767 
(b) ELIGIBLE RECIPIENTS.—Eligible recipients of as-
sistance under this section shall include State and local 
governments, State and local government associations, 
public and private nonprofit organizations, and colleges 
and universities. 
(c) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to the Secretary for car-
rying out this section $150,000,000 for each of the fiscal 
years 2008 through 2012. 
SEC. 9098. AUTHORIZATION OF APPROPRIATIONS. 
(a) GRANTS.—There are authorized to be appro-
priated to the Secretary for grants under this part, 
$2,000,000,000 for each of fiscal years 2008 through 
2012. 
(b) ADMINISTRATION.—There are authorized to be 
appropriated to the Secretary for administrative expenses 
of the program established under this part— 
(1) $20,000,000 for fiscal year 2008; 
(2) $20,000,000 for fiscal year 2009; 
(3) $25,000,000 for fiscal year 2010; 
(4) $25,000,000 for fiscal year 2011; and 
(5) $30,000,000 for fiscal year 2012.
768 
Subtitle B—Smart Grid Facilitation 
SEC. 9101. SHORT TITLE. 
This subtitle may be cited as the ‘‘Smart Grid Facili-
tation Act of 2007’’. 
PART 1—SMART GRID 
SEC. 9111. STATEMENT OF POLICY ON MODERNIZATION OF 
ELECTRICITY GRID. 
(a) SMART GRID CHARACTERISTICS.—It is the policy 
of the United States to support the modernization of the 
Nation’s electricity transmission and distribution system 
to incorporate digital information and controls technology 
and to share real-time pricing information with electricity 
customers to achieve each of the following, which together 
characterize a smart grid: 
(1) Increased reliability, security and efficiency 
of the electric grid. 
(2) Dynamic optimization of grid operations 
and resources, with full cyber-security. 
(3) Deployment and integration of distributed 
resources and generation. 
(4) Development and incorporation of demand 
response demand-side resources, and energy effi-
ciency resources.
769 
(5) Deployment of ‘‘smart’’ technologies for me-
tering, communications concerning grid operations 
and status, and distribution automation. 
(6) Integration of ‘‘smart’’ appliances and con-
sumer devices. 
(7) Deployment and integration of renewable 
energy resources, both to the grid and on the cus-
tomer side of the electric meter. 
(8) Deployment and integration of advanced 
electricity storage and peak-sharing technologies, in-
cluding plug-in electric and hybrid electric vehicles, 
and thermal-storage air conditioning. 
(9) Provision to consumers of new information 
and control options. 
(10) Continual environmental improvement in 
electricity production and distribution. 
(11) Enhanced capacity and efficiency of elec-
tricity networks, reduction of line losses, and main-
tenance of power quality. 
(b) SUPPORT.—The Secretary of Energy and the 
Federal Energy Regulatory Commission and other Federal 
agencies as appropriate shall undertake programs to sup-
port the development and demonstration of Smart Grid 
technologies and standards to maximize the achievement 
of these goals.
770 
(c) BARRIERS.—It is further the policy of the United 
States that no State, State agency, or local government 
or instrumentality thereof should prohibit, or erect unrea-
sonable barriers to, the deployment of smart grid tech-
nologies on an electric utility’s distribution facilities, or 
unreasonably limit the services that may be provided using 
such technologies. 
(d) INFORMATION.—It is further the policy of the 
United States that electricity purchasers are entitled to 
receive information about the varying value of electricity 
at different times and places, and that States shall not 
prohibit nor erect unreasonable barriers to the provision 
of such information flows to end users. 
SEC. 9112. GRID MODERNIZATION COMMISSION. 
(a) ESTABLISHMENT AND MISSION.— 
(1) ESTABLISHMENT.—The President shall es-
tablish a Grid Modernization Commission composed 
of 9 members. Three members of the Commission 
shall be appointed by the President, and one each 
shall be appointed by the Speaker and Minority 
Leader of the United States House of Representa-
tives and by the Majority Leader and Minority 
Leader of the United States Senate. Two members 
shall be appointed by the President from among per-
sons recommended by an association representing
771 
State utility regulatory commissioners. The Presi-
dent shall designate one Commissioner to serve as 
Chairperson. 
(2) MISSION.—The mission of the Grid Mod-
ernization Commission shall be to facilitate the 
adoption of Smart Grid standards, technologies, and 
practices across the Nation’s electricity grid to the 
point of general adoption and ongoing market sup-
port in the United States electric sector. The Com-
mission shall be responsible for monitoring develop-
ments, encouraging progress toward common stand-
ards and protocols, identifying barriers and pro-
posing solutions, coordinating with all Federal de-
partments and agencies, and coordinating ap-
proaches on smart grid implementation with States 
and local governmental authorities. 
(b) MEMBERSHIP.—The members appointed to the 
Commission shall, collectively, have qualifications in elec-
tric utility operations and infrastructure, digital informa-
tion and control technologies, security, market develop-
ment, finance and utility regulation, energy efficiency, de-
mand response, renewable energy, and consumer protec-
tion. 
(c) AUTHORITIES TO INTERVENE.—The Commission 
shall have the authority to intervene and represent itself
772 
before the Federal Energy Regulatory Commission and 
other Federal and State agencies as it deems necessary 
to accomplish its mission. 
