area or region of the country, except that any such 
waiver shall not have the effect of reducing the ap-
plicable volume of renewable fuel specified in para-
graph (2)(B) with respect to any year for which the 
determination is made. In determining economic im-
pact under this paragraph, the Administrator shall 
not consider the reduced revenues available from the 
Highway Trust Fund (section 9503 of the Internal 
Revenue Code of 1986) as a result of the use of eth-
anol. 
‘‘(11) SMALL REFINERIES.—
‘‘(A) IN
GENERAL.—The requirement of 
paragraph (2) shall not apply to small refineries 
until the first calendar year beginning more 
than 5 years after the first year set forth in the 
table in paragraph (2)(B)(i). Not later than De-
cember 31, 2007, the Secretary of Energy shall 
complete for the Administrator a study to de-
termine whether the requirement of paragraph 
(2) would impose a disproportionate economic 
hardship on small refineries. For any small re-
finery that the Secretary of Energy determines 
would experience a disproportionate economic 
hardship, the Administrator shall extend the
small refinery exemption for such small refinery 
for no less than two additional years. 
‘‘(B) ECONOMIC HARDSHIP.—
‘‘(i) EXTENSION OF EXEMPTION.—A 
small refinery may at any time petition the 
Administrator for an extension of the ex-
emption from the requirement of para-
graph (2) for the reason of dispropor-
tionate economic hardship. In evaluating a 
hardship petition, the Administrator, in 
consultation with the Secretary of Energy, 
shall consider the findings of the study in 
addition to other economic factors. 
‘‘(ii) DEADLINE FOR ACTION ON PETI-
TIONS.—The Administrator shall act on 
any petition submitted by a small refinery 
for a hardship exemption not later than 90 
days after the receipt of the petition. 
‘‘(C) CREDIT PROGRAM.—If a small refin-
ery notifies the Administrator that it waives the 
exemption provided by this Act, the regulations 
shall provide for the generation of credits by 
the small refinery beginning in the year fol-
lowing such notification.
‘‘(D) OPT-IN
FOR
SMALL
REFINERS.—A 
small refinery shall be subject to the require-
ments of this section if it notifies the Adminis-
trator that it waives the exemption under sub-
paragraph (A). 
‘‘(12) 
ETHANOL
MARKET
CONCENTRATION 
ANALYSIS.—
‘‘(A) ANALYSIS.—
‘‘(i) IN
GENERAL.—Not later than 
180 days after the date of enactment of 
this subsection, and annually thereafter, 
the Federal Trade Commission shall per-
form a market concentration analysis of 
the ethanol production industry using the 
Herfindahl-Hirschman Index to determine 
whether there is sufficient competition 
among industry participants to avoid price 
setting and other anticompetitive behavior. 
‘‘(ii) SCORING.—For the purpose of 
scoring 
under 
clause 
(i) 
using 
the 
Herfindahl-Hirschman 
Index, 
all 
mar-
keting arrangements among industry par-
ticipants shall be considered. 
‘‘(B) REPORT.—Not later than December 
1, 2004, and annually thereafter, the Federal
Trade Commission shall submit to Congress 
and the Administrator a report on the results 
of the market concentration analysis performed 
under subparagraph (A)(i).’’. 
(b) 
PENALTIES
AND
ENFORCEMENT.—Section 
211(d) of the Clean Air Act (42 U.S.C. 7545(d)) is 
amended as follows: 
(1) In paragraph (1)—
(A) in the first sentence, by striking ‘‘or 
(n)’’ each place it appears and inserting ‘‘(n), 
or (o)’’; and 
(B) in the second sentence, by striking ‘‘or 
(m)’’ and inserting ‘‘(m), or (o)’’. 
(2) In the first sentence of paragraph (2), by 
striking ‘‘and (n)’’ each place it appears and insert-
ing ‘‘(n), and (o)’’. 
(c) SURVEY OF RENEWABLE FUEL MARKET.—
(1) SURVEY AND REPORT.—Not later than De-
cember 1, 2006, and annually thereafter, the Admin-
istrator of the Environmental Protection Agency (in 
consultation with the Secretary of Energy acting 
through the Administrator of the Energy Informa-
tion Administration) shall—
(A) conduct, with respect to each conven-
tional gasoline use area and each reformulated
gasoline use area in each State, a survey to de-
termine the market shares of—
(i) conventional gasoline containing 
ethanol; 
(ii) reformulated gasoline containing 
ethanol; 
(iii) conventional gasoline containing 
renewable fuel; and 
(iv) reformulated gasoline containing 
renewable fuel; and 
(B) submit to Congress, and make publicly 
available, a report on the results of the survey 
under subparagraph (A). 
(2) RECORDKEEPING
AND
REPORTING
RE-
QUIREMENTS.—The Administrator of the Environ-
mental Protection Agency (hereinafter in this sub-
section referred to as the ‘‘Administrator’’) may re-
quire any refiner, blender, or importer to keep such 
records and make such reports as are necessary to 
ensure that the survey conducted under paragraph 
(1) is accurate. The Administrator, to avoid duplica-
tive requirements, shall rely, to the extent prac-
ticable, on existing reporting and recordkeeping re-
quirements and other information available to the
Administrator including gasoline distribution pat-
terns that include multistate use areas. 
(3) APPLICABLE
LAW.—Activities carried out 
under this subsection shall be conducted in a man-
ner designed to protect confidentiality of individual 
responses. 
SEC. 102. PROHIBITION ON USE OF MTBE AS A FUEL ADDI-
TIVE. 
Section 211(c) of the Clean Air Act (42 U.S.C. 
7545(c)) is amended by adding the following at the end 
of paragraph (1): ‘‘Effective on the date of the enactment 
of this sentence, the use of methyl tertiary butyl ether 
(MTBE) as a fuel additive is prohibited.’’. The Adminis-
trator of the Environmental Protection Agency shall 
amend the regulations under section 211(c) of the Clean 
Air Act (42 U.S.C. 7545(c)) as promptly as practicable 
after the enactment of this Act to conform to the amend-
ment made by this section. 
SEC. 103. FEDERAL AGENCY FLEET VEHICLES. 
Section 248(f) of the Clean Air Act (42 U.S.C. 
