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‘‘(3) such component or combination of measures
reasonably can be expected to remain in use for at
least 5 years.
‘‘(e) CERTIFICATION.—
‘‘(1) METHODS OF CERTIFICATION.—
‘‘(A) 
COMPONENT-BASED
METHOD.—The
certification described in subsection (d) for any
component described in such subsection shall be
determined on the basis of applicable energy effi-
ciency ratings (including product labeling re-
quirements) for affected building envelope compo-
nents.
‘‘(B) PERFORMANCE-BASED METHOD.—
‘‘(i) IN
GENERAL.—The certification
described in subsection (d) for any combina-
tion of measures described in such sub-
section shall be—
‘‘(I) determined by comparing the
projected heating and cooling energy
usage for the dwelling to such usage for
such dwelling in its original condition,
and
‘‘(II) accompanied by a written
analysis documenting the proper ap-
plication of a permissible energy per-
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formance calculation method to the
specific circumstances of such dwelling.
‘‘(ii) 
COMPUTER
SOFTWARE.—Com-
puter software shall be used in support of a
performance-based 
method 
certification
under clause (i). Such software shall meet
procedures and methods for calculating en-
ergy and cost savings in regulations pro-
mulgated by the Secretary of Energy. Such
regulations on the specifications for software
and verification protocols shall be based on
the 2001 California Residential Alternative
Calculation Method Approval Manual.
‘‘(2) PROVIDER.—A certification described in
subsection (d) shall be provided by—
‘‘(A) in the case of the method described in
paragraph (1)(A), by a third party, such as a
local building regulatory authority, a utility, a
manufactured home production inspection pri-
mary inspection agency (IPIA), or a home en-
ergy rating organization, or
‘‘(B) in the case of the method described in
paragraph (1)(B), an individual recognized by
an organization designated by the Secretary for
such purposes.
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‘‘(3) FORM.—A certification described in sub-
section (d) shall be made in writing on forms which
specify in readily inspectable fashion the energy effi-
cient components and other measures and their re-
spective efficiency ratings, and which include a per-
manent label affixed to the electrical distribution
panel of the dwelling.
‘‘(4) REGULATIONS.—
‘‘(A) IN GENERAL.—In prescribing regula-
tions under this subsection for certification meth-
ods described in paragraph (1)(B), the Secretary,
after examining the requirements for energy con-
sultants and home energy ratings providers spec-
ified by the Mortgage Industry National Accredi-
tation Procedures for Home Energy Rating Sys-
tems, shall prescribe procedures for calculating
annual energy usage and cost reductions for
heating and cooling and for the reporting of the
results. Such regulations shall—
‘‘(i) provide that any calculation pro-
cedures be fuel neutral such that the same
energy efficiency measures allow a dwelling
to be eligible for the credit under this sec-
tion regardless of whether such dwelling uses
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a gas or oil furnace or boiler or an electric
heat pump, and
‘‘(ii) require that any computer soft-
ware allow for the printing of the Federal
tax forms necessary for the credit under this
section and for the printing of forms for
disclosure to the owner of the dwelling.
‘‘(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 consultants
and home energy raters specified by the Mort-
gage Industry National Accreditation Procedures
for Home Energy Rating Systems.
‘‘(f) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) DOLLAR AMOUNTS IN CASE OF JOINT OCCU-
PANCY.—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
for the qualified energy efficiency improvements
made during such calendar year by any of such
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individuals with respect to such dwelling unit
shall be determined by treating all of such indi-
viduals as 1 taxpayer whose taxable year is such
calendar year.
‘‘(B) There shall be allowable, with respect
to such expenditures to each of such individuals,
a credit under subsection (a) for the taxable year
in which such calendar year ends in an amount
which bears the same ratio to the amount deter-
mined under subparagraph (A) as the amount of
such expenditures made by such individual dur-
ing such calendar year bears to the aggregate of
such expenditures made by all of such individ-
uals 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 de-
fined in such section), such individual shall be treated
as having paid his tenant-stockholder’s proportionate
share (as defined in section 216(b)(3)) of the cost of
qualified energy efficiency improvements made by
such corporation.