(d) TERMS OF OFFICE.—The term of office of each 
Commissioner shall be 5 years, and any member may be 
reappointed for not more than one additional term of 5 
years. 
(e) TERMINATION.—Unless extended by Act of Con-
gress, the Commission shall complete its work and cease 
its activities by January 1, 2020, or on such earlier date 
that the Commission determines that the proliferation, 
evolution, and adaptation of Smart Grid technologies no 
longer require Federal leadership and assistance. 
(f) COMPENSATION OF MEMBERS.—Each member of 
the Commission who is not an officer or employee of the 
Federal Government shall be compensated at a rate equal 
to the daily equivalent of the annual rate of basic pay pre-
scribed for level III of the Executive Schedule under sec-
tion 5315 of title 5, United States Code, for each day (in-
cluding travel time) during which such member is engaged 
in the performance of the duties of the Commission. All 
members of the Commission who are officers or employees 
of the United States shall serve without compensation in 
addition to that received for their services as officers or 
employees of the United States.
785 
(3) In the case of transmission and distribution 
equipment fitted with monitoring and communica-
tions devices to enable smart grid functions, the doc-
umented expenditures incurred by the electric utility 
to purchase and install such monitoring and commu-
nications devices. 
(4) In the case of metering devices, sensors, 
control devices, and other devices integrated with 
and attached to an electric utility system that are 
capable of engaging in Smart Grid functions, the 
documented expenditures incurred by the electric 
utility and its customers to purchase and install 
such devices. 
(5) In the case of software that enables devices 
or computers to engage in Smart Grid functions, the 
documented purchase costs of the software. 
(6) In the case of entities that operate or co-
ordinate operations of regional electric grids, the 
documented expenditures for purchasing and install-
ing such equipment that allows Smart Grid func-
tions to operate and be combined or coordinated 
among multiple electric utilities and between that re-
gion and other regions. 
(7) In the case of persons or entities other than 
electric utilities owning and operating a distributed
786 
electricity generator, the documented expenditures of 
enabling that generator to be monitored, controlled, 
or otherwise integrated into grid operations and elec-
tricity flows on the grid utilizing Smart Grid func-
tions. 
(8) In the case of electric or hybrid-electric ve-
hicles, the documented expenses for devices that 
allow the vehicle to engage in Smart Grid functions. 
(9) The documented expenditures related to 
purchasing and implementing Smart Grid functions 
in such other cases as the Secretary of Energy shall 
identify. In making such grants, the Secretary shall 
seek to reward innovation and early adaptation, even 
if success is not complete, rather than deployment of 
proven and commercially viable technologies. 
(c) 
INVESTMENTS
NOT
INCLUDED.—Qualifying 
Smart Grid investments do not include any of the fol-
lowing: 
(1) Expenditures for electricity generation, 
transmission, or distribution infrastructure or equip-
ment not directly related to enabling Smart Grid 
functions. 
(2) After the effective date of a standard under 
paragraph (21) of section 111(d) of the Public Util-
ity Regulatory Policies Act of 1978 (relating to
787 
Smart Grid information), an investment that is not 
in compliance with such standard. 
(3) After the development and publication by 
the Commission of protocols and model standards 
for interoperability of smart grid devices and tech-
nologies, an investment that fails to incorporate any 
of such protocols or model standards. 
(4) Expenditures for physical interconnection of 
generators or other devices to the grid except those 
that are directly related to enabling Smart Grid 
functions. 
(5) Expenditures for ongoing salaries, benefits, 
or personnel costs not incurred in the initial installa-
tion, training, or start up of smart grid functions. 
(6) Expenditures for travel, lodging, meals or 
other personal costs. 
(7) Ongoing or routine operation, billing, cus-
tomer relations, security, and maintenance expendi-
tures. 
(8) Such other expenditures that the Secretary 
of Energy determines not to be Qualifying Smart 
Grid Investments by reason of the lack of the ability 
to perform smart grid functions or lack of direct re-
lationship to smart grid functions.
788 
(d) SMART GRID FUNCTIONS.—The term ‘‘smart 
grid functions’’ means any of the following: 
(1) The ability to develop, store, send and re-
ceive digital information concerning electricity use, 
costs, prices, time of use, nature of use, storage, or 
other information relevant to device, grid, or utility 
operations, to or from or by means of the electric 
utility system, through one or a combination of de-
vices and technologies. 
(2) The ability to develop, store, send and re-
ceive digital information concerning electricity use, 
costs, prices, time or use, nature of use, storage, or 
other information relevant to device, grid, or utility 
operations to or from a computer or other control 
device. 
(3) The ability to measure or monitor electricity 
use as a function of time of day, power quality char-
acteristics such as voltage level, current, cycles per 
second, or source or type of generation and to store, 
synthesize or report that information by digital 
means. 
(4) The ability to sense and localize disruptions 
or changes in power flows on the grid and commu-
nicate such information instantaneously and auto-
matically for purposes of enabling automatic protec-
789 
tive responses to sustain reliability and security of 
grid operations. 
(5) The ability to detect, prevent, communicate 
with regard to, respond to, or recover from system 
security threats, including cyber-security threats and 
terrorism, using digital information, media, and de-
vices. 
