(2) ALLOWANCE AGAINST ALTERNATIVE MINIMUM 
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 begin-
ning 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 enactment 
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 June 20, 2007, in taxable years ending 
after such date, under rules similar to the rules of sec-
tion 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 chapter 
1 (relating to credits against tax) is amended by adding 
at the end the following new subpart: 
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‘‘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 CREDIT 
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 cred-
its determined under subsection (b) with respect to such 
dates. 
‘‘(b) AMOUNT OF CREDIT.— 
‘‘(1) IN GENERAL.—The amount of the credit de-
termined 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 re-
spect to such bond. 
‘‘(2) ANNUAL CREDIT.—The annual credit deter-
mined 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. 
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‘‘(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 specified 
maturity or redemption date without discount and 
without interest cost to the qualified issuer. The ap-
plicable 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 REDEMP-
TION.—In the case of a bond which is issued during 
the 3-month period ending on a credit allowance date, 
the amount of the credit determined under this sub-
section with respect to such credit allowance date 
shall be a ratable portion of the credit otherwise deter-
mined 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— 
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‘‘(A) the sum of the regular tax liability (as 
defined in section 26(b)) plus the tax imposed by 
section 55, over 
‘‘(B) the sum of the credits allowable under 
this part (other than subpart C and this sub-
part). 
‘‘(2) CARRYOVER
OF
UNUSED
CREDIT.—If the 
credit allowable under subsection (a) exceeds the limi-
tation 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 treat-
ed as meeting the requirements of this paragraph 
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if, as of the date of issuance, the issuer reason-
ably 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 beginning 
on such date of issuance. 
‘‘(B) 
FAILURE
TO
SPEND
REQUIRED 
AMOUNT OF BOND PROCEEDS WITHIN 3 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 period. For purposes of 
this paragraph, the amount of the non-
qualified 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 ‘expendi-
ture 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 failure 
to expend the proceeds within the original 
expenditure period is due to reasonable 
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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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 
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 treat-
ed as meeting the requirements of this paragraph 
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if the issuer satisfies the requirements of section 
148 with respect to the proceeds of the issue. 
‘‘(B) SPECIAL
RULE
FOR
INVESTMENTS 
DURING EXPENDITURE PERIOD.—An issue shall 
not be treated as failing to meet the requirements 
of subparagraph (A) by reason of any investment 
of available project proceeds during the expendi-
ture period. 
‘‘(C) 
SPECIAL
RULE
FOR
RESERVE 
FUNDS.—An issue shall not be treated as failing 
to meet the requirements of subparagraph (A) by 
reason of any fund which is expected to be used 
to repay such issue if— 
‘‘(i) such fund is funded at a rate not 
more rapid than equal annual installments, 
‘‘(ii) such fund is funded in a manner 
that such fund will not exceed the amount 
necessary to repay the issue if invested at 
the maximum rate permitted under clause 
(iii), and 
‘‘(iii) the yield on such fund is not 
greater than the discount rate determined 
under paragraph (5)(B) with respect to the 
issue. 
‘‘(5) MATURITY LIMITATION.— 
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‘‘(A) IN GENERAL.—An issue shall not be 
treated as meeting the requirements of this para-
graph if the maturity of any bond which is part 
of such issue exceeds the maximum term deter-
mined by the Secretary under subparagraph (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 prin-
cipal 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-exempt obli-
gations 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 the 
requirements of this paragraph if the issuer certifies 
that— 
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‘‘(A) applicable State and local law require-
ments 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 additional 
rules are satisfied with respect to such issue. 
‘‘(e) OTHER DEFINITIONS.—For purposes of this sub-
chapter— 
‘‘(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 obli-
gation. 
‘‘(3) STATE.—The term ‘State’ includes the Dis-
trict of Columbia and any possession of the United 
States. 
‘‘(4) AVAILABLE PROJECT PROCEEDS.—The term 
‘available project proceeds’ means— 
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‘‘(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 COM-
PANIES AND REAL ESTATE INVESTMENT TRUSTS.—If any 
qualified tax credit bond is held by a regulated investment 
company or a real estate investment trust, the credit deter-
mined 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 share-
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holders or beneficiaries) under procedures prescribed by the 
Secretary. 
‘‘(i) CREDITS MAY BE STRIPPED.—Under regulations 
prescribed by the Secretary— 
‘‘(1) IN GENERAL.—There may be a separation 
(including at issuance) of the ownership of a qualified 
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 allow-
ance date holds the instrument evidencing the entitle-
ment 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. 
‘‘SEC. 54B. NEW CLEAN RENEWABLE ENERGY BONDS. 
‘‘(a) NEW CLEAN RENEWABLE ENERGY BOND.—For 
purposes of this subpart, the term ‘new clean renewable en-
ergy bond’ means any bond issued as part of an issue if— 
‘‘(1) 100 percent of the available project proceeds 
of such issue are to be used for capital expenditures 
incurred by public power providers or cooperative 
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electric companies for one or more qualified renewable 
energy facilities, 
‘‘(2) the bond is issued by a qualified issuer, and 
‘‘(3) the issuer designates such bond for purposes 
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 limi-
tation amount allocated under this subsection to such 
issuer. 
‘‘(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 
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‘‘(B) not more than 40 percent thereof may 
be allocated to qualified projects of cooperative 
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 limi-
tation under subparagraph (2)(A) bears to the 
cost of all such projects. 
‘‘(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 appropriate. 
‘‘(d) DEFINITIONS.—For purposes of this section— 
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‘‘(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 com-
pany. 
‘‘(2) PUBLIC POWER PROVIDER.—The term ‘pub-
lic power provider’ means a State utility with a serv-
ice obligation, as such terms are defined in section 
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). 
‘‘(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 coopera-
tive electric companies and is in existence on Feb-
ruary 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 
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electric company, a clean renewable energy bond lend-
er, or a not-for-profit electric utility which has re-
ceived a loan or loan guarantee under the Rural Elec-
trification Act.’’. 
(b) REPORTING.—Subsection (d) of section 6049 (relat-
ing to returns regarding payments of interest) is amended 
by adding at the end the following new paragraph: 
‘‘(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 regulations, in 
the case of any interest described in subpara-
graph (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 nec-
essary or appropriate to carry out the purposes 
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of this paragraph, including regulations which 
require more frequent or more detailed report-
ing.’’. 
(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 sub-
chapter A of chapter 1 is amended by striking ‘‘Cer-
tain Bonds’’ and inserting ‘‘Clean Renewable 
Energy Bonds’’. 
(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. 
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SEC. 105. EXTENSION AND MODIFICATION OF SPECIAL 
RULE TO IMPLEMENT FERC AND STATE ELEC-
TRIC 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 striking ‘‘before January 1, 2008,’’ and 
inserting ‘‘before January 1, 2010, by a qualified 
electric utility,’’. 
