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HR 6049 EHPCS

Calendar No. 767

110th CONGRESS

2d Session

H. R. 6049

IN THE SENATE OF THE UNITED STATES

June 4, 2008

Received

June 5 (legislative day, June 4), 2008

Read the first time

June 5, 2008

Read the second time and placed on the calendar

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AN ACT

To amend the Internal Revenue Code of 1986 to provide incentives for energy production and conservation, to extend certain expiring provisions, to provide individual income tax relief, and for other purposes.

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

SECTION 1. SHORT TITLE, ETC.

(a) Short Title- This Act may be cited as the `Renewable Energy and Job Creation Act of 2008'.

(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 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 for this Act is as follows:

Sec. 1. Short title, etc.

TITLE I--ENERGY TAX INCENTIVES

Subtitle A--Energy Production Incentives

Part I--Renewable Energy Incentives

Sec. 101. Renewable energy credit.

Sec. 102. Production credit for electricity produced from marine renewables.

Sec. 103. Energy credit.

Sec. 104. Credit for residential energy efficient property.

Sec. 105. Special rule to implement FERC and State electric restructuring policy.

Sec. 106. New clean renewable energy bonds.

Part II--Carbon Mitigation Provisions

Sec. 111. Expansion and modification of advanced coal project investment credit.

Sec. 112. Expansion and modification of coal gasification investment credit.

Sec. 113. Temporary increase in coal excise tax.

Sec. 114. Special rules for refund of the coal excise tax to certain coal producers and exporters.

Sec. 115. Carbon audit of the tax code.

Subtitle B--Transportation and Domestic Fuel Security Provisions

Sec. 121. Inclusion of cellulosic biofuel in bonus depreciation for biomass ethanol plant property.

Sec. 122. Credits for biodiesel and renewable diesel.

Sec. 123. Clarification that credits for fuel are designed to provide an incentive for United States production.

Sec. 124. Credit for new qualified plug-in electric drive motor vehicles.

Sec. 125. Exclusion from heavy truck tax for idling reduction units and advanced insulation.

Sec. 126. Restructuring of New York Liberty Zone tax credits.

Sec. 127. Transportation fringe benefit to bicycle commuters.

Sec. 128. Alternative fuel vehicle refueling property credit.

Subtitle C--Energy Conservation and Efficiency Provisions

Sec. 141. Qualified energy conservation bonds.

Sec. 142. Credit for nonbusiness energy property.

Sec. 143. Energy efficient commercial buildings deduction.

Sec. 144. Modifications of energy efficient appliance credit for appliances produced after 2007.

Sec. 145. Accelerated recovery period for depreciation of smart meters and smart grid systems.

Sec. 146. Qualified green building and sustainable design projects.

TITLE II--ONE-YEAR EXTENSION OF TEMPORARY PROVISIONS

Subtitle A--Extensions Primarily Affecting Individuals

Sec. 201. Deduction for State and local sales taxes.

Sec. 202. Deduction of qualified tuition and related expenses.

Sec. 203. Treatment of certain dividends of regulated investment companies.

Sec. 204. Tax-free distributions from individual retirement plans for charitable purposes.

Sec. 205. Deduction for certain expenses of elementary and secondary school teachers.

Sec. 206. Election to include combat pay as earned income for purposes of earned income tax credit.

Sec. 207. Modification of mortgage revenue bonds for veterans.

Sec. 208. Distributions from retirement plans to individuals called to active duty.

Sec. 209. Stock in RIC for purposes of determining estates of nonresidents not citizens.

Sec. 210. Qualified investment entities.

Sec. 211. Exclusion of amounts received under qualified group legal services plans.

Subtitle B--Extensions Primarily Affecting Businesses

Sec. 221. Research credit.

Sec. 222. Indian employment credit.

Sec. 223. New markets tax credit.

Sec. 224. Railroad track maintenance.

Sec. 225. Fifteen-year straight-line cost recovery for qualified leasehold improvements and qualified restaurant property.

Sec. 226. Seven-year cost recovery period for motorsports racing track facility.

Sec. 227. Accelerated depreciation for business property on Indian reservation.

Sec. 228. Expensing of environmental remediation costs.

Sec. 229. Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico.

Sec. 230. Modification of tax treatment of certain payments to controlling exempt organizations.

Sec. 231. Qualified zone academy bonds.

Sec. 232. Tax incentives for investment in the District of Columbia.

Sec. 233. Economic development credit for American Samoa.

Sec. 234. Enhanced charitable deduction for contributions of food inventory.

Sec. 235. Enhanced charitable deduction for contributions of book inventory to public schools.

Sec. 236. Enhanced deduction for qualified computer contributions.

Sec. 237. Basis adjustment to stock of S corporations making charitable contributions of property.

Sec. 238. Work opportunity tax credit for Hurricane Katrina employees.

Sec. 239. Subpart F exception for active financing income.

Sec. 240. Look-thru rule for related controlled foreign corporations.

Sec. 241. Expensing for certain qualified film and television productions.

Subtitle C--Other Extensions

Sec. 251. Authority to disclose information related to terrorist activities made permanent.

Sec. 252. Authority for undercover operations made permanent.

Sec. 253. Authority to disclose return information for certain veterans programs made permanent.

Sec. 254. Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands.

Sec. 255. Parity in the application of certain limits to mental health benefits.

TITLE III--ADDITIONAL TAX RELIEF

Subtitle A--Individual Tax Relief

Sec. 301. Additional standard deduction for real property taxes for nonitemizers.

