Renewable Energy and Energy Conservation Tax Act of 2008

        [Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5351 Referred in Senate (RFS)]

2d Session
H. R. 5351

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

February 28, 2008

Received; read twice and referred to the Committee on Finance

_______________________________________________________________________

AN ACT

To amend the Internal Revenue Code of 1986 to provide tax incentives
for the production of renewable energy and energy conservation.

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

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Renewable Energy
and Energy Conservation Tax Act of 2008''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act 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.
(c) Table of Contents.--The table of contents of this Act is as
follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.
TITLE I--PRODUCTION INCENTIVES

Sec. 101. Extension and modification of renewable energy credit.
Sec. 102. Production credit for electricity produced from marine
renewables.
Sec. 103. Extension and modification of energy credit.
Sec. 104. New clean renewable energy bonds.
Sec. 105. Extension and modification of special rule to implement FERC
and State electric restructuring policy.
Sec. 106. Extension and modification of credit for residential energy
efficient property.
TITLE II--CONSERVATION

Subtitle A--Transportation

Part 1--Vehicles

Sec. 201. Credit for plug-in hybrid vehicles.
Sec. 202. Extension and modification of alternative fuel vehicle
refueling property credit.
Sec. 203. Modification of limitation on automobile depreciation.
Part 2--Fuels

Sec. 211. Extension and modification of credits for biodiesel and
renewable diesel.
Sec. 212. Clarification that credits for fuel are designed to provide
an incentive for United States production.
Sec. 213. Credit for production of cellulosic alcohol.
Part 3--Other Transportation Incentives

Sec. 221. Extension of transportation fringe benefit to bicycle
commuters.
Sec. 222. Restructuring of New York Liberty Zone tax credits.
Subtitle B--Other Conservation Provisions

Sec. 231. Qualified energy conservation bonds.
Sec. 232. Extension and modification of credit for nonbusiness energy
property.
Sec. 233. Extension of energy efficient commercial buildings deduction.
Sec. 234. Modifications of energy efficient appliance credit for
appliances produced after 2007.
Sec. 235. Five-year applicable recovery period for depreciation of
qualified energy management devices.
TITLE III--REVENUE PROVISIONS

Sec. 301. Limitation of deduction for income attributable to domestic
production of oil, gas, or primary products
thereof.
Sec. 302. Clarification of determination of foreign oil and gas
extraction income.
Sec. 303. Time for payment of corporate estimated taxes.
TITLE IV--OTHER PROVISIONS

Subtitle A--Studies

Sec. 401. Carbon audit of the tax code.
Sec. 402. Comprehensive study of biofuels.
Subtitle B--Application of Certain Labor Standards on Projects Financed
Under Tax Credit Bonds

Sec. 411. Application of certain labor standards on projects financed
under tax credit bonds.

TITLE I--PRODUCTION INCENTIVES

SEC. 101. EXTENSION AND MODIFICATION OF RENEWABLE ENERGY CREDIT.

(a) Extension of Credit.--Each of the following provisions of
section 45(d) (relating to qualified facilities) is amended by striking
``January 1, 2009'' and inserting ``January 1, 2012'':
(1) Paragraph (1).
(2) Clauses (i) and (ii) of paragraph (2)(A).
(3) Clauses (i)(I) and (ii) of paragraph (3)(A).
(4) Paragraph (4).
(5) Paragraph (5).
(6) Paragraph (6).
(7) Paragraph (7).
(8) 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) 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.--The amendments made by
subsection (c) 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. 102. PRODUCTION CREDIT FOR ELECTRICITY PRODUCED FROM MARINE
RENEWABLES.

(a) In General.--Paragraph (1) of section 45(c) (relating to
resources) 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(a), 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. 103. EXTENSION AND MODIFICATION OF ENERGY CREDIT.

(a) Extension of Credit.--
(1) Solar energy property.--Paragraphs (2)(A)(i)(II) and
(3)(A)(ii) of section 48(a) (relating to energy credit) are
each amended by striking ``January 1, 2009'' and inserting
``January 1, 2017''.
(2) Fuel cell property.--Subparagraph (E) of section
48(c)(1) (relating to qualified fuel cell property) is amended
by striking ``December 31, 2008'' and inserting ``December 31,
2016''.
(b) Allowance of Energy Credit Against Alternative Minimum Tax.--
Subparagraph (B) of section 38(c)(4) (relating to specified credits) 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) the credit determined under section
46 to the extent that such credit is
attributable to the energy credit determined
under section 48.''.
(c) Increase of Credit Limitation for Fuel Cell Property.--
Subparagraph (B) of section 48(c)(1) is amended by striking ``$500''
and inserting ``$1,500''.
(d) Public Electric 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).
(e) 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) Increase in limitation for fuel cell property.--The
amendment made by subsection (c) 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 electric utility property.--The amendments made
by subsection (d) 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. 104. NEW CLEAN RENEWABLE ENERGY BONDS.

(a) In General.--Part IV of subchapter A of chapter 1 (relating to
credits against tax) is amended by adding at the end the following new
subpart:

``Subpart I--Qualified Tax Credit Bonds

``Sec. 54A. Credit to holders of qualified tax credit bonds.
``Sec. 54B. New clean renewable energy bonds.

``SEC. 54A. CREDIT TO HOLDERS OF QUALIFIED TAX CREDIT BONDS.

