Provides for: (1) the treatment of natural gas gathering lines as 7-year property; (2) the temporary suspension of the limitation based on 65 percent of taxable income and the extension of suspension of taxable income limit with respect to marginal production; (3) the election to expense geological and geophysical expenditures for oil and gas wells; (4) a five-year net operating loss carryback for losses attributable to operating mineral interests of oil and gas producers.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1436 Introduced in House (IH)]
108th CONGRESS
1st Session
H. R. 1436
To amend the Internal Revenue Code of 1986 to enhance energy
conservation, research, and development and to provide for security and
diversity in the energy supply for the American people.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 25, 2003
Mr. Sandlin introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to enhance energy
conservation, research, and development and to provide for security and
diversity in the energy supply for the American people.
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 ``Energy
Independence and Security Act of 2003''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--
Sec. 1. Short title, etc.
Sec. 2. Credit for residential solar energy property.
Sec. 3. Credit for energy efficiency improvements to existing homes.
Sec. 4. Alternative motor vehicle credit.
Sec. 5. Extension and expansion of credit for electricity produced from
renewable resources.
Sec. 6. Credit for production from qualifying advanced clean coal
technology.
Sec. 7. Oil and gas from marginal wells.
Sec. 8. Natural gas gathering lines treated as 7-year property.
Sec. 9. Temporary suspension of limitation based on 65 percent of
taxable income and extension of suspension
of taxable income limit with respect to
marginal production.
Sec. 10. Election to expense geological and geophysical expenditures.
Sec. 11. Five-year net operating loss carryback for losses attributable
to operating mineral interests of oil and
gas producers.
Sec. 12. Extension and modification of credit for producing fuel from a
nonconventional source.
SEC. 2. CREDIT FOR RESIDENTIAL SOLAR ENERGY PROPERTY.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
(relating to nonrefundable personal credits) is amended by inserting
after section 25B the following new section:
``SEC. 25C. RESIDENTIAL SOLAR ENERGY PROPERTY.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to the sum of--
``(1) 15 percent of the qualified photovoltaic property
expenditures made by the taxpayer during such year, and
``(2) 15 percent of the qualified solar water heating
property expenditures made by the taxpayer during the taxable
year.
``(b) Limitations.--
``(1) Maximum credit.--The credit allowed under subsection
(a) shall not exceed--
``(A) $2,000 for each system of property described
in subsection (c)(1), and
``(B) $2,000 for each system of property described
in subsection (c)(2).
``(2) Safety certifications.--No credit shall be allowed
under this section for an item of property unless--
``(A) in the case of solar water heating equipment,
such equipment is certified for performance and safety
by the non-profit Solar Rating Certification
Corporation or a comparable entity endorsed by the
government of the State in which such property is
installed, and
``(B) in the case of a photovoltaic system, such
system meets appropriate fire and electric code
requirements.
``(3) Limitation based on amount of tax.--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 sections 23 and
25D) and section 27 for the taxable year.
``(c) Definitions.--For purposes of this section--
``(1) Qualified solar water heating property expenditure.--
The term `qualified solar water heating property expenditure'
means an expenditure for property to heat water for use in a
dwelling unit located in the United States and used as a
residence if at least half of the energy used by such property
for such purpose is derived from the sun.
``(2) Qualified photovoltaic property expenditure.--The
term `qualified photovoltaic property expenditure' means an
expenditure for property that uses solar energy to generate
electricity for use in a dwelling unit.
``(3) Solar panels.--No expenditure relating to a solar
panel or other property installed as a roof (or portion
thereof) shall fail to be treated as property described in
paragraph (1) or (2) solely because it constitutes a structural
component of the structure on which it is installed.
``(4) Labor costs.--Expenditures for labor costs properly
allocable to the onsite preparation, assembly, or original
installation of the property described in paragraph (1) or (2)
and for piping or wiring to interconnect such property to the
dwelling unit shall be taken into account for purposes of this
section.
``(5) Swimming pools, etc., used as storage medium.--
Expenditures which are properly allocable to a swimming pool,
hot tub, or any other energy storage medium which has a
function other than the function of such storage shall not be
taken into account for purposes of this section.
``(d) Special Rules.--
``(1) Dollar amounts in case of joint occupancy.--In the
case of any dwelling unit which is jointly occupied and used
during any calendar year as a residence by 2 or more
individuals the following shall apply:
``(A) The amount of the credit allowable under
subsection (a) by reason of expenditures (as the case
may be) made during such calendar year by any of such
individuals with respect to such dwelling unit shall be
determined by treating all of such individuals as 1
taxpayer whose taxable year is such calendar year.
``(B) There shall be allowable with respect to such
expenditures to each of such individuals, a credit
under subsection (a) for the taxable year in which such
calendar year ends in an amount which bears the same
ratio to the amount determined under subparagraph (A)
as the amount of such expenditures made by such
individual during such calendar year bears to the
aggregate of such expenditures made by all of such
individuals during such calendar year.
``(2) Tenant-stockholder in cooperative housing
corporation.--In the case of an individual who is a tenant-
stockholder (as defined in section 216) in a cooperative
housing corporation (as defined in such section), such
individual shall be treated as having made his tenant-
stockholder's proportionate share (as defined in section
216(b)(3)) of any expenditures of such corporation.
``(3) Condominiums.--
``(A) In general.--In the case of an individual who
is a member of a condominium management association
with respect to a condominium which he owns, such
individual shall be treated as having made his
proportionate share of any expenditures of such
association.
``(B) Condominium management association.--For
purposes of this paragraph, the term `condominium
management association' means an organization which
meets the requirements of paragraph (1) of section
528(c) (other than subparagraph (E) thereof) with
respect to a condominium project substantially all of
the units of which are used as residences.
``(4) Allocation in certain cases.--If less than 80 percent
of the use of an item is for nonbusiness purposes, only that
portion of the expenditures for such item which is properly
allocable to use for nonbusiness purposes shall be taken into
account.
``(5) When expenditure made; amount of expenditure.--
``(A) In general.--Except as provided in
subparagraph (B), an expenditure with respect to an
item shall be treated as made when the original
installation of the item is completed.
``(B) Expenditures part of building construction.--
In the case of an expenditure in connection with the
construction or reconstruction of a structure, such
expenditure shall be treated as made when the original
use of the constructed or reconstructed structure by
the taxpayer begins.
``(C) Amount.--The amount of any expenditure shall
be the cost thereof.
``(6) Property financed by subsidized energy financing.--
For purposes of determining the amount of expenditures made by
any individual with respect to any dwelling unit, there shall
not be taken in to account expenditures which are made from
subsidized energy financing (as defined in section
48(a)(4)(A)).
``(e) Basis Adjustments.--For purposes of this subtitle, if a
credit is allowed under this section for any expenditure with respect
to any property, the increase in the basis of such property which would
(but for this subsection) result from such expenditure shall be reduced
by the amount of the credit so allowed.