Sec. 302. Refundable child credit.

Sec. 303. Increase of AMT refundable credit amount for individuals with long-term unused credits for prior year minimum tax liability, etc.

Subtitle B--Business Related Provisions

Sec. 311. Uniform treatment of attorney-advanced expenses and court costs in contingency fee cases.

Sec. 312. Provisions related to film and television productions.

Subtitle C--Modification of Penalty on Understatement of Taxpayer's Liability by Tax Return Preparer

Sec. 321. Modification of penalty on understatement of taxpayer's liability by tax return preparer.

Subtitle D--Extension and Expansion of Certain GO Zone Incentives

Sec. 331. Certain GO Zone incentives.

TITLE IV--REVENUE PROVISIONS

Sec. 401. Nonqualified deferred compensation from certain tax indifferent parties.

Sec. 402. Delay in application of worldwide allocation of interest.

Sec. 403. Time for payment of corporate estimated taxes.

TITLE I--ENERGY TAX INCENTIVES

Subtitle A--Energy Production Incentives

PART I--RENEWABLE ENERGY INCENTIVES

SEC. 101. RENEWABLE ENERGY CREDIT.

(a) Extension of Credit-

(1) 1-year EXTENSION FOR WIND FACILITIES- Paragraph (1) of section 45(d) is amended by striking `January 1, 2009' and inserting `January 1, 2010'.

(2) 3-year EXTENSION FOR CERTAIN OTHER FACILITIES- Each of the following provisions of section 45(d) is amended by striking `January 1, 2009' and inserting `January 1, 2012':

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

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

(C) Paragraph (4).

(D) Paragraph (5).

(E) Paragraph (6).

(F) Paragraph (7).

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

(b) Modification of Credit Phaseout-

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

(A) by striking paragraph (1), and

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

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

`(1) LIMITATION BASED ON INVESTMENT IN FACILITY-

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

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

`(ii) the eligible basis of such facility.

`(B) CARRYFORWARD OF UNUSED LIMITATION AND EXCESS CREDIT-

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

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

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

`(C) APPLICABLE PERCENTAGE- For purposes of this paragraph--

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

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

`(iii) METHOD OF DISCOUNTING- The present value under clause (ii) shall be determined--

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

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

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

`(D) ELIGIBLE BASIS- For purposes of this paragraph--

`(i) IN GENERAL- The term `eligible basis' means, with respect to any facility, the sum of--

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

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

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

`(iii) SHARED QUALIFIED PROPERTY- For purposes of this paragraph, the term `shared qualified property' means, with respect to any facility, any property described in section 168(e)(3)(B)(vi)--

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

`(II) which is not a qualified facility.

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

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

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

(c) Trash Facility Clarification- Paragraph (7) of section 45(d) is amended--

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

(2) by striking `COMBUSTION'.

(d) Expansion of Biomass Facilities-

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

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

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

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

(e) Sales of Net Electricity to Regulated Public Utilities Treated as Sales to Unrelated Persons- Paragraph (4) of section 45(e) is amended by adding at the end the following new sentence: `The net amount of electricity sold by any taxpayer to a regulated public utility (as defined in section 7701(a)(33)) shall be treated as sold to an unrelated person.'.

(f) Modification of Rules for Hydropower Production- Subparagraph (C) of section 45(c)(8) is amended to read as follows:

`(C) NONHYDROELECTRIC DAM- For purposes of subparagraph (A), a facility is described in this subparagraph if--

`(i) the hydroelectric project installed on the nonhydroelectric dam is licensed by the Federal Energy Regulatory Commission and meets all other applicable environmental, licensing, and regulatory requirements,

`(ii) the nonhydroelectric dam was placed in service before the date of the enactment of this paragraph and operated for flood control, navigation, or water supply purposes and did not produce hydroelectric power on the date of the enactment of this paragraph, and

`(iii) the hydroelectric project is operated so that the water surface elevation at any given location and time that would have occurred in the absence of the hydroelectric project is maintained, subject to any license requirements imposed under applicable law that change the water surface elevation for the purpose of improving environmental quality of the affected waterway.

The Secretary, in consultation with the Federal Energy Regulatory Commission, shall certify if a hydroelectric project licensed at a nonhydroelectric dam meets the criteria in clause (iii). Nothing in this section shall affect the standards under which the Federal Energy Regulatory Commission issues licenses for and regulates hydropower projects under part I of the Federal Power Act.'.

(g) Effective Date-

(1) IN GENERAL- Except as otherwise provided in this subsection, the amendments made by this section shall apply to property originally placed in service after December 31, 2008.

(2) REPEAL OF CREDIT PHASEOUT- The amendments made by subsection (b)(1) shall apply to taxable years ending after December 31, 2008.

(3) LIMITATION BASED ON INVESTMENT IN FACILITY- The amendment made by subsection (b)(2) shall apply to property originally placed in service after December 31, 2009.

(4) TRASH FACILITY CLARIFICATION; SALES TO RELATED REGULATED PUBLIC UTILITIES- The amendments made by subsections (c) and (e) shall apply to electricity produced and sold after the date of the enactment of this Act.

(5) EXPANSION OF BIOMASS FACILITIES- The amendments made by subsection (d) shall apply to property placed in service after the date of the enactment of this Act.

SEC. 102. PRODUCTION CREDIT FOR ELECTRICITY PRODUCED FROM MARINE RENEWABLES.