7588(f)) is amended by inserting the following before the 
period at the end thereof: ‘‘, all such vehicles shall be clean 
fuel vehicles certified under this part capable of using eth-
anol as fuel and shall use ethanol wherever economically 
feasible, as determined by the Administrator, and all such
agencies shall use biodiesel fuel to operate any Federal 
vehicle that uses diesel fuel, unless the cost of doing so 
is prohibitive’’. 
TITLE II—TAX INCENTIVES 
SEC. 201. EXTENSION AND EXPANSION OF CREDIT FOR 
ELECTRICITY PRODUCED FROM CERTAIN RE-
NEWABLE RESOURCES. 
(a) EXPANSION
OF
QUALIFIED
ENERGY
RE-
SOURCES.—Subsection (c) of section 45 of the Internal 
Revenue Code of 1986 (relating to electricity produced 
from certain renewable resources) is amended to read as 
follows: 
‘‘(c) QUALIFIED ENERGY RESOURCES.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘qualified energy 
resources’ means—
‘‘(A) wind, 
‘‘(B) closed-loop biomass, and 
‘‘(C) open-loop biomass. 
‘‘(2) 
CLOSED-LOOP
BIOMASS.—The 
term 
‘closed-loop biomass’ means any organic material 
from a plant which is planted exclusively for pur-
poses of being used at a qualified facility to produce 
electricity. 
‘‘(3) OPEN-LOOP BIOMASS.—
‘‘(A) IN GENERAL.—The term ‘open-loop 
biomass’ means—
‘‘(i) any agricultural livestock waste 
nutrients, or 
‘‘(ii) any solid, nonhazardous, cel-
lulosic waste material which is segregated 
from other waste materials and which is 
derived from—
‘‘(I) any of the following forest-
related resources: mill and harvesting 
residues, 
precommercial 
thinnings, 
slash, and brush; but not including 
spent chemicals from pulp manufac-
turing, 
‘‘(II) solid wood waste materials, 
including 
waste 
pallets, 
crates, 
dunnage, manufacturing and con-
struction wood wastes (other than 
pressure-treated, 
chemically-treated, 
or painted wood wastes), and land-
scape or right-of-way tree trimmings, 
but not including municipal solid 
waste, gas derived from the bio-
degradation of solid waste, or paper 
which is commonly recycled, or
‘‘(III) agriculture sources, includ-
ing orchard tree crops, vineyard, 
grain, legumes, sugar, and other crop 
by-products or residues. 
‘‘(B) AGRICULTURAL
LIVESTOCK
WASTE 
NUTRIENTS.—
‘‘(i) IN GENERAL.—The term ‘agricul-
tural livestock waste nutrients’ means agri-
cultural livestock manure and litter, includ-
ing wood shavings, straw, rice hulls, and 
other bedding material for the disposition 
of manure. 
‘‘(ii) AGRICULTURAL
LIVESTOCK.—
The term ‘agricultural livestock’ includes 
bovine, swine, poultry, and sheep. 
‘‘(C) EXCEPTIONS.—The term ‘open-loop 
biomass’ does not include—
‘‘(i) closed-loop biomass, or 
‘‘(ii) biomass burned in conjunction 
with fossil fuel (cofiring) beyond such fossil 
fuel required for startup and flame sta-
bilization.’’. 
(b) EXTENSION AND EXPANSION OF QUALIFIED FA-
CILITIES.—Section 45 of such Code is amended by redes-
ignating subsection (d) as subsection (e) and by inserting 
after subsection (c) the following new subsection: 
‘‘(d) QUALIFIED FACILITIES.—For purposes of this 
section—
‘‘(1) WIND FACILITY.—In the case of a facility 
using wind to produce electricity, the term ‘qualified 
facility’ means any facility owned by the taxpayer 
which is originally placed in service after December 
31, 1993. 
‘‘(2) CLOSED-LOOP BIOMASS FACILITY.—
‘‘(A) IN GENERAL.—In the case of a facil-
ity using closed-loop biomass to produce elec-
tricity, the term ‘qualified facility’ means any 
facility—
‘‘(i) owned by the taxpayer which is 
originally placed in service after December 
31, 1992, or 
‘‘(ii) owned by the taxpayer which is 
originally placed in service and modified to 
use closed-loop biomass to co-fire with coal, 
with other biomass, or with both, but only 
if the modification is approved under the 
Biomass Power for Rural Development 
Programs or is part of a pilot project of
the Commodity Credit Corporation as de-
scribed in 65 Fed. Reg. 63052. 
‘‘(B) SPECIAL RULES.—In the case of a 
qualified facility described in subparagraph 
(A)(ii)—
‘‘(i) the 10-year period referred to in 
subsection (a) shall be treated as beginning 
no earlier than January 1, 2005, 
‘‘(ii) the amount of the credit deter-
mined under subsection (a) with respect to 
the facility shall be an amount equal to the 
amount determined without regard to this 
clause multiplied by the ratio of the ther-
mal content of the closed-loop biomass 
used in such facility to the thermal content 
of all fuels used in such facility, and 
‘‘(iii) if the owner of such facility is 
not the producer of the electricity, the per-
son eligible for the credit allowable under 
subsection (a) shall be the lessee or the op-
erator of such facility. 
‘‘(3) OPEN-LOOP BIOMASS FACILITY.—
‘‘(A) IN GENERAL.—In the case of a facil-
ity using open-loop biomass to produce elec-
tricity for grid sale in excess of its internal re-
quirements, the term ‘qualified facility’ means 
any facility owned by the taxpayer which—
‘‘(i) in the case of a facility using ag-
ricultural livestock waste nutrients, is 
originally placed in service after December 
31, 2004, and 
‘‘(ii) in the case of any other facility, 
is originally placed in service before Janu-
ary 1, 2005. 
‘‘(B) SPECIAL RULES FOR PREEFFECTIVE 
DATE FACILITIES.—In the case of any facility 
described in subparagraph (A)(ii) which is 
placed in service before January 1, 2005—
‘‘(i) subsection (a)(1) shall be applied 
by substituting ‘1.2 cents’ for ‘1.5 cents’, 
and 
‘‘(ii) the 5-year period beginning on 
January 1, 2005, shall be substituted for 
the 
10-year 
period 
in 
subsection 
(a)(2)(A)(ii). 
