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SEC. 1410. OTHER TRANSACTIONS.
(a) IN GENERAL.—Section 646 of the Department of
Energy Organization Act (42 U.S.C. 7256) is amended by
adding at the end the following:
‘‘(g) OTHER TRANSACTIONS AUTHORITY.—(1) In ad-
dition to other authorities granted to the Secretary to enter
into procurement contracts, leases, cooperative agreements,
grants, and other similar arrangements, the Secretary may
enter into other transactions with public agencies, private
organizations, or persons on such terms as the Secretary
may deem appropriate in furtherance of basic, applied, and
advanced research functions now or hereafter vested in the
Secretary. Such other transactions shall not be subject to
the provisions of section 9 of the Federal Nonnuclear En-
ergy Research and Development Act of 1974 (42 U.S.C.
5908).
‘‘(2)(A) The Secretary of Energy shall ensure that—
‘‘(i) to the maximum extent practicable, no
transaction entered into under paragraph (1) pro-
vides for research that duplicates research being con-
ducted under existing programs carried out by the
Department of Energy; and
‘‘(ii) to the extent that the Secretary determines
practicable, the funds provided by the Government
under a transaction authorized by paragraph (1) do
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not exceed the total amount provided by other parties
to the transaction.
‘‘(B) A transaction authorized by paragraph (1) may
be used for a research project when the use of a standard
contract, grant, or cooperative agreement for such project
is not feasible or appropriate.
‘‘(3)(A) The Secretary shall not disclose any trade se-
cret or commercial or financial information submitted by
a non-Federal entity under paragraph (1) that is privileged
and confidential.
‘‘(B) The Secretary shall not disclose, for 5 years after
the date the information is received, any other information
submitted by a non-Federal entity under paragraph (1), in-
cluding any proposal, proposal abstract, document sup-
porting a proposal, business plan, or technical information
that is privileged and confidential.
‘‘(C) The Secretary may protect from disclosure, for
up to 5 years, any information developed pursuant to a
transaction under paragraph (1) that would be protected
from disclosure under section 552(b)(4) of title 5, United
States Code, if obtained from a person other than a Federal
agency.’’.
(b) IMPLEMENTATION.—Not later than 6 months after
the date of enactment of this section, the Department shall
establish guidelines for the use of other transactions.
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SEC. 1411. MOBILITY OF SCIENTIFIC AND TECHNICAL PER-
SONNEL.
Not later than 2 years after the enactment of this sec-
tion, the Secretary, acting through the Technology Transfer
Coordinator under section 1407, shall determine whether
each contractor operating a National Laboratory or single-
purpose research facility has policies and procedures that
do not create disincentives to the transfer of scientific and
technical personnel among the contractor-operated National
Laboratories or contractor-operated single-purpose research
facilities.
SEC. 1412. NATIONAL ACADEMY OF SCIENCES REPORT.
Within 90 days after the date of enactment of this Act,
the Secretary shall contract with the National Academy of
Sciences to—
(1) conduct a study on the obstacles to accel-
erating the innovation cycle for energy technology,
and
(2) report to the Congress recommendations for
shortening the cycle of research, development, and de-
ployment.
SEC. 1413. REPORT ON TECHNOLOGY READINESS AND BAR-
RIERS TO TECHNOLOGY TRANSFER.
(a) IN GENERAL.—The Secretary, acting through the
Technology Partnership Working Group and in consulta-
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tion with representatives of affected industries, universities,
and small business concerns, shall—
(1) assess the readiness for technology transfer of
energy technologies developed through projects funded
from appropriations authorized under subtitles A
through D of title XIV, and
(2) identify barriers to technology transfer and
cooperative research and development agreements be-
tween the Department or a National Laboratory and
a non-Federal person; and
(3) make recommendations for administrative or
legislative actions needed to reduce or eliminate such
barriers.
(b) REPORT.—The Secretary shall provide a report to
Congress and the President on activities carried out under
this section not later than 1 year after the date of enactment
of this section, and shall update such report on a biennial
basis, taking into account progress toward eliminating bar-
riers to technology transfer identified in previous reports
under this section.
SEC. 1414. UNITED STATES-MEXICO ENERGY TECHNOLOGY
COOPERATION.
(a) FINDING.—Congress finds that the economic and
energy security of the United States and Mexico is furthered
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through collaboration between the United States and Mexico
on research related to energy technologies.
(b) PROGRAM.—
(1) IN GENERAL.—The Secretary, acting through
the Assistant Secretary for Environmental Manage-
ment, shall establish a collaborative research, develop-
ment, and deployment program to promote energy ef-
ficient, environmentally sound economic development
along the United States-Mexico border to—
(A) mitigate hazardous waste;
(B) promote energy efficient materials proc-
essing technologies that minimize environmental
damage; and
(C) protect the public health.
(2) 
CONSULTATION.—The 
Secretary, 
acting
through the Assistant Secretary for Environmental
Management, shall consult with the Office of Energy
Efficiency and Renewable Energy in carrying out
paragraph (1)(B).
(c) PROGRAM MANAGEMENT.—The program under
subsection (b) shall be managed by the Department of En-
ergy Carlsbad Environmental Management Field Office.
(d) COST SHARING.—The cost of any project or activ-
ity carried out using funds provided under this section shall
be shared as provided in section 1403.
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(e) 
TECHNOLOGY
TRANSFER.—In 
carrying 
out
projects and activities under this section to mitigate haz-
ardous waste, the Secretary shall emphasize the transfer of
technology developed under the Environmental Management
Science Program of the Department of Energy.
(f) INTELLECTUAL PROPERTY.—In carrying out this
section, the Secretary shall comply with the requirements
of any agreement entered between the United States and
Mexico regarding intellectual property protection.
(g) AUTHORIZATION OF APPROPRIATIONS.—There are
authorized to be appropriated to carry out this section
$5,000,000 for fiscal year 2003 and $6,000,000 for each of
fiscal years 2004 through 2006, to remain available until
expended.
TITLE XV—PERSONNEL AND
TRAINING
SEC. 
1501. 
WORKFORCE 
TRENDS 
AND 
TRAINEESHIP
GRANTS.
(a) WORKFORCE TRENDS.—
(1) MONITORING.—The Secretary of Energy (in
this title referred to as the ‘‘Secretary’’), acting
through the Administrator of the Energy Information
Administration, in consultation with the Secretary of
Labor, shall monitor trends in the workforce of skilled
technical personnel supporting energy technology in-
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dustries, including renewable energy industries, com-
panies developing and commercializing devices to in-
crease energy-efficiency, the oil and gas industry, the
electric power generation industry (including the nu-
clear power industry), the coal industry, and other
industrial sectors as the Secretary may deem appro-
priate.
(2) ANNUAL
REPORTS.—The Administrator of
the Energy Information Administration shall include
statistics on energy industry workforce trends in the
annual reports of the Energy Information Adminis-
tration.
(3) SPECIAL REPORTS.—The Secretary shall re-
port to the appropriate committees of Congress when-
ever the Secretary determines that significant short-
falls of technical personnel in one or more energy in-
dustry segments are forecast or have occurred.
(b) TRAINEESHIP GRANTS FOR TECHNICALLY SKILLED
PERSONNEL.—
(1) GRANT PROGRAMS.—The Secretary shall es-
tablish grant programs in the appropriate offices of
the Department to enhance training of technically
skilled personnel for which a shortfall is determined
under subsection (a).
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(2) ELIGIBLE INSTITUTIONS.—As determined by
the Secretary to be appropriate to the particular
workforce shortfall, the Secretary shall make grants
under paragraph (1) to—
(A) an institution of higher education;
(B) a postsecondary educational institution
providing vocational and technical education
(within the meaning given those terms in section
3 of the Carl D. Perkins Vocational and Tech-
nical Education Act of 1998 (20 U.S.C. 2302));
(C) appropriate agencies of State, local, or
tribal governments; or
(D) joint labor and management training
organizations with State or federally recognized
apprenticeship programs and other employee-
based training organizations as the Secretary
considers appropriate.
(c) DEFINITION.—For purposes of this section, the
term ‘‘skilled technical personnel’’ means journey and ap-
prentice level workers who are enrolled in or have completed
a State or federally recognized apprenticeship program and
other skilled workers in energy technology industries.
(d) AUTHORIZATION
OF
APPROPRIATIONS.—From
amounts authorized under section 1241(c), there are author-
ized to be appropriated to the Secretary for activities under
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this section such sums as may be necessary for each fiscal
year.
SEC. 1502. POSTDOCTORAL AND SENIOR RESEARCH FEL-
LOWSHIPS IN ENERGY RESEARCH.
(a) POSTDOCTORAL FELLOWSHIPS.—The Secretary
shall establish a program of fellowships to encourage out-
standing young scientists and engineers to pursue
postdoctoral research appointments in energy research and
development at institutions of higher education of their
choice. In establishing a program under this subsection, the
Secretary may enter into appropriate arrangements with
the National Academy of Sciences to help administer the
program.
(b) DISTINGUISHED
SENIOR
RESEARCH
FELLOW-
SHIPS.—The Secretary shall establish a program of fellow-
ships to allow outstanding senior researchers in energy re-
search and development and their research groups to explore
research and development topics of their choosing for a fixed
period of time. Awards under this program shall be made
on the basis of past scientific or technical accomplishment
and promise for continued accomplishment during the pe-
riod of support, which shall not be less than 3 years.
(c) AUTHORIZATION
OF
APPROPRIATIONS.—From
amounts authorized under section 1241(c), there are author-
ized to be appropriated to the Secretary for activities under
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this section such sums as may be necessary for each fiscal
year.
SEC. 1503. TRAINING GUIDELINES FOR ELECTRIC ENERGY
INDUSTRY PERSONNEL.
(a) MODEL GUIDELINES.—The Secretary shall, in co-
operation with electric generation, transmission, and dis-
tribution companies and recognized representatives of em-
ployees of those entities, develop model employee training
guidelines to support electric supply system reliability and
safety.
(b) CONTENT OF GUIDELINES.—The guidelines under
this section shall include—
(1) requirements for worker training, com-
petency, and certification, developed using criteria set
forth by the Utility Industry Group recognized by the
National Skill Standards Board; and
(2) consolidation of existing guidelines on the
construction, operation, maintenance, and inspection
of electric supply generation, transmission and dis-
tribution facilities such as those established by the
National Electric Safety Code and other industry
consensus standards.
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SEC. 1504. NATIONAL CENTER ON ENERGY MANAGEMENT
AND BUILDING TECHNOLOGIES.
The Secretary shall establish a National Center on En-
ergy Management and Building Technologies, to carry out
research, education, and training activities to facilitate the
improvement of energy efficiency and indoor air quality in
industrial, commercial and residential buildings. The Na-
tional Center shall be established in cooperation with—
(1) recognized representatives of employees in the
heating, ventilation, and air-conditioning industry;
(2) contractors that install and maintain heat-
ing, ventilation and air-conditioning systems and
equipment;
(3) manufacturers of heating, ventilation and
air-conditioning systems and equipment;
(4) representatives of the advanced building en-
velope industry, including design, windows, lighting,
and insulation industries; and
(5) other entities as appropriate.
SEC. 1505. IMPROVED ACCESS TO ENERGY-RELATED SCI-
ENTIFIC AND TECHNICAL CAREERS.
(a) DEPARTMENT OF ENERGY SCIENCE EDUCATION
PROGRAMS.—Section 3164 of the Department of Energy
Science Education Enhancement Act (42 U.S.C. 7381a) is
amended by adding at the end the following:
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‘‘(c) PROGRAMS
FOR WOMEN
AND MINORITY STU-
DENTS.—In carrying out a program under subsection (a),
the Secretary shall give priority to activities that are de-
signed to encourage women and minority students to pursue
scientific and technical careers.’’.
(b) PARTNERSHIPS WITH HISTORICALLY BLACK COL-
LEGES AND UNIVERSITIES, HISPANIC-SERVICING INSTITU-
TIONS, AND TRIBAL COLLEGES.—The Department of En-
ergy Science Education Enhancement Act (42 U.S.C. 7381
et seq.) is amended—
(1) by redesignating sections 3167 and 3168 as
sections 3168 and 3169, respectively; and
(2) by inserting after section 3166 the following:
‘‘SEC. 3167. PARTNERSHIPS WITH HISTORICALLY BLACK
COLLEGES 
AND 
UNIVERSITIES, 
HISPANIC-
SERVING INSTITUTIONS, AND TRIBAL COL-
LEGES.
‘‘(a) DEFINITIONS.—In this section:
‘‘(1) HISPANIC-SERVING INSTITUTION.—The term
‘Hispanic-serving institution’ has the meaning given
the term in section 502(a) of the Higher Education
Act of 1965 (20 U.S.C. 1101a(a)).
‘‘(2) HISTORICALLY BLACK COLLEGE OR UNIVER-
SITY.—The term ‘historically Black college or univer-
sity’ has the meaning given the term ‘part B institu-
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‘‘(2) ACTIVITIES.—An activity under paragraph
(1) may include—
‘‘(A) collaborative research;
‘‘(B) a transfer of equipment;
‘‘(C) training of personnel at a National
Laboratory or science facility; and
‘‘(D) a mentoring activity by personnel at
a National Laboratory or science facility.
‘‘(c) REPORT.—Not later than 2 years after the date
of enactment of this section, the Secretary shall submit to
the Committee on Science of the House of Representatives
and the Committee on Energy and Natural Resources of
the Senate a report on the activities carried out under this
section.’’.
SEC. 1506. NATIONAL POWER PLANT OPERATIONS TECH-
NOLOGY AND EDUCATION CENTER.