(a) In General- Paragraph (1) of section 45(c) is amended by striking `and' at the end of subparagraph (G), by striking the period at the end of subparagraph (H) and inserting `, and', and by adding at the end the following new subparagraph:

`(I) marine and hydrokinetic renewable energy.'.

(b) Marine Renewables- Subsection (c) of section 45 is amended by adding at the end the following new paragraph:

`(10) MARINE AND HYDROKINETIC RENEWABLE ENERGY-

`(A) IN GENERAL- The term `marine and hydrokinetic renewable energy' means energy derived from--

`(i) waves, tides, and currents in oceans, estuaries, and tidal areas,

`(ii) free flowing water in rivers, lakes, and streams,

`(iii) free flowing water in an irrigation system, canal, or other man-made channel, including projects that utilize nonmechanical structures to accelerate the flow of water for electric power production purposes, or

`(iv) differentials in ocean temperature (ocean thermal energy conversion).

`(B) EXCEPTIONS- Such term shall not include any energy which is derived from any source which utilizes a dam, diversionary structure (except as provided in subparagraph (A)(iii)), or impoundment for electric power production purposes.'.

(c) Definition of Facility- Subsection (d) of section 45 is amended by adding at the end the following new paragraph:

`(11) MARINE AND HYDROKINETIC RENEWABLE ENERGY FACILITIES- In the case of a facility producing electricity from marine and hydrokinetic renewable energy, the term `qualified facility' means any facility owned by the taxpayer--

`(A) which has a nameplate capacity rating of at least 150 kilowatts, and

`(B) which is originally placed in service on or after the date of the enactment of this paragraph and before January 1, 2012.'.

(d) Credit Rate- Subparagraph (A) of section 45(b)(4) is amended by striking `or (9)' and inserting `(9), or (11)'.

(e) Coordination With Small Irrigation Power- Paragraph (5) of section 45(d), as amended by section 101, is amended by striking `January 1, 2012' and inserting `the date of the enactment of paragraph (11)'.

(f) Effective Date- The amendments made by this section shall apply to electricity produced and sold after the date of the enactment of this Act, in taxable years ending after such date.

SEC. 103. ENERGY CREDIT.

(a) Extension of Credit-

(1) SOLAR ENERGY PROPERTY- Paragraphs (2)(A)(i)(II) and (3)(A)(ii) of section 48(a) are each amended by striking `January 1, 2009' and inserting `January 1, 2015'.

(2) FUEL CELL PROPERTY- Subparagraph (E) of section 48(c)(1) is amended by striking `December 31, 2008' and inserting `December 31, 2014'.

(3) MICROTURBINE PROPERTY- Subparagraph (E) of section 48(c)(2) is amended by striking `December 31, 2008' and inserting `December 31, 2014'.

(b) Allowance of Energy Credit Against Alternative Minimum Tax- Subparagraph (B) of section 38(c)(4) is amended by striking `and' at the end of clause (iii), by redesignating clause (iv) as clause (v), and by inserting after clause (iii) the following new clause:

`(iv) the credit determined under section 46 to the extent that such credit is attributable to the energy credit determined under section 48, and'.

(c) Energy Credit for Combined Heat and Power System Property-

(1) IN GENERAL- Section 48(a)(3)(A) (defining energy property) is amended by striking `or' at the end of clause (iii), by inserting `or' at the end of clause (iv), and by adding at the end the following new clause:

`(v) combined heat and power system property,'.

(2) COMBINED HEAT AND POWER SYSTEM PROPERTY- Section 48 is amended by adding at the end the following new subsection:

`(d) Combined Heat and Power System Property- For purposes of subsection (a)(3)(A)(v)--

`(1) COMBINED HEAT AND POWER SYSTEM PROPERTY- The term `combined heat and power system property' means property comprising a system--

`(A) which uses the same energy source for the simultaneous or sequential generation of electrical power, mechanical shaft power, or both, in combination with the generation of steam or other forms of useful thermal energy (including heating and cooling applications),

`(B) which produces--

`(i) at least 20 percent of its total useful energy in the form of thermal energy which is not used to produce electrical or mechanical power (or combination thereof), and

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

`(C) the energy efficiency percentage of which exceeds 60 percent, and

`(D) which is placed in service before January 1, 2015.

`(2) LIMITATION-

`(A) IN GENERAL- In the case of combined heat and power system property with an electrical capacity in excess of the applicable capacity placed in service during the taxable year, the credit under subsection (a)(1) (determined without regard to this paragraph) for such year shall be equal to the amount which bears the same ratio to such credit as the applicable capacity bears to the capacity of such property.

`(B) APPLICABLE CAPACITY- For purposes of subparagraph (A), the term `applicable capacity' means 15 megawatts or a mechanical energy capacity of more than 20,000 horsepower or an equivalent combination of electrical and mechanical energy capacities.

`(C) MAXIMUM CAPACITY- The term `combined heat and power system property' shall not include any property comprising a system if such system has a capacity in excess of 50 megawatts or a mechanical energy capacity in excess of 67,000 horsepower or an equivalent combination of electrical and mechanical energy capacities.

`(3) SPECIAL RULES-

`(A) ENERGY EFFICIENCY PERCENTAGE- For purposes of this subsection, the energy efficiency percentage of a system is the fraction--

`(i) the numerator of which is the total useful electrical, thermal, and mechanical power produced by the system at normal operating rates, and expected to be consumed in its normal application, and

`(ii) the denominator of which is the lower heating value of the fuel sources for the system.

`(B) DETERMINATIONS MADE ON BTU BASIS- The energy efficiency percentage and the percentages under paragraph (1)(B) shall be determined on a Btu basis.