‘‘(3) 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 the individual owns, such indi-
vidual shall be treated as having paid the indi-
vidual’s proportionate share of the cost of quali-
fied energy efficiency improvements made by
such association.
‘‘(B) CONDOMINIUM MANAGEMENT ASSOCIA-
TION.—For purposes of this paragraph, the term
‘condominium management association’ means
an organization which meets the requirements of
paragraph (1) of section 528(c) (other than sub-
paragraph (E) thereof) with respect to a condo-
minium project substantially all of the units of
which are used as residences.
‘‘(4) BUILDING
ENVELOPE
COMPONENT.—The
term ‘building envelope component’ means—
‘‘(A) insulation material or system which is
specifically and primarily designed to reduce the
heat loss or gain or a dwelling when installed in
or on such dwelling,
‘‘(B) exterior windows (including skylights),
and
‘‘(C) exterior doors.
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‘‘(5) 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 C.F.R. 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 subsection)
result from such expenditure shall be reduced by the amount
of the credit so allowed.
‘‘(h) APPLICATION OF SECTION.—Subsection (a) shall
apply to qualified energy efficiency improvements installed
during the period beginning on the date of the enactment
of this section and ending on December 31, 2006.’’.
(b) CREDIT ALLOWED AGAINST REGULAR TAX AND
ALTERNATIVE MINIMUM TAX.—
(1) IN GENERAL.—Section 25D(b), as added by
subsection (a), is amended by adding at the end the
following new paragraph:
‘‘(3) LIMITATION BASED ON AMOUNT OF TAX.—
The credit allowed under subsection (a) for the tax-
able year shall not exceed the excess of—
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‘‘(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
‘‘(B) the sum of the credits allowable under
this subpart (other than this section) and section
27 for the taxable year.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 25D(c), as added by subsection
(a), is amended by striking ‘‘section 26(a) for
such taxable year reduced by the sum of the cred-
its allowable under this subpart (other than this
section)’’ and inserting ‘‘subsection (b)(3)’’.
(B) Section 23(b)(4)(B), as amended by this
Act, is amended by striking ‘‘section 25C’’ and
inserting ‘‘sections 25C and 25D’’.
(C) Section 24(b)(3)(B), as amended by this
Act, is amended by striking ‘‘and 25C’’ and in-
serting ‘‘25C, and 25D’’.
(D) Section 25(e)(1)(C), as amended by this
Act, is amended by inserting ‘‘25D,’’ after
‘‘25C,’’.
(E) Section 25B(g)(2), as amended by this
Act, is amended by striking ‘‘23 and 25C’’ and
inserting ‘‘23, 25C, and 25D’’.
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(F) Section 26(a)(1), as amended by this
Act, is amended by striking ‘‘and 25C’’ and in-
serting ‘‘25C, and 25D’’.
(G) Section 904(h), as amended by this Act,
is amended by striking ‘‘and 25C’’ and inserting
‘‘25C, and 25D’’.
(H) Section 1400C(d), as amended by this
Act, is amended by striking ‘‘and 25C’’ and in-
serting ‘‘25C, and 25D’’.
(c) ADDITIONAL CONFORMING AMENDMENTS.—
(1) Section 23(c), as in effect for taxable years
beginning before January 1, 2004, and as amended
by this Act, is amended by inserting ‘‘, 25D,’’ after
‘‘sections 25C’’.
(2) Section 25(e)(1)(C), as in effect for taxable
years beginning before January 1, 2004, and as
amended by this Act, is amended by inserting ‘‘25D,’’
after ‘‘25C,’’.
(3) Subsection (a) of section 1016, as amended
by this Act, 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 add-
ing at the end the following new paragraph:
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‘‘(34) to the extent provided in section 25D(f), in
the case of amounts with respect to which a credit has
been allowed under section 25D.’’.
(4) Section 1400C(d), as in effect for taxable
years beginning before January 1, 2004, and as
amended by this Act, is amended by striking ‘‘section
25C’’ and inserting ‘‘sections 25C and 25D’’.
