S.Amdt. 4732

1. Adds TITLE II--ELIMINATING UNNECESSARY OIL TAX BREAKS at the end of the bill

   Adds a title

   In S. 3711 · Placed on Calendar Senate

   (B) any remainder of the qualified outer Continental Shelf revenues shall revert to the general fund of the Treasury.

   Inserted: TITLE II--ELIMINATING UNNECESSARY OIL TAX BREAKS

   Inserted: SEC. 201. ELIMINATION OF DEDUCTION FOR INTANGIBLE DRILLING AND DEVELOPMENT COSTS FOR MAJOR OIL COMPANIES.

   Inserted: (a) In General.--Section 263(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new sentences: "This subsection shall not apply during any taxable year with respect to a major integrated oil company (as defined in section 43(f)(2)) if during the preceding taxable year for the production of oil, the average price of crude oil in the United States is greater than $34.71 per barrel, and for the production of natural gas, the average wellhead price of natural gas in the United States is greater than $4.34 per 1,000 cubic feet. For purposes of the preceding sentence, the Secretary shall determine average prices, taking into consideration the most recent data reported by the Energy Information Administration. For taxable years beginning after December 31, 2007, each dollar amount specified in this subsection shall be adjusted to reflect changes for the 12-month period ending the preceding September 30 in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor."

   Inserted: (b) Effective Date.--The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

   Inserted: SEC. 202. ELIMINATION OF ENHANCED OIL RECOVERY CREDIT FOR MAJOR OIL COMPANIES.

   Inserted: (a) In General.--Section 43 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

   Inserted: "(f) Nonapplication of Section.--

   Inserted: "(1) In general.--This section shall not apply during any taxable year with respect to a major integrated oil company if during the preceding taxable year for the production of oil, the average price of crude oil in the United States is greater than $34.71 per barrel. For purposes of the preceding sentence, the Secretary shall determine average prices, taking into consideration the most recent data reported by the Energy Information Administration. For taxable years beginning after December 31, 2007, the dollar amount specified in this paragraph shall be adjusted to reflect changes for the 12-month period ending the preceding September 30 in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.

   Inserted: "(2) Major integrated oil company.--For purposes of this subsection, the term 'major integrated oil company' means, with respect to any taxable year, a producer of crude oil--

   Inserted: "(A) which has an average daily worldwide production of crude oil of at least 500,000 barrels for the taxable year,

   Inserted: "(B) which had gross receipts in excess of $1,000,000,000 for its last taxable year ending during calendar year 2005, and

   Inserted: "(C) to whom subsection (c) of section 613A does not apply by reason of paragraph (4) of section 613A(d), determined--

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   Inserted: "(i) by substituting '15 percent' for '5 percent' each place it occurs in paragraph (3) of section 613A(d), and

   Inserted: "(ii) without regard to whether subsection (c) of section 613A does not apply by reason of paragraph (2) of section 613A(d). For purposes of subparagraphs (A) and (B), all persons treated as a single employer under subsections (a) and (b) of section 52 shall be treated as 1 person and, in case of a short taxable year, the rule under section 448(c)(3)(B) shall apply.".

   Inserted: (b) Effective Date.--The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

   Inserted: SEC. 203. OIL AND GAS ROYALTY-RELATED AMENDMENTS.

   Inserted: (a) Repeal.--Sections 344 through 346 of the Energy Policy Act of 2005 (42 U.S.C. 15902 et seq.) are repealed.

   Inserted: (b) Termination of Alaska Offshore Royalty Suspension.--Section 8(a)(3)(B) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(B)) is amended by striking "and in the Planning Areas offshore Alaska".

   Inserted: SEC. 204. EXTENSION OF ELECTION TO EXPENSE CERTAIN REFINERIES.

   Inserted: (a) Extension.--

   Inserted: (1) In general.--Section 179C(c)(1) of the Internal Revenue Code of 1986 (defining qualified refinery property) is amended--

   Inserted: (A) by striking "and before January 1, 2012" in subparagraph (B) and inserting "and, in the case of any qualified refinery described in subsection (d)(1), before January 1, 2012", and

   Inserted: (B) by inserting "if described in subsection (d)(1)" after "of which" in subparagraph (F)(i).