(a) ESTABLISHMENT.—The Secretary shall establish a
National Power Plant Operations Technology and Edu-
cation Center (the ‘‘Center’’), to address the need for train-
ing and educating certified operators for electric power gen-
eration plants.
(b) ROLE.—The Center shall provide both training
and continuing education relating to electric power genera-
tion plant technologies and operations. The Center shall
conduct training and education activities on site and
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through Internet-based information technologies that allow
for learning at remote sites.
(c) CRITERIA
FOR COMPETITIVE SELECTION.—The
Secretary shall establish the Center at an institution of
higher education with expertise in plant technology and op-
eration and that can provide on-site as well as Internet-
based training.
SEC. 1507. FEDERAL MINE INSPECTORS.
In light of projected retirements of Federal mine in-
spectors and the need for additional personnel, the Sec-
retary of Labor shall hire, train, and deploy such addi-
tional skilled mine inspectors (particularly inspectors with
practical experience as a practical mining engineer) as nec-
essary to ensure the availability of skilled and experienced
individuals and to maintain the number of Federal mine
inspectors at or above the levels authorized by law or estab-
lished by regulation.
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DIVISION F—TECHNOLOGY
ASSESSMENT AND STUDIES
TITLE XVI—TECHNOLOGY
ASSESSMENT
SEC. 1601. NATIONAL SCIENCE AND TECHNOLOGY ASSESS-
MENT SERVICE.
The National Science and Technology Policy, Organi-
zation, and Priorities Act of 1976 (42 U.S.C. 6601 et seq.)
is amended by adding at the end the following:
‘‘TITLE VII—NATIONAL SCIENCE
AND 
TECHNOLOGY 
ASSESS-
MENT SERVICE
‘‘SEC. 701. ESTABLISHMENT.
‘‘There is hereby created a Science and Technology As-
sessment Service (hereinafter referred to as the ‘Service’),
which shall be within and responsible to the legislative
branch of the Government.
‘‘SEC. 702. COMPOSITION.
‘‘The Service shall consist of a Science and Technology
Board (hereinafter referred to as the ‘Board’) which shall
formulate and promulgate the policies of the Service, and
a Director who shall carry out such policies and administer
the operations of the Service.
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‘‘SEC. 703. FUNCTIONS AND DUTIES.
‘‘The Service shall coordinate and develop information
for Congress relating to the uses and application of tech-
nology to address current national science and technology
policy issues. In developing such technical assessments for
Congress, the Service shall utilize, to the extent practicable,
experts selected in coordination with the National Research
Council.
‘‘SEC. 704. INITIATION OF ACTIVITIES.
‘‘Science and technology assessment activities under-
taken by the Service may be initiated upon the request of—
‘‘(1) the Chairman of any standing, special, or
select committee of either House of the Congress, or of
any joint committee of the Congress, acting for him-
self or at the request of the ranking minority member
or a majority of the committee members;
‘‘(2) the Board; or
‘‘(3) the Director.
‘‘SEC. 705. ADMINISTRATION AND SUPPORT.
‘‘The Director of the Science and Technology Assess-
ment Service shall be appointed by the Board and shall
serve for a term of 6 years unless sooner removed by the
Board. The Director shall receive basic pay at the rate pro-
vided for level III of the Executive Schedule under section
5314 of title 5, United States Code. The Director shall con-
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tract for administrative support from the Library of Con-
gress.
‘‘SEC. 706. AUTHORITY.
‘‘The Service shall have the authority, within the lim-
its of available appropriations, to do all things necessary
to carry out the provisions of this section, including, but
without being limited to, the authority to—
‘‘(1) make full use of competent personnel and
organizations outside the Office, public or private,
and form special ad hoc task forces or make other ar-
rangements when appropriate;
‘‘(2) enter into contracts or other arrangements
as may be necessary for the conduct of the work of the
Office with any agency or instrumentality of the
United States, with any State, territory, or possession
or any political subdivision thereof, or with any per-
son, firm, association, corporation, or educational in-
stitution, with or without reimbursement, without
performance or other bonds, and without regard to
section 3709 of the Revised Statutes (41 U.S.C. 51);
‘‘(3) accept and utilize the services of voluntary
and uncompensated personnel necessary for the con-
duct of the work of the Service and provide transpor-
tation and subsistence as authorized by section 5703
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of title 5, United States Code, for persons serving
without compensation; and
‘‘(4) prescribe such rules and regulations as it
deems necessary governing the operation and organi-
zation of the Service.
‘‘SEC. 707. BOARD.
‘‘The Board shall consist of 13 members as follows—
‘‘(1) six Members of the Senate, appointed by the
President pro tempore of the Senate, three from the
majority party and three from the minority party;
‘‘(2) six Members of the House of Representatives
appointed by the Speaker of the House of Representa-
tives, three from the majority party and three from
the minority party; and
‘‘(3) the Director, who shall not be a voting
member.
‘‘SEC. 708. REPORT TO CONGRESS.
‘‘The Service shall submit to the Congress an annual
report which shall include, but not be limited to, an evalua-
tion of technology assessment techniques and identification,
insofar as may be feasible, of technological areas and pro-
grams requiring future analysis. The annual report shall
be submitted not later than March 15 of each year.
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‘‘SEC. 709. AUTHORIZATION OF APPROPRIATIONS.
‘‘There are authorized to be appropriated to the Service
such sums as are necessary to fulfill the requirements of
this title.’’.
TITLE XVII—STUDIES
SEC. 1701. REGULATORY REVIEWS.
(a) REGULATORY REVIEWS.—Not later than 1 year
after the date of enactment of this section and every 5 years
thereafter, each Federal agency shall review relevant regula-
tions and standards to identify—
(1) existing regulations and standards that act
as barriers to—
(A) market entry for emerging energy tech-
nologies (including fuel cells, combined heat and
power, distributed power generation, and small-
scale renewable energy), and
(B) market development and expansion for
existing energy technologies (including combined
heat and power, small-scale renewable energy,
geothermal heat pump technology, and energy re-
covery in industrial processes), and
(2) actions the agency is taking or could take
to—
(A) remove barriers to market entry for
emerging energy technologies and to market ex-
pansion for existing technologies,
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(B) increase energy efficiency and conserva-
tion, or
(C) encourage the use of new and existing
processes to meet energy and environmental
goals.
(b) REPORT TO CONGRESS.—Not later than 18 months
after the date of enactment of this section, and every 5 years
thereafter, the Director of the Office of Science and Tech-
nology Policy shall report to the Congress on the results of
the agency reviews conducted under subsection (a).
(c) CONTENTS OF THE REPORT.—The report shall—
(1) identify all regulatory barriers to—
(A) the development and commercialization
of emerging energy technologies and processes,
and
(B) the further development and expansion
of existing energy conservation technologies and
processes,
(2) actions taken, or proposed to be taken, to re-
move such barriers, and
(3) recommendations for changes in laws or reg-
ulations that may be needed to—
(A) expedite the siting and development of
energy production and distribution facilities,
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(B) encourage the adoption of energy effi-
ciency and process improvements,
(C) facilitate the expanded use of existing
energy conservation technologies, and
(D) reduce the environmental impacts of en-
ergy facilities and processes through transparent
and flexible compliance methods.
SEC. 1702. ASSESSMENT OF DEPENDENCE OF STATE OF HA-
WAII ON OIL.
(a) ASSESSMENT.—The Secretary of Energy shall as-
sess the economic implications of the dependence of the State
of Hawaii on oil as the principal source of energy for the
State, including—
(1) the short- and long-term prospects for crude
oil supply disruption and price volatility and poten-
tial impacts on the economy of Hawaii;
(2) the economic relationship between oil-fired
generation of electricity from residual fuel and refined
petroleum products consumed for ground, marine,
and air transportation;
(3) the technical and economic feasibility of in-
creasing the contribution of renewable energy re-
sources for generation of electricity, on an island-by-
island basis, including—
(A) siting and facility configuration;
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(B) environmental, operational, and safety
considerations;
(C) the availability of technology;
(D) effects on the utility system, including
reliability;
(E) infrastructure and transport require-
ments;
(F) community support; and
(G) other factors affecting the economic im-
pact of such an increase and any effect on the
economic relationship described in paragraph
(2);
(4) the technical and economic feasibility of
using liquefied natural gas to displace residual fuel
oil for electric generation, including neighbor island
opportunities, and the effect of such displacement on
the economic relationship described in paragraph (2),
including—
(A) the availability of supply;
(B) siting and facility configuration for on-
shore and offshore liquefied natural gas receiving
terminals;
(C) the factors described in subparagraphs
(B) through (F) of paragraph (3); and
(D) other economic factors;
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(5) the technical and economic feasibility of
using renewable energy sources (including hydrogen)
for ground, marine, and air transportation energy
applications to displace the use of refined petroleum
products, on an island-by-island basis, and the eco-
nomic impact of such displacement on the relation-
ship described in paragraph (2); and
(6) an island-by-island approach to—
(A) the development of hydrogen from re-
newable resources; and
(B) the application of hydrogen to the en-
ergy needs of Hawaii.
(b) CONTRACTING AUTHORITY.—The Secretary may
carry out the assessment under subsection (a) directly or,
in whole or in part, through one or more contracts with
qualified public or private entities.
(c) REPORT.—Not later than 300 days after the date
of enactment of this Act, the Secretary shall prepare, in
consultation with agencies of the State of Hawaii and other
stakeholders, as appropriate, and submit to Congress, a re-
port detailing the findings, conclusions, and recommenda-
tions resulting from the assessment.
(d) AUTHORIZATION OF APPROPRIATIONS.—There are
authorized to be appropriated such sums as are necessary
to carry out this section.
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SEC. 1703. STUDY OF SITING AN ELECTRIC TRANSMISSION
SYSTEM ON AMTRAK RIGHT-OF-WAY.
(a) STUDY.—The Secretary of Energy shall contract
with Amtrak to conduct a study of the feasibility of building
and operating a new electric transmission system on the
Amtrak right-of-way in the Northeast Corridor.
(b) SCOPE OF THE STUDY.—The study shall focus on
siting the new system on the Amtrak right-of-way within
the Northeast Corridor between Washington, D.C., and New
Rochelle, New York, including the Amtrak right-of-way be-
tween Philadelphia, Pennsylvania and Harrisburg, Penn-
sylvania.
(c) CONTENTS
OF
THE STUDY.—The study shall
consider—
(1) alternative geographic configuration of a new
electronic transmission system on the Amtrak right-
of-way;
(2) alternative technologies for the system;
(3) the estimated costs of building and operating
each alternative;
(4) alternative means of financing the system;
(5) the environmental risks and benefits of build-
ing and operating each alternative as well as environ-
mental risks and benefits of building and operating
the system on the Northeast Corridor rather than at
other locations;
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(6) engineering and technological obstacles to
building and operating each alternative; and
(7) the extent to which each alternative would
enhance the reliability of the electric transmission
grid and enhance competition in the sale of electric
energy at wholesale within the Northeast Corridor.
(d) RECOMMENDATIONS.—The study shall recommend
the optimal geographic configuration, the optimal tech-
nology, the optimal engineering design, and the optimal
means of financing for the new system from among the al-
ternatives considered.
(e) REPORT.—The Secretary of Energy shall submit
the completed study to the Committee on Energy and Nat-
ural Resources of the United States Senate and the Com-
mittee on Energy and Commerce of the House of Represent-
atives not later than 270 days after the date of enactment
of this section.
(f) DEFINITIONS.—For purposes of this section—
(1) the term ‘‘Amtrak’’ means the National Rail-
road Passenger Corporation established under chapter
243 of title 49, United States Code; and
(2) the term ‘‘Northeast Corridor’’ shall have the
meaning given such term under section 24102(7) of
title 49, United States Code.
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SEC. 1704. UPDATING OF INSULAR AREA RENEWABLE EN-
ERGY AND ENERGY EFFICIENCY PLANS.
Section 604 of Public Law 96–597 (48 U.S.C. 1492)
is amended—
(1) in subsection (a) at the end of paragraph (4)
by striking ‘‘resources.’’ and inserting ‘‘resources; and
‘‘(5) the development of renewable energy and en-
ergy efficiency technologies since publication of the
1982 Territorial Energy Assessment prepared under
subsection (c) reveals the need to reassess the state of
energy production, consumption, efficiency, infra-
structure, reliance on imported energy, and potential
of the indigenous renewable energy resources and en-
ergy efficiency in regard to the insular areas.’’; and
(2) by adding at the end of subsection (e) ‘‘The
Secretary of Energy, in consultation with the Sec-
retary of the Interior and the chief executive officer of
each insular area, shall update the plans required
under subsection (c) and draft long-term energy plans
for each insular area that will reduce, to the extent
feasible, the reliance of the insular area on energy im-
ports by the year 2010, and maximize, to the extent
feasible, use of renewable energy resources and energy
efficiency opportunities. Not later than December 31,
2002, the Secretary of Energy shall submit the up-
dated plans to Congress.’’.
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SEC. 1705. CONSUMER ENERGY COMMISSION.
(a) ESTABLISHMENT OF COMMISSION.—There is estab-
lished a commission to be known as the ‘‘Consumer Energy
Commission’’.
(b) MEMBERSHIP.—
(1) IN GENERAL.—The Commission shall be com-
prised of 11 members who shall be appointed within
30 days from the date of enactment of this section and
who shall serve for the life of the Commission.
(2) APPOINTMENTS IN THE SENATE AND THE
HOUSE.—The Majority Leader and the Minority
Leader of the Senate and the Speaker and Minority
Leader of the House of Representatives shall each ap-
point 2 members—
(A) one of whom shall represent consumer
groups focusing on energy issues; and
(B) one of whom shall represent the energy
industry.
