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to assist in the planning, design, and implementation of
projects to convert rice straw and barley grain into
biopower or biofuels.
Subtitle C—Transmission
Infrastructure Systems
SEC. 2241. TRANSMISSION INFRASTRUCTURE SYSTEMS RE-
SEARCH, DEVELOPMENT, DEMONSTRATION,
AND COMMERCIAL APPLICATION.
(a) IN GENERAL.—The Secretary shall develop and
implement a comprehensive research, development, dem-
onstration, and commercial application program to ensure
the reliability, efficiency, and environmental integrity of
electrical transmission systems. Such program shall in-
clude advanced energy technologies and systems, high ca-
pacity superconducting transmission lines and generators,
advanced grid reliability and efficiency technologies devel-
opment, technologies contributing to significant load re-
ductions, advanced metering, load management and con-
trol technologies, and technology transfer and education.
(b) TECHNOLOGY.—In carrying out this subtitle, the
Secretary may include research, development, and dem-
onstration on and commercial application of improved
transmission technologies including the integration of the
following technologies into improved transmission systems:
(1) High temperature superconductivity.
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(2) Advanced transmission materials.
(3) Self-adjusting equipment, processes, or soft-
ware for survivability, security, and failure contain-
ment.
(4) Enhancements of energy transfer over exist-
ing lines.
(5) Any other infrastructure technologies, as
appropriate.
SEC. 2242. PROGRAM PLAN.
Within 4 months after the date of the enactment of
this Act, the Secretary, in consultation with other appro-
priate Federal agencies, shall prepare and transmit to
Congress a 5-year program plan to guide activities under
this subtitle. In preparing the program plan, the Secretary
shall consult with appropriate representatives of the trans-
mission infrastructure systems industry to select and
prioritize appropriate program areas. The Secretary shall
also seek the advice of utilities, energy services providers,
manufacturers, institutions of higher learning, other ap-
propriate State and local agencies, environmental organi-
zations, professional and technical societies, and any other
persons as the Secretary considers appropriate.
SEC. 2243. REPORT.
Two years after the date of the enactment of this Act,
and at 2-year intervals thereafter, the Secretary, in con-
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sultation with other appropriate Federal agencies, shall
transmit a report to Congress describing the progress
made to achieve the purposes of this subtitle and identi-
fying any additional resources needed to continue the de-
velopment and commercial application of transmission in-
frastructure technologies.
Subtitle D—Department of Energy
Authorization of Appropriations
SEC. 2261. AUTHORIZATION OF APPROPRIATIONS.
(a) OPERATION AND MAINTENANCE.—There are au-
thorized to be appropriated to the Secretary for Renewable
Energy operation and maintenance, including activities
under subtitle C, Geothermal Technology Development,
Hydropower, Concentrating Solar Power, Photovoltaic
Energy Systems, Solar Building Technology Research,
Wind Energy Systems, High Temperature Super-
conducting Research and Development, Energy Storage
Systems, Transmission Reliability, International Renew-
able Energy Program, Renewable Energy Production In-
centive Program, Renewable Program Support, National
Renewable Energy Laboratory, and Program Direction,
and including amounts authorized under the amendment
made by section 2210 and amounts authorized under sec-
tion 
2225, 
$535,000,000 
for 
fiscal 
year 
2002,
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$639,000,000 for fiscal year 2003, and $683,000,000 for
fiscal year 2004, to remain available until expended.
(b) WAVE
POWERED
ELECTRIC
GENERATION.—
Within the amounts authorized to be appropriated to the
Secretary under subsection (a), the Secretary shall carry
out a research program, in conjunction with other appro-
priate Federal agencies, on wave powered electric genera-
tion.
(c) ASSESSMENT
OF
RENEWABLE
ENERGY
RE-
SOURCES.—
(1) IN GENERAL.—Using funds authorized in
subsection (a), of this section, the Secretary shall
transmit to the Congress, within 1 year after the
date of the enactment of this Act, an assessment of
all renewable energy resources available within the
United States.
(2) 
RESOURCE
ASSESSMENT.—Such 
report
shall include a detailed inventory describing the
available amount and characteristics of solar, wind,
biomass, geothermal, hydroelectric, and other renew-
able energy sources, and an estimate of the costs
needed to develop each resource. The report shall
also include such other information as the Secretary
believes would be useful in siting renewable energy
generation, such as appropriate terrain, population
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and load centers, nearby energy infrastructure, and
location of energy resources.
(3) AVAILABILITY.—The information and cost
estimates in this report shall be updated annually
and made available to the public, along with the
data used to create the report.
(4) SUNSET.—This subsection shall expire at
the end of fiscal year 2004.
(d) LIMITS ON USE OF FUNDS.—None of the funds
authorized to be appropriated in subsection (a) may be
used for—
(1) Departmental Energy Management Pro-
gram; or
(2) Renewable Indian Energy Resources.
TITLE III—NUCLEAR ENERGY
Subtitle A—University Nuclear
Science and Engineering
SEC. 2301. SHORT TITLE.
This subtitle may be cited as ‘‘Department of Energy
University Nuclear Science and Engineering Act’’.
SEC. 2302. FINDINGS.
The Congress finds the following:
(1) United States university nuclear science and
engineering programs are in a state of serious de-
cline, with nuclear engineering enrollment at a 35-
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year low. Since 1980, the number of nuclear engi-
neering university programs has declined nearly 40
percent, and over two-thirds of the faculty in these
programs are 45 years of age or older. Also, since
1980, the number of university research and train-
ing reactors in the United States has declined by
over 50 percent. Most of these reactors were built in
the late 1950s and 1960s with 30-year to 40-year
operating licenses, and many will require relicensing
in the next several years.
(2) A decline in a competent nuclear workforce,
and the lack of adequately trained nuclear scientists
and engineers, will affect the ability of the United
States to solve future nuclear waste storage issues,
operate existing and design future fission reactors in
the United States, respond to future nuclear events
worldwide, help stem the proliferation of nuclear
weapons, and design and operate naval nuclear reac-
tors.
(3) The Department of Energy’s Office of Nu-
clear Energy, Science and Technology, a principal
Federal agency for civilian research in nuclear
science and engineering, is well suited to help main-
tain tomorrow’s human resource and training invest-
ment in the nuclear sciences and engineering.
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SEC. 2303. DEPARTMENT OF ENERGY PROGRAM.
(a) ESTABLISHMENT.—The Secretary, through the
Office of Nuclear Energy, Science and Technology, shall
support a program to maintain the Nation’s human re-
source investment and infrastructure in the nuclear
sciences and engineering consistent with the Department’s
statutory authorities related to civilian nuclear research,
development, and demonstration and commercial applica-
tion of energy technology.
(b) DUTIES OF THE OFFICE OF NUCLEAR ENERGY,
SCIENCE AND TECHNOLOGY.—In carrying out the pro-
gram under this subtitle, the Director of the Office of Nu-
clear Energy, Science and Technology shall—
(1) develop a robust graduate and under-
graduate fellowship program to attract new and tal-
ented students;
(2) assist universities in recruiting and retain-
ing new faculty in the nuclear sciences and engineer-
ing through a Junior Faculty Research Initiation
Grant Program;
(3) maintain a robust investment in the funda-
mental nuclear sciences and engineering through the
Nuclear Engineering Education Research Program;
(4) encourage collaborative nuclear research
among industry, national laboratories, and univer-
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sities through the Nuclear Energy Research Initia-
tive;
(5) assist universities in maintaining reactor in-
frastructure; and
(6) support communication and outreach re-
lated to nuclear science and engineering.
(c) MAINTAINING
UNIVERSITY
RESEARCH
AND
TRAINING REACTORS
AND ASSOCIATED INFRASTRUC-
TURE.—The Secretary, through the Office of Nuclear En-
ergy, Science and Technology, shall provide for the fol-
lowing university research and training reactor infrastruc-
ture maintenance and research activities:
(1) Refueling of university research reactors
with low enriched fuels, upgrade of operational in-
strumentation, and sharing of reactors among uni-
versities.
(2) In collaboration with the United States nu-
clear industry, assistance, where necessary, in reli-
censing and upgrading university training reactors
as part of a student training program.
(3) A university reactor research and training
award program that provides for reactor improve-
ments as part of a focused effort that emphasizes re-
search, training, and education.
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(d) 
UNIVERSITY-DOE 
LABORATORY
INTER-
ACTIONS.—The Secretary, through the Office of Nuclear
Energy, Science and Technology, shall develop—
(1) a sabbatical fellowship program for univer-
sity faculty to spend extended periods of time at De-
partment of Energy laboratories in the areas of nu-
clear science and technology; and
(2) a visiting scientist program in which labora-
tory staff can spend time in academic nuclear
science and engineering departments.
The Secretary may under subsection (b)(1) provide for fel-
lowships for students to spend time at Department of En-
ergy laboratories in the areas of nuclear science and tech-
nology under the mentorship of laboratory staff.
(e) OPERATIONS AND MAINTENANCE.—To the extent
that the use of a university research reactor is funded
under this subtitle, funds authorized under this subtitle
may be used to supplement operation of the research reac-
tor during the investigator’s proposed effort. The host in-
stitution shall provide at least 50 percent of the cost of
the reactor’s operation.
(f) MERIT REVIEW REQUIRED.—All grants, con-
tracts, cooperative agreements, or other financial assist-
ance awards under this subtitle shall be made only after
independent merit review.
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(g) REPORT.—Not later than 6 months after the date
of the enactment of this Act, the Secretary shall prepare
and transmit to the appropriate congressional committees
a 5-year plan on how the programs authorized in this sub-
title will be implemented. The plan shall include a review
of the projected personnel needs in the fields of nuclear
science and engineering and of the scope of nuclear science
and engineering education programs at the Department
and other Federal agencies.
SEC. 2304. AUTHORIZATION OF APPROPRIATIONS.
(a) TOTAL AUTHORIZATION.—The following sums
are authorized to be appropriated to the Secretary, to re-
main available until expended, for the purposes of carrying
out this subtitle:
(1) $30,200,000 for fiscal year 2002.
(2) $41,000,000 for fiscal year 2003.
(3) $47,900,000 for fiscal year 2004.
(4) $55,600,000 for fiscal year 2005.
(5) $64,100,000 for fiscal year 2006.
(b) GRADUATE
AND UNDERGRADUATE FELLOW-
SHIPS.—Of the funds authorized by subsection (a), the fol-
lowing sums are authorized to be appropriated to carry
out section 2303(b)(1):
(1) $3,000,000 for fiscal year 2002.
(2) $3,100,000 for fiscal year 2003.
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(3) $3,200,000 for fiscal year 2004.
(4) $3,200,000 for fiscal year 2005.
(5) $3,200,000 for fiscal year 2006.
(c) JUNIOR FACULTY RESEARCH INITIATION GRANT
PROGRAM.—Of the funds authorized by subsection (a),
the following sums are authorized to be appropriated to
carry out section 2303(b)(2):
(1) $5,000,000 for fiscal year 2002.
(2) $7,000,000 for fiscal year 2003.
(3) $8,000,000 for fiscal year 2004.
(4) $9,000,000 for fiscal year 2005.
(5) $10,000,000 for fiscal year 2006.
(d) NUCLEAR ENGINEERING EDUCATION RESEARCH
PROGRAM.—Of the funds authorized by subsection (a),
the following sums are authorized to be appropriated to
carry out section 2303(b)(3):
(1) $8,000,000 for fiscal year 2002.
(2) $12,000,000 for fiscal year 2003.
(3) $13,000,000 for fiscal year 2004.
(4) $15,000,000 for fiscal year 2005.
(5) $20,000,000 for fiscal year 2006.
(e) COMMUNICATION AND OUTREACH RELATED TO
NUCLEAR SCIENCE AND ENGINEERING.—Of the funds
authorized by subsection (a), the following sums are au-
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thorized to be appropriated to carry out section
2303(b)(5):
(1) $200,000 for fiscal year 2002.
(2) $200,000 for fiscal year 2003.
(3) $300,000 for fiscal year 2004.
(4) $300,000 for fiscal year 2005.
(5) $300,000 for fiscal year 2006.
(f) REFUELING OF UNIVERSITY RESEARCH REAC-
TORS AND INSTRUMENTATION UPGRADES.—Of the funds
authorized by subsection (a), the following sums are au-
thorized to be appropriated to carry out section
2303(c)(1):
(1) $6,000,000 for fiscal year 2002.
(2) $6,500,000 for fiscal year 2003.
(3) $7,000,000 for fiscal year 2004.
(4) $7,500,000 for fiscal year 2005.
(5) $8,000,000 for fiscal year 2006.
(g) RELICENSING ASSISTANCE.—Of the funds au-
thorized by subsection (a), the following sums are author-
ized to be appropriated to carry out section 2303(c)(2):
(1) $1,000,000 for fiscal year 2002.
(2) $1,100,000 for fiscal year 2003.
(3) $1,200,000 for fiscal year 2004.
(4) $1,300,000 for fiscal year 2005.
(5) $1,300,000 for fiscal year 2006.
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(h) REACTOR RESEARCH
AND TRAINING AWARD
PROGRAM.—Of the funds authorized by subsection (a),
the following sums are authorized to be appropriated to
carry out section 2303(c)(3):
(1) $6,000,000 for fiscal year 2002.
(2) $10,000,000 for fiscal year 2003.
(3) $14,000,000 for fiscal year 2004.
(4) $18,000,000 for fiscal year 2005.
(5) $20,000,000 for fiscal year 2006.
(i) 
UNIVERSITY-DOE 
LABORATORY
INTER-
ACTIONS.—Of the funds authorized by subsection (a), the
following sums are authorized to be appropriated to carry
out section 2303(d):
(1) $1,000,000 for fiscal year 2002.
(2) $1,100,000 for fiscal year 2003.
(3) $1,200,000 for fiscal year 2004.
(4) $1,300,000 for fiscal year 2005.
(5) $1,300,000 for fiscal year 2006.
Subtitle B—Advanced Fuel Recy-
cling Technology Research and
Development Program
SEC. 2321. PROGRAM.
(a) IN GENERAL.—The Secretary, through the Direc-
tor of the Office of Nuclear Energy, Science and Tech-
nology, shall conduct an advanced fuel recycling tech-
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nology research and development program to further the
availability of proliferation-resistant fuel recycling tech-
nologies as an alternative to aqueous reprocessing in sup-
port of evaluation of alternative national strategies for
spent nuclear fuel and the Generation IV advanced reactor
concepts, subject to annual review by the Secretary’s Nu-
clear Energy Research Advisory Committee or other inde-
pendent entity, as appropriate.
(b) REPORTS.—The Secretary shall report on the ac-
tivities of the advanced fuel recycling technology research
and development program, as part of the Department’s
annual budget submission.
(c) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated to the Secretary to carry
out this section—
(1) $10,000,000 for fiscal year 2002; and
(2) such sums as are necessary for fiscal year
2003 and fiscal year 2004.
Subtitle C—Department of Energy
Authorization of Appropriations
SEC. 2341. NUCLEAR ENERGY RESEARCH INITIATIVE.
(a) PROGRAM.—The Secretary, through the Office of
Nuclear Energy, Science and Technology, shall conduct a
Nuclear Energy Research Initiative for grants to be com-
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petitively awarded and subject to peer review for research
relating to nuclear energy.
(b) OBJECTIVES.—The program shall be directed to-
ward accomplishing the objectives of—
(1) developing advanced concepts and scientific
breakthroughs in nuclear fission and reactor tech-
nology to address and overcome the principal tech-
nical and scientific obstacles to the expanded use of
nuclear energy in the United States;
(2) advancing the state of nuclear technology to
maintain a competitive position in foreign markets
and a future domestic market;
(3) promoting and maintaining a United States
nuclear science and engineering infrastructure to
meet future technical challenges;
(4) providing an effective means to collaborate
on a cost-shared basis with international agencies
and research organizations to address and influence
nuclear technology development worldwide; and
(5) promoting United States leadership and
partnerships in bilateral and multilateral nuclear en-
ergy research.
(c) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated to the Secretary to carry
out this section—
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(1) $60,000,000 for fiscal year 2002; and
(2) such sums as are necessary for fiscal year
2003 and fiscal year 2004.
SEC. 2342. NUCLEAR ENERGY PLANT OPTIMIZATION PRO-
GRAM.
(a) PROGRAM.—The Secretary, through the Office of
Nuclear Energy, Science and Technology, shall conduct a
Nuclear Energy Plant Optimization research and develop-
ment program jointly with industry and cost-shared by in-
dustry by at least 50 percent and subject to annual review
by the Secretary’s Nuclear Energy Research Advisory
Committee or other independent entity, as appropriate.
(b) OBJECTIVES.—The program shall be directed to-
ward accomplishing the objectives of—
(1) managing long-term effects of component
aging; and
(2) improving the efficiency and productivity of
existing nuclear power stations.
(c) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated to the Secretary to carry
out this section—
(1) $15,000,000 for fiscal year 2002; and
(2) such sums as are necessary for fiscal years
2003 and 2004.
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SEC. 2343. NUCLEAR ENERGY TECHNOLOGIES.
(a) IN GENERAL.—The Secretary, through the Office
of Nuclear Energy, Science and Technology, shall conduct
a study of Generation IV nuclear energy systems, includ-
ing development of a technology roadmap and perform-
ance of research and development necessary to make an
informed technical decision regarding the most promising
candidates for commercial application.
(b) REACTOR CHARACTERISTICS.—To the extent
practicable, in conducting the study under subsection (a),
the Secretary shall study nuclear energy systems that offer
the highest probability of achieving the goals for Genera-
tion IV nuclear energy systems, including—
(1) economics competitive with any other gen-
erators;
(2) enhanced safety features, including passive
safety features;
(3) substantially reduced production of high-
level waste, as compared with the quantity of waste
produced by reactors in operation on the date of the
enactment of this Act;
(4) highly proliferation-resistant fuel and waste;
(5) sustainable energy generation including op-
timized fuel utilization; and
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(6) substantially improved thermal efficiency, as
compared with the thermal efficiency of reactors in
operation on the date of the enactment of this Act.
(c) CONSULTATION.—In conducting the study under
subsection (a), the Secretary shall consult with appro-
priate representatives of industry, institutions of higher
education, Federal agencies, and international, profes-
sional, and technical organizations.
(d) REPORT.—
(1) IN GENERAL.—Not later than December 31,
2002, the Secretary shall transmit to the appro-
priate congressional committees a report describing
the activities of the Secretary under this section, and
plans for research and development leading to a
public/private cooperative demonstration of one or
more Generation IV nuclear energy systems.
(2) CONTENTS.—The report shall contain—
(A) an assessment of all available tech-
nologies;
(B) a summary of actions needed for the
most promising candidates to be considered as
viable commercial options within the five to ten
years after the date of the report, with consid-
eration of regulatory, economic, and technical
issues;
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(C) a recommendation of not more than
three promising Generation IV nuclear energy
system concepts for further development;
(D) an evaluation of opportunities for pub-
lic/private partnerships;
(E) a recommendation for structure of a
public/private partnership to share in develop-
ment and construction costs;
(F) a plan leading to the selection and con-
ceptual design, by September 30, 2004, of at
least one Generation IV nuclear energy system
concept recommended under subparagraph (C)
for demonstration through a public/private
partnership;
(G) an evaluation of opportunities for
siting demonstration facilities on Department of
Energy land; and
(H) a recommendation for appropriate in-
volvement of other Federal agencies.
(e) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated to the Secretary to carry
out this section and to carry out the recommendations in
the report transmitted under subsection (d)—
(1) $20,000,000 for fiscal year 2002; and
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(2) such sums as are necessary for fiscal year
2003 and fiscal year 2004.
SEC. 2344. AUTHORIZATION OF APPROPRIATIONS.
(a) OPERATION AND MAINTENANCE.—There are au-
thorized to be appropriated to the Secretary to carry out
activities authorized under this title for nuclear energy op-
eration and maintenance, including amounts authorized
under sections 2304(a), 2321(c), 2341(c), 2342(c), and
2343(e), and including Advanced Radioisotope Power Sys-
tems, Test Reactor Landlord, and Program Direction,
$191,200,000 for fiscal year 2002, $199,000,000 for fis-
cal year 2003, and $207,000,000 for fiscal year 2004, to
remain available until expended.
(b) CONSTRUCTION.—There are authorized to be ap-
propriated to the Secretary—
(1) $950,000 for fiscal year 2002, $2,200,000
for fiscal year 2003, $1,246,000 for fiscal year
2004, and $1,699,000 for fiscal year 2005 for com-
pletion of construction of Project 99-E-200, Test
Reactor Area Electric Utility Upgrade, Idaho Na-
tional Engineering and Environmental Laboratory;
and
(2) $500,000 for fiscal year 2002, $500,000 for
fiscal year 2003, $500,000 for fiscal year 2004, and
$500,000 for fiscal year 2005, for completion of con-
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struction of Project 95-E-201, Test Reactor Area
Fire and Life Safety Improvements, Idaho National
Engineering and Environmental Laboratory.
(c) LIMITS ON USE OF FUNDS.—None of the funds
authorized to be appropriated in subsection (a) may be
used for—
(1) Nuclear Energy Isotope Support and Pro-
duction;
(2) Argonne National Laboratory-West Oper-
ations;
(3) Fast Flux Test Facility; or
(4) Nuclear Facilities Management.
TITLE IV—FOSSIL ENERGY
Subtitle A—Coal
SEC. 2401. COAL AND RELATED TECHNOLOGIES PRO-
GRAMS.
(a) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated to the Secretary
$172,000,000 for fiscal year 2002, $179,000,000 for fis-
cal year 2003, and $186,000,000 for fiscal year 2004, to
remain available until expended, for other coal and related
technologies research and development programs, which
shall include—
(1) Innovations for Existing Plants;
(2) Integrated Gasification Combined Cycle;
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(3) advanced combustion systems;
(4) Turbines;
(5) Sequestration Research and Development;
(6) innovative technologies for demonstration;
(7) Transportation Fuels and Chemicals;
(8) Solid Fuels and Feedstocks;
(9) Advanced Fuels Research; and
(10) Advanced Research.
(b) LIMIT ON USE OF FUNDS.—Notwithstanding sub-
section (a), no funds may be used to carry out the activi-
ties authorized by this section after September 30, 2002,
unless the Secretary has transmitted to the Congress the
report required by this subsection and 1 month has
elapsed since that transmission. The report shall include
a plan containing—
(1) a detailed description of how proposals will
be solicited and evaluated, including a list of all ac-
tivities expected to be undertaken;
(2) a detailed list of technical milestones for
each coal and related technology that will be pur-
sued;
(3) a description of how the programs author-
ized in this section will be carried out so as to com-
plement and not duplicate activities authorized
under division E.
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(c) GASIFICATION.—The Secretary shall fund at least
one gasification project with the funds authorized under
this section.
Subtitle B—Oil and Gas
SEC. 2421. PETROLEUM-OIL TECHNOLOGY.
