I 

110TH CONGRESS 

1ST SESSION S. 162 

To amend the Internal Revenue Code of 1986 to modify the alcohol credit 

and the alternative fuel credit, to amend the Clean Air Act to promote 

the installation of fuel pumps for E–85 fuel, to amend title 49 of 

the United States Code to require the manufacture of dual fueled automobiles, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 4, 2007 

Mr. LUGAR introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to modify 

the alcohol credit and the alternative fuel credit, to 

amend the Clean Air Act to promote the installation 

of fuel pumps for E–85 fuel, to amend title 49 of the 

United States Code to require the manufacture of dual 

fueled automobiles, 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 ‘‘National Fuels Initiative’’. 


bajohnson on PROD1PC77 with BILLS
2 

•S 162 IS

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

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 

TITLE I—ALTERNATIVE FUELS 

Sec. 101. Declaration of United States policy on the development and use of 

renewable alternative fuels. 

Sec. 102. Modification to alcohol credit and alternative fuel credit. 

Sec. 103. Installation of E–85 fuel pumps by major oil companies at owned stations and branded stations. 

Sec. 104. Requirement to manufacture dual fueled automobiles. 

Sec. 105. Definition of automobile. 

Sec. 106. Average fuel economy standards. 

Sec. 107. Credit trading and compliance. 

Sec. 108. Consumer tax credit. 

Sec. 109. Advanced technology motor vehicles manufacturing credit. 

TITLE II—USED OIL RE-REFINING AND REUSE 

Sec. 201. Definitions. 

Sec. 202. Informing public. 

Sec. 203. Labeling. 

Sec. 204. Collection facilities. 

Sec. 205. Information exchange. 

Sec. 206. Used oil from Federal agencies. 

Sec. 207. Used oil in space heaters. 

Sec. 208. Extension and modification of election to expense certain refineries. 

Sec. 209. Credit for re-refined lubricating oil feedstock. 

3 SEC. 2. FINDINGS. 

4 Congress makes the following findings: 

5 (1) The national security and economic pros6 perity of the United States is threatened by our oil 

7 dependence, and the reliance of the United States on 

8 oil imports impinges on our foreign policy. Adver9 sarial regimes rich in oil and natural gas are using 

10 their energy supplies as leverage against import-de11 pendent countries and are using increased revenues 

12 from oil and gas exports to gain international influVerDate Aug 31 2005 05:06 Jan 14, 2007 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S162.IS S162

bajohnson on PROD1PC77 with BILLS
3 

•S 162 IS

1 ence, fund anti-American appeals, entrench 

2 authoritarianism, and support terrorism. 

3 (2) Global competition for oil reserves is in4 creasing as supply is depleted, demand increases, 

5 and foreign governments attempt to exert more con6 trol over reserves. Supplies of oil are vulnerable to 

7 disruption resulting from war, political manipula8 tion, natural disasters, and terrorist attacks. A 

9 major loss in oil supply could result in a price shock 

10 extremely damaging to the economy of the United 

11 States and our way of life, and competition over 

12 scarce resources could create conflict. 

13 (3) Inefficient and unclean use of oil damages 

14 the environment and worsens the threat of global cli15 mate change. 

16 TITLE I—ALTERNATIVE FUELS 

17 SEC. 101. DECLARATION OF UNITED STATES POLICY ON 

18 THE DEVELOPMENT AND USE OF RENEW19 ABLE ALTERNATIVE FUELS. 

20 Congress declares that: 

21 (1) It is the policy of the United States to re22 duce dependence on imported oil through increased 

23 efficiency and diversification of fuel sources through 

24 dramatically expanded use of clean alternative fuels. 

25 Such a reduction will increase the foreign policy 


bajohnson on PROD1PC77 with BILLS
4 

•S 162 IS

1 flexibility of the United States, make the United 

2 States less vulnerable to oil supply disruption, and 

3 promote economic growth. The United States will 

4 continue to promote research and development of a 

5 range of alternatives fuels, and it will implement 

6 policies to accelerate the deployment and commer7 cialization of existing efficiency and alternative fuels 

8 technologies. 

9 (2) It is the policy goal of the United States to 

10 produce and utilize the equivalent of at least 

11 100,000,000,000 gallons of renewable fuel per year 

12 by 2025. This amount of renewable fuel, along with 

13 innovation in fuel efficiency, will substantially reduce 

14 the need for oil imports in the United States. 

15 (3) It is the policy of the United States to pro16 mote the development of a global biofuels market 

17 through partnerships with other nations and to re18 duce trade barriers for renewable fuels. 

