II

106TH CONGRESS

1ST SESSION S. 1833

To amend the Internal Revenue Code of 1986 to provide tax incentives

to encourage the production and use of efficient energy sources, and

for other purposes.

IN THE SENATE OF THE UNITED STATES

OCTOBER 29, 1999

Mr. DASCHLE (for himself, Mr. BINGAMAN, Mr. BAUCUS, Mr. BYRD, Mr.

KERREY, and Mr. INOUYE) 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 provide

tax incentives to encourage the production and use of

efficient energy sources, 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; AMENDMENT OF 1986 CODE;

4 TABLE OF CONTENTS.

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

6 ‘‘Energy Security Tax Act of 1999’’.

7 (b) AMENDMENT OF 1986 CODE.—Except as other8 wise expressly provided, whenever in this Act an amend9 ment or repeal is expressed in terms of an amendment
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1 to, or repeal of, a section or other provision, the reference

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

4 (c) TABLE OF CONTENTS.—The table of contents for

5 this Act is as follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.

TITLE I—ENERGY-EFFICIENT PROPERTY USED IN BUSINESS

Sec. 101. Credit for certain energy-efficient property used in business.

TITLE II—NONBUSINESS ENERGY SYSTEMS

Sec. 201. Credit for certain nonbusiness energy systems.

TITLE III—ALTERNATIVE FUELS

Sec. 301. Allocation of alcohol fuels credit to patrons of a cooperative.

TITLE IV—AUTOMOBILES

Sec. 401. Extension of credit for qualified electric vehicles.

TITLE V—CLEAN COAL TECHNOLOGIES

Sec. 501. Credit for investment in qualifying clean coal technology.

Sec. 502. Credit for production from qualifying clean coal technology.

Sec. 503. Risk pool for qualifying clean coal technology.

TITLE VI—METHANE RECOVERY

Sec. 601. Credit for capture of coalbed methane gas.

TITLE VII—OIL AND GAS PRODUCTION

Sec. 701. Credit for production of re-refined lubricating oil.

Sec. 702. 5-year net operating loss carryback for losses attributable to operating mineral interests of independent oil and gas producers.

Sec. 703. Deduction for delay rental payments.

Sec. 704. Election to expense geological and geophysical expenditures.

Sec. 705. Elimination of limitation based on 65 percent of taxable income.

Sec. 706. Taxable income limit on percentage depletion for marginal production.

TITLE VIII—RENEWABLE POWER GENERATION

Sec. 801. Modifications to credit for electricity produced from renewable resources.

Sec. 802. Credit for capital costs of qualified biomass-based generating system.

Sec. 803. Treatment of facilities using bagasse to produce energy as solid waste

disposal facilities eligible for tax-exempt financing.

TITLE IX—STEELMAKING
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Sec. 901. Credit for investment in energy-efficient steelmaking facilities.

Sec. 902. Extension of credit for electricity to production from steel cogeneration.

TITLE X—AGRICULTURE

Sec. 1001. Agricultural conservation tax credit.

1 TITLE I—ENERGY-EFFICIENT

2 PROPERTY USED IN BUSINESS

3 SEC. 101. CREDIT FOR CERTAIN ENERGY-EFFICIENT PROP4 ERTY USED IN BUSINESS.

5 (a) IN GENERAL.—Subpart E of part IV of sub6 chapter A of chapter 1 (relating to rules for computing

7 investment credit) is amended by inserting after section

8 48 the following:

9 ‘‘SEC. 48A. ENERGY CREDIT.

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

11 energy credit for any taxable year is the sum of—

12 ‘‘(1) the amount equal to the energy percentage

13 of the basis of each energy property placed in service

14 during such taxable year, and

15 ‘‘(2) the credit amount for each qualified hybrid

16 vehicle placed in service during the taxable year.

17 ‘‘(b) ENERGY PERCENTAGE.—

18 ‘‘(1) IN GENERAL.—The energy percentage is—

19 ‘‘(A) except as otherwise provided in this

20 subparagraph, 10 percent,
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1 ‘‘(B) in the case of energy property de2 scribed in clauses (i), (iii), (vi), and (vii) of sub3 section (c)(1)(A), 20 percent,

4 ‘‘(C) in the case of energy property de5 scribed in subsection (c)(1)(A)(v), 15 percent,

6 and

7 ‘‘(D) in the case of energy property de8 scribed in subsection (c)(1)(A)(ii) relating to a

9 high risk geothermal well, 20 percent.

10 ‘‘(2) COORDINATION WITH REHABILITATION.—

11 The energy percentage shall not apply to that por12 tion of the basis of any property which is attrib13 utable to qualified rehabilitation expenditures.

14 ‘‘(c) ENERGY PROPERTY DEFINED.—

15 ‘‘(1) IN GENERAL.—For purposes of this sub16 part, the term ‘energy property’ means any

17 property—

18 ‘‘(A) which is—

19 ‘‘(i) solar energy property,

20 ‘‘(ii) geothermal energy property,

21 ‘‘(iii) energy-efficient building prop22 erty,

23 ‘‘(iv) combined heat and power system

24 property,
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1 ‘‘(v) low core loss distribution trans2 former property,

3 ‘‘(vi) qualified anaerobic digester

4 property, or

5 ‘‘(vii) qualified wind energy systems

6 equipment property,

7 ‘‘(B)(i) the construction, reconstruction, or

8 erection of which is completed by the taxpayer,

9 or

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

11 the original use of such property commences

12 with the taxpayer,

13 ‘‘(C) which can reasonably be expected to

14 remain in operation for at least 5 years,

15 ‘‘(D) with respect to which depreciation (or

16 amortization in lieu of depreciation) is allow17 able, and

18 ‘‘(E) which meets the performance and

19 quality standards (if any) which—

20 ‘‘(i) have been prescribed by the Sec21 retary by regulations (after consultation

22 with the Secretary of Energy), and

23 ‘‘(ii) are in effect at the time of the

24 acquisition of the property.

25 ‘‘(2) EXCEPTIONS.—
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1 ‘‘(A) PUBLIC UTILITY PROPERTY.—Such

2 term shall not include any property which is

3 public utility property (as defined in section

4 46(f)(5) as in effect on the day before the date

5 of the enactment of the Revenue Reconciliation

6 Act of 1990), except for property described in

7 paragraph (1)(A)(iv).

8 ‘‘(B) CERTAIN WIND EQUIPMENT.—Such

9 term shall not include equipment described in

10 paragraph (1)(A)(vii) which is taken into ac11 count for purposes of section 45 for the taxable

12 year.

13 ‘‘(d) DEFINITIONS RELATING TO TYPES OF ENERGY

14 PROPERTY.—For purposes of this section—

15 ‘‘(1) SOLAR ENERGY PROPERTY.—

16 ‘‘(A) IN GENERAL.—The term ‘solar en17 ergy property’ means equipment which uses

18 solar energy to generate electricity, to heat or

19 cool (or provide hot water for use in) a struc20 ture, or to provide solar process heat.

21 ‘‘(B) SWIMMING POOLS, ETC., USED AS

22 STORAGE MEDIUM.—The term ‘solar energy

23 property’ shall not include property with respect

24 to which expenditures are properly allocable to

25 a swimming pool, hot tub, or any other energy
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1 storage medium which has a function other

2 than the function of such storage.

3 ‘‘(C) SOLAR PANELS.—No solar panel or

4 other property installed as a roof (or portion

5 thereof) shall fail to be treated as solar energy

6 property solely because it constitutes a struc7 tural component of the structure on which it is

8 installed.

9 ‘‘(2) GEOTHERMAL ENERGY PROPERTY.—

10 ‘‘(A) IN GENERAL.—The term ‘geothermal

11 energy property’ means equipment used to

12 produce, distribute, or use energy derived from

13 a geothermal deposit (within the meaning of

14 section 613(e)(2)), but only, in the case of elec15 tricity generated by geothermal power, up to

16 (but not including) the electrical transmission

17 stage.

18 ‘‘(B) HIGH RISK GEOTHERMAL WELL.—

19 The term ‘high risk geothermal well’ means a

20 geothermal deposit (within the meaning of sec21 tion 613(e)(2)) which requires high risk drilling

22 techniques. Such deposit may not be located in

23 a State or national park or in an area in which

24 the relevant State park authority or the Na25 tional Park Service determines the development
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1 of such a deposit will negatively impact on a

2 State or national park.

3 ‘‘(3) ENERGY-EFFICIENT BUILDING PROP4 ERTY.—

5 ‘‘(A) IN GENERAL.—The term ‘energy-effi6 cient building property’ means—

7 ‘‘(i) a fuel cell that—

8 ‘‘(I) generates electricity and

9 heat using an electrochemical process,

10 ‘‘(II) has an electricity-only gen11 eration efficiency greater than 35 per12 cent, and

13 ‘‘(III) has a minimum generating

14 capacity of 5 kilowatts,

15 ‘‘(ii) an electric heat pump hot water

16 heater that yields an energy factor of 1.7

17 or greater under standards prescribed by

18 the Secretary of Energy,

19 ‘‘(iii) an electric heat pump that has

20 a heating system performance factor

21 (HSPF) of 9 or greater and a cooling sea22 sonal energy efficiency ratio (SEER) of

23 13.5 or greater,

24 ‘‘(iv) a natural gas heat pump that

25 has a coefficient of performance of not less
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1 than 1.25 for heating and not less than

2 0.60 for cooling,

3 ‘‘(v) a central air conditioner that has

4 a cooling seasonal energy efficiency ratio

5 (SEER) of 13.5 or greater,

6 ‘‘(vi) an advanced natural gas water

7 heater that—

8 ‘‘(I) increases steady state effi9 ciency and reduces standby and vent

10 losses, and

11 ‘‘(II) has an energy factor of at

12 least 0.65,

13 ‘‘(vii) an advanced natural gas fur14 nace that achieves a 95 percent AFUE,

15 and

16 ‘‘(viii) natural gas cooling

17 equipment—

18 ‘‘(I) that has a coefficient of per19 formance of not less than .60, or

20 ‘‘(II) that uses desiccant tech21 nology and has an efficiency rating of

22 40 percent.

23 ‘‘(B) LIMITATIONS.—The credit under sub24 section (a)(1) for the taxable year may not

25 exceed—
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1 ‘‘(i) $500 in the case of property de2 scribed in subparagraph (A) other than

3 clauses (i) and (iv) thereof,

4 ‘‘(ii) $500 for each kilowatt of capac5 ity in the case of a fuel cell described in

6 subparagraph (A)(i), and

7 ‘‘(iii) $1,000 in the case of a natural

8 gas heat pump described in subparagraph

9 (A)(iv).

10 ‘‘(4) COMBINED HEAT AND POWER SYSTEM

11 PROPERTY.—

12 ‘‘(A) IN GENERAL.—The term ‘combined

13 heat and power system property’ means

14 property—

15 ‘‘(i) comprising a system for using the

16 same energy source for the sequential gen17 eration of electrical power, mechanical

18 shaft power, or both, in combination with

19 steam, heat, or other forms of useful en20 ergy,

21 ‘‘(ii) that has an electrical capacity of

22 more than 50 kilowatts, and

23 ‘‘(iii) that produces at least 20 per24 cent of its total useful energy in the form
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1 of both thermal energy and electrical or

2 mechanical power.

3 ‘‘(B) ACCOUNTING RULE FOR PUBLIC

4 UTILITY PROPERTY.—In the case that combined

5 heat and power system property is public utility

6 property (as defined in section 46(f)(5) as in ef7 fect on the day before the date of the enact8 ment of the Revenue Reconciliation Act of

9 1990), the taxpayer may only claim the credit

10 under subsection (a)(1) if, with respect to such

11 property, the taxpayer uses a normalization

12 method of accounting.

13 ‘‘(5) LOW CORE LOSS DISTRIBUTION TRANS14 FORMER PROPERTY.—The term ‘low core loss dis15 tribution transformer property’ means a distribution

16 transformer which has energy savings from a highly

17 efficient core of at least 20 percent more than the

18 average for power ratings reported by studies re19 quired under section 124 of the Energy Policy Act

20 of 1992.

21 ‘‘(6) QUALIFIED ANAEROBIC DIGESTER PROP22 ERTY.—The term ‘qualified anaerobic digester prop23 erty’ means an anaerobic digester for manure or

24 crop waste that achieves at least 65 percent effi25 ciency measured in terms of the fraction of energy
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1 input converted to electricity and useful thermal en2 ergy.

3 ‘‘(7) QUALIFIED WIND ENERGY SYSTEMS

4 EQUIPMENT PROPERTY.—The term ‘qualified wind

5 energy systems equipment property’ means wind en6 ergy systems equipment with a turbine size of not

7 more than 50 kilowatts rated capacity.

