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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1736 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                S. 1736

  To amend the Internal Revenue Code of 1986 to enhance the Nation's 
  energy security by promoting renewable energy resources and energy 
                             conservation.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

            November 20 (legislative day, November 2), 1993

  Mr. Daschle introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
  To amend the Internal Revenue Code of 1986 to enhance the Nation's 
  energy security by promoting renewable energy resources and energy 
                             conservation.

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

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Energy and 
Environment Tax Act of 1993''.
    (b) Amendment of 1986 Code.--Except as otherwise provided, whenever 
in this Act an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision of the 
Internal Revenue Code of 1986.

           TITLE I--INCENTIVES FOR RENEWABLE ENERGY RESOURCES

SEC. 101. ALCOHOL FUELS CREDIT MAY OFFSET MINIMUM TAX.

    (a) In General.--Subsection (c) of section 38 (relating to 
limitation based on amount of tax) is amended by redesignating 
paragraph (3) as paragraph (4) and by inserting after paragraph (2) the 
following new paragraph:
            ``(3) Alcohol fuels credit may offset minimum tax.--
                    ``(A) In general.--In the case of the alcohol fuels 
                credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to such credit, 
                        and
                            ``(ii) for purposes of applying paragraph 
                        (1) to such credit--
                                    ``(I) 50 percent of the tentative 
                                minimum tax shall be substituted for 
                                the tentative minimum tax under 
                                subparagraph (A) thereof, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the alcohol 
                                fuels credit).
                    ``(B) Alcohol fuels credit.--For purposes of this 
                subsection, the term `alcohol fuels credit' means the 
                portion of the credit under subsection (a) which is 
                attributable to the alcohol fuels credit determined 
                under section 40(a).''.
    (b) Conforming Amendment.--Subclause (II) of section 
38(c)(2)(A)(ii) is amended by inserting ``or the alcohol fuels credit'' 
after ``empowerment zone employment credit''.
    (c) Effective Date.--
            (1) In general.--The amendment made by this section shall 
        apply to taxable years beginning after December 31, 1993.
            (2) Exception.--The amendment made by this section shall 
        not apply to--
                    (A) any credit which was determined in a taxable 
                year, or
                    (B) the portion of any credit which is carried back 
                to a taxable year,
        beginning on or before December 31, 1993.

SEC. 102. ENERGY CREDIT ALLOWED AGAINST MINIMUM TAX.

    (a) Energy Credit Allowable Against Entire Regular Tax and 
Alternative Minimum Tax.--Subsection (c) of section 38 (relating to 
limitation based on amount of tax), as amended by section 101, is 
amended by redesignating paragraph (4) as paragraph (5) and by 
inserting after paragraph (3) the following new paragraph:
            ``(4) Special rules for energy credit.--
                    ``(A) In general.--In the case of a C corporation, 
                this section and section 39 shall be applied 
                separately--
                            ``(i) first with respect to so much of the 
                        credit allowed by subsection (a) as is not 
                        attributable to the energy credit, and
                            ``(ii) then with respect to the energy 
                        credit.
                    ``(B) Rules for application of energy credit.--
                            ``(i) In general.--In the case of the 
                        energy credit, in lieu of applying the 
                        preceding paragraphs of this subsection, the 
                        amount of such credit allowed under subsection 
                        (a) for any taxable year shall not exceed the 
                        net chapter 1 tax for such year.
                            ``(ii) Net chapter 1 tax.--For purposes of 
                        clause (i), the term `net chapter 1 tax' means 
                        the sum of the regular tax liability for the 
                        taxable year and the tax imposed by section 55 
                        for the taxable year, reduced by the sum of the 
                        credits allowable under this part for the 
                        taxable year (other than under section 34 and 
                        other than the energy credit).
                    ``(C) Energy credit.--For purposes of this 
                subsection, the term `energy credit' means the credit 
                allowable under subsection (a) by reason of section 
                48(a).''.
    (b) Conforming Amendments.--
            (1) Subclause (II) of section 38(c)(2)(A)(ii), as amended 
        by section 101(b), is amended by striking ``or the alcohol 
        fuels credit'' and inserting ``, the alcohol fuels credit, or 
        the energy credit''.
            (2) Subclause (II) of section 38(c)(3)(A)(ii), as added by 
        section 101(a), is amended by inserting ``or the energy 
        credit'' after ``alcohol fuels credit''.
    (c) Effective Date.--
            (1) In general.--The amendment made by this section shall 
        apply to taxable years beginning after December 31, 1993.
            (2) Exception.--The amendment made by this section shall 
        not apply to--
                    (A) any credit which was determined in a taxable 
                year, or
                    (B) the portion of any credit which is carried back 
                to a taxable year,
        beginning on or before December 31, 1993.

