I
107TH CONGRESS
2D SESSION
H. R. 4668
To amend the Internal Revenue Code of 1986 to expand the renewable
resources production tax credit to include additional forms of renewable
energy, and to expand the investment tax credit to include equipment
used to produce electricity from renewable resources.
IN THE HOUSE OF REPRESENTATIVES
MAY 7, 2002
Mr. HUNTER (for himself and Mr. UDALL of Colorado) introduced the
following bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to expand
the renewable resources production tax credit to include
additional forms of renewable energy, and to expand
the investment tax credit to include equipment used to
produce electricity from renewable resources.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Renewable Fuel Equity
Act’’.
SEC. 2. EXPANSION OF RENEWABLE RESOURCES CREDIT.
(a) IN GENERAL.—Section 45(c)(1) of the Internal
Revenue Code of 1986 (relating to qualified energy re-
sources) is amended by striking ‘‘and’’ at the end of sub-
paragraph (B), by striking the period at the end of the
subparagraph (C) and inserting a comma, and by adding
at the end the following new subparagraphs:
‘‘(D) geothermal energy,
‘‘(E) solar energy,
‘‘(F) incremental hydropower, and
‘‘(G) biomass (other than closed-loop bio-
mass).’’
(b) EXTENSION AND MODIFICATION OF PLACED-IN-
SERVICE RULES WITH RESPECT TO BIOMASS FACILI-
TIES.—
(1) IN
GENERAL.—Paragraph (3) of section
45(c) of the Internal Revenue Code of 1986 (defin-
ing qualified facility) is amended—
(A) by striking subparagraph (B) and in-
serting the following new subparagraph:
‘‘(B) CLOSED-LOOP BIOMASS FACILITY.—
In the case of a facility using closed-loop bio-
mass to produce electricity, the term ‘qualified
facility’ means any facility—
‘‘(i) owned by the taxpayer which is
originally placed in service after December
31, 1992, and before January 1, 2007, or
‘‘(ii) owned by the taxpayer which is
originally placed in service on or before
December 31, 1992, and modified to use
closed-loop biomass to co-fire with coal be-
fore January 1, 2007.’’,
(B) by striking ‘‘2004’’ in subparagraph
(C) and inserting ‘‘2007’’, and
(C) by adding at the end the following new
subparagraph:
‘‘(D) BIOMASS FACILITY.—In the case of a
facility using biomass (other than closed-loop
biomass) to produce electricity, the term ‘quali-
fied facility’ means any facility owned by the
taxpayer which is originally placed in service be-
fore January 1, 2007.’’.
(2) DEFINITION.—Subsection (c) of section 45
of such Code (relating to definitions) is amended by
adding at the end the following new paragraph:
‘‘(5) BIOMASS.—The term ‘biomass’ means any
solid, nonhazardous, cellulosic waste material which
is segregated from other waste materials and which
is derived from—
‘‘(A) any of the following forest-related re-
sources: mill residues, precommercial thinnings,
slash, and brush, but not including old-growth
timber,
‘‘(B) solid wood waste materials, including
waste pallets, crates, dunnage, manufacturing
and construction wood wastes (other than pres-
sure-treated, 
chemically-treated, 
or 
painted
wood wastes), and landscape or right-of-way
tree trimmings, but not including municipal
solid waste (garbage), gas derived from the bio-
degradation of solid waste, or paper that is
commonly recycled, or
‘‘(C) agriculture sources, including orchard
tree crops, vineyard, grain, legumes, sugar, and
other crop by-products or residues.’’.
(3) SPECIAL RULES.—Subsection (d) of section
45 of such Code (relating to definitions and special
rules) is amended by adding at the end the following
new paragraph:
‘‘(8) SPECIAL RULES WITH RESPECT TO BIO-
MASS.—In the case of a qualified facility described
in subparagraph (B)(ii) or (D) of subsection
(c)(3)—
‘‘(A) the 10-year period referred to in sub-
section (a) shall be treated as beginning no ear-
lier than the date of the enactment of this para-
graph,
‘‘(B) subsection (b)(3) shall not apply to
any such facility originally placed in service be-
fore January 1, 1997, and
‘‘(C) if such a facility is leased and the op-
erator thereof is the lessee, such lessee (and not
the owner) shall be treated for purposes of this
section as owning such facility.’’
(c) QUALIFIED
FACILITY
TO
INCLUDE
GEO-
THERMAL, SOLAR ENERGY, AND INCREMENTAL HYDRO-
POWER FACILITY.—
(1) IN
GENERAL.—Paragraph (3) of section
45(c) of such Code, as amended by subsection (b),
is amended by inserting after subparagraph (D) the
following new subparagraphs:
‘‘(E) GEOTHERMAL FACILITY.—In the case
of a facility using geothermal energy to produce
electricity, the term ‘qualified facility’ means—
‘‘(i) any facility owned by the tax-
payer which is originally placed in service
after December 31, 2001, or
‘‘(ii) any facility owned by the tax-
payer which is originally placed in service
before January 1, 2002, but only to the ex-
tent of its incremental geothermal produc-
tion.
‘‘(F) SOLAR
ENERGY
FACILITY.—In the
case of a facility using solar energy to produce
electricity, the term ‘qualified facility’ means—
‘‘(i) any facility owned by the tax-
payer which is originally placed in service
after December 31, 2001, or
‘‘(ii) any facility owned by the tax-
payer which is originally placed in service
before January 1, 2002, and modified on
or after such date with additional gener-
ating capacity.
In the case of a facility referred to in clause
(ii), the credit under subsection (a) applies only
to the production from the additional gener-
ating capacity.
‘‘(G) INCREMENTAL HYDROPOWER FACIL-
ITY.—In the case of a facility using incremental
hydropower to produce electricity, the term
‘qualified facility’ means any facility owned by
the taxpayer that achieves additional generation
from—
‘‘(i) increased efficiency, or
‘‘(ii) additions of new capacity,
at a non-Federal hydroelectric project originally
placed in service before the date of enactment
of this subparagraph.’’.
(2) SPECIAL RULE.—Subsection (d) of section
45 of such Code (relating to definitions and special
rules), as amended by subsection (b)(3), is amended
by adding at the end the following new paragraph:
‘‘(9) DEFINITION AND SPECIAL RULE WITH RE-
SPECT
TO
INCREMENTAL
GEOTHERMAL
PRODUC-
TION.—
‘‘(A) IN GENERAL.—The term ‘incremental
geothermal production’ means for any taxable
year the excess of—
‘‘(i) the total kilowatt hours of elec-
tricity produced from a geothermal facility
described in subsection (c)(3)(E)(ii), over
‘‘(ii) the average annual kilowatt
hours produced at such facility for five of
the previous seven calendar years prior to
the date of the enactment of this para-
graph after eliminating the highest and