`(C) INPUT AND OUTPUT PROPERTY NOT INCLUDED- The term `combined heat and power system property' does not include property used to transport the energy source to the facility or to distribute energy produced by the facility.

`(4) SYSTEMS USING BIOMASS- If a system is designed to use biomass (within the meaning of paragraphs (2) and (3) of section 45(c) without regard to the last sentence of paragraph (3)(A)) for at least 90 percent of the energy source--

`(A) paragraph (1)(C) shall not apply, but

`(B) the amount of credit determined under subsection (a) with respect to such system shall not exceed the amount which bears the same ratio to such amount of credit (determined without regard to this paragraph) as the energy efficiency percentage of such system bears to 60 percent.'.

(d) Increase of Credit Limitation for Fuel Cell Property- Subparagraph (B) of section 48(c)(1) is amended by striking `$500' and inserting `$1,500'.

(e) Public Utility Property Taken Into Account-

(1) IN GENERAL- Paragraph (3) of section 48(a) is amended by striking the second sentence thereof.

(2) CONFORMING AMENDMENTS-

(A) Paragraph (1) of section 48(c) is amended by striking subparagraph (D) and redesignating subparagraph (E) as subparagraph (D).

(B) Paragraph (2) of section 48(c) is amended by striking subparagraph (D) and redesignating subparagraph (E) as subparagraph (D).

(f) Effective Date-

(1) IN GENERAL- Except as otherwise provided in this subsection, the amendments made by this section shall take effect on the date of the enactment of this Act.

(2) ALLOWANCE AGAINST ALTERNATIVE MINIMUM TAX- The amendments made by subsection (b) shall apply to credits determined under section 46 of the Internal Revenue Code of 1986 in taxable years beginning after the date of the enactment of this Act and to carrybacks of such credits.

(3) COMBINED HEAT AND POWER AND FUEL CELL PROPERTY- The amendments made by subsections (c) and (d) shall apply to periods after the date of the enactment of this Act, in taxable years ending after such date, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

(4) PUBLIC UTILITY PROPERTY- The amendments made by subsection (e) shall apply to periods after February 13, 2008, in taxable years ending after such date, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

SEC. 104. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

(a) Extension- Section 25D(g) is amended by striking `December 31, 2008' and inserting `December 31, 2014'.

(b) Maximum Credit for Solar Electric Property-

(1) IN GENERAL- Section 25D(b)(1)(A) is amended by striking `$2,000' and inserting `$4,000'.

(2) CONFORMING AMENDMENT- Section 25D(e)(4)(A)(i) is amended by striking `$6,667' and inserting `$13,333'.

(c) Credit for Residential Wind Property-

(1) IN GENERAL- Section 25D(a) is amended by striking `and' at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting `, and', and by adding at the end the following new paragraph:

`(4) 30 percent of the qualified small wind energy property expenditures made by the taxpayer during such year.'.

(2) LIMITATION- Section 25D(b)(1) is amended by striking `and' at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting `, and', and by adding at the end the following new subparagraph:

`(D) $500 with respect to each half kilowatt of capacity (not to exceed $4,000) of wind turbines for which qualified small wind energy property expenditures are made.'.

(3) QUALIFIED SMALL WIND ENERGY PROPERTY EXPENDITURES-

(A) IN GENERAL- Section 25D(d) is amended by adding at the end the following new paragraph:

`(4) QUALIFIED SMALL WIND ENERGY PROPERTY EXPENDITURE- The term `qualified small wind energy property expenditure' means an expenditure for property which uses a wind turbine to generate electricity for use in connection with a dwelling unit located in the United States and used as a residence by the taxpayer.'.

(B) NO DOUBLE BENEFIT- Section 45(d)(1) is amended by adding at the end the following new sentence: `Such term shall not include any facility with respect to which any qualified small wind energy property expenditure (as defined in subsection (d)(4) of section 25D) is taken into account in determining the credit under such section.'.

(4) MAXIMUM EXPENDITURES IN CASE OF JOINT OCCUPANCY- Section 25D(e)(4)(A) is amended by striking `and' at the end of clause (ii), by striking the period at the end of clause (iii) and inserting `, and', and by adding at the end the following new clause:

`(iv) $1,667 in the case of each half kilowatt of capacity (not to exceed $13,333) of wind turbines for which qualified small wind energy property expenditures are made.'.

(d) Credit for Geothermal Heat pump Systems-

(1) IN GENERAL- Section 25D(a), as amended by subsection (c), is amended by striking `and' at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting `, and', and by adding at the end the following new paragraph:

`(5) 30 percent of the qualified geothermal heat pump property expenditures made by the taxpayer during such year.'.

(2) LIMITATION- Section 25D(b)(1), as amended by subsection (c), is amended by striking `and' at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting `, and', and by adding at the end the following new subparagraph:

`(E) $2,000 with respect to any qualified geothermal heat pump property expenditures.'.

(3) QUALIFIED GEOTHERMAL HEAT PUMP PROPERTY EXPENDITURE- Section 25D(d), as amended by subsection (c), is amended by adding at the end the following new paragraph:

`(5) QUALIFIED GEOTHERMAL HEAT PUMP PROPERTY EXPENDITURE-

`(A) IN GENERAL- The term `qualified geothermal heat pump property expenditure' means an expenditure for qualified geothermal heat pump property installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer.