``(a) Allowance of Credit.--If a taxpayer holds a qualified tax
credit bond on one or more credit allowance dates of the bond during
any taxable year, 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 the credits determined under subsection (b) with respect to such
dates.
``(b) Amount of Credit.--
``(1) In general.--The amount of the credit determined
under this subsection with respect to any credit allowance date
for a qualified tax credit bond is 25 percent of the annual
credit determined with respect to such bond.
``(2) Annual credit.--The annual credit determined with
respect to any qualified tax credit bond is the product of--
``(A) the applicable credit rate, multiplied by
``(B) the outstanding face amount of the bond.
``(3) Applicable credit rate.--For purposes of paragraph
(2), the applicable credit rate is the rate which the Secretary
estimates will permit the issuance of qualified tax credit
bonds with a specified maturity or redemption date without
discount and without interest cost to the qualified issuer. The
applicable credit rate with respect to any qualified tax credit
bond shall be determined as of the first day on which there is
a binding, written contract for the sale or exchange of the
bond.
``(4) Special rule for issuance and redemption.--In the
case of a bond which is issued during the 3-month period ending
on a credit allowance date, the amount of the credit determined
under this subsection with respect to such credit allowance
date shall be a ratable portion of the credit otherwise
determined based on the portion of the 3-month period during
which the bond is outstanding. A similar rule shall apply when
the bond is redeemed or matures.
``(c) Limitation Based on Amount of Tax.--
``(1) In general.--The credit allowed under subsection (a)
for any 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
part (other than subpart C and this subpart).
``(2) Carryover of unused credit.--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 taxable year
(determined before the application of paragraph (1) for such
succeeding taxable year).
``(d) Qualified Tax Credit Bond.--For purposes of this section--
``(1) Qualified tax credit bond.--The term `qualified tax
credit bond' means a new clean renewable energy bond which is
part of an issue that meets the requirements of paragraphs (2),
(3), (4), (5), and (6).
``(2) Special rules relating to expenditures.--
``(A) In general.--An issue shall be treated as
meeting the requirements of this paragraph if, as of
the date of issuance, the issuer reasonably expects--
``(i) 100 percent or more of the available
project proceeds to be spent for 1 or more
qualified purposes within the 3-year period
beginning on such date of issuance, and
``(ii) a binding commitment with a third
party to spend at least 10 percent of such
available project proceeds will be incurred
within the 6-month period beginning on such
date of issuance.
``(B) Failure to spend required amount of bond
proceeds within 3 years.--
``(i) In general.--To the extent that less
than 100 percent of the available project
proceeds of the issue are expended by the close
of the expenditure period for 1 or more
qualified purposes, the issuer shall redeem all
of the nonqualified bonds within 90 days after
the end of such period. For purposes of this
paragraph, the amount of the nonqualified bonds
required to be redeemed shall be determined in
the same manner as under section 142.
``(ii) Expenditure period.--For purposes of
this subpart, the term `expenditure period'
means, with respect to any issue, the 3-year
period beginning on the date of issuance. Such
term shall include any extension of such period
under clause (iii).
``(iii) Extension of period.--Upon
submission of a request prior to the expiration
of the expenditure period (determined without
regard to any extension under this clause), the
Secretary may extend such period if the issuer
establishes that the failure to expend the
proceeds within the original expenditure period
is due to reasonable cause and the expenditures
for qualified purposes will continue to proceed
with due diligence.
``(C) Qualified purpose.--For purposes of this
paragraph, the term `qualified purpose' means a purpose
specified in section 54B(a)(1).
``(D) Reimbursement.--For purposes of this
subtitle, available project proceeds of an issue shall
be treated as spent for a qualified purpose if such
proceeds are used to reimburse the issuer for amounts
paid for a qualified purpose after the date that the
Secretary makes an allocation of bond limitation with
respect to such issue, but only if--
``(i) prior to the payment of the original
expenditure, the issuer declared its intent to
reimburse such expenditure with the proceeds of
a qualified tax credit bond,
``(ii) not later than 60 days after payment
of the original expenditure, the issuer adopts
an official intent to reimburse the original
expenditure with such proceeds, and
``(iii) the reimbursement is made not later
than 18 months after the date the original
expenditure is paid.
``(3) Reporting.--An issue shall be treated as meeting the
requirements of this paragraph if the issuer of qualified tax
credit bonds submits reports similar to the reports required
under section 149(e).
``(4) Special rules relating to arbitrage.--
``(A) In general.--An issue shall be treated as
meeting the requirements of this paragraph if the
issuer satisfies the requirements of section 148 with
respect to the proceeds of the issue.
``(B) Special rule for investments during
expenditure period.--An issue shall not be treated as
failing to meet the requirements of subparagraph (A) by
reason of any investment of available project proceeds
during the expenditure period.
``(C) Special rule for reserve funds.--An issue
shall not be treated as failing to meet the
requirements of subparagraph (A) by reason of any fund
which is expected to be used to repay such issue if--
``(i) such fund is funded at a rate not
more rapid than equal annual installments,
``(ii) such fund is funded in a manner
reasonably expected to result in an amount not
greater than an amount necessary to repay the
issue, and
``(iii) the yield on such fund is not
greater than the discount rate determined under
paragraph (5)(B) with respect to the issue.
``(5) Maturity limitation.--
``(A) In general.--An issue shall not be treated as
meeting the requirements of this paragraph if the
maturity of any bond which is part of such issue
exceeds the maximum term determined by the Secretary
under subparagraph (B).
``(B) Maximum term.--During each calendar month,
the Secretary shall determine the maximum term
permitted under this paragraph for bonds issued during
the following calendar month. Such maximum term shall
be the term which the Secretary estimates will result
in the present value of the obligation to repay the
principal on the bond being equal to 50 percent of the
face amount of such bond. Such present value shall be
determined using as a discount rate the average annual
interest rate of tax-exempt obligations having a term
of 10 years or more which are issued during the month.
If the term as so determined is not a multiple of a
whole year, such term shall be rounded to the next
highest whole year.
``(6) Prohibition on financial conflicts of interest.--An
issue shall be treated as meeting the requirements of this
paragraph if the issuer certifies that--
``(A) applicable State and local law requirements
governing conflicts of interest are satisfied with
respect to such issue, and
``(B) if the Secretary prescribes additional
conflicts of interest rules governing the appropriate
Members of Congress, Federal, State, and local
officials, and their spouses, such additional rules are
satisfied with respect to such issue.
``(e) Other Definitions.--For purposes of this subchapter--
``(1) Credit allowance date.--The term `credit allowance
date' means--
``(A) March 15,
``(B) June 15,
``(C) September 15, and
``(D) December 15.
Such term includes the last day on which the bond is
outstanding.
``(2) Bond.--The term `bond' includes any obligation.
``(3) State.--The term `State' includes the District of
Columbia and any possession of the United States.
``(4) Available project proceeds.--The term `available
project proceeds' means--
``(A) the excess of--
``(i) the proceeds from the sale of an
issue, over
``(ii) the issuance costs financed by the
issue (to the extent that such costs do not
exceed 2 percent of such proceeds), and
``(B) the proceeds from any investment of the
excess described in subparagraph (A).
``(f) Credit Treated as Interest.--For purposes of this subtitle,
the credit determined under subsection (a) shall be treated as interest
which is includible in gross income.
``(g) S Corporations and Partnerships.--In the case of a tax credit
bond held by an S corporation or partnership, the allocation of the
credit allowed by this section to the shareholders of such corporation
or partners of such partnership shall be treated as a distribution.
``(h) Bonds Held by Regulated Investment Companies and Real Estate
Investment Trusts.--If any qualified tax credit bond is held by a
regulated investment company or a real estate investment trust, the
credit determined under subsection (a) shall be allowed to shareholders
of such company or beneficiaries of such trust (and any gross income
included under subsection (f) with respect to such credit shall be
treated as distributed to such shareholders or beneficiaries) under
procedures prescribed by the Secretary.
``(i) Credits May Be Stripped.--Under regulations prescribed by the
Secretary--
``(1) In general.--There may be a separation (including at
issuance) of the ownership of a qualified tax credit bond and
the entitlement to the credit under this section with respect
to such bond. In case of any such separation, the credit under
this section shall be allowed to the person who on the credit
allowance date holds the instrument evidencing the entitlement
to the credit and not to the holder of the bond.
``(2) Certain rules to apply.--In the case of a separation
described in paragraph (1), the rules of section 1286 shall
apply to the qualified tax credit bond as if it were a stripped
bond and to the credit under this section as if it were a
stripped coupon.