8 ‘‘(e) QUALIFIED HYBRID VEHICLES.—For purposes

9 of subsection (a)(2)—

10 ‘‘(1) CREDIT AMOUNT.—

11 ‘‘(A) IN GENERAL.—The credit amount for

12 each qualified hybrid vehicle with a recharge13 able energy storage system that provides the

14 applicable percentage of the maximum available

15 power shall be the amount specified in the fol16 lowing table:

‘‘Applicable percentage

Credit amount is:

Greater than or equal to— Less than—

5 percent ......................... 10 percent $500

10 percent ....................... 20 percent $1,000

20 percent ....................... 30 percent $1,500

30 percent ....................... $2,000

17 ‘‘(B) INCREASE IN CREDIT AMOUNT FOR

18 REGENERATIVE BRAKING SYSTEM.—In the case

19 of a qualified hybrid vehicle that actively em20 ploys a regenerative braking system which sup21 plies to the rechargeable energy storage system
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1 the applicable percentage of the energy avail2 able from braking in a typical 60 miles per

3 hour to 0 miles per hour braking event, the

4 credit amount determined under subparagraph

5 (A) shall be increased by the amount specified

6 in the following table:

‘‘Applicable percentage Credit amount increase is: Greater than or equal to— Less than—

20 percent ....................... 40 percent $250

40 percent ....................... 60 percent $500

60 percent ....................... $1,000

7 ‘‘(2) QUALIFIED HYBRID VEHICLE.—The term

8 ‘qualified hybrid vehicle, means an automobile that

9 meets all applicable regulatory requirements and

10 that can draw propulsion energy from both of the

11 following on-board sources of stored energy:

12 ‘‘(A) A consumable fuel.

13 ‘‘(B) A rechargeable energy storage sys14 tem.

15 ‘‘(3) MAXIMUM AVAILABLE POWER.—The term

16 ‘maximum available power’ means the maximum

17 value of the sum of the heat engine and electric

18 drive system power or other non-heat energy conver19 sion devices available for a driver’s command for

20 maximum acceleration at vehicle speeds under 75

21 miles per hour.
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1 ‘‘(4) AUTOMOBILE.—The term ‘automobile’ has

2 the meaning given such term by section 4064(b)(1)

3 (without regard to subparagraphs (B) and (C) there4 of). A vehicle shall not fail to be treated as an auto5 mobile solely by reason of weight if such vehicle is

6 rated at 8,500 pounds gross vehicle weight rating or

7 less.

8 ‘‘(5) DOUBLE BENEFIT; PROPERTY USED OUT9 SIDE UNITED STATES, ETC., NOT QUALIFIED.—No

10 credit shall be allowed under subsection (a)(2) with

11 respect to—

12 ‘‘(A) any property for which a credit is al13 lowed under section 25B or 30,

14 ‘‘(B) any property referred to in section

15 50(b), and

16 ‘‘(C) the portion of the cost of any prop17 erty taken into account under section 179 or

18 179A.

19 ‘‘(6) REGULATIONS.—

20 ‘‘(A) TREASURY.—The Secretary shall pre21 scribe such regulations as may be necessary or

22 appropriate to carry out the purposes of this

23 subsection.

24 ‘‘(B) ENVIRONMENTAL PROTECTION AGEN25 CY.—The Administrator of the Environmental
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1 Protection Agency shall prescribe such regula2 tions as may be necessary or appropriate to

3 specify the testing and calculation procedures

4 that would be used to determine whether a vehi5 cle meets the qualifications for a credit under

6 this subsection.

7 ‘‘(7) TERMINATION.—Paragraph (2) shall not

8 apply with respect to any vehicle placed in service

9 during a calendar year ending before January 1,

10 2003, or after December 31, 2006.

11 ‘‘(f) SPECIAL RULES.—For purposes of this

12 section—

13 ‘‘(1) SPECIAL RULE FOR PROPERTY FINANCED

14 BY SUBSIDIZED ENERGY FINANCING OR INDUSTRIAL

15 DEVELOPMENT BONDS.—

16 ‘‘(A) REDUCTION OF BASIS.—For purposes

17 of applying the energy percentage to any prop18 erty, if such property is financed in whole or in

19 part by—

20 ‘‘(i) subsidized energy financing, or

21 ‘‘(ii) the proceeds of a private activity

22 bond (within the meaning of section 141)

23 the interest on which is exempt from tax

24 under section 103,
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1 the amount taken into account as the basis of

2 such property shall not exceed the amount

3 which (but for this subparagraph) would be so

4 taken into account multiplied by the fraction

5 determined under subparagraph (B).

6 ‘‘(B) DETERMINATION OF FRACTION.—For

7 purposes of subparagraph (A), the fraction de8 termined under this subparagraph is 1 reduced

9 by a fraction—

10 ‘‘(i) the numerator of which is that

11 portion of the basis of the property which

12 is allocable to such financing or proceeds,

13 and

14 ‘‘(ii) the denominator of which is the

15 basis of the property.

16 ‘‘(C) SUBSIDIZED ENERGY FINANCING.—

17 For purposes of subparagraph (A), the term

18 ‘subsidized energy financing’ means financing

19 provided under a Federal, State, or local pro20 gram a principal purpose of which is to provide

21 subsidized financing for projects designed to

22 conserve or produce energy.

23 ‘‘(2) CERTAIN PROGRESS EXPENDITURE RULES

24 MADE APPLICABLE.—Rules similar to the rules of

25 subsections (c)(4) and (d) of section 46 (as in effect
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1 on the day before the date of the enactment of the

2 Revenue Reconciliation Act of 1990) shall apply for

3 purposes of this section.

4 ‘‘(g) APPLICATION OF SECTION.—

5 ‘‘(1) IN GENERAL.—Except as provided by

6 paragraph (2) and subsection (e), this section shall

7 apply to property placed in service after December

8 31, 1999, and before January 1, 2004.

9 ‘‘(2) EXCEPTIONS.—

10 ‘‘(A) SOLAR ENERGY AND GEOTHERMAL

11 ENERGY PROPERTY.—Paragraph (1) shall not

12 apply to solar energy property or geothermal

13 energy property.

14 ‘‘(B) FUEL CELL PROPERTY.—In the case

15 of property that is a fuel cell described in sub16 section (d)(3)(A)(i), this section shall apply to

17 property placed in service after December 31,

18 1999, and before January 1, 2005.’’

19 (b) CONFORMING AMENDMENTS.—

20 (1) Section 48 is amended to read as follows:

21 ‘‘SEC. 48. REFORESTATION CREDIT.

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

23 reforestation credit for any taxable year is 20 percent of

24 the portion of the amortizable basis of any qualified timber

25 property which was acquired during such taxable year and
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1 which is taken into account under section 194 (after the

2 application of section 194(b)(1)).

3 ‘‘(b) DEFINITIONS.—For purposes of this subpart,

4 the terms ‘amortizable basis’ and ‘qualified timber prop5 erty’ have the respective meanings given to such terms by

6 section 194.’’

7 (2) Section 39(d) is amended by adding at the

8 end the following:

9 ‘‘(9) NO CARRYBACK OF ENERGY CREDIT BE10 FORE EFFECTIVE DATE.—No portion of the unused

11 business credit for any taxable year which is attrib12 utable to the energy credit determined under section

13 48A may be carried back to a taxable year ending

14 before the date of the enactment of section 48A.’’

15 (3) Section 280C is amended by adding at the

16 end the following:

17 ‘‘(d) CREDIT FOR ENERGY PROPERTY EXPENSES.—

18 ‘‘(1) IN GENERAL.—No deduction shall be al19 lowed for that portion of the expenses for energy

20 property (as defined in section 48A(c)) otherwise al21 lowable as a deduction for the taxable year which is

22 equal to the amount of the credit determined for

23 such taxable year under section 48A(a).

24 ‘‘(2) SIMILAR RULE WHERE TAXPAYER CAP25 ITALIZES RATHER THAN DEDUCTS EXPENSES.—If—
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1 ‘‘(A) the amount of the credit allowable for

2 the taxable year under section 48A (determined

3 without regard to section 38(c)), exceeds

4 ‘‘(B) the amount allowable as a deduction

5 for the taxable year for expenses for energy

6 property (determined without regard to para7 graph (1)),

8 the amount chargeable to capital account for the

9 taxable year for such expenses shall be reduced by

10 the amount of such excess.

11 ‘‘(3) CONTROLLED GROUPS.—Paragraph (3) of

12 subsection (b) shall apply for purposes of this sub13 section.’’

14 (4) Section 29(b)(3)(A)(i)(III) is amended by

15 striking ‘‘section 48(a)(4)(C)’’ and inserting ‘‘section

16 48A(f)(1)(C)’’.

17 (5) Section 50(a)(2)(E) is amended by striking

18 ‘‘section 48(a)(5)’’ and inserting ‘‘section

19 48A(f)(2)’’.

20 (6) Section 168(e)(3)(B) is amended—

21 (A) by striking clause (vi)(I) and inserting

22 the following:

23 ‘‘(I) is described in paragraph (1)

24 or (2) of section 48A(d) (or would be

25 so described if ‘solar and wind’ were
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1 substituted for ‘solar’ in paragraph

2 (1)(B)),’’, and

3 (B) in the last sentence by striking ‘‘sec4 tion 48(a)(3)’’ and inserting ‘‘section

5 48A(c)(2)(A)’’.

6 (c) CLERICAL AMENDMENT.—The table of sections

7 for subpart E of part IV of subchapter A of chapter 1

8 is amended by striking the item relating to section 48 and

9 inserting the following:

‘‘Sec. 48. Reforestation credit.

‘‘Sec. 48A. Energy credit.’’

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

11 this section shall apply to property placed in service after

12 December 31, 1999, under rules similar to the rules of

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

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

15 the Revenue Reconciliation Act of 1990).

16 TITLE II—NONBUSINESS

17 ENERGY SYSTEMS

18 SEC. 201. CREDIT FOR CERTAIN NONBUSINESS ENERGY

19 SYSTEMS.

20 (a) IN GENERAL.—Subpart A of part IV of sub21 chapter A of chapter 1 (relating to nonrefundable personal

22 credits) is amended by inserting after section 25A the fol23 lowing:
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1 ‘‘SEC. 25B. NONBUSINESS ENERGY PROPERTY.

2 ‘‘(a) ALLOWANCE OF CREDIT.—

3 ‘‘(1) IN GENERAL.—In the case of an indi4 vidual, there shall be allowed as a credit against the

5 tax imposed by this chapter for the taxable year an

6 amount equal to the sum of—

7 ‘‘(A) the applicable percentage of residen8 tial energy property expenditures made by the

9 taxpayer during such year,

10 ‘‘(B) the credit amount (determined under

11 section 48A(e)) for each vehicle purchased dur12 ing the taxable year which is a qualified hybrid

13 vehicle (as defined in section 48A(e)(2)), and

14 ‘‘(C) the credit amount specified in the fol15 lowing table for a new, highly energy-efficient

16 principal residence:

‘‘Column A—Description Column B—Credit

Amount

Column C—Period

In the case of: The credit amount

is:

For the period:

Beginning on: Ending on:

30 percent property ............................................. $1,000 1/1/2000 12/31/2001

40 percent property ............................................. $1,500 1/1/2000 12/31/2002

50 percent property ............................................. $2,000 1/1/2000 12/31/2003.

17 In the case of any new, highly energy-efficient prin18 cipal residence, the credit amount shall be zero for

19 any period for which a credit amount is not specified

20 for such property in the table under subparagraph

21 (C).

22 ‘‘(2) APPLICABLE PERCENTAGE.—
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1 ‘‘(A) IN GENERAL.—The applicable per2 centage shall be determined in accordance with

3 the following table:

‘‘Column A—Description Column B— Applicable PercentageColumn C—Period

In the case of: The applicable percentage is:

For the period:

Beginning on: Ending on:

20 percent energy-efficient building property ..... 20 percent 1/1/2000 12/31/2003

10 percent energy-efficient building property ..... 10 percent 1/1/2000 12/31/2001

Solar water heating property .............................. 15 percent 1/1/2000 12/31/2006

Photovoltaic property .......................................... 15 percent 1/1/2000 12/31/2006.

4 ‘‘(B) PERIODS FOR WHICH PERCENTAGE

5 NOT SPECIFIED.—In the case of any residential

6 energy property, the applicable percentage shall

7 be zero for any period for which an applicable

8 percentage is not specified for such property

9 under subparagraph (A).

10 ‘‘(b) MAXIMUM CREDIT.—

11 ‘‘(1) IN GENERAL.—In the case of property de12 scribed in the following table, the amount of the

13 credit allowed under subsection (a)(1)(A) for the

14 taxable year for each item of such property with re15 spect to a dwelling unit shall not exceed the amount

16 specified for such property in such table:

‘‘Description of property item: Maximum allowable

credit amount is:

20 percent energy-efficient building property (other than

a fuel cell or natural gas heat pump).

$500.

20 percent energy-efficient building property:

fuel cell described in section 48A(d)(3)(A)(i) .......... $500 per each

kw/hr of capacity.

natural gas heat pump described in section

48A(d)(3)(D)(iv).

$1,000.

10 percent energy-efficient building property .................. $250.
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‘‘Description of property item: Maximum allowable

credit amount is:

Solar water heating property ........................................... $1,000.

Photovoltaic property ....................................................... $2,000.

1 ‘‘(2) COORDINATION OF LIMITATIONS.—If a

2 credit is allowed to the taxpayer for any taxable year

3 by reason of an acquisition of a new, highly energy4 efficient principal residence, no other credit shall be

5 allowed under subsection (a)(1)(A) with respect to

6 such residence during the 1-taxable year period be7 ginning with such taxable year.

