Text: H.R.7239 — 110th Congress (2007-2008)All Information (Except Text)

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Introduced in House (09/29/2008)


110th CONGRESS
2d Session
H. R. 7239


To reduce gasoline prices, to lessen the dependence of the United States on foreign oil, to strengthen the economy of the United States, and for other purposes.


IN THE HOUSE OF REPRESENTATIVES

September 29, 2008

Mr. Udall of Colorado introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Agriculture, Ways and Means, Science and Technology, Oversight and Government Reform, Transportation and Infrastructure, and Natural Resources, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned


A BILL

To reduce gasoline prices, to lessen the dependence of the United States on foreign oil, to strengthen the economy of the United States, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title; table of contents.

(a) Short title.—This Act may be cited as the “American Energy, American Innovation Act of 2008”.

(b) Table of contents.—


Sec. 1. Short title; table of contents.

Sec. 101. Definitions.

Sec. 102. Sale and replacement of oil from the strategic petroleum reserve.

Sec. 111. Definition of energy commodity.

Sec. 112. Speculative limits and transparency of off-shore trading.

Sec. 113. Disaggregation of index funds and other data in energy and agriculture markets.

Sec. 114. Detailed reporting from index traders and swap dealers.

Sec. 115. Transparency and recordkeeping authorities.

Sec. 116. Trading limits to prevent excessive speculation.

Sec. 117. Modifications to core principles applicable to position limits for contracts in agricultural and energy commodities.

Sec. 118. CFTC administration.

Sec. 119. Review of prior actions.

Sec. 120. Review of over-the-counter markets.

Sec. 121. Studies; reports.

Sec. 122. Over-the-counter authority.

Sec. 123. Expedited process.

Sec. 201. Establishment of Commission.

Sec. 202. Purpose.

Sec. 203. Composition of Commission.

Sec. 204. Functions of Commission.

Sec. 205. Powers of Commission.

Sec. 206. Reports.

Sec. 207. Staff of Commission.

Sec. 208. Compensation and travel expenses.

Sec. 209. Meetings.

Sec. 210. Authorization of appropriations.

Sec. 301. National renewable electricity standard.

Sec. 401. Sense of Senate on conversion of motor vehicles to alternative fuels and energy independence.

Sec. 402. Consumer tax credits for advanced vehicles.

Sec. 403. Research and development program for alternative fuel vehicle technologies.

Sec. 404. Federal fleet requirements.

Sec. 501. Increase corporate fuel economy standards.

Sec. 502. More realistic determination of fuel efficiency standards.

Sec. 503. Fuel efficiency standards revisions.

Sec. 504. Automobile safety.

Sec. 511. Lightweight materials research and development.

Sec. 512. Federal Government gasoline consumption.

Sec. 513. Credit for fuel-efficient motor vehicles.

Sec. 514. Exclusion from heavy truck tax for idling reduction units and advanced insulation.

Sec. 515. Idling reduction tax credit.

Sec. 516. Determination of certification standards by Secretary of Energy for certifying idling reduction devices.

Sec. 517. Extension and modification of alternative motor vehicle credit.

Sec. 521. Bioenergy research and development.

Sec. 522. Alternative fueled automobile production requirement.

Sec. 523. Definition of renewable biomass.

Sec. 524. Loan guarantees for renewable energy pipelines.

Sec. 530. Reference.

Sec. 531. Expansion of special allowance to cellulosic biomass alcohol fuel plant property.

Sec. 532. Credit for producers of fossil free alcohol.

Sec. 533. Extension and modification of credit for biodiesel used as fuel.

Sec. 534. Extension and modification of alternative fuel credit.

Sec. 535. Extension of suspension of taxable income limit on percentage depletion for oil and natural gas produced from marginal properties.

Sec. 536. Extension and modification of election to expense certain refineries.

Sec. 537. Hydrogen installation, infrastructure, and fuel costs.

Sec. 538. Alternative fuel vehicle refueling property credit.

Sec. 539. Certain income and gains relating to alcohol fuels and mixtures, biodiesel fuels and mixtures, and alternative fuels and mixtures treated as qualifying income for publicly traded partnerships.

Sec. 541. Energy efficiency and conservation block grants.

Sec. 542. Weatherization assistance program for low-income persons.

Sec. 543. Renewable energy workforce.

Sec. 550. Reference.

Sec. 551. Renewable energy credit.

Sec. 552. Production credit for electricity produced from marine renewables.

Sec. 553. Energy credit.

Sec. 554. Credit for residential energy efficient property.

Sec. 555. Special rule to implement FERC and State electric restructuring policy.

Sec. 556. New clean renewable energy bonds.

Sec. 561. Expansion and modification of advanced coal project investment credit.

Sec. 562. Expansion and modification of coal gasification investment credit.

Sec. 563. Temporary increase in coal excise tax.

Sec. 564. Special rules for refund of the coal excise tax to certain coal producers and exporters.

Sec. 565. Carbon audit of the tax code.

Sec. 571. Qualified energy conservation bonds.

Sec. 572. Credit for nonbusiness energy property.

Sec. 573. Energy efficient commercial buildings deduction.

Sec. 574. Modifications of energy efficient appliance credit for appliances produced after 2007.

Sec. 575. Accelerated recovery period for depreciation of smart meters and smart grid systems.

Sec. 576. Qualified green building and sustainable design projects.

Sec. 581. Energy credit for geothermal heat pump systems.

Sec. 582. 3-year accelerated depreciation period for geothermal heat pump systems.

Sec. 601. Prohibition on leasing.

Sec. 602. Opening of certain areas to oil and gas leasing.

Sec. 603. Coastal State roles and responsibilities.

Sec. 604. Protection of the environment and conservation of the natural resources of the Outer Continental Shelf.

Sec. 605. Limitations.

Sec. 606. Prohibition on leasing in certain Federal protected areas.

Sec. 607. No effect on applicable law.

Sec. 608. Buy American requirements.

Sec. 609. Small, woman-owned, and minority-owned businesses.

Sec. 610. OCS joint permitting offices.

Sec. 611. Definitions.

Sec. 621. Issuance of new leases.

Sec. 622. Fair return on production of Federal oil and gas resources.

Sec. 631. Coal innovation direct loan program.

Sec. 641. Nuclear Regulatory Commission.

Sec. 642. Nuclear energy workforce.

Sec. 643. Interagency working group to promote domestic manufacturing base for nuclear components and equipment.

Sec. 651. Tax credit for carbon dioxide sequestration.

Sec. 700. Reference.

Sec. 701. Limitation of deduction for income attributable to domestic production of oil, gas, or primary products thereof.

Sec. 702. 7-year amortization of geological and geophysical expenditures for certain major integrated oil companies.

Sec. 703. Clarification of determination of foreign oil and gas extraction income.

Sec. 704. Clarification of eligibility for renewable diesel credit.

Sec. 705. Clarification that credits for fuel are designed to provide an incentive for United States production.

Sec. 711. Nonqualified deferred compensation from certain tax indifferent parties.

Sec. 712. Delay in application of worldwide allocation of interest.

Sec. 713. Time for payment of corporate estimated taxes.

SEC. 101. Definitions.

In this subtitle—

(1) the term “light grade petroleum” means crude oil with an API gravity of 30 degrees or higher;

(2) the term “heavy grade petroleum” means crude oil with an API gravity of 26 degrees or lower; and

(3) the term “Secretary” means the Secretary of Energy.

SEC. 102. Sale and replacement of oil from the strategic petroleum reserve.

(a) Initial Petroleum Sale and Replacement.—Notwithstanding section 161 of the Energy Policy and Conservation Act (42 U.S.C. 6241), the Secretary shall publish a plan not later than 15 days after the date of enactment of this Act to—

(1) sell, in the amounts and on the schedule described in subsection (b), light grade petroleum from the Strategic Petroleum Reserve and acquire an equivalent volume of heavy grade petroleum;

(2) deposit the cash proceeds from sales under paragraph (1) into the SPR Petroleum Account established under section 167 of the Energy Policy and Conservation Act (42 U.S.C. 6247); and

(3) from the cash proceeds deposited pursuant to paragraph (2), withdraw the amount necessary to pay for the direct administrative and operational costs of the sale and acquisition.

(b) Amounts and Schedule.—The sale and acquisition described in subsection (a) shall require the offer for sale of a total quantity of 70,000,000 barrels of light grade petroleum from the Strategic Petroleum Reserve. The sale shall commence, whether or not a plan has been published under subsection (a), not later than 30 days after the date of enactment of this Act and be completed no more than 6 months after the date of enactment of this Act, with at least 20,000,000 barrels to be offered for sale within the first 60 days after the date of enactment of this Act. In no event shall the Secretary sell barrels of oil under subsection (a) that would result in a Strategic Petroleum Reserve that contains fewer than 90 percent of the total amount of barrels in the Strategic Petroleum Reserve as of the date of enactment of this Act. Heavy grade petroleum, to replace the quantities of light grade petroleum sold under this section, shall be obtained through acquisitions which—

(1) shall commence no sooner than 6 months after the date of enactment of this Act;

(2) shall be completed, at the discretion of the Secretary, not later than 5 years after the date of enactment of this Act;

(3) shall be carried out in a manner so as to maximize the monetary value to the Federal Government; and

(4) shall be acquired using the receipts from the sale of light petroleum authorized under this section.

(c) Deferrals.—The Secretary is encouraged to, when economically beneficial and practical, grant requests to defer scheduled deliveries of petroleum to the Reserve under subsection (a) if the deferral will result in a premium paid in additional barrels of oil which will reduce the cost of oil acquisition and increase the volume of oil delivered to the Reserve or yield additional cash bonuses.

SEC. 111. Definition of energy commodity.

(a) Definition of Energy Commodity.—Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended—

(1) by redesignating paragraphs (13) through (34) as paragraphs (14) through (35), respectively; and

(2) by inserting after paragraph (12) the following:

“(13) ENERGY COMMODITY.—The term ‘energy commodity’ means—

“(A) coal;

“(B) crude oil, gasoline, diesel fuel, jet fuel, heating oil, and propane;

“(C) electricity;

“(D) natural gas; and

“(E) any other substance that is used as a source of energy, as the Commission, in its discretion, deems appropriate.”.

(b) Conforming Amendments.—

(1) Section 2(c)(2)(B)(i)(II)(cc) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(B)(i)(II)(cc)) is amended—

(A) in subitem (AA), by striking “section 1a(20)” and inserting “section 1a(21)”; and

(B) in subitem (BB), by striking “section 1a(20)” and inserting “section 1a(21)”.

(2) Section 13106(b)(1) of the Food, Conservation, and Energy Act of 2008 is amended by striking “section 1a(32)” and inserting “section 1a”.

(3) Section 402 of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27) is amended—

(A) in subsection (a)(7), by striking “section 1a(20)” and inserting “section 1a”; and

(B) in subsection (d)—

(i) in paragraph (1)(B), by striking “section 1a(33)” and inserting “section 1a”; and

(ii) in paragraph (2)(D), by striking “section 1a(13)” and inserting “section 1a”.

SEC. 112. Speculative limits and transparency of off-shore trading.

(a) In General.—Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is amended by adding at the end the following:

“(e) Foreign Boards of Trade.—

“(1) IN GENERAL.—The Commission may not permit a foreign board of trade to provide to the members of the foreign board of trade or other participants located in the United States direct access to the electronic trading and order matching system of the foreign board of trade with respect to an agreement, contract, or transaction in an energy or agricultural commodity that settles against any price (including the daily or final settlement price) of 1 or more contracts listed for trading on a registered entity, unless—

“(A) the foreign board of trade makes public daily trading information regarding the agreement, contract, or transaction that is comparable to the daily trading information published by the registered entity for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles; and

“(B) the foreign board of trade (or the foreign futures authority that oversees the foreign board of trade)—

“(i) adopts position limits (including related hedge exemption provisions) for the agreement, contract, or transaction that are comparable, taking into consideration the relative sizes of the respective markets, to the position limits (including related hedge exemption provisions) adopted by the registered entity for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles;

“(ii) has the authority to require or direct market participants to limit, reduce, or liquidate any position the foreign board of trade (or the foreign futures authority that oversees the foreign board of trade) determines to be necessary to prevent or reduce the threat of price manipulation, excessive speculation as described in section 4a, price distortion, or disruption of delivery or the cash settlement process;

“(iii) agrees to promptly notify the Commission of any change regarding—

“(I) the information that the foreign board of trade will make publicly available;

“(II) the position limits that the foreign board of trade or foreign futures authority will adopt and enforce;

“(III) the position reductions required to prevent manipulation, excessive speculation as described in section 4a, price distortion, or disruption of delivery or the cash settlement process; and

“(IV) any other area of interest expressed by the Commission to the foreign board of trade or foreign futures authority;

“(iv) provides information to the Commission regarding large trader positions in the agreement, contract, or transaction that is comparable to the large trader position information collected by the Commission for the 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles; and

“(v) provides the Commission with information necessary to publish reports on aggregate trader positions for the agreement, contract, or transaction traded on the foreign board of trade that are comparable to such reports for 1 or more contracts against which the agreement, contract, or transaction traded on the foreign board of trade settles.

“(2) EXISTING FOREIGN BOARDS OF TRADE.—Paragraph (1) shall not be effective with respect to any agreement, contract, or transaction in an energy commodity executed on a foreign board of trade to which the Commission had granted direct access permission before the date of the enactment of this subsection until the date that is 180 days after such date of enactment.”.

(b) Liability of Registered Persons Trading on a Foreign Board of Trade.—

(1) Section 4(a) of such Act (7 U.S.C. 6(a)) is amended by inserting “or by subsection (f)” after “Unless exempted by the Commission pursuant to subsection (c)”.

(2) Section 4 of such Act (7 U.S.C. 6) is further amended by adding at the end the following:

“(f) A person registered with the Commission, or exempt from registration by the Commission, under this Act may not be found to have violated subsection (a) with respect to a transaction in, or in connection with, a contract of sale of a commodity for future delivery if the person has reason to believe the transaction and the contract is made on or subject to the rules of a board of trade that is legally organized under the laws of a foreign country, authorized to act as a board of trade by a foreign futures authority, subject to regulation by the foreign futures authority, and has not been determined by the Commission to be operating in violation of subsection (a).”.

(c) Contract Enforcement for Foreign Futures Contracts.—Section 22(a) of such Act (7 U.S.C. 25(a)) is amended by adding at the end the following:

“(5) A contract of sale of a commodity for future delivery traded or executed on or through the facilities of a board of trade, exchange, or market located outside the United States for purposes of section 4(a) shall not be void, voidable, or unenforceable, and a party to such a contract shall not be entitled to rescind or recover any payment made with respect to the contract, based on the failure of the foreign board of trade to comply with any provision of this Act.”.

SEC. 113. Disaggregation of index funds and other data in energy and agriculture markets.

Section 4 of the Commodity Exchange Act (7 U.S.C. 6), as amended by section 112 of this Act, is amended by adding at the end the following:

“(g) Disaggregation of Index Funds and Other Data in Energy and Agriculture Markets.—Subject to section 8 and beginning within 30 days of the issuance of the final rule required by section 4h, the Commission shall disaggregate and make public weekly—

“(1) the number of positions and total value of index funds and other passive, long-only and short-only positions (as defined by the Commission) in all energy and agricultural markets to the extent such information is available; and

“(2) data on speculative positions relative to bona fide physical hedgers in those markets to the extent such information is available.”.

SEC. 114. Detailed reporting from index traders and swap dealers.

Section 4 of the Commodity Exchange Act (7 U.S.C. 6), as amended by sections 112 and 113 of this Act, is amended by adding at the end the following:

“(h) Index Traders and Swap Dealers Reporting.—The Commission shall issue a proposed rule defining and classifying index traders and swap dealers (as those terms are defined by the Commission) for purposes of data reporting requirements and setting routine detailed reporting requirements for such entities in designated contract markets, derivatives transaction execution facilities, foreign boards of trade subject to section 4(e), and electronic trading facilities with respect to significant price discovery contracts with respect to exempt and agricultural commodities not later than 60 days after the date of the enactment of this subsection, and issue a final rule within 120 days after such date of enactment.”.

SEC. 115. Transparency and recordkeeping authorities.

(a) In General.—Section 4g(a) of the Commodity Exchange Act (7 U.S.C. 6g(a)) is amended—

(1) by inserting “a” before “futures commission merchant”; and

(2) by inserting “and transactions and positions traded pursuant to subsection (g), (h)(1), or (h)(2) of section 2, or any exemption issued by the Commission by rule, regulation or order,” after “United States or elsewhere,”.

(b) Reports of Deals Equal to or in Excess of Trading Limits.—Section 4i of such Act (7 U.S.C. 6i) is amended—

(1) in the first sentence—

(A) by inserting “(a)” before “It shall”; and

(B) by inserting “in the United States or elsewhere, and of transactions and positions in any such commodity entered into pursuant to subsection (g), (h)(1), or (h)(2) of section 2, or any exemption issued by the Commission by rule, regulation or order” before “, and of cash or spot”; and

(2) by striking all that follows the 1st sentence and inserting the following:

“(b) With respect to agricultural and energy commodities, upon special call by the Commission, any person shall provide to the Commission, in a form and manner and within the period specified in the special call, books and records of all transactions and positions traded on or subject to the rules of any board of trade or electronic trading facility in the United States or elsewhere, or pursuant to subsection (g), (h)(1), or (h)(2) of section 2, or any exemption issued by the Commission by rule, regulation, or order, as the Commission may determine appropriate to deter and prevent price manipulation or any other disruption to market integrity or to diminish, eliminate, or prevent excessive speculation as described in section 4a(a).

“(c) Such books and records described in subsections (a) and (b) shall show complete details concerning all such transactions, positions, inventories, and commitments, including the names and addresses of all persons having any interest therein, shall be kept for a period of 5 years, and shall be open at all times to inspection by any representative of the Commission or the Department of Justice. For the purposes of this section, the futures and cash or spot transactions and positions of any person shall include such transactions and positions of any persons directly or indirectly controlled by the person.”.

(c) Conforming Amendments.—

(1) Section 2(g) of such Act (7 U.S.C. 2(g)) is amended—

(A) by inserting “4g(a), 4i,” before “5a (to”; and

(B) by inserting “, and the regulations of the Commission pursuant to section 4c(b) requiring reporting in connection with commodity option transactions,” before “shall apply”.

(2) Section 2(h)(2)(A) of such Act (7 U.S.C. 2(h)(2)(A)) is amended to read as follows:

“(A) sections 4g(a), 4i, 5b, and 12(e)(2)(B), and the regulations of the Commission pursuant to section 4c(b) requiring reporting in connection with commodity option transactions;”.

SEC. 116. Trading limits to prevent excessive speculation.

Section 4a of the Commodity Exchange Act (7 U.S.C. 6a) is amended—

(1) in subsection (a)—

(A) by inserting “(1)” after “(a)”; and

(B) by adding after and below the end the following:

“(2) In accordance with the standards set forth in paragraph (1) of this subsection and consistent with the good faith exception cited in subsection (b)(2), with respect to agricultural commodities enumerated in section 1a(4) and energy commodities, the Commission, within 60 days after the date of the enactment of this paragraph, shall by rule, regulation, or order establish limits on the amount of positions that may be held by any person with respect to contracts of sale for future delivery or with respect to options on such contracts or commodities traded on or subject to the rules of a contract market or derivatives transaction execution facility, or on an electronic trading facility as a significant price discovery contract.

“(3) In establishing the limits required in paragraph (2), the Commission shall set limits—

“(A) on the number of positions that may be held by any person for the spot month, each other month, and the aggregate number of positions that may be held by any person for all months;

“(B) to the maximum extent practicable, in its discretion—

“(i) to diminish, eliminate, or prevent excessive speculation as described under this section;

“(ii) to deter and prevent market manipulation, squeezes, and corners;

“(iii) to ensure sufficient market liquidity for bona fide hedgers; and

“(iv) to ensure that the price discovery function of the underlying market is not disrupted; and

“(C) to the maximum extent practicable, in its discretion, take into account the total number of positions in fungible agreements, contracts, or transactions that a person can hold in agricultural and energy commodities in other markets.

“(4)(A) Not later than 150 days after the date of the enactment of this paragraph, the Commission shall convene a Position Limit Agricultural Advisory Group and a Position Limit Energy Group, each group consisting of representatives from—

“(i) 5 predominantly commercial short hedgers of the actual physical commodity for future delivery;

“(ii) 5 predominantly commercial long hedgers of the actual physical commodity for future delivery;

“(iii) 4 noncommercial participants in markets for commodities for future delivery; and

“(iv) each designated contract market or derivatives transaction execution facility upon which a contract in the commodity for future delivery is traded, and each electronic trading facility that has a significant price discovery contract in the commodity.

“(B) Not later than 60 days after the date on which the advisory groups are convened under subparagraph (A), and annually thereafter, the advisory groups shall submit to the Commission advisory recommendations regarding the position limits to be established in paragraph (2) and a recommendation as to whether the position limits should be administered directly by the Commission, or by the registered entity on which the commodity is listed (with enforcement by both the registered entity and the Commission).”; and

(2) in subsection (c)—

(A) by inserting “(1)” after “(c)”; and

(B) by adding after and below the end the following:

“(2) With respect to agricultural and energy commodities, for the purposes of contracts of sale for future delivery and options on such contracts or commodities, a bona fide hedging transaction or position is a transaction or position that—

“(A)(i) represents a substitute for transactions to be made or positions to be taken at a later time in a physical marketing channel;

“(ii) is economically appropriate to the reduction of risks in the conduct and management of a commercial enterprise; and

“(iii) arises from the potential change in the value of—

“(I) assets that a person owns, produces, manufactures, processes, or merchandises or anticipates owning, producing, manufacturing, processing, or merchandising;

“(II) liabilities that a person owns or anticipates incurring; or

“(III) services that a person provides, purchases, or anticipates providing or purchasing; or

“(B) reduces risks attendant to a position resulting from a transaction that—

“(i) was executed pursuant to subsection (g), (h)(1), or (h)(2) of section 2, or an exemption issued by the Commission by rule, regulation or order; and

“(ii) was executed opposite a counterparty for which the transaction would qualify as a bona fide hedging transaction pursuant to paragraph (2)(A) of this subsection.”.

SEC. 117. Modifications to core principles applicable to position limits for contracts in agricultural and energy commodities.

(a) Contracts Traded on Contract Markets.—Section 5(d)(5) of the Commodity Exchange Act (7 U.S.C. 7(d)(5)) is amended by striking all that follows “adopt” and inserting “, for speculators, position limitations with respect to agricultural commodities enumerated in section 1a(4) or energy commodities, and position limitations or position accountability with respect to other commodities, where necessary and appropriate.”.

(b) Contracts Traded on Derivatives Transaction Execution Facilities.—Section 5a(d)(4) of such Act (7 U.S.C. 7a(d)(4)) is amended by striking all that follows “adopt” and inserting “, for speculators, position limitations with respect to energy commodities, and position limitations or position accountability with respect to other commodities, where necessary and appropriate for a contract, agreement or transaction with an underlying commodity that has a physically deliverable supply.”.

(c) Significant Price Discovery Contracts.—Section 2(h)(7)(C)(ii)(IV) of such Act (7 U.S.C. 2(h)(7)(C)(ii)(IV)) is amended by striking “where necessary” and all that follows through “in significant price discovery contracts” and inserting “for speculators, position limitations with respect to significant price discovery contracts in energy commodities, and position limitations or position accountability with respect to significant price discovery contracts in other commodities”.

SEC. 118. CFTC administration.

(a) Additional Commodity Futures Trading Commission Employees for Improved Enforcement.—Section 2(a)(7) of the Commodity Exchange Act (7 U.S.C. 2(a)(7)) is amended by adding at the end the following:

“(D) ADDITIONAL EMPLOYEES.—As soon as practicable after the date of the enactment of this subparagraph, subject to appropriations, the Commission shall appoint at least 100 full-time employees (in addition to the employees employed by the Commission as of the date of the enactment of this subparagraph)—

“(i) to increase the public transparency of operations in agriculture and energy markets;

“(ii) to improve the enforcement of this Act in those markets; and

“(iii) to carry out such other duties as are prescribed by the Commission.”.

(b) Inspector General of Commodity Futures Trading Commission.—

(1) ELEVATION OF OFFICE.—

(A) INCLUSION OF CFTC IN DEFINITION OF ESTABLISHMENT.—Section 11(2) of the Inspector General Act of 1878 (5 U.S.C. App.) is amended by striking “or the Export-Import Bank,” and inserting “, the Export-Import Bank, or the Commodity Futures Trading Commission,”.

(B) EXCLUSION OF CFTC FROM DEFINITION OF DESIGNATED FEDERAL ENTITY.—Section 8G(a)(2) of such Act (5 U.S.C. App.) is amended by striking “the Commodity Futures Trading Commission,”.

(2) TRANSITION.—Until such time as the Inspector General of the Commodity Futures Trading Commission is appointed in accordance with section 3 of the Inspector General Act of 1978, the Office of Inspector General of the Commission shall continue in effect as provided in such Act before the date of the enactment of this Act.

SEC. 119. Review of prior actions.

Notwithstanding any provision of the Commodity Exchange Act, the Commodity Futures Trading Commission shall review, as appropriate, all regulations, rules, exemptions, exclusions, guidance, no action letters, orders, other actions taken by or on behalf of the Commission, and any action taken pursuant to the Commodity Exchange Act by an exchange, self-regulatory organization, or any other registered entity, that are currently in effect, to ensure that such prior actions are in compliance with the provisions of this title.

SEC. 120. Review of over-the-counter markets.

(a) Study.—The Commodity Futures Trading Commission shall conduct a study—

(1) to determine the efficacy, practicality, and consequences of establishing position limits for agreements, contracts, or transactions conducted in reliance on sections 2(g) and 2(h) of the Commodity Exchange Act and of any exemption issued by the Commission by rule, regulation or order, as a means to deter and prevent price manipulation or any other disruption to market integrity or to diminish, eliminate, or prevent excessive speculation as described in section 4a of such Act for physical-based commodities; and

(2) to determine the efficacy, practicality, and consequences of establishing aggregate position limits for similar agreements, contracts, or transactions for physical-based commodities traded—

(A) on designated contract markets;

(B) on derivatives transaction execution facilities; and

(C) in reliance on such sections 2(g) and 2(h) and of any exemption issued by the Commission by rule, regulation or order.

(b) Public Hearings.—The Commission shall provide for not less than 2 public hearings to take testimony, on the record, as part of the fact-gathering process in preparation of the report.

(c) Report and Recommendations.—Not less than 12 months after the date of the enactment of this section, the Commission shall provide to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report that—

(1) describes the results of the study; and

(2) provides recommendations on any actions necessary to deter and prevent price manipulation or any other disruption to market integrity or to diminish, eliminate, or prevent excessive speculation as described in section 4a of the Commodity Exchange Act for physical-based commodities, including—

(A) any additional statutory authority that the Commission determines to be necessary to implement the recommendations; and

(B) a description of the resources that the Commission considers to be necessary to implement the recommendations.

SEC. 121. Studies; reports.

(a) Study Relating to International Regulation of Energy Commodity Markets.—

(1) IN GENERAL.—The Comptroller General of the United States shall conduct a study of the international regime for regulating the trading of energy commodity futures and derivatives.

(2) ANALYSIS.—The study shall include an analysis of, at a minimum—

(A) key common features and differences among countries in the regulation of energy commodity trading, including with respect to market oversight and enforcement standards and activities;

(B) variations among countries with respect to the use of position limits, position accountability levels, or other thresholds to detect and prevent price manipulation, excessive speculation as described in section 4a of the Commodity Exchange Act, or other unfair trading practices;

(C) variations in practices regarding the differentiation of commercial and noncommercial trading;

(D) agreements and practices for sharing market and trading data among futures authorities and between futures authorities and the entities that the futures authorities oversee; and

(E) agreements and practices for facilitating international cooperation on market oversight, compliance, and enforcement.

(3) REPORT.—Not later than 1 year after the date of the enactment of this Act, the Comptroller General shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report that—

(A) describes the results of the study;

(B) addresses whether there is excessive speculation, and if so, the effects of any such speculation and energy price volatility on energy futures; and

(C) provides recommendations to improve openness, transparency, and other necessary elements of a properly functioning market in a manner that protects consumers in the United States.

(b) Study Relating to Effects of Speculators on Agriculture and Energy Futures Markets and Agriculture and Energy Prices.—

(1) STUDY.—The Comptroller General of the United States shall conduct a study of the effects of speculators on agriculture and energy futures markets and agriculture and energy prices.

