II 

110TH CONGRESS 

1ST SESSION S. 701 

To amend the Internal Revenue Code of 1986 to impose a temporary oil 

profit fee and to use the proceeds of the fee collected to provide a 

Strategic Energy Fund and expand certain energy tax incentives, and 

for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 28, 2007 

Mrs. CLINTON 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 impose 

a temporary oil profit fee and to use the proceeds of 

the fee collected to provide a Strategic Energy Fund 

and expand certain energy tax incentives, 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; TABLE OF CONTENTS. 

4 (a) IN GENERAL.—This Act may be cited as the 

5 ‘‘Strategic Energy Fund Act of 2007’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 


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Sec. 1. Short title; table of contents. 

TITLE I—STRATEGIC ENERGY FUND 

Subtitle A—Establishment of Strategic Energy Fund 

Sec. 101. Strategic Energy Fund. 

Subtitle B—Incentives To Accelerate Biofuels Availability 

Sec. 111. Modification of alternative fuel vehicle refueling property credit. 

Sec. 112. Extension of biodiesel income and excise tax credits. 

Sec. 113. Extension of ethanol income and excise tax credits. 

Sec. 114. Small ethanol producer credit expanded for producers of sucrose and 

cellulosic ethanol. 

Subtitle C—Incentives To Deploy Fuel-Efficient Vehicles 

Sec. 121. Expansion of number of new qualified hybrid and advanced lean burn 

technology vehicles eligible for full alternative motor vehicle tax 

credit. 

Sec. 122. Advanced technology motor vehicles manufacturing credit. 

Subtitle D—Incentives for Clean Power 

Sec. 131. Extension and modification of production tax credit for electricity 

produced from certain renewable resources. 

Sec. 132. Extension and modification of investment tax credit with respect to 

solar energy property and qualified fuel cell property. 

Sec. 133. Credit for wind energy systems. 

Sec. 134. Extension and expansion of qualifying advanced coal project credit. 

Sec. 135. Geological disposal of global warming pollutants. 

Subtitle E—Incentives for Energy Efficient Buildings 

Sec. 141. Extension of energy efficient commercial buildings deduction. 

Sec. 142. Extension and expansion of new energy efficient home credit. 

Subtitle F—Clean Energy Research 

Sec. 151. Assistant Secretary for Advanced Energy Research, Technology Development, and Deployment. 

TITLE II—REALIGNING OIL COMPANY INCENTIVES 

Subtitle A—Excess Oil Profits 

Sec. 201. Temporary oil profit fee. 

Subtitle B—Energy Fairness for America 

Sec. 211. Elimination of deduction for intangible drilling and development costs 

for major oil companies. 

Sec. 212. Extension of election to expense certain refineries. 

Sec. 213. Elimination of amortization of geological and geophysical expenditures for major oil companies. 

Sec. 214. Modifications of foreign tax credit rules applicable to major oil companies which are dual capacity taxpayers. 


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Sec. 215. Denial of deduction for income attributable to domestic production of 

oil, natural gas, or primary products thereof. 

Sec. 216. Elimination of enhanced oil recovery credit for major oil companies. 

Subtitle C—Protection and Retention of Value of Publicly-Owned Energy 

Resources 

Sec. 221. Price thresholds for royalty suspension provisions. 

Sec. 222. Clarification of authority to impose price thresholds for certain lease 

sales. 

Sec. 223. Eligibility for new leases and the transfer of leases; conservation of 

resources fees. 

Sec. 224. Repeal of certain taxpayer subsidized royalty relief for the oil and gas 

industry. 

Subtitle D—Reduction in Incentives to Guzzle Gas 

Sec. 231. Reducing incentives to guzzle gas. 

1 TITLE I—STRATEGIC ENERGY 

2 FUND 

3 Subtitle A—Establishment of 

4 Strategic Energy Fund 

5 SEC. 101. STRATEGIC ENERGY FUND. 

6 (a) IN GENERAL.—Subchapter A of chapter 98 of the 

7 Internal Revenue Code of 1986 (relating to trust fund 

8 code) is amended by adding at the end the following new 

9 section: 

10 ‘‘SEC. 9511. STRATEGIC ENERGY FUND. 

11 ‘‘(a) ESTABLISHMENT.—There is established in the 

12 Treasury of the United States a trust fund to be known 

13 as the ‘Strategic Energy Fund’, consisting of such 

14 amounts as may be appropriated or credited to such Fund 

15 as provided in this section or section 9602(b). 

16 ‘‘(b) TRANSFERS TO FUND.— 


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1 ‘‘(1) IN GENERAL.—There are hereby appro2 priated to the Strategic Energy Fund amounts 

3 equivalent to— 

4 ‘‘(A) the fees received in the Treasury 

5 under section 5896, and 

6 ‘‘(B) the revenues received in the Treasury 

7 resulting from the implementation of sections 

8 221, 222, and 223 of the Strategic Energy 

9 Fund Act of 2007. 

10 ‘‘(2) LIMITATION.—The aggregate amount ap11 propriated under this subsection shall not exceed— 

12 ‘‘(A) for purposes described in subsection 

13 (c)(1)(A)— 

14 ‘‘(i) $1,000,000,000 during fiscal year 

15 2008, and 

16 ‘‘(ii) $2,000,000,000 during each of 

17 fiscal years 2009 through 2012, 

18 ‘‘(B) for purposes described in subsection 

19 (c)(1)(B), a total of $3,500,000,000 for the fis20 cal year period 2008 through 2017, and 

21 ‘‘(C) for purposes described in subsection 

22 (c)(1)(C), $2,500,000,000. 

23 ‘‘(c) EXPENDITURES.— 


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1 ‘‘(1) IN GENERAL.—Amounts in the Strategic 

2 Energy Fund shall be available, without further ap3 propriation, to carry out— 

4 ‘‘(A) the purposes authorized under section 

5 151 of the Strategic Energy Fund Act of 2007, 

6 ‘‘(B) projects under title XVII of the En7 ergy Policy Act of 2005 that have a design ca8 pacity to produce, in the aggregate, 

9 1,000,000,000 gallons of cellulosic biomass eth10 anol, without regard to section 1510(l) of the 

11 Energy Policy Act of 2005 (42 U.S.C. 

12 16501(l)), and 

13 ‘‘(C) the grants under section 701 of the 

14 Clean Air Act. 

15 ‘‘(2) UNEXPENDED FUNDS.—Any funds that 

16 have not been expended by September 30, 2017, 

17 shall be credited back to the general fund as mis18 cellaneous tax receipts.’’. 

19 (b) CLERICAL AMENDMENT.—The table of sections 

20 for such subchapter is amended by adding at the end the 

21 following new item: 

‘‘Sec. 9511. Strategic Energy Fund.’’. 

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

23 this section shall take effect on the date of the enactment 

24 of this Act. 


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1 Subtitle B—Incentives To 

2 Accelerate Biofuels Availability 

3 SEC. 111. MODIFICATION OF ALTERNATIVE FUEL VEHICLE 

4 REFUELING PROPERTY CREDIT. 

5 (a) INCREASE IN CREDIT AMOUNT.—Section 30C of 

6 the Internal Revenue Code of 1986 (relating to alternative 

7 fuel vehicle refueling property credit) is amended— 

8 (1) by striking ‘‘30 percent’’ in subsection (a) 

9 and inserting ‘‘50 percent’’, and 

10 (2) by striking ‘‘$30,000’’ in subsection (b)(1) 

11 and inserting ‘‘$50,000’’. 

12 (b) CREDIT ALLOWED FOR ELECTRIC DRIVE TRANS13 PORTATION PROPERTY.—Paragraph (1) of section 30C(c) 

14 of the Internal Revenue Code of 1986 (relating to quali15 fied alternative fuel vehicle refueling property) is amended 

16 by striking ‘‘, but only with respect to any fuel’’ and in17 serting ‘‘, except that in the case of property described 

18 in paragraph (3)(A) thereof, only with respect to fuels’’. 

19 (c) EXTENSION OF CREDIT.—Subsection (g) section 

20 30C of the Internal Revenue Code of 1986 (relating to 

21 termination) is amended to read as follows: 

22 ‘‘(g) TERMINATION OF AVAILABILITY OF CREDIT.— 

23 This section shall not apply to property placed in service 

24 after the earlier of December 31, 2015, or the date after 


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1 which more than 20,000 alternative refueling properties 

2 have been installed through use of this credit.’’. 

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

4 this section shall apply to property placed in service after 

5 the date of the enactment of this Act, in taxable years 

6 ending after such date. 

7 SEC. 112. EXTENSION OF BIODIESEL INCOME AND EXCISE 

8 TAX CREDITS. 

9 (a) IN GENERAL.—Sections 40A(g), 6426(c)(6), and 

10 6427(e)(5)(B) of the Internal Revenue Code of 1986 are 

11 each amended by striking ‘‘December 31, 2008’’ and in12 serting ‘‘December 31, 2015’’. 

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

14 this section shall take effect on January 1, 2009. 

15 SEC. 113. EXTENSION OF ETHANOL INCOME AND EXCISE 

16 TAX CREDITS. 

17 (a) IN GENERAL.—Sections 40(e)(1)(A), 6426(b)(5), 

18 and 6427(e)(5)(A) of the Internal Revenue Code of 1986 

19 are each amended by striking ‘‘December 31, 2010’’ and 

20 inserting ‘‘December 31, 2012’’. 

21 (b) CONFORMING AMENDMENT.—Section 

22 40(e)(1)(B) of the Internal Revenue Code of 1986 is 

23 amended by striking ‘‘January 1, 2011’’ and inserting 

24 ‘‘January 1, 2013’’. 


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

2 this section shall take effect on January 1, 2011. 

3 SEC. 114. SMALL ETHANOL PRODUCER CREDIT EXPANDED 

4 FOR PRODUCERS OF SUCROSE AND CEL5 LULOSIC ETHANOL. 

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

7 40(b)(4) of the Internal Revenue Code of 1986 (relating 

8 to small ethanol producer credit) is amended by inserting 

9 ‘‘(30,000,000 gallons for any sucrose or cellulosic ethanol 

10 producer)’’ after ‘‘15,000,000 gallons’’. 

