II 

110TH CONGRESS 

1ST SESSION S. 133 

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 

JANUARY 4, 2007 

Mr. OBAMA (for himself, Mr. LUGAR, and Mr. HARKIN) 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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘American Fuels Act of 2007’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Office of Energy Security. 

Sec. 3. Credit for production of qualified flexible fuel motor vehicles. 


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Sec. 4. Incentives for the retail sale of alternative fuels as motor vehicle fuel. 

Sec. 5. Freedom for fuel franchisers. 

Sec. 6. Alternative diesel fuel content of diesel. 

Sec. 7. Excise tax credit for production of cellulosic biomass ethanol. 

Sec. 8. Incentive for Federal and State fleets for medium and heavy duty hybrids. 

Sec. 9. Credit for qualifying ethanol blending and processing equipment. 

Sec. 10. Public access to Federal alternative refueling stations. 

Sec. 11. Purchase of clean fuel buses. 

Sec. 12. Domestic fuel production volumes to meet Department of Defense 

needs. 

Sec. 13. Federal fleet energy conservation improvement. 

1 SEC. 2. OFFICE OF ENERGY SECURITY. 

2 (a) DEFINITIONS.—In this section: 

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

4 the Director of Energy Security appointed under 

5 subsection (c)(1). 

6 (2) OFFICE.—The term ‘‘Office’’ means the Of7 fice of Energy Security established by subsection 

8 (b). 

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

10 Executive Office of the President the Office of Energy Se11 curity. 

12 (c) DIRECTOR.— 

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

14 by a Director, who shall be appointed by the Presi15 dent, by and with the advice and consent of the Sen16 ate. 

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

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

19 Schedule under section 5312 of title 5, United 

20 States Code. 


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1 (d) RESPONSIBILITIES.— 

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

3 the Director, shall be responsible for overseeing all 

4 Federal energy security programs, including the co5 ordination of efforts of Federal agencies to assist the 

6 United States in achieving full energy independence. 

7 (2) SPECIFIC RESPONSIBILITIES.—In carrying 

8 out paragraph (1), the Director shall— 

9 (A) serve as head of the energy commu10 nity; 

11 (B) act as the principal advisor to the 

12 President, the National Security Council, the 

13 National Economic Council, the Domestic Pol14 icy Council, and the Homeland Security Council 

15 with respect to intelligence matters relating to 

16 energy security; 

17 (C) with request to budget requests and 

18 appropriations for Federal programs relating to 

19 energy security— 

20 (i) consult with the President and the 

21 Director of the Office of Management and 

22 Budget with respect to each major Federal 

23 budgetary decision relating to energy secu24 rity of the United States; 


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1 (ii) based on priorities established by 

2 the President, provide to the heads of de3 partments containing agencies or organiza4 tions within the energy community, and to 

5 the heads of such agencies and organiza6 tions, guidance for use in developing the 

7 budget for Federal programs relating to 

8 energy security; 

9 (iii) based on budget proposals pro10 vided to the Director by the heads of agen11 cies and organizations described in clause 

12 (ii), develop and determine an annual con13 solidated budget for Federal programs re14 lating to energy security; and 

15 (iv) present the consolidated budget, 

16 together with any recommendations of the 

17 Director and any heads of agencies and or18 ganizations described in clause (ii), to the 

19 President for approval; 

20 (D) establish and meet regularly with a 

21 council of business and labor leaders to develop 

22 and provide to the President and Congress rec23 ommendations relating to the impact of energy 

24 supply and prices on economic growth; 


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1 (E) submit to Congress an annual report 

2 that describes the progress of the United States 

3 toward the goal of achieving full energy inde4 pendence; and 

5 (F) carry out such other responsibilities as 

6 the President may assign. 

7 (e) STAFF.— 

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

9 regard to the civil service laws (including regula10 tions), appoint and terminate such personnel as are 

11 necessary to enable the Director to carry out the re12 sponsibilities of the Director under this section. 

13 (2) COMPENSATION.— 

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

15 subparagraph (B), the Director may fix the 

16 compensation of personnel without regard to 

17 the provisions of chapter 51 and subchapter III 

18 of chapter 53 of title 5, United States Code, re19 lating to classification of positions and General 

20 Schedule pay rates. 

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

22 pay for the personnel appointed by the Director 

23 shall not exceed the rate payable for level V of 

24 the Executive Schedule under section 5316 of 

25 title 5, United States Code. 


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1 (f) AUTHORIZATION OF APPROPRIATIONS.—There 

2 are authorized to be appropriated such sums as are nec3 essary to carry out this section. 

4 SEC. 3. CREDIT FOR PRODUCTION OF QUALIFIED FLEXIBLE 

5 FUEL MOTOR VEHICLES. 

6 (a) IN GENERAL.—Subpart D of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of 

8 1986 is amended by adding at the end the following new 

9 section: 

10 ‘‘SEC. 45O. PRODUCTION OF QUALIFIED FLEXIBLE FUEL 

11 MOTOR VEHICLES. 

12 ‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec13 tion 38, in the case of a manufacturer, the qualified flexi14 ble fuel motor vehicle production credit determined under 

15 this section for any taxable year is an amount equal to 

16 the incremental flexible fuel motor vehicle cost for each 

17 qualified flexible fuel motor vehicle produced in the United 

18 States by the manufacturer during the taxable year. 

19 ‘‘(b) INCREMENTAL FLEXIBLE FUEL MOTOR VEHI20 CLE COST.—With respect to any qualified flexible fuel 

21 motor vehicle, the incremental flexible fuel motor vehicle 

22 cost is an amount equal to the lesser of— 

23 ‘‘(1) the excess of— 

24 ‘‘(A) the cost of producing such qualified 

25 flexible fuel motor vehicle, over 


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1 ‘‘(B) the cost of producing such motor ve2 hicle if such motor vehicle was not a qualified 

3 flexible fuel motor vehicle, or 

4 ‘‘(2) $100. 

5 ‘‘(c) QUALIFIED FLEXIBLE FUEL MOTOR VEHI6 CLE.—For purposes of this section, the term ‘qualified 

7 flexible fuel motor vehicle’ means a flexible fuel motor ve8 hicle— 

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

10 the manufacturer to meet— 

11 ‘‘(A) the maximum credit allowable for ve12 hicles described in paragraph (2) in determining 

13 the fleet average fuel economy requirements (as 

14 determined under section 32904 of title 49, 

15 United States Code) of the manufacturer for 

16 the model year ending in the taxable year, or 

17 ‘‘(B) the requirements of any other provi18 sion of Federal law, and 

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

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

21 gasoline mixture of which 85 percent (or another 

22 percentage of not less than 70 percent, as the Sec23 retary may determine, by rule, to provide for re24 quirements relating to cold start, safety, or vehicle 

25 functions) of the volume of consists of ethanol. 


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1 ‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.— 

2 For purposes of this section— 

3 ‘‘(1) MOTOR VEHICLE.—The term ‘motor vehi4 cle’ has the meaning given such term by section 

5 30(c)(2). 

