Hydrogen Transportation Wins Over Growing Reliance on Oil (H2 GROW) Act

        [Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1180 Introduced in House (IH)]

108th CONGRESS
1st Session
H. R. 1180

To promote the use of hydrogen fuel cell vehicles, and for other
purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

March 11, 2003

Mr. Cox introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committees on
Energy and Commerce, and Government Reform, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned

_______________________________________________________________________

A BILL

To promote the use of hydrogen fuel cell vehicles, and for other
purposes.

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Hydrogen Transportation Wins Over
Growing Reliance on Oil (H2 GROW) Act''.

SEC. 2. REFERENCES; TABLE OF CONTENTS.

(a) References.--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.
(b) Table of Contents.--The table of contents of this Act is as
follows:

Sec. 1. Short title.
Sec. 2. References; table of contents.
TITLE I--HYDROGEN FUEL CELL VEHICLES

Sec. 101. Fuel cell vehicle credit.
Sec. 102. No depreciation limit for hydrogen vehicles.
Sec. 103. Minimum Federal fleet requirement.
Sec. 104. Replacement of reliance on foreign oil through hydrogen
powered fuel cells.
TITLE II--HYDROGEN FUEL

Sec. 201. Credit for retail sale of hydrogen fuel as motor vehicle
fuel.
Sec. 202. Credit for production of hydrogen fuel.
Sec. 203. Tax holiday for hydrogen fuel.
Sec. 204. Sense of Congress regarding hydrogen fuel taxes.
Sec. 205. Hydrogen fueling fringe benefit.
Sec. 206. Exclusion of earnings from hydrogen fuel sales.
Sec. 207. Credit for use of ethanol or renewable motor fuel to produce
hydrogen fuel.
TITLE III--HYDROGEN FUELING INFRASTRUCTURE

Sec. 301. Credit for installation of alternative fueling stations.
Sec. 302. Exclusion of earnings from hydrogen fueling equipment sales.
Sec. 303. Extension of deduction for hydrogen fueling infrastructure.
Sec. 304. Deduction for refueling use of hydrogen fuel cells.
Sec. 305. Accelerated depreciation for qualified hydrogen fueling
equipment.

TITLE I--HYDROGEN FUEL CELL VEHICLES

SEC. 101. FUEL CELL 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. FUEL CELL 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 new qualified fuel cell motor vehicle credit determined
under subsection (b).
``(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 equal to--
``(A) in the case of any vehicle placed in service
before 2010, the lesser of--
``(i) 25 percent of the retail sale price
of such fuel cell motor vehicle, or
``(ii) $50,000
``(B) in the case of any vehicle placed in service
after 2009 and before 2012, the lesser of--
``(i) 15 percent of the retail sale price
of such fuel cell motor vehicle, or
``(ii) $25,000, and
``(C) in the case of any vehicle placed in service
after 2012, the lesser of--
``(i) 5 percent of the retail sale price of
such fuel cell motor vehicle, or
``(ii) $10,000.
``(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 125 percent but less than 150 percent of
the 2000 model year city fuel economy,
``(ii) $2,000, if such vehicle achieves at
least 150 percent but less than 175 percent of
the 2000 model year city fuel economy,
``(iii) $3,000, if such vehicle achieves at
least 175 percent but less than 200 percent of
the 2000 model year city fuel economy,
``(iv) $4,000, if such vehicle achieves at
least 200 percent but less than 225 percent of
the 2000 model year city fuel economy, and
``(v) $5,000, if such vehicle achieves at
least 225 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:
The 2000 model year city
``If vehicle inertia weight class                      fuel economy is:
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 to 8,500 lbs............................            11.1 mpg.
``(ii) In the case of a light truck:

