[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 505 Introduced in Senate (IS)]
108th CONGRESS
1st Session
S. 505
To amend the Internal Revenue Code of 1986 to encourage and accelerate
the nationwide production, retail sale, and consumer use of new motor
vehicles that are powered by fuel cell technology, hybrid technology,
battery electric technology, alternative fuels, or other advanced motor
vehicle technologies, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 4, 2003
Mr. Hatch (for himself, Mr. Rockefeller, Mr. Jeffords, Ms. Snowe, Mr.
Lieberman, Mr. Smith, Mr. Kerry, Mr. Ensign, Mrs. Clinton, Mr. Crapo,
Mr. Dorgan, Ms. Collins, and Mr. Chafee) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to encourage and accelerate
the nationwide production, retail sale, and consumer use of new motor
vehicles that are powered by fuel cell technology, hybrid technology,
battery electric technology, alternative fuels, or other advanced motor
vehicle technologies, 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; ETC.
(a) Short Title.--This Act may be cited as the ``Clean Efficient
Automobiles Resulting From Advanced Car Technologies (CLEAR ACT) Act of
2003''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this division 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.
(c) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; etc.
Sec. 2. Findings and purposes.
Sec. 3. Alternative motor vehicle credit.
Sec. 4. Modification of credit for qualified electric vehicles.
Sec. 5. Credit for installation of alternative fueling stations.
Sec. 6. Credit for retail sale of alternative fuels as motor vehicle
fuel.
Sec. 7. Study of effectiveness of certain provisions by GAO.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--Congress finds the following:
(1) The United States is a large and diverse geographic
area that includes densely populated urban and suburban areas
along with large sparsely populated rural areas separated by
long distances, and, as a result, Americans require reliable,
efficient, and diversified modes of transportation.
(2) According to the Energy Information Administration's
(referred to in this section as the ``EIA'') March 2000
publication ``International Energy Outlook'', oil currently
provides a larger share of world energy consumption than any
other energy source and most of the growth in oil consumption
in industrialized countries, including the United States, is
projected for the transportation sector, where few alternatives
are currently economical.
(3) To meet all its national security, economic
development, and public health and welfare needs, the United
States depends on oil as the primary fuel source for the
transportation of people and goods and services in intrastate
and interstate commerce.
(4) Since 1994, the United States has imported over 50
percent of the oil it has consumed and the EIA expects North
American petroleum imports from the Persian Gulf to more than
double over the forecast period of 1997-2020, with additional
imports from offshore Atlantic Basin producers and refiners;
this increasingly heavy reliance on imported oil presents
national security risks, contributes negatively to the balance
of trade of the United States, and adversely affects the United
States economy, public health, and the environment.
(5) The United States currently has 121 areas containing
over a third of its population that do not meet the National
Ambient Air Quality Standards resulting in losses of many
billions of dollars in extra economic costs and lost
opportunities, immeasurable health problems, and a general
reduction in the quality of life for millions of Americans.
(6) Mobile sources have become a top cause of emissions in
the United States.
(7) This heavy reliance on imported oil and failure to meet
the National Ambient Air Quality Standards demonstrate the need
to accelerate development of advanced fuel cell technology,
hybrid technology, battery electric technology, and alternative
fuels technology for new motor vehicles in the transportation
of people and goods and services as an important means of
helping to reverse the trends of increasing dependence on oil
imports and non-attainment of air quality standards,
contributing to lessening national security risks, improving
our balance of trade with other nations, increasing economic
growth, improving health and quality of life for millions of
Americans, and providing public health, welfare, and economic
benefits.
(8) Despite the availability of significant Federal and
private sector funds and programs to encourage technological
advancement for the development and use of motor vehicles that
are powered by fuel cell and hybrid technologies, battery
electric technology, and alternative technologies, consumer
acceptance of such vehicles and fuels has been restrained by 3
major barriers--the increased costs of these technologies, the
cost of alternative fuels, and the lack of adequate
infrastructure to refuel the alternative-fueled vehicles.
