S. ll IN THE SENATE OF THE UNITED STATES A BILL

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1 TH CONGRESS D SESSION S. ll To amend the Internal Revenue Code of to provide incentives for clean energy manufacturing, to reduce emissions, to produce renewable energy, to promote conservation, and for other purposes. IN THE SENATE OF THE UNITED STATES llllllllll Mr. KERRY introduced the following bill; which was read twice and referred to the Committee on llllllllll A BILL To amend the Internal Revenue Code of to provide incentives for clean energy manufacturing, to reduce emissions, to produce renewable energy, to promote conservation, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION. SHORT TITLE, ETC. (a) SHORT TITLE. This Act may be cited as the Clean Energy Technology Leadership Act of 00. (b) REFERENCE. 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

2 section or other provision, the reference shall be consid- ered to be made to a section or other provision of the In- ternal Revenue Code of. (c) TABLE OF CONTENTS. The table of contents of this Act is as follows: Sec.. Short title, etc. TITLE I CLEAN ENERGY MANUFACTURING Sec. 0. Extension and modification of the qualifying advanced energy project credit. Sec. 0. Extension and modification of energy efficient appliance credit. Sec. 0. Enhanced deduction for production of advanced alternative energy technology. TITLE II RENEWABLE ENERGY Sec. 0. Elective payment for specified energy property. Sec. 0. Extension and expansion of new clean renewable energy bonds. Sec. 0. Increased research credit for energy research. TITLE III PROMOTING CONSERVATION Sec. 0. Extension of new energy efficient home credit. Sec. 0. Extension and modification of nonbusiness energy credit. Sec. 0. Energy efficient commercial buildings deduction. TITLE IV TRANSPORTATION Sec. 0. Credit for qualified natural gas motor vehicles. Sec. 0. Natural gas vehicle bonds. Sec. 0. Incentives for manufacturing facilities producing vehicles fueled by compressed or liquified natural gas. Sec. 0. Transportation fringe benefits. Sec. 0. Alternative fuel vehicle refueling property. TITLE V ALTERNATIVE FUELS Sec. 0. Extension of incentives for biodiesel and renewable diesel. Sec. 0. Inclusion of algae-based biofuel in definition of cellulosic biofuel. TITLE VI OTHER PROVISIONS Sec. 0. Report on the utilization of tax incentives.

3 0 0 TITLE I CLEAN ENERGY MANUFACTURING SEC. 0. EXTENSION AND MODIFICATION OF THE QUALI- FYING ADVANCED ENERGY PROJECT CREDIT. (a) CERTAIN PROJECTS ELIGIBLE FOR CREDIT WITHOUT LIMITATION. () IN GENERAL. Subsection (a) of section C is amended by striking an amount equal to and all that follows and inserting an amount equal to the sum of () 0 percent of the basis of the statutory advanced energy property placed in service by the taxpayer during such taxable year, plus () 0 percent of the qualified investment for such taxable year with respect to any qualifying advanced energy project of the taxpayer.. () STATUTORY ADVANCED ENERGY PROP- ERTY. Subsection (c) of section C is amended by adding at the end the following new paragraph: () STATUTORY ADVANCED ENERGY PROP- ERTY. (A) IN GENERAL. The term statutory advanced energy property means any eligible property used exclusively to manufacture or fabricate

4 (i) equipment which uses solar en- ergy to generate electricity, (ii) fuel cell power plants (as defined in section (c)()(c)), or (iii) systems for the electro-chemical storage of electricity (other than lead-acid batteries) for use (I) in electric or hybrid-electric motor vehicles, or 0 (II) in connection with electric grids. (B) TERMINATION. Such term shall not include any property for any period after De- cember, 0.. () DENIAL OF DOUBLE BENEFIT. Subsection (e) of section C is amended by adding at the end the following: Statutory advanced energy property shall not be taken into account in determining the qualified investment in any qualifying advanced en- 0 ergy project.. (b) EXTENSION AND MODIFICATION OF THE QUALI- FYING ADVANCED ENERGY PROJECT PROGRAM. () ADDITIONAL LIMITATION AMOUNT TO BE COMPETITIVELY ALLOCATED BY SECRETARY. Sub-

5 0 0 paragraph (B) of section C(d)() is amended to read as follows: (B) LIMITATION. The total amount of qualified investments which may be designated under such program shall not exceed the amount which will result in the total amount of credits allowed under such program being equal to the sum of the following amounts: (i) 00 LIMITATION $,00,000,000. (ii) 00 LIMITATION $,000,000,000.. AMOUNT. AMOUNT. () MANUFACTURING OF PROPERTY USED TO PRODUCE COMPOSITE UTILITY POLES. Clause (i) of section C(c)()(A) is amended by striking or at the end of subclause (VI), by redesignating subclause (VII) as subclause (VIII), and by inserting after subclause (VI) the following new subclause: (VII) utility poles or supports made from composite materials which are comprised of at least percent recycled materials and are fully recyclable,. () PREFERENCE IN SELECTION CRITERIA FOR MANUFACTURING. Paragraph () of section C(d)

6 is amended by striking and at the end of subpara- graph (A), by striking the period at the end of sub- paragraph (B) and inserting, and, and by adding at the end the following new subparagraph: (C) shall give the lowest priority to projects which merely assemble components.. (c) ELECTIVE DIRECT PAYMENT OF CREDIT. Chap- ter is amended by adding at the end the following new subchapter: 0 Subchapter C Direct Payment Provisions Sec.. Elective payment for qualifying advanced energy project credit. 0 SEC.. ELECTIVE PAYMENT FOR QUALIFYING AD- VANCED ENERGY PROJECT CREDIT. (a) IN GENERAL. Any person electing the application of this section with respect to any qualifying advanced energy property placed in service by such person during the taxable year shall be treated as making a payment against the tax imposed by subtitle A for the taxable year equal to percent of the credit which would (but for subsection (d)) be determined under section C with respect to such property for such taxable year. Such payment shall be treated as made on the later of the due date of the return of such tax or the date on which such return is filed.