   Inserted: (2) Conforming amendment.--Subsection (d) of section 179C of the Internal Revenue Code of 1986 is amended to read as follows:

   Inserted: "(d) Qualified Refinery.--For purposes of this section, the term 'qualified refinery' means any refinery located in the United States which is designed to serve the primary purpose of processing liquid fuel from--

   Inserted: "(1) crude oil, or

   Inserted: "(2) qualified fuels (as defined in section 45K(c)).".

   Inserted: (3) Effective date.--The amendments made by this subsection shall take effect as if included in the amendment made by section 1323(a) of the Energy Policy Act of 2005.

   Inserted: (b) Nonapplication for Major Oil Companies.--

   Inserted: (1) In general.--Section 179C of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

   Inserted: "(i) Nonapplication of Section.--

   Inserted: "(1) In general.--This section shall not apply during any taxable year with respect to a major integrated oil company if during the preceding taxable year for the production of oil, the average price of crude oil in the United States is greater than $34.71 per barrel. For purposes of the preceding sentence, the Secretary shall determine average prices, taking into consideration the most recent data reported by the Energy Information Administration. For taxable years beginning after December 31, 2007, the dollar amount specified in this paragraph shall be adjusted to reflect changes for the 12-month period ending the preceding September 30 in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.

   Inserted: "(2) Major integrated oil company.--For purposes of this subsection, the term 'major integrated oil company' means, with respect to any taxable year, a producer of crude oil--

   Inserted: "(A) which has an average daily worldwide production of crude oil of at least 500,000 barrels for the taxable year,

   Inserted: "(B) which had gross receipts in excess of $1,000,000,000 for its last taxable year ending during calendar year 2005, and

   Inserted: "(C) to whom subsection (c) of section 613A does not apply by reason of paragraph (4) of section 613A(d), determined--

   Inserted: "(i) by substituting '15 percent' for '5 percent' each place it occurs in paragraph (3) of section 613A(d), and

   Inserted: "(ii) without regard to whether subsection (c) of section 613A does not apply by reason of paragraph (2) of section 613A(d). For purposes of subparagraphs (A) and (B), all persons treated as a single employer under subsections (a) and (b) of section 52 shall be treated as 1 person and, in case of a short taxable year, the rule under section 448(c)(3)(B) shall apply.".

   Inserted: (2) Effective date.--The amendment made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.

   Inserted: SEC. 205. ELIMINATION OF AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL EXPENDITURES FOR MAJOR OIL COMPANIES.

   Inserted: (a) In General.--Section 167(h) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

   Inserted: "(5) Nonapplication of section.--

   Inserted: "(A) In general.--This subsection shall not apply during any taxable year with respect to a major integrated oil company if during the preceding taxable year for the production of oil, the average price of crude oil in the United States is greater than $34.71 per barrel, and for the production of natural gas, the average wellhead price of natural gas in the United States is greater than $4.34 per 1,000 cubic feet. For purposes of the preceding sentence, the Secretary shall determine average prices, taking into consideration the most recent data reported by the Energy Information Administration. For taxable years beginning after December 31, 2007, each dollar amount specified in this subparagraph shall be adjusted to reflect changes for the 12-month period ending the preceding September 30 in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.

   Inserted: "(B) Major integrated oil company.--For purposes of this paragraph, the term 'major integrated oil company' means, with respect to any taxable year, a producer of crude oil--

   Inserted: "(i) which has an average daily worldwide production of crude oil of at least 500,000 barrels for the taxable year,

   Inserted: "(ii) which had gross receipts in excess of $1,000,000,000 for its last taxable year ending during calendar year 2005, and

   Inserted: "(iii) to whom subsection (c) of section 613A does not apply by reason of paragraph (4) of section 613A(d), determined--

   Inserted: "(I) by substituting '15 percent' for '5 percent' each place it occurs in paragraph (3) of section 613A(d), and

   Inserted: "(II) without regard to whether subsection (c) of section 613A does not apply by reason of paragraph (2) of section 613A(d).