The 2000 model year city
``If vehicle inertia weight class                      fuel economy is:
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 to 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 1 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 for 2003 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.
``(c) Application With Other Credits.--The credit allowed under
subsection (a) for any taxable year shall not exceed the excess (if
any) of--
``(1) the sum of the regular tax plus the tax imposed by
section 55, over
``(2) the sum of the credits allowable under sections 27,
29, and 30A, for the taxable year.
``(d) Credit May Be Transferred.--
``(1) In general.--A taxpayer may transfer the credit
allowable under this section through an assignment. Such
transfer may be revoked only with the consent of the Secretary.
``(2) Regulations.--The Secretary shall prescribe such
regulations as necessary to ensure that any credit described in
paragraph (1) is claimed once and not reassigned by an assignee
described in paragraph (1).
``(e) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Motor vehicle.--The term `motor vehicle' means any
car or truck.
``(2) City fuel economy.--The Secretary of Energy shall
calculate the city fuel economy of fuel cell motor vehicles
which are passenger automobiles and light trucks in a manner
consistent with the procedures for calculating the fuel economy
for alternative fuel automobiles under section 32905(a) of
title 49, United States Code.
``(3) Retail sales price.--The retail sales price for any
vehicle shall be determined under the rules of section 4052(b).
``(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 (determined without regard to subsection (c)).
``(6) Recapture.--
``(A) In general.--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).
``(B) Economic life.--The regulations provided by
the Secretary pursuant to subparagraph (A) shall
provide that the economic life of a vehicle is 4 years.
``(7) 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.
``(8) 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.
``(9) Carryback and 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 (in this paragraph referred to as the
`unused credit year'), such excess shall be allowed as
a credit carryback for each of the 3 taxable years
beginning after January 1, 2003, which precede the
unused credit year and a credit carryforward for each
of the 20 taxable years which succeed the unused credit
year.
``(B) Rules.--Rules similar to the rules of section
39 shall apply with respect to the credit carryback and
credit carryforward under subparagraph (A).
``(10) 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.--Except as provided in paragraph (2), the
Secretary shall promulgate such regulations as necessary to
carry out the provisions of this section.
``(2) Coordination in prescription of certain
regulations.--The Secretary of the Treasury, in coordination
with the Secretary of Transportation and the Administrator of
the Environmental Protection Agency, 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 December 31, 2015.''.
(b) Conforming Amendments.--
(1) Section 1016(a) 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 30B(e)(5).''.
(2) Section 55(c)(2) is amended by inserting ``30B(c),''
after ``30(b)(3),''.
(3) Section 6501(m) is amended by inserting ``30B(e)(8),''
after ``30(d)(4),''.
(4) 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 new item:

``Sec. 30B. Fuel cell vehicle credit.''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service after December 31, 2002, in taxable
years ending after such date.

SEC. 102. NO DEPRECIATION LIMIT FOR HYDROGEN VEHICLES.

(a) In General.--Paragraph (1) of section 280F(a) (relating to
limitation on amount of depreciation for luxury automobiles) is amended
by adding at the end the following new subparagraph--
``(D) Hydrogen Vehicles.--Subparagraph (A) shall
not apply to any motor vehicle with respect to which a
credit is allowable under section 30B.''.
(b) Effective Date.--The amendment made by this section shall apply
to property placed in service after December 31, 2002, in taxable years
ending after such date.

SEC. 103. MINIMUM FEDERAL FLEET REQUIREMENT.

Section 303(b) of the Energy Policy Act of 1992 (42 U.S.C.
13212(b)) is amended by adding at the end the following:
``(4) Hydrogen fuel cell vehicles.--In each of the fiscal
years specified in the following table, not fewer than the
specified percentage of the number of vehicles acquired under
paragraph (1)(D) for any Federal fleet of the specified size
shall be hydrogen fuel cell vehicles that meet standards for
performance, reliability, cost, and maintenance established by
the Secretary of Energy (unless the Secretary determines, after
making best efforts to acquire such vehicles in a fiscal year,
that such vehicles are not available at commercially reasonable
prices, or that in the case of any agency, acquisition of all
or a portion of such specified percentage of vehicles would
impair the fulfillment of a central national mission, or the
national security). This paragraph shall not apply for or with
respect to fiscal years ending before the date the Secretary of
Energy publishes a finding that compliance with this paragraph
is economically practicable:

``Fleet size:                Fiscal year:           Percentage:

100 or more.................      2006, 2007............             5
100 or more.................      2008, 2009............            10
100 or more.................      2010, 2011............            20
50 or more.................      2012, 2013............         20.''

