I 

109TH CONGRESS 

1ST SESSION H. R. 1744

To amend the Internal Revenue Code of 1986 to provide incentives for 

alternative fuels and alternative fuel vehicles. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 20, 2005

Mr. RUPPERSBERGER introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to provide 

incentives for alternative fuels and alternative fuel vehicles.

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 ‘‘Common Sense Auto5 mobile Efficiency Act of 2005’’. 

6 SEC. 2. REPEAL OF PHASEOUTS FOR QUALIFIED ELECTRIC 

7 VEHICLES AND CLEAN-FUEL VEHICLES. 

8 (a) QUALIFIED ELECTRIC VEHICLES.—Subsection 

9 (b) of section 30 of the Internal Revenue Code of 1986 
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1 (relating to limitations) is amended by striking paragraph 

2 (2) and redesignating paragraph (3) as paragraph (2). 

3 (b) CLEAN-FUEL VEHICLES AND CERTAIN REFUEL4 ING PROPERTY.—Paragraph (1) of section 179A(b) of 

5 such Code (relating to qualified clean-fuel vehicle prop6 erty) is amended to read as follows: 

7 ‘‘(1) QUALIFIED CLEAN-FUEL VEHICLE PROP8 ERTY.—The cost which may be taken into account 

9 under subsection (a)(1)(A) with respect to any 

10 motor vehicle shall not exceed—

11 ‘‘(A) in the case of a motor vehicle not de12 scribed in subparagraph (B) or (C), $2,000, 

13 ‘‘(B) in the case of any truck or van with 

14 a gross vehicle weight rating greater than 

15 10,000 pounds but not greater than 26,000 

16 pounds, $5,000, or 

17 ‘‘(C) $50,000 in the case of—

18 ‘‘(i) a truck or van with a gross vehi19 cle weight rating greater than 26,000 

20 pounds, or 

21 ‘‘(ii) any bus which has a seating ca22 pacity of at least 20 adults (not including 

23 the driver).’’. 
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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to property placed in service after 

3 the date of the enactment of this Act. 

4 SEC. 3. SMALL ETHANOL PRODUCER CREDIT. 

5 (a) DEFINITION OF SMALL ETHANOL PRODUCER.—

6 Section 40(g) of the Internal Revenue Code of 1986 (relat7 ing to definitions and special rules for eligible small eth8 anol producer credit) is amended by striking 

9 ‘‘30,000,000’’ each place it appears and inserting 

10 ‘‘60,000,000’’. 

11 (b) CONFORMING AMENDMENT.—Section 1388 of 

12 such Code (relating to definitions and special rules for co13 operative organizations) is amended by adding at the end 

14 the following new subsection: 

15 ‘‘(l) CROSS REFERENCE.—For provisions relating to 

16 the apportionment of the alcohol fuels credit between coop17 erative organizations and their patrons, see section 

18 40(g)(6).’’. 

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

20 this section shall apply to taxable years beginning after 

21 December 31, 2004. 
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1 SEC. 4. NONAPPLICATION OF EXPORT EXEMPTION TO DE2 LIVERY OF FUEL TO MOTOR VEHICLES RE3 MOVED FROM UNITED STATES. 

4 (a) IN GENERAL.—Section 4221(d)(2) of the Inter5 nal Revenue Code of 1986 (defining export) is amended 

6 by adding at the end the following new sentence: ‘‘Such 

7 term does not include the delivery of a taxable fuel (as 

8 defined in section 4083(a)(1)) into a fuel tank of a motor 

9 vehicle which is shipped or driven out of the United 

10 States.’’. 

11 (b) CONFORMING AMENDMENTS.—

12 (1) Section 4041(g) of such Code (relating to 

13 other exemptions) is amended by adding at the end 

14 the following new sentence: ‘‘Paragraph (3) shall not 

15 apply to the sale for delivery of a liquid into a fuel 

16 tank of a motor vehicle which is shipped or driven 

17 out of the United States.’’. 

18 (2) Clause (iv) of section 4081(a)(1)(A) of such 

19 Code (relating to tax on removal, entry, or sale) is 

20 amended by inserting ‘‘or at a duty-free sales enter21 prise (as defined in section 555(b)(8) of the Tariff 

22 Act of 1930)’’ after ‘‘section 4101’’. 

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

24 this section shall apply to sales or deliveries made after 

25 the date of the enactment of this Act. 
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1 SEC. 5. ALTERNATIVE MOTOR VEHICLE CREDIT. 