``(f) Termination.--The credit allowed under this section shall not
apply to taxable years beginning after December 31, 2008 (December 31,
2009, with respect to qualified photovoltaic property expenditures).''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 1016 is amended by striking
``and'' at the end of paragraph (27), by striking the period at
the end of paragraph (28) and inserting ``, and'', and by
adding at the end the following new paragraph:
``(29) to the extent provided in section 25C(e), in the
case of amounts with respect to which a credit has been allowed
under section 25C.''.
(2) The table of sections for subpart A of part IV of
subchapter A of chapter 1 is amended by inserting after the
item relating to section 25B the following new item:
``Sec. 25C. Residential solar energy
property.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending after December 31, 2003.
SEC. 3. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
(relating to nonrefundable personal credits) is amended by inserting
after section 25C the following new section:
``SEC. 25D. ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to 20 percent of the amount paid
or incurred by the taxpayer for qualified energy efficiency
improvements installed during such taxable year.
``(b) Limitations.--
``(1) Maximum credit.--The credit allowed by this section
with respect to a dwelling shall not exceed $2,000.
``(2) Prior credit amounts for taxpayer on same dwelling
taken into account.--If a credit was allowed to the taxpayer
under subsection (a) with respect to a dwelling in 1 or more
prior taxable years, the amount of the credit otherwise
allowable for the taxable year with respect to that dwelling
shall not exceed the amount of $2,000 reduced by the sum of the
credits allowed under subsection (a) to the taxpayer with
respect to the dwelling for all prior taxable years.
``(3) Limitation based on amount of tax.--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 23) and
section 27 for the taxable year.
``(c) Carryforward of Unused Credit.--If the credit allowable under
subsection (a) exceeds the limitation imposed by subsection (b)(3) for
such taxable year, such excess shall be carried to the succeeding
taxable year and added to the credit allowable under subsection (a) for
such succeeding taxable year.
``(d) Qualified Energy Efficiency Improvements.--For purposes of
this section, the term `qualified energy efficiency improvements' means
any energy efficient building envelope component which meets the
prescriptive criteria for such component established by the 1998
International Energy Conservation Code, if--
``(1) such component is installed in or on a dwelling--
``(A) located in the United States, and
``(B) owned and used by the taxpayer as the
taxpayer's principal residence (within the meaning of
section 121),
``(2) the original use of such component commences with the
taxpayer, and
``(3) such component reasonably can be expected to remain
in use for at least 5 years.
If the aggregate cost of such components with respect to any dwelling
exceeds $1,000, such components shall be treated as qualified energy
efficiency improvements only if such components are also certified in
accordance with subsection (e) as meeting such criteria.
``(e) Certification.--The certification described in subsection (d)
shall be--
``(1) determined on the basis of the technical
specifications or applicable ratings (including product
labeling requirements) for the measurement of energy
efficiency, based upon energy use or building envelope
component performance, for the energy efficient building
envelope component,
``(2) provided by a local building regulatory authority, a
utility, a manufactured home production inspection primary
inspection agency (IPIA), or an accredited home energy rating
system provider who is accredited by or otherwise authorized to
use approved energy performance measurement methods by the Home
Energy Ratings Systems Council or the National Association of
State Energy Officials, and
``(3) made in writing in a manner that specifies in readily
verifiable fashion the energy efficient building envelope
components installed and their respective energy efficiency
levels.
``(f) Definitions and Special Rules.--
``(1) Tenant-stockholder in cooperative housing
corporation.--In the case of an individual who is a tenant-
stockholder (as defined in section 216) in a cooperative
housing corporation (as defined in such section), such
individual shall be treated as having paid his tenant-
stockholder's proportionate share (as defined in section
216(b)(3)) of the cost of qualified energy efficiency
improvements made by such corporation.
``(2) Condominiums.--
``(A) In general.--In the case of an individual who
is a member of a condominium management association
with respect to a condominium which he owns, such
individual shall be treated as having paid his
proportionate share of the cost of qualified energy
efficiency improvements made by such association.
``(B) Condominium management association.--For
purposes of this paragraph, the term `condominium
management association' means an organization which
meets the requirements of paragraph (1) of section
528(c) (other than subparagraph (E) thereof) with
respect to a condominium project substantially all of
the units of which are used as residences.
``(3) Building envelope component.--The term `building
envelope component' means insulation material or system which
is specifically and primarily designed to reduce the heat loss
or gain of a dwelling when installed in or on such dwelling,
exterior windows (including skylights) and doors, and metal
roofs with appropriate pigmented coatings which are
specifically and primarily designed to reduce the heat gain of
a dwelling when installed in or on such dwelling.
``(4) Manufactured homes included.--For purposes of this
section, the term `dwelling' includes a manufactured home which
conforms to Federal Manufactured Home Construction and Safety
Standards (24 CFR 3280).
``(g) Basis Adjustment.--For purposes of this subtitle, if a credit
is allowed under this section for any expenditure with respect to any
property, the increase in the basis of such property which would (but
for this subsection) result from such expenditure shall be reduced by
the amount of the credit so allowed.
``(h) Application of Section.--This section shall apply to
qualified energy efficiency improvements installed after December 31,
2003 and before January 1, 2009.''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 1016 is amended by striking
``and'' at the end of paragraph (28), by striking the period at
the end of paragraph (29) and inserting ``, and'', and by
adding at the end the following new paragraph:
``(30) to the extent provided in section 25D(g), in the
case of amounts with respect to which a credit has been allowed
under section 25D.''.
(2) The table of sections for subpart A of part IV of
subchapter A of chapter 1 is amended by inserting after the
item relating to section 25C the following new item:
``Sec. 25D. Energy efficiency
improvements to existing
homes.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years ending after December 31, 2003.
SEC. 4. ALTERNATIVE MOTOR VEHICLE CREDIT.
(a) In General.--Subpart B of part IV of subchapter A of chapter 1
(relating to other credits) is amended by adding at the end the
following:
``SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT.
``(a) Allowance of Credit.--There shall be allowed as a credit
against the tax imposed by this chapter for the taxable year an amount
equal to the sum of--
``(1) the new qualified fuel cell motor vehicle credit
determined under subsection (b), and
``(2) the new qualified hybrid motor vehicle credit
determined under subsection (c).
``(b) New Qualified Fuel Cell Motor Vehicle Credit.--
``(1) In general.--For purposes of subsection (a), the new
qualified fuel cell motor vehicle credit determined under this
subsection with respect to a new qualified fuel cell motor
vehicle placed in service by the taxpayer during the taxable
year is--
``(A) $4,000, if such vehicle has a gross vehicle
weight rating of not more than 8,500 pounds,
``(B) $10,000, if such vehicle has a gross vehicle
weight rating of more than 8,500 pounds but not more
than 14,000 pounds,
``(C) $20,000, if such vehicle has a gross vehicle
weight rating of more than 14,000 pounds but not more
than 26,000 pounds, and
``(D) $40,000, if such vehicle has a gross vehicle
weight rating of more than 26,000 pounds.