(b) Refueling.--Section 304 of the Energy Policy Act of 1992 (42
U.S.C. 13213) is amended--
(1) by redesignating subsection (b) as subsection (c);
(2) in the second sentence of subsection (a), by striking
``If publicly'' and inserting the following:
``(b) Commercial Arrangements.--
``(1) In general.--If publicly''; and
(3) in subsection (b) (as designated by paragraph (2)), by
adding at the end the following:
``(2) Mandatory arrangements.--
``(A) In general.--In a case in which publicly
available fueling facilities are not convenient or
accessible to the locations of 2 or more Federal fleets
for which hydrogen fuel cell vehicles are required to
be purchased under section 303(b)(4), the Federal
agency for which the Federal fleets are maintained (or
the Federal agencies for which the Federal fleets are
maintained, acting jointly under a memorandum of
agreement providing for cost sharing) shall enter into
a commercial arrangement as provided in paragraph (1).
``(B) Sunset.--Subparagraph (A) ceases to be
effective at the end of fiscal year 2013.''.

SEC. 104. REPLACEMENT OF RELIANCE ON FOREIGN OIL THROUGH HYDROGEN
POWERED FUEL CELLS.

(a) Goal.--It shall be a goal to replace reliance on 30,000,000
barrels of foreign oil through the use of hydrogen powered fuel cells
by December 31, 2012.
(b) Fuel Cell Motor Vehicle Defined.--For the purposes of this
section, the term ``fuel cell motor vehicle'' means a motor vehicle
that 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.
(c) Advisory Commission on Achievement of Goal.--
(1) Establishment and duties.--
(A) Establishment.--The Secretary of Transportation
shall establish an advisory commission to provide the
Secretary and Congress with advice regarding the
commercialization of fuel cell motor vehicles,
including the achievement of the goal set forth in
subsection (a).
(B) Duties.--The commission shall have the
following duties:
(i) Make recommendations for uniform
industry codes and standards for fuel cell
motor vehicles and hydrogen fueling equipment
or a process for developing such codes and
standards.
(ii) Make recommendations on how to achieve
the goal set forth in subsection (a).
(iii) Identify any impediments to achieving
such goal.
(iv) Make any other recommendations
relating to such goal that the commission
determines appropriate.
(2) Membership and chairman.--The commission shall be
composed of 5 members appointed by the Secretary, as follows:
(A) One representative of fuel cell motor vehicle
manufacturers in the United States.
(B) One representative of fuel cell motor vehicle
manufacturers outside the United States.
(C) One person from academia who is a scientist
with particular expertise in--
(i) fuel cell technology for the propulsion
of motor vehicles; and
(ii) the manufacture of fuel cell motor
vehicles.
(D) One representative of an environmental
protection interest group having a significantly
numerous nationwide membership in the United States.
(E) One representative of the Secretary, who shall
serve as Chairman of the commission.
(3) Period of appointment; vacancies.--Members shall be
appointed for the life of the commission. Any vacancy in the
commission shall not affect its powers, but shall be filled in
the same manner as the original appointment.
(4) Meetings.--
(A) Scheduling.--
(i) In general.--The commission shall meet
at the call of the Chairman.
(ii) Mandatory meeting if goal not met.--If
the goal specified in subsection (a) is not
achieved by December 31, 2013, the commission
shall meet not later than January 31, 2014, and
within 90 days of such meeting shall make
recommendations to the Secretary and Congress
on how to achieve such goal at the earliest
possible date.
(B) Quorum.--A majority of the members of the
commission shall constitute a quorum, but a lesser
number of members may hold hearings.
(5) Powers.--
(A) Hearings.--The commission may hold such
hearings, sit and act at such times and places, take
such testimony, and receive such evidence as the
commission considers advisable to carry out this
section.
(B) Information from federal agencies.--The
commission may secure directly from any Federal
department or agency such information as the commission
considers necessary to carry out this section. Upon
request of the Chairman of the commission, the head of
such department or agency shall furnish such
information to the commission.
(C) Postal services.--The commission may use the
United States mails in the same manner and under the
same conditions as other departments and agencies of
the Federal Government.
(6) Personnel matters.--
(A) Compensation of Members.--Each member of the
commission who is not an officer or employee of the
Federal Government shall be compensated at a rate equal
to the daily equivalent of the annual rate of basic pay
prescribed for level IV of the Executive Schedule under
section 5315 of title 5, United States Code, for each
day (including travel time) during which such member is
engaged in the performance of the duties of the
commission. All members of the commission who are
officers or employees of the United States shall serve
without compensation in addition to that received for
their services as officers or employees of the United
States.
(B) Travel expenses.--The members of the commission
shall be allowed travel expenses, including per diem in
lieu of subsistence, at rates authorized for employees
of agencies under subchapter I of chapter 57 of title
5, United States Code, while away from their homes or
regular places of business in the performance of
services for the commission.
(C) Staff.--
(i) In general.--The Chairman of the
commission may, without regard to the civil
service laws and regulations, appoint and
terminate an executive director and such other
additional personnel as may be necessary to
enable the commission to perform its duties.
The employment of an executive director shall
be subject to confirmation by the commission.
(ii) Compensation.--The Chairman of the
commission may fix the compensation of the
executive director and other personnel without
regard to chapter 51 and subchapter III of
chapter 53 of title 5, United States Code,
relating to classification of positions and
General Schedule pay rates, except that the
rate of pay for the executive director and
other personnel may not exceed the rate payable
for level V of the Executive Schedule under
section 5316 of such title.
(D) Detail of government employees.--Any Federal
Government employee may be detailed to the commission
without reimbursement, and such detail shall be without
interruption or loss of civil service status or
privilege.
(E) Procurement of temporary and intermittent
services.--The Chairman of the commission may procure
temporary and intermittent services under section
3109(b) of title 5, United States Code, at rates for
individuals which do not exceed the daily equivalent of
the annual rate of basic pay prescribed for level V of
the Executive Schedule under section 5316 of such title.
(7) Termination of commission.--The commission shall
terminate on the earlier of--
(A) the date that is 90 days after the date on
which the commission submits to the Secretary of
Transportation and Congress a finding that the goal set
forth in subsection (a) has been achieved; or
(B) the date that is 90 days after the date on
which the commission submits the recommendations
required under clause (ii) of paragraph (4)(A).