(5) The table of sections for subpart A of part IV
of subchapter A of chapter 1, as amended by this Act,
is amended by inserting after the item relating to sec-
tion 25C the following new item:
‘‘Sec. 25D. Energy efficiency improvements to existing homes.’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided by para-
graph (2), the amendments made by this section shall
apply to expenditures after December 31, 2002, in
taxable years ending after such date.
(2) SUBSECTION (b).—The amendments made by
subsection (b) shall apply to taxable years beginning
after December 31, 2003.
SEC. 2110. ALLOWANCE OF DEDUCTION FOR QUALIFIED
NEW OR RETROFITTED WATER SUBMETERING
DEVICES.
(a) IN GENERAL.—Part VI of subchapter B of chapter
1 (relating to itemized deductions for individuals and cor-
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porations), as amended by this Act, is amended by inserting
after section 179D the following new section:
‘‘SEC. 179E. DEDUCTION FOR QUALIFIED NEW OR RETRO-
FITTED WATER SUBMETERING DEVICES.
‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of a
taxpayer who is an eligible resupplier, there shall be allowed
as a deduction an amount equal to the cost of each qualified
water submetering device placed in service during the tax-
able year.
‘‘(b) MAXIMUM DEDUCTION.—The deduction allowed
by this section with respect to each qualified water sub-
metering device shall not exceed $30.
‘‘(c) ELIGIBLE RESUPPLIER.—For purposes of this
section, the term ‘eligible resupplier’ means any taxpayer
who purchases and installs qualified water submetering de-
vices in every unit in any multi-unit property.
‘‘(d) QUALIFIED WATER SUBMETERING DEVICE.—The
term ‘qualified water submetering device’ means any tan-
gible property to which section 168 applies if such property
is a submetering device (including ancillary equipment)—
‘‘(1) which is purchased and installed by the tax-
payer to enable consumers to manage their purchase
or use of water in response to water price and usage
signals, and
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‘‘(2) which permits reading of water price and
usage signals on at least a daily basis.
‘‘(e) PROPERTY USED OUTSIDE THE UNITED STATES
NOT QUALIFIED.—No deduction shall be allowed under sub-
section (a) with respect to property which is used predomi-
nantly outside the United States or with respect to the por-
tion of the cost of any property taken into account under
section 179.
‘‘(f) 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 property which
is allowed by subsection (a).
‘‘(2) ORDINARY INCOME RECAPTURE.—For pur-
poses of section 1245, the amount of the deduction al-
lowable under subsection (a) with respect to any
property that is of a character subject to the allow-
ance for depreciation shall be treated as a deduction
allowed for depreciation under section 167.
‘‘(g) TERMINATION.—This section shall not apply to
any property placed in service after December 31, 2007.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 263(a)(1), as amended by this Act, is
amended by striking ‘‘or’’ at the end of subparagraph
(J), by striking the period at the end of subparagraph
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(K) and inserting ‘‘, or’’, and by inserting after sub-
paragraph (K) the following new subparagraph:
‘‘(L) expenditures for which a deduction is
allowed under section 179E.’’.
(2) Section 312(k)(3)(B), as amended by this
Act, is amended by striking ‘‘or 179D’’ each place it
appears in the heading and text and inserting ‘‘,
179D, or 179E’’.
(3) Section 1016(a), as amended by this Act, is
amended by striking ‘‘and’’ at the end of paragraph
(34), by striking the period at the end of paragraph
(35) and inserting ‘‘, and’’, and by adding at the end
the following new paragraph:
‘‘(36) 
to 
the 
extent 
provided 
in 
section
179E(f)(1).’’.
(4) Section 1245(a), as amended by this Act, is
amended by inserting ‘‘179E,’’ after ‘‘179D,’’ 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, as amended by this
Act, is amended by inserting after the item relating
to section 179D the following new item:
‘‘Sec. 179E. Deduction for qualified new or retrofitted water sub-
metering devices.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to qualified water submetering devices
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placed in service after the date of the enactment of this Act,
in taxable years ending after such date.
SEC. 2111. THREE-YEAR APPLICABLE RECOVERY PERIOD
FOR DEPRECIATION OF QUALIFIED WATER
SUBMETERING DEVICES.
