II 

109TH CONGRESS 

2D SESSION S. 2446 

To promote the national security and stability of the economy of the United 

States by reducing the dependence of the United States on oil through 

the use of alternative fuels and new technology, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 16 (legislative day, MARCH 15), 2006 

Mr. OBAMA (for himself and Mr. LUGAR) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To promote the national security and stability of the economy 

of the United States by reducing the dependence of the 

United States on oil through the use of alternative fuels 

and new technology, 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 ‘‘American Fuels Act 

5 of 2006’’. 

6 SEC. 2. OFFICE OF ENERGY SECURITY. 

7 (a) DEFINITIONS.—In this section: 


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1 (1) DIRECTOR.—The term ‘‘Director’’ means 

2 the Director of Energy Security appointed under 

3 subsection (c)(1). 

4 (2) OFFICE.—The term ‘‘Office’’ means the Of5 fice of Energy Security established by subsection 

6 (b). 

7 (b) ESTABLISHMENT.—There is established in the 

8 Executive Office of the President the Office of Energy Se9 curity. 

10 (c) DIRECTOR.— 

11 (1) IN GENERAL.—The Office shall be headed 

12 by a Director, who shall be appointed by the Presi13 dent, by and with the advice and consent of the Sen14 ate. 

15 (2) RATE OF PAY.—The Director shall be paid 

16 at a rate of pay equal to level I of the Executive 

17 Schedule under section 5312 of title 5, United 

18 States Code. 

19 (d) RESPONSIBILITIES.— 

20 (1) IN GENERAL.—The Office, acting through 

21 the Director, shall be responsible for overseeing all 

22 Federal energy security programs, including the co23 ordination of efforts of Federal agencies to assist the 

24 United States in achieving full energy independence. 


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1 (2) SPECIFIC RESPONSIBILITIES.—In carrying 

2 out paragraph (1), the Director shall— 

3 (A) serve as head of the energy commu4 nity; 

5 (B) act as the principal advisor to the 

6 President, the National Security Council, the 

7 National Economic Council, the Domestic Pol8 icy Council, and the Homeland Security Council 

9 with respect to intelligence matters relating to 

10 energy security; 

11 (C) with request to budget requests and 

12 appropriations for Federal programs relating to 

13 energy security— 

14 (i) consult with the President and the 

15 Director of the Office of Management and 

16 Budget with respect to each major Federal 

17 budgetary decision relating to energy secu18 rity of the United States; 

19 (ii) based on priorities established by 

20 the President, provide to the heads of de21 partments containing agencies or organiza22 tions within the energy community, and to 

23 the heads of such agencies and organiza24 tions, guidance for use in developing the 


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1 budget for Federal programs relating to 

2 energy security; 

3 (iii) based on budget proposals pro4 vided to the Director by the heads of agen5 cies and organizations described in clause 

6 (ii), develop and determine an annual con7 solidated budget for Federal programs re8 lating to energy security; and 

9 (iv) present the consolidated budget, 

10 together with any recommendations of the 

11 Director and any heads of agencies and or12 ganizations described in clause (ii), to the 

13 President for approval; 

14 (D) establish and meet regularly with a 

15 council of business and labor leaders to develop 

16 and provide to the President and Congress rec17 ommendations relating to the impact of energy 

18 supply and prices on economic growth; 

19 (E) submit to Congress an annual report 

20 that describes the progress of the United States 

21 toward the goal of achieving full energy inde22 pendence; and 

23 (F) carry out such other responsibilities as 

24 the President may assign. 

25 (e) STAFF.— 


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1 (1) IN GENERAL.—The Director may, without 

2 regard to the civil service laws (including regula3 tions), appoint and terminate such personnel as are 

4 necessary to enable the Director to carry out the re5 sponsibilities of the Director under this section. 

6 (2) COMPENSATION.— 

7 (A) IN GENERAL.—Except as provided in 

8 subparagraph (B), the Director may fix the 

9 compensation of personnel without regard to 

10 the provisions of chapter 51 and subchapter III 

11 of chapter 53 of title 5, United States Code, re12 lating to classification of positions and General 

13 Schedule pay rates. 

14 (B) MAXIMUM RATE OF PAY.—The rate of 

15 pay for the personnel appointed by the Director 

16 shall not exceed the rate payable for level V of 

17 the Executive Schedule under section 5316 of 

18 title 5, United States Code. 

19 (f) AUTHORIZATION OF APPROPRIATIONS.—There 

20 are authorized to be appropriated such sums as are nec21 essary to carry out this section. 

22 SEC. 3. CREDIT FOR PRODUCTION OF QUALIFIED FLEXIBLE 

23 FUEL MOTOR VEHICLES. 

24 (a) IN GENERAL.—Subpart D of part IV of sub25 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 is amended by adding at the end the following new 

2 section: 

3 ‘‘SEC. 45N. PRODUCTION OF QUALIFIED FLEXIBLE FUEL 

4 MOTOR VEHICLES. 

5 ‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec6 tion 38, the qualified flexible fuel motor vehicle production 

7 credit determined under this section for any taxable year 

8 is an amount equal to $100 for each qualified flexible fuel 

9 motor vehicle produced in the United States by the manu10 facturer during the taxable year. 

