(b) MODIFICATIONS REGARDING OPEN-LOOP BIO-
MASS.—
(1) Subclause (I) of section 45(c)(3)(A)(ii) is 
amended by adding at the end ‘‘but not including 
old-growth timber or black liquor,’’. 
(2) Subclause (II) of section 45(c)(3)(A)(ii) is 
amended by striking ‘‘municipal solid waste, gas de-
rived from the biodegradation of solid waste, or 
paper which is commonly recycled’’ and inserting 
‘‘unsegregated municipal solid waste (garbage) or 
postconsumer wastepaper which can be recycled 
affordably’’. 
(c) QUALIFIED
FACILITIES
WITH
CO-PRODUC-
TION.—Section 45(b) is amended by striking paragraph 
(4) and inserting the following new paragraph: 
‘‘(4) INCREASED CREDIT FOR CO-PRODUCTION 
FACILITIES.—
‘‘(A) IN GENERAL.—In the case of a quali-
fied facility described in paragraph (2) or (3) of 
subsection (c) which adds a co-production facil-
ity after the date of the enactment of this para-
graph, the amount in effect under subsection 
(a)(1) for an eligible taxable year of the tax-
payer shall (after adjustment under paragraphs 
(1), (2), and (3)) be increased by .25 cents.
‘‘(B) 
CO-PRODUCTION
FACILITY.—For 
purposes of subparagraph (A), the term ‘co-pro-
duction facility’ means a facility which—
‘‘(i) enables a qualified facility to 
produce heat, mechanical power, or min-
erals from qualified energy resources in ad-
dition to electricity, and 
‘‘(ii) produces such energy on a con-
tinuous basis. 
‘‘(C) ELIGIBLE TAXABLE YEAR.—For pur-
poses of subparagraph (A), the term ‘eligible 
taxable year’ means any taxable year in which 
the amount of gross receipts attributable to the 
co-production facility of a qualified facility are 
at least 10 percent of the amount of gross re-
ceipts attributable to electricity produced by 
such facility.’’. 
(d) QUALIFIED
FACILITIES
LOCATED
WITHIN 
QUALIFIED INDIAN LANDS.—Section 45(b) is amended by 
adding at the end the following new paragraph: 
‘‘(5) INCREASED CREDIT FOR QUALIFIED FA-
CILITY
LOCATED
WITHIN
QUALIFIED
INDIAN 
LAND.—In the case of a qualified facility described 
in subsection (d)(2)(A) which—
‘‘(A) is located within—
‘‘(i) qualified Indian lands (as defined 
in section 7871(c)(3)), or 
‘‘(ii) lands which are held in trust by 
a Native Corporation (as defined in section 
3(m) of the Alaska Native Claims Settle-
ment Act (43 U.S.C. 1602(m))) for Alaska 
Natives, and 
‘‘(B) is operated with the explicit written 
approval of the Indian tribal government or Na-
tive Corporation (as so defined) having jurisdic-
tion over such lands, the amount in effect under 
subsection (a)(1) for a taxable year shall (after 
adjustment under paragraphs (1), (2), (3), and 
(4)) be increased by .25 cents.’’. 
(e) TREATMENT OF QUALIFIED FACILITIES NOT IN 
COMPLIANCE WITH POLLUTION LAWS.—Section 45(c) is 
further amended by adding at the end the following new 
paragraph: 
‘‘(10) 
NONCOMPLIANCE
WITH
POLLUTION 
LAWS.—A facility which is not in compliance with 
the applicable State and Federal pollution preven-
tion, control, and permit requirements for any period 
of time shall not be treated as a qualified facility 
during such period.’’.
(f) COORDINATION WITH OTHER CREDITS.—Section 
45(e) is amended by adding at the end the following new 
paragraph: 
‘‘(10) COORDINATION WITH OTHER CREDITS.—
This section shall not apply to any qualified facility 
with respect to which a credit under any other sec-
tion is allowed for the taxable year unless the tax-
payer elects to waive application of such credit to 
such facility.’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to electricity and other energy pro-
duced in taxable years beginning after the date of the en-
actment of this Act. 
SEC. 313. TRADABLE RENEWABLE RESOURCE CREDIT FOR 
PUBLIC UTILITIES AND OTHER TAX EXEMPT 
ORGANIZATIONS. 
(a) CREDITS FOR CERTAIN TAX-EXEMPT ORGANIZA-
TIONS AND GOVERNMENTAL UNITS.—
(1) IN GENERAL.—Section 45(d) (relating to 
definitions and special rules), as amended by section 
312, is amended by adding at the end the following: 
‘‘(10) CREDITS FOR CERTAIN TAX-EXEMPT OR-
GANIZATIONS AND GOVERNMENTAL UNITS.—
‘‘(A) ALLOWANCE OF CREDIT.—Any credit 
which would be allowable under subsection (a)
with respect to a qualified facility of an entity 
if such entity were not exempt from tax under 
this chapter shall be treated as a credit allow-
able under subpart D to such entity if such en-
tity is—
‘‘(i) an organization described in sec-
tion 501(c)(12)(C) and exempt from tax 
under section 501(a), 
‘‘(ii) an organization described in sec-
tion 1381(a)(2)(C), 
‘‘(iii) an entity the income of which is 
excludable from gross income under section 
115, or 
‘‘(iv) a State, the District of Colum-
bia, any territory or possession of the 
United States, or any political subdivision 
thereof. 