7 0 0 (b) QUALIFYING ADVANCED ENERGY PROPERTY. For purposes of this section, the term qualifying advanced energy property means () statutory advanced energy property (as defined in section C(c)()), and () eligible property (as defined in section C(c)()) which is part of a qualifying advanced energy project (as defined in section C(c)()). (c) SPECIAL RULES FOR CERTAIN NON-TAX- PAYERS. () DENIAL OF PAYMENT. Subsection (a) shall not apply with respect to any property originally placed in service by (A) any governmental entity, (B) any organization described in section 0(c) or 0(a) and exempt from tax under section 0(a), or (C) any entity referred to in paragraph () of section (j). () EXCEPTION FOR PROPERTY USED IN UN- RELATED TRADE OR BUSINESS. Paragraph () shall not apply with respect to any property originally placed in service by an entity described in section (a)() if substantially all of the income de-

8 rived from such property by such entity is unrelated business taxable income (as defined in section ). 0 0 () SPECIAL RULES FOR PARTNERSHIPS AND S CORPORATIONS. In the case of property originally placed in service by a partnership or an S corporation (A) the election under subsection (a) may be made only by such partnership or S corporation, (B) such partnership or S corporation shall be treated as making the payment referred to in subsection (a) only to the extent of the proportionate share of such partnership or S corporation as is owned by persons who would be treated as making such payment if the property were originally placed in service by such persons, and (C) the return required to be made by such partnership or S corporation under section 0 or 0 (as the case may be) shall be treated as a return of tax for purposes of subsection (a). For purposes of subparagraph (B), rules similar to the rules of section (h)() (other than subparagraph (F) thereof) shall apply.

9 0 0 (d) COORDINATION WITH QUALIFYING ADVANCED ENERGY PROJECT CREDIT. tion () DENIAL OF DOUBLE BENEFIT. No credit shall be determined under section C with respect to any property with respect to which an election is made under this section for the taxable year in which such property is placed in service or any subsequent taxable year. PROGRAM () FULL CREDIT AMOUNT TO COUNT AGAINST LIMITATION. For purposes of admin- istering the qualifying advanced energy project program under subsection (d) of section C, the full amount of the credit with respect to which the payment under subsection (a) is determined shall be treated as allowed under such program. (e) SPECIAL RULES. For purposes of this sec- () APPLICATION OF RECAPTURE RULES, ETC. Except as otherwise provided by the Secretary (A) IN GENERAL. Except as otherwise provided in this paragraph, rules similar to the rules of section 0, and section 0 of the American Recovery and Reinvestment Act of 00, shall apply.

10 0 0 0 (B) EXCEPTION TO LIMITATION ON REAL ESTATE INVESTMENT TRUSTS, ETC. Para- graph () of section 0(d) shall not apply. (C) APPLICATION OF NORMALIZATION RULES. Paragraph () of section 0(d) shall not apply with respect to property placed in service by a person in the trade or business of furnishing or selling electrical energy if any law or regulation requires that not less than a certain amount of the electrical energy so furnished or sold by such person be derived from one or more renewable resources. () PROVISION OF INFORMATION. A person shall not be treated as having elected the application of this section unless the taxpayer provides such information as the Secretary (in consultation with the Secretary of Energy) may require for purposes of verifying the proper amount to be treated as a payment under subsection (a) and evaluating the effectiveness of this section. () EXCLUSION FROM GROSS INCOME. Any credit or refund allowed or made by reason of this section shall not be includible in gross income or alternative minimum taxable income..

11 (d) CONFORMING AMENDMENTS RELATED TO DI- 0 0 RECT PAYMENT. () Subparagraph (A) of section (b)()(a) is amended by inserting and subchapter C of chapter (including any payment treated as made under such subchapter) after. () Subparagraph (B) of section (c)() is amended (A) by striking the credits and inserting the sum of (i) the credits, (B) by striking the period at the end of clause (i) thereof (as amended by this paragraph) and inserting, plus, and (C) by adding at the end the following new clause: (ii) the payments treated as made under subchapter C of chapter.. () Paragraph () of section (f) is amended (A) by striking the credits and inserting the sum of (A) the credits,

12 0 0 (B) by striking the period at the end of subparagraph (A) thereof (as amended by this paragraph) and inserting, and, and (C) by adding at the end the following new subparagraph: (B) the payments treated as made under subchapter C of chapter.. () Subparagraph (B) of section (g)() is amended (A) by striking the credits and inserting the sum of (i) the credits, (B) by striking the period at the end of clause (i) thereof (as amended by this paragraph) and inserting, plus, and (C) by adding at the end the following new clause: (ii) the payments treated as made under subchapter C of chapter.. () Paragraph () of section (b) of title, United States Code, is amended by inserting, or from the provisions of subchapter C of chapter of such Code before the period at the end.