11 (b) SUCROSE OR CELLULOSIC ETHANOL PRO12 DUCER.—Section 40(b)(4) of the Internal Revenue Code 

13 of 1986 is amended by adding at the end the following 

14 new subparagraph: 

15 ‘‘(E) SUCROSE OR CELLULOSIC ETHANOL

16 PRODUCER.— 

17 ‘‘(i) IN GENERAL.—For purposes of 

18 this paragraph, the term ‘sucrose or cel19 lulosic ethanol producer’ means a producer 

20 of ethanol using sucrose feedstock or a 

21 producer of cellulosic biomass ethanol (as 

22 defined in section 168(l)(3)). 

23 ‘‘(ii) SUCROSE FEEDSTOCK.—For pur24 poses of clause (i), the term ‘sucrose feed25 stock’ means any raw sugar, refined sugar, 


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1 or sugar equivalents (including juice and 

2 extract). Such term does not include any 

3 molasses, beet thick juice, or other similar 

4 products as determined by the Secretary.’’. 

5 (c) CONFORMING AMENDMENTS.— 

6 (1) Section 40(g)(2) of the Internal Revenue 

7 Code of 1986 is amended by striking ‘‘15,000,000 

8 gallon limitation’’ and inserting ‘‘15,000,000 and 

9 30,000,000 gallon limitations’’. 

10 (2) Section 40(g)(5)(B) of such Code is amend11 ed by striking ‘‘15,000,000 gallons’’ and inserting 

12 ‘‘the gallon limitation under subsection (b)(4)(C)’’. 

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

14 this section shall apply to taxable years beginning after 

15 the date of the enactment of this Act. 

16 Subtitle C—Incentives To Deploy 

17 Fuel-Efficient Vehicles 

18 SEC. 121. EXPANSION OF NUMBER OF NEW QUALIFIED HY19 BRID AND ADVANCED LEAN BURN TECH20 NOLOGY VEHICLES ELIGIBLE FOR FULL AL21 TERNATIVE MOTOR VEHICLE TAX CREDIT. 

22 (a) IN GENERAL.—Paragraph (2) of section 30B(f) 

23 of the Internal Revenue Code of 1986 (relating to phase24 out) is amended by striking ‘‘60,000’’ and inserting 

25 ‘‘250,000’’. 


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

2 this section shall take effect as if included in the amend3 ments made by section 1341(a) of the Energy Policy Act 

4 of 2005. 

5 SEC. 122. ADVANCED TECHNOLOGY MOTOR VEHICLES MAN6 UFACTURING CREDIT. 

7 (a) IN GENERAL.—Subpart B of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 

9 1986 (relating to foreign tax credit, etc.) is amended by 

10 adding at the end the following new section: 

11 ‘‘SEC. 30D. ADVANCED TECHNOLOGY MOTOR VEHICLES 

12 MANUFACTURING CREDIT. 

13 ‘‘(a) CREDIT ALLOWED.—There shall be allowed as 

14 a credit against the tax imposed by this chapter for the 

15 taxable year an amount equal to 35 percent of the quali16 fied investment of an eligible taxpayer for such taxable 

17 year. 

18 ‘‘(b) QUALIFIED INVESTMENT.—For purposes of this 

19 section— 

20 ‘‘(1) IN GENERAL.—The term ‘qualified invest21 ment’ means, with respect to any taxable year, the 

22 sum of— 

23 ‘‘(A) the costs paid or incurred by the eli24 gible taxpayer during such taxable year— 


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1 ‘‘(i) to re-equip, expand, or establish 

2 any manufacturing facility in the United 

3 States of the eligible taxpayer to produce 

4 advanced technology motor vehicles or to 

5 produce eligible components, and 

6 ‘‘(ii) for qualified research (as defined 

7 in section 41(d)) related to advanced tech8 nology motor vehicles and eligible compo9 nents performed in the United States, and 

10 ‘‘(B) qualified engineering integration 

11 costs performed in the United States. 

12 ‘‘(2) ATTRIBUTION RULES.—For purposes of 

13 paragraph (1)(A)(i), in the case of a manufacturing 

14 facility of the eligible taxpayer which produces both 

15 advanced technology motor vehicles and other motor 

16 vehicles, or eligible components and other compo17 nents, only the amount paid or incurred for the pro18 duction of advanced technology motor vehicles and 

19 eligible components shall be taken into account. 

20 ‘‘(c) ELIGIBLE TAXPAYER.—For purposes of this sec21 tion— 

22 ‘‘(1) IN GENERAL.—The term ‘eligible taxpayer’ 

23 means— 

24 ‘‘(A) any motor vehicle manufacturer if 

25 more than 50 percent of its gross receipts for 


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1 the taxable year is derived from the manufac2 ture of motor vehicles or any component parts 

3 of such vehicles, and 

4 ‘‘(B) any motor vehicle component parts 

5 manufacturer if more than 20 percent of its 

6 gross receipts for the taxable year is derived 

7 from the manufacture of any component parts 

8 of motor vehicles. 

9 ‘‘(2) MOTOR VEHICLE MANUFACTURER.—The 

10 term ‘motor vehicle manufacturer’ means any tax11 payer who manufacturers motor vehicles. 

12 ‘‘(3) MOTOR VEHICLE COMPONENT PARTS MAN13 UFACTURER.—The term ‘motor vehicle component 

14 parts manufacturer’ means any taxpayer who manu15 factures motor vehicle component parts, but is not 

16 a motor vehicle manufacturer. 

17 ‘‘(d) DEFINITIONS.—For purposes of this section— 

18 ‘‘(1) ADVANCED TECHNOLOGY MOTOR VEHI19 CLE.—The term ‘advanced technology motor vehicle’ 

20 means— 

21 ‘‘(A) any new qualified fuel cell motor vehi22 cle (as defined in section 30B(b)(3)); 

23 ‘‘(B) any new advanced lean burn tech24 nology motor vehicle (as defined in section 

25 30B(c)(3)); 


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1 ‘‘(C) any new qualified hybrid motor vehi2 cle (as defined in section 30B(d)(3)(A) and de3 termined without regard to any gross vehicle 

4 weight rating); 

5 ‘‘(D) any new qualified alternative motor 

6 fuel vehicle (as defined in section 30B(e)(4)); 

7 ‘‘(E) any plug-in hybrid electric vehicle; 

8 and 

9 ‘‘(F) any electric vehicle. 

10 ‘‘(2) ELIGIBLE COMPONENTS.—The term ‘eligi11 ble component’ means any component inherent to 

12 any advanced technology motor vehicle but not in13 herent to a motor vehicle which is not an advanced 

14 technology motor vehicle, including— 

15 ‘‘(A) with respect to any gasoline or diesel16 electric new qualified hybrid motor vehicle, 

17 any— 

18 ‘‘(i) electric motor or generator, 

19 ‘‘(ii) power split device, 

20 ‘‘(iii) power control unit, 

21 ‘‘(iv) power controls, 

22 ‘‘(v) integrated starter generator, or 

23 ‘‘(vi) battery, 

24 ‘‘(B) with respect to any hydraulic new 

25 qualified hybrid motor vehicle, any— 


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1 ‘‘(i) accumulator or other energy stor2 age device, 

3 ‘‘(ii) hydraulic pump, or 

4 ‘‘(iii) hydraulic pump-motor assembly, 

5 ‘‘(iv) power control unit, or 

6 ‘‘(v) power controls, 

7 ‘‘(C) with respect to any new advanced 

8 lean burn technology motor vehicle, any— 

9 ‘‘(i) diesel engine, 

10 ‘‘(ii) turbocharger, 

11 ‘‘(iii) fuel injection system, or 

12 ‘‘(iv) after-treatment system, such as 

13 a particle filter or NOX absorber, and 

14 ‘‘(D) with respect to any advanced tech15 nology motor vehicle, any other component sub16 mitted for approval by the Secretary. 

17 ‘‘(3) MOTOR VEHICLE.—The term ‘motor vehi18 cle’ has the meaning given such term by section 

19 30(c)(2). 

20 ‘‘(4) PLUG-IN HYBRID ELECTRIC VEHICLE.— 

21 ‘‘(A) IN GENERAL.—The term ‘plug-in hy22 brid electric vehicle’ means a light-duty, me23 dium-duty, or heavy-duty on-road or nonroad 

24 vehicle that is propelled by any combination 

25 of— 


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1 ‘‘(i) an electric motor and on-board, 

2 rechargeable energy storage system capable 

3 of operating the vehicle in intermittent or 

4 continuous all-electric mode and which is 

5 rechargeable using an off-board source of 

6 electricity, and 

7 ‘‘(ii) an internal combustion engine or 

8 heat engine using any combustible fuel. 

9 ‘‘(B) NONROAD VEHICLE.—The term 

10 ‘nonroad vehicle’ means a vehicle powered by a 

11 nonroad engine, as that term is defined in sec12 tion 216 of the Clean Air Act (42 U.S.C. 

13 7550). 

14 ‘‘(5) QUALIFIED ENGINEERING INTEGRATION

15 COSTS.—For purposes of subsection (b)(1)(B), the 

16 term ‘qualified engineering integration costs’ means, 

17 with respect to any advanced technology motor vehi18 cle, costs incurred prior to the market introduction 

19 of such motor vehicle for engineering tasks related 

20 to— 

21 ‘‘(A) establishing functional, structural, 

22 and performance requirements for components 

23 and subsystems to meet overall vehicle objec24 tives for a specific application, 


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1 ‘‘(B) designing interfaces for components 

2 and subsystems with mating systems within a 

3 specific vehicle application, 

4 ‘‘(C) designing cost effective, efficient, and 

5 reliable manufacturing processes to produce 

6 components and subsystems for a specific vehi7 cle application, and 

8 ‘‘(D) validating functionality and perform9 ance of components and subsystems for a spe10 cific vehicle application. 

11 ‘‘(e) LIMITATION BASED ON AMOUNT OF TAX.— 

12 ‘‘(1) IN GENERAL.—The credit allowed under 

13 subsection (a) for any taxable year shall not exceed 

14 the sum of— 

15 ‘‘(A) the taxpayer’s regular tax liability (as 

16 defined in section 26(b)) for the taxable year, 

17 plus 

18 ‘‘(B) the tax imposed under section 55 for 

19 the taxable year. 

20 ‘‘(2) CARRYOVER OF UNUSED CREDIT

21 AMOUNTS.— 

22 ‘‘(A) IN GENERAL.—If the credit allowable 

23 under subsection (a) for a taxable year exceeds 

24 the limitation under paragraph (1) for such tax25 able year, such excess shall be allowed— 


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1 ‘‘(i) as a credit carryback to each of 

2 the 13 taxable years preceding such year, 

3 and 

4 ‘‘(ii) as a credit carryforward to each 

5 of the 20 taxable years following such year. 