``(2) Increase for fuel efficiency.--
``(A) In general.--The amount determined under
paragraph (1)(A) with respect to a new qualified fuel
cell motor vehicle which is a passenger automobile or
light truck shall be increased by--
``(i) $1,000, if such vehicle achieves at
least 150 percent but less than 175 percent of
the 2002 model year city fuel economy,
``(ii) $1,500, if such vehicle achieves at
least 175 percent but less than 200 percent of
the 2002 model year city fuel economy,
``(iii) $2,000, if such vehicle achieves at
least 200 percent but less than 225 percent of
the 2002 model year city fuel economy,
``(iv) $2,500, if such vehicle achieves at
least 225 percent but less than 250 percent of
the 2002 model year city fuel economy,
``(v) $3,000, if such vehicle achieves at
least 250 percent but less than 275 percent of
the 2002 model year city fuel economy,
``(vi) $3,500, if such vehicle achieves at
least 275 percent but less than 300 percent of
the 2002 model year city fuel economy, and
``(vii) $4,000, if such vehicle achieves at
least 300 percent of the 2002 model year city
fuel economy.
``(B) 2002 model year city fuel economy.--For
purposes of subparagraph (A), the 2002 model year city
fuel economy with respect to a vehicle shall be
determined in accordance with the following tables:
``(i) In the case of a passenger
automobile:
``If vehicle inertia weight class The 2002 model year city fuel
is: economy is:
1,500 or 1,750 lbs............................ 43.7 mpg
2,000 lbs..................................... 38.3 mpg
2,250 lbs..................................... 34.1 mpg
2,500 lbs..................................... 30.7 mpg
2,750 lbs..................................... 27.9 mpg
3,000 lbs..................................... 25.6 mpg
3,500 lbs..................................... 22.0 mpg
4,000 lbs..................................... 19.3 mpg
4,500 lbs..................................... 17.2 mpg
5,000 lbs..................................... 15.5 mpg
5,500 lbs..................................... 14.1 mpg
6,000 lbs..................................... 12.9 mpg
6,500 lbs..................................... 11.9 mpg
7,000 or 8,500 lbs............................ 11.1 mpg.
``(ii) In the case of a light truck:
``If vehicle inertia weight class The 2002 model year city fuel
is: economy is:
1,500 or 1,750 lbs............................ 37.6 mpg
2,000 lbs..................................... 33.7 mpg
2,250 lbs..................................... 30.6 mpg
2,500 lbs..................................... 28.0 mpg
2,750 lbs..................................... 25.9 mpg
3,000 lbs..................................... 24.1 mpg
3,500 lbs..................................... 21.3 mpg
4,000 lbs..................................... 19.0 mpg
4,500 lbs..................................... 17.3 mpg
5,000 lbs..................................... 15.8 mpg
5,500 lbs..................................... 14.6 mpg
6,000 lbs..................................... 13.6 mpg
6,500 lbs..................................... 12.8 mpg
7,000 or 8,500 lbs............................ 12.0 mpg.
``(C) Vehicle inertia weight class.--For purposes
of subparagraph (B), the term `vehicle inertia weight
class' has the same meaning as when defined in
regulations prescribed by the Administrator of the
Environmental Protection Agency for purposes of the
administration of title II of the Clean Air Act (42
U.S.C. 7521 et seq.).
``(3) New qualified fuel cell motor vehicle.--For purposes
of this subsection, the term `new qualified fuel cell motor
vehicle' means a motor vehicle--
``(A) which is propelled by power derived from one
or more cells which convert chemical energy directly
into electricity by combining oxygen with hydrogen fuel
which is stored on board the vehicle in any form and
may or may not require reformation prior to use,
``(B) which, in the case of a passenger automobile
or light truck--
``(i) for 2004 and later model vehicles,
has received a certificate of conformity under
the Clean Air Act and meets or exceeds the
equivalent qualifying California low emission
vehicle standard under section 243(e)(2) of the
Clean Air Act for that make and model year, and
``(ii) for 2006 and later model vehicles,
has received a certificate that such vehicle
meets or exceeds the Tier II emission level
established in regulations prescribed by the
Administrator of the Environmental Protection
Agency under section 202(i) of the Clean Air
Act for that make and model year vehicle,
``(C) the original use of which commences with the
taxpayer,
``(D) which is acquired for use or lease by the
taxpayer and not for resale, and
``(E) which is made by a manufacturer.
``(c) New Qualified Hybrid Motor Vehicle Credit.--
``(1) In general.--For purposes of subsection (a), the new
qualified hybrid motor vehicle credit determined under this
subsection with respect to a new qualified hybrid motor vehicle
placed in service by the taxpayer during the taxable year is
the credit amount determined under paragraph (2).
``(2) Credit amount.--
``(A) In general.--The credit amount determined
under this paragraph shall be determined in accordance
with the following tables:
``(i) In the case of a new qualified hybrid
motor vehicle which is a passenger automobile
or light truck and which provides the following
percentage of the maximum available power:
``If percentage of the maximum The credit amount is:
available power is:
At least 2.5 percent but less than 10 percent. $250
At least 10 percent but less than 20 percent.. $500
At least 20 percent but less than 30 percent.. $750
At least 30 percent........................... $1,000.
``(ii) In the case of a new qualified
hybrid motor vehicle which is a heavy duty
hybrid motor vehicle and which provides the
following percentage of the maximum available
power:
``(I) If such vehicle has a gross
vehicle weight rating of not more than
14,000 pounds:
``If percentage of the maximum The credit amount is:
available power is:
At least 20 percent but less than 30 percent.. $1,500
At least 30 percent but less than 40 percent.. $1,750
At least 40 percent but less than 50 percent.. $2,000
At least 50 percent but less than 60 percent.. $2,250
At least 60 percent........................... $2,500.
``(II) If such vehicle has a gross
vehicle weight rating of more than
14,000 but not more than 26,000 pounds:
``If percentage of the maximum The credit amount is:
available power is:
At least 20 percent but less than 30 percent.. $4,000
At least 30 percent but less than 40 percent.. $4,500
At least 40 percent but less than 50 percent.. $5,000
At least 50 percent but less than 60 percent.. $5,500
At least 60 percent........................... $6,000.
``(III) If such vehicle has a gross
vehicle weight rating of more than
26,000 pounds:
``If percentage of the maximum The credit amount is:
available power is:
At least 20 percent but less than 30 percent.. $6,000
At least 30 percent but less than 40 percent.. $7,000
At least 40 percent but less than 50 percent.. $8,000
At least 50 percent but less than 60 percent.. $9,000
At least 60 percent........................... $10,000.
``(B) Increase for fuel efficiency.--
``(i) Amount.--The amount determined under
subparagraph (A)(i) with respect to a passenger
automobile or light truck shall be increased
by--
``(I) $1,000, if such vehicle
achieves at least 125 percent but less
than 150 percent of the 2002 model year
city fuel economy,
``(II) $1,500, if such vehicle
achieves at least 150 percent but less
than 175 percent of the 2002 model year
city fuel economy,
``(III) $2,000, if such vehicle
achieves at least 175 percent but less
than 200 percent of the 2002 model year
city fuel economy,
``(IV) $2,500, if such vehicle
achieves at least 200 percent but less
than 225 percent of the 2002 model year
city fuel economy,
``(V) $3,000, if such vehicle
achieves at least 225 percent but less
than 250 percent of the 2002 model year
city fuel economy, and
``(VI) $3,500, if such vehicle
achieves at least 250 percent of the
2002 model year city fuel economy.