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

9 ‘‘(1) RESIDENTIAL ENERGY PROPERTY EX10 PENDITURES.—The term ‘residential energy prop11 erty expenditures’ means expenditures made by the

12 taxpayer for qualified energy property installed on or

13 in connection with a dwelling unit which—

14 ‘‘(A) is located in the United States, and

15 ‘‘(B) is used by the taxpayer as a resi16 dence.

17 Such term includes expenditures for labor costs

18 properly allocable to the onsite preparation, assem19 bly, or original installation of the property.

20 ‘‘(2) QUALIFIED ENERGY PROPERTY.—

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

22 energy property’ means—

23 ‘‘(i) energy-efficient building property,
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1 ‘‘(ii) solar water heating property, and

2 ‘‘(iii) photovoltaic property.

3 ‘‘(B) SWIMMING POOL, ETC., USED AS

4 STORAGE MEDIUM; SOLAR PANELS.—For pur5 poses of this paragraph, the provisions of sub6 paragraphs (B) and (C) of section 48A(d)(1)

7 shall apply.

8 ‘‘(3) ENERGY-EFFICIENT BUILDING PROP9 ERTY.—The term ‘energy-efficient building property’

10 has the meaning given to such term by section

11 48A(e)(3).

12 ‘‘(4) SOLAR WATER HEATING PROPERTY.—The

13 term ‘solar water heating property’ means property

14 which, when installed in connection with a structure,

15 uses solar energy for the purpose of providing hot

16 water for use within such structure.

17 ‘‘(5) PHOTOVOLTAIC PROPERTY.—The term

18 ‘photovoltaic property’ means property which, when

19 installed in connection with a structure, uses a solar

20 photovoltaic process to generate electricity for use in

21 such structure.

22 ‘‘(6) NEW, HIGHLY ENERGY-EFFICIENT PRIN23 CIPAL RESIDENCE.—

24 ‘‘(A) IN GENERAL.—Property is a new,

25 highly energy-efficient principal residence if—
25

•S 1833 IS

1 ‘‘(i) such property is located in the

2 United States,

3 ‘‘(ii) the original use of such property

4 commences with the taxpayer and is, at

5 the time of such use, the principal resi6 dence of the taxpayer, and

7 ‘‘(iii) such property is certified before

8 such use commences as being 50 percent

9 property, 40 percent property, or 30 per10 cent property.

11 ‘‘(B) 50, 40, OR 30 PERCENT PROPERTY.—

12 ‘‘(i) IN GENERAL.—For purposes of

13 subparagraph (A), property is 50 percent

14 property, 40 percent property, or 30 per15 cent property if the projected energy usage

16 of such property is reduced by 50 percent,

17 40 percent, or 30 percent, respectively,

18 compared to the energy usage of a ref19 erence house that complies with minimum

20 standard practice, such as the 1998 Inter21 national Energy Conservation Code of the

22 International Code Council, as determined

23 according to the requirements specified in

24 clause (ii).

25 ‘‘(ii) PROCEDURES.—
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•S 1833 IS

1 ‘‘(I) IN GENERAL.—For purposes

2 of clause (i), energy usage shall be

3 demonstrated either by a component4 based approach or a performance5 based approach.

6 ‘‘(II) COMPONENT APPROACH.—

7 Compliance by the component ap8 proach is achieved when all of the

9 components of the house comply with

10 the requirements of prescriptive pack11 ages established by the Secretary of

12 Energy, in consultation with the Ad13 ministrator of the Environmental Pro14 tection Agency, such that they are

15 equivalent to the results of using the

16 performance-based approach of sub17 clause (III) to achieve the required re18 duction in energy usage.

19 ‘‘(III) PERFORMANCE-BASED AP20 PROACH.—Performance-based compli21 ance shall be demonstrated in terms

22 of the required percentage reductions

23 in projected energy use. Computer

24 software used in support of perform25 ance-based compliance must meet all
27

•S 1833 IS

1 of the procedures and methods for

2 calculating energy savings reductions

3 that are promulgated by the Secretary

4 of Energy. Such regulations on the

5 specifications for software shall be

6 based in the 1998 California Residen7 tial Alternative Calculation Method

8 Approval Manual, except that the cal9 culation procedures shall be developed

10 such that the same energy efficiency

11 measures qualify a home for tax cred12 its regardless of whether the home

13 uses a gas or oil furnace or boiler, or

14 an electric heat pump.

15 ‘‘(IV) APPROVAL OF SOFTWARE

16 SUBMISSIONS.—The Secretary of En17 ergy shall approve software submis18 sions that comply with the calculation

19 requirements of subclause (III).

20 ‘‘(C) DETERMINATIONS OF COMPLIANCE.—

21 A determination of compliance made for the

22 purposes of this paragraph shall be filed with

23 the Secretary of Energy within 1 year of the

24 date of such determination and shall include the

25 TIN of the certifier, the address of the building
28

•S 1833 IS

1 in compliance, and the identity of the person

2 for whom such determination was performed.

3 Determinations of compliance filed with the

4 Secretary of Energy shall be available for in5 spection by the Secretary.

6 ‘‘(D) COMPLIANCE.—

7 ‘‘(i) IN GENERAL.—The Secretary of

8 Energy in consultation with the Secretary

9 of the Treasury shall establish require10 ments for certification and compliance pro11 cedures after examining the requirements

12 for energy consultants and home energy

13 ratings providers specified by the Mortgage

14 Industry National Accreditation Proce15 dures for Home Energy Rating Systems.

16 ‘‘(ii) INDIVIDUALS QUALIFIED TO DE17 TERMINE COMPLIANCE.—Individuals quali18 fied to determine compliance shall be only

19 those individuals who are recognized by an

20 organization certified by the Secretary of

21 Energy for such purposes.

22 ‘‘(E) PRINCIPAL RESIDENCE.—The term

23 ‘principal residence’ has the same meaning as

24 when used in section 121, except that the pe25 riod for which a building is treated as the prin-
29

•S 1833 IS

1 cipal residence of the taxpayer shall also include

2 the 60-day period ending on the 1st day on

3 which it would (but for this subparagraph) first

4 be treated as the taxpayer’s principal residence.

5 ‘‘(d) SPECIAL RULES.—For purposes of this

6 section—

7 ‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC8 CUPANCY.—In the case of any dwelling unit which if

9 jointly occupied and used during any calendar year

10 as a residence by 2 or more individuals the following

11 shall apply:

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

13 under subsection (a) by reason of expenditures

14 made during such calendar year by any of such

15 individuals with respect to such dwelling unit

16 shall be determined by treating all of such indi17 viduals as 1 taxpayer whose taxable year is

18 such calendar year.

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

20 to such expenditures to each of such individ21 uals, a credit under subsection (a) for the tax22 able year in which such calendar year ends in

23 an amount which bears the same ratio to the

24 amount determined under subparagraph (A) as

25 the amount of such expenditures made by such
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•S 1833 IS

1 individual during such calendar year bears to

2 the aggregate of such expenditures made by all

3 of such individuals during such calendar year.

4 ‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE

5 HOUSING CORPORATION.—In the case of an indi6 vidual who is a tenant-stockholder (as defined in sec7 tion 216) in a cooperative housing corporation (as

8 defined in such section), such individual shall be

9 treated as having made his tenant-stockholder’s pro10 portionate share (as defined in section 216(b)(3)) of

11 any expenditures of such corporation.

12 ‘‘(3) CONDOMINIUMS.—

13 ‘‘(A) IN GENERAL.—In the case of an indi14 vidual who is a member of a condominium man15 agement association with respect to a condo16 minium which the individual owns, such indi17 vidual shall be treated as having made his pro18 portionate share of any expenditures of such as19 sociation.

20 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO21 CIATION.—For purposes of this paragraph, the

22 term ‘condominium management association’

23 means an organization which meets the require24 ments of paragraph (1) of section 528(c) (other

25 than subparagraph (E) thereof) with respect to
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•S 1833 IS

1 a condominium project substantially all of the

2 units of which are used as residences.

3 ‘‘(4) JOINT OWNERSHIP OF ENERGY ITEMS.—

4 ‘‘(A) IN GENERAL.—Any expenditure oth5 erwise qualifying as a residential energy prop6 erty expenditure shall not be treated as failing

7 to so qualify merely because such expenditure

8 was made with respect to 2 or more dwelling

9 units.

10 ‘‘(B) LIMITS APPLIED SEPARATELY.—In

11 the case of any expenditure described in sub12 paragraph (A), the amount of the credit allow13 able under subsection (a) shall (subject to para14 graph (1)) be computed separately with respect

15 to the amount of the expenditure made for each

16 dwelling unit.

17 ‘‘(5) ALLOCATION IN CERTAIN CASES.—

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

19 subparagraph (B), if less than 80 percent of

20 the use of an item is for nonbusiness purposes,

21 only that portion of the expenditures for such

22 item which is properly allocable to use for non23 business purposes shall be taken into account.

24 For purposes of this paragraph, use for a swim-
32

•S 1833 IS

1 ming pool shall be treated as use which is not

2 for nonbusiness purposes.

3 ‘‘(B) SPECIAL RULE FOR VEHICLES.—For

4 purposes of this section and section 48A, a ve5 hicle shall be treated as used entirely for busi6 ness or nonbusiness purposes if the majority of

7 the use of such vehicle is for business or non8 business purposes, as the case may be.

9 ‘‘(6) DOUBLE BENEFIT; PROPERTY USED OUT10 SIDE UNITED STATES, ETC., NOT QUALIFIED.—No

11 credit shall be allowed under subsection (a)(1)(B)

12 with respect to—

13 ‘‘(A) any property for which a credit is al14 lowed under section 30 or 48A,

15 ‘‘(B) any property referred to in section

16 50(b), and

17 ‘‘(C) the portion of the cost of any prop18 erty taken into account under section 179 or

19 179A.

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

21 EXPENDITURE.—

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

23 subparagraph (B), an expenditure with respect

24 to an item shall be treated as made when the

25 original installation of the item is completed.
33

•S 1833 IS

1 ‘‘(B) EXPENDITURES PART OF BUILDING

2 CONSTRUCTION.—In the case of an expenditure

3 in connection with the construction of a struc4 ture, such expenditure shall be treated as made

5 when the original use of the constructed struc6 ture by the taxpayer begins.

7 ‘‘(C) AMOUNT.—The amount of any ex8 penditure shall be the cost thereof.

9 ‘‘(8) PROPERTY FINANCED BY SUBSIDIZED EN10 ERGY FINANCING.—

11 ‘‘(A) REDUCTION OF EXPENDITURES.—

12 For purposes of determining the amount of res13 idential energy property expenditures made by

14 any individual with respect to any dwelling unit,

15 there shall not be taken in to account expendi16 tures which are made from subsidized energy fi17 nancing (as defined in section 48A(f)(1)(C)).

18 ‘‘(B) DOLLAR LIMITS REDUCED.—The dol19 lar amounts in the table contained in subsection

20 (b)(1) with respect to each property purchased

21 for such dwelling unit for any taxable year of

22 such taxpayer shall be reduced proportionately

23 by an amount equal to the sum of—

24 ‘‘(i) the amount of the expenditures

25 made by the taxpayer during such taxable
34

•S 1833 IS

1 year with respect to such dwelling unit and

2 not taken into account by reason of sub3 paragraph (A), and

4 ‘‘(ii) the amount of any Federal,

5 State, or local grant received by the tax6 payer during such taxable year which is

7 used to make residential energy property

8 expenditures with respect to the dwelling

9 unit and is not included in the gross in10 come of such taxpayer.

11 ‘‘(9) SAFETY CERTIFICATIONS.—No credit shall

12 be allowed under this section for an item of property

13 unless—

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

15 property, such property is certified for perform16 ance and safety by the non-profit Solar Rating

17 Certification Corporation or a comparable enti18 ty endorsed by the government of the State in

19 which such property is installed, and

20 ‘‘(B) in the case of photovoltaic property,

21 such property meets appropriate fire and elec22 tric code requirements.

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

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

25 expenditure with respect to any property, the increase in
35

•S 1833 IS

1 the basis of such property which would (but for this sub2 section) result from such expenditure shall be reduced by

3 the amount of the credit so allowed.’’

4 (b) CONFORMING AMENDMENTS.—

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

6 ‘‘and’’ at the end of paragraph (26), by striking the

7 period at the end of paragraph (27) and inserting ‘‘;

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

9 ‘‘(28) to the extent provided in section 25B(e),

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

11 has been allowed under section 25B.’’

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

13 IV of subchapter A of chapter 1 is amended by in14 serting after the item relating to section 25A the fol15 lowing:

‘‘Sec. 25B. Nonbusiness energy property.’’

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

17 this section shall apply to expenditures after December 31,

18 1999.