13 () The table of subchapters for chapter is amended by adding at the end the following new item: SUBCHAPTER C. DIRECT PAYMENT PROVISIONS (e) OTHER CONFORMING AMENDMENTS. () Paragraph () of section C(b) is amended to read as follows: () LIMITATION. The amount which is treated as a qualified investment for all taxable years with respect to any qualifying advanced manufacturing project shall not exceed the amount designated by the Secretary under subsection (d).. () Subparagraph (A) of section C(c)() is amended by inserting in the case of a qualifying advanced energy project, before which is necessary. () Subparagraph (A) of section C(d)() is amended (A) by striking during the -year period and inserting during the (i) in the case of an allocation from the limitation described in paragraph ()(B)(i), the -year period, (B) by striking the period at the end and inserting, or, and

14 0 0 (C) by adding at the end the following new clause: (ii) in the case of an allocation from the limitation described in paragraph ()(B)(ii), the -year period beginning on the date of the enactment of this clause.. () Clause (v) of section (a)()(c) is amended by inserting which is statutory advanced energy property (as defined in section C(c)()) or after the basis of any property. (f) EFFECTIVE DATE. () IN GENERAL. Except as provided in paragraph (), the amendments made by this section shall apply to periods after the date of the enactment of this Act, under rules similar to the rules of section (m) of the Internal Revenue Code of (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 0). () DIRECT PAYMENT PROVISIONS. The amendments made by subsections (c) and (d) shall apply to property placed in service after the date of the enactment of this Act.

15 0 0 SEC. 0. EXTENSION AND MODIFICATION OF ENERGY EF- FICIENT APPLIANCE CREDIT. (a) DISHWASHERS. Paragraph () of section M(b) is amended by striking and at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting a comma, and by adding at the end the following new subparagraphs: (C) $ in the case of a dishwasher which is manufactured in calendar year 0 and which uses no more than 0 kilowatt hours per year and.0 gallons per cycle (. gallons per cycle for dishwashers designed for greater than place settings), (D) $0 in the case of a dishwasher which is manufactured in calendar year 0, 0, or 0 and which uses no more than kilowatt hours per year and. gallons per cycle (. gallons per cycle for dishwashers designed for greater than place settings), and (E) $ in the case of a dishwasher which is manufactured in calendar year 0, 0, or 0 and which uses no more than 0 kilowatt hours per year and gallons per cycle (. gallons per cycle for dishwashers designed for greater than place settings)..

16 (b) CLOTHES WASHERS. Paragraph () of section M(b) is amended by striking and at the end of sub- paragraph (C), by striking the period at the end of sub- paragraph (D) and inserting a comma, and by adding at the end the following new subparagraphs: (E) $ in the case of a top-loading clothes washer manufactured in calendar year 0 which meets or exceeds a. modified en- ergy factor and does not exceed a. water 0 consumption factor, and (F) $ in the case of a clothes washer manufactured in calendar year 0, 0, or 0 (i) which is a top-loading clothes washer and which meets or exceeds a. modified energy factor and does not exceed a. water consumption factor, or (ii) which is a front-loading clothes washer and which meets or exceeds a. 0 modified energy factor and does not exceed a. water consumption factor.. (c) REFRIGERATORS. Paragraph () of section M(b) is amended by striking and at the end of sub- paragraph (C), by striking the period at the end of sub-

17 paragraph (D) and inserting a comma, and by adding at the end the following new subparagraphs: (E) $0 in the case of a refrigerator manufactured in calendar year 0, 0, or 0 which consumes at least 0 percent less energy than the 00 energy conservation standards, and (F) $00 in the case of a refrigerator manufactured in calendar year 0, 0, or 0 0 which consumes at least percent less energy than the 00 energy conservation standards.. 0 (d) REBASING OF LIMITATIONS. () IN GENERAL. Paragraph () of section M(e) is amended by striking December, 00 and inserting December, 00. () EXCEPTION FOR CERTAIN REFRIGERATORS AND CLOTHES WASHERS. Paragraph () of section M(e) is amended (A) by striking subsection (b)()(d) and inserting subsection (b)()(f), and (B) by striking subsection (b)()(d) and inserting subsection (b)()(f).

18 () GROSS RECEIPTS LIMITATION. Paragraph () of section M(e) is amended by striking per- cent and inserting percent. 0 0 (e) EFFECTIVE DATE. () IN GENERAL. Except as provided in paragraph (), the amendments made by this section shall apply to appliances produced after December, 00. () LIMITATIONS. The amendments made by subsection (d) shall apply to taxable years beginning after December, 00. SEC. 0. ENHANCED DEDUCTION FOR PRODUCTION OF ADVANCED ALTERNATIVE ENERGY TECH- NOLOGY. (a) IN GENERAL. Section is amended by adding at the end the following new subsection: (e) ENHANCED DEDUCTION FOR MANUFACTURERS OF ALTERNATIVE ENERGY PRODUCTS. () IN GENERAL. In the case of a taxpayer with domestic alternative energy production gross receipts with respect to any taxable year beginning after December, 00, and before January, 0 (A) this section shall be applied separately with respect to qualified production ac-

19 0 0 tivities income attributable to such domestic alternative energy production gross receipts and qualified production activities income attributable to other domestic production gross receipts, and (B) in applying this section to qualified production activities income attributable to such domestic alternative energy production gross receipts (i) subsection (a)() shall be applied by substituting percent for percent, and (ii) subsection (b)()(b) shall be applied by substituting domestic alternative energy production gross receipts for domestic production gross receipts. () DOMESTIC ALTERNATIVE ENERGY PRO- DUCTION GROSS RECEIPTS. For purposes of this subsection, the term domestic alternative energy production gross receipts means the gross receipts of the taxpayer derived from the manufacturing of qualifying production property which is (A) described in clause (i) of section C(c)()(A),

20 0 0 MISSION 0 (B) qualified high efficiency transmission property, or (C) qualified advanced electric transmission property. () QUALIFIED HIGH EFFICIENCY TRANS- PROPERTY. For purposes of this sub- section, the term qualified high efficiency transmission property means any high voltage overhead electric transmission line, related substation, or other integrated facility that (A) utilizes advanced conductor core technology that has been determined by the Secretary of Energy as (i) reasonably likely to become commercially viable not later than the date which is 0 years after the date of the enactment of this subsection, (ii) is suitable for use on transmission lines up to kv, and (iii) exhibits power losses at least 0 percent lower than that of transmission lines using conventional ACSR conductors, (B) has been determined by an appropriate energy regulatory body, upon application,

