727
HR 6 PCS 
‘‘(4) TREATMENT
UPON
ABANDONMENT.—If 
any property to which a delay rental payment relates 
is retired or abandoned during the 24-month period 
described in paragraph (1), no deduction shall be al-
lowed on account of such retirement or abandon-
ment and the amortization deduction under this sub-
section shall continue with respect to such payment. 
‘‘(5) DELAY RENTAL PAYMENTS.—For purposes 
of this subsection, the term ‘delay rental payment’ 
means an amount paid for the privilege of deferring 
development of an oil or gas well under an oil or gas 
lease.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2003. 
SEC. 43004. AMORTIZATION OF GEOLOGICAL AND GEO-
PHYSICAL EXPENDITURES. 
(a) IN GENERAL.—Section 167 (relating to deprecia-
tion) is amended by redesignating subsection (i) as sub-
section (j) and by inserting after subsection (h) the fol-
lowing new subsection: 
‘‘(i) AMORTIZATION
OF GEOLOGICAL
AND GEO-
PHYSICAL EXPENDITURES.—
‘‘(1) IN
GENERAL.—Any geological and geo-
physical expenses paid or incurred in connection
728
HR 6 PCS 
with the exploration for, or development of, oil or 
gas within the United States (as defined in section 
638) shall be allowed as a deduction ratably over the 
24-month period beginning on the date that such ex-
pense was paid or incurred. 
‘‘(2) SPECIAL
RULES.—For purposes of this 
subsection, rules similar to the rules of paragraphs 
(2), (3), and (4) of subsection (h) shall apply.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to costs paid or incurred in taxable 
years beginning after December 31, 2003. 
SEC. 43005. EXTENSION AND MODIFICATION OF CREDIT 
FOR PRODUCING FUEL FROM A NONCONVEN-
TIONAL SOURCE. 
(a) IN GENERAL.—Section 29 is amended by adding 
at the end the following new subsection: 
‘‘(h) EXTENSION FOR OTHER FACILITIES.—
‘‘(1) EXTENSION FOR OIL AND CERTAIN GAS.—
In the case of a well for producing qualified fuels de-
scribed in subparagraph (A) or (B)(i) of subsection 
(c)(1)—
‘‘(A) APPLICATION OF CREDIT FOR NEW 
WELLS.—Notwithstanding subsection (f), this 
section shall apply with respect to such fuels—
729
HR 6 PCS 
‘‘(i) which are produced from a well 
drilled after the date of the enactment of 
this subsection and before January 1, 
2007, and 
‘‘(ii) which are sold not later than the 
close of the 4-year period beginning on the 
date that such well is drilled, or, if earlier, 
January 1, 2010. 
‘‘(B) EXTENSION
OF
CREDIT
FOR
OLD 
WELLS.—Subsection (f)(2) shall be applied by 
substituting ‘2007’ for ‘2003’ with respect to 
wells described in subsection (f)(1)(A) with re-
spect to such fuels. 
‘‘(2) EXTENSION FOR FACILITIES PRODUCING 
QUALIFIED FUEL FROM LANDFILL GAS.—
‘‘(A) IN GENERAL.—In the case of a facil-
ity for producing qualified fuel from landfill gas 
which was placed in service after June 30, 
1998, and before January 1, 2007, this section 
shall apply to fuel produced at such facility dur-
ing the 5-year period beginning on the later 
of—
‘‘(i) the date such facility was placed 
in service, or
730
HR 6 PCS 
‘‘(ii) the date of the enactment of this 
subsection. 
‘‘(B) REDUCTION OF CREDIT FOR CERTAIN 
LANDFILL FACILITIES.—In the case of a facility 
to which paragraph (1) applies and which is lo-
cated at a landfill which is required pursuant to 
section 60.751(b)(2) or section 60.33c of title 
40, Code of Federal Regulations (as in effect on 
April 3, 2003) to install and operate a collec-
tion and control system which captures gas gen-
erated within the landfill, subsection (a)(1) 
shall be applied to gas so captured by sub-
stituting ‘$2’ for ‘$3’ for the taxable year dur-
ing which such system is required to be in-
stalled and operated. 
