II

106TH CONGRESS

1ST SESSION S. 1003

To amend the Internal Revenue Code of 1986 to provide increased tax

incentives for the purchase of alternative fuel and electric vehicles, and

for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 11, 1999

Mr. ROCKEFELLER (for himself, Mr. HATCH, Mr. CRAPO, and Mr. BRYAN)

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 provide

increased tax incentives for the purchase of alternative

fuel and electric vehicles, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Alternative Fuels Pro5 motion Act’’.

6 SEC. 2. FINDINGS.

7 The Senate finds the following:

8 (1)(A) Since 1994, the United States has im9 ported over half its oil.
2

•S 1003 IS

1 (B) Without efforts to mitigate this dependence

2 on foreign oil, the percentage of oil imported is ex3 pected to grow to all-time highs.

4 (C) This reliance on foreign oil presents a na5 tional security risk, which Congress should address

6 through policy changes designed to increase the use

7 of domestically-available alternative transportation

8 fuels.

9 (2)(A) The importing of a majority of the oil

10 used in the United States contributes negatively to

11 the balance of trade of the United States.

12 (B) Assuring the Nation’s economic security de13 mands the development and promotion of domesti14 cally-available alternative transportation fuels.

15 (3)(A) The reliance on oil as a transportation

16 fuel has numerous negative environmental con17 sequences, including increasing air pollution and

18 greenhouse gas emissions.

19 (B) Developing alternative transportation fuels

20 will help address these environmental impacts by re21 ducing emissions.

22 (4) In order to encourage installation of alter23 native fueling infrastructure, and make alternative

24 fuels economically favorable to the producer, dis25 tributor, marketer, and consumer, tax credits pro-
3

•S 1003 IS

1 vided at the point of distribution into an alternative

2 fuel vehicle are necessary.

3 (5)(A) In the short-term, United States alter4 native fuel policy must be made fuel neutral.

5 (B) Fuel neutrality will foster private innova6 tion and commercialization using the most techno7 logically feasible and economic fuels available.

8 (C) This will allow market forces to decide the

9 alternative fuel winners and losers.

10 (6)(A) Tax credits which have been in place

11 have led to increases in the quantity and quality of

12 alternative fuel technology available today.

13 (B) Extending these credits is an efficient

14 means of promoting alternative fuel vehicles and al15 ternative fueling infrastructures.

16 (7)(A) The Federal fleet is one of the best cus17 tomers for alternative fuel vehicles due to its com18 bination of large purchasing power, tight record

19 keeping, geographic diversity, and high fuel usage.

20 (B) For these reasons, the National Energy

21 Policy Act of 1991 required Federal fleets to pur22 chase certain numbers of alternatively-fueled vehi23 cles.

24 (C) In most cases, these requirements have not

25 been met.
4

•S 1003 IS

1 (D) Efforts must be made to ensure that all

2 Federal agencies comply with Federal fleet purchase

3 requirement laws and executive orders.

4 TITLE I—TAX INCENTIVES

5 SEC. 101. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

6 (a) INCREASED CREDIT FOR VEHICLES WHICH

7 MEET CERTAIN RANGE REQUIREMENTS.—

8 (1) IN GENERAL.—Section 30(a) of the Internal

9 Revenue Code of 1986 (relating to allowance of

10 credit) is amended to read as follows:

11 ‘‘(a) ALLOWANCE OF CREDIT.—

12 ‘‘(1) IN GENERAL.—There shall be allowed as a

13 credit against the tax imposed by this chapter for

14 the taxable year an amount equal to the sum of—

15 ‘‘(A) 10 percent of the cost of any quali16 fied electric vehicle placed in service by the tax17 payer during the taxable year, plus

18 ‘‘(B) in the case of any such vehicle also

19 meeting the requirement described in paragraph

20 (2), $5,000.

21 ‘‘(2) RANGE REQUIREMENT.—The requirement

22 described in this paragraph is a driving range of at

23 least 100 miles—
5

•S 1003 IS

1 ‘‘(A) on a single charge of the vehicle’s re2 chargeable batteries, fuel cells, or other portable

3 source of electrical current, and

4 ‘‘(B) measured pursuant to the urban dy5 namometer schedules under appendix I to part

6 86 of title 40, Code of Federal Regulations.’’.

7 (2) CONFORMING AMENDMENT.—Section

8 30(b)(1) of the Internal Revenue Code of 1986 is

9 amended by striking ‘‘subsection (a)’’ and inserting

10 ‘‘subsection (a)(1)(A)’’.

11 (b) CREDIT EXTENDED THROUGH 2010.—

12 (1) IN GENERAL.—Section 30(e) of the Internal

13 Revenue Code of 1986 (relating to termination) is

14 amended by striking ‘‘2004’’ and inserting ‘‘2010’’.

15 (2) CONFORMING AMENDMENTS.—Section

16 30(b)(2) of such Code (relating to phaseout) is

17 amended—

18 (A) by striking ‘‘2002’’ in subparagraph

19 (A) and inserting ‘‘2008’’,

20 (B) by striking ‘‘2003’’ in subparagraph

21 (B) and inserting ‘‘2009’’, and

22 (C) by striking ‘‘2004’’ in subparagraph

23 (C) and inserting ‘‘2010’’.
6

•S 1003 IS

1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to property placed in service after

3 the date of enactment of this Act.