19 TITLE III—ALTERNATIVE FUELS

20 SEC. 301. ALLOCATION OF ALCOHOL FUELS CREDIT TO PA21 TRONS OF A COOPERATIVE.

22 (a) IN GENERAL.—Section 40(d) (relating to alcohol

23 used as fuel) is amended by adding at the end the fol24 lowing:
36

•S 1833 IS

1 ‘‘(6) ALLOCATION OF SMALL ETHANOL PRO2 DUCER CREDIT TO PATRONS OF COOPERATIVE.—

3 ‘‘(A) IN GENERAL.—In the case of a coop4 erative organization described in section

5 1381(a), any portion of the credit determined

6 under subsection (a)(3) for the taxable year

7 may, at the election of the organization made

8 on a timely filed return (including extensions)

9 for such year, be apportioned pro rata among

10 patrons of the organization on the basis of the

11 quantity or value of business done with or for

12 such patrons for the taxable year. Such an elec13 tion, once made, shall be irrevocable for such

14 taxable year.

15 ‘‘(B) TREATMENT OF ORGANIZATIONS AND

16 PATRONS.—The amount of the credit appor17 tioned to patrons pursuant to subparagraph

18 (A)—

19 ‘‘(i) shall not be included in the

20 amount determined under subsection (a)

21 for the taxable year of the organization,

22 and

23 ‘‘(ii) shall be included in the amount

24 determined under subsection (a) for the

25 taxable year of each patron in which the
37

•S 1833 IS

1 patronage dividend for the taxable year re2 ferred to in subparagraph (A) is includible

3 in gross income.

4 ‘‘(C) SPECIAL RULE FOR DECREASING

5 CREDIT FOR TAXABLE YEAR.—If the amount of

6 the credit of a cooperative organization deter7 mined under subsection (a)(3) for a taxable

8 year is less than the amount of such credit

9 shown on the cooperative organization’s return

10 for such year, an amount equal to the excess of

11 such reduction over the amount not apportioned

12 to the patrons under subparagraph (A) for the

13 taxable year shall be treated as an increase in

14 tax imposed by this chapter on the organiza15 tion. Any such increase shall not be treated as

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

18 subpart or subpart A, B, E, or G of this part.’’

19 (b) TECHNICAL AMENDMENT.—Section 1388 (relat20 ing to definitions and special rules for cooperative organi21 zations) is amended by adding at the end the following:
38

•S 1833 IS

1 ‘‘(k) CROSS REFERENCE.—

‘‘For provisions relating to the apportionment of

the alcohol fuels credit between cooperative organizations and their patrons, see section 40(d)(6).’’

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

3 this section shall apply to taxable years beginning after

4 December 31, 1999.

5 TITLE IV—AUTOMOBILES

6 SEC. 401. EXTENSION OF CREDIT FOR QUALIFIED ELEC7 TRIC VEHICLES.

8 (a) EXTENSION OF CREDIT FOR QUALIFIED ELEC9 TRIC VEHICLES.—Subsection (f) of section 30 (relating to

10 termination) is amended by striking ‘‘December 31, 2004’’

11 and inserting ‘‘December 31, 2006’’.

12 (b) REPEAL OF PHASEOUT.—Subsection (b) of sec13 tion 30 (relating to limitations) is amended by striking

14 paragraph (2) and redesignating paragraph (3) as para15 graph (2).

16 (c) NO DOUBLE BENEFIT.—

17 (1) Subsection (d) of section 30 (relating to

18 special rules) is amended by adding at the end the

19 following:

20 ‘‘(5) NO DOUBLE BENEFIT.—No credit shall be

21 allowed under subsection (a) with respect to any ve22 hicle if the taxpayer claims a credit for such vehicle

23 under section 25B(a)(1)(B) or 48A(a)(2).’’
39

•S 1833 IS

1 (2) Paragraph (3) of section 30(d) (relating to

2 property used outside United States, etc., not quali3 fied) is amended by striking ‘‘section 50(b)’’ and in4 serting ‘‘section 25B, 48A, or 50(b)’’.

5 (3) Paragraph (5) of section 179A(e) (relating

6 to property used outside United States, etc., not

7 qualified) is amended by striking ‘‘section 50(b)’’

8 and inserting ‘‘section 25B, 48A, or 50(b)’’.

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

10 this section shall apply to property placed in service after

11 the date of the enactment of this Act.

12 TITLE V—CLEAN COAL

13 TECHNOLOGIES

14 SEC. 501. CREDIT FOR INVESTMENT IN QUALIFYING CLEAN

15 COAL TECHNOLOGY.

16 (a) ALLOWANCE OF QUALIFYING CLEAN COAL

17 TECHNOLOGY FACILITY CREDIT.—Section 46 (relating to

18 amount of credit) is amended by striking ‘‘and’’ at the

19 end of paragraph (2), by striking the period at the end

20 of paragraph (3) and inserting ‘‘, and’’, and by adding

21 at the end the following:

22 ‘‘(4) the qualifying clean coal technology facility

23 credit.’’

24 (b) AMOUNT OF QUALIFYING CLEAN COAL TECH25 NOLOGY FACILITY CREDIT.—Subpart E of part IV of sub-
40

•S 1833 IS

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

2 investment credit), as amended by section 101(a), is

3 amended by inserting after section 48A the following:

4 ‘‘SEC. 48B. QUALIFYING CLEAN COAL TECHNOLOGY FACIL5 ITY CREDIT.

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

7 qualifying clean coal technology facility credit for any tax8 able year is an amount equal to 10 percent of the qualified

9 investment in a qualifying clean coal technology facility

10 for such taxable year.

11 ‘‘(b) QUALIFYING CLEAN COAL TECHNOLOGY FACIL12 ITY.—

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

14 (a), the term ‘qualifying clean coal technology facil15 ity’ means a facility of the taxpayer—

16 ‘‘(A)(i)(I) which replaces a conventional

17 technology facility of the taxpayer and the origi18 nal use of which commences with the taxpayer,

19 or

20 ‘‘(II) which is a retrofitted or repowered

21 conventional technology facility, the retrofitting

22 or repowering of which is completed by the tax23 payer (but only with respect to that portion of

24 the basis which is properly attributable to such

25 retrofitting or repowering), or
41

•S 1833 IS

1 ‘‘(ii) that is acquired through purchase (as

2 defined by section 179(d)(2)),

3 ‘‘(B) that is depreciable under section 167,

4 ‘‘(C) that has a useful life of not less than

5 4 years,

6 ‘‘(D) that is located in the United States,

7 and

8 ‘‘(E) that uses qualifying clean coal tech9 nology.

10 ‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—

11 For purposes of subparagraph (A) of paragraph (1),

12 in the case of a facility that—

13 ‘‘(A) is originally placed in service by a

14 person, and

15 ‘‘(B) is sold and leased back by such per16 son, or is leased to such person, within 3

17 months after the date such facility was origi18 nally placed in service, for a period of not less

19 than 12 years,

20 such facility shall be treated as originally placed in

21 service not earlier than the date on which such prop22 erty is used under the leaseback (or lease) referred

23 to in subparagraph (B). The preceding sentence

24 shall not apply to any property if the lessee and les25 sor of such property make an election under this
42

•S 1833 IS

1 sentence. Such an election, once made, may be re2 voked only with the consent of the Secretary.

3 ‘‘(3) QUALIFYING CLEAN COAL TECHNOLOGY.—

4 For purposes of paragraph (1)(A)—

5 ‘‘(A) IN GENERAL.—The term ‘qualifying

6 clean coal technology’ means, with respect to

7 clean coal technology—

8 ‘‘(i) applications totaling 1,000

9 megawatts of advanced pulverized coal or

10 atmospheric fluidized bed combustion tech11 nology installed as a new, retrofit, or

12 repowering application and operated be13 tween 2000 and 2014 that has a design

14 average net heat rate of not more than

15 8,750 Btu’s per kilowatt hour,

16 ‘‘(ii) applications totaling 1,500

17 megawatts of pressurized fluidized bed

18 combustion technology installed as a new,

19 retrofit, or repowering application and op20 erated between 2000 and 2014 that has a

21 design average net heat rate of not more

22 than 8,400 Btu’s per kilowatt hour,

23 ‘‘(iii) applications totaling 1,500

24 megawatts of integrated gasification com25 bined cycle technology installed as a new,
43

•S 1833 IS

1 retrofit, or repowering application and op2 erated between 2000 and 2014 that has a

3 design average net heat rate of not more

4 than 8,550 Btu’s per kilowatt hour, and

5 ‘‘(iv) applications totaling 2,000

6 megawatts or equivalent of technology for

7 the production of electricity installed as a

8 new, retrofit, or repowering application

9 and operated between 2000 and 2014 that

10 has a carbon emission rate that is not

11 more than 85 percent of conventional tech12 nology.

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

14 include clean coal technology projects receiving

15 or scheduled to receive funding under the Clean

16 Coal Technology Program of the Department of

17 Energy.

18 ‘‘(C) CLEAN COAL TECHNOLOGY.—The

19 term ‘clean coal technology’ means advanced

20 technology that utilizes coal to produce 50 per21 cent or more of its thermal output as electricity

22 including advanced pulverized coal or atmos23 pheric fluidized bed combustion, pressurized flu24 idized bed combustion, integrated gasification

25 combined cycle, and any other technology for
44

•S 1833 IS

1 the production of electricity that exceeds the

2 performance of conventional technology.

3 ‘‘(D) CONVENTIONAL COAL TECH4 NOLOGY.—The term ‘conventional technology’

5 means—

6 ‘‘(i) coal-fired combustion technology

7 with a design average net heat rate of not

8 less than 9,300 Btu’s per kilowatt hour

9 (HHV) and a carbon equivalents emission

10 rate of not more than 0.53 pounds of car11 bon per kilowatt hour; or

12 ‘‘(ii) natural gas-fired combustion

13 technology with a design average net heat

14 rate of not less than 7,500 Btu’s per kilo15 watt hour (HHV) and a carbon equivalents

16 emission rate of not more than 0.24 pound

17 of carbon per kilowatt hour.

18 ‘‘(E) DESIGN AVERAGE NET HEAT RATE.—

19 The term ‘design average net heat rate’ shall be

20 based on the design average annual heat input

21 to and the design average annual net electrical

22 output from the qualifying clean coal technology

23 (determined without regard to such technology’s

24 co-generation of steam).
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•S 1833 IS

1 ‘‘(F) SELECTION CRITERIA.—Selection cri2 teria for clean coal technology facilities—

3 ‘‘(i) shall be established by the Sec4 retary of Energy as part of a competitive

5 solicitation,

6 ‘‘(ii) shall include primary criteria of

7 minimum design average net heat rate,

8 maximum design average thermal effi9 ciency, and lowest cost to the government,

10 and

11 ‘‘(iii) shall include supplemental cri12 teria as determined appropriate by the

13 Secretary of Energy.

14 ‘‘(c) QUALIFIED INVESTMENT.—For purposes of sub15 section (a), the term ‘qualified investment’ means, with

16 respect to any taxable year, the basis of a qualifying clean

17 coal technology facility placed in service by the taxpayer

18 during such taxable year.

19 ‘‘(d) QUALIFIED PROGRESS EXPENDITURES.—

20 ‘‘(1) INCREASE IN QUALIFIED INVESTMENT.—

21 In the case of a taxpayer who has made an election

22 under paragraph (5), the amount of the qualified in23 vestment of such taxpayer for the taxable year (de24 termined under subsection (c) without regard to this

25 section) shall be increased by an amount equal to
46

•S 1833 IS

1 the aggregate of each qualified progress expenditure

2 for the taxable year with respect to progress expend3 iture property.

4 ‘‘(2) PROGRESS EXPENDITURE PROPERTY DE5 FINED.—For purposes of this subsection, the term

6 ‘progress expenditure property’ means any property

7 being constructed by or for the taxpayer and which

8 it is reasonable to believe will qualify as a qualifying

9 clean coal technology facility which is being con10 structed by or for the taxpayer when it is placed in

11 service.

12 ‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE13 FINED.—For purposes of this subsection—

14 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—In

15 the case of any self-constructed property, the

16 term ‘qualified progress expenditures’ means

17 the amount which, for purposes of this subpart,

18 is properly chargeable (during such taxable

19 year) to capital account with respect to such

20 property.

21 ‘‘(B) NON-SELF-CONSTRUCTED PROP22 ERTY.—In the case of non-self-constructed

23 property, the term ‘qualified progress expendi24 tures’ means the amount paid during the tax-
47

•S 1833 IS

1 able year to another person for the construction

2 of such property.

3 ‘‘(4) OTHER DEFINITIONS.—For purposes of

4 this subsection—

5 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—

6 The term ‘self-constructed property’ means

7 property for which it is reasonable to believe

8 that more than half of the construction expendi9 tures will be made directly by the taxpayer.

10 ‘‘(B) NON-SELF-CONSTRUCTED PROP11 ERTY.—The term ‘non-self-constructed prop12 erty’ means property which is not self-con13 structed property.

14 ‘‘(C) CONSTRUCTION, ETC.—The term

15 ‘construction’ includes reconstruction and erec16 tion, and the term ‘constructed’ includes recon17 structed and erected.

18 ‘‘(D) ONLY CONSTRUCTION OF QUALI19 FYING CLEAN COAL TECHNOLOGY FACILITY TO

20 BE TAKEN INTO ACCOUNT.—Construction shall

21 be taken into account only if, for purposes of

22 this subpart, expenditures therefor are properly

23 chargeable to capital account with respect to

24 the property.
48

•S 1833 IS

1 ‘‘(5) ELECTION.—An election under this sub2 section may be made at such time and in such man3 ner as the Secretary may by regulations prescribe.