6 ‘‘(B) AMOUNT CARRIED TO EACH YEAR.— 

7 For purposes of this paragraph, rules similar to 

8 the rules of section 39(a)(2) shall apply. 

9 ‘‘(f) SPECIAL RULES.— 

10 ‘‘(1) REDUCTION IN BASIS.—For purposes of 

11 this subtitle, if a credit is allowed under this section 

12 for any expenditure with respect to any property, the 

13 increase in the basis of such property which would 

14 (but for this paragraph) result from such expendi15 ture shall be reduced by the amount of the credit so 

16 allowed. 

17 ‘‘(2) INVESTMENTS AND PROPERTY OUTSIDE

18 THE UNITED STATES.—No credit shall be allowed 

19 under subsection (a) with respect to— 

20 ‘‘(A) any manufacturing facility which is 

21 located outside the United States, and 

22 ‘‘(B) any engineering integration or re23 search and development conducted outside the 

24 United States. 


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1 ‘‘(3) AGGREGATION OF EXPENDITURES; ALLO2 CATIONS.—For purposes of this section, rules simi3 lar to the rules of paragraphs (1) and (2) of section 

4 41(f) shall apply. 

5 ‘‘(4) RECAPTURE.—The Secretary shall, by reg6 ulation, provide for recapturing the benefit of any 

7 credit allowable under subsection (a) with respect to 

8 any manufacturing facility which ceases to produce 

9 advanced technology motor vehicles or eligible com10 ponents. 

11 ‘‘(5) PUBLIC STATEMENT.— 

12 ‘‘(A) IN GENERAL.—No credit shall be al13 lowed under subsection (a) for any taxable year 

14 unless the eligible taxpayer makes publicly 

15 available a statement describing the activities of 

16 the eligible taxpayer for which the credit is al17 lowed and the public benefits of such activities, 

18 including the estimated amount of any reduc19 tion in national oil consumption in future years 

20 as a result of such activities. 

21 ‘‘(B) TIME FOR PUBLICATION.—The state22 ment required under subparagraph (A) shall be 

23 made available not later than 90 days after the 

24 end of the taxable year for which the credit 


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1 under subsection (a) is allowed and shall be in 

2 such form as the Secretary shall prescribe. 

3 ‘‘(6) NO DOUBLE BENEFIT.— 

4 ‘‘(A) COORDINATION WITH OTHER DEDUC5 TIONS AND CREDITS.—Except as provided in 

6 subparagraph (B), the amount of any deduction 

7 or other credit allowable under this chapter for 

8 any cost taken into account in determining the 

9 amount of the credit under subsection (a) shall 

10 be reduced by the amount of such credit attrib11 utable to such cost. 

12 ‘‘(B) RESEARCH AND DEVELOPMENT

13 COSTS.— 

14 ‘‘(i) IN GENERAL.—Except as pro15 vided in clause (ii), any amount described 

16 in subsection (b)(1)(A)(ii) taken into ac17 count in determining the amount of the 

18 credit under subsection (a) for any taxable 

19 year shall not be taken into account for 

20 purposes of determining the credit under 

21 section 41 for such taxable year. 

22 ‘‘(ii) COSTS TAKEN INTO ACCOUNT IN

23 DETERMINING BASE PERIOD RESEARCH

24 EXPENSES.—Any amounts described in 

25 subsection (b)(1)(A)(ii) taken into account 


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1 in determining the amount of the credit 

2 under subsection (a) for any taxable year 

3 which are qualified research expenses 

4 (within the meaning of section 41(b)) shall 

5 be taken into account in determining base 

6 period research expenses for purposes of 

7 applying section 41 to subsequent taxable 

8 years. 

9 ‘‘(g) ELECTION NOT TO TAKE CREDIT.—No credit 

10 shall be allowed under subsection (a) for any property if 

11 the taxpayer elects not to have this section apply to such 

12 property. 

13 ‘‘(h) REGULATIONS.—The Secretary shall prescribe 

14 such regulations as necessary to carry out the provisions 

15 of this section.’’. 

16 (b) CONFORMING AMENDMENTS.— 

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

18 Code of 1986, as amended by this Act, is amended 

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

20 striking the period at the end of paragraph (38) and 

21 inserting ‘‘, and’’, and by adding at the end the fol22 lowing new paragraph: 

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

24 30D(f)(1).’’. 


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1 (2) Section 6501(m) of such Code is amended 

2 by inserting ‘‘30D(g),’’ after ‘‘30C(e)(5),’’. 

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

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

5 amended by inserting after the item relating to sec6 tion 30C the following new item: 

‘‘Sec. 30D. Advanced technology motor vehicles manufacturing credit.’’. 

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

8 this section shall apply to amounts incurred in taxable 

9 years beginning after December 31, 1993. 

10 Subtitle D—Incentives for Clean 

11 Power 

12 SEC. 131. EXTENSION AND MODIFICATION OF PRODUCTION 

13 TAX CREDIT FOR ELECTRICITY PRODUCED 

14 FROM CERTAIN RENEWABLE RESOURCES. 

15 Section 45(d) of the Internal Revenue Code of 1986 

16 (relating to qualified facilities) is amended by striking 

17 ‘‘January 1, 2009’’ each place it appears and inserting 

18 ‘‘January 1, 2014’’. 

19 SEC. 132. EXTENSION AND MODIFICATION OF INVESTMENT 

20 TAX CREDIT WITH RESPECT TO SOLAR EN21 ERGY PROPERTY AND QUALIFIED FUEL CELL 

22 PROPERTY. 

23 (a) SOLAR ENERGY PROPERTY.—Paragraphs 

24 (2)(A)(i)(II) and (3)(A)(ii) of section 48(a) of the Internal 


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1 Revenue Code of 1986 are each amended by striking 

2 ‘‘January 1, 2009’’ and inserting ‘‘January 1, 2015’’. 

3 (b) ELIGIBLE FUEL CELL PROPERTY.—Paragraph 

4 (1)(E) of section 48(c) of the Internal Revenue Code of 

5 1986 is amended by striking ‘‘December 31, 2007’’ and 

6 inserting ‘‘December 31, 2015’’. 

7 (c) CREDITS ALLOWED AGAINST THE ALTERNATIVE

8 MINIMUM TAX.— 

9 (1) IN GENERAL.—Section 38(c)(4)(B) of the 

10 Internal Revenue Code of 1986 (defining specified 

11 credits), as amended by this Act, is amended by 

12 striking the period at the end of clause (iii) and in13 serting ‘‘, and,’’ and by adding at the end the fol14 lowing new clause: 

15 ‘‘(iv) the portion of the investment 

16 credit under section 46(2) as determined 

17 under section 48(a)(2)(A)(i).’’. 

18 (2) EFFECTIVE DATE.—The amendments made 

19 by this subsection shall apply to taxable years begin20 ning after December 31, 2006. 

21 (d) SOLAR INVESTMENT CREDIT ALLOWED FOR

22 PUBLIC UTILITY PROPERTY.— 

23 (1) IN GENERAL.—The second sentence of sec24 tion 48(a)(3) of the Internal Revenue Code of 1986 

25 is amended by inserting ‘‘(other than property deVerDate Aug 31 2005 22:45 Mar 07, 2007 Jkt 059196 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\S701.IS S701

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1 scribed in clause (i) or (ii) of subparagraph (A))’’ 

2 before ‘‘shall not’’. 

3 (2) EFFECTIVE DATE.—The amendments made 

4 by this subsection shall apply to periods after the 

5 date of the enactment of this Act, in taxable years 

6 ending after such date, under rules similar to the 

7 rules of section 48(m) of the Internal Revenue Code 

8 of 1986 (as in effect on the day before the date of 

9 the enactment of the Revenue Reconciliation Act of 

10 1990). 

11 SEC. 133. CREDIT FOR WIND ENERGY SYSTEMS. 

12 (a) RESIDENTIAL.— 

13 (1) IN GENERAL.—Section 25D(a) of the Inter14 nal Revenue Code of 1986 is amended by striking 

15 ‘‘and’’ at the end of paragraph (2), by striking the 

16 period at the end of paragraph (3) and inserting ‘‘, 

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

18 paragraph: 

19 ‘‘(4) 30 percent of the qualified small wind en20 ergy property expenditures made by the taxpayer 

21 during such year.’’. 

22 (2) LIMITATION.—Section 25D(b)(1) of the In23 ternal Revenue Code of 1986 is amended by striking 

24 ‘‘and’’ at the end of subparagraph (B), by striking 

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1 serting ‘‘, and’’, and by adding at the end the fol2 lowing new subparagraph: 

3 ‘‘(D) $500 with respect to each half kilo4 watt of capacity (not to exceed $2,000) of 

5 qualifying wind turbines for which qualified 

6 small wind energy property expenditures are 

7 made.’’. 

8 (3) QUALIFIED SMALL WIND ENERGY PROP9 ERTY EXPENDITURES.—Section 25D(d) of the Inter10 nal Revenue Code of 1986 is amended by adding at 

11 the end the following new paragraph: 

12 ‘‘(4) QUALIFIED SMALL WIND ENERGY PROP13 ERTY EXPENDITURE.— 

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

15 wind energy property expenditure’ means an ex16 penditure for property which uses a qualifying 

17 wind turbine to generate electricity for use in 

18 connection with a dwelling unit located in the 

19 United States and used as a residence by the 

20 taxpayer. 

21 ‘‘(B) QUALIFYING WIND TURBINE.—The 

22 term ‘qualifying wind turbine’ means a wind 

23 turbine of 100 kilowatts of rated capacity or 

24 less which meets the latest performance rating 

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1 ergy Association and which is used to generate 

2 electricity and carries at least a 5-year limited 

3 warranty covering defects in design, material, 

4 or workmanship, and, for property that is not 

5 installed by the taxpayer, at least a 5-year lim6 ited warranty covering defects in installation.’’. 

7 (b) BUSINESS.—Section 48(a)(3)(A) of the Internal 

8 Revenue Code of 1986 (defining energy property) is 

9 amended by striking ‘‘or’’ at the end of clause (iii), by 

10 adding ‘‘or’’ at the end of clause (iv), and by inserting 

11 after clause (iv) the following new clause: 

12 ‘‘(v) qualifying wind turbine (as de13 fined in section 25D(d)(B)),’’. 

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

15 this section shall apply to property placed in service after 

16 the date of the enactment of this Act, in taxable years 

17 ending after such date. 