The Secretary shall conduct a program of research,
development, demonstration, and commercial application
on petroleum-oil technology. The program shall address—
(1) Exploration and Production Supporting Re-
search;
(2) Oil Technology Reservoir Management/Ex-
tension; and
(3) Effective Environmental Protection.
SEC. 2422. GAS.
The Secretary shall conduct a program of research,
development, demonstration, and commercial application
on natural gas technologies. The program shall address—
(1) Exploration and Production;
(2) Infrastructure; and
(3) Effective Environmental Protection.
SEC. 2423. NATURAL GAS AND OIL DEPOSITS REPORT.
Two years after the date of the enactment of this Act,
and at 2-year intervals thereafter, the Secretary of the In-
terior, in consultation with other appropriate Federal
agencies, shall transmit a report to the Congress assessing
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the contents of natural gas and oil deposits at existing
drilling sites off the coast of Louisiana and Texas.
SEC. 2424. OIL SHALE RESEARCH.
There are authorized to be appropriated to the Sec-
retary of Energy for fiscal year 2002 $10,000,000, to be
divided equally between grants for research on Eastern oil
shale and grants for research on Western oil shale.
Subtitle C—Ultra-Deepwater and
Unconventional Drilling
SEC. 2441. SHORT TITLE.
This subtitle may be cited as the ‘‘Natural Gas and
Other Petroleum Research, Development, and Demonstra-
tion Act of 2001’’.
SEC. 2442. DEFINITIONS.
For purposes of this subtitle—
(1) the term ‘‘deepwater’’ means water depths
greater than 200 meters but less than 1,500 meters;
(2) the term ‘‘Fund’’ means the Ultra-Deep-
water and Unconventional Gas Research Fund es-
tablished under section 2450;
(3) the term ‘‘institution of higher education’’
has the meaning given that term in section 101 of
the Higher Education Act of 1965 (20 U.S.C.
1001);
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(4) the term ‘‘Research Organization’’ means
the Research Organization created pursuant to sec-
tion 2446(a);
(5) the term ‘‘ultra-deepwater’’ means water
depths greater than 1,500 meters; and
(6) the term ‘‘unconventional’’ means located in
heretofore inaccessible or uneconomic formations on
land.
SEC. 2443. ULTRA-DEEPWATER PROGRAM.
The Secretary shall establish a program of research,
development, and demonstration of ultra-deepwater nat-
ural gas and other petroleum exploration and production
technologies, in areas currently available for Outer Conti-
nental Shelf leasing. The program shall be carried out by
the Research Organization as provided in this subtitle.
SEC. 2444. NATIONAL ENERGY TECHNOLOGY LABORATORY.
The National Energy Technology Laboratory and the
United States Geological Survey, when appropriate, shall
carry out programs of long-term research into new natural
gas and other petroleum exploration and production tech-
nologies and environmental mitigation technologies for
production from unconventional and ultra-deepwater re-
sources, including methane hydrates. Such Laboratory
shall also conduct a program of research, development,
and demonstration of new technologies for the reduction
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of greenhouse gas emissions from unconventional and
ultra-deepwater natural gas or other petroleum explo-
ration and production activities, including sub-sea floor
carbon sequestration technologies.
SEC. 2445. ADVISORY COMMITTEE.
(a) ESTABLISHMENT.—The Secretary shall, within 3
months after the date of the enactment of this Act, estab-
lish an Advisory Committee consisting of 7 members, each
having extensive operational knowledge of and experience
in the natural gas and other petroleum exploration and
production industry who are not Federal Government em-
ployees or contractors. A minimum of 4 members shall
have extensive knowledge of ultra-deepwater natural gas
or other petroleum exploration and production tech-
nologies, a minimum of 2 members shall have extensive
knowledge of unconventional natural gas or other petro-
leum exploration and production technologies, and at least
1 member shall have extensive knowledge of greenhouse
gas emission reduction technologies, including carbon se-
questration.
(b) FUNCTION.—The Advisory Committee shall ad-
vise the Secretary on the selection of an organization to
create the Research Organization and on the implementa-
tion of this subtitle.
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(c) COMPENSATION.—Members of the Advisory Com-
mittee shall serve without compensation but shall receive
travel expenses, including per diem in lieu of subsistence,
in accordance with applicable provisions under subchapter
I of chapter 57 of title 5, United States Code.
(d) ADMINISTRATIVE COSTS.—The costs of activities
carried out by the Secretary and the Advisory Committee
under this subtitle shall be paid or reimbursed from the
Fund.
(e) DURATION OF ADVISORY COMMITTEE.—Section
14 of the Federal Advisory Committee Act shall not apply
to the Advisory Committee.
SEC. 2446. RESEARCH ORGANIZATION.
(a) SELECTION OF RESEARCH ORGANIZATION.—The
Secretary, within 6 months after the date of the enactment
of this Act, shall solicit proposals from eligible entities for
the creation of the Research Organization, and within 3
months after such solicitation, shall select an entity to cre-
ate the Research Organization.
(b) ELIGIBLE ENTITIES.—Entities eligible to create
the Research Organization shall—
(1) have been in existence as of the date of the
enactment of this Act;
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(2) be entities exempt from tax under section
501(c)(3) of the Internal Revenue Code of 1986;
and
(3) be experienced in planning and managing
programs in natural gas or other petroleum explo-
ration and production research, development, and
demonstration.
(c) PROPOSALS.—A proposal from an entity seeking
to create the Research Organization shall include a de-
tailed description of the proposed membership and struc-
ture of the Research Organization.
(d) FUNCTIONS.—The Research Organization shall—
(1) award grants on a competitive basis to
qualified—
(A) research institutions;
(B) institutions of higher education;
(C) companies; and
(D) consortia formed among institutions
and companies described in subparagraphs (A)
through (C) for the purpose of conducting re-
search, development, and demonstration of un-
conventional and ultra-deepwater natural gas or
other petroleum exploration and production
technologies; and
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(2) review activities under those grants to en-
sure that they comply with the requirements of this
subtitle and serve the purposes for which the grant
was made.
SEC. 2447. GRANTS.
(a) TYPES OF GRANTS.—
(1) UNCONVENTIONAL.—The Research Organi-
zation shall award grants for research, development,
and demonstration of technologies to maximize the
value of the Government’s natural gas and other pe-
troleum resources in unconventional reservoirs, and
to develop technologies to increase the supply of nat-
ural gas and other petroleum resources by lowering
the cost and improving the efficiency of exploration
and production of unconventional reservoirs, while
improving safety and minimizing environmental im-
pacts.
(2) ULTRA-DEEPWATER.—The Research Orga-
nization shall award grants for research, develop-
ment, and demonstration of natural gas or other pe-
troleum exploration and production technologies
to—
(A) maximize the value of the Federal
Government’s natural gas and other petroleum
resources in the ultra-deepwater areas;
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(B) increase the supply of natural gas and
other petroleum resources by lowering the cost
and improving the efficiency of exploration and
production of ultra-deepwater reservoirs; and
(C) improve safety and minimize the envi-
ronmental impacts of ultra-deepwater develop-
ments.
(3) ULTRA-DEEPWATER
ARCHITECTURE.—The
Research Organization shall award a grant to one or
more consortia described in section 2446(d)(1)(D)
for the purpose of developing and demonstrating the
next generation architecture for ultra-deepwater pro-
duction of natural gas and other petroleum in fur-
therance of the purposes stated in paragraph (2)(A)
through (C).
(b) CONDITIONS
FOR GRANTS.—Grants provided
under this section shall contain the following conditions:
(1) If the grant recipient consists of more than
one entity, the recipient shall provide a signed con-
tract agreed to by all participating members clearly
defining all rights to intellectual property for exist-
ing technology and for future inventions conceived
and developed using funds provided under the grant,
in a manner that is consistent with applicable laws.
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(2) There shall be a repayment schedule for
Federal dollars provided for demonstration projects
under the grant in the event of a successful commer-
cialization of the demonstrated technology. Such re-
payment schedule shall provide that the payments
are made to the Secretary with the express intent
that these payments not impede the adoption of the
demonstrated technology in the marketplace. In the
event that such impedance occurs due to market
forces or other factors, the Research Organization
shall renegotiate the grant agreement so that the ac-
ceptance of the technology in the marketplace is en-
abled.
(3) Applications for grants for demonstration
projects shall clearly state the intended commercial
applications of the technology demonstrated.
(4) The total amount of funds made available
under a grant provided under subsection (a)(3) shall
not exceed 50 percent of the total cost of the activi-
ties for which the grant is provided.
(5) The total amount of funds made available
under a grant provided under subsection (a)(1) or
(2) shall not exceed 50 percent of the total cost of
the activities covered by the grant, except that the
Research Organization may elect to provide grants
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covering a higher percentage, not to exceed 90 per-
cent, of total project costs in the case of grants
made solely to independent producers.
(6) An appropriate amount of funds provided
under a grant shall be used for the broad dissemina-
tion of technologies developed under the grant to in-
terested institutions of higher education, industry,
and appropriate Federal and State technology enti-
ties to ensure the greatest possible benefits for the
public and use of government resources.
(7) Demonstrations of ultra-deepwater tech-
nologies for which funds are provided under a grant
may be conducted in ultra-deepwater or deepwater
locations.
(c) ALLOCATION OF FUNDS.—Funds available for
grants under this subtitle shall be allocated as follows:
(1) 15 percent shall be for grants under sub-
section (a)(1).
(2) 15 percent shall be for grants under sub-
section (a)(2).
(3) 60 percent shall be for grants under sub-
section (a)(3).
(4) 10 percent shall be for carrying out section
2444.
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SEC. 2448. PLAN AND FUNDING.
(a) TRANSMITTAL TO SECRETARY.—The Research
Organization shall transmit to the Secretary an annual
plan proposing projects and funding of activities under
each paragraph of section 2447(a).
(b) REVIEW.—The Secretary shall have 1 month to
review the annual plan, and shall approve the plan, if it
is consistent with this subtitle. If the Secretary approves
the plan, the Secretary shall provide funding as proposed
in the plan.
(c) DISAPPROVAL.—If the Secretary does not approve
the plan, the Secretary shall notify the Research Organiza-
tion of the reasons for disapproval and shall withhold
funding until a new plan is submitted which the Secretary
approves. Within 1 month after notifying the Research Or-
ganization of a disapproval, the Secretary shall notify the
appropriate congressional committees of the disapproval.
SEC. 2449. AUDIT.
The Secretary shall retain an independent, commer-
cial auditor to determine the extent to which the funds
authorized by this subtitle have been expended in a man-
ner consistent with the purposes of this subtitle. The audi-
tor shall transmit a report annually to the Secretary, who
shall transmit the report to the appropriate congressional
committees, along with a plan to remedy any deficiencies
cited in the report.
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SEC. 2450. FUND.
(a) ESTABLISHMENT.—There is established in the
Treasury of the United States a fund to be known as the
‘‘Ultra-Deepwater and Unconventional Gas Research
Fund’’ which shall be available for obligation to the extent
provided in advance in appropriations Acts for allocation
under section 2447(c).
(b) FUNDING SOURCES.—
(1) LOANS FROM TREASURY.—There are au-
thorized to be appropriated to the Secretary
$900,000,000 for the period encompassing fiscal
years 2002 through 2009. Such amounts shall be
deposited by the Secretary in the Fund, and shall be
considered loans from the Treasury. Income received
by the United States in connection with any ultra-
deepwater oil and gas leases shall be deposited in
the Treasury and considered as repayment for the
loans under this paragraph.
(2) ADDITIONAL APPROPRIATIONS.—There are
authorized to be appropriated to the Secretary such
sums as may be necessary for the fiscal years 2002
through 2009, to be deposited in the Fund.
(3) OIL AND GAS LEASE INCOME.—To the ex-
tent provided in advance in appropriations Acts, not
more than 7.5 percent of the income of the United
States from Federal oil and gas leases may be de-
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posited in the Fund for fiscal years 2002 through
2009.
SEC. 2451. SUNSET.
No funds are authorized to be appropriated for car-
rying out this subtitle after fiscal year 2009. The Research
Organization shall be terminated when it has expended all
funds made available pursuant to this subtitle.
Subtitle D—Fuel Cells
SEC. 2461. FUEL CELLS.
(a) IN GENERAL.—The Secretary shall conduct a
program of research, development, demonstration, and
commercial application on fuel cells. The program shall
address—
(1) Advanced Research;
(2) Systems Development;
(3) Vision 21-Hybrids; and
(4) Innovative Concepts.
(b) MANUFACTURING
PRODUCTION
AND
PROC-
ESSES.—In addition to the program under subsection (a),
the Secretary, in consultation other Federal agencies, as
appropriate, shall establish a program for the demonstra-
tion of fuel cell technologies, including fuel cell proton ex-
change membrane technology, for commercial, residential,
and transportation applications. The program shall spe-
cifically focus on promoting the application of and im-
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proved manufacturing production and processes for fuel
cell technologies.
(c) AUTHORIZATION OF APPROPRIATIONS.—Within
the amounts authorized to be appropriated under section
2481(a), there are authorized to be appropriated to the
Secretary for the purpose of carrying out subsection (b),
$28,000,000 for each of fiscal years 2002 through 2004.
Subtitle E—Department of Energy
Authorization of Appropriations
SEC. 2481. AUTHORIZATION OF APPROPRIATIONS.
(a) OPERATION AND MAINTENANCE.—There are au-
thorized to be appropriated to the Secretary for operation
and maintenance for subtitle B and subtitle D, and for
Fossil Energy Research and Development Headquarters
Program Direction, Field Program Direction, Plant and
Capital Equipment, Cooperative Research and Develop-
ment, Import/Export Authorization, and Advanced Met-
allurgical Processes $282,000,000 for fiscal year 2002,
$293,000,000 for fiscal year 2003, and $305,000,000 for
fiscal year 2004, to remain available until expended.
(b) LIMITS ON USE OF FUNDS.—None of the funds
authorized to be appropriated in subsection (a) may be
used for—
(1) Gas Hydrates.
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(2) Fossil Energy Environmental Restoration;
or
(3) research, development, demonstration, and
commercial application on coal and related tech-
nologies, including activities under subtitle A.
TITLE V—SCIENCE
Subtitle A—Fusion Energy
Sciences
SEC. 2501. SHORT TITLE.
This subtitle may be cited as the ‘‘Fusion Energy
Sciences Act of 2001’’.
SEC. 2502. FINDINGS.
The Congress finds that—
(1) economic prosperity is closely linked to an
affordable and ample energy supply;
(2) environmental quality is closely linked to en-
ergy production and use;
(3) population, worldwide economic develop-
ment, energy consumption, and stress on the envi-
ronment are all expected to increase substantially in
the coming decades;
(4) the few energy options with the potential to
meet economic and environmental needs for the
long-term future should be pursued as part of a bal-
anced national energy plan;
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(5) fusion energy is an attractive long-term en-
ergy source because of the virtually inexhaustible
supply of fuel, and the promise of minimal adverse
environmental impact and inherent safety;
(6) the National Research Council, the Presi-
dent’s Committee of Advisers on Science and Tech-
nology, and the Secretary of Energy Advisory Board
have each recently reviewed the Fusion Energy
Sciences Program and each strongly supports the
fundamental science and creative innovation of the
program, and has confirmed that progress toward
the goal of producing practical fusion energy has
been excellent, although much scientific and engi-
neering work remains to be done;
(7) each of these reviews stressed the need for
a magnetic fusion burning plasma experiment to ad-
dress key scientific issues and as a necessary step in
the development of fusion energy;
(8) the National Research Council has also
called for a broadening of the Fusion Energy
Sciences Program research base as a means to more
fully integrate the fusion science community into the
broader scientific community; and
(9) the Fusion Energy Sciences Program budg-
et is inadequate to support the necessary science and
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innovation for the present generation of experiments,
and cannot accommodate the cost of a burning plas-
ma experiment constructed by the United States, or
even the cost of key participation by the United
States in an international effort.
SEC. 2503. PLAN FOR FUSION EXPERIMENT.
(a) PLAN FOR UNITED STATES FUSION EXPERI-
MENT.—The Secretary, on the basis of full consultation
with the Fusion Energy Sciences Advisory Committee and
the Secretary of Energy Advisory Board, as appropriate,
shall develop a plan for United States construction of a
magnetic fusion burning plasma experiment for the pur-
pose of accelerating scientific understanding of fusion
plasmas. The Secretary shall request a review of the plan
by the National Academy of Sciences, and shall transmit
the plan and the review to the Congress by July 1, 2004.
(b) REQUIREMENTS OF PLAN.—The plan described
in subsection (a) shall—
(1) address key burning plasma physics issues;
and
(2) include specific information on the scientific
capabilities of the proposed experiment, the rel-
evance of these capabilities to the goal of practical
fusion energy, and the overall design of the experi-
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ment including its estimated cost and potential con-
struction sites.
(c) UNITED STATES PARTICIPATION IN AN INTER-
NATIONAL EXPERIMENT.—In addition to the plan de-
scribed in subsection (a), the Secretary, on the basis of
full consultation with the Fusion Energy Sciences Advi-
sory Committee and the Secretary of Energy Advisory
Board, as appropriate, may also develop a plan for United
States participation in an international burning plasma
experiment for the same purpose, whose construction is
found by the Secretary to be highly likely and where
United States participation is cost effective relative to the
cost and scientific benefits of a domestic experiment de-
scribed in subsection (a). If the Secretary elects to develop
a plan under this subsection, he shall include the informa-
tion described in subsection (b), and an estimate of the
cost of United States participation in such an inter-
national experiment. The Secretary shall request a review
by the National Academies of Sciences and Engineering
of a plan developed under this subsection, and shall trans-
mit the plan and the review to the Congress not later than
July 1, 2004.
(d) AUTHORIZATION OF RESEARCH AND DEVELOP-
MENT.—The Secretary, through the Fusion Energy
Sciences Program, may conduct any research and develop-
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ment necessary to fully develop the plans described in this
section.
SEC. 2504. PLAN FOR FUSION ENERGY SCIENCES PRO-
GRAM.
Not later than 6 months after the date of the enact-
ment of this Act, the Secretary, in full consultation with
FESAC, shall develop and transmit to the Congress a plan
for the purpose of ensuring a strong scientific base for
the Fusion Energy Sciences Program and to enable the
experiments described in section 2503. Such plan shall in-
clude as its objectives—
(1) to ensure that existing fusion research fa-
cilities and equipment are more fully utilized with
appropriate measurements and control tools;
(2) to ensure a strengthened fusion science the-
ory and computational base;
(3) to ensure that the selection of and funding
for new magnetic and inertial fusion research facili-
ties is based on scientific innovation and cost effec-
tiveness;
(4) to improve the communication of scientific
results and methods between the fusion science com-
munity and the wider scientific community;
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(5) to ensure that adequate support is provided
to optimize the design of the magnetic fusion burn-
ing plasma experiments referred to in section 2503;
(6) to ensure that inertial confinement fusion
facilities are utilized to the extent practicable for the
purpose of inertial fusion energy research and devel-
opment;
(7) to develop a roadmap for a fusion-based en-
ergy source that shows the important scientific ques-
tions, the evolution of confinement configurations,
the relation between these two features, and their re-
lation to the fusion energy goal;
(8) to establish several new centers of excel-
lence, selected through a competitive peer-review
process and devoted to exploring the frontiers of fu-
sion science;
(9) to ensure that the National Science Foun-
dation, and other agencies, as appropriate, play a
role in extending the reach of fusion science and in
sponsoring general plasma science; and
(10) to ensure that there be continuing broad
assessments of the outlook for fusion energy and
periodic external reviews of fusion energy sciences.
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SEC. 2505. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to the Sec-
retary for the development and review, but not for imple-
mentation, of the plans described in this subtitle and for
activities of the Fusion Energy Sciences Program
$320,000,000 for fiscal year 2002 and $335,000,000 for
fiscal year 2003, of which up to $15,000,000 for each of
fiscal year 2002 and fiscal year 2003 may be used to es-
tablish several new centers of excellence, selected through
a competitive peer-review process and devoted to exploring
the frontiers of fusion science.
Subtitle B—Spallation Neutron
Source
SEC. 2521. DEFINITION.
For the purposes of this subtitle, the term ‘‘Spall-
ation Neutron Source’’ means Department Project 99–E–
334, Oak Ridge National Laboratory, Oak Ridge, Ten-
nessee.
SEC. 2522. AUTHORIZATION OF APPROPRIATIONS.
(a) AUTHORIZATION OF CONSTRUCTION FUNDING.—
There are authorized to be appropriated to the Secretary
for construction of the Spallation Neutron Source—
(1) $276,300,000 for fiscal year 2002;
(2) $210,571,000 for fiscal year 2003;
(3) $124,600,000 for fiscal year 2004;
(4) $79,800,000 for fiscal year 2005; and
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(5) $41,100,000 for fiscal year 2006 for com-
pletion of construction.
(b) AUTHORIZATION
OF OTHER PROJECT FUND-
ING.—There are authorized to be appropriated to the Sec-
retary for other project costs (including research and de-
velopment necessary to complete the project, preoperations
costs, and capital equipment not related to construction)
of the Spallation Neutron Source $15,353,000 for fiscal
year 2002 and $103,279,000 for the period encompassing
fiscal years 2003 through 2006, to remain available until
expended through September 30, 2006.
SEC. 2523. REPORT.
The Secretary shall report on the Spallation Neutron
Source as part of the Department’s annual budget submis-
sion, including a description of the achievement of mile-
stones, a comparison of actual costs to estimated costs,
and any changes in estimated project costs or schedule.
SEC. 2524. LIMITATIONS.
The total amount obligated by the Department, in-
cluding prior year appropriations, for the Spallation Neu-
tron Source may not exceed—
(1) $1,192,700,000 for costs of construction;
(2) $219,000,000 for other project costs; and
(3) $1,411,700,000 for total project cost.
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Subtitle C—Facilities,
Infrastructure, and User Facilities
SEC. 2541. DEFINITION.
For purposes of this subtitle—
(1) the term ‘‘nonmilitary energy laboratory’’
means—
(A) Ames Laboratory;
(B) Argonne National Laboratory;
(C) Brookhaven National Laboratory;
(D) Fermi National Accelerator Labora-
tory;
(E) Lawrence Berkeley National Labora-
tory;
(F) Oak Ridge National Laboratory;
(G) Pacific Northwest National Labora-
tory;
(H) Princeton Plasma Physics Laboratory;
(I) Stanford Linear Accelerator Center;
(J) Thomas Jefferson National Accelerator
Facility; or
(K) any other facility of the Department
that the Secretary, in consultation with the Di-
rector, Office of Science and the appropriate
congressional committees, determines to be con-
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sistent with the mission of the Office of
Science; and
(2) the term ‘‘user facility’’ means—
(A) an Office of Science facility at a non-
military energy laboratory that provides special
scientific and research capabilities, including
technical expertise and support as appropriate,
to serve the research needs of the Nation’s uni-
versities, industry, private laboratories, Federal
laboratories, and others, including research in-
stitutions or individuals from other nations
where reciprocal accommodations are provided
to United States research institutions and indi-
viduals or where the Secretary considers such
accommodation to be in the national interest;
and
(B) any other Office of Science funded fa-
cility designated by the Secretary as a user fa-
cility.