(3) APPOINTMENTS
BY
THE
PRESIDENT.—The
President shall appoint three members—
(A) one of whom shall represent consumer
groups focusing on energy issues;
(B) one of whom shall represent the energy
industry; and
(C) one of whom shall represent the Depart-
ment of Energy.
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(c) INITIAL MEETING.—Not later than 60 days after
the date of enactment of this Act, the Commission shall hold
the first meeting of the Commission regardless of the num-
ber of members that have been appointed and shall select
a Chairperson and Vice Chairperson from among the mem-
bers of the Commission.
(d) ADMINISTRATIVE EXPENSES.—Members of the
Commission shall serve without compensation, except for
per diem and travel expenses which shall be reimbursed,
and the Department of Energy shall pay expenses as nec-
essary to carry out this section, with the expenses not to
exceed $400,000.
(e) STUDIES.—The Commission shall conduct a na-
tionwide study of significant price spikes since 1990 in
major United States consumer energy products, including
electricity, gasoline, home heating oil, natural gas and pro-
pane with a focus on their causes including insufficient in-
ventories, supply disruptions, refinery capacity limits, in-
sufficient infrastructure, regulatory failures, demand
growth, reliance on imported supplies, insufficient avail-
ability of alternative energy sources, abuse of market power,
market concentration and any other relevant factors.
(f) REPORT.—Not later than 180 days after the date
of the first meeting of the Commission, the Commission
shall submit to Congress a report that contains the findings
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and conclusions of the Commission and any recommenda-
tions for legislation, administrative actions, and voluntary
actions by industry and consumers to protect consumers
and small businesses from future price spikes in consumer
energy products.
(g) CONSULTATION.—The Commission shall consult
with the Federal Trade Commission, the Federal Energy
Regulatory Commission, the Department of Energy and
other Federal and State agencies as appropriate.
(h) SUNSET.—The Commission shall terminate within
30 days after the submission of the report to Congress.
SEC. 1706. STUDY OF NATURAL GAS AND OTHER ENERGY
TRANSMISSION 
INFRASTRUCTURE 
ACROSS
THE GREAT LAKES.
(a) DEFINITIONS.—In this section:
(1) GREAT
LAKE.—The term ‘‘Great Lake’’
means Lake Erie, Lake Huron (including Lake Saint
Clair), Lake Michigan, Lake Ontario (including the
Saint Lawrence River from Lake Ontario to the 45th
parallel of latitude), and Lake Superior.
(2) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Energy.
(b) STUDY.—
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(1) IN GENERAL.—The Secretary, in consultation
with representatives of appropriate Federal and State
agencies, shall—
(A) conduct a study of—
(i) the location and extent of antici-
pated growth of natural gas and other en-
ergy transmission infrastructure proposed
to be constructed across the Great Lakes;
and
(ii) the environmental impacts of any
natural gas or other energy transmission
infrastructure proposed to be constructed
across the Great Lakes; and
(B) make recommendations for minimizing
the environmental impact of pipelines and other
energy transmission infrastructure on the Great
Lakes ecosystem.
(2) ADVISORY COMMITTEE.—Not later than 30
days after the date of enactment of this Act, the Sec-
retary shall enter into an agreement with the Na-
tional Academy of Sciences to establish an advisory
committee to ensure that the study is complete, objec-
tive, and of good quality.
(c) REPORT.—Not later than 1 year after the date of
enactment of this Act, the Secretary shall submit to Con-
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gress a report that describes the findings and recommenda-
tions resulting from the study under subsection (b).
SEC. 1707. NATIONAL ACADEMY OF SCIENCES STUDY OF
PROCEDURES FOR SELECTION AND ASSESS-
MENT OF CERTAIN ROUTES FOR SHIPMENT
OF SPENT NUCLEAR FUEL FROM RESEARCH
NUCLEAR REACTORS.
(a) IN GENERAL.—The Secretary of Transportation
shall enter into an agreement with the National Academy
of Sciences under which agreement the National Academy
of Sciences shall conduct a study of the procedures by which
the Department of Energy, together with the Department
of Transportation and the Nuclear Regulatory Commission,
selects routes for the shipment of spent nuclear fuel from
research nuclear reactors between or among existing De-
partment of Energy facilities currently licensed to accept
such spent nuclear fuel.
(b) ELEMENTS OF STUDY.—In conducting the study
under subsection (a), the National Academy of Sciences
shall analyze the manner in which the Department of
Energy—
(1) selects potential routes for the shipment of
spent nuclear fuel from research nuclear reactors be-
tween or among existing Department facilities cur-
rently licensed to accept such spent nuclear fuel;
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(2) selects such a route for a specific shipment of
such spent nuclear fuel; and
(3) conducts assessments of the risks associated
with shipments of such spent nuclear fuel along such
a route.
(c) CONSIDERATIONS
REGARDING
ROUTE
SELEC-
TION.—The analysis under subsection (b) shall include a
consideration whether, and to what extent, the procedures
analyzed for purposes of that subsection take into account
the following:
(1) The proximity of the routes under consider-
ation to major population centers and the risks asso-
ciated with shipments of spent nuclear fuel from re-
search nuclear reactors through densely populated
areas.
(2) Current traffic and accident data with re-
spect to the routes under consideration.
(3) The quality of the roads comprising the
routes under consideration.
(4) Emergency response capabilities along the
routes under consideration.
(5) The proximity of the routes under consider-
ation to places or venues (including sports stadiums,
convention centers, concert halls and theaters, and
other venues) where large numbers of people gather.
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(d) RECOMMENDATIONS.—In conducting the study
under subsection (a), the National Academy of Sciences
shall also make such recommendations regarding the mat-
ters studied as the National Academy of Sciences considers
appropriate.
(e) DEADLINE
FOR
DISPERSAL
OF
FUNDS
FOR
STUDY.—The Secretary shall disperse to the National Acad-
emy of Sciences the funds for the cost of the study required
by subsection (a) not later than 30 days after the date of
the enactment of this Act.
(f) REPORT ON RESULTS OF STUDY.—Not later than
6 months after the date of the dispersal of funds under sub-
section (e), the National Academy of Sciences shall submit
to the appropriate committees of Congress a report on the
study conducted under subsection (a), including the rec-
ommendations required by subsection (d).
(g) APPROPRIATE COMMITTEES OF CONGRESS DE-
FINED.—In this section, the term ‘‘appropriate committees
of Congress’’ means—
(1) the Committees on Commerce, Science, and
Transportation, Energy and Natural Resources, and
Environment and Public Works of the Senate; and
(2) the Committee on Energy and Commerce of
the House of Representatives.
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SEC. 1708. REPORT ON ENERGY SAVINGS AND WATER USE.
(a) REPORT.—The Secretary of Energy shall conduct
a study of opportunities to reduce energy use by cost-effec-
tive improvements in the efficiency of municipal water and
wastewater treatment and use, including water pumps, mo-
tors, and delivery systems; purification, conveyance and
distribution; upgrading of aging water infrastructure, and
improved methods for leakage monitoring, measuring, and
reporting; and public education.
(b) SUBMISSION OF REPORT.—The Secretary of En-
ergy shall submit a report on the results of the study, in-
cluding any recommendations for implementation of meas-
ures and estimates of costs and resource savings, no later
than 2 years from the date of enactment of this section.
(c) AUTHORIZATION.—There is hereby authorized to be
appropriated such sums as may be necessary to carry out
the purposes of this section.
SEC. 1709. REPORT ON RESEARCH ON HYDROGEN PRODUC-
TION AND USE.
Not later than 120 days after the date of enactment
of this Act, the Secretary of Energy shall submit to Congress
a report that identifies current or potential research
projects at Department of Energy nuclear facilities relating
to the production or use of hydrogen in fuel cell development
or any other method or process enhancing alternative en-
ergy production technologies.
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DIVISION G—ENERGY
INFRASTRUCTURE SECURITY
TITLE XVIII—CRITICAL ENERGY
INFRASTRUCTURE
Subtitle A—Department of Energy
Programs
SEC. 1801. DEFINITIONS.
In this title:
(1) CRITICAL ENERGY INFRASTRUCTURE.—
(A) IN GENERAL.—The term ‘‘critical en-
ergy infrastructure’’ means a physical or cyber-
based system or service for—
(i) the generation, transmission or dis-
tribution of electric energy; or
(ii) the production, refining, or storage
of petroleum, natural gas, or petroleum
product—
the incapacity or destruction of which would
have a debilitating impact on the defense or eco-
nomic security of the United States.
(B) EXCLUSION.—The term shall not in-
clude a facility that is licensed by the Nuclear
Regulatory Commission under section 103 or
104b. of the Atomic Energy Act of 1954 (42
U.S.C. 2133 and 2134(b)).
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(2) DEPARTMENT; NATIONAL LABORATORY; SEC-
RETARY.—The terms ‘‘Department’’, ‘‘National Lab-
oratory’’, and ‘‘Secretary’’ have the meaning given
such terms in section 1203.
SEC. 1802. ROLE OF THE DEPARTMENT OF ENERGY.
Section 102 of the Department of Energy Organization
Act (42 U.S.C. 7112) is amended by adding at the end the
following:
‘‘(20) To ensure the safety, reliability, and secu-
rity of the Nation’s energy infrastructure, and to re-
spond to any threat to or disruption of such infra-
structure, through activities including—
‘‘(A) research and development;
‘‘(B) financial assistance, technical assist-
ance, and cooperative activities with States, in-
dustry, and other interested parties; and
‘‘(C) education and public outreach activi-
ties.’’.
SEC. 1803. CRITICAL ENERGY INFRASTRUCTURE PRO-
GRAMS.
(a) PROGRAMS.—In addition to the authorities other-
wise provided by law (including section 1261), the Sec-
retary is authorized to establish programs of financial, tech-
nical, or administrative assistance to—
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(1) enhance the security of critical energy infra-
structure in the United States;
(2) develop and disseminate, in cooperation with
industry, best practices for critical energy infrastruc-
ture assurance; and
(3) protect against, mitigate the effect of, and
improve the ability to recover from disruptive inci-
dents affecting critical energy infrastructure.
(b) REQUIREMENTS.—A program established under
this section shall—
(1) be undertaken in consultation with the advi-
sory committee established under section 1804;
(2) have available to it the scientific and tech-
nical resources of the Department, including resources
at a National Laboratory; and
(3) be consistent with any overall Federal plan
for national infrastructure security developed by the
President or his designee.
SEC. 1804. ADVISORY COMMITTEE ON ENERGY INFRA-
STRUCTURE SECURITY.
(a) ESTABLISHMENT.—The Secretary shall establish
an advisory committee, or utilize an existing advisory com-
mittee within the Department, to advise the Secretary on
policies and programs related to the security of United
States energy infrastructure.
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(b) BALANCED MEMBERSHIP.—The Secretary shall en-
sure that the advisory committee established or utilized
under subsection (a) has a membership with an appropriate
balance among the various interests related to energy infra-
structure security, including—
(1) scientific and technical experts;
(2) industrial managers;
(3) worker representatives;
(4) insurance companies or organizations;
(5) environmental organizations;
(6) representatives of State, local, and tribal gov-
ernments; and
(7) such other interests as the Secretary may
deem appropriate.
(c) EXPENSES.—Members of the advisory committee
established or utilized under subsection (a) shall serve with-
out compensation, and shall be allowed travel expenses, in-
cluding per diem in lieu of subsistence, at rates authorized
for an employee of an agency under subchapter I of chapter
57 of title 5, United States Code, while away from the home
or regular place of business of the member in the perform-
ance of the duties of the committee.
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SEC. 1805. BEST PRACTICES AND STANDARDS FOR ENERGY
INFRASTRUCTURE SECURITY.
The Secretary, in consultation with the advisory com-
mittee under section 1804, shall enter into appropriate ar-
rangements with one or more standard-setting organiza-
tions, or similar organizations, to assist the development
of industry best practices and standards for security related
to protecting critical energy infrastructure.
Subtitle B—Department of the
Interior Programs
SEC. 1811. OUTER CONTINENTAL SHELF ENERGY INFRA-
STRUCTURE SECURITY.
(a) DEFINITIONS.—In this section:
(1) APPROVED
STATE
PLAN.—The term ‘‘ap-
proved State plan’’ means a State plan approved by
the Secretary under subsection (c)(3).
(2) COASTLINE.—The term ‘‘coastline’’ has the
same meaning as the term ‘‘coast line’’ as defined in
subsection 2(c) of the Submerged Lands Act (43
U.S.C. 1301(c)).
(3) CRITICAL OCS ENERGY INFRASTRUCTURE FA-
CILITY.—The term ‘‘OCS critical energy infrastruc-
ture facility’’ means—
(A) a facility located in an OCS Production
State or in the waters of such State related to the
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production of oil or gas on the Outer Continental
Shelf; or
(B) a related facility located in an OCS
Production State or in the waters of such State
that carries out a public service, transportation,
or infrastructure activity critical to the oper-
ation of an Outer Continental Shelf energy in-
frastructure facility, as determined by the Sec-
retary.
(4) DISTANCE.—The term ‘‘distance’’ means the
minimum great circle distance, measured in statute
miles.
(5) LEASED TRACT.—
(A) IN GENERAL.—The term ‘‘leased tract’’
means a tract that—
(i) is subject to a lease under section 6
or 8 of the Outer Continental Shelf Lands
Act (43 U.S.C. 1335, 1337) for the purpose
of drilling for, developing, and producing
oil or natural gas resources; and
(ii) consists of a block, a portion of a
block, a combination of blocks or portions of
blocks, or a combination of portions of
blocks, as—
(I) specified in the lease; and
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(II) depicted on an outer Conti-
nental Shelf official protraction dia-
gram.