(a) IN
GENERAL.—Subparagraph (A) of section
168(e)(3) (relating to classification of property) is amended
by striking ‘‘and’’ at the end of clause (iii), by striking the
period at the end of clause (iv) and inserting ‘‘, and’’, and
by adding at the end the following new clause:
‘‘(v) any qualified water submetering
device.’’.
(b) DEFINITION OF QUALIFIED WATER SUBMETERING
DEVICE.—Section 168(i) (relating to definitions and spe-
cial rules), as amended by this Act, is amended by inserting
at the end the following new paragraph:
‘‘(16) QUALIFIED
WATER
SUBMETERING
DE-
VICE.—The term ‘qualified water submetering device’
means any qualified water submetering device (as de-
fined in section 179E(d)) which is placed in service
before January 1, 2008, by a taxpayer who is an eli-
gible resupplier (as defined in section 179E(c)).’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after the
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date of the enactment of this Act, in taxable years ending
after such date.
TITLE XXII—CLEAN COAL
INCENTIVES
Subtitle A—Credit for Emission Re-
ductions and Efficiency Improve-
ments in Existing Coal-Based
Electricity Generation Facilities
SEC. 2201. CREDIT FOR PRODUCTION FROM A QUALIFYING
CLEAN COAL TECHNOLOGY UNIT.
(a) CREDIT FOR PRODUCTION FROM A QUALIFYING
CLEAN COAL TECHNOLOGY UNIT.—Subpart D of part IV
of subchapter A of chapter 1 (relating to business related
credits), as amended by this Act, is amended by adding at
the end the following new section:
‘‘SEC. 45I. CREDIT FOR PRODUCTION FROM A QUALIFYING
CLEAN COAL TECHNOLOGY UNIT.
‘‘(a) GENERAL RULE.—For purposes of section 38, the
qualifying clean coal technology production credit of any
taxpayer for any taxable year is equal to the product of—
‘‘(1) the applicable amount of clean coal tech-
nology production credit, multiplied by
‘‘(2) the applicable percentage of the kilowatt
hours of electricity produced by the taxpayer during
such taxable year at a qualifying clean coal tech-
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nology unit, but only if such production occurs dur-
ing the 10-year period beginning on the date the unit
was returned to service after becoming a qualifying
clean coal technology unit.
‘‘(b) APPLICABLE AMOUNT.—
‘‘(1) IN GENERAL.—For purposes of this section,
the applicable amount of clean coal technology pro-
duction credit is equal to $0.0034.
‘‘(2) INFLATION
ADJUSTMENT.—For calendar
years after 2003, the applicable amount of clean coal
technology production credit shall be adjusted by mul-
tiplying such amount by the inflation adjustment fac-
tor for the calendar year in which the amount is ap-
plied. If any amount as increased under the pre-
ceding sentence is not a multiple of 0.01 cent, such
amount shall be rounded to the nearest multiple of
0.01 cent.
‘‘(c) APPLICABLE PERCENTAGE.—For purposes of this
section, with respect to any qualifying clean coal technology
unit, the applicable percentage is the percentage equal to
the ratio which the portion of the national megawatt capac-
ity limitation allocated to the taxpayer with respect to such
unit under subsection (e) bears to the total megawatt capac-
ity of such unit.
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‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) QUALIFYING
CLEAN
COAL
TECHNOLOGY
UNIT.—The term ‘qualifying clean coal technology
unit’ means a clean coal technology unit of the tax-
payer which—
‘‘(A) on the date of the enactment of this
section was a coal-based electricity generating
steam generator-turbine unit which was not a
clean coal technology unit,
‘‘(B) has a nameplate capacity rating of
not more than 300,000 kilowatts,
‘‘(C) becomes a clean coal technology unit
as the result of the retrofitting, repowering, or
replacement of the unit with clean coal tech-
nology during the 10-year period beginning on
the date of the enactment of this section,
‘‘(D) is not receiving nor is scheduled to re-
ceive funding under the Clean Coal Technology
Program, the Power Plant Improvement Initia-
tive, or the Clean Coal Power Initiative admin-
istered by the Secretary of Energy, and
‘‘(E) receives an allocation of a portion of
the national megawatt capacity limitation under
subsection (e).
