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‘‘(e) OTHER RULES TO APPLY.—Rules similar to the 
rules of paragraphs (1), (2), (3), (4), and (5) of section 
45(e) shall apply for purposes of this section.’’. 
(b) CREDIT TREATED AS BUSINESS CREDIT.—Sec-
tion 38(b), as amended by this Act, is amended by striking 
‘‘plus’’ at the end of paragraph (20), by striking the period 
at the end of paragraph (21) and inserting ‘‘, plus’’, and 
by adding at the end the following: 
‘‘(22) the advanced nuclear power facility pro-
duction credit determined under section 45L(a).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1, 
as amended by this Act, is amended by adding at the end 
the following: 
‘‘Sec. 45L. Credit for production from advanced nuclear power facilities.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to production in taxable years be-
ginning after December 31, 2003. 
PART II—FUELS AND ALTERNATIVE MOTOR 
VEHICLES 
SEC. 1311. REPEAL OF 4.3-CENT MOTOR FUEL EXCISE 
TAXES ON RAILROADS AND INLAND WATER-
WAY TRANSPORTATION WHICH REMAIN IN 
GENERAL FUND. 
(a) TAXES ON TRAINS.—
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(1) IN GENERAL.—Subparagraph (A) of section 
4041(a)(1) is amended by striking ‘‘or a diesel-pow-
ered train’’ each place it appears and by striking ‘‘or 
train’’. 
(2) CONFORMING AMENDMENTS.— 
(A) 
Subparagraph 
(C) 
of 
section 
4041(a)(1) is amended by striking clause (ii) 
and by redesignating clause (iii) as clause (ii). 
(B) 
Subparagraph 
(C) 
of 
section 
4041(b)(1) is amended by striking all that fol-
lows ‘‘section 6421(e)(2)’’ and inserting a pe-
riod. 
(C) Subsection (d) of section 4041 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
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‘‘(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 (f) of section 4082 is 
amended by striking ‘‘section 4041(a)(1)’’ and 
inserting ‘‘subsections (d)(3) and (a)(1) of sec-
tion 4041, respectively’’. 
(E) Paragraph (3) of section 4083(a) is 
amended by striking ‘‘or a diesel-powered 
train’’. 
(F) Paragraph (3) of section 6421(f) 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) 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
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HR 4503 RDS 
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) is amended by adding ‘‘and’’ at the end of 
subparagraph (A), by striking ‘‘, and’’ at the end of 
subparagraph (B) and inserting a period, and by 
striking subparagraph (C). 
(2) CONFORMING AMENDMENT.—Paragraph (2) 
of section 4042(b) is amended by striking subpara-
graph (C). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on January 1, 2004. 
SEC. 1312. REDUCED MOTOR FUEL EXCISE TAX ON CER-
TAIN MIXTURES OF DIESEL FUEL. 
(a) IN GENERAL.—Paragraph (2) of section 4081(a) 
is amended by adding at the end the following: 
‘‘(C) DIESEL-WATER FUEL EMULSION.—In 
the case of diesel-water fuel emulsion at least 
14 percent of which is water and with respect 
to which the emulsion additive is registered by
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a United States manufacturer with the Envi-
ronmental Protection Agency pursuant to sec-
tion 211 of the Clean Air Act (as in effect on 
March 31, 2003), subparagraph (A)(iii) shall be 
applied by substituting ‘19.7 cents’ for ‘24.3 
cents’.’’. 
(b) SPECIAL RULES
FOR DIESEL-WATER FUEL 
EMULSIONS.— 
(1) REFUNDS FOR TAX-PAID PURCHASES.—Sec-
tion 6427 is amended by redesignating subsections 
(m) through (p) as subsections (n) through (q), re-
spectively, and by inserting after subsection (l) the 
following new subsection: 
‘‘(m) DIESEL FUEL USED
TO PRODUCE EMUL-
SION.— 
‘‘(1) IN GENERAL.—Except as provided in sub-
section (k), if any diesel fuel on which tax was im-
posed by section 4081 at the regular tax rate is used 
by any person in producing an emulsion described in 
section 4081(a)(2)(C) which is sold or used in such 
person’s trade or business, the Secretary shall pay 
(without interest) to such person an amount equal to 
the excess of the regular tax rate over the incentive 
tax rate with respect to such fuel.
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‘‘(2) DEFINITIONS.—For purposes of paragraph 
(1)— 
‘‘(A) REGULAR TAX RATE.—The term ‘reg-
ular tax rate’ means the aggregate rate of tax 
imposed by section 4081 determined without re-
gard to section 4081(a)(2)(C). 
‘‘(B) INCENTIVE
TAX
RATE.—The term 
‘incentive tax rate’ means the aggregate rate of 
tax imposed by section 4081 determined with 
regard to section 4081(a)(2)(C).’’. 
(2) LATER SEPARATION OF FUEL.— 
(A) IN GENERAL.—Section 4081 (relating 
to imposition of tax) is amended by redesig-
nating subsections (d) and (e) as subsections 
(e) and (f), respectively, and by inserting after 
subsection (c) the following new subsection: 
‘‘(d) LATER SEPARATION OF FUEL FROM DIESEL- 
WATER FUEL EMULSION.—If any person separates the 
taxable fuel from a diesel-water fuel emulsion on which 
tax was imposed under subsection (a) at a rate determined 
under subsection (a)(2)(C) (or with respect to which a 
credit or payment was allowed or made by reason of sec-
tion 6427), such person shall be treated as the refiner of 
such taxable fuel. The amount of tax imposed on any re-
moval of such fuel by such person shall be reduced by the
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amount of tax imposed (and not credited or refunded) on 
any prior removal or entry of such fuel.’’. 
(B) 
CONFORMING
AMENDMENT.—Sub-
section (d) of section 6416 is amended by strik-
ing ‘‘section 4081(e)’’ and inserting ‘‘section 
4081(f)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on January 1, 2004. 
SEC. 1313. SMALL ETHANOL PRODUCER CREDIT. 
(a) ALLOCATION OF ALCOHOL FUELS CREDIT TO 
PATRONS OF A COOPERATIVE.—Section 40(g) (relating to 
definitions and special rules for eligible small ethanol pro-
ducer credit) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(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
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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 RULE.—If the amount of a 
credit which has been apportioned to any pa-
tron under this paragraph is decreased for any 
reason—
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‘‘(i) such amount shall not increase 
the tax imposed on such patron, and 
‘‘(ii) the tax imposed by this chapter 
on such organization shall be increased by 
such amount. 
The increase under clause (ii) shall not be 
treated as tax imposed by this chapter for pur-
poses of determining the amount of any credit 
under this chapter or for purposes of section 
55.’’. 
(b) DEFINITION OF SMALL ETHANOL PRODUCER.— 
Section 40(g) (relating to definitions and special rules for 
eligible small ethanol producer credit) is amended by strik-
ing ‘‘30,000,000’’ each place it appears and inserting 
‘‘60,000,000’’. 
(c) CONFORMING AMENDMENT.—Section 1388 (re-
lating to definitions and special rules for cooperative orga-
nizations) is amended by adding at the end the following 
new subsection: 
‘‘(k) 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).’’.
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HR 4503 RDS 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2003. 
SEC. 1314. INCENTIVES FOR BIODIESEL. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (relating to business related cred-
its) is amended by inserting after section 40 the following 
new section: 
‘‘SEC. 40A. BIODIESEL USED AS FUEL. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
the biodiesel fuels credit determined under this section for 
the taxable year is an amount equal to the sum of— 
‘‘(1) the biodiesel mixture credit, plus 
‘‘(2) the biodiesel credit. 
‘‘(b) DEFINITION OF BIODIESEL MIXTURE CREDIT 
AND BIODIESEL CREDIT.—For purposes of this section— 
‘‘(1) BIODIESEL MIXTURE CREDIT.— 
‘‘(A) IN GENERAL.—The biodiesel mixture 
credit of any taxpayer for any taxable year is 
50 cents for each gallon of biodiesel used by the 
taxpayer in the production of a qualified bio-
diesel mixture. 
‘‘(B) QUALIFIED
BIODIESEL
MIXTURE.— 
The term ‘qualified biodiesel mixture’ means a
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mixture of biodiesel and a taxable fuel (within 
the meaning of section 4083(a)(1)) which— 
‘‘(i) is sold by the taxpayer producing 
such mixture to any person for use as a 
fuel, or 
‘‘(ii) is used as a fuel by the taxpayer 
producing such mixture. 
‘‘(C) SALE OR USE MUST BE IN TRADE OR 
BUSINESS, ETC.—Biodiesel used in the produc-
tion of a qualified biodiesel mixture shall be 
taken into account— 
‘‘(i) only if the sale or use described 
in subparagraph (B) is in a trade or busi-
ness of the taxpayer, and 
‘‘(ii) for the taxable year in which 
such sale or use occurs. 
‘‘(D) CASUAL OFF-FARM PRODUCTION NOT 
ELIGIBLE.—No credit shall be allowed under 
this section with respect to any casual off-farm 
production of a qualified biodiesel mixture. 
‘‘(2) BIODIESEL CREDIT.— 
‘‘(A) IN GENERAL.—The biodiesel credit of 
any taxpayer for any taxable year is 50 cents 
for each gallon of biodiesel which is not in a 
mixture and which during the taxable year—
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HR 4503 RDS 
‘‘(i) is used by the taxpayer as a fuel 
in a trade or business, or 
‘‘(ii) is sold by the taxpayer at retail 
to a person and placed in the fuel tank of 
such person’s vehicle. 