``SEC. 54B. 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 60 percent thereof may be
allocated to qualified projects of public power
providers, and
``(B) not more than 40 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
subparagraph (2)(A) bears to the cost of all such
projects.
``(B) Allocation among cooperative electric
companies.--The Secretary shall make allocations of the
amount of the national new clean renewable energy bond
limitation described in paragraph (2)(B) among
qualified projects of cooperative electric companies 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 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) 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).
``(4) 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.
``(5) Qualified issuer.--The term `qualified issuer' means
a public power provider, a cooperative electric company, 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) Reporting.--Subsection (d) of section 6049 (relating to returns
regarding payments of interest) is amended by adding at the end the
following new paragraph:
``(9) Reporting of credit on qualified tax credit bonds.--
``(A) In general.--For purposes of subsection (a),
the term `interest' includes amounts includible in
gross income under section 54A and such amounts shall
be treated as paid on the credit allowance date (as
defined in section 54A(e)(1)).
``(B) Reporting to corporations, etc.--Except as
otherwise provided in regulations, in the case of any
interest described in subparagraph (A) of this
paragraph, subsection (b)(4) of this section shall be
applied without regard to subparagraphs (A), (H), (I),
(J), (K), and (L)(i).
``(C) Regulatory authority.--The Secretary may
prescribe such regulations as are necessary or
appropriate to carry out the purposes of this
paragraph, including regulations which require more
frequent or more detailed reporting.''.
(c) Conforming Amendments.--
(1) Sections 54(c)(2) and 1400N(l)(3)(B) are each amended
by striking ``subpart C'' and inserting ``subparts C and I''.
(2) Section 1397E(c)(2) is amended by striking ``subpart
H'' and inserting ``subparts H and I''.
(3) Section 6401(b)(1) is amended by striking ``and H'' and
inserting ``H, and I''.
(4) The heading of subpart H of part IV of subchapter A of
chapter 1 is amended by striking ``Certain Bonds'' and
inserting ``Clean Renewable Energy Bonds''.
(5) The table of subparts for part IV of subchapter A of
chapter 1 is amended by striking the item relating to subpart H
and inserting the following new items:

``subpart h. nonrefundable credit to holders of clean renewable energy
bonds.

``subpart i. qualified tax credit bonds.''.

(d) Effective Dates.--The amendments made by this section shall
apply to obligations issued after the date of the enactment of this
Act.

SEC. 105. EXTENSION AND MODIFICATION OF 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) (relating
to special rule for sales or dispositions to implement Federal
Energy Regulatory Commission or State electric restructuring
policy) 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. 106. EXTENSION AND MODIFICATION OF CREDIT FOR RESIDENTIAL ENERGY
EFFICIENT PROPERTY.

(a) Extension.--Section 25D(g) (relating to termination) 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) (relating to maximum
credit) 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) (relating to allowance of
credit) 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) (relating to maximum
credit) 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) (relating to
definitions) 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) (relating
to wind facility) 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) (relating to maximum expenditures) 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) (relating to allowance of
credit), 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) (relating to maximum
credit), 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) (relating to definitions), 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) (relating to maximum expenditures), 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.

TITLE II--CONSERVATION

Subtitle A--Transportation

PART 1--VEHICLES

SEC. 201. CREDIT FOR PLUG-IN HYBRID VEHICLES.

(a) In General.--Subpart B of part IV of subchapter A of chapter 1
(relating to other credits) is amended by adding at the end the
following new section:

``SEC. 30D. PLUG-IN HYBRID VEHICLES.