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‘‘(2) CLEAN COAL TECHNOLOGY UNIT.—The term
‘clean coal technology unit’ means a unit which—
‘‘(A) uses clean coal technology, including
advanced pulverized coal or atmospheric fluid-
ized bed combustion, pressurized fluidized bed
combustion, integrated gasification combined
cycle, or any other technology for the production
of electricity,
‘‘(B) uses coal to produce 75 percent or
more of its thermal output as electricity,
‘‘(C) has a design net heat rate of at least
500 less than that of such unit as described in
paragraph (1)(A),
‘‘(D) has a maximum design net heat rate
of not more than 9,500, and
‘‘(E) meets the pollution control require-
ments of paragraph (3).
‘‘(3) POLLUTION CONTROL REQUIREMENTS.—
‘‘(A) IN GENERAL.—A unit meets the re-
quirements of this paragraph if—
‘‘(i) its emissions of sulfur dioxide, ni-
trogen oxide, or particulates meet the lower
of the emission levels for each such emission
specified in—
‘‘(I) subparagraph (B), or
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‘‘(II) the new source performance
standards of the Clean Air Act (42
U.S.C. 7411) which are in effect for the
category of source at the time of the
retrofitting, repowering, or replacement
of the unit, and
‘‘(ii) its emissions do not exceed any
relevant emission level specified by regula-
tion pursuant to the hazardous air pollut-
ant requirements of the Clean Air Act (42
U.S.C. 7412) in effect at the time of the ret-
rofitting, repowering, or replacement.
‘‘(B) SPECIFIC LEVELS.—The levels speci-
fied in this subparagraph are—
‘‘(i) in the case of sulfur dioxide emis-
sions, 50 percent of the sulfur dioxide emis-
sion levels specified in the new source per-
formance standards of the Clean Air Act
(42 U.S.C. 7411) in effect on the date of the
enactment of this section for the category of
source,
‘‘(ii) in the case of nitrogen oxide
emissions—
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‘‘(I) 0.1 pound per million Btu of
heat input if the unit is not a cyclone-
fired boiler, and
‘‘(II) if the unit is a cyclone-fired
boiler, 15 percent of the uncontrolled
nitrogen oxide emissions from such
boilers, and
‘‘(iii) in the case of particulate emis-
sions, 0.02 pound per million Btu of heat
input.
‘‘(4) DESIGN NET HEAT RATE.—The design net
heat rate with respect to any unit, measured in Btu
per kilowatt hour (HHV)—
‘‘(A) shall be based on the design annual
heat input to and the design annual net elec-
trical output from such unit (determined without
regard to such unit’s co-generation of steam),
‘‘(B) shall be adjusted for the heat content
of the design coal to be used by the unit if it is
less than 12,000 Btu per pound according to the
following formula:
Design net heat rate = Unit net heat rate X [l-
{((12,000-design coal heat content, Btu per pound)/
1,000) X 0.013}], and
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‘‘(C) shall be corrected for the site reference
conditions of—
‘‘(i) elevation above sea level of 500 feet,
‘‘(ii) air pressure of 14.4 pounds per square inch
absolute (psia),
‘‘(iii) temperature, dry bulb of 63°F,
‘‘(iv) temperature, wet bulb of 54°F, and
‘‘(v) relative humidity of 55 percent.
‘‘(5) HHV.—The term ‘HHV’ means higher
heating value.
‘‘(6) APPLICATION
OF
CERTAIN
RULES.—The
rules of paragraphs (3), (4), and (5) of section 45(d)
shall apply.
‘‘(7) INFLATION ADJUSTMENT FACTOR.—
‘‘(A) IN GENERAL.—The term ‘inflation ad-
justment factor’ means, with respect to a cal-
endar year, a fraction the numerator of which is
the GDP implicit price deflator for the preceding
calendar year and the denominator of which is
the GDP implicit price deflator for the calendar
year 2002.
‘‘(B) GDP IMPLICIT
PRICE
DEFLATOR.—
The term ‘GDP implicit price deflator’ means
the most recent revision of the implicit price
deflator for the gross domestic product as com-
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puted by the Department of Commerce before
March 15 of the calendar year.