‘‘(B) USER CREDIT NOT TO APPLY TO BIO-
DIESEL SOLD AT RETAIL.—No credit shall be 
allowed under subparagraph (A)(i) with respect 
to any biodiesel which was sold in a retail sale 
described in subparagraph (A)(ii). 
‘‘(3) CREDIT
FOR
AGRI-BIODIESEL.—In the 
case of any biodiesel which is agri-biodiesel, para-
graphs (1)(A) and (2)(A) shall be applied by sub-
stituting ‘$1.00’ for ‘50 cents’. 
‘‘(4) 
CERTIFICATION
FOR
BIODIESEL.—No 
credit shall be allowed under this section unless the 
taxpayer obtains a certification (in such form and 
manner as prescribed by the Secretary) from the 
producer of the biodiesel which identifies the product 
produced and the percentage of biodiesel and agri- 
biodiesel in the product. 
‘‘(c) COORDINATION WITH CREDIT AGAINST EXCISE 
TAX.—The amount of the credit determined under this 
section with respect to any biodiesel shall be properly re-
duced to take into account any benefit provided with re-
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spect to such biodiesel solely by reason of the application 
of section 6426. 
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) BIODIESEL.—The term ‘biodiesel’ means 
the monoalkyl esters of long chain fatty acids de-
rived from plant or animal matter which meet— 
‘‘(A) the registration requirements for 
fuels and fuel additives established by the Envi-
ronmental Protection Agency under section 211 
of the Clean Air Act (42 U.S.C. 7545), and 
‘‘(B) the requirements of the American So-
ciety of Testing and Materials D6751. 
‘‘(2) AGRI-BIODIESEL.—The term ‘agri-bio-
diesel’ means biodiesel derived solely from virgin oils, 
including esters derived from virgin vegetable oils 
from corn, soybeans, sunflower seeds, cottonseeds, 
canola, crambe, rapeseeds, safflowers, flaxseeds, rice 
bran, and mustard seeds, and from animal fats. 
‘‘(3) MIXTURE OR BIODIESEL NOT USED AS A 
FUEL, ETC.— 
‘‘(A) MIXTURES.—If— 
‘‘(i) any credit was determined under 
this section with respect to biodiesel used
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HR 4503 RDS 
in the production of any qualified biodiesel 
mixture, and 
‘‘(ii) any person— 
‘‘(I) separates the biodiesel from 
the mixture, or 
‘‘(II) without separation, uses the 
mixture other than as a fuel, 
then there is hereby imposed on such person a 
tax equal to the product of the rate applicable 
under subsection (b)(1)(A) and the number of 
gallons of such biodiesel in such mixture. 
‘‘(B) BIODIESEL.—If— 
‘‘(i) any credit was determined under 
this section with respect to the retail sale 
of any biodiesel, and 
‘‘(ii) any person mixes such biodiesel 
or uses such biodiesel other than as a fuel, 
then there is hereby imposed on such person a 
tax equal to the product of the rate applicable 
under subsection (b)(2)(A) and the number of 
gallons of such biodiesel. 
‘‘(C) APPLICABLE LAWS.—All provisions of 
law, including penalties, shall, insofar as appli-
cable and not inconsistent with this section, 
apply in respect of any tax imposed under sub-
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paragraph (A) or (B) as if such tax were im-
posed by section 4081 and not by this chapter. 
‘‘(4) PASS-THRU IN THE CASE OF ESTATES AND 
TRUSTS.—Under regulations prescribed by the Sec-
retary, rules similar to the rules of subsection (d) of 
section 52 shall apply. 
‘‘(e) TERMINATION.—This section shall not apply to 
any sale or use after December 31, 2005.’’. 
(b) CREDIT TREATED AS PART OF GENERAL BUSI-
NESS CREDIT.—Section 38(b) (relating to current year 
business credit) is amended by striking ‘‘plus’’ at the end 
of paragraph (16), by striking the period at the end of 
paragraph (17) and inserting ‘‘, plus’’, and by adding at 
the end the following new paragraph: 
‘‘(18) the biodiesel fuels credit determined 
under section 40A(a).’’. 
(c) CONFORMING AMENDMENTS.— 
(1)(A) Section 87 is amended to read as fol-
lows: 
‘‘SEC. 87. ALCOHOL AND BIODIESEL FUELS CREDITS. 
‘‘Gross income includes— 
‘‘(1) the amount of the alcohol fuels credit de-
termined with respect to the taxpayer for the taxable 
year under section 40(a), and
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‘‘(2) the biodiesel fuels credit determined with 
respect to the taxpayer for the taxable year under 
section 40A(a).’’. 
(B) The item relating to section 87 in the table 
of sections for part II of subchapter B of chapter 1 
is amended by striking ‘‘fuel credit’’ and inserting 
‘‘and biodiesel fuels credits’’. 
(2) Section 196(c), as amended by this Act, is 
amended by striking ‘‘and’’ at the end of paragraph 
(11), by striking the period at the end of paragraph 
(12) and inserting ‘‘, and’’, and by adding at the 
end the following new paragraph: 
‘‘(13) the biodiesel fuels credit determined 
under section 40A(a).’’. 
(3) The table of sections for subpart D of part 
IV of subchapter A of chapter 1 is amended by add-
ing after the item relating to section 40 the fol-
lowing new item: 
‘‘Sec. 40A. Biodiesel used as fuel.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to fuel produced, and sold or used, 
after December 31, 2003, in taxable years ending after 
such date.
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HR 4503 RDS 
SEC. 1315. ALCOHOL FUEL AND BIODIESEL MIXTURES EX-
CISE TAX CREDIT. 
(a) IN GENERAL.—Subchapter B of chapter 65 (re-
lating to rules of special application) is amended by insert-
ing after section 6425 the following new section: 
‘‘SEC. 6426. CREDIT FOR ALCOHOL FUEL AND BIODIESEL 
MIXTURES. 
‘‘(a) ALLOWANCE OF CREDITS.—There shall be al-
lowed as a credit against the tax imposed by section 4081 
an amount equal to the sum of— 
‘‘(1) the alcohol fuel mixture credit, plus 
‘‘(2) the biodiesel mixture credit. 
‘‘(b) ALCOHOL FUEL MIXTURE CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the alcohol fuel mixture credit is the product 
of the applicable amount and the number of gallons 
of alcohol used by the taxpayer in producing any al-
cohol fuel mixture for sale or use in a trade or busi-
ness of the taxpayer. 
‘‘(2) APPLICABLE AMOUNT.—For purposes of 
this subsection— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the applicable amount is 52 
cents (51 cents in the case of any sale or use 
after 2004).
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HR 4503 RDS 
‘‘(B) MIXTURES
NOT
CONTAINING
ETH-
ANOL.—In the case of an alcohol fuel mixture 
in which none of the alcohol consists of ethanol, 
the applicable amount is 60 cents. 
‘‘(3) ALCOHOL FUEL MIXTURE.—For purposes 
of this subsection, the term ‘alcohol fuel mixture’ 
means a mixture of alcohol and a taxable fuel 
which— 
‘‘(A) is sold by the taxpayer producing 
such mixture to any person for use as a fuel, 
‘‘(B) is used as a fuel by the taxpayer pro-
ducing such mixture, or 
‘‘(C) is removed from the refinery by a 
person producing such mixture. 
‘‘(4) OTHER
DEFINITIONS.—For purposes of 
this subsection— 
‘‘(A) ALCOHOL.—The term ‘alcohol’ in-
cludes methanol and ethanol but does not in-
clude— 
‘‘(i) alcohol produced from petroleum, 
natural gas, or coal (including peat), or 
‘‘(ii) alcohol with a proof of less than 
190 (determined without regard to any 
added denaturants).
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Such term also includes an alcohol gallon equiv-
alent of ethyl tertiary butyl ether or other 
ethers produced from such alcohol. 
‘‘(B) TAXABLE FUEL.—The term ‘taxable 
fuel’ has the meaning given such term by sec-
tion 4083(a)(1). 
‘‘(5) TERMINATION.—This subsection shall not 
apply to any sale, use, or removal for any period 
after December 31, 2010. 
‘‘(c) BIODIESEL MIXTURE CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the biodiesel mixture credit is the product of 
the applicable amount and the number of gallons of 
biodiesel used by the taxpayer in producing any bio-
diesel mixture for sale or use in a trade or business 
of the taxpayer. 
‘‘(2) APPLICABLE AMOUNT.—For purposes of 
this subsection— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the applicable amount is 50 
cents. 
‘‘(B) AMOUNT
FOR
AGRI-BIODIESEL.—In 
the case of any biodiesel which is agri-biodiesel, 
the applicable amount is $1.00.
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‘‘(3) BIODIESEL
MIXTURE.—For purposes of 
this section, the term ‘biodiesel mixture’ means a 
mixture of biodiesel and a taxable fuel which— 
‘‘(A) is sold by the taxpayer producing 
such mixture to any person for use as a fuel, 
‘‘(B) is used as a fuel by the taxpayer pro-
ducing such mixture, or 
‘‘(C) is removed from the refinery by a 
person producing such mixture. 
