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‘‘(2) RESIDENTIAL PROPERTY.—In the case of
any property installed on property which is used as
the principal residence (within the meaning of section
121) of the taxpayer, paragraph (1) of section
179A(d) shall not apply.
‘‘(d) APPLICATION WITH OTHER CREDITS.—The cred-
it allowed under subsection (a) for any taxable year shall
not exceed the excess (if any) of—
‘‘(1) the regular tax for the taxable year reduced
by the sum of the credits allowable under subpart A
and sections 27, 29, 30, and 30B, over
‘‘(2) the tentative minimum tax for the taxable
year.
‘‘(e) CARRYFORWARD ALLOWED.—
‘‘(1) IN GENERAL.—If the credit amount allow-
able under subsection (a) for a taxable year exceeds
the amount of the limitation under subsection (d) for
such taxable year, such excess shall be allowed as a
credit carryforward for each of the 20 taxable years
following the unused credit year.
‘‘(2) RULES.—Rules similar to the rules of sec-
tion 39 shall apply with respect to the credit
carryforward under paragraph (1).
‘‘(f) SPECIAL RULES.—For purposes of this section—
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‘‘(1) BASIS REDUCTION.—The basis of any prop-
erty shall be reduced by the portion of the cost of such
property taken into account under subsection (a).
‘‘(2) NO DOUBLE BENEFIT.—No deduction shall
be allowed under section 179A with respect to any
property with respect to which a credit is allowed
under subsection (a).
‘‘(3) PROPERTY USED BY TAX-EXEMPT ENTITY.—
In the case of any qualified alternative fuel vehicle re-
fueling property the use of which is described in para-
graph (3) or (4) of section 50(b) and which is not
subject to a lease, the person who sold such property
to the person or entity using such property shall be
treated as the taxpayer that placed such property in
service, but only if such person clearly discloses to
such person or entity in a document the amount of
any credit allowable under subsection (a) with respect
to such property (determined without regard to sub-
section (d)).
‘‘(4) PROPERTY USED OUTSIDE UNITED STATES
NOT QUALIFIED.—No credit shall be allowable under
subsection (a) with respect to any property referred to
in section 50(b)(1) or with respect to the portion of
the cost of any property taken into account under sec-
tion 179.
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‘‘(5) ELECTION NOT TO TAKE CREDIT.—No credit
shall be allowed under subsection (a) for any property
if the taxpayer elects not to have this section apply
to such property.
‘‘(6) RECAPTURE RULES.—Rules similar to the
rules of section 179A(e)(4) shall apply.
‘‘(g) REGULATIONS.—The Secretary shall prescribe
such regulations as necessary to carry out the provisions
of this section.
‘‘(h) TERMINATION.—This section shall not apply to
any property placed in service—
‘‘(1) in the case of property relating to hydrogen,
after December 31, 2014, and
‘‘(2) in the case of any other property, after De-
cember 31, 2009.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 1016(a), as amended by this Act, is
amended by striking ‘‘and’’ at the end of paragraph
(36), by striking the period at the end of paragraph
(37) and inserting ‘‘, and’’, and by adding at the end
the following new paragraph:
‘‘(38) to the extent provided in section 30C(f).’’.
(2) Section 55(c)(2), as amended by this Act, is
amended by inserting ‘‘30C(e),’’ after ‘‘30B(e),’’.
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(3) Section 6501(m) is amended by inserting
‘‘30C(f)(5),’’ after ‘‘30B(f)(9),’’.
(4) The table of sections for subpart B of part IV
of subchapter A of chapter 1, as amended by this Act,
is amended by inserting after the item relating to sec-
tion 30B the following new item:
‘‘Sec. 30C. Clean-fuel vehicle refueling property credit.’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after De-
cember 31, 2005, in taxable years ending after such date.
SEC. 1534. VOLUMETRIC EXCISE TAX CREDIT FOR ALTER-
NATIVE FUELS.
(a) IMPOSITION OF TAX.—
(1) IN GENERAL.—Section 4041(a)(2)(B) (relat-
ing to rate of tax) is amended—
(A) by adding ‘‘and’’ at the end of clause
(i),
(B) by striking clauses (ii) and (iii),
(C) by striking the last sentence, and
(D) by adding after clause (i) the following
new clause:
‘‘(ii) in the case of liquefied natural
gas, any liquid fuel (other than ethanol and
methanol) derived from coal (including
peat), and liquid hydrocarbons derived from
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biomass (as defined in section 29(c)(3)),
24.3 cents per gallon.’’.
