I 
108TH CONGRESS 
1ST SESSION 
H. R. 991
To amend the Internal Revenue Code of 1986 to expand the renewable 
resources production tax credit to include additional forms of renewable 
energy, and to expand the investment tax credit to include equipment 
used to produce electricity from renewable resources. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 27, 2003
Mr. HUNTER (for himself and Mr. UDALL of Colorado) introduced the 
following bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to expand 
the renewable resources production tax credit to include 
additional forms of renewable energy, and to expand 
the investment tax credit to include equipment used to 
produce electricity from renewable resources.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Renewable Fuel Equity 
Act’’.
SEC. 2. EXPANSION OF RENEWABLE RESOURCES CREDIT. 
(a) IN GENERAL.—Section 45(c)(1) of the Internal 
Revenue Code of 1986 (relating to qualified energy re-
sources) is amended by striking ‘‘and’’ at the end of sub-
paragraph (B), by striking the period at the end of the 
subparagraph (C) and inserting a comma, and by adding 
at the end the following new subparagraphs: 
‘‘(D) geothermal energy, 
‘‘(E) solar energy, 
‘‘(F) incremental hydropower, and 
‘‘(G) biomass (other than closed-loop bio-
mass).’’
(b) EXTENSION AND MODIFICATION OF PLACED-IN-
SERVICE RULES WITH RESPECT TO BIOMASS FACILI-
TIES.—
(1) IN
GENERAL.—Paragraph (3) of section 
45(c) of the Internal Revenue Code of 1986 (defin-
ing qualified facility) is amended—
(A) by striking subparagraph (B) and in-
serting the following new subparagraph: 
‘‘(B) CLOSED-LOOP BIOMASS FACILITY.—
In the case of a facility using closed-loop bio-
mass to produce electricity, the term ‘qualified 
facility’ means any facility—
‘‘(i) owned by the taxpayer which is 
originally placed in service after December 
31, 1992, and before January 1, 2009, or 
‘‘(ii) owned by the taxpayer which is 
originally placed in service on or before 
December 31, 1992, and modified to use 
closed-loop biomass to co-fire with coal be-
fore January 1, 2009.’’, 
(B) by striking ‘‘2004’’ in subparagraph 
(C) and inserting ‘‘2009’’, and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(D) BIOMASS FACILITY.—In the case of a 
facility using biomass (other than closed-loop 
biomass) to produce electricity, the term ‘quali-
fied facility’ means any facility owned by the 
taxpayer which is originally placed in service be-
fore January 1, 2009.’’. 
(2) DEFINITION.—Subsection (c) of section 45 
of such Code (relating to definitions) is amended by 
adding at the end the following new paragraph: 
‘‘(5) BIOMASS.—The term ‘biomass’ means any 
solid, nonhazardous, cellulosic waste material which 
is segregated from other waste materials and which 
is derived from—
‘‘(A) any of the following forest-related re-
sources: mill residues, precommercial thinnings, 
slash, and brush, but not including old-growth 
timber, 
‘‘(B) solid wood waste materials, including 
waste pallets, crates, dunnage, manufacturing 
and construction wood wastes (other than pres-
sure-treated, 
chemically-treated, 
or 
painted 
wood wastes), and landscape or right-of-way 
tree trimmings, but not including municipal 
solid waste (garbage), gas derived from the bio-
degradation of solid waste, or paper that is 
commonly recycled, or 
‘‘(C) agriculture sources, including orchard 
tree crops, vineyard, grain, legumes, sugar, and 
other crop by-products or residues.’’. 
(3) SPECIAL RULES.—Subsection (d) of section 
45 of such Code (relating to definitions and special 
rules) is amended by adding at the end the following 
new paragraph: 
‘‘(8) SPECIAL RULES WITH RESPECT TO BIO-
MASS.—In the case of a qualified facility described 
in subparagraph (B)(ii) or (D) of subsection 
(c)(3)—
‘‘(ii) any facility owned by the tax-
payer which is originally placed in service 
before January 1, 2004, but only to the ex-
tent of its incremental production. 
If such a facility is leased and the operator 
thereof is the lessee, such lessee (and not the 
owner) shall be treated for purposes of this sec-
tion as owning such facility. 