‘‘(B) USE OF CREDIT.—
‘‘(i) TRANSFER OF CREDIT.—An enti-
ty described in subparagraph (A) may as-
sign, trade, sell, or otherwise transfer any 
credit allowable to such entity under sub-
paragraph (A) to any taxpayer. 
‘‘(ii) USE
OF
CREDIT
AS
AN
OFF-
SET.—Notwithstanding any other provision
of law, in the case of an entity described 
in clause (i) or (ii) of subparagraph (A), 
any credit allowable to such entity under 
subparagraph (A) may be applied by such 
entity, without penalty, as a prepayment of 
any loan, debt, or other obligation the enti-
ty has incurred under subchapter I of 
chapter 31 of title 7 of the Rural Elec-
trification Act of 1936 (7 U.S.C. 901 et 
seq.). 
‘‘(C) CREDIT
NOT
INCOME.—Neither a 
transfer under clause (i) nor a use under clause 
(ii) of subparagraph (B) of any credit allowable 
under subparagraph (A) shall result in income 
for purposes of section 501(c)(12). 
‘‘(D) TRANSFER PROCEEDS TREATED AS 
ARISING FROM ESSENTIAL GOVERNMENT FUNC-
TION.—Any proceeds derived by an entity de-
scribed in subparagraph (A)(iii) from the trans-
fer of any credit under subparagraph (B)(i) 
shall be treated as arising from an essential 
government function. 
‘‘(E) CREDITS NOT REDUCED BY TAX-EX-
EMPT BONDS OR CERTAIN OTHER SUBSIDIES.—
Subsection (b)(3) shall not apply to reduce any
credit allowable under subparagraph (A) with 
respect to—
‘‘(i) proceeds described in subpara-
graph (A)(ii) of such subsection, or 
‘‘(ii) any loan, debt, or other obliga-
tion incurred under subchapter I of chap-
ter 31 of title 7 of the Rural Electrification 
Act of 1936 (7 U.S.C. 901 et seq.), used 
to provide financing for any qualified facil-
ity. 
‘‘(F) TREATMENT
OF
UNRELATED
PER-
SONS.—For purposes of this paragraph, sales 
among and between entities described in sub-
paragraph (A) shall be treated as sales between 
unrelated parties.’’. 
(2) INCLUSION
OF
INDIAN
TRIBAL
GOVERN-
MENTS.—Section 7871(a)(7) is amended by striking 
‘‘and’’ at the end of subparagraph (A), by striking 
the period at the end of subparagraph (B), and by 
adding at the end the following: 
‘‘(C) section 45 (relating to credit for elec-
tricity produced from certain renewable re-
sources).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to electricity and other energy pro-
duced in taxable years beginning after the date of the en-
actment of this Act. 
SEC. 314. ALTERNATIVE MOTOR VEHICLE CREDIT. 
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 (relating to foreign tax credit, etc.) 
is amended by adding at the end the following new section: 
‘‘SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the sum of—
‘‘(1) the new qualified fuel cell motor vehicle 
credit determined under subsection (b), 
‘‘(2) the new qualified hybrid motor vehicle 
credit determined under subsection (c), 
‘‘(3) the new qualified alternative fuel motor ve-
hicle credit determined under subsection (d), and 
‘‘(4) the new qualified advanced diesel motor 
vehicle credit determined under subsection (e). 
‘‘(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE 
CREDIT.—
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), the new qualified fuel cell motor vehicle credit 
determined under this subsection with respect to a 
new qualified fuel cell motor vehicle placed in service 
by the taxpayer during the taxable year is—
‘‘(A) $8,000 ($4,000 in the case of vehicles 
placed in service after December 31, 2008), if 
such vehicle has a gross vehicle weight rating of 
not more than 8,500 pounds, 
‘‘(B) $10,000, if such vehicle has a gross 
vehicle weight rating of more than 8,500 
pounds but not more than 14,000 pounds, 
‘‘(C) $20,000, if such vehicle has a gross 
vehicle weight rating of more than 14,000 
pounds but not more than 26,000 pounds, and 
‘‘(D) $40,000, if such vehicle has a gross 
vehicle weight rating of more than 26,000 
pounds. 