‘‘(3) SPECIAL
RULES.—In determining the 
amount of credit allowable under this section solely 
by reason of this subsection—
‘‘(A) DAILY LIMIT.—The amount of quali-
fied fuels sold during any taxable year which 
may be taken into account by reason of this 
subsection with respect to any project shall not 
exceed an average barrel-of-oil equivalent of 
200,000 cubic feet of natural gas per day. Days 
before the date the project is placed in service
731
HR 6 PCS 
shall not be taken into account in determining 
such average. 
‘‘(B) EXTENSION PERIOD TO COMMENCE 
WITH UNADJUSTED CREDIT AMOUNT.—In the 
case of fuels sold during 2003, the dollar 
amount applicable under subsection (a)(1) shall 
be $3 (without regard to subsection (b)(2)). In 
the case of fuels sold after 2003, subparagraph 
(B) of subsection (d)(2) shall be applied by sub-
stituting ‘2003’ for ‘1979’.’’. 
(b) TREATMENT AS BUSINESS CREDIT.—
(1) CREDIT MOVED TO SUBPART RELATING TO 
BUSINESS
RELATED
CREDITS.—The Internal Rev-
enue Code of 1986 is amended by redesignating sec-
tion 29 as section 45J and by moving section 45J 
(as so redesignated) from subpart B of part IV of 
subchapter A of chapter 1 to the end of subpart D 
of part IV of subchapter A of chapter 1. 
(2) CREDIT TREATED AS BUSINESS CREDIT.—
Section 38(b) is amended by striking ‘‘plus’’ at the 
end of paragraph (17), by striking the period at the 
end of paragraph (18) and inserting ‘‘, plus’’, and 
by adding at the end the following: 
‘‘(19) the nonconventional source production 
credit determined under section 45J(a).’’.
732
HR 6 PCS 
(3) CONFORMING AMENDMENTS.—
(A) Section 30(b)(2)(A), as redesignated 
by section 110(a), is amended by striking ‘‘sec-
tions 27 and 29’’ and inserting ‘‘section 27’’. 
(B) Section 30B(d), as added by section 
41011, is amended by striking ‘‘, 29,’’. 
(C) Section 39(d) is amended by adding at 
the end the following new paragraph: 
‘‘(13) NO CARRYBACK FOR NONCONVENTIONAL 
SOURCE PRODUCTION CREDIT.—No portion of the 
unused business credit for any taxable year which is 
attributable to the credit under section 45J may be 
carried back to a taxable year ending before April 1, 
2003.’’. 
(D) Sections 43(b)(2), 45I(b)(2)(C) (as 
added by section 43001), and 613A(c)(6)(C) 
are 
each 
amended 
by 
striking 
‘‘section 
29(d)(2)(C)’’ 
and 
inserting 
‘‘section 
45J(d)(2)(C)’’. 
(E) Paragraph (9) of section 45(c), as 
added by section 41002(c), is amended by strik-
ing ‘‘section 29’’ and inserting ‘‘section 45J’’ 
and by striking ‘‘SECTION 29’’ in the heading of 
such paragraph and inserting ‘‘SECTION 45J’’.
733
HR 6 PCS 
(F) Section 45I(d)(3), as added by section 
43001, is amended by striking ‘‘section 29’’ 
each place it appears and inserting ‘‘section 
45J’’. 
(G) Section 45J(a), as amended by section 
43001(d) and redesignated by paragraph (1), is 
amended by striking ‘‘At the election of the tax-
payer, there shall be allowed as a credit against 
the tax imposed by this chapter for the taxable 
year’’ and inserting ‘‘For purposes of section 
38, if the taxpayer elects to have this section 
apply, the nonconventional source production 
credit determined under this section for the tax-
able year is’’. 
(H) Section 45J(b), as so redesignated, is 
amended by striking paragraph (6). 
(I) Section 53(d)(1)(B)(iii) is amended by 
striking ‘‘under section 29’’ and all that follows 
through ‘‘or not allowed’’. 