(b) Purposes.--The purposes of this Act are to--
(1) help instill consumer confidence and acceptance of
alternative motor vehicles by lowering the 3 major barriers to
this confidence and acceptance;
(2) enable the accelerated introduction into the
marketplace of new motor vehicle technologies without adverse
emission impact, while retaining a policy of fuel neutrality in
order to foster private innovation and commercialization and
allow market forces to decide the technologies and fuels that
are consumer-friendly, safe, environmentally sound, and
economic;
(3) provide, for a limited time period, financial
incentives to encourage consumers nationwide to purchase or
lease new fuel cell, hybrid, battery electric, and alternative
fuel motor vehicles;
(4) increase demand of such vehicles so as to make the
annual production by manufacturers and retail sale of such
vehicles economically and commercially viable for the consumer;
(5) promote and expand the use of such vehicles nationwide;
and
(6) promote a nationwide diversity of motor vehicle fuels
for advanced and hybrid technology and alternatively fueled
motor vehicles.
SEC. 3. 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) $8,000 ($4,000 in the case of vehicles placed
in service after December 31, 2008), 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 2002 model year city fuel economy,
``(ii) $1,500, if such vehicle achieves at
least 175 percent but less than 200 percent of
the 2002 model year city fuel economy,
``(iii) $2,000, if such vehicle achieves at
least 200 percent but less than 225 percent of
the 2002 model year city fuel economy,
``(iv) $2,500, if such vehicle achieves at
least 225 percent but less than 250 percent of
the 2002 model year city fuel economy,
``(v) $3,000, if such vehicle achieves at
least 250 percent but less than 275 percent of
the 2002 model year city fuel economy,
``(vi) $3,500, if such vehicle achieves at
least 275 percent but less than 300 percent of
the 2002 model year city fuel economy, and
``(vii) $4,000, if such vehicle achieves at
least 300 percent of the 2002 model year city
fuel economy.
``(B) 2002 model year city fuel economy.--For
purposes of subparagraph (A), the 2002 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 2002 model year city
``If vehicle inertia weight class fuel economy is:
is:
1,500 or 1,750 lbs............................ 45.2 mpg
2,000 lbs..................................... 39.6 mpg
2,250 lbs..................................... 35.2 mpg
2,500 lbs..................................... 31.7 mpg
2,750 lbs..................................... 28.8 mpg
3,000 lbs..................................... 26.4 mpg
3,500 lbs..................................... 22.6 mpg
4,000 lbs..................................... 19.8 mpg
4,500 lbs..................................... 17.6 mpg
5,000 lbs..................................... 15.9 mpg
5,500 lbs..................................... 14.4 mpg
6,000 lbs..................................... 13.2 mpg
6,500 lbs..................................... 12.2 mpg
7,000 to 8,500 lbs............................ 11.3 mpg.
``(ii) In the case of a light truck:
The 2002 model year city
``If vehicle inertia weight class fuel economy is:
is:
1,500 or 1,750 lbs............................ 39.4 mpg
2,000 lbs..................................... 35.2 mpg
2,250 lbs..................................... 31.8 mpg
2,500 lbs..................................... 29.0 mpg
2,750 lbs..................................... 26.8 mpg
3,000 lbs..................................... 24.9 mpg
3,500 lbs..................................... 21.8 mpg
4,000 lbs..................................... 19.4 mpg
4,500 lbs..................................... 17.6 mpg
5,000 lbs..................................... 16.1 mpg
5,500 lbs..................................... 14.8 mpg
6,000 lbs..................................... 13.7 mpg
6,500 lbs..................................... 12.8 mpg
7,000 to 8,500 lbs............................ 12.1 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,
``(B) which, in the case of a passenger automobile
or light truck--
``(i) for 2002 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, and
``(ii) for 2004 and later model vehicles,
has received a certificate that such vehicle
meets or exceeds the Bin 5 Tier II emission
level established in regulations prescribed by
the Administrator of the Environmental
Protection Agency under section 202(i) of the
Clean Air Act for that make and model year
vehicle,
``(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) New Qualified Hybrid Motor Vehicle Credit.--
``(1) In general.--For purposes of subsection (a), the new
qualified hybrid motor vehicle credit determined under this
subsection with respect to a new qualified hybrid motor vehicle
placed in service by the taxpayer during the taxable year is
the credit amount determined under paragraph (2).
``(2) Credit amount.--
``(A) In general.--The credit amount determined
under this paragraph shall be determined in accordance
with the following tables:
``(i) In the case of a new qualified hybrid
motor vehicle which is a passenger automobile,
medium duty passenger vehicle, or light truck and which provides the
following percentage of the maximum available power:
``If percentage of the maximum
available power is: The credit amount is:
At least 5 percent but less than 10 percent... $250
At least 10 percent but less than 20 percent.. $500
At least 20 percent but less than 30 percent.. $750
At least 30 percent........................... $1,000.