TITLE II--HYDROGEN FUEL

SEC. 201. CREDIT FOR RETAIL SALE OF HYDROGEN FUEL AS MOTOR VEHICLE
FUEL.

(a) In General.--Subpart D of part IV of subchapter A of chapter 1
(relating to business related credits) is amended by inserting after
section 40 the following new section:

``SEC. 40A. CREDIT FOR RETAIL SALE OF HYDROGEN AS MOTOR VEHICLE FUEL.

``(a) General Rule.--For purposes of section 38, the hydrogen fuel
retail sales credit for any taxable year is an amount equal to the
greater of--
``(1) 20 percent of the price of hydrogen, or
``(2) 50 cents for each quantity of hydrogen having a BTU
content of 115,000,
sold at retail by the taxpayer during such year as a fuel to propel any
hydrogen fuel cell vehicle.
``(b) Definitions.--For purposes of this section--
``(1) Hydrogen fuel cell vehicle.--The term `hydrogen fuel
cell vehicle' means a motor vehicle which is propelled by power
derived from 1 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.
``(2) Sold at retail.--
``(A) In general.--The term `sold at retail' means
the sale, for a purpose other than resale, after
manufacture, production, or importation.
``(B) Use treated as sale.--If any person uses
hydrogen (including any use after importation) as a
fuel to propel any car or truck before such fuel is
sold at retail, then such use shall be treated in the
same manner as if such fuel were sold at retail as a
fuel to propel such a vehicle by such person.
``(c) Pass-Thru in the Case of Estates and Trusts.--Under
regulations prescribed by the Secretary, rules similar to the rules of
subsection (d) of section 52 shall apply.
``(d) Termination.--This section shall not apply to any fuel sold
at retail after December 31, 2013.''.
(b) Credit Treated as Business Credit.--Section 38(b) (relating to
current year business credit) 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
new paragraph:
``(16) the hydrogen fuel retail sales credit determined
under section 40A(a).''.
(c) Transitional Rule.--Section 39(d) (relating to transitional
rules) is amended by adding at the end the following new paragraph:
``(11) No carryback of section 40a credit before effective
date.--No portion of the unused business credit for any taxable
year which is attributable to the hydrogen fuel retail sales
credit determined under section 40A(a) may be carried back to a
taxable year ending before January 1, 2003.''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amended by inserting after the
item relating to section 40 the following new item:

``Sec. 40A. Credit for retail sale of hydrogen as motor vehicle
fuel.''.
(e) Effective Date.--The amendments made by this section shall
apply to fuel sold at retail after December 31, 2002, in taxable years
ending after such date.

SEC. 202. CREDIT FOR PRODUCTION OF HYDROGEN FUEL.

(a) Hydrogen Produced From Any Source.--Section 29 (relating to
credit for producing fuel from nonconventional sources) is amended by
adding at the end the following new subsection:
``(h) Hydrogen Fuel.--
``(1) Hydrogen fuel produced from any source.--There shall
be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to--
``(A) $10, multiplied by
``(B) each quantity of hydrogen having a Btu
content of 5,800,000--
``(i) sold by the taxpayer to an unrelated
person during the taxable year, and
``(ii) the production of which is
attributable to the taxpayer.
``(2) Additional credit for production from renewable
sources.--
``(A) In general.--In the case of hydrogen which is
produced from a renewable source, paragraph (1)(A)
shall be applied by substituting `$20' for `$10'.
``(B) Renewable source.--
``(i) In general.--The term `renewable
source' means solar, wind, ocean, geothermal
energy, biomass, landfill gas, or incremental
hydropower.
``(ii) Incremental hydropower.--The term
`incremental hydropower' means additional
generating capacity achieved from increased
efficiency or additions of new capacity at a
hydroelectric facility in existence on the date
of enactment of this paragraph.
``(3) Exclusion on sale for certain uses.--No credit shall
be allowed under this subsection for hydrogen fuel sold by the
taxpayer the use of which is for the production or refining of
other petroleum products.
``(4) Termination.--This subsection shall not apply to
hydrogen fuel produced after December 31, 2013.''.
(b) Effective Date.--The amendments made by this section shall
apply to hydrogen produced after December 31, 2002, in taxable years
ending after such date.

SEC. 203. TAX HOLIDAY FOR HYDROGEN FUEL.

(a) In General.--Subchapter B of chapter 65 (relating to
abatements, credits, and refunds) is amended by adding at the end the
following new section:

``SEC. 6429. FUELS USED IN HYDROGEN POWERED VEHICLES.

``(a) In General.--If any fuel taxable under section 4041 (relating
to imposition of tax on special fuels) or 4081 (relating to imposition
of tax on gasoline) is used to produce hydrogen as a means of
propelling a hydrogen fuel cell vehicle during the applicable period,
the Secretary shall pay (without interest) to the consumer an amount
equal to the amount determined by multiplying the number of gallons so
used by the rate at which tax was imposed on such fuel under section
4041 or 4081.
``(b) Applicable Period.--The term `applicable period' means the
period beginning after December 31, 2002, and ending before January 1,
2014.
``(c) Hydrogen Fuel Cell Vehicle.--The term `hydrogen fuel cell
vehicle' means a motor vehicle which is propelled by power derived from
1 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) Conforming Amendment.--The table of sections for subchapter B
of chapter 65 is amended by inserting after the item relating to
section 6428 the following new item:

``Sec. 6429. Fuels used in hydrogen powered vehicles.''.

SEC. 204. SENSE OF CONGRESS REGARDING HYDROGEN FUEL TAXES.

It is the sense of Congress that no tax should be imposed on
hydrogen fuel before January 1, 2014.