11 ‘‘(b) QUALIFIED FLEXIBLE FUEL MOTOR VEHI12 CLE.—For purposes of this section, the term ‘qualified 

13 flexible fuel motor vehicle’ means a flexible fuel motor ve14 hicle— 

15 ‘‘(1) the production of which is not required for 

16 the manufacturer to meet— 

17 ‘‘(A) the maximum credit allowable for ve18 hicles described in paragraph (2) in determining 

19 the fleet average fuel economy requirements (as 

20 determined under section 32904 of title 49, 

21 United States Code) of the manufacturer for 

22 the model year ending in the taxable year, or 

23 ‘‘(B) the requirements of any other provi24 sion of Federal law, and 


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1 ‘‘(2) which is designed so that the vehicle is 

2 propelled by an engine which can use as a fuel a 

3 gasoline mixture of which 85 percent (or another 

4 percentage of not less than 70 percent, as the Sec5 retary may determine, by rule, to provide for re6 quirements relating to cold start, safety, or vehicle 

7 functions) of the volume of consists of ethanol. 

8 ‘‘(c) OTHER DEFINITIONS AND SPECIAL RULES.— 

9 For purposes of this section— 

10 ‘‘(1) MOTOR VEHICLE.—The term ‘motor vehi11 cle’ has the meaning given such term by section 

12 30(c)(2). 

13 ‘‘(2) MANUFACTURER.—The term ‘manufac14 turer’ has the meaning given such term in regula15 tions prescribed by the Administrator of the Envi16 ronmental Protection Agency for purposes of the ad17 ministration of title II of the Clean Air Act (42 

18 U.S.C. 7521 et seq.). 

19 ‘‘(3) REDUCTION IN BASIS.—For purposes of 

20 this subtitle, if a credit is allowed under this section 

21 for any expenditure with respect to any property, the 

22 increase in the basis of such property which would 

23 (but for this paragraph) result from such expendi24 ture shall be reduced by the amount of the credit so 

25 allowed. 


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

2 any deduction or credit allowable under this chapter 

3 (other than the credits allowable under this section 

4 and section 30B) shall be reduced by the amount of 

5 credit allowed under subsection (a) for such vehicle 

6 for the taxable year. 

7 ‘‘(5) ELECTION NOT TO TAKE CREDIT.—No 

8 credit shall be allowed under subsection (a) for any 

9 vehicle if the taxpayer elects to not have this section 

10 apply to such vehicle. 

11 ‘‘(6) TERMINATION.—This section shall not 

12 apply to any vehicle produced after December 31, 

13 2010. 

14 ‘‘(7) CROSS REFERENCE.—For an election to 

15 claim certain minimum tax credits in lieu of the 

16 credit determined under this section, see section 

17 53(e).’’. 

18 (b) CREDIT ALLOWED AGAINST THE ALTERNATIVE

19 MINIMUM TAX.—Section 38(c)(4)(B) of the Internal Rev20 enue Code of 1986 (defining specified credits) is amended 

21 by striking the period at the end of clause (ii)(II) and in22 serting ‘‘, and’’, and by adding at the end the following 

23 new clause: 

24 ‘‘(iii) the credit determined under sec25 tion 45N.’’. 


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1 (c) ELECTION TO USE ADDITIONAL AMT CREDIT.— 

2 Section 53 of the Internal Revenue Code of 1986 (relating 

3 to credit for prior year minimum tax liability) is amended 

4 by adding at the end the following new subsection: 

5 ‘‘(e) ADDITIONAL CREDIT IN LIEU OF FLEXIBLE

6 FUEL MOTOR VEHICLE CREDIT.— 

7 ‘‘(1) IN GENERAL.—In the case of a taxpayer 

8 making an election under this subsection for a tax9 able year, the amount otherwise determined under 

10 subsection (c) shall be increased by any amount of 

11 the credit determined under section 45N for such 

12 taxable year which the taxpayer elects not to claim 

13 pursuant to such election. 

14 ‘‘(2) ELECTION.—A taxpayer may make an 

15 election for any taxable year not to claim any 

16 amount of the credit allowable under section 45N 

17 with respect to property produced by the taxpayer 

18 during such taxable year. An election under this sub19 section may only be revoked with the consent of the 

20 Secretary. 

21 ‘‘(3) CREDIT REFUNDABLE.—The aggregate in22 crease in the credit allowed by this section for any 

23 taxable year by reason of this subsection shall for 

24 purposes of this title (other than subsection (b)(2) 


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1 of this section) be treated as a credit allowed to the 

2 taxpayer under subpart C.’’. 

3 (d) CONFORMING AMENDMENTS.—Section 38(b) of 

4 the Internal Revenue Code of 1986 is amended by striking 

5 ‘‘and’’ at the end of paragraph (29), by striking the period 

6 at the end of paragraph (30) and inserting a comma, and 

7 by adding at the end the following new paragraph: 

8 ‘‘(31) the qualified flexible fuel motor vehicle 

9 production credit determined under section 45N, 

10 plus’’. 

11 (e) CLERICAL AMENDMENT.—The table of sections 

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

13 of the Internal Revenue Code of 1986 is amended by add14 ing at the end the following new item: 

‘‘Sec. 45N. Production of qualified flexible fuel motor vehicles.’’. 