``(ii) In the case of a new qualified
hybrid motor vehicle which is a heavy duty
hybrid motor vehicle and which provides the
following percentage of the maximum available
power:
``(I) If such vehicle has a gross
vehicle weight rating of not more than
14,000 pounds:
``If percentage of the maximum
available power is: The credit amount is:
At least 20 percent but less than 30 percent.. $1,000
At least 30 percent but less than 40 percent.. $1,750
At least 40 percent but less than 50 percent.. $2,000
At least 50 percent but less than 60 percent.. $2,250
At least 60 percent........................... $2,500.
``(II) If such vehicle has a gross
vehicle weight rating of more than
14,000 but not more than 26,000 pounds:
``If percentage of the maximum
available power is: The credit amount is:
At least 20 percent but less than 30 percent.. $4,000
At least 30 percent but less than 40 percent.. $4,500
At least 40 percent but less than 50 percent.. $5,000
At least 50 percent but less than 60 percent.. $5,500
At least 60 percent........................... $6,000.
``(III) If such vehicle has a gross
vehicle weight rating of more than
26,000 pounds:
``If percentage of the maximum
available power is: The credit amount is:
At least 20 percent but less than 30 percent.. $6,000
At least 30 percent but less than 40 percent.. $7,000
At least 40 percent but less than 50 percent.. $8,000
At least 50 percent but less than 60 percent.. $9,000
At least 60 percent........................... $10,000.
``(B) Increase for fuel efficiency.--
``(i) Amount.--The amount determined under
subparagraph (A)(i) with respect to a new
qualified hybrid motor vehicle which is a
passenger automobile or light truck shall be
increased by--
``(I) $500, if such vehicle
achieves at least 125 percent but less
than 150 percent of the 2002 model year
city fuel economy,
``(II) $1,000, if such vehicle
achieves at least 150 percent but less
than 175 percent of the 2002 model year
city fuel economy,
``(III) $1,500, if such vehicle
achieves at least 175 percent but less
than 200 percent of the 2002 model year
city fuel economy,
``(IV) $2,000, if such vehicle
achieves at least 200 percent but less
than 225 percent of the 2002 model year
city fuel economy,
``(V) $2,500, if such vehicle
achieves at least 225 percent but less
than 250 percent of the 2002 model year
city fuel economy, and
``(VI) $3,000, if such vehicle
achieves at least 250 percent of the
2002 model year city fuel economy.
``(ii) 2002 model year city fuel economy.--
For purposes of clause (i), the 2002 model year
city fuel economy with respect to a vehicle
shall be determined on a gasoline gallon
equivalent basis as determined by the
Administrator of the Environmental Protection
Agency using the tables provided in subsection
(b)(2)(B) with respect to such vehicle.
``(C) Increase for accelerated emissions
performance.--The amount determined under subparagraph
(A)(ii) with respect to an applicable heavy duty hybrid
motor vehicle shall be increased by the increased
credit amount determined in accordance with the
following tables:
``(i) In the case of a vehicle which has a
gross vehicle weight rating of not more than
14,000 pounds:
``If the model year is: The increased credit amount is:
2003.......................................... $3,000
2004.......................................... $2,500
2005.......................................... $2,000
2006.......................................... $1,500.
``(ii) In the case of a vehicle which has a
gross vehicle weight rating of more than 14,000
pounds but not more than 26,000 pounds:
``If the model year is: The increased credit amount is:
2003.......................................... $7,750
2004.......................................... $6,500
2005.......................................... $5,250
2006.......................................... $4,000.
``(iii) In the case of a vehicle which has
a gross vehicle weight rating of more than
26,000 pounds:
``If the model year is: The increased credit amount is:
2003.......................................... $12,000
2004.......................................... $10,000
2005.......................................... $8,000
2006.......................................... $6,000.
``(D) Definitions relating to credit amount.--
``(i) Applicable heavy duty hybrid motor
vehicle.--For purposes of subparagraph (C), the
term `applicable heavy duty hybrid motor
vehicle' means a heavy duty hybrid motor
vehicle which is powered by an internal
combustion or heat engine which is certified as
meeting the emission standards set in the
regulations prescribed by the Administrator of
the Environmental Protection Agency for 2007
and later model year diesel heavy duty engines,
or for 2008 and later model year ottocycle
heavy duty engines, as applicable.