``(ii) 2002 model year city fuel economy.--
For purposes of clause (i), the 2002 model year
city fuel economy with respect to a vehicle
shall be determined using the tables provided
in subsection (b)(2)(B) with respect to such
vehicle.
``(iii) Option to use like vehicle.--For
purposes of clause (i), at the option of the
vehicle manufacturer, the increase for fuel
efficiency may be calculated by comparing the
new qualified hybrid motor vehicle to a `like
vehicle'.
``(C) Increase for accelerated emissions
performance.--The amount determined under subparagraph
(A)(ii) with respect to an applicable heavy duty hybrid
motor vehicle shall be increased by the increase credit
amount determined in accordance with the following
tables:
``(i) In the case of a vehicle which has a
gross vehicle weight rating of not more than
14,000 pounds:
``If the model year is: The increase credit amount is:
2004.......................................... $3,500
2005.......................................... $3,000
2006.......................................... $2,500
2007.......................................... $2,000
2008.......................................... $1,500.
``(ii) In the case of a vehicle which has a
gross vehicle weight rating of more than 14,000
pounds but not more than 26,000 pounds:
``If the model year is: The increase credit amount is:
2004.......................................... $9,000
2005.......................................... $7,750
2006.......................................... $6,500
2007.......................................... $5,250
2008.......................................... $4,000.
``(iii) In the case of a vehicle which has
a gross vehicle weight rating of more than
26,000 pounds:
``If the model year is: The increase credit amount is:
2004.......................................... $14,000
2005.......................................... $12,000
2006.......................................... $10,000
2007.......................................... $8,000
2008.......................................... $6,000.
``(D) Conservation credit.--
``(i) Amount.--The amount determined under
subparagraph (A)(i) with respect to a passenger
automobile or light truck shall be increased
by--
``(I) $250, if such vehicle
achieves a lifetime fuel savings of at
least 1,500 gallons of gasoline, and
``(II) $500, if such vehicle
achieves a lifetime fuel savings of at
least 2,500 gallons of gasoline.
``(ii) Lifetime fuel savings for like
vehicle.--For purposes of clause (i), at the
option of the vehicle manufacturer, the
lifetime fuel savings fuel may be calculated by
comparing the new qualified hybrid motor
vehicle to a `like vehicle'.
``(E) Definitions.--
``(i) Applicable heavy duty hybrid motor
vehicle.--For purposes of subparagraph (C), the
term `applicable heavy duty hybrid motor
vehicle' means a heavy duty hybrid motor
vehicle which is powered by an internal
combustion or heat engine which is certified as
meeting the emission standards set in the
regulations prescribed by the Administrator of
the Environmental Protection Agency for 2009
and later model year diesel heavy duty engines
or 2010 and later model year ottocycle heavy
duty engines, as applicable.
``(ii) Heavy duty hybrid motor vehicle.--
For purposes of this paragraph, the term `heavy
duty hybrid motor vehicle' means a new
qualified hybrid motor vehicle which has a
gross vehicle weight rating of more than 10,000
pounds and draws propulsion energy from both of
the following onboard sources of stored energy:
``(I) An internal combustion or
heat engine using consumable fuel
which, for 2004 and later model
vehicles, has received a certificate of
conformity under the Clean Air Act and
meets or exceeds a level of not greater
than 3.0 grams per brake horsepower-
hour of oxides of nitrogen and 0.01 per
brake horsepower-hour of particulate
matter.
``(II) A rechargeable energy
storage system.
``(iii) Maximum available power.--
``(I) Passenger automobile or light
truck.--For purposes of subparagraph
(A)(i), the term `maximum available
power' means the maximum power
available from the battery or other
electrical storage device, during a
standard 10 second pulse power test,
divided by the sum of the battery or
other electrical storage device and the
SAE net power of the heat engine.
``(II) Heavy duty hybrid motor
vehicle.--For purposes of subparagraph
(A)(ii), the term `maximum available
power' means the maximum power
available from the battery or other
electrical storage device, during a
standard 10 second pulse power test,
divided by the vehicle's total traction
power. The term `total traction power'
means the sum of the electric motor
peak power and the heat engine peak
power of the vehicle, except that if
the electric motor is the sole means by
which the vehicle can be driven, the
total traction power is the peak
electric motor power.
``(iv) Like vehicle.--For purposes of
subparagraph (B)(iii), the term `like vehicle'
for a new qualified hybrid motor vehicle
derived from a conventional production vehicle
produced in the same model year means a model
that is equivalent in the following areas:
``(I) Body style (2-door or 4-
door).
``(II) Transmission (automatic or
manual).
``(III) Acceleration performance
(<plus-minus> 0.05 seconds).
``(IV) Drivetrain (2-wheel drive or
4-wheel drive).
``(V) Certification by the
Administrator of the Environmental
Protection Agency.
``(v) Lifetime fuel savings.--For purposes
of subsection (c)(2)(D), the term `lifetime
fuel savings' shall be calculated by dividing
120,000 by the difference between the 2002
model year city fuel economy for the vehicle
inertia weight class and the city fuel economy
for the new qualified hybrid motor vehicle.
``(3) New qualified hybrid motor vehicle.--For purposes of
this subsection, the term `new qualified hybrid motor vehicle'
means a motor vehicle--
``(A) which draws propulsion energy from onboard
sources of stored energy which are both--
``(i) an internal combustion or heat engine
using combustible fuel, and
``(ii) a rechargeable energy storage
system,
``(B) which, in the case of a passenger automobile
or light truck, for 2004 and later model vehicles, has
received a certificate of conformity under the Clean
Air Act and meets or exceeds the equivalent qualifying
California low emission vehicle standard under section
243(e)(2) of the Clean Air Act for that make and model
year,
``(C) the original use of which commences with the
taxpayer,
``(D) which is acquired for use or lease by the
taxpayer and not for resale, and
``(E) which is made by a manufacturer.
``(d) Limitation Based on Amount of Tax.--The credit allowed under
subsection (a) for the taxable year shall not exceed the excess of--
``(1) the sum of the regular tax liability (as defined in
section 26(b)) plus the tax imposed by section 55, over
``(2) the sum of the credits allowable under subpart A and
sections 27, 29, and 30A for the taxable year.
``(e) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Consumable fuel.--The term `consumable fuel' means
any solid, liquid, or gaseous matter which releases energy when
consumed by an auxiliary power unit.
``(2) Motor vehicle.--The term `motor vehicle' has the
meaning given such term by section 30(c)(2).
``(3) 2002 model year city fuel economy.--The 2002 model
year city fuel economy with respect to any vehicle shall be
measured under rules similar to the rules under section
4064(c).
``(4) Other terms.--The terms `automobile', `passenger
automobile', `light truck', and `manufacturer' have the
meanings given such terms in regulations prescribed by the
Administrator of the Environmental Protection Agency for
purposes of the administration of title II of the Clean Air Act
(42 U.S.C. 7521 et seq.).
``(5) Reduction in basis.--For purposes of this subtitle,
the basis of any property for which a credit is allowable under
subsection (a) shall be reduced by the amount of such credit so
allowed.
