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SEC. 101. 5-YEAR EXTENSION OF CREDIT FOR PRODUCING ELECTRICITY FROM WIND AND POULTRY WASTE.

(a) IN GENERAL- Subparagraphs (A) and (C) of section 45(c)(3) (relating to qualified facility) are each amended by striking `January 1, 2002' and inserting `January 1, 2007'.

(b) EFFECTIVE DATE- The amendments made by this section shall apply to electricity sold after the date of the enactment of this Act, in taxable years ending after such date.

SEC. 102. CREDIT FOR ELECTRICITY PRODUCED FROM BIOMASS.

(a) EXTENSION AND MODIFICATION OF PLACED-IN-SERVICE RULES- Paragraph (3) of section 45(c) is amended--

(1) by striking subparagraph (B) and inserting the following new subparagraph:

`(B) CLOSED-LOOP BIOMASS FACILITY-

`(i) 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 December 31, 1992, and before January 1, 2007, or

`(II) owned by the taxpayer which is originally placed in service before January 1, 1993, and modified to use closed-loop biomass to co-fire with coal before January 1, 2007.

`(ii) SPECIAL RULES- In the case of a qualified facility described in clause (i)(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 subclause, and

`(II) the owner of such facility may transfer the credit allowable under subsection (a) to the lessee operator of such facility subject to the regulations prescribed under subsection (d)(6)((B)(ii).', and

(2) by adding at the end the following new subparagraph:

`(D) BIOMASS FACILITY-

`(i) IN GENERAL- In the case of a facility using biomass (other than closed-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, 2005.

`(ii) SPECIAL RULE FOR POSTEFFECTIVE DATE FACILITIES- In the case of any facility described in clause (i) which is placed in service after the date of the enactment of this clause, the 3-year period beginning on the date the facility is originally placed in service shall be substituted for the 10-year period in subsection (a)(2)(A)(ii).

`(iii) SPECIAL RULES FOR PREEFFECTIVE DATE FACILITIES- In the case of any facility described in clause (i) which is placed in service before the date of the enactment of this clause--

`(I) subsection (a)(1) shall be applied by substituting `1.0 cents' for `1.5 cents', and

`(II) the 3-year period beginning after December 31, 2002, shall be substituted for the 10-year period in subsection (a)(2)(A)(ii).

`(iv) CREDIT ELIGIBILITY- In the case of any facility described in clause (i), the owner of such facility may transfer the credit allowable under subsection (a) to the lessee operator of such facility subject to the regulations prescribed under subsection (d)(6)((B)(ii).'.

(b) DEFINITION OF BIOMASS-

(1) IN GENERAL- Section 45(c)(1) (defining qualified energy resources) is amended--

(A) by striking `and' at the end of subparagraph (B),

(B) by striking the period at the end of subparagraph (C) and inserting `, and', and

(C) by adding at the end the following new subparagraph:

`(D) biomass (other than closed-loop biomass).'.

(2) BIOMASS DEFINED- Section 45(c) (relating to definitions) is amended by adding at the end the following new paragraph:

`(5) BIOMASS- The term `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 (other than old-growth timber which has been permitted or contracted for removal by any appropriate Federal authority through the National Environmental Policy Act or by any appropriate State authority),

`(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.'.

(c) COORDINATION WITH SECTION 29- Section 45(c) (relating to definitions) is amended by adding at the end the following new paragraph:

`(6) COORDINATION WITH SECTION 29- The term `qualified facility' shall not include any facility the production from which is taken into account in determining any credit under section 29 for the taxable year or any prior taxable year.'.

(d) CLERICAL AMENDMENTS-

(1) The heading for subsection (c) of section 45 is amended by inserting `AND SPECIAL RULES' after `DEFINITIONS'.

(2) The heading for subsection (d) of section 45 is amended by inserting `ADDITIONAL' before `DEFINITIONS'.

(e) EFFECTIVE DATES-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to electricity sold after the date of the enactment of this Act.