(2) ANALYSIS.—The study shall include an analysis of, at a minimum—

(A) the effect of increased amounts of capital in agriculture and energy futures markets;

(B) the impact of the roll-over of positions by index fund traders and swap dealers on agriculture and energy futures markets and agriculture and energy prices; and

(C) the extent to which each factor described in subparagraphs (A) and (B) and speculators—

(i) affect—

(I) the pricing of agriculture and energy commodities; and

(II) risk management functions; and

(ii) contribute to economically efficient price discovery.

(3) REPORT.—Not later than 2 years after the date of the enactment of this Act, the Comptroller General shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report that describes the results of the study.

SEC. 122. Over-the-counter authority.

(a) In general.—Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is amended by adding at the end the following:

“(j) Over-the-Counter Authority.—

“(1) Within 60 days after the date of the enactment of this subsection, the Commission shall, by rule, regulation, or order, require routine reporting as it deems in its discretion appropriate, on not less than a monthly basis, of agreements, contracts, or transactions, with regard to an agricultural or energy commodity, entered into in reliance on subsection (g), (h)(1), or (h)(2) of section 2, or any exemption issued by the Commission by rule, regulation, or order that are fungible (as defined by the Commission) with agreements, contracts, or transactions traded on or subject to the rules of any board of trade or of any electronic trading facility with respect to a significant price discovery contract.

“(2) Notwithstanding subsections (g), (h)(1), and (h)(2) of section 2, and any exemption issued by the Commission by rule, regulation, or order, the Commission shall assess and issue a finding on whether the agreements, contracts, or transactions reported pursuant to paragraph (1), alone or in conjunction with other similar agreements, contracts, or transactions, have the potential to—

“(A) disrupt the liquidity or price discovery function on a registered entity;

“(B) cause a severe market disturbance in the underlying cash or futures market for an agricultural or energy commodity; or

“(C) prevent or otherwise impair the price of a contract listed for trading on a registered entity from reflecting the forces of supply and demand in any market for an agricultural commodity enumerated in section 1a(4) or an energy commodity.

“(3) If the Commission makes a finding pursuant to paragraph (2) of this subsection, the Commission may, in its discretion, utilize its authority under section 8a(9) to impose position limits for speculators on the agreements, contracts, or transactions involved and take corrective actions to enforce the limits.”.

(b) Conforming Amendments.—

(1) Section 2(g) of such Act (7 U.S.C. 2(g)) is amended by inserting “subsection (j) of this section, and” after “(other than”.

(2) Section 2(h)(2)(A) of such Act (7 U.S.C. 2(h)(2)(A)) is amended by inserting “subsection (j) of this section and” before “sections”.

(3) Section 8a(9) of such Act (7 U.S.C. 12a(a)(9)) is amended by inserting after “of the Commission’s action” the following: “, and to fix and enforce limits to agreements, contracts, or transaction subject to section 2(j)(1) pursuant to a finding made under section 2(j)(2)”.

SEC. 123. Expedited process.

The Commodity Futures Trading Commission may use emergency and expedited procedures (including any administrative or other procedure as appropriate) to carry out this title and the amendments made by this title if, in its discretion, it deems it necessary to do so.

SEC. 201. Establishment of Commission.

There is established in the legislative branch the National Commission on Energy Independence (referred to in this title as the “Commission”).

SEC. 202. Purpose.

The purpose of the Commission is to study and make recommendations to Congress and the President to remove technical obstacles and policy barriers for the United States to achieve independence from foreign oil.

SEC. 203. Composition of Commission.

(a) Members.—The Commission shall be composed of 12 members, of whom—

(1) 1 member shall be jointly appointed by the majority leader of the Senate and the Speaker of the House of Representatives, who shall serve as Chairperson of the Commission;

(2) 1 member shall be jointly appointed by the minority leader of the Senate and the minority leader of the House of Representatives, who shall serve as Vice-Chairperson of the Commission;

(3)(A) 1 member shall be jointly appointed by the Chair and ranking member of the Committee on the Environment and Public Works of the Senate; and

(B) 1 member shall be jointly appointed by the Chair and ranking member of the Committee on Natural Resources of the House of Representatives, in consultation with the Select Committee on Energy Independence and Global Warming of the House of Representatives;

(4)(A) 1 member shall be jointly appointed by the Chair and ranking member of the Committee on Energy and Natural Resources of the Senate; and

(B) 1 member shall be jointly appointed by the Chair and ranking member of the Committee on Energy and Commerce of the House of Representatives;

(5)(A) 1 member shall be jointly appointed by the Chair and ranking member of the Committee on Commerce, Science and Transportation of the Senate; and

(B) 1 member shall be jointly appointed by the Chair and ranking member of the Committee on Science and Technology of the House of Representatives and the Committee on Transportation and Infrastructure of the House of Representatives;

(6)(A) 1 member shall be jointly appointed by the Chair and ranking member of the Committee on Agriculture, Nutrition and Forestry of the Senate; and

(B) 1 member shall be jointly appointed by the Chair and ranking member of the Committee on Agriculture of the House of Representatives; and

(7)(A) 1 member shall be jointly appointed by the Chair and ranking member of the Committee on Finance of the Senate; and

(B) 1 member shall be jointly appointed by the Chair and ranking member of the Committee on Ways and Means of the House of Representatives.

(b) Qualifications; initial meeting.—

(1) POLITICAL PARTY AFFILIATION.—Each appointment to the Commission shall be made without regard to political party affiliation and on a nonpartisan basis.

(2) NONGOVERNMENTAL APPOINTEES.—An individual appointed to the Commission may not be an officer or employee of the Federal Government or any State or local government—

(A) on the date on which the individual is appointed to the Commission; or

(B) at any time during the term of service on the Commission of the individual.

(3) OTHER QUALIFICATIONS.—It is the sense of Congress that individuals appointed to the Commission should be prominent United States citizens, with national recognition and significant depth of experience in such professions as governmental service, science, energy, economics, environment, agriculture, manufacturing, public administration, or commerce (including aviation matters).

(4) DEADLINE FOR APPOINTMENT.—Each member of the Commission shall be appointed not later than 90 days after the date of enactment of this Act.

(c) Meetings.—

(1) INITIAL MEETING.—The Commission shall hold the initial meeting of the Commission as soon as practicable, and not later than 60 days, after the date on which all members of the Commission are appointed.

(2) SUBSEQUENT MEETINGS.—After the initial meeting under paragraph (1), the Commission shall meet at the call of—

(A) the Chairperson; or

(B) a majority of the members of the Commission.

(d) Quorum.—7 members of the Commission shall constitute a quorum.

(e) Vacancies.—A vacancy on the Commission—

(1) shall not affect the powers of the Commission; and

(2) shall be filled in the same manner in which the original appointment was made.

SEC. 204. Functions of Commission.

The functions of the Commission are—

(1) to examine, study, and evaluate the technical obstacles and policy barriers that need to be addressed in order for the United States to achieve independence from foreign oil through a balanced combination of—

(A) increased domestic production of energy;

(B) enhanced energy conservation and efficiency; and

(C) the accelerated development of alternative fuels and technologies to transition the United States motor vehicle fleet away from reliance on petroleum-based fuels;

(2) to investigate matters that relate to achieving independence from foreign oil, such as—

(A) carbon capture and storage;

(B) nuclear and renewable energy; and

(C) the need for upgrading and transitioning the national grid and other energy infrastructure; and

(3) to submit to Congress and the President such reports as are required by section 106 containing such findings, conclusions, and recommendations as the Commission shall determine to be necessary to advise and assist Congress and the President in developing legislation, procedures, rules, and regulations relating to the removal of technical obstacles and policy barriers to achieve independence from foreign oil.

SEC. 205. Powers of Commission.

(a) In general.—

(1) RULES.—The Commission may establish such rules and regulations relating to administrative procedures as are reasonably necessary to enable the Commission to carry out this title.

(2) HEARINGS AND EVIDENCE.—The Commission or, on the authority of the Commission, any subcommittee or member of the Commission may, for the purpose of carrying out this title, hold such hearings and sit and act at such times and places, take such testimony, receive such evidence, and administer such oaths as the Commission determines to be appropriate.

(b) Contracting.—To the extent amounts are made available in appropriations Acts, the Commission may enter into contracts to assist the Commission in carrying out the duties of the Commission under this title.

(c) Information from Federal agencies.—

(1) IN GENERAL.—The Commission may secure directly from a Federal agency such information, suggestions, estimates, and statistics as the Commission considers to be necessary to carry out this title.

(2) PROVISION OF INFORMATION.—On request of the Commission, the head of the agency shall provide the information, suggestions, estimates, and statistics to the Commission.

(3) TREATMENT.—Information provided to the Commission under this subsection shall be received, handled, stored, and disseminated by members and staff of the Commission in accordance with applicable law (including regulations) and Executive orders.

(d) Assistance from Federal agencies.—

(1) GENERAL SERVICES ADMINISTRATION.—The Administrator of General Services shall provide to the Commission, on a reimbursable basis, administrative support and other services to assist the Commission in carrying out the duties of the Commission under this title.

(2) OTHER DEPARTMENTS AND AGENCIES.—In addition to the assistance described in paragraph (1), any other Federal department or agency may provide to the Commission such services, funds, facilities, staff, and other support as the head of the department or agency determines to be appropriate.

(e) Gifts.—The Commission may accept, use, and dispose of gifts or donations of services or property only in accordance with the ethical rules applicable to congressional officers and employees.

(f) Volunteer services.—

(1) IN GENERAL.—Notwithstanding section 1342 of title 31, United States Code, the Commission may accept and use the services of volunteers serving without compensation.

(2) REIMBURSEMENT.—The Commission may reimburse a volunteer for office supplies, local travel expenses, and other travel expenses, including per diem in lieu of subsistence, in accordance with section 5703 of title 5, United States Code.

(3) TREATMENT.—A volunteer of the Commission shall be considered to be an employee of the Federal Government in carrying out activities for the Commission, for purposes of—

(A) chapter 81 of title 5, United States Code;

(B) chapter 11 of title 18, United States Code; and

(C) chapter 171 of title 28, United States Code.

(g) Postal services.—The Commission may use the United States mails in the same manner and under the same conditions as other agencies of the Federal Government.

SEC. 206. Reports.

Not later than 1 year after the date on which all members of the Commission are appointed under section 103 and each year thereafter, the Commission shall submit to Congress and the President a report that contains the findings, conclusions, and recommendations of the Commission to remove the technical obstacles and policy barriers that need to be addressed in order for the United States to achieve independence from foreign oil and address related matters in accordance with section 103.

SEC. 207. Staff of Commission.

(a) In general.—The Chairperson of the Commission (in consultation with the Vice-Chairperson of the Commission) may, without regard to the civil service laws (including regulations), appoint and terminate a staff director and such other additional personnel as are necessary to enable the Commission to perform the duties of the Commission.

(b) Compensation.—

(1) IN GENERAL.—Except as provided in paragraph (2), the Chairperson of the Commission may fix the compensation of the staff director and other personnel without regard to the provisions of chapter 51 and subchapter III of chapter 53 of title 5, United States Code, relating to classification of positions and General Schedule pay rates.

(2) MAXIMUM RATE OF PAY.—The rate of pay for the staff director and other personnel shall not exceed the rate payable for level IV of the Executive Schedule under section 5316 of title 5, United States Code.

(c) Status.—The staff director and any employee (not including any member) of the Commission shall be considered to be employees under section 2105 of title 5, United States Code, for purposes of chapters 63, 81, 83, 84, 85, 87, 89, and 90 of that title.

(d) Consultant services.—The Commission may procure the services of experts and consultants in accordance with section 3109 of title 5, United States Code, at rates not to exceed the daily rate paid to an individual occupying a position at level IV of the Executive Schedule under section 5315 of title 5, United States Code.

SEC. 208. Compensation and travel expenses.

(a) Compensation of members.—A member of the Commission shall be compensated at a rate equal to the daily equivalent of the annual rate of basic pay prescribed for level IV of the Executive Schedule under section 5315 of title 5, United States Code, for each day (including travel time) during which the member is engaged in the performance of the duties of the Commission.

(b) Travel expenses.—A member of the Commission shall be allowed travel expenses, including 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 performance of the duties of the Commission.

SEC. 209. Meetings.

(a) In general.—The Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the Commission.

(b) Public meetings and release of public versions of reports.—The Commission shall ensure, to the maximum extent practicable, that—

(1) all hearings of the Commission are available to the public, including by—

(A) providing live and recorded public access to hearings on the Internet; and

(B) publishing all transcripts and records of hearings at such time and in such manner as is agreed to by the majority of members of the Commission; and

(2) all reports, findings, and conclusions are made public.

(c) Public hearings.—Public hearings of the Commission shall be conducted in a manner consistent with the protection of information provided to or developed for or by the Commission as required by any applicable law (including regulations) or Executive order.

SEC. 210. Authorization of appropriations.

There are authorized to be appropriated to the Commission such sums as are necessary to carry out this title, to remain available until expended.

SEC. 301. National renewable electricity standard.

(a) Standard.—Title VI of the Public Utility Regulatory Policies Act of 1978 is amended by adding at the end the following:

“SEC. 610. Federal renewable portfolio standard.

“(a) Definitions.—For purposes of this section:

“(1) BIOMASS.—The term ‘biomass’ means—

“(A) cellulosic (plant fiber) organic materials from a plant that is planted for the purpose of being used to produce energy;

“(B) nonhazardous, plant or algal matter waste materials that is segregated from other waste materials and is derived from—

“(i) an agricultural crop, crop byproduct or residue resource;

“(ii) waste such as landscape or right-of-way trimmings, but not including—

“(I) municipal solid waste;

“(II) recyclable postconsumer waste paper;

“(III) painted, treated, or pressurized wood;

“(IV) wood contaminated with plastic or metals; or

“(iii) gasified animal waste;

“(iv) landfill methane; and

“(C) with respect to material removed from National Forest System lands the term includes only organic material from—

“(i) precommercial thinnings;

“(ii) slash;

“(iii) brush; and

“(iv) mill residues.

“(2) ELIGIBLE FACILITY.—The term ‘eligible facility’ means—

“(A) a facility for the generation of electric energy from a renewable energy resource that is placed in service on or after the date of enactment of this section or the effective date of the applicable State renewable portfolio standard program; or

“(B) a repowering or cofiring increment that is placed in service on or after the date of enactment of this section or the effective date of the applicable State renewable portfolio standard program, at a facility for the generation of electric energy from a renewable energy resource that was placed in service before that date.

“(3) EXISTING FACILITY OFFSET.—The term ‘existing facility offset’ means renewable energy generated from an existing facility, not classified as an eligible facility, that is owned or under contract, directly or indirectly, to a retail electric supplier on the date of enactment of this section.

“(4) INCREMENTAL HYDROPOWER.—The term ‘incremental hydropower’ means additional generation that is achieved from increased efficiency or additions of capacity on or after the date of enactment of this section or the effective date of the applicable State renewable portfolio standard program, at a hydroelectric facility that was placed in service before that date.

“(5) INDIAN LAND.—The term ‘Indian land’ means—

“(A) any land within the limits of any Indian reservation, pueblo, or rancheria;

“(B) any land not within the limits of any Indian reservation, pueblo, or rancheria title to which was on the date of enactment of this paragraph either held by the United States for the benefit of any Indian tribe or individual or held by any Indian tribe or individual subject to restriction by the United States against alienation;

“(C) any dependent Indian community; and

“(D) any land conveyed to any Alaska Native corporation under the Alaska Native Claims Settlement Act.

“(6) INDIAN TRIBE.—The term ‘Indian tribe’ means any Indian tribe, band, nation, or other organized group or community, including any Alaskan Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.

“(7) RENEWABLE ENERGY.—The term ‘renewable energy’ means electric energy generated by a renewable energy resource.

“(8) RENEWABLE ENERGY RESOURCE.—The term ‘renewable energy resource’ means solar (including solar water heating), wind, ocean, tidal, geothermal energy, biomass, landfill gas, or incremental hydropower.

“(9) REPOWERING OR COFIRING INCREMENT.—The term ‘repowering or cofiring increment’ means—

“(A) the additional generation from a modification that is placed in service on or after the date of enactment of this section or the effective date of the applicable State renewable portfolio standard program, to expand electricity production at a facility used to generate electric energy from a renewable energy resource or to cofire biomass that was placed in service before the date of enactment of this section or the effective date of the applicable State renewable portfolio standard program; or

“(B) the additional generation above the average generation in the 3 years preceding the date of enactment of this section or the effective date of the applicable State renewable portfolio standard program, to expand electricity production at a facility used to generate electric energy from a renewable energy resource or to cofire biomass that was placed in service before the date of enactment of this section or the effective date of the applicable State renewable portfolio standard program.

“(10) RETAIL ELECTRIC SUPPLIER.—The term ‘retail electric supplier’ means a person that sells electric energy to electric consumers and sold not less than 1,000,000 megawatt-hours of electric energy to electric consumers for purposes other than resale during the preceding calendar year; except that such term does not include the United States, a State or any political subdivision of a State, or any agency, authority, or instrumentality of any one or more of the foregoing, or a rural electric cooperative.

“(11) RETAIL ELECTRIC SUPPLIER’S BASE AMOUNT.—The term ‘retail electric supplier’s base amount’ means the total amount of electric energy sold by the retail electric supplier, expressed in terms of kilowatt hours, to electric customers for purposes other than resale during the most recent calendar year for which information is available, excluding electric energy generated by a hydroelectric facility.

“(b) Minimum renewable generation requirement.—For each calendar year beginning in calendar year 2010, each retail electric supplier shall submit to the Secretary, not later than April 1 of the following calendar year, renewable energy credits in an amount equal to the required annual percentage specified in subsection (c).

“(c) Required annual percentage.—For calendar years 2010 through 2039, the required annual percentage of the retail electric supplier’s base amount that shall be generated from renewable energy resources, or otherwise credited towards such percentage requirement pursuant to subsection (d), shall be the percentage specified in the following table:


Required annual
Calendar years: percentage:
2010 1
2011 2
2012 4
2013 6
2014 8
2015 10
2016 12
2017 14
2018 16
2019 18
2020 and thereafter 20.

“(d) Renewable energy credits.—(1) A retail electric supplier may satisfy the requirements of subsection (b) through the submission of renewable energy credits—

“(A) issued to the retail electric supplier under subsection (e);

“(B) obtained by purchase or exchange under subsection (f) or (h); or

“(C) borrowed under subsection (j).

“(2) A renewable energy credit may be counted toward compliance with subsection (b) only once.

“(e) Issuance of credits.—(1) The Secretary shall establish by rule, not later than 1 year after the date of enactment of this section, a program to verify and issue renewable energy credits, track their sale, exchange and submission, and enforce the requirements of this section.

“(2) An entity that generates electric energy through the use of a renewable energy resource may apply to the Secretary for the issuance of renewable energy credits. The applicant must demonstrate that the electric energy will be transmitted onto the grid or, in the case of a generation offset, that the electric energy offset would have otherwise been consumed on site. The application shall indicate—

“(A) the type of renewable energy resource used to produce the electricity;

“(B) the location where the electric energy was produced; and

“(C) any other information the Secretary determines appropriate.

“(3)(A) Except as provided in subparagraphs (B), (C), and (D), the Secretary shall issue to each entity that generates electric energy one renewable energy credit for each kilowatt hour of electric energy the entity generates from the date of enactment of this section and in each subsequent calendar year through the use of a renewable energy resource at an eligible facility.

“(B) For incremental hydropower the renewable energy credits shall be calculated based on the expected increase in average annual generation resulting from the efficiency improvements or capacity additions. The number of credits shall be calculated using the same water flow information used to determine a historic average annual generation baseline for the hydroelectric facility and certified by the Secretary or the Federal Energy Regulatory Commission. The calculation of the renewable energy credits for incremental hydropower shall not be based on any operational changes at the hydroelectric facility not directly associated with the efficiency improvements or capacity additions.

“(C) The Secretary shall issue two renewable energy credits for each kilowatt hour of electric energy generated and supplied to the grid in that calendar year through the use of a renewable energy resource at an eligible facility located on Indian land. For purposes of this paragraph, renewable energy generated by biomass cofired with other fuels is eligible for two credits only if the biomass was grown on such land.

“(D) For electric energy generated by a renewable energy resource at an on-site eligible facility, used to offset part or all of the customer’s requirements for electric energy, the Secretary shall issue three renewable energy credits to such customer for each kilowatt hour generated.

“(E) In the case of a retail electric supplier that is subject to a State renewable standard program that—

“(i) requires the generation of electricity from renewable energy; or

“(ii) provides for alternative compliance payments in satisfaction of applicable State requirements under the program,

the Secretary shall issue an amount of renewable energy credits equal to the amount of renewable energy credits that the Secretary would have issued had a payment of the same amount been made to the Secretary under subsection (j). Such renewable energy credits may be applied against the retail electric supplier’s own required annual percentage or may be transferred for use only by an associate company of the retail electric supplier.

“(f) Eligibility.—To be eligible for a renewable energy credit, the unit of electric energy generated through the use of a renewable energy resource may be sold or may be used by the generator. If both a renewable energy resource and a non-renewable energy resource are used to generate the electric energy, the Secretary shall issue renewable energy credits based on the proportion of the renewable energy resources used. The Secretary shall identify renewable energy credits by type and date of generation.

“(g) Contracts under section 210.—When a generator sells electric energy generated through the use of a renewable energy resource to a retail electric supplier under a contract subject to section 210 of this Act, the retail electric supplier is treated as the generator of the electric energy for the purposes of this section or the duration of the contract.

“(h) Existing facility offsets.—The Secretary shall issue renewable energy credits for existing facility offsets to be applied against a retail electric supplier’s required annual percentage. Such credits are not tradeable and may be used only in the calendar year generation actually occurs.

“(i) Renewable energy credit trading.—A renewable energy credit, may be sold, transferred or exchanged by the entity to whom issued or by any other entity who acquires the renewable energy credit, except for those renewable energy credits issued pursuant to subsection (e)(3)(E). A renewable energy credit for any year that is not used to satisfy the minimum renewable generation requirement of subsection (a) for that year may be carried forward for use within the next 4 years.

“(j) Renewable energy credit borrowing.—At any time before the end of calendar year 2012, a retail electric supplier that has reason to believe it will not have sufficient renewable energy credits to comply with subsection (b) may—

“(1) submit a plan to the Secretary demonstrating that the retail electric supplier will earn sufficient credits within the next 3 calendar years which, when taken into account, will enable the retail electric supplier to meet the requirements of subsection (b) for calendar year 2012 and the subsequent calendar years involved; and

“(2) upon the approval of the plan by the Secretary, apply renewable energy credits that the plan demonstrates will be earned within the next 3 calendar years to meet the requirements of subsection (b) for each calendar year involved.

The retail electric supplier must repay all of the borrowed renewable energy credits by submitting an equivalent number of renewable energy credits, in addition to those otherwise required under subsection (b), by calendar year 2020 or any earlier deadlines specified in the approved plan. Failure to repay the borrowed renewable energy credits shall subject the retail electric supplier to civil penalties under subsection (k) for violation of the requirements of subsection (b) for each calendar year involved.

“(k) Enforcement.—A retail electric supplier that does not submit renewable energy credits as required under subsection (b) shall be liable for the payment of a civil penalty. That penalty shall be calculated on the basis of the number of renewable energy credits not submitted, multiplied by the lesser of 4.5 cents or 300 percent of the average market value of credits for the compliance period. Any such penalty shall be due and payable without demand to the Secretary as provided in the regulations issued under subsection (e). On January 1 of each year following calendar year 2006, the Secretary shall adjust for inflation the penalty for such calendar year, based on the Gross Domestic Product Implicity Price Deflator.

“(l) Credit cost cap.—The Secretary shall offer renewable energy credits for sale at the lesser of 3 cents per kilowatt-hour or 200 percent of the average market value of renewable credits for the applicable compliance period. On January 1 of each year following calendar year 2006, the Secretary shall adjust for inflation the price charged per credit for such calendar year, based on the Gross Domestic Product Implicit Price Deflator.

“(m) Information collection.—The Secretary may collect the information necessary to verify and audit—

“(1) the annual electric energy generation and renewable energy generation of any entity applying for renewable energy credits under this section;

“(2) the validity of renewable energy credits submitted by a retail electric supplier to the Secretary; and

“(3) the quantity of electricity sales of all retail electric suppliers.

“(n) Environmental savings clause.—Incremental hydropower shall be subject to all applicable environmental laws and licensing and regulatory requirements.

“(o) Existing programs.—(1) This section does not preclude a State from imposing additional renewable energy requirements in that State, including specifying eligible technologies under such State requirements.

“(2) In the rule establishing this program, the Secretary shall incorporate common elements of existing renewable energy programs, including State programs, to ensure administrative ease, market transparency and effective enforcement. The Secretary shall work with the States to minimize administrative burdens and costs and to avoid duplicating compliance charges to retail electric suppliers.

“(p) Recovery of costs.—An electric utility whose sales of electric energy are subject to rate regulation, including any utility whose rates are regulated by the Commission and any State regulated electric utility, shall not be denied the opportunity to recover the full amount of the prudently incurred incremental cost of renewable energy obtained to comply with the requirements of subsection (b) for sales to electric customers which are subject to rate regulation, notwithstanding any other law, regulation, rule, administrative order or any agreement between the electric utility and either the Commission or a State regulatory authority. For the purpose of this subsection, the term ‘incremental cost of renewable energy’ means—

“(1) the additional cost to the electric utility for the purchase or generation of renewable energy to satisfy the minimum renewable generation requirement of subsection (b), as compared to the cost of the electric energy the electric utility would generate or purchase from another source but for the requirements of subsection (b); and

“(2) the cost to the electric utility for acquiring by purchase or exchange renewable energy credits to satisfy the minimum renewable generation requirement of subsection (b).

For purposes of this subsection, the definitions in section 3 of this Act shall apply to the terms ‘electric utility’, ‘State regulated electric utility’, ‘State agency’, ‘Commission’, and ‘State regulatory authority’.

“(q) Voluntary participation.—The Secretary shall encourage federally owned utilities, municipally owned utilities and rural electric cooperatives that sell electric energy to electric consumers for purposes other than resale to participate in the renewable portfolio standard program. A municipally owned utility or rural electric cooperative that owns or has under contract a facility for the generation of electric energy from a renewable energy resource may not sell or trade renewable energy credits generated by such resource unless it participates in the renewable portfolio standard program under the same terms and conditions as retail electric suppliers.

“(r) Program review.—The Secretary shall enter into a contract with the National Academy of Sciences to conduct a comprehensive evaluation of all aspects of the Renewable Portfolio Standard program, within 8 years of enactment of this section. The study shall include an evaluation of—

“(1) the effectiveness of the program in increasing the market penetration and lower the cost of the eligible renewable technologies;

“(2) the opportunities for any additional technologies and sources of renewable energy emerging since enactment of this section;

“(3) the impact on the regional diversity and reliability of supply sources, including the power quality benefits of distributed generation;

“(4) the regional resource development relative to renewable potential and reasons for any under investment in renewable resources; and

“(5) the net cost/benefit of the renewable portfolio standard to the national and State economies, including retail power costs, economic development benefits of investment, avoided costs related to environmental and congestion mitigation investments that would otherwise have been required, impact on natural gas demand and price, effectiveness of green marketing programs at reducing the cost of renewable resources.

The Secretary shall transmit the results of the evaluation and any recommendations for modifications and improvements to the program to Congress not later than January 1, 2016.

“(s) Program improvements.—Using the results of the evaluation under subsection (p), the Secretary shall by rule, within 6 months of the completion of the evaluation, make such modifications to the program as may be necessary to improve the efficiency of the program and maximize the use of renewable energy under the program.

“(t) State renewable energy account program.—(1) The Secretary shall establish, not later than December 31, 2009, a State renewable energy account program.

“(2) All money collected by the Secretary from the sale of renewable energy credits shall be deposited into the State renewable energy account established pursuant to this subsection. The State renewable energy account shall be held by the Secretary and shall not be transferred to the Secretary of the Treasury.

“(3) Proceeds deposited in the State renewable energy account shall be used by the Secretary, subject to annual appropriations, for a program to provide grants to the State agency responsible for developing State energy conservation plans under section 363 of the Energy Policy and Conservation Act (42 U.S.C. 6322) for the purposes of promoting renewable energy production and providing energy assistance and weatherization services to low-income consumers.

“(4) The Secretary may issue guidelines and criteria for grants awarded under this subsection. At least 75 percent of the funds provided to each State shall be used for promoting renewable energy production. The funds shall be allocated to the States on the basis of retail electric sales subject to the Renewable Portfolio Standard under this section or through voluntary participation. To the extent Federal credits have been issued without payment due to reciprocity with State programs under subsection (d)(3)(E), deductions shall be made from the relevant State’s allocation. State energy offices receiving grants under this section shall maintain such records and evidence of compliance as the Secretary may require.”.

(b) Table of contents.—The table of contents for such title is amended by adding the following new item at the end:


“Sec. 610. Federal renewable portfolio standard.”.