21 0 0 MISSION to be in the public interest and thereby eligible for inclusion in regulated rates, and (C) can be located safely and economically in a right of way not to exceed that used by conventional ACSR conductors. () QUALIFIED ADVANCED ELECTRIC TRANS- PROPERTY. For purposes of this sub- section, the term qualified advanced electric transmission property means any high voltage electric transmission cable, related substation, converter station, or other integrated facility that (A) utilizes advanced ultra low resistance superconductive material or other advanced technology that has been determined by the Secretary of Energy as (i) reasonably likely to become commercially viable not later than the date which is 0 years after the date of the enactment of this subsection, (ii) capable of reliably transmitting at least gigawatts of high-voltage electric energy for distances greater than 00 miles with energy losses not exceeding percent of the total power transported, and

22 (iii) not creating an electromagnetic field, (B) has been determined by an appro- priate energy regulatory body, upon application, to be in the public interest and thereby eligible for inclusion in regulated rates, and (C) can be located safely and economi- cally in a permanent underground right of way not to exceed feet in width. 0 () RELATED PERSONS. Rules similar to the rules of subsection (c)() shall apply for purposes of this subsection.. (b) REGULATIONS. Not later than 0 days after the date of the enactment of this Act, the Secretary of the Treasury (or the Secretary s delegate) shall issue regu- lations with respect to a process for determining whether property is described in section (e)() of the Internal Revenue Code of for purposes of the deduction under section of such Code. 0 (c) EFFECTIVE DATE. The amendment made by subsection (a) shall apply to taxable years beginning after December, 00.

23 0 0 TITLE II RENEWABLE ENERGY SEC. 0. ELECTIVE PAYMENT FOR SPECIFIED ENERGY PROPERTY. (a) ELECTIVE PAYMENTS. () IN GENERAL. Subchapter C of chapter, as added by section 0, is amended by adding at the end the following new section: SEC.. ELECTIVE PAYMENT FOR SPECIFIED ENERGY PROPERTY. (a) IN GENERAL. Any person electing the application of this section with respect to any specified energy property originally placed in service by such person during the taxable year shall be treated as making a payment against the tax imposed by subtitle A for the taxable year equal to the applicable percentage of the basis of such property. Such payment shall be treated as made on the later of the due date of the return of such tax or the date on which such return is filed. (b) APPLICABLE PERCENTAGE. For purposes of this section, the term applicable percentage means () 0 percent in the case of any property described in paragraph ()(A)(i) or () of section (a), and () 0 percent in the case of any other property.

24 (c) DOLLAR LIMITATIONS. In the case of property described in paragraph (), (), or () of section (c), the payment otherwise treated as made under subsection (a) with respect to such property shall not exceed the limi- tation applicable to such property under such paragraph. (d) SPECIFIED ENERGY PROPERTY. For purposes of this section () IN GENERAL. The term specified energy property means energy property (within the mean- 0 ing of section ) which (A) is originally placed in service before January, 0, or (B) is originally placed in service on or after such date and before the credit termi- nation date with respect to such property, but only if the construction of such property began before January, 0. () CREDIT TERMINATION DATE. The term credit termination date means 0 (A) in the case of any energy property which is part of a facility described in para- graph () of section (d), January, 0, (B) in the case of any energy property which is part of a facility described in para-

25 graph (), (), (), (), (), (), or () of sec- tion (d), January, 0, and (C) in the case of any energy property de- scribed in section (a)(), January, 0. In the case of any property which is described in subparagraph (C) and also in another subparagraph of this paragraph, subparagraph (C) shall apply with respect to such property. (e) COORDINATION WITH PRODUCTION AND IN- 0 VESTMENT CREDITS. In the case of any property with respect to which an election is made under this section 0 MENT () DENIAL OF PRODUCTION AND INVEST- CREDITS. No credit shall be determined under section or with respect to such property for the taxable year in which such property is originally placed in service or any subsequent taxable year. () REDUCTION OF PAYMENT BY PROGRESS EXPENDITURES ALREADY TAKEN INTO ACCOUNT. The amount of the payment treated as made under subsection (a) with respect to such property shall be reduced by the aggregate amount of credits determined under section with respect to such property for all taxable years preceding the taxable year in which such property is originally placed in service.

26 0 0 (f) SPECIAL RULES FOR CERTAIN NON-TAX- PAYERS. () DENIAL OF PAYMENT. Subsection (a) shall not apply with respect to any property originally placed in service by (A) any governmental entity other than a governmental unit which is a State utility with a service obligation (as such terms are defined in section of the Federal Power Act), or (B) any organization described in section 0(c) (other than a mutual or cooperative electric company described in section 0(c)()) or 0(a) and exempt from tax under section 0(a). () EXCEPTION FOR PROPERTY USED IN UN- RELATED TRADE OR BUSINESS. Paragraph () shall not apply with respect to any property originally placed in service by an entity described in section (a)() if substantially all of the income derived from such property by such entity is unrelated business taxable income (as defined in section ). () SPECIAL RULES FOR PARTNERSHIPS AND S CORPORATIONS. In the case of property originally placed in service by a partnership or an S corporation

27 (A) the election under subsection (a) may be made only by such partnership or S corpora- tion, (B) such partnership or S corporation shall be treated as making the payment referred to in subsection (a) only to the extent of the proportionate share of such partnership or S corporation as is owned by persons who would be treated as making such payment if the prop- 0 erty were originally placed in service by such persons, and (C) the return required to be made by such partnership or S corporation under section 0 or 0 (as the case may be) shall be treated as a return of tax for purposes of sub- section (a). For purposes of subparagraph (B), rules similar to the rules of section (h)() (other than subparagraph (F) thereof) shall apply. For purposes of applying such rules, 0 the term tax-exempt entity shall not include any entity which is a governmental unit which is a State utility with a service obligation (as such terms are defined in section of the Federal Power Act) or which is a mutual or cooperative electric company described in section 0(c)().