``(6) No double benefit.--The amount of any deduction or
credit allowable under this chapter (other than the credit
allowable under this section) shall be reduced by the amount of
credit allowed under subsection (a) for such vehicle for the
taxable year.
``(7) Property used by tax-exempt entities.--In the case of
a credit amount which is allowable with respect to a motor
vehicle which is acquired by an entity exempt from tax under
this chapter, the person which sells or leases such vehicle to
the entity shall be treated as the taxpayer with respect to the
vehicle for purposes of this section and the credit shall be
allowed to such person, but only if the person clearly
discloses to the entity in any sale or lease document the
specific amount of any credit otherwise allowable to the entity
under this section and reduces the sale or lease price of such
vehicle by an equivalent amount of such credit.
``(8) Recapture.--The Secretary shall, by regulations,
provide for recapturing the benefit of any credit allowable
under subsection (a) with respect to any property which ceases
to be property eligible for such credit (including recapture in
the case of a lease period of less than the economic life of a
vehicle).
``(9) Property used outside united states, etc., not
qualified.--No credit shall be allowed under subsection (a)
with respect to any property referred to in section 50(b) or
with respect to the portion of the cost of any property taken
into account under section 179.
``(10) Election to not take credit.--No credit shall be
allowed under subsection (a) for any vehicle if the taxpayer
elects to not have this section apply to such vehicle.
``(11) Carryforward allowed.--
``(A) In general.--If the credit amount allowable
under subsection (a) for a taxable year exceeds the
amount of the limitation under subsection (c) for such
taxable year (referred to as the `unused credit year'
in this paragraph), such excess shall be allowed as a
credit carryforward for each of the 20 taxable years
following the unused credit year.
``(B) Rules.--Rules similar to the rules of section
39 shall apply with respect to the credit carryforward
under subparagraph (A).
``(12) Interaction with air quality and motor vehicle
safety standards.--Unless otherwise provided in this section, a
motor vehicle shall not be considered eligible for a credit
under this section unless such vehicle is in compliance with--
``(A) the applicable provisions of the Clean Air
Act for the applicable make and model year of the
vehicle (or applicable air quality provisions of State
law in the case of a State which has adopted such
provision under a waiver under section 209(b) of the
Clean Air Act), and
``(B) the motor vehicle safety provisions of
sections 30101 through 30169 of title 49, United States
Code.
``(f) Regulations.--
``(1) In general.--The Secretary shall promulgate such
regulations as necessary to carry out the provisions of this
section.
``(2) Administrator of environmental protection agency.--
The Administrator of the Environmental Protection Agency, in
coordination with the Secretary of Transportation and the Secretary of
the Treasury, shall prescribe such regulations as necessary to
determine whether a motor vehicle meets the requirements to be eligible
for a credit under this section.
``(g) Termination.--This section shall not apply to any property
placed in service after--
``(1) in the case of a new qualified fuel cell motor
vehicle (as described in subsection (b)), December 31, 2013,
and
``(2) in the case of any other property, December 31,
2009.''.
(b) Conforming Amendments.--
(1) Section 1016(a) is amended by striking ``and'' at the
end of paragraph (29), by striking the period at the end of
paragraph (30) and inserting ``, and'', and by adding at the
end the following:
``(31) to the extent provided in section 30B(e)(5).''.
(2) Section 6501(m) is amended by inserting ``30B(e)(10),''
after ``30(d)(4),''.
(3) The table of sections for subpart B of part IV of
subchapter A of chapter 1 is amended by inserting after the
item relating to section 30A the following:
``Sec. 30B. Alternative motor vehicle
credit.''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service after December 31, 2003, in taxable
years ending after such date.
SEC. 5. EXTENSION AND EXPANSION OF CREDIT FOR ELECTRICITY PRODUCED FROM
RENEWABLE RESOURCES.
(a) Extension of Credit for Wind and Closed-Loop Biomass
Facilities.--Subparagraphs (A) and (B) of section 45(c)(3) are each
amended by striking ``2004'' and inserting ``2009''.
(b) Expansion of Credit for Open-loop Biomass and Landfill Gas
Facilities.--Paragraph (3) of section 45(c) is amended by adding at the
end the following new subparagraphs:
``(D) Open-loop biomass facilities.--In the case of
a facility using open-loop biomass to produce
electricity, the term `qualified facility' means any
facility owned by the taxpayer which is originally
placed in service before January 1, 2009.
``(E) Landfill gas facilities.--In the case of a
facility producing electricity from gas derived from
the biodegradation of municipal solid waste, the term
`qualified facility' means any facility owned by the
taxpayer which is originally placed in service before
January 1, 2009.''.
(c) Definition and Special Rules.--Subsection (c) of section 45 is
amended by adding at the end the following new paragraphs:
``(5) Open-loop biomass.--The term `open-loop biomass'
means any solid, nonhazardous, cellulosic waste material which
is segregated from other waste materials and which is derived
from--
``(A) any of the following forest-related
resources: mill residues, precommercial thinnings,
slash, and brush, but not including old-growth timber,
``(B) solid wood waste materials, including waste
pallets, crates, dunnage, manufacturing and
construction wood wastes (other than pressure-treated,
chemically-treated, or painted wood wastes), and
landscape or right-of-way tree trimmings, but not
including municipal solid waste (garbage), gas derived
from the biodegradation of solid waste, or paper that
is commonly recycled, or
``(C) agriculture sources, including orchard tree
crops, vineyard, grain, legumes, sugar, and other crop
by-products or residues.
Such term shall not include closed-loop biomass.
``(6) Reduced credit for certain preeffective date
facilities.--In the case of any facility described in
subparagraph (D) or (E) of paragraph (3) which is placed in
service before the date of the enactment of this subparagraph--
``(A) subsection (a)(1) shall be applied by
substituting `1.0 cents' for `1.5 cents', and
``(B) the 5-year period beginning on the date of
the enactment of this paragraph shall be substituted in
lieu of the 10-year period in subsection (a)(2)(A)(ii).
``(7) Limit on reductions for grants, etc., for open-loop
biomass facilities.--If the amount of the credit determined
under subsection (a) with respect to any open-loop biomass
facility is required to be reduced under paragraph (3) of
subsection (b), the fraction under such paragraph shall in no
event be greater than \4/5\.
``(8) Coordination with section 29.--The term `qualified
facility' shall not include any facility the production from
which is allowed as a credit under section 29 for the taxable
year or any prior taxable year.''.
(d) Effective Date.--The amendments made by this section shall
apply to electricity sold after the date of the enactment of this Act.
SEC. 6. CREDIT FOR PRODUCTION FROM QUALIFYING ADVANCED CLEAN COAL
TECHNOLOGY.
(a) Credit for Production From Qualifying Advanced Clean Coal
Technology.--Subpart D of part IV of subchapter A of chapter 1
(relating to business related credits) is amended by adding after
section 45F the following:
``SEC. 45G. CREDIT FOR PRODUCTION FROM QUALIFYING ADVANCED CLEAN COAL
TECHNOLOGY.
