IIB 
110TH CONGRESS 
2D SESSION 
H. R. 5351 
IN THE SENATE OF THE UNITED STATES 
FEBRUARY 28, 2008 
Received; read twice and referred to the Committee on Finance 
AN ACT 
To amend the Internal Revenue Code of 1986 to provide 
tax incentives for the production of renewable energy 
and energy conservation. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; 
TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Renewable Energy and Energy Conservation Tax Act of 
2008’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; amendment of 1986 Code; table of contents. 
TITLE I—PRODUCTION INCENTIVES 
Sec. 101. Extension and modification of renewable energy credit. 
Sec. 102. Production credit for electricity produced from marine renewables. 
Sec. 103. Extension and modification of energy credit. 
Sec. 104. New clean renewable energy bonds. 
Sec. 105. Extension and modification of special rule to implement FERC and 
State electric restructuring policy. 
Sec. 106. Extension and modification of credit for residential energy efficient 
property. 
TITLE II—CONSERVATION 
Subtitle A—Transportation 
PART 1—VEHICLES 
Sec. 201. Credit for plug-in hybrid vehicles. 
Sec. 202. Extension and modification of alternative fuel vehicle refueling prop-
erty credit. 
Sec. 203. Modification of limitation on automobile depreciation. 
PART 2—FUELS 
Sec. 211. Extension and modification of credits for biodiesel and renewable die-
sel. 
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Sec. 212. Clarification that credits for fuel are designed to provide an incentive 
for United States production. 
Sec. 213. Credit for production of cellulosic alcohol. 
PART 3—OTHER TRANSPORTATION INCENTIVES 
Sec. 221. Extension of transportation fringe benefit to bicycle commuters. 
Sec. 222. Restructuring of New York Liberty Zone tax credits. 
Subtitle B—Other Conservation Provisions 
Sec. 231. Qualified energy conservation bonds. 
Sec. 232. Extension and modification of credit for nonbusiness energy property. 
Sec. 233. Extension of energy efficient commercial buildings deduction. 
Sec. 234. Modifications of energy efficient appliance credit for appliances pro-
duced after 2007. 
Sec. 235. Five-year applicable recovery period for depreciation of qualified en-
ergy management devices. 
TITLE III—REVENUE PROVISIONS 
Sec. 301. Limitation of deduction for income attributable to domestic produc-
tion of oil, gas, or primary products thereof. 
Sec. 302. Clarification of determination of foreign oil and gas extraction in-
come. 
Sec. 303. Time for payment of corporate estimated taxes. 
TITLE IV—OTHER PROVISIONS 
Subtitle A—Studies 
Sec. 401. Carbon audit of the tax code. 
Sec. 402. Comprehensive study of biofuels. 
Subtitle B—Application of Certain Labor Standards on Projects Financed 
Under Tax Credit Bonds 
Sec. 411. Application of certain labor standards on projects financed under tax 
credit bonds. 
TITLE I—PRODUCTION 
INCENTIVES 
SEC. 101. EXTENSION AND MODIFICATION OF RENEWABLE 
ENERGY CREDIT. 
(a) EXTENSION OF CREDIT.—Each of the following 
provisions of section 45(d) (relating to qualified facilities) 
is amended by striking ‘‘January 1, 2009’’ and inserting 
‘‘January 1, 2012’’: 
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(1) Paragraph (1). 
(2) Clauses (i) and (ii) of paragraph (2)(A). 
(3) Clauses (i)(I) and (ii) of paragraph (3)(A). 
(4) Paragraph (4). 
(5) Paragraph (5). 
(6) Paragraph (6). 
(7) Paragraph (7). 
(8) Subparagraphs (A) and (B) of paragraph 
(9). 
(b) MODIFICATION OF CREDIT PHASEOUT.— 
(1) REPEAL OF PHASEOUT.—Subsection (b) of 
section 45 is amended— 
(A) by striking paragraph (1), and 
(B) by striking ‘‘the 8 cent amount in 
paragraph (1),’’ in paragraph (2) thereof. 
(2) LIMITATION BASED ON INVESTMENT IN FA-
CILITY.—Subsection (b) of section 45 is amended by 
inserting before paragraph (2) the following new 
paragraph: 
‘‘(1) LIMITATION
BASED
ON
INVESTMENT
IN 
FACILITY.— 
‘‘(A) IN
GENERAL.—In the case of any 
qualified facility originally placed in service 
after December 31, 2009, the amount of the 
credit determined under subsection (a) for any 
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taxable year with respect to electricity produced 
at such facility shall not exceed the product 
of— 
‘‘(i) the applicable percentage with re-
spect to such facility, multiplied by 
‘‘(ii) the eligible basis of such facility. 
‘‘(B) CARRYFORWARD OF UNUSED LIMITA-
TION AND EXCESS CREDIT.— 
‘‘(i) UNUSED
LIMITATION.—If the 
limitation imposed under subparagraph (A) 
with respect to any facility for any taxable 
year exceeds the prelimitation credit for 
such facility for such taxable year, the lim-
itation imposed under subparagraph (A) 
with respect to such facility for the suc-
ceeding taxable year shall be increased by 
the amount of such excess. 
‘‘(ii) 
EXCESS
CREDIT.—If 
the 
prelimitation credit with respect to any fa-
cility for any taxable year exceeds the limi-
tation imposed under subparagraph (A) 
with respect to such facility for such tax-
able year, the credit determined under sub-
section (a) with respect to such facility for 
the succeeding taxable year (determined 
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before the application of subparagraph (A) 
for such succeeding taxable year) shall be 
increased by the amount of such excess. 
With respect to any facility, no amount 
may be carried forward under this clause 
to any taxable year beginning after the 10- 
year 
period 
described 
in 
subsection 
(a)(2)(A)(ii) with respect to such facility. 
‘‘(iii) PRELIMITATION
CREDIT.—The 
term ‘prelimitation credit’ with respect to 
any facility for a taxable year means the 
credit determined under subsection (a) 
with respect to such facility for such tax-
able year, determined without regard to 
subparagraph (A) and after taking into ac-
count any increase for such taxable year 
under clause (ii). 
‘‘(C) 
APPLICABLE
PERCENTAGE.—For 
purposes of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘applica-
ble percentage’ means, with respect to any 
facility, the appropriate percentage pre-
scribed by the Secretary for the month in 
which such facility is originally placed in 
service. 
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‘‘(D) ELIGIBLE
BASIS.—For purposes of 
this paragraph— 
‘‘(i) IN GENERAL.—The term ‘eligible 
basis’ means, with respect to any facility, 
the sum of— 
‘‘(I) the basis of such facility de-
termined as of the time that such fa-
cility is originally placed in service, 
and 
‘‘(II) the portion of the basis of 
any shared qualified property which is 
properly allocable to such facility 
under clause (ii). 
‘‘(ii) RULES FOR ALLOCATION.—For 
purposes of subclause (II) of clause (i), the 
basis of shared qualified property shall be 
allocated among all qualified facilities 
which are projected to be placed in service 
and which require utilization of such prop-
erty in proportion to projected generation 
from such facilities. 
‘‘(iii) 
SHARED
QUALIFIED
PROP-
ERTY.—For purposes of this paragraph, 
the term ‘shared qualified property’ means, 
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with respect to any facility, any property 
described in section 168(e)(3)(B)(vi)— 
‘‘(I) which a qualified facility will 
require for utilization of such facility, 
and 
‘‘(II) which is not a qualified fa-
cility. 
‘‘(iv) SPECIAL
RULE
RELATING
TO 
GEOTHERMAL FACILITIES.—In the case of 
any qualified facility using geothermal en-
ergy to produce electricity, the basis of 
such facility for purposes of this paragraph 
shall be determined as though intangible 
drilling and development costs described in 
section 263(c) were capitalized rather than 
expensed. 
‘‘(E) SPECIAL RULE FOR FIRST AND LAST 
YEAR OF CREDIT PERIOD.—In the case of any 
taxable year any portion of which is not within 
the 10-year period described in subsection 
(a)(2)(A)(ii) with respect to any facility, the 
amount of the limitation under subparagraph 
(A) with respect to such facility shall be re-
duced by an amount which bears the same ratio 
to the amount of such limitation (determined 
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without regard to this subparagraph) as such 
portion of the taxable year which is not within 
such period bears to the entire taxable year. 
‘‘(F) ELECTION TO TREAT ALL FACILITIES 
PLACED IN SERVICE IN A YEAR AS 1 FACIL-
ITY.—At the election of the taxpayer, all quali-
fied facilities which are part of the same project 
and which are placed in service during the same 
calendar year shall be treated for purposes of 
this section as 1 facility which is placed in serv-
ice at the mid-point of such year or the first 
day of the following calendar year.’’. 
(c) TRASH FACILITY CLARIFICATION.—Paragraph 
(7) of section 45(d) is amended— 
(1) by striking ‘‘facility which burns’’ and in-
serting ‘‘facility (other than a facility described in 
paragraph (6)) which uses’’, and 
(2) by striking ‘‘COMBUSTION’’. 
(d) EXPANSION OF BIOMASS FACILITIES.— 
(1) OPEN-LOOP
BIOMASS
FACILITIES.—Para-
graph (3) of section 45(d) is amended by redesig-
nating subparagraph (B) as subparagraph (C) and 
by inserting after subparagraph (A) the following 
new subparagraph: 
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‘‘(B) EXPANSION
OF
FACILITY.—Such 
term shall include a new unit placed in service 
after the date of the enactment of this subpara-
graph in connection with a facility described in 
subparagraph (A), but only to the extent of the 
increased amount of electricity produced at the 
facility by reason of such new unit.’’. 
(2) CLOSED-LOOP BIOMASS FACILITIES.—Para-
graph (2) of section 45(d) is amended by redesig-
nating subparagraph (B) as subparagraph (C) and 
inserting after subparagraph (A) the following new 
subparagraph: 
‘‘(B) EXPANSION
OF
FACILITY.—Such 
term shall include a new unit placed in service 
after the date of the enactment of this subpara-
graph in connection with a facility described in 
subparagraph (A)(i), but only to the extent of 
the increased amount of electricity produced at 
the facility by reason of such new unit.’’. 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to property originally placed 
in service after December 31, 2008. 