   Inserted: For purposes of subparagraphs (A) and (B), all persons treated as a single employer under subsections (a) and (b) of section 52 shall be treated as 1 person and, in case of a short taxable year, the rule under section 448(c)(3)(B) shall apply.".

   Inserted: (b) Effective Date.--The amendments made by this section shall take effect on and after the date of the enactment of this Act.

   Inserted: SEC. 206. REVALUATION OF LIFO INVENTORIES OF MAJOR INTEGRATED OIL COMPANIES.

   Inserted: (a) General Rule.--Notwithstanding any other provision of law, if a taxpayer is a major integrated oil company for its last taxable year ending in calendar year 2005, the taxpayer shall--

   Inserted: (1) increase, effective as of the close of such taxable year, the value of each historic LIFO layer of inventories of crude oil, natural gas, or any other petroleum product (within the meaning of section 4611) by the layer adjustment amount, and

   Inserted: (2) decrease its cost of goods sold for such taxable year by the aggregate amount of the increases under paragraph (1). If the aggregate amount of the increases under paragraph (1) exceed the taxpayer's cost of goods sold for such taxable year, the taxpayer's gross income for such taxable year shall be increased by the amount of such excess.

   Inserted: (b) Layer Adjustment Amount.--For purposes of this section--

   Inserted: (1) In general.--The term "layer adjustment amount" means, with respect to any historic LIFO layer, the product of--

   Inserted: (A) $18.75, and

   Inserted: (B) the number of barrels of crude oil (or in the case of natural gas or other petroleum products, the number of barrel-of-oil equivalents) represented by the layer.

   Inserted: (2) Barrel-of-oil equivalent.--The term "barrel-of-oil equivalent" has the meaning given such term by section 29(d)(5) (as in effect before its redesignation by the Energy Tax Incentives Act of 2005).

   Inserted: (c) Application of Requirement.--

   Inserted: (1) No change in method of accounting.--Any adjustment required by this section shall not be treated as a change in method of accounting.

   Inserted: (2) Underpayments of estimated tax.--No addition to the tax shall be made under section 6655 of the Internal Revenue Code of 1986 (relating to failure by corporation to pay estimated tax) with respect to any underpayment of an installment required to be paid with respect to the taxable year described in subsection (a) to the extent such underpayment was created or increased by this section.

   Inserted: (d) Major Integrated Oil Company.--For purposes of this section, the term "major integrated oil company" has the meaning given such term by section 43(f)(2) of the Internal Revenue Code of 1986.

   Inserted: SEC. 207. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE TO MAJOR INTEGRATED OIL COMPANIES WHICH ARE DUAL CAPACITY TAXPAYERS.

   Inserted: (a) In General.--Section 901 of the Internal Revenue Code of 1986 (relating to credit for taxes of foreign countries and of possessions of the United States) is amended by redesignating subsection (m) as (n) and by inserting after subsection (l) the following new subsection:

   Inserted: "(m) Special Rules Relating to Major Integrated Oil Companies Which Are Dual Capacity Taxpayers.--

   Inserted: "(1) General rule.--Notwithstanding any other provision of this chapter, any amount paid or accrued by a dual capacity taxpayer which is a major integrated oil company to a foreign country or possession of the United States for any period shall not be considered a tax--

   Inserted: "(A) if, for such period, the foreign country or possession does not impose a generally applicable income tax, or

   Inserted: "(B) to the extent such amount exceeds the amount (determined in accordance with regulations) which--

   Inserted: "(i) is paid by such dual capacity taxpayer pursuant to the generally applicable income tax imposed by the country or possession, or

   Inserted: "(ii) would be paid if the generally applicable income tax imposed by the country or possession were applicable to such dual capacity taxpayer. Nothing in this paragraph shall be construed to imply the proper treatment of any such amount not in excess of the amount determined under subparagraph (B).

   Inserted: "(2) Dual capacity taxpayer.--For purposes of this subsection, the term 'dual capacity taxpayer' means, with respect to any foreign country or possession of the United States, a person who--

   Inserted: "(A) is subject to a levy of such country or possession, and

   Inserted: "(B) receives (or will receive) directly or indirectly a specific economic benefit (as determined in accordance with regulations) from such country or possession.