15 (f) EFFECTIVE DATE.—The amendments made by 

16 this section shall apply to motor vehicles produced in 

17 model years ending after the date of the enactment of this 

18 Act. 

19 SEC. 4. INCENTIVES FOR THE RETAIL SALE OF ALTER20 NATIVE FUELS AS MOTOR VEHICLE FUEL. 

21 (a) IN GENERAL.—Subpart D of part IV of sub22 chapter A of chapter 1 of the Internal Revenue Code of 

23 1986 (relating to business related credits) is amended by 

24 inserting after section 40A the following new section: 


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1 ‘‘SEC. 40B. CREDIT FOR RETAIL SALE OF ALTERNATIVE 

2 FUELS AS MOTOR VEHICLE FUEL. 

3 ‘‘(a) GENERAL RULE.—The alternative fuel retail 

4 sales credit for any taxable year is the applicable amount 

5 for each gallon of alternative fuel sold at retail by the tax6 payer during such year. 

7 ‘‘(b) APPLICABLE AMOUNT.—For purposes of this 

8 section, the applicable amount shall be determined in ac9 cordance with the following table: 

‘‘In the case of The applicable amount 

any sale: for each gallon is: 

Before 2009 ............................................................................. 35 cents

During 2009 or 2010 ............................................................... 20 cents

During 2011 ............................................................................ 10 cents. 

10 ‘‘(c) DEFINITIONS.—For purposes of this section— 

11 ‘‘(1) ALTERNATIVE FUEL.—The term ‘alter12 native fuel’ means any fuel at least 85 percent (or 

13 another percentage of not less than 70 percent, as 

14 the Secretary may determine, by rule, to provide for 

15 requirements relating to cold start, safety, or vehicle 

16 functions) of the volume of which consists of eth17 anol. 

18 ‘‘(2) SOLD AT RETAIL.— 

19 ‘‘(A) IN GENERAL.—The term ‘sold at re20 tail’ means the sale, for a purpose other than 

21 resale, after manufacture, production, or impor22 tation. 


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1 ‘‘(B) USE TREATED AS SALE.—If any per2 son uses alternative fuel (including any use 

3 after importation) as a fuel to propel any quali4 fied alternative fuel motor vehicle (as defined in 

5 this section) before such fuel is sold at retail, 

6 then such use shall be treated in the same man7 ner as if such fuel were sold at retail as a fuel 

8 to propel such a vehicle by such person. 

9 ‘‘(3) QUALIFIED ALTERNATIVE FUEL MOTOR

10 VEHICLE.—The term ‘new qualified alternative fuel 

11 motor vehicle’ means any motor vehicle— 

12 ‘‘(A) which is capable of operating on an 

13 alternative fuel, 

14 ‘‘(B) the original use of which commences 

15 with the taxpayer, 

16 ‘‘(C) which is acquired by the taxpayer for 

17 use or lease, but not for resale, and 

18 ‘‘(D) which is made by a manufacturer. 

19 ‘‘(d) ELECTION TO PASS CREDIT.—A person which 

20 sells alternative fuel at retail may elect to pass the credit 

21 allowable under this section to the purchaser of such fuel 

22 or, in the event the purchaser is a tax-exempt entity or 

23 otherwise declines to accept such credit, to the person 

24 which supplied such fuel, under rules established by the 

25 Secretary. 


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1 ‘‘(e) PASS-THRU IN THE CASE OF ESTATES AND

2 TRUSTS.—Under regulations prescribed by the Secretary, 

3 rules similar to the rules of subsection (d) of section 52 

4 shall apply. 

5 ‘‘(f) TERMINATION.—This section shall not apply to 

6 any fuel sold at retail after December 31, 2011.’’. 

7 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec8 tion 38(b) of the Internal Revenue Code of 1986 (relating 

9 to current year business credit) (as amended by section 

10 3(d)) is amended by adding at the end the following new 

11 paragraph: 

12 ‘‘(32) the alternative fuel retail sales credit de13 termined under section 40B(a).’’. 

14 (c) CLERICAL AMENDMENT.—The table of sections 

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

16 of the Internal Revenue Code of 1986 is amended by in17 serting after the item relating to section 40A the following 

18 new item: 

‘‘Sec. 40B. Credit for retail sale of alternative fuels as motor vehicle fuel.’’. 

19 (d) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to fuel sold at retail after the date 

21 of enactment of this Act, in taxable years ending after 

22 such date. 

23 SEC. 5. ALTERNATIVE DIESEL FUEL CONTENT OF DIESEL. 

24 (a) FINDINGS.—Congress finds that— 


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1 (1) section 211(o) of the Clean Air Act (42 

2 U.S.C. 7535(o)) (as amended by section 1501 of the 

3 Energy Policy Act of 2005 (Public Law 109–58)) 

4 established a renewable fuel program under which 

5 entities in the petroleum sector are required to blend 

6 renewable fuels into motor vehicle fuel based on the 

7 gasoline motor pool; 

8 (2) the need for energy diversification is greater 

9 as of the date of enactment of this Act than it was 

10 only months before the date of enactment of the En11 ergy Policy Act (Public Law 109–58; 119 Stat. 

