H. R. 6—425
‘‘(ii) only to the extent that the electricity is sold 
(other than for resale) to customers of such utility 
who are located within the service area of such utility. 
‘‘(D) ADJUSTMENTS FOR CHANGES IN CUSTOMER BASE.— 
‘‘(i) NEW BUSINESS CUSTOMERS.—If— 
‘‘(I) after the close of the testing period and 
before the date of issuance of the issue, the utility 
owned by a governmental unit enters into a con-
tract to supply natural gas (other than for resale) 
for a business use at a property within the service 
area of such utility, and 
‘‘(II) the utility did not supply natural gas 
to such property during the testing period or the 
ratable amount of natural gas to be supplied under 
the contract is significantly greater than the rat-
able amount of gas supplied to such property 
during the testing period, 
then a contract shall not fail to be treated as a qualified 
natural gas supply contract by reason of supplying 
the additional natural gas under the contract referred 
to in subclause (I). 
‘‘(ii) 
LOST
CUSTOMERS.—The 
average 
under 
subparagraph (B)(i) shall not exceed the annual 
amount of natural gas reasonably expected to be pur-
chased (other than for resale) by persons who are 
located within the service area of such utility and 
who, as of the date of issuance of the issue, are cus-
tomers of such utility. 
‘‘(E) RULING REQUESTS.—The Secretary may increase 
the average under subparagraph (B)(i) for any period if 
the utility owned by the governmental unit establishes 
to the satisfaction of the Secretary that, based on objective 
evidence of growth in natural gas consumption or popu-
lation, such average would otherwise be insufficient for 
such period. 
‘‘(F) ADJUSTMENT
FOR
NATURAL
GAS
OTHERWISE
ON 
HAND.— 
‘‘(i) IN GENERAL.—The amount otherwise permitted 
to be acquired under the contract for any period shall 
be reduced by— 
‘‘(I) the applicable share of natural gas held 
by the utility on the date of issuance of the issue, 
and 
‘‘(II) the natural gas (not taken into account 
under subclause (I)) which the utility has a right 
to acquire during such period (determined as of 
the date of issuance of the issue). 
‘‘(ii) APPLICABLE
SHARE.—For purposes of the 
clause (i), the term ‘applicable share’ means, with 
respect to any period, the natural gas allocable to 
such period if the gas were allocated ratably over the 
period to which the prepayment relates. 
‘‘(G) INTENTIONAL ACTS.—Subparagraph (A) shall cease 
to apply to any issue if the utility owned by the govern-
mental unit engages in any intentional act to render the 
volume of natural gas acquired by such prepayment to 
be in excess of the sum of—
H. R. 6—426
‘‘(i) the amount of natural gas needed (other than 
for resale) by customers of such utility who are located 
within the service area of such utility, and 
‘‘(ii) the amount of natural gas used to transport 
such natural gas to the utility. 
‘‘(H) TESTING PERIOD.—For purposes of this paragraph, 
the term ‘testing period’ means, with respect to an issue, 
the most recent 5 calendar years ending before the date 
of issuance of the issue. 
‘‘(I) SERVICE AREA.—For purposes of this paragraph, 
the service area of a utility owned by a governmental 
unit shall be comprised of— 
‘‘(i) any area throughout which such utility pro-
vided at all times during the testing period— 
‘‘(I) in the case of a natural gas utility, natural 
gas transmission or distribution services, and 
‘‘(II) in the case of an electric utility, electricity 
distribution services, 
‘‘(ii) any area within a county contiguous to the 
area described in clause (i) in which retail customers 
of such utility are located if such area is not also 
served by another utility providing natural gas or elec-
tricity services, as the case may be, and 
‘‘(iii) any area recognized as the service area of 
such utility under State or Federal law.’’. 
(b) PRIVATE LOAN FINANCING TEST NOT TO APPLY TO PREPAY-
MENTS FOR NATURAL GAS.—Paragraph (2) of section 141(c) (pro-
viding exceptions to the private loan financing test) is amended 
by striking ‘‘or’’ at the end of subparagraph (A), by striking the 
period at the end of subparagraph (B) and inserting ‘‘, or’’, and 
by adding at the end the following new subparagraph: 
‘‘(C) is a qualified natural gas supply contract (as 
defined in section 148(b)(4)).’’. 
(c) EXCEPTION
FOR QUALIFIED ELECTRIC
AND NATURAL GAS 
SUPPLY CONTRACTS.—Section 141(d) is amended by adding at the 
end the following new paragraph: 
‘‘(7) EXCEPTION FOR QUALIFIED ELECTRIC AND NATURAL GAS 
SUPPLY CONTRACTS.—The term ‘nongovernmental output prop-
erty’ shall not include any contract for the prepayment of 
electricity or natural gas which is not investment property 
under section 148(b)(2).’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to obligations issued after the date of the enactment 
of this Act. 
SEC. 1328. DETERMINATION OF SMALL REFINER EXCEPTION 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 one 
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 75,000 barrels. For 
purposes of this paragraph, the average daily refinery runs
H. R. 6—427
for any taxable year shall be determined by dividing the aggre-
gate 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. 1329. AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL 
EXPENDITURES. 
(a) IN GENERAL.—Section 167 (relating to depreciation) is 
amended by redesignating subsection (h) as subsection (i) and by 
inserting after subsection (g) the following new subsection: 
‘‘(h) AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL EXPENDI-
TURES.— 
‘‘(1) IN GENERAL.—Any geological and geophysical expenses 
paid or incurred in connection with the exploration for, or 
development of, oil or gas within the United States (as defined 
in section 638) shall be allowed as a deduction ratably over 
the 24-month period beginning on the date that such expense 
was paid or incurred. 
‘‘(2) HALF-YEAR CONVENTION.—For purposes of paragraph 
(1), any payment paid or incurred during the taxable year 
shall be treated as paid or incurred on the mid-point of such 
taxable year. 
‘‘(3) EXCLUSIVE METHOD.—Except as provided in this sub-
section, no depreciation or amortization deduction shall be 
allowed with respect to such payments. 
‘‘(4) TREATMENT UPON ABANDONMENT.—If any property with 
respect to which geological and geophysical expenses are paid 
or incurred is retired or abandoned during the 24-month period 
described in paragraph (1), no deduction shall be allowed on 
account of such retirement or abandonment and the amortiza-
tion deduction under this subsection shall continue with respect 
to such payment.’’. 
(b) CONFORMING AMENDMENT.—Section 263A(c)(3) is amended 
by inserting ‘‘167(h),’’ after ‘‘under section’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to amounts paid or incurred in taxable years beginning 
after the date of the enactment of this Act. 
Subtitle C—Conservation and Energy 
Efficiency Provisions 
SEC. 1331. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION. 
(a) IN GENERAL.—Part VI of subchapter B of chapter 1 (relating 
to itemized deductions for individuals and corporations), as amended 
by this Act, is amended by inserting after section 179C the following 
new section: 
‘‘SEC. 179D. ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION. 
‘‘(a) IN GENERAL.—There shall be allowed as a deduction an 
amount equal to the cost of energy efficient commercial building 
property placed in service during the taxable year. 
‘‘(b) MAXIMUM AMOUNT OF DEDUCTION.—The deduction under 
subsection (a) with respect to any building for any taxable year 
shall not exceed the excess (if any) of—