``(ii) Maximum available power.--
``(I) Passenger automobile, medium
duty passenger vehicle, or light
truck.--For purposes of subparagraph
(A)(i), the term `maximum available
power' means the maximum power
available from the rechargeable energy
storage system, during a standard 10
second pulse power or equivalent test,
divided by such maximum power and the
SAE net power of the heat engine.
``(II) Heavy duty hybrid motor
vehicle.--For purposes of subparagraph
(A)(ii), the term `maximum available
power' means the maximum power
available from the rechargeable energy
storage system, during a standard 10
second pulse power or equivalent test,
divided by the vehicle's total traction
power. The term `total traction power'
means the sum of the peak power from
the rechargeable energy storage system
and the heat engine peak power of the
vehicle, except that if such storage
system is the sole means by which the
vehicle can be driven, the total
traction power is the peak power of
such storage system.
``(3) New qualified hybrid motor vehicle.--For purposes of
this subsection, the term `new qualified hybrid motor vehicle'
means a motor vehicle--
``(A) which draws propulsion energy from onboard
sources of stored energy which are both--
``(i) an internal combustion or heat engine
using combustible fuel, and
``(ii) a rechargeable energy storage
system,
``(B) which, in the case of a passenger automobile,
medium duty passenger vehicle, or light truck--
``(i) for 2002 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, and
``(ii) for 2004 and later model vehicles,
has received a certificate that such vehicle
meets or exceeds the Bin 5 Tier II emission
level established in regulations prescribed by
the Administrator of the Environmental
Protection Agency under section 202(i) of the
Clean Air Act for that make and model year
vehicle,
``(C) which, in the case of a heavy duty hybrid
motor vehicle, the internal combustion or heat engine
of which has received a certificate of conformity under
the Clean Air Act as meeting the emission standards set
in the regulations prescribed by the Administrator of
the Environmental Protection Agency for 2004 through
2007 model year diesel heavy duty engines or ottocycle
heavy duty engines, as applicable,
``(D) the original use of which commences with the
taxpayer,
``(E) which is acquired for use or lease by the
taxpayer and not for resale, and
``(F) which is made by a manufacturer.
``(4) Heavy duty hybrid motor vehicle.--For purposes of
this subsection, the term `heavy duty hybrid motor vehicle'
means a new qualified hybrid motor vehicle which has a gross
vehicle weight rating of more than 8,500 pounds. Such term does
not include a medium duty passenger vehicle.
``(d) New Qualified Alternative Fuel Motor Vehicle Credit.--
``(1) Allowance of credit.--Except as provided in paragraph
(5), the new qualified alternative fuel motor vehicle credit
determined under this subsection is an amount equal to the
applicable percentage of the incremental cost of any new
qualified alternative fuel motor vehicle placed in service by
the taxpayer during the taxable year.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage with respect to any new
qualified alternative fuel motor vehicle is--
``(A) 50 percent, plus
``(B) 30 percent, if such vehicle--
``(i) has received a certificate of
conformity under the Clean Air Act and meets or
exceeds the most stringent standard available
for certification under the Clean Air Act for
that make and model year vehicle (other than a
zero emission standard), or
``(ii) has received an order certifying the
vehicle as meeting the same requirements as
vehicles which may be sold or leased in
California and meets or exceeds the most
stringent standard available for certification
under the State laws of California (enacted in
accordance with a waiver granted under section
209(b) of the Clean Air Act) for that make and
model year vehicle (other than a zero emission
standard).
For purposes of the preceding sentence, in the case of any new
qualified alternative fuel motor vehicle which weighs more than
14,000 pounds gross vehicle weight rating, the most stringent
standard available shall be such standard available for
certification in 2002.
``(3) Incremental cost.--For purposes of this subsection,
the incremental cost of any new qualified alternative fuel
motor vehicle is equal to the amount of the excess of the
manufacturer's suggested retail price for such vehicle over
such price for a gasoline or diesel fuel motor vehicle of the
same model, to the extent such amount does not exceed--
``(A) $5,000, 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) $25,000, 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.