(2) QUALIFIED ELECTRIC UTILITY.—Subsection 
(i) of section 451 is amended by redesignating para-
graphs (6) through (10) as paragraphs (7) through 
(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) an electric utility (as defined in sec-
tion 3(22) of the Federal Power Act (16 U.S.C. 
796(22))), and 
‘‘(B) any person in the same holding com-
pany system (as defined in section 1262(9) of the 
Public Utility Holding Company Act of 2005 
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(42 U.S.C. 16451(9))) as an electric utility re-
ferred to subparagraph (A).’’. 
(b) EXTENSION OF PERIOD FOR TRANSFER OF OPER-
ATIONAL 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 PROPERTY.— 
Paragraph (5) of section 451(i) is amended by adding at 
the end the following new subparagraph: 
‘‘(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 amendment made by sub-
section (a) shall apply to transactions after December 
31, 2007. 
(2) TRANSFERS
OF
OPERATIONAL
CONTROL.— 
The amendment made by subsection (b) shall take ef-
fect as if included in section 909 of the American Jobs 
Creation Act of 2004. 
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(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. REPEAL OF DOLLAR LIMITATION AND ALLOW-
ANCE AGAINST ALTERNATIVE MINIMUM TAX 
FOR RESIDENTIAL SOLAR AND FUEL CELL 
PROPERTY CREDIT. 
(a) REPEAL OF MAXIMUM DOLLAR LIMITATION.— 
(1) IN GENERAL.—Subsection (b) of section 25D 
(relating to limitations) is amended to read as fol-
lows: 
‘‘(b) CERTIFICATION
OF SOLAR WATER HEATING 
PROPERTY.—No credit shall be allowed under this section 
for an item of property described in subsection (d)(1) unless 
such property is certified for performance by the non-profit 
Solar Rating Certification Corporation or a comparable en-
tity endorsed by the government of the State in which such 
property is installed.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Subsection (e) of section 25D is amend-
ed by striking paragraph (4) and by redesig-
nating paragraphs (5) through (9) as para-
graphs (4) through (8), respectively. 
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(B) Paragraph (1) of section 25C(e) is 
amended by striking ‘‘(8), and (9)’’ and insert-
ing ‘‘and (8) (and paragraph (4) as in effect be-
fore its repeal by the Renewable Energy and En-
ergy Conservation Tax Act of 2007)’’. 
(b) 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— 
‘‘(A) the sum of the regular tax liability (as 
defined in section 26(b)) plus the tax imposed 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 PER-
SONAL
CREDITS
ALLOWED
AGAINST
REGULAR 
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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) ex-
ceeds 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 subsection (a) for such suc-
ceeding 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 sub-
section (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 sub-
section (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’’. 
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(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 striking 
‘‘and 25B’’ and inserting ‘‘25B, and 25D’’. 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as otherwise provided 
in this subsection, the amendments made by this sec-
tion shall apply to expenditures made after the date 
of the enactment of this Act. 
(2) ALLOWANCE AGAINST ALTERNATIVE MINIMUM 
TAX.— 
(A) IN GENERAL.—The amendments made 
by subsection (b) shall apply to taxable years be-
ginning after the date of the enactment of this 
Act. 
(B) APPLICATION OF EGTRRA SUNSET.—The 
amendments made by subparagraphs (A) and 
(B) of subsection (b)(2) shall be subject to title 
IX of the Economic Growth and Tax Relief Rec-
onciliation Act of 2001 in the same manner as 
the provisions of such Act to which such amend-
ments relate. 
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TITLE II—CONSERVATION 
Subtitle A—Transportation 
SEC. 201. CREDIT FOR PLUG-IN HYBRID VEHICLES. 
(a) IN GENERAL.—Subpart B of part IV of subchapter 
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 allowed 
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 respect 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 vehicle 
which draws propulsion energy from a battery with 
not less than 5 kilowatt hours of capacity, the amount 
determined under this paragraph is $200, plus $200 
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for each kilowatt hour of capacity in excess of 5 kilo-
watt hours. The amount determined under this para-
graph 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 character 
subject to an allowance for depreciation shall be treat-
ed 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 al-
lowable under subpart A for such taxable year. 
‘‘(B) LIMITATION
BASED
ON
AMOUNT
OF 
TAX.—In the case of a taxable year to which sec-
tion 26(a)(2) does not apply, the credit allowed 
under subsection (a) for any taxable year (deter-
mined after application of paragraph (1)) shall 
not exceed the excess of— 
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‘‘(i) the sum of the regular tax liability 
(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 con-
formity under the Clean Air Act and meets or 
exceeds the Bin 5 Tier II emission standard es-
tablished in regulations prescribed by the Ad-
ministrator of the Environmental Protection 
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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 vehi-
cle has a gross vehicle weight rating of less than 8,500 
pounds. 
‘‘(3) OTHER TERMS.—The terms ‘passenger auto-
mobile’, ‘light truck’, and ‘manufacturer’ have the 
meanings given such terms in regulations prescribed 
by the Administrator of the Environmental Protection 
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Agency for purposes of the administration 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 allowed. 
‘‘(2) PHASEOUT PERIOD.—For purposes of this 
subsection, the phaseout period is the period begin-
ning with the second calendar quarter following the 
calendar quarter which includes the first date on 
which the number of qualified 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 section, 
is at least 60,000. 
‘‘(3) APPLICABLE
PERCENTAGE.—For purposes 
of paragraph (1), the applicable percentage is— 
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‘‘(A) 50 percent for the first 2 calendar 
quarters of the phaseout period, 
‘‘(B) 25 percent for the 3d and 4th calendar 
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 purposes 
of this subsection. 
‘‘(f) SPECIAL RULES.— 
‘‘(1) BASIS REDUCTION.—The basis of any prop-
erty for which a credit is allowable under subsection 
(a) shall be reduced by the amount of such credit (de-
termined without regard to subsection (c)). 
‘‘(2) RECAPTURE.—The Secretary shall, by regu-
lations, 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 re-
ferred to in section 50(b)(1) or with respect to the 
portion of the cost of any property taken into account 
under section 179. 
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‘‘(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 VEHICLE 
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 QUALI-
FIED HYBRID VEHICLES.—Section 30B(d)(3) is amended 
by adding at the end the following new subparagraph: 
‘‘(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, 
(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 
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(4) by adding at the end the following new para-
graph: 
‘‘(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 inserting 
‘‘25D, and 30D’’. 
(B) Section 25(e)(1)(C)(ii) is amended by insert-
ing ‘‘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 (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 
30D(f)(1).’’. 
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(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 adding 
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 cred-
it 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.— 
(1) IN GENERAL.—Except as otherwise provided 
in this subsection, the amendments made by this sec-
tion shall apply to taxable years beginning after De-
cember 31, 2007. 