4 Such an election shall apply to the taxable year for

5 which made and to all subsequent taxable years.

6 Such an election, once made, may not be revoked ex7 cept with the consent of the Secretary.

8 ‘‘(e) COORDINATION WITH OTHER CREDITS.—This

9 section shall not apply to any property with respect to

10 which the rehabilitation credit under section 47 or the en11 ergy credit under section 48A is allowed unless the tax12 payer elects to waive the application of such credit to such

13 property.

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

15 with respect to any qualified investment after December

16 31, 2014.’’

17 (c) RECAPTURE.—Section 50(a) (relating to other

18 special rules) is amended by adding at the end the fol19 lowing:

20 ‘‘(6) SPECIAL RULES RELATING TO QUALIFYING

21 CLEAN COAL TECHNOLOGY FACILITY.—For purposes

22 of applying this subsection in the case of any credit

23 allowable by reason of section 48B, the following

24 shall apply:
49

•S 1833 IS

1 ‘‘(A) GENERAL RULE.—In lieu of the

2 amount of the increase in tax under paragraph

3 (1), the increase in tax shall be an amount

4 equal to the investment tax credit allowed under

5 section 38 for all prior taxable years with re6 spect to a qualifying clean coal technology facil7 ity (as defined by section 48B(b)(1)) multiplied

8 by a fraction whose numerator is the number of

9 years remaining to fully depreciate under this

10 title the qualifying clean coal technology facility

11 disposed of, and whose denominator is the total

12 number of years over which such facility would

13 otherwise have been subject to depreciation. For

14 purposes of the preceding sentence, the year of

15 disposition of the qualifying clean coal tech16 nology facility property shall be treated as a

17 year of remaining depreciation.

18 ‘‘(B) PROPERTY CEASES TO QUALIFY FOR

19 PROGRESS EXPENDITURES.—Rules similar to

20 the rules of paragraph (2) shall apply in the

21 case of qualified progress expenditures for a

22 qualifying clean coal technology facility under

23 section 48B, except that the amount of the in24 crease in tax under subparagraph (A) of this
50

•S 1833 IS

1 paragraph shall be substituted in lieu of the

2 amount described in such paragraph (2).

3 ‘‘(C) APPLICATION OF PARAGRAPH.—This

4 paragraph shall be applied separately with re5 spect to the credit allowed under section 38 re6 garding a qualifying clean coal technology facil7 ity.’’

8 (d) TRANSITIONAL RULE.—Section 39(d) of the In9 ternal Revenue Code of 1986 (relating to transitional

10 rules), as amended by section 101(b)(2), is amended by

11 adding at the end the following:

12 ‘‘(10) NO CARRYBACK OF SECTION 48B CREDIT

13 BEFORE EFFECTIVE DATE.—No portion of the un14 used business credit for any taxable year which is

15 attributable to the qualifying clean coal technology

16 facility credit determined under section 48B may be

17 carried back to a taxable year ending before the date

18 of the enactment of section 48B.’’

19 (e) TECHNICAL AMENDMENTS.—

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

21 ‘‘and’’ at the end of clause (ii), by striking the pe22 riod at the end of clause (iii) and inserting ‘‘, and’’,

23 and by adding at the end the following:

24 ‘‘(iv) the portion of the basis of any

25 qualifying clean coal technology facility at-
51

•S 1833 IS

1 tributable to any qualified investment (as

2 defined by section 48B(c)).’’

3 (2) Section 50(a)(4) is amended by striking

4 ‘‘and (2)’’ and inserting ‘‘, (2), and (6)’’.

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

6 IV of subchapter A of chapter 1, as amended by sec7 tion 101(d), is amended by inserting after the item

8 relating to section 48A the following:

‘‘Sec. 48B. Qualifying clean coal technology facility credit.’’

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

10 this section shall apply to periods after December 31,

11 1999, under rules similar to the rules of section 48(m)

12 of the Internal Revenue Code of 1986 (as in effect on the

13 day before the date of the enactment of the Revenue Rec14 onciliation Act of 1990).

15 SEC. 502. CREDIT FOR PRODUCTION FROM QUALIFYING

16 CLEAN COAL TECHNOLOGY.

17 (a) CREDIT FOR PRODUCTION FROM QUALIFYING

18 CLEAN COAL TECHNOLOGY.—Subpart D of part IV of

19 subchapter A of chapter 1 (relating to business related

20 credits) is amended by adding at the end the following:

21 ‘‘SEC. 45D. CREDIT FOR PRODUCTION FROM QUALIFYING

22 CLEAN COAL TECHNOLOGY.

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

24 the qualifying clean coal technology production credit of
52

•S 1833 IS

1 any taxpayer for any taxable year is equal to the applica2 ble amount for each kilowatt hour—

3 ‘‘(1) produced by the taxpayer at a qualifying

4 clean coal technology facility during the 10-year pe5 riod beginning on the date the facility was originally

6 placed in service, and

7 ‘‘(2) sold by the taxpayer to an unrelated per8 son during such taxable year.

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

10 section, the applicable amount with respect to production

11 from a qualifying clean coal technology facility shall be

12 determined as follows:

13 ‘‘(1) In the case of a facility originally placed

14 in service before 2007, if—

‘‘The facility design average net heat rate, Btu/kWh

(HHV) is equal to:

The applicable amount is:

For 1st 5 years

of such service

For 2d 5 years of

such service

Not more than 8400 ............................................................. $.0130 $.0110

More than 8400 but not more than 8550 ............................ $.0100 $.0085

More than 8550 but not more than 8750 ............................ $.0090 $.0070.

15 ‘‘(2) In the case of a facility originally placed

16 in service after 2006 and before 2011, if—

‘‘The facility design average net heat rate, Btu/kWh

(HHV) is equal to:

The applicable amount is:

For 1st 5 years

of such service

For 2d 5 years of

such service

Not more than 7770 ............................................................. $.0100 $.0080

More than 7770 but not more than 8125 ............................ $.0080 $.0065

More than 8125 but not more than 8350 ............................ $.0070 $.0055.

17 ‘‘(3) In the case of a facility originally placed

18 in service after 2010 and before 2015, if—
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•S 1833 IS

‘‘The facility design average net heat rate, Btu/kWh

(HHV) is equal to:

The applicable amount is:

For 1st 5 years

of such service

For 2d 5 years of

such service

Not more than 7720 ............................................................. $.0085 $.0070

More than 7720 but not more than 7380 ............................ $.0070 $.0045.

1 ‘‘(c) INFLATION ADJUSTMENT FACTOR.—Each

2 amount in paragraphs (1), (2), and (3) shall each be ad3 justed by multiplying such amount by the inflation adjust4 ment factor for the calendar year in which the amount

5 is applied. If any amount as increased under the preceding

6 sentence is not a multiple of 0.01 cent, such amount shall

7 be rounded to the nearest multiple of 0.01 cent.

8 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur9 poses of this section—

10 ‘‘(1) any term used in this section which is also

11 used in section 48B shall have the meaning given

12 such term in section 48B,

13 ‘‘(2) the rules of paragraphs (3), (4), and (5)

14 of section 45 shall apply,

15 ‘‘(3) the term ‘inflation adjustment factor’

16 means, with respect to a calendar year, a fraction

17 the numerator of which is the GDP implicit price

18 deflator for the preceding calendar year and the de19 nominator of which is the GDP implicit price

20 deflator for the calendar year 1998, and

21 ‘‘(4) the term ‘GDP implicit price deflator’

22 means the most recent revision of the implicit price
54

•S 1833 IS

1 deflator for the gross domestic product as computed

2 by the Department of Commerce before March 15 of

3 the calendar year.’’

4 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec5 tion 38(b) is amended by striking ‘‘plus’’ at the end of

6 paragraph (11), by striking the period at the end of para7 graph (12) and inserting ‘‘, plus’’, and by adding at the

8 end the following:

9 ‘‘(13) the qualifying clean coal technology pro10 duction credit determined under section 45D(a).’’

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

12 transitional rules), as amended by section 501(d), is

13 amended by adding at the end the following:

14 ‘‘(11) NO CARRYBACK OF CERTAIN CREDITS

15 BEFORE EFFECTIVE DATE.—No portion of the un16 used business credit for any taxable year which is

17 attributable to the credits allowable under any sec18 tion added to this subpart by the amendments made

19 by the Energy Security Tax Act of 1999 may be car20 ried back to a taxable year ending before the date

21 of the enactment of such Act.’’

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

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

24 is amended by adding at the end the following:

‘‘Sec. 45D. Credit for production from qualifying clean coal technology.’’
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•S 1833 IS

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

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

3 enactment of this Act.

4 SEC. 503. RISK POOL FOR QUALIFYING CLEAN COAL TECH5 NOLOGY.

6 (a) ESTABLISHMENT.—The Secretary of the Treas7 ury shall establish a financial risk pool which shall be

8 available to any United States owner of qualifying clean

9 coal technology (as defined in section 48B(b)(3) of the In10 ternal Revenue Code of 1986) to offset for the first 3 three

11 years of the operation of such technology the costs (not

12 to exceed 5 percent of the total cost of installation) for

13 modifications resulting from the technology’s failure to

14 achieve its design performance.

15 (b) AUTHORIZATION OF APPROPRIATIONS.—There is

16 authorized to be appropriated such sums as are necessary

17 to carry out the purposes of this section.

18 TITLE VI—METHANE RECOVERY

19 SEC. 601. CREDIT FOR CAPTURE OF COALBED METHANE

20 GAS.

21 (a) CREDIT FOR CAPTURE OF COALBED METHANE

22 GAS.—Subpart D of part IV of subchapter A of chapter

23 1 (relating to business related credits), as amended by sec24 tion 502(a), is amended by adding at the end the fol25 lowing:
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•S 1833 IS

1 ‘‘SEC. 45E. CREDIT FOR CAPTURE OF COALBED METHANE

2 GAS.

3 ‘‘For purposes of section 38, the coalbed methane gas

4 capture credit of any taxpayer for any taxable year is $10

5 for each ton of carbon-equivalent coalbed methane gas

6 captured by the taxpayer and sold by the taxpayer to an

7 unrelated person during such taxable year (within the

8 meaning of section 45).’’

9 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec10 tion 38(b), as amended by section 502(b), is amended by

11 striking ‘‘plus’’ at the end of paragraph (12), by striking

12 the period at the end of paragraph (13) and inserting ‘‘,

13 plus’’, and by adding at the end the following:

14 ‘‘(14) the coalbed methane gas capture credit

15 determined under section 45E(a).’’

16 (c) CLERICAL AMENDMENT.—The table of sections

17 for subpart D of part IV of subchapter A of chapter 1,

18 as amended by section 502(d), is amended by adding at

19 the end the following:

‘‘Sec. 45E. Credit for capture of coalbed methane gas.’’

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

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

22 enactment of this Act.
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•S 1833 IS

1 TITLE VII—OIL AND GAS

2 PRODUCTION

3 SEC. 701. CREDIT FOR PRODUCTION OF RE-REFINED LU4 BRICATING OIL.

5 (a) IN GENERAL.—Subpart D of part IV of sub6 chapter A of chapter 1 (relating to business related cred7 its), as amended by section 601(a), is amended by adding

8 at the end the following:

9 ‘‘SEC. 45F. CREDIT FOR PRODUCING RE-REFINED LUBRI10 CATING OIL.

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

12 the re-refined lubricating oil production credit of any tax13 payer for any taxable year is equal to $4.05 per barrel

14 of qualified re-refined lubricating oil production which is

15 attributable to the taxpayer (within the meaning of section

16 29(d)(3)).

17 ‘‘(b) QUALIFIED RE-REFINED LUBRICATING OIL

18 PRODUCTION.—For purposes of this section—

19 ‘‘(1) IN GENERAL.—The term ‘qualified re-re20 fined lubricating oil production’ means a base oil

21 manufactured from at least 95 percent used oil and

22 not more than 2 percent of previously unused oil by

23 a re-refining process which effectively removes phys24 ical and chemical impurities and spent and unspent

25 additives to the extent that such base oil meets in-
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•S 1833 IS

1 dustry standards for engine oil as defined by the

2 American Petroleum Institute document API 1509

3 as in effect on the date of the enactment of this sec4 tion.

5 ‘‘(2) LIMITATION ON AMOUNT OF PRODUCTION

6 WHICH MAY QUALIFY.—Re-refined lubricating oil

7 produced during any taxable year shall not be treat8 ed as qualified re-refined lubricating oil production

9 but only to the extent average daily production dur10 ing the taxable year exceeds 7,000 barrels.

11 ‘‘(3) BARREL.—The term ‘barrel’ has the

12 meaning given such term by section 613A(e)(4).

13 ‘‘(c) INFLATION ADJUSTMENT.—In the case of any

14 taxable year beginning in a calendar year after 1999, the

15 dollar amount contained in subsection (a) shall be in16 creased to an amount equal to such dollar amount multi17 plied by the inflation adjustment factor for such calendar

18 year (determined under section 29(d)(2)(B) by sub19 stituting ‘1998’ for ‘1979’).’’