(6) The ability of any appliance or machine to 
respond to such signals, measurements, or commu-
nications automatically or in a manner programmed 
by its owner or operator without independent human 
intervention. 
(7) The ability to use digital information to op-
erate functionalities on the electric utility grid that 
were previously electro-mechanical or manual. 
(8) The ability to use digital controls to manage 
and modify electricity demand, enable congestion 
management, assist in voltage control, provide oper-
ating reserves, and provide frequency regulation. 
(9) Such other functions as the Secretary of 
Energy may identify as being necessary or useful to 
the operation of a Smart Grid. 
(e) OFFICE.—The Secretary of Energy shall— 
(1) establish an Office to administer the Smart 
Grid Investment Grant Program, assuring that ex-
790 
pert resources from the Commission on Grid Mod-
ernization, the Office of Energy Distribution and 
Electricity Reliability, and the Office of Energy Effi-
ciency and Renewable Energy are fully available to 
advise on its administration and actions; 
(2) appoint a Senior Executive Service officer 
to direct the Office, together with such personnel as 
are required to administer the Smart Grid Invest-
ment Grant program; 
(3) establish and publish in the Federal Reg-
ister, within 180 days after the enactment of this 
Act procedures by which applicants who have made 
qualifying Smart Grid investments can seek and ob-
tain reimbursement of one-fourth of their docu-
mented expenditures; 
(4) establish procedures to assure that there is 
no duplication or multiple reimbursement for the 
same investment or costs, that the reimbursement 
goes to the party making the actual expenditures for 
Qualifying Smart Grid Investments, and that the 
grants made have significant effect in encouraging 
and facilitating the development of a smart grid.; 
(5) maintain public records of reimbursements 
made, recipients, and qualifying Smart Grid invest-
ments which have received reimbursements;
831 
(ii) the impact of the projected costs on 
the marketability of the domestically-produced 
renewable fuel; 
(D) whether there is adequate railroad 
competition to ensure— 
(i) a fair price for the railroad trans-
portation of domestically-produced renew-
able fuel; and 
(ii) acceptable levels of service for rail-
road transportation of domestically-pro-
duced renewable fuel; 
(E) any rail infrastructure capital costs 
that the railroads indicate should be paid by the 
producers or distributors of domestically-pro-
duced renewable fuel; 
(F) whether Federal agencies have ade-
quate legal authority to ensure a fair and rea-
sonable transportation price and acceptable lev-
els of service in cases in which the domestically- 
produced renewable fuel source does not have 
access to competitive rail service; 
(G) whether Federal agencies have ade-
quate legal authority to address railroad service 
problems that may be resulting in inadequate
832 
supplies of domestically-produced renewable fuel 
in any area of the United States; and 
(H) any recommendations for any addi-
tional legal authorities for Federal agencies to 
ensure the reliable railroad transportation of 
adequate supplies of domestically-produced re-
newable fuel at reasonable prices. 
(b) REPORT.—Not later than 180 days after the date 
of enactment of this Act, the Secretary shall submit to 
the Committee on Energy and Natural Resources of the 
Senate and the Committee on Energy and Commerce of 
the House of Representatives a report that describes the 
results of the study conducted under subsection (a). 
SEC. 9307. STANDARD SPECIFICATIONS FOR BIODIESEL. 
Section 211 of the Clean Air Act (42 U.S.C. 7545) 
is amended by redesignating subsection (s) as subsection 
(t), redesignating subsection (r) (relating to conversion as-
sistance for cellulosic biomass, waste-derived ethanol, ap-
proved renewable fuels) as subsection (s) and by adding 
the following new subsection at the end thereof: 
‘‘(u) STANDARD SPECIFICATIONS FOR BIODIESEL.— 
Unless the American Society for Testing and Materials 
has adopted a standard for diesel fuel containing 20 per-
cent biodiesel, not later than 1 year after the date of en-
actment of this subsection, the Administrator shall initiate
833 
a rulemaking establishing a series of uniform per gallon 
fuel standards for categories of fuels that contain bio-
diesel, including one standard for fuel containing 20 per-
cent biodiesel, and designate an identification number for 
fuel meeting each standard in each such category so that 
vehicle manufacturers are able to design engines to use 
fuel meeting one or more of such standards. The Adminis-
trator shall finalize the standards under this subsection 
18 months after the date of the enactment of this sub-
section.’’. 
SEC. 9308. GRANTS FOR CELLULOSIC ETHANOL PRODUC-
TION. 
Subsection (s) of section 211 of the Clean Air Act 
(as added by section 1512 of the Energy Policy Act of 
2005) (and as redesignated by section 9307 of this Act), 
relating to conversion assistance for cellulosic biomass, 
waste-derived ethanol, and approved renewable fuels, is 
amended as follows: 
(1) By adding the following new subparagraphs 
at the end of paragraph (3): 
‘‘(D) $500,000,000 for fiscal year 2009. 
‘‘(E) $500,000,000 for fiscal year 2010.’’. 
(2) By adding the following new paragraph at 
the end thereof:
834 
‘‘(5) CRITERIA.—In awarding grants under this 
section, the Secretary shall give priority to applica-
tions that promote feedstock diversity and the geo-
graphic dispersion of production facilities.’’. 
SEC. 9309. CONSUMER EDUCATION CAMPAIGN RELATING 
TO FLEXIBLE-FUEL VEHICLES. 