(J) Section 55(c)(2) is amended by strik-
ing ‘‘29(b)(6),’’. 
(K) Subsection (a) of section 772 is 
amended by inserting ‘‘and’’ at the end of para-
graph (9), by striking paragraph (10), and by
734
HR 6 PCS 
redesignating paragraph (11) as paragraph 
(10). 
(L) Paragraph (5) of section 772(d) is 
amended by striking ‘‘the foreign tax credit, 
and the credit allowable under section 29’’ and 
inserting ‘‘and the foreign tax credit’’. 
(M) The table of sections for subpart B of 
part IV of subchapter A of chapter 1 is amend-
ed by striking the item relating to section 29. 
(N) The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amend-
ed by inserting after the item relating to section 
45I the following new item:
‘‘Sec. 45J. Credit for producing fuel from a nonconventional 
source.’’.
(c) EFFECTIVE DATES.—
(1) IN
GENERAL.—The amendment made by 
subsection (a) shall apply to fuel sold after March 
31, 2003, in taxable years ending after such date. 
(2) TREATMENT
AS
BUSINESS
CREDIT.—The 
amendments made by subsection (b) shall apply to 
taxable years ending after March 31, 2003.
735
HR 6 PCS 
SEC. 43006. BUSINESS RELATED ENERGY CREDITS AL-
LOWED AGAINST REGULAR AND MINIMUM 
TAX. 
(a) IN GENERAL.—Subsection (c) of section 38 (re-
lating to limitation based on amount of tax) is amended 
by redesignating paragraph (4) as paragraph (5) and by 
inserting after paragraph (3) the following new paragraph: 
‘‘(4) SPECIAL RULES FOR SPECIFIED ENERGY 
CREDITS.—
‘‘(A) IN GENERAL.—In the case of speci-
fied energy credits—
‘‘(i) this section and section 39 shall 
be applied separately with respect to such 
credits, and 
‘‘(ii) in applying paragraph (1) to 
such credits—
‘‘(I) the tentative minimum tax 
shall be treated as being zero, and 
‘‘(II) the limitation under para-
graph (1) (as modified by subclause 
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the 
taxable year (other than the specified 
energy credits). 
‘‘(B) SPECIFIED
ENERGY
CREDITS.—For 
purposes of this subsection, the term ‘specified
736
HR 6 PCS 
energy credits’ means the credits determined 
under sections 45G, 45H, and 45I. 
‘‘(C) SPECIAL RULE FOR QUALIFIED WIND 
FACILITIES.—For purposes of this subsection, 
the term ‘specified energy credits’ shall include 
the credit determined under section 45 to the 
extent that such credit is attributable to elec-
tricity produced—
‘‘(i) at a facility using wind to 
produce electricity which is originally 
placed in service after the date of the en-
actment of this paragraph, and 
‘‘(ii) during the 4-year period begin-
ning on the date that such facility was 
originally placed in service.’’. 
(b) 
CONFORMING
AMENDMENTS.—Paragraphs 
(2)(A)(ii)(II) and (3)(A)(ii)(II) of section 38(c) are each 
amended by inserting ‘‘or the specified energy credits’’ 
after ‘‘employee credit’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act.
737
HR 6 PCS 
SEC. 43007. TEMPORARY REPEAL OF ALTERNATIVE MIN-
IMUM TAX PREFERENCE FOR INTANGIBLE 
DRILLING COSTS. 
(a) IN GENERAL.—Clause (ii) of section 57(a)(2)(E) 
is amended by adding at the end the following new sen-
tence: ‘‘The preceding sentence shall not apply to taxable 
years beginning after December 31, 2003, and before Jan-
uary 1, 2006.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2003. 
SEC. 43008. ALLOWANCE OF ENHANCED RECOVERY CREDIT 
AGAINST THE ALTERNATIVE MINIMUM TAX. 