‘‘(4) 
CERTIFICATION
FOR
BIODIESEL.—No 
credit shall be allowed under this section unless the 
taxpayer obtains a certification (in such form and 
manner as prescribed by the Secretary) from the 
producer of the biodiesel which identifies the product 
produced and the percentage of biodiesel and agri- 
biodiesel in the product. 
‘‘(5) OTHER DEFINITIONS.—Any term used in 
this subsection which is also used in section 40A 
shall have the meaning given such term by section 
40A. 
‘‘(6) TERMINATION.—This subsection shall not 
apply to any sale, use, or removal for any period 
after December 31, 2005. 
‘‘(d) MIXTURE NOT USED AS A FUEL, ETC.— 
‘‘(1) IMPOSITION OF TAX.—If—
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‘‘(A) any credit was determined under this 
section with respect to alcohol or biodiesel used 
in the production of any alcohol fuel mixture or 
biodiesel mixture, respectively, and 
‘‘(B) any person— 
‘‘(i) separates the alcohol or biodiesel 
from the mixture, or 
‘‘(ii) without separation, uses the mix-
ture other than as a fuel, 
then there is hereby imposed on such person a 
tax equal to the product of the applicable 
amount and the number of gallons of such alco-
hol or biodiesel. 
‘‘(2) APPLICABLE LAWS.—All provisions of law, 
including penalties, shall, insofar as applicable and 
not inconsistent with this section, apply in respect of 
any tax imposed under paragraph (1) as if such tax 
were imposed by section 4081 and not by this sec-
tion. 
‘‘(e) COORDINATION WITH EXEMPTION FROM EX-
CISE TAX.—Rules similar to the rules under section 40(c) 
shall apply for purposes of this section.’’. 
(b) REGISTRATION REQUIREMENT.—Section 4101(a) 
(relating to registration) is amended by inserting ‘‘and 
every person producing biodiesel (as defined in section
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40A(d)(1)) 
or 
alcohol 
(as 
defined 
in 
section 
6426(b)(4)(A))’’ after ‘‘4091’’. 
(c) ADDITIONAL AMENDMENTS.— 
(1) Section 40(c) is amended by striking ‘‘or 
section 4091(c)’’ and inserting ‘‘section 4091(c), or 
section 6426’’. 
(2) Section 40(e)(1) is amended— 
(A) by striking ‘‘2007’’ in subparagraph 
(A) and inserting ‘‘2010’’, and 
(B) by striking ‘‘2008’’ in subparagraph 
(B) and inserting ‘‘2011’’. 
(3) Section 40(h) is amended— 
(A) by striking ‘‘2007’’ in paragraph (1) 
and inserting ‘‘2010’’, and 
(B) by striking ‘‘, 2006, or 2007’’ in the 
table contained in paragraph (2) and inserting 
‘‘through 2010’’. 
(4)(A) Subpart C of part III of subchapter A 
of chapter 32 is amended by adding at the end the 
following new section: 
‘‘SEC. 4104. INFORMATION REPORTING FOR PERSONS 
CLAIMING CERTAIN TAX BENEFITS. 
‘‘(a) IN GENERAL.—The Secretary shall require any 
person claiming tax benefits under the provisions of sec-
tion 34, 40, 40A, 4041(b)(2), 4041(k), 4081(c), 6426, or
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6427(f) to file a quarterly return (in such manner as the 
Secretary may prescribe) providing such information relat-
ing to such benefits and the coordination of such benefits 
as the Secretary may require to ensure the proper admin-
istration and use of such benefits. 
‘‘(b) ENFORCEMENT.—With respect to any person 
described in subsection (a) and subject to registration re-
quirements under this title, rules similar to rules of section 
4222(c) shall apply with respect to any requirement under 
this section.’’. 
(B) The table of sections for subpart C of part 
III of subchapter A of chapter 32 is amended by 
adding at the end the following new item: 
‘‘Sec. 4104. Information reporting for persons claiming certain tax benefits.’’. 
(5) Section 6427(i)(3) is amended— 
(A) by adding at the end of subparagraph 
(A) the following new flush sentence: 
‘‘In the case of an electronic claim, this sub-
paragraph shall be applied without regard to 
clause (i).’’, and 
(B) by striking ‘‘20 days of the date of the 
filing of such claim’’ in subparagraph (B) and 
inserting ‘‘45 days of the date of the filing of 
such claim (20 days in the case of an electronic 
claim)’’.
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(6) Section 9503(b)(1) is amended by adding at 
the end the following new flush sentence: 
‘‘For purposes of this paragraph, taxes received 
under sections 4041 and 4081 shall be determined 
without reduction for credits under section 6426.’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subchapter B of chapter 65 is amended by inserting 
after the item relating to section 6425 the following new 
item: 
‘‘Sec. 6426. Credit for alcohol fuel and biodiesel mixtures.’’. 
(e) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), the amendments made by this 
section shall apply to fuel sold, used, or removed 
after December 31, 2003. 
(2) SUBSECTION
(c)(4).—The amendments 
made by subsection (c)(4) shall take effect on Janu-
ary 1, 2004. 
(3) SUBSECTION
(c)(5).—The amendments 
made by subsection (c)(5) shall apply to claims filed 
after December 31, 2004. 
(f) FORMAT
FOR FILING.—The Secretary of the 
Treasury shall prescribe the electronic format for filing 
claims described in section 6427(i)(3)(B) of the Internal 
Revenue Code of 1986 (as amended by subsection 
(c)(5)(A)) not later than December 31, 2004.
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SEC. 1316. NONAPPLICATION OF EXPORT EXEMPTION TO 
DELIVERY OF FUEL TO MOTOR VEHICLES RE-
MOVED FROM UNITED STATES. 
(a) IN GENERAL.—Section 4221(d)(2) (defining ex-
port) is amended by adding at the end the following new 
sentence: ‘‘Such term does not include the delivery of a 
taxable fuel (as defined in section 4083(a)(1)) into a fuel 
tank of a motor vehicle which is shipped or driven out 
of the United States.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 4041(g) (relating to other exemp-
tions) is amended by adding at the end the following 
new sentence: ‘‘Paragraph (3) shall not apply to the 
sale for delivery of a liquid into a fuel tank of a 
motor vehicle which is shipped or driven out of the 
United States.’’. 
(2) Clause (iv) of section 4081(a)(1)(A) (relat-
ing to tax on removal, entry, or sale) is amended by 
inserting ‘‘or at a duty-free sales enterprise (as de-
fined in section 555(b)(8) of the Tariff Act of 
1930)’’ after ‘‘section 4101’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to sales or deliveries made after 
the date of the enactment of this Act.
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SEC. 1317. REPEAL OF PHASEOUTS FOR QUALIFIED ELEC-
TRIC VEHICLE CREDIT AND DEDUCTION FOR 
CLEAN FUEL-VEHICLES. 
(a) CREDIT FOR QUALIFIED ELECTRIC VEHICLES.— 
Subsection (b) of section 30 (relating to limitations) is 
amended by striking paragraph (2) and redesignating 
paragraph (3) as paragraph (2). 
(b) DEDUCTION FOR CLEAN-FUEL VEHICLES AND 
CERTAIN REFUELING PROPERTY.—Paragraph (1) of sec-
tion 179A(b) (relating to qualified clean-fuel vehicle prop-
erty) is amended to read as follows: 
‘‘(1) QUALIFIED CLEAN-FUEL VEHICLE PROP-
ERTY.—The cost which may be taken into account 
under subsection (a)(1)(A) with respect to any 
motor vehicle shall not exceed— 
‘‘(A) in the case of a motor vehicle not de-
scribed in subparagraph (B) or (C), $2,000, 
‘‘(B) in the case of any truck or van with 
a gross vehicle weight rating greater than 
10,000 pounds but not greater than 26,000 
pounds, $5,000, or 
‘‘(C) $50,000 in the case of— 
‘‘(i) a truck or van with a gross vehi-
cle weight rating greater than 26,000 
pounds, or
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‘‘(ii) any bus which has a seating ca-
pacity of at least 20 adults (not including 
the driver).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act. 
SEC. 1318. 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: 
‘‘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 advanced lean burn technology 
motor vehicle credit determined under subsection (c), 
‘‘(3) the new qualified hybrid motor vehicle 
credit determined under subsection (d), and 
‘‘(4) the new qualified alternative fuel motor ve-
hicle credit determined under subsection (e). 
‘‘(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE 
CREDIT.—
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‘‘(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 shall be de-
termined in accordance with the following table: 
‘‘In the case of a vehicle which 
has a gross vehicle weight rat-
ing of— 
The new qualified fuel cell 
motor vehicle credit is— 
Not more than 8,500 lbs .................................................................... $4,000 
More than 8,500 lbs but not more than 14,000 lbs ..........................$10,000 
More than 14,000 lbs but not more than 26,000 lbs ........................$20,000 
More than 26,000 lbs .........................................................................$40,000. 
‘‘(2) INCREASE FOR FUEL EFFICIENCY.— 
‘‘(A) IN
GENERAL.—The amount deter-
mined under paragraph (1) with respect to a 
new qualified fuel cell motor vehicle which is a 
passenger automobile or light truck shall be in-
creased by the additional credit amount. 