``(4) New qualified alternative fuel motor vehicle.--For
purposes of this subsection--
``(A) In general.--The term `new qualified
alternative fuel motor vehicle' means any motor
vehicle--
``(i) which is only capable of operating on
an alternative fuel,
``(ii) the original use of which commences
with the taxpayer,
``(iii) which is acquired by the taxpayer
for use or lease, but not for resale, and
``(iv) which is made by a manufacturer.
``(B) Alternative fuel.--The term `alternative
fuel' means compressed natural gas, liquefied natural
gas, liquefied petroleum gas, hydrogen, and any liquid
at least 85 percent of the volume of which consists of
methanol.
``(5) Credit for mixed-fuel vehicles.--
``(A) In general.--In the case of a mixed-fuel
vehicle placed in service by the taxpayer during the
taxable year, the credit determined under this
subsection is an amount equal to--
``(i) in the case of a 75/25 mixed-fuel
vehicle, 70 percent of the credit which would
have been allowed under this subsection if such
vehicle was a qualified alternative fuel motor
vehicle, and
``(ii) in the case of a 90/10 mixed-fuel
vehicle, 90 percent of the credit which would
have been allowed under this subsection if such
vehicle was a qualified alternative fuel motor
vehicle.
``(B) Mixed-fuel vehicle.--For purposes of this
subsection, the term `mixed-fuel vehicle' means any
motor vehicle described in subparagraph (C) or (D) of
paragraph (3), which--
``(i) is certified by the manufacturer as
being able to perform efficiently in normal
operation on a combination of an alternative
fuel and a petroleum-based fuel,
``(ii) either--
``(I) has received a certificate of
conformity under the Clean Air Act, or
``(II) has received an order
certifying the vehicle as meeting the
same requirements as vehicles which may
be sold or leased in California and
meets or exceeds the low emission
vehicle standard under section 88.105-
94 of title 40, Code of Federal
Regulations, for that make and model
year vehicle,
``(iii) the original use of which commences
with the taxpayer,
``(iv) which is acquired by the taxpayer
for use or lease, but not for resale, and
``(v) which is made by a manufacturer.
``(C) 75/25 mixed-fuel vehicle.--For purposes of
this subsection, the term `75/25 mixed-fuel vehicle'
means a mixed-fuel vehicle which operates using at
least 75 percent alternative fuel and not more than 25
percent petroleum-based fuel.
``(D) 90/10 mixed-fuel vehicle.--For purposes of
this subsection, the term `90/10 mixed-fuel vehicle'
means a mixed-fuel vehicle which operates using at
least 90 percent alternative fuel and not more than 10
percent petroleum-based fuel.
``(e) 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, and 30, over
``(2) the tentative minimum tax for the taxable year.
``(f) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Consumable fuel.--The term `consumable fuel' means
any solid, liquid, or gaseous matter which releases energy when
consumed by an auxiliary power unit.
``(2) Motor vehicle.--The term `motor vehicle' has the
meaning given such term by section 30(c)(2).
``(3) City fuel economy.--The city fuel economy with
respect to any vehicle shall be measured in a manner which is
substantially similar to the manner city fuel economy is measured in
accordance with procedures under part 600 of subchapter Q of chapter I
of title 40, Code of Federal Regulations, as in effect on the date of
the enactment of this section.
``(4) Other terms.--The terms `automobile', `passenger
automobile', `medium duty passenger vehicle', `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 (e)).
``(6) No double benefit.--The amount of any deduction or
other credit allowable under this chapter--
``(A) for any incremental cost taken into account
in computing the amount of the credit determined under
subsection (d) shall be reduced by the amount of such
credit attributable to such cost, and
``(B) with respect to a vehicle described under
subsection (b) or (c), shall be reduced by the amount
of credit allowed under subsection (a) for such vehicle
for the taxable year.
``(7) Property used by tax-exempt entities.--In the case of
a credit amount which is allowable with respect to a motor
vehicle which is acquired by an entity exempt from tax under
this chapter, the person which sells or leases such vehicle to
the entity shall be treated as the taxpayer with respect to the
vehicle for purposes of this section and the credit shall be
allowed to such person, but only if the person clearly
discloses to the entity at the time of any sale or lease the
specific amount of any credit otherwise allowable to the entity
under this section.
``(8) Recapture.--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).
``(9) 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.
``(10) 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.
``(11) 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 (e) 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 the date of the enactment of this
section, 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).
``(12) 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.
``(g) 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.