2 (a) IN GENERAL.—Subpart B of part IV of sub3 chapter A of chapter 1 of the Internal Revenue Code of 

4 1986 (relating to foreign tax credit, etc.) is amended by 

5 adding at the end the following: 

6 ‘‘SEC. 30B. ALTERNATIVE MOTOR VEHICLE CREDIT. 

7 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al8 lowed as a credit against the tax imposed by this chapter 

9 for the taxable year an amount equal to the sum of—

10 ‘‘(1) the new qualified fuel cell motor vehicle 

11 credit determined under subsection (b), 

12 ‘‘(2) the new advanced lean burn technology 

13 motor vehicle credit determined under subsection (c), 

14 ‘‘(3) the new qualified hybrid motor vehicle 

15 credit determined under subsection (d), and 

16 ‘‘(4) the new qualified alternative fuel motor ve17 hicle credit determined under subsection (e). 

18 ‘‘(b) NEW QUALIFIED FUEL CELL MOTOR VEHICLE

19 CREDIT.—

20 ‘‘(1) IN GENERAL.—For purposes of subsection 

21 (a), the new qualified fuel cell motor vehicle credit 

22 determined under this subsection with respect to a 

23 new qualified fuel cell motor vehicle placed in service 

24 by the taxpayer during the taxable year shall be de25 termined in accordance with the following table:
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‘‘In the case of a vehicle which has a 

gross vehicle weight rating of—

The new qualified 

fuel cell motor vehicle credit is—

Not more than 8,500 lbs ............................................ $4,000

More than 8,500 lbs but not more than 14,000 lbs ... $10,000

More than 14,000 lbs but not more than 26,000 lbs $20,000

More than 26,000 lbs ................................................. $40,000. 

1 ‘‘(2) INCREASE FOR FUEL EFFICIENCY.—

2 ‘‘(A) IN GENERAL.—The amount deter3 mined under paragraph (1) with respect to a 

4 new qualified fuel cell motor vehicle which is a 

5 passenger automobile or light truck shall be in6 creased by the additional credit amount. 

7 ‘‘(B) ADDITIONAL CREDIT AMOUNT.—For 

8 purposes of subparagraph (A), the additional 

9 credit amount shall be determined in accord10 ance with the following table:

‘‘In the case of a vehicle which achieves a 

fuel economy (expressed as a percentage 

of the 2002 model year city fuel economy) 

of—

The additional 

credit amount is—

At least 150 percent but less than 175 percent ......... $1,000

At least 175 percent but less than 200 percent ......... $1,500

At least 200 percent but less than 225 percent ......... $2,000

At least 225 percent but less than 250 percent ......... $2,500

At least 250 percent but less than 275 percent ......... $3,000

At least 275 percent but less than 300 percent ......... $3,500

At least 300 percent ................................................... $4,000. 

11 ‘‘(3) NEW QUALIFIED FUEL CELL MOTOR VEHI12 CLE.—For purposes of this subsection, the term 

13 ‘new qualified fuel cell motor vehicle’ means a motor 

14 vehicle—

15 ‘‘(A) which is propelled by power derived 

16 from one or more cells which convert chemical 
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1 energy directly into electricity by combining ox2 ygen with hydrogen fuel which is stored on 

3 board the vehicle in any form and may or may 

4 not require reformation prior to use, 

5 ‘‘(B) which, in the case of a passenger 

6 automobile or light truck, has received—

7 ‘‘(i) a certificate of conformity under 

8 the Clean Air Act and meets or exceeds the 

9 equivalent qualifying California low emis10 sion vehicle standard under section 

11 243(e)(2) of the Clean Air Act for that 

12 make and model year, and 

13 ‘‘(ii) a certificate that such vehicle 

14 meets or exceeds the Bin 5 Tier II emis15 sion standard established in regulations 

16 prescribed by the Administrator of the En17 vironmental Protection Agency under sec18 tion 202(i) of the Clean Air Act for that 

19 make and model year vehicle, 

20 ‘‘(C) the original use of which commences 

21 with the taxpayer, 

22 ‘‘(D) which is acquired for use or lease by 

23 the taxpayer and not for resale, and 

24 ‘‘(E) which is made by a manufacturer. 
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1 ‘‘(c) NEW ADVANCED LEAN BURN TECHNOLOGY

2 MOTOR VEHICLE CREDIT.—

3 ‘‘(1) IN GENERAL.—For purposes of subsection 

4 (a), the new advanced lean burn technology motor 

5 vehicle credit determined under this subsection with 

6 respect to a new advanced lean burn technology 

7 motor vehicle placed in service by the taxpayer dur8 ing the taxable year is the credit amount determined 

9 under paragraph (2). 