19 SEC. 102. MODIFICATION TO ALCOHOL CREDIT AND ALTER20 NATIVE FUEL CREDIT. 

21 (a) INCOME TAX CREDIT FOR ALCOHOL.— 

22 (1) RATE BASED ON PRICE OF OIL.—Section 40 

23 of the Internal Revenue Code of 1986 (relating to 

24 alcohol used as fuel) is amended by striking ‘‘60 


bajohnson on PROD1PC77 with BILLS
5 

•S 162 IS

1 cents’’ each place it appears and inserting ‘‘the ap2 plicable amount’’. 

3 (2) APPLICABLE AMOUNT.—Subsection (h) of 

4 section 40 of such Code is amended to read as fol5 lows: 

6 ‘‘(h) APPLICABLE AMOUNT.—For purposes of this 

7 section— 

8 ‘‘(1) IN GENERAL.—The term ‘applicable 

9 amount’ means, with respect to any quarter— 

10 ‘‘(A) five cents for each $1 (or any fraction 

11 thereof) by which $45 exceeds— 

12 ‘‘(i) in the case of the alcohol mixture 

13 credit, the average price of a barrel of oil 

14 for the quarter during which the qualified 

15 mixture used is sold or used, and 

16 ‘‘(ii) in the case of the alcohol credit, 

17 the average price of a barrel of oil for the 

18 quarter during which the alcohol was sold 

19 or used, and 

20 ‘‘(B) $0 for any quarter in which the price 

21 of a barrel of oil is greater than $45. 

22 ‘‘(2) SPECIAL RULE FOR CERTAIN TAX23 PAYERS.— 

24 ‘‘(A) IN GENERAL.—In the case of any al25 cohol or qualified mixture sold or used before 


bajohnson on PROD1PC77 with BILLS
6 

•S 162 IS

1 January 1, 2011, by an applicable taxpayer, the 

2 applicable amount is— 

3 ‘‘(i) 60 cents in the case of a qualified 

4 mixture in which none of the alcohol con5 sists of ethanol, and 

6 ‘‘(ii) 51 cents in any other case. 

7 ‘‘(B) APPLICABLE TAXPAYER.—For pur8 poses of subparagraph (A), the term ‘applicable 

9 taxpayer’ means a taxpayer who, on the day be10 fore the date of the enactment of the National 

11 Fuels Initiative, is in the trade or business of 

12 producing qualified mixtures or selling alcohol 

13 at retail for use as a fuel. 

14 ‘‘(3) OTHER RULES.—For purposes of this sub15 section— 

16 ‘‘(A) DETERMINATION OF AVERAGE

17 PRICE.—The average price of a barrel of oil 

18 shall be determined under regulations pre19 scribed by the Secretary. 

20 ‘‘(B) BARREL.—The term ‘barrel’ means 

21 42 United States gallons.’’. 

22 (3) MODIFICATION OF SMALL ETHANOL PRO23 DUCER CREDIT.—Paragraph (1) of section 40(g) of 

24 such Code is amended by adding at the end the fol25 lowing new sentence: ‘‘Such term shall not include 


bajohnson on PROD1PC77 with BILLS
7 

•S 162 IS

1 any person who is not in the trade or business of 

2 producing alcohol (as defined in subsection (d)(1)(A) 

3 without regard to clauses (i) and (ii)) before the 

4 date of the enactment of this Act.’’. 

5 (4) EXTENSION OF CREDIT.— 

6 (A) IN GENERAL.—Paragraph (1) of sec7 tion 40(e) of such Code is amended— 

8 (i) by striking ‘‘This section’’ and in9 serting ‘‘Except as provided in paragraph 

10 (2), this section’’, 

11 (ii) in subparagraph (A), by striking 

12 ‘‘2010’’ and inserting ‘‘2020’’, and 

13 (iii) in subparagraph (B), by striking 

14 ‘‘2011’’ and inserting ‘‘2021’’. 

15 (B) TERMINATION OF SMALL ETHANOL

16 PRODUCER CREDIT.— 

17 (i) IN GENERAL.—Subsection (e) of 

18 section 40 of such Code is amended by re19 designating paragraph (2) as paragraph 

20 (3) and by inserting after paragraph (1) 

21 the following new paragraph: 

22 ‘‘(2) SMALL ETHANOL PRODUCER CREDIT.—No 

23 credit shall be allowed under subsection (a)(3) for 

24 any sale or use— 


bajohnson on PROD1PC77 with BILLS
8 

•S 162 IS

1 ‘‘(A) for any period after December 31, 

2 2010, or 

3 ‘‘(B) for any period before January 1, 

4 2011, during which the rates of tax under sec5 tion 4081(a)(2)(A) are 4.3 cents per gallon.’’. 