``(a) General Rule.--For purposes of section 38, the qualifying
advanced clean coal technology production credit of any taxpayer for
any taxable year is equal to--
``(1) the applicable amount of advanced clean coal
technology production credit, multiplied by
``(2) the sum of--
``(A) the kilowatt hours of electricity, plus
``(B) each 3,413 Btu of fuels or chemicals,
produced by the taxpayer during such taxable year at a
qualifying advanced clean coal technology facility during the
10-year period beginning on the date the facility was
originally placed in service.
``(b) Applicable Amount.--For purposes of this section, the
applicable amount of advanced clean coal technology production credit
with respect to production from a qualifying advanced clean coal
technology facility shall be determined as follows:
``(1) Where the design coal has a heat content of more than
9,000 Btu per pound:
``(A) In the case of a facility originally placed
in service before 2009, if--
------------------------------------------------------------------------
The applicable amount is:
``The facility design net -------------------------------------------
heat rate, Btu/kWh (HHV) is For 1st 5 years of For 2d 5 years of
equal to: such service such service
------------------------------------------------------------------------
Not more than 8,400......... $.0060 $.0038
More than 8,400 but not more $.0025 $.0010
than 8,550.
More than 8,550 but not more $.0010 $.0010.
than 8,750.
------------------------------------------------------------------------
``(B) In the case of a facility originally placed
in service after 2008 and before 2013, if--
------------------------------------------------------------------------
The applicable amount is:
``The facility design net -------------------------------------------
heat rate, Btu/kWh (HHV) is For 1st 5 years of For 2d 5 years of
equal to: such service such service
------------------------------------------------------------------------
Not more than 7,770......... $.0105 $.0090
More than 7,770 but not more $.0085 $.0068
than 8,125.
More than 8,125 but not more $.0075 $.0055.
than 8,350.
------------------------------------------------------------------------
``(C) In the case of a facility originally placed
in service after 2012 and before 2017, if--
------------------------------------------------------------------------
The applicable amount is:
``The facility design net -------------------------------------------
heat rate, Btu/kWh (HHV) is For 1st 5 years of For 2d 5 years of
equal to: such service such service
------------------------------------------------------------------------
Not more than 7,380......... $.0140 $.01
More than 7,380 but not more $.0120 $.0090.
than 7,720.
------------------------------------------------------------------------
``(2) Where the design coal has a heat content of not more
than 9,000 Btu per pound:
``(A) In the case of a facility originally placed
in service before 2009, if--
------------------------------------------------------------------------
The applicable amount is:
``The facility design net -------------------------------------------
heat rate, Btu/kWh (HHV) is For 1st 5 years of For 2d 5 years of
equal to: such service such service
------------------------------------------------------------------------
Not more than 8,500......... $.0060 $.0038
More than 8,500 but not more $.0025 $.0010
than 8,650.
More than 8,650 but not more $.0010 $.0010.
than 8,750.
------------------------------------------------------------------------
``(B) In the case of a facility originally placed
in service after 2008 and before 2013, if--
------------------------------------------------------------------------
The applicable amount is:
``The facility design net -------------------------------------------
heat rate, Btu/kWh (HHV) is For 1st 5 years of For 2d 5 years of
equal to: such service such service
------------------------------------------------------------------------
Not more than 8,000......... $.0105 $.009
More than 8,000 but not more $.0085 $.0068
than 8,250.
More than 8,250 but not more $.0075 $.0055.
than 8,400.
------------------------------------------------------------------------
``(C) In the case of a facility originally placed
in service after 2012 and before 2017, if--
------------------------------------------------------------------------
The applicable amount is:
``The facility design net -------------------------------------------
heat rate, Btu/kWh (HHV) is For 1st 5 years of For 2d 5 years of
equal to: such service such service
------------------------------------------------------------------------
Not more than 7,800......... $.0140 $.0115
More than 7,800 but not more $.0120 $.0090.
than 7,950.
------------------------------------------------------------------------
``(3) Where the clean coal technology facility is producing
fuel or chemicals:
``(A) In the case of a facility originally placed
in service before 2009, if--
------------------------------------------------------------------------
The applicable amount is:
``The facility design net -------------------------------------------
thermal efficiency (HHV) is For 1st 5 years of For 2d 5 years of
equal to: such service such service
------------------------------------------------------------------------
Not less than 40.6 percent.. $.0060 $.0038
Less than 40.6 but not less $.0025 $.0010
than 40 percent.
Less than 40 but not less $.0010 $.0010.
than 39 percent.
------------------------------------------------------------------------
``(B) In the case of a facility originally placed
in service after 2008 and before 2013, if--
------------------------------------------------------------------------
The applicable amount is:
``The facility design net -------------------------------------------
thermal efficiency (HHV) is For 1st 5 years of For 2d 5 years of
equal to: such service such service
------------------------------------------------------------------------
Not less than 43.9 percent.. $.0105 $.009
Less than 43.9 but not less $.0085 $.0068
than 42 percent.
Less than 42 but not less $.0075 $.0055.
than 40.9 percent.
------------------------------------------------------------------------
``(C) In the case of a facility originally placed
in service after 2012 and before 2017, if--
------------------------------------------------------------------------
The applicable amount is:
``The facility design net -------------------------------------------
thermal efficiency (HHV) is For 1st 5 years of For 2d 5 years of
equal to: such service such service
------------------------------------------------------------------------
Not less than 44.2 percent.. $.0140 $.0115
Less than 44.2 but not less $.0120 $.0090.
than 43.6 percent.
------------------------------------------------------------------------
``(c) Inflation Adjustment Factor.--For calendar years after 2003,
each amount in paragraphs (1), (2), and (3) of subsection (b) shall be
adjusted by multiplying such amount by the inflation adjustment factor
for the calendar year in which the amount is applied. If any amount as
increased under the preceding sentence is not a multiple of 0.01 cent,
such amount shall be rounded to the nearest multiple of 0.01 cent.
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) In general.--Any term used in this section which is
also used in section 48A shall have the meaning given such term
in section 48A.
``(2) Applicable rules.--The rules of paragraphs (3), (4),
and (5) of section 45 shall apply.
``(3) Inflation adjustment factor.--The term `inflation
adjustment factor' means, with respect to a calendar year, a
fraction the numerator of which is the GDP implicit price
deflator for the preceding calendar year and the denominator of
which is the GDP implicit price deflator for the calendar year
2003.
``(4) GDP implicit price deflator.--The term `GDP implicit
price deflator' means the most recent revision of the implicit
price deflator for the gross domestic product as computed by
the Department of Commerce before March 15 of the calendar
year.''.
(b) Credit Treated as Business Credit.--Section 38(b) is amended by
striking ``plus'' at the end of paragraph (14), by striking the period
at the end of paragraph (15) and inserting ``, plus'', and by adding at
the end the following:
``(16) the qualifying advanced clean coal technology
production credit determined under section 45G(a).''.
(c) Transitional Rule.--Section 39(d) (relating to transitional
rules) is amended by adding after paragraph (10) the following:
``(11) No carryback of section 45g credit before effective
date.--No portion of the unused business credit for any taxable
year which is attributable to the qualifying advanced clean
coal technology production credit determined under section 45G
may be carried back to a taxable year ending before the date of
the enactment of section 45G.''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amended by adding at the end
the following:
``Sec. 45G. Credit for production from
qualifying advanced clean coal
technology.''.