‘‘(B) ADDITIONAL CREDIT AMOUNT.—For 
purposes of subparagraph (A), the additional 
credit amount shall be determined in accord-
ance with the following table: 
‘‘In the case of a vehicle which 
achieves a fuel economy (ex-
pressed as a percentage of the 
2002 model year city fuel econ-
omy) of— 
The additional credit 
amount is— 
At least 150 percent but less than 175 percent ................................ $1,000 
At least 175 percent but less than 200 percent ................................ $1,500 
At least 200 percent but less than 225 percent ................................ $2,000 
At least 225 percent but less than 250 percent ................................ $2,500 
At least 250 percent but less than 275 percent ................................ $3,000 
At least 275 percent but less than 300 percent ................................ $3,500 
At least 300 percent .......................................................................... $4,000.
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‘‘(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, has received— 
‘‘(i) a certificate of conformity under 
the Clean Air Act and meets or exceeds the 
equivalent qualifying California low emis-
sion 
vehicle 
standard 
under 
section 
243(e)(2) of the Clean Air Act for that 
make and model year, and 
‘‘(ii) a certificate that such vehicle 
meets or exceeds the Bin 5 Tier II emis-
sion standard established in regulations 
prescribed by the Administrator of the En-
vironmental Protection Agency under sec-
tion 202(i) of the Clean Air Act for that 
make and model year vehicle,
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HR 4503 RDS 
‘‘(C) the original use of which commences 
with the taxpayer, 
‘‘(D) which is acquired for use or lease by 
the taxpayer and not for resale, and 
‘‘(E) which is made by a manufacturer. 
‘‘(c) NEW ADVANCED LEAN BURN TECHNOLOGY 
MOTOR VEHICLE CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), the new advanced lean burn technology motor 
vehicle credit determined under this subsection with 
respect to a new advanced lean burn technology 
motor vehicle placed in service by the taxpayer dur-
ing the taxable year is the credit amount determined 
under paragraph (2). 
‘‘(2) CREDIT AMOUNT.— 
‘‘(A) FUEL ECONOMY.—The credit amount 
determined under this paragraph shall be deter-
mined in accordance with the following table: 
‘‘In the case of a vehicle which 
achieves a fuel economy (ex-
pressed as a percentage of the 
2002 model year city fuel econ-
omy) of— 
The credit amount is— 
At least 125 percent but less than 150 percent ................................
$400 
At least 150 percent but less than 175 percent ................................
$800 
At least 175 percent but less than 200 percent ................................ $1,200 
At least 200 percent but less than 225 percent ................................ $1,600 
At least 225 percent but less than 250 percent ................................ $2,000 
At least 250 percent .......................................................................... $2,400. 
‘‘(B) 
CONSERVATION
CREDIT.—The 
amount determined under subparagraph (A)
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with respect to a new advanced lean burn tech-
nology motor vehicle shall be increased by the 
conservation credit amount determined in ac-
cordance with the following table: 
‘‘In the case of a vehicle which 
achieves a lifetime fuel savings 
(expressed in gallons of gaso-
line) of— 
The conservation credit 
amount is— 
At least 1,200 but less than 1,800 ....................................................
$250 
At least 1,800 but less than 2,400 ....................................................
$500 
At least 2,400 but less than 3,000 ....................................................
$750 
At least 3,000 .................................................................................... $1,000. 
‘‘(3) NEW ADVANCED LEAN BURN TECHNOLOGY 
MOTOR VEHICLE.—For purposes of this subsection, 
the term ‘new advanced lean burn technology motor 
vehicle’ means a passenger automobile or a light 
truck— 
‘‘(A) with an internal combustion engine 
which— 
‘‘(i) is designed to operate primarily 
using more air than is necessary for com-
plete combustion of the fuel, 
‘‘(ii) incorporates direct injection, 
‘‘(iii) achieves at least 125 percent of 
the 2002 model year city fuel economy, 
‘‘(iv) for 2004 and later model vehi-
cles, has received a certificate that such ve-
hicle meets or exceeds—
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HR 4503 RDS 
‘‘(I) in the case of a vehicle hav-
ing a gross vehicle weight rating of 
6,000 pounds or less, the Bin 5 Tier 
II emission standard established in 
regulations prescribed by the Adminis-
trator of the Environmental Protec-
tion Agency under section 202(i) of 
the Clean Air Act for that make and 
model year vehicle, and 
‘‘(II) in the case of a vehicle hav-
ing a gross vehicle weight rating of 
more than 6,000 pounds but not more 
than 8,500 pounds, the Bin 8 Tier II 
emission standard which is so estab-
lished. 
‘‘(B) the original use of which commences 
with the taxpayer, 
‘‘(C) which is acquired for use or lease by 
the taxpayer and not for resale, and 
‘‘(D) which is made by a manufacturer. 
‘‘(4) LIFETIME FUEL SAVINGS.—For purposes 
of this subsection, the term ‘lifetime fuel savings’ 
means, in the case of any new advanced lean burn 
technology motor vehicle, an amount equal to the ex-
cess (if any) of—
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HR 4503 RDS 
‘‘(A) 120,000 divided by the 2002 model 
year city fuel economy for the vehicle inertia 
weight class, over 
‘‘(B) 120,000 divided by the city fuel econ-
omy for such vehicle. 
‘‘(d) NEW QUALIFIED HYBRID MOTOR VEHICLE 
CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), the new qualified hybrid motor vehicle credit de-
termined under this subsection with respect to a new 
qualified hybrid motor vehicle placed in service by 
the taxpayer during the taxable year is the credit 
amount determined under paragraph (2). 
‘‘(2) CREDIT AMOUNT.— 
‘‘(A) CREDIT
AMOUNT
FOR
PASSENGER 
AUTOMOBILES
AND
LIGHT
TRUCKS.—In the 
case of a new qualified hybrid motor vehicle 
which is a passenger automobile or light truck 
and which has a gross vehicle weight rating of 
not more than 8,500 pounds, the amount deter-
mined under this paragraph is the sum of the 
amounts determined under clauses (i) and (ii). 
‘‘(i) FUEL
ECONOMY.—The amount 
determined under this clause is the amount 
which would be determined under sub-
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HR 4503 RDS 
section (c)(2)(A) if such vehicle were a ve-
hicle referred to in such subsection. 
‘‘(ii) CONSERVATION
CREDIT.—The 
amount determined under this clause is the 
amount which would be determined under 
subsection (c)(2)(B) if such vehicle were a 
vehicle referred to in such subsection. 
‘‘(B) CREDIT AMOUNT FOR OTHER MOTOR 
VEHICLES.— 
‘‘(i) IN GENERAL.—In the case of any 
new qualified hybrid motor vehicle to which 
subparagraph (A) does not apply, the 
amount determined under this paragraph 
is the amount equal to the applicable per-
centage of the qualified incremental hybrid 
cost of the vehicle as certified under clause 
(v). 
‘‘(ii) APPLICABLE PERCENTAGE.—For 
purposes of clause (i), the applicable per-
centage is— 
‘‘(I) 20 percent if the vehicle 
achieves an increase in city fuel econ-
omy relative to a comparable vehicle 
of at least 30 percent but less than 40 
percent,
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HR 4503 RDS 
‘‘(II) 30 percent if the vehicle 
achieves such an increase of at least 
40 percent but less than 50 percent, 
and 
‘‘(III) 40 percent if the vehicle 
achieves such an increase of at least 
50 percent. 
‘‘(iii) QUALIFIED
INCREMENTAL
HY-
BRID COST.—For purposes of this subpara-
graph, the qualified incremental hybrid 
cost of any vehicle is equal to the amount 
of the excess of the manufacturer’s sug-
gested retail price for such vehicle over 
such price for a comparable vehicle, to the 
extent such amount does not exceed— 
‘‘(I) $7,500, if such vehicle has a 
gross vehicle weight rating of not 
more than 14,000 pounds, 
‘‘(II) $15,000, if such vehicle has 
a gross vehicle weight rating of more 
than 14,000 pounds but not more 
than 26,000 pounds, and 
‘‘(III) $30,000, if such vehicle 
has a gross vehicle weight rating of 
more than 26,000 pounds.
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‘‘(iv) COMPARABLE
VEHICLE.—For 
purposes of this subparagraph, the term 
‘comparable vehicle’ means, with respect to 
any new qualified hybrid motor vehicle, 
any vehicle which is powered solely by a 
gasoline or diesel internal combustion en-
gine and which is comparable in weight, 
size, and use to such vehicle. 
‘‘(v) CERTIFICATION.—A certification 
described in clause (i) shall be made by the 
manufacturer and shall be determined in 
accordance with guidance prescribed by the 
Secretary. Such guidance shall specify pro-
cedures and methods for calculating fuel 
economy savings and incremental hybrid 
costs. 