12 594); and 

13 (3)(A) the renewable fuel program under sec14 tion 211(o) of the Clean Air Act requires a small 

15 percentage of the gasoline motor pool, totaling near16 ly 140,000,000,000 gallons, to contain a renewable 

17 fuel; and 

18 (B) the small percentage requirement described 

19 in subparagraph (A) does not include the 

20 40,000,000,000-gallon diesel motor pool. 

21 (b) ALTERNATIVE DIESEL FUEL PROGRAM FOR DIE22 SEL MOTOR POOL.—Section 211 of the Clean Air Act (42 

23 U.S.C. 7545) is amended by inserting after subsection (o) 

24 the following: 


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1 ‘‘(p) ALTERNATIVE DIESEL FUEL PROGRAM FOR

2 DIESEL MOTOR POOL.— 

3 ‘‘(1) DEFINITION OF ALTERNATIVE DIESEL

4 FUEL.— 

5 ‘‘(A) IN GENERAL.—In this subsection, the 

6 term ‘alternative diesel fuel’ means biodiesel (as 

7 defined in section 312(f) of the Energy Policy 

8 Act of 1992 (42 U.S.C. 13220(f))) and any 

9 blending components derived from alternative 

10 fuel (provided that only the alternative fuel por11 tion of any such blending component shall be 

12 considered to be part of the applicable volume 

13 under the alternative diesel fuel program estab14 lished by this subsection). 

15 ‘‘(B) INCLUSIONS.—The term ‘alternative 

16 diesel fuel’ includes a diesel fuel substitute pro17 duced from— 

18 ‘‘(i) animal fat; 

19 ‘‘(ii) vegetable oil; 

20 ‘‘(iii) recycled yellow grease; 

21 ‘‘(iv) thermal depolymerization; 

22 ‘‘(v) thermochemical conversion; 

23 ‘‘(vi) the coal-to-liquid process (includ24 ing the Fischer-Tropsch process); or 


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1 ‘‘(vii) a diesel-ethanol blend of not less 

2 than 7 percent ethanol. 

3 ‘‘(2) ALTERNATIVE DIESEL FUEL PROGRAM.— 

4 ‘‘(A) REGULATIONS.— 

5 ‘‘(i) IN GENERAL.—Not later than 1 

6 year after the date of enactment of this 

7 subsection, the Administrator shall promul8 gate regulations to ensure that diesel sold 

9 or introduced into commerce in the United 

10 States (except in noncontiguous States or 

11 territories), on an annual average basis, 

12 contains the applicable volume of alter13 native diesel fuel determined in accordance 

14 with subparagraph (B). 

15 ‘‘(ii) PROVISIONS OF REGULATIONS.— 

16 Regardless of the date of promulgation, 

17 the regulations promulgated under clause 

18 (i)— 

19 ‘‘(I) shall contain compliance pro20 visions applicable to refineries, blend21 ers, distributors, and importers, as 

22 appropriate, to ensure that the re23 quirements of this paragraph are met; 

24 but 

25 ‘‘(II) shall not— 


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1 ‘‘(aa) restrict geographic 

2 areas in which alternative diesel 

3 fuel may be used; or 

4 ‘‘(bb) impose any per-gallon 

5 obligation for the use of alter6 native diesel fuel. 

7 ‘‘(iii) REQUIREMENT IN CASE OF

8 FAILURE TO PROMULGATE REGULA9 TIONS.—If the Administrator fails to pro10 mulgate regulations under clause (i), the 

11 percentage of alternative diesel fuel in the 

12 diesel motor pool sold or dispensed to con13 sumers in the United States, on a volume 

14 basis, shall be 0.6 percent for calendar 

15 year 2008. 

16 ‘‘(B) APPLICABLE VOLUME.— 

17 ‘‘(i) CALENDAR YEARS 2008 THROUGH

18 2015.—For the purpose of subparagraph 

19 (A), the applicable volume for any of cal20 endar years 2008 through 2015 shall be 

21 determined in accordance with the fol22 lowing table: 

‘‘Applicable volume of Alternative 

diesel fuel in diesel motor pool 

(in millions of gallons): 

Calendar year: 

250 ........................................................................................... 2008

500 ........................................................................................... 2009

750 ........................................................................................... 2010

1,000 ........................................................................................ 2011


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‘‘Applicable volume of Alternative 

diesel fuel in diesel motor pool 

(in millions of gallons): 

Calendar year: 

1,250 ........................................................................................ 2012

1,500 ........................................................................................ 2013

1,750 ........................................................................................ 2014

2,000 ........................................................................................ 2015. 

1 ‘‘(ii) CALENDAR YEAR 2016 AND

2 THEREAFTER.—The applicable volume for 

3 calendar year 2016 and each calendar year 

4 thereafter shall be determined by the Ad5 ministrator, in coordination with the Sec6 retary of Agriculture and the Secretary of 

7 Energy, based on a review of the imple8 mentation of the program during calendar 

9 years 2008 through 2015, including a re10 view of— 

11 ‘‘(I) the impact of the use of al12 ternative diesel fuels on the environ13 ment, air quality, energy security, job 

14 creation, and rural economic develop15 ment; and 

16 ‘‘(II) the expected annual rate of 

17 future production of alternative diesel 

18 fuels to be used as a blend component 

19 or replacement to the diesel motor 

20 pool. 