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(2) REPEAL
OF
CREDIT
PHASEOUT.—The 
amendments made by subsection (b)(1) shall apply 
to taxable years ending after December 31, 2008. 
(3) LIMITATION BASED ON INVESTMENT IN FA-
CILITY.—The amendment made by subsection (b)(2) 
shall apply to property originally placed in service 
after December 31, 2009. 
(4) TRASH
FACILITY
CLARIFICATION.—The 
amendments made by subsection (c) shall apply to 
electricity produced and sold after the date of the 
enactment of this Act. 
(5) EXPANSION OF BIOMASS FACILITIES.—The 
amendments made by subsection (d) shall apply to 
property placed in service after the date of the en-
actment of this Act. 
SEC. 102. PRODUCTION CREDIT FOR ELECTRICITY PRO-
DUCED FROM MARINE RENEWABLES. 
(a) IN GENERAL.—Paragraph (1) of section 45(c) 
(relating to resources) is amended by striking ‘‘and’’ at 
the end of subparagraph (G), by striking the period at 
the end of subparagraph (H) and inserting ‘‘, and’’, and 
by adding at the end the following new subparagraph: 
‘‘(I) marine and hydrokinetic renewable en-
ergy.’’. 
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(b) MARINE RENEWABLES.—Subsection (c) of sec-
tion 45 is amended by adding at the end the following 
new paragraph: 
‘‘(10) MARINE
AND
HYDROKINETIC
RENEW-
ABLE ENERGY.— 
‘‘(A) IN GENERAL.—The term ‘marine and 
hydrokinetic renewable energy’ means energy 
derived from— 
‘‘(i) waves, tides, and currents in 
oceans, estuaries, and tidal areas, 
‘‘(ii) free flowing water in rivers, 
lakes, and streams, 
‘‘(iii) free flowing water in an irriga-
tion system, canal, or other man-made 
channel, including projects that utilize non-
mechanical structures to accelerate the 
flow of water for electric power production 
purposes, or 
‘‘(iv) differentials in ocean tempera-
ture (ocean thermal energy conversion). 
‘‘(B) EXCEPTIONS.—Such term shall not 
include any energy which is derived from any 
source which utilizes a dam, diversionary struc-
ture (except as provided in subparagraph 
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(A)(iii)), or impoundment for electric power 
production purposes.’’. 
(c) DEFINITION
OF FACILITY.—Subsection (d) of 
section 45 is amended by adding at the end the following 
new paragraph: 
‘‘(11) MARINE
AND
HYDROKINETIC
RENEW-
ABLE ENERGY FACILITIES.—In the case of a facility 
producing electricity from marine and hydrokinetic 
renewable energy, the term ‘qualified facility’ means 
any facility owned by the taxpayer— 
‘‘(A) which has a nameplate capacity rat-
ing of at least 150 kilowatts, and 
‘‘(B) which is originally placed in service 
on or after the date of the enactment of this 
paragraph and before January 1, 2012.’’. 
(d) CREDIT RATE.—Subparagraph (A) of section 
45(b)(4) is amended by striking ‘‘or (9)’’ and inserting 
‘‘(9), or (11)’’. 
(e) 
COORDINATION
WITH
SMALL
IRRIGATION 
POWER.—Paragraph (5) of section 45(d), as amended by 
section 101(a), is amended by striking ‘‘January 1, 2012’’ 
and inserting ‘‘the date of the enactment of paragraph 
(11)’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to electricity produced and sold 
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after the date of the enactment of this Act, in taxable 
years ending after such date. 
SEC. 103. EXTENSION AND MODIFICATION OF ENERGY 
CREDIT. 
(a) EXTENSION OF CREDIT.— 
(1) SOLAR
ENERGY
PROPERTY.—Paragraphs 
(2)(A)(i)(II) and (3)(A)(ii) of section 48(a) (relating 
to energy credit) are each amended by striking 
‘‘January 1, 2009’’ and inserting ‘‘January 1, 
2017’’. 
(2) FUEL CELL PROPERTY.—Subparagraph (E) 
of section 48(c)(1) (relating to qualified fuel cell 
property) is amended by striking ‘‘December 31, 
2008’’ and inserting ‘‘December 31, 2016’’. 
(b) ALLOWANCE OF ENERGY CREDIT AGAINST AL-
TERNATIVE MINIMUM TAX.—Subparagraph (B) of section 
38(c)(4) (relating to specified credits) is amended by strik-
ing ‘‘and’’ at the end of clause (iii), by striking the period 
at the end of clause (iv) and inserting ‘‘, and’’, and by 
adding at the end the following new clause: 
‘‘(v) the credit determined under sec-
tion 46 to the extent that such credit is at-
tributable to the energy credit determined 
under section 48.’’. 
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46 of the Internal Revenue Code of 1986 in taxable 
years beginning after the date of the enactment of 
this Act and to carrybacks of such credits. 
(3) INCREASE IN LIMITATION FOR FUEL CELL 
PROPERTY.—The amendment made by subsection 
(c) shall apply to periods after the date of the enact-
ment of this Act, in taxable years ending after such 
date, under rules similar to the rules of section 
48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990). 
(4) PUBLIC
ELECTRIC
UTILITY
PROPERTY.— 
The amendments made by subsection (d) shall apply 
to periods after February 13, 2008, in taxable years 
ending after such date, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code 
of 1986 (as in effect on the day before the date of 
the enactment of the Revenue Reconciliation Act of 
1990). 
SEC. 104. NEW CLEAN RENEWABLE ENERGY BONDS. 
(a) IN GENERAL.—Part IV of subchapter A of chap-
ter 1 (relating to credits against tax) is amended by add-
ing at the end the following new subpart: 
‘‘Subpart I—Qualified Tax Credit Bonds 
‘‘Sec. 54A. Credit to holders of qualified tax credit bonds. 
‘‘Sec. 54B. New clean renewable energy bonds. 
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‘‘SEC. 54A. CREDIT TO HOLDERS OF QUALIFIED TAX CRED-
IT BONDS. 
‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 
a qualified tax credit bond on one or more credit allowance 
dates of the bond during any taxable year, there shall be 
allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the sum of the 
credits determined under subsection (b) with respect to 
such dates. 
‘‘(b) AMOUNT OF CREDIT.— 
‘‘(1) IN GENERAL.—The amount of the credit 
determined under this subsection with respect to any 
credit allowance date for a qualified tax credit bond 
is 25 percent of the annual credit determined with 
respect to such bond. 
‘‘(2) ANNUAL CREDIT.—The annual credit de-
termined with respect to any qualified tax credit 
bond is the product of— 
‘‘(A) the applicable credit rate, multiplied 
by 
‘‘(B) the outstanding face amount of the 
bond. 
‘‘(3) APPLICABLE CREDIT RATE.—For purposes 
of paragraph (2), the applicable credit rate is the 
rate which the Secretary estimates will permit the 
issuance of qualified tax credit bonds with a speci-
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fied maturity or redemption date without discount 
and without interest cost to the qualified issuer. The 
applicable credit rate with respect to any qualified 
tax credit bond shall be determined as of the first 
day on which there is a binding, written contract for 
the sale or exchange of the bond. 
‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE-
DEMPTION.—In the case of a bond which is issued 
during the 3-month period ending on a credit allow-
ance date, the amount of the credit determined 
under this subsection with respect to such credit al-
lowance date shall be a ratable portion of the credit 
otherwise determined based on the portion of the 3- 
month period during which the bond is outstanding. 
A similar rule shall apply when the bond is redeemed 
or matures. 
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— 
‘‘(1) IN GENERAL.—The credit allowed under 
subsection (a) for any taxable year shall not exceed 
the excess of— 
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
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‘‘(B) the sum of the credits allowable 
under this part (other than subpart C and this 
subpart). 
‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 
credit allowable under subsection (a) exceeds the 
limitation imposed by paragraph (1) for such taxable 
year, such excess shall be carried to the succeeding 
taxable year and added to the credit allowable under 
subsection (a) for such taxable year (determined be-
fore the application of paragraph (1) for such suc-
ceeding taxable year). 
‘‘(d) QUALIFIED TAX CREDIT BOND.—For purposes 
of this section— 
‘‘(1) QUALIFIED TAX CREDIT BOND.—The term 
‘qualified tax credit bond’ means a new clean renew-
able energy bond which is part of an issue that 
meets the requirements of paragraphs (2), (3), (4), 
(5), and (6). 
‘‘(2) SPECIAL RULES RELATING TO EXPENDI-
TURES.— 
‘‘(A) IN
GENERAL.—An issue shall be 
treated as meeting the requirements of this 
paragraph if, as of the date of issuance, the 
issuer reasonably expects— 
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‘‘(i) 100 percent or more of the avail-
able project proceeds to be spent for 1 or 
more qualified purposes within the 3-year 
period beginning on such date of issuance, 
and 
‘‘(ii) a binding commitment with a 
third party to spend at least 10 percent of 
such available project proceeds will be in-
curred within the 6-month period begin-
ning on such date of issuance. 
‘‘(B) 
FAILURE
TO
SPEND
REQUIRED 
AMOUNT
OF
BOND
PROCEEDS
WITHIN
YEARS.— 
‘‘(i) IN GENERAL.—To the extent that 
less than 100 percent of the available 
project proceeds of the issue are expended 
by the close of the expenditure period for 
1 or more qualified purposes, the issuer 
shall redeem all of the nonqualified bonds 
within 90 days after the end of such pe-
riod. For purposes of this paragraph, the 
amount of the nonqualified bonds required 
to be redeemed shall be determined in the 
same manner as under section 142. 
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‘‘(ii) 
EXPENDITURE
PERIOD.—For 
purposes of this subpart, the term ‘expend-
iture period’ means, with respect to any 
issue, the 3-year period beginning on the 
date of issuance. Such term shall include 
any extension of such period under clause 
(iii). 
‘‘(iii) EXTENSION OF PERIOD.—Upon 
submission of a request prior to the expira-
tion of the expenditure period (determined 
without regard to any extension under this 
clause), the Secretary may extend such pe-
riod if the issuer establishes that the fail-
ure to expend the proceeds within the 
original expenditure period is due to rea-
sonable cause and the expenditures for 
qualified purposes will continue to proceed 
with due diligence. 