(c) Sunset.—Section 610 of such title and the item relating to such section 610 in the table of contents for such title are each repealed as of December 31, 2039.

SEC. 401. Sense of Senate on conversion of motor vehicles to alternative fuels and energy independence.

It is the sense of the Senate that—

(1) not later than 20 years after the date of enactment of this Act, not less than 85 percent of new motor vehicles sold in the United States should run primarily on fuels other than petroleum-based fuels; and

(2) not later than calendar year 2030, the United States should be energy independent.

SEC. 402. Consumer tax credits for advanced vehicles.

(a) Plug-In electric drive motor vehicle credit.—

(1) IN GENERAL.—Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to other credits) is amended by adding at the end the following new section:

“SEC. 30D. Plug-in electric drive motor vehicle credit.

“(a) Allowance of credit.—

“(1) IN GENERAL.—There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the applicable amount with respect to each new qualified plug-in electric drive motor vehicle placed in service by the taxpayer during the taxable year.

“(2) APPLICABLE AMOUNT.—For purposes of paragraph (1), the applicable amount is sum of—

“(A) $2,500, plus

“(B) $400 for each kilowatt hour of traction battery capacity in excess of 4 kilowatt hours.

“(b) Limitation.—The amount of the credit allowed under subsection (a) by reason of subsection (a)(2) shall not exceed $7,500.

“(c) New qualified plug-In electric drive motor vehicle.—For purposes of this section, the term ‘new qualified plug-in electric drive motor vehicle’ means motor vehicle—

“(1) which draws propulsion using a traction battery with at least 4 kilowatt hours of capacity,

“(2) which uses an offboard source of energy to recharge such battery,

“(3) which, in the case of a passenger vehicle or light truck which has a gross vehicle weight rating of not more than 8,500 pounds, has received a certificate of conformity under the Clean Air Act and meets or exceeds the equivalent qualifying California low emission vehicle standard under section 243(e)(2) of the Clean Air Act for that make and model year in the case of a vehicle—

“(A) having a gross vehicle weight rating of 6,000 pounds or less, the Bin 5 Tier II emission standard 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, and

“(B) having a gross vehicle weight rating of more than 6,000 pounds but not more than 8,500 pounds, the Bin 8 Tier II emission standard which is so established,

“(4) the original use of which commences with the taxpayer,

“(5) which is acquired for use or lease by the taxpayer and not for resale, and

“(6) which is made by a manufacturer.

“(d) Application with other credits.—

“(1) BUSINESS CREDIT TREATED AS PART OF GENERAL BUSINESS CREDIT.—So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to property of a character subject to an allowance for depreciation shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)).

“(2) PERSONAL CREDIT.—The credit allowed under subsection (a) (after the application of paragraph (1)) for any taxable year shall not exceed the excess (if any) of—

“(A) the regular tax liability (as defined in section 26(b)) reduced by the sum of the credits allowable under subpart A and sections 27, 30, 30B, and 30C, over

“(B) the tentative minimum tax for the taxable year.

“(e) Other definitions and special rules.—For purposes of this section—

“(1) MOTOR VEHICLE.—The term ‘motor vehicle’ has the meaning given such term by section 30(c)(2).

“(2) OTHER TERMS.—The terms ‘passenger automobile’, ‘light truck’, and ‘manufacturer’ have the meanings given such terms 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. 7521et seq.).

“(3) TRACTION BATTERY CAPACITY.—Traction battery capacity shall be measured in kilowatt hours from a 100 percent state of charge to a zero percent state of charge.

“(4) 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.

“(5) NO DOUBLE BENEFIT.—The amount of any deduction or other credit allowable under this chapter for a new qualified plug-in electric drive motor vehicle shall be reduced by the amount of credit allowed under subsection (a) for such vehicle for the taxable year.

“(6) PROPERTY USED BY TAX-EXEMPT ENTITY.—In the case of a vehicle the use of which is described in paragraph (3) or (4) of section 50(b) and which is not subject to a lease, the person who sold such vehicle to the person or entity using such vehicle shall be treated as the taxpayer that placed such vehicle in service, but only if such person clearly discloses to such person or entity in a document the amount of any credit allowable under subsection (a) with respect to such vehicle (determined without regard to subsection (b)(2)).

“(7) PROPERTY USED OUTSIDE UNITED STATES, ETC., NOT QUALIFIED.—No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1) or with respect to the portion of the cost of any property taken into account under section 179.

“(8) RECAPTURE.—The Secretary shall, by regulations, 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) ELECTION TO NOT TAKE CREDIT.—No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects not to have this section apply to such vehicle.

“(10) INTERACTION WITH AIR QUALITY AND MOTOR VEHICLE SAFETY STANDARDS.—Unless otherwise provided in this section, a motor vehicle shall not be considered eligible for a credit under this section unless such vehicle is in compliance with—

“(A) the applicable provisions of the Clean Air Act for the applicable make and model year of the vehicle (or applicable air quality provisions 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.

“(f) Regulations.—

“(1) IN GENERAL.—Except as provided in paragraph (2), the Secretary shall promulgate such regulations as necessary to carry out the provisions of this section.

“(2) COORDINATION IN PRESCRIPTION OF CERTAIN REGULATIONS.—The Secretary of the Treasury, in coordination with the Secretary of Transportation and the Administrator of the Environmental Protection Agency, shall prescribe such regulations as necessary to determine whether a motor vehicle meets the requirements to be eligible for a credit under this section.

“(g) Termination.—This section shall not apply to property purchased after December 31, 2012.”.

(2) COORDINATION WITH OTHER MOTOR VEHICLE CREDITS.—

(A) NEW QUALIFIED FUEL CELL MOTOR VEHICLES.—Paragraph (3) of section 30B(b) of such Code is amended by adding at the end the following new flush sentence: “Such term shall not include any motor vehicle which is a new qualified plug-in electric drive motor vehicle (as defined by section 30D(c)).”.

(B) NEW QUALIFIED HYBRID MOTOR VEHICLES.—Paragraph (3) of section 30B(d) of such Code is amended by adding at the end the following new flush sentence:

“Such term shall not include any motor vehicle which is a new qualified plug-in electric drive motor vehicle (as defined by section 30D(c)).”.

(3) CONFORMING AMENDMENTS.—

(A) Section 38(b) of such Code is amended by striking “plus” at the end of paragraph (32), by striking the period at the end of paragraph (33) and inserting “, plus”, and by adding at the end the following new paragraph:

“(34) the portion of the new qualified plug-in electric drive motor vehicle credit to which section 30D(d)(1) applies.”.

(B) Section 55(c)(3) of such Code is amended by inserting “30D(d)(2),” after “30C(d)(2),”.

(C) Section 1016(a) of such Code is amended by striking “and” at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting “, and”, and by adding at the end the following new paragraph:

“(37) to the extent provided in section 30D(e)(4).”.

(D) Section 6501(m) of such Code is amended by inserting “30D(e)(9)” after “30C(e)(5)”.

(E) The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:


“Sec. 30D. Plug-in electric drive motor vehicle credit.”.

(b) Conversion kits.—

(1) IN GENERAL.—Section 30B of such Code (relating to alternative motor vehicle credit) is amended by redesignating subsections (i) and (j) as subsections (j) and (k), respectively, and by inserting after subsection (h) the following new subsection:

“(i) Plug-In conversion credit.—

“(1) IN GENERAL.—For purposes of subsection (a), the plug-in conversion credit determined under this subsection with respect to any motor vehicle which is converted to a qualified plug-in electric drive motor vehicle is an amount equal to 20 percent of the cost of the plug-in traction battery module installed in such vehicle as part of such conversion.

“(2) LIMITATIONS.—The amount of the credit allowed under this subsection shall not exceed $2,500 with respect to the conversion of any motor vehicle.

“(3) DEFINITIONS AND SPECIAL RULES.—For purposes of this subsection—

“(A) QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLE.—The term ‘qualified plug-in electric drive motor vehicle’ means any new qualified plug-in electric drive motor vehicle (as defined in section 30D(c), determined without regard to paragraphs (4) and (6) thereof).

“(B) PLUG-IN TRACTION BATTERY MODULE.—The term ‘plug-in traction battery module’ means an electro-chemical energy storage device which—

“(i) has a traction battery capacity of not less than 2.5 kilowatt hours,

“(ii) is equipped with an electrical plug by means of which it can be energized and recharged when plugged into an external source of electric power,

“(iii) consists of a standardized configuration and is mass produced,

“(iv) has been tested and approved by the National Highway Transportation Safety Administration as compliant with applicable motor vehicle and motor vehicle equipment safety standards when installed by a mechanic with standardized training in protocols established by the battery manufacturer as part of a nationwide distribution program, and

“(v) is certified by a battery manufacturer as meeting the requirements of clauses (i) through (iv).

“(C) CREDIT ALLOWED TO LESSOR OF BATTERY MODULE.—In the case of a plug-in traction battery module which is leased to the taxpayer, the credit allowed under this subsection shall be allowed to the lessor of the plug-in traction battery module.

“(D) CREDIT ALLOWED IN ADDITION TO OTHER CREDITS.—The credit allowed under this subsection shall be allowed with respect to a motor vehicle notwithstanding whether a credit has been allowed with respect to such motor vehicle under this section (other than this subsection) in any preceding taxable year.

“(4) TERMINATION.—This subsection shall not apply to conversions made after December 31, 2012.”.

(2) CREDIT TREATED AS PART OF ALTERNATIVE MOTOR VEHICLE CREDIT.—Section 30B(a) of such Code is amended by striking “and” at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting “, and”, and by adding at the end the following new paragraph:

“(5) the plug-in conversion credit determined under subsection (i).”.

(3) NO RECAPTURE FOR VEHICLES CONVERTED TO QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VEHICLES.—Paragraph (8) of section 30B(h) of such Code is amended by adding at the end the following: “, except that no benefit shall be recaptured if such property ceases to be eligible for such credit by reason of conversion to a qualified plug-in electric drive motor vehicle.”

(c) Effective date.—The amendments made by this section shall apply to property placed in service after December 31, 2008, in taxable years beginning after such date.

SEC. 403. Research and development program for alternative fuel vehicle technologies.

(a) Purposes.—The purposes of this section are—

(1) to enable and promote, in partnership with industry, comprehensive development, demonstration, and commercialization of a wide range of alternative fuel components, systems, and vehicles using diverse transportation technologies;

(2) to make critical public investments to help private industry, institutions of higher education, National Laboratories, and research institutions to expand innovation, industrial growth, and jobs in the United States;

(3) to expand the availability of the existing alternative fuel infrastructure for fueling light-duty transportation vehicles and other on-road and nonroad vehicles that are using petroleum and are mobile sources of emissions, with the goals of—

(A) enhancing the energy security of the United States;

(B) reducing dependence on imported oil; and

(C) reducing emissions through the expansion of alternative fuel supported mobility;

(4) to accelerate the widespread commercialization of alternative fuel vehicle technology into all sizes and applications of vehicles, including commercialization of alternative fuel vehicles; and

(5) to improve the energy efficiency of and reduce the petroleum use in surface transportation.

(b) Program.—The Secretary of Energy shall conduct a program of research, development, demonstration, and commercial application for alternative fuel transportation technology, including—

(1) high capacity, high-efficiency storage devices;

(2) high-efficiency on-board and off-board alternative fuel components;

(3) high-powered alternative fuel systems for passenger and commercial vehicles and for nonroad equipment;

(4) control system development and power train development and integration for alternative fuel vehicles, including—

(A) development of efficient cooling systems;

(B) analysis and development of control systems that minimize the emissions profile when clean diesel engines are part of an alternative fuel system; and

(C) development of different control systems that optimize for different goals, including—

(i) storage life;

(ii) reduction of petroleum consumption; and

(iii) green house gas reduction;

(5) nanomaterial technology applied to both alternative fuel systems;

(6) large-scale demonstrations, testing, and evaluation of alternative fuel vehicles in different applications with different storage and control systems, including—

(A) military applications;

(B) mass market passenger and light-duty truck applications;

(C) private fleet applications; and

(D) medium- and heavy-duty applications;

(7) development, in consultation with the Administrator of the Environmental Protection Agency, of procedures for testing and certification of criteria pollutants, fuel economy, and petroleum use for light-, medium-, and heavy-duty vehicle applications, including consideration of—

(A) the vehicle and fuel as a system, not just an engine; and

(B) nightly off-board charging; and

(8) advancement of alternative fuel transportation technologies in mobile source applications by—

(A) improvement in alternative fuel technologies; and

(B) working with industry and the Administrator of the Environmental Protection Agency to—

(i) understand and inventory markets; and

(ii) identify and implement methods of removing barriers for existing and emerging applications.

(c) Funding.—

(1) IN GENERAL.—Out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall transfer to the Secretary of Energy to carry out this section, to remain available until expended—

(A) on October 1, 2008, and each October 1 thereafter through October 1, 2012, $1,000,000,000; and

(B) on October 1, 2013, and each October 1 thereafter through October 1, 2017, $500,000,000.

(2) RECEIPT AND ACCEPTANCE.—The Secretary of Energy shall be entitled to receive, shall accept, and shall use to carry out this section the funds transferred under paragraph (1), without further appropriation.

SEC. 404. Federal fleet requirements.

(a) Definition of advanced alternative fueled vehicle.—Section 301 of the Energy Policy Act of 1992 (42 U.S.C. 13211) is amended by inserting after paragraph (14) the following:

“(15) ADVANCED ALTERNATIVE FUELED VEHICLE.—

“(A) IN GENERAL.—The term ‘advanced alternative fueled vehicle’ means an alternative fueled vehicle that is powered primarily by a nonpetroleum-based fuel.

“(B) EXCLUSION.—The term ‘advanced alternative fueled vehicle’ does not include a flex fuel vehicle.”.

(b) Advanced alternative fuel vehicles.—Section 303(b) of the Energy Policy Act of 1992 (42 U.S.C. 13212(b)) is amended—

(1) by inserting after paragraph (3) the following:

“(4) Advanced alternative fuel vehicles.—Of all vehicles purchased by the Federal Government for a model year, at least the following percentage of the vehicles shall be advanced alternative fueled vehicles:

“(A) 10 percent for each of fiscal years 2013 and 2014.

“(B) 20 percent for each of fiscal years 2015 and 2016.

“(C) 30 percent for each of fiscal years 2017 and 2018.

“(D) 40 percent for each of fiscal years 2019 and 2020.

“(E) 50 percent for each of fiscal years 2021 and 2022.

“(F) 60 percent for each of fiscal years 2023 and 2024.

“(G) 70 percent for each of fiscal years 2025 and 2026.

“(H) 80 percent for each of fiscal years 2027 and 2028.

“(I) 90 percent for fiscal year 2029 and each fiscal year thereafter.”; and

(2) in paragraph (2), by inserting “or (4)” after “paragraph (1)”.

SEC. 501. Increase corporate fuel economy standards.

Section 32902 of title 49, United States Code, is amended by striking “for model year 2020 of at least 35 miles per gallon” and inserting “for model year 2015 of at least 35 miles per gallon and for model year 2030 of at least 50 miles per gallon”.

SEC. 502. More realistic determination of fuel efficiency standards.

Section 32902 of title 49, United States Code, is amended by adding at the end the following:

“(l) Calculation of maximum feasible fuel economy standards.—

“(1) IN GENERAL.—The Secretary shall determine the maximum feasible fuel economy level achievable for passenger automobiles and non-passenger automobiles for each model year for purposes of this section based on a projected gasoline price that is not less than the applicable high gasoline price projection issued by the Energy Information Administration.

“(2) APPLICABLE HIGH GASOLINE PRICE PROJECTION DEFINED.—In this subsection the term ‘applicable high gasoline price projection’ means the greatest of a range of estimated gasoline prices that the Energy Information Administration issues as part of its annual energy outlook, short-term energy outlook, or similar analyses, for the year or years corresponding to the model year or model years for which the Secretary is prescribing an average fuel economy standard under this section, and for the range of years considered by the Secretary in determining the costs and benefits associated with such standard.”.

SEC. 503. Fuel efficiency standards revisions.

(a) Weight.—Section 32901(a)(3) of title 49, United States Code, is amended by striking “rated at—” and all that follows through the period at the end and inserting “rated at not more than 10,000 pounds gross vehicle weight.”.

(b) Fuel economy information.—Section 32908(a) of title 49, United States Code, is amended, by striking 8,500 and inserting “10,000”.

(c) Effective date.—The amendments made by this section shall apply to model year 2009 and each subsequent model year.

SEC. 504. Automobile safety.

Nothing in this Act shall be construed to limit, constrain, supercede, or expand the authority of the Secretary of Transportation to prescribe motor vehicle safety standards to reduce traffic accidents and deaths and injuries resulting from traffic accidents conferred by chapter 301 of title 49, United States Code.

SEC. 511. Lightweight materials research and development.

(a) In general.—As soon as practicable after the date of enactment of this Act, the Secretary shall establish a research and development program on lightweight materials and composites and other innovations to increase the fuel efficiency of motor vehicles, including materials, composites, and innovation that will permit—

(1) the weight of vehicles to be reduced to improve fuel efficiency without compromising passenger safety; and

(2) the cost of lightweight materials (such as 18 steel alloys and carbon fibers) required for the construction of lighter-weight vehicles to be reduced.

(b) Funding.—

(1) IN GENERAL.—On October 1, 2008, and on each October 1 thereafter through October 1, 2017, out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall transfer to the Secretary to carry out this subsection $500,000,000, to remain available until expended.

(2) RECEIPT AND ACCEPTANCE.—The Secretary shall be entitled to receive, shall accept, and shall use to carry out this subsection the funds transferred under paragraph (1), without further appropriation.

SEC. 512. Federal Government gasoline consumption.

(a) In general.—Section 303(b) of the Energy Policy Act of 1992 (42 U.S.C. 13212(b)) is amended by adding at the end the following:

“(5) GASOLINE CONSUMPTION.—The Secretary shall promulgate regulations for Federal fleets subject to this title requiring that, not later than fiscal year 2010, each Federal agency achieve at least a 5-percent reduction in petroleum consumption, as calculated from the baseline established by the Secretary for fiscal year 2008.”.

(b) Additional gasoline reduction measures.—

(1) STUDY.—The Comptroller General of the United States shall conduct a study to determine whether additional gasoline reduction measures by Federal departments, agencies, and Congress are technically feasible.

(2) REPORT.—Not later than 180 days after the date of enactment of this Act, the Comptroller General shall submit to Congress a report that describes the results of the study, including any recommendations.

SEC. 513. Credit for fuel-efficient motor vehicles.

(a) In general.—Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986, as amended by this Act, is amended by adding at the end the following new section:

“SEC. 30E. Fuel-efficient motor vehicle credit.

“(a) Allowance of credit.—

“(1) IN GENERAL.—There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the amount determined under paragraph (2) with respect to any new fuel-efficient motor vehicle placed in service by the taxpayer during the taxable year.

“(2) CREDIT AMOUNT.—The amount determined under this paragraph shall be—

“(A) $500, if the new fuel-efficient motor vehicle achieves a city fuel economy which is 42 miles per gallon or less;

“(B) $1,000, if the new fuel-efficient motor vehicle achieves a city fuel economy which is greater than 42 miles per gallon but less than 45.6 miles per gallon;

“(C) $1,500, if the new fuel-efficient motor vehicle achieves a city fuel economy which is greater than 45.5 miles per gallon but less than 49.1 miles per gallon;

“(D) $2,000, if the new fuel-efficient motor vehicle achieves a city fuel economy which is greater than 49 miles per gallon but less than 52.6 miles per gallon; and

“(E) $2,500, if the new fuel-efficient motor vehicle achieves a city fuel economy which is greater than 52.5 miles per gallon.

“(b) New fuel-efficient motor vehicle.—For purposes of this section, the term ‘new fuel-efficient motor vehicle’ means any motor vehicle—

“(1) which has a gross vehicle weight rating of not more than 8,500 pounds,

“(2) which achieves a city fuel economy of at least 38.5 miles per gallon,

“(3) the original use of which commences with the taxpayer,

“(4) which is acquired by the taxpayer for use or lease, but not for resale, and

“(5) which is made by a manufacturer.

“(c) Other definitions and special rules.—For purposes of this section—

“(1) CITY FUEL ECONOMY; MANUFACTURER.—The terms ‘city fuel economy’ and ‘manufacturer’ have the meanings given such terms under section 30B(h).

“(2) BASIS REDUCTION.—The basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit.

“(3) RECAPTURE; PROPERTY USED OUTSIDE THE UNITED STATES; ELECTION NOT TO TAKE CREDIT.—For purposes of this section, rules similar to the rules of paragraphs (2), (3), and (4) of section 30(d) shall apply.

“(4) DENIAL OF DOUBLE BENEFIT.—No credit shall be allowed under this section with respect to any new fuel-efficient motor vehicle if a credit is allowed with respect to such vehicle under section 30, 30B, or 30D.

“(d) Application with other credits.—

“(1) BUSINESS CREDIT TREATED AS PART OF GENERAL BUSINESS CREDIT.—So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to property of a character subject to an allowance for depreciation shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)).

“(2) PERSONAL CREDIT.—The credit allowed under subsection (a) (after the application of paragraph (1)) for any taxable year shall not exceed the excess (if any) of—

“(A) the regular tax liability (as defined in section 26(b)) reduced by the sum of the credits allowable under subpart A and sections 27, 30, 30B, and 30D, over

“(B) the tentative minimum tax for the taxable year.

“(e) Termination.—This section shall not apply to property placed in service after December 31, 2010.”.

(b) Conforming amendments.—

(1) Section 38(b) of the Internal Revenue Code of 1986, as amended by this Act, is amended by striking “plus” at the end of paragraph (33), by striking the period at the end of paragraph (34) and inserting “, plus”, and by adding at the end the following new paragraph:

“(35) the portion of the new fuel-efficient motor vehicle credit to which section 30E(d)(1) applies.”.

(2) Section 1016(a) of such Code, as amended by this Act, is amended by striking “and” at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting “, and”, and by adding at the end the following new paragraph:

“(38) to the extent provided in section 30E(c)(2).”.

(3) Section 6501(m) of such Code, as amended by this Act, is amended by inserting “30E(c)(3),” after “30D(e)(9),”.

(c) Clerical amendment.—The table of sections for subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:


“Sec. 30E. Fuel-efficient motor vehicle credit.”.

(d) Effective date.—The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

SEC. 514. Exclusion from heavy truck tax for idling reduction units and advanced insulation.

(a) In general.—Section 4053 of the Internal Revenue Code of 1986 (relating to exemptions) is amended by adding at the end the following new paragraphs:

“(9) IDLING REDUCTION DEVICE.—Any device or system of devices which—

“(A) is designed to provide to a vehicle those services (such as heat, air conditioning, or electricity) that would otherwise require the operation of the main drive engine while the vehicle is temporarily parked or remains stationary using one or more devices affixed to a tractor, and

“(B) is determined by the Administrator of the Environmental Protection Agency, in consultation with the Secretary of Energy and the Secretary of Transportation, to reduce idling of such vehicle at a motor vehicle rest stop or other location where such vehicles are temporarily parked or remain stationary.

“(10) ADVANCED INSULATION.—Any insulation that has an R value of not less than R35 per inch.”.

(b) Effective date.—The amendment made by this section shall apply to sales or installations after the date of the enactment of this Act.

SEC. 515. Idling reduction tax credit.

(a) In general.—Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business-related credits) is amended by adding at the end the following new section:

“SEC. 45Q. Idling reduction credit.

“(a) General rule.—For purposes of section 38, the idling reduction tax credit determined under this section for the taxable year is an amount equal to 25 percent of the amount paid or incurred for each qualifying idling reduction device placed in service by the taxpayer during the taxable year.

“(b) Limitation.—The maximum amount allowed as a credit under subsection (a) shall not exceed $1,000 per device.

“(c) Definitions.—For purposes of subsection (a)—

“(1) QUALIFYING IDLING REDUCTION DEVICE.—The term ‘qualifying idling reduction device’ means any device or system of devices that—

“(A) is installed on a heavy-duty diesel-powered on-highway vehicle;

“(B) is designed to provide to such vehicle those services (such as heat, air conditioning, or electricity) that would otherwise require the operation of the main drive engine while the vehicle is temporarily parked or remains stationary;

“(C) the original use of which commences with the taxpayer;

“(D) is acquired for use by the taxpayer and not for resale; and

“(E) is certified by the Secretary of Energy, in consultation with the Administrator of the Environmental Protection Agency and the Secretary of Transportation, to reduce long-duration idling of such vehicle at a motor vehicle rest stop or other location where such vehicles are temporarily parked or remain stationary.

“(2) HEAVY-DUTY DIESEL-POWERED ON-HIGH WAY VEHICLE.—The term ‘heavy-duty diesel-powered on-highway vehicle’ means any vehicle, machine, tractor, trailer, or semi-trailer propelled or 21 drawn by mechanical power and used upon the highways in the transportation of passengers or property, or any combination thereof determined by the Federal Highway Administration.

“(3) LONG-DURATION IDLING.—The term ‘long duration idling’ means the operation of a main drive engine, for a period greater than 15 consecutive minutes, where the main drive engine is not engaged in gear. Such term does not apply to routine stop pages associated with traffic movement or congestion.

“(d) No double benefit.—For purposes of this section—

“(1) REDUCTION IN BASIS.—If a credit is determined under this section with respect to any property by reason of expenditures described in subsection (a), the basis of such property shall be reduced by the amount of the credit so determined.

“(2) OTHER DEDUCTIONS AND CREDITS.—No deduction or credit shall be allowed under any other provision of this chapter with respect to the amount of the credit determined under this section.

“(e) Election not To claim credit.—This section shall not apply to a taxpayer for any taxable year if such taxpayer elects to have this section not apply for such taxable year”.

(b) Credit To be part of general business credit.—Section 38 of such Code (relating to general business credit), as amended by this Act, is amended by striking “plus” at the end of paragraph (34), by striking the period at the end of paragraph (35) and inserting “, plus”, and by adding at the end the following new paragraph:

“(36) the idling reduction tax credit determined under section 45Q(a).”.

(c) Conforming amendments.—

(1) The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 45P the following new item:


“Sec. 45Q. Idling reduction credit.”.

(2) Section 1016(a) of such Code, as amended by this Act, is amended by striking “and” at the end of paragraph (37), by striking the period at the end of paragraph (38) and inserting “, and”, and by adding at the end the following:

“(39) in the case of a facility with respect to which a credit was allowed under section 45Q, to the extent provided in section 45Q(d)(A).”.

(3) Section 6501(m) of such Code is amended by inserting “45Q(e),” after “45C(d)(4),”.

(d) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

SEC. 516. Determination of certification standards by Secretary of Energy for certifying idling reduction devices.

Not later than 6 months after the date of the enactment of this Act and in order to reduce air pollution and fuel consumption, the Secretary of Energy, in consultation with the Administrator of the Environmental Protection Agency and the Secretary of Transportation, shall publish the standards under which the Secretary, in consultation with the Administrator of the Environmental Protection Agency and the Secretary of Transportation, will, for purposes of section 45Q of the Internal Revenue Code of 1986 (as added by this Act), certify the idling reduction devices which will reduce long-duration idling of vehicles at motor vehicle rest stops or other locations where such vehicles are temporarily parked or remain stationary in order to reduce air pollution and fuel consumption.

SEC. 517. Extension and modification of alternative motor vehicle credit.

(a) Elimination of manufacturer limitation.—

(1) IN GENERAL.—Section 30B of the Internal Revenue Code of 1986, as amended by this Act, is amended—

(A) by striking subsection (f), and

(B) by redesignating subsections (g) through (k) as subsections (f) through (j), respectively.

(2) CONFORMING AMENDMENTS.—

(A) Paragraphs (4) and (6) of section 30B (g) of the Internal Revenue Code of 1986 (as redesignated by paragraph (1)) are each amended by striking “(determined without regard to subsection (g))” and inserting “determined without regard to subsection (f))”.

(B) Section 38(b)(25) of such Code is amended by striking “section 30B(g)(1)” and inserting “section 30B(f)(1)”.

(C) Section 55(c)(3) of such Code is amended by striking “section 30B(g)(2)” and inserting “section 30B(f)(2)”.

(D) Section 1016(a)(36) of such Code is amended by striking “section 30B(h)(4)” and inserting “section 30B(g)(4)”.

(E) Section 6501(m) of such Code is amended by striking “section 30B(h)(9)” and inserting “section 30B(g)(9)”.

(b) Extension.—Subsection (j) of section 30B of the Internal Revenue Code of 1986 (as redesignated by subsection (a)) is amended—

(1) by striking “December 31, 2010” in paragraphs (2) and (4) and inserting “December 31, 2014”, and

(2) by striking “December 31, 2009” in paragraph (3) and inserting “December 31, 2012”.