‘‘(C) CREDIT ELIGIBILITY.—In the case of 
any facility described in subparagraph (A), if 
the owner of such facility is not the producer of 
the electricity, the person eligible for the credit
allowable under subsection (a) shall be the les-
see or the operator of such facility.’’. 
(c) CREDIT RATE
FOR ELECTRICITY PRODUCED 
FROM NEW FACILITIES.—
(1) IN GENERAL.—Section 45(a) of such Code 
is amended by adding at the end the following new 
flush sentence: ‘‘In the case of electricity produced 
after December 31, 2004, at any qualified facility 
originally placed in service after such date, para-
graph (1) shall be applied by substituting ‘1.8 cents’ 
for ‘1.5 cents’.’’. 
(2) NEW RATE NOT SUBJECT TO INFLATION 
ADJUSTMENT.—Section 45(b)(2) of such Code (re-
lating to credit and phaseout adjustment based on 
inflation) is amended by adding at the end the fol-
lowing new sentence: ‘‘This paragraph shall not 
apply to any amount which is substituted for the 1.5 
cent amount in subsection (a) by reason of any pro-
vision of this section.’’. 
(d) EFFECTIVE DATES.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to electricity produced and 
sold after December 31, 2004, in taxable years end-
ing after such date.
(2) CERTAIN
BIOMASS
FACILITIES.—With re-
spect 
to 
any 
facility 
described 
in 
section 
45(d)(3)(A)(ii) of the Internal Revenue Code of 
1986, as added by subsection (b)(1), which is placed 
in service before the date of the enactment of this 
Act, the amendments made by this section shall 
apply to electricity produced and sold after Decem-
ber 31, 2004, in taxable years ending after such 
date. 
(3) CREDIT RATE FOR NEW FACILITIES.—The 
amendments made by subsection (c) shall apply to 
electricity produced and sold after December 31, 
2004, in taxable years ending after such date. 
(4) NONAPPLICATION
OF
AMENDMENTS
TO 
PREEFFECTIVE
DATE
POULTRY
WASTE
FACILI-
TIES.—The amendments made by this section shall 
not apply with respect to any poultry waste facility 
(within the meaning of section 45(c)(3)(C), as in ef-
fect on December 31, 2004) placed in service on or 
before such date. 
SEC. 202. SMALL ETHANOL PRODUCER CREDIT. 
(a) ALLOCATION OF ALCOHOL FUELS CREDIT TO 
PATRONS OF A COOPERATIVE.—Section 40(g) of the In-
ternal Revenue Code of 1986 (relating to definitions and 
special rules for eligible small ethanol producer credit) is
amended by adding at the end the following new para-
graph: 
‘‘(6) ALLOCATION
OF
SMALL
ETHANOL
PRO-
DUCER CREDIT TO PATRONS OF COOPERATIVE.—
‘‘(A) ELECTION TO ALLOCATE.—
‘‘(i) IN GENERAL.—In the case of a 
cooperative organization described in sec-
tion 1381(a), any portion of the credit de-
termined under subsection (a)(3) for the 
taxable year may, at the election of the or-
ganization, be apportioned pro rata among 
patrons of the organization on the basis of 
the quantity or value of business done with 
or for such patrons for the taxable year. 
‘‘(ii) FORM
AND
EFFECT
OF
ELEC-
TION.—An election under clause (i) for any 
taxable year shall be made on a timely 
filed return for such year. Such election, 
once made, shall be irrevocable for such 
taxable year. 
‘‘(B) TREATMENT OF ORGANIZATIONS AND 
PATRONS.—The amount of the credit appor-
tioned to patrons under subparagraph (A)—
‘‘(i) shall not be included in the 
amount determined under subsection (a)
with respect to the organization for the 
taxable year, and 
‘‘(ii) shall be included in the amount 
determined under subsection (a) for the 
taxable year of each patron for which the 
patronage dividends for the taxable year 
described in subparagraph (A) are included 
in gross income. 
‘‘(C) SPECIAL RULES FOR DECREASE IN 
CREDITS FOR TAXABLE YEAR.—If the amount 
of the credit of a cooperative organization de-
termined under subsection (a)(3) for a taxable 
year is less than the amount of such credit 
shown on the return of the cooperative organi-
zation for such year, an amount equal to the 
excess of—
‘‘(i) such reduction, over 
‘‘(ii) the amount not apportioned to 
such patrons under subparagraph (A) for 
the taxable year, 
shall be treated as an increase in tax imposed 
by this chapter on the organization. Such in-
crease shall not be treated as tax imposed by 
this chapter for purposes of determining the
amount of any credit under this chapter or for 
purposes of section 55.’’. 
(b) IMPROVEMENTS TO SMALL ETHANOL PRODUCER 
CREDIT.—
(1) DEFINITION
OF
SMALL
ETHANOL
PRO-
DUCER.—Section 40(g) of such Code (relating to 
definitions and special rules for eligible small ethanol 
producer 
credit) 
is 
amended 
by 
striking 
‘‘30,000,000’’ each place it appears and inserting 
‘‘60,000,000’’. 
(2) SMALL ETHANOL PRODUCER CREDIT NOT A 
PASSIVE
ACTIVITY
CREDIT.—Clause (i) of section 
469(d)(2)(A) of such Code is amended by striking 
‘‘subpart D’’ and inserting ‘‘subpart D, other than 
section 40(a)(3),’’. 
(3) SMALL ETHANOL PRODUCER CREDIT NOT 
ADDED BACK TO INCOME UNDER SECTION 87.—Sec-
tion 87 of such Code (relating to income inclusion 
of alcohol fuel credit) is amended to read as follows: 
‘‘SEC. 87. ALCOHOL FUEL CREDIT. 
‘‘Gross income includes an amount equal to the sum 
of—
‘‘(1) the amount of the alcohol mixture credit 
determined with respect to the taxpayer for the tax-
able year under section 40(a)(1), and
‘‘(2) the alcohol credit determined with respect 
to the taxpayer for the taxable year under section 
40(a)(2).’’. 
