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‘‘(I) an organization described in
section 501(c)(12)(C) and exempt from
tax under section 501(a),
‘‘(II) an organization described in
section 1381(a)(2)(C),
‘‘(III) a public utility (as defined
in section 136(c)(2)(B)), which is ex-
empt from income tax under this sub-
title,
‘‘(IV) any State or political sub-
division thereof, the District of Colum-
bia, any possession of the United
States, or any agency or instrumen-
tality of any of the foregoing, or
‘‘(V) any Indian tribal govern-
ment (within the meaning of section
7871) or any agency or instrumen-
tality thereof.
‘‘(B) TRANSFER OF CREDIT.—
‘‘(i) IN GENERAL.—A person described
in subparagraph (A)(ii) may transfer any
credit to which subparagraph (A)(i) applies
through an assignment to any other person
not described in subparagraph (A)(ii). Such
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transfer may be revoked only with the con-
sent of the Secretary.
‘‘(ii) REGULATIONS.—The Secretary
shall prescribe such regulations as necessary
to ensure that any credit described in clause
(i) is claimed once and not reassigned by
such other person.
‘‘(iii) TRANSFER PROCEEDS TREATED
AS ARISING FROM ESSENTIAL GOVERNMENT
FUNCTION.—Any proceeds derived by a per-
son described in subclause (III), (IV), or (V)
of subparagraph (A)(ii) from the transfer of
any credit under clause (i) shall be treated
as arising from the exercise of an essential
government function.
‘‘(C) USE OF CREDIT AS AN OFFSET.—Not-
withstanding any other provision of law, in the
case of a person described in subclause (I), (II),
or (V) of subparagraph (A)(ii), any credit to
which subparagraph (A)(i) applies may be ap-
plied by such person, to the extent provided by
the Secretary of Agriculture, as a prepayment of
any loan, debt, or other obligation the entity has
incurred under subchapter I of chapter 31 of title
7 of the Rural Electrification Act of 1936 (7
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U.S.C. 901 et seq.), as in effect on the date of the
enactment of the Energy Tax Incentives Act of
2003.
‘‘(D) CREDIT NOT INCOME.—Any transfer
under subparagraph (B) or use under subpara-
graph (C) of any credit to which subparagraph
(A)(i) applies shall not be treated as income for
purposes of section 501(c)(12).
‘‘(E) TREATMENT
OF
UNRELATED
PER-
SONS.—For purposes of subsection (a)(2)(B),
sales among and between persons described in
subparagraph (A)(ii) shall be treated as sales be-
tween unrelated parties.’’.
(b) CREDITS NOT REDUCED BY TAX-EXEMPT BONDS
OR CERTAIN OTHER SUBSIDIES.—Section 45(b)(3) (relat-
ing to credit reduced for grants, tax-exempt bonds, sub-
sidized energy financing, and other credits) is amended—
(1) by striking clause (ii),
(2) by redesignating clauses (iii) and (iv) as
clauses (ii) and (iii),
(3) by inserting ‘‘(other than any loan, debt, or
other obligation incurred under subchapter I of chap-
ter 31 of title 7 of the Rural Electrification Act of
1936 (7 U.S.C. 901 et seq.), as in effect on the date
of the enactment of the Energy Tax Incentives Act of
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2003)’’ after ‘‘project’’ in clause (ii) (as so redesig-
nated),
(4) by adding at the end the following new sen-
tence: ‘‘This paragraph shall not apply with respect
to 
any 
facility 
described 
in 
subsection
(c)(3)(B)(i)(II).’’, and
(5) by striking ‘‘TAX-EXEMPT
BONDS,’’ in the
heading and inserting ‘‘CERTAIN’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to electricity sold after the date of the
enactment of this Act, in taxable years ending after such
date.
SEC. 1905. CREDIT FOR ELECTRICITY PRODUCED FROM
SMALL IRRIGATION POWER.
(a) IN GENERAL.—Section 45(c)(1) (defining qualified
energy resources), as amended by this Act, is amended by
striking ‘‘and’’ at the end of subparagraph (F), by striking
the period at the end of subparagraph (G) and inserting
‘‘, and’’, and by adding at the end the following new sub-
paragraph:
‘‘(H) small irrigation power.’’.
(b) QUALIFIED FACILITY.—Section 45(c)(3) (relating
to qualified facility), as amended by this Act, is amended
by adding at the end the following new subparagraph:
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‘‘(G) SMALL
IRRIGATION
POWER
FACIL-
ITY.—In the case of a facility using small irriga-
tion power to produce electricity, the term ‘quali-
fied facility’ means any facility owned by the
taxpayer which is originally placed in service
after date of the enactment of this subparagraph
and before January 1, 2007.’’.
(c) DEFINITION.—Section 45(c), as amended by this
Act, is amended by redesignating paragraph (8) as para-
graph (9) and by inserting after paragraph (7) the fol-
lowing new paragraph:
‘‘(8) SMALL
IRRIGATION
POWER.—The term
‘small irrigation power’ means power—
‘‘(A) generated without any dam or im-
poundment of water through an irrigation sys-
tem canal or ditch, and
‘‘(B) the installed capacity of which is less
than 5 megawatts.’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to electricity sold after the date of the
enactment of this Act, in taxable years ending after such
date.