(B) EXCLUSION.—The term ‘‘leased tract’’
does not include a tract described in subpara-
graph (A) that is located in a geographic area
subject to a leasing moratorium on January 1,
2001, unless the lease was in production on that
date.
(6) OCS POLITICAL
SUBDIVISION.—The term
‘‘OCS political subdivision’’ means a county, parish,
borough or any equivalent subdivision of an OCS
Production State all or part of which subdivision lies
within the coastal zone (as defined in section 304(1)
of the Coastal Zone Management Act of 1972 (16
U.S.C. 1453(1)).
(7) OCS PRODUCTION STATE.—The term ‘‘OCS
Production State’’ means the State of—
(A) Alaska;
(B) Alabama;
(C) California;
(D) Florida;
(E) Louisiana;
(F) Mississippi; or
(G) Texas.
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(8) PRODUCTION.—The term ‘‘production’’ has
the meaning given the term in section 2 of the Outer
Continental Shelf Lands Act (43 U.S.C. 1331).
(9) PROGRAM.—The term ‘‘program’’ means the
Outer Continental Shelf Energy Infrastructure Secu-
rity Program established under subsection (b).
(10) QUALIFIED
OUTER
CONTINENTAL
SHELF
REVENUES.—The term ‘‘qualified Outer Continental
Shelf revenues’’ means all amounts received by the
United States from each leased tract or portion of a
leased tract lying seaward of the zone defined and
governed by section 8(g) of the Outer Continental
Shelf Lands Act (43 U.S.C. 1331 et seq.), or lying
within such zone but to which section 8(g) does not
apply, the geographic center of which lies within a
distance of 200 miles from any part of the coastline
of any State, including bonus bids, rents, royalties
(including payments for royalties taken in kind and
sold), net profit share payments, and related late pay-
ment interest. Such term does not include any reve-
nues from a leased tract or portion of a leased tract
that is included within any area of the Outer Conti-
nental Shelf where a moratorium on new leasing was
in effect as of January 1, 2001, unless the lease was
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issued prior to the establishment of the moratorium
and was in production on January 1, 2001.
(11) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of the Interior.
(12) STATE
PLAN.—The term ‘‘State plan’’
means a State plan described in subsection (b).
(b) ESTABLISHMENT.—The Secretary shall establish a
program, to be known as the ‘‘Outer Continental Shelf En-
ergy Infrastructure Security Program’’, under which the
Secretary shall provide funds to OCS Production States to
implement approved State plans to provide security against
hostile and natural threats to critical OCS energy infra-
structure facilities and support of any necessary public
service or transportation activities that are needed to main-
tain the safety and operation of critical energy infrastruc-
ture activities. For purposes of this program, restoration
of any coastal wetland shall be considered to be an activity
that secures critical OCS energy infrastructure facilities
from a natural threat.
(c) STATE PLANS.—
(1) INITIAL
PLAN.—Not later than 180 days
after the date of enactment of this Act, to be eligible
to receive funds under the program, the Governor of
an OCS Production State shall submit to the Sec-
retary a plan to provide security against hostile and
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natural threats to critical energy infrastructure facili-
ties in the OCS Production State and to support any
of the necessary public service or transportation ac-
tivities that are needed to maintain the safety and
operation of critical energy infrastructure facilities.
Such plan shall include—
(A) the name of the State agency that will
have the authority to represent and act for the
State in dealing with the Secretary for purposes
of this section;
(B) a program for the implementation of
the plan which describes how the amounts pro-
vided under this section will be used;
(C) a contact for each OCS political sub-
division and description of how such political
subdivisions will use amounts provided under
this section, including a certification by the Gov-
ernor that such uses are consistent with the re-
quirements of this section; and
(D) measures for taking into account other
relevant Federal resources and programs.
(2) ANNUAL REVIEWS.—Not later than 1 year
after the date of submission of the plan and annually
thereafter, the Governor of an OCS Production State
shall—
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(A) review the approved State plan; and
(B) submit to the Secretary any revised
State plan resulting from the review.
(3) APPROVAL OF PLANS.—
(A) IN GENERAL.—In consultation with ap-
propriate Federal security officials and the Sec-
retaries of Commerce and Energy, the Secretary
shall—
(i) approve each State plan; or
(ii) recommend changes to the State
plan.
(B) RESUBMISSION
OF
STATE
PLANS.—If
the Secretary recommends changes to a State
plan under subparagraph (A)(ii), the Governor
of the OCS Production State may resubmit a re-
vised State plan to the Secretary for approval.
(4) AVAILABILITY
OF
PLANS.—The Secretary
shall provide to Congress a copy of each approved
State plan.
(5) CONSULTATION AND PUBLIC COMMENT.—
(A) CONSULTATION.—The Governor of an
OCS Production State shall develop the State
plan in consultation with Federal, State, and
local law enforcement and public safety officials,
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industry, Indian tribes, the scientific commu-
nity, and other persons as appropriate.
(B) PUBLIC
COMMENT.—The Governor of
an OCS Production State may solicit public
comments on the State plan to the extent that the
Governor determines to be appropriate.
(d) ALLOCATION OF AMOUNTS BY THE SECRETARY.—
The Secretary shall allocate the amounts made available for
the purposes of carrying out the program provided for by
this section among OCS Production States as follows:
(1) twenty-five percent of the amounts shall be
divided equally among OCS Production States.
(2) seventy-five percent of the amounts shall be
divided among OCS Production States on the basis of
the proximity of each OCS Production State to off-
shore locations at which oil and gas are being pro-
duced.
(e) CALCULATION.—The amount for each OCS Produc-
tion State under paragraph (d)(2) shall be calculated based
on the ratio of qualified OCS revenues generated off the
coastline of the OCS Production State to the qualified OCS
revenues generated off the coastlines of all OCS Production
States for the prior 5-year period. Where there is more than
one OCS Production State within 200 miles of a leased
tract, the amount of each OCS Production State’s payment
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under paragraph (d)(2) for such leased tract shall be in-
versely proportional to the distance between the nearest
point on the coastline of such State and the geographic cen-
ter of each leased tract or portion of the leased tract (to
the nearest whole mile) that is within 200 miles of that
coastline, as determined by the Secretary. A leased tract or
portion of a leased tract shall be excluded if the tract or
portion is located in a geographic area where a moratorium
on new leasing was in effect on January 1, 2001, unless
the lease was issued prior to the establishment of the mora-
torium and was in production on January 1, 2001.
(f) PAYMENTS TO OCS POLITICAL SUBDIVISIONS.—
Thirty-five percent of each OCS Production State’s allo-
cable share as determined under subsection (e) shall be paid
directly to the OCS political subdivisions by the Secretary
based on the following formula:
(1) twenty-five percent shall be allocated based
on the ratio of such OCS political subdivision’s popu-
lation to the population of all OCS political subdivi-
sions in the OCS Production State.
(2) twenty-five percent shall be allocated based
on the ratio of such OCS political subdivision’s coast-
line miles to the coastline miles of all OCS political
subdivisions in the OCS Production State. For pur-
poses of this subsection, those OCS political subdivi-
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sions without coastlines shall be considered to have a
coastline that is the average length of the coastlines of
all political subdivisions in the State.
(3) fifty percent shall be allocated based on the
relative distance of such OCS political subdivision
from any leased tract used to calculate that OCS Pro-
duction State’s allocation using ratios that are in-
versely proportional to the distance between the point
in the coastal political subdivision closest to the geo-
graphic center of each leased tract or portion, as de-
termined by the Secretary. For purposes of the cal-
culations under this subparagraph, a leased tract or
portion of a leased tract shall be excluded if the leased
tract or portion is located in a geographic area where
a moratorium on new leasing was in effect on Janu-
ary 1, 2001, unless the lease was issued prior to the
establishment of the moratorium and was in produc-
tion on January 1, 2001.
(g) FAILURE
TO
HAVE
PLAN
APPROVED.—Any
amount allocated to an OCS Production State or OCS po-
litical subdivision but not disbursed because of a failure to
have an approved Plan under this section shall be allocated
equally by the Secretary among all other OCS Production
States in a manner consistent with this subsection except
that the Secretary shall hold in escrow such amount until
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the final resolution of any appeal regarding the disapproval
of a plan submitted under this section. The Secretary may
waive the provisions of this paragraph and hold an OCS
Production State’s allocable share in escrow if the Secretary
determines that such State is making a good faith effort
to develop and submit, or update, a Plan.
(h) USE
OF AMOUNTS ALLOCATED
BY
THE SEC-
RETARY.—
(1) IN GENERAL.—Amounts allocated by the Sec-
retary under subsection (d) may be used only in ac-
cordance with a plan approved pursuant to sub-
section (c) for—
(A) activities to secure critical OCS energy
infrastructure facilities from human or natural
threats; and
(B) support of any necessary public service
or transportation activities that are needed to
maintain the safety and operation of critical
OCS energy infrastructure facilities.
(2) RESTORATION OF COASTAL WETLAND.—For
the purpose of subparagraph (1)(A), restoration of
any coastal wetland shall be considered to be an ac-
tivity that secures critical OCS energy infrastructure
facilities from a natural threat.
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(i) FAILURE TO HAVE USE.—Any amount allocated
to an OCS political subdivision but not disbursed because
of a failure to have a qualifying use as described in sub-
section (h) shall be allocated by the Secretary to the OCS
Production State in which the OCS political subdivision
is located except that the Secretary shall hold in escrow such
amount until the final resolution of any appeal regarding
the use of the funds.
(j) COMPLIANCE WITH AUTHORIZED USES.—If the
Secretary determines that any expenditure made by an
OCS Production State or an OCS political subdivision is
not consistent with the uses authorized in subsection (h),
the Secretary shall not disburse any further amounts under
this section to that OCS Production State or OCS political
subdivision until the amounts used for the inconsistent ex-
penditure have been repaid or obligated for authorized uses.
(k) RULEMAKING.—The Secretary may promulgate
such rules and regulations as may be necessary to carry
out the purposes of this section, including rules and regula-
tions setting forth an appropriate process for appeals.
(l) AUTHORIZATION OF APPROPRIATIONS.—There are
hereby authorized to be appropriated $450,000,000 for each
of the fiscal years 2003 through 2008 to carry out the pur-
poses of this section.
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DIVISION H—ENERGY TAX
INCENTIVES
SEC. 1900. SHORT TITLE; ETC.
(a) SHORT TITLE.—This division may be cited as the
‘‘Energy Tax Incentives Act of 2003’’.
(b) AMENDMENT OF 1986 CODE.—Except as otherwise
expressly provided, whenever in this division an amend-
ment or repeal is expressed in terms of an amendment to,
or repeal of, a section or other provision, the reference shall
be considered to be made to a section or other provision
of the Internal Revenue Code of 1986.
TITLE 
XIX—EXTENSION 
AND
MODIFICATION 
OF 
RENEW-
ABLE ELECTRICITY PRODUC-
TION TAX CREDIT
SEC. 1901. THREE-YEAR EXTENSION OF CREDIT FOR PRO-
DUCING ELECTRICITY FROM WIND AND POUL-
TRY WASTE.
(a) IN GENERAL.—Subparagraphs (A) and (C) of sec-
tion 45(c)(3) (relating to qualified facility), as amended by
section 603(a) of the Job Creation and Worker Assistance
Act of 2002, are each amended by striking ‘‘January 1,
2004’’ and inserting ‘‘January 1, 2007’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to electricity sold after the date of the
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enactment of this Act, in taxable years ending after such
date.
SEC. 1902. CREDIT FOR ELECTRICITY PRODUCED FROM BIO-
MASS.
(a) EXTENSION AND MODIFICATION OF PLACED-IN-
SERVICE
RULES.—Paragraph (3) of section 45(c) is
amended—
(1) by striking subparagraph (B) and inserting
the following new subparagraph:
‘‘(B) CLOSED-LOOP BIOMASS FACILITY.—
‘‘(i) IN GENERAL.—In the case of a fa-
cility using closed-loop biomass to produce
electricity, the term ‘qualified facility’
means any facility—
‘‘(I) owned by the taxpayer which
is originally placed in service after De-
cember 31, 1992, and before January
1, 2007, or
‘‘(II) owned by the taxpayer
which is originally placed in service
before January 1, 1993, and modified
to use closed-loop biomass to co-fire
with coal before January 1, 2007, as
approved under the Biomass Power for
Rural Development Programs or under
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a pilot project of the Commodity Cred-
it Corporation as described in 65 Fed.
Reg. 63052.
‘‘(ii) SPECIAL RULES.—In the case of a
qualified 
facility 
described 
in 
clause
(i)(II)—
‘‘(I) the 10-year period referred to
in subsection (a) shall be treated as be-
ginning no earlier than the date of the
enactment of this subclause, and
‘‘(II) if the owner of such facility
is not the producer of the electricity,
the person eligible for the credit allow-
able under subsection (a) is the lessee
or the operator of such facility.’’, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(D) BIOMASS FACILITY.—
‘‘(i) IN GENERAL.—In the case of a fa-
cility using biomass (other than closed-loop
biomass) to produce electricity, the term
‘qualified facility’ means any facility owned
by the taxpayer which is originally placed
in service before January 1, 2005.
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‘‘(ii) 
SPECIAL
RULE
FOR
POSTEFFECTIVE DATE FACILITIES.—In the
case of any facility described in clause (i)
which is placed in service after the date of
the enactment of this clause, the 3-year pe-
riod beginning on the date the facility is
originally placed in service shall be sub-
stituted for the 10-year period in subsection
(a)(2)(A)(ii).