10 ‘‘(2) CREDIT AMOUNT.—

11 ‘‘(A) FUEL ECONOMY.—The credit amount 

12 determined under this paragraph shall be deter13 mined in accordance with the following table:

‘‘In the case of a vehicle which achieves a 

fuel economy (expressed as a percentage 

of the 2002 model year city fuel economy) 

of—

The credit amount 

is—

At least 125 percent but less than 150 percent ......... $400

At least 150 percent but less than l75 percent .......... $800

At least 175 percent but less than 200 percent ......... $1,200

At least 200 percent but less than 225 percent ......... $1,600

At least 225 percent but less than 250 percent ......... $2,000

At least 250 percent ................................................... $2,400. 

14 ‘‘(B) CONSERVATION CREDIT.—The 

15 amount determined under subparagraph (A) 

16 with respect to a new advanced lean burn tech17 nology motor vehicle shall be increased by the 

18 conservation credit amount determined in ac19 cordance with the following table:
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‘‘In the case of a vehicle which achieves a 

lifetime fuel savings (expressed in gallons 

of gasoline) of—

The conservation 

credit amount is—

At least 1,200 but less than 1,800 ............................. $250

At least 1,800 but less than 2,400 ............................. $500

At least 2,400, but less than 3,000 ............................ $750

At least 3,000 ............................................................. $1,000. 

1 ‘‘(3) NEW ADVANCED LEAN BURN TECHNOLOGY

2 MOTOR VEHICLE.—For purposes of this subsection, 

3 the term ‘new advanced lean burn technology motor 

4 vehicle’ means a passenger automobile or a light 

5 truck—

6 ‘‘(A) with an internal combustion engine 

7 which—

8 ‘‘(i) is designed to operate primarily 

9 using more air than is necessary for com10 plete combustion of the fuel, 

11 ‘‘(ii) incorporates direct injection, 

12 ‘‘(iii) achieves at least 125 percent of 

13 the 2002 model year city fuel economy, 

14 and 

15 ‘‘(iv) for 2005 and later model vehi16 cles, has received a certificate that such ve17 hicle meets or exceeds—

18 ‘‘(I) in the case of a vehicle hav19 ing a gross vehicle weight rating of 

20 6,000 pounds or less, the Bin 5 Tier 

21 II emission standard established in 
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1 regulations prescribed by the Adminis2 trator of the Environmental Protec3 tion Agency under section 202(i) of 

4 the Clean Air Act for that make and 

5 model year vehicle, and 

6 ‘‘(II) in the case of a vehicle hav7 ing a gross vehicle weight rating of 

8 more than 6,000 pounds but not more 

9 than 8,500 pounds, the Bin 8 Tier II 

10 emission standard which is so estab11 lished, 

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

13 with the taxpayer, 

14 ‘‘(C) which is acquired for use or lease by 

15 the taxpayer and not for resale, and 

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

17 ‘‘(4) LIFETIME FUEL SAVINGS.—For purposes 

18 of this subsection, the term ‘lifetime fuel savings’ 

19 means, in the case of any new advanced lean burn 

20 technology motor vehicle, an amount equal to the ex21 cess (if any) of—

22 ‘‘(A) 120,000 divided by the 2002 model 

23 year city fuel economy for the vehicle inertia 

24 weight class, over 
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1 ‘‘(B) 120,000 divided by the city fuel econ2 omy for such vehicle. 

3 ‘‘(d) NEW QUALIFIED HYBRID MOTOR VEHICLE

4 CREDIT.—

5 ‘‘(1) IN GENERAL.—For purposes of subsection 

6 (a), the new qualified hybrid motor vehicle credit de7 termined under this subsection with respect to a new 

8 qualified hybrid motor vehicle placed in service by 

9 the taxpayer during the taxable year is the credit 

10 amount determined under paragraph (2). 

