I

107TH CONGRESS

1ST SESSION H. R. 1999

To amend the Clean Air Act to prohibit the use of methyl tertiary butyl

ether as a fuel additive, to require Federal vehicles to use ethanol

fuel, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 24, 2001

Mr. NUSSLE introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on

Ways and Means, for a period to be subsequently determined by the

Speaker, in each case for consideration of such provisions as fall within

the jurisdiction of the committee concerned

A BILL

To amend the Clean Air Act to prohibit the use of methyl

tertiary butyl ether as a fuel additive, to require Federal

vehicles to use ethanol fuel, 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 ‘‘Ethanol Energy Pro5 motion Act of 2001’’.
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1 SEC. 2. PROHIBITION ON USE OF MTBE AS A FUEL ADDI2 TIVE

3 Section 211(c) of the Clean Air Act (42 U.S.C.

4 7545(c)) is amended by adding the following at the end

5 of paragraph (1): ‘‘Effective on the date of the enactment

6 of this sentence, the use of methyl tertiary butyl ether

7 (MTBE) as a fuel additive is prohibited.’’. The Adminis8 trator of the Environmental Protection Agency shall

9 amend the regulations under section 211(c) of the Clean

10 Air Act (42 U.S.C. 7545(c)) as promptly as practicable

11 after the enactment of this Act to conform to the amend12 ment made by this section.

13 SEC. 3. WAIVER OF OXYGEN CONTENT REQUIREMENT RE14 PEALED.

15 Section 211(k) of the Clean Air Act (42 U.S.C.

16 7545(k)) is amended by striking out the second sentence.

17 SEC. 4. CREDITS FOR EXCEEDING REDUCTION IN CARBON

18 MONOXIDE AND VOLATILITY REQUIREMENTS.

19 Section 211(k)(7) of the Clean Air Act (42 U.S.C.

20 7545(k)(7)) is amended by adding the following at the end

21 thereof:

22 ‘‘(D) In addition to the credits described in

23 subparagraph (A), the Administrator shall also

24 promulgate regulations under this paragraph

25 permitting any person who refines, blends, or

26 imports and certifies a gasoline or a slate of
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1 gasoline with an oxygen content that exceeds

2 the minimum oxygen content specified in para3 graph (2) to take a volatility credit for such

4 gasoline. Such credit may be used to offset to

5 an appropriate extent, the Reid Vapor Pressure

6 levels requirements of subsection (h). The

7 amount of the credit that is appropriate shall

8 be based on the ozone forming potential of the

9 gasoline concerned to insure that allowance of

10 such credit will not increase the ozone forming

11 potential of such gasoline above that of other

12 gasoline that meets the requirements of this

13 subsection.’’.

14 SEC. 5. FEDERAL VEHICLES.

15 Section 248(f) of the Clean Air Act (42 U.S.C.

16 7588(f)) is amended by inserting the following before the

17 period at the end thereof: ‘‘, and all such vehicles shall

18 be clean fuel vehicles certified under this part capable of

19 using ethanol as fuel and shall use ethanol wherever eco20 nomically feasible, as determined by the Administrator’’.

21 SEC. 6. SMALL ETHANOL PRODUCER CREDIT.

22 (a) ALLOCATION OF ALCOHOL FUELS CREDIT TO

23 PATRONS OF A COOPERATIVE.—Section 40(g) Internal

24 Revenue Code of 1986 (relating to definitions and special
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1 rules for eligible small ethanol producer credit) is amended

2 by adding at the end the following:

3 ‘‘(6) ALLOCATION OF SMALL ETHANOL PRO4 DUCER CREDIT TO PATRONS OF COOPERATIVE.—

5 ‘‘(A) ELECTION TO ALLOCATE.—

6 ‘‘(i) IN GENERAL.—Notwithstanding

7 paragraph (4), in the case of a cooperative

8 organization described in section 1381(a),

9 any portion of the credit determined under

10 subsection (a)(3) for the taxable year may,

11 at the election of the organization, be ap12 portioned pro rata among patrons of the

13 organization on the basis of the quantity

14 or value of business done with or for such

15 patrons for the taxable year.

16 ‘‘(ii) FORM AND EFFECT OF ELEC17 TION.—An election under clause (i) for any

18 taxable year shall be made on a timely

19 filed return for such year. Such election,

20 once made, shall be irrevocable for such

21 taxable year.

22 ‘‘(B) TREATMENT OF ORGANIZATIONS AND

23 PATRONS.—The amount of the credit appor24 tioned to patrons under subparagraph (A)—
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1 ‘‘(i) shall not be included in the

2 amount determined under subsection (a)

3 with respect to the organization for the

4 taxable year,

5 ‘‘(ii) shall be included in the amount

6 determined under subsection (a) for the

7 taxable year of each patron for which the

8 patronage dividends for the taxable year

9 described in subparagraph (A) are included

10 in gross income, and

11 ‘‘(iii) shall be included in gross income

12 of such patrons for the taxable year in the

13 manner and to the extent provided in sec14 tion 87.