‘‘(8) NONCOMPLIANCE WITH POLLUTION LAWS.—
For purposes of this section, a unit which is not in
compliance with the applicable State and Federal pol-
lution prevention, control, and permit requirements
for any period of time shall not be considered to be
a qualifying clean coal technology unit during such
period.
‘‘(e) NATIONAL LIMITATION ON THE AGGREGATE CA-
PACITY
OF
QUALIFYING
CLEAN
COAL
TECHNOLOGY
UNITS.—
‘‘(1) IN GENERAL.—For purposes of subsection
(d)(1)(E), the national megawatt capacity limitation
for qualifying clean coal technology units is 4,000
megawatts.
‘‘(2) ALLOCATION
OF
LIMITATION.—The Sec-
retary shall allocate the national megawatt capacity
limitation for qualifying clean coal technology units
in such manner as the Secretary may prescribe under
the regulations under paragraph (3).
‘‘(3) REGULATIONS.—Not later than 6 months
after the date of the enactment of this section, the Sec-
retary shall prescribe such regulations as may be nec-
essary or appropriate—
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‘‘(A) to carry out the purposes of this sub-
section,
‘‘(B) to limit the capacity of any qualifying
clean coal technology unit to which this section
applies so that the combined megawatt capacity
allocated to all such units under this subsection
when all such units are placed in service during
the 10-year period described in subsection
(d)(1)(C), does not exceed 4,000 megawatts,
‘‘(C) to provide a certification process under
which the Secretary, in consultation with the
Secretary of Energy, shall approve and allocate
the national megawatt capacity limitation—
‘‘(i) to encourage that units with the
highest thermal efficiencies, when adjusted
for the heat content of the design coal and
site reference conditions described in sub-
section (d)(4)(C), and environmental per-
formance be placed in service as soon as
possible,
‘‘(ii) to allocate capacity to taxpayers
that have a definite and credible plan for
placing into commercial operation a quali-
fying 
clean 
coal 
technology 
unit,
including—
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‘‘(I) a site,
‘‘(II) contractual commitments for
procurement and construction or, in
the case of regulated utilities, the
agreement of the State utility commis-
sion,
‘‘(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 determines are appropriate,
‘‘(D) to allocate the national megawatt ca-
pacity limitation to a portion of the capacity of
a qualifying clean coal technology unit if the
Secretary determines that such an allocation
would maximize the amount of efficient produc-
tion encouraged with the available tax credits,
‘‘(E) to set progress requirements and con-
ditional approvals so that capacity allocations
for clean coal technology units that become un-
likely to meet the necessary conditions for quali-
fying can be reallocated by the Secretary to other
clean coal technology units, and
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‘‘(F) to provide taxpayers with opportuni-
ties to correct administrative errors and omis-
sions with respect to allocations and record keep-
ing within a reasonable period after discovery,
taking into account the availability of regula-
tions and other administrative guidance from
the Secretary.’’.
(b) CREDIT TREATED AS BUSINESS CREDIT.—Section
38(b), as amended by this Act, is amended by striking
‘‘plus’’ at the end of paragraph (18), by striking the period
at the end of paragraph (19) and inserting ‘‘, plus’’, and
by adding at the end the following new paragraph:
‘‘(20) the qualifying clean coal technology pro-
duction credit determined under section 45I(a).’’.
(c) TRANSITIONAL RULE.—Section 39(d) (relating to
transitional rules), as amended by this Act, is amended by
adding at the end the following new paragraph:
‘‘(16) NO CARRYBACK OF SECTION 45I CREDIT
BEFORE EFFECTIVE DATE.—No portion of the unused
business credit for any taxable year which is attrib-
utable to the qualifying clean coal technology produc-
tion credit determined under section 45I may be car-
ried back to a taxable year ending on or before the
date of the enactment of section 45I.’’.
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(d) CLERICAL AMENDMENT.—The table of sections for
subpart D of part IV of subchapter A of chapter 1, as
amended by this Act, is amended by adding at the end the
following new item:
‘‘Sec. 45I. Credit for production from a qualifying clean coal technology unit.’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to production after the date of the enact-
ment of this Act, in taxable years ending after such date.