The Secretary of Transportation, in consultation with 
the Secretary of Energy, shall carry out an education pro-
gram to inform consumers about which motor vehicles are 
flexible-fuel vehicles and how to exercise their opportunity 
to choose E85 or B20. As part of such program, the Sec-
retary of Transportation may coordinate with motor vehi-
cle manufacturers to notify owners of flexible-fuel vehicles 
of locations where E85 and B20 are sold in their area. 
SEC. 9310. REVIEW OF NEW RENEWABLE FUELS OR NEW 
RENEWABLE FUEL ADDITIVES. 
Notwithstanding any other provision of law, a waiver 
under section 211(f)(4) of the Clean Air Act for any re-
newable fuel or renewable fuel additive shall not be consid-
ered granted unless the Administrator of the Environment 
Protection Agency, following a public notice and comment 
period, takes final action granting the application for a 
waiver based on an application of the section 211(f)(4) 
standards and criteria with respect to emissions control 
devices or systems and vehicle emissions standards to on-
835 
road and non-road engines and vehicles. The Adminis-
trator shall take final action on an application for a waiver 
no later than 270 days after the Administrator receives 
the application. 
SEC. 
9311. 
DOMESTIC 
MANUFACTURING 
CONVERSION 
GRANT PROGRAM. 
Section 712 of the Energy Policy Act of 2005 (42 
U.S.C. 16062) is amended— 
(1) in subsection (a)— 
(A) by inserting ‘‘, flexible-fuel,’’ after 
‘‘production of efficient hybrid’’; and 
(B) by adding at the end the following: 
‘‘Priority shall be given to the refurbishment or 
retooling of manufacturing facilities that have 
recently ceased operation or will cease operation 
in the near future.’’; and 
(2) by striking subsection (b) and inserting the 
following: 
‘‘(b) COORDINATION WITH STATE AND LOCAL PRO-
GRAMS.—The Secretary may coordinate implementation of 
this section with State and local programs designed to ac-
complish similar goals, including the retention and retrain-
ing of skilled workers from the such manufacturing facili-
ties, including by establishing matching grant arrange-
ments.
850 
(c) MEMBERSHIP.— 
(1) COMPOSITION.—The Advisory Board shall 
be composed of— 
(A) 1 member appointed by the Secretary 
of Commerce; 
(B) 1 member appointed by the Secretary 
of Energy; and 
(C) 2 members who shall be Israeli citi-
zens, appointed by the Secretary of Energy 
after consultation with appropriate officials in 
the Israeli Government. 
(2) DEADLINE FOR APPOINTMENTS.—The ini-
tial appointments under paragraph (1) shall be 
made not later than 60 days after the date of enact-
ment of this Act. 
(3) TERM.—Each member of the Advisory 
Board shall be appointed for a term of 4 years. 
(4) VACANCIES.—A vacancy on the Advisory 
Board shall be filled in the manner in which the 
original appointment was made. 
(5) BASIC PAY.— 
(A) COMPENSATION.—A member of the 
Advisory Board shall serve without pay. 
(B) TRAVEL EXPENSES.—Each member of 
the Advisory Board shall receive travel ex-
851 
penses, including per diem in lieu of subsist-
ence, in accordance with applicable provisions of 
subchapter I of chapter 57 of title 5, United 
States Code. 
(6) QUORUM.—Three members of the Advisory 
Board shall constitute a quorum. 
(7) CHAIRPERSON.—The Chairperson of the 
Advisory Board shall be designated by the Secretary 
of Energy at the time of the appointment. 
(8) MEETINGS.—The Advisory Board shall 
meet at least once annually at the call of the Chair-
person. 
(d) TERMINATION.—Section 14(a)(2)(B) of the Fed-
eral Advisory Committee Act (5 U.S.C. App.) shall not 
apply to the Advisory Board. 
SEC. 9325. DEFINITIONS. 
In this part: 
(1) ADVISORY
BOARD.—The term ‘‘Advisory 
Board’’ means the International Energy Advisory 
Board established by section 9324(a). 
(2) BIRD.—The term ‘‘BIRD’’ means the 
Israel-United States Binational Industrial Research 
and Development Foundation. 
(3) BSF.—The term ‘‘BSF’’ means the United 
States-Israel Binational Science Foundation.
852 
(4) ELIGIBLE ENTITY.—The term ‘‘eligible enti-
ty’’ means a joint venture comprised of both Israeli 
and United States private business entities or a joint 
venture comprised of both Israeli academic persons 
(who reside and work in Israel) and United States 
academic persons, that— 
(A) carries out an eligible project; and 
(B) is selected by the Secretary, in con-
sultation with the BIRD or BSF, using the cri-
teria established by the Secretary, in consulta-
tion with the Advisory Board. 
(5) ELIGIBLE
PROJECT.—The term ‘‘eligible 
project’’ means a project to encourage cooperation 
between the United States and Israel on research, 
development, or commercialization of alternative en-
ergy, improved energy efficiency, or renewable en-
ergy sources. 
(6) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Energy, acting through the Assist-
ant Secretary of Energy for Energy Efficiency and 
Renewable Energy. 
SEC. 9326. TERMINATION. 