   Inserted: "(3) Generally applicable income tax.--For purposes of this subsection--

   Inserted: "(A) In general.--The term 'generally applicable income tax' means an income tax (or a series of income taxes) which is generally imposed under the laws of a foreign country or possession on income derived from the conduct of a trade or business within such country or possession.

   Inserted: "(B) Exceptions.--Such term shall not include a tax unless it has substantial application, by its terms and in practice, to--

   Inserted: "(i) persons who are not dual capacity taxpayers, and

   Inserted: "(ii) persons who are citizens or residents of the foreign country or possession.

   Inserted: "(4) Major integrated oil company.--For purposes of this subsection, the term 'major integrated oil company' has the meaning given such term by section 43(f)(2).".

   Inserted: (b) Effective Date.--

   Inserted: (1) In general.--The amendments made by this section shall apply to taxes paid or accrued in taxable years beginning after the date of the enactment of this Act.

   Inserted: (2) Contrary treaty obligations upheld.--The amendments made by this section shall not apply to the extent contrary to any treaty obligation of the United States.

   Inserted: SEC. 208. DENIAL OF DEDUCTION FOR INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION OF OIL, NATURAL GAS, OR PRIMARY PRODUCTS THEREOF.

   Inserted: (a) 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:

   Inserted: "(iv) in the case of any major integrated oil company (as defined in section 43(f)(2)), the production, refining, processing, transportation, or distribution of oil, natural gas, or any primary product thereof during any taxable year described in section 167(h)(5)(A).".

   Inserted: (b) Conforming Amendments.--Section 199(c)(4) of the Internal Revenue Code of 1986 is amended--

   Inserted: (1) in subparagraph (A)(i)(III) by striking "electricity, natural gas," and inserting "electricity", and

   Inserted: (2) in subparagraph (B)(ii) by striking "electricity, natural gas," and inserting "electricity".

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2005.

   Inserted: SEC. 209. RULES RELATING TO FOREIGN OIL AND GAS INCOME.

   Inserted: (a) Separate Basket for Foreign Tax Credit.--

   Inserted: (1) Years before 2007.--Paragraph (1) of section 904(d) of the Internal Revenue Code of 1986 (relating to separate application of section with respect to certain categories of income), as in effect for years beginning before 2007, is amended by striking 'and' at the end of subparagraph (H), by redesignating subparagraph (I) as subparagraph (J), and by inserting after subparagraph (H) the following new subparagraph:

   Inserted: "(I) foreign oil and gas income, and".

   Inserted: (2) 2007 and after.--Paragraph (1) of section 904(d) of such Code, as in effect for years beginning after 2006, is amended by striking "and" at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting ", and", and by adding at the end the following:

   Inserted: "(C) foreign oil and gas income.".

   Inserted: (b) Definition.--

   Inserted: (1) Years before 2007.--Paragraph (2) of section 904(d) of the Internal Revenue Code of 1986, as in effect for years beginning before 2007, is amended by redesignating subparagraphs (H) and (I) as subparagraphs (I) and (J), respectively, and by inserting after subparagraph (G) the following new subparagraph:

   Inserted: "(H) Foreign oil and gas income.--The term 'foreign oil and gas income' has the meaning given such term by section 954(g).".

   Inserted: (2) 2007 and after.--Section 904(d)(2) of such Code, as in effect for years after 2006, is amended by redesignating subparagraphs (J) and (K) as subparagraphs (K) and (L) and by inserting after subparagraph (I) the following:

   Inserted: "(J) Foreign oil and gas income.--For purposes of this section--

   Inserted: "(i) In general.--The term 'foreign oil and gas income' has the meaning given such term by section 954(g).

   Inserted: "(ii) Coordination.--Passive category income and general category income shall not include foreign oil and gas income (as so defined).".

   Inserted: (c) Conforming Amendments.--

   Inserted: (1) Section 904(d)(3)(F)(i) of the Internal Revenue Code of 1986 is amended by striking "or (E)" and inserting "(E), or (I)".