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(2) TREATMENT OF ALTERNATIVE MOTOR VEHI-
CLE CREDIT AS PERSONAL CREDIT.—The amendments 
made by subsection (e) shall apply to taxable years 
beginning after December 31, 2006. 
(g) APPLICATION OF EGTRRA SUNSET.—The amend-
ment made by subsection (d)(1)(A) shall be subject to title 
IX of the Economic Growth and Tax Relief Reconciliation 
Act of 2001 in the same manner as the provision of such 
Act to which such amendment relates. 
SEC. 202. EXTENSION AND MODIFICATION OF ALTERNATIVE 
FUEL VEHICLE REFUELING PROPERTY CRED-
IT. 
(a) INCREASE IN CREDIT AMOUNT.—Section 30C (re-
lating to alternative fuel vehicle refueling property credit) 
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 section 
30C(g) (relating to termination) is amended by striking 
‘‘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 
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date of the enactment of this Act, in taxable years ending 
after such date. 
SEC. 203. 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 
‘‘using 
a 
thermal 
depolymerization process’’, and 
(2) by striking ‘‘or D396’’ in subparagraph (B) 
and inserting ‘‘or other equivalent standard approved 
by the Secretary for fuels to be used in diesel-powered 
highway vehicles’’. 
(c) 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 the 
date of the enactment of this Act. 
(2) UNIFORM TREATMENT OF DIESEL PRODUCED 
FROM
BIOMASS.—The amendments made by sub-
section (b) shall apply to fuel produced, and sold or 
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used, after the date which is 30 days after the date 
of the enactment of this Act. 
SEC. 204. 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 production 
of such producer. 
‘‘(B) QUALIFIED
CELLULOSIC
FUEL
PRO-
DUCTION.—For purposes of this paragraph, the 
term ‘qualified cellulosic fuel production’ means 
any cellulosic alcohol which is produced by a cel-
lulosic alcohol fuel producer, and which during 
the taxable year— 
‘‘(i) is sold by such producer to another 
person— 
‘‘(I) for use by such other person 
in the production of a qualified mix-
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ture in such other person’s trade or 
business (other than casual off-farm 
production), 
‘‘(II) for use by such other person 
as a fuel in a trade or business, or 
‘‘(III) who sells such alcohol at re-
tail 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 purposes 
of this paragraph, the term ‘cellulosic alcohol’ 
means any alcohol which— 
‘‘(i) is produced in the United States 
for use as a fuel in the United States, and 
‘‘(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 
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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 pro-
ducer increases the proof of the alcohol by addi-
tional distillation.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Subsection (a) of section 40 is amended by 
striking ‘‘plus’’ at the end of paragraph (1), by strik-
ing ‘‘plus’’ at the end of paragraph (2), by striking 
the period at the end of paragraph (3) and inserting 
‘‘, plus’’, and by adding at the end the following 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 amended 
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, 
2007. 
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SEC. 205. EXTENSION OF TRANSPORTATION FRINGE BEN-
EFIT TO BICYCLE COMMUTERS. 
(a) IN GENERAL.—Paragraph (1) of section 132(f) of 
the Internal Revenue Code of 1986 (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) of such Code 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: 
‘‘(C) the applicable annual limitation in 
the case of any qualified bicycle commuting re-
imbursement.’’. 
(c) DEFINITIONS.—Paragraph (5) of section 132(f) of 
such Code (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 
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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 storage, 
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 
multiplied by the number of qualified bicy-
cle commuting months during such year. 
‘‘(iii) QUALIFIED BICYCLE COMMUTING 
MONTH.—The term ‘qualified bicycle com-
muting month’ means, with respect 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 
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‘‘(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 reimbursement)’’ after 
‘‘qualified transportation fringe’’. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2007. 
SEC. 206. MODIFICATION OF LIMITATION ON AUTOMOBILE 
DEPRECIATION. 
(a) IN GENERAL.—Paragraph (5) of section 280F(d) 
of the Internal Revenue Code of 1986 (defining passenger 
automobile) is amended to read as follows: 
‘‘(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 
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‘‘(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 
‘‘(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 
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and load carrying device, does not have 
seating rearward of the driver’s seat, 
and has no body section protruding 
more than 30 inches ahead of the lead-
ing edge of the windshield. 
‘‘(D) EXEMPT-USE VEHICLE.—The term ‘ex-
empt-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 taxpayer 
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. 
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‘‘(E) RECAPTURE.—In the case of any vehi-
cle which is not a passenger automobile by rea-
son 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 such vehicle 
is placed in service, a rule similar to the rule of 
subsection (b) shall apply.’’. 
(b) CONFORMING AMENDMENT.—Section 179(b) of 
such Code (relating 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 De-
cember 31, 2007. 
SEC. 207. 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 Liberty 
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 sec-
tion 3403 an amount equal to so much of the portion of 
the qualifying project expenditure amount allocated under 
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subsection (b)(3) to such governmental unit for the calendar 
year as is allocated by such governmental unit to such pe-
riod 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 cal-
endar year, the sum of— 
‘‘(A) the total expenditures paid or incurred 
during such calendar year by all New York Lib-
erty Zone governmental units and the Port Au-
thority of New York and New Jersey for any 
portion of qualifying projects located 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-
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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 
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 pe-
riod 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 pe-
riod shall not exceed the sum of— 
‘‘(i) $169,000,000, plus 
‘‘(ii) the aggregate amount authorized 
to be allocated under this paragraph for all 
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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 credit 
period, the amount under subparagraph (B) ex-
ceeds the aggregate amount allocated under sub-
paragraph (A) for all calendar years in the cred-
it 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 calendar 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 ex-
penditure amount under paragraph (3) for a cal-
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endar year may allocate such portion to payroll peri-
ods beginning in such calendar year as such govern-
mental 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 im-
posed by section 3402 for which such governmental 
unit is liable under section 3403 for periods begin-
ning in such year, such excess shall be carried to the 
succeeding calendar year and added to the allocation 
of such governmental unit for such succeeding cal-
endar year. 
‘‘(2) REALLOCATION.—If a New York Liberty 
Zone governmental unit does not use an amount allo-
cated 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 manner as 
if it had never been allocated. 
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
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‘‘(1) CREDIT PERIOD.—The term ‘credit period’ 
means the 12-year period beginning on January 1, 
2008. 
‘‘(2) NEW YORK LIBERTY ZONE GOVERNMENTAL 
UNIT.—The term ‘New York Liberty Zone govern-
mental 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-
poses of the credit under this section shall be consid-
ered State and local funds for the purpose of any Fed-
eral program. 
‘‘(4) TREATMENT OF CREDIT AMOUNTS FOR PUR-
POSES
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 deducts 
and withholds wages for such payroll period under 
section 3401 (relating to wage withholding). 