(2) CERTAIN BIOMASS FACILITIES- With respect to any facility described in section 45(c)(3)(D)(i) of the Internal Revenue Code of 1986, as added by this section, which is placed in service before the date of the enactment of this Act, the amendments made by this section shall apply to electricity sold after December 31, 2002.

SEC. 103. CREDIT FOR ELECTRICITY PRODUCED FROM SWINE AND BOVINE WASTE NUTRIENTS, GEOTHERMAL ENERGY , AND SOLAR ENERGY .

(a) EXPANSION OF QUALIFIED ENERGY RESOURCES-

(1) IN GENERAL- Section 45(c)(1) (defining qualified energy resources), as amended by this Act, is amended by striking `and' at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting a comma, and by adding at the end the following new subparagraphs:

`(E) swine and bovine waste nutrients,

`(F) geothermal energy , and

`(G) solar energy .'.

(2) DEFINITIONS- Section 45(c) (relating to definitions and special rules), as amended by this Act, is amended by redesignating paragraph (6) as paragraph (8) and by inserting after paragraph (5) the following new paragraphs:

`(6) SWINE AND BOVINE WASTE NUTRIENTS- The term `swine and bovine waste nutrients' means swine and bovine manure and litter, including bedding material for the disposition of manure.

`(7) GEOTHERMAL ENERGY - The term `geothermal energy' means energy derived from a geothermal deposit (within the meaning of section 613(e)(2)).'.

(b) EXTENSION AND MODIFICATION OF PLACED-IN-SERVICE RULES- Section 45(c)(3) (relating to qualified facility), as amended by this Act, is amended by adding at the end the following new subparagraphs:

`(E) SWINE AND BOVINE WASTE NUTRIENTS FACILITY- In the case of a facility using swine and bovine waste nutrients 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 subparagraph and before January 1, 2007.

`(F) GEOTHERMAL OR SOLAR ENERGY FACILITY-

`(i) IN GENERAL- 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 clause and before January 1, 2007.

`(ii) SPECIAL RULE- In the case of any facility described in clause (i), 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).'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to electricity sold after the date of the enactment of this Act, in taxable years ending after such date.

SEC. 104. TREATMENT OF PERSONS NOT ABLE TO USE ENTIRE CREDIT.

(a) IN GENERAL- Paragraph (6) of section 45(d) (relating to additional definitions and special rules), as amended by this Act, is amended to read as follows:

`(6) TREATMENT OF PERSONS NOT ABLE TO USE ENTIRE CREDIT-

`(A) ALLOWANCE OF CREDIT-

`(i) IN GENERAL- Except as otherwise provided in this subsection--

`(I) any credit allowable under subsection (a) with respect to a qualified facility owned by a person described in clause (ii) may be transferred or used as provided in this paragraph, and

`(II) the determination as to whether the credit is allowable shall be made without regard to the tax -exempt status of the person.

`(ii) PERSONS DESCRIBED- A person is described in this clause if the person is--

`(I) an organization described in section 501(c)(12)(C) and exempt from tax under section 501(a),

`(II) an organization described in section 1381(a)(2)(C),

`(III) a public utility (as defined in section 136(c)(2)(B)),

`(IV) any State or political subdivision thereof, the District of Columbia, any possession of the United States, or any agency or instrumentality of any of the foregoing, or

`(V) any Indian tribal government (within the meaning of section 7871) or any agency or instrumentality thereof.

`(B) TRANSFER OF CREDIT-

`(i) IN GENERAL- A person described in subparagraph (A)(ii) may transfer any credit to which subparagraph (A)(i) applies through an assignment to any other person not described in subparagraph (A)(ii). Such transfer may be revoked only with the consent of the Secretary.

`(ii) REGULATIONS- The Secretary shall prescribe such regulations as necessary to ensure that any credit described in clause (i) is claimed once and not reassigned by such other person.