``(h) Termination.--This section shall not apply to any property
purchased after--
``(1) in the case of a new qualified fuel cell motor
vehicle (as described in subsection (b)), December 31, 2013,
and
``(2) in the case of any other property, December 31,
2009.''.
(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(f)(5).''.
(2) Section 55(c)(2) is amended by inserting ``30B(e),''
after ``30(b)(3)''.
(3) Section 6501(m) is amended by inserting ``30B(f)(10),''
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. Alternative motor vehicle credit.''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service after the date of the enactment of
this Act, in taxable years ending after such date.
SEC. 4. MODIFICATION OF CREDIT FOR QUALIFIED ELECTRIC VEHICLES.
(a) Amount of Credit.--
(1) In general.--Section 30(a) (relating to allowance of
credit) is amended by striking ``10 percent of''.
(2) Limitation of credit according to type of vehicle.--
Section 30(b) (relating to limitations) is amended--
(A) by striking paragraphs (1) and (2) and
inserting the following new paragraph:
``(1) Limitation according to type of vehicle.--The amount
of the credit allowed under subsection (a) for any vehicle
shall not exceed the greatest of the following amounts
applicable to such vehicle:
``(A) In the case of a vehicle which conforms to
the Motor Vehicle Safety Standard 500 prescribed by the
Secretary of Transportation, as in effect on the date
of the enactment of the Clean Efficient Automobiles
Resulting From Advanced Car Technologies (CLEAR ACT)
Act of 2003, the lesser of--
``(i) 10 percent of the manufacturer's
suggested retail price of the vehicle, or
``(ii) $1,500.
``(B) In the case of a vehicle not described in
subparagraph (A) with a gross vehicle weight rating not
exceeding 8,500 pounds--
``(i) $4,000, or
``(ii) $6,000, if such vehicle is--
``(I) capable of a driving range of
at least 100 miles on a single charge
of the vehicle's rechargeable batteries
as measured pursuant to the urban
dynamometer schedules under appendix I
to part 86 of title 40, Code of Federal
Regulations, or
``(II) capable of a payload
capacity of at least 1,000 pounds.
``(C) In the case of a vehicle with a gross vehicle
weight rating exceeding 8,500 but not exceeding 14,000
pounds, $10,000.
``(D) In the case of a vehicle with a gross vehicle
weight rating exceeding 14,000 but not exceeding 26,000
pounds, $20,000.
``(E) In the case of a vehicle with a gross vehicle
weight rating exceeding 26,000 pounds, $40,000.'', and
(B) by redesignating paragraph (3) as paragraph
(2).
(3) Conforming amendments.--
(A) Section 53(d)(1)(B)(iii) is amended by striking
``section 30(b)(3)(B)'' and inserting ``section
30(b)(2)(B)''.
(B) Section 55(c)(2), as amended by this Act, is
amended by striking ``30(b)(3)'' and inserting
``30(b)(2)''.
(b) Qualified Battery Electric Vehicle.--
(1) In general.--Section 30(c)(1)(A) (defining qualified
electric vehicle) is amended to read as follows:
``(A) which is--
``(i) operated solely by use of a battery
or battery pack, or
``(ii) powered primarily through the use of
an electric battery or battery pack using a
flywheel or capacitor which stores energy
produced by an electric motor through
regenerative braking to assist in vehicle
operation,''.
(2) Leased vehicles.--Section 30(c)(1)(C) is amended by
inserting ``or lease'' after ``use''.
(3) Conforming amendments.--
(A) Subsections (a), (b)(2), and (c) of section 30
are each amended by inserting ``battery'' after
``qualified'' each place it appears.
(B) The heading of subsection (c) of section 30 is
amended by inserting ``Battery'' after ``Qualified''.
(C) The heading of section 30 is amended by
inserting ``battery'' after ``qualified''.
(D) The item relating to section 30 in the table of
sections for subpart B of part IV of subchapter A of
chapter 1 is amended by inserting ``battery'' after
``qualified''.
(E) Section 179A(c)(3) is amended by inserting
``battery'' before ``electric''.
(F) The heading of paragraph (3) of section 179A(c)
is amended by inserting ``battery'' before
``electric''.
(c) Additional Special Rules.--Section 30(d) (relating to special
rules) is amended by adding at the end the following new paragraphs:
``(5) No double benefit.--The amount of any deduction or
other credit allowable under this chapter for any cost taken
into account in computing the amount of the credit determined
under subsection (a) shall be reduced by the amount of such
credit attributable to such cost.