11 ‘‘(2) CREDIT AMOUNT.—

12 ‘‘(A) CREDIT AMOUNT FOR PASSENGER

13 AUTOMOBILES AND LIGHT TRUCKS.—In the 

14 case of a new qualified hybrid motor vehicle 

15 which is a passenger automobile or light truck 

16 and which has a gross vehicle weight rating of 

17 not more than 8,500 pounds, the amount deter18 mined under this paragraph is the sum of the 

19 amounts determined under clauses (i) and (ii). 

20 ‘‘(i) FUEL ECONOMY.—The amount 

21 determined under this clause is the amount 

22 which would be determined under sub23 section (c)(2)(A) if such vehicle were a ve24 hicle referred to in such subsection. 
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1 ‘‘(ii) CONSERVATION CREDIT.—The 

2 amount determined under this clause is the 

3 amount which would be determined under 

4 subsection (c)(2)(B) if such vehicle were a 

5 vehicle referred to in such subsection. 

6 ‘‘(B) CREDIT AMOUNT FOR OTHER MOTOR

7 VEHICLES.—

8 ‘‘(i) IN GENERAL.—In the case of any 

9 new qualified hybrid motor vehicle to which 

10 subparagraph (A) does not apply, the 

11 amount determined under this paragraph 

12 is the amount equal to the applicable per13 centage of the qualified incremental hybrid 

14 cost of the vehicle as certified under clause 

15 (v). 

16 ‘‘(ii) APPLICABLE PERCENTAGE.—For 

17 purposes of clause (i), the applicable per18 centage is—

19 ‘‘(I) 20 percent if the vehicle 

20 achieves an increase in city fuel econ21 omy relative to a comparable vehicle 

22 of at least 30 percent but less than 40 

23 percent, 

24 ‘‘(II) 30 percent if the vehicle 

25 achieves such an increase of at least 
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1 40 percent but less than 50 percent, 

2 and 

3 ‘‘(III) 40 percent if the vehicle 

4 achieves such an increase of at least 

5 50 percent. 

6 ‘‘(iii) QUALIFIED INCREMENTAL HY7 BRID COST.—For purposes of this subpara8 graph, the qualified incremental hybrid 

9 cost of any vehicle is equal to the amount 

10 of the excess of the manufacturer’s sug11 gested retail price for such vehicle over 

12 such price for a comparable vehicle, to the 

13 extent such amount does not exceed—

14 ‘‘(I) $7,500, if such vehicle has a 

15 gross vehicle weight rating of not 

16 more than 14,000 pounds, 

17 ‘‘(II) $15,000, if such vehicle has 

18 a gross vehicle weight rating of more 

19 than 14,000 pounds but not more 

20 than 26,000 pounds, and 

21 ‘‘(III) $30,000, if such vehicle 

22 has a gross vehicle weight rating of 

23 more than 26,000 pounds. 

24 ‘‘(iv) COMPARABLE VEHICLE.—For 

25 purposes of this subparagraph, the term 
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1 ‘comparable vehicle’ means, with respect to 

2 any new qualified hybrid motor vehicle, 

3 any vehicle which is powered solely by a 

4 gasoline or diesel internal combustion en5 gine and which is comparable in weight, 

6 size, and use to such vehicle. 

7 ‘‘(v) CERTIFICATION.—A certification 

8 described in clause (i) shall be made by the 

9 manufacturer and shall be determined in 

10 accordance with guidance prescribed by the 

11 Secretary. Such guidance shall specify pro12 cedures and methods for calculating fuel 

13 economy savings and incremental hybrid 

14 costs. 

15 ‘‘(3) NEW QUALIFIED HYBRID MOTOR VEHI16 CLE.—For purposes of this subsection—

17 ‘‘(A) IN GENERAL.—The term ‘new quali18 fied hybrid motor vehicle’ means a motor vehi19 cle—

20 ‘‘(i) which draws propulsion energy 

21 from onboard sources of stored energy 

22 which are both—

23 ‘‘(I) an internal combustion or 

24 heat engine using consumable fuel, 

25 and 
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1 ‘‘(II) a rechargeable energy stor2 age system, 

3 ‘‘(ii) which, in the case of a vehicle to 

4 which paragraph (2)(A) applies, has re5 ceived a certificate of conformity under the 