SEC. 2542. FACILITY AND INFRASTRUCTURE SUPPORT FOR
NONMILITARY ENERGY LABORATORIES.
(a) FACILITY POLICY.—The Secretary shall develop
and implement a least-cost nonmilitary energy laboratory
facility and infrastructure strategy for—
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(1) maintaining existing facilities and infra-
structure, as needed;
(2) closing unneeded facilities;
(3) making facility modifications; and
(4) building new facilities.
(b) PLAN.—The Secretary shall prepare a com-
prehensive 10-year plan for conducting future facility
maintenance, making repairs, modifications, and new ad-
ditions, and constructing new facilities at each nonmilitary
energy laboratory. Such plan shall provide for facilities
work in accordance with the following priorities:
(1) Providing for the safety and health of em-
ployees, visitors, and the general public with regard
to correcting existing structural, mechanical, elec-
trical, and environmental deficiencies.
(2) Providing for the repair and rehabilitation
of existing facilities to keep them in use and prevent
deterioration, if feasible.
(3) Providing engineering design and construc-
tion services for those facilities that require modi-
fication or additions in order to meet the needs of
new or expanded programs.
(c) REPORT.—
(1) TRANSMITTAL.—Within 1 year after the
date of the enactment of this Act, the Secretary
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shall prepare and transmit to the appropriate con-
gressional committees a report containing the plan
prepared under subsection (b).
(2) CONTENTS.—For each nonmilitary energy
laboratory, such report shall contain—
(A) the current priority list of proposed fa-
cilities and infrastructure projects, including
cost and schedule requirements;
(B) a current ten-year plan that dem-
onstrates the reconfiguration of its facilities and
infrastructure to meet its missions and to ad-
dress its long-term operational costs and return
on investment;
(C) the total current budget for all facili-
ties and infrastructure funding; and
(D) the current status of each facilities
and infrastructure project compared to the
original baseline cost, schedule, and scope.
(3) ADDITIONAL ELEMENTS.—The report shall
also—
(A) include a plan for new facilities and fa-
cility modifications at each nonmilitary energy
laboratory that will be required to meet the De-
partment’s changing missions of the twenty-
first century, including schedules and estimates
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for implementation, and including a section out-
lining long-term funding requirements con-
sistent with anticipated budgets and annual au-
thorization of appropriations;
(B) address the coordination of moderniza-
tion and consolidation of facilities among the
nonmilitary energy laboratories in order to meet
changing mission requirements; and
(C) provide for annual reports to the ap-
propriate congressional committees on accom-
plishments, conformance to schedules, commit-
ments, and expenditures.
SEC. 2543. USER FACILITIES.
(a) NOTICE REQUIREMENT.—When the Department
makes a user facility available to universities and other
potential users, or seeks input from universities and other
potential users regarding significant characteristics or
equipment in a user facility or a proposed user facility,
the Department shall ensure broad public notice of such
availability or such need for input to universities and other
potential users.
(b) COMPETITION REQUIREMENT.—When the De-
partment considers the participation of a university or
other potential user in the establishment or operation of
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a user facility, the Department shall employ full and open
competition in selecting such a participant.
(c) PROHIBITION.—The Department may not redes-
ignate a user facility, as defined by section 2541(b) as
something other than a user facility for avoid the require-
ments of subsections (a) and (b).
Subtitle D—Advisory Panel on
Office of Science
SEC. 2561. ESTABLISHMENT.
The Director of the Office of Science and Technology
Policy, in consultation with the Secretary, shall establish
an Advisory Panel on the Office of Science comprised of
knowledgeable individuals to—
(1) address concerns about the current status
and the future of scientific research supported by
the Office;
(2) examine alternatives to the current organi-
zational structure of the Office within the Depart-
ment, taking into consideration existing structures
for the support of scientific research in other Fed-
eral agencies and the private sector; and
(3) suggest actions to strengthen the scientific
research supported by the Office that might be
taken jointly by the Department and Congress.
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SEC. 2562. REPORT.
Within 6 months after the date of the enactment of
this Act, the Advisory Panel shall transmit its findings
and recommendations in a report to the Director of the
Office of Science and Technology Policy and the Sec-
retary. The Director and the Secretary shall jointly—
(1) consider each of the Panel’s findings and
recommendations, and comment on each as they
consider appropriate; and
(2) transmit the Panel’s report and the com-
ments of the Director and the Secretary on the re-
port to the appropriate congressional committees
within 9 months after the date of the enactment of
this Act.
Subtitle E—Department of Energy
Authorization of Appropriations
SEC. 2581. AUTHORIZATION OF APPROPRIATIONS.
(a) OPERATION AND MAINTENANCE.—Including the
amounts authorized to be appropriated for fiscal year
2002 under section 2505 for Fusion Energy Sciences and
under section 2522(b) for the Spallation Neutron Source,
there are authorized to be appropriated to the Secretary
for the Office of Science (also including subtitle C, High
Energy Physics, Nuclear Physics, Biological and Environ-
mental Research, Basic Energy Sciences (except for the
Spallation Neutron Source), Advanced Scientific Com-
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puting Research, Energy Research Analysis, Multipro-
gram Energy Laboratories-Facilities Support, Facilities
and Infrastructure, Safeguards and Security, and Pro-
gram 
Direction) 
operation 
and 
maintenance
$3,299,558,000 for fiscal year 2002, to remain available
until expended.
(b) RESEARCH REGARDING PRECIOUS METAL CA-
TALYSIS.—Within the amounts authorized to be appro-
priated to the Secretary under subsection (a), $5,000,000
for fiscal year 2002 may be used to carry out research
in the use of precious metals (excluding platinum, palla-
dium, and rhodium) in catalysis, either directly though na-
tional laboratories, or through the award of grants, coop-
erative agreements, or contracts with public or nonprofit
entities.
(c) CONSTRUCTION.—In addition to the amounts au-
thorized to be appropriated under section 2522(a) for con-
struction of the Spallation Neutron Source, there are au-
thorized to be appropriated to the Secretary for Science—
(1) 
$19,400,000 
for 
fiscal 
year 
2002,
$14,800,000 for fiscal year 2003, and $8,900,000
for fiscal year 2004 for completion of constuction of
Project 98–G–304, Neutrinos at the Main Injector,
Fermi National Accelerator Laboratory;
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(2) $11,405,000 for fiscal year 2002 for com-
pletion of construction of Project 01-E-300, Labora-
tory for Comparative and Functional Genomics, Oak
Ridge National Laboratory;
(3) $4,000,000 for fiscal year 2002, $8,000,000
for fiscal year 2003, and $2,000,000 for fiscal year
2004 for completion of construction of Project 02-
SC-002, Project Engineering Design (PED), Var-
ious Locations;
(4) $3,183,000 for fiscal year 2002 for comple-
tion of construction of Project 02-SC-002, Multipro-
gram Energy Laboratories Infrastructure Project
Engineering Design (PED), Various Locations; and
(5) $18,633,000 for fiscal year 2002 and
$13,029,000 for fiscal year 2003 for completion of
construction of Project MEL-001, Multiprogram En-
ergy Laboratories, Infrastructure, Various Loca-
tions.
(d) LIMITS ON USE OF FUNDS.—None of the funds
authorized to be appropriated in subsection (c) may be
used for construction at any national security laboratory
as defined in section 3281(1) of the National Defense Au-
thorization Act for Fiscal Year 2000 (50 U.S.C. 2471(1))
or at any nuclear weapons production facility as defined
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in section 3281(2) of the National Defense Authorization
Act for Fiscal Year 2000 (50 U.S.C. 2471(2)).
TITLE VI—MISCELLANEOUS
Subtitle A—General Provisions for
the Department of Energy
SEC. 2601. RESEARCH, DEVELOPMENT, DEMONSTRATION,
AND COMMERCIAL APPLICATION OF ENERGY
TECHNOLOGY PROGRAMS, PROJECTS, AND
ACTIVITIES.
(a) AUTHORIZED ACTIVITIES.—Except as otherwise
provided in this division, research, development, dem-
onstration, 
and 
commercial 
application 
programs,
projects, and activities for which appropriations are au-
thorized under this division may be carried out under the
procedures of the Federal Nonnuclear Energy Research
and Development Act of 1974 (42 U.S.C. 5901 et seq.),
the Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.),
or any other Act under which the Secretary is authorized
to carry out such programs, projects, and activities, but
only to the extent the Secretary is authorized to carry out
such activities under each such Act.
(b) AUTHORIZED AGREEMENTS.—Except as other-
wise provided in this division, in carrying out research,
development, demonstration, and commercial application
programs, projects, and activities for which appropriations
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are authorized under this division, the Secretary may use,
to the extent authorized under applicable provisions of
law, contracts, cooperative agreements, cooperative re-
search and development agreements under the Stevenson-
Wydler Technology Innovation Act of 1980 (15 U.S.C.
3701 et seq.), grants, joint ventures, and any other form
of agreement available to the Secretary.
(c) DEFINITION.—For purposes of this section, the
term ‘‘joint venture’’ has the meaning given that term
under section 2 of the National Cooperative Research and
Production Act of 1993 (15 U.S.C. 4301), except that
such term may apply under this section to research, devel-
opment, demonstration, and commercial application of en-
ergy technology joint ventures.
(d) 
PROTECTION
OF
INFORMATION.—Section
12(c)(7) of the Stevenson-Wydler Technology Innovation
Act of 1980 (15 U.S.C. 3710a(c)(7)), relating to the pro-
tection of information, shall apply to research, develop-
ment, demonstration, and commercial application of en-
ergy technology programs, projects, and activities for
which appropriations are authorized under this division.
(e) INVENTIONS.—An invention conceived and devel-
oped by any person using funds provided through a grant
under this division shall be considered a subject invention
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for the purposes of chapter 18 of title 35, United States
Code (commonly referred to as the Bayh-Dole Act).
(f) OUTREACH.—The Secretary shall ensure that
each program authorized by this division includes an out-
reach component to provide information, as appropriate,
to manufacturers, consumers, engineers, architects, build-
ers, energy service companies, universities, facility plan-
ners and managers, State and local governments, and
other entities.
(g) GUIDELINES AND PROCEDURES.—The Secretary
shall provide guidelines and procedures for the transition,
where appropriate, of energy technologies from research
through development and demonstration to commercial
application of energy technology. Nothing in this section
shall preclude the Secretary from—
(1) entering into a contract, cooperative agree-
ment, cooperative research and development agree-
ment under the Stevenson-Wydler Technology Inno-
vation Act of 1980 (15 U.S.C. 3701 et seq.), grant,
joint venture, or any other form of agreement avail-
able to the Secretary under this section that relates
to research, development, demonstration, and com-
mercial application of energy technology; or
(2) extending a contract, cooperative agree-
ment, cooperative research and development agree-
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ment under the Stevenson-Wydler Technology Inno-
vation Act of 1980, grant, joint venture, or any
other form of agreement available to the Secretary
that relates to research, development, and dem-
onstration to cover commercial application of energy
technology.
(h) APPLICATION OF SECTION.—This section shall
not apply to any contract, cooperative agreement, coopera-
tive research and development agreement under the Ste-
venson-Wydler Technology Innovation Act of 1980 (15
U.S.C. 3701 et seq.), grant, joint venture, or any other
form of agreement available to the Secretary that is in
effect as of the date of the enactment of this Act.
SEC. 2602. LIMITS ON USE OF FUNDS.
(a) MANAGEMENT AND OPERATING CONTRACTS.—
(1) 
COMPETITIVE
PROCEDURE
REQUIRE-
MENT.—None of the funds authorized to be appro-
priated to the Secretary by this division may be used
to award a management and operating contract for
a federally owned or operated nonmilitary energy
laboratory of the Department unless such contract is
awarded using competitive procedures or the Sec-
retary grants, on a case-by-case basis, a waiver to
allow for such a deviation. The Secretary may not
delegate the authority to grant such a waiver.
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(2) CONGRESSIONAL
NOTICE.—At least 2
months before a contract award, amendment, or
modification for which the Secretary intends to
grant such a waiver, the Secretary shall submit to
the appropriate congressional committees a report
notifying the committees of the waiver and setting
forth the reasons for the waiver.
(b) PRODUCTION OR PROVISION OF ARTICLES OR
SERVICES.—None of the funds authorized to be appro-
priated to the Secretary by this division may be used to
produce or provide articles or services for the purpose of
selling the articles or services to a person outside the Fed-
eral Government, unless the Secretary determines that
comparable articles or services are not available from a
commercial source in the United States.
(c) REQUESTS FOR PROPOSALS.—None of the funds
authorized to be appropriated to the Secretary by this divi-
sion may be used by the Department to prepare or initiate
Requests for Proposals for a program if the program has
not been authorized by Congress.
SEC. 2603. COST SHARING.
(a) RESEARCH AND DEVELOPMENT.—Except as oth-
erwise provided in this division, for research and develop-
ment programs carried out under this division, the Sec-
retary shall require a commitment from non-Federal
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sources of at least 20 percent of the cost of the project.
The Secretary may reduce or eliminate the non-Federal
requirement under this subsection if the Secretary deter-
mines that the research and development is of a basic or
fundamental nature.
(b) DEMONSTRATION
AND COMMERCIAL APPLICA-
TION.—Except as otherwise provided in this division, the
Secretary shall require at least 50 percent of the costs di-
rectly and specifically related to any demonstration or
commercial application project under this division to be
provided from non-Federal sources. The Secretary may re-
duce the non-Federal requirement under this subsection
if the Secretary determines that the reduction is necessary
and appropriate considering the technological risks in-
volved in the project and is necessary to meet the objec-
tives of this division.
(c) CALCULATION OF AMOUNT.—In calculating the
amount of the non-Federal commitment under subsection
(a) or (b), the Secretary may include personnel, services,
equipment, and other resources.
SEC. 2604. LIMITATION ON DEMONSTRATION AND COMMER-
CIAL 
APPLICATION 
OF 
ENERGY 
TECH-
NOLOGY.
Except as otherwise provided in this division, the Sec-
retary shall provide funding for scientific or energy dem-
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onstration and commercial application of energy tech-
nology programs, projects, or activities only for tech-
nologies or processes that can be reasonably expected to
yield new, measurable benefits to the cost, efficiency, or
performance of the technology or process.
SEC. 2605. REPROGRAMMING.
(a) AUTHORITY.—The Secretary may use amounts
appropriated under this division for a program, project,
or activity other than the program, project, or activity for
which such amounts were appropriated only if—
(1) the Secretary has transmitted to the appro-
priate congressional committees a report described
in subsection (b) and a period of 30 days has
elapsed after such committees receive the report;
(2) amounts used for the program, project, or
activity do not exceed—
(A) 105 percent of the amount authorized
for the program, project, or activity; or
(B) $250,000 more than the amount au-
thorized for the program, project, or activity,
whichever is less; and
(3) the program, project, or activity has been
presented to, or requested of, the Congress by the
Secretary.
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(b) REPORT.—(1) The report referred to in sub-
section (a) is a report containing a full and complete state-
ment of the action proposed to be taken and the facts and
circumstances relied upon in support of the proposed ac-
tion.
(2) In the computation of the 30-day period under
subsection (a), there shall be excluded any day on which
either House of Congress is not in session because of an
adjournment of more than 3 days to a day certain.
(c) LIMITATIONS.—(1) In no event may the total
amount of funds obligated by the Secretary pursuant to
this division exceed the total amount authorized to be ap-
propriated to the Secretary by this division.
(2) Funds appropriated to the Secretary pursuant to
this division may not be used for an item for which Con-
gress has declined to authorize funds.
Subtitle B—Other Miscellaneous
Provisions
SEC. 2611. NOTICE OF REORGANIZATION.
The Secretary shall provide notice to the appropriate
congressional committees not later than 15 days before
any reorganization of any environmental research or devel-
opment, scientific or energy research, development, or
demonstration, or commercial application of energy tech-
nology program, project, or activity of the Department.
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SEC. 2612. LIMITS ON GENERAL PLANT PROJECTS.
If, at any time during the construction of a civilian
environmental research and development, scientific or en-
ergy research, development, or demonstration, or commer-
cial application of energy technology project of the Depart-
ment for which no specific funding level is provided by
law, the estimated cost (including any revision thereof) of
the project exceeds $5,000,000, the Secretary may not
continue such construction unless the Secretary has fur-
nished a complete report to the appropriate congressional
committees explaining the project and the reasons for the
estimate or revision.
SEC. 2613. LIMITS ON CONSTRUCTION PROJECTS.
(a) LIMITATION.—Except as provided in subsection
(b), construction on a civilian environmental research and
development, scientific or energy research, development, or
demonstration, or commercial application of energy tech-
nology project of the Department for which funding has
been specifically provided by law may not be started, and
additional obligations may not be incurred in connection
with the project above the authorized funding amount,
whenever the current estimated cost of the construction
project exceeds by more than 10 percent the higher of—
(1) the amount authorized for the project, if the
entire project has been funded by the Congress; or
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(2) the amount of the total estimated cost for
the project as shown in the most recent budget jus-
tification data submitted to Congress.
(b) NOTICE.—An action described in subsection (a)
may be taken if—
(1) the Secretary has submitted to the appro-
priate congressional committees a report on the pro-
posed actions and the circumstances making such
actions necessary; and
(2) a period of 30 days has elapsed after the
date on which the report is received by the commit-
tees.
(c) EXCLUSION.—In the computation of the 30-day
period described in subsection (b)(2), there shall be ex-
cluded any day on which either House of Congress is not
in session because of an adjournment of more than 3 days
to a day certain.
(d) EXCEPTION.—Subsections (a) and (b) shall not
apply to any construction project that has a current esti-
mated cost of less than $5,000,000.
SEC. 2614. AUTHORITY FOR CONCEPTUAL AND CONSTRUC-
TION DESIGN.
(a) REQUIREMENT FOR CONCEPTUAL DESIGN.—(1)
Subject to paragraph (2) and except as provided in para-
graph (3), before submitting to Congress a request for
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funds for a construction project that is in support of a
civilian environmental research and development, scientific
or energy research, development, or demonstration, or
commercial application of energy technology program,
project, or activity of the Department, the Secretary shall
complete a conceptual design for that project.
(2) If the estimated cost of completing a conceptual
design for a construction project exceeds $750,000, the
Secretary shall submit to Congress a request for funds for
the conceptual design before submitting a request for
funds for the construction project.
(3) The requirement in paragraph (1) does not apply
to a request for funds for a construction project, the total
estimated cost of which is less than $5,000,000.
(b) AUTHORITY FOR CONSTRUCTION DESIGN.—(1)
The Secretary may carry out construction design (includ-
ing architectural and engineering services) in connection
with any proposed construction project that is in support
of a civilian environmental research and development, sci-
entific or energy research, development, and demonstra-
tion, or commercial application of energy technology pro-
gram, project, or activity of the Department if the total
estimated cost for such design does not exceed $250,000.
(2) If the total estimated cost for construction design
in connection with any construction project described in
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paragraph (1) exceeds $250,000, funds for such design
must be specifically authorized by law.
SEC. 2615. NATIONAL ENERGY POLICY DEVELOPMENT
GROUP MANDATED REPORTS.
(a) THE SECRETARY’S REVIEW OF ENERGY EFFI-
CIENCY RENEWABLE ENERGY, AND ALTERNATIVE EN-
ERGY RESEARCH AND DEVELOPMENT.—Upon completion
of the Secretary’s review of current funding and historic
performance of the Department’s energy efficiency, renew-
able energy, and alternative energy research and develop-
ment programs in response to the recommendations of the
May 16, 2001, Report of the National Energy Policy De-
velopment Group, the Secretary shall transmit a report
containing the results of such review to the appropriate
congressional committees.
(b) REVIEW AND RECOMMENDATIONS ON USING THE
NATION’S ENERGY RESOURCES MORE EFFICIENTLY.—
Upon completion of the Office of Science and Technology
Policy and the President’s Council of Advisors on Science
and Technology reviewing and making recommendations
on using the Nation’s energy resources more efficiently,
in response to the recommendation of the May 16, 2001,
Report of the National Energy Policy Development Group,
the Director of the Office of Science and Technology Pol-
icy shall transmit a report containing the results of such
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review and recommendations to the appropriate congres-
sional committees.
SEC. 2616. PERIODIC REVIEWS AND ASSESSMENTS.
The Secretary shall enter into appropriate arrange-
ments with the National Academies of Sciences and Engi-
neering to ensure that there be periodic reviews and as-
sessments of the programs authorized by this division, as
well as the measurable cost and performance-based goals
for such programs as established under section 2004, and
the progress on meeting such goals. Such reviews and as-
sessments shall be conducted at least every 5 years, or
more often as the Secretary considers necessary, and the
Secretary shall transmit to the appropriate congressional
committees reports containing the results of such reviews
and assessments.
DIVISION C
SEC. 3001. SHORT TITLE.
(a) SHORT TITLE.—This division may be cited as the
‘‘Energy Tax Policy Act of 2001’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this division an
amendment or repeal is expressed in terms of an amend-
ment to, or repeal of, a section or other provision, the ref-
erence shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
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TITLE I—CONSERVATION
SEC. 3101. CREDIT FOR RESIDENTIAL SOLAR ENERGY
PROPERTY.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 (relating to nonrefundable personal
credits) is amended by inserting after section 25B the fol-
lowing new section:
‘‘SEC. 25C. RESIDENTIAL SOLAR ENERGY PROPERTY.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, 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—
‘‘(1) 15 percent of the qualified photovoltaic
property expenditures made by the taxpayer during
such year, and
‘‘(2) 15 percent of the qualified solar water
heating property expenditures made by the taxpayer
during the taxable year.
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM
CREDIT.—The credit allowed
under subsection (a) shall not exceed—
‘‘(A) $2,000 for each system of property
described in subsection (c)(1), and
‘‘(B) $2,000 for each system of property
described in subsection (c)(2).
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‘‘(2) SAFETY CERTIFICATIONS.—No credit shall
be allowed under this section for an item of property
unless—
‘‘(A) in the case of solar water heating
equipment, such equipment is certified for per-
formance and safety by the non-profit Solar
Rating Certification Corporation or a com-
parable entity endorsed by the government of
the State in which such property is installed,
and
‘‘(B) in the case of a photovoltaic system,
such system meets appropriate fire and electric
code requirements.
‘‘(3) LIMITATION
BASED
ON
AMOUNT
OF
TAX.—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 im-
posed by section 55, over
‘‘(B) the sum of the credits allowable
under this subpart (other than this section and
sections 23, 25D, and 25E) and section 27 for
the taxable year.
‘‘(c) DEFINITIONS.—For purposes of this section—
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‘‘(1) QUALIFIED SOLAR WATER HEATING PROP-
ERTY
EXPENDITURE.—The term ‘qualified solar
water heating property expenditure’ means an ex-
penditure for property to heat water for use in a
dwelling unit located in the United States and used
as a residence if at least half of the energy used by
such property for such purpose is derived from the
sun.