SEC. 103. TAX CREDIT FOR BIODIESEL FUELS.

    (a) In General.--Section 40 (relating to credit for alcohol used as 
a fuel) is amended by adding at the end the following new subsection:
    ``(i) Special Rules for Biodiesel.--
            ``(1) In general.--In the case of biodiesel used as a 
        component of, or replacement for, diesel fuel (as defined in 
        section 4083(a)(3))--
                    ``(A) the biodiesel shall be treated in the same 
                manner as alcohol for purposes of this section, and
                    ``(B) subsection (h) shall apply in computing the 
                amount of any credit under this section with respect to 
                the biodiesel.
            ``(2) Biodiesel.--For purposes of this subsection, the term 
        `biodiesel' means a liquid derived from biological materials 
        (other than alcohol) for use in compression ignition 
        engines.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to biodiesel produced, and sold or used, in taxable years beginning 
after December 31, 1993.

SEC. 104. REPEAL OF ALCOHOL FUEL CREDIT INCOME INCLUSION FOR BIODIESEL 
              AND CERTAIN ALCOHOLS.

    (a) In General.--Section 87 (relating to inclusion in income of the 
alcohol fuels credit) is amended by adding at the end the following new 
subsection:
    ``(b) Exception for Biodiesel and Certain Alcohol-Based Ethers.--
Subsection (a) shall not apply to any portion of the alcohol fuel 
credit determined for the taxable year under section 40(a) which is 
attributable to--
            ``(1) biodiesel (as defined in section 40(i)(2)),
            ``(2) ethanol which is used to produce ethyl tertiary butyl 
        ether, or
            ``(3) alcohol which is used to produce any ether derived 
        from alcohol in a chemical reaction in which there is no 
        significant loss in the energy content of the alcohol.''.
    (b) Conforming Amendment.--Section 87 is amended by striking 
``Gross'' and inserting:
    ``(a) In General.--Gross''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.

SEC. 105. SMALL WIND TURBINES ELIGIBLE FOR ENERGY CREDIT.

    (a) In General.--Subparagraph (A) of section 48(a)(3) (defining 
energy property) is amended by striking ``or'' at the end of clause 
(i), by redesignating clause (ii) as clause (iii), and by inserting 
after clause (i) the following new clause:
                            ``(ii) equipment which uses wind energy to 
                        generate electricity but only if such equipment 
                        has a rated capacity of 50 kilowatts or less 
                        and is not primarily used in the trade or 
                        business of producing electricity for sale to 
                        an unrelated person, or''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to property placed in service after December 31, 1993.

SEC. 106. CLARIFICATION OF APPLICATION OF ENERGY CREDIT TO PROPERTY 
              USING SOLAR ENERGY.

    (a) In General.--Paragraph (3) of section 48(a) (relating to energy 
credit) is amended by adding at the end the following: ``For purposes 
of subparagraph (A)(i), equipment shall be treated as using solar 
energy if its average annual use of energy from sources other than 
solar energy does not exceed 50 percent of its total energy input.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to property placed in service after December 31, 1993.

          TITLE II--INCENTIVES TO PROMOTE ENERGY CONSERVATION

SEC. 201. ENERGY CONSERVATION EXPENDITURES BY ELECTRIC AND GAS 
              UTILITIES.