(e) Effective Date.--The amendments made by this section shall
apply to production after the date of the enactment of this Act.
SEC. 7. OIL AND GAS FROM MARGINAL WELLS.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
(relating to business credits) is amended by adding at the end the
following:
``SEC. 45H. CREDIT FOR PRODUCING OIL AND GAS FROM MARGINAL WELLS.
``(a) General Rule.--For purposes of section 38, the marginal well
production credit for any taxable year is an amount equal to the
product of--
``(1) the credit amount, and
``(2) the qualified credit oil production and the qualified
natural gas production which is attributable to the taxpayer.
``(b) Credit Amount.--For purposes of this section--
``(1) In general.--The credit amount is--
``(A) $3 per barrel of qualified crude oil
production, and
``(B) 50 cents per 1,000 cubic feet of qualified
natural gas production.
``(2) Reduction as oil and gas prices increase.--
``(A) In general.--The $3 and 50 cents amounts
under paragraph (1) shall each be reduced (but not
below zero) by an amount which bears the same ratio to
such amount (determined without regard to this
paragraph) as--
``(i) the excess (if any) of the applicable
reference price over $15 ($1.67 for qualified
natural gas production), bears to
``(ii) $3 ($0.33 for qualified natural gas
production).
The applicable reference price for a taxable year is
the reference price of the calendar year preceding the
calendar year in which the taxable year begins.
``(B) Inflation adjustment.--In the case of any
taxable year beginning in a calendar year after 2003,
each of the dollar amounts contained in subparagraph
(A) shall be increased to an amount equal to such
dollar amount multiplied by the inflation adjustment
factor for such calendar year (determined under section
43(b)(3)(B) by substituting `2002' for `1990').
``(C) Reference price.--For purposes of this
paragraph, the term `reference price' means, with
respect to any calendar year--
``(i) in the case of qualified crude oil
production, the reference price determined
under section 29(d)(2)(C), and
``(ii) in the case of qualified natural gas
production, the Secretary's estimate of the
annual average wellhead price per 1,000 cubic
feet for all domestic natural gas.
``(c) Qualified Crude Oil and Natural Gas Production.--For purposes
of this section--
``(1) In general.--The terms `qualified crude oil
production' and `qualified natural gas production' mean
domestic crude oil or natural gas which is produced from a
qualified marginal well.
``(2) Limitation on amount of production which may
qualify.--
``(A) In general.--Crude oil or natural gas
produced during any taxable year from any well shall
not be treated or qualified crude oil production or
qualified natural gas production to the extent
production from the well during the taxable year
exceeds 1,095 barrels or barrel equivalents.
``(B) Proportionate reductions.--
``(i) Short taxable years.--In the case of
a short taxable year, the limitations under
this paragraph shall be proportionately reduced
to reflect the ratio which the number of days
in such taxable year bears to 365.
``(ii) Wells not in production entire
year.--In the case of a well which is not
capable of production during each day of a
taxable year, the limitations under this
paragraph applicable to the well shall be
proportionately reduced to reflect the ratio
which the number of days of production bears to
the total number of days in the taxable year.
``(3) Definitions.--
``(A) Qualified marginal well.--The term `qualified
marginal well' means a domestic well--
``(i) the production from which during the
taxable year is treated as marginal production
under section 613A(c)(6), or
``(ii) which, during the taxable year--
``(I) has average daily production
of not more than 25 barrel equivalents,
and
``(II) produces water at a rate not
less than 95 percent of total well
effluent.
``(B) Crude oil, etc.--The terms `crude oil',
`natural gas', `domestic', and `barrel' have the
meanings given such terms by section 613A(e).
``(C) Barrel equivalent.--The term `barrel
equivalent' means, with respect to natural gas, a
conversation ratio of 6,000 cubic feet of natural gas
to 1 barrel of crude oil.
``(d) Other Rules.--
``(1) Production attributable to the taxpayer.--In the case
of a qualified marginal well in which there is more than one
owner of operating interests in the well and the crude oil or
natural gas production exceeds the limitation under subsection
(c)(2), qualifying crude oil production or qualifying natural
gas production attributable to the taxpayer shall be determined
on the basis of the ratio which taxpayer's revenue interest in
the production bears to the aggregate of the revenue interests
of all operating interest owners in the production.
``(2) Operating interest required.--Any credit under this
section may be claimed only on production which is attributable
to the holder of an operating interest.
``(3) Production from nonconventional sources excluded.--In
the case of production from a qualified marginal well which is
eligible for the credit allowed under section 29 for the
taxable year, no credit shall be allowable under this section
unless the taxpayer elects not to claim the credit under
section 29 with respect to the well.
``(4) Noncompliance with pollution laws.--For purposes of
subsection (c)(3)(A), a marginal well which is not in
compliance with the applicable State and Federal pollution
prevention, control, and permit requirements for any period of
time shall not be considered to be a qualified marginal well
during such period.''.
(b) Credit Treated as Business Credit.--Section 38(b) is amended by
striking ``plus'' at the end of paragraph (15), by striking the period
at the end of paragraph (16) and inserting ``, plus'', and by adding at
the end the following:
``(17) the marginal oil and gas well production credit
determined under section 45H(a).''.
(c) Carryback.--Subsection (a) of section 39 (relating to carryback
and carryforward of unused credits generally) is amended by adding at
the end the following:
``(3) 10-year carryback for marginal oil and gas well
production credit.--In the case of the marginal oil and gas
well production credit--
``(A) this section shall be applied separately from
the business credit (other than the marginal oil and
gas well production credit),
``(B) paragraph (1) shall be applied by
substituting `10 taxable years' for `1 taxable years'
in subparagraph (A) thereof, and
``(C) paragraph (2) shall be applied--
``(i) by substituting `31 taxable years'
for `21 taxable years' in subparagraph (A)
thereof, and
``(ii) by substituting `30 taxable years'
for `20 taxable years' in subparagraph (A)
thereof.''.
(d) Coordination With Section 29.--Section 29(a) is amended by
striking ``There'' and inserting ``At the election of the taxpayer,
there''.
(e) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter I is amended by adding at the end
the following:
``Sec. 45H. Credit for producing oil and
gas from marginal wells.''.
(f) Effective Date.--The amendments made by this section shall
apply to production in taxable years beginning after December 31, 2003.
SEC. 8. NATURAL GAS GATHERING LINES TREATED AS 7-YEAR PROPERTY.
(a) In General.--Subparagraph (C) of section 168(e)(3) (relating to
classification of certain property) is amended by striking ``and'' at
the end of clause (i), by redesignating clause (ii) as clause (iii),
and by inserting after clause (i) the following new clause:
``(ii) any natural gas gathering line,
and''.