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‘‘(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 sub-
section (b)(3) for the calendar year, and 
‘‘(2) includes such other information as the Sec-
retary may require to carry out this section. 
‘‘(f) GUIDANCE.—The Secretary may prescribe such 
guidance as may be necessary or appropriate to ensure com-
pliance with the purposes of this section.’’ 
(b) TERMINATION OF SPECIAL ALLOWANCE AND EX-
PENSING.—Subparagraph (A) of section 1400K(b)(2), as re-
designated by subsection (a), is amended by striking the 
parenthetical therein and inserting ‘‘(in the case of nonresi-
dential real property and residential rental property, the 
date of the enactment of the Renewable Energy and Energy 
Conservation Tax Act of 2007 or, if acquired pursuant to 
a binding contract in effect on such enactment date, Decem-
ber 31, 2009)’’. 
(c) CONFORMING AMENDMENTS.— 
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(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 strik-
ing ‘‘section 1400L(c)(2)’’ and inserting ‘‘section 
1400K(c)(2)’’. 
(3) The table of sections for part I of subchapter 
Y of chapter 1 is amended by redesignating the item 
relating to section 1400L as an item relating to sec-
tion 1400K and by inserting after such item the fol-
lowing new item: 
‘‘Sec. 1400L. New York Liberty Zone tax credits.’’. 
(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. 211. QUALIFIED ENERGY CONSERVATION BONDS. 
(a) IN GENERAL.—Subpart I of part IV of subchapter 
A of chapter 1, as added by section 104, is amended 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 energy con-
servation bond’ means any bond issued as part of an issue 
if— 
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‘‘(1) 100 percent of the available project proceeds 
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 purposes 
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 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 GOVERN-
MENTS.— 
‘‘(A) IN
GENERAL.—In the case of any 
State in which there is a large local government, 
each such local government shall be allocated a 
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portion of such State’s allocation which bears the 
same ratio to the State’s allocation (determined 
without regard to this subparagraph) as the pop-
ulation 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 re-
allocated 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 gov-
ernment’ 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 government 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 government being used to des-
ignate bonds which are not private activity bonds. 
‘‘(e) QUALIFIED CONSERVATION PURPOSE.—For pur-
poses of this section— 
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‘‘(1) IN GENERAL.—The term ‘qualified conserva-
tion purpose’ means any of the following: 
‘‘(A) Capital expenditures incurred for pur-
poses of— 
‘‘(i) reducing energy consumption in 
publicly-owned buildings by at least 20 per-
cent, 
‘‘(ii) implementing green community 
programs, or 
‘‘(iii) rural development involving the 
production of electricity from renewable en-
ergy resources. 
‘‘(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, 
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‘‘(iv) automobile battery technologies 
and other technologies to reduce fossil fuel 
consumption in transportation, or 
‘‘(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. 
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‘‘(2) SPECIAL
RULES
FOR
PRIVATE
ACTIVITY 
BONDS.—For purposes of this section, in the case of 
any private activity bond, the term ‘qualified con-
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 enact-
ment 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 
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State to the extent of so much of the population of 
such government as resides within such State, and 
‘‘(2) any bond issued by an Indian tribal gov-
ernment shall be treated as a qualified energy con-
servation bond only if issued as part of an issue the 
available project proceeds of which are used for pur-
poses for which such Indian tribal government could 
issue bonds to which section 103(a) applies.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (1) of section 54A(d), as added by 
section 104, is amended to read as follows: 
‘‘(1) QUALIFIED TAX CREDIT BOND.—The term 
‘qualified tax credit bond’ means— 
‘‘(A) a new clean renewable energy bond, or 
‘‘(B) a qualified energy conservation bond, 
which is part of an issue that meets requirements of 
paragraphs (2), (3), (4), and (5).’’. 
(2) Subparagraph (C) of section 54A(d)(2), as 
added by section 104, is amended to read as follows: 
‘‘(C) QUALIFIED
PURPOSE.—For purposes 
of this paragraph, the term ‘qualified purpose’ 
means— 
‘‘(i) in the case of a new clean renew-
able energy bond, a purpose specified in sec-
tion 54B(a)(1), and 
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‘‘(ii) in the case of a qualified energy 
conservation bond, a purpose specified in 
section 54C(a)(1).’’. 
(3) The table of sections for subpart I of part IV 
of subchapter A of chapter 1 is amended by adding 
at the end the following new item: 
‘‘Sec. 54C. Qualified energy conservation bonds.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to obligations issued after the date of 
the enactment of this Act. 
SEC. 212. QUALIFIED RESIDENTIAL ENERGY EFFICIENCY 
ASSISTANCE BONDS. 
(a) IN GENERAL.—Subpart I of part IV of subchapter 
A of chapter 1 (as amended by this Act) is amended by 
adding at the end the following new section: 
‘‘SEC. 54D. QUALIFIED RESIDENTIAL ENERGY EFFICIENCY 
ASSISTANCE BONDS. 
‘‘(a) QUALIFIED RESIDENTIAL ENERGY EFFICIENCY 
ASSISTANCE BOND.—For purposes of this subchapter, the 
term ‘qualified residential energy efficiency assistance bond’ 
means any bond issued as part of an issue if— 
‘‘(1) 100 percent of the available project proceeds 
of such issue are to be used for 1 or more qualified 
residential energy efficiency assistance purposes, 
‘‘(2) not less than 20 percent of the available 
project proceeds of such issue are to be used for 1 or 
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more qualified low-income residential energy effi-
ciency assistance purposes, 
‘‘(3) repayments of principal and applicable in-
terest on financing provided by the issue are used not 
later than the close of the 3-month period beginning 
on the date the prepayment (or complete repayment) 
is received to redeem bonds which are part of the issue 
or to provide for 1 or more qualified residential en-
ergy efficiency assistance purposes, 
‘‘(4) the bond is issued by a State, and 
‘‘(5) the issuer designates such bond for purposes 
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 any issuer 
shall not exceed the limitation amount allocated under sub-
section (d) to such issuer. 
‘‘(c) NATIONAL LIMITATION ON AMOUNT OF BONDS 
DESIGNATED.—There is a national qualified energy con-
servation bond limitation of $2,400,000,000. 
‘‘(d) LIMITATION ALLOCATED AMONG STATES.—The 
limitation under subsection (c) shall be allocated by the Sec-
retary among the States in proportion to the population 
of the States. 