20 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec21 tion 38(b) (relating to current year business credit), as

22 amended by section 601(b), is amended by striking ‘‘plus’’

23 at the end of paragraph (13), by striking the period at

24 the end of paragraph (14) and inserting ‘‘, plus’’, and by

25 adding at the end the following:
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•S 1833 IS

1 ‘‘(15) the re-refined lubricating oil production

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

3 (c) CLERICAL AMENDMENT.—The table of sections

4 for subpart D of part IV of subchapter A of chapter 1,

5 as amended by section 601(c), is amended by adding at

6 the end the following:

‘‘Sec. 45F. Credit for producing re-refined lubricating oil.’’

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

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

9 enactment of this Act.

10 SEC. 702. 5-YEAR NET OPERATING LOSS CARRYBACK FOR

11 LOSSES ATTRIBUTABLE TO OPERATING MIN12 ERAL INTERESTS OF INDEPENDENT OIL AND

13 GAS PRODUCERS.

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

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

16 by adding at the end the following new subparagraph:

17 ‘‘(H) LOSSES ON OPERATING MINERAL IN18 TERESTS OF INDEPENDENT OIL AND GAS PRO19 DUCERS.—In the case of a taxpayer—

20 ‘‘(i) which has an eligible oil and gas

21 loss (as defined in subsection ( j)) for a

22 taxable year, and

23 ‘‘(ii) which is not an integrated oil

24 company (as defined in section 291(b)(4)),
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•S 1833 IS

1 such eligible oil and gas loss shall be a net op2 erating loss carryback to each of the 5 taxable

3 years preceding the taxable year of such loss.’’

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

5 amended by redesignating subsection ( j) as subsection (k)

6 and by inserting after subsection (i) the following new sub7 section:

8 ‘‘( j) ELIGIBLE OIL AND GAS LOSS.—For purposes

9 of this section—

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

11 gas loss’ means the lesser of—

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

13 operating loss for the taxable year if only in14 come and deductions attributable to operating

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

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

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

18 for such taxable year.

19 ‘‘(2) COORDINATION WITH SUBSECTION

20 (b)(2).—For purposes of applying subsection (b)(2),

21 an eligible oil and gas loss for any taxable year shall

22 be treated in a manner similar to the manner in

23 which a specified liability loss is treated.

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

25 year carryback under subsection (b)(1)(H) from any
61

•S 1833 IS

1 loss year may elect to have the carryback period

2 with respect to such loss year determined without re3 gard to subsection (b)(1)(H).’’

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

5 this section shall apply to net operating losses for taxable

6 years beginning after December 31, 1998.

7 SEC. 703. DEDUCTION FOR DELAY RENTAL PAYMENTS.

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

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

10 the following new subsection:

11 ‘‘( j) DELAY RENTAL PAYMENTS FOR DOMESTIC OIL

12 AND GAS WELLS.—

13 ‘‘(1) IN GENERAL.—Notwithstanding subsection

14 (a), a taxpayer may elect to treat delay rental pay15 ments incurred in connection with the development

16 of oil or gas within the United States (as defined in

17 section 638) as payments which are not chargeable

18 to capital account. Any payments so treated shall be

19 allowed as a deduction in the taxable year in which

20 paid or incurred.

21 ‘‘(2) DELAY RENTAL PAYMENTS.—For purposes

22 of paragraph (1), the term ‘delay rental payment’

23 means an amount paid for the privilege of deferring

24 development of an oil or gas well.’’
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•S 1833 IS

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

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

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

4 this section shall apply to amounts paid or incurred in tax5 able years beginning after December 31, 1999.

6 SEC. 704. ELECTION TO EXPENSE GEOLOGICAL AND GEO7 PHYSICAL EXPENDITURES.

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

9 expenditures) is amended by adding after subsection ( j)

10 the following new subsection:

11 ‘‘(k) GEOLOGICAL AND GEOPHYSICAL EXPENDI12 TURES FOR DOMESTIC OIL AND GAS WELLS.—Notwith13 standing subsection (a), a taxpayer may elect to treat geo14 logical and geophysical expenses incurred in connection

15 with the exploration for, or development of, oil or gas with16 in the United States (as defined in section 638) as ex17 penses which are not chargeable to capital account. Any

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

19 taxable year in which paid or incurred.’’

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

21 is amended by inserting ‘‘263(k),’’ after ‘‘263( j),’’.

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

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

24 years beginning after December 31, 1999.
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•S 1833 IS

1 SEC. 705. ELIMINATION OF LIMITATION BASED ON 65 PER2 CENT OF TAXABLE INCOME.

3 (a) IN GENERAL.—Section 613A(d) (relating to limi4 tation on percentage depletion in case of oil and gas wells)

5 is amended by striking paragraph (1) and by redesig6 nating paragraphs (2), (3), (4), and (5) as paragraphs (1),

7 (2), (3), and (4), respectively.

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

9 this section shall apply to taxable years beginning after

10 December 31, 1998.

11 SEC. 706. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLE12 TION FOR MARGINAL PRODUCTION.

13 (a) IN GENERAL.—Subparagraph (H) of section

14 613A(c)(6) is amended—

15 (1) by striking ‘‘, and before January 1, 2000’’,

16 and

17 (2) by striking ‘‘TEMPORARY SUSPENSION’’ in

18 the heading and inserting ‘‘NONAPPLICATION’’.

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

20 this section shall apply to taxable years beginning after

21 December 31, 1999.
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1 TITLE VIII—RENEWABLE POWER

2 GENERATION

3 SEC. 801. MODIFICATIONS TO CREDIT FOR ELECTRICITY

4 PRODUCED FROM RENEWABLE RESOURCES.

5 (a) EXPANSION OF QUALIFIED ENERGY RE6 SOURCES.—

7 (1) IN GENERAL.—Section 45(c)(1) (defining

8 qualified energy resources) is amended by striking

9 ‘‘and’’ at the end of subparagraph (A), by striking

10 the period at the end of subparagraph (B) and in11 serting a comma, and by adding at the end the fol12 lowing:

13 ‘‘(C) biomass (other than closed-loop bio14 mass), and

15 ‘‘(D) poultry waste.’’

16 (2) DEFINITIONS.—Section 45(c) is amended

17 by redesignating paragraph (3) as paragraph (4)

18 and by striking paragraph (2) and inserting the fol19 lowing:

20 ‘‘(2) BIOMASS.—

21 ‘‘(A) IN GENERAL.—The term ‘biomass’

22 means—

23 ‘‘(i) closed-loop biomass, and

24 ‘‘(ii) any solid, nonhazardous, cel25 lulosic waste material, which is segregated
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•S 1833 IS

1 from other waste materials, and which is

2 derived from—

3 ‘‘(I) any of the following forest4 related resources: mill residues,

5 precommercial thinnings, slash, and

6 brush, but not including old-growth

7 timber,

8 ‘‘(II) waste pallets, crates, and

9 dunnage, and landscape or right-of10 way tree trimmings, but not including

11 unsegregated municipal solid waste

12 (garbage) and post-consumer waste13 paper, or

14 ‘‘(III) agriculture sources, includ15 ing orchard tree crops, vineyard,

16 grain, legumes, sugar, and other crop

17 by-products or residues.

18 ‘‘(B) CLOSED-LOOP BIOMASS.—The term

19 ‘closed-loop biomass’ means any organic mate20 rial from a plant which is planted exclusively

21 for purposes of being used at a qualified facility

22 to produce electricity.

23 ‘‘(3) POULTRY WASTE.—The term ‘poultry

24 waste’ means poultry manure and litter, including
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•S 1833 IS

1 wood shavings, straw, rice hulls, and other bedding

2 material for the disposition of manure.’’

3 (b) EXTENSION AND MODIFICATION OF PLACED-IN4 SERVICE RULES.—Paragraph (4) of section 45(c), as re5 designated by subsection (a), is amended to read as fol6 lows:

7 ‘‘(4) QUALIFIED FACILITY.—

8 ‘‘(A) WIND FACILITY.—In the case of a fa9 cility using wind to produce electricity, the term

10 ‘qualified facility’ means any facility owned by

11 the taxpayer which is originally placed in serv12 ice after December 31, 1993, and before Janu13 ary 1, 2004.

14 ‘‘(B) CLOSED-LOOP BIOMASS FACILITY.—

15 In the case of a facility using closed-loop bio16 mass to produce electricity, the term ‘qualified

17 facility’ means any facility owned by the tax18 payer which is originally placed in service after

19 December 31, 1992, and before January 1,

20 2004.

21 ‘‘(C) BIOMASS FACILITY.—In the case of a

22 facility using biomass (other than closed-loop

23 biomass) to produce electricity, the term ‘quali24 fied facility’ means any facility owned by the

25 taxpayer which is originally placed in service
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•S 1833 IS

1 after the date of the enactment of this para2 graph and before January 1, 2004.

3 ‘‘(D) POULTRY WASTE FACILITY.—In the

4 case of a facility using poultry waste to produce

5 electricity, the term ‘qualified facility’ means

6 any facility of the taxpayer which is originally

7 placed in service after the date of the enact8 ment of this paragraph and before January 1,

9 2004.

10 ‘‘(E) SPECIAL RULES.—

11 ‘‘(i) COMBINED PRODUCTION FACILI12 TIES INCLUDED.—For purposes of this

13 paragraph, the term ‘qualified facility’

14 shall include a facility using biomass or

15 poultry waste to produce electricity and

16 ethanol.

17 ‘‘(ii) SPECIAL RULES.—In the case of

18 a qualified facility described in subpara19 graph (C) or (D)—

20 ‘‘(I) the 10-year period referred

21 to in subsection (a) shall be treated as

22 beginning no earlier than the date of

23 the enactment of this paragraph, and

24 ‘‘(II) subsection (b)(3) shall not

25 apply to any such facility originally
68

•S 1833 IS

1 placed in service before January 1,

2 1997.’’

3 (c) ELECTRICITY PRODUCED FROM BIOMASS CO4 FIRED IN COAL PLANTS.—Paragraph (1) of section 45(a)

5 (relating to general rule) is amended by inserting ‘‘(1.0

6 cents in the case of electricity produced from biomass co7 fired in a facility which produces electricity from coal)

8 after ‘‘1.5 cents’’.

9 (d) COORDINATION WITH OTHER CREDITS.—Section

10 45(d) (relating to definitions and special rules) is amended

11 by adding at the end the following:

12 ‘‘(6) COORDINATION WITH OTHER CREDITS.—

13 This section shall not apply to any production with

14 respect to which the clean coal technology produc15 tion credit under section 45B is allowed unless the

16 taxpayer elects to waive the application of such cred17 it to such production.’’

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

19 this section shall apply to electricity produced after the

20 date of the enactment of this Act.

21 SEC. 802. CREDIT FOR CAPITAL COSTS OF QUALIFIED BIO22 MASS-BASED GENERATING SYSTEM.

23 (a) ALLOWANCE OF QUALIFIED BIOMASS-BASED

24 GENERATING SYSTEM FACILITY CREDIT.—Section 46

25 (relating to amount of credit), as amended by section
69

•S 1833 IS

1 501(a), is amended by striking ‘‘and’’ at the end of para2 graph (3), by striking the period at the end of paragraph

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

4 following:

5 ‘‘(5) the qualified biomass-based generating sys6 tem facility credit.’’

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

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

9 investment credit), as amended by section 501(b), is

10 amended by inserting after section 48C the following:

11 ‘‘SEC. 48C. QUALIFIED BIOMASS-BASED GENERATING SYS12 TEM FACILITY CREDIT.

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

14 qualified biomass-based generating system facility credit

15 for any taxable year is an amount equal to 20 percent

16 of the qualified investment in a qualified biomass-based

17 generating system facility for such taxable year.

18 ‘‘(b) QUALIFIED BIOMASS-BASED GENERATING SYS19 TEM FACILITY.—

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

21 (a), the term ‘qualified biomass-based generating

22 system facility’ means a facility of the taxpayer—

23 ‘‘(A)(i) the original use of which com24 mences with the taxpayer or the reconstruction

25 of which is completed by the taxpayer (but only
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•S 1833 IS

1 with respect to that portion of the basis which

2 is properly attributable to such reconstruction),

3 or

4 ‘‘(ii) that is acquired through purchase (as

5 defined by section 179(d)(2)),

6 ‘‘(B) that is depreciable under section 167,

7 ‘‘(C) that has a useful life of not less than

8 4 years, and

9 ‘‘(D) that uses a qualified biomass-based

10 generating system.

11 ‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—

12 For purposes of subparagraph (A) of paragraph (1),

13 in the case of a facility that—

14 ‘‘(A) is originally placed in service by a

15 person, and

16 ‘‘(B) is sold and leased back by such per17 son, or is leased to such person, within 3

18 months after the date such facility was origi19 nally placed in service, for a period of not less

20 than 12 years,

21 such facility shall be treated as originally placed in

22 service not earlier than the date on which such prop23 erty is used under the leaseback (or lease) referred

24 to in subparagraph (B). The preceding sentence

25 shall not apply to any property if the lessee and les-
71

•S 1833 IS

1 sor of such property make an election under this

2 sentence. Such an election, once made, may be re3 voked only with the consent of the Secretary.