(c) CONFORMING AMENDMENT.—Section 1388 of 
such Code (relating to definitions and special rules for co-
operative organizations) is amended by adding at the end 
the following new subsection: 
‘‘(l) CROSS REFERENCE.—For provisions relating to 
the apportionment of the alcohol fuels credit between coop-
erative organizations and their patrons, see section 
40(g)(6).’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 203. CREDIT FOR ENERGY EFFICIENT APPLIANCES. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (relating to business-related cred-
its) is amended by adding after section 45F the following 
new section: 
‘‘SEC. 45G. ENERGY EFFICIENT APPLIANCE CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 38, 
the energy efficient appliance credit determined 
under this section for the taxable year is an amount 
equal to the sum of the amounts determined under
paragraph (2) for qualified energy efficient appli-
ances produced by the taxpayer during the calendar 
year ending with or within the taxable year. 
‘‘(2) AMOUNT.—The amount determined under 
this paragraph for any category described in sub-
section (b)(2)(B) shall be the product of the applica-
ble amount for appliances in the category and the el-
igible production for the category. 
‘‘(b) APPLICABLE
AMOUNT; ELIGIBLE
PRODUC-
TION.—For purposes of subsection (a)—
‘‘(1) APPLICABLE
AMOUNT.—The applicable 
amount is—
‘‘(A) $50, in the case of—
‘‘(i) a clothes washer which is manu-
factured with at least a 1.42 MEF, or 
‘‘(ii) a refrigerator which consumes at 
least 10 percent less kilowatt hours per 
year than the energy conservation stand-
ards for refrigerators promulgated by the 
Department of Energy and effective on 
July 1, 2001, 
‘‘(B) $100, in the case of—
‘‘(i) a clothes washer which is manu-
factured with at least a 1.50 MEF, or
‘‘(ii) a refrigerator which consumes at 
least 15 percent (20 percent in the case of 
a refrigerator manufactured after 2006) 
less kilowatt hours per year than such en-
ergy conservation standards, and 
‘‘(C) $150, in the case of a refrigerator 
manufactured before 2007 which consumes at 
least 20 percent less kilowatt hours per year 
than such energy conservation standards. 
‘‘(2) ELIGIBLE PRODUCTION.—
‘‘(A) IN GENERAL.—The eligible produc-
tion of each category of qualified energy effi-
cient appliances is the excess of—
‘‘(i) the number of appliances in such 
category which are produced by the tax-
payer during such calendar year, over 
‘‘(ii) the average number of appliances 
in such category which were produced by 
the taxpayer during calendar years 2001, 
2002, and 2003. 
‘‘(B) CATEGORIES.—For purposes of sub-
paragraph (A), the categories are—
‘‘(i) clothes washers described in para-
graph (1)(A)(i),
‘‘(ii) clothes washers described in 
paragraph (1)(B)(i), 
‘‘(iii) refrigerators described in para-
graph (1)(A)(ii), 
‘‘(iv) refrigerators described in para-
graph (1)(B)(ii), and 
‘‘(v) refrigerators described in para-
graph (1)(C). 
‘‘(c) LIMITATION ON MAXIMUM CREDIT.—
‘‘(1) IN GENERAL.—The amount of credit al-
lowed under subsection (a) with respect to a tax-
payer for all taxable years shall not exceed 
$60,000,000, of which not more than $30,000,000 
may be allowed with respect to the credit determined 
by using the applicable amount under subsection 
(b)(1)(A). 
‘‘(2) 
LIMITATION
BASED
ON
GROSS
RE-
CEIPTS.—The credit allowed under subsection (a) 
with respect to a taxpayer for the taxable year shall 
not exceed an amount equal to 2 percent of the aver-
age annual gross receipts of the taxpayer for the 3 
taxable years preceding the taxable year in which 
the credit is determined.
‘‘(3) GROSS RECEIPTS.—For purposes of this 
subsection, the rules of paragraphs (2) and (3) of 
section 448(c) shall apply. 
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED
ENERGY
EFFICIENT
APPLI-
ANCE.—The term ‘qualified energy efficient appli-
ance’ means—
‘‘(A) a clothes washer described in sub-
paragraph (A)(i) or (B)(i) of subsection (b)(1), 
or 
‘‘(B) a refrigerator described in subpara-
graph (A)(ii), (B)(ii), or (C) of subsection 
(b)(1). 
‘‘(2) CLOTHES
WASHER.—The term ‘clothes 
washer’ means a residential clothes washer, includ-
ing a residential style coin operated washer. 
‘‘(3) REFRIGERATOR.—The term ‘refrigerator’ 
means an automatic defrost refrigerator-freezer 
which has an internal volume of at least 16.5 cubic 
feet. 
‘‘(4) MEF.—The term ‘MEF’ means Modified 
Energy Factor (as determined by the Secretary of 
Energy). 
‘‘(e) SPECIAL RULES.—
‘‘(1) IN GENERAL.—Rules similar to the rules 
of subsections (c), (d), and (e) of section 52 shall 
apply for purposes of this section. 
‘‘(2) AGGREGATION RULES.—All persons treat-
ed as a single employer under subsection (a) or (b) 
of section 52 or subsection (m) or (o) of section 414 
shall be treated as 1 person for purposes of sub-
section (a). 
‘‘(f) VERIFICATION.—The taxpayer shall submit such 
information or certification as the Secretary, in consulta-
tion with the Secretary of Energy, determines necessary 
to claim the credit amount under subsection (a).’’. 
(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Section 38(b) of such Code (relating to current 
year business credit) is amended by striking ‘‘plus’’ at the 
end of paragraph (14), by striking the period at the end 
of paragraph (15) and inserting ‘‘, plus’’, and by adding 
at the end the following new paragraph: 
‘‘(16) the energy efficient appliance credit de-
termined under section 45G(a).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of such Code is amended by adding at the end the fol-
lowing new item:
‘‘45G. Energy efficient appliance credit.’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to appliances produced after De-
cember 31, 2004, in taxable years ending after such date. 
SEC. 204. REPEAL OF 4.3-CENT MOTOR FUEL EXCISE TAXES 
ON RAILROADS AND INLAND WATERWAY 
TRANSPORTATION WHICH REMAIN IN GEN-
ERAL FUND. 
(a) TAXES ON TRAINS.—
(1) IN GENERAL.—Subparagraph (A) of section 
4041(a)(1) of the Internal Revenue Code of 1986 is 
amended by striking ‘‘or a diesel-powered train’’ 
each place it appears and by striking ‘‘or train’’. 