21 ‘‘(iii) MINIMUM APPLICABLE VOL22 UME.—For the purpose of subparagraph 


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1 (A), the applicable volume for calendar 

2 year 2016 and each calendar year there3 after shall be equal to the product obtained 

4 by multiplying— 

5 ‘‘(I) the number of gallons of die6 sel that the Administrator estimates 

7 will be sold or introduced into com8 merce during the calendar year; and 

9 ‘‘(II) the ratio that— 

10 ‘‘(aa) 2,000,000,000 gallons 

11 of alternative diesel fuel; bears to 

12 ‘‘(bb) the number of gallons 

13 of diesel sold or introduced into 

14 commerce during calendar year 

15 2015. 

16 ‘‘(3) APPLICABLE PERCENTAGES.— 

17 ‘‘(A) PROVISION OF ESTIMATE OF VOL18 UMES OF DIESEL SALES.—Not later than Octo19 ber 31 of each of calendar years 2007 through 

20 2015, the Administrator of the Energy Infor21 mation Administration shall provide to the Ad22 ministrator an estimate, with respect to the fol23 lowing calendar year, of the volumes of diesel 

24 projected to be sold or introduced into com25 merce in the United States. 


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1 ‘‘(B) DETERMINATION OF APPLICABLE

2 PERCENTAGES.— 

3 ‘‘(i) IN GENERAL.—Not later than 

4 November 30 of each of calendar years 

5 2008 through 2015, based on the estimate 

6 provided under subparagraph (A), the Ad7 ministrator shall determine and publish in 

8 the Federal Register, with respect to the 

9 following calendar year, the alternative die10 sel fuel obligation that ensures that the re11 quirements of paragraph (2) are met. 

12 ‘‘(ii) REQUIRED ELEMENTS.—The al13 ternative diesel fuel obligation determined 

14 for a calendar year under clause (i) shall— 

15 ‘‘(I) be applicable to refineries, 

16 blenders, and importers, as appro17 priate; 

18 ‘‘(II) be expressed in terms of a 

19 volume percentage of diesel sold or in20 troduced into commerce in the United 

21 States; and 

22 ‘‘(III) subject to subparagraph 

23 (C), consist of a single applicable per24 centage that applies to all categories 

25 of persons described in subclause (I). 


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1 ‘‘(C) ADJUSTMENTS.—In determining the 

2 applicable percentage for a calendar year, the 

3 Administrator shall make adjustments to pre4 vent the imposition of redundant obligations on 

5 any person described in subparagraph 

6 (B)(ii)(I). 

7 ‘‘(4) CREDIT PROGRAM.— 

8 ‘‘(A) IN GENERAL.—The regulations pro9 mulgated pursuant to paragraph (2)(A) shall 

10 provide for the generation of an appropriate 

11 amount of credits by any person that refines, 

12 blends, or imports diesel that contains a quan13 tity of alternative diesel fuel that is greater 

14 than the quantity required under paragraph 

15 (2). 

16 ‘‘(B) USE OF CREDITS.—A person that 

17 generates a credit under subparagraph (A) may 

18 use the credit, or transfer all or a portion of the 

19 credit to another person, for the purpose of 

20 complying with regulations promulgated pursu21 ant to paragraph (2). 

22 ‘‘(C) DURATION OF CREDITS.—A credit 

23 generated under this paragraph shall be valid 

24 during the 1-year period beginning on the date 

25 on which the credit is generated. 


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1 ‘‘(D) INABILITY TO GENERATE OR PUR2 CHASE SUFFICIENT CREDITS.—The regulations 

3 promulgated pursuant to paragraph (2)(A) 

4 shall include provisions allowing any person 

5 that is unable to generate or purchase sufficient 

6 credits under subparagraph (A) to meet the re7 quirements of paragraph (2) by carrying for8 ward a credit generated during a previous year 

9 on the condition that the person, during the cal10 endar year following the year in which the al11 ternative diesel fuel deficit is created— 

12 ‘‘(i) achieves compliance with the al13 ternative diesel fuel requirement under 

14 paragraph (2); and 

15 ‘‘(ii) generates or purchases additional 

16 credits under subparagraph (A) to offset 

17 the deficit of the previous year. 

18 ‘‘(5) WAIVERS.— 

19 ‘‘(A) IN GENERAL.—The Administrator, in 

20 consultation with the Secretary of Agriculture 

21 and the Secretary of Energy, may waive the re22 quirements of paragraph (2) in whole or in part 

23 on receipt of a petition of 1 or more States by 

24 reducing the national quantity of alternative 

25 diesel fuel for the diesel motor pool required 


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1 under paragraph (2) based on a determination 

2 by the Administrator, after public notice and 

3 opportunity for comment, that— 

4 ‘‘(i) implementation of the require5 ment would severely harm the economy or 

6 environment of a State, a region, or the 

7 United States; or 

8 ‘‘(ii) there is an inadequate domestic 

9 supply of alternative diesel fuel. 

10 ‘‘(B) PETITIONS FOR WAIVERS.—Not later 

11 than 90 days after the date on which the Ad12 ministrator receives a petition under subpara13 graph (A), the Administrator, in consultation 

14 with the Secretary of Agriculture and the Sec15 retary of Energy, shall approve or disapprove 

16 the petition. 