‘‘(iii) 
SPECIAL
RULES
FOR
PREEFFECTIVE
DATE
FACILITIES.—In the
case of any facility described in clause (i)
which is placed in service before the date of
the enactment of this clause—
‘‘(I) subsection (a)(1) shall be ap-
plied by substituting ‘1.0 cents’ for ‘1.5
cents’, and
‘‘(II) the 3-year period beginning
after December 31, 2002, shall be sub-
stituted for the 10-year period in sub-
section (a)(2)(A)(ii).
‘‘(iv) CREDIT
ELIGIBILITY.—In the
case of any facility described in clause (i),
if the owner of such facility is not the pro-
ducer of the electricity, the person eligible
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for the credit allowable under subsection (a)
is the lessee or the operator of such facil-
ity.’’.
(b) DEFINITION OF BIOMASS.—
(1) IN
GENERAL.—Section 45(c)(1) (defining
qualified energy resources) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (B),
(B) by striking the period at the end of sub-
paragraph (C) and inserting ‘‘, and’’, and
(C) by adding at the end the following new
subparagraph:
‘‘(D) biomass (other than closed-loop bio-
mass).’’.
(2) BIOMASS DEFINED.—Section 45(c) (relating
to definitions) is amended by adding at the end the
following new paragraph:
‘‘(5) BIOMASS.—The term ‘biomass’ means any
solid, nonhazardous, cellulosic waste material which
is segregated from other waste materials and which is
derived from—
‘‘(A) any of the following forest-related re-
sources: mill residues, precommercial thinnings,
slash, and brush, but not including old-growth
timber (other than old-growth timber which has
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been permitted or contracted for removal by any
appropriate Federal authority through the Na-
tional Environmental Policy Act or by any ap-
propriate State authority),
‘‘(B) solid wood waste materials, including
waste pallets, crates, dunnage, manufacturing
and construction wood wastes (other than pres-
sure-treated, chemically-treated, or painted wood
wastes), and landscape or right-of-way tree trim-
mings, but not including municipal solid waste
(garbage), gas derived from the biodegradation 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.’’.
(c) COORDINATION WITH SECTION 29.—Section 45(c)
(relating to definitions) is amended by adding at the end
the following new paragraph:
‘‘(6) COORDINATION
WITH
SECTION
29.—The
term ‘qualified facility’ shall not include any facility
the production from which is taken into account in
determining any credit under section 29 for the tax-
able year or any prior taxable year.’’.
(d) CLERICAL AMENDMENTS.—
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(1) The heading for subsection (c) of section 45
is amended by inserting ‘‘AND SPECIAL RULES’’ after
‘‘DEFINITIONS’’.
(2) The heading for subsection (d) of section 45
is amended by inserting ‘‘ADDITIONAL’’ before ‘‘DEFI-
NITIONS’’.
(e) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall
apply to electricity sold after the date of the enact-
ment of this Act.
(2) CERTAIN BIOMASS FACILITIES.—With respect
to any facility described in section 45(c)(3)(D)(i) of
the Internal Revenue Code of 1986, as added by this
section, which is placed in service before the date of
the enactment of this Act, the amendments made by
this section shall apply to electricity sold after Decem-
ber 31, 2002.
SEC. 1903. CREDIT FOR ELECTRICITY PRODUCED FROM
SWINE AND BOVINE WASTE NUTRIENTS, GEO-
THERMAL ENERGY, AND SOLAR ENERGY.
(a) 
EXPANSION
OF
QUALIFIED
ENERGY
RE-
SOURCES.—
(1) IN
GENERAL.—Section 45(c)(1) (defining
qualified energy resources), as amended by this Act,
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is amended by striking ‘‘and’’ at the end of subpara-
graph (C), by striking the period at the end of sub-
paragraph (D) and inserting a comma, and by add-
ing at the end the following new subparagraphs:
‘‘(E) swine and bovine waste nutrients,
‘‘(F) geothermal energy, and
‘‘(G) solar energy.’’.
(2) DEFINITIONS.—Section 45(c) (relating to
definitions and special rules), as amended by this
Act, is amended by redesignating paragraph (6) as
paragraph (8) and by inserting after paragraph (5)
the following new paragraphs:
‘‘(6) SWINE AND BOVINE WASTE NUTRIENTS.—
The term ‘swine and bovine waste nutrients’ means
swine and bovine manure and litter, including bed-
ding material for the disposition of manure.
‘‘(7) GEOTHERMAL
ENERGY.—The term ‘geo-
thermal energy’ means energy derived from a geo-
thermal deposit (within the meaning of section
613(e)(2)).’’.
(b) EXTENSION AND MODIFICATION OF PLACED-
IN-SERVICE RULES.—Section 45(c)(3) (relating to
qualified facility), as amended by this Act, is amend-
ed by adding at the end the following new subpara-
graphs:
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‘‘(E) SWINE AND BOVINE WASTE NUTRIENTS
FACILITY.—In the case of a facility using swine
and bovine waste nutrients to produce electricity,
the term ‘qualified facility’ means any facility
owned by the taxpayer which is originally placed
in service after the date of the enactment of this
subparagraph and before January 1, 2007.
‘‘(F) GEOTHERMAL OR SOLAR ENERGY FA-
CILITY.—
‘‘(i) IN GENERAL.—In the case of a fa-
cility using geothermal or solar energy to
produce electricity, the term ‘qualified facil-
ity’ means any facility owned by the tax-
payer which is originally placed in service
after the date of the enactment of this clause
and before January 1, 2007.
‘‘(ii) SPECIAL RULE.—In the case of
any facility described in clause (i), the 5-
year period beginning on the date the facil-
ity was originally placed in service shall be
substituted for the 10-year period in sub-
section (a)(2)(A)(ii).’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to electricity sold after the date of the
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enactment of this Act, in taxable years ending after such
date.
SEC. 1904. TREATMENT OF PERSONS NOT ABLE TO USE EN-
TIRE CREDIT.
(a) IN GENERAL.—Section 45(d) (relating to addi-
tional definitions and special rules), as amended by this
Act, is amended by adding at the end the following new
paragraph:
‘‘(8) TREATMENT OF PERSONS NOT ABLE TO USE
ENTIRE CREDIT.—
‘‘(A) ALLOWANCE OF CREDIT.—
‘‘(i) IN GENERAL.—Except as otherwise
provided in this subsection—
‘‘(I) any credit allowable under
subsection (a) with respect to a quali-
fied facility owned by a person de-
scribed in clause (ii) may be trans-
ferred or used as provided in this
paragraph, and
‘‘(II) the determination as to
whether the credit is allowable shall be
made without regard to the tax-exempt
status of the person.
‘‘(ii) PERSONS DESCRIBED.—A person
is described in this clause if the person is—
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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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HR 6 EAS1S/PP
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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HR 6 EAS1S/PP
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.
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SEC. 1906. CREDIT FOR ELECTRICITY PRODUCED FROM MU-
NICIPAL BIOSOLIDS AND RECYCLED SLUDGE.
(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 by adding
at the end the following new subparagraphs:
‘‘(H) municipal biosolids, and
‘‘(I) recycled sludge.’’.
(b) QUALIFIED FACILITIES.—Section 45(c)(3) (relat-
ing to qualified facility), as amended by this Act, is amend-
ed by adding at the end the following new subparagraphs:
‘‘(G) MUNICIPAL BIOSOLIDS FACILITY.—In
the case of a facility using municipal biosolids
to produce electricity, the term ‘qualified facility’
means any facility owned by the taxpayer which
is originally placed in service after December 31,
2001, and before January 1, 2007.
‘‘(H) RECYCLED SLUDGE FACILITY.—
‘‘(i) IN GENERAL.—In the case of a fa-
cility using recycled sludge to produce elec-
tricity, the term ‘qualified facility’ means
any facility owned by the taxpayer which is
originally placed in service before January
1, 2007.
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‘‘(ii) SPECIAL RULE.—In the case of a
qualified facility described in clause (i), the
10-year period referred to in subsection (a)
shall be treated as beginning no earlier than
the date of the enactment of this subpara-
graph.’’.
(c) DEFINITIONS.—Section 45(c), as amended by this
Act, is amended by redesignating paragraph (8) as para-
graph (10) and by inserting after paragraph (7) the fol-
lowing new paragraphs:
‘‘(8) MUNICIPAL BIOSOLIDS.—The term ‘munic-
ipal biosolids’ means the residue or solids removed by
a municipal wastewater treatment facility.
‘‘(9) RECYCLED SLUDGE.—
‘‘(A) IN
GENERAL.—The term ‘recycled
sludge’ means the recycled residue byproduct cre-
ated in the treatment of commercial, industrial,
municipal, or navigational wastewater.
‘‘(B) 
RECYCLED.—The 
term 
‘recycled’
means the processing of residue into a market-
able product, but does not include incineration
for the purpose of volume reduction.’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to electricity sold after the date of the
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enactment of this Act, in taxable years ending after such
date.
TITLE XX—ALTERNATIVE MOTOR
VEHICLES AND FUELS INCEN-
TIVES
SEC. 2001. ALTERNATIVE MOTOR VEHICLE CREDIT.
(a) IN GENERAL.—Subpart B of part IV of subchapter
A of chapter 1 (relating to foreign tax credit, etc.) is amend-
ed by adding at the end the following new section:
‘‘SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.
‘‘(a) ALLOWANCE OF CREDIT.—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) the new qualified fuel cell motor vehicle
credit determined under subsection (b),
‘‘(2) the new qualified hybrid motor vehicle cred-
it determined under subsection (c), and
‘‘(3) the new qualified alternative fuel motor ve-
hicle credit determined under subsection (d).
‘‘(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE
CREDIT.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a), the new qualified fuel cell motor vehicle credit de-
termined under this subsection with respect to a new
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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 ve-
hicle weight rating of more than 8,500 pounds
but not more than 14,000 pounds,
‘‘(C) $20,000, if such vehicle has a gross ve-
hicle 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 ve-
hicle weight rating of more than 26,000 pounds.
‘‘(2) INCREASE FOR FUEL EFFICIENCY.—
‘‘(A) IN GENERAL.—The amount determined
under paragraph (1)(A) with respect to a new
qualified fuel cell motor vehicle which is a pas-
senger automobile or light truck shall be in-
creased by—
‘‘(i) $1,000, if such vehicle achieves at
least 150 percent but less than 175 percent
of the 2000 model year city fuel economy,
‘‘(ii) $1,500, if such vehicle achieves at
least 175 percent but less than 200 percent
of the 2000 model year city fuel economy,
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‘‘(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 percent
of the 2000 model year city fuel economy,
‘‘(v) $3,000, if such vehicle achieves at
least 250 percent but less than 275 percent
of the 2000 model year city fuel economy,
‘‘(vi) $3,500, if such vehicle achieves at
least 275 percent but less than 300 percent
of the 2000 model year city fuel economy,
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
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:
The 2000 model year city
‘‘If vehicle inertia weight class is:
fuel economy is:
1,500 or 1,750 lbs ..........................................................................
43.7 mpg
2,000 lbs ..........................................................................................
38.3 mpg
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The 2000 model year city
‘‘If vehicle inertia weight class is:
fuel economy is:
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 to 8,500 lbs ...........................................................................
11.1 mpg.
‘‘(ii) In the case of a light truck:
The 2000 model year city
‘‘If vehicle inertia weight class is:
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 to 8,500 lbs ...........................................................................
12.0 mpg.
‘‘(C) VEHICLE INERTIA WEIGHT CLASS.—
For purposes of subparagraph (B), the term ‘ve-
hicle inertia weight class’ has the same meaning
as when defined in regulations prescribed by the
Administrator of the Environmental 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
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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 re-
quire reformation prior to use,
‘‘(B) which, in the case of a passenger auto-
mobile 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 section
243(e)(2) of the Clean Air Act for that make
and model year, and
‘‘(ii) for 2004 and later model vehicles,
has received a certificate that such vehicle
meets or exceeds the Bin 5 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,
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‘‘(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 CRED-
IT.—
‘‘(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
automobile or light truck and which pro-
vides the following percentage of the max-
imum available power:
‘‘If percentage of the maximum
available power is:
The credit amount is:
At least 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.
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‘‘(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 avail-
able power:
‘‘(I) If such vehicle has a gross ve-
hicle weight rating of not more than
14,000 pounds:
‘‘If percentage of the maximum
available power is:
The credit amount is:
At least 20 percent but less than 30 percent ...............................
$1,000
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 maximum
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.
‘‘(III) If such vehicle has a gross
vehicle weight rating of more than
26,000 pounds:
‘‘If percentage of the maximum
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.
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‘‘(B) INCREASE FOR FUEL EFFICIENCY.—
‘‘(i) AMOUNT.—The amount deter-
mined under subparagraph (A)(i) with re-
spect to a new qualified hybrid motor vehi-
cle which is a passenger automobile or light
truck shall be increased by—
‘‘(I) $500, if such vehicle achieves
at least 125 percent but less than 150
percent of the 2000 model year city
fuel economy,
‘‘(II) 
$1,000, 
if 
such 
vehicle
achieves at least 150 percent but less
than 175 percent of the 2000 model
year city fuel economy,
‘‘(III) $1,500, if such vehicle
achieves at least 175 percent but less
than 200 percent of the 2000 model
year city fuel economy,
‘‘(IV) $2,000, if such vehicle
achieves at least 200 percent but less
than 225 percent of the 2000 model
year city fuel economy,
‘‘(V) 
$2,500, 
if 
such 
vehicle
achieves at least 225 percent but less
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than 250 percent of the 2000 model
year city fuel economy, and
‘‘(VI) $3,000, 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.