4 ‘‘(3) QUALIFIED BIOMASS-BASED GENERATING

5 SYSTEM.—For purposes of paragraph (1)(D), the

6 term ‘qualified biomass-based generating system’

7 means a biomass-based integrated gasification com8 bined cycle (IGCC) generating system which has an

9 electricity-only generation efficiency greater than 40

10 percent.

11 ‘‘(c) QUALIFIED INVESTMENT.—For purposes of sub12 section (a), the term ‘qualified investment’ means, with

13 respect to any taxable year, the basis of a qualified bio14 mass-based generating system facility placed in service by

15 the taxpayer during such taxable year.

16 ‘‘(d) QUALIFIED PROGRESS EXPENDITURES.—

17 ‘‘(1) INCREASE IN QUALIFIED INVESTMENT.—

18 In the case of a taxpayer who has made an election

19 under paragraph (5), the amount of the qualified in20 vestment of such taxpayer for the taxable year (de21 termined under subsection (c) without regard to this

22 section) shall be increased by an amount equal to

23 the aggregate of each qualified progress expenditure

24 for the taxable year with respect to progress expend25 iture property.
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1 ‘‘(2) PROGRESS EXPENDITURE PROPERTY DE2 FINED.—For purposes of this subsection, the term

3 ‘progress expenditure property’ means any property

4 being constructed by or for the taxpayer and

5 which—

6 ‘‘(A) cannot reasonably be expected to be

7 completed in less than 18 months, and

8 ‘‘(B) it is reasonable to believe will qualify

9 as a qualified biomass-based generating system

10 facility which is being constructed by or for the

11 taxpayer when it is placed in service.

12 ‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE13 FINED.—For purposes of this subsection—

14 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—In

15 the case of any self-constructed property, the

16 term ‘qualified progress expenditures’ means

17 the amount which, for purposes of this subpart,

18 is properly chargeable (during such taxable

19 year) to capital account with respect to such

20 property.

21 ‘‘(B) NON-SELF-CONSTRUCTED PROP22 ERTY.—In the case of non-self-constructed

23 property, the term ‘qualified progress expendi24 tures’ means the amount paid during the tax-
73

•S 1833 IS

1 able year to another person for the construction

2 of such property.

3 ‘‘(4) OTHER DEFINITIONS.—For purposes of

4 this subsection—

5 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—

6 The term ‘self-constructed property’ means

7 property for which it is reasonable to believe

8 that more than half of the construction expendi9 tures will be made directly by the taxpayer.

10 ‘‘(B) NON-SELF-CONSTRUCTED PROP11 ERTY.—The term ‘non-self-constructed prop12 erty’ means property which is not self-con13 structed property.

14 ‘‘(C) CONSTRUCTION, ETC.—The term

15 ‘construction’ includes reconstruction and erec16 tion, and the term ‘constructed’ includes recon17 structed and erected.

18 ‘‘(D) ONLY CONSTRUCTION OF QUALIFIED

19 BIOMASS-BASED GENERATING SYSTEM FACILITY

20 TO BE TAKEN INTO ACCOUNT.—Construction

21 shall be taken into account only if, for purposes

22 of this subpart, expenditures therefor are prop23 erly chargeable to capital account with respect

24 to the property.
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1 ‘‘(5) ELECTION.—An election under this sub2 section may be made at such time and in such man3 ner as the Secretary may by regulations prescribe.

4 Such an election shall apply to the taxable year for

5 which made and to all subsequent taxable years.

6 Such an election, once made, may not be revoked ex7 cept with the consent of the Secretary.

8 ‘‘(e) COORDINATION WITH OTHER CREDITS.—This

9 section shall not apply to any property with respect to

10 which the rehabilitation credit under section 47 or the en11 ergy credit under section 48A is allowed unless the tax12 payer elects to waive the application of such credits to

13 such property.’’

14 (c) RECAPTURE.—Section 50(a) (relating to other

15 special rules), as amended by section 501(c), is amended

16 by adding at the end the following:

17 ‘‘(7) SPECIAL RULES RELATING TO QUALIFIED

18 BIOMASS-BASED GENERATING SYSTEM FACILITY.—

19 For purposes of applying this subsection in the case

20 of any credit allowable by reason of section 48C, the

21 following shall apply:

22 ‘‘(A) GENERAL RULE.—In lieu of the

23 amount of the increase in tax under paragraph

24 (1), the increase in tax shall be an amount

25 equal to the investment tax credit allowed under
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1 section 38 for all prior taxable years with re2 spect to a qualified biomass-based generating

3 system facility (as defined by section 48C(b))

4 multiplied by a fraction whose numerator is the

5 number of years remaining to fully depreciate

6 under this title the qualified biomass-based gen7 erating system facility disposed of, and whose

8 denominator is the total number of years over

9 which such facility would otherwise have been

10 subject to depreciation. For purposes of the

11 preceding sentence, the year of disposition of

12 the qualified biomass-based generating system

13 facility shall be treated as a year of remaining

14 depreciation.

15 ‘‘(B) PROPERTY CEASES TO QUALIFY FOR

16 PROGRESS EXPENDITURES.—Rules similar to

17 the rules of paragraph (2) shall apply in the

18 case of qualified progress expenditures for a

19 qualified biomass-based generating system facil20 ity under section 48C, except that the amount

21 of the increase in tax under subparagraph (A)

22 of this paragraph shall be substituted in lieu of

23 the amount described in such paragraph (2).

24 ‘‘(C) APPLICATION OF PARAGRAPH.—This

25 paragraph shall be applied separately with re-
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1 spect to the credit allowed under section 38 re2 garding a qualified biomass-based generating

3 system facility.’’

4 (d) TRANSITIONAL RULE.—Section 39(d) of the In5 ternal Revenue Code of 1986 (relating to transitional

6 rules), as amended by section 501(d), is amended by add7 ing at the end the following:

8 ‘‘(11) NO CARRYBACK OF SECTION 48C CREDIT

9 BEFORE EFFECTIVE DATE.—No portion of the un10 used business credit for any taxable year which is

11 attributable to the qualified biomass-based gener12 ating system facility credit determined under section

13 48C may be carried back to a taxable year ending

14 before the date of the enactment of section 48C.’’

15 (e) TECHNICAL AMENDMENTS.—

16 (1) Section 49(a)(1)(C), as amended by section

17 501(e), is amended by striking ‘‘and’’ at the end of

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

19 clause (iv) and inserting ‘‘, and’’, and by adding at

20 the end the following:

21 ‘‘(v) the portion of the basis of any

22 qualified biomass-based generating system

23 facility attributable to any qualified invest24 ment (as defined by section 48C(c)).’’
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1 (2) Section 50(a)(4), as amended by section

2 501(e), is amended by striking ‘‘and (6)’’ and insert3 ing ‘‘, (6), and (7)’’.

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

5 IV of subchapter A of chapter 1, as amended by sec6 tion 501(e), is amended by inserting after the item

7 relating to section 48B the following:

‘‘Sec. 48C. Qualified biomass-based generating system facility

credit.’’

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

9 this section shall apply to periods after December 31,

10 1999, under rules similar to the rules of section 48(m)

11 of the Internal Revenue Code of 1986 (as in effect on the

12 day before the date of the enactment of the Revenue Rec13 onciliation Act of 1990).

14 SEC. 803. TREATMENT OF FACILITIES USING BAGASSE TO

15 PRODUCE ENERGY AS SOLID WASTE DIS16 POSAL FACILITIES ELIGIBLE FOR TAX-EX17 EMPT FINANCING.

18 (a) IN GENERAL.—Section 142 (relating to exempt

19 facility bond) is amended by adding at the end the fol20 lowing:

21 ‘‘(k) SOLID WASTE DISPOSAL FACILITIES.—For pur22 poses of subsection (a)(6), the term ‘solid waste disposal

23 facilities’ includes property located in Hawaii and used for

24 the collection, storage, treatment, utilization, processing,
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1 or final disposal of bagasse in the manufacture of eth2 anol.’’

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

4 this section shall apply to bonds issued after the date of

5 the enactment of this Act.

6 TITLE IX—STEELMAKING

7 SEC. 901. CREDIT FOR INVESTMENT IN ENERGY-EFFICIENT

8 STEELMAKING FACILITIES.

9 (a) ALLOWANCE OF ENERGY-EFFICIENT

10 STEELMAKING FACILITY CREDIT.—Section 46 (relating

11 to amount of credit), as amended by section 802(a), is

12 amended by striking ‘‘and’’ at the end of paragraph (4),

13 by striking the period at the end of paragraph (5) and

14 inserting ‘‘, and’’, and by adding at the end the following:

15 ‘‘(6) the energy-efficient steelmaking facility

16 credit.’’

17 (b) AMOUNT OF ENERGY-EFFICIENT STEELMAKING

18 FACILITY CREDIT.—Subpart E of part IV of subchapter

19 A of chapter 1 (relating to rules for computing investment

20 credit), as amended by section 802(b), is amended by in21 serting after section 48C the following:

22 ‘‘SEC. 48D. ENERGY-EFFICIENT STEELMAKING FACILITY

23 CREDIT.

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

25 energy-efficient steelmaking facility credit for any taxable
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1 year is an amount equal to 10 percent of the qualified

2 investment in an energy-efficient steelmaking facility for

3 such taxable year.

4 ‘‘(b) ENERGY-EFFICIENT STEELMAKING FACIL5 ITY.—

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

7 (a), the term ‘energy-efficient steelmaking facility’

8 means a facility of the taxpayer—

9 ‘‘(A)(i) which—

10 ‘‘(I) with respect to a facility the

11 original use of which commences with the

12 taxpayer, improves steelmaking energy effi13 ciency by 20 percent over the energy effi14 ciency norm of the industry as determined

15 by the Secretary for the year in which such

16 facility is placed in service, or

17 ‘‘(II) with respect to a facility which

18 replaces an existing steelmaking facility

19 and the original use of which commences

20 with the taxpayer, improves steelmaking

21 energy efficiency by 20 percent over the

22 average energy efficiency of the replaced

23 facility for the 2 taxable years preceding

24 the year in which the replacing facility is

25 placed in service (but only with respect to
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1 that portion of the basis which is properly

2 attributable to such replacement), or

3 ‘‘(ii) that is acquired through purchase (as

4 defined by section 179(d)(2)),

5 ‘‘(B) that is depreciable under section 167,

6 and

7 ‘‘(C) that has a useful life of not less than

8 4 years.

9 ‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—

10 For purposes of subparagraph (A) of paragraph (1),

11 in the case of a facility that—

12 ‘‘(A) is originally placed in service by a

13 person, and

14 ‘‘(B) is sold and leased back by such per15 son, or is leased to such person, within 3

16 months after the date such facility was origi17 nally placed in service, for a period of not less

18 than 12 years,

19 such facility shall be treated as originally placed in

20 service not earlier than the date on which such prop21 erty is used under the leaseback (or lease) referred

22 to in subparagraph (B). The preceding sentence

23 shall not apply to any property if the lessee and les24 sor of such property make an election under this
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1 sentence. Such an election, once made, may be re2 voked only with the consent of the Secretary.

3 ‘‘(3) STEELMAKING ENERGY EFFICIENCY.—For

4 purposes of paragraph (1)(A), steelmaking energy

5 efficiency shall be measured in BTu’s per ton of raw

6 steel produced.

7 ‘‘(c) QUALIFIED INVESTMENT.—For purposes of sub8 section (a), the term ‘qualified investment’ means, with

9 respect to any taxable year, the basis of an energy-efficient

10 steelmaking facility placed in service by the taxpayer dur11 ing such taxable year.

12 ‘‘(d) QUALIFIED PROGRESS EXPENDITURES.—

13 ‘‘(1) INCREASE IN QUALIFIED INVESTMENT.—

14 In the case of a taxpayer who has made an election

15 under paragraph (5), the amount of the qualified in16 vestment of such taxpayer for the taxable year (de17 termined under subsection (c) without regard to this

18 section) shall be increased by an amount equal to

19 the aggregate of each qualified progress expenditure

20 for the taxable year with respect to progress expend21 iture property.

22 ‘‘(2) PROGRESS EXPENDITURE PROPERTY DE23 FINED.—For purposes of this subsection, the term

24 ‘progress expenditure property’ means any property

25 being constructed by or for the taxpayer and which
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1 it is reasonable to believe will qualify as an energy2 efficient steelmaking facility which is being con3 structed by or for the taxpayer when it is placed in

4 service.

5 ‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE6 FINED.—For purposes of this subsection—

7 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—In

8 the case of any self-constructed property, the

9 term ‘qualified progress expenditures’ means

10 the amount which, for purposes of this subpart,

11 is properly chargeable (during such taxable

12 year) to capital account with respect to such

13 property.

14 ‘‘(B) NON-SELF-CONSTRUCTED PROP15 ERTY.—In the case of non-self-constructed

16 property, the term ‘qualified progress expendi17 tures’ means the amount paid during the tax18 able year to another person for the construction

19 of such property.

20 ‘‘(4) OTHER DEFINITIONS.—For purposes of

21 this subsection—

22 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—

23 The term ‘self-constructed property’ means

24 property for which it is reasonable to believe
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1 that more than half of the construction expendi2 tures will be made directly by the taxpayer.