‘‘(3) NEW
QUALIFIED
HYBRID
MOTOR
VEHI-
CLE.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘new quali-
fied hybrid motor vehicle’ means a motor vehi-
cle— 
‘‘(i) which draws propulsion energy 
from onboard sources of stored energy 
which are both—
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‘‘(I) an internal combustion or 
heat engine using consumable fuel, 
and 
‘‘(II) a rechargeable energy stor-
age system, 
‘‘(ii) which, in the case of a vehicle to 
which paragraph (2)(A) applies, has re-
ceived a certificate of conformity under the 
Clean Air Act and meets or exceeds the 
equivalent qualifying California low emis-
sion 
vehicle 
standard 
under 
section 
243(e)(2) of the Clean Air Act for that 
make and model year, and 
‘‘(I) in the case of a vehicle hav-
ing a gross vehicle weight rating of 
6,000 pounds or less, the Bin 5 Tier 
II emission standard established in 
regulations prescribed by the Adminis-
trator of the Environmental Protec-
tion Agency under section 202(i) of 
the Clean Air Act for that make and 
model year vehicle, and 
‘‘(II) in the case of a vehicle hav-
ing a gross vehicle weight rating of 
more than 6,000 pounds but not more
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than 8,500 pounds, the Bin 8 Tier II 
emission standard which is so estab-
lished, 
‘‘(iii) which has a maximum available 
power of at least— 
‘‘(I) 4 percent in the case of a ve-
hicle to which paragraph (2)(A) ap-
plies, 
‘‘(II) 10 percent in the case of a 
vehicle which has a gross vehicle 
weight rating or more than 8,500 
pounds and not than 14,000 pounds, 
and 
‘‘(III) 15 percent in the case of a 
vehicle in excess of 14,000 pounds, 
‘‘(iv) which, in the case of a vehicle to 
which paragraph (2)(B) applies, has an in-
ternal combustion or heat engine which 
has received a certificate of conformity 
under the Clean Air Act as meeting the 
emission standards set in the regulations 
prescribed by the Administrator of the En-
vironmental Protection Agency for 2004 
through 2007 model year diesel heavy duty
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engines or ottocycle heavy duty engines, as 
applicable, 
‘‘(v) the original use of which com-
mences with the taxpayer, 
‘‘(vi) which is acquired for use or 
lease by the taxpayer and not for resale, 
and 
‘‘(vii) which is made by a manufac-
turer. 
Such term shall not include any vehicle which 
is not a passenger automobile or light truck if 
such vehicle has a gross vehicle weight rating of 
less than 8,500 pounds. 
‘‘(B) CONSUMABLE FUEL.—For purposes 
of subparagraph (A)(i)(I), the term ‘consumable 
fuel’ means any solid, liquid, or gaseous matter 
which releases energy when consumed by an 
auxiliary power unit. 
‘‘(C) MAXIMUM AVAILABLE POWER.— 
‘‘(i) 
CERTAIN
PASSENGER
AUTO-
MOBILES AND LIGHT TRUCKS.—In the case 
of a vehicle to which paragraph (2)(A) ap-
plies, the term ‘maximum available power’ 
means the maximum power available from 
the rechargeable energy storage system,
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during a standard 10 second pulse power 
or equivalent test, divided by such max-
imum power and the SAE net power of the 
heat engine. 
‘‘(ii) OTHER
MOTOR
VEHICLES.—In 
the case of a vehicle to which paragraph 
(2)(B) applies, the term ‘maximum avail-
able power’ means the maximum power 
available from the rechargeable energy 
storage system, during a standard 10 sec-
ond pulse power or equivalent test, divided 
by the vehicle’s total traction power. For 
purposes of the preceding sentence, the 
term ‘total traction power’ means the sum 
of the peak power from the rechargeable 
energy storage system and the heat engine 
peak power of the vehicle, except that if 
such storage system is the sole means by 
which the vehicle can be driven, the total 
traction power is the peak power of such 
storage system. 
‘‘(e) NEW QUALIFIED ALTERNATIVE FUEL MOTOR 
VEHICLE CREDIT.— 
‘‘(1) ALLOWANCE OF CREDIT.—Except as pro-
vided in paragraph (5), the new qualified alternative
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fuel motor vehicle credit determined under this sub-
section is an amount equal to the applicable percent-
age of the incremental cost of any new qualified al-
ternative fuel motor vehicle placed in service by the 
taxpayer during the taxable year. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of paragraph (1), the applicable percentage with re-
spect to any new qualified alternative fuel motor ve-
hicle is— 
‘‘(A) 40 percent, plus 
‘‘(B) 30 percent, if such vehicle— 
‘‘(i) has received a certificate of con-
formity under the Clean Air Act and meets 
or exceeds the most stringent standard 
available for certification under the Clean 
Air Act for that make and model year vehi-
cle (other than a zero emission standard), 
or 
‘‘(ii) has received an order certifying 
the vehicle as meeting the same require-
ments as vehicles which may be sold or 
leased in California and meets or exceeds 
the most stringent standard available for 
certification under the State laws of Cali-
fornia (enacted in accordance with a waiv-
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er granted under section 209(b) of the 
Clean Air Act) for that make and model 
year vehicle (other than a zero emission 
standard). 
For purposes of the preceding sentence, in the case 
of any new qualified alternative fuel motor vehicle 
which has a gross vehicle weight rating of more than 
14,000 pounds, the most stringent standard avail-
able shall be such standard available for certification 
on the date of the enactment of the Energy Tax Pol-
icy Act of 2003. 
‘‘(3) INCREMENTAL
COST.—For purposes of 
this subsection, the incremental cost of any new 
qualified alternative fuel motor vehicle is equal to 
the amount of the excess of the manufacturer’s sug-
gested retail price for such vehicle over such price 
for a gasoline or diesel fuel motor vehicle of the 
same model, to the extent such amount does not ex-
ceed— 
‘‘(A) $5,000, if such vehicle has a gross ve-
hicle 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,
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‘‘(C) $25,000, 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. 
‘‘(4) NEW
QUALIFIED
ALTERNATIVE
FUEL 
MOTOR
VEHICLE.—For purposes of this sub-
section— 
‘‘(A) IN GENERAL.—The term ‘new quali-
fied alternative fuel motor vehicle’ means any 
motor vehicle— 
‘‘(i) which is only capable of operating 
on an alternative fuel, 
‘‘(ii) the original use of which com-
mences with the taxpayer, 
‘‘(iii) which is acquired by the tax-
payer for use or lease, but not for resale, 
and 
‘‘(iv) which is made by a manufac-
turer. 
‘‘(B) ALTERNATIVE FUEL.—The term ‘al-
ternative fuel’ means compressed natural gas, 
liquefied natural gas, liquefied petroleum gas,
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hydrogen, and any liquid at least 85 percent of 
the volume of which consists of methanol. 
‘‘(5) CREDIT FOR MIXED-FUEL VEHICLES.— 
‘‘(A) IN
GENERAL.—In the case of a 
mixed-fuel vehicle placed in service by the tax-
payer during the taxable year, the credit deter-
mined under this subsection is an amount equal 
to— 
‘‘(i) in the case of a 75/25 mixed-fuel 
vehicle, 70 percent of the credit which 
would have been allowed under this sub-
section if such vehicle was a qualified alter-
native fuel motor vehicle, and 
‘‘(ii) in the case of a 90/10 mixed-fuel 
vehicle, 90 percent of the credit which 
would have been allowed under this sub-
section if such vehicle was a qualified alter-
native fuel motor vehicle. 
‘‘(B) MIXED-FUEL
VEHICLE.—For pur-
poses of this subsection, the term ‘mixed-fuel 
vehicle’ means any motor vehicle described in 
subparagraph (C) or (D) of paragraph (3), 
which— 
‘‘(i) is certified by the manufacturer 
as being able to perform efficiently in nor-
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mal operation on a combination of an al-
ternative fuel and a petroleum-based fuel, 
‘‘(ii) either— 
‘‘(I) has received a certificate of 
conformity under the Clean Air Act, 
or 
‘‘(II) has received an order certi-
fying the vehicle as meeting the same 
requirements as vehicles which may be 
sold or leased in California and meets 
or exceeds the low emission vehicle 
standard under section 88.105–94 of 
title 40, Code of Federal Regulations, 
for that make and model year vehicle, 
‘‘(iii) the original use of which com-
mences with the taxpayer, 
‘‘(iv) which is acquired by the tax-
payer for use or lease, but not for resale, 
and 
‘‘(v) which is made by a manufac-
turer. 
‘‘(C) 75/25
MIXED-FUEL
VEHICLE.—For 
purposes of this subsection, the term ‘75/25 
mixed-fuel vehicle’ means a mixed-fuel vehicle 
which operates using at least 75 percent alter-
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native fuel and not more than 25 percent petro-
leum-based fuel. 
‘‘(D) 90/10
MIXED-FUEL
VEHICLE.—For 
purposes of this subsection, the term ‘90/10 
mixed-fuel vehicle’ means a mixed-fuel vehicle 
which operates using at least 90 percent alter-
native fuel and not more than 10 percent petro-
leum-based fuel. 
‘‘(f) LIMITATION ON NUMBER OF NEW QUALIFIED 
HYBRID AND ADVANCED LEAN-BURN TECHNOLOGY VE-
HICLES ELIGIBLE FOR CREDIT.— 
‘‘(1) IN GENERAL.—In the case of a qualified 
vehicle sold during the phaseout period, only the ap-
plicable percentage of the credit otherwise allowable 
under subsection (c) or (d) shall be allowed. 
‘‘(2) PHASEOUT PERIOD.—For purposes of this 
subsection, the phaseout period is the period begin-
ning with the second calendar quarter following the 
calendar quarter which includes the first date on 
which the number of qualified vehicles manufactured 
by the manufacturer of the vehicle referred to in 
paragraph (1) sold for use in the United States after 
the date of the enactment of this section is at least 
80,000.
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‘‘(3) APPLICABLE PERCENTAGE.—For purposes 
of paragraph (1), the applicable percentage is— 
‘‘(A) 50 percent for the first 2 calendar 
quarters of the phaseout period, 
‘‘(B) 25 percent for the 3d and 4th cal-
endar quarters of the phaseout period, and 
‘‘(C) 0 percent for each calendar quarter 
thereafter. 