(2) TREATMENT
OF
COMPRESSED
NATURAL
GAS.—Section 4041(a)(3) (relating to compressed nat-
ural gas) is amended—
(A) by striking ‘‘48.54 cents per MCF (de-
termined at standard temperature and pres-
sure)’’ in subparagraph (A) and inserting ‘‘18.3
cents per energy equivalent of a gallon of gaso-
line’’, and
(B) by striking ‘‘MCF’’ in subparagraph
(C) and inserting ‘‘energy equivalent of a gallon
of gasoline’’.
(3) 
ZERO
RATE
FOR
HYDROGEN.—Section
4041(a)(2)(A) is amended by inserting ‘‘liquefied hy-
drogen,’’ after ‘‘fuel oil,’’.
(4) NEW REFERENCE.—The heading for para-
graph (2) of section 4041(a) is amended by striking
‘‘SPECIAL
MOTOR
FUELS’’ and inserting ‘‘ALTER-
NATIVE FUELS’’.
(b) CREDIT
FOR ALTERNATIVE FUEL
AND ALTER-
NATIVE FUEL MIXTURES.—
(1) IN GENERAL.—Section 6426(a) (relating to
allowance of credits) is amended to read as follows:
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‘‘(a) ALLOWANCE OF CREDITS.—There shall be allowed
as a credit—
‘‘(1) against the tax imposed by section 4081 an
amount equal to the sum of the credits described in
subsections (b), (c), and (e), and
‘‘(2) against the tax imposed by section 4041 an
amount equal to the sum of the credits described in
subsection (d).
No credit shall be allowed in the case of the credits described
in subsections (d) and (e) unless the taxpayer is registered
under section 4101.
(2) ALTERNATIVE FUEL AND ALTERNATIVE FUEL
MIXTURE CREDIT.—Section 6426 (relating to credit
for alcohol fuel and biodiesel mixtures) is amended by
redesignating subsections (d) and (e) as subsections
(f) and (g) and by inserting after subsection (c) the
following new subsections:
‘‘(d) ALTERNATIVE FUEL CREDIT.—
‘‘(1) IN GENERAL.—For purposes of this section,
the alternative fuel credit is the product of 50 cents
and the number of gallons of an alternative fuel or
gasoline gallon equivalents of a nonliquid alternative
fuel sold by the taxpayer for use as a fuel in a motor
vehicle or motorboat, or so used by the taxpayer.
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‘‘(2) ALTERNATIVE FUEL.—For purposes of this
section, the term ‘alternative fuel’ means—
‘‘(A) liquefied petroleum gas,
‘‘(B) P Series Fuels (as defined by the Sec-
retary of Energy under section 13211(2) of title
42, United States Code),
‘‘(C) compressed or liquefied natural gas,
‘‘(D) hydrogen,
‘‘(E) any liquid fuel derived from coal (in-
cluding peat) through the Fischer-Tropsch proc-
ess,
‘‘(F) liquid hydrocarbons derived from bio-
mass (as defined in section 29(c)(3)).
Such term does not include ethanol, methanol, or bio-
diesel.
‘‘(3) GASOLINE GALLON EQUIVALENT.—For pur-
poses of this subsection, the term ‘gasoline gallon
equivalent’ means, with respect to any nonliquid al-
ternative fuel, the amount of such fuel having a Btu
content of 124,800 (higher heating value).
‘‘(4) TERMINATION.—This subsection shall not
apply to any sale, use, or removal for any period
after September 30, 2009.
‘‘(e) ALTERNATIVE FUEL MIXTURE CREDIT.—
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‘‘(1) IN GENERAL.—For purposes of this section,
the alternative fuel mixture credit is the product of 50
cents and the number of gallons of alternative fuel
used by the taxpayer in producing any alternative
fuel mixture for sale or use in a trade or business of
the taxpayer.
‘‘(2) ALTERNATIVE
FUEL
MIXTURE.—For pur-
poses of this section, the term ‘alternative fuel mix-
ture’ means a mixture of alternative fuel and taxable
fuel (as defined in subparagraph (A), (B), or (C) of
section 4083(a)(1)) which—
‘‘(A) is sold by the taxpayer producing such
mixture to any person for use as fuel, or
‘‘(B) is used as a fuel by the taxpayer pro-
ducing such mixture.
‘‘(3) TERMINATION.—This subsection shall not
apply to any sale, use, or removal for any period
after September 30, 2009.’’.
(3) CONFORMING AMENDMENTS.—
(A) The section heading for section 6426 is
amended by striking ‘‘ALCOHOL
FUEL
AND
BIODIESEL’’ and inserting ‘‘ALCOHOL FUEL,
BIODIESEL, AND ALTERNATIVE FUEL’’.