18 SEC. 134. EXTENSION AND EXPANSION OF QUALIFYING AD19 VANCED COAL PROJECT CREDIT. 

20 (a) EXPANDING AGGREGATE CREDITS.—Section 

21 48A(d)(3)(A) of the Internal Revenue Code of 1986 (relat22 ing to aggregate credits) is amended by striking 

23 ‘‘$1,300,000,000’’ and inserting ‘‘$2,300,000,000’’. 

24 (b) AUTHORIZATION OF ADDITIONAL PROJECTS.— 

25 Subparagraph (B) of section 48A(d)(3) of the Internal 


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1 Revenue Code of 1986 (relating to aggregate credits) is 

2 amended to read as follows: 

3 ‘‘(B) PARTICULAR PROJECTS.—Of the dol4 lar amount in subparagraph (A), the Secretary 

5 is authorized to certify— 

6 ‘‘(i) $800,000,000 for integrated gas7 ification combined cycle projects the appli8 cation for which is submitted during the 

9 period described in paragraph (2)(A)(i), 

10 ‘‘(ii) $500,000,000 for projects which 

11 use other advanced coal-based generation 

12 technologies the application for which is 

13 submitted during the period described in 

14 paragraph (2)(A)(i), and 

15 ‘‘(iii) $1,000,000,000 for integrated 

16 gasification combined cycle projects and 

17 other advanced coal-based generation tech18 nology projects that include equipment to 

19 separate and sequester a significant frac20 tion of such a project’s carbon dioxide 

21 emissions the application for which is sub22 mitted during the period described in para23 graph (2)(A)(ii).’’. 

24 (c) APPLICATION PERIOD FOR ADDITIONAL

25 PROJECTS.—Subparagraph (A) of section 48A(d)(2) of 


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1 the Internal Revenue Code of 1986 (relating to certifi2 cation) is amended to read as follows: 

3 ‘‘(A) APPLICATION PERIOD.—Each appli4 cant for certification under this paragraph shall 

5 submit an application meeting the requirements 

6 of subparagraph (B). An applicant may only 

7 submit an application— 

8 ‘‘(i) for an allocation from the dollar 

9 amount specified in clause (i) or (ii) of 

10 paragraph (3)(A) during the 3-year period 

11 beginning on the date the Secretary estab12 lishes the program under paragraph (1), 

13 and 

14 ‘‘(ii) for an allocation from the dollar 

15 amount specified in paragraph (3)(A)(iii) 

16 during the 3-year period beginning at the 

17 earlier of the termination of the period de18 scribed in clause (i) or the date prescribed 

19 by the Secretary.’’. 

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

21 this section shall take effect as if included in the amend22 ments made by section 1307 of the Energy Policy Act of 

23 2005. 


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1 SEC. 135. GEOLOGICAL DISPOSAL OF GLOBAL WARMING 

2 POLLUTANTS. 

3 The Clean Air Act (42 U.S.C. 7401 et seq.) is amend4 ed by adding at the end the following: 

5 ‘‘TITLE VII—GEOLOGICAL DIS6 POSAL OF GLOBAL WARMING 

7 POLLUTANTS 

8 ‘‘SEC. 701. GEOLOGICAL DISPOSAL OF GLOBAL WARMING 

9 POLLUTANTS. 

10 ‘‘(a) GEOLOGICAL CARBON DIOXIDE DISPOSAL DE11 PLOYMENT PROJECTS.— 

12 ‘‘(1) IN GENERAL.—The Administrator shall es13 tablish a competitive grant program to provide 

14 grants to 5 entities for the deployment of projects to 

15 geologically dispose of carbon dioxide (referred to in 

16 this subsection as ‘geological disposal deployment 

17 projects’), including through the use of equipment to 

18 separate, pressurize, transport, and sequester carbon 

19 dioxide. 

20 ‘‘(2) LOCATION.—Each geological disposal de21 ployment project shall be conducted in a geologically 

22 distinct location in order to demonstrate the suit23 ability of a variety of geological structures for car24 bon dioxide disposal. 

25 ‘‘(3) COMPONENTS.—Each geological disposal 

26 deployment project shall include an analysis of— 


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1 ‘‘(A) mechanisms for trapping the carbon 

2 dioxide to be geologically disposed; 

3 ‘‘(B) techniques for monitoring the geologi4 cally disposed carbon dioxide; 

5 ‘‘(C) public response to the geological dis6 posal deployment project; and 

7 ‘‘(D) the permanency of carbon dioxide 

8 storage in geological reservoirs. 

9 ‘‘(4) REQUIREMENTS.— 

10 ‘‘(A) IN GENERAL.—The Administrator 

11 shall establish— 

12 ‘‘(i) appropriate conditions for envi13 ronmental protection with respect to geo14 logical disposal deployment projects to pro15 tect public health and the environment; 

16 and 

17 ‘‘(ii) requirements relating to applica18 tions for grants under this subsection. 

19 ‘‘(B) RULEMAKING.—The establishment of 

20 requirements under subparagraph (A) shall not 

21 require a rulemaking. 

22 ‘‘(C) MINIMUM REQUIREMENTS.—At a 

23 minimum, each application for a grant under 

24 this subsection shall include— 


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1 ‘‘(i) a description of the geological dis2 posal deployment project proposed in the 

3 application; 

4 ‘‘(ii) an estimate of the quantity of 

5 carbon dioxide to be geologically disposed 

6 over the life of the geological disposal de7 ployment project; and 

8 ‘‘(iii) a plan to collect and disseminate 

9 data relating to each geological disposal 

10 deployment project to be funded by the 

11 grant. 

12 ‘‘(5) PARTNERS.—An applicant for a grant 

13 under this subsection may carry out a geological dis14 posal deployment project under a pilot program in 

15 partnership with 1 or more public or private entities. 

16 ‘‘(6) SELECTION CRITERIA.—In evaluating ap17 plications under this subsection, the Administrator 

18 shall— 

19 ‘‘(A) consider the previous experience of 

20 each applicant with similar projects; and 

21 ‘‘(B) give priority consideration to applica22 tions for geological disposal deployment projects 

23 that— 


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1 ‘‘(i) offer the greatest geological diver2 sity from other projects that have pre3 viously been approved; 

4 ‘‘(ii) are located in closest proximity 

5 to a source of carbon dioxide; 

6 ‘‘(iii) make use of the most affordable 

7 source of carbon dioxide; 

8 ‘‘(iv) are expected to geologically dis9 pose of the largest quantity of carbon diox10 ide; 

11 ‘‘(v) are combined with demonstra12 tions of advanced coal electricity genera13 tion technologies; 

14 ‘‘(vi) demonstrate the greatest com15 mitment on the part of the applicant to en16 sure funding for the proposed demonstra17 tion project and the greatest likelihood 

18 that the demonstration project will be 

19 maintained or expanded after Federal as20 sistance under this subsection is com21 pleted; and 

22 ‘‘(vii) minimize any adverse environ23 mental effects from the project. 

24 ‘‘(7) PERIOD OF GRANTS.— 


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1 ‘‘(A) IN GENERAL.—A geological disposal 

2 deployment project funded by a grant under 

3 this subsection shall begin construction not 

4 later than 3 years after the date on which the 

5 grant is provided. 

6 ‘‘(B) TERM.—The Administrator shall not 

7 provide grant funds to any applicant under this 

8 subsection for a period of more than 5 years. 

9 ‘‘(8) TRANSFER OF INFORMATION AND KNOWL10 EDGE.—The Administrator shall establish mecha11 nisms to ensure that the information and knowledge 

12 gained by participants in the program under this 

13 subsection are published and disseminated, including 

14 to other applicants that submitted applications for a 

15 grant under this subsection. 

16 ‘‘(9) SCHEDULE.— 

17 ‘‘(A) PUBLICATION.—Not later than 180 

18 days after the date of enactment of this title, 

19 the Administrator shall publish in the Federal 

20 Register, and elsewhere as appropriate, a re21 quest for applications to carry out geological 

22 disposal deployment projects. 

23 ‘‘(B) DATE FOR APPLICATIONS.—An appli24 cation for a grant under this subsection shall be 

25 submitted not later than 180 days after the 


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1 date of publication of the request under sub2 paragraph (A). 

3 ‘‘(C) SELECTION.—After the date by which 

4 applications for grants are required to be sub5 mitted under subparagraph (B), the Adminis6 trator, in a timely manner, shall select, after 

7 peer review and based on the criteria under 

8 paragraph (6), those geological disposal deploy9 ment projects to be provided a grant under this 

10 subsection. 

11 ‘‘(b) INTERIM STANDARDS.—Not later than 3 years 

12 after the date of enactment of this title, the Administrator, 

13 in consultation with the Secretary of Energy, shall, by reg14 ulation, establish interim geological carbon dioxide dis15 posal standards that address— 

16 ‘‘(1) site selection; 

17 ‘‘(2) permitting processes; 

18 ‘‘(3) monitoring requirements; 

19 ‘‘(4) public participation; and 

20 ‘‘(5) such other issues as the Administrator and 

21 the Secretary of Energy determine to be appro22 priate. 

23 ‘‘(c) FINAL STANDARDS.—Not later than 6 years 

24 after the date of enactment of this title, taking into ac25 count the results of geological disposal deployment 


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1 projects carried out under subsection (a), the Adminis2 trator shall, by regulation, establish final geological carbon 

3 dioxide disposal standards. 

4 ‘‘(d) CONSIDERATIONS.—In developing standards 

5 under subsections (b) and (c), the Administrator shall con6 sider the experience in the United States in regulating— 

7 ‘‘(1) underground injection of waste; 

8 ‘‘(2) enhanced oil recovery; 

9 ‘‘(3) short-term storage of natural gas; and 

10 ‘‘(4) long-term waste storage. 

11 ‘‘(e) TERMINATION OF AUTHORITY.—This section 

12 and the authority provided by this section terminate on 

13 December 31, 2030.’’. 

14 Subtitle E—Incentives for Energy 

15 Efficient Buildings 

16 SEC. 141. EXTENSION OF ENERGY EFFICIENT COMMERCIAL 

17 BUILDINGS DEDUCTION. 

18 Section 179D(h) of the Internal Revenue Code of 

19 1986 (relating to termination) is amended by striking 

20 ‘‘December 31, 2008’’ and inserting ‘‘December 31, 

21 2015’’. 