‘‘(C) INCREASE
FOR
ACCELERATED
EMIS-
SIONS PERFORMANCE.—The amount determined
under subparagraph (A)(ii) with respect to an
applicable heavy duty hybrid motor vehicle shall
be increased by the increased credit amount de-
termined in accordance with the following 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 increased 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
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14,000 pounds but not more than 26,000
pounds:
‘‘If the model year is:
The increased 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 increased credit amount is:
2002 ................................................................................................
$14,000
2003 ................................................................................................
$12,000
2004 ................................................................................................
$10,000
2005 ................................................................................................
$8,000
2006 ................................................................................................
$6,000.
‘‘(D) DEFINITIONS.—
‘‘(i) APPLICABLE HEAVY DUTY HYBRID
MOTOR VEHICLE.—For purposes of subpara-
graph (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 Environmental
Protection Agency for 2007 and later model
year diesel heavy duty engines, or for 2008
and later model year ottocycle heavy duty
engines, as applicable.
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‘‘(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 particulate
matter.
‘‘(II) A rechargeable energy stor-
age system.
‘‘(iii) MAXIMUM AVAILABLE POWER.—
‘‘(I) PASSENGER AUTOMOBILE OR
LIGHT TRUCK.—For purposes of sub-
paragraph (A)(i), the term ‘maximum
available power’ means the maximum
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power available from the rechargeable
energy storage system, during a stand-
ard 10 second pulse power or equiva-
lent test, divided by such maximum
power and the SAE net power of the
heat engine.
‘‘(II) HEAVY DUTY HYBRID MOTOR
VEHICLE.—For purposes of subpara-
graph (A)(ii), the term ‘maximum
available power’ means the maximum
power available from the rechargeable
energy storage system, during a stand-
ard 10 second pulse power or equiva-
lent test, divided by the vehicle’s total
traction power. The term ‘total trac-
tion power’ means the sum of the peak
power from the rechargeable energy
storage system and the heat engine
peak power of the vehicle, except that if
such storage system is the sole means
by which the vehicle can be driven, the
total traction power is the peak power
of such storage system.
‘‘(3) NEW
QUALIFIED
HYBRID
MOTOR
VEHI-
CLE.—For purposes of this subsection, the term ‘new
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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 en-
gine using combustible fuel, and
‘‘(ii) a rechargeable energy storage sys-
tem,
‘‘(B) which, in the case of a passenger auto-
mobile 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 section
243(e)(2) of the Clean Air Act for that make
and model year, and
‘‘(ii) for 2004 and later model vehicles,
has received a certificate that such vehicle
meets or exceeds the Bin 5 Tier II emission
level established in regulations prescribed by
the Administrator of the Environmental
Protection Agency under section 202(i) of
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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.
‘‘(d) NEW QUALIFIED ALTERNATIVE FUEL MOTOR VE-
HICLE 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 vehi-
cle is—
‘‘(A) 40 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
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Air Act for that make and model year vehi-
cle (other than a zero emission standard), or
‘‘(ii) has received an order certifying
the vehicle as meeting the same require-
ments as vehicles which may be sold or
leased in California and meets or exceeds
the most stringent standard available for
certification under the State laws of Cali-
fornia (enacted in accordance with a waiver
granted under section 209(b) of the Clean
Air Act) for that make and model year vehi-
cle (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 suggested 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 ve-
hicle weight rating of more than 8,500 pounds
but not more than 14,000 pounds,
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‘‘(A) IN GENERAL.—In the case of a mixed-
fuel vehicle placed in service by the taxpayer
during the taxable year, the credit determined
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 subsection if
such vehicle was a qualified alternative fuel
motor vehicle, and
‘‘(ii) in the case of a 90/10 mixed-fuel
vehicle, 90 percent of the credit which would
have been allowed under this subsection if
such vehicle was a qualified alternative fuel
motor vehicle.
‘‘(B) MIXED-FUEL VEHICLE.—For purposes
of this subsection, the term ‘mixed-fuel vehicle’
means any motor vehicle described in subpara-
graph (C) or (D) of paragraph (3), which—
‘‘(i) is certified by the manufacturer as
being able to perform efficiently in normal
operation on a combination of an alter-
native fuel and a petroleum-based fuel,
‘‘(ii) either—
‘‘(I) has received a certificate of
conformity under the Clean Air Act, or
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‘‘(II) has received an order certi-
fying the vehicle as meeting the same
requirements as vehicles which may be
sold or leased in California and meets
or exceeds the low emission vehicle
standard under section 88.105-94 of
title 40, Code of Federal Regulations,
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 manufacturer.
‘‘(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-
native fuel and not more than 25 percent petro-
leum-based fuel.
‘‘(D) 90/10 
MIXED-FUEL
VEHICLE.—For
purposes of this subsection, the term ‘90/10
mixed-fuel vehicle’ means a mixed-fuel vehicle
which operates using at least 90 percent alter-
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native fuel and not more than 10 percent petro-
leum-based fuel.
‘‘(e) APPLICATION WITH OTHER CREDITS.—The credit
allowed under subsection (a) for any taxable year shall not
exceed the excess (if any) of—
‘‘(1) the regular tax for the taxable year reduced
by the sum of the credits allowable under subpart A
and sections 27, 29, and 30, over
‘‘(2) the tentative minimum tax for the taxable
year.
‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.—For
purposes of this section—
‘‘(1) CONSUMABLE FUEL.—The term ‘consumable
fuel’ means any solid, liquid, or gaseous matter which
releases energy when consumed by an auxiliary power
unit.
‘‘(2) MOTOR VEHICLE.—The term ‘motor vehicle’
has the meaning given such term by section 30(c)(2).
‘‘(3) CITY FUEL ECONOMY.—The city fuel econ-
omy with respect to any vehicle shall be measured in
a manner which is substantially similar to the man-
ner city fuel economy is measured in accordance with
procedures under part 600 of subchapter Q of chapter
I of title 40, Code of Federal Regulations, as in effect
on the date of the enactment of this section.
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‘‘(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 Environ-
mental Protection Agency for purposes of the admin-
istration 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 reduced by
the amount of such credit so allowed (determined
without regard to subsection (e)).
‘‘(6) NO DOUBLE BENEFIT.—The amount of any
deduction or other credit allowable under this
chapter—
‘‘(A) for any incremental cost taken into ac-
count in computing the amount of the credit de-
termined under subsection (d) shall be reduced
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.
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‘‘(7) PROPERTY
USED
BY
TAX-EXEMPT
ENTI-
TIES.—In the case of a credit amount which is allow-
able with respect to a motor 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 ve-
hicle for purposes of this section and the credit shall
be allowed to such person, but only if the person
clearly discloses to the entity at the time of any sale
or lease the specific amount of any credit otherwise
allowable to the entity under this section.
‘‘(8) RECAPTURE.—The Secretary shall, by regu-
lations, provide for recapturing the benefit of any
credit allowable under subsection (a) with respect to
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 vehicle).
‘‘(9) PROPERTY USED OUTSIDE UNITED STATES,
ETC., NOT
QUALIFIED.—No credit shall be allowed
under subsection (a) with respect to any property re-
ferred to in section 50(b) or with respect to the por-
tion 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
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vehicle if the taxpayer elects to not have this section
apply to such vehicle.
‘‘(11) CARRYBACK
AND
CARRYFORWARD
AL-
LOWED.—
‘‘(A) IN GENERAL.—If the credit amount al-
lowable under subsection (a) for a taxable year
exceeds the amount of the limitation under sub-
section (e) for such taxable year (in this para-
graph referred to as the ‘unused credit year’),
such excess shall be allowed as a credit carryback
for each of the 3 taxable years beginning after
September 30, 2002, which precede the unused
credit year and a credit carryforward for each of
the 20 taxable years which succeed the unused
credit year.
‘‘(B) RULES.—Rules similar to the rules of
section 39 shall apply with respect to the credit
carryback and credit carryforward under sub-
paragraph (A).
‘‘(12) INTERACTION
WITH
AIR
QUALITY
AND
MOTOR VEHICLE SAFETY STANDARDS.—Unless other-
wise 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—
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‘‘(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.
‘‘(g) REGULATIONS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the Secretary shall promulgate such regula-
tions as necessary to carry out the provisions of this
section.
‘‘(2) COORDINATION IN PRESCRIPTION OF CER-
TAIN REGULATIONS.—The Secretary of the Treasury,
in coordination with the Secretary of Transportation
and the Administrator of the Environmental Protec-
tion Agency, shall prescribe such regulations as nec-
essary to determine whether a motor vehicle meets the
requirements to be eligible for a credit under this sec-
tion.
‘‘(h) TERMINATION.—This section shall not apply to
any property purchased after—
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‘‘(1) in the case of a new qualified fuel cell motor
vehicle (as described in subsection (b)), December 31,
2011, and
‘‘(2) in the case of any other property, December
31, 2006.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 1016(a) 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 following new
paragraph:
‘‘(29) 
to 
the 
extent 
provided 
in 
section
30B(f)(5).’’.
(2) Section 55(c)(2) is amended by inserting
‘‘30B(e),’’ after ‘‘30(b)(3)’’.
(3) Section 6501(m) is amended by inserting
‘‘30B(f)(10),’’ after ‘‘30(d)(4),’’.
(4) The table of sections for subpart B of part IV
of subchapter A of chapter 1 is amended by inserting
after the item relating to section 30A the following
new item:
‘‘Sec. 30B. Alternative motor vehicle credit.’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after Sep-
tember 30, 2002, in taxable years ending after such date.
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SEC. 2002. 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 percent
of’’.
(2) LIMITATION OF CREDIT ACCORDING TO TYPE
OF VEHICLE.—Section 30(b) (relating to limitations)
is amended—
(A) by striking paragraphs (1) and (2) and
inserting the following new paragraph:
‘‘(1) LIMITATION ACCORDING TO TYPE OF VEHI-
CLE.—The amount of the credit allowed under sub-
section (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 conforms
to the Motor Vehicle Safety Standard 500 pre-
scribed by the Secretary of Transportation, as in
effect on the date of the enactment of the Energy
Tax Incentives Act of 2003, the lesser of—
‘‘(i) 10 percent of the manufacturer’s
suggested retail price of the vehicle, or
‘‘(ii) $1,500.
‘‘(B) In the case of a vehicle not described
in subparagraph (A) with a gross vehicle weight
rating not exceeding 8,500 pounds—
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‘‘(i) $3,500, or
‘‘(ii) $6,000, if such vehicle is—
‘‘(I) capable of a driving range of
at least 100 miles on a single charge of
the vehicle’s rechargeable batteries as
measured pursuant to the urban dyna-
mometer schedules under appendix 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 but not ex-
ceeding 14,000 pounds, $10,000.
‘‘(D) In the case of a vehicle with a gross
vehicle weight rating exceeding 14,000 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.—
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(A) Section 53(d)(1)(B)(iii) is amended by
striking ‘‘section 30(b)(3)(B)’’ and inserting
‘‘section 30(b)(2)(B)’’.
(3) Section 55(c)(2), as amended by this Act, is
amended by striking ‘‘30(b)(3)’’ and inserting
‘‘30(b)(2)’’.
(b) QUALIFIED BATTERY ELECTRIC VEHICLE.—
(1) IN GENERAL.—Section 30(c)(1)(A) (defining
qualified electric vehicle) is amended to read as fol-
lows:
‘‘(A) which is—
‘‘(i) operated solely by use of a battery
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 ve-
hicle operation,’’.
(2) LEASED VEHICLES.—Section 30(c)(1)(C) is
amended by inserting ‘‘or lease’’ after ‘‘use’’.
(3) CONFORMING AMENDMENTS.—
(A) Subsections (a), (b)(2), and (c) of sec-
tion 30 are each amended by inserting ‘‘battery’’
after ‘‘qualified’’ each place it appears.
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(B) The heading of subsection (c) of section
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 sub-
chapter A of chapter 1 is amended by inserting
‘‘battery’’ after ‘‘qualified’’.
(E) Section 179A(c)(3) is amended by in-
serting ‘‘battery’’ before ‘‘electric’’.
(F) The heading of paragraph (3) of section
179A(c) is amended by inserting ‘‘BATTERY’’ be-
fore ‘‘ELECTRIC’’.
(c) ADDITIONAL SPECIAL RULES.—Section 30(d) (re-
lating to special rules) is amended by adding at the end
the following new paragraphs:
‘‘(5) NO DOUBLE BENEFIT.—The amount of any
deduction or other 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 attrib-
utable to such cost.
‘‘(6) PROPERTY
USED
BY
TAX-EXEMPT
ENTI-
TIES.—In the case of a credit amount which is allow-
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able 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 person clearly discloses
to the entity at the time of any sale or lease the spe-
cific amount of any credit otherwise allowable to the
entity under this section.
‘‘(7) 
CARRYBACK
AND
CARRYFORWARD
AL-
LOWED.—
‘‘(A) IN GENERAL.—If the credit amount al-
lowable under subsection (a) for a taxable year
exceeds the amount of the limitation under sub-
section (b)(2) for such taxable year (in this para-
graph referred to as the ‘unused credit year’),
such excess shall be allowed as a credit carryback
for each of the 3 taxable years beginning after
September 30, 2002, which precede the unused
credit year and a credit carryforward for each of
the 20 taxable years which succeed the unused
credit year.
‘‘(B) RULES.—Rules similar to the rules of
section 39 shall apply with respect to the credit
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carryback and credit carryforward under sub-
paragraph (A).’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after Sep-
tember 30, 2002, in taxable years ending after such date.
SEC. 2003. CREDIT FOR INSTALLATION OF ALTERNATIVE
FUELING STATIONS.