‘‘(C) QUALIFIED PURPOSE.—For purposes 
of this paragraph, the term ‘qualified purpose’ 
means a purpose specified in section 54B(a)(1). 
‘‘(D) REIMBURSEMENT.—For purposes of 
this subtitle, available project proceeds of an 
issue shall be treated as spent for a qualified 
purpose if such proceeds are used to reimburse 
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‘‘(A) IN GENERAL.—An issue shall not be 
treated as meeting the requirements of this 
paragraph if the maturity of any bond which is 
part of such issue exceeds the maximum term 
determined by the Secretary under subpara-
graph (B). 
‘‘(B) MAXIMUM TERM.—During each cal-
endar month, the Secretary shall determine the 
maximum term permitted under this paragraph 
for bonds issued during the following calendar 
month. Such maximum term shall be the term 
which the Secretary estimates will result in the 
present value of the obligation to repay the 
principal on the bond being equal to 50 percent 
of the face amount of such bond. Such present 
value shall be determined using as a discount 
rate the average annual interest rate of tax-ex-
empt obligations having a term of 10 years or 
more which are issued during the month. If the 
term as so determined is not a multiple of a 
whole year, such term shall be rounded to the 
next highest whole year. 
‘‘(6) PROHIBITION
ON
FINANCIAL
CONFLICTS 
OF INTEREST.—An issue shall be treated as meeting 
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the requirements of this paragraph if the issuer cer-
tifies that— 
‘‘(A) applicable State and local law re-
quirements governing conflicts of interest are 
satisfied with respect to such issue, and 
‘‘(B) if the Secretary prescribes additional 
conflicts of interest rules governing the appro-
priate Members of Congress, Federal, State, 
and local officials, and their spouses, such addi-
tional rules are satisfied with respect to such 
issue. 
‘‘(e) OTHER DEFINITIONS.—For purposes of this 
subchapter— 
‘‘(1) CREDIT
ALLOWANCE
DATE.—The term 
‘credit allowance date’ means— 
‘‘(A) March 15, 
‘‘(B) June 15, 
‘‘(C) September 15, and 
‘‘(D) December 15. 
Such term includes the last day on which the bond 
is outstanding. 
‘‘(2) BOND.—The term ‘bond’ includes any ob-
ligation. 
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‘‘(3) STATE.—The term ‘State’ includes the 
District of Columbia and any possession of the 
United States. 
‘‘(4) AVAILABLE
PROJECT
PROCEEDS.—The 
term ‘available project proceeds’ means— 
‘‘(A) the excess of— 
‘‘(i) the proceeds from the sale of an 
issue, over 
‘‘(ii) the issuance costs financed by 
the issue (to the extent that such costs do 
not exceed 2 percent of such proceeds), 
and 
‘‘(B) the proceeds from any investment of 
the excess described in subparagraph (A). 
‘‘(f) CREDIT TREATED AS INTEREST.—For purposes 
of this subtitle, the credit determined under subsection (a) 
shall be treated as interest which is includible in gross in-
come. 
‘‘(g) S CORPORATIONS AND PARTNERSHIPS.—In the 
case of a tax credit bond held by an S corporation or part-
nership, the allocation of the credit allowed by this section 
to the shareholders of such corporation or partners of such 
partnership shall be treated as a distribution. 
‘‘(h) BONDS HELD
BY REGULATED INVESTMENT 
COMPANIES AND REAL ESTATE INVESTMENT TRUSTS.— 
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If any qualified tax credit bond is held by a regulated in-
vestment company or a real estate investment trust, the 
credit determined under subsection (a) shall be allowed to 
shareholders of such company or beneficiaries of such 
trust (and any gross income included under subsection (f) 
with respect to such credit shall be treated as distributed 
to such shareholders or beneficiaries) under procedures 
prescribed by the Secretary. 
‘‘(i) CREDITS MAY BE STRIPPED.—Under regula-
tions prescribed by the Secretary— 
‘‘(1) IN GENERAL.—There may be a separation 
(including at issuance) of the ownership of a quali-
fied tax credit bond and the entitlement to the credit 
under this section with respect to such bond. In case 
of any such separation, the credit under this section 
shall be allowed to the person who on the credit al-
lowance date holds the instrument evidencing the en-
titlement to the credit and not to the holder of the 
bond. 
‘‘(2) CERTAIN RULES TO APPLY.—In the case 
of a separation described in paragraph (1), the rules 
of section 1286 shall apply to the qualified tax credit 
bond as if it were a stripped bond and to the credit 
under this section as if it were a stripped coupon. 
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‘‘SEC. 54B. NEW CLEAN RENEWABLE ENERGY BONDS. 
‘‘(a) NEW CLEAN RENEWABLE ENERGY BOND.—For 
purposes of this subpart, the term ‘new clean renewable 
energy bond’ means any bond issued as part of an issue 
if— 
‘‘(1) 100 percent of the available project pro-
ceeds of such issue are to be used for capital expend-
itures incurred by public power providers or coopera-
tive electric companies for one or more qualified re-
newable energy facilities, 
‘‘(2) the bond is issued by a qualified issuer, 
and 
‘‘(3) the issuer designates such bond for pur-
poses of this section. 
‘‘(b) REDUCED CREDIT AMOUNT.—The annual credit 
determined under section 54A(b) with respect to any new 
clean renewable energy bond shall be 70 percent of the 
amount so determined without regard to this subsection. 
‘‘(c) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.— 
‘‘(1) IN
GENERAL.—The maximum aggregate 
face amount of bonds which may be designated 
under subsection (a) by any issuer shall not exceed 
the limitation amount allocated under this sub-
section to such issuer. 
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‘‘(2) NATIONAL
LIMITATION
ON
AMOUNT
OF 
BONDS DESIGNATED.—There is a national new clean 
renewable energy bond limitation of $2,000,000,000 
which shall be allocated by the Secretary as provided 
in paragraph (3), except that— 
‘‘(A) not more than 60 percent thereof 
may be allocated to qualified projects of public 
power providers, and 
‘‘(B) not more than 40 percent thereof 
may be allocated to qualified projects of cooper-
ative electric companies. 
‘‘(3) METHOD OF ALLOCATION.— 
‘‘(A) ALLOCATION AMONG PUBLIC POWER 
PROVIDERS.—After the Secretary determines 
the qualified projects of public power providers 
which are appropriate for receiving an alloca-
tion of the national new clean renewable energy 
bond limitation, the Secretary shall, to the max-
imum extent practicable, make allocations 
among such projects in such manner that the 
amount allocated to each such project bears the 
same ratio to the cost of such project as the 
limitation under subparagraph (2)(A) bears to 
the cost of all such projects. 
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‘‘(B) ALLOCATION
AMONG
COOPERATIVE 
ELECTRIC
COMPANIES.—The Secretary shall 
make allocations of the amount of the national 
new clean renewable energy bond limitation de-
scribed in paragraph (2)(B) among qualified 
projects of cooperative electric companies in 
such manner as the Secretary determines ap-
propriate. 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED RENEWABLE ENERGY FACIL-
ITY.—The term ‘qualified renewable energy facility’ 
means a qualified facility (as determined under sec-
tion 45(d) without regard to paragraphs (8) and 
(10) thereof and to any placed in service date) 
owned by a public power provider or a cooperative 
electric company. 
‘‘(2) PUBLIC
POWER
PROVIDER.—The term 
‘public power provider’ means a State utility with a 
service obligation, as such terms are defined in sec-
tion 217 of the Federal Power Act (as in effect on 
the date of the enactment of this paragraph). 
‘‘(3) COOPERATIVE ELECTRIC COMPANY.—The 
term ‘cooperative electric company’ means a mutual 
or cooperative electric company described in section 
501(c)(12) or section 1381(a)(2)(C). 
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‘‘(4) CLEAN RENEWABLE ENERGY BOND LEND-
ER.—The term ‘clean renewable energy bond lender’ 
means a lender which is a cooperative which is 
owned by, or has outstanding loans to, 100 or more 
cooperative electric companies and is in existence on 
February 1, 2002, and shall include any affiliated 
entity which is controlled by such lender. 
‘‘(5) QUALIFIED ISSUER.—The term ‘qualified 
issuer’ means a public power provider, a cooperative 
electric company, a clean renewable energy bond 
lender, or a not-for-profit electric utility which has 
received a loan or loan guarantee under the Rural 
Electrification Act.’’. 
(b) REPORTING.—Subsection (d) of section 6049 (re-
lating to returns regarding payments of interest) is 
amended by adding at the end the following new para-
graph: 
‘‘(9) REPORTING
OF
CREDIT
ON
QUALIFIED 
TAX CREDIT BONDS.— 
‘‘(A) IN GENERAL.—For purposes of sub-
section (a), the term ‘interest’ includes amounts 
includible in gross income under section 54A 
and such amounts shall be treated as paid on 
the credit allowance date (as defined in section 
54A(e)(1)). 
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‘‘(B) 
REPORTING
TO
CORPORATIONS, 
ETC.—Except as otherwise provided in regula-
tions, in the case of any interest described in 
subparagraph (A) of this paragraph, subsection 
(b)(4) of this section shall be applied without 
regard to subparagraphs (A), (H), (I), (J), (K), 
and (L)(i). 
‘‘(C) REGULATORY AUTHORITY.—The Sec-
retary may prescribe such regulations as are 
necessary or appropriate to carry out the pur-
poses of this paragraph, including regulations 
which require more frequent or more detailed 
reporting.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Sections 54(c)(2) and 1400N(l)(3)(B) are 
each amended by striking ‘‘subpart C’’ and inserting 
‘‘subparts C and I’’. 
(2) Section 1397E(c)(2) is amended by striking 
‘‘subpart H’’ and inserting ‘‘subparts H and I’’. 
(3) Section 6401(b)(1) is amended by striking 
‘‘and H’’ and inserting ‘‘H, and I’’. 
(4) The heading of subpart H of part IV of 
subchapter A of chapter 1 is amended by striking 
‘‘Certain Bonds’’ and inserting ‘‘Clean Re-
newable Energy Bonds’’. 
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(5) The table of subparts for part IV of sub-
chapter A of chapter 1 is amended by striking the 
item relating to subpart H and inserting the fol-
lowing new items: 
‘‘SUBPART H. NONREFUNDABLE CREDIT TO HOLDERS OF CLEAN RENEWABLE 
ENERGY BONDS. 
