

20 is primarily domestic coal, at a facility which 

21 produces coal-to-liquid fuel. 

22 ‘‘(E) CAPTURE OR SEQUESTRATION.—The 

23 term ‘capture or sequestration’ means any 

24 equipment or facility necessary to— 


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1 ‘‘(i) capture or separate qualified car2 bon dioxide from other emissions, 

3 ‘‘(ii) transport qualified carbon diox4 ide, or 

5 ‘‘(iii) process and use qualified carbon 

6 dioxide in a qualified project. 

7 ‘‘(4) TERMINATION.—This subsection shall not 

8 apply to costs paid or incurred for any qualified 

9 project after December 31, 2020.’’. 

10 (b) CONFORMING AMENDMENTS.— 

11 (1) Section 43 is amended— 

12 (A) by striking ‘‘enhanced oil recovery 

13 credit’’ in subsection (a) and inserting ‘‘en14 hanced oil, natural gas, and coalbed methane 

15 recovery, and capture and sequestration credit’’, 

16 (B) by striking ‘‘qualified enhanced oil re17 covery costs’’ each place it appears and insert18 ing ‘‘qualified costs’’, 

19 (C) by striking ‘‘qualified enhanced oil re20 covery project’’ each place it appears and in21 serting ‘‘qualified project’’, and 

22 (D) by striking the heading and inserting: 


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1 ‘‘SEC. 43. ENHANCED OIL, NATURAL GAS, AND COALBED 

2 METHANE RECOVERY, AND CAPTURE AND SE3 QUESTRATION CREDIT.’’. 

4 (2) The item in the table of sections for subpart 

5 D of part IV of subchapter A of chapter 1 relating 

6 to section 43 is amended to read as follows: 

‘‘Sec. 43. Enhanced oil, natural gas, and coalbed methane recovery, and capture and sequestration credit.’’. 

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

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

9 years ending after December 31, 2007. 

10 SEC. 705. ALLOWANCE OF ENHANCED OIL, NATURAL GAS, 

11 AND COALBED METHANE RECOVERY, AND 

12 CAPTURE AND SEQUESTRATION CREDIT 

13 AGAINST THE ALTERNATIVE MINIMUM TAX. 

14 (a) IN GENERAL.—Subsection (c) of section 38 (re15 lating to limitation based on amount of tax) is amended 

16 by redesignating paragraphs (4) and (5) as paragraphs 

17 (5) and (6), respectively, and by inserting after paragraph 

18 (3) the following new paragraph: 

19 ‘‘(4) SPECIAL RULES FOR ENHANCED OIL, NAT20 URAL GAS, AND COALBED METHANE RECOVERY, AND

21 CAPTURE AND SEQUESTRATION CREDIT.—In the 

22 case of the enhanced oil, natural gas, and coalbed 

23 methane recovery, and capture and sequestration 

24 credit determined under section 43— 


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1 ‘‘(A) this section and section 39 shall be 

2 applied separately with respect to such credit, 

3 and 

4 ‘‘(B) in applying paragraph (1) to such 

5 credit— 

6 ‘‘(i) the tentative minimum tax shall 

7 be treated as being zero, and 

8 ‘‘(ii) the limitation under paragraph 

9 (1) (as modified by clause (i)) shall be re10 duced by the credit allowed under sub11 section (a) for the taxable year (other than 

12 the enhanced oil, natural gas, and coalbed 

13 methane recovery, and capture and seques14 tration credit and the specified credits).’’. 

15 (b) CONFORMING AMENDMENTS.— 

16 (1) Section 38(c)(2)(A)(ii)(II) is amended by 

17 inserting ‘‘the enhanced oil, natural gas, and coalbed 

18 methane recovery, and capture and sequestration 

19 credit,’’ after ‘‘employee credit,’’. 

20 (2) Section 38(c)(3)(A)(ii)(II) is amended by 

21 inserting ‘‘, the enhanced oil, natural gas, coalbed 

22 methane recovery, capture and sequestration credit,’’ 

23 after ‘‘employee credit’’. 


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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, 2007. 

Æ 


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