‘‘(2) QUALIFIED PHOTOVOLTAIC PROPERTY EX-
PENDITURE.—The term ‘qualified photovoltaic prop-
erty expenditure’ means an expenditure for property
that uses solar energy to generate electricity for use
in a dwelling unit.
‘‘(3) SOLAR PANELS.—No expenditure relating
to a solar panel or other property installed as a roof
(or portion thereof) shall fail to be treated as prop-
erty described in paragraph (1) or (2) solely because
it constitutes a structural component of the struc-
ture on which it is installed.
‘‘(4) LABOR
COSTS.—Expenditures for labor
costs properly allocable to the onsite preparation, as-
sembly, or original installation of the property de-
scribed in paragraph (1) or (2) and for piping or
wiring to interconnect such property to the dwelling
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unit shall be taken into account for purposes of this
section.
‘‘(5) SWIMMING POOLS, ETC., USED AS STOR-
AGE MEDIUM.—Expenditures which are properly al-
locable to a swimming pool, hot tub, or any other
energy storage medium which has a function other
than the function of such storage shall not be taken
into account for purposes of this section.
‘‘(d) SPECIAL RULES.—
‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OC-
CUPANCY.—In the case of any dwelling unit which is
jointly occupied and used during any calendar year
as a residence by 2 or more individuals the following
shall apply:
‘‘(A) The amount of the credit allowable
under subsection (a) by reason of expenditures
(as the case may be) made during such cal-
endar year by any of such individuals with re-
spect to such dwelling unit shall be determined
by treating all of such individuals as 1 taxpayer
whose taxable year is such calendar year.
‘‘(B) There shall be allowable with respect
to such expenditures to each of such individ-
uals, a credit under subsection (a) for the tax-
able year in which such calendar year ends in
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an amount which bears the same ratio to the
amount determined under subparagraph (A) as
the amount of such expenditures made by such
individual during such calendar year bears to
the aggregate of such expenditures made by all
of such individuals during such calendar year.
‘‘(2) TENANT-STOCKHOLDER IN COOPERATIVE
HOUSING CORPORATION.—In the case of an indi-
vidual who is a tenant-stockholder (as defined in sec-
tion 216) in a cooperative housing corporation (as
defined in such section), such individual shall be
treated as having made his tenant-stockholder’s pro-
portionate share (as defined in section 216(b)(3)) of
any expenditures of such corporation.
‘‘(3) CONDOMINIUMS.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is a member of a condominium man-
agement association with respect to a condo-
minium which he owns, such individual shall be
treated as having made his proportionate share
of any expenditures of such association.
‘‘(B) CONDOMINIUM
MANAGEMENT
ASSO-
CIATION.—For purposes of this paragraph, the
term ‘condominium management association’
means an organization which meets the require-
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ments of paragraph (1) of section 528(c) (other
than subparagraph (E) thereof) with respect to
a condominium project substantially all of the
units of which are used as residences.
‘‘(4) ALLOCATION IN CERTAIN CASES.—If less
than 80 percent of the use of an item is for nonbusi-
ness purposes, only that portion of the expenditures
for such item which is properly allocable to use for
nonbusiness purposes shall be taken into account.
‘‘(5) WHEN EXPENDITURE MADE; AMOUNT OF
EXPENDITURE.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), an expenditure with respect
to an item shall be treated as made when the
original installation of the item is completed.
‘‘(B) EXPENDITURES PART OF BUILDING
CONSTRUCTION.—In the case of an expenditure
in connection with the construction or recon-
struction of a structure, such expenditure shall
be treated as made when the original use of the
constructed or reconstructed structure by the
taxpayer begins.
‘‘(C) AMOUNT.—The amount of any ex-
penditure shall be the cost thereof.
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‘‘(6) PROPERTY FINANCED BY SUBSIDIZED EN-
ERGY FINANCING.—For purposes of determining the
amount of expenditures made by any individual with
respect to any dwelling unit, there shall not be taken
in to account expenditures which are made from
subsidized energy financing (as defined in section
48(a)(4)(A)).
‘‘(e) BASIS ADJUSTMENTS.—For purposes of this
subtitle, if a credit is allowed under this section for any
expenditure with respect to any property, the increase in
the basis of such property which would (but for this sub-
section) result from such expenditure shall be reduced by
the amount of the credit so allowed.
‘‘(f) TERMINATION.—The credit allowed under this
section shall not apply to taxable years beginning after
December 31, 2006 (December 31, 2008, with respect to
qualified photovoltaic property expenditures).’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 1016 is amended
by striking ‘‘and’’ at the end of paragraph (27), by
striking the period at the end of paragraph (28) and
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph:
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‘‘(29) to the extent provided in section 25C(e),
in the case of amounts with respect to which a credit
has been allowed under section 25C.’’.
(2) The table of sections for subpart A of part
IV of subchapter A of chapter 1 is amended by in-
serting after the item relating to section 25B the fol-
lowing new item:
‘‘Sec. 25C. Residential solar energy property.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after De-
cember 31, 2001.
SEC. 3102. EXTENSION AND EXPANSION OF CREDIT FOR
ELECTRICITY PRODUCED FROM RENEWABLE
RESOURCES.
(a) EXTENSION OF CREDIT FOR WIND AND CLOSED-
LOOP BIOMASS FACILITIES.—Subparagraphs (A) and (B)
of section 45(c)(3) are each amended by striking ‘‘2002’’
and inserting ‘‘2007’’.
(b) EXPANSION OF CREDIT FOR OPEN-LOOP BIOMASS
AND LANDFILL GAS FACILITIES.—Paragraph (3) of sec-
tion 45(c) is amended by adding at the end the following
new subparagraphs:
‘‘(D) OPEN-LOOP BIOMASS FACILITIES.—
In the case of a facility using open-loop biomass
to produce electricity, the term ‘qualified facil-
ity’ means any facility owned by the taxpayer
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which is originally placed in service before Jan-
uary 1, 2007.
‘‘(E) LANDFILL GAS FACILITIES.—In the
case of a facility producing electricity from gas
derived from the biodegradation of municipal
solid waste, the term ‘qualified facility’ means
any facility owned by the taxpayer which is
originally placed in service before January 1,
2007.’’.
(c) DEFINITION AND SPECIAL RULES.—Subsection
(c) of section 45 is amended by adding at the end the
following new paragraphs:
‘‘(5) OPEN-LOOP
BIOMASS.—The term ‘open-
loop biomass’ means any solid, nonhazardous, cel-
lulosic 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
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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.
Such term shall not include closed-loop biomass.
‘‘(6) 
REDUCED
CREDIT
FOR
CERTAIN
PREEFFECTIVE DATE FACILITIES.—In the case of
any facility described in subparagraph (D) or (E) of
paragraph (3) which is placed in service before the
date of the enactment of this subparagraph—
‘‘(A) subsection (a)(1) shall be applied by
substituting ‘1.0 cents’ for ‘1.5 cents’, and
‘‘(B) the 5-year period beginning on the
date of the enactment of this paragraph shall
be substituted in lieu of the 10-year period in
subsection (a)(2)(A)(ii).
‘‘(7) LIMIT ON REDUCTIONS FOR GRANTS, ETC.,
FOR
OPEN-LOOP
BIOMASS
FACILITIES.—If 
the
amount of the credit determined under subsection
(a) with respect to any open-loop biomass facility is
required to be reduced under paragraph (3) of sub-
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section (b), the fraction under such paragraph shall
in no event be greater than 4⁄5.
‘‘(8) COORDINATION
WITH
SECTION
29.—The
term ‘qualified facility’ shall not include any facility
the production from which is allowed as a credit
under section 29 for the taxable year or any prior
taxable year.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to electricity sold after the date
of the enactment of this Act.
SEC. 3103. CREDIT FOR QUALIFIED STATIONARY FUEL
CELL POWERPLANTS.
(a) BUSINESS PROPERTY.—
(1) IN GENERAL.—Subparagraph (A) of section
48(a)(3) (defining energy property) is amended by
striking ‘‘or’’ at the end of clause (i), by adding
‘‘or’’ at the end of clause (ii), and by inserting after
clause (ii) the following new clause:
‘‘(iii) equipment which is part of a
qualified stationary fuel cell powerplant,’’.
(2) QUALIFIED STATIONARY FUEL CELL POW-
ERPLANT.—Subsection (a) of section 48 is amended
by redesignating paragraphs (4) and (5) as para-
graphs (5) and (6), respectively, and by inserting
after paragraph (3) the following new paragraph:
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‘‘(4) QUALIFIED STATIONARY FUEL CELL POW-
ERPLANT.—For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
stationary fuel cell powerplant’ means a sta-
tionary fuel cell power plant that has an elec-
tricity-only generation efficiency greater than
30 percent.
‘‘(B) LIMITATION.—In the case of quali-
fied stationary fuel cell powerplant placed in
service during the taxable year, the credit under
subsection (a) for such year may not exceed
$1,000 for each kilowatt of capacity.
‘‘(C) STATIONARY
FUEL
CELL
POWER
PLANT.—The term ‘stationary fuel cell power
plant’ means an integrated system comprised of
a fuel cell stack assembly and associated bal-
ance of plant components that converts a fuel
into electricity using electrochemical means.
‘‘(D) TERMINATION.—Such term shall not
include any property placed in service after De-
cember 31, 2006.’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to property placed in
service after December 31, 2001, under rules similar
to the rules of section 48(m) of the Internal Revenue
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Code of 1986 (as in effect on the day before the
date of the enactment of the Revenue Reconciliation
Act of 1990).
(b) NONBUSINESS PROPERTY.—
(1) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 (relating to nonrefundable
personal credits) is amended by inserting after sec-
tion 25C the following new section:
‘‘SEC. 25D. NONBUSINESS QUALIFIED STATIONARY FUEL
CELL POWERPLANT.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a credit against the tax imposed
by this chapter for the taxable year an amount equal to
10 percent of the qualified stationary fuel cell powerplant
expenditures which are paid or incurred during such year.
‘‘(b) LIMITATIONS.—
‘‘(1) IN GENERAL.—The credit allowed under
subsection (a) for the taxable year and all prior tax-
able years shall not exceed $1,000 for each kilowatt
of capacity.
‘‘(2) LIMITATION
BASED
ON
AMOUNT
OF
TAX.—The credit allowed under subsection (a) for
the 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 im-
posed by section 55, over
‘‘(B) the sum of the credits allowable
under this subpart (other than this section and
sections 23 and 25E) and section 27 for the
taxable year.
‘‘(c) QUALIFIED STATIONARY FUEL CELL POWER-
PLANT EXPENDITURES.—For purposes of this section, the
term ‘qualified stationary fuel cell powerplant expendi-
tures’ means expenditures by the taxpayer for any quali-
fied stationary fuel cell powerplant (as defined in section
48(a)(4))—
‘‘(1) which meets the requirements of subpara-
graphs (B) and (D) of section 48(a)(3), and
‘‘(2) which is installed on or in connection with
a dwelling unit—
‘‘(A) which is located in the United States,
and
‘‘(B) which is used by the taxpayer as a
residence.
Such term includes expenditures for labor costs properly
allocable to the onsite preparation, assembly, or original
installation of the property.
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‘‘(d) SPECIAL RULES.—For purposes of this section,
rules similar to the rules of section 25C(d) shall apply.
‘‘(e) BASIS ADJUSTMENTS.—For purposes of this
subtitle, if a credit is allowed under this section for any
expenditure with respect to any property, the increase in
the basis of such property which would (but for this sub-
section) result from such expenditure shall be reduced by
the amount of the credit so allowed.
‘‘(f) TERMINATION.—This section shall not apply to
any expenditure made after December 31, 2006.’’.
(2) CONFORMING AMENDMENTS.—
(A) Subsection (a) of section 1016 is
amended by striking ‘‘and’’ at the end of para-
graph (28), by striking the period at the end of
paragraph (29) and inserting ‘‘, and’’, and by
adding at the end the following new paragraph:
‘‘(30) to the extent provided in section 25D(e),
in the case of amounts with respect to which a credit
has been allowed under section 25D.’’.
(B) The table of sections for subpart A of
part IV of subchapter A of chapter 1 is amend-
ed by inserting after the item relating to section
25C the following new item:
‘‘Sec. 25D. Nonbusiness qualified stationary fuel cell power-
plant.’’.
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(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to expenditures paid
or incurred after December 31, 2001.
SEC. 3104. ALTERNATIVE MOTOR VEHICLE CREDIT.
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 (relating to foreign tax credit, etc.)
is amended by adding at the end the following:
‘‘SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to the sum of—
‘‘(1) the new qualified fuel cell motor vehicle
credit determined under subsection (b),
‘‘(2) the new qualified hybrid motor vehicle
credit determined under subsection (c),
‘‘(3) the new qualified alternative fuel motor ve-
hicle credit determined under subsection (d), and
‘‘(4) the advanced lean burn technology motor
vehicle credit determined under subsection (e).
‘‘(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE
CREDIT.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a), the new qualified fuel cell motor vehicle credit
determined under this subsection with respect to a
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new qualified fuel cell motor vehicle placed in service
by the taxpayer during the taxable year is—
‘‘(A) $4,000, if such vehicle has a gross ve-
hicle weight rating of not more than 8,500
pounds,
‘‘(B) $10,000, if such vehicle has a gross
vehicle weight rating of more than 8,500
pounds but not more than 14,000 pounds,
‘‘(C) $20,000, if such vehicle has a gross
vehicle weight rating of more than 14,000
pounds but not more than 26,000 pounds, and
‘‘(D) $40,000, if such vehicle has a gross
vehicle weight rating of more than 26,000
pounds.
‘‘(2) INCREASE FOR FUEL EFFICIENCY.—
‘‘(A) IN
GENERAL.—The amount deter-
mined under paragraph (1)(A) with respect to
a new qualified fuel cell motor vehicle which is
a passenger automobile or light truck shall be
increased by—
‘‘(i) $1,000, if such vehicle achieves at
least 150 percent but less than 175 per-
cent of the 2000 model year city fuel econ-
omy,
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‘‘(ii) $1,500, if such vehicle achieves
at least 175 percent but less than 200 per-
cent of the 2000 model year city fuel econ-
omy,
‘‘(iii) $2,000, if such vehicle achieves
at least 200 percent but less than 225 per-
cent of the 2000 model year city fuel econ-
omy,
‘‘(iv) $2,500, if such vehicle achieves
at least 225 percent but less than 250 per-
cent of the 2000 model year city fuel econ-
omy,
‘‘(v) $3,000, if such vehicle achieves
at least 250 percent but less than 275 per-
cent of the 2000 model year city fuel econ-
omy,
‘‘(vi) $3,500, if such vehicle achieves
at least 275 percent but less than 300 per-
cent of the 2000 model year city fuel econ-
omy, and
‘‘(vii) $4,000, if such vehicle achieves
at least 300 percent of the 2000 model
year city fuel economy.
‘‘(B) 2000 MODEL YEAR CITY FUEL ECON-
OMY.—For purposes of subparagraph (A), the
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2000 model year city fuel economy with respect
to a vehicle shall be determined in accordance
with the following tables:
‘‘(i) In the case of a passenger auto-
mobile:
‘‘If 
vehicle 
inertia 
weight
class is:
The 2000 model year city fuel
economy is:
1,500 or 1,750 lbs ....................................................................
43.7 mpg
2,000 lbs ..................................................................................
38.3 mpg
2,250 lbs ..................................................................................
34.1 mpg
2,500 lbs ..................................................................................
30.7 mpg
2,750 lbs ..................................................................................
27.9 mpg
3,000 lbs ..................................................................................
25.6 mpg
3,500 lbs ..................................................................................
22.0 mpg
4,000 lbs ..................................................................................
19.3 mpg
4,500 lbs ..................................................................................
17.2 mpg
5,000 lbs ..................................................................................
15.5 mpg
5,500 lbs ..................................................................................
14.1 mpg
6,000 lbs ..................................................................................
12.9 mpg
6,500 lbs ..................................................................................
11.9 mpg
7,000 or 8,500 lbs ....................................................................
11.1 mpg.
‘‘(ii) In the case of a light truck:
‘‘If 
vehicle 
inertia 
weight
class is:
The 2000 model year city fuel
economy is:
1,500 or 1,750 lbs ....................................................................
37.6 mpg
2,000 lbs ..................................................................................
33.7 mpg
2,250 lbs ..................................................................................
30.6 mpg
2,500 lbs ..................................................................................
28.0 mpg
2,750 lbs ..................................................................................
25.9 mpg
3,000 lbs ..................................................................................
24.1 mpg
3,500 lbs ..................................................................................
21.3 mpg
4,000 lbs ..................................................................................
19.0 mpg
4,500 lbs ..................................................................................
17.3 mpg
5,000 lbs ..................................................................................
15.8 mpg
5,500 lbs ..................................................................................
14.6 mpg
6,000 lbs ..................................................................................
13.6 mpg
6,500 lbs ..................................................................................
12.8 mpg
7,000 or 8,500 lbs ....................................................................
12.0 mpg.
‘‘(C) VEHICLE INERTIA WEIGHT CLASS.—
For purposes of subparagraph (B), the term
‘vehicle inertia weight class’ has the same
meaning as when defined in regulations pre-
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scribed by the Administrator of the Environ-
mental Protection Agency for purposes of the
administration of title II of the Clean Air Act
(42 U.S.C. 7521 et seq.).
‘‘(3) NEW QUALIFIED FUEL CELL MOTOR VEHI-
CLE.—For purposes of this subsection, the term
‘new qualified fuel cell motor vehicle’ means a motor
vehicle—
‘‘(A) which is propelled by power derived
from one or more cells which convert chemical
energy directly into electricity by combining ox-
ygen with hydrogen fuel which is stored on
board the vehicle in any form and may or may
not require reformation prior to use,
‘‘(B) which, in the case of a passenger
automobile or light truck—
‘‘(i) for 2002 and later model vehicles,
has received a certificate of conformity
under the Clean Air Act and meets or ex-
ceeds the equivalent qualifying California
low emission vehicle standard under sec-
tion 243(e)(2) of the Clean Air Act for
that make and model year, and
‘‘(ii) for 2004 and later model vehi-
cles, has received a certificate that such ve-
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hicle meets or exceeds the Tier II emission
level established in regulations prescribed
by the Administrator of the Environmental
Protection Agency under section 202(i) of
the Clean Air Act for that make and model
year vehicle,
‘‘(C) the original use of which commences
with the taxpayer,
‘‘(D) which is acquired for use or lease by
the taxpayer and not for resale, and
‘‘(E) which is made by a manufacturer.
‘‘(c) NEW QUALIFIED HYBRID MOTOR VEHICLE
CREDIT.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a), the new qualified hybrid motor vehicle credit de-
termined under this subsection with respect to a new
qualified hybrid motor vehicle placed in service by
the taxpayer during the taxable year is the credit
amount determined under paragraph (2).
‘‘(2) CREDIT AMOUNT.—
‘‘(A) IN GENERAL.—The credit amount de-
termined under this paragraph shall be deter-
mined in accordance with the following tables:
‘‘(i) In the case of a new qualified hy-
brid motor vehicle which is a passenger
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automobile or light truck and which pro-
vides the following percentage of the max-
imum available power:
‘‘If percentage of the max-
imum available power is:
The credit amount is:
At least 2.5 percent but less than 10 percent .........................
$250
At least 10 percent but less than 20 percent ..........................
$500
At least 20 percent but less than 30 percent ..........................
$750
At least 30 percent ..................................................................
$1,000.
‘‘(ii) In the case of a new qualified hy-
brid motor vehicle which is a heavy duty
hybrid motor vehicle and which provides
the following percentage of the maximum
available power:
‘‘(I) If such vehicle has a gross
vehicle weight rating of not more than
14,000 pounds:
‘‘If percentage of the max-
imum available power is:
The credit amount is:
At least 20 percent but less than 30 percent ..........................
$1,500
At least 30 percent but less than 40 percent ..........................
$1,750
At least 40 percent but less than 50 percent ..........................
$2,000
At least 50 percent but less than 60 percent ..........................
$2,250
At least 60 percent ..................................................................
$2,500.
‘‘(II) If such vehicle has a gross
vehicle weight rating of more than
14,000 but not more than 26,000
pounds:
‘‘If percentage of the max-
imum available power is:
The credit amount is:
At least 20 percent but less than 30 percent ..........................
$4,000
At least 30 percent but less than 40 percent ..........................
$4,500
At least 40 percent but less than 50 percent ..........................
$5,000
At least 50 percent but less than 60 percent ..........................
$5,500
At least 60 percent ..................................................................
$6,000.
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‘‘(III) If such vehicle has a gross
vehicle weight rating of more than
26,000 pounds:
‘‘If percentage of the max-
imum available power is:
The credit amount is:
At least 20 percent but less than 30 percent ..........................
$6,000
At least 30 percent but less than 40 percent ..........................
$7,000
At least 40 percent but less than 50 percent ..........................
$8,000
At least 50 percent but less than 60 percent ..........................
$9,000
At least 60 percent ..................................................................
$10,000.
‘‘(B) INCREASE FOR FUEL EFFICIENCY.—
‘‘(i) AMOUNT.—The amount deter-
mined under subparagraph (A)(i) with re-
spect to a passenger automobile or light
truck shall be increased by—
‘‘(I) $1,000, if such vehicle
achieves at least 125 percent but less
than 150 percent of the 2000 model
year city fuel economy,
‘‘(II) $1,500, if such vehicle
achieves at least 150 percent but less
than 175 percent of the 2000 model
year city fuel economy,
‘‘(III) $2,000, if such vehicle
achieves at least 175 percent but less
than 200 percent of the 2000 model
year city fuel economy,
‘‘(IV) $2,500, if such vehicle
achieves at least 200 percent but less
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than 225 percent of the 2000 model
year city fuel economy,
‘‘(V) $3,000, if such vehicle
achieves at least 225 percent but less
than 250 percent of the 2000 model
year city fuel economy, and
‘‘(VI) $3,500, if such vehicle
achieves at least 250 percent of the
2000 model year city fuel economy.
‘‘(ii) 2000 MODEL YEAR CITY FUEL
ECONOMY.—For purposes of clause (i), the
2000 model year city fuel economy with re-
spect to a vehicle shall be determined using
the tables provided in subsection (b)(2)(B)
with respect to such vehicle.
‘‘(iii) OPTION
TO
USE
LIKE
VEHI-
CLE.—For purposes of clause (i), at the
option of the vehicle manufacturer, the in-
crease for fuel efficiency may be calculated
by comparing the new qualified hybrid
motor vehicle to a ‘like vehicle’.
‘‘(C) INCREASE FOR ACCELERATED EMIS-
SIONS
PERFORMANCE.—The amount deter-
mined under subparagraph (A)(ii) with respect
to an applicable heavy duty hybrid motor vehi-
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cle shall be increased by the increase credit
amount determined in accordance with the fol-
lowing tables:
‘‘(i) In the case of a vehicle which has
a gross vehicle weight rating of not more
than 14,000 pounds:
‘‘If the model year is:
The increase credit amount is:
2002 .........................................................................................