(c) Effective date.—The amendments made by this section shall apply to property placed in service after the date of enactment of this Act, in taxable years ending after such date.

SEC. 521. Bioenergy research and development.

(a) In general.—Section 931 of the Energy Policy Act of 2005 (42 U.S.C. 16231) is amended as follows:

(1) In subsection (b), by striking paragraphs (3) and (4) and inserting the following:

“(3) $3,352,000,000 for fiscal year 2009; and

“(4) $3,463,000,000 for fiscal year 2010.”.

(2) In subsection (c), by striking paragraphs (3) and (4) and inserting the following:

“(3) $2,898,000,000 for fiscal year 2009, of which $150,000,000 shall be for section 932(d); and

“(4) $2,919,000,000 for fiscal year 2010, of which $150,000,000 shall be for section 932(d).”.

(b) Pipeline infrastructure.—Section 212 of the Clean Air Act (42 U.S.C. 7546) is amended by adding at the end the following:

“(f) Pipeline infrastructure.—

“(1) IN GENERAL.—The Administrator shall provide grants for research into, and development and implementation of, the manner in which pipeline infrastructure can be retrofitted to accommodate biofuels.

“(2) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated such sums as are necessary to carry out this subsection for each of fiscal years 2009 through 2014.”.

SEC. 522. Alternative fueled automobile production requirement.

Section 32905 of title 49, United States Code, as amended by section 203 of this Act, is further amended by adding at the end the following:

“(h) Alternative fueled automobiles.—Each manufacturer that manufactures automobiles for sale or use in the United States shall ensure that—

“(1) not less than 75 percent of such automobiles manufactured for each of model years 2015 through 2019 are alternative fueled automobiles; and

“(2) 100 percent of such automobiles manufactured for model year 2020 and each subsequent model year are alternative fueled automobiles.”.

SEC. 523. Definition of renewable biomass.

Effective January 1, 2009, section 211(o)(1) of the Clean Air Act (42 U.S.C.7545(o)(1)), as amended by section 210(c) of the Energy Independence and Security Act of 2007 (Public Law 110–140) is amended by striking subparagraph (I) and inserting the following:

“(I) RENEWABLE BIOMASS.—The term ‘renewable biomass’ means—

“(i) materials, pre-commercial thinnings, or invasive species from National Forest System land and public lands (as defined in section 103 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702)) that—

“(I) are byproducts of preventive treatments that are removed—

“(aa) to reduce hazardous fuels;

“(bb) to reduce or contain disease or insect infestation; or

“(cc) to restore ecosystem health;

“(II) would not otherwise be used for higher-value products; and

“(III) are harvested in accordance with—

“(aa) applicable law and land management plans; and

“(bb) the requirements for—

“(AA) old-growth maintenance, restoration, and management direction of paragraphs (2), (3), and (4) of subsection (e) of section 102 of the Healthy Forests Restoration Act of 2003 (16 U.S.C. 6512); and

“(BB) large-tree retention of subsection (f) of that section; or

“(ii) any organic matter that is avail1able on a renewable or recurring basis from non-Federal land or land belonging to an Indian or Indian tribe that is held in trust by the United States or subject to a restriction against alienation imposed by the United States, including—

“(I) renewable plant material, including—

“(aa) feed grains;

“(bb) other agricultural commodities;

“(cc) other plants and trees; and

“(dd) algae; and

“(II) waste material, including—

“(aa) crop residue;

“(bb) other vegetative waste material (including wood waste and wood residues);

“(cc) animal waste and by products (including fats, oils, greases, and manure); and

“(dd) food waste and yard waste.”.

SEC. 524. Loan guarantees for renewable energy pipelines.

Subtitle C of title II of the Energy Independence and Security Act of 2007 (42 U.S.C. 17051 et seq.) is amended by adding at the end the following:

“SEC. 249. Loan guarantees for renewable energy pipelines.

“(a) Definitions.—In this section:

“(1) COST.—The term ‘cost’ has the meaning given the term ‘cost of a loan guarantee’ in section 502(5)(C) of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5)(C)).

“(2) ELIGIBLE PROJECT.—The term eligible project means a project described in subsection (b)(1).

“(3) GUARANTEE.—

“(A) IN GENERAL.—The term ‘guarantee’ has the meaning given the term ‘loan guarantee’ in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a).

“(B) INCLUSION.—The term ‘guarantee’ includes a loan guarantee commitment (as defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)).

“(4) RENEWABLE ENERGY PIPELINE.—The term ‘renewable energy pipeline’ means a common carrier pipeline for transporting renewable energy.

“(b) Loan guarantees.—

“(1) IN GENERAL.—The Secretary shall make guarantees under this section for projects that provide for—

“(A) the construction of new renewable energy pipelines; or

“(B) the modification of pipelines to transport renewable energy.

“(2) ELIGIBILITY.—In determining the eligibility of a project for a guarantee under this section, the Secretary shall consider—

“(A) the volume of renewable energy to be moved by the renewable energy pipeline;

“(B) the size of the markets to be served by the renewable energy pipeline;

“(C) the existence of sufficient storage to facilitate access to the markets served by the renewable energy pipeline;

“(D) the proximity of the renewable energy pipeline to ethanol production facilities;

“(E) the investment of the entity carrying out the proposed project in terminal infrastructure;

“(F) the experience of the entity carrying out the proposed project in working with renewable energy;

“(G) the ability of the entity carrying out the proposed project to maintain the quality of the renewable energy through—

“(i) the terminal system of the entity; and

“(ii) the dedicated pipeline system;

“(H) the ability of the entity carrying out the proposed project to complete the project in a timely manner; and

“(I) the ability of the entity carrying out the proposed project to secure property rights of-way in order to move the proposed project forward in a timely manner.

“(3) AMOUNT.—Unless otherwise provided bylaw, a guarantee by the Secretary under this section shall not exceed an amount equal to 90 percent of the eligible project cost of the renewable energy pipeline that is the subject of the guarantee, as estimated at the time at which the guarantee is issued or subsequently modified while the eligible project is under construction.

“(4) TERMS AND CONDITIONS.—Guarantees under this section shall be provided in accordance with section 1702 of the Energy Policy Act of 2005 (42 U.S.C. 16512), except that subsections (b) and (c) of that section shall not apply to guarantees under this section.

“(5) EXISTING FUNDING AUTHORITY.—The Secretary shall make a guarantee under this section under an existing funding authority.

“(6) FINAL RULE.—Not later than 90 days after the date of enactment of this section, the Secretary shall publish in the Federal Register a final rule directing the Director of the Department of Energy Loan Guarantee Program Office to initiate the loan guarantee program under this section in accordance with this section.

“(c) Funding.—

“(1) IN GENERAL.—There are authorized to be appropriated such sums as are necessary to provide guarantees under this section.

“(2) USE OF OTHER APPROPRIATED FUNDS.—To the extent that the amounts made available under title XVII of the Energy Policy Act of 2005 (42 U.S.C. 16511 et seq.) have not been disbursed to programs under that title, the Secretary may use the amounts to carry out this section.”.

SEC. 530. Reference.

Except as otherwise expressly provided, whenever in this part an amendment 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.

SEC. 531. Expansion of special allowance to cellulosic biomass alcohol fuel plant property.

(a) In general.—Paragraph (3) of section 168(l) (relating to special allowance for cellulosic biomass ethanol plant property) is amended to read as follows:

“(3) CELLULOSIC BIOMASS ALCOHOL.—For purposes of this subsection, the term ‘cellulosic biomass alcohol’ means any alcohol produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis.”.

(b) Conforming amendments.—

(1) Subsection (l) of section 168 is amended by striking “cellulosic biomass ethanol” each place it appears and inserting “cellulosic biomass alcohol”.

(2) The heading of section 168(l) is amended by striking “Cellulosic Biomass Ethanol” and inserting “Cellulosic biomass alcohol”.

(3) The heading of paragraph (2) of section 168(l) is amended by striking “Cellulosic biomass ethanol” and inserting “Cellulosic biomass alcohol” .

(c) Effective date.—The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.

SEC. 532. Credit for producers of fossil free alcohol.

(a) In general.—Subsection (a) of section 40 (relating to alcohol used as fuel) is amended by striking “plus” at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting “, plus”, and by adding at the end the following new paragraph:

“(5) the small fossil free alcohol producer credit.”.

(b) Small fossil free alcohol producer credit.—

(1) IN GENERAL.—Subsection (b) of section 40 is amended by adding at the end the following new paragraph:

“(7) SMALL FOSSIL FREE ALCOHOL PRODUCER CREDIT.—

“(A) IN GENERAL.—In addition to any other credit allowed under this section, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 25 cents for each gallon of qualified fossil free alcohol production.

“(B) QUALIFIED FOSSIL FREE ALCOHOL PRODUCTION.—For purposes of this section, the term ‘qualified fossil free alcohol production’ means alcohol which is produced by an eligible small fossil free alcohol producer at a fossil free alcohol production facility and which during the taxable year—

“(i) is sold by the taxpayer to another person—

“(I) for use by such other person in the production of a qualified alcohol mixture in such other person’s trade or business (other than casual off-farm production);

“(II) for use by such other person as a fuel in a trade or business; or

“(III) who sells such alcohol at retail to another person and places such alcohol in the fuel tank of such other person; or

“(ii) is used or sold by the taxpayer for any purpose described in clause (i).

“(C) ADDITIONAL DISTILLATION EXCLUDED.—The qualified fossil free alcohol production of any taxpayer for any taxable year shall not include any alcohol which is purchased by the taxpayer and with respect to which such producer increases the proof of the alcohol by additional distillation.”.

(c) Eligible small fossil free alcohol producer.—Section 40 is amended by adding at the end the following new subsection:

“(i) Definitions and special rules for small fossil free alcohol producer.—For purposes of this section—

“(1) IN GENERAL.—The term ‘eligible small fossil free alcohol producer’ means a person, who at all times during the taxable year, has a productive capacity for alcohol from all fossil free alcohol production facilities of the taxpayer which is not in excess of 60,000,000 gallons.

“(2) FOSSIL FREE ALCOHOL PRODUCTION FA2CILITY.—The term ‘fossil free alcohol production facility’ means any facility at which 90 percent of fuel used in the production of alcohol is from biomass (as defined in section 45K(c)(3)).

“(3) AGGREGATION RULE.—For purposes of the 60,000,000 gallon limitation under paragraph (1), all members of the same controlled group of corporations (within the meaning of section 267(f)) and all persons under common control (within the meaning of section 52(b) but determined by treating an interest of more than 50 percent as a controlling interest) shall be treated as 1 person.

“(4) PARTNERSHIP, S CORPORATIONS, AND OTHER PASS-THRU ENTITIES.—In the case of a partnership, trust, S corporation, or other pass-thru entity, the limitation contained in paragraph (1) shall be applied at the entity level and at the partner or similar level.

“(5) ALLOCATION.—For purposes of this sub section, in the case of a facility in which more than 1 person has an interest, productive capacity shall be allocated among such persons in such manner as the Secretary may prescribe.

“(6) REGULATIONS.—The Secretary may prescribe such regulations as may be necessary to prevent the credit provided for in subsection (a)(5)25 from directly or indirectly benefitting any person with a direct or indirect productive capacity of more than 60,000,000 gallons of alcohol from fossil free alcohol production facilities during the taxable year.

“(7) ALLOCATION OF SMALL FOSSIL FREE ALCOHOL PRODUCER CREDIT TO PATRONS OF COOPERATIVE.—Rules similar to the rules under subsection (g)(6) shall apply for purposes of this subsection.”.

(d) Alcohol not used as a fuel, etc.—

(1) IN GENERAL.—Paragraph (3) of section 40(d) is amended by redesignating subparagraph (E) as subparagraph (F) and by inserting after subparagraph (D) the following new subparagraph:

“(E) SMALL FOSSIL FREE ALCOHOL PRODUCER CREDIT.—If—

“(i) any credit is allowed under subsection (a)(5); and

“(ii) any person does not use such fuel for a purpose described in subsection (b)(7)(B), then there is hereby imposed on such person a tax equal to 25 cents for each gallon of such alcohol.”.

(2) CONFORMING AMENDMENT.—Subparagraph (F) of section 40(d)(3), as redesignated by paragraph (1), is amended by striking “or (D)” and inserting “(D), or (E)”.

(e) Termination.—Paragraph (1) of section 40(e) is amended—

(1) in subparagraph (A), by inserting “(December 31, 2012, in the case of the credit allowed by reason of subsection (a)(5))” after “December 31, 2010”, and

(2) in subparagraph (B), by inserting “(January 1, 2013, in the case of the credit allowed by reason of subsection (a)(5))” after “January 1, 2011”.

(f) Effective date.—The amendments made by this section shall apply to fuel produced after the date of enactment of this Act.

SEC. 533. Extension and modification of credit for biodiesel used as fuel.

(a) Extension.—

(1) INCOME TAX CREDITS FOR BIODIESEL AND RENEWABLE DIESEL AND SMALL AGRI-BIODIESEL PRODUCER CREDIT.—Section 40A(g) (relating to termination) is amended by striking “December 31, 2008” and inserting “December 31, 2012”.

(2) EXCISE TAX CREDIT.—Section 6426(c)(6) (relating to termination) is amended by striking “2008” and inserting “2012”.

(3) FUELS NOT USED FOR TAXABLE PURPOSES.—Section 6427(e)(5)(B) (relating to termination) is amended by striking “2008” and inserting “2012”.

(b) Modification of credit for renewable diesel.—

(1) ELIGIBILITY OF CERTAIN AVIATION FUEL.—Paragraph (3) of section 40A(f) (defining renewable diesel) is amended by adding at the end the following: “The term ‘renewable diesel’ also means fuel derived from biomass which meets the requirements of a Department of Defense specification for military jet fuel or an American Society of Testing and Materials specification for aviation turbine fuel.”.

(2) CO-PROCESSED RENEWABLE DIESEL.—Section 40A(f) (relating to renewable diesel) is amended by adding at the end the following new paragraph:

“(4) SPECIAL RULE FOR CO-PROCESSED RENEWABLE DIESEL.—In the case of a taxpayer which produces renewable diesel through the co-processing of biomass and petroleum at any facility, this subsection shall not apply to so much of the renewable diesel produced at such facility and sold or used during the taxable year in a qualified biodiesel mixture as exceeds 60,000,000 gallons.”.

(c) Modification relating to definition of agri-biodiesel.—Paragraph (2) of section 40A(d) (relating to agri-biodiesel) is amended by striking “and mustard seeds” and inserting “mustard seeds, and camelina”.

(d) Effective dates.—The amendments made by this section shall apply to fuel sold or used after the date of the enactment of this Act.

SEC. 534. Extension and modification of alternative fuel credit.

(a) Extension.—

(1) ALTERNATIVE FUEL CREDIT.—Paragraph (4) of section 6426(d) (relating to alternative fuel credit) is amended by striking “September 30, 2009” and inserting “December 31, 2012”.

(2) ALTERNATIVE FUEL MIXTURE CREDIT.—Paragraph (3) of section 6426(e) (relating to alternative fuel mixture credit) is amended by striking “September 30, 2009” and inserting “December 31, 2012”.

(3) PAYMENTS.—Subparagraph (C) of section 6427(e)(5) (relating to termination) is amended by striking “September 30, 2009” and inserting “December 31, 2012”.

(b) Modifications.—

(1) ALTERNATIVE FUEL TO INCLUDE COMPRESSED OR LIQUIFIED BIOMASS GAS.—Paragraph (2) of section 6426(d) (relating to alternative fuel credit) is amended by striking “and” at the end of subparagraph (E), by redesignating subparagraph (F) as subparagraph (G), and by inserting after subparagraph (E) the following new subparagraph:

“(F) compressed or liquified biomass gas, and”.

(2) CREDIT ALLOWED FOR AVIATION USE OF FUEL.—Paragraph (1) of section 6426(d) is amended by inserting “sold by the taxpayer for use as a fuel in aviation,” after “motorboat,”.

(c) Carbon capture requirement for certain fuels.—

(1) IN GENERAL.—Subsection (d) of section 6426, as amended by subsection (a), is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph:

“(4) CARBON CAPTURE REQUIREMENT.—The requirements of this paragraph are met if the fuel is certified, under such procedures as required by the Secretary, as having been produced at a facility which separates and sequesters not less than 75 percent of such facility’s total carbon dioxide emissions.”.

(2) CONFORMING AMENDMENT.—Subparagraph (E) of section 6426(d)(2) is amended by inserting “which meets the requirements of paragraph (4) and which is” after “any liquid fuel”.

(d) Effective dates.—

(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section shall apply to fuel sold or used after the date of the enactment of this Act.

(2) CARBON CAPTURE REQUIREMENTS.—The amendments made by subsection (c) shall apply to fuel sold or used after December 31, 2008.

SEC. 535. Extension of suspension of taxable income limit on percentage depletion for oil and natural gas produced from marginal properties.

Subparagraph (H) of section 613A(c)(6) (relating to oil and gas produced from marginal properties) is amended by striking “January 1, 2008” and inserting “January 1, 2013”.

SEC. 536. Extension and modification of election to expense certain refineries.

(a) Extension.—Paragraph (1) of section 179C(c) (relating to qualified refinery property) is amended—

(1) by striking “January 1, 2012” in subparagraph (B) and inserting “January 1, 2013”, and

(2) by striking “January 1, 2008” each place it appears in subparagraph (F) and inserting “January 1, 2010”.

(b) Inclusion of fuel derived from shale and tar sands.—

(1) IN GENERAL.—Subsection (d) of section 179C is amended by inserting “, or directly from shale or tar sands” after “(as defined in section 45K(c))”.

(2) CONFORMING AMENDMENT.—Paragraph (2) of section 179C(e) is amended by inserting “shale, tar sands, or” before “qualified fuels”.

(c) Effective date.—The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

SEC. 537. Hydrogen installation, infrastructure, and fuel costs.

(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. 30F. Hydrogen installation, infrastructure, and fuel costs.

“(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 hydrogen installation and infrastructure costs credit determined under subsection (b), and

“(2) the hydrogen fuel costs credit determined under subsection (c).

“(b) Hydrogen installation and infrastructure costs credit.—

“(1) IN GENERAL.—For purposes of subsection (a), the hydrogen installation and infrastructure costs credit determined under this subsection with respect to each eligible hydrogen production and distribution facility of the taxpayer is an amount equal to—

“(A) 30 percent of so much of the installation costs which when added to such costs taken into account with respect to such facility for all preceding taxable years under this subparagraph does not exceed $200,000, plus

“(B) 30 percent of so much of the infrastructure costs for the taxable year as does not exceed $200,000 with respect to such facility, and which when added to such costs taken into account with respect to such facility for all preceding taxable years under this subparagraph does not exceed $600,000.

Nothing in this section shall permit the same cost to be taken into account more than once.

“(2) ELIGIBLE HYDROGEN PRODUCTION AND DISTRIBUTION FACILITY.—For purposes of this subsection, the term ‘eligible hydrogen production and distribution facility’ means a hydrogen production and distribution facility which is placed in service after December 31, 2008.

“(c) Hydrogen fuel costs credit.—

“(1) IN GENERAL.—For purposes of subsection (a), the hydrogen fuel costs credit determined under this subsection with respect to each eligible hydrogen device of the taxpayer is an amount equal to the qualified hydrogen expenditure amounts with respect to such device.

“(2) QUALIFIED HYDROGEN EXPENDITURE AMOUNT.—For purposes of this subsection—

“(A) IN GENERAL.—The term ‘qualified hydrogen expenditure amount’ means, with respect to each eligible hydrogen energy conversion device of the taxpayer with a production capacity of not more than 25 kilowatts of electricity per year, the lesser of—

“(i) 30 percent of the amount paid or incurred by the taxpayer during the taxable year for hydrogen which is consumed by such device, and

“(ii) $2,000.

In the case of any device which is not owned by the taxpayer at all times during the taxable year, the $2,000 amount in subparagraph (B) shall be reduced by an amount which bears the same ratio to $2,000 as the portion of the year which such device is not owned by the taxpayer bears to the entire year.

“(B) HIGHER LIMITATION FOR DEVICES WITH MORE PRODUCTION CAPACITY.—In the case of any eligible hydrogen energy conversion device with a production capacity of—

“(i) more than 25 but less than 100 kilowatts of electricity per year, subparagraph (A) shall be applied by substituting ‘$4,000’ for ‘$2,000’ each place it appears; and

“(ii) not less than 100 kilowatts of electricity per year, subparagraph (A) shall be applied by substituting ‘$6,000’ for ‘$2,000’ each place it appears.

“(3) ELIGIBLE HYDROGEN ENERGY CONVERSION DEVICES.—For purposes of this subsection—

“(A) IN GENERAL.—The term ‘eligible hydrogen energy conversion device’ means, with respect to any taxpayer, any hydrogen energy conversion device which—

“(i) is placed in service after December 31, 2004; and

“(ii) is wholly owned by the taxpayer during the taxable year.

If an owner of a device (determined without regard to this subparagraph) provides to the primary user of such device a written statement that such user shall be treated as the owner of such device for purposes of this section, then such user (and not such owner) shall be so treated.

“(B) HYDROGEN ENERGY CONVERSION DEVICE.—The term ‘hydrogen energy conversion device’ means—

“(i) any electrochemical device which converts hydrogen into electricity; and

“(ii) any combustion engine which burns hydrogen as a fuel.

“(d) Reduction in basis.—For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this paragraph) result from such expenditure shall be reduced by the amount of the credit so allowed.

“(e) Application with other credits.—

“(1) BUSINESS CREDIT TREATED AS PART OF GENERAL BUSINESS CREDIT.—So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to amounts which (but for subsection (g) would be allowed as a deduction under section 162 shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)).

“(2) PERSONAL CREDIT.—The credit allowed under subsection (a) (after the application of paragraph (1)) for any taxable year shall not exceed the excess (if any) of—

“(A) the regular tax liability (as defined in section 26(b)) reduced by the sum of the credits allowable under subpart A and sections 27, 30, 30B, and 30C, over

“(B) the tentative minimum tax for the taxable year.

“(f) Denial of double benefit.—The amount of any deduction or other credit allowable under this chapter for any cost taken into account in determining the amount of the credit under subsection (a) shall be reduced by the amount of such credit attributable to such cost.

“(g) Recapture.—The Secretary shall, by regulations, provided 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.

“(h) Election not To take credit.—No credit shall be allowed under subsection (a) for any property if the taxpayer elects not to have this section apply to such property.

“(i) Regulations.—The Secretary shall prescribe such regulations as necessary to carry out the provisions of this section.

“(j) Termination.—This section shall not apply to any costs after December 31, 2012.”.

(b) Conforming amendments.—

(1) Section 38(b), as amended by this Act, is amended by striking “plus” at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting “plus”, and by adding at the end the following new paragraph:

“(37) the portion of the hydrogen installation, infrastructure, and fuel credit to which section 30F(e)(1) applies.”.

(2) Section 55(c)(3), as amended by this Act, is amended by inserting “30F(e)(2),” after “30C(d)(2),”.

(3) Section 1016(a), as amended by this Act, is amended by striking “and” at the end of paragraph (38), by striking the period at the end of paragraph (39) and inserting “, and”, and by adding at the end the following new paragraph:

“(40) to the extent provided in section 30F(d).”.

(4) Section 6501(m), as amended by this Act, is amended by inserting “30F(h),” after “30E(c)(3),”.

(5) 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 30E the following new item:


“Sec. 30F. Hydrogen installation, infrastructure, and fuel costs.”.

(c) Effective date.—The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act, in taxable years ending after such date.

SEC. 538. Alternative fuel vehicle refueling property credit.

(a) Increase in credit amount.—Section 30C is amended—

(1) by striking “30 percent” in subsection (a) and inserting “50 percent”, and

(2) by striking “$30,000” in subsection (b)(1) and inserting “$50,000”.

(b) Extension of credit.—Paragraph (2) of section 30C(g) is amended by striking “December 31, 2009” and inserting “December 31, 2012”.

(c) Inclusion of electricity as a clean-burning fuel.—Section 30C(c)(2) is amended by adding at the end the following new subparagraph:

“(C) Electricity.”.

(d) Effective date.—The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.

SEC. 539. Certain income and gains relating to alcohol fuels and mixtures, biodiesel fuels and mixtures, and alternative fuels and mixtures treated as qualifying income for publicly traded partnerships.

(a) In general.—Subparagraph (E) of section 7704(d)(1) is amended by inserting “, or the transportation, storage, or marketing of any fuel described in subsection (b), (c), (d), or (e) of section 6426, or any alcohol fuel defined in section 6426(b)(4)(A) or any biodiesel fuel as defined in section 40A(d)(1)” after “timber)”.

(b) Effective date.—The amendment made by this section shall take effect on the date of the enactment of this Act, in taxable years ending after such date.

SEC. 541. Energy efficiency and conservation block grants.

Section 544 of the Energy Independence and Security Act of 2007 (42 U.S.C. 17154) is amended—

(1) in paragraph (13), by striking “and” at the end;

(2) by redesignating paragraph (14) as paragraph (15); and

(3) by inserting after paragraph (13) the following:

“(14) development, implementation, and installation of smart grid technologies and smart grid functions (as defined in section 1306(d)); and”.

SEC. 542. Weatherization assistance program for low-income persons.

(a) In general.—Section 422 of the Energy Conservation and Production Act (42 U.S.C. 6872) is amended—

(1) by striking the section heading and all that follows through “For the purpose” and inserting the following:

“SEC. 422 Funding.

“(a) Discretionary funding.—For the purpose”;

(1) by striking “fiscal year 2008” and inserting “each of fiscal years 2008 through 2012”; and

(2) by adding at the end the following:

“(b) Mandatory funding.—

“(1) IN GENERAL.—In addition to any amounts made available under subsection (a), on October 1, 2008, and on each October 1 thereafter through October 1, 2011, out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall transfer to the Secretary to carry out this part $500,000,000, to remain available until expended.

“(2) RECEIPT AND ACCEPTANCE.—The Secretary shall be entitled to receive, shall accept, and shall use to carry out this part the funds transferred under paragraph (1), without further appropriation.”.

(b) Conforming amendments.—Section 415 of the Energy Conservation and Production Act (42 U.S.C. 6865) is amended by striking “section 422(b)” each place it appears in subsections (d) and (e)(1)(A) and inserting “section 422”.

SEC. 543. Renewable energy workforce.

Section 1101 of the Energy Policy Act of 2005 (42 U.S.C. 16411) is amended—

(1) in subsection (b)(1)—

(A) in subparagraph (A), by striking “and” at the end;

(B) in subparagraph (B), by striking the period and inserting “; and”; and

(C) by adding at the end the following:

“(D) renewable energy product and service industries.”;

(2) by redesignating subsection (d) as subsection (e); and

(3) by inserting after subsection (c) the following:

“(d) Workforce training.—

“(1) IN GENERAL.—The Secretary of Labor, in cooperation with the Secretary, shall promulgate regulations to implement a program to provide grants to enhance workforce training for any occupation in the workforce of the renewable energy products and services industries for which a shortage is identified or predicted in the report under subsection (b)(2).

“(2) CONSULTATION.—In carrying out this subsection, the Secretary of Labor shall consult with representatives of the renewable energy industry and renewable energy products and services industries, including organized labor organizations and other stakeholders.

“(3) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to the Secretary of Labor, working in coordination with the Secretary and the Secretary of Education, $20,000,000 for each of fiscal years 2009 through 2013 to carry out this subsection.”.

SEC. 550. Reference.

Except as otherwise expressly provided, whenever in this part an amendment 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.

SEC. 551. Renewable energy credit.

(a) Extension of credit.—

(1) 4-YEAR EXTENSION FOR WIND FACILITIES.—Paragraph (1) of section 45(d) is amended by striking “January 1, 2009” and inserting “January 1, 2013”.

(2) 4-YEAR EXTENSION FOR CERTAIN OTHER FACILITIES.—Each of the following provisions of section 45(d) is amended by striking “January 1, 2009” and inserting “January 1, 2013”:

(A) Clauses (i) and (ii) of paragraph (2)(A).

(B) Clauses (i)(I) and (ii) of paragraph (3)(A).

(C) Paragraph (4).

(D) Paragraph (5).

(E) Paragraph (6).

(F) Paragraph (7).

(G) Subparagraphs (A) and (B) of paragraph (9).

(b) Modification of Credit Phaseout.—

(1) REPEAL OF PHASEOUT.—Subsection (b) of section 45 is amended—

(A) by striking paragraph (1), and

(B) by striking “the 8 cent amount in paragraph (1),” in paragraph (2) thereof.