    (a) In General.--Part VI of subchapter B of chapter 1 (relating to 
itemized deductions for individuals and corporations) is amended by 
inserting after section 197 the following new section:

``SEC. 198. ENERGY CONSERVATION EXPENDITURES BY ELECTRIC AND GAS 
              UTILITIES.

    ``(a) General Rule.--In the case of an electric or gas utility, 
there shall be allowed as a deduction for the taxable year an amount 
equal to the energy conservation expenditures paid or incurred by the 
taxpayer during such taxable year.
    ``(b) Energy Conservation Expenditures.--For purposes of this 
section, the term `energy conservation expenditures' means expenditures 
for--
            ``(1) subsidies provided directly or indirectly to 
        customers for the purchase, installation, or modification of--
                    ``(A) any device or service primarily designed to 
                reduce consumption of electricity, natural gas, or 
                steam or to improve the management of energy demand, or
                    ``(B) any specially defined energy property (as 
                defined in section 136(c)(2)(A)),
            ``(2) energy use consulting and audits of commercial, 
        residential, and industrial properties, or
            ``(3) administrative, promotional, and other costs 
        associated with expenditures described in paragraph (1) or (2).
Such term shall not include any expenditure taken into account in 
determining the basis of any tangible property which is owned by the 
taxpayer and which is of a character subject to the allowance for 
depreciation.
    ``(c) Electric or Gas Utility.--For purposes of this section, the 
term `electric or gas utility' means any corporation engaged in the 
furnishing or sale of electric energy, natural gas, or steam if the 
rates for such furnishing or sale have been established or approved by 
a State or political subdivision thereof, by any agency or 
instrumentality of the United States, or by a public utility or public 
service commission or other similar body of any State or political 
subdivision thereof or of the District of Columbia.''.
    (b) Conforming Amendments.--
            (1) Paragraph (1) of section 263(a) is amended by striking 
        ``; or'' at the end of subparagraph (F) and inserting a comma, 
        by striking the period at the end of subparagraph (G) and 
        inserting ``, or'', and by adding at the end the following new 
        subparagraph:
                    ``(H) expenditures for which a deduction is allowed 
                under section 198.''.
            (2) The table of sections for part VI of subchapter B of 
        chapter 1 is amended by adding at the end the following new 
        item:

                              ``Sec. 198. Energy conservation 
                                        expenditures by electric and 
                                        gas utilities.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures paid or incurred in taxable years beginning after 
December 31, 1980.

SEC. 202. LARGE ELECTRIC TRUCKS, VANS, AND BUSES ELIGIBLE FOR DEDUCTION 
              FOR CLEAN-FUEL VEHICLES.

    (a) Deduction Allowed in Lieu of Credit.--Subsection (c) of section 
30 is amended by adding at the end the following new paragraph:
            ``(3) Exception for trucks, vans, and buses.--The term 
        `qualified electric vehicle' shall not include any vehicle 
        described in subclause (I) or (II) of section 
        179A(b)(1)(A)(iii).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 1993.

SEC. 203. CREDIT FOR PROPERTY USED IN CERTAIN AGRICULTURE-RELATED 
              ACTIVITIES TO CONTROL ENVIRONMENTAL POLLUTION AND FOR 
              SOIL AND WATER CONSERVATION EXPENDITURES.