(2) CONFORMING AMENDMENTS.—
(A) 
Subparagraph 
(C) 
of 
section 
4041(a)(1) of such Code is amended by striking 
clause (ii) and by redesignating clause (iii) as 
clause (ii). 
(B) 
Subparagraph 
(C) 
of 
section 
4041(b)(1) of such Code is amended by striking 
all that follows ‘‘section 6421(e)(2)’’ and insert-
ing a period. 
(C) Subsection (d) of section 4041 of such 
Code is amended by redesignating paragraph 
(3) as paragraph (4) and by inserting after 
paragraph (2) the following new paragraph:
‘‘(3) DIESEL FUEL USED IN TRAINS.—There is 
hereby imposed a tax of 0.1 cent per gallon on any 
liquid other than gasoline (as defined in section 
4083)—
‘‘(A) sold by any person to an owner, les-
see, or other operator of a diesel-powered train 
for use as a fuel in such train, or 
‘‘(B) used by any person as a fuel in a die-
sel-powered train unless there was a taxable 
sale of such fuel under subparagraph (A). 
No tax shall be imposed by this paragraph on the 
sale or use of any liquid if tax was imposed on such 
liquid under section 4081.’’
(D) Subsection (e) of section 4082 of such 
Code 
is 
amended 
by 
striking 
‘‘section 
4041(a)(1)’’ and inserting ‘‘subsections (d)(3) 
and (a)(1) of section 4041, respectively’’. 
(E) Paragraph (3) of section 4083(a) of 
such Code is amended by striking ‘‘or a diesel-
powered train’’. 
(F) Paragraph (3) of section 6421(f) of 
such Code is amended to read as follows: 
‘‘(3) GASOLINE USED IN TRAINS.—In the case 
of gasoline used as a fuel in a train, this section 
shall not apply with respect to the Leaking Under-
ground Storage Tank Trust Fund financing rate 
under section 4081.’’
(G) Paragraph (3) of section 6427(l) of 
such Code is amended to read as follows: 
‘‘(3) REFUND
OF
CERTAIN
TAXES
ON
FUEL 
USED IN DIESEL-POWERED TRAINS.—For purposes 
of this subsection, the term ‘nontaxable use’ includes 
fuel used in a diesel-powered train. The preceding 
sentence shall not apply to the tax imposed by sec-
tion 4041(d) and the Leaking Underground Storage 
Tank Trust Fund financing rate under section 4081 
except with respect to fuel sold for exclusive use by 
a State or any political subdivision thereof.’’
(b) FUEL USED ON INLAND WATERWAYS.—
(1) IN
GENERAL.—Paragraph (1) of section 
4042(b) of such Code is amended by adding ‘‘and’’ 
at the end of subparagraph (A), by striking ‘‘, and’’ 
at the end of subparagraph (B) and inserting a pe-
riod, and by striking subparagraph (C). 
(2) CONFORMING AMENDMENT.—Paragraph (2) 
of section 4042(b) of such Code is amended by strik-
ing subparagraph (C). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act.
SEC. 205. CREDIT FOR CONSTRUCTION OF NEW ENERGY EF-
FICIENT HOME. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (relating to business related cred-
its) is amended by adding after section 45G the following 
new section: 
‘‘SEC. 45H. NEW ENERGY EFFICIENT HOME CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 38, in 
the case of an eligible contractor, the credit determined 
under this section for the taxable year is an amount equal 
to the aggregate adjusted bases of all energy efficient 
property installed in a qualifying new home during con-
struction of such home. 
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM CREDIT.—
‘‘(A) IN GENERAL.—The credit allowed by 
this section with respect to a qualifying new 
home shall not exceed—
‘‘(i) in the case of a 30-percent home, 
$1,000, and 
‘‘(ii) in the case of a 50-percent home, 
$2,000. 
‘‘(B) 30- OR 50-PERCENT HOME.—For pur-
poses of subparagraph (A)—
‘‘(i) 30-PERCENT
HOME.—The term 
‘30-percent home’ means—
‘‘(I) a qualifying new home which 
is certified to have a projected level of 
annual heating and cooling energy 
consumption, measured in terms of 
average annual energy cost to the 
homeowner, which is at least 30 per-
cent less than the annual level of 
heating and cooling energy consump-
tion of a qualifying new home con-
structed in accordance with the latest 
standards of chapter 4 of the Inter-
national Energy Conservation Code 
approved by the Department of En-
ergy before the construction of such 
qualifying new home and any applica-
ble Federal minimum efficiency stand-
ards for equipment, or 
‘‘(II) in the case of a qualifying 
new home which is a manufactured 
home, a home which meets the appli-
cable standards required by the Ad-
ministrator of the Environmental Pro-
tection Agency under the Energy Star 
Labeled Homes program.
‘‘(ii) 50-PERCENT
HOME.—The term 
‘50-percent home’ means a qualifying new 
home which would be described in clause 
(i)(I) if 50 percent were substituted for 30 
percent. 
‘‘(C) PRIOR
CREDIT
AMOUNTS
ON
SAME 
HOME TAKEN INTO ACCOUNT.—The amount of 
the credit otherwise allowable for the taxable 
year with respect to a qualifying new home 
under clause (i) or (ii) of subparagraph (A) 
shall be reduced by the sum of the credits al-
lowed under subsection (a) to any taxpayer with 
respect to the home for all preceding taxable 
years. 
‘‘(2) COORDINATION WITH CERTAIN CREDITS.—
For purposes of this section—
‘‘(A) the basis of any property referred to 
in subsection (a) shall be reduced by that por-
tion of the basis of any property which is attrib-
utable to the rehabilitation credit (as deter-
mined under section 47(a)) or to the energy 
credit (as determined under section 48(a)), and 
‘‘(B) expenditures taken into account 
under section 47, or 48(a) shall not be taken 
into account under this section.
‘‘(3) PROVIDER LIMITATION.—Any eligible con-
tractor who directly or indirectly provides the guar-
antee of energy savings under a guarantee-based 
method of certification described in subsection 
(d)(1)(D) shall not be eligible to receive the credit 
allowed by this section. 