28 0 0 (g) OTHER DEFINITIONS AND SPECIAL RULES. For purposes of this section () OTHER DEFINITIONS. Terms used in this section which are also used in section or shall have the same meanings for purposes of this section as when used in such sections. () APPLICATION OF CERTAIN RULES. Rules similar to the rules of subsection (e) of section shall apply for purposes of this section. () EXCEPTION FOR CERTAIN PROJECTS. Subsection (a) shall not apply to any governmental unit or cooperative electric company (as defined in section (j)()) with respect to any specified energy property which is described in section (a)()(d) if such entity has issued any bond (A) which is designated as a clean renewable energy bond under section of the Internal Revenue Code of or as a new clean renewable energy bond under section C of such Code, and (B) the proceeds of which are used for expenditures in connection with the same qualified facility with respect to which such specified energy property is a part.

29 0 () COORDINATION WITH GRANT PROGRAM. If a grant under section 0 of the American Recovery and Reinvestment Tax Act of 00 is made with respect to any specified energy property (A) no election may be made under subsection (a) with respect to such property on or after the date of such grant, and (B) if such grant is made after such election, such property shall be treated as having ceased to be specified energy property immediately after such property was originally placed in service.. () CLERICAL AMENDMENT. The table of sections for subchapter C of chapter, as added by section 0, is amended by adding at the end the following new item: Sec.. Elective payment for specified energy property.. 0 (b) TREATMENT OF GRANTS FOR COOPERATIVE ELECTRIC COMPANIES. Section 0(c)() is amended by adding at the end the following new subparagraph: (I) In the case of a mutual or cooperative electric company described in this paragraph or an organization described in section (a)()(c), subparagraph (A) shall be applied without taking into account any payment made by reason of section..

30 0 0 0 (c) TECHNICAL AMENDMENTS. () Paragraphs () and () of section 0(a) of the American Recovery and Reinvestment Tax Act of 00 are each amended by striking is placed in service and inserting is originally placed in service by such person. () Paragraph () of section 0(d) of such Act is amended (A) by striking (within the meaning of section of such Code), and (B) by inserting before the period at the end the following: which would (but for section (d)() of such Code) be eligible for credit under section of such Code (determined without regard to subsection (a)()(b) thereof). () Subsection (f) of section 0 of such Act is amended (A) by striking the second sentence and inserting the following: In applying such rules, any increase in tax under chapter of such Code by reason of the property being disposed of (or otherwise ceasing to be specified energy property) shall be imposed on the person to whom the grant was made.,

31 0 0 and (B) by striking In making grants under and inserting the following: () IN GENERAL. In making grants under, (C) by adding at the end following new paragraph: () SPECIAL RULES. (A) RECAPTURE OF EXCESSIVE GRANT AMOUNTS. If the amount of a grant made under this section exceeds the amount allowable as a grant under this section, such excess shall be recaptured under paragraph () as if the property to which such grant relates were disposed of immediately after such grant was made. (B) GRANT INFORMATION NOT TREATED AS RETURN INFORMATION. For purposes of section 0 of the Internal Revenue Code of, in no event shall any of the following be treated as return information: (i) The amount of a grant made under subsection (a). (ii) The identity of the person to whom the grant was made.

32 0 0 (iii) A description of the property with respect to which the grant was made. (iv) The fact and amount of any recapture. (v) The content of any report required by the Secretary of the Treasury to be filed in connection with the grant.. () Subsection (g) of section 0 of such Act is amended (A) by redesignating paragraphs () through () as subparagraphs (A) through (D), respectively, (B) by moving such subparagraphs (as so redesignated) ems to the right, (C) by striking paragraph (), (), or () in subparagraph (D) (as so redesignated) and inserting subparagraphs (A), (B), or (C), (D) by striking The Secretary and inserting the following: () IN GENERAL. Except as provided in paragraph (), the Secretary, and (E) by adding at the end the following new paragraph: () EXCEPTION WHERE PROPERTY USED IN UNRELATED TRADE OR BUSINESS.

33 0 0 (A) IN GENERAL. Paragraph () shall not apply to any person or entity described therein to the extent the grant is with respect to unrelated trade or business property. (B) UNRELATED TRADE OR BUSINESS PROPERTY. For purposes of this paragraph, the term unrelated trade or business property means any property with respect to which substantially all of the income derived therefrom by an organization described in section (a)() of the Internal Revenue Code of is subject to tax under section of such Code. (C) INFORMATION WITH RESPECT TO PASS-THRUS. In the case of a partnership or other pass-thru entity, partners or other holders of an equity or profits interest must provide to such partnership or entity such information as the Secretary may require to carry out the purposes of this subsection.. (d) EFFECTIVE DATE. () IN GENERAL. Except as provided in paragraph (), the amendments made by this section shall apply to property originally placed in service after the date of the enactment of this Act.