6 ‘‘(2) MANUFACTURER.—The term ‘manufac7 turer’ has the meaning given such term in regula8 tions prescribed by the Administrator of the Envi9 ronmental Protection Agency for purposes of the ad10 ministration of title II of the Clean Air Act (42 

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

12 ‘‘(3) 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 ‘‘(4) NO DOUBLE BENEFIT.—The amount of 

20 any deduction or credit allowable under this chapter 

21 (other than the credits allowable under this section 

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

23 credit allowed under subsection (a) for such vehicle 

24 for the taxable year. 


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

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

3 vehicle if the taxpayer elects to not have this section 

4 apply to such vehicle. 

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

6 apply to any vehicle produced after December 31, 

7 2011. 

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

9 claim certain minimum tax credits in lieu of the 

10 credit determined under this section, see section 

11 53(e).’’. 

12 (b) CREDIT ALLOWED AGAINST THE ALTERNATIVE

13 MINIMUM TAX.—Section 38(c)(4)(B) of the Internal Rev14 enue Code of 1986 (defining specified credits) is amended 

15 by striking the period at the end of clause (ii)(II) and in16 serting ‘‘, and’’, and by adding at the end the following 

17 new clause: 

18 ‘‘(iii) the credit determined under sec19 tion 45O.’’. 

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

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

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

23 by adding at the end the following new subsection: 

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

25 FUEL MOTOR VEHICLE CREDIT.— 


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

2 making an election under this subsection for a tax3 able year, the amount otherwise determined under 

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

5 the credit determined under section 45O for such 

6 taxable year which the taxpayer elects not to claim 

7 pursuant to such election. 

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

9 election for any taxable year not to claim any 

10 amount of the credit allowable under section 45O 

11 with respect to property produced by the taxpayer 

12 during such taxable year. An election under this sub13 section may only be revoked with the consent of the 

14 Secretary. 

15 ‘‘(3) CREDIT REFUNDABLE.—The aggregate in16 crease in the credit allowed by this section for any 

17 taxable year by reason of this subsection shall for 

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

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

20 taxpayer under subpart C.’’. 

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

22 the Internal Revenue Code of 1986 is amended by striking 

23 ‘‘plus’’ at the end of paragraph (30), by striking the period 

24 at the end of paragraph (31) and inserting ‘‘, plus’’, and 

25 by adding at the end the following new paragraph: 


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1 ‘‘(32) the qualified flexible fuel motor vehicle 

2 production credit determined under section 45N, 

3 plus’’. 

4 (e) 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 add7 ing at the end the following new item: 

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

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

9 this section shall apply to motor vehicles produced in 

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

11 Act. 

12 SEC. 4. INCENTIVES FOR THE RETAIL SALE OF ALTER13 NATIVE FUELS AS MOTOR VEHICLE FUEL. 

14 (a) IN GENERAL.—Subpart D of part IV of sub15 chapter A of chapter 1 of the Internal Revenue Code of 

16 1986 (relating to business related credits) is amended by 

17 inserting after section 40A the following new section: 

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

19 FUELS AS MOTOR VEHICLE FUEL. 

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

21 sales credit for any taxable year is the applicable amount 

22 for each gallon of alternative fuel sold at retail by the tax23 payer during such year. 


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

2 section, the applicable amount shall be determined in ac3 cordance with the following table: 

‘‘In the case of The applicable amount 

any sale: for each gallon is: 

Before 2010 ............................................................................. 35 cents

During 2010 or 2011 ............................................................... 20 cents

During 2012 ............................................................................ 10 cents. 

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

5 ‘‘(1) ALTERNATIVE FUEL.—The term ‘alter6 native fuel’ means any fuel at least 85 percent (or 

7 another percentage of not less than 70 percent, as 

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

9 requirements relating to cold start, safety, or vehicle 

10 functions) of the volume of which consists of eth11 anol. 

12 ‘‘(2) SOLD AT RETAIL.— 

13 ‘‘(A) IN GENERAL.—The term ‘sold at re14 tail’ means the sale, for a purpose other than 

15 resale, after manufacture, production, or impor16 tation. 

17 ‘‘(B) USE TREATED AS SALE.—If any per18 son uses alternative fuel (including any use 

19 after importation) as a fuel to propel any quali20 fied alternative fuel motor vehicle (as defined in 

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

22 then such use shall be treated in the same manVerDate Aug 31 2005 06:31 Jan 13, 2007 Jkt 059200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S133.IS S133

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1 ner as if such fuel were sold at retail as a fuel 

2 to propel such a vehicle by such person. 

3 ‘‘(3) QUALIFIED ALTERNATIVE FUEL MOTOR

4 VEHICLE.—The term ‘new qualified alternative fuel 

5 motor vehicle’ means any motor vehicle— 

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

7 alternative fuel, 

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

9 with the taxpayer, 

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

11 use or lease, but not for resale, and 

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

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

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

15 allowable under this section to the purchaser of such fuel 

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

17 otherwise declines to accept such credit, to the person 

18 which supplied such fuel, under rules established by the 

19 Secretary. 

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

21 TRUSTS.—Under regulations prescribed by the Secretary, 

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

23 shall apply. 

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

25 any fuel sold at retail after December 31, 2012.’’. 


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1 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec2 tion 38(b) of the Internal Revenue Code of 1986 (relating 

3 to current year business credit), as amended by section 

4 4(d), is amended by striking ‘‘plus’’ at the end of para5 graph (31), by striking the period at the end of paragraph 

6 (32) and inserting ‘‘, plus’’, and by adding at the end the 

7 following new paragraph: 

8 ‘‘(33) the alternative fuel retail sales credit de9 termined under section 40B(a).’’. 

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

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

12 of the Internal Revenue Code of 1986 is amended by in13 serting after the item relating to section 40A the following 

14 new item: 

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

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

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

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

18 such date. 

19 SEC. 5. FREEDOM FOR FUEL FRANCHISERS. 

20 (a) PROHIBITION ON RESTRICTION OF INSTALLA21 TION OF ALTERNATIVE FUEL PUMPS.— 

22 (1) IN GENERAL.—Title I of the Petroleum 

23 Marketing Practices Act (15 U.S.C. 2801 et seq.) is 

24 amended by adding at the end the following: 


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1 ‘‘SEC. 107. PROHIBITION ON RESTRICTION OF INSTALLA2 TION OF ALTERNATIVE FUEL PUMPS. 

3 ‘‘(a) DEFINITION.—In this section: 

4 ‘‘(1) ALTERNATIVE FUEL.—The term ‘alter5 native fuel’ means any fuel— 

6 ‘‘(A) at least 85 percent of the volume of 

7 which consists of ethanol, natural gas, com8 pressed natural gas, liquefied natural gas, lique9 fied petroleum gas, hydrogen, or any combina10 tion of those fuels; or 

11 ‘‘(B) any mixture of biodiesel (as defined 

12 in section 40A(d)(1) of the Internal Revenue 

13 Code of 1986) and diesel fuel (as defined in 

14 section 4083(a)(3) of the Internal Revenue 

15 Code of 1986), determined without regard to 

16 any use of kerosene and containing at least 20 

17 percent biodiesel. 

18 ‘‘(2) FRANCHISE-RELATED DOCUMENT.—The 

19 term ‘franchise-related document’ means— 

20 ‘‘(A) a franchise under this Act; and 

21 ‘‘(B) any other contract or directive of a 

22 franchisor relating to terms or conditions of the 

23 sale of fuel by a franchisee. 