   Inserted: (2) Section 907(a) of such Code is hereby repealed.

   Inserted: (3) Section 907(c)(4) of such Code is hereby repealed.

   Inserted: (4) Section 907(f) of such Code is hereby repealed.

   Inserted: (d) Effective Dates.--

   Inserted: (1) In general.--The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

   Inserted: (2) Years after 2006.--The amendments made by paragraphs (1)(B) and (2)(B) shall apply to taxable years beginning after December 31, 2006.

   Inserted: (3) Transitional rules.--

   Inserted: (A) Separate basket treatment.--Any taxes paid or accrued in a taxable year beginning on or before the date of the enactment of this Act, with respect to income which was described in subparagraph (I) of section 904(d)(1) of such Code (as in effect on the day before the date of the enactment of this Act), shall be treated as taxes paid or accrued with respect to foreign oil and gas income to the extent the taxpayer establishes to the satisfaction of the Secretary of the Treasury that such taxes were paid or accrued with respect to foreign oil and gas income.

   Inserted: (B) Carryovers.--Any unused oil and gas extraction taxes which under section 907(f) of such Code (as so in effect) would have been allowable as a carryover to the taxpayer's first taxable year beginning after the date of the enactment of this Act (without regard to the limitation of paragraph (2) of such section 907(f) for first taxable year) shall be allowed as carryovers under section 904(c) of such Code in the same manner as if such taxes were unused taxes under such section 904(c) with respect to foreign oil and gas extraction income.

   Inserted: (C) Losses.--The amendment made by subsection (c)(3) shall not apply to foreign oil and gas extraction losses arising in taxable years beginning on or before the date of the enactment of this Act.

   Inserted: SEC. 210. ELIMINATION OF DEFERRAL FOR FOREIGN OIL AND GAS EXTRACTION INCOME.

   Inserted: (a) General Rule.--Paragraph (1) of section 954(g) of the Internal Revenue Code of 1986 (defining foreign base company oil related income) is amended to read as follows:

   Inserted: "(1) In general.--Except as otherwise provided in this subsection, the term 'foreign oil and gas income' means, in the case of any major integrated oil company (as defined in section 43(f)(2)) during any taxable year described in section 167(h)(5)(A), any income of a kind which would be taken into account in determining the amount of--

   Inserted: "(A) foreign oil and gas extraction income (as defined in section 907(c)), or

   Inserted: "(B) foreign oil related income (as defined in section 907(c)).".

   Inserted: (b) Conforming Amendments.--

   Inserted: (1) Subsections (a)(5), (b)(5), and (b)(6) of section 954, and section 952(c)(1)(B)(ii)(I) of the Internal Revenue Code of 1986, are each amended by striking "base company oil related income" each place it appears (including in the heading of subsection (b)(8)) and inserting "oil and gas income".

   Inserted: (2) Subsection (b)(4) of section 954 of such Code is amended by striking "base company oil-related income" and inserting "oil and gas income".

   Inserted: (3) The subsection heading for subsection (g) of section 954 of such Code is amended by striking "Foreign Base Company Oil Related Income" and inserting "Foreign Oil and Gas Income".

   Inserted: (4) Subparagraph (A) of section 954(g)(2) of such Code is amended by striking "foreign base company oil related income" and inserting "foreign oil and gas income".

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to taxable years of foreign corporations beginning after the date of the enactment of this Act, and to taxable years of United States shareholders ending with or within such taxable years of foreign corporations.

   Inserted: TITLE III--EXPANDING ENERGY EFFICIENCY

   Inserted: SEC. 301. EXTENSION OF ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

   Inserted: Section 179D(h) of the Internal Revenue Code of 1986 (relating to termination) is amended by striking "2007" and inserting "2014".

   Inserted: SEC. 302. EXTENSION AND EXPANSION OF NEW ENERGY EFFICIENT HOME CREDIT.

   Inserted: (a) Extension.--Section 45L(g) of the Internal Revenue Code of 1986 (relating to termination) is amended by striking "2007" and inserting "2014".