‘‘SUBPART I. QUALIFIED TAX CREDIT BONDS.’’. 
(d) EFFECTIVE DATES.—The amendments made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act. 
SEC. 105. EXTENSION AND MODIFICATION OF SPECIAL 
RULE TO IMPLEMENT FERC AND STATE 
ELECTRIC RESTRUCTURING POLICY. 
(a) EXTENSION FOR QUALIFIED ELECTRIC UTILI-
TIES.— 
(1) IN
GENERAL.—Paragraph (3) of section 
451(i) (relating to special rule for sales or disposi-
tions to implement Federal Energy Regulatory Com-
mission or State electric restructuring policy) is 
amended by inserting ‘‘(before January 1, 2010, in 
the case of a qualified electric utility)’’ after ‘‘Janu-
ary 1, 2008’’. 
(2) QUALIFIED ELECTRIC UTILITY.—Subsection 
(i) of section 451 is amended by redesignating para-
graphs (6) through (10) as paragraphs (7) through 
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(11), respectively, and by inserting after paragraph 
(5) the following new paragraph: 
‘‘(6) QUALIFIED ELECTRIC UTILITY.—For pur-
poses of this subsection, the term ‘qualified electric 
utility’ means a person that, as of the date of the 
qualifying 
electric 
transmission 
transaction, 
is 
vertically integrated, in that it is both— 
‘‘(A) a transmitting utility (as defined in 
section 3(23) of the Federal Power Act (16 
U.S.C. 796(23))) with respect to the trans-
mission facilities to which the election under 
this subsection applies, and 
‘‘(B) an electric utility (as defined in sec-
tion 3(22) of the Federal Power Act (16 U.S.C. 
796(22))).’’. 
(b) EXTENSION
OF PERIOD
FOR TRANSFER
OF 
OPERATIONAL
CONTROL
AUTHORIZED
BY
FERC.— 
Clause (ii) of section 451(i)(4)(B) is amended by striking 
‘‘December 31, 2007’’ and inserting ‘‘the date which is 
4 years after the close of the taxable year in which the 
transaction occurs’’. 
(c) PROPERTY LOCATED OUTSIDE
THE UNITED 
STATES NOT TREATED
AS EXEMPT UTILITY PROP-
ERTY.—Paragraph (5) of section 451(i) is amended by 
adding at the end the following new subparagraph: 
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‘‘(C) EXCEPTION FOR PROPERTY LOCATED 
OUTSIDE THE UNITED STATES.—The term ‘ex-
empt utility property’ shall not include any 
property which is located outside the United 
States.’’. 
(d) EFFECTIVE DATES.— 
(1) EXTENSION.—The amendments made by 
subsection (a) shall apply to transactions after De-
cember 31, 2007. 
(2) TRANSFERS OF OPERATIONAL CONTROL.— 
The amendment made by subsection (b) shall take 
effect as if included in section 909 of the American 
Jobs Creation Act of 2004. 
(3) EXCEPTION FOR PROPERTY LOCATED OUT-
SIDE THE UNITED STATES.—The amendment made 
by subsection (c) shall apply to transactions after 
the date of the enactment of this Act. 
SEC. 106. EXTENSION AND MODIFICATION OF CREDIT FOR 
RESIDENTIAL 
ENERGY 
EFFICIENT 
PROP-
ERTY. 
(a) EXTENSION.—Section 25D(g) (relating to termi-
nation) is amended by striking ‘‘December 31, 2008’’ and 
inserting ‘‘December 31, 2014’’. 
(b) MAXIMUM CREDIT FOR SOLAR ELECTRIC PROP-
ERTY.— 
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(1) IN GENERAL.—Section 25D(b)(1)(A) (relat-
ing to maximum credit) is amended by striking 
‘‘$2,000’’ and inserting ‘‘$4,000’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
25D(e)(4)(A)(i) is amended by striking ‘‘$6,667’’ 
and inserting ‘‘$13,333’’. 
(c) CREDIT FOR RESIDENTIAL WIND PROPERTY.— 
(1) IN GENERAL.—Section 25D(a) (relating to 
allowance of credit) is amended by striking ‘‘and’’ at 
the end of paragraph (2), by striking the period at 
the end of paragraph (3) and inserting ‘‘, and’’, and 
by adding at the end the following new paragraph: 
‘‘(4) 30 percent of the qualified small wind en-
ergy property expenditures made by the taxpayer 
during such year.’’. 
(2) LIMITATION.—Section 25D(b)(1) (relating 
to maximum credit) is amended by striking ‘‘and’’ at 
the end of subparagraph (B), by striking the period 
at the end of subparagraph (C) and inserting ‘‘, 
and’’, and by adding at the end the following new 
subparagraph: 
‘‘(D) $500 with respect to each half kilo-
watt of capacity (not to exceed $4,000) of wind 
turbines for which qualified small wind energy 
property expenditures are made.’’. 
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(3) QUALIFIED
SMALL
WIND
ENERGY
PROP-
ERTY EXPENDITURES.— 
(A) IN GENERAL.—Section 25D(d) (relat-
ing to definitions) is amended by adding at the 
end the following new paragraph: 
‘‘(4) QUALIFIED SMALL WIND ENERGY PROP-
ERTY
EXPENDITURE.—The term ‘qualified small 
wind energy property expenditure’ means an expend-
iture for property which uses a wind turbine to gen-
erate electricity for use in connection with a dwelling 
unit located in the United States and used as a resi-
dence by the taxpayer.’’. 
(B) 
NO
DOUBLE
BENEFIT.—Section 
45(d)(1) (relating to wind facility) is amended 
by adding at the end the following new sen-
tence: ‘‘Such term shall not include any facility 
with respect to which any qualified small wind 
energy property expenditure (as defined in sub-
section (d)(4) of section 25D) is taken into ac-
count in determining the credit under such sec-
tion.’’. 
(4) MAXIMUM
EXPENDITURES
IN
CASE
OF 
JOINT OCCUPANCY.—Section 25D(e)(4)(A) (relating 
to maximum expenditures) is amended by striking 
‘‘and’’ at the end of clause (ii), by striking the pe-
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riod at the end of clause (iii) and inserting ‘‘, and’’, 
and by adding at the end the following new clause: 
‘‘(iv) $1,667 in the case of each half 
kilowatt 
of 
capacity 
(not 
to 
exceed 
$13,333) of wind turbines for which quali-
fied small wind energy property expendi-
tures are made.’’. 
(d) CREDIT FOR GEOTHERMAL HEAT PUMP SYS-
TEMS.— 
(1) IN GENERAL.—Section 25D(a) (relating to 
allowance of credit), as amended by subsection (c), 
is amended by striking ‘‘and’’ at the end of para-
graph (3), by striking the period at the end of para-
graph (4) and inserting ‘‘, and’’, and by adding at 
the end the following new paragraph: 
‘‘(5) 30 percent of the qualified geothermal 
heat pump property expenditures made by the tax-
payer during such year.’’. 
(2) LIMITATION.—Section 25D(b)(1) (relating 
to maximum credit), as amended by subsection (c), 
is amended by striking ‘‘and’’ at the end of subpara-
graph (C), by striking the period at the end of sub-
paragraph (D) and inserting ‘‘, and’’, and by adding 
at the end the following new subparagraph: 
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‘‘(E) $2,000 with respect to any qualified 
geothermal heat pump property expenditures.’’. 
(3) QUALIFIED
GEOTHERMAL
HEAT
PUMP 
PROPERTY
EXPENDITURE.—Section 25D(d) (relat-
ing to definitions), as amended by subsection (c), is 
amended by adding at the end the following new 
paragraph: 
‘‘(5) QUALIFIED
GEOTHERMAL
HEAT
PUMP 
PROPERTY EXPENDITURE.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
geothermal heat pump property expenditure’ 
means an expenditure for qualified geothermal 
heat pump property installed on or in connec-
tion with a dwelling unit located in the United 
States and used as a residence by the taxpayer. 
‘‘(B) 
QUALIFIED
GEOTHERMAL
HEAT 
PUMP
PROPERTY.—The term ‘qualified geo-
thermal heat pump property’ means any equip-
ment which— 
‘‘(i) uses the ground or ground water 
as a thermal energy source to heat the 
dwelling unit referred to in subparagraph 
(A) or as a thermal energy sink to cool 
such dwelling unit, and 
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‘‘(ii) meets the requirements of the 
Energy Star program which are in effect 
at the time that the expenditure for such 
equipment is made.’’. 
(4) MAXIMUM
EXPENDITURES
IN
CASE
OF 
JOINT OCCUPANCY.—Section 25D(e)(4)(A) (relating 
to maximum expenditures), as amended by sub-
section (c), is amended by striking ‘‘and’’ at the end 
of clause (iii), by striking the period at the end of 
clause (iv) and inserting ‘‘, and’’, and by adding at 
the end the following new clause: 
‘‘(v) $6,667 in the case of any quali-
fied geothermal heat pump property ex-
penditures.’’. 
(e) CREDIT ALLOWED AGAINST ALTERNATIVE MIN-
IMUM TAX.— 
(1) IN
GENERAL.—Subsection (c) of section 
25D is amended to read as follows: 
‘‘(c) LIMITATION BASED
ON AMOUNT
OF TAX; 
CARRYFORWARD OF UNUSED CREDIT.— 
‘‘(1) LIMITATION
BASED
ON
AMOUNT
OF 
TAX.—In the case of a taxable year to which section 
26(a)(2) does not apply, the credit allowed under 
subsection (a) for the taxable year shall not exceed 
the excess of— 
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‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under this subpart (other than this section) and 
section 27 for the taxable year. 
‘‘(2) CARRYFORWARD OF UNUSED CREDIT.— 
‘‘(A) RULE
FOR
YEARS
IN
WHICH
ALL 
PERSONAL
CREDITS
ALLOWED
AGAINST
REG-
ULAR
AND
ALTERNATIVE
MINIMUM
TAX.—In 
the case of a taxable year to which section 
26(a)(2) applies, if the credit allowable under 
subsection (a) exceeds the limitation imposed by 
section 26(a)(2) for such taxable year reduced 
by the sum of the credits allowable under this 
subpart (other than this section), such excess 
shall be carried to the succeeding taxable year 
and added to the credit allowable under sub-
section (a) for such succeeding taxable year. 