22 SEC. 142. EXTENSION AND EXPANSION OF NEW ENERGY EF23 FICIENT HOME CREDIT. 

24 (a) EXTENSION.—Section 45L(g) of the Internal 

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1 ed by striking ‘‘December 31, 2008’’ and inserting ‘‘De2 cember 31, 2015’’. 

3 (b) INCLUSION OF 30 PERCENT HOMES.— 

4 (1) IN GENERAL.—Section 45L(c) of the Inter5 nal Revenue Code of 1986 (relating to energy saving 

6 requirements) is amended— 

7 (A) by striking ‘‘or’’ at the end of para8 graph (2); 

9 (B) by redesignating paragraph (3) as 

10 paragraph (4); and 

11 (C) by inserting after paragraph (2) the 

12 following new paragraph: 

13 ‘‘(3) certified— 

14 ‘‘(A) to have a level of annual heating and 

15 cooling energy consumption which is at least 30 

16 percent below the annual level described in 

17 paragraph (1), and 

18 ‘‘(B) to have building envelope component 

19 improvements account for at least 1/3 of such 

20 30 percent, or.’’. 

21 (2) APPLICABLE AMOUNT OF CREDIT.—Section 

22 45L(a)(2) is amended by striking ‘‘paragraph (3)’’ 

23 and inserting ‘‘paragraph (3) or (4)’’. 

24 (3) EFFECTIVE DATE.—The amendments made 

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1 ergy efficient homes acquired after the date of the 

2 enactment of this Act. 

3 Subtitle F—Clean Energy Research 

4 SEC. 151. ASSISTANT SECRETARY FOR ADVANCED ENERGY 

5 RESEARCH, TECHNOLOGY DEVELOPMENT, 

6 AND DEPLOYMENT. 

7 (a) ESTABLISHMENT.— 

8 (1) IN GENERAL.—The Secretary of Energy 

9 shall establish in the Department of Energy the po10 sition of Assistant Secretary for Advanced Energy 

11 Research, Technology Development, and Deployment 

12 (referred to in this section as the ‘‘Assistant Sec13 retary’’), to be headed by, and to report to, the Sec14 retary. 

15 (2) QUALIFICATIONS.—The Assistant Secretary 

16 shall be an individual with— 

17 (A) an advanced education degree in en18 ergy technology; and 

19 (B) substantial commercial research and 

20 technology development and deployment experi21 ence. 

22 (b) MISSION.—The mission of the Assistant Sec23 retary is— 


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1 (1) to implement an innovative energy research, 

2 technology development, and deployment program 

3 to— 

4 (A) increase national security by signifi5 cantly reducing petroleum and imported fuels 

6 consumption; 

7 (B) significantly improve the efficiency of 

8 electricity use and the reliability of the elec9 tricity system; and 

10 (C) significantly reduce greenhouse gas 

11 emissions; and 

12 (2) to sponsor a diverse portfolio of cutting13 edge, high-payoff research, development, and deploy14 ment projects to carry out the program. 

15 (c) EXPERIMENTAL PERSONNEL AUTHORITY.—The 

16 Assistant Secretary may staff the office of the Assistant 

17 Secretary primarily using a program of experimental use 

18 of special personnel management authority in order to fa19 cilitate recruitment of eminent experts in science or engi20 neering for management of research and development 

21 projects and programs administered by the Assistant Sec22 retary under similar terms and conditions as the authority 

23 is exercised under section 1101 of the Strom Thurmond 

24 National Defense Authorization Act for Fiscal Year 1999 


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1 (Public Law 105–261; 5 U.S.C. 3104 note), as determined 

2 by the Assistant Secretary. 

3 (d) TRANSACTIONS OTHER THAN CONTRACTS AND

4 GRANTS.—To carry out projects under this section, the 

5 Assistant Secretary may enter into transactions to carry 

6 out advanced research projects under this subsection 

7 under similar terms and conditions as the authority is ex8 ercised under section 646(g) of the Department of Energy 

9 Organization Act (42 U.S.C. 7256(g)). 

10 (e) PRIZES FOR ADVANCED TECHNOLOGY ACHIEVE11 MENTS.— 

12 (1) IN GENERAL.—Subject to paragraphs (2) 

13 through (4), the Assistant Secretary may carry out 

14 a program to award cash prizes in recognition of 

15 outstanding achievements in basic, advanced, and 

16 applied research, technology development, and proto17 type development that have the potential to advance 

18 the mission described in subsection (b) under similar 

19 terms and conditions as the authority is exercised 

20 under section 1008 of the Energy Policy Act of 

21 2005 (42 U.S.C. 16396). 

22 (2) COMPETITION REQUIREMENTS.—In car23 rying out this subsection, the Assistant Secretary 

24 shall— 


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1 (A) use a competitive process for the selec2 tion of recipients of cash prizes; and 

3 (B) conduct widely-advertised solicitation 

4 of submissions of research results, technology 

5 developments, and prototypes. 

6 (3) MAXIMUM AMOUNT FOR ALL CASH

7 PRIZES.—The total amount of all cash prizes award8 ed for a fiscal year under this subsection may not 

9 exceed $50,000,000. 

10 (4) MAXIMUM AMOUNT OF INDIVIDUAL CASH

11 PRIZES.—The amount of an individual cash prize 

12 awarded under this subsection may not exceed 

13 $10,000,000 unless the amount of the award is ap14 proved by the Secretary of Energy. 

15 (f) COMMERCIALIZATION OF CELLULOSIC BIOMASS

16 ETHANOL.—Of the amounts that are made available to 

17 carry out this section, the Assistant Secretary shall use 

18 not less that $2,000,000,000 to conduct research and de19 velopment to increase yields, reduce production costs, and 

20 take other steps to accelerate the commercialization of cel21 lulosic biomass ethanol (as defined in section 211(o)(1) 

22 of the Clean Air Act (42 U.S.C. 7545(o)(1))). 

23 (g) ADVANCED AUTOMOTIVE BATTERY RESEARCH.— 

24 Of the amounts that are made available to carry out this 

25 section, the Assistant Secretary shall use not less than 


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1 $500,000,000 to conduct research and development on ad2 vanced battery technology for use in hybrid-electric vehi3 cles. 

4 (h) ANNUAL REPORTS.—As soon as practicable after 

5 the end of each fiscal year for which the Assistant Sec6 retary receives funds under subsection (i), the Assistant 

7 Secretary shall submit to the Committee on Energy and 

8 Natural Resources of the Senate and the Committee on 

9 Energy and Commerce, and the Committee on Science, of 

10 the House of Representatives a report on the progress, 

11 challenges, future milestones, and strategic plan of the As12 sistant Secretary, including— 

13 (1) a description of, and rationale for, any 

14 changes in the strategic plan; 

15 (2) the adequacy of human and financial re16 sources necessary to achieve the mission described in 

17 subsection (b); and 

18 (3) in the case of cash prizes awarded under 

19 subsection (e), a description of— 

20 (A) the applications of the research, tech21 nology, or prototypes for which prizes were 

22 awarded; 

23 (B) the total amount of the prizes that 

24 were awarded; 


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1 (C) the methods used for solicitation and 

2 evaluation of submissions and an assessment of 

3 the effectiveness of those methods; and 

4 (D) recommendations to improve the prize 

5 program. 

6 (i) RELATIONSHIP TO OTHER AUTHORITY.—The 

7 program under this section may be carried out in conjunc8 tion with, or in addition to, the exercise of any other au9 thority of the Assistant Secretary to acquire, support, or 

10 stimulate basic, advanced, and applied research, tech11 nology development, or prototype projects. 

12 TITLE II—REALIGNING OIL 

13 COMPANY INCENTIVES 

14 Subtitle A—Excess Oil Profits 

15 SEC. 201. TEMPORARY OIL PROFIT FEE. 

16 (a) IN GENERAL.—Subtitle E of the Internal Rev17 enue Code of 1986 (relating to alcohol, tobacco, and cer18 tain other excise taxes) is amended by adding at the end 

19 the following new chapter: 

20 ‘‘CHAPTER 56—TEMPORARY FEE ON 

21 EXCESS OIL PROFIT 

‘‘Sec. 5896. Imposition of fee. 

‘‘Sec. 5897. Excess profit; etc. 

‘‘Sec. 5898. Special rules and definitions. 

22 ‘‘SEC. 5896. IMPOSITION OF FEE. 

23 ‘‘(a) IN GENERAL.—In addition to any other tax im24 posed under this title, there is hereby imposed on any apVerDate Aug 31 2005 22:45 Mar 07, 2007 Jkt 059196 PO 00000 Frm 00041 Fmt 6652 Sfmt 6201 E:\BILLS\S701.IS S701

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1 plicable taxpayer an excise fee in an amount equal to 50 

2 percent of the excess profit of such taxpayer for any tax3 able year beginning during 2007 or 2008. 

4 ‘‘(b) APPLICABLE TAXPAYER.—For purposes of this 

5 chapter, the term ‘applicable taxpayer’ means, with re6 spect to operations in the United States— 

7 ‘‘(1) any integrated oil company (as defined in 

8 section 291(b)(4)), and 

9 ‘‘(2) any other producer or refiner of crude oil 

10 with gross receipts from the sale of such crude oil 

11 or refined oil products for the taxable year exceeding 

12 $100,000,000. 

13 ‘‘SEC. 5897. EXCESS PROFIT; ETC. 

14 ‘‘(a) GENERAL RULE.—For purposes of this chapter, 

15 the term ‘excess profit’ means the excess of the adjusted 

16 taxable income of the applicable taxpayer for the taxable 

17 year over the reasonably inflated average profit for such 

18 taxable year. 

19 ‘‘(b) ADJUSTED TAXABLE INCOME.—For purposes of 

20 this chapter, with respect to any applicable taxpayer, the 

21 adjusted taxable income for any taxable year is equal to 

22 the taxable income for such taxable year (within the mean23 ing of section 63 and determined without regard to this 

24 subsection)— 


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1 ‘‘(1) increased by any interest expense deduc2 tion, charitable contribution deduction, and any net 

3 operating loss deduction carried forward from any 

4 prior taxable year, and 

5 ‘‘(2) reduced by— 

6 ‘‘(A) any interest income, dividend income, 

7 and net operating losses to the extent such 

8 losses exceed taxable income for the taxable 

9 year, and 

10 ‘‘(B) any qualified domestic energy invest11 ment for such taxable year. 

