S.Amdt. 627

SA 627. Mr. GRASSLEY submitted an amendment intended to be proposed
to amendment SA 605 proposed by Mr. Inhofe to the bill H.R. 3, to
authorize funds for Federal-aid highways, highway safety programs, and
transit programs, and for other purposes; which was ordered to lie on
the table; as follows:

At the end of part I of subtitle B of title V, add the
following:

SEC. 5204. VOLUMETRIC EXCISE TAX CREDIT FOR ALTERNATIVE
FUELS.

(a) Imposition of Tax.--
(1) In general.--Section 4081(a)(2)(A) (relating to rates
of tax), as amended by section 5611 of this Act, is amended--
(A) by striking ``and'' at the end of clause (ii),
(B) by striking the period at the end of clause (iii), and
(C) by adding at the end the following new clauses:
``(iv) in the case of liquefied petroleum gas and P Series
Fuels, 18.3 cents per gallon,
``(v) in the case of compressed natural gas and hydrogen,
18.3 cents per energy equivalent of a gallon of gasoline, and
``(vi) in the case of liquefied natural gas, any liquid
fuel derived from coal (including peat), and liquid
hydrocarbons derived from biomass (as defined in section
29(c)(3)), 24.3 cents per gallon.''.
(2) Treatment of alternative fuel as taxable fuel.--
(A) In general.--Section 4083(a)(1) (defining taxable fuel)
is amended--
(i) by striking ``and'' at the end of subparagraph (B),
(ii) by striking the period at the end of subparagraph (C)
and inserting ``, and'', and
(iii) by adding at the end the following new subparagraph:
``(D) alternative fuel.''.
(B) Definition.--Section 4083(a) is amended by adding at
the end the following new paragraph:
``(4) Alternative fuel.--The term `alternative fuel'
means--
``(A) compressed or liquefied natural gas,
``(B) liquefied petroleum gas,
``(C) P Series Fuels (as defined by the Secretary of Energy
under section 13211(2) of title 42, United States Code,
``(D) hydrogen,
``(E) any liquid fuel derived from coal (including peat),
and
``(F) liquid hydrocarbons derived from biomass (as defined
in section 29(c)(3)).''.
(3) Conforming amendments.--
(A) Section 4041(a), as amended by section 5101 of this
Act, is amended by striking paragraphs (2) and (3) and
inserting the following:
``(2) Special motor fuels.--
``(A) In general.--There is hereby imposed a tax on any
alternative fuel (other than gas oil or fuel oil)--
``(i) sold by any person to an owner, lessee, or other
operator of a motor vehicle or motorboat for use as a fuel in
such motor vehicle or motorboat, or
``(ii) used by any person as a fuel in a motor vehicle or
motorboat unless there was a taxable sale of such fuel under
clause (i).
``(B) Exemption for previously taxed fuel.--No tax shall be
imposed by this paragraph on the sale or use of any
alternative fuel if tax was imposed on such alternative fuel
under section 4081 and the tax thereon was not credited or
refunded.
``(C) Rate of tax.--The rate of the tax imposed by this
paragraph shall be the rate of tax specified in clause (iv),
(v), or (vi) of section 4081(a)(2)(A) on the alternative fuel
which is in effect at the time of such sale or use.
``(D) Bus uses.--No tax shall be imposed by this paragraph
on any sale for use, or use, described in subparagraph (B) or
(C) of section 6427(b)(2) (relating to school bus and
intracity transportation).''.
(B) Section 4041(b)(2) is amended by striking ``2007'' both
places it appears and inserting ``2005''.
(C) Section 4041, as amended by section 5101 of this Act,
is amended by striking subsection (m).
(b) Credit for Alternative Fuel and Alternative Fuel
Mixtures.--
(1) In general.--Section 6426(a) (relating to allowance of
credits) is amended by striking ``plus'' at the end of
paragraph (1), by striking the period at the end of paragraph
(2) and by adding at the end the following new paragraphs:
``(3) the alternative fuel credit, plus
``(4) the alternative fuel mixture credit.''.
(2) Alternative fuel and alternative fuel mixture credit.--
Section 6426 (relating to credit for alcohol fuel and
biodiesel mixtures) is amended by redesignating subsections
(d) and (e) as subsections (f) and (g) and by inserting after
subsection (c) the following new subsection:
``(d) Alternative Fuel Credit.--
``(1) In general.--For purposes of this section, the
alternative fuel credit is the product of 50 cents and the
number of gallons of an alternative fuel or gasoline gallon
equivalents of a nonliquid alternative fuel sold by the
taxpayer for use as a motor fuel in a highway vehicle.
``(2) Alternative fuel.--For purposes of this section, the
term `alternative fuel' has the meaning given such term by
section 4083(a)(4), except such term does not include ethanol
or methanol.
``(3) Gasoline gallon equivalent.--For purposes of this
subsection, the term `gasoline gallon equivalent' means, with
respect to any nonliquid alternative fuel, the amount of such
fuel having a Btu content of 124,800 (higher heating value).
``(4) Termination.--This subsection shall not apply to any
sale, use, or removal for any period after December 31, 2010.
``(e) Alternative Fuel Mixture Credit.--
``(1) In general.--For purposes of this section, the
alternative fuel mixture credit is the product of 50 cents
and the number of gallons of alternative fuel used by the
taxpayer in producing any alternative fuel mixture for sale
or use in a trade or business of the taxpayer.
``(2) Alternative fuel mixture.--For purposes of this
section, the term `alternative fuel mixture' means a mixture
of alternative fuel and taxable fuel (as defined in
subparagraph (A), (B), or (C) of section 4083(a)(1)) which--
``(A) is sold by the taxpayer producing such mixture to any
person for use as fuel in a highway vehicle, or
``(B) is used as a fuel in a highway vehicle by the
taxpayer producing such mixture.
``(3) Termination.--This subsection shall not apply to any
sale, use, or removal for any period after December 31,
2010.''.
(3) Conforming amendments.--
(A) The section heading for section 6426 is amended by
striking ``ALCOHOL FUEL AND BIODIESEL'' and inserting
``CERTAIN ALTERNATIVE FUEL''.
(B) The table of sections for subchapter B of chapter 65 is
amended by striking ``ALCOHOL FUEL AND BIODIESEL'' in the
item relating to section 6426 and inserting ``certain
alternative fuel''.
(C) Section 6427(a) is amended by striking ``paragraph (2)
or (3) of section 4041(a) or section 4041(c)'' and inserting
``section 4041(a)(2) or 4041(c)''.
(D) Section 6427(e) is amended--
(i) by inserting ``or the alternative fuel mixture credit''
after ``biodiesel mixture credit'' in paragraph (1),
(ii) by inserting ``or alternative fuel'' after ``section
40A(d)(2))'' in paragraph (2),
(iii) by striking ``and'' at the end of paragraph (3)(A),
(iv) by striking the period at the end of paragraph (3)(B),
(v) by adding at the end of paragraph (3) the following new
subparagraph:
``(C) any alternative fuel or alternative fuel mixture (as
defined in section 6426 (d)(2) or (e)(3)) sold or used after
December 31, 2010.'', and
(vi) by striking ``or Biodiesel Used To Produce Alcohol
Fuel and Biodiesel Mixtures'' in the heading and inserting
``, Biodiesel, or Alternative Fuel''.
(c) Effective Date.--The amendments made by this section
shall apply to any sale, use, or removal for any period after
December 31, 2005.
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