    (a) In General.--Section 46 (relating to amount of investment 
credit) is amended by striking ``and'' at the end of paragraph (2), by 
striking the period at the end of paragraph (3) and inserting ``, 
and'', and by adding at the end the following new paragraph:
            ``(4) in the case of an eligible taxpayer (as defined in 
        section 48(c)), the agricultural environmental credit.''.
    (b) Agricultural Environmental Credit.--Section 48 is amended by 
adding at the end the following new subsection:
    ``(c) Agricultural Environmental Credit.--
            ``(1) In general.--For purposes of section 46, in the case 
        of an eligible taxpayer, the agricultural environmental credit 
        for any taxable year is equal to the lesser of--
                    ``(A) the sum of--
                            ``(i) 15 percent of the aggregate bases of 
                        all agricultural environmental properties 
                        placed in service by the taxpayer during such 
                        taxable year, and
                            ``(ii) 15 percent of the amount allowed as 
                        a deduction under section 175 (determined 
                        without regard to paragraph (4)(B)) for such 
                        taxable year, or
                    ``(B) the lesser of--
                            ``(i) $15,000, or
                            ``(ii) the excess of--
                                    ``(I) $150,000, over
                                    ``(II) the amount of the credit 
                                taken into account under this section 
                                by the taxpayer for taxable years 
                                preceding the taxable year.
            ``(2) Eligible taxpayer.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `eligible taxpayer' means any taxpayer 
                primarily engaged in a farming-related business.
                    ``(B) Farming-related business.--For purposes of 
                this subsection, the term `farming-related business' 
                means--
                            ``(i) a farming business (as defined in 
                        section 263A(e)(4)),
                            ``(ii) a trade or business of mixing 
                        fertilizers from purchased fertilizer 
                        materials, and
                            ``(iii) a trade or business of the 
                        wholesale distribution of animal feeds, 
                        fertilizers, agricultural chemicals, 
                        pesticides, seeds, or other farm supplies 
                        (other than grains).
            ``(3) Agricultural environmental property.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `agricultural environmental property' means 
                any new identifiable treatment facility--
                            ``(i) which is used in a farming-related 
                        business for the primary purpose of complying 
                        with Federal, State, and local environmental 
                        laws dealing with the abatement or control of 
                        water, soil, or atmospheric pollution or 
                        contamination by removing, altering, disposing, 
                        storing, or preventing the creation or emission 
                        of pollutants, contaminants, wastes, or heat, 
                        and
                            ``(ii) which does not significantly--
                                    ``(I) increase the output or 
                                capacity, extend the useful life, or 
                                reduce the total operating costs of 
                                plant or property to which such 
                                facility relates, or
                                    ``(II) alter the nature of any 
                                manufacturing or production process or 
                                facility.
                    ``(B) New identifiable treatment facility.--The 
                term `new identifiable treatment facility' has the 
                meaning given such term by section 169(e)(4)(A), 
                determined by substituting `December 31, 1993' for 
                `December 31, 1968' each place it appears.
            ``(4) Special rules.--
                    ``(A) Coordination with energy and rehabilitation 
                credits.--This subsection shall not apply to--
                            ``(i) any property to the extent the basis 
                        of such property is attributable to qualified 
                        rehabilitation expenditures (as defined in 
                        section 47(c)(2)), or
                            ``(ii) energy property.
                    ``(B) Coordination with deduction for soil and 
                water conservation expenditures.--The amount which 
                would (but for this subparagraph) be allowed as a 
                deduction under section 175 for any taxable year shall 
                be reduced by the lesser of the amount of the credit 
                determined under paragraph (1)(A)(ii) for the taxable 
                year or the credit allowed under paragraph (1) for the 
                taxable year.
                    ``(C) Coordination with amortization of pollution 
                control facilities.--This subsection shall not apply to 
                any property to the extent an election is made under 
                section 169 with respect to the basis of such 
                property.''.
    (c) Clerical Amendments.--
            (1) The section heading for section 48 is amended to read 
        as follows:

``SEC. 48. ENERGY CREDIT; REFORESTATION CREDIT; AGRICULTURAL 
              ENVIRONMENTAL CREDIT.''

            (2) The item relating to section 48 in the table of 
        sections for subpart E of part IV of subchapter A of chapter 1 
        is amended to read as follows:

                              ``Sec. 48. Energy credit; reforestation 
                                        credit; agricultural 
                                        environmental credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 1993, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 204. AMORTIZATION OF POLLUTION CONTROL FACILITIES.

    (a) In General.--Paragraph (1) of section 169(d) (defining 
certified pollution control facility) is amended by striking ``January 
1, 1976'' and inserting ``January 1, 1994''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to additions to basis in taxable years beginning after December 
31, 1993.

                                 <all>

S 1736 IS----2
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