The grant program authorized under section 9323 
and the Advisory Board shall terminate upon the expira-
853 
tion of the 7-year period which begins on the date of the 
enactment of this Act. 
SEC. 9327. AUTHORIZATION OF APPROPRIATIONS. 
The Secretary is authorized to expend not more than 
$20,000,000 to carry out this part for each of fiscal years 
2008 through 2014 from funds previously authorized to 
the Office of Energy Efficiency and Renewable Energy. 
SEC. 9328. CONSTITUTIONAL AUTHORITY. 
The Constitutional authority on which this part rests 
is the power of Congress to regulate commerce with for-
eign nations as enumerated in Article I, Section 8 of the 
United States Constitution. 
Subtitle E—Advanced Plug-In 
Hybrid Vehicles and Components 
SEC. 9401. ADVANCED BATTERY LOAN GUARANTEE PRO-
GRAM. 
(a) ESTABLISHMENT OF PROGRAM.—The Secretary 
of Energy shall establish a program to provide guarantees 
of loans by private institutions for the construction of fa-
cilities for the manufacture of advanced vehicle batteries 
and battery systems that are developed and produced in 
the United States, including advanced lithium ion bat-
teries and hybrid electrical system and component manu-
facturers and software designers.
854 
(b) REQUIREMENTS.—The Secretary may provide a 
loan guarantee under subsection (a) to an applicant if— 
(1) without a loan guarantee, credit is not 
available to the applicant under reasonable terms or 
conditions sufficient to finance the construction of a 
facility described in subsection (a); 
(2) the prospective earning power of the appli-
cant and the character and value of the security 
pledged provide a reasonable assurance of repayment 
of the loan to be guaranteed in accordance with the 
terms of the loan; and 
(3) the loan bears interest at a rate determined 
by the Secretary to be reasonable, taking into ac-
count the current average yield on outstanding obli-
gations of the United States with remaining periods 
of maturity comparable to the maturity of the loan. 
(c) CRITERIA.—In selecting recipients of loan guar-
antees from among applicants, the Secretary shall give 
preference to proposals that— 
(1) meet all applicable Federal and State per-
mitting requirements; 
(2) are most likely to be successful; and 
(3) are located in local markets that have the 
greatest need for the facility.
855 
(d) MATURITY.—A loan guaranteed under subsection 
(a) shall have a maturity of not more than 20 years. 
(e) TERMS AND CONDITIONS.—The loan agreement 
for a loan guaranteed under subsection (a) shall provide 
that no provision of the loan agreement may be amended 
or waived without the consent of the Secretary. 
(f) ASSURANCE
OF REPAYMENT.—The Secretary 
shall require that an applicant for a loan guarantee under 
subsection (a) provide an assurance of repayment in the 
form of a performance bond, insurance, collateral, or other 
means acceptable to the Secretary in an amount equal to 
not less than 20 percent of the amount of the loan. 
(g) GUARANTEE FEE.—The recipient of a loan guar-
antee under subsection (a) shall pay the Secretary an 
amount determined by the Secretary to be sufficient to 
cover the administrative costs of the Secretary relating to 
the loan guarantee. 
(h) FULL FAITH AND CREDIT.—The full faith and 
credit of the United States is pledged to the payment of 
all guarantees made under this section. Any such guar-
antee made by the Secretary shall be conclusive evidence 
of the eligibility of the loan for the guarantee with respect 
to principal and interest. The validity of the guarantee 
shall be incontestable in the hands of a holder of the guar-
anteed loan.
879 
type and maximizes the retention of late- 
successional and large and old growth 
trees, late-successional and old growth for-
est structure, and late-successional and old 
growth forest composition. 
‘‘(ii) Federal land on which the re-
moval of vegetation is prohibited, including 
components of the National Wilderness 
Preservation System. 
‘‘(iii) Wilderness Study Areas. 
‘‘(iv) Inventoried roadless areas. 
‘‘(v) Components of the National 
Landscape Conservation System. 
‘‘(vi) National Monuments. 
‘‘(2) ELIGIBLE
FACILITY.—The term ‘eligible 
facility’ means— 
‘‘(A) a facility for the generation of electric 
energy from a renewable energy resource that is 
placed in service on or after January 1, 2001; 
or 
‘‘(B) a repowering or cofiring increment. 
‘‘(3) EXISTING FACILITY.—The term ‘existing 
facility’ means a facility for the generation of elec-
tric energy from a renewable energy resource that is 
not an eligible facility.
880 
‘‘(4) INCREMENTAL HYDROPOWER.—The term 
‘incremental hydropower’ means additional genera-
tion that is achieved from increased efficiency or ad-
ditions of capacity made on or after January 1, 
2001, or the effective date of an existing applicable 
State renewable portfolio standard program at a hy-
droelectric facility that was placed in service before 
that date. 
‘‘(5) INDIAN
LAND.—The term ‘Indian land’ 
means— 
‘‘(A) any land within the limits of any In-
dian reservation, pueblo, or rancheria; 
‘‘(B) any land not within the limits of any 
Indian reservation, pueblo, or rancheria title to 
which was on the date of enactment of this 
paragraph either held by the United States for 
the benefit of any Indian tribe or individual or 
held by any Indian tribe or individual subject to 
restriction by the United States against alien-
ation; 
‘‘(C) any dependent Indian community; or 
‘‘(D) any land conveyed to any Alaska Na-
tive corporation under the Alaska Native 
Claims Settlement Act.