4 SEC. 102. ADDITIONAL DEDUCTION FOR COST OF INSTAL5 LATION OF ALTERNATIVE FUELING STA6 TIONS.

7 (a) IN GENERAL.—Subparagraph (A) of section

8 179A(b)(2) of the Internal Revenue Code of 1986 (relat9 ing to qualified clean-fuel vehicle refueling property) is

10 amended to read as follows:

11 ‘‘(A) IN GENERAL.—The aggregate cost

12 which may be taken into account under sub13 section (a)(1)(B) with respect to qualified

14 clean-fuel vehicle refueling property placed in

15 service during the taxable year at a location

16 shall not exceed the sum of—

17 ‘‘(i) with respect to costs not de18 scribed in clause (ii), the excess (if any)

19 of—

20 ‘‘(I) $100,000, over

21 ‘‘(II) the aggregate amount of

22 such costs taken into account under

23 subsection (a)(1)(B) by the taxpayer

24 (or any related person or predecessor)

25 with respect to property placed in
7

•S 1003 IS

1 service at such location for all pre2 ceding taxable years, plus

3 ‘‘(ii) the lesser of—

4 ‘‘(I) the cost of the installation of

5 such property, or

6 ‘‘(II) $30,000.’’.

7 (b) EFFECTIVE DATE.—The amendment made by

8 this section shall apply to property placed in service after

9 the date of enactment of this Act.

10 SEC. 103. CREDIT FOR RETAIL SALE OF CLEAN BURNING

11 FUELS AS MOTOR VEHICLE FUEL.

12 (a) IN GENERAL.—Subpart D of part IV of sub13 chapter A of chapter 1 of the Internal Revenue Code of

14 1986 (relating to business related credits) is amended by

15 inserting after section 40 the following:

16 ‘‘SEC. 40A. CREDIT FOR RETAIL SALE OF CLEAN BURNING

17 FUELS AS MOTOR VEHICLE FUEL.

18 ‘‘(a) GENERAL RULE.—For purposes of section 38,

19 the clean burning fuel retail sales credit of any taxpayer

20 for any taxable year is 50 cents for each gasoline gallon

21 equivalent of clean burning fuel sold at retail by the tax22 payer during such year as a fuel to propel any qualified

23 motor vehicle.

24 ‘‘(b) DEFINITIONS.—For purposes of this section—
8

•S 1003 IS

1 ‘‘(1) CLEAN BURNING FUEL.—The term ‘clean

2 burning fuel’ means natural gas, compressed natural

3 gas, liquefied natural gas, liquefied petroleum gas,

4 hydrogen, and any liquid at least 85 percent of

5 which consists of methanol.

6 ‘‘(2) GASOLINE GALLON EQUIVALENT.—The

7 term ‘gasoline gallon equivalent’ means, with respect

8 to any clean burning fuel, the amount (determined

9 by the Secretary) of such fuel having a Btu content

10 of 114,000.

11 ‘‘(3) QUALIFIED MOTOR VEHICLE.—The term

12 ‘qualified motor vehicle’ means any motor vehicle (as

13 defined in section 179A(e)) which meets any applica14 ble Federal or State emissions standards with re15 spect to each fuel by which such vehicle is designed

16 to be propelled.

17 ‘‘(4) SOLD AT RETAIL.—

18 ‘‘(A) IN GENERAL.—The term ‘sold at re19 tail’ means the sale, for a purpose other than

20 resale, after manufacture, production, or impor21 tation.

22 ‘‘(B) USE TREATED AS SALE.—If any per23 son uses clean burning fuel as a fuel to propel

24 any qualified motor vehicle (including any use

25 after importation) before such fuel is sold at re-
9

•S 1003 IS

1 tail, then such use shall be treated in the same

2 manner as if such fuel were sold at retail as a

3 fuel to propel such a vehicle by such person.

4 ‘‘(c) NO DOUBLE BENEFIT.—The amount of the

5 credit determined under subsection (a) shall be reduced

6 by the amount of any deduction or credit allowable under

7 this chapter for fuel taken into account in computing the

8 amount of such credit.

9 ‘‘(d) TERMINATION.—This section shall not apply to

10 any fuel sold at retail after December 31, 2007.’’.

11 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec12 tion 38(b) of the Internal Revenue Code of 1986 (relating

13 to current year business credit) is amended by striking

14 ‘‘plus’’ at the end of paragraph (11), by striking the period

15 at the end of paragraph (12) and inserting ‘‘, plus’’, and

16 by adding at the end the following:

17 ‘‘(13) the clean burning fuel retail sales credit

18 determined under section 40A(a).’’.

19 (c) TRANSITIONAL RULE.—Section 39(d) of the In20 ternal Revenue Code of 1986 (relating to transitional

21 rules) is amended by adding at the end the following:

22 ‘‘(9) NO CARRYBACK OF SECTION 40A CREDIT

23 BEFORE EFFECTIVE DATE.—No portion of the un24 used business credit for any taxable year which is

25 attributable to the clean burning fuel retail sales
10

•S 1003 IS

1 credit determined under section 40A(a) may be car2 ried back to a taxable year ending before January

3 1, 1999.’’.

4 (d) CLERICAL AMENDMENT.—The table of sections

5 for subpart D of part IV of subchapter A of chapter 1

6 of the Internal Revenue Code of 1986 is amended by in7 serting after the item relating to section 40 the following:

‘‘Sec. 40A. Credit for retail sale of clean burning fuels as motor vehicle

fuel.’’.

8 (e) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to fuel sold at retail after Decem10 ber 31, 1999, in taxable years ending after such date.

11 TITLE II—PROGRAM

12 EFFICIENCIES

13 SEC. 201. EXCEPTION TO HOV PASSENGER REQUIREMENTS

14 FOR ALTERNATIVE FUEL VEHICLES.

15 Section 102(a) of title 23, United States Code, is

16 amended by inserting ‘‘(unless, at the discretion of the

17 State highway department, the vehicle operates on, or is

18 fueled by, an alternative fuel (as defined in section 301

19 of Public Law 102–486 (42 U.S.C. 13211(2)))’’ after

20 ‘‘required’’.

Æ