(a) IN GENERAL.—Subparagraph (B) of section 
38(c)(4), as amended by section 43006, is amended by 
adding at the end the following new sentence: ‘‘For taxable 
years beginning after December 31, 2003, and before Jan-
uary 1, 2006, such term includes the credit determined 
under section 43.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2003.
738
HR 6 PCS 
TITLE IV—CORPORATE 
EXPATRIATION
SEC. 44001. TAX TREATMENT OF CORPORATE EXPATRIA-
TION. 
(a) IN GENERAL.—Subchapter C of chapter 80 (re-
lating to provisions affecting more than one subtitle) is 
amended by adding at the end the following new section: 
‘‘SEC. 7874. TAX TREATMENT OF CORPORATE EXPATRIA-
TION. 
‘‘(a) INVERTED CORPORATIONS TREATED AS DOMES-
TIC CORPORATIONS.—
‘‘(1) IN GENERAL.—If a foreign incorporated 
entity is treated as an inverted domestic corporation, 
then, notwithstanding section 7701(a)(4), such enti-
ty shall be treated for purposes of this title as a do-
mestic corporation. 
‘‘(2) INVERTED DOMESTIC CORPORATION.—For 
purposes of this section, a foreign incorporated enti-
ty shall be treated as an inverted domestic corpora-
tion if, pursuant to a plan (or a series of related 
transactions)—
‘‘(A) the entity completes after March 4, 
2003, the direct or indirect acquisition of sub-
stantially all of the properties held directly or 
indirectly by a domestic corporation or substan-
739
HR 6 PCS 
tially all of the properties constituting a trade 
or business of a domestic partnership, 
‘‘(B) after the acquisition at least 80 per-
cent of the stock (by vote or value) of the entity 
is held—
‘‘(i) in the case of an acquisition with 
respect to a domestic corporation, by 
former shareholders of the domestic cor-
poration by reason of holding stock in the 
domestic corporation, or 
‘‘(ii) in the case of an acquisition with 
respect to a domestic partnership, by 
former partners of the domestic partner-
ship by reason of holding a capital or prof-
its interest in the domestic partnership, 
and 
‘‘(C) the expanded affiliated group which 
after the acquisition includes the entity does 
not have substantial business activities in the 
foreign country in which or under the law of 
which the entity is created or organized when 
compared to the total business activities of such 
expanded affiliated group.
740
HR 6 PCS 
‘‘(3) TERMINATION.—This subsection shall not 
apply to any acquisition completed after December 
31, 2004. 
‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) FOREIGN
INCORPORATED
ENTITY.—The 
term ‘foreign incorporated entity’ means any entity 
which is, or but for subsection (a) would be, treated 
as a foreign corporation for purposes of this title. 
‘‘(2) EXPANDED
AFFILIATED
GROUP.—The 
term ‘expanded affiliated group’ means an affiliated 
group as defined in section 1504(a) but without re-
gard to paragraphs (2), (3), and (4) of section 
1504(b), except that section 1504(a) shall be applied 
by substituting ‘more than 50 percent’ for ‘at least 
80 percent’ each place it appears. 
‘‘(3) CERTAIN
STOCK
DISREGARDED.—There 
shall not be taken into account in determining own-
ership under subsection (a)(3)(B)—
‘‘(A) stock held by members of the ex-
panded affiliated group which includes the for-
eign incorporated entity, or 
‘‘(B) stock of such foreign incorporated en-
tity which is sold in a public offering related to
741
HR 6 PCS 
the 
acquisition 
described 
in 
subsection 
(a)(3)(A). 
‘‘(4) PLAN DEEMED IN CERTAIN CASES.—If a 
foreign incorporated entity acquires directly or indi-
rectly substantially all of the properties of a domes-
tic corporation or partnership during the 4-year pe-
riod beginning on the date which is 2 years before 
the ownership requirements of subsection (a)(3)(B) 
are met, such actions shall be treated as pursuant 
to a plan. 
‘‘(5) CERTAIN TRANSFERS DISREGARDED.—The 
transfer of properties or liabilities (including by con-
tribution or distribution) shall be disregarded if such 
transfers are part of a plan a principal purpose of 
which is to avoid the purposes of this section. 