34 () TECHNICAL AMENDMENTS. The amend- ments made by subsection (c) shall take effect as if included in section 0 of the American Recovery and Reinvestment Tax Act of SEC. 0. EXTENSION AND EXPANSION OF NEW CLEAN RE- NEWABLE ENERGY BONDS. (a) INCREASED LIMITATION ON ISSUANCE OF NEW CLEAN RENEWABLE ENERGY BONDS. () IN GENERAL. Subsection (c) of section C is amended by adding at the end the following new paragraph: () 00 ADDITIONAL LIMITATION. The national new clean renewable bond limitation shall be increased by $,00,000,000. Such increase shall be allocated by the Secretary as provided in paragraph (), except that (A) 0 percent thereof shall be allocated to qualified projects of public power providers, and (B) 0 percent thereof shall be allocated to qualified projects of cooperative electric companies.. () CONFORMING AMENDMENT. Paragraph () of section C(c) is amended by striking ADDI-

35 TIONAL in the heading thereof and inserting ADDITIONAL. (b) ENERGY STORAGE SYSTEMS AND BIOGAS PROP- ERTY MADE ELIGIBLE FOR FINANCING. Paragraph () of section C(d) is amended by inserting or an energy storage system used in connection with electric grids to support the use of intermittent sources of renewable energy before owned by. (c) EFFECTIVE DATE. The amendments made by this subsection shall apply to obligations issued after the date of the enactment of this Act. SEC. 0. INCREASED RESEARCH CREDIT FOR ENERGY RE- SEARCH. (a) IN GENERAL. Section is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection: (h) ENERGY RESEARCH CREDIT. In the case of any taxable year beginning in 0 or 0 () IN GENERAL. The amounts determined under paragraphs () and () of subsection (a) shall each be increased by 0 percent of the qualified energy research expenses for the taxable year. () QUALIFIED ENERGY RESEARCH EX- PENSES. For purposes of this subsection

36 0 0 (A) IN GENERAL. The term qualified energy research expenses means so much of the taxpayer s qualified research expenses as are related to the fields of fuel cells and battery technology, renewable energy and renewable fuels, energy conservation technology, efficient transmission and distribution of electricity, and carbon capture and sequestration. (B) COORDINATION WITH QUALIFYING ADVANCED ENERGY PROJECT CREDIT. Such term shall not include expenditures taken into account in determining the amount of the credit under section or C. () COORDINATION WITH OTHER RESEARCH CREDITS. (A) IN GENERAL. The amount of qualified energy research expenses taken into account under subsection (a)()(a) shall not exceed the base amount. (B) ALTERNATIVE SIMPLIFIED CREDIT. For purposes of subsection (c)(), the amount of qualified energy research expenses taken into account for the taxable year for which the credit is being determined shall not exceed

37 0 0 (i) in the case of subsection (c)()(a), 0 percent of the average qualified research expenses for the taxable years preceding the taxable year for which the credit is being determined, and (ii) in the case of subsection (c)()(b)(ii), zero. (C) BASIC RESEARCH AND ENERGY RE- SEARCH CONSORTIUM PAYMENTS. Any amount taken into account under paragraph () shall not be taken into account under paragraph () or () of subsection (a).. (b) EXTENSION OF CREDIT. () IN GENERAL. Subparagraph (B) of section (h)() is amended by striking December, 00 and inserting December, 0. () CONFORMING AMENDMENT. Subparagraph (D) of section C(b)() is amended by striking December, 00 and inserting December, 0. (c) EFFECTIVE DATES. () INCREASED RESEARCH CREDIT. The amendments made by subsection (a) shall apply to taxable years beginning after December, 00.

38 0 0 () EXTENSION. The amendments made by subsection (b) shall apply to amounts paid or incurred after December, 00. TITLE III PROMOTING CONSERVATION SEC. 0. EXTENSION OF NEW ENERGY EFFICIENT HOME CREDIT. (a) IN GENERAL. Section L(g) is amended by striking December, 00 and inserting December, 0. (b) EFFECTIVE DATE. The amendment made by this section shall apply to qualified new efficient energy homes acquired after December, 00, in taxable years ending after such date. SEC. 0. EXTENSION AND MODIFICATION OF NONBUSI- NESS ENERGY CREDIT. (a) EXTENSION. () IN GENERAL. Section C(g)() is amended by striking December, 00 and inserting December, 0. () LIMITATION. Section C(b) is amended by striking 00 and 00 and inserting 00, 00, 0, and 0. (b) MODIFICATION OF STANDARDS FOR WINDOWS, DOORS, AND SKYLIGHTS. Paragraph () of section

39 C(c) is amended by striking unless and all that fol- lows and inserting unless (A) in the case of any component placed in service after the date which is 0 days after the date of the enactment of the Clean Energy Technology Leadership Act of 00, such com- ponent meets the criteria for such components established by the 00 Energy Star Program Requirements for Residential Windows, Doors, 0 and Skylights, Version.0 (or any subsequent version of such requirements which is in effect after January, 00), (B) in the case of any component placed in service after the date of the enactment of the Clean Energy Technology Leadership Act of 00 and on or before the date which is 0 days after such date, such component meets the criteria described in subparagraph (A) or is equal to or below a U factor of 0.0 and SHGC 0 of 0.0, and (C) in the case of any component which is a garage door, such component is equal to or below a U factor of 0.0 and SHGC of 0.0..

40 0 (c) EFFECTIVE DATE. The amendments made by this section shall take effect on the date of the enactment of this Act. 0 0 SEC. 0. ENERGY EFFICIENT COMMERCIAL BUILDINGS DE- DUCTION. (a) CERTIFIED HISTORIC STRUCTURES. Section D is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection: (g) SPECIAL RULES FOR CERTIFIED HISTORIC STRUCTURES. In the case of energy efficient commercial building property installed on or in a certified historic structure (as defined in section (c)()) in connection with a certified rehabilitation (as defined in section (c)()(c)) () subsection (c)()(d) shall be applied by substituting 0 percent for 0 percent, () subsection (b)()(a) shall be applied by substituting $.00 for $.0, () subparagraphs (A) and (C)(i) of subsection (d)() shall be applied by substituting $.00 for $.0 and the substitutions described in such subparagraphs shall be made without regard to the substitution described in paragraph (), and