(2) LIMITATION BASED ON INVESTMENT IN FACILITY.—Subsection (b) of section 45 is amended by inserting before paragraph (2) the following new paragraph:

“(1) LIMITATION BASED ON INVESTMENT IN FACILITY.—

“(A) IN GENERAL.—In the case of any qualified facility originally placed in service after December 31, 2009, the amount of the credit determined under subsection (a) for any taxable year with respect to electricity produced at such facility shall not exceed the product of—

“(i) the applicable percentage with respect to such facility, multiplied by

“(ii) the eligible basis of such facility.

“(B) CARRYFORWARD OF UNUSED LIMITATION AND EXCESS CREDIT.—

“(i) UNUSED LIMITATION.—If the limitation imposed under subparagraph (A) with respect to any facility for any taxable year exceeds the prelimitation credit for such facility for such taxable year, the limitation imposed under subparagraph (A) with respect to such facility for the succeeding taxable year shall be increased by the amount of such excess.

“(ii) EXCESS CREDIT.—If the prelimitation credit with respect to any facility for any taxable year exceeds the limitation imposed under subparagraph (A) with respect to such facility for such taxable year, the credit determined under subsection (a) with respect to such facility for the succeeding taxable year (determined before the application of subparagraph (A) for such succeeding taxable year) shall be increased by the amount of such excess. With respect to any facility, no amount may be carried forward under this clause to any taxable year beginning after the 10-year period described in subsection (a)(2)(A)(ii) with respect to such facility.

“(iii) PRELIMITATION CREDIT.—The term ‘prelimitation credit’ with respect to any facility for a taxable year means the credit determined under subsection (a) with respect to such facility for such taxable year, determined without regard to subparagraph (A) and after taking into account any increase for such taxable year under clause (ii).

“(C) APPLICABLE PERCENTAGE.—For purposes of this paragraph—

“(i) IN GENERAL.—The term ‘applicable percentage’ means, with respect to any facility, the appropriate percentage prescribed by the Secretary for the month in which such facility is originally placed in service.

“(ii) METHOD OF PRESCRIBING APPLICABLE PERCENTAGES.—The applicable percentages prescribed by the Secretary for any month under clause (i) shall be percentages which yield over a 10-year period amounts of limitation under subparagraph (A) which have a present value equal to 35 percent of the eligible basis of the facility.

“(iii) METHOD OF DISCOUNTING.—The present value under clause (ii) shall be determined—

“(I) as of the last day of the 1st year of the 10-year period referred to in clause (ii),

“(II) by using a discount rate equal to the greater of 110 percent of the Federal long-term rate as in effect under section 1274(d) for the month preceding the month for which the applicable percentage is being prescribed, or 4.5 percent, and

“(III) by taking into account the limitation under subparagraph (A) for any year on the last day of such year.

“(D) ELIGIBLE BASIS.—For purposes of this paragraph—

“(i) IN GENERAL.—The term ‘eligible basis’ means, with respect to any facility, the sum of—

“(I) the basis of such facility determined as of the time that such facility is originally placed in service, and

“(II) the portion of the basis of any shared qualified property which is properly allocable to such facility under clause (ii).

“(ii) RULES FOR ALLOCATION.—For purposes of subclause (II) of clause (i), the basis of shared qualified property shall be allocated among all qualified facilities which are projected to be placed in service and which require utilization of such property in proportion to projected generation from such facilities.

“(iii) SHARED QUALIFIED PROPERTY.—For purposes of this paragraph, the term ‘shared qualified property’ means, with respect to any facility, any property described in section 168(e)(3)(B)(vi)—

“(I) which a qualified facility will require for utilization of such facility, and

“(II) which is not a qualified facility.

“(iv) SPECIAL RULE RELATING TO GEOTHERMAL FACILITIES.—In the case of any qualified facility using geothermal energy to produce electricity, the basis of such facility for purposes of this paragraph shall be determined as though intangible drilling and development costs described in section 263(c) were capitalized rather than expensed.

“(E) SPECIAL RULE FOR FIRST AND LAST YEAR OF CREDIT PERIOD.—In the case of any taxable year any portion of which is not within the 10-year period described in subsection (a)(2)(A)(ii) with respect to any facility, the amount of the limitation under subparagraph (A) with respect to such facility shall be reduced by an amount which bears the same ratio to the amount of such limitation (determined without regard to this subparagraph) as such portion of the taxable year which is not within such period bears to the entire taxable year.

“(F) ELECTION TO TREAT ALL FACILITIES PLACED IN SERVICE IN A YEAR AS 1 FACILITY.—At the election of the taxpayer, all qualified facilities which are part of the same project and which are placed in service during the same calendar year shall be treated for purposes of this section as 1 facility which is placed in service at the mid-point of such year or the first day of the following calendar year.”.

(c) Trash facility clarification.—Paragraph (7) of section 45(d) is amended—

(1) by striking “facility which burns” and inserting “facility (other than a facility described in paragraph (6)) which uses”, and

(2) by striking “combustion”.

(d) Expansion of biomass facilities.—

(1) OPEN-LOOP BIOMASS FACILITIES.—Paragraph (3) of section 45(d) is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:

“(B) EXPANSION OF FACILITY.—Such term shall include a new unit placed in service after the date of the enactment of this subparagraph in connection with a facility described in subparagraph (A), but only to the extent of the increased amount of electricity produced at the facility by reason of such new unit.”.

(2) CLOSED-LOOP BIOMASS FACILITIES.—Paragraph (2) of section 45(d) is amended by redesignating subparagraph (B) as subparagraph (C) and inserting after subparagraph (A) the following new subparagraph:

“(B) EXPANSION OF FACILITY.—Such term shall include a new unit placed in service after the date of the enactment of this subparagraph in connection with a facility described in subparagraph (A)(i), but only to the extent of the increased amount of electricity produced at the facility by reason of such new unit.”.

(e) Sales of net electricity to regulated public utilities treated as sales to unrelated persons.—Paragraph (4) of section 45(e) is amended by adding at the end the following new sentence: “The net amount of electricity sold by any taxpayer to a regulated public utility (as defined in section 7701(a)(33)) shall be treated as sold to an unrelated person.”.

(f) Modification of rules for hydropower production.—Subparagraph (C) of section 45(c)(8) is amended to read as follows:

“(C) NONHYDROELECTRIC DAM.—For purposes of subparagraph (A), a facility is described in this subparagraph if—

“(i) the hydroelectric project installed on the nonhydroelectric dam is licensed by the Federal Energy Regulatory Commission and meets all other applicable environmental, licensing, and regulatory requirements,

“(ii) the nonhydroelectric dam was placed in service before the date of the enactment of this paragraph and operated for flood control, navigation, or water supply purposes and did not produce hydroelectric power on the date of the enactment of this paragraph, and

“(iii) the hydroelectric project is operated so that the water surface elevation at any given location and time that would have occurred in the absence of the hydroelectric project is maintained, subject to any license requirements imposed under applicable law that change the water surface elevation for the purpose of improving environmental quality of the affected waterway.

The Secretary, in consultation with the Federal Energy Regulatory Commission, shall certify if a hydroelectric project licensed at a nonhydroelectric dam meets the criteria in clause (iii). Nothing in this section shall affect the standards under which the Federal Energy Regulatory Commission issues licenses for and regulates hydropower projects under part I of the Federal Power Act.”.

(g) Effective date.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to property originally placed in service after December 31, 2008.

(2) REPEAL OF CREDIT PHASEOUT.—The amendments made by subsection (b)(1) shall apply to taxable years ending after December 31, 2008.

(3) LIMITATION BASED ON INVESTMENT IN FACILITY.—The amendment made by subsection (b)(2) shall apply to property originally placed in service after December 31, 2009.

(4) TRASH FACILITY CLARIFICATION; SALES TO RELATED REGULATED PUBLIC UTILITIES.—The amendments made by subsections (c) and (e) shall apply to electricity produced and sold after the date of the enactment of this Act.

(5) EXPANSION OF BIOMASS FACILITIES.—The amendments made by subsection (d) shall apply to property placed in service after the date of the enactment of this Act.

SEC. 552. Production credit for electricity produced from marine renewables.

(a) In general.—Paragraph (1) of section 45(c) is amended by striking “and” at the end of subparagraph (G), by striking the period at the end of subparagraph (H) and inserting “, and”, and by adding at the end the following new subparagraph:

“(I) marine and hydrokinetic renewable energy.”.

(b) Marine renewables.—Subsection (c) of section 45 is amended by adding at the end the following new paragraph:

“(10) MARINE AND HYDROKINETIC RENEWABLE ENERGY.—

“(A) IN GENERAL.—The term ‘marine and hydrokinetic renewable energy’ means energy derived from—

“(i) waves, tides, and currents in oceans, estuaries, and tidal areas,

“(ii) free flowing water in rivers, lakes, and streams,

“(iii) free flowing water in an irrigation system, canal, or other man-made channel, including projects that utilize nonmechanical structures to accelerate the flow of water for electric power production purposes, or

“(iv) differentials in ocean temperature (ocean thermal energy conversion).

“(B) EXCEPTIONS.—Such term shall not include any energy which is derived from any source which utilizes a dam, diversionary structure (except as provided in subparagraph (A)(iii)), or impoundment for electric power production purposes.”.

(c) Definition of facility.—Subsection (d) of section 45 is amended by adding at the end the following new paragraph:

“(11) MARINE AND HYDROKINETIC RENEWABLE ENERGY FACILITIES.—In the case of a facility producing electricity from marine and hydrokinetic renewable energy, the term ‘qualified facility’ means any facility owned by the taxpayer—

“(A) which has a nameplate capacity rating of at least 150 kilowatts, and

“(B) which is originally placed in service on or after the date of the enactment of this paragraph and before January 1, 2012.”.

(d) Credit rate.—Subparagraph (A) of section 45(b)(4) is amended by striking “or (9)” and inserting “(9), or (11)”.

(e) Coordination with small irrigation power.—Paragraph (5) of section 45(d), as amended by section 101, is amended by striking “January 1, 2012” and inserting “the date of the enactment of paragraph (11)”.

(f) Effective date.—The amendments made by this section shall apply to electricity produced and sold after the date of the enactment of this Act, in taxable years ending after such date.

SEC. 553. Energy credit.

(a) Extension of credit.—

(1) SOLAR ENERGY PROPERTY.—Paragraphs (2)(A)(i)(II) and (3)(A)(ii) of section 48(a) are each amended by striking “January 1, 2009” and inserting “January 1, 2015”.

(2) FUEL CELL PROPERTY.—Subparagraph (E) of section 48(c)(1) is amended by striking “December 31, 2008” and inserting “December 31, 2014”.

(3) MICROTURBINE PROPERTY.—Subparagraph (E) of section 48(c)(2) is amended by striking “December 31, 2008” and inserting “December 31, 2014”.

(b) Allowance of energy credit against alternative minimum tax.—Subparagraph (B) of section 38(c)(4) is amended by striking “and” at the end of clause (iii), by redesignating clause (iv) as clause (v), and by inserting after clause (iii) the following new clause:

“(iv) the credit determined under section 46 to the extent that such credit is attributable to the energy credit determined under section 48, and”.

(c) Energy credit for combined heat and power system property.—

(1) IN GENERAL.—Section 48(a)(3)(A) (defining energy property) is amended by striking “or” at the end of clause (iii), by inserting “or” at the end of clause (iv), and by adding at the end the following new clause:

“(v) combined heat and power system property,”.

(2) COMBINED HEAT AND POWER SYSTEM PROPERTY.—Section 48 is amended by adding at the end the following new subsection:

“(d) Combined Heat and Power System Property.—For purposes of subsection (a)(3)(A)(v)—

“(1) COMBINED HEAT AND POWER SYSTEM PROPERTY.—The term ‘combined heat and power system property’ means property comprising a system—

“(A) which uses the same energy source for the simultaneous or sequential generation of electrical power, mechanical shaft power, or both, in combination with the generation of steam or other forms of useful thermal energy (including heating and cooling applications),

“(B) which produces—

“(i) at least 20 percent of its total useful energy in the form of thermal energy which is not used to produce electrical or mechanical power (or combination thereof), and

“(ii) at least 20 percent of its total useful energy in the form of electrical or mechanical power (or combination thereof),

“(C) the energy efficiency percentage of which exceeds 60 percent, and

“(D) which is placed in service before January 1, 2015.

“(2) LIMITATION.—

“(A) IN GENERAL.—In the case of combined heat and power system property with an electrical capacity in excess of the applicable capacity placed in service during the taxable year, the credit under subsection (a)(1) (determined without regard to this paragraph) for such year shall be equal to the amount which bears the same ratio to such credit as the applicable capacity bears to the capacity of such property.

“(B) APPLICABLE CAPACITY.—For purposes of subparagraph (A), the term ‘applicable capacity’ means 15 megawatts or a mechanical energy capacity of more than 20,000 horsepower or an equivalent combination of electrical and mechanical energy capacities.

“(C) MAXIMUM CAPACITY.—The term ‘combined heat and power system property’ shall not include any property comprising a system if such system has a capacity in excess of 50 megawatts or a mechanical energy capacity in excess of 67,000 horsepower or an equivalent combination of electrical and mechanical energy capacities.

“(3) SPECIAL RULES.—

“(A) ENERGY EFFICIENCY PERCENTAGE.—For purposes of this subsection, the energy efficiency percentage of a system is the fraction—

“(i) the numerator of which is the total useful electrical, thermal, and mechanical power produced by the system at normal operating rates, and expected to be consumed in its normal application, and

“(ii) the denominator of which is the lower heating value of the fuel sources for the system.

“(B) DETERMINATIONS MADE ON BTU BASIS.—The energy efficiency percentage and the percentages under paragraph (1)(B) shall be determined on a Btu basis.

“(C) INPUT AND OUTPUT PROPERTY NOT INCLUDED.—The term ‘combined heat and power system property’ does not include property used to transport the energy source to the facility or to distribute energy produced by the facility.

“(4) SYSTEMS USING BIOMASS.—If a system is designed to use biomass (within the meaning of paragraphs (2) and (3) of section 45(c) without regard to the last sentence of paragraph (3)(A)) for at least 90 percent of the energy source—

“(A) paragraph (1)(C) shall not apply, but

“(B) the amount of credit determined under subsection (a) with respect to such system shall not exceed the amount which bears the same ratio to such amount of credit (determined without regard to this paragraph) as the energy efficiency percentage of such system bears to 60 percent.”.

(d) Increase of credit limitation for fuel cell property.—Subparagraph (B) of section 48(c)(1) is amended by striking “$500” and inserting “$1,500”.

(e) Public utility property taken into account.—

(1) IN GENERAL.—Paragraph (3) of section 48(a) is amended by striking the second sentence thereof.

(2) CONFORMING AMENDMENTS.—

(A) Paragraph (1) of section 48(c) is amended by striking subparagraph (D) and redesignating subparagraph (E) as subparagraph (D).

(B) Paragraph (2) of section 48(c) is amended by striking subparagraph (D) and redesignating subparagraph (E) as subparagraph (D).

(f) Effective date.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall take effect on the date of the enactment of this Act.

(2) ALLOWANCE AGAINST ALTERNATIVE MINIMUM TAX.—The amendments made by subsection (b) shall apply to credits determined under section 46 of the Internal Revenue Code of 1986 in taxable years beginning after the date of the enactment of this Act and to carrybacks of such credits.

(3) COMBINED HEAT AND POWER AND FUEL CELL PROPERTY.—The amendments made by subsections (c) and (d) shall apply to periods after the date of the enactment of this Act, in taxable years ending after such date, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

(4) PUBLIC UTILITY PROPERTY.—The amendments made by subsection (e) shall apply to periods after February 13, 2008, in taxable years ending after such date, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

SEC. 554. Credit for residential energy efficient property.

(a) Extension.—Section 25D(g) is amended by striking “December 31, 2008” and inserting “December 31, 2014”.

(b) Maximum credit for solar electric property.—

(1) IN GENERAL.—Section 25D(b)(1)(A) is amended by striking “$2,000” and inserting “$4,000”.

(2) CONFORMING AMENDMENT.—Section 25D(e)(4)(A)(i) is amended by striking “$6,667” and inserting “$13,333”.

(c) Credit for residential wind property.—

(1) IN GENERAL.—Section 25D(a) is amended by striking “and” at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting “, and”, and by adding at the end the following new paragraph:

“(4) 30 percent of the qualified small wind energy property expenditures made by the taxpayer during such year.”.

(2) LIMITATION.—Section 25D(b)(1) is amended by striking “and” at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting “, and”, and by adding at the end the following new subparagraph:

“(D) $500 with respect to each half kilowatt of capacity (not to exceed $4,000) of wind turbines for which qualified small wind energy property expenditures are made.”.

(3) QUALIFIED SMALL WIND ENERGY PROPERTY EXPENDITURES.—

(A) IN GENERAL.—Section 25D(d) is amended by adding at the end the following new paragraph:

“(4) QUALIFIED SMALL WIND ENERGY PROPERTY EXPENDITURE.—The term ‘qualified small wind energy property expenditure’ means an expenditure for property which uses a wind turbine to generate electricity for use in connection with a dwelling unit located in the United States and used as a residence by the taxpayer.”.

(B) NO DOUBLE BENEFIT.—Section 45(d)(1) is amended by adding at the end the following new sentence: “Such term shall not include any facility with respect to which any qualified small wind energy property expenditure (as defined in subsection (d)(4) of section 25D) is taken into account in determining the credit under such section.”.

(4) MAXIMUM EXPENDITURES IN CASE OF JOINT OCCUPANCY.—Section 25D(e)(4)(A) is amended by striking “and” at the end of clause (ii), by striking the period at the end of clause (iii) and inserting “, and”, and by adding at the end the following new clause:

“(iv) $1,667 in the case of each half kilowatt of capacity (not to exceed $13,333) of wind turbines for which qualified small wind energy property expenditures are made.”.

(d) Credit for geothermal heat Pump systems.—

(1) IN GENERAL.—Section 25D(a), as amended by subsection (c), is amended by striking “and” at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting “, and”, and by adding at the end the following new paragraph:

“(5) 30 percent of the qualified geothermal heat pump property expenditures made by the taxpayer during such year.”.

(2) LIMITATION.—Section 25D(b)(1), as amended by subsection (c), is amended by striking “and” at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting “, and”, and by adding at the end the following new subparagraph:

“(E) $2,000 with respect to any qualified geothermal heat pump property expenditures.”.

(3) QUALIFIED GEOTHERMAL HEAT PUMP PROPERTY EXPENDITURE.—Section 25D(d), as amended by subsection (c), is amended by adding at the end the following new paragraph:

“(5) QUALIFIED GEOTHERMAL HEAT PUMP PROPERTY EXPENDITURE.—

“(A) IN GENERAL.—The term ‘qualified geothermal heat pump property expenditure’ means an expenditure for qualified geothermal heat pump property installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer.

“(B) QUALIFIED GEOTHERMAL HEAT PUMP PROPERTY.—The term ‘qualified geothermal heat pump property’ means any equipment which—

“(i) uses the ground or ground water as a thermal energy source to heat the dwelling unit referred to in subparagraph (A) or as a thermal energy sink to cool such dwelling unit, and

“(ii) meets the requirements of the Energy Star program which are in effect at the time that the expenditure for such equipment is made.”.

(4) MAXIMUM EXPENDITURES IN CASE OF JOINT OCCUPANCY.—Section 25D(e)(4)(A), as amended by subsection (c), is amended by striking “and” at the end of clause (iii), by striking the period at the end of clause (iv) and inserting “, and”, and by adding at the end the following new clause:

“(v) $6,667 in the case of any qualified geothermal heat pump property expenditures.”.

(e) Credit allowed against alternative minimum tax.—

(1) IN GENERAL.—Subsection (c) of section 25D is amended to read as follows:

“(c) Limitation based on amount of tax; carryforward of unused credit.—

“(1) LIMITATION BASED ON AMOUNT OF TAX.—In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for the taxable year shall not exceed the excess of—

“(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

“(B) the sum of the credits allowable under this subpart (other than this section) and section 27 for the taxable year.

“(2) CARRYFORWARD OF UNUSED CREDIT.—

“(A) RULE FOR YEARS IN WHICH ALL PERSONAL CREDITS ALLOWED AGAINST REGULAR AND ALTERNATIVE MINIMUM TAX.—In the case of a taxable year to which section 26(a)(2) applies, if the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a)(2) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.

“(B) RULE FOR OTHER YEARS.—In the case of a taxable year to which section 26(a)(2) does not apply, if the credit allowable under subsection (a) exceeds the limitation imposed by paragraph (1) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.”.

(2) CONFORMING AMENDMENTS.—

(A) Section 23(b)(4)(B) is amended by inserting “and section 25D” after “this section”.

(B) Section 24(b)(3)(B) is amended by striking “and 25B” and inserting “, 25B, and 25D”.

(C) Section 25B(g)(2) is amended by striking “section 23” and inserting “sections 23 and 25D”.

(D) Section 26(a)(1) is amended by striking “and 25B” and inserting “25B, and 25D”.

(f) Effective date.—

(1) IN GENERAL.—The amendments made by this section shall apply to taxable years beginning after December 31, 2007.

(2) APPLICATION OF EGTRRA SUNSET.—The amendments made by subparagraphs (A) and (B) of subsection (e)(2) shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 in the same manner as the provisions of such Act to which such amendments relate.

SEC. 555. Special rule to implement FERC and State electric restructuring policy.

(a) Extension for qualified electric utilities.—

(1) IN GENERAL.—Paragraph (3) of section 451(i) is amended by inserting “(before January 1, 2010, in the case of a qualified electric utility)” after “January 1, 2008”.

(2) QUALIFIED ELECTRIC UTILITY.—Subsection (i) of section 451 is amended by redesignating paragraphs (6) through (10) as paragraphs (7) through (11), respectively, and by inserting after paragraph (5) the following new paragraph:

“(6) QUALIFIED ELECTRIC UTILITY.—For purposes of this subsection, the term ‘qualified electric utility’ means a person that, as of the date of the qualifying electric transmission transaction, is vertically integrated, in that it is both—

“(A) a transmitting utility (as defined in section 3(23) of the Federal Power Act (16 U.S.C. 796(23))) with respect to the transmission facilities to which the election under this subsection applies, and

“(B) an electric utility (as defined in section 3(22) of the Federal Power Act (16 U.S.C. 796(22))).”.

(b) Extension of period for transfer of operational control authorized by FERC.—Clause (ii) of section 451(i)(4)(B) is amended by striking “December 31, 2007” and inserting “the date which is 4 years after the close of the taxable year in which the transaction occurs”.

(c) Property located outside the united states not treated as exempt utility property.—Paragraph (5) of section 451(i) is amended by adding at the end the following new subparagraph:

“(C) EXCEPTION FOR PROPERTY LOCATED OUTSIDE THE UNITED STATES.—The term ‘exempt utility property’ shall not include any property which is located outside the United States.”.

(d) Effective Dates.—

(1) EXTENSION.—The amendments made by subsection (a) shall apply to transactions after December 31, 2007.

(2) TRANSFERS OF OPERATIONAL CONTROL.—The amendment made by subsection (b) shall take effect as if included in section 909 of the American Jobs Creation Act of 2004.

(3) EXCEPTION FOR PROPERTY LOCATED OUTSIDE THE UNITED STATES.—The amendment made by subsection (c) shall apply to transactions after the date of the enactment of this Act.

SEC. 556. New clean renewable energy bonds.

(a) In general.—Subpart I of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section:

“SEC. 54C. New clean renewable energy bonds.

“(a) New clean renewable energy bond.—For purposes of this subpart, the term ‘new clean renewable energy bond’ means any bond issued as part of an issue if—

“(1) 100 percent of the available project proceeds of such issue are to be used for capital expenditures incurred by public power providers or cooperative electric companies for one or more qualified renewable energy facilities,

“(2) the bond is issued by a qualified issuer, and

“(3) the issuer designates such bond for purposes of this section.

“(b) Reduced credit amount.—The annual credit determined under section 54A(b) with respect to any new clean renewable energy bond shall be 70 percent of the amount so determined without regard to this subsection.

“(c) Limitation on amount of bonds designated.—

“(1) IN GENERAL.—The maximum aggregate face amount of bonds which may be designated under subsection (a) by any issuer shall not exceed the limitation amount allocated under this subsection to such issuer.

“(2) NATIONAL LIMITATION ON AMOUNT OF BONDS DESIGNATED.—There is a national new clean renewable energy bond limitation of $2,000,000,000 which shall be allocated by the Secretary as provided in paragraph (3), except that—

“(A) not more than 3313 percent thereof may be allocated to qualified projects of public power providers,

“(B) not more than 3313 percent thereof may be allocated to qualified projects of governmental bodies, and

“(C) not more than 3313 percent thereof may be allocated to qualified projects of cooperative electric companies.

“(3) METHOD OF ALLOCATION.—

“(A) ALLOCATION AMONG PUBLIC POWER PROVIDERS.—After the Secretary determines the qualified projects of public power providers which are appropriate for receiving an allocation of the national new clean renewable energy bond limitation, the Secretary shall, to the maximum extent practicable, make allocations among such projects in such manner that the amount allocated to each such project bears the same ratio to the cost of such project as the limitation under paragraph (2)(A) bears to the cost of all such projects.

“(B) ALLOCATION AMONG GOVERNMENTAL BODIES AND COOPERATIVE ELECTRIC COMPANIES.—The Secretary shall make allocations of the amount of the national new clean renewable energy bond limitation described in paragraphs (2)(B) and (2)(C) among qualified projects of governmental bodies and cooperative electric companies, respectively, in such manner as the Secretary determines appropriate.

“(d) Definitions.—For purposes of this section—

“(1) QUALIFIED RENEWABLE ENERGY FACILITY.—The term ‘qualified renewable energy facility’ means a qualified facility (as determined under section 45(d) without regard to paragraphs (8) and (10) thereof and to any placed in service date) owned by a public power provider, a governmental body, or a cooperative electric company.

“(2) PUBLIC POWER PROVIDER.—The term ‘public power provider’ means a State utility with a service obligation, as such terms are defined in section 217 of the Federal Power Act (as in effect on the date of the enactment of this paragraph).

“(3) GOVERNMENTAL BODY.—The term ‘governmental body’ means any State or Indian tribal government, or any political subdivision thereof.

“(4) COOPERATIVE ELECTRIC COMPANY.—The term ‘cooperative electric company’ means a mutual or cooperative electric company described in section 501(c)(12) or section 1381(a)(2)(C).

“(5) CLEAN RENEWABLE ENERGY BOND LENDER.—The term ‘clean renewable energy bond lender’ means a lender which is a cooperative which is owned by, or has outstanding loans to, 100 or more cooperative electric companies and is in existence on February 1, 2002, and shall include any affiliated entity which is controlled by such lender.

“(6) QUALIFIED ISSUER.—The term ‘qualified issuer’ means a public power provider, a cooperative electric company, a governmental body, a clean renewable energy bond lender, or a not-for-profit electric utility which has received a loan or loan guarantee under the Rural Electrification Act.”.

(b) Conforming amendments.—

(1) Paragraph (1) of section 54A(d) is amended to read as follows:

“(1) QUALIFIED TAX CREDIT BOND.—The term ‘qualified tax credit bond’ means—

“(A) a qualified forestry conservation bond, or

“(B) a new clean renewable energy bond,

which is part of an issue that meets requirements of paragraphs (2), (3), (4), (5), and (6).”.

(2) Subparagraph (C) of section 54A(d)(2) is amended to read as follows:

“(C) QUALIFIED PURPOSE.—For purposes of this paragraph, the term ‘qualified purpose’ means—

“(i) in the case of a qualified forestry conservation bond, a purpose specified in section 54B(e), and

“(ii) in the case of a new clean renewable energy bond, a purpose specified in section 54C(a)(1).”.

(3) The table of sections for subpart I of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:


“Sec. 54C. New clean renewable energy bonds.”.

(c) Application of certain labor standards on projects financed under tax credit bonds.—Subchapter IV of chapter 31 of title 40, United States Code, shall apply to projects financed with the proceeds of any tax credit bond (as defined in section 54A of the Internal Revenue Code of 1986) other than qualified forestry conservation bonds (as defined in section 54B of such Code).

(d) Effective date.—The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.

SEC. 561. Expansion and modification of advanced coal project investment credit.

(a) Modification of credit amount.—Section 48A(a) is amended by striking “and” at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting “, and”, and by adding at the end the following new paragraph:

“(3) 30 percent of the qualified investment for such taxable year in the case of projects described in clause (iii) of subsection (d)(3)(B).”.

(b) Expansion of aggregate credits.—Section 48A(d)(3)(A) is amended by striking “$1,300,000,000” and inserting “$2,550,000,000”.

