To amend the Internal Revenue Code of 1986 to provide a credit for the purchase of qualified flexible fuel motor vehicles, and for other purposes.

Summary: Green Vehicles Promotion Act of 2006 - Amends the Internal Revenue Code to allow tax credits through 2010 for the purchase of a qualified flexible fuel motor vehicle and for the conversion of an existing motor vehicle into a qualified flexible fuel motor vehicle. Defines "qualified flexible fuel vehicle" to include a vehicle using fuel with an 85% ethanol content.

Establishes in the Treasury the Alternative Fueling Infrastructure Trust Fund to create a grant program for the construction and operation of alternative fuel refueling stations. Defines "alternative fuels" to mean: (1) fuels with an 85% ethanol content, liquefied petroleum gas, or hydrogen; or (2) biodiesel mixtures.

Directs the Secretary of Transportation to remit 90% of the civil penalties collected for violations of automobile fuel economy standards to the Trust Fund.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Green Vehicles Promotion Act of 
2006''.

SEC. 2. QUALIFIED FLEXIBLE FUEL MOTOR VEHICLE CREDIT.

    (a) In General.--Section 30B of the Internal Revenue Code of 1986 
(relating to alternative motor vehicle credit) is amended--
            (1) in subsection (a) by striking ``and'' at the end of 
        paragraph (3), by striking the period and inserting ``, and'' 
        at the end of paragraph (4), and by adding at the end the 
        following new paragraph:
            ``(5) the qualified flexible fuel motor vehicle credit 
        determined under subsection (f).'', and
            (2) by redesignating subsections (f), (g), (h), (i), and 
        (j) as subsections (g), (h), (i), (j), and (k), respectively, 
        and by inserting after subsection (e) the following new 
        subsection:
    ``(f) Qualified Flexible Fuel Motor Vehicle Credit.--
            ``(1) Allowance of credit.--For purposes of subsection (a), 
        the qualified flexible fuel motor vehicle credit determined 
        under this subsection for the taxable year is an amount equal 
        to the sum of--
                    ``(A) $100 for each qualified flexible fuel motor 
                vehicle placed in service by the taxpayer during the 
                taxable year that is not a new qualified hybrid motor 
                vehicle (as described in subsection (d)(3)), plus
                    ``(B) $200 for each qualified flexible fuel motor 
                vehicle placed in service by the taxpayer during the 
                taxable year that is a new qualified hybrid motor 
                vehicle (as described in subsection (d)(3)).
            ``(2) Qualified flexible fuel motor vehicle.--For purposes 
        of this subsection--
                    ``(A) In general.--The term `qualified flexible 
                fuel motor vehicle' means a motor vehicle that meets 
                the requirements of subparagraph (B) and is designed so 
                that the vehicle is propelled by an engine which can 
                use as a fuel a gasoline mixture of which 85 percent 
                (or another percentage of not less than 70 percent, as 
                the Secretary may determine, by rule, to provide for 
                requirements relating to cold start, safety, or vehicle 
                functions) of the volume of consists of ethanol.
                    ``(B) Other requirements.--A vehicle meets the 
                requirements of this paragraph if--
                            ``(i) the original use of the vehicle 
                        commences with the taxpayer,
                            ``(ii) the vehicle is acquired for use or 
                        lease by the taxpayer and not for resale, and
                            ``(iii) the vehicle is made by a 
                        manufacturer in the United States.''.
    (b) Termination.--Subsection (k) of section 30B of such Code (as 
redesignated by subsection (a)) is amended by striking ``and'' at the 
end of paragraph (3), by striking the period and inserting ``, and'' at 
the end of paragraph (4), and by adding at the end the following new 
paragraph:
            ``(5) in the case of a qualified flexible fuel motor 
        vehicle (as described in subsection (f)(2)), December 31, 
        2010.''.
    (c) Conforming Amendments.--
            (1) Paragraph (4) of section 30B(i) of such Code (as 
        redesignated by subsection (a)) is amended by striking 
        ``subsection (g)'' and inserting ``subsection (h)''.
            (2) Paragraph (6) of section 30B(i) of such Code (as 
        redesignated by subsection (a)) is amended by striking 
        ``subsection (g)'' each place it appears and inserting 
        ``subsection (h)''.
            (3) Paragraph (25) of section 38(b) of such Code is amended 
        by striking ``section 30B(g)(1)'' and inserting ``section 
        30B(h)(1)''.
            (4) Paragraph (3) of section 55(c) of such Code is amended 
        by striking ``30B(g)(2)'' and inserting ``30B(h)(2)''.
            (5) Paragraph (36) of section 1016(a) of such Code is 
        amended by striking ``section 30B(h)(4)'' and inserting 
        ``section 30B(i)(4)''.
            (6) Subsection (m) of section 6501 of such Code is amended 
        by striking ``30B(h)(9)'' and inserting ``30B(i)(9)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to purchases made after the date of the enactment of this Act, in 
taxable years ending after such date.