6 (ii) CONFORMING AMENDMENT.—Sec7 tion 40(e)(3) of such Code, as redesignated 

8 by clause (i), is amended by inserting ‘‘or 

9 (2)’’ after ‘‘paragraph (1)’’. 

10 (5) CONFORMING AMENDMENT.—Section 40(b) 

11 of such Code is amended by striking paragraph (3) 

12 and by redesignating paragraphs (4) and (5) as 

13 paragraph (3) and (4), respectively. 

14 (b) MODIFICATIONS TO EXCISE TAX CREDIT AND

15 PAYMENTS FOR ALCOHOL.— 

16 (1) IN GENERAL.—Paragraph (2) of section 

17 6426(b) of the Internal Revenue Code of 1986 is 

18 amended to read as follows: 

19 ‘‘(2) APPLICABLE AMOUNT.—For purposes of 

20 this section— 

21 ‘‘(A) IN GENERAL.—The term ‘applicable 

22 amount’ means, with respect to any quarter— 

23 ‘‘(i) five cents for each $1 (or any 

24 fraction thereof) by which $45 exceeds the 

25 average price of a barrel of oil for the 


bajohnson on PROD1PC77 with BILLS
9 

•S 162 IS

1 quarter during which the alcohol fuel mix2 ture is sold or used, and 

3 ‘‘(ii) $0 for any quarter in which the 

4 price of a barrel of oil is greater than $45. 

5 ‘‘(B) SPECIAL RULE FOR CERTAIN TAX6 PAYERS.— 

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

8 alcohol fuel mixture sold or used before 

9 January 1, 2011, by an applicable tax10 payer, the applicable amount is— 

11 ‘‘(I) 60 cents in the case of a 

12 qualified mixture in which none of the 

13 alcohol consists of ethanol, and 

14 ‘‘(II) 51 cents in any other case. 

15 ‘‘(ii) APPLICABLE TAXPAYER.—For 

16 purposes of subparagraph (A), the term 

17 ‘applicable taxpayer’ means a taxpayer 

18 who, on the day before the date of the en19 actment of the National Fuels Initiative, is 

20 in the trade or business of producing alco21 hol fuel mixtures. 

22 ‘‘(C) OTHER RULES.—For purposes of this 

23 subsection— 

24 ‘‘(i) DETERMINATION OF AVERAGE

25 PRICE.—The average price of a barrel of 


bajohnson on PROD1PC77 with BILLS
10 

•S 162 IS

1 oil shall be determined under regulations 

2 prescribed by the Secretary. 

3 ‘‘(ii) BARREL.—The term ‘barrel’ 

4 means 42 United States gallons.’’. 

5 (2) EXTENSION.— 

6 (A) ALCOHOL FUEL MIXTURE CREDIT.— 

7 Paragraph (5) of section 6426(b) of such Code 

8 is amended by striking ‘‘2010’’ and inserting 

9 ‘‘2020’’. 

10 (B) PAYMENTS.—Subparagraph (A) of 

11 section 6427(e)(5) of such Code is amended by 

12 striking ‘‘2010’’ and inserting ‘‘2020’’. 

13 (c) MODIFICATIONS TO EXCISE TAX AND PAYMENTS

14 FOR ALTERNATIVE FUEL.— 

15 (1) ALTERNATIVE FUEL CREDIT.— 

16 (A) RATE.— 

17 (i) IN GENERAL.—Paragraph (1) of 

18 section 6426(d) of the Internal Revenue 

19 Code of 1986 is amended by striking ‘‘50 

20 cents’’ and inserting ‘‘the applicable 

21 amount’’. 

22 (ii) APPLICABLE AMOUNT.—Sub23 section (d) of section 6426 of such Code is 

24 amended by redesignating paragraphs (2), 

25 (3), and (4) as paragraphs (3), (4), and 


bajohnson on PROD1PC77 with BILLS
11 

•S 162 IS

1 (5), respectively, and by inserting after 

2 paragraph (1) the following new para3 graph: 

4 ‘‘(2) APPLICABLE AMOUNT.—For purposes of 

5 this section— 

6 ‘‘(A) IN GENERAL.—The term ‘applicable 

7 amount’ means, with respect to any quarter— 

8 ‘‘(i) five cents for each $1 (or any 

9 fraction thereof) by which $45 exceeds the 

10 average price of a barrel of oil for the 

11 quarter during which the alternative fuel is 

12 sold or used, and 

13 ‘‘(ii) $0 for any quarter in which the 

14 price of a barrel of oil is greater than $45. 