(B) The table of sections for subchapter B of
chapter 65 is amended by striking ‘‘alcohol fuel
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and biodiesel’’ in the item relating to section
6426 and inserting ‘‘alcohol fuel, biodiesel, and
alternative fuel’’.
(C) Section 6427(e) is amended—
(i) by inserting ‘‘or the alternative fuel
mixture credit’’ after ‘‘biodiesel mixture
credit’’ in paragraph (1),
(ii) by redesignating paragraph (2) as
paragraph (3) and paragraph (4) as para-
graph (5),
(iii) by inserting after paragraph (1)
the following new paragraph:
‘‘(2) ALTERNATIVE FUEL.—If any person sells or
uses an alternative fuel (as defined in section
6426(d)(2)) for a purpose described in section
6426(d)(1) in such person’s trade or business, the Sec-
retary shall pay (without interest) to such person an
amount equal to the alternative fuel credit with re-
spect to such fuel.’’,
(iv) by striking ‘‘under paragraph (1)
with respect to any mixture’’ in paragraph
(3) (as redesignated by clause (ii)) and in-
serting ‘‘under paragraph (1) or (2) with
respect to any mixture or alternative fuel’’,
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(v) by inserting after paragraph (3)
(as so redesignated) the following new para-
graph:
‘‘(4) REGISTRATION REQUIREMENT FOR ALTER-
NATIVE FUELS.—The Secretary shall not make any
payment under this subsection to any person with re-
spect to any alternative fuel credit or alternative fuel
mixture credit unless the person is registered under
section 4101.’’,
(vi) by striking ‘‘and’’ at the end of
paragraph (5)(A) (as redesignated by clause
(ii)),
(vii) by striking the period at the end
of paragraph (5)(B) (as so redesignated)
and inserting a comma,
(viii) by adding at the end of para-
graph (4) (as so redesignated) the following
new subparagraphs:
‘‘(C) except as provided in subparagraph
(D), any alternative fuel or alternative fuel mix-
ture (as defined in section 6426 (d)(2) or (e)(3))
sold or used after September 30, 2009, and
‘‘(D) any alternative fuel or alternative fuel
mixture (as so defined) involving hydrogen sold
or used after December 31, 2014.’’, and
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(ix) by striking ‘‘OR BIODIESEL USED
TO PRODUCE ALCOHOL FUEL
AND BIO-
DIESEL MIXTURES’’ in the heading and in-
serting ‘‘, BIODIESEL, OR ALTERNATIVE
FUEL’’.
(c) ADDITIONAL REGISTRATION REQUIREMENTS.—
Section 4101(a)(1) (relating to registration) is amended—
(1) by striking ‘‘4041(a)(1)’’ and inserting
‘‘4041(a)’’, and
(2) by inserting ‘‘or hydrogen’’ before ‘‘shall reg-
ister’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to any sale, use, or removal for any pe-
riod after September 30, 2006.
SEC. 1535. EXTENSION OF EXCISE TAX PROVISIONS AND IN-
COME TAX CREDIT FOR BIODIESEL.
(a) IN GENERAL.—Sections 40A(e), 6426(c)(6), and
6427(e)(4)(B) are each amended by striking ‘‘2006’’ and in-
serting ‘‘2010’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall take effect on the date of the enactment of this
Act.
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Subtitle E—Additional Energy Tax
Incentives
SEC. 1541. 10-YEAR RECOVERY PERIOD FOR UNDERGROUND
NATURAL GAS STORAGE FACILITY PROPERTY.
(a) IN
GENERAL.—Subparagraph (D) of section
168(e)(3) (relating to 10-year property) is amended by
striking ‘‘and’’ at the end of clause (i), by striking the pe-
riod at the end of clause (ii) and inserting ‘‘, and’’, and
by adding at the end the following new clause:
‘‘(iii) any qualified underground nat-
ural gas storage facility property.’’.
(b) DEFINITION.—Section 168(i) (relating to defini-
tions and special rules) is amended by adding at the end
the following new paragraph:
‘‘(17) QUALIFIED UNDERGROUND NATURAL GAS
STORAGE FACILITY PROPERTY.—
‘‘(A) IN GENERAL.—The term ‘qualified un-
derground natural gas storage facility property’
means any underground natural gas storage fa-
cility and any equipment related to such facility,
including any nonrecoverable cushion gas, the
original use of which commences with the tax-
payer.
‘‘(B) CUSHION
GAS.—The term ‘cushion
gas’ means the minimum volume of natural gas
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necessary to provide the pressure to facilitate the
flow of natural gas from a storage reservoir, aq-
uifer, or cavern to a pipeline.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after the
date of the enactment of this Act.
SEC. 1542. EXPANSION OF RESEARCH CREDIT.