6 Clean Air Act and meets or exceeds the 

7 equivalent qualifying California low emis8 sion vehicle standard under section 

9 243(e)(2) of the Clean Air Act for that 

10 make and model year, and 

11 ‘‘(I) in the case of a vehicle hav12 ing a gross vehicle weight rating of 

13 6,000 pounds or less, the Bin 5 Tier 

14 II emission standard established in 

15 regulations prescribed by the Adminis16 trator of the Environmental Protec17 tion Agency under section 202(i) of 

18 the Clean Air Act for that make and 

19 model year vehicle, and 

20 ‘‘(II) in the case of a vehicle hav21 ing a gross vehicle weight rating of 

22 more than 6,000 pounds but not more 

23 than 8,500 pounds, the Bin 8 Tier II 

24 emission standard which is so estab25 lished, 
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1 ‘‘(iii) which has a maximum available 

2 power of at least—

3 ‘‘(I) 4 percent in the case of a ve4 hicle to which paragraph (2)(A) ap5 plies, 

6 ‘‘(II) 10 percent in the case of a 

7 vehicle which has a gross vehicle 

8 weight rating or more than 8,500 

9 pounds and not than 14,000 pounds, 

10 and 

11 ‘‘(III) 15 percent in the case of a 

12 vehicle in excess of 14,000 pounds, 

13 ‘‘(iv) which, in the case of a vehicle to 

14 which paragraph (2)(B) applies, has an in15 ternal combustion or heat engine which 

16 has received a certificate of conformity 

17 under the Clean Air Act as meeting the 

18 emission standards set in the regulations 

19 prescribed by the Administrator of the En20 vironmental Protection Agency for 2005 

21 through 2008 model year diesel heavy duty 

22 engines or ottocycle heavy duty engines, as 

23 applicable, 

24 ‘‘(v) the original use of which com25 mences with the taxpayer, 
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1 ‘‘(vi) which is acquired for use or 

2 lease by the taxpayer and not for resale, 

3 and 

4 ‘‘(vii) which is made by a manufac5 turer. 

6 Such term shall not include any vehicle which 

7 is not a passenger automobile or light truck if 

8 such vehicle has a gross vehicle weight rating of 

9 less than 8,500 pounds. 

10 ‘‘(B) CONSUMABLE FUEL.—For purposes 

11 of subparagraph (A)(i)(I), the term ‘consumable 

12 fuel’ means any solid, liquid, or gaseous matter 

13 which releases energy when consumed by an 

14 auxiliary power unit. 

15 ‘‘(C) MAXIMUM AVAILABLE POWER.—

16 ‘‘(i) CERTAIN PASSENGER AUTO17 MOBILES AND LIGHT TRUCKS.—In the case 

18 of a vehicle to which paragraph (2)(A) ap19 plies, the term ‘maximum available power’ 

20 means the maximum power available from 

21 the rechargeable energy storage system, 

22 during a standard 10 second pulse power 

23 or equivalent test, divided by such max24 imum power and the SAE net power of the 

25 heat engine. 
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1 ‘‘(ii) OTHER MOTOR VEHICLES.—In 

2 the case of a vehicle to which paragraph 

3 (2)(B) applies, the term ‘maximum avail4 able power’ means the maximum power 

5 available from the rechargeable energy 

6 storage system, during a standard 10 sec7 ond pulse power or equivalent test, divided 

8 by the vehicle’s total traction power. For 

9 purposes of the preceding sentence, the 

10 term ‘total traction power’ means the sum 

11 of the peak power from the rechargeable 

12 energy storage system and the heat engine 

13 peak power of the vehicle, except that if 

14 such storage system is the sole means by 

15 which the vehicle can be driven, the total 

16 traction power is the peak power of such 

17 storage system. 

18 ‘‘(e) NEW QUALIFIED ALTERNATIVE FUEL MOTOR

19 VEHICLE CREDIT.—

20 ‘‘(1) ALLOWANCE OF CREDIT.—Except as pro21 vided in paragraph (5), the new qualified alternative 

22 fuel motor vehicle credit determined under this sub23 section is an amount equal to the applicable percent24 age of the incremental cost of any new qualified al-
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1 ternative fuel motor vehicle placed in service by the 

2 taxpayer during the taxable year. 