‘‘(6) SPECIAL RULE FOR RELATED PARTNER-
SHIPS.—For 
purposes 
of 
applying 
subsection 
(a)(3)(B) to the acquisition of a domestic partner-
ship, except as provided in regulations, all partner-
ships which are under common control (within the 
meaning of section 482) shall be treated as 1 part-
nership. 
‘‘(7) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be appropriate to de-
742
HR 6 PCS 
termine whether a corporation is an inverted domes-
tic corporation, including regulations—
‘‘(A) to treat warrants, options, contracts 
to acquire stock, convertible debt interests, and 
other similar interests as stock, and 
‘‘(B) to treat stock as not stock. 
‘‘(c) SPECIAL RULE FOR TREATIES.—Nothing in sec-
tion 894 or 7852(d) or in any other provision of law shall 
be construed as permitting an exemption, by reason of any 
treaty obligation of the United States heretofore or here-
after entered into, from the provisions of this section. 
‘‘(d) REGULATIONS.—The Secretary shall provide 
such regulations as are necessary to carry out this section, 
including regulations providing for such adjustments to 
the application of this section as are necessary to prevent 
the avoidance of the purposes of this section, including the 
avoidance of such purposes through—
‘‘(1) the use of related persons, pass-through or 
other noncorporate entities, or other intermediaries, 
or 
‘‘(2) transactions designed to have persons 
cease to be (or not become) members of expanded 
affiliated groups or related persons.’’.
743
HR 6 PCS 
(b) CONFORMING AMENDMENT.—The table of sec-
tions for subchapter C of chapter 80 is amended by adding 
at the end the following new item:
‘‘Sec. 7874. Tax treatment of corporate expatriation.’’
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after 
March 4, 2003.
SEC. 44002. EXPRESSING THE SENSE OF THE CONGRESS 
THAT TAX REFORM IS NEEDED TO ADDRESS 
THE ISSUE OF CORPORATE EXPATRIATION. 
(a) FINDINGS.—The Congress finds that—
(1) the tax laws of the United States are overly 
complex; 
(2) the tax laws of the United States are among 
the most burdensome and uncompetitive in the 
world; 
(3) the tax laws of the United States make it 
difficult for domestically-owned United States com-
panies to compete abroad and in the United States; 
(4) a domestically-owned corporation is dis-
advantaged compared to a United States subsidiary 
of a foreign-owned corporation; and 
(5) international competitiveness is forcing 
many United States corporations to make a choice 
they do not want to make–go out of business, sell 
the business to a foreign competitor, or become a
744
HR 6 PCS 
subsidiary of a foreign corporation (i.e., engage in 
an inversion transaction). 
(b) SENSE OF CONGRESS.—It is the sense of Con-
gress that passage of legislation to fix the underlying prob-
lems with our tax laws is essential and should occur as 
soon as possible, so United States corporations will not 
face the current pressures to engage in inversion trans-
actions.
DIVISION E—CLEAN COAL
SEC. 50001. AUTHORIZATION OF APPROPRIATIONS. 
(a) CLEAN COAL POWER INITIATIVE.—Except as 
provided in subsection (b), there are authorized to be ap-
propriated to the Secretary to carry out the activities au-
thorized by this division $200,000,000 for each of the fis-
cal years 2004 through 2012, to remain available until ex-
pended. 
(b) LIMIT ON USE OF FUNDS.—The Secretary shall 
transmit to the Committee on Energy and Commerce and 
the Committee on Science of the House of Representa-
tives, and to the Senate, the report required by this sub-
section not later than March 31, 2005. Notwithstanding 
subsection (a), no funds may be used to carry out the ac-
tivities authorized by this division after September 30, 
2005, unless the report has been transmitted and one 
month has elapsed since that transmission. The report
745
HR 6 PCS 
shall include, with respect to subsection (a), a 10-year 
plan containing—
(1) a detailed assessment of whether the aggre-
gate funding levels provided under subsection (a) are 
the appropriate funding levels for that program; 
(2) a detailed description of how proposals will 
be solicited and evaluated, including a list of all ac-
tivities expected to be undertaken; 
(3) a detailed list of technical milestones for 
each coal and related technology that will be pur-
sued; and 
(4) a detailed description of how the program 
will avoid problems enumerated in General Account-
ing Office reports on the Clean Coal Technology 
Program, including problems that have resulted in 
unspent funds and projects that failed either finan-
cially or scientifically. 