``(6) Property used by tax-exempt entities.--In the case of
a credit amount which is allowable with respect to a vehicle
which is acquired by an entity exempt from tax under this
chapter, the person which sells or leases such vehicle to the
entity shall be treated as the taxpayer with respect to the
vehicle for purposes of this section and the credit shall be
allowed to such person, but only if the person clearly
discloses to the entity at the time of any sale or lease the
specific amount of any credit otherwise allowable to the entity
under this section.
``(7) 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 (b)(2) 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 the date of the enactment of this
paragraph, 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).''.
(d) Effective Date.--The amendments made by this section shall
apply to property placed in service after the date of the enactment of
this Act, in taxable years ending after such date.
SEC. 5. CREDIT FOR INSTALLATION OF ALTERNATIVE 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. CLEAN-FUEL 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 installation of qualified clean-fuel vehicle
refueling property.
``(b) Limitation.--
``(1) In general.--The credit allowed under subsection
(a)--
``(A) with respect to any retail clean-fuel vehicle
refueling property, shall not exceed $30,000, and
``(B) with respect to any residential clean-fuel
vehicle refueling property, shall not exceed $1,000.
``(2) Phaseout.--
``(A) In general.--Except as provided in
subparagraph (B), in the case of any qualified clean-
fuel vehicle refueling property placed in service after
December 31, 2007, the limit otherwise applicable under
paragraph (1) shall be reduced by--
``(i) 25 percent in the case of any vehicle
placed in service in calendar year 2008, and
``(ii) 50 percent in the case of any
vehicle placed in service in calendar year
2009.
``(B) Hydrogen property.--In the case of any
qualified clean-fuel vehicle refueling property
relating to hydrogen placed in service after December
31, 2011, the limit otherwise applicable under
paragraph (1) shall be reduced by--
``(i) 25 percent in the case of any vehicle
placed in service in calendar year 2012, and
``(ii) 50 percent in the case of any
vehicle placed in service in calendar year
2013.
``(c) Year Credit Allowed.--The credit allowed under subsection (a)
shall be allowed in the taxable year in which the qualified clean-fuel
vehicle refueling property is placed in service by the taxpayer.
``(d) Definitions.--For purposes of this section--
``(1) Qualified clean-fuel vehicle refueling property.--The
term `qualified clean-fuel vehicle refueling property' has the
same meaning given such term by section 179A(d).
``(2) Residential clean-fuel vehicle refueling property.--
The term `residential clean-fuel vehicle refueling property'
means qualified clean-fuel vehicle refueling property which is
installed on property which is used as the principal residence
(within the meaning of section 121) of the taxpayer.
``(3) Retail clean-fuel vehicle refueling property.--The
term `retail clean-fuel vehicle refueling property' means
qualified clean-fuel vehicle refueling property which is
installed on property (other than property described in
paragraph (2)) used in a trade or business of the taxpayer.
``(e) 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.
``(f) 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).
``(g) No Double Benefit.--No deduction shall be allowed under
section 179A with respect to any property with respect to which a
credit is allowed under subsection (a).
``(h) Refueling Property Installed for Tax-Exempt Entities.--In the
case of qualified clean-fuel vehicle refueling property installed on
property owned or used by an entity exempt from tax under this chapter,
the person which installs such refueling property for the entity shall
be treated as the taxpayer with respect to the refueling property for
purposes of this section (and such refueling property shall be treated
as retail clean-fuel vehicle refueling property) and the credit shall
be allowed to such person, but only if the person clearly discloses to
the entity in any installation contract the specific amount of the
credit allowable under this section.
``(i) 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).
``(j) Special Rules.--Rules similar to the rules of paragraphs (4)
and (5) of section 179A(e) shall apply.
``(k) Regulations.--The Secretary shall prescribe such regulations
as necessary to carry out the provisions of this section.
``(l) Termination.--This section shall not apply to any property
placed in service--
``(1) in the case of property relating to hydrogen, after
December 31, 2013, and
``(2) in the case of any other property, after December 31,
2009.''.
(b) Incentive for Production of Hydrogen at Qualified Clean-Fuel
Vehicle Refueling Property.--Section 179A(d) (defining qualified clean-
fuel vehicle refueling property) is amended by adding at the end the
following new flush sentence:
``In the case of clean-burning fuel which is hydrogen produced from
another clean-burning fuel, paragraph (3)(A) shall be applied by
substituting `production, storage, or dispensing' for `storage or
dispensing' both places it appears.''.