(b) Natural Gas Gathering Line.--Subsection (i) of section 168 is
amended by adding after paragraph (14) the following new paragraph:
``(15) Natural gas gathering line.--The term `natural gas
gathering line' means--
``(A) the pipe, equipment, and appurtenances
determined to be a gathering line by the Federal Energy
Regulatory Commission, or
``(B) the pipe, equipment, and appurtenances used
to deliver natural gas from the wellhead or a
commonpoint to the point at which such gas first
reaches--
``(i) a gas processing plant,
``(ii) an interconnection with a
transmission pipeline certificated by the
Federal Energy Regulatory Commission as an
interstate transmission pipeline,
``(iii) an interconnection with an
intrastate transmission pipeline, or
``(iv) a direct interconnection with a
local distribution company, a gas storage
facility, or an industrial consumer.''.
(c) Alternative System.--The table contained in section
168(g)(3)(B) is amended by inserting after the item relating to
subparagraph (C)(i) the following:
``(C)(ii)...................................................... 10''.
(d) Alternative Minimum Tax Exception.--Subparagraph (B) of section
56(a)(1) is amended by inserting before the period the following: ``or
in clause (ii) of section 168(e)(3)(C)''.
(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.
SEC. 9. TEMPORARY SUSPENSION OF LIMITATION BASED ON 65 PERCENT OF
TAXABLE INCOME AND EXTENSION OF SUSPENSION OF TAXABLE
INCOME LIMIT WITH RESPECT TO MARGINAL PRODUCTION.
(a) Limitation Based on 65 Percent of Taxable Income.--Subsection
(d) of section 613A (relating to limitation on percentage depletion in
case of oil and gas wells) is amended by adding at the end the
following new paragraph:
``(6) Temporary suspension of taxable income limit.--
Paragraph (1) shall not apply to taxable years beginning after
December 31, 2003, and before January 1, 2009, including with
respect to amounts carried under the second sentence of
paragraph (1) to such taxable years.''.
(b) Extension of Suspension of Taxable Income Limit With Respect to
Marginal Production.--Subparagraph (H) of section 613A(c)(6) (relating
to temporary suspension of taxable income limit with respect to
marginal production) is amended by striking ``2004'' and inserting
``2009''.
(c) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 2003.
SEC. 10. ELECTION TO EXPENSE GEOLOGICAL AND GEOPHYSICAL EXPENDITURES.
(a) In General.--Section 263 (relating to capital expenditures) is
amended by adding after subsection (i) the following:
``(j) Geological and Geophysical Expenditures for Domestic Oil and
Gas Wells.--Notwithstanding subsection (a), a taxpayer may elect to
treat geological and geophysical expenses incurred in connection with
the exploration for, or development of, oil or gas within the United
States (as defined in section 638) as expenses which are not chargeable
to capital account. Any expenses so treated shall be allowed as a
deduction in the taxable year in which paid or incurred.''.
(b) Conforming Amendment.--Section 263A(c)(3) is amended by
inserting ``263(j),'' after ``263(i),''.
(c) Effective Date.--The amendments made by this section shall
apply to costs paid or incurred in taxable years beginning after
December 31, 2003.
SEC. 11. FIVE-YEAR NET OPERATING LOSS CARRYBACK FOR LOSSES ATTRIBUTABLE
TO OPERATING MINERAL INTERESTS OF OIL AND GAS PRODUCERS.
(a) In General.--Paragraph (1) of section 172(b) (relating to years
to which loss may be carried) is amended by adding at the end the
following new subparagraph:
``(I) Losses on operating mineral interests of oil
and gas producers.--In the case of a taxpayer which has
an eligible oil and gas loss (as defined in subsection
(k)) for a taxable year, such eligible oil and gas loss
shall be a net operating loss carryback to each of the
5 taxable years preceding the taxable year of such
loss.''.
(b) Eligible Oil and Gas Loss.--Section 172 is amended by
redesignating subsection (k) as subsection (l) and by inserting after
subsection (j) the following new subsection:
``(k) Eligible Oil and Gas Loss.--For purposes of this section--
``(1) In general.--The term `eligible oil and gas loss'
means the lesser of--
``(A) the amount which would be the net operating
loss for the taxable year if only income and deductions
attributable to operating mineral interests (as defined
in section 614(d)) in oil and gas wells are taken into
account, or
``(B) the amount of the net operating loss for such
taxable year.
``(2) Coordination with subsection (b)(2).--For purposes of
applying subsection (b)(2), an eligible oil and gas loss for
any taxable year shall be treated in a manner similar to the
manner in which a specified liability loss is treated.
``(3) Election.--Any taxpayer entitled to a 5-year
carryback under subsection (b)(1)(H) from any loss year may
elect to have the carryback period with respect to such loss
year determined without regard to subsection (b)(1)(H).''.
(c) Effective Date.--The amendments made by this section shall
apply to net operating losses for taxable years beginning after
December 31, 2003.
SEC. 12. EXTENSION AND MODIFICATION OF CREDIT FOR PRODUCING FUEL FROM A
NONCONVENTIONAL SOURCE.
(a) In General.--Section 29 is amended by adding at the end the
following new subsection:
``(h) Extension for Other Facilities.--
``(1) Extension for oil and certain gas.--In the case of a
well for producing qualified fuels described in subparagraph
(A) or (B)(i) of subsection (c)(1)--
``(A) Application of credit for new wells.--
Notwithstanding subsection (f), this section shall
apply with respect to such fuels--
``(i) which are produced from a well
drilled after the date of the enactment of this
subsection and before January 1, 2014, and
``(ii) which are sold not later than the
close of the 4-year period beginning on the
date that such well is drilled.
``(B) Extension of credit for old wells.--
Subsection (f)(2) shall be applied by substituting
`2009' for `2003' with respect to wells described in
subsection (f)(1)(A) with respect to such fuels.
``(2) Extension for facilities producing qualified fuel
from landfill gas.--
``(A) In general.--In the case of a facility for
producing qualified fuel from landfill gas which was
placed in service after June 30, 1998, and before
January 1, 2009, this section shall apply to fuel
produced at such facility during the 5-year period
beginning on the later of--
``(i) the date such facility was placed in
service, or
``(ii) the date of the enactment of this
subsection.
``(B) Reduction of credit for certain landfill
facilities.--In the case of a facility to which
paragraph (1) applies and which is subject to the 1996
New Source Performance Standards/Emissions Guidelines
of the Environmental Protection Agency, subsection
(a)(1) shall be applied by substituting `$2' for `$3'.
``(3) Special rules.--In determining the amount of credit
allowable under this section solely by reason of this
subsection--
``(A) Daily limit.--The amount of qualified fuels
sold during any taxable year which may be taken into
account by reason of this subsection with respect to
any project shall not exceed an average barrel-of-oil
equivalent of 200,000 cubic feet of natural gas per
day. Days before the date the project is placed in
service shall not be taken into account in determining
such average.
``(B) Extension period to commence with unadjusted
credit amount.--In the case of fuels sold during 2003
and 2004, the dollar amount applicable under subsection
(a)(1) shall be $3 (without regard to subsection
(b)(2)). In the case of fuels sold after 2004,
subparagraph (B) of subsection (d)(2) shall be applied
by substituting `2004' for `1979'.''.
(b) Effective Date.--The amendment made by this section shall apply
to fuel sold after the date of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Sponsor introductory remarks on measure. (CR E562)
Referred to the House Committee on Ways and Means.
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