‘‘(4) CONTROLLED GROUPS.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, all persons treated as a single em-
ployer under subsection (a) or (b) of section 52 
or subsection (m) or (o) of section 414 shall be 
treated as a single manufacturer. 
‘‘(B) INCLUSION
OF
FOREIGN
CORPORA-
TIONS.—For purposes of subparagraph (A), in 
applying subsections (a) and (b) of section 52 
to this section, section 1563 shall be applied 
without regard to subsection (b)(2)(C) thereof. 
‘‘(5) QUALIFIED
VEHICLE.—For purposes of 
this subsection, the term ‘qualified vehicle’ means 
any new qualified hybrid motor vehicle and any new 
advanced lean burn technology motor vehicle.
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‘‘(g) LIMITATION BASED ON AMOUNT OF TAX.—The 
credit allowed under subsection (a) for the taxable year 
shall not exceed the excess of— 
‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by sec-
tion 55, over 
‘‘(2) the sum of the credits allowable under sub-
part A and sections 27 and 30 for the taxable year. 
‘‘(h) OTHER DEFINITIONS AND SPECIAL RULES.— 
For purposes of this section— 
‘‘(1) MOTOR VEHICLE.—The term ‘motor vehi-
cle’ has the meaning given such term by section 
30(c)(2). 
‘‘(2) OTHER TERMS.—The terms ‘automobile’, 
‘passenger automobile’, ‘light truck’, and ‘manufac-
turer’ have the meanings given such terms in regula-
tions prescribed by the Administrator of the Envi-
ronmental Protection Agency for purposes of the ad-
ministration of title II of the Clean Air Act (42 
U.S.C. 7521 et seq.). 
‘‘(3) 2002 MODEL
YEAR
CITY
FUEL
ECON-
OMY.— 
‘‘(A) IN GENERAL.—The 2002 model year 
city fuel economy with respect to a vehicle shall
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be determined in accordance with the following 
tables: 
‘‘(i) In the case of a passenger auto-
mobile: 
‘‘(ii) In the case of a light truck: 
‘‘(B) VEHICLE INERTIA WEIGHT CLASS.— 
For purposes of subparagraph (A), 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.). 
‘‘(4) FUEL ECONOMY.—Fuel economy with re-
spect to any vehicle shall be measured under rules 
similar to the rules under section 4064(c). 
‘‘(5) REDUCTION IN BASIS.—For purposes of 
this subtitle, if a credit is allowed under this section 
for any expenditure with respect to any property, the 
increase in the basis of such property which would 
(but for this paragraph) result from such expendi-
ture shall be reduced by the amount of the credit so 
allowed. 
‘‘(6) NO
DOUBLE
BENEFIT.—The amount of 
any deduction or credit allowable under this chapter
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(other than the credits allowable under this section 
and section 30) shall be reduced by the amount of 
credit allowed under subsection (a) for such vehicle 
for the taxable year. 
‘‘(7) RECAPTURE.—The Secretary shall, by reg-
ulations, provide for recapturing the benefit of any 
credit allowable under subsection (a) with respect to 
any property which ceases to be property eligible for 
such credit (including recapture in the case of a 
lease period of less than the economic life of a vehi-
cle). 
‘‘(8) 
PROPERTY
USED
OUTSIDE
UNITED 
STATES, ETC., NOT QUALIFIED.—No credit shall be 
allowed under subsection (a) with respect to any 
property referred to in section 50(b) or with respect 
to the portion of the cost of any property taken into 
account under section 179. 
‘‘(9) ELECTION
NOT
TO
TAKE
CREDIT.—No 
credit shall be allowed under subsection (a) for any 
vehicle if the taxpayer elects to not have this section 
apply to such vehicle. 
‘‘(10) BUSINESS
CARRYOVERS
ALLOWED.—If 
the credit allowable under subsection (a) for a tax-
able year exceeds the limitation under subsection (g) 
for such taxable year, such excess (to the extent of
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the credit allowable with respect to property subject 
to the allowance for depreciation) shall be allowed as 
a credit carryback and carryforward under rules 
similar to the rules of section 39. 
‘‘(11) INTERACTION
WITH
MOTOR
VEHICLE 
SAFETY STANDARDS.—Unless otherwise provided in 
this section, a motor vehicle shall not be considered 
eligible for a credit under this section unless such 
vehicle is in compliance with the motor vehicle safety 
provisions of sections 30101 through 30169 of title 
49, United States Code. 
‘‘(i) REGULATIONS.— 
‘‘(1) IN GENERAL.—The Secretary shall pro-
mulgate such regulations as necessary to carry out 
the provisions of this section. 
‘‘(2) DETERMINATION OF MOTOR VEHICLE ELI-
GIBILITY.—The Secretary, after coordination with 
the Secretary of Transportation and the Adminis-
trator of the Environmental Protection Agency, shall 
prescribe such regulations as necessary to determine 
whether a motor vehicle meets the requirements to 
be eligible for a credit under this section. 
‘‘(j) TERMINATION.—This section shall not apply to 
any property placed in service after—
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‘‘(1) in the case of a new qualified alternative 
fuel motor vehicle, December 31, 2006, 
‘‘(2) in the case of a new advanced lean burn 
technology motor vehicle or a new qualified hybrid 
motor vehicle, December 31, 2008, and 
‘‘(3) in the case of a new qualified fuel cell 
motor vehicle, December 31, 2012.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 30(d) (relating to special rules) is 
amended by adding at the end the following new 
paragraphs: 
‘‘(5) NO DOUBLE BENEFIT.—No credit shall be 
allowed under this section for any motor vehicle for 
which a credit is also allowed under section 30B.’’. 
(2) Section 1016(a), as amended by this Act, is 
amended by striking ‘‘and’’ at the end of paragraph 
(31), by striking the period at the end of paragraph 
(32) and inserting ‘‘, and’’, and by adding at the 
end the following: 
‘‘(33) to the extent provided in section 
30B(h)(5).’’. 
(3) Section 6501(m) is amended by inserting 
‘‘30B(h)(9),’’ after ‘‘30(d)(4),’’. 
(4) The table of sections for subpart B of part 
IV of subchapter A of chapter 1 is amended by in-
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serting after the item relating to section 30A the fol-
lowing: 
‘‘Sec. 30B. Alternative motor vehicle credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act, in taxable years 
ending after such date. 
(d) STICKER INFORMATION REQUIRED AT RETAIL 
SALE.— 
(1) IN GENERAL.—The Secretary of the Treas-
ury shall issue regulations under which each quali-
fied vehicle sold at retail shall display a notice— 
(A) that such vehicle is a qualified vehicle, 
and 
(B) that the buyer may not benefit from 
the credit allowed under section 30B of the In-
ternal Revenue Code of 1986 if such buyer has 
insufficient tax liability. 
(2) QUALIFIED
VEHICLE.—For purposes of 
paragraph (1), the term ‘‘qualified vehicle’’ means a 
vehicle with respect to which a credit is allowed 
under section 30B of the Internal Revenue Code of 
1986.
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SEC. 1319. MODIFICATIONS OF DEDUCTION FOR CERTAIN 
REFUELING PROPERTY. 
(a) IN GENERAL.—Subsection (f) of section 179A is 
amended to read as follows: 
‘‘(f) TERMINATION.—This section shall not apply to 
any property placed in service— 
‘‘(1) in the case of property relating to hydro-
gen, after December 31, 2011, and 
‘‘(2) in the case of any other property, after 
December 31, 2008.’’. 
(b) INCENTIVE FOR PRODUCTION OF HYDROGEN AT 
QUALIFIED CLEAN-FUEL VEHICLE REFUELING PROP-
ERTY.—Section 179A(d) (defining qualified clean-fuel ve-
hicle refueling property) is amended by adding at the end 
the following new flush sentence: 
‘‘In the case of clean-burning fuel which is hydrogen pro-
duced from another clean-burning fuel, paragraph (3)(A) 
shall be applied by substituting ‘production, storage, or 
dispensing’ for ‘storage or dispensing’ both places it ap-
pears.’’. 
(c) INCREASE IN LOCATION EXPENDITURES.—Sec-
tion 179A(b)(2)(A)(i) is amended by striking ‘‘$100,000’’ 
and inserting ‘‘$150,000’’. 
(d) NONBUSINESS USE OF QUALIFIED CLEAN-FUEL 
VEHICLE REFUELING PROPERTY.—Section 179A(d) is 
amended by striking paragraph (1) and by redesignating
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paragraphs (2) and (3) as paragraphs (1) and (2), respec-
tively. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act, in taxable years 
ending after such date. 
Subtitle B—Reliability 
SEC. 1321. NATURAL GAS GATHERING LINES TREATED AS 7– 
YEAR PROPERTY. 
(a) IN GENERAL.—Subparagraph (C) of section 
168(e)(3) (relating to classification of certain property) is 
amended by striking ‘‘and’’ at the end of clause (i), by 
redesignating clause (ii) as clause (iii), and by inserting 
after clause (i) the following new clause: 
‘‘(ii) any natural gas gathering line, 
and’’. 