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‘‘(e) QUALIFIED RESIDENTIAL ENERGY EFFICIENCY 
ASSISTANCE PURPOSE.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified residen-
tial energy efficiency assistance purpose’ means any 
grant or low-interest loan to acquire (including rea-
sonable installation costs)— 
‘‘(A) any property which meets (at a min-
imum) the requirements of the Energy Star pro-
gram and which is to be installed in a dwelling 
unit, 
‘‘(B) any property which uses wind, solar, 
or geothermal energy or qualified fuel cell prop-
erty (as defined in section 48(c)(1)) to generate 
electricity, or to heat or cool water, for use in a 
dwelling unit (other than property described in 
section 25D(e)(3)), and 
‘‘(C) any improvements to a dwelling unit 
which are made pursuant to a plan certified by 
an energy efficiency expert that such improve-
ment will yield at least a 20 percent reduction 
in total household energy consumption related to 
heating, cooling, lighting, and appliances. 
‘‘(2) GEOTHERMAL
HEAT
PUMP.—Any geo-
thermal heat pump to provide heating or cooling in 
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a dwelling unit described in paragraph (1)(B) shall 
be treated as described in paragraph (1)(B). 
‘‘(3) DOLLAR LIMITATIONS.— 
‘‘(A) IN GENERAL.—Such term shall not in-
clude any grant or loan for improvements de-
scribed in paragraph (1)(C) with respect to any 
dwelling unit to the extent that such grant or 
loan (when added to all other grants or loans for 
such improvements) exceeds $5,000. 
‘‘(B) INCREASED LIMITATION FOR CERTAIN 
PRINCIPAL RESIDENCES.—In the case of a dwell-
ing unit which is used as a principal residence 
(within the meaning of section 121) by the re-
cipient of the grant or loan referred to in sub-
paragraph (A)— 
‘‘(i) subparagraph (A) shall be applied 
by substituting ‘$12,000’ for ‘$5,000’ if such 
grant or loan would satisfy the require-
ments of paragraph (1)(A) if such para-
graph were applied by substituting ‘50 per-
cent’ for ‘20 percent’, and 
‘‘(ii) in any case to which clause (i) 
does not apply, subparagraph (A) shall be 
applied by substituting ‘$8,000’ for ‘$5,000’ 
if such grant or loan would satisfy the re-
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quirements of paragraph (1)(A) if such 
paragraph were applied by substituting ‘35 
percent’ for ‘20 percent’. 
‘‘(4) LOW-INTEREST LOAN.—The term ‘low inter-
est loan’ means any loan which charges interest at a 
rate which does not exceed the applicable Federal rate 
in effect under section 1288(b)(1) determined as of the 
issuance of the loan. 
‘‘(5) EXCLUSION OF CERTAIN PROPERTY.—The 
following property shall not be taken into account for 
purposes of paragraph (1)(A): 
‘‘(A) Any equipment used in connection 
with a swimming pool, hot tub, or similar prop-
erty. 
‘‘(B) Any television. 
‘‘(C) Any device for converting digital sig-
nal to analog. 
‘‘(D) Any DVD player. 
‘‘(E) Any video cassette recorder (VCR). 
‘‘(F) Any audio equipment. 
‘‘(G) Any cordless phone. 
‘‘(H) Any other item of property where 
there is substantial recreational use. 
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‘‘(f) QUALIFIED LOW-INCOME RESIDENTIAL EFFI-
CIENCY ASSISTANCE PURPOSE.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘qualified low-in-
come residential energy efficiency assistance purpose’ 
means any qualified residential energy efficiency as-
sistance purpose with respect to a dwelling unit 
which is occupied (at the time of the grant or loan) 
by individuals whose income is 50 percent or less of 
area median gross income. Rules similar to the rules 
of section 142(d)(2)(B) shall apply for purposes of 
this paragraph. 
‘‘(2) RESTRICTION TO GRANTS.—Such term shall 
not include any loan. 
‘‘(g) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) APPLICABLE INTEREST.—The term ‘appli-
cable interest’ means, with respect to any loan, so 
much of any interest on such loan which exceeds 1 
percentage point. 
‘‘(2) SPECIAL RULE RELATING TO ARBITRAGE.— 
An issue shall not be treated as failing to meet the re-
quirements of section 54A(d)(4)(A) by reason of any 
investment of available project proceeds in 1 or more 
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qualified residential energy efficiency assistance pur-
poses. 
‘‘(3) POPULATION.—The population of any State 
or local government shall be determined as provided 
in section 146(j) for the calendar year which includes 
the date of the enactment of this section. 
‘‘(4) REPORTING.— 
‘‘(A) REPORTS
BY
ISSUERS.—Issuers of 
qualified residential energy efficiency assistance 
bonds shall, not later than 6 months after the ex-
penditure period (as defined in section 54A) and 
annually thereafter until the last such bond is 
redeemed, submit reports to the Secretary regard-
ing such bonds, including information regard-
ing— 
‘‘(i) the number and monetary value of 
loans and grants provided and the purposes 
for which provided, 
‘‘(ii) the number of dwelling units the 
energy efficiency of which improved as re-
sult of such loans and grants, 
‘‘(iii) the types of property described in 
subsection (e)(1)(A) installed as a result of 
such loans and grants and the projected en-
ergy savings with respect to such property, 
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‘‘(iv) the types of property described in 
subsection (e)(1)(B) installed as a result of 
such loans and grants and the projected 
production of such property, and 
‘‘(v) the projected energy savings as a 
result of such loans and grants for improve-
ments described in subsection (e)(1)(C). 
‘‘(B) REPORT
TO
CONGRESS.—Not later 
than 12 months after receipt of the first report 
under subparagraph (A) and annually thereafter 
until the last such report is required to be sub-
mitted, the Secretary, in consultation with the 
Secretary of Energy and the Administrator of 
the Environmental Protection Agency, shall sub-
mit a report to Congress regarding the bond pro-
gram under this section, including information 
regarding— 
‘‘(i) the aggregate of each category of 
information described in subparagraph (A) 
(including any independent assessment of 
projected energy savings), and 
‘‘(ii) an estimate of the amount of 
greenhouse gas emissions reduced as a result 
of such bond program.’’. 
(b) CONFORMING AMENDMENTS.— 
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(1) Paragraph (1) of section 54A(d), as added by 
section 104 and amended by section 211, is amended 
by striking ‘‘or’’ at the end of subparagraph (A), by 
inserting ‘‘or’’ at the end of subparagraph (B), and 
by inserting after subparagraph (B) the following new 
subparagraph: 
‘‘(C) a qualified residential energy effi-
ciency assistance bond,’’. 
(2) Subparagraph (C) of section 54A(d)(2), as 
added by section 104 and amended by section 211, is 
amended by striking ‘‘and’’ at the end of clause (i), 
by striking the period at the end of clause (ii) and 
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new clause: 
‘‘(iii) in the case of a qualified residen-
tial energy efficiency assistance bond, a 
purpose specified in section 54D(a)(1).’’. 
(3) The table of sections for subpart I of part IV 
of subchapter A of chapter 1, as amended by this Act, 
is amended by adding at the end the following new 
item: 
‘‘Sec. 54D. Qualified residential energy efficiency assistance bonds.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to obligations issued after the date of 
the enactment of this Act. 