(a) IN GENERAL.—Subpart B of part IV of subchapter
A of chapter 1 (relating to foreign tax credit, etc.), as
amended by this Act, is amended by adding at the end the
following new section:
‘‘SEC. 30C. CLEAN-FUEL VEHICLE REFUELING PROPERTY
CREDIT.
‘‘(a) CREDIT ALLOWED.—There shall be allowed as a
credit against the tax imposed by this chapter for the tax-
able year an amount equal to 50 percent of the amount
paid or incurred by the taxpayer during the taxable year
for the installation of qualified clean-fuel vehicle refueling
property.
‘‘(b) LIMITATION.—The credit allowed under sub-
section (a)—
‘‘(1) with respect to any retail clean-fuel vehicle
refueling property, shall not exceed $30,000, and
‘‘(2) with respect to any residential clean-fuel ve-
hicle refueling property, shall not exceed $1,000.
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‘‘(c) YEAR CREDIT ALLOWED.—The credit allowed
under subsection (a) shall be allowed in the taxable year
in which the qualified clean-fuel vehicle refueling property
is placed in service by the taxpayer.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED CLEAN-FUEL VEHICLE REFUEL-
ING PROPERTY.—The term ‘qualified clean-fuel vehicle
refueling property’ has the same meaning given such
term by section 179A(d).
‘‘(2) RESIDENTIAL
CLEAN-FUEL
VEHICLE
RE-
FUELING PROPERTY.—The term ‘residential clean-fuel
vehicle refueling property’ means qualified clean-fuel
vehicle refueling property which is installed on prop-
erty which is used as the principal residence (within
the meaning of section 121) of the taxpayer.
‘‘(3) RETAIL CLEAN-FUEL VEHICLE REFUELING
PROPERTY.—The term ‘retail clean-fuel vehicle refuel-
ing property’ means qualified clean-fuel vehicle refuel-
ing property which is installed on property (other
than property described in paragraph (2)) used in a
trade or business of the taxpayer.
‘‘(e) APPLICATION WITH OTHER CREDITS.—The credit
allowed under subsection (a) for any taxable year shall not
exceed the excess (if any) of—
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‘‘(1) the regular tax for the taxable year reduced
by the sum of the credits allowable under subpart A
and sections 27, 29, 30, and 30B, over
‘‘(2) the tentative minimum tax for the taxable
year.
‘‘(f) BASIS REDUCTION.—For purposes of this title, the
basis of any property shall be reduced by the portion of
the cost of such property taken into account under sub-
section (a).
‘‘(g) NO DOUBLE BENEFIT.—No deduction shall be al-
lowed under section 179A with respect to any property with
respect to which a credit is allowed under subsection (a).
‘‘(h) REFUELING PROPERTY INSTALLED FOR TAX-EX-
EMPT ENTITIES.—In the case of qualified clean-fuel vehicle
refueling property installed on property owned or used by
an entity exempt from tax under this chapter, the person
which installs such refueling property for the entity shall
be treated as the taxpayer with respect to the refueling prop-
erty for purposes of this section (and such refueling prop-
erty shall be treated as retail clean-fuel vehicle refueling
property) and the credit shall be allowed to such person,
but only if the person clearly discloses to the entity in any
installation contract the specific amount of the credit allow-
able under this section.
‘‘(i) CARRYFORWARD ALLOWED.—
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cle refueling property) is amended by adding at the end
the following new flush sentence:
‘‘In the case of clean-burning fuel which is hydrogen pro-
duced from another clean-burning fuel, paragraph (3)(A)
shall be applied by substituting ‘production, storage, or dis-
pensing’ for ‘storage or dispensing’ both places it appears.’’.
(c) CONFORMING AMENDMENTS.—(1) Section 1016(a),
as amended by this Act, is amended by striking ‘‘and’’ at
the end of paragraph (28), by striking the period at the
end of paragraph (29) and inserting ‘‘, and’’, and by add-
ing at the end the following new paragraph:
‘‘(30) to the extent provided in section 30C(f).’’.
(2) Section 55(c)(2), as amended by this Act, is
amended by inserting ‘‘30C(e),’’ after ‘‘30B(e)’’.
(3) The table of sections 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 30B
the following new item:
‘‘Sec. 30C. Clean-fuel vehicle refueling property credit.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after Sep-
tember 30, 2002, in taxable years ending after such date.
SEC. 2004. CREDIT FOR RETAIL SALE OF ALTERNATIVE
FUELS AS MOTOR VEHICLE FUEL.
(a) IN GENERAL.—Subpart D of part IV of subchapter
A of chapter 1 (relating to business related credits) is
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amended by inserting after section 40 the following new sec-
tion:
‘‘SEC. 40A. CREDIT FOR RETAIL SALE OF ALTERNATIVE
FUELS AS MOTOR VEHICLE FUEL.
‘‘(a) GENERAL RULE.—For purposes of section 38, the
alternative fuel retail sales credit for any taxable year is
the applicable amount for each gasoline gallon equivalent
of alternative fuel sold at retail by the taxpayer during such
year as a fuel to propel any qualified motor vehicle.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) APPLICABLE AMOUNT.—The term ‘applica-
ble amount’ means the amount determined in accord-
ance with the following table:
‘‘In the case of any taxable year
ending in—
The applicable amount is—
2002 and 2003 ...............................................................................
30 cents
2004 ................................................................................................
40 cents
2005 and 2006 ...............................................................................
50 cents.
‘‘(2) ALTERNATIVE FUEL.—The term ‘alternative
fuel’ means compressed natural gas, liquefied natural
gas, liquefied petroleum gas, hydrogen, and any liq-
uid at least 85 percent of the volume of which consists
of methanol or ethanol.
‘‘(3) GASOLINE GALLON EQUIVALENT.—The term
‘gasoline gallon equivalent’ means, with respect to
any alternative fuel, the amount (determined by the
Secretary) of such fuel having a Btu content of
114,000.
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‘‘(4) QUALIFIED
MOTOR
VEHICLE.—The term
‘qualified motor vehicle’ means any motor vehicle (as
defined in section 30(c)(2)) which meets any applica-
ble Federal or State emissions standards with respect
to each fuel by which such vehicle is designed to be
propelled.
‘‘(5) SOLD AT RETAIL.—
‘‘(A) IN GENERAL.—The term ‘sold at retail’
means the sale, for a purpose other than resale,
after manufacture, production, or importation.
‘‘(B) USE TREATED AS SALE.—If any per-
son uses alternative fuel (including any use after
importation) as a fuel to propel any qualified
alternative fuel motor vehicle (as defined in sec-
tion 30B(d)(4)) before such fuel is sold at retail,
then such use shall be treated in the same man-
ner as if such fuel were sold at retail as a fuel
to propel such a vehicle by such person.
‘‘(c) NO DOUBLE BENEFIT.—The amount of any de-
duction or other credit allowable under this chapter for any
fuel taken into account in computing the amount of the
credit determined under subsection (a) shall be reduced by
the amount of such credit attributable to such fuel.
‘‘(d) PASS-THRU
IN
THE CASE
OF ESTATES
AND
TRUSTS.—Under regulations prescribed by the Secretary,
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rules similar to the rules of subsection (d) of section 52 shall
apply.
‘‘(e) TERMINATION.—This section shall not apply to
any fuel sold at retail after December 31, 2006.’’.
(b) CREDIT TREATED AS BUSINESS CREDIT.—Section
38(b) (relating to current year 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 para-
graph:
‘‘(16) the alternative fuel retail sales credit deter-
mined under section 40A(a).’’.
(c) TRANSITIONAL RULE.—Section 39(d) (relating to
transitional rules) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(11) NO CARRYBACK OF SECTION 40A CREDIT
BEFORE EFFECTIVE DATE.—No portion of the unused
business credit for any taxable year which is attrib-
utable to the alternative fuel retail sales credit deter-
mined under section 40A(a) may be carried back to
a taxable year ending before January 1, 2002.’’.
(d) CLERICAL AMENDMENT.—The table of sections for
subpart D of part IV of subchapter A of chapter 1 is amend-
ed by inserting after the item relating to section 40 the fol-
lowing new item:
‘‘Sec. 40A. Credit for retail sale of alternative fuels as motor vehicle fuel.’’.
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(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to fuel sold at retail after September
30, 2002, in taxable years ending after such date.
SEC. 2005. SMALL ETHANOL PRODUCER CREDIT.
(a) ALLOCATION OF ALCOHOL FUELS CREDIT TO PA-
TRONS OF A COOPERATIVE.—Section 40(g) (relating to al-
cohol used as fuel) is amended by adding at the end the
following new paragraph:
‘‘(6) ALLOCATION
OF
SMALL
ETHANOL
PRO-
DUCER CREDIT TO PATRONS OF COOPERATIVE.—
‘‘(A) ELECTION TO ALLOCATE.—
‘‘(i) IN GENERAL.—In the case of a co-
operative organization described in section
1381(a), any portion of the credit deter-
mined under subsection (a)(3) for the tax-
able year may, at the election of the organi-
zation, be apportioned pro rata among pa-
trons of the organization on the basis of the
quantity or value of business done with or
for such patrons for the taxable year.
‘‘(ii) FORM
AND
EFFECT
OF
ELEC-
TION.—An election under clause (i) for any
taxable year shall be made on a timely filed
return for such year. Such election, once
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made, shall be irrevocable for such taxable
year.
‘‘(B) TREATMENT OF ORGANIZATIONS AND
PATRONS.—The amount of the credit apportioned
to patrons under subparagraph (A)—
‘‘(i) shall not be included in the
amount determined under subsection (a)
with respect to the organization for the tax-
able year,
‘‘(ii) shall be included in the amount
determined under subsection (a) for the tax-
able year of each patron for which the pa-
tronage dividends for the taxable year de-
scribed in subparagraph (A) are included in
gross income, and
‘‘(iii) shall be included in gross income
of such patrons for the taxable year in the
manner and to the extent provided in sec-
tion 87.
‘‘(C) SPECIAL
RULES
FOR
DECREASE
IN
CREDITS FOR TAXABLE YEAR.—If the amount of
the credit of a cooperative organization deter-
mined under subsection (a)(3) for a taxable year
is less than the amount of such credit shown on
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the return of the cooperative organization for
such year, an amount equal to the excess of—
‘‘(i) such reduction, over
‘‘(ii) the amount not apportioned to
such patrons under subparagraph (A) for
the taxable year,
shall be treated as an increase in tax imposed by
this chapter on the organization. Such increase
shall not be treated as tax imposed by this chap-
ter for purposes of determining the amount of
any credit under this chapter or for purposes of
section 55.’’.
(b) IMPROVEMENTS TO SMALL ETHANOL PRODUCER
CREDIT.—
(1) DEFINITION
OF
SMALL
ETHANOL
PRO-
DUCER.—Section 40(g) (relating to definitions and
special rules for eligible small ethanol producer cred-
it) is amended by striking ‘‘30,000,000’’ each place it
appears and inserting ‘‘60,000,000’’.
(2) SMALL ETHANOL PRODUCER CREDIT NOT A
PASSIVE
ACTIVITY
CREDIT.—Clause (i) of section
469(d)(2)(A) is amended by striking ‘‘subpart D’’ and
inserting ‘‘subpart D, other than section 40(a)(3),’’.
(3) ALLOWING
CREDIT
AGAINST
ENTIRE
REG-
ULAR TAX AND MINIMUM TAX.—
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(A) IN GENERAL.—Subsection (c) of section
38 (relating to limitation based on amount of
tax), as amended by section 301(b) of the Job
Creation and Worker Assistance Act of 2002, is
amended by redesignating paragraph (4) as
paragraph (5) and by inserting after paragraph
(3) the following new paragraph:
‘‘(4) SPECIAL RULES FOR SMALL ETHANOL PRO-
DUCER CREDIT.—
‘‘(A) IN GENERAL.—In the case of the small
ethanol producer credit—
‘‘(i) this section and section 39 shall be
applied separately with respect to the cred-
it, and
‘‘(ii) in applying paragraph (1) to the
credit—
‘‘(I) the amounts in subpara-
graphs (A) and (B) thereof shall be
treated as being zero, and
‘‘(II) the limitation under para-
graph (1) (as modified by subclause
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the tax-
able year (other than the small ethanol
producer credit).
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‘‘(B) SMALL
ETHANOL
PRODUCER
CRED-
IT.—For purposes of this subsection, the term
‘small ethanol producer credit’ means the credit
allowable under subsection (a) by reason of sec-
tion 40(a)(3).’’.
(B) CONFORMING AMENDMENTS.—Subclause
(II) of section 38(c)(2)(A)(ii), as amended by
section 301(b)(2) of the Job Creation and Worker
Assistance Act of 2002, and subclause (II) of sec-
tion 
38(c)(3)(A)(ii), 
as 
added 
by 
section
301(b)(1) of such Act, are each amended by in-
serting ‘‘or the small ethanol producer credit’’
after ‘‘employee credit’’.
(4) SMALL
ETHANOL
PRODUCER
CREDIT
NOT
ADDED BACK TO INCOME UNDER SECTION 87.—Sec-
tion 87 (relating to income inclusion of alcohol fuel
credit) is amended to read as follows:
‘‘SEC. 87. ALCOHOL FUEL CREDIT.
‘‘Gross income includes an amount equal to the sum
of—
‘‘(1) the amount of the alcohol mixture credit de-
termined with respect to the taxpayer for the taxable
year under section 40(a)(1), and
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‘‘(2) the alcohol credit determined with respect to
the taxpayer for the taxable year under section
40(a)(2).’’.