‘‘(B) RULE
FOR
OTHER
YEARS.—In the 
case of a taxable year to which section 26(a)(2) 
does not apply, if the credit allowable under 
subsection (a) exceeds the limitation imposed by 
paragraph (1) for such taxable year, such ex-
cess shall be carried to the succeeding taxable 
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year and added to the credit allowable under 
subsection (a) for such succeeding taxable 
year.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 23(b)(4)(B) is amended by in-
serting ‘‘and section 25D’’ after ‘‘this section’’. 
(B) Section 24(b)(3)(B) is amended by 
striking ‘‘and 25B’’ and inserting ‘‘, 25B, and 
25D’’. 
(C) Section 25B(g)(2) is amended by strik-
ing ‘‘section 23’’ and inserting ‘‘sections 23 and 
25D’’. 
(D) Section 26(a)(1) is amended by strik-
ing ‘‘and 25B’’ and inserting ‘‘25B, and 25D’’. 
(f) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2007. 
(2) APPLICATION
OF
EGTRRA
SUNSET.—The 
amendments made by subparagraphs (A) and (B) of 
subsection (e)(2) shall be subject to title IX of the 
Economic Growth and Tax Relief Reconciliation Act 
of 2001 in the same manner as the provisions of 
such Act to which such amendments relate. 
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TITLE II—CONSERVATION 
Subtitle A—Transportation 
PART 1—VEHICLES 
SEC. 201. CREDIT FOR PLUG-IN HYBRID VEHICLES. 
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 (relating to other credits) is 
amended by adding at the end the following new section: 
‘‘SEC. 30D. PLUG-IN HYBRID VEHICLES. 
‘‘(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 the 
credit amounts determined under subsection (b) with re-
spect to each qualified plug-in hybrid vehicle placed in 
service by the taxpayer during the taxable year. 
‘‘(b) PER VEHICLE DOLLAR LIMITATION.— 
‘‘(1) IN
GENERAL.—The amount determined 
under this subsection with respect to any qualified 
plug-in hybrid vehicle is the sum of the amounts de-
termined under paragraphs (2) and (3) with respect 
to such vehicle. 
‘‘(2) BASE AMOUNT.—The amount determined 
under this paragraph is $4,000. 
‘‘(3) BATTERY CAPACITY.—In the case of vehi-
cle which draws propulsion energy from a battery 
with not less than 5 kilowatt hours of capacity, the 
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amount determined under this paragraph is $200, 
plus $200 for each kilowatt hour of capacity in ex-
cess of 5 kilowatt hours. The amount determined 
under this paragraph shall not exceed $2,000. 
‘‘(c) APPLICATION WITH OTHER CREDITS.— 
‘‘(1) BUSINESS CREDIT TREATED AS PART OF 
GENERAL BUSINESS CREDIT.—So much of the credit 
which would be allowed under subsection (a) for any 
taxable year (determined without regard to this sub-
section) that is attributable to property of a char-
acter subject to an allowance for depreciation shall 
be treated as a credit listed in section 38(b) for such 
taxable year (and not allowed under subsection (a)). 
‘‘(2) PERSONAL CREDIT.— 
‘‘(A) IN GENERAL.—For purposes of this 
title, the credit allowed under subsection (a) for 
any taxable year (determined after application 
of paragraph (1)) shall be treated as a credit 
allowable under subpart A for such taxable 
year. 
‘‘(B) LIMITATION BASED ON AMOUNT OF 
TAX.—In the case of a taxable year to which 
section 26(a)(2) does not apply, the credit al-
lowed under subsection (a) for any taxable year 
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(determined after application of paragraph (1)) 
shall not exceed the excess of— 
‘‘(i) the sum of the regular tax liabil-
ity (as defined in section 26(b)) plus the 
tax imposed by section 55, over 
‘‘(ii) the sum of the credits allowable 
under subpart A (other than this section 
and sections 23 and 25D) and section 27 
for the taxable year. 
‘‘(d) QUALIFIED PLUG-IN HYBRID VEHICLE.—For 
purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified plug-in 
hybrid vehicle’ means a motor vehicle (as defined in 
section 30(c)(2))— 
‘‘(A) the original use of which commences 
with the taxpayer, 
‘‘(B) which is acquired for use or lease by 
the taxpayer and not for resale, 
‘‘(C) which is made by a manufacturer, 
‘‘(D) which has a gross vehicle weight rat-
ing of less than 14,000 pounds, 
‘‘(E) which has received a certificate of 
conformity under the Clean Air Act and meets 
or exceeds the Bin 5 Tier II emission standard 
established in regulations prescribed by the Ad-
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ministrator of the Environmental Protection 
Agency under section 202(i) of the Clean Air 
Act for that make and model year vehicle, 
‘‘(F) which is propelled to a significant ex-
tent by an electric motor which draws electricity 
from a battery which— 
‘‘(i) has a capacity of not less than 4 
kilowatt hours, and 
‘‘(ii) is capable of being recharged 
from an external source of electricity, and 
‘‘(G) which either— 
‘‘(i) is also propelled to a significant 
extent by other than an electric motor, or 
‘‘(ii) has a significant onboard source 
of electricity which also recharges the bat-
tery referred to in subparagraph (F). 
‘‘(2) EXCEPTION.—The term ‘qualified plug-in 
hybrid vehicle’ shall not include any vehicle which is 
not a passenger automobile or light truck if such ve-
hicle has a gross vehicle weight rating of less than 
8,500 pounds. 
‘‘(3) OTHER
TERMS.—The terms ‘passenger 
automobile’, ‘light truck’, and ‘manufacturer’ have 
the meanings given such terms in regulations pre-
scribed by the Administrator of the Environmental 
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Protection Agency for purposes of the administra-
tion of title II of the Clean Air Act (42 U.S.C. 7521 
et seq.). 
‘‘(4) BATTERY CAPACITY.—The term ‘capacity’ 
means, with respect to any battery, the quantity of 
electricity which the battery is capable of storing, ex-
pressed in kilowatt hours, as measured from a 100 
percent state of charge to a 0 percent state of 
charge. 
‘‘(e) LIMITATION ON NUMBER OF QUALIFIED PLUG- 
IN HYBRID VEHICLES ELIGIBLE FOR CREDIT.— 
‘‘(1) IN GENERAL.—In the case of a qualified 
plug-in hybrid vehicle sold during the phaseout pe-
riod, only the applicable percentage of the credit oth-
erwise allowable under subsection (a) shall be al-
lowed. 
‘‘(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 plug-in hybrid vehicles 
manufactured by the manufacturer of the vehicle re-
ferred to in paragraph (1) sold for use in the United 
States after the date of the enactment of this sec-
tion, is at least 60,000. 
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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.—Rules similar to 
the rules of section 30B(f)(4) shall apply for pur-
poses of this subsection. 
‘‘(f) SPECIAL RULES.— 
‘‘(1) BASIS
REDUCTION.—The basis of any 
property for which a credit is allowable under sub-
section (a) shall be reduced by the amount of such 
credit (determined without regard to subsection (c)). 
‘‘(2) 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. 
‘‘(3) 
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)(1) or with re-
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spect to the portion of the cost of any property 
taken into account under section 179. 
‘‘(4) 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. 
‘‘(5) PROPERTY USED BY TAX-EXEMPT ENTITY; 
INTERACTION WITH AIR QUALITY AND MOTOR VEHI-
CLE SAFETY STANDARDS.—Rules similar to the rules 
of paragraphs (6) and (10) of section 30B(h) shall 
apply for purposes of this section.’’. 
(b) PLUG-IN VEHICLES NOT TREATED
AS NEW 
QUALIFIED HYBRID VEHICLES.—Section 30B(d)(3) is 
amended by adding at the end the following new subpara-
graph: 
‘‘(D) EXCLUSION OF PLUG-IN VEHICLES.— 
Any vehicle with respect to which a credit is al-
lowable under section 30D (determined without 
regard to subsection (c) thereof) shall not be 
taken into account under this section.’’. 
(c) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Section 38(b) is amended— 
(1) by striking ‘‘and’’ each place it appears at 
the end of any paragraph, 
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(2) by striking ‘‘plus’’ each place it appears at 
the end of any paragraph, 
(3) by striking the period at the end of para-
graph (31) and inserting ‘‘, plus’’, and 
(4) by adding at the end the following new 
paragraph: 
‘‘(32) the portion of the plug-in hybrid vehicle 
credit to which section 30D(c)(1) applies.’’. 
(d) CONFORMING AMENDMENTS.— 
(1)(A) Section 24(b)(3)(B), as amended by this 
Act, is amended by striking ‘‘and 25D’’ and insert-
ing ‘‘25D, and 30D’’. 
(B) Section 25(e)(1)(C)(ii) is amended by in-
serting ‘‘30D,’’ after ‘‘25D,’’. 
(C) Section 25B(g)(2), as amended by this Act, 
is amended by striking ‘‘and 25D’’ and inserting ‘‘, 
25D, and 30D’’. 
(D) Section 26(a)(1), as amended by this Act, 
is amended by striking ‘‘and 25D’’ and inserting 
‘‘25D, and 30D’’. 
(E) Section 1400C(d)(2) is amended by striking 
‘‘and 25D’’ and inserting ‘‘25D, and 30D’’. 
(2) Section 1016(a) is amended by striking 
‘‘and’’ at the end of paragraph (35), by striking the 
period at the end of paragraph (36) and inserting ‘‘, 
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and’’, and by adding at the end the following new 
paragraph: 
‘‘(37) to the extent provided in section 
30D(f)(1).’’. 
(3) Section 6501(m) is amended by inserting 
‘‘30D(f)(4),’’ after ‘‘30C(e)(5),’’. 
(4) The table of sections for subpart B of part 
IV of subchapter A of chapter 1 is amended by add-
ing at the end the following new item: 
‘‘Sec. 30D. Plug-in hybrid vehicles.’’. 