24 ‘‘(b) PROHIBITIONS.— 

25 ‘‘(1) IN GENERAL.—Notwithstanding any provi26 sion of a franchise-related document in effect on the 


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1 date of enactment of this section, no franchisee or 

2 affiliate of a franchisee shall be restricted from— 

3 ‘‘(A) installing on the marketing premises 

4 of the franchisee an alternative fuel pump; 

5 ‘‘(B) converting an existing tank and 

6 pump on the marketing premises of the 

7 franchisee for alternative fuel use; 

8 ‘‘(C) advertising (including through the 

9 use of signage or logos) the sale of any alter10 native fuel; or 

11 ‘‘(D) selling alternative fuel in any speci12 fied area on the marketing premises of the 

13 franchisee (including any area in which a name 

14 or logo of a franchisor or any other entity ap15 pears). 

16 ‘‘(2) ENFORCEMENT.—Any restriction de17 scribed in paragraph (1) that is contained in a fran18 chise-related document and in effect on the date of 

19 enactment of this section— 

20 ‘‘(A) shall be considered to be null and 

21 void as of that date; and 

22 ‘‘(B) shall not be enforced under section 

23 105. 

24 ‘‘(c) EXCEPTION TO 3-GRADE REQUIREMENT.—No 

25 franchise-related document that requires that 3 grades of 


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1 gasoline be sold by the applicable franchisee shall prevent 

2 the franchisee from selling an alternative fuel in lieu of 

3 1 grade of gasoline.’’. 

4 (2) CONFORMING AMENDMENTS.— 

5 (A) IN GENERAL.—Section 101(13) of the 

6 Petroleum Marketing Practices Act (15 U.S.C. 

7 2801(13)) is amended by adjusting the indenta8 tion of subparagraph (C) appropriately. 

9 (B) TABLE OF CONTENTS.—The table of 

10 contents of the Petroleum Marketing Practices 

11 Act (15 U.S.C. 2801 note) is amended— 

12 (i) by inserting after the item relating 

13 to section 106 the following: 

‘‘Sec. 107. Prohibition on restriction of installation of alternative fuel pumps.’’; 

14 and 

15 (ii) by striking the item relating to 

16 section 202 and inserting the following: 

‘‘Sec. 202. Automotive fuel rating testing and disclosure requirements.’’. 

17 (b) APPLICATION OF GASOHOL COMPETITION ACT

18 OF 1980.—Section 26 of the Clayton Act (15 U.S.C. 26a) 

19 is amended— 

20 (1) by redesignating subsection (c) as sub21 section (d); 

22 (2) by inserting after subsection (b) the fol23 lowing: 


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1 ‘‘(c) RESTRICTION PROHIBITED.—For purposes of 

2 subsection (a), restricting the right of a franchisee to in3 stall on the premises of that franchisee qualified alter4 native fuel vehicle refueling property (as defined in section 

5 30C(c) of the Internal Revenue Code of 1986) shall be 

6 considered an unlawful restriction.’’; and 

7 (3) in subsection (d) (as redesignated by para8 graph (1)), by striking ‘‘(d) As used in this section,’’ 

9 and inserting the following: 

10 SEC. 6. ALTERNATIVE DIESEL FUEL CONTENT OF DIESEL. 

11 (a) FINDINGS.—Congress finds that— 

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

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

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

15 established a renewable fuel program under which 

16 entities in the petroleum sector are required to blend 

17 renewable fuels into motor vehicle fuel based on the 

18 gasoline motor pool; 

19 (2) the need for energy diversification is greater 

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

21 only months before the date of enactment of the En22 ergy Policy Act (Public Law 109–58; 119 Stat. 

23 594); and 

24 (3)(A) the renewable fuel program under sec25 tion 211(o) of the Clean Air Act requires a small 


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1 percentage of the gasoline motor pool, totaling near2 ly 140,000,000,000 gallons, to contain a renewable 

3 fuel; and 

4 (B) the small percentage requirement described 

5 in subparagraph (A) does not include the 

6 40,000,000,000-gallon diesel motor pool. 

7 (b) ALTERNATIVE DIESEL FUEL PROGRAM FOR DIE8 SEL MOTOR POOL.—Section 211 of the Clean Air Act (42 

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

10 the following: 

11 ‘‘(p) ALTERNATIVE DIESEL FUEL PROGRAM FOR

12 DIESEL MOTOR POOL.— 

13 ‘‘(1) DEFINITION OF ALTERNATIVE DIESEL

14 FUEL.— 

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

16 term ‘alternative diesel fuel’ means biodiesel (as 

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

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

19 blending components derived from alternative 

20 fuel (provided that only the alternative fuel por21 tion of any such blending component shall be 

22 considered to be part of the applicable volume 

23 under the alternative diesel fuel program estab24 lished by this subsection). 


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

2 diesel fuel’ includes a diesel fuel substitute pro3 duced from— 

4 ‘‘(i) animal fat; 

5 ‘‘(ii) plant oil; 

6 ‘‘(iii) recycled yellow grease; 

7 ‘‘(iv) single-cell or microbial oil; 

8 ‘‘(v) thermal depolymerization; 

9 ‘‘(vi) thermochemical conversion; 

10 ‘‘(vii) a coal-to-liquid process (includ11 ing the Fischer-Tropsch process) that pro12 vides for the sequestration of carbon emis13 sions; 

14 ‘‘(viii) a diesel-ethanol blend of not 

15 less than 7 percent ethanol; or 

16 ‘‘(ix) sugar, starch, or cellulosic bio17 mass. 

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

19 ‘‘(A) REGULATIONS.— 

20 ‘‘(i) IN GENERAL.—Not later than 1 

21 year after the date of enactment of this 

22 subsection, the Administrator shall promul23 gate regulations to ensure that diesel sold 

24 or introduced into commerce in the United 

25 States (except in noncontiguous States or 


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1 territories), on an annual average basis, 

2 contains the applicable volume of alter3 native diesel fuel determined in accordance 

4 with subparagraph (B). 

5 ‘‘(ii) PROVISIONS OF REGULATIONS.— 

6 Regardless of the date of promulgation, 

7 the regulations promulgated under clause 

8 (i)— 

9 ‘‘(I) shall contain compliance pro10 visions applicable to refineries, blend11 ers, distributors, and importers, as 

12 appropriate, to ensure that the re13 quirements of this paragraph are met; 

14 but 

15 ‘‘(II) shall not— 

16 ‘‘(aa) restrict geographic 

17 areas in which alternative diesel 

18 fuel may be used; or 

19 ‘‘(bb) impose any per-gallon 

20 obligation for the use of alter21 native diesel fuel. 

22 ‘‘(iii) REQUIREMENT IN CASE OF

23 FAILURE TO PROMULGATE REGULA24 TIONS.—If the Administrator fails to pro25 mulgate regulations under clause (i), the 


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1 percentage of alternative diesel fuel in the 

2 diesel motor pool sold or dispensed to con3 sumers in the United States, on a volume 

4 basis, shall be 0.6 percent for calendar 

5 year 2009. 