3 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

4 of paragraph (1), the applicable percentage with re5 spect to any new qualified alternative fuel motor ve6 hicle is—

7 ‘‘(A) 40 percent, plus 

8 ‘‘(B) 30 percent, if such vehicle—

9 ‘‘(i) has received a certificate of con10 formity under the Clean Air Act and meets 

11 or exceeds the most stringent standard 

12 available for certification under the Clean 

13 Air Act for that make and model year vehi14 cle (other than a zero emission standard), 

15 or 

16 ‘‘(ii) has received an order certifying 

17 the vehicle as meeting the same require18 ments as vehicles which may be sold or 

19 leased in California and meets or exceeds 

20 the most stringent standard available for 

21 certification under the State laws of Cali22 fornia (enacted in accordance with a waiv23 er granted under section 209(b) of the 

24 Clean Air Act) for that make and model 
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1 year vehicle (other than a zero emission 

2 standard). 

3 For purposes of the preceding sentence, in the case 

4 of any new qualified alternative fuel motor vehicle 

5 which has a gross vehicle weight rating of more than 

6 14,000 pounds, the most stringent standard avail7 able shall be such standard available for certification 

8 on the date of the enactment of the Common Sense 

9 Automobile Efficiency Act of 2005. 

10 ‘‘(3) INCREMENTAL COST.—For purposes of 

11 this subsection, the incremental cost of any new 

12 qualified alternative fuel motor vehicle is equal to 

13 the amount of the excess of the manufacturer’s sug14 gested retail price for such vehicle over such price 

15 for a gasoline or diesel fuel motor vehicle of the 

16 same model, to the extent such amount does not ex17 ceed—

18 ‘‘(A) $5,000, if such vehicle has a gross ve19 hicle weight rating of not more than 8,500 

20 pounds, 

21 ‘‘(B) $10,000, if such vehicle has a gross 

22 vehicle weight rating of more than 8,500 

23 pounds but not more than 14,000 pounds, 
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1 ‘‘(C) $25,000, if such vehicle has a gross 

2 vehicle weight rating of more than 14,000 

3 pounds but not more than 26,000 pounds, and 

4 ‘‘(D) $40,000, if such vehicle has a gross 

5 vehicle weight rating of more than 26,000 

6 pounds. 

7 ‘‘(4) NEW QUALIFIED ALTERNATIVE FUEL

8 MOTOR VEHICLE.—For purposes of this sub9 section—

10 ‘‘(A) IN GENERAL.—The term ‘new quali11 fied alternative fuel motor vehicle’ means any 

12 motor vehicle—

13 ‘‘(i) which is only capable of operating 

14 on an alternative fuel, 

15 ‘‘(ii) the original use of which com16 mences with the taxpayer, 

17 ‘‘(iii) which is acquired by the tax18 payer for use or lease, but not for resale, 

19 and 

20 ‘‘(iv) which is made by a manufac21 turer. 

22 ‘‘(B) ALTERNATIVE FUEL.—The term ‘al23 ternative fuel’ means compressed natural gas, 

24 liquefied natural gas, liquefied petroleum gas, 
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1 hydrogen, and any liquid at least 85 percent of 

2 the volume of which consists of methanol. 

3 ‘‘(5) CREDIT FOR MIXED-FUEL VEHICLES.—

4 ‘‘(A) IN GENERAL.—In the case of a 

5 mixed-fuel vehicle placed in service by the tax6 payer during the taxable year, the credit deter7 mined under this subsection is an amount equal 

8 to—

9 ‘‘(i) in the case of a 75/25 mixed-fuel 

10 vehicle, 70 percent of the credit which 

11 would have been allowed under this sub12 section if such vehicle was a qualified alter13 native fuel motor vehicle, and 

14 ‘‘(ii) in the case of a 90/10 mixed-fuel 

15 vehicle, 90 percent of the credit which 

16 would have been allowed under this sub17 section if such vehicle was a qualified alter18 native fuel motor vehicle. 

19 ‘‘(B) MIXED-FUEL VEHICLE.—For pur20 poses of this subsection, the term ‘mixed-fuel 

21 vehicle’ means any motor vehicle described in 

22 subparagraph (C) or (D) of paragraph (3), 

23 which—

24 ‘‘(i) is certified by the manufacturer 

25 as being able to perform efficiently in nor-
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1 mal operation on a combination of an al2 ternative fuel and a petroleum-based fuel, 

3 ‘‘(ii) either—

4 ‘‘(I) has received a certificate of 

5 conformity under the Clean Air Act, 

6 or 

7 ‘‘(II) has received an order certi8 fying the vehicle as meeting the same 

9 requirements as vehicles which may be 

10 sold or leased in California and meets 

11 or exceeds the low emission vehicle 

12 standard under section 88.105–94 of 

13 title 40, Code of Federal Regulations, 

14 for that make and model year vehicle, 

15 ‘‘(iii) the original use of which com16 mences with the taxpayer, 

17 ‘‘(iv) which is acquired by the tax18 payer for use or lease, but not for resale, 

19 and 

20 ‘‘(v) which is made by a manufac21 turer. 