(e) TREATMENT OF ALTERNATIVE MOTOR VEHICLE 
CREDIT AS A PERSONAL CREDIT.— 
(1) IN
GENERAL.—Paragraph (2) of section 
30B(g) is amended to read as follows: 
‘‘(2) PERSONAL
CREDIT.—The credit allowed 
under subsection (a) for any taxable year (after ap-
plication of paragraph (1)) shall be treated as a 
credit allowable under subpart A for such taxable 
year.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Subparagraph (A) of section 30C(d)(2) 
is amended by striking ‘‘sections 27, 30, and 
30B’’ and inserting ‘‘sections 27 and 30’’. 
(B) Paragraph (3) of section 55(c) is 
amended by striking ‘‘30B(g)(2),’’. 
(f) EFFECTIVE DATE.— 
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(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2008. 
(2) TREATMENT OF ALTERNATIVE MOTOR VE-
HICLE CREDIT AS PERSONAL CREDIT.—The amend-
ments made by subsection (e) shall apply to taxable 
years beginning after December 31, 2007. 
(g) APPLICATION
OF
EGTRRA SUNSET.—The 
amendment made by subsection (d)(1)(A) shall be subject 
to title IX of the Economic Growth and Tax Relief Rec-
onciliation Act of 2001 in the same manner as the provi-
sion of such Act to which such amendment relates. 
SEC. 202. EXTENSION AND MODIFICATION OF ALTER-
NATIVE FUEL VEHICLE REFUELING PROP-
ERTY CREDIT. 
(a) INCREASE IN CREDIT AMOUNT.—Section 30C 
(relating to alternative fuel vehicle refueling property cred-
it) is amended— 
(1) by striking ‘‘30 percent’’ in subsection (a) 
and inserting ‘‘50 percent’’, and 
(2) by striking ‘‘$30,000’’ in subsection (b)(1) 
and inserting ‘‘$50,000’’. 
(b) EXTENSION OF CREDIT.—Paragraph (2) of sec-
tion 30C(g) (relating to termination) is amended by strik-
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ing ‘‘December 31, 2009’’ and inserting ‘‘December 31, 
2010’’. 
(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. 203. MODIFICATION OF LIMITATION ON AUTOMOBILE 
DEPRECIATION. 
(a) IN GENERAL.—Paragraph (5) of section 280F(d) 
(defining passenger automobile) is amended to read as fol-
lows: 
‘‘(5) PASSENGER AUTOMOBILE.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘passenger auto-
mobile’ means any 4-wheeled vehicle— 
‘‘(i) which is primarily designed or 
which can be used to carry passengers over 
public streets, roads, or highways (except 
any vehicle operated exclusively on a rail or 
rails), and 
‘‘(ii) which is rated at not more than 
14,000 pounds gross vehicle weight. 
‘‘(B) EXCEPTIONS.—The term ‘passenger 
automobile’ shall not include— 
‘‘(i) any exempt-design vehicle, and 
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‘‘(ii) any exempt-use vehicle. 
‘‘(C) 
EXEMPT-DESIGN
VEHICLE.—The 
term ‘exempt-design vehicle’ means— 
‘‘(i) any vehicle which, by reason of its 
nature or design, is not likely to be used 
more than a de minimis amount for per-
sonal purposes, and 
‘‘(ii) any vehicle— 
‘‘(I) which is designed to have a 
seating capacity of more than 9 per-
sons behind the driver’s seat, 
‘‘(II) which is equipped with a 
cargo area of at least 5 feet in interior 
length which is an open area or is de-
signed for use as an open area but is 
enclosed by a cap and is not readily 
accessible directly from the passenger 
compartment, or 
‘‘(III) has an integral enclosure, 
fully enclosing the driver compartment 
and load carrying device, does not 
have seating rearward of the driver’s 
seat, and has no body section pro-
truding more than 30 inches ahead of 
the leading edge of the windshield. 
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‘‘(D) EXEMPT-USE
VEHICLE.—The term 
‘exempt-use vehicle’ means— 
‘‘(i) any ambulance, hearse, or com-
bination ambulance-hearse used by the tax-
payer directly in a trade or business, 
‘‘(ii) any vehicle used by the taxpayer 
directly in the trade or business of trans-
porting persons or property for compensa-
tion or hire, and 
‘‘(iii) any truck or van if substantially 
all of the use of such vehicle by the tax-
payer is directly in— 
‘‘(I) a farming business (within 
the meaning of section 263A(e)(4)), 
‘‘(II) the transportation of a sub-
stantial amount of equipment, sup-
plies, or inventory, or 
‘‘(III) the moving or delivery of 
property which requires substantial 
cargo capacity. 
‘‘(E) RECAPTURE.—In the case of any ve-
hicle which is not a passenger automobile by 
reason of being an exempt-use vehicle, if such 
vehicle ceases to be an exempt-use vehicle in 
any taxable year after the taxable year in which 
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such vehicle is placed in service, a rule similar 
to the rule of subsection (b) shall apply.’’. 
(b) CONFORMING AMENDMENT.—Section 179(b) (re-
lating to limitations) is amended by striking paragraph 
(6). 
(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. 
PART 2—FUELS 
SEC. 211. EXTENSION AND MODIFICATION OF CREDITS FOR 
BIODIESEL AND RENEWABLE DIESEL. 
(a) IN GENERAL.—Sections 40A(g), 6426(c)(6), and 
6427(e)(5)(B) are each amended by striking ‘‘December 
31, 2008’’ and inserting ‘‘December 31, 2010’’. 
(b) UNIFORM TREATMENT OF DIESEL PRODUCED 
FROM BIOMASS.—Paragraph (3) of section 40A(f) is 
amended— 
(1) by striking ‘‘diesel fuel’’ and inserting ‘‘liq-
uid fuel’’, 
(2) 
by 
striking 
‘‘using 
a 
thermal 
depolymerization process’’, and 
(3) by striking ‘‘or D396’’ in subparagraph (B) 
and inserting ‘‘or other equivalent standard ap-
proved by the Secretary for fuels to be used in die-
sel-powered highway vehicles’’. 
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(c) COPRODUCTION OF RENEWABLE DIESEL WITH 
PETROLEUM FEEDSTOCK.— 
(1) IN
GENERAL.—Paragraph (3) of section 
40A(f) (defining renewable diesel) is amended by 
adding at the end the following flush sentence: 
‘‘Such term does not include any fuel derived from 
coprocessing biomass with a feedstock which is not 
biomass. For purposes of this paragraph, the term 
‘biomass’ has the meaning given such term by sec-
tion 45K(c)(3).’’. 
(2) CONFORMING AMENDMENT.—Paragraph (3) 
of section 40A(f) is amended by striking ‘‘(as de-
fined in section 45K(c)(3))’’. 
(d) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to fuel produced, and sold or 
used, after December 31, 2008. 
(2) COPRODUCTION
OF
RENEWABLE
DIESEL 
WITH PETROLEUM FEEDSTOCK.—The amendments 
made by subsection (c) shall apply to fuel produced, 
and sold or used, after February 13, 2008. 
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SEC. 212. CLARIFICATION THAT CREDITS FOR FUEL ARE 
DESIGNED TO PROVIDE AN INCENTIVE FOR 
UNITED STATES PRODUCTION. 
(a) BIODIESEL FUELS CREDIT.—Paragraph (5) of 
section 40A(d), as added by subsection (c), is amended 
to read as follows: 
‘‘(5) LIMITATION TO BIODIESEL WITH CONNEC-
TION TO THE UNITED STATES.—No credit shall be 
determined under this section with respect to any 
biodiesel unless— 
‘‘(A) such biodiesel is produced in the 
United States for use as a fuel in the United 
States, and 
‘‘(B) 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 
location of such production. 
For purposes of this paragraph, the term ‘United 
States’ includes any possession of the United 
States.’’. 
(b) EXCISE TAX CREDIT.—Paragraph (2) of section 
6426(h), as added by subsection (c), is amended to read 
as follows: 
‘‘(2) BIODIESEL AND ALTERNATIVE FUELS.— 
No credit shall be determined under this section 
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with respect to any biodiesel or alternative fuel un-
less— 
‘‘(A) such biodiesel or alternative fuel is 
produced in the United States for use as a fuel 
in the United States, and 
‘‘(B) the taxpayer obtains a certification 
(in such form and manner as prescribed by the 
Secretary) from the producer of such biodiesel 
or alternative fuel which identifies the product 
produced and the location of such production.’’. 
(c) PROVISIONS CLARIFYING TREATMENT OF FUELS 
WITH NO NEXUS TO THE UNITED STATES.— 
(1) ALCOHOL FUELS CREDIT.—Subsection (d) 
of section 40 is amended by adding at the end the 
following new paragraph: 
‘‘(6) LIMITATION TO ALCOHOL WITH CONNEC-
TION TO THE UNITED STATES.—No credit shall be 
determined under this section with respect to any al-
cohol which is produced outside the United States 
for use as a fuel outside the United States. For pur-
poses of this paragraph, the term ‘United States’ in-
cludes any possession of the United States.’’. 
(2) BIODIESEL FUELS CREDIT.—Subsection (d) 
of section 40A is amended by adding at the end the 
following new paragraph: 
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‘‘(5) LIMITATION TO BIODIESEL WITH CONNEC-
TION TO THE UNITED STATES.—No credit shall be 
determined under this section with respect to any 
biodiesel which is produced outside the United 
States for use as a fuel outside the United States. 
For purposes of this paragraph, the term ‘United 
States’ includes any possession of the United 
States.’’. 
(3) EXCISE TAX CREDIT.— 
(A) IN GENERAL.—Section 6426 is amend-
ed by adding at the end the following new sub-
section: 
‘‘(h) LIMITATION TO FUELS WITH CONNECTION TO 
THE UNITED STATES.— 
‘‘(1) ALCOHOL.—No credit shall be determined 
under this section with respect to any alcohol which 
is produced outside the United States for use as a 
fuel outside the United States. 
‘‘(2) BIODIESEL AND ALTERNATIVE FUELS.— 
No credit shall be determined under this section 
with respect to any biodiesel or alternative fuel 
which is produced outside the United States for use 
as a fuel outside the United States. 
For purposes of this subsection, the term ‘United States’ 
includes any possession of the United States.’’. 