``(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 the credit amounts determined under subsection (b)
with respect to each qualified plug-in hybrid vehicle placed in service
by the taxpayer during the taxable year.
``(b) Per Vehicle Dollar Limitation.--
``(1) In general.--The amount determined under this
subsection with respect to any qualified plug-in hybrid vehicle
is the sum of the amounts determined under paragraphs (2) and
(3) with respect to such vehicle.
``(2) Base amount.--The amount determined under this
paragraph is $4,000.
``(3) Battery capacity.--In the case of vehicle which draws
propulsion energy from a battery with not less than 5 kilowatt
hours of capacity, the amount determined under this paragraph
is $200, plus $200 for each kilowatt hour of capacity in excess
of 5 kilowatt hours. The amount determined under this paragraph
shall not exceed $2,000.
``(c) 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.--
``(A) In general.--For purposes of this title, the
credit allowed under subsection (a) for any taxable
year (determined after application of paragraph (1))
shall be treated as a credit allowable under subpart A
for such taxable year.
``(B) 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
any taxable year (determined after application of
paragraph (1)) shall not exceed the excess of--
``(i) the sum of the regular tax liability
(as defined in section 26(b)) plus the tax
imposed by section 55, over
``(ii) the sum of the credits allowable
under subpart A (other than this section and
sections 23 and 25D) and section 27 for the
taxable year.
``(d) Qualified Plug-In Hybrid Vehicle.--For purposes of this
section--
``(1) In general.--The term `qualified plug-in hybrid
vehicle' means a motor vehicle (as defined in section
30(c)(2))--
``(A) the original use of which commences with the
taxpayer,
``(B) which is acquired for use or lease by the
taxpayer and not for resale,
``(C) which is made by a manufacturer,
``(D) which has a gross vehicle weight rating of
less than 14,000 pounds,
``(E) which has received a certificate of
conformity under the Clean Air Act and meets or exceeds
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,
``(F) which is propelled to a significant extent by
an electric motor which draws electricity from a
battery which--
``(i) has a capacity of not less than 4
kilowatt hours, and
``(ii) is capable of being recharged from
an external source of electricity, and
``(G) which either--
``(i) is also propelled to a significant
extent by other than an electric motor, or
``(ii) has a significant onboard source of
electricity which also recharges the battery
referred to in subparagraph (F).
``(2) Exception.--The term `qualified plug-in hybrid
vehicle' shall not include any vehicle which is not a passenger
automobile or light truck if such vehicle has a gross vehicle
weight rating of less than 8,500 pounds.
``(3) 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. 7521
et seq.).
``(4) Battery capacity.--The term `capacity' means, with
respect to any battery, the quantity of electricity which the
battery is capable of storing, expressed in kilowatt hours, as
measured from a 100 percent state of charge to a 0 percent
state of charge.
``(e) Limitation on Number of Qualified Plug-In Hybrid Vehicles
Eligible for Credit.--
``(1) In general.--In the case of a qualified plug-in
hybrid vehicle sold during the phaseout period, only the
applicable percentage of the credit otherwise allowable under
subsection (a) shall be allowed.
``(2) Phaseout period.--For purposes of this subsection,
the phaseout period is the period beginning with the second
calendar quarter following the calendar quarter which includes
the first date on which the number of qualified plug-in hybrid
vehicles manufactured by the manufacturer of the vehicle
referred to in paragraph (1) sold for use in the United States
after the date of the enactment of this section, is at least
60,000.
``(3) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage is--
``(A) 50 percent for the first 2 calendar quarters
of the phaseout period,
``(B) 25 percent for the 3d and 4th calendar
quarters of the phaseout period, and
``(C) 0 percent for each calendar quarter
thereafter.
``(4) Controlled groups.--Rules similar to the rules of
section 30B(f)(4) shall apply for purposes of this subsection.
``(f) Special Rules.--
``(1) 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 (determined without regard to
subsection (c)).
``(2) 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.
``(3) Property used outside united states, etc., not
qualified.--No credit shall be allowed 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.
``(4) Election not to take credit.--No credit shall be
allowed under subsection (a) for any vehicle if the taxpayer
elects to not have this section apply to such vehicle.
``(5) Property used by tax-exempt entity; interaction with
air quality and motor vehicle safety standards.--Rules similar
to the rules of paragraphs (6) and (10) of section 30B(h) shall
apply for purposes of this section.''.
(b) Plug-In Vehicles Not Treated as New Qualified Hybrid
Vehicles.--Section 30B(d)(3) is amended by adding at the end the
following new subparagraph:
``(D) Exclusion of plug-in vehicles.--Any vehicle
with respect to which a credit is allowable under
section 30D (determined without regard to subsection
(c) thereof) shall not be taken into account under this
section.''.
(c) Credit Made Part of General Business Credit.--Section 38(b) is
amended--
(1) by striking ``and'' each place it appears at the end of
any paragraph,
(2) by striking ``plus'' each place it appears at the end
of any paragraph,
(3) by striking the period at the end of paragraph (31) and
inserting ``, plus'', and
(4) by adding at the end the following new paragraph:
``(32) the portion of the plug-in hybrid vehicle credit to
which section 30D(c)(1) applies.''.
(d) Conforming Amendments.--
(1)(A) Section 24(b)(3)(B), as amended by this Act, is
amended by striking ``and 25D'' and inserting ``25D, and 30D''.
(B) Section 25(e)(1)(C)(ii) is amended by inserting
``30D,'' after ``25D,''.
(C) Section 25B(g)(2), as amended by this Act, is amended
by striking ``and 25D'' and inserting ``, 25D, and 30D''.
(D) Section 26(a)(1), as amended by this Act, is amended by
striking ``and 25D'' and inserting ``25D, and 30D''.
(E) Section 1400C(d)(2) is amended by striking ``and 25D''
and inserting ``25D, and 30D''.
(2) Section 1016(a) 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(f)(1).''.
(3) Section 6501(m) is amended by inserting ``30D(f)(4),''
after ``30C(e)(5),''.
(4) 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 hybrid vehicles.''.
(e) Treatment of Alternative Motor Vehicle Credit as a Personal
Credit.--
(1) In general.--Paragraph (2) of section 30B(g) is amended
to read as follows:
``(2) Personal credit.--The credit allowed under subsection
(a) for any taxable year (after application of paragraph (1))
shall be treated as a credit allowable under subpart A for such
taxable year.''.
(2) Conforming amendments.--
(A) Subparagraph (A) of section 30C(d)(2) is
amended by striking ``sections 27, 30, and 30B'' and
inserting ``sections 27 and 30''.
(B) Paragraph (3) of section 55(c) is amended by
striking ``30B(g)(2),''.
(f) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
taxable years beginning after December 31, 2008.
(2) Treatment of alternative motor vehicle credit as
personal credit.--The amendments made by subsection (e) shall
apply to taxable years beginning after December 31, 2007.
(g) Application of EGTRRA Sunset.--The amendment made by subsection
(d)(1)(A) shall be subject to title IX of the Economic Growth and Tax
Relief Reconciliation Act of 2001 in the same manner as the provision
of such Act to which such amendment relates.