881 
‘‘(6) INDIAN TRIBE.—The term ‘Indian tribe’ 
means any Indian tribe, band, nation, or other orga-
nized group or community, including any Alaskan 
Native village or regional or village corporation as 
defined in or established pursuant to the Alaska Na-
tive Claims Settlement Act (43 U.S.C. 1601 et seq.), 
which is recognized as eligible for the special pro-
grams and services provided by the United States to 
Indians because of their status as Indians. 
‘‘(7) RENEWABLE ENERGY.—The term ‘renew-
able energy’ means electric energy generated by a re-
newable energy resource. 
‘‘(8) RENEWABLE
ENERGY
RESOURCE.—The 
term ‘renewable energy resource’ means solar (in-
cluding solar water heating), wind, ocean, tidal, geo-
thermal energy, biomass, landfill gas, or incremental 
hydropower. 
‘‘(9) REPOWERING OR COFIRING INCREMENT.— 
The 
term 
‘repowering 
or 
cofiring 
increment’ 
means— 
‘‘(A) the additional generation from a 
modification that is placed in service on or after 
January 1, 2001, to expand electricity produc-
tion at a facility used to generate electric en-
ergy from a renewable energy resource or to
882 
cofire biomass that was placed in service before 
the date of enactment of this section; or 
‘‘(B) the additional generation above the 
average generation in the 3 years preceding the 
date of enactment of this section at a facility 
used to generate electric energy from a renew-
able energy resource or to cofire biomass that 
was placed in service before the date of enact-
ment of this section. 
‘‘(10) RETAIL ELECTRIC SUPPLIER.—The term 
‘retail electric supplier’ means a person that sells 
electric energy to electric consumers (other than con-
sumers in Hawaii) that sold not less than 1,000,000 
megawatt-hours of electric energy to electric con-
sumers for purposes other than resale during the 
preceding calendar year; except that such term does 
not include the United States, a State or any polit-
ical subdivision of a State, or any agency, authority, 
or instrumentality of any one or more of the fore-
going, or a rural electric cooperative. 
‘‘(11) RETAIL
ELECTRIC
SUPPLIER’S
BASE 
AMOUNT.—The term ‘retail electric supplier’s base 
amount’ means the total amount of electric energy 
sold by the retail electric supplier, expressed in 
terms of kilowatt hours, to electric customers for
883 
purposes other than resale during the most recent 
calendar year for which information is available, ex-
cluding— 
‘‘(A) electric energy that is not incremental 
hydropower generated by a hydroelectric facil-
ity; and 
‘‘(B) electricity generated through the in-
cineration of municipal solid waste. 
‘‘(b) COMPLIANCE.—For each calendar year begin-
ning in calendar year 2010, each retail electric supplier 
shall meet the requirements of subsection (c) by submit-
ting to the Secretary, not later than April 1 of the fol-
lowing calendar year, one or more of the following: 
‘‘(1) Federal renewable energy credits issued 
under subsection (e). 
‘‘(2) Federal energy efficiency credits issued 
under subsection (i), except that Federal energy effi-
ciency credits may not be used to meet more than 
27 percent of the requirements of subsection (c) in 
any calendar year. 
‘‘(3) Certification of the renewable energy gen-
erated and electricity savings pursuant to the funds 
associated with State compliance payments as speci-
fied in subsection (e)(3)(G).
884 
‘‘(4) Alternative compliance payments pursuant 
to subsection (j). 
‘‘(c) REQUIRED ANNUAL PERCENTAGE.—For cal-
endar years 2010 through 2039, the required annual per-
centage of the retail electric supplier’s base amount that 
shall be generated from renewable energy resources, or 
otherwise credited towards such percentage requirement 
pursuant to subsection (d), shall be the percentage speci-
fied in the following table: 
Required annual 
‘‘Calendar Years 
percentage 
2010 .....................................................................................
2.75 
2011 .....................................................................................
2.75 
2012 .....................................................................................
3.75 
2013 .....................................................................................
4.5 
2014 .....................................................................................
5.5 
2015 .....................................................................................
6.5 
2016 .....................................................................................
7.5 
2017 .....................................................................................
8.25 
2018 .....................................................................................
10.25 
2019 .....................................................................................
12.25 
2020 and thereafter through 2039 ......................................
‘‘(d) RENEWABLE ENERGY
AND ENERGY EFFI-
CIENCY CREDITS.—(1) A retail electric supplier may sat-
isfy the requirements of subsection (b)(1) through the sub-
mission of Federal renewable energy credits— 
‘‘(A) issued to the retail electric supplier under 
subsection (e); 
‘‘(B) obtained by purchase or exchange under 
subsection (f) or (g); or 
‘‘(C) borrowed under subsection (h).
890 
renewable energy credits shall subject the retail electric 
supplier to civil penalties under subsection (i) for violation 
of the requirements of subsection (b) for each calendar 
year involved. 