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligi-
ble contractor’ means—
‘‘(A) the person who constructed the quali-
fying new home, or 
‘‘(B) in the case of a qualifying new home 
which is a manufactured home, the manufac-
tured home producer of such home. 
If more than 1 person is described in subparagraph 
(A) or (B) with respect to any qualifying new home, 
such term means the person designated as such by 
the owner of such home. 
‘‘(2) ENERGY
EFFICIENT
PROPERTY.—The 
term ‘energy efficient property’ means any energy 
efficient building envelope component, and any en-
ergy efficient heating or cooling equipment or system 
which can, individually or in combination with other 
components, meet the requirements of this section. 
‘‘(3) QUALIFYING NEW HOME.—
‘‘(A) IN GENERAL.—The term ‘qualifying 
new home’ means a dwelling—
‘‘(i) located in the United States, 
‘‘(ii) the construction of which is sub-
stantially completed after December 31, 
2004, and 
‘‘(iii) the first use of which after con-
struction is as a principal residence (within 
the meaning of section 121). 
‘‘(B) MANUFACTURED HOME INCLUDED.—
The term ‘qualifying new home’ includes a 
manufactured home conforming to Federal 
Manufactured Home Construction and Safety 
Standards (24 C.F.R. 3280). 
‘‘(4) CONSTRUCTION.—The term ‘construction’ 
includes reconstruction and rehabilitation. 
‘‘(5) BUILDING ENVELOPE COMPONENT.—The 
term ‘building envelope component’ means—
‘‘(A) any insulation material or system 
which is specifically and primarily designed to 
reduce the heat loss or gain of a qualifying new 
home when installed in or on such home, 
‘‘(B) exterior windows (including sky-
lights), and 
‘‘(C) exterior doors.
‘‘(d) CERTIFICATION.—
‘‘(1) METHOD OF CERTIFICATION.—
‘‘(A) IN
GENERAL.—A certification de-
scribed in subsection (b)(1)(B) shall be deter-
mined either by a component-based method, a 
performance-based method, or a guarantee-
based method, or, in the case of a qualifying 
new home which is a manufactured home, by a 
method prescribed by the Administrator of the 
Environmental Protection Agency under the 
Energy Star Labeled Homes program. 
‘‘(B) 
COMPONENT-BASED
METHOD.—A 
component-based method is a method which 
uses the applicable technical energy efficiency 
specifications or ratings (including product la-
beling requirements) for the energy efficient 
building envelope component or energy efficient 
heating or cooling equipment. The Secretary 
shall, in consultation with the Administrator of 
the Environmental Protection Agency, develop 
prescriptive component-based packages which 
are equivalent in energy performance to prop-
erties which qualify under subparagraph (C). 
‘‘(C) PERFORMANCE-BASED METHOD.—
‘‘(i) IN
GENERAL.—A performance-
based method is a method which calculates 
projected energy usage and cost reductions 
in the qualifying new home in relation to 
a new home—
‘‘(I) heated by the same fuel 
type, and 
‘‘(II) constructed in accordance 
with the latest standards of chapter 4 
of the International Energy Conserva-
tion Code approved by the Depart-
ment of Energy before the construc-
tion of such qualifying new home and 
any applicable Federal minimum effi-
ciency standards for equipment. 
‘‘(ii) COMPUTER
SOFTWARE.—Com-
puter software shall be used in support of 
a performance-based method certification 
under clause (i). Such software shall meet 
procedures and methods for calculating en-
ergy and cost savings in regulations pro-
mulgated by the Secretary of Energy. 
‘‘(D) GUARANTEE-BASED METHOD.—
‘‘(i) IN GENERAL.—A guarantee-based 
method is a method which guarantees in
writing to the homeowner energy savings 
of either 30 percent or 50 percent over the 
2000 International Energy Conservation 
Code for heating and cooling costs. The 
guarantee shall be provided for a minimum 
of 2 years and shall fully reimburse the 
homeowner any heating and cooling costs 
in excess of the guaranteed amount. 
‘‘(ii) COMPUTER
SOFTWARE.—Com-
puter software shall be selected by the pro-
vider to support the guarantee-based meth-
od certification under clause (i). Such soft-
ware shall meet procedures and methods 
for calculating energy and cost savings in 
regulations promulgated by the Secretary 
of Energy. 
‘‘(2) PROVIDER.—A certification described in 
subsection (b)(1)(B) shall be provided by—
‘‘(A) in the case of a component-based 
method, a local building regulatory authority, a 
utility, or a home energy rating organization, 
‘‘(B) in the case of a performance-based 
method or a guarantee-based method, an indi-
vidual recognized by an organization designated 
by the Secretary for such purposes, or
‘‘(C) in the case of a qualifying new home 
which is a manufactured home, a manufactured 
home primary inspection agency. 
‘‘(3) FORM.—
‘‘(A) IN
GENERAL.—A certification de-
scribed in subsection (b)(1)(B) shall be made in 
writing in a manner which specifies in readily 
verifiable fashion the energy efficient building 
envelope components and energy efficient heat-
ing or cooling equipment installed and their re-
spective rated energy efficiency performance, 
and 
‘‘(i) in the case of a performance-
based method, accompanied by a written 
analysis documenting the proper applica-
tion of a permissible energy performance 
calculation method to the specific cir-
cumstances of such qualifying new home, 
and 
‘‘(ii) in the case of a qualifying new 
home which is a manufactured home, ac-
companied by such documentation as re-
quired by the Administrator of the Envi-
ronmental Protection Agency under the 
Energy Star Labeled Homes program.
‘‘(B) FORM PROVIDED TO BUYER.—A form 
documenting the energy efficient building enve-
lope components and energy efficient heating or 
cooling equipment installed and their rated en-
ergy efficiency performance shall be provided to 
the buyer of the qualifying new home. The form 
shall include labeled R-value for insulation 
products, NFRC-labeled U-factor and solar 
heat gain coefficient for windows, skylights, and 
doors, labeled annual fuel utilization efficiency 
(AFUE) ratings for furnaces and boilers, la-
beled heating seasonal performance factor 
(HSPF) ratings for electric heat pumps, and la-
beled seasonal energy efficiency ratio (SEER) 
ratings for air conditioners. 