(a) CREDIT FOR EXPENSES ATTRIBUTABLE TO CER-
TAIN COLLABORATIVE ENERGY RESEARCH CONSORTIA.—
(1) IN
GENERAL.—Section 41(a) (relating to
credit for increasing research activities) is amended
by striking ‘‘and’’ at the end of paragraph (1), by
striking the period at the end of paragraph (2) and
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph:
‘‘(3) 20 percent of the amounts paid or incurred
by the taxpayer in carrying on any trade or business
of the taxpayer during the taxable year (including as
contributions) to an energy research consortium.’’.
(2) 
ENERGY
RESEARCH
CONSORTIUM
DE-
FINED.—Section 41(f) (relating to special rules) is
amended by adding at the end the following new
paragraph:
‘‘(6) ENERGY RESEARCH CONSORTIUM.—
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‘‘(A) IN GENERAL.—The term ‘energy re-
search consortium’ means any organization—
‘‘(i) which is—
‘‘(I) described in section 501(c)(3)
and is exempt from tax under section
501(a) and is organized and operated
primarily to conduct energy research,
or
‘‘(II) organized and operated pri-
marily to conduct energy research in
the public interest (within the meaning
of section 501(c)(3)),
‘‘(ii) which is not a private founda-
tion,
‘‘(iii) to which at least 5 unrelated
persons paid or incurred during the cal-
endar year in which the taxable year of the
organization begins amounts (including as
contributions) to such organization for en-
ergy research, and
‘‘(iv) to which no single person paid or
incurred (including as contributions) dur-
ing such calendar year an amount equal to
more than 50 percent of the total amounts
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received by such organization during such
calendar year for energy research.
‘‘(B) TREATMENT
OF
PERSONS.—All per-
sons treated as a single employer under sub-
section (a) or (b) of section 52 shall be treated
as related persons for purposes of subparagraph
(A)(iii) and as a single person for purposes of
subparagraph (A)(iv).’’.
(3) 
CONFORMING
AMENDMENT.—Section
41(b)(3)(C) is amended by inserting ‘‘(other than an
energy research consortium)’’ after ‘‘organization’’.
(b) REPEAL OF LIMITATION ON CONTRACT RESEARCH
EXPENSES PAID TO SMALL BUSINESSES, UNIVERSITIES,
AND FEDERAL LABORATORIES.—Section 41(b)(3) (relating
to contract research expenses) is amended by adding at the
end the following new subparagraph:
‘‘(D) AMOUNTS PAID TO ELIGIBLE SMALL
BUSINESSES, UNIVERSITIES, AND FEDERAL LAB-
ORATORIES.—
‘‘(i) IN
GENERAL.—In the case of
amounts paid by the taxpayer to—
‘‘(I) an eligible small business,
‘‘(II) an institution of higher edu-
cation (as defined in section 3304(f)),
or
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‘‘(III) an organization which is a
Federal laboratory,
for qualified research which is energy re-
search, subparagraph (A) shall be applied
by substituting ‘100 percent’ for ‘65 per-
cent’.
‘‘(ii) ELIGIBLE SMALL BUSINESS.—For
purposes of this subparagraph, the term ‘eli-
gible small business’ means a small business
with respect to which the taxpayer does not
own (within the meaning of section 318) 50
percent or more of—
‘‘(I) in the case of a corporation,
the outstanding stock of the corpora-
tion (either by vote or value), and
‘‘(II) in the case of a small busi-
ness which is not a corporation, the
capital and profits interests of the
small business.
‘‘(iii) SMALL BUSINESS.—For purposes
of this subparagraph—
‘‘(I) 
IN
GENERAL.—The 
term
‘small business’ means, with respect to
any calendar year, any person if the
annual average number of employees
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employed by such person during either
of the 2 preceding calendar years was
500 or fewer. For purposes of the pre-
ceding sentence, a preceding calendar
year may be taken into account only if
the person was in existence throughout
the year.
‘‘(II) 
STARTUPS, 
CONTROLLED
GROUPS, AND
PREDECESSORS.—Rules
similar to the rules of subparagraphs
(B) and (D) of section 220(c)(4) shall
apply for purposes of this clause.
‘‘(iv) 
FEDERAL
LABORATORY.—For
purposes of this subparagraph, the term
‘Federal laboratory’ has the meaning given
such term by section 4(6) of the Stevenson-
Wydler Technology Innovation Act of 1980
(15 U.S.C. 3703(6)), as in effect on the date
of the enactment of the Energy Tax Incen-
tives Act.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to amounts paid or incurred after the
date of the enactment of this Act, in taxable years ending
after such date.