(c) CONFORMING AMENDMENT.—Section 1388 (relat-
ing to definitions and special rules for cooperative organi-
zations) is amended by adding at the end the following new
subsection:
‘‘(k) CROSS REFERENCE.—For provisions relating to
the apportionment of the alcohol fuels credit between cooper-
ative organizations and their patrons, see section
40(g)(6).’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after the date
of the enactment of this Act.
SEC. 2006. ALL ALCOHOL FUELS TAXES TRANSFERRED TO
HIGHWAY TRUST FUND.
(a) IN GENERAL.—Section 9503(b)(4) (relating to cer-
tain taxes not transferred to Highway Trust Fund) is
amended—
(1) by adding ‘‘or’’ at the end of subparagraph
(C),
(2) by striking the comma at the end of subpara-
graph (D)(iii) and inserting a period, and
(3) by striking subparagraphs (E) and (F).
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(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxes imposed after September 30,
2003.
SEC. 2007. INCREASED FLEXIBILITY IN ALCOHOL FUELS
TAX CREDIT.
(a) ALCOHOL
FUELS
CREDIT
MAY
BE
TRANS-
FERRED.—Section 40 (relating to alcohol used as fuel) is
amended by adding at the end the following new subsection:
‘‘(i) CREDIT MAY BE TRANSFERRED.—
‘‘(1) IN
GENERAL.—A taxpayer may transfer
any credit allowable under paragraph (1) or (2) of
subsection (a) with respect to alcohol used in the pro-
duction of ethyl tertiary butyl ether through an as-
signment to a qualified assignee. Such transfer may
be revoked only with the consent of the Secretary.
‘‘(2) QUALIFIED
ASSIGNEE.—For purposes of
this subsection, the term ‘qualified assignee’ means
any person who—
‘‘(A) is liable for taxes imposed under sec-
tion 4081,
‘‘(B) is required to register under section
4101, and
‘‘(C) obtains a certificate from the taxpayer
described in paragraph (1) which identifies the
amount of alcohol used in such production.
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‘‘(3) REGULATIONS.—The Secretary shall pre-
scribe such regulations as necessary to insure that
any credit described in paragraph (1) is claimed once
and not reassigned by a qualified assignee.’’.
(b) ALCOHOL FUELS CREDIT MAY BE TAKEN AGAINST
MOTOR FUELS TAX LIABILITY.—
(1) IN GENERAL.—Subpart C of part III of sub-
chapter A of chapter 32 (relating to special provisions
applicable to petroleum products) is amended by add-
ing at the end the following new section:
‘‘SEC. 4104. CREDIT AGAINST MOTOR FUELS TAXES.
‘‘(a) ELECTION TO USE CREDIT AGAINST MOTOR
FUELS TAXES.—There is hereby allowed as a credit against
the taxes imposed by section 4081, any credit allowed under
paragraph (1) or (2) of section 40(a) with respect to alcohol
used in the production of ethyl tertiary butyl ether to the
extent—
‘‘(1) such credit is not claimed by the taxpayer
or the qualified assignee under section 40(i) as a
credit under section 40, and
‘‘(2) the taxpayer or qualified assignee elects to
claim such credit under this section.
‘‘(b) ELECTION IRREVOCABLE.—Any election under
subsection (a) shall be irrevocable.
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‘‘(c) REQUIRED STATEMENT.—Any return claiming a
credit pursuant to an election under this section shall be
accompanied by a statement that the credit was not, and
will not, be claimed on an income tax return.
‘‘(d) REGULATIONS.—The Secretary shall prescribe
such regulations as necessary to avoid the claiming of dou-
ble benefits and to prescribe the taxable periods with respect
to which the credit may be claimed.’’.
(2) CONFORMING AMENDMENT.—Section 40(c) is
amended by striking ‘‘or section 4091(c)’’ and insert-
ing ‘‘section 4091(c), or section 4104’’.
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart C of part III of subchapter A of
chapter 32 is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 4104. Credit against motor fuels taxes.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall take effect on and after the date of the enact-
ment of this Act.
SEC. 2008. INCENTIVES FOR BIODIESEL.
(a) CREDIT FOR BIODIESEL USED AS A FUEL.—
(1) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (relating to business related
credits), as amended by this Act, is amended by in-
serting after section 40A the following new section:
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‘‘SEC. 40B. BIODIESEL USED AS FUEL.
‘‘(a) GENERAL RULE.—For purposes of section 38, the
biodiesel fuels credit determined under this section for the
taxable year is an amount equal to the biodiesel mixture
credit.
‘‘(b) DEFINITION OF BIODIESEL MIXTURE CREDIT.—
For purposes of this section—
‘‘(1) BIODIESEL MIXTURE CREDIT.—
‘‘(A) IN GENERAL.—The biodiesel mixture
credit of any taxpayer for any taxable year is
the sum of the products of the biodiesel mixture
rate for each qualified biodiesel mixture and the
number of gallons of such mixture of the tax-
payer for the taxable year.
‘‘(B) BIODIESEL MIXTURE RATE.—For pur-
poses of subparagraph (A), the biodiesel mixture
rate for each qualified biodiesel mixture shall
be—
‘‘(i) in the case of a mixture with only
biodiesel V, 1 cent for each whole percentage
point (not exceeding 20 percentage points)
of biodiesel V in such mixture, and
‘‘(ii) in the case of a mixture with bio-
diesel NV, or a combination of biodiesel V
and biodiesel NV, 0.5 cent for each whole
percentage point (not exceeding 20 percent-
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age points) of such biodiesel in such mix-
ture.
‘‘(2) QUALIFIED BIODIESEL MIXTURE.—
‘‘(A) IN GENERAL.—The term ‘qualified bio-
diesel mixture’ means a mixture of diesel and
biodiesel V or biodiesel NV which—
‘‘(i) is sold by the taxpayer producing
such mixture to any person for use as a
fuel, or
‘‘(ii) is used as a fuel by the taxpayer
producing such mixture.
‘‘(B) SALE OR USE MUST BE IN TRADE OR
BUSINESS, ETC.—
‘‘(i) IN GENERAL.—Biodiesel V or bio-
diesel NV used in the production of a quali-
fied biodiesel mixture shall be taken into
account—
‘‘(I) only if the sale or use de-
scribed in subparagraph (A) is in a
trade or business of the taxpayer, and
‘‘(II) for the taxable year in which
such sale or use occurs.
‘‘(ii) CERTIFICATION
FOR
BIODIESEL
V.—Biodiesel V used in the production of a
qualified biodiesel mixture shall be taken
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into account only if the taxpayer described
in subparagraph (A) obtains a certification
from the producer of the biodiesel V which
identifies the product produced.
‘‘(C) CASUAL OFF-FARM PRODUCTION NOT
ELIGIBLE.—No credit shall be allowed under this
section with respect to any casual off-farm pro-
duction of a qualified biodiesel mixture.
‘‘(c) COORDINATION WITH EXEMPTION FROM EXCISE
TAX.—The amount of the credit determined under this sec-
tion with respect to any biodiesel V shall, under regulations
prescribed by the Secretary, be properly reduced to take into
account any benefit provided with respect to such biodiesel
V solely by reason of the application of section 4041(n) or
section 4081(f).
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) BIODIESEL V DEFINED.—The term ‘biodiesel
V’ means the monoalkyl esters of long chain fatty
acids derived solely from virgin vegetable oils for use
in compressional-ignition (diesel) engines. Such term
shall include esters derived from vegetable oils from
corn, soybeans, sunflower seeds, cottonseeds, canola,
crambe, rapeseeds, safflowers, flaxseeds, rice bran, and
mustard seeds.
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‘‘(2) BIODIESEL NV DEFINED.—The term ‘bio-
diesel nv’ means the monoalkyl esters of long chain
fatty acids derived from nonvirgin vegetable oils or
animal fats for use in compressional-ignition (diesel)
engines.
‘‘(3) REGISTRATION REQUIREMENTS.—The terms
‘biodiesel V’ and ‘biodiesel NV’ shall only include a
biodiesel which meets—
‘‘(i) the registration requirements for
fuels and fuel additives established by the
Environmental Protection Agency under
section 211 of the Clean Air Act (42 U.S.C.
7545), and
‘‘(ii) the requirements of the American
Society of Testing and Materials D6751.
‘‘(2) BIODIESEL MIXTURE NOT USED AS A FUEL,
ETC.—
‘‘(A) IMPOSITION OF TAX.—If—
‘‘(i) any credit was determined under
this section with respect to biodiesel V or
biodiesel NV used in the production of any
qualified biodiesel mixture, and
‘‘(ii) any person—
‘‘(I) separates such biodiesel from
the mixture, or
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‘‘(II) without separation, uses the
mixture other than as a fuel,
then there is hereby imposed on such person
a tax equal to the product of the biodiesel
mixture rate applicable under subsection
(b)(1)(B) and the number of gallons of the
mixture.
‘‘(B) APPLICABLE LAWS.—All provisions of
law, including penalties, shall, insofar as appli-
cable and not inconsistent with this section,
apply in respect of any tax imposed under sub-
paragraph (A) as if such tax were imposed by
section 4081 and not by this chapter.
‘‘(3) PASS-THRU IN THE CASE OF ESTATES AND
TRUSTS.—Under regulations prescribed by the Sec-
retary, rules similar to the rules of subsection (d) of
section 52 shall apply.
‘‘(e) ELECTION TO HAVE BIODIESEL FUELS CREDIT
NOT APPLY.—
‘‘(1) IN
GENERAL.—A taxpayer may elect to
have this section not apply for any taxable year.
‘‘(2) TIME FOR MAKING ELECTION.—An election
under paragraph (1) for any taxable year may be
made (or revoked) at any time before the expiration
of the 3-year period beginning on the last date pre-
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scribed by law for filing the return for such taxable
year (determined without regard to extensions).
‘‘(3) MANNER OF MAKING ELECTION.—An elec-
tion under paragraph (1) (or revocation thereof) shall
be made in such manner as the Secretary may by reg-
ulations prescribe.’’.
‘‘(f) TERMINATION.—This section shall not apply to
any fuel sold after December 31, 2005.’’.
(2) CREDIT
TREATED
AS
PART
OF
GENERAL
BUSINESS
CREDIT.—Section 38(b), as amended by
this Act, 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 add-
ing at the end the following new paragraph:
‘‘(17) the biodiesel fuels credit determined under
section 40B(a).’’.
(3) CONFORMING AMENDMENTS.—
(A) Section 39(d), as amended by this Act,
is amended by adding at the end the following
new paragraph:
‘‘(12) NO
CARRYBACK
OF
BIODIESEL
FUELS
CREDIT BEFORE JANUARY 1, 2003.—No portion of the
unused business credit for any taxable year which is
attributable to the biodiesel fuels credit determined
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under section 40B may be carried back to a taxable
year beginning before January 1, 2003.’’.
(B) Section 196(c) is amended by striking
‘‘and’’ at the end of paragraph (9), by striking
the period at the end of paragraph (10), and by
adding at the end the following new paragraph:
‘‘(11) the biodiesel fuels credit determined under
section 40B(a).’’.
(C) Section 6501(m), as amended by this
Act, is amended by inserting ‘‘40B(e),’’ after
‘‘40(f),’’.
(D) The table of sections for subpart D of
part IV of subchapter A of chapter 1, as amend-
ed by this Act, is amended by adding after the
item relating to section 40A the following new
item:
‘‘Sec. 40B. Biodiesel used as fuel.’’.
(4) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after December 31, 2002.
(b) REDUCTION OF MOTOR FUEL EXCISE TAXES ON
BIODIESEL V MIXTURES.—
(1) IN
GENERAL.—Section 4081 (relating to
manufacturers tax on petroleum products) is amended
by adding at the end the following new subsection:
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‘‘(3) GROSS
RECEIPTS.—For purposes of this
subsection, the rules of paragraphs (2) and (3) of sec-
tion 448(c) shall apply.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED
ENERGY
EFFICIENT
APPLI-
ANCE.—The term ‘qualified energy efficient appliance’
means—
‘‘(A) a clothes washer described in subpara-
graph (A)(i) or (B)(i) of subsection (b)(1), or
‘‘(B) a refrigerator described in subpara-
graph (A)(ii) or (B)(ii) of subsection (b)(1).
‘‘(2) CLOTHES
WASHER.—The term ‘clothes
washer’ means a residential clothes washer, including
a residential style coin operated washer.
‘‘(3) REFRIGERATOR.—The term ‘refrigerator’
means an automatic defrost refrigerator-freezer which
has an internal volume of at least 16.5 cubic feet.
‘‘(4) MEF.—The term ‘MEF’ means Modified
Energy Factor (as determined by the Secretary of En-
ergy).
‘‘(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.
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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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‘‘(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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‘‘(B) to limit the capacity of any qualifying
advanced clean coal technology unit to which
this section applies so that the combined mega-
watt capacity of all such units to which this sec-
tion applies does not exceed 4,000 megawatts,
‘‘(C) to provide a certification process de-
scribed in section 45I(e)(3)(C),
‘‘(D) to carry out the purposes described in
subparagraphs (D), (E), and (F) of section
45I(e)(3), and
‘‘(E) to reallocate capacity which is not al-
located to any technology described in subpara-
graphs (A) through (D) of paragraph (1) because
an insufficient number of qualifying units re-
quest an allocation for such technology, to an-
other technology described in such subparagraphs
in order to maximize the amount of energy effi-
cient production encouraged with the available
tax credits.
‘‘(4) SELECTION
CRITERIA.—For purposes of
paragraph (3)(C), the selection criteria for allocating
the national megawatt capacity limitation to quali-
fying advanced clean coal technology units—
‘‘(A) shall be established by the Secretary of
Energy as part of a competitive solicitation,