3 ‘‘(B) NON-SELF-CONSTRUCTED PROP4 ERTY.—The term ‘non-self-constructed prop5 erty’ means property which is not self-con6 structed property.

7 ‘‘(C) CONSTRUCTION, ETC.—The term

8 ‘construction’ includes reconstruction and erec9 tion, and the term ‘constructed’ includes recon10 structed and erected.

11 ‘‘(D) ONLY CONSTRUCTION OF ENERGY12 EFFICIENT STEELMAKING FACILITY TO BE

13 TAKEN INTO ACCOUNT.—Construction shall be

14 taken into account only if, for purposes of this

15 subpart, expenditures therefor are properly

16 chargeable to capital account with respect to

17 the property.

18 ‘‘(5) ELECTION.—An election under this sub19 section may be made at such time and in such man20 ner as the Secretary may by regulations prescribe.

21 Such an election shall apply to the taxable year for

22 which made and to all subsequent taxable years.

23 Such an election, once made, may not be revoked ex24 cept with the consent of the Secretary.
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1 ‘‘(e) COORDINATION WITH OTHER CREDITS.—This

2 section shall not apply to any property with respect to

3 which the rehabilitation credit under section 47 or the en4 ergy credit under section 48A is allowed unless the tax5 payer elects to waive the application of such credits to

6 such property.

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

8 with respect to any qualified investment after December

9 31, 2004.’’

10 (c) RECAPTURE.—Section 50(a) (relating to other

11 special rules), as amended by section 802(c), is amended

12 by adding at the end the following:

13 ‘‘(8) SPECIAL RULES RELATING TO ENERGY-EF14 FICIENT STEELMAKING FACILITY.—For purposes of

15 applying this subsection in the case of any credit al16 lowable by reason of section 48D, the following shall

17 apply:

18 ‘‘(A) GENERAL RULE.—In lieu of the

19 amount of the increase in tax under paragraph

20 (1), the increase in tax shall be an amount

21 equal to the investment tax credit allowed under

22 section 38 for all prior taxable years with re23 spect to an energy-efficient steelmaking facility

24 (as defined by section 48D(b)) multiplied by a

25 fraction whose numerator is the number of
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1 years remaining to fully depreciate under this

2 title the energy-efficient steelmaking facility

3 disposed of, and whose denominator is the total

4 number of years over which such facility would

5 otherwise have been subject to depreciation. For

6 purposes of the preceding sentence, the year of

7 disposition of the energy-efficient steelmaking

8 facility property shall be treated as a year of

9 remaining depreciation.

10 ‘‘(B) PROPERTY CEASES TO QUALIFY FOR

11 PROGRESS EXPENDITURES.—Rules similar to

12 the rules of paragraph (2) shall apply in the

13 case of qualified progress expenditures for an

14 energy-efficient steelmaking facility under sec15 tion 48D, except that the amount of the in16 crease in tax under subparagraph (A) of this

17 paragraph shall be substituted in lieu of the

18 amount described in such paragraph (2).

19 ‘‘(C) APPLICATION OF PARAGRAPH.—This

20 paragraph shall be applied separately with re21 spect to the credit allowed under section 38 re22 garding an energy-efficient steelmaking facil23 ity.’’

24 (d) TRANSITIONAL RULE.—Section 39(d) of the In25 ternal Revenue Code of 1986 (relating to transitional
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•S 1833 IS

1 rules), as amended by section 802(d), is amended by add2 ing at the end the following:

3 ‘‘(12) NO CARRYBACK OF SECTION 48D CREDIT

4 BEFORE EFFECTIVE DATE.—No portion of the un5 used business credit for any taxable year which is

6 attributable to the energy-efficient steelmaking facil7 ity credit determined under section 48D may be car8 ried back to a taxable year ending before the date

9 of the enactment of section 48D.’’

10 (e) TECHNICAL AMENDMENTS.—

11 (1) Section 49(a)(1)(C), as amended by section

12 802(e), is amended by striking ‘‘and’’ at the end of

13 clause (iv), by striking the period at the end of

14 clause (v) and inserting ‘‘, and’’, and by adding at

15 the end the following:

16 ‘‘(vi) the portion of the basis of any

17 energy-efficient steelmaking facility attrib18 utable to any qualified investment (as de19 fined by section 48D(c)).’’

20 (2) Section 50(a)(4), as amended by section

21 802(e), is amended by striking ‘‘and (7)’’ and insert22 ing ‘‘, (7), and (8)’’.

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

24 IV of subchapter A of chapter 1, as amended by sec-
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1 tion 802(e), is amended by inserting after the item

2 relating to section 48C the following:

‘‘Sec. 48D. Energy-efficient steelmaking facility credit.’’

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

4 this section shall apply to periods after December 31,

5 1999, under rules similar to the rules of section 48(m)

6 of the Internal Revenue Code of 1986 (as in effect on the

7 day before the date of the enactment of the Revenue Rec8 onciliation Act of 1990).

9 SEC. 902. EXTENSION OF CREDIT FOR ELECTRICITY TO

10 PRODUCTION FROM STEEL COGENERATION.

11 (a) EXTENSION OF CREDIT FOR COKE PRODUCTION

12 AND STEEL MANUFACTURING FACILITIES.—Section

13 45(c)(1) (defining qualified energy resources), as amended

14 by section 801(a)(1), is amended by striking ‘‘and’’ at the

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

16 of subparagraph (D) and inserting ‘‘, and’’, and by adding

17 at the end the following:

18 ‘‘(E) steel cogeneration.’’

19 (b) STEEL COGENERATION.—Section 45(c), as

20 amended by subsections (a)(2) and (b) of section 801, is

21 amended by redesignating paragraph (4) as paragraph (5)

22 and by inserting after paragraph (3) the following:

23 ‘‘(4) STEEL COGENERATION.—

24 ‘‘(A) IN GENERAL.—The term ‘steel cogen25 eration’ means the production of steam or other
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1 form of thermal energy of at least 20 percent

2 of total production and the production of elec3 tricity or mechanical energy (or both) of at

4 least 20 percent of total production if the co5 generation meets regulatory energy-efficiency

6 standards established by the Secretary and only

7 to the extent that such energy is produced

8 from—

9 ‘‘(i) gases or heat generated during

10 the production of coke,

11 ‘‘(ii) blast furnace gases or heat gen12 erated during the production of iron ore or

13 iron, or

14 ‘‘(iii) waste gases or heat generated

15 from the manufacture of steel that uses at

16 least 20 percent recycled material.

17 ‘‘(B) TOTAL PRODUCTION.—For purposes

18 of subparagraph (A), the term ‘total produc19 tion’ means, with respect to any facility which

20 produces coke, iron ore, iron, or steel, produc21 tion from all waste sources described in clauses

22 (i), (ii), and (iii) of subparagraph (A) (which23 ever applicable) from the entire facility.’’

24 (c) MODIFICATION OF PLACED IN SERVICE RULES

25 FOR STEEL COGENERATION FACILITIES.—Section
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1 45(c)(5) (defining qualified facility), as amended by sec2 tion 801(b) and redesignated by subsection (b), is amend3 ed by redesignating subparagraph (E) as subparagraph

4 (F) and by inserting after subparagraph (D) the following:

5 ‘‘(E) STEEL COGENERATION FACILITIES.—

6 In the case of a facility using steel cogeneration

7 to produce electricity, the term ‘qualified facil8 ity’ means any facility permitted to operate

9 under the environmental requirements of the

10 Clean Air Act Amendments of 1990 which is

11 owned by the taxpayer and originally placed in

12 service after December 31, 1999, and before

13 January 1, 2005. Such a facility may be treated

14 as originally placed in service when such facility

15 was last upgraded to increase efficiency or gen16 eration capability. However, no facility shall be

17 allowed a credit under this section for more

18 than 10 years of production.’’

19 (d) CONFORMING AMENDMENTS.—

20 (1) The heading for section 45 is amended by

21 inserting ‘‘AND WASTE ENERGY’’ after ‘‘RENEW22 ABLE’’.

23 (2) The item relating to section 45 in the table

24 of sections subpart D of part IV of subchapter A of
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1 chapter 1 is amended by inserting ‘‘and waste en2 ergy’’ after ‘‘renewable’’.

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

4 this section shall apply to taxable years beginning after

5 December 31, 2001, and before January 1, 2005.

6 TITLE X—AGRICULTURE

7 SEC. 1001. AGRICULTURAL CONSERVATION TAX CREDIT.

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 (relating to business related cred10 its), as amended by section 701(a), is amended by adding

11 at the end the following:

12 ‘‘SEC. 45G. AGRICULTURAL CONSERVATION CREDIT.

13 ‘‘(a) IN GENERAL.—For purposes of section 38, in

14 the case of an eligible person, the agricultural conservation

15 credit determined under this section for the taxable year

16 is an amount equal to—

17 ‘‘(1) 10 percent of the eligible conservation till18 age equipment expenses, and

19 ‘‘(2) 10 percent of the eligible irrigation equip20 ment expenses,

21 paid or incurred by such person in connection with the

22 active conduct of the trade or business of farming for the

23 taxable year.

24 ‘‘(b) ELIGIBLE PERSON.—For purposes of this sec25 tion, the term ‘eligible person’ means, with respect to any
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1 taxable year, any person if the average annual gross re2 ceipts of such person for the 3 preceding taxable years

3 do not exceed $1,000,000. For purposes of the preceding

4 sentence, rules similar to the rules of section 448(c)(3)

5 shall apply.

6 ‘‘(c) LIMITATION.—The amount of the credit allowed

7 under subsection (a) for any taxable year shall not exceed

8 $2,500 for each credit determined under paragraph (1)

9 or (2) of such subsection.

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

11 ‘‘(1) ELIGIBLE CONSERVATION TILLAGE EQUIP12 MENT EXPENSES.—

13 ‘‘(A) IN GENERAL.—The term ‘eligible con14 servation tillage equipment expenses’ means

15 amounts paid or incurred by a taxpayer to pur16 chase and install conservation tillage equipment

17 for use in the trade or business of the taxpayer.

18 ‘‘(B) CONSERVATION TILLAGE EQUIP19 MENT.—The term ‘conservation tillage equip20 ment’ means a no-till planter or drill designed

21 to minimize the disturbance of the soil in plant22 ing crops, including such planters or drills

23 which may be attached to equipment already

24 owned by the taxpayer.
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1 ‘‘(2) ELIGIBLE IRRIGATION EQUIPMENT EX2 PENSES.—The term ‘eligible irrigation equipment

3 expenses’ means amounts paid or incurred by a

4 taxpayer—

5 ‘‘(A) to purchase and install on currently

6 irrigated lands new or upgraded equipment

7 which will improve the efficiency of existing irri8 gation systems used in the trade or business of

9 the taxpayer, including—

10 ‘‘(i) spray jets or nozzles which im11 prove water distribution efficiency,

12 ‘‘(ii) irrigation well meters,

13 ‘‘(iii) surge valves and surge irrigation

14 systems, and

15 ‘‘(iv) conversion of equipment from

16 gravity irrigation to sprinkler or drip irri17 gation, including center pivot systems, and

18 ‘‘(B) for service required to schedule the

19 use of such irrigation equipment as necessary to

20 manage water application to the crop require21 ment based on local evaporation and transpira22 tion rates or soil moisture.

23 ‘‘(e) SPECIAL RULES.—

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

25 this subtitle, if a credit is determined under this sec-
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1 tion with respect to any property, the basis of such

2 property shall be reduced by the amount of the cred3 it so determined.

4 ‘‘(2) PASS-THRU IN THE CASE OF ESTATES AND

5 TRUSTS.—For purposes of this section, under regu6 lations prescribed by the Secretary, rules similar to

7 the rules of subsection (d) of section 52 shall apply.

8 ‘‘(3) ALLOCATION IN THE CASE OF PARTNER9 SHIPS.—For purposes of this section, in the case of

10 partnerships, the credit shall be allocated among

11 partners under regulations prescribed by the Sec12 retary.

13 ‘‘(4) DENIAL OF DOUBLE BENEFIT.—No other

14 deduction or credit shall be allowed to the taxpayer

15 under this chapter for any amount taken into ac16 count in determining the credit under this section.’’

17 (b) CONFORMING AMENDMENTS.—

18 (1) Section 38(b), as amended by section

19 701(b), is amended by striking ‘‘plus’’ at the end of

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

21 paragraph (15), and inserting ‘‘, plus’’, and by add22 ing at the end the following:

23 ‘‘(16) the agricultural conservation credit deter24 mined under section 45G.’’
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1 (2) The table of sections for subpart D of part

2 IV of subchapter A of chapter 1, as amended by sec3 tion 701(c), is amended by adding at the end the

4 following:

‘‘Sec. 45G. Agricultural conservation credit.’’

5 (3) Section 1016(a), as amended by section

6 201(b)(1), is amended by striking ‘‘and’’ at the end

7 of paragraph (27), striking the period at the end of

8 paragraph (28) and inserting ‘‘; and’’, and adding at

9 the end the following:

10 ‘‘(29) in the case of property with respect to

11 which a credit was allowed under section 45G, to the

12 extent provided in section 45G(d)(1).’’

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

14 this section shall apply to taxable years beginning after

15 December 31, 1999.

Æ