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(B) 
CONFORMING
AMENDMENT.—Sub-
section (e) of section 6427 is amended by redes-
ignating paragraph (5) as paragraph (6) and by 
inserting after paragraph (4) the following new 
paragraph: 
‘‘(5) LIMITATION TO FUELS WITH CONNECTION 
TO THE UNITED STATES.—No amount shall be pay-
able under paragraph (1) or (2) with respect to any 
mixture or alternative fuel if credit is not allowed 
with respect to such mixture or alternative fuel by 
reason of section 6426(h).’’. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to fuel produced, and sold or used, after 
December 31, 2008. 
(2) PROVISIONS
CLARIFYING
TREATMENT
OF 
FUELS WITH NO NEXUS TO THE UNITED STATES.— 
(A) IN
GENERAL.—Except as otherwise 
provided in this paragraph, the amendments 
made by subsection (c) shall take effect as if in-
cluded in section 301 of the American Jobs 
Creation Act of 2004. 
(B) ALTERNATIVE
FUEL
CREDITS.—So 
much of the amendments made by subsection 
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(c) as relate to the alternative fuel credit or the 
alternative fuel mixture credit shall take effect 
as if included in section 11113 of the Safe, Ac-
countable, Flexible, Efficient Transportation 
Equity Act: A Legacy for Users. 
(C) RENEWABLE DIESEL.—So much of the 
amendments made by subsection (c) as relate to 
renewable diesel shall take effect as if included 
in section 1346 of the Energy Policy Act of 
2005. 
SEC. 213. CREDIT FOR PRODUCTION OF CELLULOSIC ALCO-
HOL. 
(a) IN GENERAL.—Subsection (b) of section 40 is 
amended by redesignating paragraph (5) as paragraph (6) 
and by inserting after paragraph (4) the following new 
paragraph: 
‘‘(5) CELLULOSIC
ALCOHOL
FUEL
PRODUCER 
CREDIT.— 
‘‘(A) IN GENERAL.—The cellulosic alcohol 
fuel producer credit of any cellulosic alcohol fuel 
producer for any taxable year is 50 cents for 
each gallon of qualified cellulosic fuel produc-
tion of such producer. 
‘‘(B) QUALIFIED CELLULOSIC FUEL PRO-
DUCTION.—For purposes of this paragraph, the 
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term ‘qualified cellulosic fuel production’ means 
any cellulosic alcohol which is produced by a 
cellulosic alcohol fuel producer, and which dur-
ing the taxable year— 
‘‘(i) is sold by such producer to an-
other person— 
‘‘(I) for use by such other person 
in the production of a qualified mix-
ture in such other person’s trade or 
business (other than casual off-farm 
production), 
‘‘(II) for use by such other per-
son as a fuel in a trade or business, 
or 
‘‘(III) who sells such alcohol at 
retail to another person and places 
such alcohol in the fuel tank of such 
other person, or 
‘‘(ii) is used or sold by such producer 
for any purpose described in clause (i). 
‘‘(C) CELLULOSIC
ALCOHOL.—For pur-
poses of this paragraph, the term ‘cellulosic al-
cohol’ means any alcohol which— 
‘‘(i) is produced in the United States 
for use as a fuel in the United States, and 
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‘‘(ii) 
is 
derived 
from 
any 
lignocellulosic or hemicellulosic matter that 
is available on a renewable or recurring 
basis. 
For purposes of this subparagraph, the term 
‘United States’ includes any possession of the 
United States. 
‘‘(D) CELLULOSIC
ALCOHOL
FUEL
PRO-
DUCER.—For purposes of this paragraph, the 
term ‘cellulosic alcohol fuel producer’ means 
any person who produces cellulosic alcohol in a 
trade or business and is registered with the 
Secretary as a cellulosic alcohol fuel producer. 
‘‘(E) 
ADDITIONAL
DISTILLATION
EX-
CLUDED.—The qualified cellulosic fuel produc-
tion of any producer for any taxable year shall 
not include any alcohol which is purchased by 
the producer and with respect to which such 
producer increases the proof of the alcohol by 
additional distillation.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Subsection (a) of section 40 is amended by 
striking ‘‘plus’’ at the end of paragraph (1), by 
striking ‘‘plus’’ at the end of paragraph (2), by 
striking the period at the end of paragraph (3) and 
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inserting ‘‘, plus’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(4) in the case of a cellulosic alcohol fuel pro-
ducer, the cellulosic alcohol fuel producer credit.’’. 
(2) Clause (ii) of section 40(d)(3)(C) is amend-
ed by striking ‘‘subsection (b)(4)(B)’’ and inserting 
‘‘paragraph (4)(B) or (5)(B) of subsection (b)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to alcohol produced after December 
31, 2008. 
PART 3—OTHER TRANSPORTATION INCENTIVES 
SEC. 221. EXTENSION OF TRANSPORTATION FRINGE BEN-
EFIT TO BICYCLE COMMUTERS. 
(a) IN GENERAL.—Paragraph (1) of section 132(f) 
(relating to general rule for qualified transportation 
fringe) is amended by adding at the end the following: 
‘‘(D) Any qualified bicycle commuting re-
imbursement.’’. 
(b) LIMITATION ON EXCLUSION.—Paragraph (2) of 
section 132(f) is amended by striking ‘‘and’’ at the end 
of subparagraph (A), by striking the period at the end 
of subparagraph (B) and inserting ‘‘, and’’, and by adding 
at the end the following new subparagraph: 
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‘‘(C) the applicable annual limitation in 
the case of any qualified bicycle commuting re-
imbursement.’’. 
(c) DEFINITIONS.—Paragraph (5) of section 132(f) 
(relating to definitions) is amended by adding at the end 
the following: 
‘‘(F) DEFINITIONS RELATED TO BICYCLE 
COMMUTING REIMBURSEMENT.— 
‘‘(i) QUALIFIED BICYCLE COMMUTING 
REIMBURSEMENT.—The term ‘qualified bi-
cycle commuting reimbursement’ means, 
with respect to any calendar year, any em-
ployer reimbursement during the 15-month 
period beginning with the first day of such 
calendar year for reasonable expenses in-
curred by the employee during such cal-
endar year for the purchase of a bicycle 
and bicycle improvements, repair, and stor-
age, if such bicycle is regularly used for 
travel between the employee’s residence 
and place of employment. 
‘‘(ii) APPLICABLE
ANNUAL
LIMITA-
TION.—The term ‘applicable annual limita-
tion’ means, with respect to any employee 
for any calendar year, the product of $20 
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multiplied by the number of qualified bicy-
cle commuting months during such year. 
‘‘(iii) 
QUALIFIED
BICYCLE
COM-
MUTING MONTH.—The term ‘qualified bi-
cycle commuting month’ means, with re-
spect to any employee, any month during 
which such employee— 
‘‘(I) regularly uses the bicycle for 
a substantial portion of the travel be-
tween the employee’s residence and 
place of employment, and 
‘‘(II) does not receive any benefit 
described in subparagraph (A), (B), 
or (C) of paragraph (1).’’. 
(d) CONSTRUCTIVE RECEIPT OF BENEFIT.—Para-
graph (4) of section 132(f) is amended by inserting 
‘‘(other than a qualified bicycle commuting reimburse-
ment)’’ after ‘‘qualified transportation fringe’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
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SEC. 222. RESTRUCTURING OF NEW YORK LIBERTY ZONE 
TAX CREDITS. 
(a) IN GENERAL.—Part I of subchapter Y of chapter 
1 is amended by redesignating section 1400L as section 
1400K and by adding at the end the following new section: 
‘‘SEC. 1400L. NEW YORK LIBERTY ZONE TAX CREDITS. 
‘‘(a) IN GENERAL.—In the case of a New York Lib-
erty Zone governmental unit, there shall be allowed as a 
credit against any taxes imposed for any payroll period 
by section 3402 for which such governmental unit is liable 
under section 3403 an amount equal to so much of the 
portion of the qualifying project expenditure amount allo-
cated under subsection (b)(3) to such governmental unit 
for the calendar year as is allocated by such governmental 
unit to such period under subsection (b)(4). 
‘‘(b) 
QUALIFYING
PROJECT
EXPENDITURE 
AMOUNT.—For purposes of this section— 
‘‘(1) 
IN
GENERAL.—The 
term 
‘qualifying 
project expenditure amount’ means, with respect to 
any calendar year, the sum of— 
‘‘(A) the total expenditures paid or in-
curred during such calendar year by all New 
York Liberty Zone governmental units and the 
Port Authority of New York and New Jersey 
for any portion of qualifying projects located 
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wholly within the City of New York, New York, 
and 
‘‘(B) any such expenditures— 
‘‘(i) paid or incurred in any preceding 
calendar year which begins after the date 
of enactment of this section, and 
‘‘(ii) not previously allocated under 
paragraph (3). 
‘‘(2) QUALIFYING PROJECT.—The term ‘quali-
fying project’ means any transportation infrastruc-
ture project, including highways, mass transit sys-
tems, railroads, airports, ports, and waterways, in or 
connecting with the New York Liberty Zone (as de-
fined in section 1400K(h)), which is designated as a 
qualifying project under this section jointly by the 
Governor of the State of New York and the Mayor 
of the City of New York, New York. 
‘‘(3) GENERAL ALLOCATION.— 
‘‘(A) IN GENERAL.—The Governor of the 
State of New York and the Mayor of the City 
of New York, New York, shall jointly allocate to 
each New York Liberty Zone governmental unit 
the portion of the qualifying project expenditure 
amount which may be taken into account by 
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such governmental unit under subsection (a) for 
any calendar year in the credit period. 
‘‘(B) AGGREGATE LIMIT.—The aggregate 
amount which may be allocated under subpara-
graph (A) for all calendar years in the credit 
period shall not exceed $2,000,000,000. 
‘‘(C) 
ANNUAL
LIMIT.—The 
aggregate 
amount which may be allocated under subpara-
graph (A) for any calendar year in the credit 
period shall not exceed the sum of— 
‘‘(i) $169,000,000, plus 
‘‘(ii) the aggregate amount authorized 
to be allocated under this paragraph for all 
preceding calendar years in the credit pe-
riod which was not so allocated. 