SEC. 3. CREDIT FOR CONVERSION OF MOTOR VEHICLE TO QUALIFIED FLEXIBLE 
              FUEL MOTOR VEHICLE.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 25D the following new section:

``SEC. 25E. CREDIT FOR CONVERSION OF MOTOR VEHICLE TO QUALIFIED 
              FLEXIBLE FUEL MOTOR VEHICLE.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to 100 percent of the qualified 
flexible fuel motor vehicle conversion expenditures made by the 
taxpayer during the taxable year.
    ``(b) Maximum Credit.--The credit allowed under subsection (a) for 
any taxable year shall not exceed $500.
    ``(c) Qualified Flexible Fuel Motor Vehicle Conversion 
Expenditure.--For purposes of this section--
            ``(1) In general.--The term `qualified flexible fuel motor 
        vehicle conversion expenditure' means any expenditure directly 
        related to the process of converting a motor vehicle owned by a 
        taxpayer to a motor vehicle that meets the qualified flexible 
        fuel motor vehicle requirement described in paragraph (2).
            ``(2) Qualified flexible fuel motor vehicle requirement.--A 
        vehicle meets the qualified flexible fuel motor vehicle 
        requirements described in this paragraph if the vehicle is 
        propelled by an engine which can use as a fuel a gasoline 
        mixture of which 85 percent (or another percentage of not less 
        than 70 percent, as the Secretary may determine, by rule, to 
        provide for requirements relating to cold start, safety, or 
        vehicle functions) of the volume of consists of ethanol.
            ``(3) Motor vehicle.--The term `motor vehicle' means any 
        vehicle which is manufactured primarily for use on public 
        streets, roads, and highways (not including a vehicle operated 
        exclusively on a rail or rails) and which has at least 4 
        wheels.
    ``(d) Termination.--The credit allowed under this section shall not 
apply to expenditures made after December 31, 2010.''.
    (b) Conforming Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 25D the following new 
item:

``Sec. 25E. Credit for conversion of motor vehicle to qualified 
                            flexible fuel motor vehicle.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures made after December 31, 2006, in taxable years 
ending after such date.

SEC. 4. USE OF CAFE PENALTIES TO BUILD ALTERNATIVE FUELING 
              INFRASTRUCTURE.