SEC. 202. EXTENSION AND MODIFICATION OF ALTERNATIVE FUEL VEHICLE
REFUELING PROPERTY CREDIT.

(a) Increase in Credit Amount.--Section 30C (relating to
alternative fuel vehicle refueling property credit) 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) (relating
to termination) is amended by striking ``December 31, 2009'' and
inserting ``December 31, 2010''.
(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. 203. MODIFICATION OF LIMITATION ON AUTOMOBILE DEPRECIATION.

(a) In General.--Paragraph (5) of section 280F(d) (defining
passenger automobile) is amended to read as follows:
``(5) Passenger automobile.--
``(A) In general.--Except as provided in
subparagraph (B), the term `passenger automobile' means
any 4-wheeled vehicle--
``(i) which is primarily designed or which
can be used to carry passengers over public
streets, roads, or highways (except any vehicle
operated exclusively on a rail or rails), and
``(ii) which is rated at not more than
14,000 pounds gross vehicle weight.
``(B) Exceptions.--The term `passenger automobile'
shall not include--
``(i) any exempt-design vehicle, and
``(ii) any exempt-use vehicle.
``(C) Exempt-design vehicle.--The term `exempt-
design vehicle' means--
``(i) any vehicle which, by reason of its
nature or design, is not likely to be used more
than a de minimis amount for personal purposes,
and
``(ii) any vehicle--
``(I) which is designed to have a
seating capacity of more than 9 persons
behind the driver's seat,
``(II) which is equipped with a
cargo area of at least 5 feet in
interior length which is an open area
or is designed for use as an open area
but is enclosed by a cap and is not
readily accessible directly from the
passenger compartment, or
``(III) has an integral enclosure,
fully enclosing the driver compartment
and load carrying device, does not have
seating rearward of the driver's seat,
and has no body section protruding more
than 30 inches ahead of the leading
edge of the windshield.
``(D) Exempt-use vehicle.--The term `exempt-use
vehicle' means--
``(i) any ambulance, hearse, or combination
ambulance-hearse used by the taxpayer directly
in a trade or business,
``(ii) any vehicle used by the taxpayer
directly in the trade or business of
transporting persons or property for
compensation or hire, and
``(iii) any truck or van if substantially
all of the use of such vehicle by the taxpayer
is directly in--
``(I) a farming business (within
the meaning of section 263A(e)(4)),
``(II) the transportation of a
substantial amount of equipment,
supplies, or inventory, or
``(III) the moving or delivery of
property which requires substantial
cargo capacity.
``(E) Recapture.--In the case of any vehicle which
is not a passenger automobile by reason of being an
exempt-use vehicle, if such vehicle ceases to be an
exempt-use vehicle in any taxable year after the
taxable year in which such vehicle is placed in
service, a rule similar to the rule of subsection (b)
shall apply.''.
(b) Conforming Amendment.--Section 179(b) (relating to limitations)
is amended by striking paragraph (6).
(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.

PART 2--FUELS

SEC. 211. EXTENSION AND MODIFICATION OF CREDITS FOR BIODIESEL AND
RENEWABLE DIESEL.

(a) In General.--Sections 40A(g), 6426(c)(6), and 6427(e)(5)(B) are
each amended by striking ``December 31, 2008'' and inserting ``December
31, 2010''.
(b) Uniform Treatment of Diesel Produced From Biomass.--Paragraph
(3) of section 40A(f) is amended--
(1) by striking ``diesel fuel'' and inserting ``liquid
fuel'',
(2) by striking ``using a thermal depolymerization
process'', and
(3) by striking ``or D396'' in subparagraph (B) and
inserting ``or other equivalent standard approved by the
Secretary for fuels to be used in diesel-powered highway
vehicles''.
(c) Coproduction of Renewable Diesel 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))''.
(d) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
fuel produced, and sold or used, after December 31, 2008.
(2) Coproduction of renewable diesel with petroleum
feedstock.--The amendments made by subsection (c) shall apply
to fuel produced, and sold or used, after February 13, 2008.

SEC. 212. 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(h), 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 is amended by adding
at the end the following new subsection:
``(h) 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(h).''.
(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 December 31, 2008.
(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. 213. CREDIT FOR PRODUCTION OF CELLULOSIC ALCOHOL.