12 In the case of any applicable taxpayer which is a foreign 

13 corporation, the adjusted taxable income shall be deter14 mined with respect to such income which is effectively con15 nected with the conduct of a trade or business in the 

16 United States. 

17 ‘‘(c) REASONABLY INFLATED AVERAGE PROFIT.— 

18 For purposes of this chapter, with respect to any applica19 ble taxpayer, the reasonably inflated average profit for any 

20 taxable year is an amount equal to the average of the ad21 justed taxable income of such taxpayer for taxable years 

22 beginning during the 2000–2004 taxable year period (de23 termined without regard to the taxable year with the high24 est adjusted taxable income in such period) plus 10 per25 cent of such average. 


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1 ‘‘(d) QUALIFIED DOMESTIC ENERGY INVESTMENT.— 

2 ‘‘(1) IN GENERAL.—For purposes of this chap3 ter, the term ‘qualified domestic energy investment’ 

4 means any amount paid or incurred with respect 

5 to— 

6 ‘‘(A) any qualified facility described in 

7 paragraph (1), (2), (3), or (4) of section 45(d) 

8 (determined without regard to any placed in 

9 service date requirement under such section), 

10 and 

11 ‘‘(B) any facility for the production of al12 cohol used as a fuel (within the meaning of sec13 tion 40) or biodiesel or agri-biodiesel used as a 

14 fuel (within the meaning of section 40A), 

15 originally placed in service by the taxpayer after the 

16 date of the enactment of this section and for which 

17 no binding contract was entered into before such 

18 date. 

19 ‘‘(2) DENIAL OF DOUBLE BENEFIT.—No deduc20 tion or credit under this title shall be allowed for 

21 that portion of the amount taken into account in de22 termining any qualified domestic energy investment 

23 under this section. 


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1 ‘‘SEC. 5898. SPECIAL RULES AND DEFINITIONS. 

2 ‘‘(a) WITHHOLDING AND DEPOSIT OF FEE.—The 

3 Secretary shall provide such rules as are necessary for the 

4 withholding and deposit of the fee imposed under section 

5 5896. 

6 ‘‘(b) RECORDS AND INFORMATION.—Each taxpayer 

7 liable for the fee under section 5896 shall keep such 

8 records, make such returns, and furnish such information 

9 as the Secretary may by regulations prescribe. 

10 ‘‘(c) RETURN OF FEE.—The Secretary shall provide 

11 for the filing and the time of such filing of the return of 

12 the fee imposed under section 5896. 

13 ‘‘(d) CRUDE OIL.—The term ‘crude oil’ includes 

14 crude oil condensates and natural gasoline. 

15 ‘‘(e) BUSINESSES UNDER COMMON CONTROL.—For 

16 purposes of this chapter, all members of the same con17 trolled group of corporations (within the meaning of sec18 tion 267(f)) and all persons under common control (within 

19 the meaning of section 52(b) but determined by treating 

20 an interest of more than 50 percent as a controlling inter21 est) shall be treated as 1 person. 

22 ‘‘(f) REGULATIONS.—The Secretary shall prescribe 

23 such regulations as may be necessary or appropriate to 

24 carry out the purposes of this chapter.’’. 


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1 (b) CLERICAL AMENDMENT.—The table of chapters 

2 for subtitle E of the Internal Revenue Code of 1986 is 

3 amended by adding at the end the following new item: 

‘‘CHAPTER 56. TEMPORARY FEE ON EXCESS OIL PROFIT.’’. 

4 (c) DEDUCTIBILITY OF FEE.—The first sentence of 

5 section 164(a) of the Internal Revenue Code of 1986 (re6 lating to deduction for taxes) is amended by inserting 

7 after paragraph (5) the following new paragraph: 

8 ‘‘(6) The fee imposed by section 5896.’’. 

9 Subtitle B—Energy Fairness for 

10 America 

11 SEC. 211. ELIMINATION OF DEDUCTION FOR INTANGIBLE 

12 DRILLING AND DEVELOPMENT COSTS FOR 

13 MAJOR OIL COMPANIES. 

14 (a) IN GENERAL.—Section 263(c) of the Internal 

15 Revenue Code of 1986 is amended by adding at the end 

16 the following new sentences: ‘‘This subsection shall not 

17 apply during any taxable year with respect to an applica18 ble taxpayer (as defined in section 5896(b)) if during the 

19 preceding taxable year for the production of oil, the aver20 age price of crude oil in the United States is greater than 

21 $34.71 per barrel, and for the production of natural gas, 

22 the average wellhead price of natural gas in the United 

23 States is greater than $4.34 per 1,000 cubic feet. For pur24 poses of the preceding sentence, the Secretary shall deter25 mine average prices, taking into consideration the most 


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1 recent data reported by the Energy Information Adminis2 tration. For taxable years beginning after December 31, 

3 2008, each dollar amount specified in this subsection shall 

4 be adjusted to reflect changes for the 12-month period 

5 ending the preceding September 30 in the Consumer Price 

6 Index for All Urban Consumers published by the Bureau 

7 of Labor Statistics of the Department of Labor.’’ 

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

9 this section shall apply to taxable years beginning after 

10 the date of the enactment of this Act. 

11 SEC. 212. EXTENSION OF ELECTION TO EXPENSE CERTAIN 

12 REFINERIES. 

13 (a) EXTENSION.— 

14 (1) IN GENERAL.—Section 179C(c)(1) of the 

15 Internal Revenue Code of 1986 (defining qualified 

16 refinery property) is amended— 

17 (A) by striking ‘‘and before January 1, 

18 2012’’ in subparagraph (B) and inserting ‘‘and, 

19 in the case of any qualified refinery described in 

20 subsection (d)(1), before January 1, 2012’’, and 

21 (B) by inserting ‘‘if described in subsection 

22 (d)(1)’’ after ‘‘of which’’ in subparagraph 

23 (F)(i). 


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1 (2) CONFORMING AMENDMENT.—Subsection (d) 

2 of section 179C of the Internal Revenue Code of 

3 1986 is amended to read as follows: 

4 ‘‘(d) QUALIFIED REFINERY.—For purposes of this 

5 section, the term ‘qualified refinery’ means any refinery 

6 located in the United States which is designed to serve 

7 the primary purpose of processing liquid fuel from— 

8 ‘‘(1) crude oil, or 

9 ‘‘(2) qualified fuels (as defined in section 

10 45K(c)).’’. 

11 (3) EFFECTIVE DATE.—The amendments made 

12 by this subsection shall take effect as if included in 

13 the amendment made by section 1323(a) of the En14 ergy Policy Act of 2005. 

15 (b) NONAPPLICATION FOR MAJOR OIL COMPA16 NIES.— 

17 (1) IN GENERAL.—Section 179C of the Internal 

18 Revenue Code of 1986 is amended by adding at the 

19 end the following new subsection: 

20 ‘‘(i) NONAPPLICATION OF SECTION.—This section 

21 shall not apply during any taxable year with respect to 

22 an applicable taxpayer (as defined in section 5896(b)) if 

23 during the preceding taxable year for the production of 

24 oil, the average price of crude oil in the United States is 

25 greater than $34.71 per barrel. For purposes of the preVerDate Aug 31 2005 22:45 Mar 07, 2007 Jkt 059196 PO 00000 Frm 00048 Fmt 6652 Sfmt 6201 E:\BILLS\S701.IS S701

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1 ceding sentence, the Secretary shall determine average 

2 prices, taking into consideration the most recent data re3 ported by the Energy Information Administration. For 

4 taxable years beginning after December 31, 2008, the dol5 lar amount specified in this paragraph shall be adjusted 

6 to reflect changes for the 12-month period ending the pre7 ceding September 30 in the Consumer Price Index for All 

8 Urban Consumers published by the Bureau of Labor Sta9 tistics of the Department of Labor.’’. 

10 (2) EFFECTIVE DATE.—The amendment made 

11 by this subsection shall apply to taxable years begin12 ning after the date of the enactment of this Act. 

13 SEC. 213. ELIMINATION OF AMORTIZATION OF GEOLOGI14 CAL AND GEOPHYSICAL EXPENDITURES FOR 

15 MAJOR OIL COMPANIES. 

16 (a) IN GENERAL.—Section 167(h) of the Internal 

17 Revenue Code of 1986 is amended by adding at the end 

18 the following new paragraph: 

19 ‘‘(5) NONAPPLICATION OF SECTION.—This sub20 section shall not apply during any taxable year with 

21 respect to an applicable taxpayer (as defined in sec22 tion 5896(b)) if during the preceding taxable year 

23 for the production of oil, the average price of crude 

24 oil in the United States is greater than $34.71 per 

25 barrel, and for the production of natural gas, the avVerDate Aug 31 2005 22:45 Mar 07, 2007 Jkt 059196 PO 00000 Frm 00049 Fmt 6652 Sfmt 6201 E:\BILLS\S701.IS S701

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1 erage wellhead price of natural gas in the United 

2 States is greater than $4.34 per 1,000 cubic feet. 

3 For purposes of the preceding sentence, the Sec4 retary shall determine average prices, taking into 

5 consideration the most recent data reported by the 

6 Energy Information Administration. For taxable 

7 years beginning after December 31, 2008, each dol8 lar amount specified in this subparagraph shall be 

9 adjusted to reflect changes for the 12-month period 

10 ending the preceding September 30 in the Consumer 

11 Price Index for All Urban Consumers published by 

12 the Bureau of Labor Statistics of the Department of 

13 Labor.’’. 

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

15 this section shall take effect on and after the date of the 

16 enactment of this Act. 

17 SEC. 214. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 

18 APPLICABLE TO MAJOR OIL COMPANIES 

19 WHICH ARE DUAL CAPACITY TAXPAYERS. 

20 (a) IN GENERAL.—Section 901 of the Internal Rev21 enue Code of 1986 (relating to credit for taxes of foreign 

22 countries and of possessions of the United States) is 

23 amended by redesignating subsection (m) as (n) and by 

24 inserting after subsection (l) the following new subsection: 


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1 ‘‘(m) SPECIAL RULES RELATING TO MAJOR OIL

2 COMPANIES WHICH ARE DUAL CAPACITY TAXPAYERS.— 

3 ‘‘(1) GENERAL RULE.—Notwithstanding any 

4 other provision of this chapter, any amount paid or 

5 accrued by a dual capacity taxpayer which is an ap6 plicable taxpayer (as defined in section 5896(b)) to 

7 a foreign country or possession of the United States 

8 for any period shall not be considered a tax— 

9 ‘‘(A) if, for such period, the foreign coun10 try or possession does not impose a generally 

11 applicable income tax, or 

12 ‘‘(B) to the extent such amount exceeds 

13 the amount (determined in accordance with reg14 ulations) which— 

15 ‘‘(i) is paid by such dual capacity tax16 payer pursuant to the generally applicable 

17 income tax imposed by the country or pos18 session, or 

19 ‘‘(ii) would be paid if the generally ap20 plicable income tax imposed by the country 

21 or possession were applicable to such dual 

22 capacity taxpayer. 