41 () the amount of any credit under section with respect to such property shall be determined without regard to any reduction in the basis of such property under subsection (e).. (b) ENERGY EFFICIENT ROOFS. Paragraph () of section D(d) is amended by adding at the end the fol- lowing new subparagraph: 0 0 (C) SPECIAL RULE FOR ENERGY EFFI- CIENT ROOFS. (i) IN GENERAL. If (I) the building envelope is not treated as meeting the requirements of subsection (c)()(d) under subparagraph (A) of this paragraph, but (II) the roof exceeds the minimum requirements of Standard by 0 percent or more, then the requirement of subsection (c)()(d) shall be treated as met with respect to the roof, and the deduction under subsection (a) shall be allowed with respect to energy efficient commercial building property installed as part of such roof, except that subsection (b) shall be applied to

42 0 such property by substituting the applicable percentage of $.0 for $.0. (ii) APPLICABLE PERCENTAGE. For purposes of this subparagraph, the term applicable percentage means the ratio (expressed as a percentage) of (I) the square footage of the roof, over (II) the square footage of the building envelope.. (c) EFFECTIVE DATE. The amendment made by 0 this section shall apply to property placed in service after the date of the enactment of this Act. TITLE IV TRANSPORTATION SEC. 0. CREDIT FOR QUALIFIED NATURAL GAS MOTOR VEHICLES. (a) IN GENERAL. () IN GENERAL. Subsection (e) of section 0B (relating to new qualified alternative fuel motor vehicle credit) is amended by adding at the end the following new paragraphs: () SPECIAL RULES FOR QUALIFIED NATURAL GAS MOTOR VEHICLES. (A) IN GENERAL. In the case of a qualified natural gas motor vehicle

43 0 0 (i) such motor vehicle shall be treated as a new qualified alternative fuel motor vehicle under this subsection, (ii) paragraph () shall be applied by multiplying each of the dollar amounts contained in such paragraph by, and (iii) the credit allowed under this subsection shall be transferrable as provided in subparagraph (B). (B) TRANSFERABILITY OF CREDIT. (i) IN GENERAL. A taxpayer who places in service qualified natural gas motor vehicle may transfer the credit allowed under this subsection with respect to such vehicle through an assignment to the seller, the manufacturer, or the lessee of such vehicle. Such transfer may be revoked only with the consent of the Secretary. (ii) REGULATIONS. The Secretary shall prescribe such regulations as necessary to ensure that any credit transferred under clause (i) is claimed once and not reassigned by such other person. () QUALIFIED NATURAL GAS MOTOR VEHI- CLE.

44 0 0 (A) IN GENERAL. For purposes of this subsection, the term qualified natural gas motor vehicle means any motor vehicle (i) which is described in subparagraph (B), (C), or (D), (ii) the original use of which commences with the taxpayer, and (iii) which is acquired by the taxpayer for use or lease, but not for resale. (B) HEAVY DUTY VEHICLES. A motor vehicle is described in this subparagraph if such motor vehicle (i) is made by a manufacturer, (ii) has a gross vehicle weight rating of more than,00 pounds, and (iii) is (I) only capable of operating on compressed or liquified natural gas, or (II) capable of operating for more than miles on fueling of compressed or liquified natural gas and is capable of operating on gasoline or diesel fuel.

45 0 0 (C) LIGHT AND MEDIUM DUTY VEHI- CLES. A motor vehicle is described in this subparagraph if such motor vehicle (i) is made by a manufacturer, (ii) has a gross vehicle weight rating of not more,00 pounds, (iii) is (I) only capable of operating on compressed or liquified natural gas, or (II) capable of operating for more than miles on fueling of compressed or liquified natural gas and is capable of operating on gasoline or diesel fuel, (iv) is of a character subject to depreciation, and (v) is acquired by a taxpayer who (I) owns and operates not less than 0 motor vehicles in the course of a trade or business at the time of the acquisition, and (II) has placed in service more than motor vehicles described in clauses (i) through (iv) or described in

46 0 0 subparagraph (D)(iii) after the date of the enactment of this paragraph. (D) CONVERTED OR REPOWERED VEHI- CLES. (i) IN GENERAL. A motor vehicle is described in this subparagraph if such motor vehicle is a motor vehicle described in clause (ii) or clause (iii) which is converted or repowered so that it (I) is only capable of operating on compressed or liquified natural gas, or (II) is capable of operating for more than miles on fueling of compressed or liquified natural gas and is capable of operating on gasoline or diesel fuel, is capable of operating on compressed or liquefied natural gas. (ii) HEAVY DUTY VEHICLES. A motor vehicle is described in this clause if such motor vehicle (I) has a gross vehicle weight rating of more than,00 pounds, and

47 0 0 (II) was not capable of operating on compressed or liquified natural gas before the date of such conversion or repower. (iii) LIGHT AND MEDIUM DUTY VE- HICLES. A motor vehicle is described in this clause if such motor vehicle (I) has a gross vehicle weight rating of not more,00 pounds, (II) was not capable of operating on compressed or liquified natural gas before the date of such conversion or repower, (III) is of a character subject to depreciation, (IV) is acquired by a taxpayer who owns and operates not less than 0 motor vehicles in the course of a trade or business at the time of the acquisition, and (V) is acquired by a taxpayer who has placed in service more than motor vehicles described in subclauses (I) through (III) or described in sub-