$3,500
2003 .........................................................................................
$3,000
2004 .........................................................................................
$2,500
2005 .........................................................................................
$2,000
2006 .........................................................................................
$1,500.
‘‘(ii) In the case of a vehicle which
has a gross vehicle weight rating of more
than 14,000 pounds but not more than
26,000 pounds:
‘‘If the model year is:
The increase credit amount is:
2002 .........................................................................................
$9,000
2003 .........................................................................................
$7,750
2004 .........................................................................................
$6,500
2005 .........................................................................................
$5,250
2006 .........................................................................................
$4,000.
‘‘(iii) In the case of a vehicle which
has a gross vehicle weight rating of more
than 26,000 pounds:
‘‘If the model year is:
The increase credit amount is:
2002 .........................................................................................
$14,000
2003 .........................................................................................
$12,000
2004 .........................................................................................
$10,000
2005 .........................................................................................
$8,000
2006 .........................................................................................
$6,000.
‘‘(D) CONSERVATION CREDIT.—
‘‘(i) AMOUNT.—The amount deter-
mined under subparagraph (A)(i) with re-
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spect to a passenger automobile or light
truck shall be increased by—
‘‘(I) 
$250, 
if 
such 
vehicle
achieves a lifetime fuel savings of at
least 1,500 gallons of gasoline, and
‘‘(II) 
$500, 
if 
such 
vehicle
achieves a lifetime fuel savings of at
least 2,500 gallons of gasoline.
‘‘(ii) LIFETIME
FUEL
SAVINGS
FOR
LIKE
VEHICLE.—For purposes of clause
(i), at the option of the vehicle manufac-
turer, the lifetime fuel savings fuel may be
calculated by comparing the new qualified
hybrid motor vehicle to a ‘like vehicle’.
‘‘(E) DEFINITIONS.—
‘‘(i) APPLICABLE
HEAVY
DUTY
HY-
BRID MOTOR VEHICLE.—For purposes of
subparagraph (C), the term ‘applicable
heavy duty hybrid motor vehicle’ means a
heavy duty hybrid motor vehicle which is
powered by an internal combustion or heat
engine which is certified as meeting the
emission standards set in the regulations
prescribed by the Administrator of the En-
vironmental Protection Agency for 2007
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and later model year diesel heavy duty en-
gines or 2008 and later model year
ottocycle heavy duty engines, as applicable.
‘‘(ii) HEAVY DUTY HYBRID MOTOR VE-
HICLE.—For purposes of this paragraph,
the term ‘heavy duty hybrid motor vehicle’
means a new qualified hybrid motor vehicle
which has a gross vehicle weight rating of
more than 10,000 pounds and draws pro-
pulsion energy from both of the following
onboard sources of stored energy:
‘‘(I) An internal combustion or
heat engine using consumable fuel
which, for 2002 and later model vehi-
cles, has received a certificate of con-
formity under the Clean Air Act and
meets or exceeds a level of not greater
than 3.0 grams per brake horsepower-
hour of oxides of nitrogen and 0.01
per brake horsepower-hour of particu-
late matter.
‘‘(II) A rechargeable energy stor-
age system.
‘‘(iii) MAXIMUM AVAILABLE POWER.—
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‘‘(I) PASSENGER
AUTOMOBILE
OR LIGHT TRUCK.—For purposes of
subparagraph (A)(i), the term ‘max-
imum available power’ means the
maximum power available from the
battery or other electrical storage de-
vice, during a standard 10 second
pulse power test, divided by the sum
of the battery or other electrical stor-
age device and the SAE net power of
the heat engine.
‘‘(II) 
HEAVY
DUTY
HYBRID
MOTOR
VEHICLE.—For purposes of
subparagraph (A)(ii), the term ‘max-
imum available power’ means the
maximum power available from the
battery or other electrical storage de-
vice, during a standard 10 second
pulse power test, divided by the vehi-
cle’s total traction power. The term
‘total traction power’ means the sum
of the electric motor peak power and
the heat engine peak power of the ve-
hicle, except that if the electric motor
is the sole means by which the vehicle
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can be driven, the total traction power
is the peak electric motor power.
‘‘(iv) LIKE
VEHICLE.—For purposes
of subparagraph (B)(iii), the term ‘like ve-
hicle’ for a new qualified hybrid motor ve-
hicle derived from a conventional produc-
tion vehicle produced in the same model
year means a model that is equivalent in
the following areas:
‘‘(I) Body style (2-door or 4-
door).
‘‘(II) Transmission (automatic or
manual).
‘‘(III) Acceleration performance
(± 0.05 seconds).
‘‘(IV) Drivetrain (2-wheel drive
or 4-wheel drive).
‘‘(V) Certification by the Admin-
istrator of the Environmental Protec-
tion Agency.
‘‘(v) LIFETIME FUEL SAVINGS.—For
purposes of subsection (c)(2)(D), the term
‘lifetime fuel savings’ shall be calculated by
dividing 120,000 by the difference between
the 2000 model year city fuel economy for
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the vehicle inertia weight class and the city
fuel economy for the new qualified hybrid
motor vehicle.
‘‘(3) NEW
QUALIFIED
HYBRID
MOTOR
VEHI-
CLE.—For purposes of this subsection, the term
‘new qualified hybrid motor vehicle’ means a motor
vehicle—
‘‘(A) which draws propulsion energy from
onboard sources of stored energy which are
both—
‘‘(i) an internal combustion or heat
engine using combustible fuel, and
‘‘(ii) a rechargeable energy storage
system,
‘‘(B) which, in the case of a passenger
automobile or light truck, for 2002 and later
model vehicles, has received a certificate of con-
formity under the Clean Air Act and meets or
exceeds the equivalent qualifying California low
emission 
vehicle 
standard 
under 
section
243(e)(2) of the Clean Air Act for that make
and model year,
‘‘(C) the original use of which commences
with the taxpayer,
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‘‘(D) which is acquired for use or lease by
the taxpayer and not for resale, and
‘‘(E) which is made by a manufacturer.
‘‘(d) NEW QUALIFIED ALTERNATIVE FUEL MOTOR
VEHICLE CREDIT.—
‘‘(1) ALLOWANCE OF CREDIT.—Except as pro-
vided in paragraph (5), the credit determined under
this subsection is an amount equal to the applicable
percentage of the incremental cost of any new quali-
fied alternative fuel motor vehicle placed in service
by the taxpayer during the taxable year.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes
of paragraph (1), the applicable percentage with re-
spect to any new qualified alternative fuel motor ve-
hicle is—
‘‘(A) 50 percent, plus
‘‘(B) 30 percent, if such vehicle—
‘‘(i) has received a certificate of con-
formity under the Clean Air Act and meets
or exceeds the most stringent standard
available for certification under the Clean
Air Act for that make and model year vehi-
cle (other than a zero emission standard),
or
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‘‘(ii) has received an order from an
applicable State certifying the vehicle for
sale or lease in California and meets or ex-
ceeds the most stringent standard available
for certification under the State laws of
California (enacted in accordance with a
waiver granted under section 209(b) of the
Clean Air Act) for that make and model
year vehicle (other than a zero emission
standard).
‘‘(3) INCREMENTAL
COST.—For purposes of
this subsection, the incremental cost of any new
qualified alternative fuel motor vehicle is equal to
the amount of the excess of the manufacturer’s sug-
gested retail price for such vehicle over such price
for a gasoline or diesel fuel motor vehicle of the
same model, to the extent such amount does not
exceed—
‘‘(A) $5,000, if such vehicle has a gross ve-
hicle weight rating of not more than 8,500
pounds,
‘‘(B) $10,000, if such vehicle has a gross
vehicle weight rating of more than 8,500
pounds but not more than 14,000 pounds,
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‘‘(C) $25,000, if such vehicle has a gross
vehicle weight rating of more than 14,000
pounds but not more than 26,000 pounds, and
‘‘(D) $40,000, if such vehicle has a gross
vehicle weight rating of more than 26,000
pounds.
‘‘(4) QUALIFIED
ALTERNATIVE
FUEL
MOTOR
VEHICLE
DEFINED.—For 
purposes 
of 
this
subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
alternative fuel motor vehicle’ means any motor
vehicle—
‘‘(i) which is only capable of operating
on an alternative fuel,
‘‘(ii) the original use of which com-
mences with the taxpayer,
‘‘(iii) which is acquired by the tax-
payer for use or lease, but not for resale,
and
‘‘(iv) which is made by a manufac-
turer.
‘‘(B) ALTERNATIVE FUEL.—The term ‘al-
ternative fuel’ means compressed natural gas,
liquefied natural gas, liquefied petroleum gas,
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hydrogen, and any liquid at least 85 percent of
the volume of which consists of methanol.
‘‘(5) CREDIT FOR MIXED-FUEL VEHICLES.—
‘‘(A) IN
GENERAL.—In the case of a
mixed-fuel vehicle placed in service by the tax-
payer during the taxable year, the credit deter-
mined under this subsection is an amount equal
to—
‘‘(i) in the case of a 75/25 mixed-fuel
vehicle, 70 percent of the credit which
would have been allowed under this sub-
section if such vehicle was a qualified alter-
native fuel motor vehicle, and
‘‘(ii) in the case of a 95/5 mixed-fuel
vehicle, 95 percent of the credit which
would have been allowed under this sub-
section if such vehicle was a qualified alter-
native fuel motor vehicle.
‘‘(B) MIXED-FUEL
VEHICLE.—For pur-
poses of this subsection, the term ‘mixed-fuel
vehicle’ means any motor vehicle described in
subparagraph (C) or (D) of paragraph (3),
which—
‘‘(i) is certified by the manufacturer
as being able to perform efficiently in nor-
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mal operation on a combination of an al-
ternative fuel and a petroleum-based fuel,
‘‘(ii) either—
‘‘(I) has received a certificate of
conformity under the Clean Air Act,
or
‘‘(II) has received an order from
an applicable State certifying the vehi-
cle for sale or lease in California and
meets or exceeds the low emission ve-
hicle standard under section 88.105–
94 of title 40, Code of Federal Regu-
lations, for that make and model year
vehicle,
‘‘(iii) the original use of which com-
mences with the taxpayer,
‘‘(iv) which is acquired by the tax-
payer for use or lease, but not for resale,
and
‘‘(v) which is made by a manufac-
turer.
‘‘(C) 75/25 MIXED-FUEL
VEHICLE.—For
purposes of this subsection, the term ‘75/25
mixed-fuel vehicle’ means a mixed-fuel vehicle
which operates using at least 75 percent alter-
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native fuel and not more than 25 percent petro-
leum-based fuel.
‘‘(D) 95/5 MIXED-FUEL
VEHICLE.—For
purposes of this subsection, the term ‘95/5
mixed-fuel vehicle’ means a mixed-fuel vehicle
which operates using at least 95 percent alter-
native fuel and not more than 5 percent petro-
leum-based fuel.
‘‘(e) ADVANCED LEAN BURN TECHNOLOGY MOTOR
VEHICLE CREDIT.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a), the advanced lean burn technology motor vehicle
credit determined under this subsection with respect
to a new qualified advanced lean burn technology
motor vehicle placed in service by the taxpayer dur-
ing the taxable year is the credit amount determined
under paragraph (2).
‘‘(2) CREDIT AMOUNT.—
‘‘(A) INCREASE FOR FUEL EFFICIENCY.—
The credit amount determined under this para-
graph shall be—
‘‘(i) $1,000, if such vehicle achieves at
least 125 percent but less than 150 per-
cent of the 2000 model year city fuel econ-
omy,
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‘‘(ii) $1,500, if such vehicle achieves
at least 150 percent but less than 175 per-
cent of the 2000 model year city fuel econ-
omy,
‘‘(iii) $2,000, if such vehicle achieves
at least 175 percent but less than 200 per-
cent of the 2000 model year city fuel econ-
omy,
‘‘(iv) $2,500, if such vehicle achieves
at least 200 percent but less than 225 per-
cent of the 2000 model year city fuel econ-
omy,
‘‘(v) $3,000, if such vehicle achieves
at least 225 percent but less than 250 per-
cent of the 2000 model year city fuel econ-
omy, and
‘‘(vi) $3,500, if such vehicle achieves
at least 250 percent of the 2000 model
year city fuel economy.
For purposes of clause (i), the 2000 model year
city fuel economy with respect to a vehicle shall
be determined using the tables provided in sub-
section (b)(2)(B) with respect to such vehicle.
‘‘(B) 
CONSERVATION
CREDIT.—The
amount determined under subparagraph (A)
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with respect to an advanced lean burn tech-
nology motor vehicle shall be increased by—
‘‘(i) $250, if such vehicle achieves a
lifetime fuel savings of at least 1,500 gal-
lons of gasoline, and
‘‘(ii) $500, if such vehicle achieves a
lifetime fuel savings of at least 2,500 gal-
lons of gasoline.
‘‘(C) OPTION TO USE LIKE VEHICLE.—At
the option of the vehicle manufacturer, the in-
crease for fuel efficiency and conservation credit
may be calculated by comparing the new ad-
vanced lean-burn technology motor vehicle to a
like vehicle.
‘‘(3) DEFINITIONS.—For purposes of this sub-
section.—
‘‘(A) ADVANCED LEAN BURN TECHNOLOGY
MOTOR
VEHICLE.—The term ‘advanced lean
burn technology motor vehicle’ means a motor
vehicle with an internal combustion engine
that—
‘‘(i) is designed to operate primarily
using more air than is necessary for com-
plete combustion of the fuel,
‘‘(ii) incorporates direct injection,
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‘‘(iii) achieves at least 125 percent of
the 2000 model year city fuel economy,
and
‘‘(iv) for 2004 and later model vehi-
cles, has received a certificate that such ve-
hicle meets or exceeds the Bin 5, Tier 2
emission levels (for passenger vehicles) or
Bin 8, Tier 2 emission levels (for light
trucks) established in regulations pre-
scribed by the Administrator of the Envi-
ronmental Protection Agency under section
202(i) of the Clean Air Act for that make
and model year vehicle.
‘‘(B) LIKE VEHICLE.—The term ‘like vehi-
cle’ for an advanced lean burn technology motor
vehicle derived from a conventional production
vehicle produced in the same model year means
a model that is equivalent in the following
areas:
‘‘(i) Body style (2-door or 4-door),
‘‘(ii) Transmission (automatic or man-
ual),
‘‘(iii) Acceleration performance (±
0.05 seconds).
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‘‘(iv) Drivetrain (2-wheel drive or 4-
wheel drive).
‘‘(v) Certification by the Adminis-
trator of the Environmental Protection
Agency.
‘‘(C) LIFETIME FUEL SAVINGS.—The term
‘lifetime fuel savings’ shall be calculated by di-
viding 120,000 by the difference between the
2000 model year city fuel economy for the vehi-
cle inertia weight class and the city fuel econ-
omy for the new qualified hybrid motor vehicle.
‘‘(f) LIMITATION BASED ON AMOUNT OF TAX.—The
credit allowed under subsection (a) for the taxable year
shall not exceed the excess of—
‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by sec-
tion 55, over
‘‘(2) the sum of the credits allowable under sub-
part A and sections 27, 29, and 30A for the taxable
year.
‘‘(g) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section—
‘‘(1) 
CONSUMABLE
FUEL.—The 
term
‘consumable fuel’ means any solid, liquid, or gaseous
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matter which releases energy when consumed by an
auxiliary power unit.
‘‘(2) MOTOR VEHICLE.—The term ‘motor vehi-
cle’ has the meaning given such term by section
30(c)(2).
‘‘(3) 2000 MODEL
YEAR
CITY
FUEL
ECON-
OMY.—The 2000 model year city fuel economy with
respect to any vehicle shall be measured under rules
similar to the rules under section 4064(c).
‘‘(4) OTHER TERMS.—The terms ‘automobile’,
‘passenger automobile’, ‘light truck’, and ‘manufac-
turer’ have the meanings given such terms in regula-
tions prescribed by the Administrator of the Envi-
ronmental Protection Agency for purposes of the ad-
ministration of title II of the Clean Air Act (42
U.S.C. 7521 et seq.).
‘‘(5) REDUCTION IN BASIS.—For purposes of
this subtitle, the basis of any property for which a
credit is allowable under subsection (a) shall be re-
duced by the amount of such credit so allowed.
‘‘(6) NO
DOUBLE
BENEFIT.—The amount of
any deduction or credit allowable under this chapter
(other than the credit allowable under this sec-
tion)—
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‘‘(A) for any incremental cost taken into
account in computing the amount of the credit
determined under subsection (d) shall be re-
duced by the amount of such credit attributable
to such cost, and
‘‘(B) with respect to a vehicle described
under subsection (b) or (c), shall be reduced by
the amount of credit allowed under subsection
(a) for such vehicle for the taxable year.
‘‘(7) PROPERTY USED BY TAX-EXEMPT ENTI-
TIES.—In the case of a credit amount which is al-
lowable with respect to a motor vehicle which is ac-
quired by an entity exempt from tax under this
chapter, the person which sells or leases such vehicle
to the entity shall be treated as the taxpayer with
respect to the vehicle for purposes of this section
and the credit shall be allowed to such person, but
only if the person clearly discloses to the entity in
any sale or lease document the specific amount of
any credit otherwise allowable to the entity under
this section and reduces the sale or lease price of
such vehicle by an equivalent amount of such credit.
‘‘(8) RECAPTURE.—The Secretary shall, by reg-
ulations, provide for recapturing the benefit of any
credit allowable under subsection (a) with respect to
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any property which ceases to be property eligible for
such credit (including recapture in the case of a
lease period of less than the economic life of a vehi-
cle).
‘‘(9) 
PROPERTY
USED
OUTSIDE
UNITED
STATES, ETC., NOT QUALIFIED.—No credit shall be
allowed under subsection (a) with respect to any
property referred to in section 50(b) or with respect
to the portion of the cost of any property taken into
account under section 179.
‘‘(10) ELECTION TO NOT 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.
‘‘(11) CARRYFORWARD ALLOWED.—
‘‘(A) IN GENERAL.—If the credit amount
allowable under subsection (a) for a taxable
year exceeds the amount of the limitation under
subsection (f) for such taxable year (referred to
as the ‘unused credit year’ in this paragraph),
such excess shall be allowed as a credit
carryforward for each of the 20 taxable years
following the unused credit year.
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‘‘(B) RULES.—Rules similar to the rules of
section 39 shall apply with respect to the credit
carryforward under subparagraph (A).
‘‘(12) INTERACTION
WITH
AIR
QUALITY
AND
MOTOR VEHICLE SAFETY STANDARDS.—Unless oth-
erwise provided in this section, a motor vehicle shall
not be considered eligible for a credit under this sec-
tion unless such vehicle is in compliance with—
‘‘(A) the applicable provisions of the Clean
Air Act for the applicable make and model year
of the vehicle (or applicable air quality provi-
sions of State law in the case of a State which
has adopted such provision under a waiver
under section 209(b) of the Clean Air Act), and
‘‘(B) the motor vehicle safety provisions of
sections 30101 through 30169 of title 49,
United States Code.
‘‘(h) REGULATIONS.—
‘‘(1) IN GENERAL.—The Secretary shall pro-
mulgate such regulations as necessary to carry out
the provisions of this section.
‘‘(2) 
ADMINISTRATOR
OF
ENVIRONMENTAL
PROTECTION
AGENCY.—The Administrator of the
Environmental Protection Agency, in coordination
with the Secretary of Transportation and the Sec-
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retary of the Treasury, shall prescribe such regula-
tions as necessary to determine whether a motor ve-
hicle meets the requirements to be eligible for a
credit under this section.
‘‘(i) TERMINATION.—This section shall not apply to
any property placed in service after—
‘‘(1) in the case of a new qualified fuel cell
motor vehicle (as described in subsection (b)), De-
cember 31, 2011, and
‘‘(2) in the case of any other property, Decem-
ber 31, 2007.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 1016(a) is amended by striking
‘‘and’’ at the end of paragraph (29), by striking the
period at the end of paragraph (30) and inserting ‘‘,
and’’, and by adding at the end the following:
‘‘(31) to the extent provided in section
30B(g)(5).’’.
(2) Section 6501(m) is amended by inserting
‘‘30B(g)(10),’’ after ‘‘30(d)(4),’’.
(3) The table of sections for subpart B of part
IV of subchapter A of chapter 1 is amended by in-
serting after the item relating to section 30A the fol-
lowing:
‘‘Sec. 30B. Alternative motor vehicle credit.’’.
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(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to property placed in service after
December 31, 2001, in taxable years ending after such
date.
SEC. 3105. EXTENSION OF DEDUCTION FOR CERTAIN RE-
FUELING PROPERTY.
(a) IN GENERAL.—Section 179A(f) (relating to ter-
mination) is amended by striking ‘‘2004’’ and inserting
‘‘2007’’.
(b) MODIFICATION
OF PHASEOUT.—Subparagraph
(B) of section 179A(b)(1) is amended—
(1) in clause (i), by striking ‘‘2002’’ and insert-
ing ‘‘2005’’,
(2) in clause (ii), by striking ‘‘2003’’ and in-
serting ‘‘2006’’, and
(3) in clause (iii), by striking ‘‘2004’’ and in-
serting ‘‘2007’’.
SEC. 3106. MODIFICATION OF CREDIT FOR QUALIFIED
ELECTRIC VEHICLES.
(a) AMOUNT OF CREDIT.—
(1) IN GENERAL.—Section 30(a) (relating to al-
lowance of credit) is amended by striking ‘‘10 per-
cent of’’.
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(2) LIMITATION
OF
CREDIT
ACCORDING
TO
TYPE OF VEHICLE.—Section 30(b) (relating to limi-
tations) is amended—
(A) by striking paragraphs (1) and (2) and
inserting the following:
‘‘(1) LIMITATION ACCORDING TO TYPE OF VE-
HICLE.—The amount of the credit allowed under
subsection (a) for any vehicle shall not exceed the
greatest of the following amounts applicable to such
vehicle:
‘‘(A) In the case of a vehicle which con-
forms to the Motor Vehicle Safety Standard
500 prescribed by the Secretary of Transpor-
tation, the lesser of—
‘‘(i) 10 percent of the manufacturer’s
suggested retail price of the vehicle, or
‘‘(ii) $4,000.
‘‘(B) In the case of a vehicle not described
in subparagraph (A) with a gross vehicle weight
rating not exceeding 8,500 pounds—
‘‘(i) $4,000, or
‘‘(ii) $5,000, if such vehicle is—
‘‘(I) capable of a driving range of
at least 70 miles on a single charge of
the vehicle’s rechargeable batteries
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and measured pursuant to the urban
dynamometer schedules under appen-
dix I to part 86 of title 40, Code of
Federal Regulations, or
‘‘(II) capable of a payload capac-
ity of at least 1,000 pounds.
‘‘(C) In the case of a vehicle with a gross
vehicle weight rating exceeding 8,500 pounds
but not exceeding 14,000 pounds, $10,000.