`(iii) TRANSFER PROCEEDS TREATED AS ARISING FROM ESSENTIAL GOVERNMENT FUNCTION- Any proceeds derived by a person described in subclause (III), (IV), or (V) of subparagraph (A)(ii) from the transfer of any credit under clause (i) shall be treated as arising from the exercise of an essential government function.

`(C) USE OF CREDIT AS AN OFFSET- Notwithstanding any other provision of law, in the case of a person described in subclause (I), (II), or (V) of subparagraph (A)(ii), any credit to which subparagraph (A)(i) applies may be applied by such person, to the extent provided by the Secretary of Agriculture, as a prepayment of any loan, debt, or other obligation the entity has incurred under subchapter I of chapter 31 of title 7 of the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.), as in effect on the date of the enactment of the Energy Tax Incentives Act of 2002.

`(D) CREDIT NOT INCOME- Any transfer under subparagraph (B) or use under subparagraph (C) of any credit to which subparagraph (A)(i) applies shall not be treated as income for purposes of section 501(c)(12).

`(E) TREATMENT OF UNRELATED PERSONS- For purposes of subsection (a)(2)(B), sales among and between persons described in subparagraph (A)(ii) shall be treated as sales between unrelated parties.'.

(b) CREDITS NOT REDUCED BY TAX -EXEMPT BONDS OR CERTAIN OTHER SUBSIDIES- Section 45(b)(3) (relating to credit reduced for grants, tax -exempt bonds, subsidized energy financing, and other credits) is amended--

(1) by striking clause (ii),

(2) by redesignating clauses (iii) and (iv) as clauses (ii) and (iii),

(3) by inserting `(other than any loan, debt, or other obligation incurred under subchapter I of chapter 31 of title 7 of the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.), as in effect on the date of the enactment of the Energy Tax Incentives Act of 2002)' after `project' in clause (ii) (as so redesignated), and

(4) by striking `TAX -EXEMPT BONDS,' in the heading and inserting `CERTAIN'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to electricity sold after the date of the enactment of this Act, in taxable years ending after such date.

TITLE II--ALTERNATIVE MOTOR VEHICLES AND FUELS INCENTIVES

SEC. 201. ALTERNATIVE MOTOR VEHICLE CREDIT.

(a) IN GENERAL- Subpart B of part IV of subchapter A of chapter 1 (relating to foreign tax credit, etc.) is amended by adding at the end the following new section:

`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),

`(2) the new qualified hybrid motor vehicle credit determined under subsection (c), and

`(3) the new qualified alternative fuel motor vehicle credit determined under subsection (d).

`(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 2000 model year city fuel economy,

`(ii) $1,500, if such vehicle achieves at least 175 percent but less than 200 percent of the 2000 model year city fuel economy,

`(iii) $2,000, if such vehicle achieves at least 200 percent but less than 225 percent of the 2000 model year city fuel economy,

`(iv) $2,500, if such vehicle achieves at least 225 percent but less than 250 percent of the 2000 model year city fuel economy,

`(v) $3,000, if such vehicle achieves at least 250 percent but less than 275 percent of the 2000 model year city fuel economy,

`(vi) $3,500, if such vehicle achieves at least 275 percent but less than 300 percent of the 2000 model year city fuel economy, and

`(vii) $4,000, if such vehicle achieves at least 300 percent of the 2000 model year city fuel economy.

`(B) 2000 MODEL YEAR CITY FUEL ECONOMY- For purposes of subparagraph (A), the 2000 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:

43.7 mpg

38.3 mpg

34.1 mpg

30.7 mpg

27.9 mpg

25.6 mpg

22.0 mpg

19.3 mpg

17.2 mpg

15.5 mpg

14.1 mpg

12.9 mpg

11.9 mpg

11.1 mpg.

`(ii) In the case of a light truck:

37.6 mpg

33.7 mpg

30.6 mpg

28.0 mpg

25.9 mpg

24.1 mpg

21.3 mpg

19.0 mpg

17.3 mpg

15.8 mpg

14.6 mpg

13.6 mpg

12.8 mpg

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,

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