(a) In General.--Subsection (b) of section 40 is amended by
redesignating paragraph (5) as paragraph (6) and by inserting after
paragraph (4) the following new paragraph:
``(5) Cellulosic alcohol fuel producer credit.--
``(A) In general.--The cellulosic alcohol fuel
producer credit of any cellulosic alcohol fuel producer
for any taxable year is 50 cents for each gallon of
qualified cellulosic fuel production of such producer.
``(B) Qualified cellulosic fuel production.--For
purposes of this paragraph, the term `qualified
cellulosic fuel production' means any cellulosic
alcohol which is produced by a cellulosic alcohol fuel
producer, and which during the taxable year--
``(i) is sold by such producer to another
person--
``(I) for use by such other person
in the production of a qualified
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 such producer for
any purpose described in clause (i).
``(C) Cellulosic alcohol.--For purposes of this
paragraph, the term `cellulosic alcohol' means any
alcohol which--
``(i) is produced in the United States for
use as a fuel in the United States, and
``(ii) is derived from any lignocellulosic
or hemicellulosic matter that is available on a
renewable or recurring basis.
For purposes of this subparagraph, the term `United
States' includes any possession of the United States.
``(D) Cellulosic alcohol fuel producer.--For
purposes of this paragraph, the term `cellulosic
alcohol fuel producer' means any person who produces
cellulosic alcohol in a trade or business and is
registered with the Secretary as a cellulosic alcohol
fuel producer.
``(E) Additional distillation excluded.--The
qualified cellulosic fuel production of any producer
for any taxable year shall not include any alcohol
which is purchased by the producer and with respect to
which such producer increases the proof of the alcohol
by additional distillation.''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 40 is amended by striking
``plus'' at the end of paragraph (1), by striking ``plus'' at
the end of paragraph (2), by striking the period at the end of
paragraph (3) and inserting ``, plus'', and by adding at the
end the following new paragraph:
``(4) in the case of a cellulosic alcohol fuel producer,
the cellulosic alcohol fuel producer credit.''.
(2) Clause (ii) of section 40(d)(3)(C) is amended by
striking ``subsection (b)(4)(B)'' and inserting ``paragraph
(4)(B) or (5)(B) of subsection (b)''.
(c) Effective Date.--The amendments made by this section shall
apply to alcohol produced after December 31, 2008.

PART 3--OTHER TRANSPORTATION INCENTIVES

SEC. 221. EXTENSION OF TRANSPORTATION FRINGE BENEFIT TO BICYCLE
COMMUTERS.

(a) In General.--Paragraph (1) of section 132(f) (relating to
general rule for qualified transportation fringe) is amended by adding
at the end the following:
``(D) Any qualified bicycle commuting
reimbursement.''.
(b) Limitation on Exclusion.--Paragraph (2) of section 132(f) 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 new subparagraph:
``(C) the applicable annual limitation in the case
of any qualified bicycle commuting reimbursement.''.
(c) Definitions.--Paragraph (5) of section 132(f) (relating to
definitions) is amended by adding at the end the following:
``(F) Definitions related to bicycle commuting
reimbursement.--
``(i) Qualified bicycle commuting
reimbursement.--The term `qualified bicycle
commuting reimbursement' means, with respect to
any calendar year, any employer reimbursement
during the 15-month period beginning with the
first day of such calendar year for reasonable
expenses incurred by the employee during such
calendar year for the purchase of a bicycle and
bicycle improvements, repair, and storage, if
such bicycle is regularly used for travel
between the employee's residence and place of
employment.
``(ii) Applicable annual limitation.--The
term `applicable annual limitation' means, with
respect to any employee for any calendar year,
the product of $20 multiplied by the number of
qualified bicycle commuting months during such
year.
``(iii) Qualified bicycle commuting
month.--The term `qualified bicycle commuting
month' means, with respect to any employee, any
month during which such employee--
``(I) regularly uses the bicycle
for a substantial portion of the travel
between the employee's residence and
place of employment, and
``(II) does not receive any benefit
described in subparagraph (A), (B), or
(C) of paragraph (1).''.
(d) Constructive Receipt of Benefit.--Paragraph (4) of section
132(f) is amended by inserting ``(other than a qualified bicycle
commuting reimbursement)'' after ``qualified transportation fringe''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2008.

SEC. 222. RESTRUCTURING OF NEW YORK LIBERTY ZONE TAX CREDITS.

(a) In General.--Part I of subchapter Y of chapter 1 is amended by
redesignating section 1400L as section 1400K and by adding at the end
the following new section:

``SEC. 1400L. NEW YORK LIBERTY ZONE TAX CREDITS.