15 ‘‘(C) SPECIAL RULES FOR DECREASE IN

16 CREDITS FOR TAXABLE YEAR.—If the amount

17 of the credit of a cooperative organization (as

18 so defined) determined under subsection (a)(3)

19 for a taxable year is less than the amount of

20 such credit shown on the return of the coopera21 tive organization for such year, an amount

22 equal to the excess of—

23 ‘‘(i) such reduction, over
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1 ‘‘(ii) the amount not apportioned to

2 such patrons under subparagraph (A) for

3 the taxable year,

4 shall be treated as an increase in tax imposed

5 by this chapter on the organization. Such in6 crease shall not be treated as tax imposed by

7 this chapter for purposes of determining the

8 amount of any credit under this subpart or sub9 part A, B, E, or G.’’.

10 (b) DEFINITION OF SMALL ETHANOL PRODUCER;

11 IMPROVEMENTS TO SMALL ETHANOL PRODUCER

12 CREDIT.—

13 (1) DEFINITION OF SMALL ETHANOL PRO14 DUCER.—

15 (A) IN GENERAL.—Section 40(g)(1) of the

16 Internal Revenue Code of 1986 (relating to eli17 gible small ethanol producer) is amended by

18 striking ‘‘30,000,000’’ and inserting

19 ‘‘60,000,000’’.

20 (B) CONFORMING AMENDMENTS.—Section

21 40(g) of such Code is amended by striking

22 ‘‘30,000,000’’ both places it appears in para23 graphs (2) and (5)(A) and inserting

24 ‘‘60,000,000’’.
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1 (2) SMALL ETHANOL PRODUCER CREDIT NOT A

2 PASSIVE ACTIVITY CREDIT.—Clause (i) of section

3 469(d)(2)(A) of such Code (relating to passive activ4 ity credit) is amended by striking ‘‘subpart D’’ and

5 inserting ‘‘subpart D, other than section 40(a)(3),’’.

6 (3) ALLOWING CREDIT AGAINST MINIMUM

7 TAX.—

8 (A) IN GENERAL.—Subsection (c) of sec9 tion 38 of such Code (relating to limitation

10 based on amount of tax) is amended by redesig11 nating paragraph (3) as paragraph (4) and by

12 inserting after paragraph (2) the following:

13 ‘‘(3) SPECIAL RULES FOR SMALL ETHANOL

14 PRODUCER CREDIT.—

15 ‘‘(A) IN GENERAL.—In the case of the

16 small ethanol producer credit—

17 ‘‘(i) this section and section 39 shall

18 be applied separately with respect to the

19 credit, and

20 ‘‘(ii) in applying paragraph (1) to the

21 credit—

22 ‘‘(I) subparagraphs (A) and (B)

23 thereof shall not apply, and

24 ‘‘(II) the limitation under para25 graph (1) (as modified by subclause
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1 (I)) shall be reduced by the credit al2 lowed under subsection (a) for the

3 taxable year (other than the small

4 ethanol producer credit).

5 ‘‘(B) SMALL ETHANOL PRODUCER CRED6 IT.—For purposes of this subsection, the term

7 ‘small ethanol producer credit’ means the credit

8 allowable under subsection (a) by reason of sec9 tion 40(a)(3).’’.

10 (B) CONFORMING AMENDMENT.—Sub11 clause (II) of section 38(c)(2)(A)(ii) of such

12 Code is amended by inserting ‘‘or the small eth13 anol producer credit’’ after ‘‘employment cred14 it’’.

15 (4) SMALL ETHANOL PRODUCER CREDIT NOT

16 ADDED BACK TO INCOME UNDER SECTION 87.—Sec17 tion 87 of such Code (relating to income inclusion

18 of alcohol fuel credit is amended to read as follows:

19 ‘‘SEC. 87. ALCOHOL FUEL CREDIT.

20 ‘‘Gross income includes an amount equal to the sum

21 of—

22 ‘‘(1) the amount of the alcohol mixture credit

23 determined with respect to the taxpayer for the tax24 able year under section 40(a)(1), and
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1 ‘‘(2) the alcohol credit determined with respect

2 to the taxpayer for the taxable year under section

3 40(a)(2).’’.

4 (c) CONFORMING AMENDMENT.—Section 1388 of the

5 Internal Revenue Code of 1986 (relating to definitions and

6 special rules for cooperative organizations) is amended by

7 adding at the end the following:

8 ‘‘(k) CROSS REFERENCE.—For provisions relating to

9 the apportionment of the alcohol fuels credit between coop10 erative organizations and their patrons, see section

11 40(d)(6).’’.

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

13 this section shall apply to taxable years beginning after

14 December 31, 2001.

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