‘‘(C) RATINGS LABEL AFFIXED IN DWELL-
ING.—A permanent label documenting the rat-
ings in subparagraph (B) shall be affixed to the 
front of the electrical distribution panel of the 
qualifying new home, or shall be otherwise per-
manently displayed in a readily inspectable loca-
tion in such home. 
‘‘(4) REGULATIONS.—
‘‘(A) IN GENERAL.—In prescribing regula-
tions under this subsection for performance-
based and guarantee-based certification meth-
ods, the Secretary shall prescribe procedures for 
calculating annual energy usage and cost reduc-
tions for heating and cooling and for the report-
ing of the results. Such regulations shall—
‘‘(i) provide that any calculation pro-
cedures be fuel neutral such that the same 
energy efficiency measures allow a quali-
fying new home to be eligible for the credit 
under this section regardless of whether 
such home uses a gas or oil furnace or 
boiler or an electric heat pump, and 
‘‘(ii) require that any computer soft-
ware allow for the printing of the Federal 
tax forms necessary for the credit under 
this section and for the printing of forms 
for disclosure to the homebuyer. 
‘‘(B) PROVIDERS.—For purposes of para-
graph (2)(B), the Secretary shall establish re-
quirements for the designation of individuals 
based on the requirements for energy consult-
ants and home energy raters specified by the 
Mortgage Industry National Home Energy Rat-
ing Standards.
‘‘(e) APPLICATION.—Subsection (a) shall apply to 
qualifying new homes the construction of which is substan-
tially completed after December 31, 2004.’’. 
(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Section 38(b) of such Code (relating to current 
year business credit) is amended by striking ‘‘plus’’ at the 
end of paragraph (15), by striking the period at the end 
of paragraph (16) and inserting ‘‘, plus’’, and by adding 
at the end the following new paragraph: 
‘‘(17) the new energy efficient home credit de-
termined under section 45H(a).’’. 
(c) DENIAL OF DOUBLE BENEFIT.—Section 280C of 
such Code (relating to certain expenses for which credits 
are allowable) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(d) NEW ENERGY EFFICIENT HOME EXPENSES.—
No deduction shall be allowed for that portion of expenses 
for a qualifying new home otherwise allowable as a deduc-
tion for the taxable year which is equal to the amount 
of the credit determined for such taxable year under sec-
tion 45H(a).’’. 
(d) DEDUCTION FOR CERTAIN UNUSED BUSINESS 
CREDITS.—Section 196(c) of such Code (defining quali-
fied business credits) is amended by striking ‘‘and’’ at the 
end of paragraph (9), by striking the period at the end
of paragraph (10) and inserting ‘‘, and’’, and by adding 
after paragraph (10) the following new paragraph: 
‘‘(11) the new energy efficient home credit de-
termined under section 45H(a).’’. 
(e) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of such Code is amended by adding after the item relating 
to section 45G the following new item:
‘‘45H. New energy efficient home credit.’’.
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to homes the construction of which 
is substantially completed after December 31, 2004. 
SEC. 206. CREDIT FOR ENERGY EFFICIENCY IMPROVE-
MENTS TO EXISTING HOMES. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to nonrefundable personal credits) is 
amended by inserting after section 25B the following new 
section: 
‘‘SEC. 25C. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST-
ING HOMES. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount 
equal to 20 percent of the amount paid or incurred by
the taxpayer for qualified energy efficiency improvements 
installed during such taxable year. 
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM CREDIT.—The credit allowed by 
this section with respect to a dwelling unit shall not 
exceed $2,000. 
‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER 
ON SAME DWELLING TAKEN INTO ACCOUNT.—If a 
credit was allowed to the taxpayer under subsection 
(a) with respect to a dwelling unit in 1 or more prior 
taxable years, the amount of the credit otherwise al-
lowable for the taxable year with respect to that 
dwelling unit shall be reduced by the sum of the 
credits allowed under subsection (a) to the taxpayer 
with respect to the dwelling unit for all prior taxable 
years. 
‘‘(c) QUALIFIED ENERGY EFFICIENCY IMPROVE-
MENTS.—For purposes of this section, the term ‘qualified 
energy efficiency improvements’ means any energy effi-
cient building envelope component which meets the pre-
scriptive criteria for such component established by the 
2000 International Energy Conservation Code, as such 
Code (including supplements) is in effect on the date of 
the enactment of this section (or, in the case of a metal
roof with appropriate pigmented coatings which meet the 
Energy Star program requirements), if—
‘‘(1) such component is installed in or on a 
dwelling unit—
‘‘(A) located in the United States, 
‘‘(B) owned and used by the taxpayer as 
the taxpayer’s principal residence (within the 
meaning of section 121), and 
‘‘(C) which has not been treated as a 
qualified new energy efficient home for pur-
poses of any credit allowed under section 45G, 
‘‘(2) the original use of such component com-
mences with the taxpayer, and 
‘‘(3) such component reasonably can be ex-
pected to remain in use for at least 5 years. 
If the aggregate cost of such components with respect to 
any dwelling unit exceeds $1,000, such components shall 
be treated as qualified energy efficiency improvements 
only if such components are also certified in accordance 
with subsection (d) as meeting such prescriptive criteria. 
‘‘(d) CERTIFICATION.—The certification described in 
subsection (c) shall be—
‘‘(1) determined on the basis of the technical 
specifications or applicable ratings (including prod-
uct labeling requirements) for the measurement of
energy efficiency (based upon energy use or building 
envelope component performance) for the energy ef-
ficient building envelope component, 
‘‘(2) provided by a local building regulatory au-
thority, a utility, a manufactured home production 
inspection primary inspection agency (IPIA), or an 
accredited home energy rating system provider who 
is accredited by or otherwise authorized to use ap-
proved energy performance measurement methods by 
the 
Residential 
Energy 
Services 
Network 
(RESNET), and 
‘‘(3) made in writing in a manner which speci-
fies in readily verifiable fashion the energy efficient 
building envelope components installed and their re-
spective energy efficiency levels. 
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) BUILDING ENVELOPE COMPONENT.—The 
term ‘building envelope component’ means—
‘‘(A) any insulation material or system 
which is specifically and primarily designed to 
reduce the heat loss or gain of a dwelling unit 
when installed in or on such dwelling unit, 
‘‘(B) exterior windows (including sky-
lights),
‘‘(C) exterior doors, and 
‘‘(D) any metal roof installed on a dwelling 
unit, but only if such roof has appropriate pig-
mented coatings which are specifically and pri-
marily designed to reduce the heat gain of such 
dwelling unit. 