   Inserted: (b) Inclusion of 30 Percent Homes.--

   Inserted: (1) In general.--Section 45L(c) of the Internal Revenue Code of 1986 (relating to energy saving requirements) is amended--

   Inserted: (A) by striking "or" at the end of paragraph (2);

   Inserted: (B) by redesignating paragraph (3) as paragraph (4); and

   Inserted: (C) by inserting after paragraph (2) the following new paragraph:

   Inserted: "(3) certified--

   Inserted: "(A) to have a level of annual heating and cooling energy consumption which is at least 30 percent below the annual level described in paragraph (1), and

   Inserted: "(B) to have building envelope component improvements account for at least 1/3 of such 30 percent, or.".

   Inserted: (2) Applicable amount of credit.--Section 45L(a)(2) is amended by striking "paragraph (3)" and inserting "paragraph (3) or (4)".

   Inserted: (3) Effective date.--The amendments made by this subsection shall apply to qualified new energy efficient homes acquired after the date of the enactment of this Act.

   Inserted: SEC. 303. EXTENSION OF NONBUSINESS ENERGY PROPERTY CREDIT.

   Inserted: Section 25C(g) of the Internal Revenue Code of 1986 (relating to termination) is amended by striking "2007" and inserting "2014".

   Inserted: SEC. 304. EXTENSION AND MODIFICATION OF RESIDENTIAL ENERGY EFFICIENT PROPERTY CREDIT.

   Inserted: (a) Extension.--Section 25D(g) of the Internal Revenue Code of 1986 (relating to termination) is amended by striking "2007" and inserting "2014".

   Inserted: (b) Modification of Maximum Credit.--Paragraph (1) of section 25D(b) of the Internal Revenue Code of 1986 (relating to limitations) is amended to read as follows:

   Inserted: "(1) Maximum credit.--The credit allowed under subsection (a) for any taxable year shall not exceed--

   Inserted: "(A) $1,000 with respect to each half kilowatt of capacity of qualified photovoltaic property for which qualified photovoltaic property expenditures are made,

   Inserted: "(B) $2,000 with respect to any qualified solar water heating property expenditures, and

   Inserted: "(C) $500 with respect to each half kilowatt of capacity of qualified fuel cell property (as defined in section 48(c)(1)) for which qualified fuel cell property expenditures are made.".

   Inserted: (c) Credit Allowed Against Alternative Minimum Tax.--

   Inserted: (1) In general.--Section 25D(b) of the Internal Revenue Code of 1986 (as amended by subsection (b)) is amended by adding at the end the following new paragraph:

   Inserted: "(3) Credit allowed against alternative minimum tax.--The credit allowed under subsection (a) for the taxable year shall not exceed the excess of--

   Inserted: "(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

   Inserted: "(B) the sum of the credits allowable under subpart A of part IV of subchapter A and section 27 for the taxable year.".

   Inserted: (2) Conforming amendment.--Subsection (c) of section 25D of such Code is amended to read as follows:

   Inserted: "(c) Carryforward of Unused Credit.--If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by subsection (b)(3) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.".

   Inserted: (d) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2005.

   Inserted: SEC. 305. ENERGY CREDIT FOR COMBINED HEAT AND POWER SYSTEM PROPERTY.

   Inserted: (a) In general.--Section 48(a)(3)(A) of the Internal Revenue Code of 1986 (defining energy property) is 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:

   Inserted: "(v) combined heat and power system property,";

   Inserted: (b) Combined Heat and Power System Property.--Section 48 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

   Inserted: "(d) Combined Heat and Power System Property.--For purposes of subsection (a)(3)(A)(v)--

   Inserted: "(1) Combined heat and power system property.--The term 'combined heat and power system property' means property comprising a system--

   Inserted: "(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),

   Inserted: "(B) which has an electrical capacity of not more than 15 megawatts or a mechanical energy capacity of not more than 2,000 horsepower or an equivalent combination of electrical and mechanical energy capacities,

   Inserted: "(C) which produces--

   Inserted: "(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

   Inserted: "(ii) at least 20 percent of its total useful energy in the form of electrical or mechanical power (or combination thereof),

   Inserted: "(D) the energy efficiency percentage of which exceeds 60 percent, and

   Inserted: "(E) which is placed in service before January 1, 2015.