‘‘(D) In the case of a vehicle with a gross
vehicle weight rating exceeding 14,000 pounds
but not exceeding 26,000 pounds, $20,000.
‘‘(E) In the case of a vehicle with a gross
vehicle weight rating exceeding 26,000 pounds,
$40,000.’’, and
(B) by redesignating paragraph (3) as
paragraph (2).
(3) CONFORMING AMENDMENTS.—
(A) Section 53(d)(1)(B)(iii) is amended by
striking ‘‘section 30(b)(3)(B)’’ and inserting
‘‘section 30(b)(2)(B)’’.
(B) Section 55(c)(2) is amended by strik-
ing ‘‘30(b)(3)’’ and inserting ‘‘30(b)(2)’’.
(b) QUALIFIED BATTERY ELECTRIC VEHICLE.—
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(1) IN GENERAL.—Section 30(c)(1)(A) (defin-
ing qualified electric vehicle) is amended to read as
follows:
‘‘(A) which is—
‘‘(i) operated solely by use of a bat-
tery or battery pack, or
‘‘(ii) powered primarily through the
use of an electric battery or battery pack
using a flywheel or capacitor which stores
energy produced by an electric motor
through regenerative braking to assist in
vehicle operation,’’.
(2) LEASED VEHICLES.—Section 30(c)(1)(C) is
amended by inserting ‘‘or lease’’ after ‘‘use’’.
(3) CONFORMING AMENDMENTS.—
(A) Subsections (a), and (c) of section 30
are each amended by inserting ‘‘battery’’ after
‘‘qualified’’ each place it appears.
(B) The heading of subsection (c) of sec-
tion 30 is amended by inserting ‘‘BATTERY’’
after ‘‘QUALIFIED’’.
(C) The heading of section 30 is amended
by inserting ‘‘BATTERY’’ after ‘‘QUALIFIED’’.
(D) The item relating to section 30 in the
table of sections for subpart B of part IV of
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subchapter A of chapter 1 is amended by in-
serting ‘‘battery’’ after ‘‘qualified’’.
(E) Section 179A(c)(3) is amended by in-
serting ‘‘battery’’ before ‘‘electric’’.
(F) The heading of paragraph (3) of sec-
tion 179A(c) is amended by inserting ‘‘BAT-
TERY’’ before ‘‘ELECTRIC’’.
(c) ADDITIONAL SPECIAL RULES.—Section 30(d)
(relating to special rules) is amended by adding at the end
the following:
‘‘(5) NO
DOUBLE
BENEFIT.—The amount of
any deduction or credit allowable under this chapter
for any cost taken into account in computing the
amount of the credit determined under subsection
(a) shall be reduced by the amount of such credit at-
tributable to such cost.
‘‘(6) PROPERTY USED BY TAX-EXEMPT ENTI-
TIES.—In the case of a credit amount which is al-
lowable with respect to a vehicle which is acquired
by an entity exempt from tax under this chapter, the
person which sells or leases such vehicle to the entity
shall be treated as the taxpayer with respect to the
vehicle for purposes of this section and the credit
shall be allowed to such person, but only if the per-
son clearly discloses to the entity in any sale or lease
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contract the specific amount of any credit otherwise
allowable to the entity under this section and re-
duces the sale or lease price of such vehicle by an
equivalent amount of such credit.
‘‘(7) CARRYFORWARD ALLOWED.—
‘‘(A) IN GENERAL.—If the credit amount
allowable under subsection (a) for a taxable
year exceeds the amount of the limitation under
subsection (b)(3) for such taxable year, such ex-
cess shall be allowed as a credit carryforward
for each of the 20 taxable years following such
taxable year.
‘‘(B) RULES.—Rules similar to the rules of
section 39 shall apply with respect to the credit
carryforward under subparagraph (A).’’.
(d) EXTENSION.—Section 30(e) (relating to termi-
nation) is amended by striking ‘‘2004’’ and inserting
‘‘2007’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to property placed in service after
December 31, 2001, in taxable years ending after such
date.
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SEC. 3107. TAX CREDIT FOR ENERGY EFFICIENT APPLI-
ANCES.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (relating to business-related cred-
its) is amended by adding at the end the following new
section:
‘‘SEC. 45G. ENERGY EFFICIENT APPLIANCE CREDIT.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the energy efficient appliance credit determined under this
section for the taxable year is an amount equal to the ap-
plicable amount determined under subsection (b) with re-
spect to the eligible production of qualified energy efficient
appliances produced by the taxpayer during the calendar
year ending with or within the taxable year.
‘‘(b) APPLICABLE
AMOUNT; ELIGIBLE
PRODUC-
TION.—For purposes of subsection (a)—
‘‘(1) APPLICABLE
AMOUNT.—The applicable
amount is—
‘‘(A) $50 in the case of an energy efficient
clothes washer described in subsection (d)(2)(A)
or an energy efficient refrigerator described in
subsection (d)(3)(B)(i), and
‘‘(B) $100 in the case of any other energy
efficient clothes washer or energy efficient re-
frigerator.
‘‘(2) ELIGIBLE PRODUCTION.—
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‘‘(A) IN GENERAL.—The eligible produc-
tion of each category of qualified energy effi-
cient appliances is the excess of—
‘‘(i) the number of appliances in such
category which are produced by the tax-
payer during such calendar year, over
‘‘(ii) the average number of appliances
in such category which were produced by
the taxpayer during calendar years 1998,
1999, and 2000.
‘‘(B) CATEGORIES.—For purposes of sub-
paragraph (A), the categories are—
‘‘(i) energy efficient clothes washers
described in subsection (d)(2)(A),
‘‘(ii) energy efficient clothes washers
described in subsection (d)(2)(B),
‘‘(iii) energy efficient refrigerators de-
scribed in subsection (d)(3)(B)(i), and
‘‘(iv) energy efficient refrigerators de-
scribed in subsection (d)(3)(B)(ii).
‘‘(C) SPECIAL
RULE
FOR
2001
PRODUC-
TION.—For purposes of determining eligible
production for calendar year 2001—
‘‘(i) only production after the date of
the enactment of this section shall be
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taken into account under subparagraph
(A)(i), and
‘‘(ii) the amount taken into account
under subparagraph (A)(ii) shall be an
amount which bears the same ratio to the
amount which would (but for this subpara-
graph) be taken into account under sub-
paragraph (A)(ii) as—
‘‘(I) the number of days in cal-
endar year 2001 after the date of the
enactment of this section, bears to
‘‘(II) 365.
‘‘(c) LIMITATION ON MAXIMUM CREDIT.—
‘‘(1) IN GENERAL.—The maximum amount of
credit allowed under subsection (a) with respect to
a taxpayer for all taxable years shall be—
‘‘(A) $30,000,000 with respect to the cred-
it determined under subsection (b)(1)(A), and
‘‘(B) $30,000,000 with respect to the cred-
it determined under subsection (b)(1)(B).
‘‘(2) 
LIMITATION
BASED
ON
GROSS
RE-
CEIPTS.—The credit allowed under subsection (a)
with respect to a taxpayer for the taxable year shall
not exceed an amount equal to 2 percent of the aver-
age annual gross receipts of the taxpayer for the 3
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taxable years preceding the taxable year in which
the credit is determined.
‘‘(3) GROSS RECEIPTS.—For purposes of this
subsection, the rules of paragraphs (2) and (3) of
section 448(c) shall apply.
‘‘(d) QUALIFIED ENERGY EFFICIENT APPLIANCE.—
For purposes of this section:
‘‘(1) IN GENERAL.—The term ‘qualified energy
efficient appliance’ means—
‘‘(A) an energy efficient clothes washer, or
‘‘(B) an energy efficient refrigerator.
‘‘(2) ENERGY EFFICIENT CLOTHES WASHER.—
The term ‘energy efficient clothes washer’ means a
residential clothes washer, including a residential
style coin operated washer, which is manufactured
with—
‘‘(A) a 1.26 MEF or greater, or
‘‘(B) a 1.42 MEF (1.5 MEF for washers
produced after 2004) or greater.
‘‘(3) ENERGY EFFICIENT REFRIGERATOR.—The
term ‘energy efficient refrigerator’ means an auto-
matic defrost refrigerator-freezer which—
‘‘(A) has an internal volume of at least
16.5 cubic feet, and
‘‘(B) consumes—
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‘‘(i) 10 percent less kw/hr/yr than the
energy conservation standards promulgated
by the Department of Energy for refrig-
erators produced during 2001, and
‘‘(ii) 15 percent less kw/hr/yr than
such energy conservation standards for re-
frigerators produced after 2001.
‘‘(4) MEF.—The term ‘MEF’ means Modified
Energy Factor (as determined by the Secretary of
Energy).
‘‘(e) SPECIAL RULES.—
‘‘(1) IN GENERAL.—Rules similar to the rules
of subsections (c), (d), and (e) of section 52 shall
apply for purposes of this section.
‘‘(2) AGGREGATION RULES.—All persons treat-
ed as a single employer under subsection (a) or (b)
of section 52 or subsection (m) or (o) of section 414
shall be treated as 1 person for purposes of sub-
section (a).
‘‘(f) VERIFICATION.—The taxpayer shall submit such
information or certification as the Secretary, in consulta-
tion with the Secretary of Energy, determines necessary
to claim the credit amount under subsection (a).
‘‘(g) TERMINATION.—This section shall not apply—
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‘‘(1) with respect to energy efficient refrig-
erators described in subsection (d)(3)(B)(i) produced
after 2004, and
‘‘(2) with respect to all other qualified energy
efficient appliances produced after 2006.’’.
(b) LIMITATION ON CARRYBACK.—Section 39(d) (re-
lating to transition rules) is amended by adding at the
end the following new paragraph:
‘‘(11) NO CARRYBACK OF ENERGY EFFICIENT
APPLIANCE CREDIT BEFORE EFFECTIVE DATE.—No
portion of the unused business credit for any taxable
year which is attributable to the energy efficient ap-
pliance credit determined under section 45G may be
carried to a taxable year ending before the date of
the enactment of section 45G.’’.
(c) CONFORMING AMENDMENT.—Section 38(b) (re-
lating to general business credit) is amended by striking
‘‘plus’’ at the end of paragraph (14), by striking the period
at the end of paragraph (15) and inserting ‘‘, plus’’, and
by adding at the end the following new paragraph:
‘‘(16) the energy efficient appliance credit de-
termined under section 45G(a).’’.
(d) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
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is amended by inserting after the item relating to section
45F the following new item:
‘‘Sec. 45G. Energy efficient appliance credit.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
SEC. 3108. CREDIT FOR ENERGY EFFICIENCY IMPROVE-
MENTS TO EXISTING HOMES.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 (relating to nonrefundable personal
credits) is amended by inserting after section 25D the fol-
lowing new section:
‘‘SEC. 25E. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST-
ING HOMES.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax
imposed by this chapter for the taxable year an amount
equal to 20 percent of the amount paid or incurred by
the taxpayer for qualified energy efficiency improvements
installed during such taxable year.
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM CREDIT.—The credit allowed by
this section with respect to a dwelling shall not ex-
ceed $2,000.
‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER
ON SAME DWELLING TAKEN INTO ACCOUNT.—If a
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credit was allowed to the taxpayer under subsection
(a) with respect to a dwelling in 1 or more prior tax-
able years, the amount of the credit otherwise allow-
able for the taxable year with respect to that dwell-
ing shall not exceed the amount of $2,000 reduced
by the sum of the credits allowed under subsection
(a) to the taxpayer with respect to the dwelling for
all prior taxable years.
‘‘(3) LIMITATION
BASED
ON
AMOUNT
OF
TAX.—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 im-
posed by section 55, over
‘‘(B) the sum of the credits allowable
under this subpart (other than this section and
section 23) and section 27 for the taxable year.
‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the
credit allowable under subsection (a) exceeds the limita-
tion imposed by subsection (b)(3) 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 succeeding taxable year.
‘‘(d) QUALIFIED ENERGY EFFICIENCY IMPROVE-
MENTS.—For purposes of this section, the term ‘qualified
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energy efficiency improvements’ means any energy effi-
cient building envelope component which meets the pre-
scriptive criteria for such component established by the
1998 International Energy Conservation Code, if—
‘‘(1) such component is installed in or on a
dwelling—
‘‘(A) located in the United States, and
‘‘(B) owned and used by the taxpayer as
the taxpayer’s principal residence (within the
meaning of section 121),
‘‘(2) the original use of such component com-
mences with the taxpayer, and
‘‘(3) such component reasonably can be ex-
pected to remain in use for at least 5 years.
If the aggregate cost of such components with respect to
any dwelling exceeds $1,000, such components shall be
treated as qualified energy efficiency improvements only
if such components are also certified in accordance with
subsection (e) as meeting such criteria.
‘‘(e) CERTIFICATION.—The certification described in
subsection (d) shall be—
‘‘(1) determined on the basis of the technical
specifications or applicable ratings (including prod-
uct labeling requirements) for the measurement of
energy efficiency, based upon energy use or building
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envelope component performance, for the energy effi-
cient building envelope component,
‘‘(2) provided by a local building regulatory au-
thority, a utility, a manufactured home production
inspection primary inspection agency (IPIA), or an
accredited home energy rating system provider who
is accredited by or otherwise authorized to use ap-
proved energy performance measurement methods by
the Home Energy Ratings Systems Council or the
National Association of State Energy Officials, and
‘‘(3) made in writing in a manner that specifies
in readily verifiable fashion the energy efficient
building envelope components installed and their re-
spective energy efficiency levels.
‘‘(f) DEFINITIONS AND SPECIAL RULES.—
‘‘(1) TENANT-STOCKHOLDER IN COOPERATIVE
HOUSING CORPORATION.—In the case of an indi-
vidual who is a tenant-stockholder (as defined in sec-
tion 216) in a cooperative housing corporation (as
defined in such section), such individual shall be
treated as having paid his tenant-stockholder’s pro-
portionate share (as defined in section 216(b)(3)) of
the cost of qualified energy efficiency improvements
made by such corporation.
‘‘(2) CONDOMINIUMS.—
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‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is a member of a condominium man-
agement association with respect to a condo-
minium which he owns, such individual shall be
treated as having paid his proportionate share
of the cost of qualified energy efficiency im-
provements made by such association.
‘‘(B) CONDOMINIUM
MANAGEMENT
ASSO-
CIATION.—For purposes of this paragraph, the
term ‘condominium management association’
means an organization which meets the require-
ments of paragraph (1) of section 528(c) (other
than subparagraph (E) thereof) with respect to
a condominium project substantially all of the
units of which are used as residences.
‘‘(3) BUILDING ENVELOPE COMPONENT.—The
term ‘building envelope component’ means insulation
material or system which is specifically and pri-
marily designed to reduce the heat loss or gain of a
dwelling when installed in or on such dwelling, exte-
rior windows (including skylights) and doors, and
metal roofs with appropriate pigmented coatings
which are specifically and primarily designed to re-
duce the heat gain of a dwelling when installed in
or on such dwelling.
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‘‘(4) MANUFACTURED HOMES INCLUDED.—For
purposes of this section, the term ‘dwelling’ includes
a manufactured home which conforms to Federal
Manufactured Home Construction and Safety Stand-
ards (24 CFR 3280).
‘‘(g) BASIS ADJUSTMENT.—For purposes of this sub-
title, if a credit is allowed under this section for any ex-
penditure with respect to any property, the increase in the
basis of such property which would (but for this sub-
section) result from such expenditure shall be reduced by
the amount of the credit so allowed.
‘‘(h) APPLICATION OF SECTION.—This section shall
apply to qualified energy efficiency improvements installed
after December 31, 2001 and before January 1, 2007.’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 1016 is amended
by striking ‘‘and’’ at the end of paragraph (30), by
striking the period at the end of paragraph (31) and
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph:
‘‘(32) to the extent provided in section 25E(g),
in the case of amounts with respect to which a credit
has been allowed under section 25E.’’.
(2) The table of sections for subpart A of part
IV of subchapter A of chapter 1 is amended by in-
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serting after the item relating to section 25D the
following new item:
‘‘Sec. 25E. Energy efficiency improvements to existing homes.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after De-
cember 31, 2001.
SEC. 3109. BUSINESS CREDIT FOR CONSTRUCTION OF NEW
ENERGY EFFICIENT HOME.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (relating to business related cred-
its) is amended by inserting after section 45G the fol-
lowing new section:
‘‘SEC. 45H. NEW ENERGY EFFICIENT HOME CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 38, in
the case of an eligible contractor, the credit determined
under this section for the taxable year is an amount equal
to the aggregate adjusted bases of all energy efficient
property installed in a qualified new energy efficient home
during construction of such home.
‘‘(b) LIMITATIONS.—
‘‘(1) MAXIMUM CREDIT.—
‘‘(A) IN GENERAL.—The credit allowed by
this section with respect to a dwelling shall not
exceed $2,000.
‘‘(B) PRIOR CREDIT AMOUNTS ON SAME
DWELLING TAKEN INTO ACCOUNT.—If a credit
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was allowed under subsection (a) with respect
to a dwelling in 1 or more prior taxable years,
the amount of the credit otherwise allowable for
the taxable year with respect to that dwelling
shall not exceed the amount of $2,000 reduced
by the sum of the credits allowed under sub-
section (a) with respect to the dwelling for all
prior taxable years.
‘‘(2) COORDINATION
WITH
REHABILITATION
AND
ENERGY
CREDITS.—For purposes of this
section—
‘‘(A) the basis of any property referred to
in subsection (a) shall be reduced by that por-
tion of the basis of any property which is attrib-
utable to qualified rehabilitation expenditures
(as defined in section 47(c)(2)) or to the energy
percentage of energy property (as determined
under section 48(a)), and
‘‘(B) expenditures taken into account
under either section 47 or 48(a) shall not be
taken into account under this section.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) ELIGIBLE CONTRACTOR.—The term ‘eligi-
ble contractor’ means the person who constructed
the new energy efficient home, or in the case of a
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manufactured home which conforms to Federal
Manufactured Home Construction and Safety Stand-
ards (24 CFR 3280), the manufactured home pro-
ducer of such home.
‘‘(2) ENERGY
EFFICIENT
PROPERTY.—The
term ‘energy efficient property’ means any energy
efficient building envelope component, and any en-
ergy efficient heating or cooling appliance.
‘‘(3) QUALIFIED
NEW
ENERGY
EFFICIENT
HOME.—The term ‘qualified new energy efficient
home’ means a dwelling—
‘‘(A) located in the United States,
‘‘(B) the construction of which is substan-
tially completed after December 31, 2001,
‘‘(C) the original use of which is as a prin-
cipal residence (within the meaning of section
121) which commences with the person who ac-
quires such dwelling from the eligible con-
tractor, and
‘‘(D) which is certified to have a level of
annual heating and cooling energy consumption
that is at least 30 percent below the annual
level of heating and cooling energy consumption
of a comparable dwelling constructed in accord-
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ance with the standards of the 1998 Inter-
national Energy Conservation Code.
‘‘(4) CONSTRUCTION.—The term ‘construction’
includes reconstruction and rehabilitation.
‘‘(5) ACQUIRE.—The term ‘acquire’ includes
purchase and, in the case of reconstruction and re-
habilitation, such term includes a binding written
contract for such reconstruction or rehabilitation.
‘‘(6) BUILDING ENVELOPE COMPONENT.—The
term ‘building envelope component’ means insulation
material or system which is specifically and pri-
marily designed to reduce the heat loss or gain of a
dwelling when installed in or on such dwelling, exte-
rior windows (including skylights) and doors, and
metal roofs with appropriate pigmented coatings
which are specifically and primarily designed to re-
duce the heat gain of a dwelling when installed in
or on such dwelling.
‘‘(7) MANUFACTURED HOME INCLUDED.—The
term ‘dwelling’ includes a manufactured home con-
forming to Federal Manufactured Home Construc-
tion and Safety Standards (24 CFR 3280).
‘‘(d) CERTIFICATION.—
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‘‘(1) METHOD.—A certification described in
subsection (c)(3)(D) shall be determined on the
basis of one of the following methods:
‘‘(A) The technical specifications or appli-
cable ratings (including product labeling re-
quirements) for the measurement of energy effi-
ciency for the energy efficient building envelope
component or energy efficient heating or cooling
appliance, based upon energy use or building
envelope component performance.
‘‘(B) An energy performance measurement
method that utilizes computer software ap-
proved by organizations designated by the Sec-
retary.
‘‘(2) PROVIDER.—Such certification shall be
provided by—
‘‘(A) in the case of a method described in
paragraph (1)(A), a local building regulatory
authority, a utility, a manufactured home pro-
duction inspection primary inspection agency
(IPIA), or an accredited home energy rating
systems provider who is accredited by, or other-
wise authorized to use, approved energy per-
formance measurement methods by the Home
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Energy Ratings Systems Council or the Na-
tional Association of State Energy Officials, or
‘‘(B) in the case of a method described in
paragraph (1)(B), an individual recognized by
an organization designated by the Secretary for
such purposes.
‘‘(3) FORM.—Such certification shall be made
in writing in a manner that specifies in readily
verifiable fashion the energy efficient building enve-
lope components and energy efficient heating or
cooling appliances installed and their respective en-
ergy efficiency levels, and in the case of a method
described in subparagraph (B) of paragraph (1), ac-
companied by written analysis documenting the
proper application of a permissible energy perform-
ance measurement method to the specific cir-
cumstances of such dwelling.
‘‘(4) REGULATIONS.—
‘‘(A) IN GENERAL.—In prescribing regula-
tions under this subsection for energy perform-
ance measurement methods, the Secretary shall
prescribe procedures for calculating annual en-
ergy costs for heating and cooling and cost sav-
ings and for the reporting of the results. Such
regulations shall—
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‘‘(i) be based on the National Home
Energy Rating Technical Guidelines of the
National Association of State Energy Offi-
cials, the Home Energy Rating Guidelines
of the Home Energy Rating Systems
Council, or the modified 1998 California
Residential ACM manual,
‘‘(ii) provide that any calculation pro-
cedures be developed such that the same
energy efficiency measures allow a home to
qualify for the credit under this section re-
gardless of whether the house uses a gas
or oil furnace or boiler or an electric heat
pump, and
‘‘(iii) require that any computer soft-
ware allow for the printing of the Federal
tax forms necessary for the credit under
this section and explanations for the home-
buyer of the energy efficient features that
were used to comply with the requirements
of this section.
‘‘(B) PROVIDERS.—For purposes of para-
graph (2)(B), the Secretary shall establish re-
quirements for the designation of individuals
based on the requirements for energy consult-
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ants and home energy raters specified by the
National Association of State Energy Officials.
‘‘(e) BASIS ADJUSTMENT.—For purposes of this sub-
title, if a credit is allowed under this section for any ex-
penditure with respect to any property, the increase in the
basis of such property which would (but for this sub-
section) result from such expenditure shall be reduced by
the amount of the credit so allowed.
‘‘(f) APPLICATION OF SECTION.—Subsection (a) shall
apply to dwellings purchased during the period beginning
on January 1, 2002, and ending on December 31, 2006.’’.