`(B) QUALIFIED GEOTHERMAL HEAT PUMP PROPERTY- The term `qualified geothermal heat pump property' means any equipment which--

`(i) uses the ground or ground water as a thermal energy source to heat the dwelling unit referred to in subparagraph (A) or as a thermal energy sink to cool such dwelling unit, and

`(ii) meets the requirements of the Energy Star program which are in effect at the time that the expenditure for such equipment is made.'.

(4) MAXIMUM EXPENDITURES IN CASE OF JOINT OCCUPANCY- Section 25D(e)(4)(A), as amended by subsection (c), is amended by striking `and' at the end of clause (iii), by striking the period at the end of clause (iv) and inserting `, and', and by adding at the end the following new clause:

`(v) $6,667 in the case of any qualified geothermal heat pump property expenditures.'.

(e) Credit Allowed Against Alternative Minimum Tax-

(1) IN GENERAL- Subsection (c) of section 25D is amended to read as follows:

`(c) Limitation Based on Amount of Tax; Carryforward of Unused Credit-

`(1) LIMITATION BASED ON AMOUNT OF TAX- In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for the taxable year shall not exceed the excess of--

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

`(B) the sum of the credits allowable under this subpart (other than this section) and section 27 for the taxable year.

`(2) CARRYFORWARD OF UNUSED CREDIT-

`(A) RULE FOR YEARS IN WHICH ALL PERSONAL CREDITS ALLOWED AGAINST REGULAR AND ALTERNATIVE MINIMUM TAX- In the case of a taxable year to which section 26(a)(2) applies, if the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a)(2) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.

`(B) RULE FOR OTHER YEARS- In the case of a taxable year to which section 26(a)(2) does not apply, if the credit allowable under subsection (a) exceeds the limitation imposed by paragraph (1) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.'.

(2) CONFORMING AMENDMENTS-

(A) Section 23(b)(4)(B) is amended by inserting `and section 25D' after `this section'.

(B) Section 24(b)(3)(B) is amended by striking `and 25B' and inserting `, 25B, and 25D'.

(C) Section 25B(g)(2) is amended by striking `section 23' and inserting `sections 23 and 25D'.

(D) Section 26(a)(1) is amended by striking `and 25B' and inserting `25B, and 25D'.

(f) Effective Date-

(1) IN GENERAL- The amendments made by this section shall apply to taxable years beginning after December 31, 2007.

(2) APPLICATION OF EGTRRA SUNSET- The amendments made by subparagraphs (A) and (B) of subsection (e)(2) shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 in the same manner as the provisions of such Act to which such amendments relate.

SEC. 105. SPECIAL RULE TO IMPLEMENT FERC AND STATE ELECTRIC RESTRUCTURING POLICY.

(a) Extension for Qualified Electric Utilities-

(1) IN GENERAL- Paragraph (3) of section 451(i) is amended by inserting `(before January 1, 2010, in the case of a qualified electric utility)' after `January 1, 2008'.

(2) QUALIFIED ELECTRIC UTILITY- Subsection (i) of section 451 is amended by redesignating paragraphs (6) through (10) as paragraphs (7) through (11), respectively, and by inserting after paragraph (5) the following new paragraph:

`(6) QUALIFIED ELECTRIC UTILITY- For purposes of this subsection, the term `qualified electric utility' means a person that, as of the date of the qualifying electric transmission transaction, is vertically integrated, in that it is both--

`(A) a transmitting utility (as defined in section 3(23) of the Federal Power Act (16 U.S.C. 796(23))) with respect to the transmission facilities to which the election under this subsection applies, and

`(B) an electric utility (as defined in section 3(22) of the Federal Power Act (16 U.S.C. 796(22))).'.

(b) Extension of Period for Transfer of Operational Control Authorized by FERC- Clause (ii) of section 451(i)(4)(B) is amended by striking `December 31, 2007' and inserting `the date which is 4 years after the close of the taxable year in which the transaction occurs'.

(c) Property Located Outside the United States Not Treated as Exempt Utility Property- Paragraph (5) of section 451(i) is amended by adding at the end the following new subparagraph:

`(C) EXCEPTION FOR PROPERTY LOCATED OUTSIDE THE UNITED STATES- The term `exempt utility property' shall not include any property which is located outside the United States.'.

(d) Effective Dates-

(1) EXTENSION- The amendments made by subsection (a) shall apply to transactions after December 31, 2007.

(2) TRANSFERS OF OPERATIONAL CONTROL- The amendment made by subsection (b) shall take effect as if included in section 909 of the American Jobs Creation Act of 2004.

(3) EXCEPTION FOR PROPERTY LOCATED OUTSIDE THE UNITED STATES- The amendment made by subsection (c) shall apply to transactions after the date of the enactment of this Act.

SEC. 106. NEW CLEAN RENEWABLE ENERGY BONDS.

(a) In General- Part IV of subchapter A of chapter 1 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 33 1/3 percent thereof may be allocated to qualified projects of public power providers,

`(B) not more than 33 1/3 percent thereof may be allocated to qualified projects of governmental bodies, and

`(C) not more than 33 1/3 percent thereof may be allocated to qualified projects of cooperative electric companies.

`(3) METHOD OF ALLOCATION-

`(A) ALLOCATION AMONG PUBLIC POWER PROVIDERS- After the Secretary determines the qualified projects of public power providers which are appropriate for receiving an allocation of the national new clean renewable energy bond limitation, the Secretary shall, to the maximum extent practicable, make allocations among such projects in such manner that the amount allocated to each such project bears the same ratio to the cost of such project as the limitation under paragraph (2)(A) bears to the cost of all such projects.