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SEC. 213. EXTENSION OF ENERGY EFFICIENT COMMERCIAL 
BUILDINGS DEDUCTION. 
Subsection (h) of section 179D (relating to termi-
nation) is amended by striking ‘‘December 31, 2008’’ and 
inserting ‘‘December 31, 2013’’. 
SEC. 214. MODIFICATIONS OF ENERGY EFFICIENT APPLI-
ANCE CREDIT FOR APPLIANCES PRODUCED 
AFTER 2007. 
(a) IN GENERAL.—Subsection (b) of section 45M (re-
lating to applicable amount) is amended to read as follows: 
‘‘(b) APPLICABLE AMOUNT.—For purposes of sub-
section (a)— 
‘‘(1) DISHWASHERS.—The applicable amount 
is— 
‘‘(A) $45 in the case of a dishwasher which 
is manufactured in calendar year 2008 or 2009 
and which uses no more than 324 kilowatt hours 
per year and 5.8 gallons per cycle, and 
‘‘(B) $75 in the case of a dishwasher which 
is manufactured in calendar year 2008, 2009, or 
2010 and which uses no more than 307 kilowatt 
hours per year and 5.0 gallons per cycle (5.5 gal-
lons per cycle for dishwashers designed for great-
er than 12 place settings). 
‘‘(2) 
CLOTHES
WASHERS.—The 
applicable 
amount is— 
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‘‘(A) $75 in the case of a residential top- 
loading clothes washer manufactured in calendar 
year 2008 which meets or exceeds a 1.72 modi-
fied energy factor and does not exceed a 8.0 
water consumption factor, 
‘‘(B) $125 in the case of a residential top- 
loading clothes washer manufactured in calendar 
year 2008 or 2009 which meets or exceeds a 1.8 
modified energy factor and does not exceed a 7.5 
water consumption factor, 
‘‘(C) $150 in the case of a residential or 
commercial clothes washer manufactured in cal-
endar year 2008, 2009 or 2010 which meets or 
exceeds 2.0 modified energy factor and does not 
exceed a 6.0 water consumption factor, and 
‘‘(D) $250 in the case of a residential or 
commercial clothes washer manufactured in cal-
endar year 2008, 2009, or 2010 which meets or 
exceeds 2.2 modified energy factor and does not 
exceed a 4.5 water consumption factor. 
‘‘(3) REFRIGERATORS.—The applicable amount 
is— 
‘‘(A) $50 in the case of a refrigerator which 
is manufactured in calendar year 2008, and con-
sumes at least 20 percent but not more than 22.9 
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percent less kilowatt hours per year than the 
2001 energy conservation standards, 
‘‘(B) $75 in the case of a refrigerator which 
is manufactured in calendar year 2008 or 2009, 
and consumes at least 23 percent but no more 
than 24.9 percent less kilowatt hours per year 
than the 2001 energy conservation standards, 
‘‘(C) $100 in the case of a refrigerator 
which is manufactured in calendar year 2008, 
2009 or 2010, and consumes at least 25 percent 
but not more than 29.9 percent less kilowatt 
hours per year than the 2001 energy conserva-
tion standards, and 
‘‘(D) $200 in the case of a refrigerator man-
ufactured in calendar year 2008, 2009 or 2010 
and which consumes at least 30 percent less en-
ergy than the 2001 energy conservation stand-
ards. 
‘‘(4) DEHUMIDIFIERS.—The applicable amount 
is— 
‘‘(A) $15 in the case of a dehumidifier man-
ufactured in calendar year 2008 that has a ca-
pacity less than or equal to 45 pints per day 
and is 7.5 percent more efficient than the appli-
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cable Department of Energy energy conservation 
standard effective October 2012, and 
‘‘(B) $25 in the case of a dehumidifier man-
ufactured in calendar year 2008 that has a ca-
pacity greater than 45 pints per day and is 7.5 
percent more efficient than the applicable De-
partment of Energy energy conservation stand-
ard effective October 2012.’’. 
(b) ELIGIBLE PRODUCTION.— 
(1) SIMILAR
TREATMENT
FOR
ALL
APPLI-
ANCES.—Subsection (c) of section 45M (relating to el-
igible production) is amended— 
(A) by striking paragraph (2), 
(B) by striking ‘‘(1) IN GENERAL’’ and all 
that follows through ‘‘the eligible’’ and inserting 
‘‘The eligible’’, and 
(C) by moving the text of such subsection in 
line with the subsection heading and redesig-
nating subparagraphs (A) and (B) as para-
graphs (1) and (2), respectively. 
(2) MODIFICATION
OF
BASE
PERIOD.—Para-
graph (2) of section 45M(c), as amended by para-
graph (1) of this section, is amended by striking ‘‘3- 
calendar year’’ and inserting ‘‘2-calendar year’’. 
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(c) TYPES OF ENERGY EFFICIENT APPLIANCES.—Sub-
section (d) of section 45M (defining types of energy efficient 
appliances) is amended to read as follows: 
‘‘(d) TYPES OF ENERGY EFFICIENT APPLIANCE.—For 
purposes of this section, the types of energy efficient appli-
ances are— 
‘‘(1) dishwashers described in subsection (b)(1), 
‘‘(2) clothes washers described in subsection 
(b)(2), 
‘‘(3) refrigerators described in subsection (b)(3), 
and 
‘‘(4) 
dehumidifiers 
described 
in 
subsection 
(b)(4).’’. 
(d) AGGREGATE CREDIT AMOUNT ALLOWED.— 
(1) INCREASE IN LIMIT.—Paragraph (1) of sec-
tion 45M(e) (relating to aggregate credit amount al-
lowed) is amended to read as follows: 
‘‘(1) AGGREGATE CREDIT AMOUNT ALLOWED.— 
The aggregate amount of credit allowed under sub-
section (a) with respect to a taxpayer for any taxable 
year shall not exceed $75,000,000 reduced by the 
amount of the credit allowed under subsection (a) to 
the taxpayer (or any predecessor) for all prior taxable 
years beginning after December 31, 2007.’’. 
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(2) EXCEPTION
FOR
CERTAIN
REFRIGERATOR 
AND CLOTHES WASHERS.—Paragraph (2) of section 
45M(e) is amended to read as follows: 
‘‘(2) AMOUNT ALLOWED FOR CERTAIN REFRIG-
ERATORS AND CLOTHES WASHERS.—Refrigerators de-
scribed in subsection (b)(3)(D) and clothes washers 
described in subsection (b)(2)(D) shall not be taken 
into account under paragraph (1).’’. 