(b) CREDIT MADE PART OF GENERAL BUSINESS
CREDIT.—Subsection (b) of section 38 (relating to current
year business credit) is amended by striking ‘‘plus’’ at the
end of paragraph (15), by striking the period at the end
of paragraph (16) and inserting ‘‘, plus’’, and by adding
at the end thereof the following new paragraph:
‘‘(17) the new energy efficient home credit de-
termined under section 45H.’’.
(c) DENIAL OF DOUBLE BENEFIT.—Section 280C
(relating to certain expenses for which credits are allow-
able) is amended by adding at the end thereof the fol-
lowing new subsection:
‘‘(d) NEW ENERGY EFFICIENT HOME EXPENSES.—
No deduction shall be allowed for that portion of expenses
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for a new energy efficient home otherwise allowable as a
deduction for the taxable year which is equal to the
amount of the credit determined for such taxable year
under section 45H.’’.
(d) LIMITATION ON CARRYBACK.—Subsection (d) of
section 39 is amended by adding at the end the following
new paragraph:
‘‘(12) NO CARRYBACK OF NEW ENERGY EFFI-
CIENT HOME CREDIT BEFORE EFFECTIVE DATE.—
No portion of the unused business credit for any
taxable year which is attributable to the credit deter-
mined under section 45H may be carried back to
any taxable year ending before January 1, 2002.’’.
(e) DEDUCTION FOR CERTAIN UNUSED BUSINESS
CREDITS.—Subsection (c) of section 196 is amended by
striking ‘‘and’’ at the end of paragraph (9), by striking
the period at the end of paragraph (10) and inserting ‘‘,
and’’, and by adding after paragraph (10) the following
new paragraph:
‘‘(11) the new energy efficient home credit de-
termined under section 45H.’’.
(f) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
is amended by inserting after the item relating to section
45G the following new item:
‘‘Sec. 45H. New energy efficient home credit.’’.
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(g) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after De-
cember 31, 2001.
SEC. 3110. ALLOWANCE OF DEDUCTION FOR ENERGY EFFI-
CIENT COMMERCIAL BUILDING PROPERTY.
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 (relating to itemized deductions for individuals and
corporations) is amended by inserting after section 179A
the following new section:
‘‘SEC. 179B. DEDUCTION FOR ENERGY EFFICIENT COMMER-
CIAL BUILDING PROPERTY.
‘‘(a) ALLOWANCE OF DEDUCTION.—
‘‘(1) IN GENERAL.—There shall be allowed as a
deduction an amount equal to energy efficient com-
mercial building property expenditures made by a
taxpayer for the taxable year.
‘‘(2) MAXIMUM AMOUNT OF DEDUCTION.—The
amount of energy efficient commercial building prop-
erty expenditures taken into account under para-
graph (1) shall not exceed an amount equal to the
product of—
‘‘(A) $2.25, and
‘‘(B) the square footage of the building
with respect to which the expenditures are
made.
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‘‘(3) YEAR DEDUCTION ALLOWED.—The deduc-
tion under paragraph (1) shall be allowed for the
taxable year in which the building is placed in serv-
ice.
‘‘(b) ENERGY EFFICIENT COMMERCIAL BUILDING
PROPERTY EXPENDITURES.—For purposes of this sec-
tion, the term ‘energy efficient commercial building prop-
erty expenditures’ means an amount paid or incurred for
energy efficient commercial building property installed on
or in connection with new construction or reconstruction
of property—
‘‘(1) for which depreciation is allowable under
section 167,
‘‘(2) which is located in the United States, and
‘‘(3) the construction or erection of which is
completed by the taxpayer.
Such property includes all residential rental property, in-
cluding low-rise multifamily structures and single family
housing property which is not within the scope of Stand-
ard 90.1–1999 (described in subsection (c)). Such term
includes expenditures for labor costs properly allocable to
the onsite preparation, assembly, or original installation
of the property.
‘‘(c) ENERGY EFFICIENT COMMERCIAL BUILDING
PROPERTY.—For purposes of subsection (b)—
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‘‘(1) IN GENERAL.—The term ‘energy efficient
commercial building property’ means any property
which reduces total annual energy and power costs
with respect to the lighting, heating, cooling, ventila-
tion, and hot water supply systems of the building
by 50 percent or more in comparison to a reference
building which meets the requirements of Standard
90.1–1999 of the American Society of Heating, Re-
frigerating, and Air Conditioning Engineers and the
Illuminating Engineering Society of North America
using methods of calculation under paragraph (2)
and certified by qualified professionals as provided
under subsection (f).
‘‘(2) METHODS
OF
CALCULATION.—The Sec-
retary, in consultation with the Secretary of Energy,
shall promulgate regulations which describe in detail
methods for calculating and verifying energy and
power consumption and cost, taking into consider-
ation the provisions of the 1998 California Nonresi-
dential ACM Manual. These procedures shall meet
the following requirements:
‘‘(A) In calculating tradeoffs and energy
performance, the regulations shall prescribe the
costs per unit of energy and power, such as kil-
owatt hour, kilowatt, gallon of fuel oil, and
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cubic foot or Btu of natural gas, which may be
dependent on time of usage.
‘‘(B) The calculational methodology shall
require that compliance be demonstrated for a
whole building. If some systems of the building,
such as lighting, are designed later than other
systems of the building, the method shall pro-
vide that either—
‘‘(i) the expenses taken into account
under subsection (a) shall not occur until
the date designs for all energy-using sys-
tems of the building are completed,
‘‘(ii) the energy performance of all
systems and components not yet designed
shall be assumed to comply minimally with
the requirements of such Standard 90.1–
1999, or
‘‘(iii) the expenses taken into account
under subsection (a) shall be a fraction of
such expenses based on the performance of
less than all energy-using systems in ac-
cordance with subparagraph (C).
‘‘(C) The expenditures in connection with
the design of subsystems in the building, such
as the envelope, the heating, ventilation, air
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conditioning and water heating system, and the
lighting system shall be allocated to the appro-
priate building subsystem based on system-spe-
cific energy cost savings targets in regulations
promulgated by the Secretary of Energy which
are equivalent, using the calculation method-
ology, to the whole building requirement of 50
percent savings.
‘‘(D) The calculational methods under this
subparagraph need not comply fully with sec-
tion 11 of such Standard 90.1–1999.
‘‘(E) The calculational methods shall be
fuel neutral, such that the same energy effi-
ciency features shall qualify a building for the
deduction under this subsection regardless of
whether the heating source is a gas or oil fur-
nace or an electric heat pump.
‘‘(F) The calculational methods shall pro-
vide appropriate calculated energy savings for
design methods and technologies not otherwise
credited in either such Standard 90.1–1999 or
in the 1998 California Nonresidential ACM
Manual, including the following:
‘‘(i) Natural ventilation.
‘‘(ii) Evaporative cooling.
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‘‘(iii) Automatic lighting controls such
as occupancy sensors, photocells, and time-
clocks.
‘‘(iv) Daylighting.
‘‘(v) Designs utilizing semi-condi-
tioned spaces that maintain adequate com-
fort conditions without air conditioning or
without heating.
‘‘(vi) Improved fan system efficiency,
including reductions in static pressure.
‘‘(vii) Advanced unloading mecha-
nisms for mechanical cooling, such as mul-
tiple or variable speed compressors.
‘‘(viii) The calculational methods may
take into account the extent of commis-
sioning in the building, and allow the tax-
payer to take into account measured per-
formance that exceeds typical performance.
‘‘(3) COMPUTER SOFTWARE.—
‘‘(A) IN GENERAL.—Any calculation under
this subsection shall be prepared by qualified
computer software.
‘‘(B) QUALIFIED COMPUTER SOFTWARE.—
For purposes of this paragraph, the term
‘qualified computer software’ means software—
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‘‘(i) for which the software designer
has certified that the software meets all
procedures and detailed methods for calcu-
lating energy and power consumption and
costs as required by the Secretary,
‘‘(ii) which provides such forms as re-
quired to be filed by the Secretary in con-
nection with energy efficiency of property
and the deduction allowed under this sec-
tion, and
‘‘(iii) which provides a notice form
which summarizes the energy efficiency
features of the building and its projected
annual energy costs.
‘‘(d) ALLOCATION
OF
DEDUCTION
FOR
PUBLIC
PROPERTY.—In the case of energy efficient commercial
building property installed on or in public property, the
Secretary shall promulgate a regulation to allow the allo-
cation of the deduction to the person primarily responsible
for designing the property in lieu of the public entity which
is the owner of such property. Such person shall be treated
as the taxpayer for purposes of this section.
‘‘(e) NOTICE TO OWNER.—The qualified individual
shall provide an explanation to the owner of the building
regarding the energy efficiency features of the building
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and its projected annual energy costs as provided in the
notice under subsection (c)(3)(B)(iii).
‘‘(f) CERTIFICATION.—The Secretary, in consultation
with the Secretary of Energy, shall establish requirements
for certification and compliance procedures similar to the
procedures under section 45H(d).
‘‘(g) BASIS REDUCTION.—For purposes of this title,
the basis of any property shall be reduced by the amount
of the deduction with respect to such property which is
allowed by subsection (a).
‘‘(h) TERMINATION.—This section shall not apply to
property placed in service after December 31, 2006.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 1016(a) is amended by striking
‘‘and’’ at the end of paragraph (31), by striking the
period at the end of paragraph (32) and inserting ‘‘,
and’’, and by inserting the following new paragraph:
‘‘(33) to the extent provided in section
179B(g).’’.
(2) Section 1245(a) is amended by inserting
‘‘179B,’’ after ‘‘179A,’’ both places it appears in
paragraphs (2)(C) and (3)(C).
(3) Section 1250(b)(3) is amended by inserting
before the period at the end of the first sentence ‘‘or
by section 179B’’.
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(4) Section 263(a)(1) is amended by striking
‘‘or’’ at the end of subparagraph (G), by striking the
period at the end of subparagraph (H) and inserting
‘‘, or’’, and by inserting after subparagraph (H) the
following new subparagraph:
‘‘(I) expenditures for which a deduction is
allowed under section 179B.’’.
(5) Section 312(k)(3)(B) is amended by strik-
ing ‘‘or 179A’’ each place it appears in the heading
and text and inserting ‘‘, 179A, or 179B’’.
(c) CLERICAL AMENDMENT.—The table of sections
for part VI of subchapter B of chapter 1 is amended by
adding after section 179A the following new item:
‘‘Sec. 179B. Deduction for energy efficient commercial building
property.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 3111. ALLOWANCE OF DEDUCTION FOR QUALIFIED EN-
ERGY MANAGEMENT DEVICES AND RETRO-
FITTED QUALIFIED METERS.
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 (relating to itemized deductions for individuals and
corporations) is amended by inserting after section 179B
the following new section:
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‘‘SEC. 179C. DEDUCTION FOR QUALIFIED ENERGY MANAGE-
MENT DEVICES AND RETROFITTED METERS.
‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of a
taxpayer who is a supplier of electric energy or natural
gas or a provider of electric energy or natural gas services,
there shall be allowed as a deduction an amount equal to
the cost of each qualified energy management device
placed in service during the taxable year.
‘‘(b) MAXIMUM DEDUCTION.—The deduction allowed
by this section with respect to each qualified energy man-
agement device shall not exceed $30.
‘‘(c) QUALIFIED ENERGY MANAGEMENT DEVICE.—
The term ‘qualified energy management device’ means any
tangible property to which section 168 applies if such
property is a meter or metering device—
‘‘(1) which is acquired and used by the tax-
payer to enable consumers to manage their purchase
or use of electricity or natural gas in response to en-
ergy price and usage signals, and
‘‘(2) which permits reading of energy price and
usage signals on at least a daily basis.
‘‘(d) PROPERTY
USED
OUTSIDE
THE
UNITED
STATES NOT QUALIFIED.—No deduction shall be allowed
under subsection (a) with respect to property which is
used predominantly outside the United States or with re-
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spect to the portion of the cost of any property taken into
account under section 179.
‘‘(e) BASIS REDUCTION.—
‘‘(1) IN GENERAL.—For purposes of this title,
the basis of any property shall be reduced by the
amount of the deduction with respect to such prop-
erty which is allowed by subsection (a).
‘‘(2) ORDINARY
INCOME
RECAPTURE.—For
purposes of section 1245, the amount of the deduc-
tion allowable under subsection (a) with respect to
any property that is of a character subject to the al-
lowance for depreciation shall be treated as a deduc-
tion allowed for depreciation under section 167.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 263(a)(1) is amended by striking
‘‘or’’ at the end of subparagraph (H), by striking
the period at the end of subparagraph (I) and in-
serting ‘‘, or’’, and by inserting after subparagraph
(I) the following new subparagraph:
‘‘(J) expenditures for which a deduction is
allowed under section 179C.’’.
(2) Section 312(k)(3)(B) is amended by strik-
ing ‘‘or 179B’’ each place it appears in the heading
and text and inserting ‘‘, 179B, or 179C’’.
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(3) Section 1016(a) is amended by striking
‘‘and’’ at the end of paragraph (32), by striking the
period at the end of paragraph (33) and inserting ‘‘,
and’’, and by inserting after paragraph (33) the fol-
lowing new paragraph:
‘‘(34) to the extent provided in section
179C(e)(1).’’.
(4) Section 1245(a) is amended by inserting
‘‘179C,’’ after ‘‘179B,’’ both places it appears in
paragraphs (2)(C) and (3)(C).
(5) The table of contents for subpart B of part
IV of subchapter A of chapter 1 is amended by in-
serting after the item relating to section 179B the
following new item:
‘‘Sec. 179C. Deduction for qualified energy management devices
and retrofitted meters.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to qualified energy management
devices placed in service after the date of the enactment
of this Act.
SEC. 3112. THREE-YEAR APPLICABLE RECOVERY PERIOD
FOR DEPRECIATION OF QUALIFIED ENERGY
MANAGEMENT DEVICES.
(a) IN GENERAL.—Subparagraph (A) of section
168(e)(3) (relating to classification of property) is amend-
ed by striking ‘‘and’’ at the end of clause (ii), by striking
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the period at the end of clause (iii) and inserting ‘‘, and’’,
and by adding at the end the following new clause:
‘‘(iv) any qualified energy manage-
ment device.’’.
(b) DEFINITION OF QUALIFIED ENERGY MANAGE-
MENT DEVICE.—Section 168(i) (relating to definitions
and special rules) is amended by inserting at the end the
following new paragraph:
‘‘(15) QUALIFIED
ENERGY
MANAGEMENT
DE-
VICE.—The term ‘qualified energy management de-
vice’ means any qualified energy management device
as defined in section 179C(c) which is placed in
service by a taxpayer who is a supplier of electric en-
ergy or natural gas or a provider of electric energy
or natural gas services.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to property placed in service after
the date of the enactment of this Act.
SEC. 3113. ENERGY CREDIT FOR COMBINED HEAT AND
POWER SYSTEM PROPERTY.
(a) IN GENERAL.—Subparagraph (A) of section
48(a)(3) (defining energy property) is amended by strik-
ing ‘‘or’’ at the end of clause (ii), by adding ‘‘or’’ at the
end of clause (iii), and by inserting after clause (iii) the
following new clause:
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‘‘(iv) combined heat and power system
property,’’.
(b) COMBINED HEAT AND POWER SYSTEM PROP-
ERTY.—Subsection (a) of section 48 is amended by redes-
ignating paragraphs (5) and (6) as paragraphs (6) and
(7), respectively, and by inserting after paragraph (4) the
following new paragraph:
‘‘(5) COMBINED
HEAT
AND
POWER
SYSTEM
PROPERTY.—For purposes of this subsection—
‘‘(A) COMBINED HEAT AND POWER SYS-
TEM PROPERTY.—The term ‘combined heat and
power system property’ means property com-
prising a system—
‘‘(i) which uses the same energy
source for the simultaneous or sequential
generation of electrical power, mechanical
shaft power, or both, in combination with
the generation of steam or other forms of
useful thermal energy (including heating
and cooling applications),
‘‘(ii) which has an electrical capacity
of more than 50 kilowatts or a mechanical
energy capacity of more than 67 horse-
power or an equivalent combination of elec-
trical and mechanical energy capacities,
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‘‘(iii) which produces—
‘‘(I) at least 20 percent of its
total useful energy in the form of
thermal energy, and
‘‘(II) at least 20 percent of its
total useful energy in the form of elec-
trical or mechanical power (or com-
bination thereof),
‘‘(iv) the energy efficiency percentage
of which exceeds 60 percent (70 percent in
the case of a system with an electrical ca-
pacity in excess of 50 megawatts or a me-
chanical energy capacity in excess of
67,000 horsepower, or an equivalent com-
bination of electrical and mechanical en-
ergy capacities), and
‘‘(v) which is placed in service after
December 31, 2001, and before January 1,
2007.
‘‘(B) SPECIAL RULES.—
‘‘(i) ENERGY
EFFICIENCY
PERCENT-
AGE.—For 
purposes 
of 
subparagraph
(A)(iv), the energy efficiency percentage of
a system is the fraction—
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‘‘(I) the numerator of which is
the total useful electrical, thermal,
and mechanical power produced by
the system at normal operating rates,
and
‘‘(II) the denominator of which is
the lower heating value of the primary
fuel source for the system.
‘‘(ii) DETERMINATIONS MADE ON BTU
BASIS.—The energy efficiency percentage
and the percentages under subparagraph
(A)(iii) shall be determined on a Btu basis.
‘‘(iii) INPUT AND OUTPUT PROPERTY
NOT INCLUDED.—The term ‘combined heat
and power system property’ does not in-
clude property used to transport the en-
ergy source to the facility or to distribute
energy produced by the facility.
‘‘(iv) PUBLIC UTILITY PROPERTY.—
‘‘(I) ACCOUNTING
RULE
FOR
PUBLIC
UTILITY
PROPERTY.—If the
combined heat and power system
property is public utility property (as
defined in section 168(i)(1)), the tax-
payer may only claim the credit under
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the subsection if, with respect to such
property, the taxpayer uses a normal-
ization method of accounting.
‘‘(II) CERTAIN
EXCEPTION
NOT
TO APPLY.—The matter in paragraph
(3) which follows subparagraph (D)
shall not apply to combined heat and
power system property.
‘‘(C) EXTENSION
OF
DEPRECIATION
RE-
COVERY PERIOD.—If a taxpayer is allowed cred-
it under this section for combined heat and
power system property and such property would
(but for this subparagraph) have a class life of
15 years or less under section 168, such prop-
erty shall be treated as having a 22-year class
life for purposes of section 168.’’.
(c) NO CARRYBACK OF ENERGY CREDIT BEFORE
EFFECTIVE DATE.—Subsection (d) of section 39 is
amended by adding at the end the following new para-
graph:
‘‘(13) NO CARRYBACK OF ENERGY CREDIT BE-
FORE EFFECTIVE DATE.—No portion of the unused
business credit for any taxable year which is attrib-
utable to the energy credit with respect to property
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described in section 48(a)(5) may be carried back to
a taxable year ending before January 1, 2002.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to property placed in service after
December 31, 2001.
SEC. 3114. NEW NONREFUNDABLE PERSONAL CREDITS AL-
LOWED AGAINST REGULAR AND MINIMUM
TAXES.
(a) IN GENERAL.—Paragraph (1) of section 26(a) is
amended by striking ‘‘and 25B’’ and inserting ‘‘25B, 25C,
25D, and 25E’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 24(b)(3)(B) is amended by striking
‘‘and 25B’’ and inserting ‘‘, 25B, 25C, 25D, and
25E’’.
(2) Section 25(e)(1)(C) is amended by inserting
‘‘25C, 25D, and 25E’’ after ‘‘25B,’’.
(3) Section 25B(g)(2) is amended by striking
‘‘section 23’’ and inserting ‘‘sections 23, 25C, 25D,
and 25E’’.
(4) Section 904(h) is amended by striking ‘‘and
25B’’ and inserting ‘‘25B, 25C, 25D, and 25E’’.
(5) Section 1400C(d) is amended by striking
‘‘and 25B’’ and inserting ‘‘25B, 25C, 25D, and
25E’’.
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(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 3115. PHASEOUT OF 4.3-CENT MOTOR FUEL EXCISE
TAXES ON RAILROADS AND INLAND WATER-
WAY TRANSPORTATION WHICH REMAIN IN
GENERAL FUND.
(a) TAXES ON TRAINS.—
(1) IN
GENERAL.—Clause (ii) of section
4041(a)(1)(C) is amended by striking subclauses (I),
(II), and (III) and inserting the following new sub-
clauses:
‘‘(I) 3.3 cents per gallon after
September 30, 2001, and before Jan-
uary 1, 2005,
‘‘(II) 2.3 cents per gallon after
December 31, 2004, and before Janu-
ary 1, 2007,
‘‘(III) 1.3 cents per gallon after
December 31, 2006, and before Janu-
ary 1, 2009,
‘‘(IV) 0.3 cent per gallon after
December 31, 2008, and before Janu-
ary 1, 2010, and
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‘‘(V) 
after 
December 
31,
2009.’’.
(2) CONFORMING AMENDMENTS.—
(A) Subsection (d) of section 4041 is
amended by redesignating paragraph (3) as
paragraph (4) and by inserting after paragraph
(2) the following new paragraph:
‘‘(3) DIESEL FUEL USED IN TRAINS.—In the
case of any sale for use (or use) after September 30,
2010, there is hereby imposed a tax of 0.1 cent per
gallon on any liquid other than gasoline (as defined
in section 4083)—
‘‘(A) sold by any person to an owner, les-
see, or other operator of a diesel-powered train
for use as a fuel in such train, or
‘‘(B) used by any person as a fuel in a die-
sel-powered train unless there was a taxable
sale of such fuel under subparagraph (A).
No tax shall be imposed by this paragraph on the
sale or use of any liquid if tax was imposed on such
liquid under section 4081.’’.
(B) Subsection (f) of section 4082 is
amended by striking ‘‘section 4041(a)(1)’’ and
inserting ‘‘subsections (a)(1) and (d)(3) of sec-
tion 4041’’.
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(C) 
Subparagraph 
(B) 
of 
section
6421(f)(3) is amended to read as follows:
‘‘(B) so much of the rate specified in sec-
tion 4081(a)(2)(A) as does not exceed the rate
applicable under section 4041(a)(1)(C)(ii).’’.
(D) 
Subparagraph 
(B) 
of 
section
6427(l)(3) is amended to read as follows:
‘‘(B) so much of the rate specified in sec-
tion 4081(a)(2)(A) as does not exceed the rate
applicable under section 4041(a)(1)(C)(ii).’’.
(b) FUEL USED ON INLAND WATERWAYS.—Subpara-
graph (C) of section 4042(b)(2) is amended to read as
follows:
‘‘(C) The deficit reduction rate is—
‘‘(i) 3.3 cents per gallon after Sep-
tember 30, 2001, and before January 1,
2005,
‘‘(ii) 2.3 cents per gallon after Decem-
ber 31, 2004, and before January 1, 2007,
‘‘(iii) 1.3 cents per gallon after De-
cember 31, 2006, and before January 1,
2009,
‘‘(iv) 0.3 cent per gallon after Decem-
ber 31, 2008, and before January 1, 2010,
and
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‘‘(v) 0 after December 31, 2009.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on October 1, 2001.