‘‘(2) MANUFACTURED HOMES INCLUDED.—The 
term ‘dwelling unit’ includes a manufactured home 
which conforms to Federal Manufactured Home 
Construction and Safety Standards (section 3280 of 
title 24, Code of Federal Regulations). 
‘‘(3) DOLLAR AMOUNTS IN CASE OF JOINT OC-
CUPANCY.—In the case of any dwelling unit which is 
jointly occupied and used during any calendar year 
as a residence by 2 or more individuals, the fol-
lowing rules shall apply: 
‘‘(A) The amount of the credit allowable 
under subsection (a) by reason of expenditures 
made during such calendar year by any of such 
individuals with respect to such dwelling unit 
shall be determined by treating all of such indi-
viduals as 1 taxpayer whose taxable year is 
such calendar year. 
‘‘(B) There shall be allowable, with respect 
to such expenditures to each of such individ-
uals, a credit under subsection (a) for the tax-
able year in which such calendar year ends in 
an amount which bears the same ratio to the 
amount determined under subparagraph (A) as 
the amount of such expenditures made by such 
individual during such calendar year bears to 
the aggregate of such expenditures made by all 
of such individuals during such calendar year. 
‘‘(4) TENANT-STOCKHOLDER IN COOPERATIVE 
HOUSING CORPORATION.—In the case of an indi-
vidual who is a tenant-stockholder (as defined in sec-
tion 216) in a cooperative housing corporation (as 
defined in such section), such individual shall be 
treated as having made the individual’s tenant-stock-
holder’s proportionate share (as defined in section 
216(b)(3)) of any expenditures of such corporation. 
‘‘(5) CONDOMINIUMS.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is a member of a condominium man-
agement association with respect to a condo-
minium which the individual owns, such indi-
vidual shall be treated as having made the indi-
vidual’s proportionate share of any expenditures 
of such association.
‘‘(B) CONDOMINIUM
MANAGEMENT
ASSO-
CIATION.—For purposes of this paragraph, the 
term ‘condominium management association’ 
means an organization which meets the require-
ments of paragraph (1) of section 528(c) (other 
than subparagraph (E) thereof) with respect to 
a condominium project substantially all of the 
units of which are used as residences. 
‘‘(f) BASIS ADJUSTMENT.—For purposes of this sub-
title, if a credit is allowed under this section for any ex-
penditure with respect to any property, the increase in the 
basis of such property which would (but for this sub-
section) result from such expenditure shall be reduced by 
the amount of the credit so allowed. 
‘‘(g) APPLICATION OF SECTION.—This section shall 
apply to qualified energy efficiency improvements installed 
after December 31, 2003, and before January 1, 2007.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 1016 of such Code 
is amended by striking ‘‘and’’ at the end of para-
graph (27), by striking the period at the end of 
paragraph (28) and inserting ‘‘, and’’, and by add-
ing at the end the following new paragraph:
‘‘(29) to the extent provided in section 25C(f), 
in the case of amounts with respect to which a credit 
has been allowed under section 25C.’’. 
(2) The table of sections for subpart A of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 25B the following new item:
‘‘25C. Energy efficiency improvements to existing homes.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after De-
cember 31, 2003. 
SEC. 207. SPECIAL RULES FOR CREDIT FOR ELECTRICITY 
PRODUCED FROM CERTAIN RENEWABLE RE-
SOURCES. 
(a) ELIMINATION
OF CERTAIN CREDIT REDUC-
TIONS.—Section 45(b)(3)(A) of the Internal Revenue 
Code of 1986 (relating to credit reduced for grants, tax-
exempt bonds, subsidized energy financing, and other 
credits) is amended—
(1) by striking clause (ii), 
(2) by redesignating clauses (iii) and (iv) as 
clauses (ii) and (iii), 
(3) by inserting ‘‘(other than proceeds of an 
issue of State or local government obligations the in-
terest on which is exempt from tax under section 
103, or any loan, debt, or other obligation incurred
under subchapter I of chapter 31 of title 7 of the 
Rural Electrification Act of 1936 (7 U.S.C. 901 et 
seq.), as in effect on the date of the enactment of 
the Energy Tax Incentives Act)’’ after ‘‘project’’ in 
clause (ii) (as so redesignated), 
(4) by adding at the end the following new sen-
tence: ‘‘This paragraph shall not apply with respect 
to any facility described in subsection (d)(2)(A)(ii).’’, 
and 
(5) by striking ‘‘tax-exempt bonds,’’ in the 
heading and inserting ‘‘certain’’. 
(b) TREATMENT OF PERSONS NOT ABLE TO USE EN-
TIRE CREDIT.—Section 45(e) of such Code (relating to 
definitions and special rules), as redesignated by section 
201(b)(1), is amended by adding at the end the following 
new paragraph: 
‘‘(8) TREATMENT OF PERSONS NOT ABLE TO 
USE ENTIRE CREDIT.—
‘‘(A) ALLOWANCE OF CREDIT.—
‘‘(i) IN GENERAL.—Except as other-
wise provided in this subsection—
‘‘(I) any credit allowable under 
subsection (a) with respect to a quali-
fied facility owned by a person de-
scribed in clause (ii) may be trans-
ferred or used as provided in this 
paragraph, and 
‘‘(II) the determination as to 
whether the credit is allowable shall 
be made without regard to the tax-ex-
empt status of the person. 
‘‘(ii) PERSONS DESCRIBED.—A person 
is described in this clause if the person 
is—
‘‘(I) an organization described in 
section 501(c)(12)(C) and exempt 
from tax under section 501(a), 
‘‘(II) an organization described 
in section 1381(a)(2)(C), 
‘‘(III) a public utility (as defined 
in section 136(c)(2)(B)), which is ex-
empt from income tax under this sub-
title, 
‘‘(IV) any State or political sub-
division thereof, the District of Co-
lumbia, any possession of the United 
States, or any agency or instrumen-
tality of any of the foregoing, 
‘‘(V) any Indian tribal govern-
ment (within the meaning of section