17 ‘‘(C) TERMINATION OF WAIVERS.— 

18 ‘‘(i) IN GENERAL.—Except as pro19 vided in clause (ii), a waiver under sub20 paragraph (A) shall terminate on the date 

21 that is 1 year after the date on which the 

22 waiver is provided. 

23 ‘‘(ii) EXCEPTION.—The Adminis24 trator, in consultation with the Secretary 

25 of Agriculture and the Secretary of EnVerDate Aug 31 2005 03:09 Mar 22, 2006 Jkt 049200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\S2446.IS S2446

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1 ergy, may extend a waiver under subpara2 graph (A), as the Administrator deter3 mines to be appropriate.’’. 

4 (c) PENALTIES AND ENFORCEMENT.—Section 

5 211(d) of the Clean Air Act (42 U.S.C. 7545(d)) is 

6 amended— 

7 (1) in paragraph (1), by striking ‘‘or (o)’’ each 

8 place it appears and inserting ‘‘(o), or (p)’’; and 

9 (2) in paragraph (2), by striking ‘‘and (o)’’ 

10 each place it appears and inserting ‘‘(o), and (p)’’. 

11 (d) TECHNICAL AMENDMENTS.—Section 211 of the 

12 Clean Air Act (42 U.S.C. 7545) is amended— 

13 (1) in subsection (i)(4), by striking ‘‘section 

14 324’’ each place it appears and inserting ‘‘section 

15 325’’; 

16 (2) in subsection (k)(10), by indenting subpara17 graphs (E) and (F) appropriately; 

18 (3) in subsection (n), by striking ‘‘section 

19 219(2)’’ and inserting ‘‘section 216(2)’’; 

20 (4) by redesignating the second subsection (r) 

21 and subsection (s) as subsections (s) and (t), respec22 tively; and 

23 (5) in subsection (t)(1) (as redesignated by 

24 paragraph (4)), by striking ‘‘this subtitle’’ and in25 serting ‘‘this part’’. 


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1 SEC. 6. EXCISE TAX CREDIT FOR CELLULOSIC BIOMASS 

2 ETHANOL. 

3 (a) IN GENERAL.—Paragraph (2) of section 6426(b) 

4 of the Internal Revenue Code of 1986 (relating to alcohol 

5 fuel mixture credit) is amended by adding at the end the 

6 following new subparagraph: 

7 ‘‘(C) CELLULOSIC BIOMASS ETHANOL.—In 

8 the case of an alcohol fuel mixture consisting of 

9 cellulosic biomass ethanol (as defined in section 

10 211(o)(1)(A) of the Clean Air Act), the applica11 ble amount is equal to the product of— 

12 ‘‘(i) the amount specified in subpara13 graph (A), times 

14 ‘‘(ii) the equivalent number of gallons 

15 of renewable fuel specified in section 

16 211(o)(4) of such Act.’’. 

17 (b) CONFORMING AMENDMENT.—Section 

18 6426(b)(2)(A) of such Code is amended by striking ‘‘sub19 paragraph (B)’’ and inserting ‘‘subparagraphs (B) and 

20 (C)’’. 

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

22 this section shall apply to fuel sold or used after the date 

23 of the enactment of this Act. 


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1 SEC. 7. INCENTIVE FOR FEDERAL AND STATE FLEETS FOR 

2 MEDIUM AND HEAVY DUTY HYBRIDS. 

3 Section 301 of the Energy Policy Act of 1992 (42 

4 U.S.C. 13211) is amended— 

5 (1) in paragraph (3), by striking ‘‘or a dual 

6 fueled vehicle’’ and inserting ‘‘, a dual fueled vehicle, 

7 or a medium or heavy duty vehicle that is a hybrid 

8 vehicle’’; 

9 (2) by redesignating paragraphs (11), (12), 

10 (13), and (14) as paragraphs (12), (14), (15), and 

11 (16), respectively; 

12 (3) by inserting after paragraph (10) the fol13 lowing: 

14 ‘‘(11) the term ‘hybrid vehicle’ means a vehicle 

15 powered both by a diesel or gasoline engine and an 

16 electric motor that is recharged as the vehicle oper17 ates;’’; and 

18 (4) by inserting after paragraph (12) (as redes19 ignated by paragraph (2)) the following: 

20 ‘‘(13) the term ‘medium or heavy duty vehicle’ 

21 means a vehicle that— 

22 ‘‘(A) in the case of a medium duty vehicle, 

23 has a gross vehicle weight rating of more than 

24 8,500 pounds but not more than 14,000 

25 pounds; and 


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1 ‘‘(B) in the case of a heavy duty vehicle, 

2 has a gross vehicle weight rating of more than 

3 14,000 pounds;’’. 

4 SEC. 8. PUBLIC ACCESS TO FEDERAL ALTERNATIVE RE5 FUELING STATIONS. 

6 (a) DEFINITIONS.—In this section: 

7 (1) ALTERNATIVE FUEL REFUELING STA8 TION.—The term ‘‘alternative fuel refueling station’’ 

9 has the meaning given the term ‘‘qualified alter10 native fuel vehicle refueling property’’ in section 

11 30C(c)(1) of the Internal Revenue Code of 1986. 

12 (2) SECRETARY.—The term ‘‘Secretary’’ means 

13 the Secretary of Energy. 