‘‘(2) INCREASE FOR FUEL EFFICIENCY.—
‘‘(A) IN
GENERAL.—The amount deter-
mined under paragraph (1)(A) with respect to 
a new qualified fuel cell motor vehicle which is 
a passenger automobile or light truck shall be 
increased by—
‘‘(i) $1,000, if such vehicle achieves at 
least 150 percent but less than 175 per-
cent of the 2002 model year city fuel econ-
omy, 
‘‘(ii) $1,500, if such vehicle achieves 
at least 175 percent but less than 200 per-
cent of the 2002 model year city fuel econ-
omy, 
‘‘(iii) $2,000, if such vehicle achieves 
at least 200 percent but less than 225 per-
cent of the 2002 model year city fuel econ-
omy, 
‘‘(iv) $2,500, if such vehicle achieves 
at least 225 percent but less than 250 per-
cent of the 2002 model year city fuel econ-
omy, 
‘‘(v) $3,000, if such vehicle achieves 
at least 250 percent but less than 275 per-
cent of the 2002 model year city fuel econ-
omy, 
‘‘(vi) $3,500, if such vehicle achieves 
at least 275 percent but less than 300 per-
cent of the 2002 model year city fuel econ-
omy, and 
‘‘(vii) $4,000, if such vehicle achieves 
at least 300 percent of the 2002 model 
year city fuel economy. 
‘‘(B) 2002 MODEL YEAR CITY FUEL ECON-
OMY.—For purposes of subparagraph (A), the 
2002 model year city fuel economy with respect
to a vehicle shall be determined in accordance 
with the following tables: 
‘‘(i) In the case of a passenger auto-
mobile:
The 2002 model year city 
‘‘‘‘If vehicle inertia weight class 
is: 
fuel economy is: 
1,500 or 1,750 lbs ....................................................................
45.2 mpg 
2,000 lbs ..................................................................................
39.6 mpg 
2,250 lbs ..................................................................................
35.2 mpg 
2,500 lbs ..................................................................................
31.7 mpg 
2,750 lbs ..................................................................................
28.8 mpg 
3,000 lbs ..................................................................................
26.4 mpg 
3,500 lbs ..................................................................................
22.6 mpg 
4,000 lbs ..................................................................................
19.8 mpg 
4,500 lbs ..................................................................................
17.6 mpg 
5,000 lbs ..................................................................................
15.9 mpg 
5,500 lbs ..................................................................................
14.4 mpg 
6,000 lbs ..................................................................................
13.2 mpg 
6,500 lbs ..................................................................................
12.2 mpg 
7,000 to 8,500 lbs ....................................................................
11.3 mpg.
‘‘(ii) In the case of a light truck:
The 2002 model year city 
‘‘‘‘If vehicle inertia weight class 
is: 
fuel economy is: 
1,500 or 1,750 lbs ....................................................................
39.4 mpg 
2,000 lbs ..................................................................................
35.2 mpg 
2,250 lbs ..................................................................................
31.8 mpg 
2,500 lbs ..................................................................................
29.0 mpg 
2,750 lbs ..................................................................................
26.8 mpg 
3,000 lbs ..................................................................................
24.9 mpg 
3,500 lbs ..................................................................................
21.8 mpg 
4,000 lbs ..................................................................................
19.4 mpg 
4,500 lbs ..................................................................................
17.6 mpg 
5,000 lbs ..................................................................................
16.1 mpg 
5,500 lbs ..................................................................................
14.8 mpg 
6,000 lbs ..................................................................................
13.7 mpg 
6,500 lbs ..................................................................................
12.8 mpg 
7,000 to 8,500 lbs ....................................................................
12.1 mpg.
‘‘(C) VEHICLE INERTIA WEIGHT CLASS.—
For purposes of subparagraph (B), the term 
‘vehicle inertia weight class’ has the same 
meaning as when defined in regulations pre-
scribed by the Administrator of the Environ-
mental Protection Agency for purposes of the 
administration of title II of the Clean Air Act 
(42 U.S.C. 7521 et seq.). 
‘‘(3) NEW QUALIFIED FUEL CELL MOTOR VEHI-
CLE.—For purposes of this subsection, the term 
‘new qualified fuel cell motor vehicle’ means a motor 
vehicle—
‘‘(A) which is propelled by power derived 
from one or more cells which convert chemical 
energy directly into electricity by combining ox-
ygen with hydrogen fuel which is stored on 
board the vehicle in any form and may or may 
not require reformation prior to use, 
‘‘(B) which, in the case of a passenger 
automobile or light truck—
‘‘(i) for 2002 and later model vehicles, 
has received a certificate of conformity 
under the Clean Air Act and meets or ex-
ceeds the equivalent qualifying California 
low emission vehicle standard under sec-
tion 243(e)(2) of the Clean Air Act for 
that make and model year, and 
‘‘(ii) for 2004 and later model vehi-
cles, has received a certificate that such ve-
hicle meets or exceeds the Bin 5 Tier II