(b) NATURAL GAS GATHERING LINE.—Subsection (i) 
of section 168, as amended by this Act, is amended by 
adding after paragraph (15) the following new paragraph: 
‘‘(16) NATURAL
GAS
GATHERING
LINE.—The 
term ‘natural gas gathering line’ means— 
‘‘(A) the pipe, equipment, and appur-
tenances determined to be a gathering line by 
the Federal Energy Regulatory Commission, or
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‘‘(B) the pipe, equipment, and appur-
tenances used to deliver natural gas from the 
wellhead or a commonpoint to the point at 
which such gas first reaches— 
‘‘(i) a gas processing plant, 
‘‘(ii) an interconnection with a trans-
mission pipeline for which a certificate as 
an interstate transmission pipeline has 
been issued by the Federal Energy Regu-
latory Commission, 
‘‘(iii) an interconnection with an 
intrastate transmission pipeline, or 
‘‘(iv) a direct interconnection with a 
local distribution company, a gas storage 
facility, or an industrial consumer.’’. 
(c) ALTERNATIVE SYSTEM.—The table contained in 
section 168(g)(3)(B) is amended by inserting after the 
item relating to subparagraph (C)(i) the following: 
‘‘(C) (ii) .....................................................................................................
14’’. 
(d) ALTERNATIVE MINIMUM TAX EXCEPTION.—Sub-
paragraph (B) of section 56(a)(1) is amended by inserting 
before the period the following: ‘‘, or in section 
168(e)(3)(C)(ii)’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after
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the date of the enactment of this Act, in taxable years 
ending after such date. 
SEC. 1322. NATURAL GAS DISTRIBUTION LINES TREATED 
AS 15-YEAR PROPERTY. 
(a) IN GENERAL.—Subparagraph (E) of section 
168(e)(3) (relating to classification of certain property) is 
amended by striking ‘‘and’’ at the end of clause (ii), by 
striking the period at the end of clause (iii) and by insert-
ing ‘‘, and’’, and by adding at the end the following new 
clause: 
‘‘(iv) any natural gas distribution 
line.’’. 
(b) ALTERNATIVE SYSTEM.—The table contained in 
section 168(g)(3)(B) is amended by inserting after the 
item relating to subparagraph (E)(iii) the following: 
‘‘(E) (iv) ....................................................................................................
35’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act, in taxable years 
ending after such date. 
SEC. 1323. ELECTRIC TRANSMISSION PROPERTY TREATED 
AS 15-YEAR PROPERTY. 
(a) IN GENERAL.—Subparagraph (E) of section 
168(e)(3) (relating to classification of certain property), 
as amended by this Act, is amended by striking ‘‘and’’ 
at the end of clause (iii), by striking the period at the
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end of clause (iv) and by inserting ‘‘, and’’, and by adding 
at the end the following new clause: 
‘‘(v) any section 1245 property (as de-
fined in section 1245(a)(3)) used in the 
transmission at 69 or more kilovolts of 
electricity for sale the original use of which 
commences with the taxpayer after the 
date of the enactment of this clause.’’. 
(b) ALTERNATIVE SYSTEM.—The table contained in 
section 168(g)(3)(B) is amended by inserting after the 
item relating to subparagraph (E)(iv) the following: 
‘‘(E) (v) .....................................................................................................
30’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act, in taxable years 
ending after such date. 
SEC. 1324. EXPENSING OF CAPITAL COSTS INCURRED IN 
COMPLYING WITH ENVIRONMENTAL PROTEC-
TION AGENCY SULFUR REGULATIONS. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 (relating to itemized deductions for individuals and 
corporations), as amended by this Act, is amended by in-
serting after section 179B the following new section:
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‘‘SEC. 179C. DEDUCTION FOR CAPITAL COSTS INCURRED IN 
COMPLYING WITH ENVIRONMENTAL PROTEC-
TION AGENCY SULFUR REGULATIONS. 
‘‘(a) TREATMENT AS EXPENSES.—A small business 
refiner (as defined in section 45I(c)(1)) may elect to treat 
75 percent of qualified capital costs (as defined in section 
45I(c)(2)) which are paid or incurred by the taxpayer dur-
ing the taxable year as expenses which are not chargeable 
to capital account. Any cost so treated shall be allowed 
as a deduction for the taxable year in which paid or in-
curred. 
‘‘(b) REDUCED PERCENTAGE.—In the case of a small 
business refiner with average daily domestic refinery runs 
for the 1-year period ending on December 31, 2002, in 
excess of 155,000 barrels, the number of percentage 
points described in subsection (a) shall be reduced (not 
below zero) by the product of such number (before the 
application of this subsection) and the ratio of such excess 
to 50,000 barrels. 
‘‘(c) BASIS REDUCTION.— 
‘‘(1) IN GENERAL.—For purposes of this title, 
the basis of any property shall be reduced by the 
portion of the cost of such property taken into ac-
count under subsection (a). 
‘‘(2) ORDINARY
INCOME
RECAPTURE.—For 
purposes of section 1245, the amount of the deduc-
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tion allowable under subsection (a) with respect to 
any property which is of a character subject to the 
allowance for depreciation shall be treated as a de-
duction allowed for depreciation under section 167.’’. 
‘‘(d) COORDINATION WITH OTHER PROVISIONS.— 
Section 280B shall not apply to amounts which are treated 
as expenses under this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 263(a)(1), as amended by this Act, 
is amended by striking ‘‘or’’ at the end of subpara-
graph (H), by striking the period at the end of sub-
paragraph (I) and inserting ‘‘; or’’, and by adding 
at the end the following new subparagraph: 
‘‘(J) expenditures for which a deduction is 
allowed under section 179C.’’. 
(2) Section 263A(c)(3) is amended by inserting 
‘‘179C,’’ after ‘‘section’’. 
(3) Section 312(k)(3)(B), as amended by this 
Act, is amended by striking ‘‘or 179B’’ each place 
it appears in the heading and text and inserting 
‘‘179B, or 179C’’. 
(4) Section 1016(a), as amended by this Act, is 
amended by striking ‘‘and’’ at the end of paragraph 
(32), by striking the period at the end of paragraph
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(33) and inserting ‘‘, and’’, and by adding at the 
end the following new paragraph: 
‘‘(34) to the extent provided in section 
179C(c).’’. 
(5) Paragraphs (2)(C) and (3)(C) of section 
1245(a), as amended by this Act, are each amended 
by inserting ‘‘179C,’’ after ‘‘179B,’’. 
(6) The table of sections for part VI of sub-
chapter B of chapter 1, as amended by this Act, is 
amended by inserting after the item relating to sec-
tion 179B the following new item: 
‘‘Sec. 179C. Deduction for capital costs incurred in complying with Environ-
mental Protection Agency sulfur regulations.’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to expenses paid or incurred after 
December 31, 2002, in taxable years ending after such 
date. 
SEC. 1325. CREDIT FOR PRODUCTION OF LOW SULFUR DIE-
SEL FUEL. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (relating to business-related cred-
its), as amended by this Act, is amended by adding at 
the end the following new section:
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‘‘SEC. 45I. CREDIT FOR PRODUCTION OF LOW SULFUR DIE-
SEL FUEL. 
‘‘(a) IN GENERAL.—For purposes of section 38, the 
amount of the low sulfur diesel fuel production credit de-
termined under this section with respect to any facility 
of a small business refiner is an amount equal to 5 cents 
for each gallon of low sulfur diesel fuel produced during 
the taxable year by such small business refiner at such 
facility. 
‘‘(b) MAXIMUM CREDIT.— 
‘‘(1) IN GENERAL.—The aggregate credit deter-
mined under subsection (a) for any taxable year with 
respect to any facility shall not exceed— 
‘‘(A) 25 percent of the qualified capital 
costs incurred by the small business refiner 
with respect to such facility, reduced by 
‘‘(B) the aggregate credits determined 
under this section for all prior taxable years 
with respect to such facility. 
‘‘(2) REDUCED PERCENTAGE.—In the case of a 
small business refiner with average daily domestic 
refinery runs for the 1-year period ending on De-
cember 31, 2002, in excess of 155,000 barrels, the 
number of percentage points described in paragraph 
(1) shall be reduced (not below zero) by the product 
of such number (before the application of this para-
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graph) and the ratio of such excess to 50,000 bar-
rels. 
‘‘(c) DEFINITIONS AND SPECIAL RULE.—For pur-
poses of this section— 
‘‘(1) SMALL
BUSINESS
REFINER.—The term 
‘small business refiner’ means, with respect to any 
taxable year, a refiner of crude oil— 
‘‘(A) with respect to which not more than 
1,500 individuals are engaged in the refinery 
operations of the business on any day during 
such taxable year, and 
‘‘(B) the average daily domestic refinery 
run or average retained production of which for 
all facilities of the taxpayer for the 1-year pe-
riod ending on December 31, 2002, did not ex-
ceed 205,000 barrels. 
‘‘(2) QUALIFIED
CAPITAL
COSTS.—The term 
‘qualified capital costs’ means, with respect to any 
facility, those costs paid or incurred during the ap-
plicable period for compliance with the applicable 
EPA regulations with respect to such facility, includ-
ing expenditures for the construction of new process 
operation units or the dismantling and reconstruc-
tion of existing process units to be used in the pro-
duction of low sulfur diesel fuel, associated adjacent
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or offsite equipment (including tankage, catalyst, 
and power supply), engineering, construction period 
interest, and sitework. 
‘‘(3) APPLICABLE
EPA
REGULATIONS.—The 
term ‘applicable EPA regulations’ means the High-
way Diesel Fuel Sulfur Control Requirements of the 
Environmental Protection Agency. 