‘‘(F) SOLAR
ENERGY
FACILITY.—In the 
case of a facility using solar energy to produce 
electricity, the term ‘qualified facility’ means—
‘‘(i) any facility owned by the tax-
payer which is originally placed in service 
after December 31, 2003, or 
‘‘(ii) any facility owned by the tax-
payer which is originally placed in service 
before January 1, 2004, but only to the ex-
tent of its incremental production. 
If such a facility is leased and the operator 
thereof is the lessee, such lessee (and not the 
owner) shall be treated for purposes of this sec-
tion as owning such facility. 
‘‘(G) INCREMENTAL HYDROPOWER FACIL-
ITY.—
‘‘(i) IN GENERAL.—In the case of a 
facility using incremental hydropower to 
produce electricity, the term ‘qualified fa-
cility’ means any facility owned by the tax-
payer that achieves additional generation 
from—
‘‘(I) increased efficiency, or 
‘‘(II) additions of new capacity, 
at a non-Federal hydroelectric project 
originally placed in service before the date 
of enactment of this subparagraph. Only 
the incremental hydropower production of 
such facility shall be taken into account 
under subsection (a). 
‘‘(ii) 
INCREMENTAL
HYDROPOWER 
PRODUCTION.—For purposes of clause (i), 
the term ‘incremental hydropower produc-
tion’ means for any taxable year an 
amount equal to the percentage of total 
kilowatt hours of electricity produced from 
a hydropower facility described in clause 
(i) attributable to efficiency improvements 
or additions of capacity as determined 
under clause (iii).
‘‘(iii) DETERMINATION
OF
INCRE-
MENTAL HYDROPOWER PRODUCTION.—For 
purposes of clause (i), incremental hydro-
power production for any hydropower facil-
ity for any taxable year shall be deter-
mined by establishing a percentage of aver-
age annual hydropower production at the 
facility attributable to the efficiency im-
provements or additions of capacity using 
the same water flow information used to 
determine an historic average annual hy-
dropower production baseline for such fa-
cility. Such percentage and baseline shall 
be certified by the Federal Energy Regu-
latory Commission. For purposes of the 
preceding sentence, the determination of 
incremental hydropower production shall 
not be based on any operational changes at 
such facility not directly associated with 
the efficiency improvements or additions of 
capacity.’’
(2) SPECIAL RULE.—Subsection (d) of section 
45 of such Code (relating to definitions and special 
rules), as amended by subsection (b)(3), is amended 
by adding at the end the following new paragraph:
‘‘(9) DEFINITION AND SPECIAL RULE WITH RE-
SPECT TO INCREMENTAL GEOTHERMAL AND SOLAR 
PRODUCTION.—For purposes of subparagraphs (E) 
and (F) of paragraph (3)—
‘‘(A) IN GENERAL.—The term ‘incremental 
production’ means, with respect to any applica-
ble facility for any taxable year, the excess of—
‘‘(i) the total kilowatt hours of elec-
tricity produced from such facility, over 
‘‘(ii) the average annual kilowatt 
hours produced at such facility for five of 
the previous seven calendar years prior to 
the date of the enactment of this para-
graph after eliminating the highest and 
lowest kilowatt hour production years in 
such seven-year period. 
‘‘(B) SPECIAL RULE.—An applicable facil-
ity which was placed in service seven years or 
longer prior to the date of the enactment of this 
paragraph shall, commencing with the year of 
such enactment, reduce the amount calculated 
under subparagraph (A)(ii) each year, on a cu-
mulative basis, by the average decrease in an-
nual kilowatt hour production for the seven-
year period described in subparagraph (A)(ii)
with such cumulative sum not to exceed 30 per-
cent. 
‘‘(C) APPLICABLE
FACILITY.—The term 
‘applicable facility’ means—
‘‘(i) a facility described in subsection 
(c)(3)(E)(ii), and 
‘‘(ii) a facility described in subsection 
(c)(3)(F)(ii).’’. 
(d) COORDINATION WITH OTHER CREDITS.—Sub-
section (d) of section 45 of such Code (relating to defini-
tions and special rules), as amended by subsection (c)(2), 
is amended by adding at the end the following: 
‘‘(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.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to electricity sold after December 
31, 2003.
placed in service before January 1, 2009, the 
energy percentage is 20 percent.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to equipment placed in service 
after December 31, 2003.
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