‘‘(i) ENERGY EFFICIENCY CREDITS.— 
‘‘(1) DEFINITIONS.—In this subsection— 
‘‘(A) CUSTOMER FACILITY SAVINGS.—The 
term ‘customer facility savings’ means a reduc-
tion in end-use electricity at a facility of an 
end-use consumer of electricity served by a re-
tail electric supplier, as compared to— 
‘‘(i) consumption at the facility during 
a base year; 
‘‘(ii) in the case of new equipment (re-
gardless of whether the new equipment re-
places existing equipment at the end of the 
useful life of the existing equipment), con-
sumption by the new equipment of average 
efficiency; or 
‘‘(iii) in the case of a new facility, 
consumption at a reference facility. 
‘‘(B) ELECTRICITY
SAVINGS.—The term 
‘electricity savings’ means— 
‘‘(i) customer facility savings of elec-
tricity consumption adjusted to reflect any
891 
associated increase in fuel consumption at 
the facility; 
‘‘(ii) reductions in distribution system 
losses of electricity achieved by a retail 
electricity distributor, as compared to 
losses attributable to new or replacement 
distribution system equipment of average 
efficiency (as defined by the Secretary by 
regulation); 
‘‘(iii) the output of new combined heat 
and power systems, to the extent provided 
under paragraph (5); and 
‘‘(iv) recycled energy savings. 
‘‘(C) 
QUALIFYING
ELECTRICITY
SAV-
INGS.—The term ‘qualifying electricity savings’ 
means electricity saving that meet the measure-
ment and verification requirements of para-
graph (4). 
‘‘(D) RECYCLED
ENERGY
SAVINGS.—The 
term ‘recycled energy savings’ means a reduc-
tion in electricity consumption that is attrib-
utable to electrical or mechanical power, or 
both, produced by modifying an industrial or 
commercial system that was in operation before
892 
July 1, 2007, in order to recapture energy that 
would otherwise be wasted. 
‘‘(2) PETITION.—The Governor of a State may 
petition the Secretary to allow up to 25 percent of 
the requirements of a retail electric supplier under 
subsection (c) in the State to be met by submitting 
Federal energy efficiency credits issued pursuant to 
this subsection. 
‘‘(3) ISSUANCE OF CREDITS.— 
‘‘(A) The Secretary shall issue energy effi-
ciency credits in States described in paragraph 
(2) in accordance with this subsection. 
‘‘(B) In accordance with regulations pro-
mulgated by the Secretary, the Secretary shall 
issue credits for— 
‘‘(i) 
qualified 
electricity 
savings 
achieved by a retail electric supplier in a 
calendar year; and 
‘‘(ii) 
qualified 
electricity 
savings 
achieved by other entities (including State 
agencies) if— 
‘‘(I) the measures used to achieve 
the qualifying electricity savings were 
installed or place in operation by the
893 
entity seeking the credit or the des-
ignated agent of the entity; and 
‘‘(II) no retail electric supplier 
paid a substantial portion of the cost 
of achieving the qualified electricity 
savings (unless the utility has waived 
any entitlement to the credit). 
‘‘(4) MEASUREMENT
AND
VERIFICATION
OF 
ELECTRICITY
SAVINGS.—Not later than June 30, 
2009, the Secretary shall promulgate regulations re-
garding the measurement and verification of elec-
tricity savings under this subsection, including regu-
lations covering— 
‘‘(A) procedures and standards for defining 
and measuring electricity savings that will be 
eligible to receive credits under paragraph (3), 
which shall— 
‘‘(i) specify the types of energy effi-
ciency and energy conservation that will be 
eligible for the credits; 
‘‘(ii) require that energy consumption 
for customer facilities or portions of facili-
ties in the applicable base and current 
years be adjusted, as appropriate, to ac-
894 
count for changes in weather, level of pro-
duction, and building area; 
‘‘(iii) account for the useful life of 
electricity savings measures; 
‘‘(iv) include specified electricity sav-
ings values for specific, commonly-used ef-
ficiency measures; 
‘‘(v) specify the extent to which elec-
tricity savings attributable to measures 
carried out before the date of enactment of 
this section are eligible to receive credits 
under this subsection; and 
‘‘(vi) exclude electricity savings that 
(I) are not properly attributable to meas-
ures carried out by the entity seeking the 
credit; or (II) have already been credited 
under this section to another entity; 
‘‘(B) procedures and standards for third- 
party verification of reported electricity savings; 
and 
‘‘(C) such requirements for information, 
reports, and access to facilities as may be nec-
essary to carry out this subsection. 
‘‘(5) COMBINED
HEAT
AND
POWER.—Under 
regulations promulgated by the Secretary, the incre-
904 
TITLE XI—PRODUCTION 
INCENTIVES 
SEC. 11001. EXTENSION AND MODIFICATION OF RENEW-
ABLE 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, 2013’’: 
(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
905 
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, 2008, the amount of the 
credit determined under subsection (a) for any 
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 credit determined under 
subsection (a) (determined without regard 
to this paragraph) with respect to such fa-
cility for such taxable year, the limitation 
imposed under subparagraph (A) with re-
spect to such facility for the succeeding
906 
taxable year shall be increased by the 
amount of such excess. 