6 ‘‘(B) APPLICABLE VOLUME.— 

7 ‘‘(i) CALENDAR YEARS 2009 THROUGH

8 2016.—For the purpose of subparagraph 

9 (A), the applicable volume for any of cal10 endar years 2009 through 2016 shall be 

11 determined in accordance with the fol12 lowing table: 

‘‘Applicable volume of Alternative 

diesel fuel in diesel motor pool 

(in millions of gallons): Calendar year: 

250 ..................................................................................................... 2009

500 ..................................................................................................... 2010

750 ..................................................................................................... 2011

1,000 .................................................................................................. 2012

1,250 .................................................................................................. 2013

1,500 .................................................................................................. 2014

1,750 .................................................................................................. 2015

2,000 .................................................................................................. 2016. 

13 ‘‘(ii) CALENDAR YEAR 2017 AND

14 THEREAFTER.—The applicable volume for 

15 calendar year 2017 and each calendar year 

16 thereafter shall be determined by the Ad17 ministrator, in coordination with the Sec18 retary of Agriculture and the Secretary of 

19 Energy, based on a review of the imple20 mentation of the program during calendar 


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1 years 2009 through 2016, including a re2 view of— 

3 ‘‘(I) the impact of the use of al4 ternative diesel fuels on the environ5 ment, air quality, energy security, job 

6 creation, and rural economic develop7 ment; and 

8 ‘‘(II) the expected annual rate of 

9 future production of alternative diesel 

10 fuels to be used as a blend component 

11 or replacement to the diesel motor 

12 pool. 

13 ‘‘(iii) MINIMUM APPLICABLE VOL14 UME.—For the purpose of subparagraph 

15 (A), the applicable volume for calendar 

16 year 2017 and each calendar year there17 after shall be equal to the product obtained 

18 by multiplying— 

19 ‘‘(I) the number of gallons of die20 sel that the Administrator estimates 

21 will be sold or introduced into com22 merce during the calendar year; and 

23 ‘‘(II) the ratio that— 

24 ‘‘(aa) 2,000,000,000 gallons 

25 of alternative diesel fuel; bears to 


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1 ‘‘(bb) the number of gallons 

2 of diesel sold or introduced into 

3 commerce during calendar year 

4 2016. 

5 ‘‘(3) APPLICABLE PERCENTAGES.— 

6 ‘‘(A) PROVISION OF ESTIMATE OF VOL7 UMES OF DIESEL SALES.—Not later than Octo8 ber 31 of each of calendar years 2008 through 

9 2016, the Administrator of the Energy Infor10 mation Administration shall provide to the Ad11 ministrator an estimate, with respect to the fol12 lowing calendar year, of the volumes of diesel 

13 projected to be sold or introduced into com14 merce in the United States. 

15 ‘‘(B) DETERMINATION OF APPLICABLE

16 PERCENTAGES.— 

17 ‘‘(i) IN GENERAL.—Not later than 

18 November 30 of each of calendar years 

19 2009 through 2016, based on the estimate 

20 provided under subparagraph (A), the Ad21 ministrator shall determine and publish in 

22 the Federal Register, with respect to the 

23 following calendar year, the alternative die24 sel fuel obligation that ensures that the re25 quirements of paragraph (2) are met. 


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1 ‘‘(ii) REQUIRED ELEMENTS.—The al2 ternative diesel fuel obligation determined 

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

4 ‘‘(I) be applicable to refineries, 

5 blenders, and importers, as appro6 priate; 

7 ‘‘(II) be expressed in terms of a 

8 volume percentage of diesel sold or in9 troduced into commerce in the United 

10 States; and 

11 ‘‘(III) subject to subparagraph 

12 (C), consist of a single applicable per13 centage that applies to all categories 

14 of persons described in subclause (I). 

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

16 applicable percentage for a calendar year, the 

17 Administrator shall make adjustments to pre18 vent the imposition of redundant obligations on 

19 any person described in subparagraph 

20 (B)(ii)(I). 

21 ‘‘(4) CREDIT PROGRAM.— 

22 ‘‘(A) IN GENERAL.—The regulations pro23 mulgated pursuant to paragraph (2)(A) shall 

24 provide for the generation of an appropriate 

25 amount of credits by any person that refines, 


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1 blends, or imports diesel that contains a quan2 tity of alternative diesel fuel that is greater 

3 than the quantity required under paragraph 

4 (2). 

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

6 generates a credit under subparagraph (A) may 

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

8 credit to another person, for the purpose of 

9 complying with regulations promulgated pursu10 ant to paragraph (2). 

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

12 generated under this paragraph shall be valid 

13 during the 1-year period beginning on the date 

14 on which the credit is generated. 

15 ‘‘(D) INABILITY TO GENERATE OR PUR16 CHASE SUFFICIENT CREDITS.—The regulations 

17 promulgated pursuant to paragraph (2)(A) 

18 shall include provisions allowing any person 

19 that is unable to generate or purchase sufficient 

20 credits under subparagraph (A) to meet the re21 quirements of paragraph (2) by carrying for22 ward a credit generated during a previous year 

23 on the condition that the person, during the cal24 endar year following the year in which the al25 ternative diesel fuel deficit is created— 


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1 ‘‘(i) achieves compliance with the al2 ternative diesel fuel requirement under 

3 paragraph (2); and 

4 ‘‘(ii) generates or purchases additional 

5 credits under subparagraph (A) to offset 

6 the deficit of the previous year. 

7 ‘‘(5) WAIVERS.— 

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

9 consultation with the Secretary of Agriculture 

10 and the Secretary of Energy, may waive the re11 quirements of paragraph (2) in whole or in part 

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

13 reducing the national quantity of alternative 

14 diesel fuel for the diesel motor pool required 

15 under paragraph (2) based on a determination 

16 by the Administrator, after public notice and 

17 opportunity for comment, that— 

18 ‘‘(i) implementation of the require19 ment would severely harm the economy or 

20 environment of a State, a region, or the 

21 United States; or 

22 ‘‘(ii) there is an inadequate domestic 

23 supply of alternative diesel fuel. 

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

25 than 90 days after the date on which the AdVerDate Aug 31 2005 06:31 Jan 13, 2007 Jkt 059200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S133.IS S133

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1 ministrator receives a petition under subpara2 graph (A), the Administrator, in consultation 

3 with the Secretary of Agriculture and the Sec4 retary of Energy, shall approve or disapprove 

5 the petition. 

6 ‘‘(C) TERMINATION OF WAIVERS.— 

7 ‘‘(i) IN GENERAL.—Except as pro8 vided in clause (ii), a waiver under sub9 paragraph (A) shall terminate on the date 

10 that is 1 year after the date on which the 

11 waiver is provided. 

12 ‘‘(ii) EXCEPTION.—The Adminis13 trator, in consultation with the Secretary 

14 of Agriculture and the Secretary of En15 ergy, may extend a waiver under subpara16 graph (A), as the Administrator deter17 mines to be appropriate.’’. 

18 (c) PENALTIES AND ENFORCEMENT.—Section 

19 211(d) of the Clean Air Act (42 U.S.C. 7545(d)) is 

20 amended— 

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

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

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

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


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

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

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

4 324’’ each place it appears and inserting ‘‘section 

5 325’’; 

6 (2) in subsection (k)(10), by indenting subpara7 graphs (E) and (F) appropriately; 

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

9 219(2)’’ and inserting ‘‘section 216(2)’’; 

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

11 and subsection (s) as subsections (s) and (t), respec12 tively; and 

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

14 paragraph (4)), by striking ‘‘this subtitle’’ and in15 serting ‘‘this part’’. 