48 0 0 paragraph (C) after the date of the enactment of this paragraph. (iv) SPECIAL RULES. (I) TREATMENT AS NEW. For purposes of this subsection, the original use of any motor vehicle described in clause (i) shall be treated as beginning with the first use after the date of the conversion or repower. (II) RULE OF CONSTRUC- TION. In the case of a used vehicle which is converted or repowered, nothing in this section shall be construed to require that the motor vehicle be acquired in the year the credit is claimed under this section with respect to such vehicle. (E) SPECIAL RULE. For purposes of this subsection, in the case of a motor vehicle which (i) is described in subparagraph (C) or (D)(iii), (ii) is placed in service after the date of the enactment of this paragraph, and

49 (iii) is placed in service by a tax- payer in a taxable year prior to the taxable year in which such taxpayer places in serv- ice the third such motor vehicle described in subparagraph (C) or (D)(iii) after such date of enactment. such motor vehicle shall be treated as placed in service in the taxable year in which such third motor vehicle is placed in service.. 0 () CONFORMING AMENDMENT. Subparagraph (B) of section 0B(e)() is amended by inserting (other than a qualified natural gas motor vehicle) after paragraph (). (b) MIXED-FUEL VEHICLES. Subparagraph (C) of section 0B(e)() is amended by striking a mixed-fuel vehicle which operates using and all that follows and in- serting a mixed-fuel vehicle which (i) in the case of such a vehicle which is capable of operating on com- 0 pressed or liquified natural gas, operates using at least percent compressed or liquified natural gas and not more than percent petroleum-based fuel, and (ii) in the case of any other such ve- hicle, operates using at least percent al-

50 0 ternative fuel and not more than per- cent petroleum-based fuel.. (c) EXTENSION OF CREDIT. Paragraph () of sec- tion 0B(k) is amended to read as follows: () in the case of (A) a new qualified alternative fuel vehi- cle (as described in subsection (e)) which is a qualified natural gas motor vehicle (as de- scribed in subsection (e)(), December, 0 0, and (B) in the case of any other new qualified alternative fuel vehicle (as described in sub- section (e)), December, (d) ALTERNATIVE MINIMUM TAX TREATMENT. Subparagraph (B) of section (c)() is amended by redesignating clauses (i) through (ix) as clauses (ii) through (x), respectively, and by inserting after before clause (ii) (as so redesignated) the following new clause: (i) the amount of the credit determined under section 0B which is attributable to a qualified natural gas motor vehicle (as defined in section 0B(e)()).. (e) EFFECTIVE DATE. The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

51 0 0 SEC. 0. NATURAL GAS VEHICLE BONDS. (a) IN GENERAL. Subpart I of part IV of subchapter A of chapter (relating to qualified tax credit bonds) is amended by adding at the end the following new section: SEC. G. NATURAL GAS VEHICLE BONDS. (a) NATURAL GAS VEHICLE BOND. For purposes of this subpart, the term natural gas vehicle bond means any bond issued as part of an issue if () 00 percent of the available project proceeds of such issue are to be used for capital expenditures incurred by a governmental body for or more qualified natural gas vehicle projects placed in service by such governmental body primarily for governmental or public use, () the bond is issued by a governmental body, () the issuer designates such bond for purposes of this section, and () in lieu of the requirements of section A(d)(), the issue meets the requirements of subsection (c). (b) LIMITATION ON AMOUNT OF BONDS DES- IGNATED. () IN GENERAL. The maximum aggregate face amount of bonds which may be designated under subsection (a) by any issuer shall not exceed

52 the limitation amount allocated under this sub- section to such issuer. 0 0 () NATIONAL LIMITATION ON AMOUNT OF BONDS DESIGNATED. There is a national natural gas vehicle bond limitation of $,000,000,000. () ALLOCATION BY SECRETARY. The Secretary shall allocate the amount described in paragraph () among qualified natural gas vehicle projects in such manner as the Secretary determines appropriate. (c) SPECIAL RULES RELATING TO EXPENDI- TURES. () IN GENERAL. An issue shall be treated as meeting the requirements of this subsection if, as of the date of issuance, the issuer reasonably expects (A) 00 percent or more of the available project proceeds of such issue are to be spent for or more qualified natural gas vehicle projects within the -year period beginning on the date of issuance of the natural gas vehicle bond, (B) a binding commitment with a third party to spend at least 0 percent of such available project proceeds will be incurred within the

53 0 0 -month period beginning on the date of issuance of the natural gas vehicle bond, and (C) such projects will be completed with due diligence and such available project proceeds will be spent with due diligence. () EXTENSION OF PERIOD. Upon submission of a request prior to the expiration of the period described in paragraph ()(A), the Secretary may extend such period if the issuer establishes that the failure to satisfy the -year requirement is due to reasonable cause and the related projects will continue to proceed with due diligence. () FAILURE TO SPEND REQUIRED AMOUNT OF BOND PROCEEDS WITHIN YEARS. To the extent that less than 00 percent of the available project proceeds of such issue are expended by the close of the -year period beginning on the date of issuance (or if an extension has been obtained under paragraph (), by the close of the extended period), the issuer shall redeem all of the nonqualified bonds within 0 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.

54 (d) GOVERNMENTAL BODY. For purposes of this section, the term governmental body means any State, territory, possession of the United States, the District of Columbia, Indian tribal government, and any political sub- division thereof. 0 0 (e) QUALIFIED NATURAL GAS VEHICLE PROJECT. For purposes of this subpart, the term qualified natural gas vehicle project means () or more qualified natural gas vehicles (as defined in section 0B(e)()), or () or more qualified alternative fuel vehicle refueling properties which are used to store and or dispense compressed or liquefied natural gas (within the meaning of section 0C(c)). (f) TERMINATION. This section shall not apply with respect to any bond issued after December, 0.. (b) CONFORMING AMENDMENTS. () Paragraph () of section A(d) is amended by striking or at the end of subparagraph (D), by inserting or at the end of subparagraph (E), and by inserting after subparagraph (E) the following new subparagraph: (F) a natural gas vehicle bond,.