SEC. 205. HYDROGEN FUELING FRINGE BENEFIT.

(a) In General.--Paragraph (1) of section 132(c) (relating to
qualified employee discounts) is amended by striking ``or'' at the end
of subparagraph (A), by striking the period and inserting ``, or'' at
the end of subparagraph (B), and by adding at the end the following new
subparagraph:
``(C) in the case of hydrogen fuel, 50 percent of
the price at which such fuel is being offered by the
employer to customers.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.

SEC. 206. EXCLUSION OF EARNINGS FROM HYDROGEN FUEL SALES.

(a) In General.--Part III of subchapter B of chapter 1 (relating to
items specifically excluded from gross income) is amended by inserting
after section 136 the following new section:

``SEC. 136A. INCOME FROM HYDROGEN FUEL SALES.

``(a) Exclusion.--Gross income shall not include income
attributable to the sale of hydrogen fuel sold for use in a hydrogen
fuel cell vehicle.
``(b) Definition of Hydrogen Fuel Cell Vehicle.--For purposes of
this section, the term `hydrogen fuel cell vehicle' means a car or
truck which is propelled by power derived from 1 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.
``(c) Termination.--This section shall not apply to income
attributable to sales after December 31, 2013.''.
(b) Conforming Amendment.--The table of sections for subpart B of
part III of subchapter B of chapter 1 is amended by inserting after the
item relating to section 136 the following new item:

``Sec. 136A. Income from hydrogen fuel sales.''.
(c) Effective Date.--The amendments made by this section shall
apply to income received after December 31, 2002, in taxable years
ending after such date.

SEC. 207. CREDIT FOR USE OF ETHANOL OR RENEWABLE MOTOR FUEL TO PRODUCE
HYDROGEN FUEL.

(a) Definitions.--In this section:
(1) Gallon-equivalent unit.--The term ``gallon-equivalent
unit'' means a quantity of ethanol or renewable motor fuel used
in the production of hydrogen fuel that the Secretary of Energy
determines is equivalent in energy value to the use of a gallon
of ethanol or renewable motor fuel (whichever is applicable)
used in the production of motor fuel.
(2) Hydrogen fuel.--The term ``hydrogen fuel'' means
hydrogen fuel produced for use in a hydrogen fuel vehicle.
(b) Credit for Use of Hydrogen Fuel.--In satisfaction of all or
part of the requirement under any Federal law (enacted before, on, or
after the date of enactment of this Act) under which a refiner of motor
fuel is required to use a gallon of ethanol or renewable motor fuel in
the production of motor fuel in any year or an importer of motor fuel
is required to import a gallon of ethanol (including ethanol blended
with motor fuel) or renewable motor fuel in any year, a refiner or
importer shall receive credit for 100 gallons of ethanol or renewable
motor fuel (whichever is applicable) for each gallon-equivalent unit
used to produce refined or imported hydrogen fuel.

TITLE III--HYDROGEN FUELING INFRASTRUCTURE

SEC. 301. CREDIT FOR INSTALLATION OF HYDROGEN FUELING STATIONS.

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

``SEC. 30C. HYDROGEN FUEL CELL VEHICLE REFUELING PROPERTY CREDIT.