16 SEC. 7. EXCISE TAX CREDIT FOR PRODUCTION OF CEL17 LULOSIC BIOMASS ETHANOL. 

18 (a) ALLOWANCE OF EXCISE TAX CREDIT.— 

19 (1) IN GENERAL.—Section 6426 of the Internal 

20 Revenue Code of 1986 (relating to credit for alcohol 

21 fuel, biodiesel, and alternative fuel mixtures) is 

22 amended by redesignating subsections (f) and (g) as 

23 subsections (g) and (h), respectively, and by insert24 ing after subsection (e) the following new subsection: 

25 ‘‘(f) CELLULOSIC BIOMASS ETHANOL CREDIT.— 


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1 ‘‘(1) IN GENERAL.—For purposes of this sec2 tion, in the case of a cellulosic biomass ethanol pro3 ducer, the cellulosic biomass ethanol credit is the 

4 product of— 

5 ‘‘(A) the product of 51 cents times the 

6 equivalent number of gallons of renewable fuel 

7 specified in section 211(o)(4) of the Clean Air 

8 Act, times 

9 ‘‘(B) the number of gallons of qualified cel10 lulosic biomass ethanol fuel production of such 

11 producer. 

12 ‘‘(2) DEFINITIONS.— 

13 ‘‘(A) CELLULOSIC BIOMASS ETHANOL.— 

14 The term ‘cellulosic biomass ethanol’ has the 

15 meaning given such term under section 

16 211(o)(1)(A) of the Clean Air Act. 

17 ‘‘(B) QUALIFIED CELLULOSIC BIOMASS

18 ETHANOL FUEL PRODUCTION.—The term 

19 ‘qualified cellulosic biomass ethanol fuel produc20 tion’ means any alcohol which is cellulosic bio21 mass ethanol which during the taxable year— 

22 ‘‘(i) is sold by the producer to another 

23 person — 

24 ‘‘(I) for use by such other person 

25 in the production of an alcohol fuel 


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1 mixture in such other person’s trade 

2 or business (other than casual off3 farm production), 

4 ‘‘(II) for use by such other per5 son as a fuel in a trade or business, 

6 or 

7 ‘‘(III) who sells such cellulosic 

8 biomass ethanol at retail to another 

9 person and places such ethanol in the 

10 fuel tank of such other person, or 

11 ‘‘(ii) is used or sold by the producer 

12 for any purpose described in clause (i). 

13 ‘‘(3) DENIAL OF DOUBLE BENEFIT.—No credit 

14 shall be allowed under subsection (b) or (c) to any 

15 taxpayer with respect to any fuel to the extent that 

16 a credit has been allowed with respect to such fuel 

17 to any taxpayer under this subsection or a payment 

18 has been made with respect to such fuel under sec19 tion 6427(e). 

20 ‘‘(4) TERMINATION.—This section shall not 

21 apply to any sale or use for any period after Decem22 ber 31, 2008.’’. 

23 (2) CONFORMING AMENDMENTS.— 

24 (A) Section 6426(a) of such Code is 

25 amended— 


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1 (i) by striking ‘‘subsection (d)’’ in 

2 paragraph (2) and inserting ‘‘subsections 

3 (d) and (f)’’, and 

4 (ii) by striking ‘‘and (e)’’ in the last 

5 sentence and inserting ‘‘, (e), and (f)’’. 

6 (B) The heading for section 6426 of such 

7 Code is amended to read as follows: 

8 ‘‘SEC. 6426. CREDIT FOR CERTAIN FUELS AND FUEL MIX9 TURES.’’. 

10 (C) The table of section for subchapter B 

11 of chapter 65 of such Code is amended by strik12 ing the item relating to section 6426 and in13 serting the following new item: 

‘‘Sec. 6426. Credit for certain fuels and fuel mixtures.’’. 

14 (b) CELLULOSIC BIOMASS ETHANOL NOT USED FOR

15 A TAXABLE PURPOSE.— 

16 (1) IN GENERAL.—Section 6427(e) of the Inter17 nal Revenue Code of 1986 is amended by redesig18 nating paragraphs (3) through (5) as paragraphs 

19 (4) through (6), respectively, and by inserting after 

20 paragraph (2) the following new paragraph: 

21 ‘‘(3) CELLULOSIC BIOMASS ETHANOL.—If any 

22 person sells or uses cellulosic biomass ethanol (as de23 fined in section 6426(f)(2)(A)) for a purpose de24 scribed in section 6426(f)(2)(B) in such person’s 

25 trade or business, the Secretary shall pay (without 


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1 interest) to such person an amount equal to the cel2 lulosic biomass ethanol credit with respect to such 

3 fuel.’’. 

4 (2) DENIAL OF DOUBLE BENEFIT.—Paragraph 

5 (4) of section 6427(e) of such Code, as redesignated 

6 by paragraph (1), is amended to read as follows: 

7 ‘‘(4) COORDINATION WITH OTHER REPAYMENT

8 PROVISIONS.— 

9 ‘‘(A) IN GENERAL.—No amount shall be 

10 payable under paragraph (1), (2), or (3) with 

11 respect to any mixture, alternative fuel, or cel12 lulosic biomass ethanol with respect to which an 

13 amount is allowed as a credit under section 

14 6426. 

15 ‘‘(B) CELLULOSIC BIOMASS ETHANOL.— 

16 No amount shall be payable under paragraph 

17 (1) or (2) with respect to any cellulosic biomass 

18 ethanol if a payment has been made with re19 spect to such ethanol under paragraph (3).’’. 

20 (3) TERMINATION.—Paragraph (6) of section 

21 6427(e) of such Code, as redesignated by paragraph 

22 (1), is amended by striking ‘‘and’’ at the end of sub23 paragraph (C), by striking the period at the end of 

24 subparagraph (D) and inserting ‘‘, and’’, and by 

25 adding at the end the following new subparagraph: 


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1 ‘‘(E) any cellulosic biomass ethanol credit 

2 (as defined in section 6426(f)(2)(A)) sold or 

3 used after December 31, 2008.’’. 

4 (4) CONFORMING AMENDMENT.—Paragraph (5) 

5 of section 6427(e) of such Code, as redesignated by 

6 paragraph (1), is amended by striking ‘‘or alter7 native fuel mixture credit’’ and inserting ‘‘, alter8 native fuel mixture credit, or cellulosic biomass eth9 anol credit’’. 

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

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

12 of the enactment of this Act. 

13 SEC. 8. INCENTIVE FOR FEDERAL AND STATE FLEETS FOR 

14 MEDIUM AND HEAVY DUTY HYBRIDS. 

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

16 U.S.C. 13211) is amended— 

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

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

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

20 vehicle’’; 

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

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

23 (16), respectively; 

24 (3) by inserting after paragraph (10) the fol25 lowing: 


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

2 powered both by a diesel or gasoline engine and an 

3 electric motor that is recharged as the vehicle oper4 ates;’’; and 

5 (4) by inserting after paragraph (12) (as redes6 ignated by paragraph (2)) the following: 

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

8 means a vehicle that— 

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

10 has a gross vehicle weight rating of more than 

11 8,500 pounds but not more than 14,000 

12 pounds; and 

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

14 has a gross vehicle weight rating of more than 

15 14,000 pounds;’’. 