    Section 32912 of title 49, United States Code, is amended by adding 
at the end the following:
    ``(e) Alternative Fueling Infrastructure Grant Program.--
            ``(1) Trust fund.--(A) There is established in the Treasury 
        of the United States a trust fund, to be known as the 
        Alternative Fueling Infrastructure Trust Fund (referred to in 
        this subsection as the `Trust Fund'), consisting of such 
        amounts as are deposited into the Trust Fund under subparagraph 
        (B) and any interest earned on investment of amounts in the 
        Trust Fund.
            ``(B) The Secretary of Transportation shall remit 90 
        percent of the amount collected in civil penalties under this 
        section to the Trust Fund.
            ``(2) Establishment of grant program.--The Secretary of 
        Energy shall obligate such sums as are available in the Trust 
        Fund to establish a grant program to increase the number of 
        locations at which consumers may purchase alternative fuels.
            ``(3) Grant recipients.--
                    ``(A) Allocation to corporate and nonprofit 
                entities.--The Secretary of Energy may allocate from 
                the Trust Fund such sums as the Secretary considers 
                appropriate to corporations (including nonprofit 
                corporations) with demonstrated experience in the 
                administration of grant funding for the purpose of 
                making alternative fueling infrastructure grants to 
                owners and operators of fueling stations. The Secretary 
                of Energy may allocate funds only to a corporation that 
                agrees to provide $1 of non-Federal contributions for 
                every $3 of Federal funding received under this 
                subparagraph. In no case may administrative expenses 
                exceed 5 percent of any total allocation that may be 
                provided. Allocations under this paragraph may be made 
                only for specific types of alternative fuels that can 
                be used in at least 50,000 automobiles produced in the 
                United States in the prior automobile production year.
                    ``(B) Considerations.--In making allocations to 
                corporate and nonprofit entities for alternative 
                fueling infrastructure awards under subparagraph (A), 
                the Secretary shall--
                            ``(i) consider the number of automobiles 
                        produced for sale in the preceding production 
                        year capable of using each specific type of 
                        alternative fuel; and
                            ``(ii) identify 1 primary entity per 
                        alternative fuel capable of implementing a 
                        national deployment program and providing 
                        technical and marketing assistance.
                    ``(C) Direct grants to fueling station owners and 
                operators.--The Secretary of Energy may award grants 
                directly to owners and operators of fueling stations 
                for the purpose of installing alternative fuel 
                infrastructure for specific types of alternative fuels 
                that can be used in not fewer than 50,000 automobiles 
                produced in the United States in the prior automobile 
                production year.
                    ``(D) Grant recipients.--A recipient of an 
                allocation under subparagraph (A) and the Secretary of 
                Energy under subparagraph (C) shall award grants to 
                owners and operators of fueling stations in an amount 
                not greater than $150,000 per site or $500,000 per 
                entity. A recipient of a grant under this paragraph 
                shall agree to provide $1 of non-Federal contributions 
                for every $3 of grant funds received under this 
                paragraph. In no case may administrative expenses 
                exceed 3 percent of any grant that may be provided. 
                Recipients of grants shall be selected on a formal, 
                open, and competitive basis, based on--
                            ``(i) the public demand for each 
                        alternative fuel in a particular county based 
                        on state registration records showing the 
                        number of automobiles that can be operated with 
                        alternative fuel;
                            ``(ii) the opportunity to create or expand 
                        corridors of alternative fuel stations along 
                        interstate or State highways; and
                            ``(iii) the opportunity to increase 
                        economic activity in economically-depressed 
                        communities.
                    ``(E) Technical and marketing assistance.--A 
                recipient of an allocation under subparagraph (A) shall 
                provide technical and marketing assistance to 
                recipients of grant awards, including point of sale and 
                labeling materials.
            ``(4) Use of funds.--(A) Grant funds received under this 
        subsection may be used to--
                    ``(i) construct new facilities to dispense 
                alternative fuels;
                    ``(ii) purchase equipment to upgrade, expand, or 
                otherwise improve existing alternative fuel facilities;
                    ``(iii) purchase equipment or pay for specific 
                turnkey fueling services by alternative fuel providers; 
                or
                    ``(iv) assist with marketing, point of sale 
                materials, including labeling materials and any other 
                efforts to promote the availability of alternative 
                fuels.
            ``(5) Operation of alternative fuel stations.--Facilities 
        constructed or upgraded with grant funds received under this 
        subsection shall--
                    ``(A) provide alternative fuel available to the 
                public for a period of not less than 4 years;
                    ``(B) establish a marketing plan to advance the 
                sale and use of alternative fuels;
                    ``(C) prominently display the price of alternative 
                fuel on the marquee and in the station;
                    ``(D) provide point of sale materials on 
                alternative fuel;
                    ``(E) clearly label the dispenser with consistent 
                materials;
                    ``(F) price the alternative fuel at the same margin 
                that is received for unleaded gasoline; and
                    ``(G) support and use all available tax incentives 
                to reduce the cost of the alternative fuel to the 
                lowest possible retail price.
            ``(6) Notification requirements.--(A) Not later than the 
        date on which each alternative fuel station begins to offer 
        alternative fuel to the public, the grant recipient that used 
        grant funds to construct such station shall notify the 
        Secretary of Energy of such opening. The Secretary of Energy 
        shall add each new alternative fuel station to the alternative 
        fuel station locator on its Website when it receives 
        notification under this subparagraph.
            ``(B) Not later than 6 months after the receipt of a grant 
        award under this subsection, and every 6 months thereafter, 
        each grant recipient shall submit a report to the Secretary of 
        Energy that describes--
                    ``(i) the status of each alternative fuel station 
                constructed with grant funds received under this 
                subsection;
                    ``(ii) the amount of alternative fuel dispensed at 
                each station during the preceding 6-month period; and
                    ``(iii) the average price per gallon of the 
                alternative fuel sold at each station during the 
                preceding 6-month period.
            ``(7) Alternative fuel defined.--For the purposes of this 
        subsection, the term `alternative fuel' means--
                    ``(A) any fuel of which at least 85 percent (or 
                such percentage, but not less than 70 percent, as 
                determined by the Secretary, by rule, to provide for 
                requirements relating to cold start, safety, or 
                automobile functions) of the volume consists of 
                ethanol, liquefied petroleum gas, or hydrogen; or
                    ``(B) any mixture of biodiesel and diesel fuel 
                determined without regard to any use of kerosene that 
                contains at least 20 percent biodiesel.''.