``(a) Credit Allowed.--There shall be allowed as a credit against
the tax imposed by this chapter for the taxable year an amount equal to
50 percent of the amount paid or incurred by the taxpayer during the
taxable year for the qualified hydrogen fuel cell vehicle refueling
property and the installation thereof.
``(b) Year Credit Allowed.--The credit allowed under subsection (a)
shall be allowed in the taxable year in which the qualified hydrogen
fuel cell vehicle refueling property is placed in service by the
taxpayer.
``(c) Definition of Qualified Hydrogen Fuel Cell Vehicle Refueling
Property.--The term `qualified hydrogen fuel cell vehicle refueling
property' means any property (not including a building and its
structural components) if--
``(1) such property is of a character subject to the
allowance for depreciation,
``(2) the original use of such property begins with the
taxpayer, and
``(3) such property is for the production, storage or
dispensing of hydrogen fuel into the fuel tank of a motor
vehicle propelled by such fuel.
``(d) Application With Other Credits.--The credit allowed under
subsection (a) for any taxable year shall not exceed the excess (if
any) of--
``(1) the regular tax for the taxable year reduced by the
sum of the credits allowable under subpart A and sections 27,
29, 30, and 30B, over
``(2) the tentative minimum tax for the taxable year.
``(e) Basis Reduction.--For purposes of this title, the basis of
any property shall be reduced by the portion of the cost of such
property taken into account under subsection (a).
``(f) No Double Benefit.--No deduction shall be allowed under
section 179A or 179B with respect to any property with respect to which
a credit is allowed under subsection (a).
``(g) Carryforward Allowed.--
``(1) In general.--If the credit amount allowable under
subsection (a) for a taxable year exceeds the amount of the
limitation under subsection (e) for such taxable year (referred
to as the `unused credit year' in this subsection), such excess
shall be allowed as a credit carryforward for each of the 20
taxable years following the unused credit year.
``(2) Rules.--Rules similar to the rules of section 39
shall apply with respect to the credit carryforward under
paragraph (1).
``(h) Special Rules.--Rules similar to the rules of paragraphs (4)
and (5) of section 179A(e) shall apply.
``(i) Regulations.--The Secretary shall prescribe such regulations
as necessary to carry out the provisions of this section.
``(j) Termination.--This section shall not apply to any property
placed in service after December 31, 2013.''.
(b) Conforming Amendments.--
(1) Section 1016(a), as amended by this Act, 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 30C(e).''.
(2) Section 55(c)(2), as amended by this Act, is amended by
inserting ``30C(d),'' after ``30B(c),''.
(3) The table of sections for subpart B of part IV of subchapter A
of chapter 1, as amended by this Act, is amended by inserting after the
item relating to section 30B the following new item:

``Sec. 30C. Hydrogen fuel cell vehicle refueling property
credit.''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service after September 30, 2002, in
taxable years ending after such date.

SEC. 302. EXCLUSION OF EARNINGS FROM HYDROGEN FUELING EQUIPMENT SALES.

(a) In General.--Subsection (a) of section 136A (as added by
section 206) is amended--
(1) by striking ``of hydrogen'' and inserting ``of--
``(1) hydrogen'',
(2) by striking the period and inserting ``, and'', and
(3) by inserting at the end the following new paragraph:
``(2) hydrogen fueling equipment suitable for vehicle
refueling.''.
(b) Definition of Hydrogen Fueling Equipment.--Subsection (b) of
section 136A (as added by section 206) is amended--
(1) by striking ``Definition of Hydrogen Fuel Cell
Vehicle.--'' and inserting ``Definitions.--
``(1) Hydrogen fuel cell vehicle.--'', and
(2) by inserting at the end the following new paragraph:
``(2) Hydrogen fueling equipment.--For purposes of this
section, the term `hydrogen fueling equipment' means equipment
used in the process of reforming, storing, supplying, or
replenishing hydrogen fuel used in a hydrogen fuel cell
vehicle.''.
(c) Conforming Amendments.--
(1) Section heading.--The heading of section 136A is
amended by inserting ``and hydrogen fueling equipment'' before
``sales''.
(2) Table of sections.--The item relating to section 136A
in the table of sections for subpart B of part III of
subchapter B of chapter 1 is amended to read as follows:

``Sec. 136A. Income from hydrogen fuel and hydrogen fueling
equipment sales.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.

SEC. 303. EXTENSION OF DEDUCTION FOR HYDROGEN FUELING INFRASTRUCTURE.

Section 179A(f) (relating to the termination of deductions for
clean-fuel vehicles and certain refueling property) is amended--
(1) by striking ``This section'' and inserting:
``(1) Qualified clean-fuel vehicle property.--The deduction
under subparagraph (A) of subsection (a)(1)'', and
(2) by adding at the end the following:
``(2) Qualified clean-fuel vehicle refueling property.--The
deduction under subparagraph (B) of subsection (a)(1) shall not
apply to any property placed in service after December 31,
2013.''.