‘‘(4) APPLICABLE PERIOD.—The term ‘applica-
ble period’ means, with respect to any facility, the 
period beginning on January 1, 2003, and ending on 
the earlier of the date which is 1 year after the date 
on which the taxpayer must comply with the applica-
ble EPA regulations with respect to such facility or 
December 31, 2009. 
‘‘(5) LOW SULFUR DIESEL FUEL.—The term 
‘low sulfur diesel fuel’ means diesel fuel with a sul-
fur content of 15 parts per million or less. 
‘‘(d) REDUCTION IN BASIS.—For purposes of this 
subtitle, if a credit is determined under this section for 
any expenditure with respect to any property, the increase 
in 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 determined. 
‘‘(e) SPECIAL RULE FOR DETERMINATION OF REFIN-
ERY
RUNS.—For purposes this section and section
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179C(b), in the calculation of average daily domestic refin-
ery run or retained production, only refineries which on 
April 1, 2003, were refineries of the refiner or a related 
person (within the meaning of section 613A(d)(3)), shall 
be taken into account. 
‘‘(f) CERTIFICATION.— 
‘‘(1) REQUIRED.—No credit shall be allowed 
unless, not later than the date which is 30 months 
after the first day of the first taxable year in which 
the low sulfur diesel fuel production credit is allowed 
with respect to a facility, the small business refiner 
obtains certification from the Secretary, after con-
sultation with the Administrator of the Environ-
mental Protection Agency, that the taxpayer’s quali-
fied capital costs with respect to such facility will re-
sult in compliance with the applicable EPA regula-
tions. 
‘‘(2) CONTENTS OF APPLICATION.—An applica-
tion for certification shall include relevant informa-
tion regarding unit capacities and operating charac-
teristics sufficient for the Secretary, after consulta-
tion with the Administrator of the Environmental 
Protection Agency, to determine that such qualified 
capital costs are necessary for compliance with the 
applicable EPA regulations.
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‘‘(3) REVIEW
PERIOD.—Any application shall 
be reviewed and notice of certification, if applicable, 
shall be made within 60 days of receipt of such ap-
plication. In the event the Secretary does not notify 
the taxpayer of the results of such certification with-
in such period, the taxpayer may presume the cer-
tification to be issued until so notified. 
‘‘(4) STATUTE OF LIMITATIONS.—With respect 
to the credit allowed under this section— 
‘‘(A) the statutory period for the assess-
ment of any deficiency attributable to such 
credit shall not expire before the end of the 3- 
year period ending on the date that the review 
period described in paragraph (3) ends with re-
spect to the taxpayer, and 
‘‘(B) such deficiency may be assessed be-
fore the expiration of such 3-year period not-
withstanding the provisions of any other law or 
rule of law which would otherwise prevent such 
assessment. 
‘‘(g) COOPERATIVE ORGANIZATIONS.— 
‘‘(1) APPORTIONMENT OF CREDIT.— 
‘‘(A) IN GENERAL.—In the case of a coop-
erative 
organization 
described 
in 
section 
1381(a), any portion of the credit determined
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under subsection (a) for the taxable year may, 
at the election of the organization, be appor-
tioned among patrons eligible to share in pa-
tronage dividends on the basis of the quantity 
or value of business done with or for such pa-
trons for the taxable year. 
‘‘(B) FORM AND EFFECT OF ELECTION.— 
An election under subparagraph (A) for any 
taxable year shall be made on a timely filed re-
turn for such year. Such election, once made, 
shall be irrevocable for such taxable year. 
‘‘(2) TREATMENT OF ORGANIZATIONS AND PA-
TRONS.— 
‘‘(A) ORGANIZATIONS.—The amount of the 
credit not apportioned to patrons pursuant to 
paragraph (1) shall be included in the amount 
determined under subsection (a) for the taxable 
year of the organization. 
‘‘(B) PATRONS.—The amount of the credit 
apportioned to patrons pursuant to paragraph 
(1) shall be included in the amount determined 
under subsection (a) for the first taxable year 
of each patron ending on or after the last day 
of the payment period (as defined in section 
1382(d)) for the taxable year of the organiza-
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tion or, if earlier, for the taxable year of each 
patron ending on or after the date on which the 
patron receives notice from the cooperative of 
the apportionment. 
‘‘(3) SPECIAL RULE.—If the amount of a credit 
which has been apportioned to any patron under this 
subsection is decreased for any reason— 
‘‘(A) such amount shall not increase the 
tax imposed on such patron, and 
‘‘(B) the tax imposed by this chapter on 
such organization shall be increased by such 
amount. 
The increase under subparagraph (B) 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) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38 (relating to general 
business credit), as amended by this Act, 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 new para-
graph:
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‘‘(19) in the case of a small business refiner, 
the low sulfur diesel fuel production credit deter-
mined under section 45I(a).’’. 
(c) DENIAL OF DOUBLE BENEFIT.—Section 280C 
(relating to certain expenses for which credits are allow-
able) is amended by adding at the end the following new 
subsection: 
‘‘(d) LOW SULFUR DIESEL FUEL PRODUCTION 
CREDIT.—No deduction shall be allowed for that portion 
of the expenses otherwise allowable as a deduction for the 
taxable year which is equal to the amount of the credit 
determined for the taxable year under section 45I(a).’’. 
(d) BASIS ADJUSTMENT.—Section 1016(a) (relating 
to adjustments to basis), as amended by this Act, is 
amended by striking ‘‘and’’ at the end of paragraph (33), 
by striking the period at the end of paragraph (34) and 
inserting ‘‘, and’’, and by adding at the end the following 
new paragraph: 
‘‘(35) in the case of a facility with respect to 
which a credit was allowed under section 45I, to the 
extent provided in section 45I(d).’’. 
(e) DEDUCTION FOR CERTAIN UNUSED BUSINESS 
CREDITS.—Section 196(c) (defining qualified business 
credits), as amended by this Act, is amended by striking 
‘‘and’’ at the end of paragraph (12), by striking the period
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at the end of paragraph (13) and inserting ‘‘, and’’, and 
by adding after paragraph (13) the following new para-
graph: 
‘‘(14) the low sulfur diesel fuel production cred-
it determined under section 45I(a).’’. 
(f) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1, 
as amended by this Act, is amended by adding at the end 
the following new item: 
‘‘Sec. 45I. Credit for production of low sulfur diesel fuel.’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenses paid or incurred after 
December 31, 2002, in taxable years ending after such 
date. 
SEC. 1326. DETERMINATION OF SMALL REFINER EXCEP-
TION TO OIL DEPLETION DEDUCTION. 
(a) IN GENERAL.—Paragraph (4) of section 613A(d) 
(relating to limitations on application of subsection (c)) 
is amended to read as follows: 
‘‘(4) CERTAIN
REFINERS
EXCLUDED.—If the 
taxpayer or 1 or more related persons engages in the 
refining of crude oil, subsection (c) shall not apply 
to the taxpayer for a taxable year if the average 
daily refinery runs of the taxpayer and such persons 
for the taxable year exceed 67,500 barrels. For pur-
poses of this paragraph, the average daily refinery
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runs for any taxable year shall be determined by di-
viding the aggregate refinery runs for the taxable 
year by the number of days in the taxable year.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 1327. SALES OR DISPOSITIONS TO IMPLEMENT FED-
ERAL ENERGY REGULATORY COMMISSION 
OR STATE ELECTRIC RESTRUCTURING POL-
ICY. 
(a) IN GENERAL.—Section 451 (relating to general 
rule for taxable year of inclusion) is amended by adding 
at the end the following new subsection: 
‘‘(i) SPECIAL RULE FOR SALES OR DISPOSITIONS TO 
IMPLEMENT FEDERAL ENERGY REGULATORY COMMIS-
SION OR STATE ELECTRIC RESTRUCTURING POLICY.— 
‘‘(1) IN GENERAL.—In the case of any quali-
fying electric transmission transaction for which the 
taxpayer elects the application of this section, quali-
fied gain from such transaction shall be recog-
nized— 
‘‘(A) in the taxable year which includes the 
date of such transaction to the extent the 
amount realized from such transaction ex-
ceeds—
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such property is its cost within the meaning of sec-
tion 1012. 
‘‘(9) ELECTION.—An election under paragraph 
(1) shall be made at such time and in such manner 
as the Secretary may require and, once made, shall 
be irrevocable. 
‘‘(10) 
NONAPPLICATION
OF
INSTALLMENT 
SALES TREATMENT.—Section 453 shall not apply to 
any qualifying electric transmission transaction with 
respect to which an election to apply this subsection 
is made.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transactions occurring after the 
date of the enactment of this Act, in taxable years ending 
after such date. 
SEC. 1328. MODIFICATIONS TO SPECIAL RULES FOR NU-
CLEAR DECOMMISSIONING COSTS. 
(a) REPEAL
OF LIMITATION
ON DEPOSITS INTO 
FUND BASED ON COST OF SERVICE; CONTRIBUTIONS 
AFTER FUNDING PERIOD.—Subsection (b) of section 
468A (relating to special rules for nuclear decommis-
sioning costs) is amended to read as follows: 
‘‘(b) LIMITATION ON AMOUNTS PAID INTO FUND.— 
‘‘(1) IN GENERAL.—The amount which a tax-
payer may pay into the Fund for any taxable year