23 Nothing in this paragraph shall be construed to 

24 imply the proper treatment of any such amount 


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1 not in excess of the amount determined under 

2 subparagraph (B). 

3 ‘‘(2) DUAL CAPACITY TAXPAYER.—For pur4 poses of this subsection, the term ‘dual capacity tax5 payer’ means, with respect to any foreign country or 

6 possession of the United States, a person who— 

7 ‘‘(A) is subject to a levy of such country or 

8 possession, and 

9 ‘‘(B) receives (or will receive) directly or 

10 indirectly a specific economic benefit (as deter11 mined in accordance with regulations) from 

12 such country or possession. 

13 ‘‘(3) GENERALLY APPLICABLE INCOME TAX.— 

14 For purposes of this subsection— 

15 ‘‘(A) IN GENERAL.—The term ‘generally 

16 applicable income tax’ means an income tax (or 

17 a series of income taxes) which is generally im18 posed under the laws of a foreign country or 

19 possession on income derived from the conduct 

20 of a trade or business within such country or 

21 possession. 

22 ‘‘(B) EXCEPTIONS.—Such term shall not 

23 include a tax unless it has substantial applica24 tion, by its terms and in practice, to— 


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1 ‘‘(i) persons who are not dual capacity 

2 taxpayers, and 

3 ‘‘(ii) persons who are citizens or resi4 dents of the foreign country or posses5 sion.’’. 

6 (b) EFFECTIVE DATE.— 

7 (1) IN GENERAL.—The amendments made by 

8 this section shall apply to taxes paid or accrued in 

9 taxable years beginning after the date of the enact10 ment of this Act. 

11 (2) CONTRARY TREATY OBLIGATIONS

12 UPHELD.—The amendments made by this section 

13 shall not apply to the extent contrary to any treaty 

14 obligation of the United States. 

15 SEC. 215. DENIAL OF DEDUCTION FOR INCOME ATTRIB16 UTABLE TO DOMESTIC PRODUCTION OF OIL, 

17 NATURAL GAS, OR PRIMARY PRODUCTS 

18 THEREOF. 

19 (a) IN GENERAL.—Subparagraph (B) of section 

20 199(c)(4) of the Internal Revenue Code of 1986 (relating 

21 to exceptions) is amended by striking ‘‘or’’ at the end of 

22 clause (ii), by striking the period at the end of clause (iii) 

23 and inserting ‘‘, or’’, and by inserting after clause (iii) the 

24 following new clause: 


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1 ‘‘(iv) the sale, exchange, or other dis2 position of oil, natural gas, or any primary 

3 product thereof.’’. 

4 (b) PRIMARY PRODUCT.—Section 199(c)(4)(B) of 

5 such Code is amended by adding at the end the following 

6 flush sentence: 

7 ‘‘For purposes of clause (iv), the term ‘primary 

8 product’ has the same meaning as when used in 

9 section 927(a)(2)(C), as in effect before its re10 peal.’’. 

11 (c) CONFORMING AMENDMENTS.—Section 199(c)(4) 

12 of such Code is amended— 

13 (1) in subparagraph (A)(i)(III) by striking 

14 ‘‘electricity, natural gas,’’ and inserting ‘‘electricity’’, 

15 and 

16 (2) in subparagraph (B)(ii) by striking ‘‘elec17 tricity, natural gas,’’ and inserting ‘‘electricity’’. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2007. 

21 SEC. 216. ELIMINATION OF ENHANCED OIL RECOVERY 

22 CREDIT FOR MAJOR OIL COMPANIES. 

23 (a) IN GENERAL.—Section 43 of the Internal Rev24 enue Code of 1986 is amended by adding at the end the 

25 following new subsection: 


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1 ‘‘(f) NONAPPLICATION OF SECTION.—This section 

2 shall not apply during any taxable year with respect to 

3 an applicable taxpayer (as defined in section 5896(b)) if 

4 during the preceding taxable year for the production of 

5 oil, the average price of crude oil in the United States is 

6 greater than $34.71 per barrel. For purposes of the pre7 ceding sentence, the Secretary shall determine average 

8 prices, taking into consideration the most recent data re9 ported by the Energy Information Administration. For 

10 taxable years beginning after December 31, 2008, the dol11 lar amount specified in this paragraph shall be adjusted 

12 to reflect changes for the 12-month period ending the pre13 ceding September 30 in the Consumer Price Index for All 

14 Urban Consumers published by the Bureau of Labor Sta15 tistics of the Department of Labor.’’. 

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

17 this section shall apply to taxable years beginning after 

18 the date of the enactment of this Act. 

19 Subtitle C—Protection and Reten20 tion of Value of Publicly-Owned 

21 Energy Resources 

22 SEC. 221. PRICE THRESHOLDS FOR ROYALTY SUSPENSION 

23 PROVISIONS. 

24 The Secretary of the Interior shall agree to a request 

25 by any lessee to amend any lease issued for any Central 


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1 and Western Gulf of Mexico tract during the period of 

2 January 1, 1998, through December 31, 1999, to incor3 porate price thresholds applicable to royalty suspension 

4 provisions, that are equal to or less than the price thresh5 olds described in clauses (v) through (vii) of section 

6 8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 

7 U.S.C. 1337(a)(3)(C)). Any amended lease shall impose 

8 the new or revised price thresholds effective October 1, 

9 2006. Existing lease provisions shall prevail through Sep10 tember 30, 2006. 

11 SEC. 222. CLARIFICATION OF AUTHORITY TO IMPOSE 

12 PRICE THRESHOLDS FOR CERTAIN LEASE 

13 SALES. 

14 Congress reaffirms the authority of the Secretary of 

15 the Interior under section 8(a)(1)(H) of the Outer Conti16 nental Shelf Lands Act (43 U.S.C. 1337(a)(1)(H)) to 

17 vary, based on the price of production from a lease, the 

18 suspension of royalties under any lease subject to section 

19 304 of the Outer Continental Shelf Deep Water Royalty 

20 Relief Act (Public Law 104–58; 43 U.S.C. 1337 note). 

21 SEC. 223. ELIGIBILITY FOR NEW LEASES AND THE TRANS22 FER OF LEASES; CONSERVATION OF RE23 SOURCES FEES. 

24 (a) ISSUANCE OF NEW LEASES.— 


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1 (1) IN GENERAL.—The Secretary shall not 

2 issue any new lease that authorizes the production 

3 of oil or natural gas in the Gulf of Mexico under the 

4 Outer Continental Shelf Lands Act (43 U.S.C. 1331 

5 et seq.) to a person described in paragraph (2) un6 less— 

7 (A) the person has renegotiated each cov8 ered lease with respect to which the person is 

9 a lessee, to modify the payment responsibilities 

10 of the person to include price thresholds that 

11 are equal to or less than the price thresholds 

12 described in clauses (v) through (vii) of section 

13 8(a)(3)(C) of the Outer Continental Shelf 

14 Lands Act (43 U.S.C. 1337(a)(3)(C)); or 

15 (B) the person has— 

16 (i) paid all fees established by the 

17 Secretary under subsection (b) that are 

18 due with respect to each covered lease for 

19 which the person is a lessee; or 

20 (ii) entered into an agreement with 

21 the Secretary under which the person is 

22 obligated to pay such fees. 

23 (2) PERSONS DESCRIBED.—A person referred 

24 to in paragraph (1) is a person that— 

25 (A) is a lessee that— 


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1 (i) holds a covered lease on the date 

2 on which the Secretary considers the 

3 issuance of the new lease; or 

4 (ii) was issued a covered lease before 

5 the date of enactment of this Act, but 

6 transferred the covered lease to another 

7 person or entity (including a subsidiary or 

8 affiliate of the lessee) after the date of en9 actment of this Act; or 

10 (B) any other person or entity who has 

11 any direct or indirect interest in, or who derives 

12 any benefit from, a covered lease; 

13 (3) MULTIPLE LESSEES.— 

14 (A) IN GENERAL.—For purposes of para15 graph (1), if there are multiple lessees that own 

16 a share of a covered lease, the Secretary may 

17 implement separate agreements with any lessee 

18 with a share of the covered lease that modifies 

19 the payment responsibilities with respect to the 

20 share of the lessee to include price thresholds 

21 that are equal to or less than the price thresh22 olds described in clauses (v) through (vii) of 

23 section 8(a)(3)(C) of the Outer Continental 

24 Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)). 


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•S 701 IS

1 (B) TREATMENT OF SHARE AS COVERED

2 LEASE.—Beginning on the effective date of an 

3 agreement under subparagraph (A), any share 

4 subject to the agreement shall not constitute a 

5 covered lease with respect to any lessees that 

6 entered into the agreement. 

7 (b) CONSERVATION OF RESOURCES FEES.— 

8 (1) IN GENERAL.—Not later than 60 days after 

9 the date of enactment of this Act, the Secretary of 

10 the Interior by regulation shall establish— 

11 (A) a conservation of resources fee for pro12 ducing Federal oil and gas leases in the Gulf of 

13 Mexico; and 

14 (B) a conservation of resources fee for 

15 nonproducing Federal oil and gas leases in the 

16 Gulf of Mexico. 

17 (2) PRODUCING LEASE FEE TERMS.—The fee 

18 under paragraph (1)(A)— 

19 (A) subject to subparagraph (C), shall 

20 apply to covered leases that are producing 

21 leases; 

22 (B) shall be set at $9 per barrel for oil and 

23 $1.25 per million Btu for gas, respectively, in 

24 2005 dollars; and 


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1 (C) shall apply only to production of oil or 

2 gas occurring— 

3 (i) in any calendar year in which the 

4 arithmetic average of the daily closing 

5 prices for light sweet crude oil on the New 

6 York Mercantile Exchange (NYMEX) ex7 ceeds $34.73 per barrel for oil and $4.34 

8 per million Btu for gas in 2005 dollars; 

9 and 

10 (ii) on or after October 1, 2006. 

11 (3) NONPRODUCING LEASE FEE TERMS.—The 

12 fee under paragraph (1)(B)— 

13 (A) subject to subparagraph (C), shall 

14 apply to leases that are nonproducing leases; 

15 (B) shall be set at $3.75 per acre per year 

16 in 2005 dollars; and 

17 (C) shall apply on and after October 1, 

18 2006. 