22 ‘‘(C) 75/25 MIXED-FUEL VEHICLE.—For 

23 purposes of this subsection, the term ‘75/25 

24 mixed-fuel vehicle’ means a mixed-fuel vehicle 

25 which operates using at least 75 percent alter-
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1 native fuel and not more than 25 percent petro2 leum-based fuel. 

3 ‘‘(D) 90/10 MIXED-FUEL VEHICLE.—For 

4 purposes of this subsection, the term ‘90/10 

5 mixed-fuel vehicle’ means a mixed-fuel vehicle 

6 which operates using at least 90 percent alter7 native fuel and not more than 10 percent petro8 leum-based fuel. 

9 ‘‘(f) LIMITATION BASED ON AMOUNT OF TAX.—The 

10 credit allowed under subsection (a) for the taxable year 

11 shall not exceed the excess of—

12 ‘‘(1) the sum of the regular tax liability (as de13 fined in section 26(b)) plus the tax imposed by sec14 tion 55, over 

15 ‘‘(2) the sum of the credits allowable under sub16 part A and sections 27 and 30 for the taxable year. 

17 ‘‘(g) OTHER DEFINITIONS AND SPECIAL RULES.—

18 For purposes of this section—

19 ‘‘(1) MOTOR VEHICLE.—The term ‘motor vehi20 cle’ has the meaning given such term by section 

21 30(c)(2). 

22 ‘‘(2) OTHER TERMS.—The terms ‘automobile’, 

23 ‘passenger automobile’, ‘light truck’, and ‘manufac24 turer’ have the meanings given such terms in regula25 tions prescribed by the Administrator of the Envi-
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1 ronmental Protection Agency for purposes of the ad2 ministration of title II of the Clean Air Act (42 

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

4 ‘‘(3) 2002 MODEL YEAR CITY FUEL ECON5 OMY.—

6 ‘‘(A) IN GENERAL.—The 2002 model year 

7 city fuel economy with respect to a vehicle shall 

8 be determined in accordance with the following 

9 tables: 

10 ‘‘(i) In the case of a passenger auto11 mobile:

‘‘If vehicle inertia weight class is:

The 2002 model 

year city fuel economy 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. 

12 ‘‘(ii) In the case of a light truck:

‘‘If vehicle inertia weight class is:

The 2002 model 

year city economy 

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
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‘‘If vehicle inertia weight class is:

The 2002 model 

year city economy 

is:

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. 

1 ‘‘(B) VEHICLE INERTIA WEIGHT CLASS.—

2 For purposes of subparagraph (A), the term 

3 ‘vehicle inertia weight class’ has the same 

4 meaning as when defined in regulations pre5 scribed by the Administrator of the Environ6 mental Protection Agency for purposes of the 

7 administration of title II of the Clean Air Act 

8 (42 U.S.C. 7521 et seq.). 

9 ‘‘(4) FUEL ECONOMY.—Fuel economy with re10 spect to any vehicle shall be measured under rules 

11 similar to the rules under section 4064(c). 

12 ‘‘(5) REDUCTION IN BASIS.—For purposes of 

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

14 for any expenditure with respect to any property, the 

15 increase in the basis of such property which would 

16 (but for this paragraph) result from such expendi17 ture shall be reduced by the amount of the credit so 

18 allowed. 

19 ‘‘(6) NO DOUBLE BENEFIT.—The amount of 

20 any deduction or credit allowable under this chapter 

21 (other than the credits allowable under this section 
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1 and section 30) shall be reduced by the amount of 

2 credit allowed under subsection (a) for such vehicle 

3 for the taxable year. 

4 ‘‘(7) RECAPTURE.—The Secretary shall, by reg5 ulations, provide for recapturing the benefit of any 

6 credit allowable under subsection (a) with respect to 

7 any property which ceases to be property eligible for 

8 such credit (including recapture in the case of a 

9 lease period of less than the economic life of a vehi10 cle). 