SEC. 3116. REDUCED MOTOR FUEL EXCISE TAX ON CER-
TAIN MIXTURES OF DIESEL FUEL.
(a) 
IN
GENERAL.—Clause 
(iii) 
of 
section
4081(a)(2)(A) is amended by inserting before the period
‘‘(19.7 cents per gallon in the case of a diesel-water fuel
emulsion at least 14 percent of which is water)’’.
(b) REFUNDS FOR TAX-PAID PURCHASES.—
(1) IN GENERAL.—Section 6427 is amended by
redesignating subsections (m) through (p) as sub-
sections (n) through (q), respectively, and by insert-
ing after subsection (l) the following new subsection:
‘‘(m) DIESEL FUEL USED TO PRODUCE EMUL-
SION.—
‘‘(1) IN GENERAL.—Except as provided in sub-
section (k), if any diesel fuel on which tax was im-
posed by section 4081 at the regular tax rate is used
by any person in producing an emulsion described in
section 4081(a)(2)(A) which is sold or used in such
person’s trade or business, the Secretary shall pay
(without interest) to such person an amount equal to
the excess of the regular tax rate over the incentive
tax rate with respect to such fuel.
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‘‘(2) DEFINITIONS.—For purposes of paragraph
(1)—
‘‘(A) REGULAR TAX RATE.—The term ‘reg-
ular tax rate’ means the aggregate rate of tax
imposed by section 4081 determined without re-
gard 
to 
the 
parenthetical 
in 
section
4081(a)(2)(A).
‘‘(B) INCENTIVE
TAX
RATE.—The term
‘incentive tax rate’ means the aggregate rate of
tax imposed by section 4081 determined with
regard 
to 
the 
parenthetical 
in 
section
4081(a)(2)(A).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on October 1, 2001.
SEC. 3117. CREDIT FOR INVESTMENT IN QUALIFYING AD-
VANCED CLEAN COAL TECHNOLOGY.
(a) ALLOWANCE OF QUALIFYING ADVANCED CLEAN
COAL TECHNOLOGY FACILITY CREDIT.—Section 46 (re-
lating to amount of credit) is amended by striking ‘‘and’’
at the end of paragraph (2), by striking the period at the
end of paragraph (3) and inserting ‘‘, and’’, and by adding
at the end the following:
‘‘(4) the qualifying advanced clean coal tech-
nology facility credit.’’.
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(b) AMOUNT
OF QUALIFYING ADVANCED CLEAN
COAL TECHNOLOGY FACILITY CREDIT.—Subpart E of
part IV of subchapter A of chapter 1 (relating to rules
for computing investment credit) is amended by inserting
after section 48 the following:
‘‘SEC. 48A. QUALIFYING ADVANCED CLEAN COAL TECH-
NOLOGY FACILITY CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 46, the
qualifying advanced clean coal technology facility credit
for any taxable year is an amount equal to 10 percent
of the qualified investment in a qualifying advanced clean
coal technology facility for such taxable year.
‘‘(b) QUALIFYING ADVANCED CLEAN COAL TECH-
NOLOGY FACILITY.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a), the term ‘qualifying advanced clean coal tech-
nology facility’ means a facility of the taxpayer
which—
‘‘(A)(i)(I) original use of which commences
with the taxpayer, or
‘‘(II) is a retrofitted or repowered conven-
tional technology facility, the retrofitting or
repowering of which is completed by the tax-
payer (but only with respect to that portion of
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the basis which is properly attributable to such
retrofitting or repowering), or
‘‘(ii) is acquired through purchase (as de-
fined by section 179(d)(2)),
‘‘(B) is depreciable under section 167,
‘‘(C) has a useful life of not less than 4
years,
‘‘(D) is located in the United States, and
‘‘(E) uses qualifying advanced clean coal
technology.
‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—
For purposes of subparagraph (A) of paragraph (1),
in the case of a facility which—
‘‘(A) is originally placed in service by a
person, and
‘‘(B) is sold and leased back by such per-
son, or is leased to such person, within 3
months after the date such facility was origi-
nally placed in service, for a period of not less
than 12 years,
such facility shall be treated as originally placed in
service not earlier than the date on which such prop-
erty is used under the leaseback (or lease) referred
to in subparagraph (B). The preceding sentence
shall not apply to any property if the lessee and les-
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sor of such property make an election under this
sentence. Such an election, once made, may be re-
voked only with the consent of the Secretary.
‘‘(c) QUALIFYING ADVANCED CLEAN COAL TECH-
NOLOGY.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualifying ad-
vanced clean coal technology’ means, with respect to
clean coal technology—
‘‘(A) which has—
‘‘(i) multiple applications, with a com-
bined capacity of not more than 5,000
megawatts (4,000 megawatts before 2009),
of advanced pulverized coal or atmospheric
fluidized bed combustion technology—
‘‘(I) installed as a new, retrofit,
or repowering application,
‘‘(II) operated between 2000 and
2012, and
‘‘(III) having a design net heat
rate of not more than 9,500 Btu per
kilowatt hour when the design coal
has a heat content of more than 9,000
Btu per pound, or a design net heat
rate of not more than 9,900 Btu per
kilowatt hour when the design coal
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has a heat content of 9,000 Btu per
pound or less,
‘‘(ii) multiple applications, with a
combined capacity of not more than 1,000
megawatts (500 megawatts before 2009
and 750 megawatts before 2013), of pres-
surized 
fluidized 
bed 
combustion
technology—
‘‘(I) installed as a new, retrofit,
or repowering application,
‘‘(II) operated between 2000 and
2016, and
‘‘(III) having a design net heat
rate of not more than 8,400 Btu per
kilowatt hour when the design coal
has a heat content of more than 9,000
Btu per pound, or a design net heat
rate of not more than 9,900 Btu’s per
kilowatt hour when the design coal
has a heat content of 9,000 Btu per
pound or less, and
‘‘(iii) multiple applications, with a
combined capacity of not more than 2,000
megawatts (1,000 megawatts before 2009
and 1,500 megawatts before 2013), of in-
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tegrated gasification combined cycle tech-
nology, with or without fuel or chemical co-
production—
‘‘(I) installed as a new, retrofit,
or repowering application,
‘‘(II) operated between 2000 and
2016,
‘‘(III) having a design net heat
rate of not more than 8,550 Btu per
kilowatt hour when the design coal
has a heat content of more than 9,000
Btu per pound, or a design net heat
rate of not more than 9,900 Btu per
kilowatt hour when the design coal
has a heat content of 9,000 Btu per
pound or less, and
‘‘(IV) having a net thermal effi-
ciency on any fuel or chemical co-pro-
duction of not less than 39 percent
(higher heating value), or
‘‘(iv) multiple applications, with a
combined capacity of not more than 2,000
megawatts (1,000 megawatts before 2009
and 1,500 megawatts before 2013) of tech-
nology for the production of electricity—
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‘‘(I) installed as a new, retrofit,
or repowering application,
‘‘(II) operated between 2000 and
2016, and
‘‘(III) having a carbon emission
rate which is not more than 85 per-
cent of conventional technology, and
‘‘(B) which reduces the discharge into the
atmosphere of 1 or more of the following pollut-
ants to not more than—
‘‘(i) 5 percent of the potential com-
bustion concentration sulfur dioxide emis-
sions for a coal with a potential combus-
tion concentration sulfur emission of 1.2
lb/million btu of heat input or greater,
‘‘(ii) 15 percent of the potential com-
bustion concentration sulfur dioxide emis-
sions for a coal with a potential combus-
tion concentration sulfur emission of less
than 1.2 lb/million btu of heat input,
‘‘(iii) nitrogen oxide emissions of 0.1
lb per million btu of heat input from other
than cyclone-fired boilers,
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‘‘(iv) 15 percent of the uncontrolled
nitrogen oxide emissions from cyclone-fired
boilers,
‘‘(v) particulate emissions of 0.02 lb
per million btu of heat input, and
‘‘(vi) the emission levels specified in
the new source performance standards of
the Clean Air Act (42 U.S.C. 7411) in ef-
fect at the time of retrofitting, repowering,
or replacement of the qualifying clean coal
technology unit for the category of source
if such level is lower than the levels speci-
fied in clause (i), (ii), (iii), (iv), or (v).
‘‘(2) EXCEPTIONS.—Such term shall not in-
clude any projects receiving or scheduled to receive
funding under the Clean Coal Technology Program,
or the Power Plant Improvement administered by
the Secretary of the Department of Energy.
‘‘(d) CLEAN COAL TECHNOLOGY.—For purposes of
this section, the term ‘clean coal technology’ means ad-
vanced technology which uses coal to produce 75 percent
or more of its thermal output as electricity including ad-
vanced pulverized coal or atmospheric fluidized bed com-
bustion, pressurized fluidized bed combustion, integrated
gasification combined cycle with or without fuel or chem-
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ical co-production, and any other technology for the pro-
duction of electricity which exceeds the performance of
conventional technology.
‘‘(e) CONVENTIONAL TECHNOLOGY.—The term ‘con-
ventional technology’ means—
‘‘(1) coal-fired combustion technology with a de-
sign net heat rate of not less than 9,500 Btu per kil-
owatt hour (HHV) and a carbon equivalents emis-
sion rate of not more than 0.54 pounds of carbon
per kilowatt hour when the design coal has a heat
content of more than 9,000 Btu per pound,
‘‘(2) coal-fired combustion technology with a de-
sign net heat rate of not less than 10,500 Btu per
kilowatt hour (HHV) and a carbon equivalents emis-
sion rate of not more than 0.60 pounds of carbon
per kilowatt hour when the design coal has a heat
content of 9,000 Btu per pound or less, or
‘‘(3) natural gas-fired combustion technology
with a design net heat rate of not less than 7,500
Btu per kilowatt hour (HHV) and a carbon equiva-
lents emission rate of not more than 0.24 pounds of
carbon per kilowatt hour.
‘‘(f) DESIGN NET HEAT RATE.—The design net heat
rate shall be based on the design annual heat input to
and the design annual net electrical output from the quali-
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fying advanced clean coal technology (determined without
regard to such technology’s co-generation of steam).
‘‘(g) SELECTION CRITERIA.—Selection criteria for
qualifying advanced clean coal technology facilities—
‘‘(1) shall be established by the Secretary of
Energy as part of a competitive solicitation,
‘‘(2) shall include primary criteria of minimum
design net heat rate, maximum design thermal effi-
ciency, environmental performance, and lowest cost
to the government, and
‘‘(3) shall include supplemental criteria as de-
termined appropriate by the Secretary of Energy.
‘‘(h) QUALIFIED INVESTMENT.—For purposes of
subsection (a), the term ‘qualified investment’ means, with
respect to any taxable year, the basis of a qualifying ad-
vanced clean coal technology facility placed in service by
the taxpayer during such taxable year.
‘‘(i) QUALIFIED PROGRESS EXPENDITURES.—
‘‘(1) INCREASE IN QUALIFIED INVESTMENT.—
In the case of a taxpayer who has made an election
under paragraph (5), the amount of the qualified in-
vestment of such taxpayer for the taxable year (de-
termined under subsection (c) without regard to this
section) shall be increased by an amount equal to
the aggregate of each qualified progress expenditure
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for the taxable year with respect to progress expend-
iture property.
‘‘(2) PROGRESS EXPENDITURE PROPERTY DE-
FINED.—For purposes of this subsection, the term
‘progress expenditure property’ means any property
being constructed by or for the taxpayer and which
it is reasonable to believe will qualify as a qualifying
advanced clean coal technology facility which is
being constructed by or for the taxpayer when it is
placed in service.
‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE-
FINED.—For purposes of this subsection—
‘‘(A) SELF-CONSTRUCTED PROPERTY.—In
the case of any self-constructed property, the
term ‘qualified progress expenditures’ means
the amount which, for purposes of this subpart,
is properly chargeable (during such taxable
year) to capital account with respect to such
property.
‘‘(B) 
NONSELF-CONSTRUCTED
PROP-
ERTY.—In the case of nonself-constructed prop-
erty, the term ‘qualified progress expenditures’
means the amount paid during the taxable year
to another person for the construction of such
property.
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‘‘(4) OTHER
DEFINITIONS.—For purposes of
this subsection—
‘‘(A) SELF-CONSTRUCTED
PROPERTY.—
The term ‘self-constructed property’ means
property for which it is reasonable to believe
that more than half of the construction expendi-
tures will be made directly by the taxpayer.
‘‘(B) 
NONSELF-CONSTRUCTED
PROP-
ERTY.—The term ‘nonself-constructed property’
means property which is not self-constructed
property.
‘‘(C) CONSTRUCTION, 
ETC.—The term
‘construction’ includes reconstruction and erec-
tion, and the term ‘constructed’ includes recon-
structed and erected.
‘‘(D) ONLY
CONSTRUCTION
OF
QUALI-
FYING
ADVANCED
CLEAN
COAL
TECHNOLOGY
FACILITY TO BE TAKEN INTO ACCOUNT.—Con-
struction shall be taken into account only if, for
purposes of this subpart, expenditures therefor
are properly chargeable to capital account with
respect to the property.
‘‘(5) ELECTION.—An election under this sub-
section may be made at such time and in such man-
ner as the Secretary may by regulations prescribe.
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Such an election shall apply to the taxable year for
which made and to all subsequent taxable years.
Such an election, once made, may not be revoked ex-
cept with the consent of the Secretary.
‘‘(j) COORDINATION WITH OTHER CREDITS.—This
section shall not apply to any property with respect to
which the rehabilitation credit under section 47 or the en-
ergy credit under section 48 is allowed unless the taxpayer
elects to waive the application of such credit to such prop-
erty.
‘‘(k) TERMINATION.—This section shall not apply
with respect to any qualified investment made after De-
cember 31, 2011.
‘‘(l) NATIONAL LIMITATION.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of this section, the term ‘qualifying ad-
vanced clean coal technology facility’ shall include
such a facility only to the extent that such facility
is allocated a portion of the national megawatt limi-
tation under this subsection.
‘‘(2) NATIONAL MEGAWATT LIMITATION.—The
national megawatt limitation under this subsection
is 7,500 megawatts.
‘‘(3) ALLOCATION
OF
LIMITATION.—The na-
tional megawatt limitation shall be allocated by the
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Secretary under rules prescribed by the Secretary.
Not later than 6 months after the date of the enact-
ment of this subsection, the Secretary shall prescribe
such regulations as may be necessary or appropriate
to carry out the purposes of this section, including
regulations—
‘‘(A) to limit which facility qualifies as
‘qualified advanced clean coal technology’ in
subsection (c) to particular facilities, a portion
of particular facilities, or a portion of the pro-
duction from particular facilities, so that when
all such facilities (or portions thereof) are
placed in service over the ten year period in sec-
tion (k), the combination of facilities approved
for tax credits (and/or portions of facilities ap-
proved for tax credits) will not exceed a com-
bined capacity of 7,500 megawatts;
‘‘(B) to provide a certification process in
consultation with the Secretary of Energy
under subsection (g) that will approve and allo-
cate the 7,500 megawatts of available tax cred-
its authority—
‘‘(i) to encourage that facilities with
the highest thermal efficiencies and envi-
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ronmental performance be placed in service
as soon as possible;
‘‘(ii) to allocate credits to taxpayers
that have a definite and credible plan for
placing into commercial operation a quali-
fying advanced clean coal technology facil-
ity, including—
‘‘(I) a site,
‘‘(II) contractual commitments
for procurement and construction,
‘‘(III) filings for all necessary
preconstruction approvals,
‘‘(IV) a demonstrated record of
having successfully completed com-
parable projects on a timely basis, and
‘‘(V) such other factors that the
Secretary shall determine are appro-
priate;
‘‘(iii) to allocate credits to a portion of
a facility (or a portion of the production
from a facility) if the Secretary determines
that such an allocation should maximize
the amount of efficient production encour-
aged with the available tax credits;
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‘‘(C) to set progress requirements and con-
ditional approvals so that credits for approved
projects that become unlikely to meet the nec-
essary conditions that can be reallocated by the
Secretary to other projects;
‘‘(D) to reallocate credits that are not allo-
cated to 1 technology described in clauses (i)
through (iv) of subsection (c)(1)(A) because an
insufficient number of qualifying facilities re-
quested credits for one technology, to another
technology described in another subparagraph
of subsection (c) in order to maximize the
amount of energy efficient production encour-
aged with the available tax credits; and
‘‘(E) to provide taxpayers with opportuni-
ties to correct administrative errors and omis-
sions with respect to allocations and record-
keeping within a reasonable period after their
discovery, taking into account the availability of
regulations and other administrative guidance
from the Secretary.’’.
(c) RECAPTURE.—Section 50(a) (relating to other
special rules) is amended by adding at the end the fol-
lowing:
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‘‘(6) SPECIAL RULES RELATING TO QUALIFYING
ADVANCED CLEAN COAL TECHNOLOGY FACILITY.—
For purposes of applying this subsection in the case
of any credit allowable by reason of section 48A, the
following shall apply:
‘‘(A) GENERAL
RULE.—In lieu of the
amount of the increase in tax under paragraph
(1), the increase in tax shall be an amount
equal to the investment tax credit allowed under
section 38 for all prior taxable years with re-
spect to a qualifying advanced clean coal tech-
nology facility (as defined by section 48A(b)(1))
multiplied by a fraction whose numerator is the
number of years remaining to fully depreciate
under this title the qualifying advanced clean
coal technology facility disposed of, and whose
denominator is the total number of years over
which such facility would otherwise have been
subject to depreciation. For purposes of the
preceding sentence, the year of disposition of
the qualifying advanced clean coal technology
facility property shall be treated as a year of re-
maining depreciation.
‘‘(B) PROPERTY CEASES TO QUALIFY FOR
PROGRESS
EXPENDITURES.—Rules similar to
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the rules of paragraph (2) shall apply in the
case of qualified progress expenditures for a
qualifying advanced clean coal technology facil-
ity under section 48A, except that the amount
of the increase in tax under subparagraph (A)
of this paragraph shall be substituted in lieu of
the amount described in such paragraph (2).
‘‘(C) APPLICATION OF PARAGRAPH.—This
paragraph shall be applied separately with re-
spect to the credit allowed under section 38 re-
garding a qualifying advanced clean coal tech-
nology facility.’’.
(d) TRANSITIONAL RULE.—Section 39(d) (relating to
transitional rules) is amended by adding at the end the
following:
‘‘(14) NO CARRYBACK OF SECTION 48A CREDIT
BEFORE EFFECTIVE DATE.—No portion of the un-
used business credit for any taxable year which is
attributable to the qualifying advanced clean coal
technology facility credit determined under section
48A may be carried back to a taxable year ending
before January 1, 2002.’’.
(e) TECHNICAL AMENDMENTS.—
(1) Section 49(a)(1)(C) is amended by striking
‘‘and’’ at the end of clause (ii), by striking the pe-
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riod at the end of clause (iii) and inserting ‘‘, and’’,
and by adding at the end the following:
‘‘(iv) the portion of the basis of any
qualifying advanced clean coal technology
facility attributable to any qualified invest-
ment (as defined by section 48A(c)).’’.
(2) Section 50(a)(4) is amended by striking
‘‘and (2)’’ and inserting ‘‘, (2), and (6)’’.
(3) Section 50(c) is amended by adding at the
end the following new paragraph:
‘‘(6) SPECIAL
RULE
FOR
QUALIFYING
AD-
VANCED CLEAN COAL TECHNOLOGY FACILITIES.—
Paragraphs (1) and (2) shall not apply to any prop-
erty with respect to the credit determined under sec-
tion 48A.’’.
(4) The table of sections for subpart E of part
IV of subchapter A of chapter 1 is amended by in-
serting after the item relating to section 48 the fol-
lowing:
‘‘Sec. 48A. Qualifying advanced clean coal technology facility
credit.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to periods after December 31,
2001, under rules similar to the rules of section 48(m)
of the Internal Revenue Code of 1986 (as in effect on the
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day before the date of the enactment of the Revenue Rec-
onciliation Act of 1990).
SEC. 3118. CREDIT FOR PRODUCTION FROM QUALIFYING
ADVANCED CLEAN COAL TECHNOLOGY.
(a) CREDIT FOR PRODUCTION FROM QUALIFYING
ADVANCED CLEAN COAL TECHNOLOGY.—Subpart D of
part IV of subchapter A of chapter 1 (relating to business
related credits) is amended by adding after section 45J
the following:
‘‘SEC. 45K. CREDIT FOR PRODUCTION FROM QUALIFYING
ADVANCED CLEAN COAL TECHNOLOGY.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the qualifying advanced clean coal technology production
credit of any taxpayer for any taxable year is equal to—
‘‘(1) the applicable amount of advanced clean
coal technology production credit, multiplied by
‘‘(2) the sum of—
‘‘(A) the kilowatt hours of electricity, plus
‘‘(B) each 3,413 Btu of fuels or chemicals,
produced by the taxpayer during such taxable year
at a qualifying advanced clean coal technology facil-
ity during the 10-year period beginning on the date
the facility was originally placed in service.
‘‘(b) APPLICABLE AMOUNT.—For purposes of this
section, the applicable amount of advanced clean coal tech-
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nology production credit with respect to production from
a qualifying advanced clean coal technology facility shall
be determined as follows:
‘‘(1) Where the design coal has a heat content
of more than 9,000 Btu per pound:
‘‘(A) In the case of a facility originally
placed in service before 2009, if—
‘‘The facility design net heat rate, Btu/kWh (HHV) is
equal to:
The applicable amount is:
For 1st 5 years
of such service
For 2d 5 years of
such service
Not more than 8,400 ............................................................
$.0060
$.0038
More than 8,400 but not more than 8,550 ..........................
$.0025
$.0010
More than 8,550 but not more than 8,750 ..........................
$.0010
$.0010.
‘‘(B) In the case of a facility originally
placed in service after 2008 and before 2013,
if—
‘‘The facility design net heat rate, Btu/kWh (HHV) is
equal to:
The applicable amount is:
For 1st 5 years
of such service
For 2d 5 years of
such service
Not more than 7,770 ............................................................
$.0105
$.0090
More than 7,770 but not more than 8,125 ..........................
$.0085
$.0068
More than 8,125 but not more than 8,350 ..........................
$.0075
$.0055.
‘‘(C) In the case of a facility originally
placed in service after 2012 and before 2017,
if—
‘‘The facility design net heat rate, Btu/kWh (HHV) is
equal to:
The applicable amount is:
For 1st 5 years
of such service
For 2d 5 years of
such service
Not more than 7,380 ............................................................
$.0140
$.01
More than 7,380 but not more than 7,720 ..........................
$.0120
$.0090.
‘‘(2) Where the design coal has a heat content
of not more than 9,000 Btu per pound: