108th
H.R.4520
American Jobs Creation Act of 2004
(Enrolled as Agreed to or Passed by Both House and
Senate)
SEC.
710. EXPANSION OF CREDIT
FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE RESOURCES.
(a)
EXPANSION OF QUALIFIED ENERGY RESOURCES- Subsection (c) of section 45 (relating
to electricity produced from certain renewable resources) is
amended to read as follows:
`(c) QUALIFIED ENERGY RESOURCES AND REFINED COAL- For purposes
of this section:
`(1) IN
GENERAL- The term `qualified energy resources' means--
`(A)
wind,
`(B)
closed-loop biomass,
`(C)
open-loop biomass,
`(D)
geothermal energy,
`(E)
solar energy,
`(F)
small irrigation power, and
`(G)
municipal solid waste.
`(2)
CLOSED-LOOP BIOMASS- The term `closed-loop biomass' means any organic material
from a plant which is planted exclusively for purposes of being used at a
qualified facility to produce electricity.
`(3)
OPEN-LOOP BIOMASS-
`(A) IN
GENERAL- The term `open-loop biomass' means--
`(i) any
agricultural livestock waste nutrients, or
`(ii) any
solid, nonhazardous, cellulosic
waste material which is segregated from other waste materials and which is
derived from--
`(I) any
of the following forest-related resources: mill and harvesting residues, precommercial thinnings, slash,
and brush,
`(II)
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, gas derived from the biodegradation of solid waste, or paper which is
commonly recycled, or
`(III)
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 or biomass burned in conjunction
with fossil fuel (cofiring) beyond such fossil fuel
required for startup and flame stabilization.
`(B)
AGRICULTURAL LIVESTOCK WASTE NUTRIENTS-
`(i) IN GENERAL- The term `agricultural livestock waste
nutrients' means agricultural livestock manure and litter, including wood
shavings, straw, rice hulls, and other bedding material for the disposition of
manure.
`(ii)
AGRICULTURAL LIVESTOCK- The term `agricultural livestock' includes bovine,
swine, poultry, and sheep.
`(4)
GEOTHERMAL ENERGY- The term `geothermal energy' means energy derived from a
geothermal deposit (within the meaning of section 613(e)(2)).
`(5)
SMALL IRRIGATION POWER- The term `small irrigation power' means power--
`(A)
generated without any dam or impoundment of water through an irrigation system
canal or ditch, and
`(B) the
nameplate capacity rating of which is not less than 150 kilowatts but is less
than 5 megawatts.
`(6) MUNICIPAL
SOLID WASTE- The term `municipal solid waste' has the meaning given the term
`solid waste' under section 2(27) of the Solid Waste Disposal Act (42 U.S.C.
6903).
`(7)
REFINED COAL-
`(A) IN
GENERAL- The term `refined coal' means a fuel which--
`(i) is a
liquid, gaseous, or solid synthetic fuel produced from coal (including lignite)
or high carbon fly ash, including such fuel used as a feedstock,
`(ii) is
sold by the taxpayer with the reasonable expectation that it will be used for
purpose of producing steam,
`(iii) is
certified by the taxpayer as resulting (when used in the production of steam)
in a qualified emission reduction, and
`(iv) is
produced in such a manner as to result in an increase of at least 50 percent in
the market value of the refined coal (excluding any increase caused by
materials combined or added during the production process), as compared to the
value of the feedstock coal.
`(B)
QUALIFIED EMISSION REDUCTION- The term `qualified emission reduction' means a
reduction of at least 20 percent of the emissions of nitrogen oxide and either
sulfur dioxide or mercury released when burning the refined coal (excluding any
dilution caused by materials combined or added during the production process),
as compared to the emissions released when burning the feedstock coal or
comparable coal predominantly available in the marketplace as of January 1,
2003.'.
(b)
EXPANSION OF QUALIFIED FACILITIES-
(1)
IN GENERAL- Section 45 is amended by redesignating
subsection (d) as subsection (e) and by inserting after subsection (c) the
following new subsection:
`(d)
QUALIFIED FACILITIES- For purposes of this section:
`(1)
WIND FACILITY- In the case of a facility using wind to produce electricity, the
term `qualified facility' means any facility owned by the taxpayer which is
originally placed in service after December 31, 1993, and before January 1,
2006.
`(2)
CLOSED-LOOP BIOMASS FACILITY-
`(A) IN
GENERAL- In the case of a facility using closed-loop biomass to produce
electricity, the term `qualified facility' means any facility--
`(i) owned
by the taxpayer which is originally placed in service after
`(ii)
owned by the taxpayer which before January 1, 2006, is originally placed in
service and modified to use closed-loop biomass to co-fire with coal, with
other biomass, or with both, but only if the modification is approved under the
Biomass Power for Rural Development Programs or is part of a pilot project of
the Commodity Credit Corporation as described in 65 Fed. Reg.
63052.
`(B)
SPECIAL RULES- In the case of a qualified facility described in subparagraph
(A)(ii)--
`(i) the 10-year period referred to in subsection (a) shall
be treated as beginning no earlier than the date of the enactment of this
clause,
`(ii)
the amount of the credit determined under subsection (a) with respect to the
facility shall be an amount equal to the amount determined without regard to
this clause multiplied by the ratio of the thermal content of the closed-loop
biomass used in such facility to the thermal content of all fuels used in such
facility, and
`(iii) if
the owner of such facility is not the producer of the electricity, the person
eligible for the credit allowable under subsection (a) shall be the lessee or
the operator of such facility.
`(3)
OPEN-
`(A)
IN GENERAL- 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--
`(i) in the
case of a facility using agricultural livestock waste nutrients--
`(I) is
originally placed in service after the date of the enactment of this subclause and before
`(II) the
nameplate capacity rating of which is not less than 150 kilowatts, and
`(ii) in
the case of any other facility, is originally placed in service before
`(B)
CREDIT ELIGIBILITY- In the case of any facility described in subparagraph (A),
if the owner of such facility is not the producer of the electricity, the
person eligible for the credit allowable under subsection (a) shall be the
lessee or the operator of such facility.
`(4)
GEOTHERMAL OR SOLAR ENERGY FACILITY- In the case of a facility using geothermal
or solar energy to produce electricity, the term `qualified facility' means any
facility owned by the taxpayer which is originally placed in service after the
date of the enactment of this paragraph and before January 1, 2006. Such term
shall not include any property described in section 48(a)(3)
the basis of which is taken into account by the taxpayer for purposes of
determining the energy credit under section 48.
`(5)
SMALL IRRIGATION POWER FACILITY- In the case of a facility using small
irrigation power to produce electricity, the term `qualified facility' means
any facility owned by the taxpayer which is originally placed in service after
the date of the enactment of this paragraph and before January 1, 2006.
`(6)
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 after the date of the enactment of this paragraph
and before January 1, 2006.
`(7)
TRASH COMBUSTION FACILITIES- In the case of a facility which burns municipal
solid waste to produce electricity, the term `qualified facility' means any
facility owned by the taxpayer which is originally placed in service after the
date of the enactment of this paragraph and before January 1, 2006.
`(8)
REFINED COAL PRODUCTION FACILITY- The term `refined coal production facility'
means a facility which is placed in service after the date of the enactment of
this paragraph and before January 1, 2009.'.
(2)
RULES FOR REFINED COAL PRODUCTION FACILITIES- Subsection (e) of section 45, as
so redesignated, is amended by adding at the end the
following new paragraph:
`(8)
REFINED COAL PRODUCTION FACILITIES-
`(A)
DETERMINATION OF CREDIT AMOUNT- In the case of a producer of refined coal, the
credit determined under this section (without regard to this paragraph) for any
taxable year shall be increased by an amount equal to $4.375 per ton of
qualified refined coal--
`(i) produced by the taxpayer at a refined coal production
facility during the 10-year period beginning on the date the facility was
originally placed in service, and
`(ii)
sold by the taxpayer--
`(I) to
an unrelated person, and
`(II)
during such 10-year period and such taxable year.
`(B)
PHASEOUT OF CREDIT- The amount of the increase determined under subparagraph
(A) shall be reduced by an amount which bears the same ratio to the amount of
the increase (determined without regard to this subparagraph) as--
`(i) the amount by which the reference price of fuel used as
a feedstock (within the meaning of subsection (c)(7)(A)) for the calendar year
in which the sale occurs exceeds an amount equal to 1.7 multiplied by the
reference price for such fuel in 2002, bears to
`(ii)
$8.75.
`(C)
APPLICATION OF RULES- Rules similar to the rules of the subsection (b)(3) and paragraphs (1) through (5) and (9) of this
subsection shall apply for purposes of determining the amount of any increase
under this paragraph.'.
(3)
CONFORMING AMENDMENTS-
(A)
Section 45(e), as so redesignated, is amended by
striking `subsection (c)(3)(A)' in paragraph (7)(A)(i) and inserting `subsection (d)(1)'.
(B)
The heading of section 45 and the item relating to such section in the table of
sections for subpart D of part IV of subchapter A of chapter 1 are each amended
by inserting before the period at the end `, etc'.
(C)
Paragraph (2) of section 45(b) is amended by striking `The 1.5 cent amount' and
all that follows through `paragraph (1)' and inserting `The 1.5 cent amount in
subsection (a), the 8 cent amount in paragraph (1), the $4.375 amount in
subsection (e)(8)(A), and in subsection (e)(8)(B)(i)
the reference price of fuel used as a feedstock (within the meaning of
subsection (c)(7)(A)) in 2002'.
(c) SPECIAL CREDIT RATE AND PERIOD FOR ELECTRICITY PRODUCED
AND SOLD AFTER ENACTMENT DATE- Section 45(b) is amended by adding at the end
the following new paragraph:
`(4)
CREDIT RATE AND PERIOD FOR ELECTRICITY PRODUCED AND SOLD FROM CERTAIN
FACILITIES-
`(A)
CREDIT RATE- In the case of electricity produced and sold in any calendar year
after 2003 at any qualified facility described in paragraph (3), (5), (6), or
(7) of subsection (d), the amount in effect under subsection (a)(1) for such
calendar year (determined before the application of the last sentence of
paragraph (2) of this subsection) shall be reduced by one-half.
`(B)
CREDIT PERIOD-
`(i) IN GENERAL- Except as provided in clause (ii), in the
case of any facility described in paragraph (3), (4), (5), (6), or (7) of
subsection (d), the 5-year period beginning on the date the facility was originally
placed in service shall be substituted for the 10-year period in subsection
(a)(2)(A)(ii).
`(ii)
CERTAIN OPEN-LOOP BIOMASS FACILITIES- In the case of any facility described in
subsection (d)(3)(A)(ii) placed in service before the date of the enactment of
this paragraph, the 5-year period beginning on the date of the enactment of
this Act shall be substituted for the 10-year period in subsection
(a)(2)(A)(ii).'.
(d)
COORDINATION WITH OTHER CREDITS- Section 45(e), as redesignated
and amended by this section, is amended by inserting after paragraph (8) the
following new paragraph:
`(9)
COORDINATION WITH CREDIT FOR PRODUCING FUEL FROM A NONCONVENTIONAL SOURCE- 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.'.
(e)
COORDINATION WITH SECTION 48- Section 48(a)(3) (defining energy property) is
amended by adding at the end the following new sentence: `Such term shall not
include any property which is part of a facility the production from which is
allowed as a credit under section 45 for the taxable year or any prior taxable
year.'.
(f)
ELIMINATION OF CERTAIN CREDIT REDUCTIONS- Section 45(b)(3)
(relating to credit reduced for grants, tax-exempt bonds, subsidized energy
financing, and other credits) is amended--
(1)
by inserting `the lesser of 1/2 or' before `a
fraction' in the matter preceding subparagraph (A), and
(2)
by adding at the end the following new sentence: `This
paragraph shall not apply with respect to any facility described in subsection
(d)(2)(A)(ii).'.
(g)
EFFECTIVE DATES-
(1)
IN GENERAL- Except as otherwise provided in this subsection, 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.
(2)
CERTAIN BIOMASS FACILITIES- With respect to any facility described in section
45(d)(3)(A)(ii) of the Internal Revenue Code of 1986,
as added by subsection (b)(1), which is placed in service before the date of
the enactment of this Act, the amendments made by this section shall apply to
electricity produced and sold after December 31, 2004, in taxable years ending
after such date.
(3)
CREDIT RATE AND PERIOD FOR NEW FACILITIES- The amendments made by subsection
(c) shall apply to electricity produced and sold after
(4)
NONAPPLICATION OF AMENDMENTS TO PREEFFECTIVE DATE POULTRY WASTE FACILITIES- The
amendments made by this section shall not apply with respect to any poultry
waste facility (within the meaning of section 45(c)(3)(C), as in effect on the
day before the date of the enactment of this Act) placed in service before
January 1, 2004.
(5)
REFINED COAL PRODUCTION FACILITIES- Section 45(e)(8)
of the Internal Revenue Code of 1986, as added by this section, shall apply to
refined coal produced and sold after the date of the enactment of this Act.