Subtitle 
B—Incentives 
for 
Early
Commercial Applications of Ad-
vanced Clean Coal Technologies
SEC. 2211. CREDIT FOR INVESTMENT IN QUALIFYING AD-
VANCED CLEAN COAL TECHNOLOGY.
(a) ALLOWANCE OF QUALIFYING ADVANCED CLEAN
COAL TECHNOLOGY UNIT CREDIT.—Section 46 (relating to
amount of credit) is amended by striking ‘‘and’’ at the end
of paragraph (2), by striking the period at the end of para-
graph (3) and inserting ‘‘, and’’, and by adding at the end
the following new paragraph:
‘‘(4) the qualifying advanced clean coal tech-
nology unit credit.’’.
(b) AMOUNT OF QUALIFYING ADVANCED CLEAN COAL
TECHNOLOGY UNIT CREDIT.—Subpart E of part IV of sub-
chapter A of chapter 1 (relating to rules for computing in-
vestment credit) is amended by inserting after section 48
the following new section:
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‘‘SEC. 48A. QUALIFYING ADVANCED CLEAN COAL TECH-
NOLOGY UNIT CREDIT.
‘‘(a) IN GENERAL.—For purposes of section 46, the
qualifying advanced clean coal technology unit credit for
any taxable year is an amount equal to 10 percent of the
applicable percentage of the qualified investment in a quali-
fying advanced clean coal technology unit for such taxable
year.
‘‘(b) QUALIFYING ADVANCED CLEAN COAL TECH-
NOLOGY UNIT.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a), the term ‘qualifying advanced clean coal tech-
nology unit’ means an advanced clean coal technology
unit of the taxpayer—
‘‘(A)(i)(I) in the case of a unit first placed
in service after the date of the enactment of this
section, the original use of which commences
with the taxpayer, or
‘‘(II) in the case of the retrofitting or
repowering of a unit first placed in service before
such date of enactment, the retrofitting or
repowering of which is completed by the tax-
payer after such date, or
‘‘(ii) which is acquired through purchase
(as defined by section 179(d)(2)),
‘‘(B) which is depreciable under section 167,
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‘‘(C) which has a useful life of not less than
4 years,
‘‘(D) which is located in the United States,
‘‘(E) which is not receiving nor is scheduled
to receive funding under the Clean Coal Tech-
nology Program, the Power Plant Improvement
Initiative, or the Clean Coal Power Initiative
administered by the Secretary of Energy,
‘‘(F) which is not a qualifying clean coal
technology unit, and
‘‘(G) which receives an allocation of a por-
tion of the national megawatt capacity limita-
tion under subsection (f).
‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—
For purposes of subparagraph (A) of paragraph (1),
in the case of a unit which—
‘‘(A) is originally placed in service by a
person, and
‘‘(B) is sold and leased back by such person,
or is leased to such person, within 3 months after
the date such unit was originally placed in serv-
ice, for a period of not less than 12 years,
such unit shall be treated as originally placed in serv-
ice not earlier than the date on which such unit is
used under the leaseback (or lease) referred to in sub-
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paragraph (B). The preceding sentence shall not
apply to any property if the lessee and lessor of such
property make an election under this sentence. Such
an election, once made, may be revoked only with the
consent of the Secretary.
‘‘(3) NONCOMPLIANCE WITH POLLUTION LAWS.—
For purposes of this subsection, a unit which is not
in compliance with the applicable State and Federal
pollution prevention, control, and permit require-
ments for any period of time shall not be considered
to be a qualifying advanced clean coal technology
unit during such period.
‘‘(c) APPLICABLE PERCENTAGE.—For purposes of this
section, with respect to any qualifying advanced clean coal
technology unit, the applicable percentage is the percentage
equal to the ratio which the portion of the national mega-
watt capacity limitation allocated to the taxpayer with re-
spect to such unit under subsection (f) bears to the total
megawatt capacity of such unit.
‘‘(d) ADVANCED CLEAN COAL TECHNOLOGY UNIT.—
For purposes of this section—
‘‘(1) IN
GENERAL.—The term ‘advanced clean
coal technology unit’ means a new, retrofit, or
repowering unit of the taxpayer which—
‘‘(A) is—