``(a) In General.--In the case of a New York Liberty Zone
governmental unit, there shall be allowed as a credit against any taxes
imposed for any payroll period by section 3402 for which such
governmental unit is liable under section 3403 an amount equal to so
much of the portion of the qualifying project expenditure amount
allocated under subsection (b)(3) to such governmental unit for the
calendar year as is allocated by such governmental unit to such period
under subsection (b)(4).
``(b) Qualifying Project Expenditure Amount.--For purposes of this
section--
``(1) In general.--The term `qualifying project expenditure
amount' means, with respect to any calendar year, the sum of--
``(A) the total expenditures paid or incurred
during such calendar year by all New York Liberty Zone
governmental units and the Port Authority of New York
and New Jersey for any portion of qualifying projects
located wholly within the City of New York, New York,
and
``(B) any such expenditures--
``(i) paid or incurred in any preceding
calendar year which begins after the date of
enactment of this section, and
``(ii) not previously allocated under
paragraph (3).
``(2) Qualifying project.--The term `qualifying project'
means any transportation infrastructure project, including
highways, mass transit systems, railroads, airports, ports, and
waterways, in or connecting with the New York Liberty Zone (as
defined in section 1400K(h)), which is designated as a
qualifying project under this section jointly by the Governor
of the State of New York and the Mayor of the City of New York,
New York.
``(3) General allocation.--
``(A) In general.--The Governor of the State of New
York and the Mayor of the City of New York, New York,
shall jointly allocate to each New York Liberty Zone
governmental unit the portion of the qualifying project
expenditure amount which may be taken into account by
such governmental unit under subsection (a) for any
calendar year in the credit period.
``(B) Aggregate limit.--The aggregate amount which
may be allocated under subparagraph (A) for all
calendar years in the credit period shall not exceed
$2,000,000,000.
``(C) Annual limit.--The aggregate amount which may
be allocated under subparagraph (A) for any calendar
year in the credit period shall not exceed the sum of--
``(i) $169,000,000, plus
``(ii) the aggregate amount authorized to
be allocated under this paragraph for all
preceding calendar years in the credit period
which was not so allocated.
``(D) Unallocated amounts at end of credit
period.--If, as of the close of the credit period, the
amount under subparagraph (B) exceeds the aggregate
amount allocated under subparagraph (A) for all
calendar years in the credit period, the Governor of
the State of New York and the Mayor of the City of New
York, New York, may jointly allocate to New York
Liberty Zone governmental units for any calendar year
in the 5-year period following the credit period an
amount equal to--
``(i) the lesser of--
``(I) such excess, or
``(II) the qualifying project
expenditure amount for such calendar
year, reduced by
``(ii) the aggregate amount allocated under
this subparagraph for all preceding calendar
years.
``(4) Allocation to payroll periods.--Each New York Liberty
Zone governmental unit which has been allocated a portion of
the qualifying project expenditure amount under paragraph (3)
for a calendar year may allocate such portion to payroll
periods beginning in such calendar year as such governmental
unit determines appropriate.
``(c) Carryover of Unused Allocations.--
``(1) In general.--Except as provided in paragraph (2), if
the amount allocated under subsection (b)(3) to a New York
Liberty Zone governmental unit for any calendar year exceeds
the aggregate taxes imposed by section 3402 for which such
governmental unit is liable under section 3403 for periods
beginning in such year, such excess shall be carried to the
succeeding calendar year and added to the allocation of such
governmental unit for such succeeding calendar year.
``(2) Reallocation.--If a New York Liberty Zone
governmental unit does not use an amount allocated to it under
subsection (b)(3) within the time prescribed by the Governor of
the State of New York and the Mayor of the City of New York,
New York, then such amount shall after such time be treated for
purposes of subsection (b)(3) in the same manner as if it had
never been allocated.
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Credit period.--The term `credit period' means the
12-year period beginning on January 1, 2008.
``(2) New york liberty zone governmental unit.--The term
`New York Liberty Zone governmental unit' means--
``(A) the State of New York,
``(B) the City of New York, New York, and
``(C) any agency or instrumentality of such State
or City.
``(3) Treatment of funds.--Any expenditure for a qualifying
project taken into account for purposes of the credit under
this section shall be considered State and local funds for the
purpose of any Federal program.
``(4) Treatment of credit amounts for purposes of
withholding taxes.--For purposes of this title, a New York
Liberty Zone governmental unit shall be treated as having paid
to the Secretary, on the day on which wages are paid to
employees, an amount equal to the amount of the credit allowed
to such entity under subsection (a) with respect to such wages,
but only if such governmental unit deducts and withholds wages
for such payroll period under section 3401 (relating to wage
withholding).
``(e) Reporting.--The Governor of the State of New York and the
Mayor of the City of New York, New York, shall jointly submit to the
Secretary an annual report--
``(1) which certifies--
``(A) the qualifying project expenditure amount for
the calendar year, and
``(B) the amount allocated to each New York Liberty
Zone governmental unit under subsection (b)(3) for the
calendar year, and
``(2) includes such other information as the Secretary may
require to carry out this section.
``(f) Guidance.--The Secretary may prescribe such guidance as may
be necessary or appropriate to ensure compliance with the purposes of
this section.''.
(b) Termination of Special Allowance and Expensing.--Subparagraph
(A) of section 1400K(b)(2), as redesignated by subsection (a), is
amended by striking the parenthetical in the flush language after
clause (v) thereof and inserting ``(in the case of nonresidential real
property and residential rental property, the date of the enactment of
the Renewable Energy and Energy Conservation Tax Act of 2008 or, if
acquired pursuant to a binding contract in effect on such enactment
date, December 31, 2009)''.
(c) Conforming Amendments.--
(1) Section 38(c)(3)(B) is amended by striking ``section
1400L(a)'' and inserting ``section 1400K(a)''.
(2) Section 168(k)(2)(D)(ii) is amended by striking
``section 1400L(c)(2)'' and inserting ``section 1400K(c)(2)''.
(3) The table of sections for part I of subchapter Y of
chapter 1 is amended by redesignating the item relating to
section 1400L as an item relating to section 1400K and by
inserting after such item the following new item:

``Sec. 1400L. New York Liberty Zone tax credits.''.
(d) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.

Subtitle B--Other Conservation Provisions

SEC. 231. QUALIFIED ENERGY CONSERVATION BONDS.

(a) In General.--Subpart I of part IV of subchapter A of chapter 1,
as added by section 104, is amended by adding at the end the following
new section:

``SEC. 54C. 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) 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 (d).
``(c) National Limitation on Amount of Bonds Designated.--There is
a national qualified energy conservation bond limitation of
$3,600,000,000.
``(d) Allocations.--
``(1) In general.--The limitation applicable under
subsection (c) 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.
``(e) 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.
``(f) 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.
``(g) 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 (d) 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 added by section
104, is amended to read as follows:
``(1) Qualified tax credit bond.--The term `qualified tax
credit bond' means--
``(A) a new clean renewable energy bond, or
``(B) a qualified energy conservation 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), as added by
section 104, 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 new clean renewable
energy bond, a purpose specified in section
54B(a)(1), and
``(ii) in the case of a qualified energy
conservation 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. 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. 232. EXTENSION AND MODIFICATION OF CREDIT FOR NONBUSINESS ENERGY
PROPERTY.