`(B) ALLOCATION AMONG GOVERNMENTAL BODIES AND COOPERATIVE ELECTRIC COMPANIES- The Secretary shall make allocations of the amount of the national new clean renewable energy bond limitation described in paragraphs (2)(B) and (2)(C) among qualified projects of governmental bodies and cooperative electric companies, respectively, in such manner as the Secretary determines appropriate.

`(d) Definitions- For purposes of this section--

`(1) QUALIFIED RENEWABLE ENERGY FACILITY- The term `qualified renewable energy facility' means a qualified facility (as determined under section 45(d) without regard to paragraphs (8) and (10) thereof and to any placed in service date) owned by a public power provider, a governmental body, or a cooperative electric company.

`(2) PUBLIC POWER PROVIDER- The term `public power provider' means a State utility with a service obligation, as such terms are defined in section 217 of the Federal Power Act (as in effect on the date of the enactment of this paragraph).

`(3) GOVERNMENTAL BODY- The term `governmental body' means any State or Indian tribal government, or any political subdivision thereof.

`(4) COOPERATIVE ELECTRIC COMPANY- The term `cooperative electric company' means a mutual or cooperative electric company described in section 501(c)(12) or section 1381(a)(2)(C).

`(5) CLEAN RENEWABLE ENERGY BOND LENDER- The term `clean renewable energy bond lender' means a lender which is a cooperative which is owned by, or has outstanding loans to, 100 or more cooperative electric companies and is in existence on February 1, 2002, and shall include any affiliated entity which is controlled by such lender.

`(6) QUALIFIED ISSUER- The term `qualified issuer' means a public power provider, a cooperative electric company, a governmental body, a clean renewable energy bond lender, or a not-for-profit electric utility which has received a loan or loan guarantee under the Rural Electrification Act.'.

(b) Reporting- Subsection (d) of section 6049 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) 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).

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

PART II--CARBON MITIGATION PROVISIONS

SEC. 111. EXPANSION AND MODIFICATION OF ADVANCED COAL PROJECT INVESTMENT CREDIT.

(a) Modification of Credit Amount- Section 48A(a) is amended by striking `and' at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting `, and', and by adding at the end the following new paragraph:

`(3) 30 percent of the qualified investment for such taxable year in the case of projects described in clause (iii) of subsection (d)(3)(B).'.

(b) Expansion of Aggregate Credits- Section 48A(d)(3)(A) is amended by striking `$1,300,000,000' and inserting `$2,550,000,000'.

(c) Authorization of Additional Projects-

(1) IN GENERAL- Subparagraph (B) of section 48A(d)(3) is amended to read as follows:

`(B) PARTICULAR PROJECTS- Of the dollar amount in subparagraph (A), the Secretary is authorized to certify--

`(i) $800,000,000 for integrated gasification combined cycle projects the application for which is submitted during the period described in paragraph (2)(A)(i),

`(ii) $500,000,000 for projects which use other advanced coal-based generation technologies the application for which is submitted during the period described in paragraph (2)(A)(i), and

`(iii) $1,250,000,000 for advanced coal-based generation technology projects the application for which is submitted during the period described in paragraph (2)(A)(ii).'.

(2) APPLICATION PERIOD FOR ADDITIONAL PROJECTS- Subparagraph (A) of section 48A(d)(2) is amended to read as follows:

`(A) APPLICATION PERIOD- Each applicant for certification under this paragraph shall submit an application meeting the requirements of subparagraph (B). An applicant may only submit an application--

`(i) for an allocation from the dollar amount specified in clause (i) or (ii) of paragraph (3)(B) during the 3-year period beginning on the date the Secretary establishes the program under paragraph (1), and

`(ii) for an allocation from the dollar amount specified in paragraph (3)(B)(iii) during the 3-year period beginning at the earlier of the termination of the period described in clause (i) or the date prescribed by the Secretary.'.

(3) CAPTURE AND SEQUESTRATION OF CARBON DIOXIDE EMISSIONS REQUIREMENT-

(A) IN GENERAL- Section 48A(e)(1) is amended by striking `and' at the end of subparagraph (E), by striking the period at the end of subparagraph (F) and inserting `; and', and by adding at the end the following new subparagraph:

`(G) in the case of any project the application for which is submitted during the period described in subsection (d)(2)(A)(ii), the project includes equipment which separates and sequesters at least 65 percent (70 percent in the case of an application for reallocated credits under subsection (d)(4)) of such project's total carbon dioxide emissions.'.

(B) HIGHEST PRIORITY FOR PROJECTS WHICH SEQUESTER CARBON DIOXIDE EMISSIONS- Section 48A(e)(3) is amended by striking `and' at the end of subparagraph (A)(iii), by striking the period at the end of subparagraph (B)(iii) and inserting `, and', and by adding at the end the following new subparagraph:

`(C) give highest priority to projects with the greatest separation and sequestration percentage of total carbon dioxide emissions.'.

(C) RECAPTURE OF CREDIT FOR FAILURE TO SEQUESTER- Section 48A is amended by adding at the end the following new subsection:

`(h) Recapture of Credit for Failure To Sequester- The Secretary shall provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any project which fails to attain or maintain the separation and sequestration requirements of subsection (e)(1)(G).'.