(c) Authorization of Additional Projects.—

(1) IN GENERAL.—Subparagraph (B) of section 48A(d)(3) is amended to read as follows:

“(B) PARTICULAR PROJECTS.—Of the dollar amount in subparagraph (A), the Secretary is authorized to certify—

“(i) $800,000,000 for integrated gasification combined cycle projects the application for which is submitted during the period described in paragraph (2)(A)(i),

“(ii) $500,000,000 for projects which use other advanced coal-based generation technologies the application for which is submitted during the period described in paragraph (2)(A)(i), and

“(iii) $1,250,000,000 for advanced coal-based generation technology projects the application for which is submitted during the period described in paragraph (2)(A)(ii).”.

(2) APPLICATION PERIOD FOR ADDITIONAL PROJECTS.—Subparagraph (A) of section 48A(d)(2) is amended to read as follows:

“(A) APPLICATION PERIOD.—Each applicant for certification under this paragraph shall submit an application meeting the requirements of subparagraph (B). An applicant may only submit an application—

“(i) for an allocation from the dollar amount specified in clause (i) or (ii) of paragraph (3)(B) during the 3-year period beginning on the date the Secretary establishes the program under paragraph (1), and

“(ii) for an allocation from the dollar amount specified in paragraph (3)(B)(iii) during the 3-year period beginning at the earlier of the termination of the period described in clause (i) or the date prescribed by the Secretary.”.

(3) CAPTURE AND SEQUESTRATION OF CARBON DIOXIDE EMISSIONS REQUIREMENT.—

(A) IN GENERAL.—Section 48A(e)(1) is amended by striking “and” at the end of subparagraph (E), by striking the period at the end of subparagraph (F) and inserting “; and”, and by adding at the end the following new subparagraph:

“(G) in the case of any project the application for which is submitted during the period described in subsection (d)(2)(A)(ii), the project includes equipment which separates and sequesters at least 65 percent (70 percent in the case of an application for reallocated credits under subsection (d)(4)) of such project's total carbon dioxide emissions.”.

(B) HIGHEST PRIORITY FOR PROJECTS WHICH SEQUESTER CARBON DIOXIDE EMISSIONS.—Section 48A(e)(3) is amended by striking “and” at the end of subparagraph (A)(iii), by striking the period at the end of subparagraph (B)(iii) and inserting “, and”, and by adding at the end the following new subparagraph:

“(C) give highest priority to projects with the greatest separation and sequestration percentage of total carbon dioxide emissions.”.

(C) RECAPTURE OF CREDIT FOR FAILURE TO SEQUESTER.—Section 48A is amended by adding at the end the following new subsection:

“(h) Recapture of credit for failure To sequester.—The Secretary shall provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any project which fails to attain or maintain the separation and sequestration requirements of subsection (e)(1)(G).”.

(4) ADDITIONAL PRIORITY FOR RESEARCH PARTNERSHIPS.—Section 48A(e)(3)(B), as amended by paragraph (3)(B), is amended—

(A) by striking “and” at the end of clause (ii),

(B) by redesignating clause (iii) as clause (iv), and

(C) by inserting after clause (ii) the following new clause:

“(iii) applicant participants who have a research partnership with an eligible educational institution (as defined in section 529(e)(5)), and”.

(5) CLERICAL AMENDMENT.—Section 48A(e)(3) is amended by striking “integrated gasification combined cycle” in the heading and inserting “certain”.

(d) Competitive certification awards modification authority.—Section 48A, as amended by subsection (c)(3), is amended by adding at the end the following new subsection:

“(i) Competitive certification awards modification authority.—In implementing this section or section 48B, the Secretary is directed to modify the terms of any competitive certification award and any associated closing agreement where such modification—

“(1) is consistent with the objectives of such section,

“(2) is requested by the recipient of the competitive certification award, and

“(3) involves moving the project site to improve the potential to capture and sequester carbon dioxide emissions, reduce costs of transporting feedstock, and serve a broader customer base,

unless the Secretary determines that the dollar amount of tax credits available to the taxpayer under such section would increase as a result of the modification or such modification would result in such project not being originally certified. In considering any such modification, the Secretary shall consult with other relevant Federal agencies, including the Department of Energy.”.

(e) Disclosure of allocations.—Section 48A(d) is amended by adding at the end the following new paragraph:

“(5) DISCLOSURE OF ALLOCATIONS.—The Secretary shall, upon making a certification under this subsection or section 48B(d), publicly disclose the identity of the applicant and the amount of the credit certified with respect to such applicant.”.

(f) Effective dates.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to credits the application for which is submitted during the period described in section 48A(d)(2)(A)(ii) of the Internal Revenue Code of 1986 and which are allocated or reallocated after the date of the enactment of this Act.

(2) COMPETITIVE CERTIFICATION AWARDS MODIFICATION AUTHORITY.—The amendment made by subsection (d) shall take effect on the date of the enactment of this Act and is applicable to all competitive certification awards entered into under section 48A or 48B of the Internal Revenue Code of 1986, whether such awards were issued before, on, or after such date of enactment.

(3) DISCLOSURE OF ALLOCATIONS.—The amendment made by subsection (e) shall apply to certifications made after the date of the enactment of this Act.

(4) CLERICAL AMENDMENT.—The amendment made by subsection (c)(5) shall take effect as if included in the amendment made by section 1307(b) of the Energy Tax Incentives Act of 2005.

SEC. 562. Expansion and modification of coal gasification investment credit.

(a) Modification of credit amount.—Section 48B(a) is amended by inserting “(30 percent in the case of credits allocated under subsection (d)(1)(B))” after “20 percent”.

(b) Expansion of aggregate credits.—Section 48B(d)(1) is amended by striking “shall not exceed $350,000,000” and all that follows and inserting“shall not exceed—

“(A) $350,000,000, plus

“(B) $250,000,000 for qualifying gasification projects that include equipment which separates and sequesters at least 75 percent of such project’s total carbon dioxide emissions.”.

(c) Recapture of credit for failure To sequester.—Section 48B is amended by adding at the end the following new subsection:

“(f) Recapture of credit for failure To sequester.—The Secretary shall provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any project which fails to attain or maintain the separation and sequestration requirements for such project under subsection (d)(1).”.

(d) Selection priorities.—Section 48B(d) is amended by adding at the end the following new paragraph:

“(4) SELECTION PRIORITIES.—In determining which qualifying gasification projects to certify under this section, the Secretary shall—

“(A) give highest priority to projects with the greatest separation and sequestration percentage of total carbon dioxide emissions, and

“(B) give high priority to applicant participants who have a research partnership with an eligible educational institution (as defined in section 529(e)(5)).”.

(e) Effective date.—The amendments made by this section shall apply to credits described in section 48B(d)(1)(B) of the Internal Revenue Code of 1986 which are allocated or reallocated after the date of the enactment of this Act.

SEC. 563. Temporary increase in coal excise tax.

Paragraph (2) of section 4121(e) is amended—

(1) by striking “January 1, 2014” in subparagraph (A) and inserting “December 31, 2018”, and

(2) by striking “January 1 after 1981” in subparagraph (B) and inserting “December 31 after 2007”.

SEC. 564. Special rules for refund of the coal excise tax to certain coal producers and exporters.

(a) Refund.—

(1) COAL PRODUCERS.—

(A) IN GENERAL.—Notwithstanding subsections (a)(1) and (c) of section 6416 and section 6511 of the Internal Revenue Code of 1986, if—

(i) a coal producer establishes that such coal producer, or a party related to such coal producer, exported coal produced by such coal producer to a foreign country or shipped coal produced by such coal producer to a possession of the United States, or caused such coal to be exported or shipped, the export or shipment of which was other than through an exporter who meets the requirements of paragraph (2),

(ii) such coal producer filed an excise tax return on or after October 1, 1990, and on or before the date of the enactment of this Act, and

(iii) such coal producer files a claim for refund with the Secretary not later than the close of the 30-day period beginning on the date of the enactment of this Act,

then the Secretary shall pay to such coal producer an amount equal to the tax paid under section 4121 of such Code on such coal exported or shipped by the coal producer or a party related to such coal producer, or caused by the coal producer or a party related to such coal producer to be exported or shipped.

(B) SPECIAL RULES FOR CERTAIN TAXPAYERS.—For purposes of this section—

(i) IN GENERAL.—If a coal producer or a party related to a coal producer has received a judgment described in clause (iii), such coal producer shall be deemed to have established the export of coal to a foreign country or shipment of coal to a possession of the United States under subparagraph (A)(i).

(ii) AMOUNT OF PAYMENT.—If a taxpayer described in clause (i) is entitled to a payment under subparagraph (A), the amount of such payment shall be reduced by any amount paid pursuant to the judgment described in clause (iii).

(iii) JUDGMENT DESCRIBED.—A judgment is described in this subparagraph if such judgment—

(I) is made by a court of competent jurisdiction within the United States,

(II) relates to the constitutionality of any tax paid on exported coal under section 4121 of the Internal Revenue Code of 1986, and

(III) is in favor of the coal producer or the party related to the coal producer.

(2) EXPORTERS.—Notwithstanding subsections (a)(1) and (c) of section 6416 and section 6511 of the Internal Revenue Code of 1986, and a judgment described in paragraph (1)(B)(iii) of this subsection, if—

(A) an exporter establishes that such exporter exported coal to a foreign country or shipped coal to a possession of the United States, or caused such coal to be so exported or shipped,

(B) such exporter filed a tax return on or after October 1, 1990, and on or before the date of the enactment of this Act, and

(C) such exporter files a claim for refund with the Secretary not later than the close of the 30-day period beginning on the date of the enactment of this Act,

then the Secretary shall pay to such exporter an amount equal to $0.825 per ton of such coal exported by the exporter or caused to be exported or shipped, or caused to be exported or shipped, by the exporter.

(b) Limitations.—Subsection (a) shall not apply with respect to exported coal if a settlement with the Federal Government has been made with and accepted by, the coal producer, a party related to such coal producer, or the exporter, of such coal, as of the date that the claim is filed under this section with respect to such exported coal. For purposes of this subsection, the term “settlement with the Federal Government” shall not include any settlement or stipulation entered into as of the date of the enactment of this Act, the terms of which contemplate a judgment concerning which any party has reserved the right to file an appeal, or has filed an appeal.

(c) Subsequent refund prohibited.—No refund shall be made under this section to the extent that a credit or refund of such tax on such exported or shipped coal has been paid to any person.

(d) Definitions.—For purposes of this section—

(1) COAL PRODUCER.—The term “coal producer” means the person in whom is vested ownership of the coal immediately after the coal is severed from the ground, without regard to the existence of any contractual arrangement for the sale or other disposition of the coal or the payment of any royalties between the producer and third parties. The term includes any person who extracts coal from coal waste refuse piles or from the silt waste product which results from the wet washing (or similar processing) of coal.

(2) EXPORTER.—The term “exporter” means a person, other than a coal producer, who does not have a contract, fee arrangement, or any other agreement with a producer or seller of such coal to export or ship such coal to a third party on behalf of the producer or seller of such coal and—

(A) is indicated in the shipper’s export declaration or other documentation as the exporter of record, or

(B) actually exported such coal to a foreign country or shipped such coal to a possession of the United States, or caused such coal to be so exported or shipped.

(3) RELATED PARTY.—The term “a party related to such coal producer” means a person who—

(A) is related to such coal producer through any degree of common management, stock ownership, or voting control,

(B) is related (within the meaning of section 144(a)(3) of the Internal Revenue Code of 1986) to such coal producer, or

(C) has a contract, fee arrangement, or any other agreement with such coal producer to sell such coal to a third party on behalf of such coal producer.

(4) SECRETARY.—The term “Secretary” means the Secretary of Treasury or the Secretary's designee.

(e) Timing of refund.—With respect to any claim for refund filed pursuant to this section, the Secretary shall determine whether the requirements of this section are met not later than 180 days after such claim is filed. If the Secretary determines that the requirements of this section are met, the claim for refund shall be paid not later than 180 days after the Secretary makes such determination.

(f) Interest.—Any refund paid pursuant to this section shall be paid by the Secretary with interest from the date of overpayment determined by using the overpayment rate and method under section 6621 of the Internal Revenue Code of 1986.

(g) Denial of double benefit.—The payment under subsection (a) with respect to any coal shall not exceed—

(1) in the case of a payment to a coal producer, the amount of tax paid under section 4121 of the Internal Revenue Code of 1986 with respect to such coal by such coal producer or a party related to such coal producer, and

(2) in the case of a payment to an exporter, an amount equal to $0.825 per ton with respect to such coal exported by the exporter or caused to be exported by the exporter.

(h) Application of section.—This section applies only to claims on coal exported or shipped on or after October 1, 1990, through the date of the enactment of this Act.

(i) Standing not conferred.—

(1) EXPORTERS.—With respect to exporters, this section shall not confer standing upon an exporter to commence, or intervene in, any judicial or administrative proceeding concerning a claim for refund by a coal producer of any Federal or State tax, fee, or royalty paid by the coal producer.

(2) COAL PRODUCERS.—With respect to coal producers, this section shall not confer standing upon a coal producer to commence, or intervene in, any judicial or administrative proceeding concerning a claim for refund by an exporter of any Federal or State tax, fee, or royalty paid by the producer and alleged to have been passed on to an exporter.

SEC. 565. Carbon audit of the tax code.

(a) Study.—The Secretary of the Treasury shall enter into an agreement with the National Academy of Sciences to undertake a comprehensive review of the Internal Revenue Code of 1986 to identify the types of and specific tax provisions that have the largest effects on carbon and other greenhouse gas emissions and to estimate the magnitude of those effects.

(b) Report.—Not later than 2 years after the date of enactment of this Act, the National Academy of Sciences shall submit to Congress a report containing the results of study authorized under this section.

(c) Authorization of appropriations.—There is authorized to be appropriated to carry out this section $1,500,000 for the period of fiscal years 2008 and 2009.

SEC. 571. Qualified energy conservation bonds.

(a) In general.—Subpart I of part IV of subchapter A of chapter 1, as amended by this Act, is amended by adding at the end the following new section:

“SEC. 54D. Qualified energy conservation bonds.

“(a) Qualified energy conservation bond.—For purposes of this subchapter, the term ‘qualified energy conservation bond’ means any bond issued as part of an issue if—

“(1) 100 percent of the available project proceeds of such issue are to be used for one or more qualified conservation purposes,

“(2) the bond is issued by a State or local government, and

“(3) the issuer designates such bond for purposes of this section.

“(b) Reduced credit amount.—The annual credit determined under section 54A(b) with respect to any qualified energy conservation bond shall be 70 percent of the amount so determined without regard to this subsection.

“(c) Limitation on amount of bonds designated.—The maximum aggregate face amount of bonds which may be designated under subsection (a) by any issuer shall not exceed the limitation amount allocated to such issuer under subsection (e).

“(d) National limitation on amount of bonds designated.—There is a national qualified energy conservation bond limitation of $3,000,000,000.

“(e) Allocations.—

“(1) IN GENERAL.—The limitation applicable under subsection (d) shall be allocated by the Secretary among the States in proportion to the population of the States.

“(2) ALLOCATIONS TO LARGEST LOCAL GOVERNMENTS.—

“(A) IN GENERAL.—In the case of any State in which there is a large local government, each such local government shall be allocated a portion of such State’s allocation which bears the same ratio to the State’s allocation (determined without regard to this subparagraph) as the population of such large local government bears to the population of such State.

“(B) ALLOCATION OF UNUSED LIMITATION TO STATE.—The amount allocated under this subsection to a large local government may be reallocated by such local government to the State in which such local government is located.

“(C) LARGE LOCAL GOVERNMENT.—For purposes of this section, the term ‘large local government’ means any municipality or county if such municipality or county has a population of 100,000 or more.

“(3) ALLOCATION TO ISSUERS; RESTRICTION ON PRIVATE ACTIVITY BONDS.—Any allocation under this subsection to a State or large local government shall be allocated by such State or large local government to issuers within the State in a manner that results in not less than 70 percent of the allocation to such State or large local government being used to designate bonds which are not private activity bonds.

“(f) Qualified conservation purpose.—For purposes of this section—

“(1) IN GENERAL.—The term ‘qualified conservation purpose’ means any of the following:

“(A) Capital expenditures incurred for purposes of—

“(i) reducing energy consumption in publicly owned buildings by at least 20 percent,

“(ii) implementing green community programs,

“(iii) rural development involving the production of electricity from renewable energy resources, or

“(iv) any qualified facility (as determined under section 45(d) without regard to paragraphs (8) and (10) thereof and without regard to any placed in service date).

“(B) Expenditures with respect to research facilities, and research grants, to support research in—

“(i) development of cellulosic ethanol or other nonfossil fuels,

“(ii) technologies for the capture and sequestration of carbon dioxide produced through the use of fossil fuels,

“(iii) increasing the efficiency of existing technologies for producing nonfossil fuels,

“(iv) automobile battery technologies and other technologies to reduce fossil fuel consumption in transportation, or

“(v) technologies to reduce energy use in buildings.

“(C) Mass commuting facilities and related facilities that reduce the consumption of energy, including expenditures to reduce pollution from vehicles used for mass commuting.

“(D) Demonstration projects designed to promote the commercialization of—

“(i) green building technology,

“(ii) conversion of agricultural waste for use in the production of fuel or otherwise,

“(iii) advanced battery manufacturing technologies,

“(iv) technologies to reduce peak use of electricity, or

“(v) technologies for the capture and sequestration of carbon dioxide emitted from combusting fossil fuels in order to produce electricity.

“(E) Public education campaigns to promote energy efficiency.

“(2) SPECIAL RULES FOR PRIVATE ACTIVITY BONDS.—For purposes of this section, in the case of any private activity bond, the term ‘qualified conservation purposes’ shall not include any expenditure which is not a capital expenditure.

“(g) Population.—

“(1) IN GENERAL.—The population of any State or local government shall be determined for purposes of this section as provided in section 146(j) for the calendar year which includes the date of the enactment of this section.

“(2) SPECIAL RULE FOR COUNTIES.—In determining the population of any county for purposes of this section, any population of such county which is taken into account in determining the population of any municipality which is a large local government shall not be taken into account in determining the population of such county.

“(h) Application to Indian tribal governments.—An Indian tribal government shall be treated for purposes of this section in the same manner as a large local government, except that—

“(1) an Indian tribal government shall be treated for purposes of subsection (e) as located within a State to the extent of so much of the population of such government as resides within such State, and

“(2) any bond issued by an Indian tribal government shall be treated as a qualified energy conservation bond only if issued as part of an issue the available project proceeds of which are used for purposes for which such Indian tribal government could issue bonds to which section 103(a) applies.”.

(b) Conforming amendments.—

(1) Paragraph (1) of section 54A(d), as amended by section 806, is amended by striking “or” at the end of subparagraph (A), by adding “or” at the end of subparagraph (B), and by inserting after subparagraph (B) the following new subparagraph:

“(C) a qualified energy conservation bond,”.

(2) Subparagraph (C) of section 54A(d)(2), as amended by section 806, is amended by striking “and” at the end of clause (i), by striking the period at the end of clause (ii) and inserting “and”, and by adding at the end the following new clause:

“(iii) in the case of a qualified energy conservation bond, a purpose specified in section 54D(a)(1).”.

(3) The table of sections for subpart I of part IV of subchapter A of chapter 1, as amended by section 806, is amended by adding at the end the following new item:


“Sec. 54D. Qualified energy conservation bonds.”.

(c) Effective date.—The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.

SEC. 572. Credit for nonbusiness energy property.

(a) Extension of credit.—Section 25C(g) is amended by striking “December 31, 2007” and inserting “December 31, 2008”.

(b) Qualified biomass fuel property.—

(1) IN GENERAL.—Section 25C(d)(3) is amended—

(A) by striking “and” at the end of subparagraph (D),

(B) by striking the period at the end of subparagraph (E) and inserting “, and”, and

(C) by adding at the end the following new subparagraph:

“(F) a stove which uses the burning of biomass fuel to heat a dwelling unit located in the United States and used as a residence by the taxpayer, or to heat water for use in such a dwelling unit, and which has a thermal efficiency rating of at least 75 percent.”.

(2) BIOMASS FUEL.—Section 25C(d) is amended by adding at the end the following new paragraph:

“(6) BIOMASS FUEL.—The term ‘biomass fuel’ means any plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers.”.

(c) Coordination with credit for qualified geothermal heat Pump property expenditures.—

(1) IN GENERAL.—Paragraph (3) of section 25C(d), as amended by subsection (b), is amended by striking subparagraph (C) and by redesignating subparagraphs (D), (E), and (F) as subparagraphs (C), (D), and (E), respectively.

(2) CONFORMING AMENDMENT.—Subparagraph (C) of section 25C(d)(2) is amended to read as follows:

“(C) REQUIREMENTS AND STANDARDS FOR AIR CONDITIONERS AND HEAT PUMPS.—The standards and requirements prescribed by the Secretary under subparagraph (B) with respect to the energy efficiency ratio (EER) for central air conditioners and electric heat pumps—

“(i) shall require measurements to be based on published data which is tested by manufacturers at 95 degrees Fahrenheit, and

“(ii) may be based on the certified data of the Air Conditioning and Refrigeration Institute that are prepared in partnership with the Consortium for Energy Efficiency.”.

(d) Effective date.—The amendments made this section shall apply to expenditures made after December 31, 2007.

SEC. 573. Energy efficient commercial buildings deduction.

Subsection (h) of section 179D is amended by striking “December 31, 2008” and inserting “December 31, 2013”.

SEC. 574. Modifications of energy efficient appliance credit for appliances produced after 2007.

(a) In general.—Subsection (b) of section 45M is amended to read as follows:

“(b) Applicable amount.—For purposes of subsection (a)—

“(1) DISHWASHERS.—The applicable amount is—

“(A) $45 in the case of a dishwasher which is manufactured in calendar year 2008 or 2009 and which uses no more than 324 kilowatt hours per year and 5.8 gallons per cycle, and

“(B) $75 in the case of a dishwasher which is manufactured in calendar year 2008, 2009, or 2010 and which uses no more than 307 kilowatt hours per year and 5.0 gallons per cycle (5.5 gallons per cycle for dishwashers designed for greater than 12 place settings).

“(2) CLOTHES WASHERS.—The applicable amount is—

“(A) $75 in the case of a residential top-loading clothes washer manufactured in calendar year 2008 which meets or exceeds a 1.72 modified energy factor and does not exceed a 8.0 water consumption factor,

“(B) $125 in the case of a residential top-loading clothes washer manufactured in calendar year 2008 or 2009 which meets or exceeds a 1.8 modified energy factor and does not exceed a 7.5 water consumption factor,

“(C) $150 in the case of a residential or commercial clothes washer manufactured in calendar year 2008, 2009, or 2010 which meets or exceeds 2.0 modified energy factor and does not exceed a 6.0 water consumption factor, and

“(D) $250 in the case of a residential or commercial clothes washer manufactured in calendar year 2008, 2009, or 2010 which meets or exceeds 2.2 modified energy factor and does not exceed a 4.5 water consumption factor.

“(3) REFRIGERATORS.—The applicable amount is—

“(A) $50 in the case of a refrigerator which is manufactured in calendar year 2008, and consumes at least 20 percent but not more than 22.9 percent less kilowatt hours per year than the 2001 energy conservation standards,

“(B) $75 in the case of a refrigerator which is manufactured in calendar year 2008 or 2009, and consumes at least 23 percent but no more than 24.9 percent less kilowatt hours per year than the 2001 energy conservation standards,

“(C) $100 in the case of a refrigerator which is manufactured in calendar year 2008, 2009, or 2010, and consumes at least 25 percent but not more than 29.9 percent less kilowatt hours per year than the 2001 energy conservation standards, and

“(D) $200 in the case of a refrigerator manufactured in calendar year 2008, 2009, or 2010 and which consumes at least 30 percent less energy than the 2001 energy conservation standards.”.

(b) Eligible production.—

(1) SIMILAR TREATMENT FOR ALL APPLIANCES.—Subsection (c) of section 45M is amended—

(A) by striking paragraph (2),

(B) by striking “(1) In general” and all that follows through “the eligible” and inserting “The eligible”,

(C) by moving the text of such subsection in line with the subsection heading, and

(D) by redesignating subparagraphs (A) and (B) as paragraphs (1) and (2), respectively, and by moving such paragraphs 2 ems to the left.

(2) MODIFICATION OF BASE PERIOD.—Paragraph (2) of section 45M(c), as amended by paragraph (1), is amended by striking “3-calendar year” and inserting “2-calendar year”.

(c) Types of energy efficient appliances.—Subsection (d) of section 45M (defining types of energy efficient appliances) is amended to read as follows:

“(d) Types of energy efficient appliance.—For purposes of this section, the types of energy efficient appliances are—

“(1) dishwashers described in subsection (b)(1),

“(2) clothes washers described in subsection (b)(2), and

“(3) refrigerators described in subsection (b)(3).”.

(d) Aggregate credit amount allowed.—

(1) INCREASE IN LIMIT.—Paragraph (1) of section 45M(e) is amended to read as follows:

“(1) AGGREGATE CREDIT AMOUNT ALLOWED.—The aggregate amount of credit allowed under subsection (a) with respect to a taxpayer for any taxable year shall not exceed $75,000,000 reduced by the amount of the credit allowed under subsection (a) to the taxpayer (or any predecessor) for all prior taxable years beginning after December 31, 2007.”.

(2) EXCEPTION FOR CERTAIN REFRIGERATOR AND CLOTHES WASHERS.—Paragraph (2) of section 45M(e) is amended to read as follows:

“(2) AMOUNT ALLOWED FOR CERTAIN REFRIGERATORS AND CLOTHES WASHERS.—Refrigerators described in subsection (b)(3)(D) and clothes washers described in subsection (b)(2)(D) shall not be taken into account under paragraph (1).”.

(e) Qualified energy efficient appliances.—

(1) IN GENERAL.—Paragraph (1) of section 45M(f) (defining qualified energy efficient appliance) is amended to read as follows:

“(1) QUALIFIED ENERGY EFFICIENT APPLIANCE.—The term ‘qualified energy efficient appliance’ means—

“(A) any dishwasher described in subsection (b)(1),

“(B) any clothes washer described in subsection (b)(2), and

“(C) any refrigerator described in subsection (b)(3).”.

(2) CLOTHES WASHER.—Section 45M(f)(3) is amended by inserting “commercial” before “residential” the second place it appears.

(3) TOP-LOADING CLOTHES WASHER.—Subsection (f) of section 45M is amended by redesignating paragraphs (4), (5), (6), and (7) as paragraphs (5), (6), (7), and (8), respectively, and by inserting after paragraph (3) the following new paragraph:

“(4) TOP-LOADING CLOTHES WASHER.—The term ‘top-loading clothes washer’ means a clothes washer which has the clothes container compartment access located on the top of the machine and which operates on a vertical axis.”.

(4) REPLACEMENT OF ENERGY FACTOR.—Section 45M(f)(6), as redesignated by paragraph (3), is amended to read as follows:

“(6) MODIFIED ENERGY FACTOR.—The term ‘modified energy factor’ means the modified energy factor established by the Department of Energy for compliance with the Federal energy conservation standard.”.

(5) GALLONS PER CYCLE; WATER CONSUMPTION FACTOR.—Section 45M(f), as amended by paragraph (3), is amended by adding at the end the following:

“(9) GALLONS PER CYCLE.—The term ‘gallons per cycle’ means, with respect to a dishwasher, the amount of water, expressed in gallons, required to complete a normal cycle of a dishwasher.

“(10) WATER CONSUMPTION FACTOR.—The term ‘water consumption factor’ means, with respect to a clothes washer, the quotient of the total weighted per-cycle water consumption divided by the cubic foot (or liter) capacity of the clothes washer.”.

(f) Effective date.—The amendments made by this section shall apply to appliances produced after December 31, 2007.

SEC. 575. Accelerated recovery period for depreciation of smart meters and smart grid systems.

(a) In general.—Section 168(e)(3)(D) is amended by striking “and” at the end of clause (i), by striking the period at the end of clause (ii) and inserting a comma, and by inserting after clause (ii) the following new clauses:

“(iii) any qualified smart electric meter, and

“(iv) any qualified smart electric grid system.”.

(b) Definitions.—Section 168(i) is amended by inserting at the end the following new paragraph:

“(18) QUALIFIED SMART ELECTRIC METERS.—

“(A) IN GENERAL.—The term ‘qualified smart electric meter’ means any smart electric meter which is placed in service by a taxpayer who is a supplier of electric energy or a provider of electric energy services.

“(B) SMART ELECTRIC METER.—For purposes of subparagraph (A), the term ‘smart electric meter’ means any time-based meter and related communication equipment which is capable of being used by the taxpayer as part of a system that—

“(i) measures and records electricity usage data on a time-differentiated basis in at least 24 separate time segments per day,

“(ii) provides for the exchange of information between supplier or provider and the customer’s electric meter in support of time-based rates or other forms of demand response,

“(iii) provides data to such supplier or provider so that the supplier or provider can provide energy usage information to customers electronically, and

“(iv) provides net metering.