(a) Extension of Credit.--Section 25C(g) (relating to termination)
is amended by striking ``December 31, 2007'' and inserting ``December
31, 2009''.
(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) (relating to residential
energy property expenditures) 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) is amended
by striking subparagraph (C) and by redesignating subparagraphs
(D) and (E) as subparagraphs (C) and (D), 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. 233. EXTENSION OF ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

Subsection (h) of section 179D (relating to termination) is amended
by striking ``December 31, 2008'' and inserting ``December 31, 2013''.

SEC. 234. MODIFICATIONS OF ENERGY EFFICIENT APPLIANCE CREDIT FOR
APPLIANCES PRODUCED AFTER 2007.

(a) In General.--Subsection (b) of section 45M (relating to
applicable amount) 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 (relating to eligible production) is amended--
(A) by striking paragraph (2),
(B) by striking ``(1) In general'' and all that
follows through ``the eligible'' and inserting ``The
eligible'', and
(C) by moving the text of such subsection in line
with the subsection heading and redesignating
subparagraphs (A) and (B) as paragraphs (1) and (2),
respectively.
(2) Modification of base period.--Paragraph (2) of section
45M(c), as amended by paragraph (1) of this section, 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)
(relating to aggregate credit amount allowed) 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) (defining clothes
washer) is amended by inserting ``commercial'' before
``residential'' the second place it appears.
(3) Top-loading clothes washer.--Subsection (f) of section
45M (relating to definitions) 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) (relating to definitions), 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. 235. FIVE-YEAR APPLICABLE RECOVERY PERIOD FOR DEPRECIATION OF
QUALIFIED ENERGY MANAGEMENT DEVICES.

(a) In General.--Section 168(e)(3)(B) (relating to 5-year property)
is amended by striking ``and'' at the end of clause (v), by striking
the period at the end of clause (vi) and inserting ``, and'', and by
inserting after clause (vi) the following new clause:
``(vii) any qualified energy management
device.''.
(b) Definition of Qualified Energy Management Device.--Section
168(i) (relating to definitions and special rules) is amended by
inserting at the end the following new paragraph:
``(18) Qualified energy management device.--
``(A) In general.--The term `qualified energy
management device' means any energy management device
which is installed on real property of a customer of
the taxpayer and is placed in service by a taxpayer
who--
``(i) is a supplier of electric energy or a
provider of electric energy services, and
``(ii) provides all commercial and
residential customers of such supplier or
provider with net metering upon the request of
such customer.
``(B) Energy management device.--For purposes of
subparagraph (A), the term `energy management device'
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 energy management device in
support of time-based rates or other forms of
demand response, and
``(iii) provides data to such supplier or
provider so that the supplier or provider can
provide energy usage information to customers
electronically.
``(C) Net metering.--For purposes of subparagraph
(A), the term `net metering' means allowing customers a
credit for providing electricity to the supplier or
provider.''.
(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.

TITLE III--REVENUE PROVISIONS

SEC. 301. 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 for
Income Attributable to Domestic Production of Oil, Gas, or Primary
Products Thereof.--
(1) In general.--Subparagraph (B) of section 199(c)(4)
(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 major integrated
oil company (as defined in section
167(h)(5)(B)), the production, refining,
processing, transportation, or distribution of
oil, gas, or any primary product thereof during
any taxable year described in section
167(h)(5)(B).''.
(2) Primary product.--Section 199(c)(4)(B) is amended by
adding at the end the following flush sentence:
``For purposes of clause (iv), 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.--
(1) In general.--Section 199(d) 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
major integrated oil company (as defined in section
167(h)(5)(B))) 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) (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. 302. 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. 303. 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 3.00 percentage
points.

TITLE IV--OTHER PROVISIONS

Subtitle A--Studies

SEC. 401. 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. 402. COMPREHENSIVE STUDY OF BIOFUELS.

(a) Study.--The Secretary of the Treasury, in consultation with the
Secretary of Agriculture, the Secretary of Energy, and the
Administrator of the Environmental Protection Agency, shall enter into
an agreement with the National Academy of Sciences to produce an
analysis of current scientific findings to determine--
(1) current biofuels production, as well as projections for
future production,
(2) the maximum amount of biofuels production capable on
United States farmland,
(3) the domestic effects of a dramatic increase in biofuels
production on, for example--
(A) the price of fuel,
(B) the price of land in rural and suburban
communities,
(C) crop acreage and other land use,
(D) the environment, due to changes in crop
acreage, fertilizer use, runoff, water use, emissions
from vehicles utilizing biofuels, and other factors,
(E) the price of feed,
(F) the selling price of grain crops,
(G) exports and imports of grains,
(H) taxpayers, through cost or savings to commodity
crop payments, and
(I) the expansion of refinery capacity,
(4) the ability to convert corn ethanol plants for other
uses, such as cellulosic ethanol or biodiesel,
(5) a comparative analysis of corn ethanol versus other
biofuels and renewable energy sources, considering cost, energy
output, and ease of implementation, and
(6) the need for additional scientific inquiry, and
specific areas of interest for future research.
(b) Report.--The National Academy of Sciences shall submit an
initial report of the findings of the report required under subsection
(a) to the Congress not later than 3 months after the date of the
enactment of this Act, and a final report not later than 6 months after
such date of enactment.

Subtitle B--Application of Certain Labor Standards on Projects Financed
Under Tax Credit Bonds

SEC. 411. 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).

Passed the House of Representatives February 27, 2008.

Attest:

LORRAINE C. MILLER,

Clerk.