(4) ADDITIONAL PRIORITY FOR RESEARCH PARTNERSHIPS- Section 48A(e)(3)(B), as amended by paragraph (3)(B), is amended--

(A) by striking `and' at the end of clause (ii),

(B) by redesignating clause (iii) as clause (iv), and

(C) by inserting after clause (ii) the following new clause:

`(iii) applicant participants who have a research partnership with an eligible educational institution (as defined in section 529(e)(5)), and'.

(5) CLERICAL AMENDMENT- Section 48A(e)(3) is amended by striking `INTEGRATED GASIFICATION COMBINED CYCLE' in the heading and inserting `CERTAIN'.

(d) Competitive Certification Awards Modification Authority- Section 48A, as amended by subsection (c)(3), is amended by adding at the end the following new subsection:

`(i) Competitive Certification Awards Modification Authority- In implementing this section or section 48B, the Secretary is directed to modify the terms of any competitive certification award and any associated closing agreement where such modification--

`(1) is consistent with the objectives of such section,

`(2) is requested by the recipient of the competitive certification award, and

`(3) involves moving the project site to improve the potential to capture and sequester carbon dioxide emissions, reduce costs of transporting feedstock, and serve a broader customer base,

unless the Secretary determines that the dollar amount of tax credits available to the taxpayer under such section would increase as a result of the modification or such modification would result in such project not being originally certified. In considering any such modification, the Secretary shall consult with other relevant Federal agencies, including the Department of Energy.'.

(e) Disclosure of Allocations- Section 48A(d) is amended by adding at the end the following new paragraph:

`(5) DISCLOSURE OF ALLOCATIONS- The Secretary shall, upon making a certification under this subsection or section 48B(d), publicly disclose the identity of the applicant and the amount of the credit certified with respect to such applicant.'.

(f) Effective Dates-

(1) IN GENERAL- Except as otherwise provided in this subsection, the amendments made by this section shall apply to credits the application for which is submitted during the period described in section 48A(d)(2)(A)(ii) of the Internal Revenue Code of 1986 and which are allocated or reallocated after the date of the enactment of this Act.

(2) COMPETITIVE CERTIFICATION AWARDS MODIFICATION AUTHORITY- The amendment made by subsection (d) shall take effect on the date of the enactment of this Act and is applicable to all competitive certification awards entered into under section 48A or 48B of the Internal Revenue Code of 1986, whether such awards were issued before, on, or after such date of enactment.

(3) DISCLOSURE OF ALLOCATIONS- The amendment made by subsection (e) shall apply to certifications made after the date of the enactment of this Act.

(4) CLERICAL AMENDMENT- The amendment made by subsection (c)(5) shall take effect as if included in the amendment made by section 1307(b) of the Energy Tax Incentives Act of 2005.

SEC. 112. EXPANSION AND MODIFICATION OF COAL GASIFICATION INVESTMENT CREDIT.

(a) Modification of Credit Amount- Section 48B(a) is amended by inserting `(30 percent in the case of credits allocated under subsection (d)(1)(B))' after `20 percent'.

(b) Expansion of Aggregate Credits- Section 48B(d)(1) is amended by striking `shall not exceed $350,000,000' and all that follows and inserting `shall not exceed--

`(A) $350,000,000, plus

`(B) $250,000,000 for qualifying gasification projects that include equipment which separates and sequesters at least 75 percent of such project's total carbon dioxide emissions.'.

(c) Recapture of Credit for Failure To Sequester- Section 48B is amended by adding at the end the following new subsection:

`(f) Recapture of Credit for Failure To Sequester- The Secretary shall provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any project which fails to attain or maintain the separation and sequestration requirements for such project under subsection (d)(1).'.

(d) Selection Priorities- Section 48B(d) is amended by adding at the end the following new paragraph:

`(4) SELECTION PRIORITIES- In determining which qualifying gasification projects to certify under this section, the Secretary shall--

`(A) give highest priority to projects with the greatest separation and sequestration percentage of total carbon dioxide emissions, and

`(B) give high priority to applicant participants who have a research partnership with an eligible educational institution (as defined in section 529(e)(5)).'.

(e) Effective Date- The amendments made by this section shall apply to credits described in section 48B(d)(1)(B) of the Internal Revenue Code of 1986 which are allocated or reallocated after the date of the enactment of this Act.

SEC. 113. TEMPORARY INCREASE IN COAL EXCISE TAX.

Paragraph (2) of section 4121(e) is amended--

(1) by striking `January 1, 2014' in subparagraph (A) and inserting `December 31, 2018', and

(2) by striking `January 1 after 1981' in subparagraph (B) and inserting `December 31 after 2007'.

SEC. 114. SPECIAL RULES FOR REFUND OF THE COAL EXCISE TAX TO CERTAIN COAL PRODUCERS AND EXPORTERS.

(a) Refund-

(1) COAL PRODUCERS-

(A) IN GENERAL- Notwithstanding subsections (a)(1) and (c) of section 6416 and section 6511 of the Internal Revenue Code of 1986, if--

(i) a coal producer establishes that such coal producer, or a party related to such coal producer, exported coal produced by such coal producer to a foreign country or shipped coal produced by such coal producer to a possession of the United States, or caused such coal to be exported or shipped, the export or shipment of which was other than through an exporter who meets the requirements of paragraph (2),

(ii) such coal producer filed an excise tax return on or after October 1, 1990, and on or before the date of the enactment of this Act, and

(iii) such coal producer files a claim for refund with the Secretary not later than the close of the 30-day period beginning on the date of the enactment of this Act,

then the Secretary shall pay to such coal producer an amount equal to the tax paid under section 4121 of such Code on such coal exported or shipped by the coal producer or a party related to such coal producer, or caused by the coal producer or a party related to such coal producer to be exported or shipped.