“(19) QUALIFIED SMART ELECTRIC GRID SYSTEMS.—

“(A) IN GENERAL.—The term ‘qualified smart electric grid system’ means any smart grid property used as part of a system for electric distribution grid communications, monitoring, and management placed in service by a taxpayer who is a supplier of electric energy or a provider of electric energy services.

“(B) SMART GRID PROPERTY.—For the purposes of subparagraph (A), the term ‘smart grid property’ means electronics and related equipment that is capable of—

“(i) sensing, collecting, and monitoring data of or from all portions of a utility’s electric distribution grid,

“(ii) providing real-time, two-way communications to monitor or manage such grid, and

“(iii) providing real time analysis of and event prediction based upon collected data that can be used to improve electric distribution system reliability, quality, and performance.”.

(c) Continued application of 150 percent declining balance method.—Paragraph (2) of section 168(b) is amended by striking “or” at the end of subparagraph (B), by redesignating subparagraph (C) as subparagraph (D), and by inserting after subparagraph (B) the following new subparagraph:

“(C) any property (other than property described in paragraph (3)) which is a qualified smart electric meter or qualified smart electric grid system, or”.

(d) Effective date.—The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

SEC. 576. Qualified green building and sustainable design projects.

(a) In general.—Paragraph (8) of section 142(l) is amended by striking “September 30, 2009” and inserting “September 30, 2012”.

(b) Treatment of current refunding bonds.—Paragraph (9) of section 142(l) is amended by striking “October 1, 2009” and inserting “October 1, 2012”.

(c) Accountability.—The second sentence of section 701(d) of the American Jobs Creation Act of 2004 is amended by striking “issuance,” and inserting “issuance of the last issue with respect to such project,”.

SEC. 581. Energy credit for geothermal heat pump systems.

(a) In general.—Subparagraph (A) of section 48(a)(3) of the Internal Revenue Code of 1986 is amended by striking “or” at the end of clause (iii), by inserting “or” at the end of clause (iv), and by adding at the end the following new clause:

“(v) equipment which uses the ground or ground water as a thermal energy source to heat a structure or as a thermal energy sink to cool a structure,”.

(b) Effective date.—The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

SEC. 582. 3-year accelerated depreciation period for geothermal heat pump systems.

(a) In general.—Subparagraph (A) of section 168(e)(3) of the Internal Revenue Code of 1986 is amended by striking “and” at the end of clause (ii), by striking the period at the end of clause (iii) and inserting “, and”, and by adding at the end the following new clause:

“(iv) any property which is described in clause (v) of section 48(a)(3)(A).”.

(b) Conforming amendment.—Subclause (I) of section 168(e)(3)(B)(vi) of such Code is amended by inserting “clause (i), (ii), (iii), or (iv) of” before “subparagraph (A)”.

(c) Effective date.—The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

SEC. 601. Prohibition on leasing.

(a) Prohibition.—The Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) notwithstanding, the Secretary shall not take nor authorize any action related to oil and gas preleasing or leasing of any area of the Outer Continental Shelf that was not available for oil and gas leasing as of July 1, 2008, unless that action is expressly authorized by this subtitle or a statute enacted by Congress after the date of enactment of this Act.

(b) Treatment of areas in Gulf of Mexico.—For purposes of this subtitle, such action with respect to an area referred to in section 104(a) of the Gulf of Mexico Energy Security Act of 2006 (title I of division C of Public Law 109–432; 42 U.S.C. 1331 note) taken or authorized after the period referred to in that section shall be treated as authorized by this subtitle, and such leasing of such area shall be treated as authorized under section 602(a).

SEC. 602. Opening of certain areas to oil and gas leasing.

(a) Leasing authorized.—The Secretary may offer for oil and gas leasing, preleasing, or other related activities, in accordance with this section and the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) and subject to subsection (b) of this section, section 603 of this Act, and section 307 of the Coastal Zone Management Act of 1972 (16 U.S.C. 1456), any area—

(1) that is in any Outer Continental Shelf Planning Area in the Atlantic Ocean or Pacific Ocean that is located farther than 50 miles from the coastline; and

(2) that was not otherwise available for oil and gas leasing, preleasing, and other related activities as of July 1, 2008.

(b) Inclusion in leasing program required.—An area may be offered for lease under this section only if it has been included in an Outer Continental Shelf leasing program approved by the Secretary in accordance with section 18 of the Outer Continental Shelf Lands Act (43 U.S.C. 1344).

(c) Requirement To conduct lease sales.—As soon as practicable, consistent with subsection (b) and section 603(a), but not later than 3 years after the date of enactment of this Act, and as appropriate thereafter, the Secretary shall conduct oil and gas lease sales under the Outer Continental Shelf lands Act (43 U.S.C. 1331 et seq.) for areas that are made available for leasing by this section.

SEC. 603. Coastal State roles and responsibilities.

(a) State approval of certain leasing required.—The Secretary may not conduct any oil and gas leasing or preleasing activity in any area made available for oil and gas leasing by section 602(a) that is located within 100 miles from the coastline and within the seaward lateral boundaries of an adjacent State, unless the adjacent State has enacted a law approving of the issuance of such leasing by the Secretary.

(b) Consultation with adjacent and neighboring States.—

(1) IN GENERAL.—In addition to the consultation provided for under section 19 of the Outer Continental Shelf Lands Act (43 U.S.C. 1345), the Governor of a State that has a coastline within 100 miles of an area of the Outer Continental Shelf being considered for oil and gas leasing and made available for such leasing by section 602(a) may submit recommendations to the Secretary with respect to—

(A) the size, timing, or location of a proposed lease sale; or

(B) a proposed development and production plan.

(2) REQUIREMENTS.—Subsections (b), (c), and (d) of section 19 of the Outer Continental Shelf Lands Act (43 U.S.C. 1345) shall apply to the recommendations provided for in paragraph (1).

SEC. 604. Protection of the environment and conservation of the natural resources of the Outer Continental Shelf.

The Secretary—

(1) shall ensure that any activity under this subtitle is carried out in a manner that provides for the protection of the coastal environment, marine environment, and human environment of State coastal zones and the Outer Continental Shelf; and

(2) shall review all Federal regulations that are otherwise applicable to activities authorized by this subtitle to ensure environmentally sound oil and gas operations on the Outer Continental Shelf.

SEC. 605. Limitations.

(a) Compliance with memorandum.—Any oil and gas leasing of areas of the Outer Continental Shelf shall be conducted in accordance with the document entitled “Memorandum of Agreement between the Department of Defense and the Department of the Interior on Mutual Concerns On The Outer Continental Shelf” and dated July 2, 1983, and such revisions thereto as may be agreed to by the Secretary of Defense and the Secretary of the Interior; except that no such revisions may be made prior to January 21, 2009.

(b) National security.—Notwithstanding subsection (a), the United States reserves the right to designate by and through the Secretary of Defense, with the approval of the President, national defense areas on the Outer Continental Shelf pursuant to section 12(d) of the Outer Continental Shelf Lands Act (43 U.S.C. 1341(d)).

SEC. 606. Prohibition on leasing in certain Federal protected areas.

(a) In general.—Notwithstanding any other provision of this or any other Federal law, no lease or other authorization may be issued by the Federal Government that authorizes exploration, development, or production of oil or natural gas in—

(1) any marine national monument or national marine sanctuary; or

(2) the fishing grounds known as Georges Bank in the waters of the United States, which is one of the largest and historically important fishing grounds of the United States.

(b) Identification of coordinates of Georges Bank.—The Secretary of Commerce, after publication of public notice and an opportunity for public comment, shall identify the specific coordinates that delineate Georges Bank in the waters of the United States for purposes of subsection (a).

SEC. 607. No effect on applicable law.

Except as otherwise specifically provided in this subtitle, nothing in this subtitle waives or modifies any applicable environmental or other law.

SEC. 608. Buy American requirements.

(a) In general.—It is the intent of Congress that this Act, among other things, result in a healthy and growing American industrial, manufacturing, transportation, and service sector employing the vast talents of America’s workforce to assist in the development of energy from domestic sources. Moreover, the Congress intends to monitor the deployment of personnel and material onshore and offshore to encourage the development of American technology and manufacturing to enable United States workers to benefit from this Act by good jobs and careers, as well as the establishment of important industrial facilities to support expanded access to American resources.

(b) Safeguard for Extraordinary Ability.—Section 30(a) of the Outer Continental Shelf Lands Act (43 U.S.C. 1356(a)) is amended in the matter preceding paragraph (1) by striking “regulations which” and inserting “regulations that shall be supplemental and complimentary with and under no circumstances a substitution for the provisions of the Constitution and laws of the United States extended to the subsoil and seabed of the outer Continental Shelf pursuant to section 4 of this Act, except insofar as such laws would otherwise apply to individuals who have extraordinary ability in the sciences, arts, education, or business, which has been demonstrated by sustained national or international acclaim, and that”.

SEC. 609. Small, woman-owned, and minority-owned businesses.

Section 8 of the Outer Continental Shelf Lands Act (43 U.S.C. 1337) is amended by adding at the end the following:

“(q) Opportunities for leasing.—The Secretary shall establish goals to ensure equal opportunity to bid on offshore leases for qualified small, women-owned, and minority-owned exploration and production companies and may implement, where appropriate, outreach programs for qualified historically underutilized exploration and production companies to participate in the bidding process for offshore leases.”.

SEC. 610. OCS joint permitting offices.

(a) Establishment.—The Secretary of the Interior (referred to in this section as the “Secretary”) shall establish Federal OCS Joint Regional Permitting Offices (referred to in this section as the “Regional Permitting Offices”) in accordance with this section.

(b) Memorandum of understanding.—Not later than 90 days after the date of enactment of this Act, the Secretary shall enter into a memorandum of understanding for purposes of this section with—

(1) the Secretary of Commerce;

(2) the Administrator of the Environmental Protection Agency; and

(3) the Chief of Engineers.

(c) Designation of qualified staff.—

(1) IN GENERAL.—Not later than 30 days after the date of the signing of the memorandum of understanding under subsection (b), all Federal signatory parties shall assign to each of the Regional Permitting Offices identified in subsection (d) a sufficient number of employees with expertise to address the full spectrum of agency regulatory issues relating to the Regional Permitting Office in which the employee is employed, including, as applicable, particular expertise in—

(A) the consultations and the preparation of biological opinions under section 7 of the Endangered Species Act of 1973 (16 U.S.C.1536);

(B) permits under section 404 of Federal Water Pollution Control Act (33 U.S.C. 1344);

(C) regulatory matters under the Clean Air Act (42 U.S.C. 7401 et seq.);

(D) the consultations and preparation of documents under the Marine Mammal Protection Act of 1972 (16 U.S.C. 1361 et seq.); and

(E) the preparation of analyses under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).

(2) DUTIES.—Each employee assigned under paragraph (1) shall—

(A) not later than 90 days after the date of assignment, report to the Minerals Management Service Regional Director in the Regional Permitting Office to which the employee is assigned;

(B) be responsible for all issues relating to the jurisdiction of the home office or agency of the employee; and

(C) participate as part of the team of personnel working on proposed energy projects, planning, and environmental analyses.

(d) Regional permitting offices.—The following Minerals Management Service Regional Headquarters shall serve as the Regional Permitting Offices:

(1) Anchorage, Alaska.

(2) New Orleans, Louisiana.

(3) MMS Pacific Regional Headquarters.

(4) MMS Atlantic Regional Headquarters.

(e) Reports.—Not later than 3 years after the date of enactment of this Act, the Secretary shall submit to Congress a report that describes the results of the Regional Permitting Offices.

(f) Transfer of fund.—For the purposes of coordination and processing of oil and gas use authorization on the Federal Outer Continental Shelf under the administration of the Regional Permitting Offices identified in subsection (d), the Secretary may authorize the expenditure or transfer of such funds as are necessary to—

(1) the United States Fish and Wildlife Service;

(2) the Bureau of Indian Affairs;

(3) the Environmental Protection Agency;

(4) the National Oceanic and Atmospheric Administration; and

(5) the Corps of Engineers.

SEC. 611. Definitions.

In this subtitle:

(1) ADJACENT STATE.—The term “adjacent State” means, with respect to any program, plan, lease sale, leased tract, or other activity, proposed, conducted, or approved in accordance with the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.), the State, the laws of which are declared pursuant to section 4(a)(2) of the Outer Continental Shelf Lands Act (43 U.S.C. 1333(a)(2)) to be the law of the United States for the portion of the Outer Continental Shelf on which the program, plan, lease sale, leased tract, or activity is, or is proposed to be, conducted.

(2) cOASTAL ENVIRONMENT.—The term “coastal environment” has the meaning given that term in the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.).

(3) cOASTAL ZONE.—The term “coastal zone” has the meaning given that term in the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.).

(4) COASTLINE.—The term “coastline” has the meaning given the term “coast line” under section 2 of the Submerged Lands Act (43 U.S.C. 1301).

(5) hUMAN ENVIRONMENT.—The term “human environment” has the meaning given that term in the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.).

(6) mARINE ENVIRONMENT.—The term “marine environment” has the meaning given that term in the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.).

(7) OUTER CONTINENTAL SHELF.—The term “Outer Continental Shelf” has the meaning given the term “outer Continental Shelf” under section 2 of the Outer Continental Shelf Lands Act (43 U.S.C. 1331).

(8) SEAWARD LATERAL BOUNDARY.—The term “seaward lateral boundary” means a boundary drawn by the Minerals Management Service in the Federal Register notice of January 3, 2006 (vol 71, no. 1).

(9) SECRETARY.—The term “Secretary” means the Secretary of the Interior.

SEC. 621. Issuance of new leases.

(a) In general.—After the date of the issuance of regulations under subsection (b), the Secretary of the Interior shall not issue to a person any new lease that authorizes the exploration for or production of oil or natural gas, under section 17 of the Mineral Leasing Act (33 U.S.C. 226), the Mineral Leasing Act for Acquired Lands Act (30 U.S.C. 351 et seq.), the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.), or any other law authorizing the issuance of oil and gas leases on Federal lands or submerged lands, unless—

(1) the person certifies for each existing lease under such Acts for the production of oil or gas with respect to which the person is a lessee, that the person is diligently developing the Federal lands that are subject to the lease in order to produce oil or natural gas or is producing oil or natural gas from such land; or

(2) the person has relinquished all ownership interest in all Federal oil and gas leases under which oil and gas is not being diligently developed.

(b) Diligent development.—The Secretary shall issue regulations within 180 days after the date of enactment of this Act that establish what constitutes “diligently developing” for purposes of this Act.

(c) Failure To comply with requirements.—Any person who fails to comply with the requirements of this section or any regulation or order issued to implement this section shall be liable for a civil penalty under section 109 of the Federal Oil and Gas Royalty Management Act of 1982 (30 U.S.C. 1719).

(d) Lessee defined.—In this section the term “lessee”—

(1) includes any person or other entity that controls, is controlled by, or is in or under common control with, a lessee; and

(2) does not include any person who does not hold more than a minority ownership interest in a lease under an Act referred to in subsection (a) authorizing the exploration for or production of oil or natural gas.

SEC. 622. Fair return on production of Federal oil and gas resources.

(a) Royalty payments.—The Secretary of the Interior shall take all steps necessary to ensure that lessees under leases for exploration, development, and production of oil and natural gas on Federal lands, including leases under the Mineral Leasing Act (30 U.S.C. 181 et seq.), the Mineral Leasing Act for Acquired Lands (30 U.S.C. 351 et seq.), the Outer Continental Shelf Lands Act (30 U.S.C. 1331 et seq.), and all other mineral leasing laws, are making prompt, transparent, and accurate royalty payments under such leases.

(b) Recommendations for legislative action.—In order to facilitate implementation of subsection (a), the Secretary of the Interior shall, within 180 days after the date of the enactment of this Act and in consultation with the affected States, prepare and transmit to Congress recommendations for legislative action to improve the accurate collection of Federal oil and gas royalties.

SEC. 631. Coal innovation direct loan program.

(a) In general.—Title XXXI of the Energy Policy Act of 1992 (42 U.S.C. 13571 et seq.) is amended by adding at the end the following:

“SEC. 3105. Coal innovation direct loan program.

“(a) Definitions.—In this section:

“(1) CARBON CAPTURE.—The term ‘carbon capture’ means the capture, separation, and compression of carbon dioxide that would otherwise be released to the atmosphere at a facility in the production of end products of a project prior to transportation of the carbon dioxide to a long-term storage site.

“(2) COAL-TO-LIQUID PRODUCT.—The term ‘coal-to-liquid product’ means a liquid fuel resulting from the conversion of a feedstock, as described in this section.

“(3) COMBUSTIBLE END PRODUCT.—The term ‘combustible end product’ means any product of a facility intended to be used as a combustible fuel.

“(4) CONVENTIONAL BASELINE EMISSIONS.—The term ‘conventional baseline emissions’ means—

“(A) the lifecycle greenhouse gas emissions of a facility that produces combustible end products, using petroleum as a feedstock, that are equivalent to combustible end products produced by a facility of comparable size through an eligible project;

“(B) in the case of noncombustible products produced through an eligible project, the average lifecycle greenhouse gas emissions emitted by projects that—

“(i) are of comparable size; and

“(ii) produce equivalent products using conventional feedstocks; and

“(C) in the case of synthesized gas intended for use as a combustible fuel in lieu of natural gas produced by an eligible project, the lifecycle greenhouse gas emissions that would result from equivalent use of natural gas.

“(5) ELIGIBLE PROJECT.—The term ‘eligible project’ means a project—

“(A) that employs gasification technology or another conversion process for feedstocks described in this section; and

“(B) for which—

“(i) the annual lifecycle greenhouse gas emissions of the project are at least 20 percent lower than conventional baseline emissions;

“(ii) at least 75 percent of the carbon dioxide that would otherwise be released to the atmosphere at the facility in the production of end products of the project is captured for long-term storage;

“(iii) the individual or entity carrying out the eligible project has entered into an enforceable agreement with the Secretary to implement carbon capture at the percentage that, by the end of the 5-year period after commencement of commercial operation of the eligible project—

“(I) represents the best available technology; and

“(II) achieves a reduction in carbon emissions that is not less than 75 percent; and

“(iv) in the opinion of the Secretary, sufficient commitments have been secured to achieve long-term storage of captured carbon dioxide beginning as of the date of commencement of commercial operation of the project.

“(6) FACILITY.—The term ‘facility’ means a facility at which the conversion of feedstocks to end products takes place.

“(7) GASIFICATION TECHNOLOGY.—The term ‘gasification technology’ means any process that converts coal, petroleum residue, renewable biomass, or other material that is recovered for energy or feedstock value into a synthesis gas composed primarily of carbon monoxide and hydrogen for direct use or subsequent chemical or physical conversion.

“(8) GREENHOUSE GAS.—The term ‘greenhouse gas’ means any of—

“(A) carbon dioxide;

“(B) methane;

“(C) nitrous oxide;

“(D) hydrofluorocarbons;

“(E) perfluorocarbons; and

“(F) sulfur hexafluoride.

“(9) LIFECYCLE GREENHOUSE GAS EMISSIONS.—The term ‘lifecycle greenhouse gas emissions’ means the aggregate quantity of greenhouse gases attributable to the production and transportation of end products at a facility, including the production, extraction, cultivation, distribution, marketing, and transportation of feedstocks, and the subsequent distribution and use of any combustible end products, as modified by deducting, as determined by the Administrator of the Environmental Protection Agency—

“(A) any greenhouse gases captured at the facility and sequestered;

“(B) the carbon content, expressed in units of carbon dioxide equivalent, of any feedstock that is renewable biomass; and

“(C) the carbon content, expressed in units of carbon dioxide equivalent, of any end products that do not result in the release of carbon dioxide to the atmosphere.

“(10) LONG-TERM STORAGE.—The term ‘long-term storage’ means sequestration with an expected maximum rate of carbon dioxide leakage over a specified period of time that is consistent with the objective of reducing atmospheric concentrations of carbon dioxide, subject to a permit issued pursuant to law in effect as of the date of the sequestration.

“(11) RENEWABLE BIOMASS.—The term ‘renewable biomass’ has the definition given the term in section 102 of the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007.

“(12) SEQUESTRATION.—The term ‘sequestration’ means the placement of carbon dioxide in a geological formation, including—

“(A) an operating oil and gas field;

“(B) coal bed methane recovery;

“(C) a depleted oil and gas field;

“(D) an unmineable coal seam;

“(E) a deep saline formation; and

“(F) a deep geological systems containing basalt formations.

“(b) Feed assistance program.—

“(1) IN GENERAL.—Subject to paragraph (3), and in accordance with section 988 of the Energy Policy Act of 2005 (42 U.S.C. 16352), not later than 1 year after the date of the enactment of this section, the Secretary shall carry out a program to provide grants for use in obtaining or carrying out any services necessary for the planning, permitting, and construction of an eligible project.

“(2) SELECTION OF ELIGIBLE PROJECTS.—The Secretary shall select eligible projects to receive grants under this section—

“(A) through the conduct of a reverse auction, in which eligible projects proposed to be carried out that have the greatest rate of carbon capture and long-term storage, and the lowest lifecycle greenhouse gas emissions, are given priority;

“(B) that, taken together, would—

“(i) represent a variety of geographical regions;

“(ii) use a variety of feedstocks and types of coal; and

“(iii) to the extent consistent with achieving long-term storage, represent a variety of geological formations; and

“(C) for which eligible projects, in the opinion of the Secretary—

“(i) each award recipient is financially viable without the receipt of additional Federal funding associated with the proposed project;

“(ii) each recipient will provide sufficient information to the Secretary for the Secretary to ensure that the qualified investment is expended efficiently and effectively;

“(iii) a market exists for the products of the proposed project, as evidenced by contracts or written statements of intent from potential customers;

“(iv) the project team of each recipient is competent in the construction and operation of the gasification technology proposed; and

“(v) each recipient has met such other criteria as may be established and published by the Secretary.

“(3) MAXIMUM AMOUNT OF GRANTS.—In carrying out this subsection, the Secretary shall provide not more than—

“(A) $20,000,000 in grant funds for any eligible project; and

“(B) $200,000,000 in grant funds, in the aggregate, for all eligible projects.

“(c) Direct loan program.—

“(1) IN GENERAL.—Not later than 1 year after the date of enactment of this section, and subject to funds being made available in advance through appropriations Acts, the Secretary shall carry out a program to provide a total of not more than $10,000,000,000 in loans to eligible individuals and entities (as determined by the Secretary) for use in carrying out eligible projects.

“(2) APPLICATION.—An applicant for a loan under this section shall comply with the terms and conditions in section 215(b)(3) of the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007 in the same manner in which applicants for Renewable Energy Construction grants are required to comply with that section.

“(3) SELECTION OF ELIGIBLE PROJECTS.—The Secretary shall select eligible projects to receive loans under this section—

“(A) through the conduct of a reverse auction, in which eligible projects proposed to be carried out that have the greatest rate of carbon capture and long-term storage, and the lowest lifecycle greenhouse gas emissions, are given priority;

“(B) that, taken together, would—

“(i) represent a variety of geographic regions;

“(ii) use a variety of types of feedstocks and coal; and

“(iii) to the extent consistent with achieving long-term storage, represent a variety of geological formations; and

“(C) for which eligible projects, in the opinion of the Secretary—

“(i) each award recipient is financially viable without the receipt of additional Federal funding associated with the proposed project;

“(ii) each recipient will provide sufficient information to the Secretary for the Secretary to ensure that the qualified investment is expended efficiently and effectively;

“(iii) a market exists for the products of the proposed project, as evidenced by contracts or written statements of intent from potential customers;

“(iv) the project team of each recipient is competent in the construction and operation of the gasification technology proposed; and

“(v) each recipient has met such other criteria as may be established and published by the Secretary.

“(4) USE OF LOAN FUNDS.—

“(A) IN GENERAL.—Subject to subparagraph (B), funds from a loan provided under this section may be used to pay up to 100 percent of the costs of capital associated with reducing lifecycle greenhouse gas emissions at the facility (including carbon dioxide capture, compression, and long-term storage, cogeneration, and gasification of biomass) carried out as part of an eligible project.

“(B) TOTAL PROJECT COST.—Funds from a loan provided under this section may not be used to pay more than 50 percent of the total cost of an eligible project.

“(5) RATES, TERMS, AND REPAYMENT OF LOANS.—A loan provided under this section—

“(A) shall have an interest rate that, as of the date on which the loan is made, is equal to the cost of funds to the Department of the Treasury for obligations of comparable maturity;

“(B) shall have a term equal to the lesser of—

“(i) the projected life, in years, of the eligible project to be carried out using funds from the loan, as determined by the Secretary; and

“(ii) 25 years;

“(C) may be subject to a deferral in repayment for not more than 5 years after the date on which the eligible project carried out using funds from the loan first begins operations, as determined by the Secretary; and

“(D) shall be made on the condition that the Secretary shall be subrogated to the rights of the recipient of the payment as specified in the loan or related agreements, including, as appropriate, the authority (notwithstanding any other provision of law)—

“(i) to complete, maintain, operate, lease, or otherwise dispose of any property acquired pursuant to the guarantee or a related agreement; or

“(ii) to permit the borrower, pursuant to an agreement with the Secretary, to continue to pursue the purposes of the project, if the Secretary determines the pursuit to be in the public interest.

“(6) METHODOLOGY.—Not later than 18 months after the date of enactment of this section, the Administrator of the Environmental Protection Agency shall, by regulation, establish a methodology for use in determining the lifecycle greenhouse gas emissions of products produced using gasification technology.

“(d) Study of maintaining coal-to-liquid products in strategic petroleum reserve.—Not later than 1 year after the date of enactment of this section, the Secretary and the Secretary of Defense shall—

“(1) conduct a study of the feasibility and suitability of maintaining coal-to-liquid products in the Strategic Petroleum Reserve; and

“(2) submit to the Committee on Energy and Natural Resources and the Committee on Armed Services of the Senate and the Committee on Energy and Commerce and the Committee on Armed Services of the House of Representatives a report describing the results of the study.

“(e) Report on emissions of coal-to-liquid products used as transportation fuels.—

“(1) IN GENERAL.—In cooperation with the Secretary, the Secretary of Defense, the Administrator of the Federal Aviation Administration, and the Secretary of Health and Human Services, the Administrator of the Environmental Protection Agency shall—

“(A) carry out a research and demonstration program to evaluate the emissions of the use of coal-to-liquid fuel for transportation, including diesel and jet fuel;

“(B) evaluate the effect of using coal-to-liquid transportation fuel on emissions of vehicles, including motor vehicles and nonroad vehicles, and aircraft (as those terms are defined in sections 216 and 234, respectively, of the Clean Air Act (42 U.S.C. 7550, 7574)); and

“(C) in accordance with paragraph (4), submit to Congress a report on the effect on air and water quality, water scarcity, land use, and public health of using coal-to-liquid fuel in the transportation sector.

“(2) GUIDANCE AND TECHNICAL SUPPORT.—The Administrator of the Environmental Protection Agency, in consultation with the Secretary, shall issue any guidance or technical support documents necessary to facilitate the effective use of coal-to-liquid fuel and blends under this subsection.

“(3) REQUIREMENTS.—The program described in paragraph (1)(A) shall take into consideration—

“(A) the use of neat (100 percent) coal-to-liquid fuel and blends of coal-to-liquid fuels with conventional crude oil-derived fuel for heavy-duty and light-duty diesel engines and the aviation sector;

“(B) the production costs associated with domestic production of those fuels and prices for consumers; and

“(C) the overall greenhouse gas effects of substituting coal-derived fuels for crude oil-derived fuels.

“(4) REPORTS.—The Administrator of the Environmental Protection Agency shall submit to the Committee on Energy and Natural Resources of the Senate and the Committee on Energy and Commerce of the House of Representatives—

“(A) not later than 180 days after the date of enactment of this section, an interim report on actions taken to carry out this subsection; and

“(B) not later than 1 year after the date of enactment of this section, a final report on actions taken to carry out this subsection.

“(f) Authorization of appropriations.—There are authorized to be appropriated such sums as are necessary to carry out this section.”.

(b) Conforming Amendment.—The table of contents of the Energy Policy Act of 1992 (42 U.S.C. prec. 13201) is amended by adding at the end of the items relating to title XXXI the following:


“Sec. 3105. Coal innovation direct loan program.”.

SEC. 641. Nuclear Regulatory Commission.

(a) There are authorized to be appropriated to the Nuclear Regulatory Commission such sums as are necessary for the Commission to establish an additional 60 full-time equivalent positions to—

(1) expedite the processing of applications for new nuclear plants;

(2) streamline the licensing process; and

(3) provide additional safety oversight for current and new facilities.

(b) There are authorized to be appropriated to the Nuclear Regulatory Commission for the Inspector General’s Office such sums as are necessary for the Inspector General’s Office to establish an additional 5 full-time equivalent positions to assist with ongoing audits and investigations.