16 SEC. 9. CREDIT FOR QUALIFYING ETHANOL BLENDING AND 

17 PROCESSING EQUIPMENT. 

18 (a) ALLOWANCE OF QUALIFYING ETHANOL BLEND19 ING AND PROCESSING EQUIPMENT CREDIT.—Section 46 

20 of the Internal Revenue Code of 1986 (relating to amount 

21 of credit) is amended by striking ‘‘and’’ at the end of para22 graph (3), by striking the period at the end of paragraph 

23 (4) and inserting ‘‘, and’’, and by adding at the end the 

24 following new paragraph: 


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1 ‘‘(5) the qualifying ethanol blending and proc2 essing equipment credit.’’. 

3 (b) AMOUNT OF QUALIFYING ETHANOL BLENDING

4 AND PROCESSING EQUIPMENT CREDIT.—Subpart E of 

5 part IV of subchapter A of chapter 1 of the Internal Rev6 enue Code of 1986 (relating to rules for computing invest7 ment credit) is amended by inserting after section 48B 

8 the following new section: 

9 ‘‘SEC. 48C. QUALIFYING ETHANOL BLENDING AND PROC10 ESSING EQUIPMENT. 

11 ‘‘(a) IN GENERAL.—For purposes of section 46, the 

12 qualifying ethanol blending and processing equipment 

13 credit for any taxable year is an amount equal to 50 per14 cent of the basis of the qualifying ethanol blending and 

15 processing equipment placed in service at a qualifying fa16 cility during such taxable year. 

17 ‘‘(b) LIMITATION.—The credit allowed under sub18 section (a) for qualifying ethanol blending and processing 

19 equipment placed in service at any 1 qualifying facility 

20 during any taxable year shall not exceed $2,000,000. 

21 ‘‘(c) QUALIFYING ETHANOL BLENDING AND PROC22 ESSING EQUIPMENT.—For purposes of this section, the 

23 term ‘qualifying ethanol blending and processing equip24 ment’ means any technology installed in or on a qualifying 

25 facility for blending ethanol with petroleum fuels for the 


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1 purpose of direct retail sale, including in-line blending 

2 equipment, storage tanks, pumps and piping for dena3 turants, and load-out equipment. 

4 ‘‘(d) QUALIFYING FACILITY.—For purposes of this 

5 section, the term ‘qualifying facility’ means any facility 

6 which produces not less than 1,000,000 gallons of ethanol 

7 during the taxable year. 

8 ‘‘(e) SPECIAL RULE FOR CERTAIN SUBSIDIZED

9 PROPERTY.—Rules similar to section 48(a)(4) shall apply 

10 for purposes of this section. 

11 ‘‘(f) CERTAIN QUALIFIED PROGRESS EXPENDITURES

12 RULES MADE APPLICABLE.—Rules similar to the rules of 

13 subsections (c)(4) and (d) of section 46 (as in effect on 

14 the day before the enactment of the Revenue Reconcili15 ation Act of 1990) shall apply for purposes of this sub16 section. 

17 ‘‘(g) TERMINATION.—This section shall not apply to 

18 property placed in service after December 31, 2014.’’. 

19 (c) RECAPTURE OF CREDIT WHERE EMISSIONS RE20 DUCTION OFFSET IS SOLD.—Paragraph (1) of section 

21 50(a) of the Internal Revenue Code of 1986 is amended 

22 by redesignating subparagraph (B) as subparagraph (C) 

23 and by inserting after subparagraph (A) the following new 

24 subparagraph: 


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1 ‘‘(B) SPECIAL RULE FOR QUALIFYING

2 ETHANOL BLENDING AND PROCESSING EQUIP3 MENT.—For purposes of subparagraph (A), any 

4 investment property which is qualifying ethanol 

5 blending and processing equipment (as defined 

6 in section 48C(c)) shall cease to be investment 

7 credit property with respect to a taxpayer if 

8 such taxpayer receives a payment in exchange 

9 for a credit for emission reductions attributable 

10 to such qualifying pollution control equipment 

11 for purposes of an offset requirement under 

12 part D of title I of the Clean Air Act.’’. 

13 (d) SPECIAL RULE FOR BASIS REDUCTION; RECAP14 TURE OF CREDIT.—Paragraph (3) of section 50(c) of the 

15 Internal Revenue Code of 1986 (relating to basis adjust16 ment to investment credit property) is amended by insert17 ing ‘‘or qualifying ethanol blending and processing equip18 ment credit’’ after ‘‘energy credit’’. 

19 (e) CERTAIN NONRECOURSE FINANCING EXCLUDED

20 FROM CREDIT BASE.—Section 49(a)(1)(C) of the Internal 

21 Revenue Code of 1986 (defining credit base) is amended 

22 by striking ‘‘and’’ at the end of clause (iii), by striking 

23 the period at the end of clause (iv) and inserting ‘‘, and’’, 

24 and by adding at the end the following new clause: 


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1 ‘‘(v) the basis of any property which 

2 is part of any qualifying ethanol blending 

3 and processing equipment under section 

4 48C.’’. 

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

6 this section shall apply to property placed in service after 

7 December 31, 2007, in taxable years ending after such 

8 date, under rules similar to the rules of section 48(m) of 

9 the Internal Revenue Code of 1986 (as in effect on the 

10 day before the date of the enactment of the Revenue Rec11 onciliation Act of 1990). 

12 SEC. 10. PUBLIC ACCESS TO FEDERAL ALTERNATIVE RE13 FUELING STATIONS. 

14 (a) DEFINITIONS.—In this section: 

15 (1) ALTERNATIVE FUEL REFUELING STA16 TION.—The term ‘‘alternative fuel refueling station’’ 

17 has the meaning given the term ‘‘qualified alter18 native fuel vehicle refueling property’’ in section 

19 30C(c)(1) of the Internal Revenue Code of 1986. 

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

21 the Secretary of Energy. 

22 (b) ACCESS TO FEDERAL ALTERNATIVE REFUELING

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

24 enactment of this Act— 


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

2 Federal property that includes at least 1 fuel refuel3 ing station shall include at least 1 alternative fuel 

4 refueling station; and 

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

6 alternative fuel refueling station located on property 

7 owned by the Federal government shall permit full 

8 public access for the purpose of refueling using al9 ternative fuel. 

10 (c) DURATION.—The requirements described in sub11 section (b) shall remain in effect until the sooner of— 

12 (1) the date that is 7 years after the date of en13 actment of this Act; or 

14 (2) the date on which the Secretary determines 

15 that not less than 5 percent of the commercial re16 fueling infrastructure in the United States offers al17 ternative fuels to the general public. 

18 (d) EXCEPTIONS.— 

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

20 to any Federal property under the jurisdiction of a 

21 Federal agency if the Secretary determines that al22 ternative fuel is not reasonably available to retail 

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

24 the agency to the Secretary. 


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1 (2) NATIONAL SECURITY EXEMPTION.—Sub2 section (b)(2) does not apply to property of the Fed3 eral government that the Secretary, in consultation 

4 with the Secretary of Defense, has certified must be 

5 exempt for national security reasons. 

