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‘‘(ii) in applying paragraph (1) to the
credit—
‘‘(I) subparagraphs (A) and (B)
thereof shall not apply, and
‘‘(II) the limitation under para-
graph (1) (as modified by subclause
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the
taxable year (other than the crude oil
and natural gas development credit).
‘‘(B) CRUDE OIL AND NATURAL GAS DE-
VELOPMENT
CREDIT.—For purposes of this
subsection, the term ‘crude oil and natural gas
development credit’ means the credit allowable
under subsection (a) by reason of section
45J(a).’’.
(2) CONFORMING
AMENDMENTS.—Subclause
(II) of section 38(c)(2)(A)(ii) and subclause (II) of
section 38(c)(3)(A)(ii), as amended by section
602(c)(2), 
and 
subclause 
(II) 
of 
section
38(c)(4)(A)(ii), as added by section 602(c)(1), are
each amended by inserting ‘‘or the crude oil and
natural gas development credit’’ after ‘‘well produc-
tion credit’’.
129
(e) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1,
as amended by section 602(f), is amended by adding at
the end the following:
‘‘Sec. 45J. Crude oil and natural gas development credit.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to expenditures paid or incurred
in taxable years beginning after December 31, 2001.
SEC. 607. CREDIT FOR CAPTURE OF COALMINE METHANE
GAS.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (relating to business related cred-
its), as amended by section 606(a), is amended by adding
at the end the following:
‘‘SEC. 45K. CAPTURE OF COALMINE METHANE GAS.
‘‘(a) IN GENERAL.—For purposes of section 38, the
coalmine methane gas capture credit of any taxpayer for
any taxable year is $1.21 for 1,000,000 Btu of coalmine
methane gas captured by the taxpayer and utilized as a
fuel source or sold by or on behalf of the taxpayer to an
unrelated person during such taxable year (within the
meaning of section 45).
‘‘(b) COALMINE METHANE GAS.—For purposes of
this section, the term ‘coalmine methane gas’ means any
methane gas which is being liberated, or would be liber-
ated, during qualified coal mining operations or as a result
130
of past qualified coal mining operations, or which is ex-
tracted up to 10 years in advance of qualified coal mining
operations as part of specific plan to mine a coal deposit.
‘‘(c) SPECIAL RULE FOR ADVANCED EXTRACTION.—
In the case of coalmine methane gas which is captured
in advance of qualified coal mining operations, the credit
under subsection (a) shall be allowed only after the date
the coal extraction occurs in the immediate area where the
coalmine methane gas was removed.
‘‘(d) NONCOMPLIANCE WITH POLLUTION LAWS.—For
purposes of subsections (b) and (c), coal mining operations
which are not in compliance with the applicable State and
Federal pollution prevention, control, and permit require-
ments for any period of time shall not be considered to
be qualified coal mining operations during such period.
‘‘(e) APPLICATION OF RULES.—For purposes of this
section, rules similar to the rules of paragraphs (3), (4),
and (5) of section 45(d) shall apply.’’.
(b) CREDIT TREATED AS BUSINESS CREDIT.—Sec-
tion 38(b), as amended by section 606(b), is amended by
striking ‘‘plus’’ at the end of paragraph (18), by striking
the period at the end of paragraph (19) and inserting
‘‘, plus’’, and by adding at the end the following:
‘‘(20) the coalmine methane gas capture credit
determined under section 45K(a).’’.
131
(c) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1,
as amended by section 606(c), is amended by adding at
the end the following:
‘‘Sec. 45K.
Capture of coalmine methane gas.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to the capture of coalmine methane
gas after the date of the enactment of this Act.
SEC. 608.
ALLOCATION OF ALCOHOL FUELS CREDIT TO
PATRONS OF A COOPERATIVE.
(a) IN GENERAL.—Section 40(d) (relating to alcohol
used as fuel) is amended by adding at the end the fol-
lowing:
‘‘(6) ALLOCATION
OF
SMALL
ETHANOL
PRO-
DUCER CREDIT TO PATRONS OF COOPERATIVE.—
‘‘(A) IN GENERAL.—In the case of a coop-
erative 
organization 
described 
in 
section
1381(a), any portion of the credit determined
under subsection (a)(3) for the taxable year
may, at the election of the organization made
on a timely filed return (including extensions)
for such year, be apportioned pro rata among
patrons of the organization on the basis of the
quantity or value of business done with or for
such patrons for the taxable year. Such an elec-
132
tion, once made, shall be irrevocable for such
taxable year.
‘‘(B) TREATMENT OF ORGANIZATIONS AND
PATRONS.—The amount of the credit appor-
tioned to patrons pursuant to subparagraph
(A)—
‘‘(i) shall not be included in the
amount determined under subsection (a)
for the taxable year of the organization,
and
‘‘(ii) shall be included in the amount
determined under subsection (a) for the
taxable year of each patron in which the
patronage dividend for the taxable year re-
ferred to in subparagraph (A) is includible
in gross income.
‘‘(C) SPECIAL
RULE
FOR
DECREASING
CREDIT FOR TAXABLE YEAR.—If the amount of
the credit of a cooperative organization deter-
mined under subsection (a)(3) for a taxable
year is less than the amount of such credit
shown on the cooperative organization’s return
for such year, an amount equal to the excess of
such reduction over the amount not apportioned
to the patrons under subparagraph (A) for the