‘‘(D) UNALLOCATED AMOUNTS AT END OF 
CREDIT PERIOD.—If, as of the close of the cred-
it period, the amount under subparagraph (B) 
exceeds the aggregate amount allocated under 
subparagraph (A) for all calendar years in the 
credit period, the Governor of the State of New 
York and the Mayor of the City of New York, 
New York, may jointly allocate to New York 
Liberty Zone governmental units for any cal-
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endar year in the 5-year period following the 
credit period an amount equal to— 
‘‘(i) the lesser of— 
‘‘(I) such excess, or 
‘‘(II) the qualifying project ex-
penditure amount for such calendar 
year, reduced by 
‘‘(ii) the aggregate amount allocated 
under this subparagraph for all preceding 
calendar years. 
‘‘(4) ALLOCATION
TO
PAYROLL
PERIODS.— 
Each New York Liberty Zone governmental unit 
which has been allocated a portion of the qualifying 
project expenditure amount under paragraph (3) for 
a calendar year may allocate such portion to payroll 
periods beginning in such calendar year as such gov-
ernmental unit determines appropriate. 
‘‘(c) CARRYOVER OF UNUSED ALLOCATIONS.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), if the amount allocated under subsection 
(b)(3) to a New York Liberty Zone governmental 
unit for any calendar year exceeds the aggregate 
taxes imposed by section 3402 for which such gov-
ernmental unit is liable under section 3403 for peri-
ods beginning in such year, such excess shall be car-
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ried to the succeeding calendar year and added to 
the allocation of such governmental unit for such 
succeeding calendar year. 
‘‘(2) REALLOCATION.—If a New York Liberty 
Zone governmental unit does not use an amount al-
located to it under subsection (b)(3) within the time 
prescribed by the Governor of the State of New York 
and the Mayor of the City of New York, New York, 
then such amount shall after such time be treated 
for purposes of subsection (b)(3) in the same man-
ner as if it had never been allocated. 
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) CREDIT PERIOD.—The term ‘credit period’ 
means the 12-year period beginning on January 1, 
2008. 
‘‘(2) NEW
YORK
LIBERTY
ZONE
GOVERN-
MENTAL UNIT.—The term ‘New York Liberty Zone 
governmental unit’ means— 
‘‘(A) the State of New York, 
‘‘(B) the City of New York, New York, and 
‘‘(C) any agency or instrumentality of such 
State or City. 
‘‘(3) TREATMENT OF FUNDS.—Any expenditure 
for a qualifying project taken into account for pur-
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poses of the credit under this section shall be consid-
ered State and local funds for the purpose of any 
Federal program. 
‘‘(4) TREATMENT
OF
CREDIT
AMOUNTS
FOR 
PURPOSES OF WITHHOLDING TAXES.—For purposes 
of this title, a New York Liberty Zone governmental 
unit shall be treated as having paid to the Secretary, 
on the day on which wages are paid to employees, 
an amount equal to the amount of the credit allowed 
to such entity under subsection (a) with respect to 
such wages, but only if such governmental unit de-
ducts and withholds wages for such payroll period 
under section 3401 (relating to wage withholding). 
‘‘(e) REPORTING.—The Governor of the State of New 
York and the Mayor of the City of New York, New York, 
shall jointly submit to the Secretary an annual report— 
‘‘(1) which certifies— 
‘‘(A) the qualifying project expenditure 
amount for the calendar year, and 
‘‘(B) the amount allocated to each New 
York Liberty Zone governmental unit under 
subsection (b)(3) for the calendar year, and 
‘‘(2) includes such other information as the 
Secretary may require to carry out this section. 
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‘‘(f) GUIDANCE.—The Secretary may prescribe such 
guidance as may be necessary or appropriate to ensure 
compliance with the purposes of this section.’’. 
(b) TERMINATION OF SPECIAL ALLOWANCE AND EX-
PENSING.—Subparagraph (A) of section 1400K(b)(2), as 
redesignated by subsection (a), is amended by striking the 
parenthetical in the flush language after clause (v) thereof 
and inserting ‘‘(in the case of nonresidential real property 
and residential rental property, the date of the enactment 
of the Renewable Energy and Energy Conservation Tax 
Act of 2008 or, if acquired pursuant to a binding contract 
in effect on such enactment date, December 31, 2009)’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 38(c)(3)(B) is amended by striking 
‘‘section 
1400L(a)’’ 
and 
inserting 
‘‘section 
1400K(a)’’. 
(2) Section 168(k)(2)(D)(ii) is amended by 
striking ‘‘section 1400L(c)(2)’’ and inserting ‘‘sec-
tion 1400K(c)(2)’’. 
(3) The table of sections for part I of sub-
chapter Y of chapter 1 is amended by redesignating 
the item relating to section 1400L as an item relat-
ing to section 1400K and by inserting after such 
item the following new item: 
‘‘Sec. 1400L. New York Liberty Zone tax credits.’’. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
Subtitle B—Other Conservation 
Provisions 
SEC. 231. QUALIFIED ENERGY CONSERVATION BONDS. 
(a) IN GENERAL.—Subpart I of part IV of sub-
chapter A of chapter 1, as added by section 104, is amend-
ed by adding at the end the following new section: 
‘‘SEC. 54C. QUALIFIED ENERGY CONSERVATION BONDS. 
‘‘(a) QUALIFIED ENERGY CONSERVATION BOND.— 
For purposes of this subchapter, the term ‘qualified en-
ergy conservation bond’ means any bond issued as part 
of an issue if— 
‘‘(1) 100 percent of the available project pro-
ceeds of such issue are to be used for one or more 
qualified conservation purposes, 
‘‘(2) the bond is issued by a State or local gov-
ernment, and 
‘‘(3) the issuer designates such bond for pur-
poses of this section. 
‘‘(b) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.—The maximum aggregate face amount of 
bonds which may be designated under subsection (a) by 
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any issuer shall not exceed the limitation amount allocated 
to such issuer under subsection (d). 
‘‘(c) NATIONAL LIMITATION ON AMOUNT OF BONDS 
DESIGNATED.—There is a national qualified energy con-
servation bond limitation of $3,600,000,000. 
‘‘(d) ALLOCATIONS.— 
‘‘(1) IN
GENERAL.—The limitation applicable 
under subsection (c) shall be allocated by the Sec-
retary among the States in proportion to the popu-
lation of the States. 
‘‘(2) ALLOCATIONS
TO
LARGEST
LOCAL
GOV-
ERNMENTS.— 
‘‘(A) IN
GENERAL.—In the case of any 
State in which there is a large local govern-
ment, each such local government shall be allo-
cated a portion of such State’s allocation which 
bears the same ratio to the State’s allocation 
(determined without regard to this subpara-
graph) as the population of such large local 
government bears to the population of such 
State. 
‘‘(B) ALLOCATION OF UNUSED LIMITATION 
TO STATE.—The amount allocated under this 
subsection to a large local government may be 
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reallocated by such local government to the 
State in which such local government is located. 
‘‘(C) LARGE
LOCAL
GOVERNMENT.—For 
purposes of this section, the term ‘large local 
government’ means any municipality or county 
if such municipality or county has a population 
of 100,000 or more. 
‘‘(3) ALLOCATION
TO
ISSUERS; RESTRICTION 
ON
PRIVATE
ACTIVITY
BONDS.—Any allocation 
under this subsection to a State or large local gov-
ernment shall be allocated by such State or large 
local government to issuers within the State in a 
manner that results in not less than 70 percent of 
the allocation to such State or large local govern-
ment being used to designate bonds which are not 
private activity bonds. 
‘‘(e) QUALIFIED
CONSERVATION
PURPOSE.—For 
purposes of this section— 
‘‘(1) IN
GENERAL.—The term ‘qualified con-
servation purpose’ means any of the following: 
‘‘(A) Capital expenditures incurred for 
purposes of— 
‘‘(i) reducing energy consumption in 
publicly-owned buildings by at least 20 
percent, 
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‘‘(ii) implementing green community 
programs, 
‘‘(iii) rural development involving the 
production of electricity from renewable 
energy resources, or 
‘‘(iv) any qualified facility (as deter-
mined under section 45(d) without regard 
to paragraphs (8) and (10) thereof and 
without regard to any placed in service 
date). 
‘‘(B) Expenditures with respect to research 
facilities, and research grants, to support re-
search in— 
‘‘(i) development of cellulosic ethanol 
or other nonfossil fuels, 
‘‘(ii) technologies for the capture and 
sequestration of carbon dioxide produced 
through the use of fossil fuels, 
‘‘(iii) increasing the efficiency of exist-
ing technologies for producing nonfossil 
fuels, 
‘‘(iv) automobile battery technologies 
and other technologies to reduce fossil fuel 
consumption in transportation, or 
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‘‘(v) technologies to reduce energy use 
in buildings. 
‘‘(C) Mass commuting facilities and related 
facilities that reduce the consumption of energy, 
including expenditures to reduce pollution from 
vehicles used for mass commuting. 
‘‘(D) Demonstration projects designed to 
promote the commercialization of— 
‘‘(i) green building technology, 
‘‘(ii) conversion of agricultural waste 
for use in the production of fuel or other-
wise, 
‘‘(iii) advanced battery manufacturing 
technologies, 
‘‘(iv) technologies to reduce peak use 
of electricity, or 
‘‘(v) technologies for the capture and 
sequestration of carbon dioxide emitted 
from combusting fossil fuels in order to 
produce electricity. 
‘‘(E) Public education campaigns to pro-
mote energy efficiency. 
‘‘(2) SPECIAL
RULES
FOR
PRIVATE
ACTIVITY 
BONDS.—For purposes of this section, in the case of 
any private activity bond, the term ‘qualified con-
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servation purposes’ shall not include any expenditure 
which is not a capital expenditure. 
‘‘(f) POPULATION.— 
‘‘(1) IN
GENERAL.—The population of any 
State or local government shall be determined for 
purposes of this section as provided in section 146(j) 
for the calendar year which includes the date of the 
enactment of this section. 
‘‘(2) SPECIAL RULE FOR COUNTIES.—In deter-
mining the population of any county for purposes of 
this section, any population of such county which is 
taken into account in determining the population of 
any municipality which is a large local government 
shall not be taken into account in determining the 
population of such county. 
‘‘(g) APPLICATION
TO INDIAN TRIBAL GOVERN-
MENTS.—An Indian tribal government shall be treated for 
purposes of this section in the same manner as a large 
local government, except that— 
‘‘(1) an Indian tribal government shall be treat-
ed for purposes of subsection (d) as located within 
a State to the extent of so much of the population 
of such government as resides within such State, 
and 
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