14 (b) ACCESS TO FEDERAL ALTERNATIVE REFUELING

15 STATIONS.—Not later than 18 months after the date of 

16 enactment of this Act— 

17 (1) except as provided in subsection (d)(1), any 

18 Federal property that includes at least 1 fuel refuel19 ing station shall include at least 1 alternative fuel 

20 refueling station; and 

21 (2) except as provided in subsection (d)(2), any 

22 alternative fuel refueling station located on property 

23 owned by the Federal government shall permit full 

24 public access for the purpose of refueling using al25 ternative fuel. 


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1 (c) DURATION.—The requirements described in sub2 section (b) shall remain in effect until the sooner of— 

3 (1) the date that is 7 years after the date of en4 actment of this Act; or 

5 (2) the date on which the Secretary determines 

6 that not less than 5 percent of the commercial re7 fueling infrastructure in the United States offers al8 ternative fuels to the general public. 

9 (d) EXCEPTIONS.— 

10 (1) WAIVER.—Subsection (b)(1) shall not apply 

11 to any Federal property under the jurisdiction of a 

12 Federal agency if the Secretary determines that al13 ternative fuel is not reasonably available to retail 

14 purchasers of the fuel, as certified by the head of 

15 the agency to the Secretary. 

16 (2) NATIONAL SECURITY EXEMPTION.—Sub17 section (b)(2) does not apply to property of the Fed18 eral government that the Secretary, in consultation 

19 with the Secretary of Defense, has certified must be 

20 exempt for national security reasons. 

21 (e) VERIFICATION OF COMPLIANCE.—The Secretary 

22 shall— 

23 (1) monitor compliance with this section by all 

24 Federal agencies; and 


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1 (2) annually submit to Congress a report de2 scribing the extent of compliance with this section. 

3 SEC. 9. PURCHASE OF CLEAN FUEL BUSES. 

4 (a) IN GENERAL.—Chapter 53 of title 49, United 

5 States Code, is amended by inserting after section 5325 

6 the following: 

7 ‘‘§ 5326. Purchase of clean fuel buses. 

8 ‘‘(a) DEFINITION OF CLEAN FUEL BUS.—In this sec9 tion, the term ‘clean fuel bus’ means a vehicle that— 

10 ‘‘(1) is capable of being powered by— 

11 ‘‘(A) compressed natural gas; 

12 ‘‘(B) liquefied natural gas; 

13 ‘‘(C) 1 or more batteries; 

14 ‘‘(D) a fuel that is composed of at least 85 

15 percent ethanol (or another percentage of not 

16 less than 70 percent, as the Secretary may de17 termine, by rule, to provide for requirements re18 lating to cold start, safety, or vehicle functions); 

19 ‘‘(E) electricity (including a hybrid electric 

20 or plug-in hybrid electric vehicle); 

21 ‘‘(F) a fuel cell; or 

22 ‘‘(G) ultra-low sulfur diesel; and 

23 ‘‘(2) has been certified by the Administrator of 

24 the Environmental Protection Agency to signifi25 cantly reduce harmful emissions, particularly in a 


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1 nonattainment area (as defined in section 171 of the 

2 Clean Air Act (42 U.S.C. 7501)). 

3 ‘‘(b) PURCHASE OF BUSES.—A bus purchased using 

4 funds made available from the Mass Transit Account of 

5 the Highway Trust Fund shall be a clean fuel bus.’’. 

6 (b) CONFORMING AMENDMENT.—The analysis for 

7 chapter 53 is amended by inserting after the item relating 

8 to section 5325 the following: 

‘‘5326. Clean fuel buses.’’. 

9 SEC. 10. DOMESTIC FUELS INFRASTRUCTURE FOR THE DE10 PARTMENT OF DEFENSE. 

11 (a) PROGRAM REQUIRED.—The Secretary of Defense 

12 shall carry out a program to evaluate the commercial and 

13 technical viability of advanced technologies for the produc14 tion of alternative transportation fuels having applications 

15 for the Department of Defense. The program shall include 

16 the construction and operation of testing facilities in ac17 cordance with subsection (d). 

18 (b) ALTERNATIVE TRANSPORTATION FUELS DE19 FINED.—For purposes of this section, the term ‘‘alter20 native transportation fuels’’ means— 

21 (1) denatured ethanol and other alcohols; 

22 (2) mixtures containing at least 85 percent (or 

23 another percentage of not less than 70 percent, as 

24 the Secretary may determine, by rule, to provide for 

25 requirements relating to cold start, safety, or vehicle 


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1 functions) by volume of denatured ethanol, particu2 larly ethanols derived from cellulosic biomass; 

3 (3) coal-derived liquid fuels, including Fischer4 Tropsch fuels; 

5 (4) fuels (other than alcohol) derived from bio6 logical materials, including fuels derived from vege7 table oils, animal fats, thermal depolymerization, or 

8 thermalchemical conversion; and 

9 (5) any other fuel the Secretary determines, by 

10 rule, is substantially not petroleum and would yield 

11 substantial energy security benefits and substantial 

12 environmental benefits. 