11 ‘‘(8) PROPERTY USED OUTSIDE UNITED

12 STATES, ETC., NOT QUALIFIED.—No credit shall be 

13 allowed under subsection (a) with respect to any 

14 property referred to in section 50(b) or with respect 

15 to the portion of the cost of any property taken into 

16 account under section 179. 

17 ‘‘(9) ELECTION NOT TO TAKE CREDIT.—No 

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

19 vehicle if the taxpayer elects to not have this section 

20 apply to such vehicle. 

21 ‘‘(10) BUSINESS CARRYOVERS ALLOWED.—If 

22 the credit allowable under subsection (a) for a tax23 able year exceeds the limitation under subsection (g) 

24 for such taxable year, such excess (to the extent of 

25 the credit allowable with respect to property subject 
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1 to the allowance for depreciation) shall be allowed as 

2 a credit carryback and carryforward under rules 

3 similar to the rules of section 39. 

4 ‘‘(11) INTERACTION WITH MOTOR VEHICLE

5 SAFETY STANDARDS.—Unless otherwise provided in 

6 this section, a motor vehicle shall not be considered 

7 eligible for a credit under this section unless such 

8 vehicle is in compliance with the motor vehicle safety 

9 provisions of sections 30101 through 30169 of title 

10 49, United States Code. 

11 ‘‘(h) REGULATIONS.—

12 ‘‘(1) IN GENERAL.—The Secretary shall pro13 mulgate such regulations as necessary to carry out 

14 the provisions of this section. 

15 ‘‘(2) DETERMINATION OF MOTOR VEHICLE ELI16 GIBILITY.—The Secretary, after coordination with 

17 the Secretary of Transportation and the Adminis18 trator of the Environmental Protection Agency, shall 

19 prescribe such regulations as necessary to determine 

20 whether a motor vehicle meets the requirements to 

21 be eligible for a credit under this section. 

22 ‘‘(i) TERMINATION.—This section shall not apply to 

23 any property placed in service after—

24 ‘‘(1) in the case of a new qualified alternative 

25 fuel motor vehicle, December 31, 2007, 
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1 ‘‘(2) in the case of a new advanced lean burn 

2 technology motor vehicle or a new qualified hybrid 

3 motor vehicle, December 31, 2009, and 

4 ‘‘(3) in the case of a new qualified fuel cell 

5 motor vehicle, December 31, 2013.’’. 

6 (b) CONFORMING AMENDMENTS.—

7 (1) Section 30(d) of such Code (relating to spe8 cial rules) is amended by adding at the end the fol9 lowing new paragraphs: 

10 ‘‘(5) NO DOUBLE BENEFIT.—No credit shall be 

11 allowed under this section for any motor vehicle for 

12 which a credit is also allowed under section 30B.’’. 

13 (2) Section 1016(a) is amended by striking 

14 ‘‘and’’ at the end of paragraph (30), by striking the 

15 period at the end of paragraph (31) and inserting ‘‘, 

16 and’’, and by adding at the end the following: 

17 ‘‘(32) to the extent provided in section 

18 30B(h)(5).’’. 

19 (3) Section 6501(m) of such Code is amended 

20 by inserting ‘‘30B(h)(9),’’ after ‘‘30(d)(4),’’. 

21 (4) The table of sections for subpart B of part 

22 IV of subchapter A of chapter 1 of such Code is 

23 amended by inserting after the item relating to sec24 tion 30A the following:

‘‘Sec. 30B. Alternative motor vehicle credit.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to property placed in service after 

3 the date of the enactment of this Act, in taxable years 

4 ending after such date. 

5 (d) STICKER INFORMATION REQUIRED AT RETAIL

6 SALE.—

7 (1) IN GENERAL.—The Secretary of the Treas8 ury shall issue regulations under which each quali9 fied vehicle sold at retail shall display a notice—

10 (A) that such vehicle is a qualified vehicle, 

11 and 

12 (B) that the buyer may not benefit from 

13 the credit allowed under section 30B of the In14 ternal Revenue Code of 1986 if such buyer has 

15 insufficient tax liability. 

16 (2) QUALIFIED VEHICLE.—For purposes of 

17 paragraph (1), the term ‘‘qualified vehicle’’ means a 

18 vehicle with respect to which a credit is allowed 

19 under section 30B of the Internal Revenue Code of 

20 1986.

Æ