19 (4) TREATMENT OF RECEIPTS.—Amounts re20 ceived by the United States as fees under this sub21 section shall be treated as offsetting receipts. 

22 (c) TRANSFERS.—A lessee or any other person who 

23 has any direct or indirect interest in, or who derives a 

24 benefit from, a lease shall not be eligible to obtain by sale 

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1 icing, or other agreement) any covered lease, the economic 

2 benefit of any covered lease, or any other lease for the 

3 production of oil or natural gas in the Gulf of Mexico 

4 under the Outer Continental Shelf Lands Act (43 U.S.C. 

5 1331 et seq.), unless— 

6 (1) the lessee or other person has— 

7 (A) renegotiated all covered leases of the 

8 lessee or other person; and 

9 (B) entered into an agreement with the 

10 Secretary to modify the terms of all covered 

11 leases of the lessee or other person to include 

12 limitations on royalty relief based on market 

13 prices that are equal to or less than the price 

14 thresholds described in clauses (v) through (vii) 

15 of section 8(a)(3)(C) of the Outer Continental 

16 Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)); or 

17 (2) the lessee or other person has— 

18 (A) paid all fees established by the Sec19 retary under subsection (b) that are due with 

20 respect to each covered lease for which the per21 son is a lessee; or 

22 (B) entered into an agreement with the 

23 Secretary under which the person is obligated 

24 to pay such fees. 

25 (d) DEFINITIONS.—In this section— 


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1 (1) COVERED LEASE.—The term ‘‘covered 

2 lease’’ means a lease for oil or gas production in the 

3 Gulf of Mexico that is— 

4 (A) in existence on the date of enactment 

5 of this Act; 

6 (B) issued by the Department of the Inte7 rior under section 304 of the Outer Continental 

8 Shelf Deep Water Royalty Relief Act (43 

9 U.S.C. 1337 note; Public Law 104–58); and 

10 (C) not subject to limitations on royalty re11 lief based on market price that are equal to or 

12 less than the price thresholds described in 

13 clauses (v) through (vii) of section 8(a)(3)(C) of 

14 the Outer Continental Shelf Lands Act (43 

15 U.S.C. 1337(a)(3)(C)). 

16 (2) LESSEE.—The term ‘‘lessee’’ includes any 

17 person or other entity that controls, is controlled by, 

18 or is in or under common control with, a lessee. 

19 (3) SECRETARY.—The term ‘‘Secretary’’ means 

20 the Secretary of the Interior. 


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1 SEC. 224. REPEAL OF CERTAIN TAXPAYER SUBSIDIZED 

2 ROYALTY RELIEF FOR THE OIL AND GAS IN3 DUSTRY. 

4 (a) REPEAL OF PROVISIONS OF ENERGY POLICY ACT

5 OF 2005.—The following provisions of the Energy Policy 

6 Act of 2005 (Public Law 109–58) are repealed: 

7 (1) Section 344 (42 U.S.C. 15904; relating to 

8 incentives for natural gas production from deep wells 

9 in shallow waters of the Gulf of Mexico). 

10 (2) Section 345 (42 U.S.C. 15905; relating to 

11 royalty relief for deep water production in the Gulf 

12 of Mexico). 

13 (3) Subsection (i) of section 365 (42 U.S.C. 

14 15924; relating to the prohibition on drilling-related 

15 permit application cost recovery fees). 

16 (b) PROVISIONS RELATING TO PLANNING AREAS

17 OFFSHORE ALASKA.—Section 8(a)(3)(B) of the Outer 

18 Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(B)) 

19 is amended by striking ‘‘and in the Planning Areas off20 shore Alaska’’ after ‘‘West longitude’’. 

21 (c) PROVISIONS RELATING TO NAVAL PETROLEUM

22 RESERVE IN ALASKA.—Section 107 of the Naval Petro23 leum Reserves Production Act of 1976 (as transferred, re24 designated, moved, and amended by section 347 of the En25 ergy Policy Act of 2005 (119 Stat. 704)) is amended— 


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1 (1) in subsection (i) by striking paragraphs (2) 

2 through (6); and 

3 (2) by striking subsection (k). 

4 Subtitle D—Reduction in 

5 Incentives to Guzzle Gas 

6 SEC. 231. REDUCING INCENTIVES TO GUZZLE GAS. 

7 (a) INCLUSION OF HEAVY VEHICLES IN LIMITATION

8 ON DEPRECIATION OF CERTAIN LUXURY AUTO9 MOBILES.— 

10 (1) IN GENERAL.—Section 280F(d)(5)(A) of 

11 the Internal Revenue Code of 1986 (defining pas12 senger automobile) is amended— 

13 (A) by striking clause (ii) and inserting the 

14 following new clause: 

15 ‘‘(ii)(I) which is rated at 6,000 

16 pounds unloaded gross vehicle weight or 

17 less, or 

18 ‘‘(II) which is rated at more than 

19 6,000 pounds but not more than 14,000 

20 pounds gross vehicle weight.’’, and 

21 (B) by striking ‘‘clause (ii)’’ in the second 

22 sentence and inserting ‘‘clause (ii)(I)’’. 

23 (2) EXCEPTION FOR VEHICLES USED IN FARM24 ING BUSINESS.—Section 280F(d)(5)(B) of such 

25 Code (relating to exception for certain vehicles) is 


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1 amended by striking ‘‘and’’ at the end of clause (ii), 

2 by redesignating clause (iii) as clause (iv), and by in3 serting after clause (ii) the following new clause: 

4 ‘‘(iii) any vehicle used in a farming 

5 business (as defined in section 263A(e)(4), 

6 and’’. 

7 (3) EFFECTIVE DATE.—The amendments made 

8 by this subsection shall apply to property placed in 

9 service after the date of the enactment of this Act. 

10 (b) UPDATED DEPRECIATION DEDUCTION LIMITS.— 

11 (1) IN GENERAL.—Subparagraph (A) of section 

12 280F(a)(1) of the Internal Revenue Code of 1986 

13 (relating to limitation on amount of depreciation for 

14 luxury automobiles) is amended to read as follows: 

15 ‘‘(I) LIMITATION.—The amount of the de16 preciation deduction for any taxable year shall 

17 not exceed for any passenger automobile— 

18 ‘‘(i) for the 1st taxable year in the re19 covery period— 

20 ‘‘(I) described in subsection 

21 (d)(5)(A)(ii)(I), $4,000, 

22 ‘‘(II) described in the second sen23 tence of subsection (d)(5)(A), $5,000, 

24 and 


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1 ‘‘(III) described in subsection 

2 (d)(5)(A)(ii)(II), $6,000, 

3 ‘‘(ii) for the 2nd taxable year in the 

4 recovery period— 

5 ‘‘(I) described in subsection 

6 (d)(5)(A)(ii)(I), $6,400, 

7 ‘‘(II) described in the second sen8 tence of subsection (d)(5)(A), $8,000, 

9 and 

10 ‘‘(III) described in subsection 

11 (d)(5)(A)(ii)(II), $9,600, 

12 ‘‘(iii) for the 3rd taxable year in the 

13 recovery period— 

14 ‘‘(I) described in subsection 

15 (d)(5)(A)(ii)(I), $3,850, 

16 ‘‘(II) described in the second sen17 tence of subsection (d)(5)(A), $4,800, 

18 and 

19 ‘‘(III) described in subsection 

20 (d)(5)(A)(ii)(II), $5,775, and 

21 ‘‘(iv) for each succeeding taxable year 

22 in the recovery period— 

23 ‘‘(I) described in subsection 

24 (d)(5)(A)(ii)(I), $2,325, 


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1 ‘‘(II) described in the second sen2 tence of subsection (d)(5)(A), $2,900, 

3 and 

4 ‘‘(III) described in subsection 

5 (d)(5)(A)(ii)(II), $3,475.’’. 

6 (2) YEARS AFTER RECOVERY PERIOD.—Section 

7 280F(a)(1)(B)(ii) of such Code is amended to read 

8 as follows: 

9 ‘‘(ii) LIMITATION.—The amount treat10 ed as an expense under clause (i) for any 

11 taxable year shall not exceed for any pas12 senger automobile— 

13 ‘‘(I) described in subsection 

14 (d)(5)(A)(ii)(I), $2,325, 

15 ‘‘(II) described in the second sen16 tence of subsection (d)(5)(A), $2,900, 

17 and 

18 ‘‘(III) described in subsection 

19 (d)(5)(A)(ii)(II), $3,475.’’. 

20 (3) INFLATION ADJUSTMENT.—Section 

21 280F(d)(7) of such Code (relating to automobile 

22 price inflation adjustment) is amended— 

23 (A) by striking ‘‘after 1988’’ in subpara24 graph (A) and inserting ‘‘after 2007’’, and 


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1 (B) by striking subparagraph (B) and in2 serting the following new subparagraph: 

3 ‘‘(B) AUTOMOBILE PRICE INFLATION AD4 JUSTMENT.—For purposes of this paragraph— 

5 ‘‘(i) IN GENERAL.—The automobile 

6 price inflation adjustment for any calendar 

7 year is the percentage (if any) by which— 

8 ‘‘(I) the average wage index for 

9 the preceding calendar year, exceeds 

10 ‘‘(II) the average wage index for 

11 2006. 

12 ‘‘(ii) AVERAGE WAGE INDEX.—The 

13 term ‘average wage index’ means the aver14 age wage index published by the Social Se15 curity Administration.’’. 

16 (4) EFFECTIVE DATE.—The amendments made 

17 by this subsection shall apply to property placed in 

18 service after the date of the enactment of this Act. 

19 (c) EXPENSING LIMITATION FOR FARM VEHICLES.— 

20 (1) IN GENERAL.—Paragraph (6) of section 

21 179(b) of the Internal Revenue Code of 1986 (relat22 ing to limitations) is amended to read as follows: 

23 ‘‘(6) LIMITATION ON COST TAKEN INTO AC24 COUNT FOR FARM VEHICLES.—The cost of any vehi25 cle described in section 280F(d)(5)(B)(iii) for any 


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•S 701 IS

1 taxable year which may be taken into account under 

2 this section shall not exceed $30,000.’’. 

3 (2) EFFECTIVE DATE.—The amendment made 

4 by this subsection shall apply to property placed in 

5 service after the date of the enactment of this Act. 

Æ 


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