13 (c) COORDINATION OF EFFORTS.— 

14 (1) IN GENERAL.—The Secretary of Defense 

15 shall carry out the program required by this section 

16 through the Under Secretary of Defense for Acquisi17 tion, Technology, and Logistics and in consultation 

18 with the Director of Defense Research and Engi19 neering, the Advanced Systems and Concepts Office, 

20 the Secretary of Agriculture, and the Secretary of 

21 Energy. 

22 (2) ROLE OF BIOMASS RESEARCH AND DEVEL23 OPMENT TECHNOLOGIC ADVISORY COMMITTEE.— 

24 The consultations under paragraph (1) shall include 

25 the participation of the Biomass Research and DeVerDate Aug 31 2005 03:09 Mar 22, 2006 Jkt 049200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\S2446.IS S2446

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1 velopment Technical Advisory Committee established 

2 under section 306 of the Biomass Research and De3 velopment Act of 2000 (title III of Public Law 106– 

4 224; 7 U.S.C. 8101 note). 

5 (d) FACILITIES FOR EVALUATING PRODUCTION OF

6 ALTERNATIVE TRANSPORTATION FUELS.— 

7 (1) IN GENERAL.—In carrying out the program 

8 required by this section, the Secretary of Defense 

9 shall provide for the construction or capital modi10 fication of— 

11 (A) not more than 3 facilities for the pur12 poses of evaluating the production from cel13 lulosic biomass of alternative transportation 

14 fuels having applications for the Department of 

15 Defense; and 

16 (B) not more than 3 facilities for the pur17 poses of evaluating the production from coal of 

18 alternative transportation fuels having applica19 tions for the Department of Defense, with not 

20 less than one of such facilities utilizing coal re21 sources with a ranking by the American Society 

22 for Testing and Materials of high volatile bitu23 minous B and C. 


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1 (2) LOCATION OF FACILITIES.—The facilities 

2 constructed under paragraph (1) for the purposes of 

3 cellulosic biomass shall— 

4 (A) afford the efficient use of a diverse 

5 range of fuel sources; and 

6 (B) give initial preference to existing do7 mestic facilities with current or potential capac8 ity for cellulose or coal conversion. 

9 (3) CAPACITY OF FACILITIES.—Each facility 

10 constructed under paragraph (1) shall have the flexi11 bility for producing commercial volumes of alter12 native transportation fuels such that when the facil13 ity demonstrates economic viability of the process it 

14 can provide commercial production for the region in 

15 which it is located. 

16 (4) AUTHORITY TO ENTER INTO TRANSACTIONS

17 FOR FACILITY CONSTRUCTION.—The Secretary of 

18 Defense shall seek to construct the facilities required 

19 by paragraph (1) at the lowest cost practicable. The 

20 Secretary may make grants, enter into agreements, 

21 and provide loans or loan guarantees to corpora22 tions, cooperatives, and consortia of such entities for 

23 such purposes. 

24 (5) EVALUATIONS AT FACILITIES.—Not later 

25 than 5 years after the date of enactment of this Act, 


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1 the Secretary of Defense shall begin at the facilities 

2 described in paragraph (1) evaluations of the tech3 nical and commercial viability of different processes 

4 of producing alternative transportation fuels having 

5 Department of Defense applications from cellulosic 

6 biomass or coal. 

7 (e) PROGRAM MILESTONES.—In carrying out the 

8 program required by this section, the Secretary of Defense 

9 shall meet the following milestones: 

10 (1) SELECTION OF TESTING PROCESSES.—Not 

11 later than 180 days after the date of enactment of 

12 this Act, the Secretary shall select processes for 

13 evaluating the technical and commercial viability of 

14 producing alternative fuels from cellulosic biomass or 

15 coal. 

16 (2) INITIATION OF WORK AT EXISTING FACILI17 TIES.—Not later than one year after the date of en18 actment of this Act, the Secretary shall enter into 

19 agreements to carry out testing under this section at 

20 existing facilities. 

21 (3) CONSTRUCTION AGREEMENTS.—Not later 

22 than one year after the date of enactment of this 

23 Act, the Secretary shall enter into agreements for 

24 the capital modification or construction of facilities 

25 under subsection (d)(1). 


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1 (4) COMPLETION OF ENGINEERING AND DESIGN

2 WORK.—Not later than three years after the date of 

3 enactment of this Act, the Secretary shall complete 

4 capital modifications of existing facilities and the en5 gineering and design work necessary for the con6 struction of new facilities under this section. 

7 (f) REPORT ON PROGRAM.—Not later than 18 

8 months after the date of enactment of this Act, and annu9 ally thereafter for the next 5 years, the Secretary of De10 fense shall, in consultation with the Under Secretary of 

11 Defense for Acquisition, Technology, and Logistics, sub12 mit a report on the implementation and results of the pro13 gram required by this section to— 

14 (1) the Committees on Armed Services, Energy 

15 and Natural Resources, Agriculture, and Appropria16 tions of the Senate; and 

17 (2) the Committees on Armed Services, Energy 

18 and Commerce, Agriculture, and Appropriations of 

19 the House of Representatives. 

20 (g) FUNDING.— 

21 (1) IN GENERAL.—Of the amounts authorized 

22 to be appropriated under this section, $250,000,000 

23 may be available for the program required by this 

24 section for fiscal years 2007 through 2012. 


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1 (2) AVAILABILITY.—Amounts available under 

2 paragraph (1) shall remain available until expended. 

Æ 


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