(e) QUALIFIED ENERGY EFFICIENT APPLIANCES.— 
(1) IN
GENERAL.—Paragraph (1) of section 
45M(f) (defining qualified energy efficient appliance) 
is amended to read as follows: 
‘‘(1) QUALIFIED
ENERGY
EFFICIENT
APPLI-
ANCE.—The term ‘qualified energy efficient appliance’ 
means— 
‘‘(A) any dishwasher described in subsection 
(b)(1), 
‘‘(B) any clothes washer described in sub-
section (b)(2), 
‘‘(C) any refrigerator described in sub-
section (b)(3), and 
‘‘(D) any dehumidifier described in sub-
section (b)(4).’’. 
(2) CLOTHES WASHER.—Section 45M(f)(3) (de-
fining clothes washer) is amended by inserting ‘‘com-
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mercial’’ before ‘‘residential’’ the second place it ap-
pears. 
(3) 
TOP-LOADING
CLOTHES
WASHER.—Sub-
section (f) of section 45M (relating to definitions) is 
amended by redesignating paragraphs (4), (5), (6), 
and (7) as paragraphs (5), (6), (7), and (8), respec-
tively, and by inserting after paragraph (3) the fol-
lowing new paragraph: 
‘‘(4) 
TOP-LOADING
CLOTHES
WASHER.—The 
term ‘top-loading clothes washer’ means a clothes 
washer which has the clothes container compartment 
access located on the top of the machine and which 
operates on a vertical axis.’’. 
(4) DEHUMIDIFIER.—Subsection (f) of section 
45M, as amended by paragraph (3), is amended by 
redesignating paragraphs (6), (7), and (8) as para-
graphs (7), (8) and (9), respectively, and by inserting 
after paragraph (5) the following new paragraph: 
‘‘(6) DEHUMIDIFIER.—The term ‘dehumidifier’ 
means a self-contained, electrically operated, and me-
chanically refrigerated encased assembly consisting 
of— 
‘‘(A) a refrigerated surface that condenses 
moisture from the atmosphere, 
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‘‘(B) a refrigerating system, including an 
electric motor, 
‘‘(C) an air-circulating fan, and 
‘‘(D) means for collecting or disposing of 
condensate.’’. 
(5) REPLACEMENT OF ENERGY FACTOR.—Section 
45M(f)(7), as amended by paragraph (4), is amended 
to read as follows: 
‘‘(7) MODIFIED
ENERGY
FACTOR.—The term 
‘modified energy factor’ means the modified energy 
factor established by the Department of Energy for 
compliance with the Federal energy conservation 
standard.’’. 
(6) GALLONS PER CYCLE; WATER CONSUMPTION 
FACTOR.—Section 45M(f) (relating to definitions) is 
amended by adding at the end the following: 
‘‘(10) GALLONS PER CYCLE.—The term ‘gallons 
per cycle’ means, with respect to a dishwasher, the 
amount of water, expressed in gallons, required to 
complete a normal cycle of a dishwasher. 
‘‘(11) WATER CONSUMPTION FACTOR.—The term 
‘water consumption factor’ means, with respect to a 
clothes washer, the quotient of the total weighted per- 
cycle water consumption divided by the cubic foot (or 
liter) capacity of the clothes washer.’’. 
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(f) EFFECTIVE DATE.—The amendments made by this 
section shall apply to appliances produced after December 
31, 2007. 
SEC. 215. FIVE-YEAR APPLICABLE RECOVERY PERIOD FOR 
DEPRECIATION OF QUALIFIED ENERGY MAN-
AGEMENT DEVICES. 
(a) IN GENERAL.—Section 168(e)(3)(B) (relating to 5- 
year property) is amended by striking ‘‘and’’ at the end 
of clause (v), by striking the period at the end of clause 
(vi) and inserting ‘‘, and’’, and by inserting after clause 
(vi) the following new clause: 
‘‘(vii) any qualified energy manage-
ment device.’’. 
(b) DEFINITION OF QUALIFIED ENERGY MANAGEMENT 
DEVICE.—Section 168(i) (relating to definitions and spe-
cial rules) is amended by inserting at the end the following 
new paragraph: 
‘‘(18) QUALIFIED
ENERGY
MANAGEMENT
DE-
VICE.— 
‘‘(A) IN GENERAL.—The term ‘qualified en-
ergy management device’ means any energy 
management device which is installed on real 
property of a customer of the taxpayer and is 
placed in service by a taxpayer who— 
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‘‘(i) is a supplier of electric energy or 
a provider of electric energy services, and 
‘‘(ii) provides all commercial and resi-
dential customers of such supplier or pro-
vider with net metering upon the request of 
such customer. 
‘‘(B) ENERGY MANAGEMENT DEVICE.—For 
purposes of subparagraph (A), the term ‘energy 
management device’ means any time-based meter 
and related communication equipment which is 
capable of being used by the taxpayer as part of 
a system that— 
‘‘(i) measures and records electricity 
usage data on a time-differentiated basis in 
at least 24 separate time segments per day, 
‘‘(ii) provides for the exchange of infor-
mation between supplier or provider and 
the customer’s energy management device in 
support of time-based rates or other forms of 
demand response, and 
‘‘(iii) provides data to such supplier or 
provider so that the supplier or provider 
can provide energy usage information to 
customers electronically. 
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‘‘(C) NET METERING.—For purposes of sub-
paragraph (A), the term ‘net metering’ means al-
lowing customers a credit for providing elec-
tricity to the supplier or provider.’’. 
(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. 
TITLE III—REVENUE 
PROVISIONS 
Subtitle A—Denial of Oil and Gas 
Tax Benefits 
SEC. 301. DENIAL OF DEDUCTION FOR INCOME ATTRIB-
UTABLE TO DOMESTIC PRODUCTION OF OIL, 
NATURAL 
GAS, 
OR 
PRIMARY 
PRODUCTS 
THEREOF. 
(a) IN
GENERAL.—Subparagraph (B) of section 
199(c)(4) (relating to exceptions) is amended by striking 
‘‘or’’ at the end of clause (ii), by striking the period at the 
end of clause (iii) and inserting ‘‘, or’’, and by inserting 
after clause (iii) the following new clause: 
‘‘(iv) the sale, exchange, or other dis-
position of oil, natural gas, or any primary 
product thereof.’’. 
(b) PRIMARY
PRODUCT.—Section 199(c)(4)(B) is 
amended by adding at the end the following flush sentence: 
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‘‘For purposes of clause (iv), the term ‘primary 
product’ has the same meaning as when used in 
section 927(a)(2)(C), as in effect before its re-
peal.’’. 
(c) CONFORMING AMENDMENTS.—Section 199(c)(4) is 
amended— 
(1) in subparagraph (A)(i)(III) by striking 
‘‘electricity, natural gas,’’ and inserting ‘‘electricity’’, 
and 
(2) in subparagraph (B)(ii) by striking ‘‘elec-
tricity, natural gas,’’ and inserting ‘‘electricity’’. 