   Inserted: "(2) Special rules.--

   Inserted: "(A) Energy efficiency percentage.--For purposes of this subsection, the energy efficiency percentage of a system is the fraction--

   Inserted: "(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

   Inserted: "(ii) the denominator of which is the higher heating value of the primary fuel sources for the system.

   Inserted: "(B) Determinations made on btu basis.--The energy efficiency percentage and the percentages under paragraph (1)(C) shall be determined on a Btu basis.

   Inserted: "(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.

   Inserted: "(D) Certain exception not to apply.--The first sentence of the matter in subsection (a)(3) which follows subparagraph (D) thereof shall not apply to combined heat and power system property.

   Inserted: "(3) Systems using bagasse.--If a system is designed to use bagasse for at least 90 percent of the energy source--

   Inserted: "(A) paragraph (1)(D) shall not apply, but

   Inserted: "(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.

   Inserted: "(4) Nonapplication of certain rules.--For purposes of determining if the term 'combined heat and power system property' includes technologies which generate electricity or mechanical power using back-pressure steam turbines in place of existing pressure-reducing valves or which make use of waste heat from industrial processes such as by using organic rankin, stirling, or kalina heat engine systems, paragraph (1) shall be applied without regard to subparagraphs (C) and (D) thereof .".

   Inserted: (c) Effective Date.--The amendments made by this section shall apply to periods after December 31, 2005, 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).

   Inserted: SEC. 306. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR DEPRECIATION OF QUALIFIED ENERGY MANAGEMENT.

   Inserted: (a) In General.--Section 168(e)(3)(A) of the Internal Revenue Code of 1986 (defining 3-year property) 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:

   Inserted: "(iv) any qualified energy management device.".

   Inserted: (b) Definition of Qualified Energy Management Device.--Section 168(i) of the Internal Revenue Code of 1986 (relating to definitions and special rules) is amended by inserting at the end the following new paragraph:

   Inserted: "(18) Qualified energy management device.--

   Inserted: "(A) In general.--The term 'qualified energy management device' means any energy management device which is placed in service before January 1, 2015, by a taxpayer who is a supplier of electric energy or a provider of electric energy services.

   Inserted: "(B) Energy management device.--For purposes of subparagraph (A), the term 'energy management device' means any meter or metering device which is used by the taxpayer--

   Inserted: "(i) to measure and record electricity usage data on a time-differentiated basis in at least 4 separate time segments per day, and

   Inserted: "(ii) to provide such data on at least a monthly basis to both consumers and the taxpayer.".

   Inserted: (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.

   Inserted: SEC. 307. THREE-YEAR APPLICABLE RECOVERY PERIOD FOR DEPRECIATION OF QUALIFIED WATER SUBMETERING DEVICES.

   Inserted: (a) In General.--Section 168(e)(3)(A) of the Internal Revenue Code of 1986 (defining 3-year property), as amended by section 306, 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:

   Inserted: "(v) any qualified water submetering device.".

   Inserted: (b) Definition of Qualified Water Submetering Device.--Section 168(i) of the Internal Revenue Code of 1986 (relating to definitions and special rules), as amended by section 306, is amended by inserting at the end the following new paragraph:

   Inserted: "(19) Qualified water submetering device.--

   Inserted: "(A) In general.--The term 'qualified water submetering device' means any water submetering device which is placed in service before January 1, 2015, by a taxpayer who is an eligible resupplier with respect to the unit for which the device is placed in service.

   Inserted: "(B) Water submetering device.--For purposes of this paragraph, the term 'water submetering device' means any submetering device which is used by the taxpayer--

   Inserted: "(i) to measure and record water usage data, and

   Inserted: "(ii) to provide such data on at least a monthly basis to both consumers and the taxpayer.

   Inserted: "(C) Eligible resupplier.--For purposes of subparagraph (A), the term 'eligible resupplier' means any taxpayer who purchases and installs qualified water submetering devices in every unit in any multi-unit property.".

   Inserted: (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.

   Original wording

   At the end, add the following:

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