(c) APPLICABILITY.—Subsection (b) shall not apply 
to any project begun before September 30, 2005. 
SEC. 50002. PROJECT CRITERIA. 
(a) IN GENERAL.—The Secretary shall not provide 
funding under this division for any project that does not 
advance efficiency, environmental performance, and cost 
competitiveness well beyond the level of technologies that 
are in commercial service or have been demonstrated on
746
HR 6 PCS 
a scale that the Secretary determines is sufficient to dem-
onstrate that commercial service is viable as of the date 
of the enactment of this Act. 
(b) TECHNICAL CRITERIA FOR CLEAN COAL POWER 
INITIATIVE.—
(1) GASIFICATION.—(A) In allocating the funds 
made available under section 50001(a), the Sec-
retary shall ensure that at least 60 percent of the 
funds are used only for projects on coal-based gasifi-
cation technologies, including gasification combined 
cycle, gasification fuel cells, gasification coproduc-
tion, and hybrid gasification/combustion. 
(B) The Secretary shall periodically set tech-
nical milestones specifying the emission and thermal 
efficiency levels that coal gasification projects must 
be designed to and reasonably expected to achieve. 
The technical milestones shall get more restrictive 
during the life of the program. The Secretary shall 
set the periodic milestones so as to achieve by 2020 
coal gasification projects able—
(i) to remove 99 percent of sulfur dioxide; 
(ii) to emit no more than .05 lbs of NOx 
per million BTU; 
(iii) to achieve substantial reductions in 
mercury emissions; and
747
HR 6 PCS 
(iv) to achieve a thermal efficiency of— 
(I) 60 percent for coal of more than 
9,000 Btu; 
(II) 59 percent for coal of 7,000 to 
9,000 Btu; and 
(III) 50 percent for coal of less than 
7,000 Btu. 
(2) OTHER PROJECTS.—The Secretary shall pe-
riodically set technical milestones for projects not 
described in paragraph (1). The milestones shall 
specify the emission and thermal efficiency levels 
that projects funded under this paragraph must be 
designed to and reasonably expected to achieve. The 
technical milestones shall get more restrictive during 
the life of the program. The Secretary shall set the 
periodic milestones so as to achieve by 2010 projects 
able—
(A) to remove 97 percent of sulfur dioxide; 
(B) to emit no more than .08 lbs of NOx 
per million BTU; 
(C) to achieve substantial reductions in 
mercury emissions; and 
(D) to achieve a thermal efficiency of—
(i) 45 percent for coal of more than 
9,000 Btu;
748
HR 6 PCS 
(ii) 44 percent for coal of 7,000 to 
9,000 Btu; and 
(iii) 40 percent for coal of less than 
7,000 Btu. 
(3) CONSULTATION.—Before setting the tech-
nical milestones under paragraphs (1)(B) and (2), 
the Secretary shall consult with the Administrator of 
the Environmental Protection Agency and interested 
entities, including coal producers, industries using 
coal, organizations to promote coal or advanced coal 
technologies, environmental organizations, and orga-
nizations representing workers. 
(4) EXISTING UNITS.—In the case of projects 
at existing units, in lieu of the thermal efficiency re-
quirements set forth in paragraph (1)(B)(iv) and 
(2)(D), the milestones shall be designed to achieve 
an overall thermal design efficiency improvement 
compared to the efficiency of the unit as operated, 
of not less than— 
(A) 7 percent for coal of more than 9,000 
Btu; 
(B) 6 percent for coal of 7,000 to 9,000 
Btu; or 
(C) 4 percent for coal of less than 7,000 
Btu.