‘‘(ii) EXCESS CREDIT.—If the credit 
determined under subsection (a) (deter-
mined without regard to this paragraph) 
with respect to any facility for any taxable 
year exceeds the limitation imposed under 
subparagraph (A) with respect to such fa-
cility for such taxable year, the credit de-
termined under subsection (a) with respect 
to such facility for the succeeding taxable 
year (determined before the application of 
subparagraph (A) for such succeeding tax-
able year) shall be increased by the 
amount of such excess. With respect to any 
facility, no amount may carried forward 
under this clause to any taxable year be-
ginning after the 10-year period described 
in subsection (a)(2)(A)(ii) with respect to 
such facility. 
‘‘(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-
907 
scribed by the Secretary for the month in 
which such facility is originally placed in 
service. 
‘‘(ii) METHOD OF PRESCRIBING PER-
CENTAGES.—The percentages prescribed 
by the Secretary for any month under 
clause (i) shall be percentages which yield 
over a 10-year period amounts of limita-
tion under subparagraph (A) which have a 
present value equal to 35 percent of the el-
igible basis of the facility. 
‘‘(iii) METHOD
OF
DISCOUNTING.— 
The present value under clause (ii) shall be 
determined— 
‘‘(I) as of the last day of the 1st 
year of the 10-year period referred to 
in clause (ii), 
‘‘(II) by using a discount rate 
equal to the average annual interest 
rate of tax-exempt obligations having 
a term of 10 years or more which are 
issued during the month preceding the 
month for which the percentage is 
being prescribed, and
908 
‘‘(III) by taking into account the 
limitation under subparagraph (A) for 
any year on the last day of such year. 
‘‘(D) ELIGIBLE
BASIS.—For purposes of 
this paragraph, the term ‘eligible basis’ means, 
with respect to any facility, the basis of such fa-
cility determined as of the time that such facil-
ity is originally placed in service. 
‘‘(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 
without regard to this subparagraph) as such 
portion of the taxable year which is not within 
such period bears to the entire taxable year.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to property originally placed in service 
after December 31, 2008.
911 
‘‘(B) which is originally placed in service 
on or after the date of the enactment of this 
paragraph and before January 1, 2013.’’. 
(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 
this Act, is amended by striking ‘‘January 1, 2013’’ 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 
after the date of the enactment of this Act, in taxable 
years ending after such date. 
SEC. 11003. 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
912 
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.’’. 
(c) INCREASE OF CREDIT LIMITATION FOR FUEL 
CELL PROPERTY.—Subparagraph (B) of section 48(c)(1) 
is amended by striking ‘‘$500’’ and inserting ‘‘$1,500’’. 
(d) PUBLIC ELECTRIC UTILITY PROPERTY TAKEN 
INTO ACCOUNT.— 
(1) IN
GENERAL.—Paragraph (3) of section 
48(a) is amended by striking the second sentence 
thereof. 
(2) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 48(c) is 
amended by striking subparagraph (D) and re-
designating subparagraph (E) as subparagraph 
(D).
913 
(B) Paragraph (2) of section 48(c) is 
amended by striking subparagraph (D) and re-
designating subparagraph (E) as subparagraph 
(D). 
(e) CLERICAL AMENDMENTS.—Paragraphs (1)(B) 
and (2)(B) of section 48(c) are each amended by striking 
‘‘paragraph (1)’’ and inserting ‘‘subsection (a)’’. 
(f) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall take effect on the date of the en-
actment of this Act. 
(2) ALLOWANCE AGAINST ALTERNATIVE MIN-
IMUM TAX.—The amendments made by subsection 
(b) shall apply to credits determined under section 
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
914 
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 June 20, 2007, in taxable years end-
ing 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. 11004. 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. 
‘‘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.
915 
‘‘(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-
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
916 
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 
‘‘(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-
917 
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— 
‘‘(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.
918 
‘‘(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. 
‘‘(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
919 
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 
the issuer for amounts paid for a qualified pur-
pose after the date that the Secretary makes an 
allocation of bond limitation with respect to 
such issue, but only if— 
‘‘(i) prior to the payment of the origi-
nal expenditure, the issuer declared its in-
tent to reimburse such expenditure with 
the proceeds of a qualified tax credit bond, 
‘‘(ii) not later than 60 days after pay-
ment of the original expenditure, the issuer 
adopts an official intent to reimburse the
920 
original expenditure with such proceeds, 
and 
‘‘(iii) the reimbursement is made not 
later than 18 months after the date the 
original expenditure is paid. 
‘‘(3) REPORTING.—An issue shall be treated as 
meeting the requirements of this paragraph if the 
issuer of qualified tax credit bonds submits reports 
similar to the reports required under section 149(e). 
‘‘(4) SPECIAL
RULES
RELATING
TO
ARBI-
TRAGE.— 
‘‘(A) IN
GENERAL.—An issue shall be 
treated as meeting the requirements of this 
paragraph if the issuer satisfies the require-
ments of section 148 with respect to the pro-
ceeds of the issue. 
‘‘(B) SPECIAL
RULE
FOR
INVESTMENTS 
DURING EXPENDITURE PERIOD.—An issue shall 
not be treated as failing to meet the require-
ments of subparagraph (A) by reason of any in-
vestment of available project proceeds during 
the expenditure period. 
‘‘(C) 
SPECIAL
RULE
FOR
RESERVE 
FUNDS.—An issue shall not be treated as fail-
ing to meet the requirements of subparagraph
929 
(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)). 
‘‘(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.’’.