6 (e) REPORT.—Not later than October 31 of each year 

7 beginning after the date of enactment of this Act, the 

8 President shall submit to Congress a report that describes 

9 the progress of the agencies of the Federal Government 

10 (including the Executive Office of the President) in com11 plying with— 

12 (1) the Energy Policy Act of 1992 (42 U.S.C. 

13 13201 et seq.); 

14 (2) Executive Order 13149 (65 Fed. Reg. 

15 24595; relating to greening the government through 

16 Federal fleet and transportation efficiency); and 

17 (3) the fueling center requirements of this sec18 tion. 

19 SEC. 11. PURCHASE OF CLEAN FUEL BUSES. 

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

21 States Code, is amended by inserting after section 5325 

22 the following: 

23 ‘‘§ 5326. Purchase of clean fuel buses 

24 ‘‘(a) DEFINITIONS.—In this section: 

25 ‘‘(1) ALTERNATIVE DIESEL FUEL.— 


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1 ‘‘(A) IN GENERAL.—The term ‘alternative 

2 diesel fuel’ means— 

3 ‘‘(i) biodiesel (as defined in section 

4 312(f) of the Energy Policy Act of 1992 

5 (42 U.S.C. 13220(f))); and 

6 ‘‘(ii) any blending components derived 

7 from alternative fuel. 

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

9 diesel fuel’ includes a diesel fuel substitute pro10 duced from— 

11 ‘‘(i) animal fat; 

12 ‘‘(ii) plant oil; 

13 ‘‘(iii) recycled yellow grease; 

14 ‘‘(iv) single-cell or microbial oil; 

15 ‘‘(v) thermal depolymerization; 

16 ‘‘(vi) thermochemical conversion; 

17 ‘‘(vii) a coal-to-liquid process (includ18 ing the Fischer-Tropsch process) that pro19 vides for the sequestration of carbon emis20 sions; or 

21 ‘‘(viii) a diesel-ethanol blend of not 

22 less than 7 percent ethanol. 

23 ‘‘(2) CELLULOSIC BIOMASS ETHANOL.—The 

24 term ‘cellulosic biomass ethanol’ means ethanol de25 rived from any lignocellulosic or hemicellulosic matVerDate Aug 31 2005 06:31 Jan 13, 2007 Jkt 059200 PO 00000 Frm 00042 Fmt 6652 Sfmt 6201 E:\BILLS\S133.IS S133

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1 ter that is available on a renewable or recurring 

2 basis, including— 

3 ‘‘(A) dedicated energy crops and trees; 

4 ‘‘(B) wood and wood residues; 

5 ‘‘(C) plants; 

6 ‘‘(D) grasses; 

7 ‘‘(E) agricultural residues; 

8 ‘‘(F) fibers; 

9 ‘‘(G) animal wastes and other waste mate10 rials; and 

11 ‘‘(H) municipal solid waste. 

12 ‘‘(3) CLEAN FUEL BUS.—The term ‘clean fuel 

13 bus’ means a vehicle that— 

14 ‘‘(A) is capable of being powered by— 

15 ‘‘(i) compressed natural gas; 

16 ‘‘(ii) liquefied natural gas; 

17 ‘‘(iii) 1 or more batteries; 

18 ‘‘(iv) a fuel that is composed of at 

19 least 85 percent ethanol (or another per20 centage of not less than 70 percent, as the 

21 Secretary may determine, by rule, to pro22 vide for requirements relating to cold start, 

23 safety, or vehicle functions); 

24 ‘‘(v) electricity (including a hybrid 

25 electric or plug-in hybrid electric vehicle); 


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1 ‘‘(vi) a fuel cell; 

2 ‘‘(vii) a fuel that is composed of at 

3 least 22 percent biodiesel (as defined in 

4 section 312(f) of the Energy Policy Act of 

5 1992 (42 U.S.C. 13220(f)) (or another 

6 percentage of not less than 10 percent, as 

7 the Secretary may determine, by rule, to 

8 provide for requirements relating to cold 

9 start, safety, or vehicle functions); 

10 ‘‘(viii) ultra-low sulfur diesel; or 

11 ‘‘(ix) liquid fuel manufactured with a 

12 coal feedstock; and 

13 ‘‘(B) has been certified by the Adminis14 trator of the Environmental Protection Agency 

15 to significantly reduce harmful emissions, par16 ticularly in a nonattainment area (as defined in 

17 section 171 of the Clean Air Act (42 U.S.C. 

18 7501)). 

19 ‘‘(4) QUALIFIED ALTERNATIVE FUEL PRO20 DUCER.—The term ‘qualified alternative fuel pro21 ducer’ means a producer of qualified fuels that, dur22 ing the applicable taxable year— 

23 ‘‘(A) are sold by the producer to another 

24 person— 


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1 ‘‘(i) for use by the person in the pro2 duction of a mixture of qualified fuels in 

3 the trade or business of the person (other 

4 than casual off-farm production); 

5 ‘‘(ii) for use by the other person as a 

6 fuel in a trade or business; or 

7 ‘‘(iii) that— 

8 ‘‘(I) sells to another person the 

9 qualified fuel at retail; and 

10 ‘‘(II) places the qualified fuel in 

11 the fuel tank of the person that pur12 chased the qualified fuel; or 

13 ‘‘(B) are used or sold by the producer for 

14 any purpose described in subparagraph (A). 

15 ‘‘(5) QUALIFIED FUEL.—The term ‘qualified 

16 fuel’ includes— 

17 ‘‘(A) cellulosic biomass ethanol; 

18 ‘‘(B) ethanol produced in facilities in which 

19 animal waste or other waste materials are di20 gested or otherwise used to displace at least 90 

21 percent of the fossil fuels that would otherwise 

22 be used in the production of ethanol; 

23 ‘‘(C) renewable fuels; 

24 ‘‘(D) alternative diesel fuels; 


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1 ‘‘(E) sugar, starch, or cellulosic biomass; 

2 and 

3 ‘‘(F) any other fuel that is not substan4 tially petroleum. 

5 ‘‘(6) RENEWABLE FUEL.—The term ‘renewable 

6 fuel’ means fuel, at least 85 percent of the volume 

7 of which— 

8 ‘‘(A)(i) is produced from grain, starch, oil9 seeds, vegetable, animal, or fish materials in10 cluding fats, greases, and oils, sugarcane, sugar 

11 beets, sugar components, tobacco, potatoes, or 

12 other biomass; or 

13 ‘‘(ii) is natural gas produced from a biogas 

14 source, including a landfill, sewage waste treat15 ment plant, feedlot, or other place in which de16 caying organic material is found; and 

17 ‘‘(B) is used to substantially replace or re18 duce the quantity of fossil fuel present in a fuel 

19 mixture used to operate a motor vehicle. 

20 ‘‘(b) PURCHASE OF BUSES.—Subject to subsections 

21 (c) and (d), beginning on the date that is 2 years after 

22 the date of enactment of this section, a bus purchased 

23 using funds made available from the Mass Transit Ac24 count of the Highway Trust Fund shall be a clean fuel 

25 bus. 


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1 ‘‘(c) ULTRA-LOW SULFUR DIESEL.— 

2 ‘‘(1) IN GENERAL.—Except as provided in para3 graph (2), not more than 20 percent of the amount 

4 of the funds provided to a recipient to purchase 

5 buses under this section may be used by the recipi6 ent to purchase clean fuel buses that are capable of 

7 being powered by a fuel described in clause (iv), 

8 (vii), (viii), or (ix) of subsection (a)(3)(A). 