(B) SPECIAL RULES FOR CERTAIN TAXPAYERS- For purposes of this section--

(i) IN GENERAL- If a coal producer or a party related to a coal producer has received a judgment described in clause (iii), such coal producer shall be deemed to have established the export of coal to a foreign country or shipment of coal to a possession of the United States under subparagraph (A)(i).

(ii) AMOUNT OF PAYMENT- If a taxpayer described in clause (i) is entitled to a payment under subparagraph (A), the amount of such payment shall be reduced by any amount paid pursuant to the judgment described in clause (iii).

(iii) JUDGMENT DESCRIBED- A judgment is described in this subparagraph if such judgment--

(I) is made by a court of competent jurisdiction within the United States,

(II) relates to the constitutionality of any tax paid on exported coal under section 4121 of the Internal Revenue Code of 1986, and

(III) is in favor of the coal producer or the party related to the coal producer.

(2) EXPORTERS- Notwithstanding subsections (a)(1) and (c) of section 6416 and section 6511 of the Internal Revenue Code of 1986, and a judgment described in paragraph (1)(B)(iii) of this subsection, if--

(A) an exporter establishes that such exporter exported coal to a foreign country or shipped coal to a possession of the United States, or caused such coal to be so exported or shipped,

(B) such exporter filed a tax return on or after October 1, 1990, and on or before the date of the enactment of this Act, and

(C) such exporter files a claim for refund with the Secretary not later than the close of the 30-day period beginning on the date of the enactment of this Act,

then the Secretary shall pay to such exporter an amount equal to $0.825 per ton of such coal exported by the exporter or caused to be exported or shipped, or caused to be exported or shipped, by the exporter.

(b) Limitations- Subsection (a) shall not apply with respect to exported coal if a settlement with the Federal Government has been made with and accepted by, the coal producer, a party related to such coal producer, or the exporter, of such coal, as of the date that the claim is filed under this section with respect to such exported coal. For purposes of this subsection, the term `settlement with the Federal Government' shall not include any settlement or stipulation entered into as of the date of the enactment of this Act, the terms of which contemplate a judgment concerning which any party has reserved the right to file an appeal, or has filed an appeal.

(c) Subsequent Refund Prohibited- No refund shall be made under this section to the extent that a credit or refund of such tax on such exported or shipped coal has been paid to any person.

(d) Definitions- For purposes of this section--

(1) COAL PRODUCER- The term `coal producer' means the person in whom is vested ownership of the coal immediately after the coal is severed from the ground, without regard to the existence of any contractual arrangement for the sale or other disposition of the coal or the payment of any royalties between the producer and third parties. The term includes any person who extracts coal from coal waste refuse piles or from the silt waste product which results from the wet washing (or similar processing) of coal.

(2) EXPORTER- The term `exporter' means a person, other than a coal producer, who does not have a contract, fee arrangement, or any other agreement with a producer or seller of such coal to export or ship such coal to a third party on behalf of the producer or seller of such coal and--

(A) is indicated in the shipper's export declaration or other documentation as the exporter of record, or

(B) actually exported such coal to a foreign country or shipped such coal to a possession of the United States, or caused such coal to be so exported or shipped.

(3) RELATED PARTY- The term `a party related to such coal producer' means a person who--

(A) is related to such coal producer through any degree of common management, stock ownership, or voting control,

(B) is related (within the meaning of section 144(a)(3) of the Internal Revenue Code of 1986) to such coal producer, or

(C) has a contract, fee arrangement, or any other agreement with such coal producer to sell such coal to a third party on behalf of such coal producer.

(4) SECRETARY- The term `Secretary' means the Secretary of Treasury or the Secretary's designee.

(e) Timing of Refund- With respect to any claim for refund filed pursuant to this section, the Secretary shall determine whether the requirements of this section are met not later than 180 days after such claim is filed. If the Secretary determines that the requirements of this section are met, the claim for refund shall be paid not later than 180 days after the Secretary makes such determination.

(f) Interest- Any refund paid pursuant to this section shall be paid by the Secretary with interest from the date of overpayment determined by using the overpayment rate and method under section 6621 of the Internal Revenue Code of 1986.

(g) Denial of Double Benefit- The payment under subsection (a) with respect to any coal shall not exceed--

(1) in the case of a payment to a coal producer, the amount of tax paid under section 4121 of the Internal Revenue Code of 1986 with respect to such coal by such coal producer or a party related to such coal producer, and

(2) in the case of a payment to an exporter, an amount equal to $0.825 per ton with respect to such coal exported by the exporter or caused to be exported by the exporter.

(h) Application of Section- This section applies only to claims on coal exported or shipped on or after October 1, 1990, through the date of the enactment of this Act.

(i) Standing Not Conferred-

(1) EXPORTERS- With respect to exporters, this section shall not confer standing upon an exporter to commence, or intervene in, any judicial or administrative proceeding concerning a claim for refund by a coal producer of any Federal or State tax, fee, or royalty paid by the coal producer.

(2) COAL PRODUCERS- With respect to coal producers, this section shall not confer standing upon a coal producer to commence, or intervene in, any judicial or administrative proceeding concerning a claim for refund by an exporter of any Federal or State tax, fee, or royalty paid by the producer and alleged to have been passed on to an exporter.

SEC. 115. CARBON AUDIT OF THE TAX CODE.

(a) Study- The Secretary of the Treasury shall enter into an agreement with the National