House Passes Energy Legislation

On August 4, 2007, in a rare Saturday session prior to the August adjournment, the House passed the Renewable Energy and Energy Conservation Tax Bill of 2007 (HR 2776) by a vote of 221 to 189. The $15.2 billion in tax incentives included in the legislation would extend and modify the Code Sec. 45 Renewable Energy Credit, extend and modify the Code Sec. 48 credit for solar energy and fuel cell property, create a credit for plug-in hybrid vehicles, extend and modify the alternative fuel vehicle refueling credit, extend and modify the credits for biodiesel and renewable diesel, create a credit for production of cellulosic alcohol, extend the transportation fringe benefit to bicycle commuters, make modifications to the limitations of automobile depreciation, and provide a variety of changes with respect to bonds for energy conservation and renewable energy.

To pay for the new tax breaks, the legislation would eliminate the Code Sec. 199 deduction with respect to oil and gas production, provide for seven year amortization of geological and geophysical expenditures by major integrated oil companies, and clarify the determination of foreign oil and gas extraction income.

The Senate is expected to revisit energy legislation after the August recess. President Bush has threatened to veto the legislation, citing higher taxes and increased energy costs.