9 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

10 apply if the recipient enters into a 3–year purchase 

11 agreement with a qualified alternative fuel producer 

12 to acquire qualified fuels in a volume sufficient to 

13 power the clean fuel buses purchased using amounts 

14 made available under this section. 

15 ‘‘(d) USE OF CERTAIN ALTERNATIVE FUELS.— 

16 ‘‘(1) IN GENERAL.—To be eligible to receive 

17 funds under subsection (c)(2) for the purchase of a 

18 clean fuel bus that is capable of being powered by 

19 a fuel described in clause (iv), (vii), or (ix) of sub20 section (a)(3)(A), an applicant or recipient shall sub21 mit to the Secretary— 

22 ‘‘(A) a certification that the applicant will 

23 operate the clean fuel bus only with the fuel at 

24 all times in accordance with the fuel capacity 


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1 and use of the fuel recommended by the manu2 facturer of the clean fuel bus; and 

3 ‘‘(B) not later than 180 days after the 

4 purchase of the clean fuel bus and every 180 

5 days thereafter, a report that documents that 

6 the fuel was used in accordance with subpara7 graph (A) during the 180-day period ending on 

8 the date of the report. 

9 ‘‘(2) NONCOMPLIANCE.—Failure of an appli10 cant or recipient of funds to provide the certification 

11 or documentation required under paragraph (1) 

12 shall— 

13 ‘‘(A) be considered a violation of the agree14 ment to receive the funds; and 

15 ‘‘(B) require the applicant or recipient to 

16 reimburse the Secretary the full amount of the 

17 funds not later than 90 days after the Sec18 retary has determined that a violation has oc19 curred.’’. 

20 (b) CONFORMING AMENDMENT.—The analysis for 

21 chapter 53 is amended by inserting after the item relating 

22 to section 5325 the following: 

‘‘5326. Clean fuel buses.’’. 


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1 SEC. 12. DOMESTIC FUEL PRODUCTION VOLUMES TO MEET 

2 DEPARTMENT OF DEFENSE NEEDS. 

3 Section 2922d of title 10, United States Code is 

4 amended— 

5 (1) in the heading, by striking ‘‘and tar 

6 sands’’ and inserting ‘‘tar sands, and other 

7 sources’’; 

8 (2) in subsection (a), by striking ‘‘fuel pro9 duced, in whole or in part, from coal, oil shale, and 

10 tar sands (referred to in this section as a ‘covered 

11 fuel’) that are extracted by either mining or in-situ 

12 methods and refined or otherwise processed in the 

13 United States’’ and inserting ‘‘fuel produced, in 

14 whole or in part, from coal, oil shale, and tar sands 

15 that are extracted by either mining or in-situ meth16 ods and refined or otherwise processed in the United 

17 States and fuel produced in the United States using 

18 starch, sugar, cellulosic biomass, plant or animal 

19 oils, or thermal chemical conversion, thermal 

20 depolymerization, or thermal conversion processes 

21 (referred to in this section as a ‘covered fuel’)’’; 

22 (3) in subsection (d), by striking ‘‘1 or more 

23 years’’ and inserting ‘‘up to 5 years’’; 

24 (4) in subsection (e), by striking the period at 

25 the end and inserting the following: ‘‘, with consider26 ation given to military installations closed or reVerDate Aug 31 2005 06:31 Jan 13, 2007 Jkt 059200 PO 00000 Frm 00049 Fmt 6652 Sfmt 6201 E:\BILLS\S133.IS S133

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1 aligned under a round of defense base closure and 

2 realignment.’’; and 

3 (5) by adding at the end the following new sub4 section: 

5 ‘‘(f) PRODUCTION FACILITIES FOR COVERED

6 FUELS.—The Secretary of Defense may enter into con7 tracts or other agreements with private companies or other 

8 entities to develop and operate production facilities for 

9 covered fuels, and may provide for the construction or cap10 ital modification of production facilities for covered 

11 fuels.’’. 

12 SEC. 13. FEDERAL FLEET ENERGY CONSERVATION IM13 PROVEMENT. 

14 (a) DEFINITIONS.—Section 301 of the Energy Policy 

15 Act of 1992 (42 U.S.C. 13211) is amended— 

16 (1) in paragraph (3), by inserting before the 

17 semicolon at the end the following: ‘‘, including a ve18 hicle that is propelled by electric drive transportation 

19 technology, engine dominant hybrid electric tech20 nology, or plug-in hybrid technology’’; 

21 (2) in paragraph (13), by striking ‘‘and’’ after 

22 the semicolon at the end; 

23 (3) in paragraph (14), by striking the period at 

24 the end and inserting a semicolon; and 

25 (4) by adding at the end the following: 


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1 ‘‘(15) the term ‘electric drive transportation 

2 technology’ means— 

3 ‘‘(A) technology that uses an electric motor 

4 for all or part of the motive power of a vehicle 

5 (regardless of whether off-board electricity is 

6 used), including— 

7 ‘‘(i) a battery electric vehicle; 

8 ‘‘(ii) a fuel cell vehicle; 

9 ‘‘(iii) an engine dominant hybrid elec10 tric vehicle; 

11 ‘‘(iv) a plug-in hybrid electric vehicle; 

12 ‘‘(v) a plug-in hybrid fuel cell vehicle; 

13 and 

14 ‘‘(vi) an electric rail vehicle; or 

15 ‘‘(B) technology that uses equipment for 

16 transportation (including transportation involv17 ing any mobile source of air pollution) that uses 

18 an electric motor to replace an internal combus19 tion engine for all or part of the work of the 

20 equipment, including corded electric equipment 

21 that is linked to transportation or a mobile 

22 source of air pollution; 

23 ‘‘(16) the term ‘engine dominant hybrid electric 

24 vehicle’ means an on-road or nonroad vehicle that— 


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1 ‘‘(A) is propelled by an internal combus2 tion engine or heat engine using— 

3 ‘‘(i) any combustible fuel; and 

4 ‘‘(ii) an on-board, rechargeable stor5 age device; and 

6 ‘‘(B) has no means of using an off-board 

7 source of electricity; and 

8 ‘‘(17) the term ‘plug-in hybrid electric vehicle’ 

9 means an on-road or nonroad vehicle that is pro10 pelled by an internal combustion engine or heat en11 gine using— 

12 ‘‘(A) any combustible fuel; 

13 ‘‘(B) an on-board, rechargeable storage de14 vice; and 

15 ‘‘(C) a means of using an off-board source 

16 of electricity.’’. 

17 (b) MINIMUM FEDERAL FLEET REQUIREMENT.— 

18 Section 303(b)(1) of the Energy Policy Act of 1992 (42 

19 U.S.C. 13212(b)(1)) is amended— 

20 (1) in subparagraph (C), by striking ‘‘and’’ 

21 after the semicolon; 

22 (2) in subparagraph (D), by striking ‘‘fiscal 

23 year 1999 and thereafter,’’ and inserting ‘‘each of 

24 fiscal years 1999 through 2013; and’’; and 


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1 (3) by inserting after subparagraph (D) the fol2 lowing: 

3 ‘‘(E) 100 percent in fiscal year 2014 and 

4 thereafter,’’. 

Æ 


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