SEC. 304. DEDUCTION FOR REFUELING USE OF HYDROGEN FUEL CELLS.

(a) In General.--Part VI of subchapter B of chapter 1 (relating to
itemized deduction for individuals and  corporations) is amended by
adding after section 179A the following new section:

``SEC. 179B. DEDUCTION FOR COPRODUCTION OF HYDROGEN FUEL CELLS.

``(a) In General.--There shall be allowed as a deduction an amount
equal to the cost of any qualified hydrogen refueling property in the
taxable year.
``(b) Limitation.--The aggregate amount which may be taken into
account under this section with respect to any qualified hydrogen
refueling property shall not exceed the excess (if any) of--
``(1) $300,000, over
``(2) the aggregate amount taken into account under this
section for the qualified hydrogen refueling property for all
preceding taxable years.
``(c) Definitions.--For the purposes of this section--
``(1) Qualified hydrogen refueling property.--
``(A) In general.--The term `qualified hydrogen
refueling property' means a building that--
``(i) uses hydrogen fuel cells to provide
power to the building,
``(ii) has facilities that allow hydrogen
to be used for public refueling of hydrogen
fuel cell vehicles, and
``(iii) has a building plan filed with the
Secretary in accordance with such regulations
as the Secretary may prescribe.
``(B) Building.--As used in paragraph (1), the term
`building' means any building, except that such
building may not be within .5 miles of another
qualified hydrogen refueling property with respect to
which a credit under this section is allowed to the
taxpayer.
``(2) Hydrogen fuel cell vehicle.--The term `hydrogen fuel
cell vehicle' means a motor vehicle which is propelled by power
derived from 1 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.
``(d) Recapture.--The Secretary shall, by regulations, provide for
recapturing the benefit of the deduction allowable under this section
if such qualified hydrogen refueling property is not placed in service.
``(e) Termination.--This section shall not apply to any property
placed in service after December 31, 2013.''.
(b) Conforming Amendment.--The table of sections for part VI of
subchapter B of chapter 1 is amended by inserting after the item
relating to section 179A the following new item:

``Sec. 179B. Deduction for coproduction of hydrogen fuel
cells.''.
(c) Effective Date.--The amendments made by this section shall
apply in taxable years beginning after December 31, 2002.

SEC. 305. ACCELERATED DEPRECIATION FOR QUALIFIED HYDROGEN FUELING
EQUIPMENT.

(a) Recovery Period.--Subparagraph (B) of section 168(e)(3)
(relating to 5-year property) is amended by striking ``and'' in clause
(v), by striking the period and inserting ``, and'' in subclause (III)
of clause (vi), and by adding at the end the following new clause:
``(vii) any qualified hydrogen fueling equipment,
as defined in subsection (l)(2).''.
(b) Depreciation Allowance.--Section 168 is amended by adding at
the end the following new subsection:
``(l) Special Allowance for Investments in Reformers and Other
Hydrogen Fueling Appliances.--
``(1) Additional allowance.--In the case of qualified
hydrogen fueling equipment--
``(A) the depreciation deduction provided by
section 167(a) for the taxable year in which such
property is placed in service shall include an
allowance equal to 25 percent of the adjusted basis of
the qualified hydrogen fueling equipment, and
``(B) the adjusted basis of the qualified property
shall be reduced by the amount of such deduction before
computing the amount otherwise allowable as a
depreciation deduction under this chapter for such
taxable year and any subsequent taxable year.
``(2) Qualified hydrogen fueling equipment.--For purposes
of this subsection:
``(A) In general.--The term `qualified hydrogen
fueling equipment' means storage containers, reformers,
fuel processors, and hydrogen compressors.
``(B) Reformer.--The term `reformer' means a device
used to produce or extract hydrogen from another source
in order to provide hydrogen fuel to power a hydrogen
fuel cell vehicle (as defined in section 136A(b)(1)).
``(3) Termination.--This subsection shall not apply to
equipment placed in service after December 31, 2007.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2002.
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