(c) 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(f).''.
(2) Section 55(c)(2), as amended by this Act, is amended by
inserting ``30C(e),'' after ``30B(e)''.
(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. Clean-fuel vehicle refueling property credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to property placed in service after the date of the enactment of
this Act, in taxable years ending after such date.
SEC. 6. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS 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 ALTERNATIVE FUELS AS MOTOR
VEHICLE FUEL.
``(a) General Rule.--For purposes of section 38, the alternative
fuel retail sales credit for any taxable year is the applicable amount
for each gasoline gallon equivalent of alternative fuel sold at retail
by the taxpayer during such year as a fuel to propel any qualified
motor vehicle.
``(b) Definitions.--For purposes of this section--
``(1) Applicable amount.--The term `applicable amount'
means as follows:
``(A) In general.--Except as provided in
subparagraph (B), the amount determined in accordance
with the following table:
``In the case of any taxable year
ending in-- The applicable amount is--
2003.......................................... 30 cents
2004.......................................... 40 cents
2005 and 2006................................. 50 cents
2007.......................................... 40 cents
2008.......................................... 30 cents.
``(B) Hydrogen fuel.--In the case of an alternative
fuel which is hydrogen fuel, the amount determined in
accordance with the following table:
``In the case of any taxable year
ending in-- The applicable amount is--
2003.......................................... 30 cents
2004.......................................... 40 cents
2005 through 2011............................. 50 cents
2012.......................................... 40 cents
2013.......................................... 30 cents.
``(2) Alternative fuel.--The term `alternative fuel' means
compressed natural gas, liquefied natural gas, liquefied
petroleum gas, hydrogen, and any liquid at least 85 percent of
the volume of which consists of methanol or ethanol.
``(3) Gasoline gallon equivalent.--The term `gasoline
gallon equivalent' means, with respect to any alternative fuel,
the amount (determined by the Secretary) of such fuel having a
Btu content of 114,000.
``(4) Qualified motor vehicle.--The term `qualified motor
vehicle' means any motor vehicle (as defined in section
30(c)(2)) which meets any applicable Federal or State emissions
standards with respect to each fuel by which such vehicle is
designed to be propelled.
``(5) 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
alternative fuel (including any use after importation)
as a fuel to propel any qualified alternative fuel
motor vehicle (as defined in section 30B(d)(4)) 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) Election To Pass Credit.--A person which sells alternative
fuel at retail may elect to pass the credit allowable under this
section to the purchaser of such fuel or, in the event the purchaser is
a tax-exempt entity or otherwise declines to accept such credit, to the
person which supplied such fuel, under rules established by the
Secretary.
``(d) No Double Benefit.--The amount of any deduction or other
credit allowable under this chapter for any fuel taken into account in
computing the amount of the credit determined under subsection (a)
shall be reduced by the amount of such credit attributable to such
fuel.
``(e) 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.
``(f) Termination.--
``(1) In general.--Except as provided in paragraph (2),
this section shall not apply to any fuel sold at retail after
December 31, 2008.
``(2) Hydrogen fuel.--In the case of an alternative fuel
which is hydrogen fuel, 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 alternative 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 alternative fuel retail sales
credit determined under section 40A(a) may be carried back to a
taxable year ending before the date of the enactment of such
section.''.
(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 alternative fuels as
motor vehicle fuel.''.
(e) Effective Date.--The amendments made by this section shall
apply to fuel sold at retail after the date of the enactment of this
Act, in taxable years ending after such date.
SEC. 7. STUDY OF EFFECTIVENESS OF CERTAIN PROVISIONS BY GAO.
(a) Study.--The Comptroller General of the United States shall
undertake an ongoing analysis of--
(1) the effectiveness of the alternative motor vehicles and
fuel incentives provisions under this Act, and
(2) the recipients of the tax benefits contained in such
provisions, including an identification of such recipients by
income and other appropriate measurements.
Such analysis shall quantify the effectiveness of such provisions by
examining and comparing the Federal Government's forgone revenue to the
aggregate amount of energy actually conserved and tangible
environmental benefits gained as a result of such provisions.
(b) Reports.--The Comptroller General of the United States shall
report the analysis required under subsection (a) to Congress not later
than December 31, 2004, and annually thereafter.
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