SEC. 642. Nuclear energy workforce.

Section 1101 of the Energy Policy Act of 2005 (42 U.S.C. 16411) is amended—

(1) in subsection (b)(1)—

(A) in subparagraph (A), by striking “and” at the end;

(B) in subparagraph (B), by striking the period and inserting “; and”; and

(C) by adding at the end the following:

“(C) nuclear utility and nuclear energy product and service industries.”;

(2) by redesignating subsection (d) as subsection (e); and

(3) by inserting after subsection (c) the following:

“(d) Workforce training.—

“(1) IN GENERAL.—The Secretary of Labor, in cooperation with the Secretary, shall promulgate regulations to implement a program to provide grants to enhance workforce training for any occupation in the workforce of the nuclear utility and nuclear energy products and services industries for which a shortage is identified or predicted in the report under subsection (b)(2).

“(2) CONSULTATION.—In carrying out this subsection, the Secretary of Labor shall consult with representatives of the nuclear utility and nuclear energy products and services industries, including organized labor organizations and multiemployer associations that jointly sponsor apprenticeship programs that provide training for skills needed in those industries.

“(3) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to the Secretary of Labor, working in coordination with the Secretary and the Secretary of Education, $20,000,000 for each of fiscal years 2009 through 2013 to carry out this subsection.”.

SEC. 643. Interagency working group to promote domestic manufacturing base for nuclear components and equipment.

(a) Purposes.—The purposes of this section are—

(1) to increase the competitiveness of the United States nuclear energy products and services industries;

(2) to identify the stimulus or incentives necessary to cause United States manufacturers of nuclear energy products to expand manufacturing capacity;

(3) to facilitate the export of United States nuclear energy products and services;

(4) to reduce the trade deficit of the United States through the export of United States nuclear energy products and services;

(5) to retain and create nuclear energy manufacturing and related service jobs in the United States;

(6) to encourage new manufacturing technologies to address industry challenges, such spent fuel recycling;

(7) to integrate the objectives described in paragraphs (1) through (5), in a manner consistent with the interests of the United States, into the foreign policy of the United States; and

(8) to authorize funds for increasing United States capacity to manufacture nuclear energy products and supply nuclear energy services.

(b) Establishment.—

(1) IN GENERAL.—There is established an interagency working group (referred to in this section as the “Working Group”) that, in consultation with representative industry organizations, manufacturers of nuclear energy products, and other stakeholder groups, shall make recommendations to coordinate the actions and programs of the Federal Government in order to promote increasing domestic manufacturing capacity and export of domestic nuclear energy products and services.

(2) COMPOSITION.—The Working Group shall be composed of—

(A) the Secretary of Energy (or a designee), who shall serve as Chairperson of the Working Group; and

(B) representatives of—

(i) the Department of Energy;

(ii) the Department of Commerce;

(iii) the Department of Defense;

(iv) the Department of Treasury;

(v) the Department of State;

(vi) the Environmental Protection Agency;

(vii) the United States Agency for International Development;

(viii) the Export-Import Bank of the United States;

(ix) the Trade and Development Agency;

(x) the Small Business Administration;

(xi) the Office of the United States Trade Representative; and

(xii) other Federal agencies, as determined by the President.

(c) Duties of working group.—The Working Group shall—

(1) not later than 180 days after the date of enactment of this Act, identify the actions necessary to promote the safe development and application in foreign countries of nuclear energy products and services—

(A) to increase electricity generation from nuclear energy sources through development of new generation facilities;

(B) to improve the efficiency, safety, and reliability of existing nuclear generating facilities through modifications; and

(C) enhance the safe treatment, handling, storage, and disposal of used nuclear fuel;

(2) not later than 180 days after the date of enactment of this Act, identify—

(A) mechanisms (including tax stimuli for investment, loans and loan guarantees, and grants) necessary for United States companies to increase—

(i) the capacity of the companies to produce or provide nuclear energy products and services; and

(ii) exports of nuclear energy products and services; and

(B) administrative or legislative initiatives that are necessary—

(i) to encourage United States companies to increase the manufacturing capacity of the companies for nuclear energy products;

(ii) to provide technical and financial assistance and support to small and mid-sized businesses to establish quality assurance programs in accordance with domestic and international nuclear quality assurance code requirements;

(iii) to encourage, through financial incentives, private sector capital investment to expand manufacturing capacity; and

(iv) to provide technical assistance and financial incentives to small and mid-sized businesses to develop the workforce necessary to increase manufacturing capacity and meet domestic and international nuclear quality assurance code requirements;

(3) not later than 270 days after the date of enactment of this Act, submit to Congress a report that describes the findings of the Working Group under paragraphs (1) and (2), including recommendations for new legislative authority, as necessary; and

(4) encourage the agencies represented by membership in the Working Group—

(A) to provide technical training and education for international development personnel and local users in other countries;

(B) to provide financial and technical assistance to nonprofit institutions that support the marketing and export efforts of domestic companies that provide nuclear energy products and services;

(C) to develop nuclear energy projects in foreign countries;

(D) to provide technical assistance and training materials to loan officers of the World Bank, international lending institutions, commercial and energy attaches at embassies of the United States, and other appropriate personnel in order to provide information about nuclear energy products and services to foreign governments or other potential project sponsors;

(E) to support, through financial incentives, private sector efforts to commercialize and export nuclear energy products and services in accordance with the subsidy codes of the World Trade Organization; and

(F) to augment budgets for trade and development programs in order to support pre-feasibility or feasibility studies for projects that use nuclear energy products and services.

(d) Personnel and service matters.—The Secretary and the heads of agencies represented by membership in the Working Group shall detail such personnel and furnish such services to the Working Group, with or without reimbursement, as are necessary to carry out the functions of the Working Group.

(e) Authorization of appropriations.—There is authorized to be appropriated to the Secretary to carry out this section $20,000,000 for each of fiscal years 2009 through 2013.

SEC. 651. Tax credit for carbon dioxide sequestration.

(a) In general.—of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business related credits) is amended by adding at the end the following new section:

“SEC. 45R. Credit for carbon dioxide sequestration.

“(a) General rule.—For purposes of section 38, the carbon dioxide sequestration credit for any taxable year is an amount equal to $15 per metric ton of qualified carbon dioxide which is—

“(1) captured by the taxpayer at a qualified facility, and

“(2) used by the taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas recovery project.

“(b) Qualified carbon dioxide.—For purposes of this section—

“(1) IN GENERAL.—The term ‘qualified carbon dioxide’ means carbon dioxide captured from an industrial source which—

“(A) would otherwise be released into the atmosphere as industrial emission of greenhouse gas, and

“(B) is measured at the source of capture and verified at the point of disposal or injection.

“(2) RECYCLED CARBON DIOXIDE.—The term ‘qualified carbon dioxide’ includes the initial deposit of captured carbon dioxide used as a tertiary injectant. Such term does not include carbon dioxide that is recaptured, recycled, and re-injected as part of the enhanced oil and natural gas recovery process.

“(c) Qualified facility.—For purposes of this section, the term ‘qualified facility’ means any industrial facility—

“(1) which is owned by the taxpayer,

“(2) at which carbon capture equipment is placed in service, and

“(3) which captures not less than 500,000 metric tons of carbon dioxide during the taxable year.

“(d) Special rules and other definitions.—For purposes of this section—

“(1) ONLY CARBON DIOXIDE CAPTURED WITHIN THE UNITED STATES TAKEN INTO ACCOUNT.—The credit under this section shall apply only with respect to qualified carbon dioxide the capture of which is within—

“(A) the United States (within the meaning of section 638(1)), or

“(B) a possession of the United States (within the meaning of section 638(2)).

“(2) TERTIARY INJECTANT.—The term ‘tertiary injectant’ has the same meaning as when used within section 193(b)(1).

“(3) QUALIFIED ENHANCED OIL OR NATURAL GAS RECOVERY PROJECT.—The term ‘qualified enhanced oil or natural gas recovery project’ has the meaning given the term ‘qualified enhanced oil recovery project’ by section 43(c)(2), by substituting ‘crude oil or natural gas’ for ‘crude oil’ in subparagraph (A)(i) thereof.

“(4) CREDIT ATTRIBUTABLE TO TAXPAYER.—Any credit under this section shall be attributable to the person that captures and physically or contractually ensures the use as a tertiary injectant of the qualified carbon dioxide, except to the extent provided in regulations prescribed by the Secretary.

“(5) RECAPTURE.—The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any qualified carbon dioxide which ceases to be captured or used as a tertiary injectant in a manner consistent with the requirements of this section.

“(6) INFLATION ADJUSTMENT.—In the case of any taxable year beginning in a calendar year after 2009, there shall be substituted for each dollar amount contained in subsection (a) an amount equal to the product of—

“(A) such dollar amount, multiplied by

“(B) the inflation adjustment factor for such calendar year determined under section 43(b)(3)(B) for such calendar year, determined by substituting ‘2008’ for ‘1990’.

“(e) Application of section.—The credit under this section shall apply with respect to qualified carbon dioxide before the end of the calendar year in which the Secretary, in consultation with the Administrator of the Environmental Protection Agency, certifies that 75,000,000 metric tons of qualified carbon dioxide have been captured and disposed of or used as a tertiary injectant.”.

(b) Conforming amendment.—Section 38(b) of the Internal Revenue Code of 1986 (relating to general business credit), as amended by this Act, is amended by striking ‘‘plus’’ at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting ‘‘, plus’’, and by adding at the end of following new paragraph:

“(38) the carbon dioxide sequestration credit determined under section 45R(a).”.

(c) Clerical amendment.—The table of sections for subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to other credits), as amended by this Act, is amended by adding at the end the following new section:


“Sec. 45R. Credit for carbon dioxide sequestration.”.

(d) Effective date.—The amendments made by 2 this section shall apply carbon dioxide captured after the date of the enactment of this Act.

SEC. 700. Reference.

Except as otherwise expressly provided, whenever in this title an amendment 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.

SEC. 701. Limitation of deduction for income attributable to domestic production of oil, gas, or primary products thereof.

(a) Denial of deduction for major integrated oil companies and state-owned oil companies for income attributable to domestic production of oil, gas, or primary products thereof.—

(1) IN GENERAL.—Subparagraph (B) of section 199(c)(4) of the Internal Revenue Code of 1986 (relating to exceptions) is amended by striking “or” at the end of clause (ii), by striking the period at the end of clause (iii) and inserting “, or”, and by inserting after clause (iii) the following new clause:

“(iv) in the case of any disqualified oil company, the production, refining, processing, transportation, or distribution of oil, gas, or any primary product thereof.”.

(2) DISQUALIFIED OIL COMPANY.—Section 199(c) of such Code is amended by adding at the end the following new paragraph:

“(8) DISQUALIFIED OIL COMPANY.—

“(B) IN GENERAL.—The term ‘disqualified oil company’ means—

“(i) any major integrated oil company (as defined in section 167(h)(5)(B)) during any taxable year described in section 167(h)(5)(B), or

“(ii) any controlled commercial entity (as defined in section 892(a)(2)(B)) the commercial activities of which during the taxable year includes the production, refining, processing, transportation, or distribution of oil, gas, or any primary product thereof.

“(C) PRIMARY PRODUCT.—The term ‘primary product’ has the same meaning as when used in section 927(a)(2)(C), as in effect before its repeal.”.

(b) Limitation on oil related qualified production activities income for taxpayers other than major integrated oil companies and state owned oil companies.—

(1) IN GENERAL.—Section 199(d) of the Internal Revenue Code of 1986 is amended by redesignating paragraph (9) as paragraph (10) and by inserting after paragraph (8) the following new paragraph:

“(9) SPECIAL RULE FOR TAXPAYERS WITH OIL RELATED QUALIFIED PRODUCTION ACTIVITIES INCOME.—

“(A) IN GENERAL.—If a taxpayer (other than a disqualified oil company) has oil related qualified production activities income for any taxable year beginning after 2009, the amount of the deduction under subsection (a) shall be reduced by 3 percent of the least of—

“(i) the oil related qualified production activities income of the taxpayer for the taxable year;

“(ii) the qualified production activities income of the taxpayer for the taxable year; or

“(iii) taxable income (determined without regard to this section).

“(B) OIL RELATED QUALIFIED PRODUCTION ACTIVITIES INCOME.—The term ‘oil related qualified production activities income’ means for any taxable year the qualified production activities income which is attributable to the production, refining, processing, transportation, or distribution of oil, gas, or any primary product thereof during such taxable year.”.

(2) CONFORMING AMENDMENT.—Section 199(d)(2) of such Code (relating to application to individuals) is amended by striking “subsection (a)(1)(B)” and inserting “subsections (a)(1)(B) and (d)(9)(A)(iii)”.

(c) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2008.

SEC. 702. 7-year amortization of geological and geophysical expenditures for certain major integrated oil companies.

(a) In general.—Subparagraph (A) of section 167(h)(5) (relating to special rule for major integrated oil companies) is amended by striking “5-year” and inserting “7-year”.

(b) Effective date.—The amendment made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act.

SEC. 703. Clarification of determination of foreign oil and gas extraction income.

(a) In general.—Paragraph (1) of section 907(c) is amended by redesignating subparagraph (B) as subparagraph (C), by striking “or” at the end of subparagraph (A), and by inserting after subparagraph (A) the following new subparagraph:

“(B) so much of any transportation of such minerals as occurs before the fair market value event, or”.

(b) Fair market value event.—Subsection (c) of section 907 is amended by adding at the end the following new paragraph:

“(6) FAIR MARKET VALUE EVENT.—For purposes of this section, the term ‘fair market value event’ means, with respect to any mineral, the first point in time at which such mineral—

“(A) has a fair market value which can be determined on the basis of a transfer, which is an arm’s length transaction, of such mineral from the taxpayer to a person who is not related (within the meaning of section 482) to such taxpayer, or

“(B) is at a location at which the fair market value is readily ascertainable by reason of transactions among unrelated third parties with respect to the same mineral (taking into account source, location, quality, and chemical composition).”.

(c) Special rule for certain petroleum taxes.—Subsection (c) of section 907, as amended by subsection (b), is amended to by adding at the end the following new paragraph:

“(7) OIL AND GAS TAXES.—In the case of any tax imposed by a foreign country which is limited in its application to taxpayers engaged in oil or gas activities—

“(A) the term ‘oil and gas extraction taxes’ shall include such tax,

“(B) the term ‘foreign oil and gas extraction income’ shall include any taxable income which is taken into account in determining such tax (or is directly attributable to the activity to which such tax relates), and

“(C) the term ‘foreign oil related income’ shall not include any taxable income which is treated as foreign oil and gas extraction income under subparagraph (B).”.

(d) Conforming amendments.—

(1) Subparagraph (C) of section 907(c)(1), as redesignated by this section, is amended by inserting “or used by the taxpayer in the activity described in subparagraph (B)” before the period at the end.

(2) Subparagraph (B) of section 907(c)(2) is amended to read as follows:

“(B) so much of the transportation of such minerals or primary products as is not taken into account under paragraph (1)(B),”.

(e) Effective date.—The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

SEC. 704. Clarification of eligibility for renewable diesel credit.

(a) Coproduction with petroleum feedstock.—

(1) IN GENERAL.—Paragraph (3) of section 40A(f) (defining renewable diesel) is amended by adding at the end the following flush sentence:

“Such term does not include any fuel derived from coprocessing biomass with a feedstock which is not biomass. For purposes of this paragraph, the term ‘biomass’ has the meaning given such term by section 45K(c)(3).”.

(2) CONFORMING AMENDMENT.—Paragraph (3) of section 40A(f) is amended by striking “(as defined in section 45K(c)(3))”.

(b) Clarification of eligibility for alternative fuel credit.—

(1) IN GENERAL.—Subparagraph (F) of section 6426(d)(2) is amended by striking “hydrocarbons” and inserting “fuel”.

(2) CONFORMING AMENDMENT.—Section 6426 is amended by adding at the end the following new subsection:

“(h) Denial of double benefit.—No credit shall be determined under subsection (d) or (e) with respect to any fuel with respect to which credit may be determined under subsection (b) or (c) or under section 40 or 40A.”.

(c) Effective date.—

(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section shall apply to fuel produced, and sold or used, after June 30, 2007.

(2) CLARIFICATION OF ELIGIBILITY FOR ALTERNATIVE FUEL CREDIT.—The amendment made by subsection (b) shall take effect as if included in section 11113 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users.

SEC. 705. Clarification that credits for fuel are designed to provide an incentive for United States production.

(a) Biodiesel fuels credit.—Paragraph (5) of section 40A(d), as added by subsection (c), is amended to read as follows:

“(5) LIMITATION TO BIODIESEL WITH CONNECTION TO THE UNITED STATES.—No credit shall be determined under this section with respect to any biodiesel unless—

“(A) such biodiesel is produced in the United States for use as a fuel in the United States, and

“(B) the taxpayer obtains a certification (in such form and manner as prescribed by the Secretary) from the producer of the biodiesel which identifies the product produced and the location of such production.

For purposes of this paragraph, the term ‘United States’ includes any possession of the United States.”.

(b) Excise tax credit.—Paragraph (2) of section 6426(i), as added by subsection (c), is amended to read as follows:

“(2) BIODIESEL AND ALTERNATIVE FUELS.—No credit shall be determined under this section with respect to any biodiesel or alternative fuel unless—

“(A) such biodiesel or alternative fuel is produced in the United States for use as a fuel in the United States, and

“(B) the taxpayer obtains a certification (in such form and manner as prescribed by the Secretary) from the producer of such biodiesel or alternative fuel which identifies the product produced and the location of such production.”.

(c) Provisions clarifying treatment of fuels with no nexus to the United States.—

(1) ALCOHOL FUELS CREDIT.—Subsection (d) of section 40 is amended by adding at the end the following new paragraph:

“(6) LIMITATION TO ALCOHOL WITH CONNECTION TO THE UNITED STATES.—No credit shall be determined under this section with respect to any alcohol which is produced outside the United States for use as a fuel outside the United States. For purposes of this paragraph, the term ‘United States’ includes any possession of the United States.”.

(2) BIODIESEL FUELS CREDIT.—Subsection (d) of section 40A is amended by adding at the end the following new paragraph:

“(5) LIMITATION TO BIODIESEL WITH CONNECTION TO THE UNITED STATES.—No credit shall be determined under this section with respect to any biodiesel which is produced outside the United States for use as a fuel outside the United States. For purposes of this paragraph, the term ‘United States’ includes any possession of the United States.”.

(3) EXCISE TAX CREDIT.—

(A) IN GENERAL.—Section 6426, as amended by this Act, is amended by adding at the end the following new subsection:

“(i) Limitation to fuels with connection to the United States.—

“(1) ALCOHOL.—No credit shall be determined under this section with respect to any alcohol which is produced outside the United States for use as a fuel outside the United States.

“(2) BIODIESEL AND ALTERNATIVE FUELS.—No credit shall be determined under this section with respect to any biodiesel or alternative fuel which is produced outside the United States for use as a fuel outside the United States.

For purposes of this subsection, the term ‘United States’ includes any possession of the United States.”.

(B) CONFORMING AMENDMENT.—Subsection (e) of section 6427 is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph:

“(5) LIMITATION TO FUELS WITH CONNECTION TO THE UNITED STATES.—No amount shall be payable under paragraph (1) or (2) with respect to any mixture or alternative fuel if credit is not allowed with respect to such mixture or alternative fuel by reason of section 6426(i).”.

(d) Effective date.—

(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section shall apply to fuel produced, and sold or used, after the date of the enactment of this Act.

(2) PROVISIONS CLARIFYING TREATMENT OF FUELS WITH NO NEXUS TO THE UNITED STATES.—

(A) IN GENERAL.—Except as otherwise provided in this paragraph, the amendments made by subsection (c) shall take effect as if included in section 301 of the American Jobs Creation Act of 2004.

(B) ALTERNATIVE FUEL CREDITS.—So much of the amendments made by subsection (c) as relate to the alternative fuel credit or the alternative fuel mixture credit shall take effect as if included in section 11113 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users.

(C) RENEWABLE DIESEL.—So much of the amendments made by subsection (c) as relate to renewable diesel shall take effect as if included in section 1346 of the Energy Policy Act of 2005.

SEC. 711. Nonqualified deferred compensation from certain tax indifferent parties.

(a) In general.—Subpart B of part II of subchapter E of chapter 1 is amended by inserting after section 457 the following new section:

“SEC. 457A. Nonqualified deferred compensation from certain tax indifferent parties.

“(a) In general.—Any compensation which is deferred under a nonqualified deferred compensation plan of a nonqualified entity shall be includible in gross income when there is no substantial risk of forfeiture of the rights to such compensation.

“(b) Nonqualified entity.—For purposes of this section, the term ‘nonqualified entity’ means—

“(1) any foreign corporation unless substantially all of its income is—

“(A) effectively connected with the conduct of a trade or business in the United States, or

“(B) subject to a comprehensive foreign income tax, and

“(2) any partnership unless substantially all of its income is allocated to persons other than—

“(A) foreign persons with respect to whom such income is not subject to a comprehensive foreign income tax, and

“(B) organizations which are exempt from tax under this title.

“(c) Determinability of amounts of compensation.—

“(1) IN GENERAL.—If the amount of any compensation is not determinable at the time that such compensation is otherwise includible in gross income under subsection (a)—

“(A) such amount shall be so includible in gross income when determinable, and

“(B) the tax imposed under this chapter for the taxable year in which such compensation is includible in gross income shall be increased by the sum of—

“(i) the amount of interest determined under paragraph (2), and

“(ii) an amount equal to 20 percent of the amount of such compensation.

“(2) INTEREST.—For purposes of paragraph (1)(B)(i), the interest determined under this paragraph for any taxable year is the amount of interest at the underpayment rate under section 6621 plus 1 percentage point on the underpayments that would have occurred had the deferred compensation been includible in gross income for the taxable year in which first deferred or, if later, the first taxable year in which such deferred compensation is not subject to a substantial risk of forfeiture.

“(d) Other definitions and special rules.—For purposes of this section—

“(1) SUBSTANTIAL RISK OF FORFEITURE.—

“(A) IN GENERAL.—The rights of a person to compensation shall be treated as subject to a substantial risk of forfeiture only if such person’s rights to such compensation are conditioned upon the future performance of substantial services by any individual.

“(B) EXCEPTION FOR COMPENSATION BASED ON GAIN RECOGNIZED ON AN INVESTMENT ASSET.—

“(i) IN GENERAL.—To the extent provided in regulations prescribed by the Secretary, if compensation is determined solely by reference to the amount of gain recognized on the disposition of an investment asset, such compensation shall be treated as subject to a substantial risk of forfeiture until the date of such disposition.

“(ii) INVESTMENT ASSET.—For purposes of clause (i), the term ‘investment asset’ means any single asset (other than an investment fund or similar entity)—

“(I) acquired directly by an investment fund or similar entity,

“(II) with respect to which such entity does not (nor does any person related to such entity) participate in the active management of such asset (or if such asset is an interest in an entity, in the active management of the activities of such entity), and

“(III) substantially all of any gain on the disposition of which (other than such deferred compensation) is allocated to investors in such entity.

“(iii) COORDINATION WITH SPECIAL RULE.—Paragraph (3)(B) shall not apply to any compensation to which clause (i) applies.

“(2) COMPREHENSIVE FOREIGN INCOME TAX.—The term ‘comprehensive foreign income tax’ means, with respect to any foreign person, the income tax of a foreign country if—

“(A) such person is eligible for the benefits of a comprehensive income tax treaty between such foreign country and the United States, or

“(B) such person demonstrates to the satisfaction of the Secretary that such foreign country has a comprehensive income tax.

“(3) NONQUALIFIED DEFERRED COMPENSATION PLAN.—

“(A) IN GENERAL.—The term ‘nonqualified deferred compensation plan’ has the meaning given such term under section 409A(d), except that such term shall include any plan that provides a right to compensation based on the appreciation in value of a specified number of equity units of the service recipient.

“(B) EXCEPTION.—Compensation shall not be treated as deferred for purposes of this section if the service provider receives payment of such compensation not later than 12 months after the end of the taxable year of the service recipient during which the right to the payment of such compensation is no longer subject to a substantial risk of forfeiture.

“(4) EXCEPTION FOR CERTAIN COMPENSATION WITH RESPECT TO EFFECTIVELY CONNECTED INCOME.—In the case a foreign corporation with income which is taxable under section 882, this section shall not apply to compensation which, had such compensation had been paid in cash on the date that such compensation ceased to be subject to a substantial risk of forfeiture, would have been deductible by such foreign corporation against such income.

“(5) APPLICATION OF RULES.—Rules similar to the rules of paragraphs (5) and (6) of section 409A(d) shall apply.

“(e) Regulations.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including regulations disregarding a substantial risk of forfeiture in cases where necessary to carry out the purposes of this section.”.

(b) Conforming amendment.—Section 26(b)(2) is amended by striking “and” at the end of subparagraph (U), by striking the period at the end of subparagraph (V) and inserting “, and”, and by adding at the end the following new subparagraph:

“(W) section 457A(c)(1)(B) (relating to determinability of amounts of compensation).”.

(c) Clerical amendment.—The table of sections of subpart B of part II of subchapter E of chapter 1 is amended by inserting after the item relating to section 457 the following new item:


“Sec. 457A. Nonqualified deferred compensation from certain tax indifferent parties.”.

(d) Effective date.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to amounts deferred which are attributable to services performed after December 31, 2008.

(2) APPLICATION TO EXISTING DEFERRALS.—In the case of any amount deferred to which the amendments made by this section do not apply solely by reason of the fact that the amount is attributable to services performed before January 1, 2009, to the extent such amount is not includible in gross income in a taxable year beginning before 2018, such amounts shall be includible in gross income in the later of—

(A) the last taxable year beginning before 2018, or

(B) the taxable year in which there is no substantial risk of forfeiture of the rights to such compensation (determined in the same manner as determined for purposes of section 457A of the Internal Revenue Code of 1986, as added by this section).

(3) CHARITABLE CONTRIBUTIONS OF EXISTING DEFERRALS PERMITTED.—

(A) IN GENERAL.—Subsection (b) of section 170 of the Internal Revenue Code of 1986 shall not apply to (and subsections (b) and (d) of such section shall be applied without regard to) so much of the taxpayer’s qualified contributions made during the taxpayer’s last taxable year beginning before 2018 as does not exceed the taxpayer’s qualified inclusion amount. For purposes of subsection (b) of section 170 of such Code, the taxpayer’s contribution base for such last taxable year shall be reduced by the amount of the taxpayer’s qualified contributions to which such subsection does not apply by reason the preceding sentence.

(B) QUALIFIED CONTRIBUTIONS.—For purposes of this paragraph, the term “qualified contributions” means the aggregate charitable contributions (as defined in section 170(c) of such Code) paid in cash by the taxpayer to organizations described in section 170(b)(1)(A) of such Code (other than any organization described in section 509(a)(3) of such Code or any fund or account described in section 4966(d)(2) of such Code).

(C) QUALIFIED INCLUSION AMOUNT.—For purposes of this paragraph, the term “qualified inclusion amount” means the amount includible in the taxpayer’s gross income for the last taxable year beginning before 2018 by reason of paragraph (2).

(4) ACCELERATED PAYMENTS.—No later than 120 days after the date of the enactment of this Act, the Secretary shall issue guidance providing a limited period of time during which a nonqualified deferred compensation arrangement attributable to services performed on or before December 31, 2008, may, without violating the requirements of section 409A(a) of the Internal Revenue Code of 1986, be amended to conform the date of distribution to the date the amounts are required to be included in income.

(5) CERTAIN BACK-TO-BACK ARRANGEMENTS.—If the taxpayer is also a service recipient and maintains one or more nonqualified deferred compensation arrangements for its service providers under which any amount is attributable to services performed on or before December 31, 2008, the guidance issued under paragraph (4) shall permit such arrangements to be amended to conform the dates of distribution under such arrangement to the date amounts are required to be included in the income of such taxpayer under this subsection.

(6) ACCELERATED PAYMENT NOT TREATED AS MATERIAL MODIFICATION.—Any amendment to a nonqualified deferred compensation arrangement made pursuant to paragraph (4) or (5) shall not be treated as a material modification of the arrangement for purposes of section 409A of the Internal Revenue Code of 1986.

SEC. 712. Delay in application of worldwide allocation of interest.

Section 864(f) is amended—

(1) by striking “December 31, 2010” in paragraphs (5)(D) and (6) and inserting “December 31, 2018”, and

(2) by striking paragraph (7).

SEC. 713. Time for payment of corporate estimated taxes.

The percentage under subparagraph (C) of section 401(1) of the Tax Increase Prevention and Reconciliation Act of 2005 in effect on the date of the enactment of this Act is increased by 37.75 percentage points.