(d) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2007. 
SEC. 302. 7-YEAR AMORTIZATION OF GEOLOGICAL AND GEO-
PHYSICAL 
EXPENDITURES 
FOR 
CERTAIN 
MAJOR INTEGRATED OIL COMPANIES. 
(a) IN
GENERAL.—Subparagraph (A) of section 
167(h)(5) (relating to special rule for major integrated oil 
companies) is amended by striking ‘‘5-year’’ and inserting 
‘‘7-year’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to amounts paid or incurred after the 
date of the enactment of this Act. 
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SEC. 303. CLARIFICATION OF DETERMINATION OF FOREIGN 
OIL AND GAS EXTRACTION INCOME. 
(a) IN GENERAL.—Paragraph (1) of section 907(c) is 
amended by redesignating subparagraph (B) as subpara-
graph (C), by striking ‘‘or’’ at the end of subparagraph (A), 
and by inserting after subparagraph (A) the following new 
subparagraph: 
‘‘(B) so much of any transportation of such 
minerals as occurs before the fair market value 
event, or’’. 
(b) FAIR MARKET VALUE EVENT.—Subsection (c) of 
section 907 is amended by adding at the end the following 
new paragraph: 
‘‘(6) FAIR MARKET VALUE EVENT.—For purposes 
of this section, the term ‘fair market value event’ 
means, with respect to any mineral, the first point in 
time at which such mineral— 
‘‘(A) has a fair market value which can be 
determined on the basis of a transfer, which is 
an arm’s length transaction, of such mineral 
from the taxpayer to a person who is not related 
(within the meaning of section 482) to such tax-
payer, or 
‘‘(B) is at a location at which the fair mar-
ket value is readily ascertainable by reason of 
transactions among unrelated third parties with 
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respect to the same mineral (taking into account 
source, location, quality, and chemical composi-
tion).’’. 
(c) SPECIAL
RULE
FOR
CERTAIN
PETROLEUM 
TAXES.—Subsection (c) of section 907, as amended by sub-
section (b), is amended to by adding at the end the following 
new paragraph: 
‘‘(7) OIL AND GAS TAXES.—In the case of any 
tax imposed by a foreign country which is limited in 
its application to taxpayers engaged in oil or gas ac-
tivities— 
‘‘(A) the term ‘oil and gas extraction taxes’ 
shall include such tax, 
‘‘(B) the term ‘foreign oil and gas extrac-
tion income’ shall include any taxable income 
which is taken into account in determining such 
tax (or is directly attributable to the activity to 
which such tax relates), and 
‘‘(C) the term ‘foreign oil related income’ 
shall not include any taxable income which is 
treated as foreign oil and gas extraction income 
under subparagraph (B).’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Subparagraph (C) of section 907(c)(1), as re-
designated by this section, is amended by inserting 
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‘‘or used by the taxpayer in the activity described in 
subparagraph (B)’’ before the period at the end. 
(2) Subparagraph (B) of section 907(c)(2) is 
amended to read as follows: 
‘‘(B) so much of the transportation of such 
minerals or primary products as is not taken 
into account under paragraph (1)(B),’’. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after the date 
of the enactment of this Act. 
Subtitle B—Clarification of 
Eligibility for Certain Fuel Credits 
SEC. 311. CLARIFICATION OF ELIGIBILITY FOR RENEWABLE 
DIESEL CREDIT. 
(a) COPRODUCTION WITH PETROLEUM FEEDSTOCK.— 
(1) IN
GENERAL.—Paragraph (3) of section 
40A(f) (defining renewable diesel) is amended by add-
ing at the end the following flush sentence: 
‘‘Such term does not include any fuel derived from co-
processing biomass with a feedstock which is not bio-
mass. For purposes of this paragraph, the term ‘bio-
mass’ has the meaning given such term by section 
45K(c)(3).’’. 
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(2) CONFORMING AMENDMENT.—Paragraph (3) 
of section 40A(f) is amended by striking ‘‘(as defined 
in section 45K(c)(3))’’. 
(b) CLARIFICATION OF ELIGIBILITY FOR ALTERNATIVE 
FUEL CREDIT.— 
(1) IN GENERAL.—Subparagraph (F) of section 
6426(d)(2) is amended by striking ‘‘hydrocarbons’’ 
and inserting ‘‘fuel’’. 
(2) CONFORMING AMENDMENT.—Section 6426 is 
amended by adding at the end the following new sub-
section: 
‘‘(h) DENIAL OF DOUBLE BENEFIT.—No credit shall 
be determined under subsection (d) or (e) with respect to 
any fuel with respect to which credit may be determined 
under subsection (b) or (c) or under section 40 or 40A.’’. 
(c) 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 June 
30, 2007. 
(2) CLARIFICATION OF ELIGIBILITY FOR ALTER-
NATIVE FUEL CREDIT.—The amendment made by sub-
section (b) shall take effect as if included in section 
11113 of the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users. 
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SEC. 312. CLARIFICATION THAT CREDITS FOR FUEL ARE DE-
SIGNED TO PROVIDE AN INCENTIVE FOR 
UNITED STATES PRODUCTION. 
(a) BIODIESEL FUELS CREDIT.—Paragraph (5) of sec-
tion 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 de-
termined under this section with respect to any bio-
diesel 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 Sec-
retary) 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(i), as added by subsection (c), is amended to read as 
follows: 
‘‘(2) BIODIESEL AND ALTERNATIVE FUELS.—No 
credit shall be determined under this section with re-
spect to any biodiesel or alternative fuel unless— 
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‘‘(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 Sec-
retary) from the producer of such biodiesel or al-
ternative fuel which identifies the product pro-
duced 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 fol-
lowing new paragraph: 
‘‘(6) LIMITATION TO ALCOHOL WITH CONNECTION 
TO THE UNITED STATES.—No credit shall be deter-
mined under this section with respect to any alcohol 
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.’’. 
(2) BIODIESEL FUELS CREDIT.—Subsection (d) 
of section 40A is amended by adding at the end the 
following new paragraph: 
‘‘(5) LIMITATION TO BIODIESEL WITH CONNEC-
TION TO THE UNITED STATES.—No credit shall be de-
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termined under this section with respect to any bio-
diesel 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, as amend-
ed by section 311, is amended by adding at the 
end the following new subsection: 
‘‘(i) 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 re-
spect to any biodiesel or alternative fuel which is pro-
duced outside the United States for use as a fuel out-
side the United States. 
For purposes of this subsection, the term ‘United States’ in-
cludes any possession of the United States.’’. 
(B) CONFORMING AMENDMENT.—Subsection 
(e) of section 6427 is amended by redesignating 
paragraph (5) as paragraph (6) and by insert-
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