15 ‘‘(B) SPECIAL RULE FOR CERTAIN TAX16 PAYERS.— 

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

18 alternative fuel sold or used before Janu19 ary 1, 2011, by an applicable taxpayer, the 

20 applicable amount is 50 cents. 

21 ‘‘(ii) APPLICABLE TAXPAYER.—For 

22 purposes of subparagraph (A), the term 

23 ‘applicable taxpayer’ means a taxpayer 

24 who, on the day before the date of the en25 actment of the National Fuels Initiative, is 


bajohnson on PROD1PC77 with BILLS
12 

•S 162 IS

1 in the trade or business of producing alter2 native fuels. 

3 ‘‘(C) OTHER RULES.—For purposes of this 

4 subsection— 

5 ‘‘(i) DETERMINATION OF AVERAGE

6 PRICE.—The average price of a barrel of 

7 oil shall be determined under regulations 

8 prescribed by the Secretary. 

9 ‘‘(ii) BARREL.—The term ‘barrel’ 

10 means 42 United States gallons.’’. 

11 (B) EXTENSION.—Paragraph (5) of sec12 tion 6426(d) of such Code, as redesignated by 

13 subparagraph (A), is amended by striking 

14 ‘‘2009 (September 30, 2014, in the case of any 

15 sale or use involving liquified hydrogen)’’ and 

16 inserting ‘‘2020’’. 

17 (2) ALTERNATIVE FUEL MIXTURE CREDIT.— 

18 (A) RATE.— 

19 (i) IN GENERAL.—Paragraph (1) of 

20 section 6426(e) of the Internal Revenue 

21 Code of 1986 is amended by striking ‘‘50 

22 cents’’ and inserting ‘‘the applicable 

23 amount’’. 

24 (ii) APPLICABLE AMOUNT.—Sub25 section (e) of section 6426 of such Code is 


bajohnson on PROD1PC77 with BILLS
13 

•S 162 IS

1 amended by redesignating paragraphs (2) 

2 and (3) as paragraphs (3) and (4), respec3 tively, and by inserting after paragraph (1) 

4 the following new paragraph: 

5 ‘‘(2) APPLICABLE AMOUNT.—For purposes of 

6 this section— 

7 ‘‘(A) IN GENERAL.—The term ‘applicable 

8 amount’ means, with respect to any quarter— 

9 ‘‘(i) five cents for each $1 (or any 

10 fraction thereof) by which $45 exceeds the 

11 average price of a barrel of oil for the 

12 quarter during which the alternative fuel 

13 mixture is sold or used, and 

14 ‘‘(ii) $0 for any quarter in which the 

15 price of a barrel of oil is greater than $45. 

16 ‘‘(B) SPECIAL RULE FOR CERTAIN TAX17 PAYERS.— 

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

19 alternative fuel mixture sold or used before 

20 January 1, 2011, by an applicable tax21 payer, the applicable amount is 50 cents. 

22 ‘‘(ii) APPLICABLE TAXPAYER.—For 

23 purposes of subparagraph (A), the term 

24 ‘applicable taxpayer’ means a taxpayer 

25 who, on the day before the date of the enVerDate Aug 31 2005 05:06 Jan 14, 2007 Jkt 059200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S162.IS S162

bajohnson on PROD1PC77 with BILLS
14 

•S 162 IS

1 actment of the National Fuels Initiative, is 

2 in the trade or business of producing alter3 native fuel mixtures. 

4 ‘‘(C) OTHER RULES.—For purposes of this 

5 subsection— 

6 ‘‘(i) DETERMINATION OF AVERAGE

7 PRICE.—The average price of a barrel of 

8 oil shall be determined under regulations 

9 prescribed by the Secretary. 

10 ‘‘(ii) BARREL.—The term ‘barrel’ 

11 means 42 United States gallons.’’. 

12 (B) EXTENSION.—Paragraph (4) of sec13 tion 6426(e) of such Code, as redesignated by 

14 subparagraph (A), is amended by striking 

15 ‘‘2009 (September 30, 2014, in the case of any 

16 sal or use involving liquified hydrogen)’’ and in17 serting ‘‘2020’’. 

18 (3) PAYMENTS.—Paragraph (5) of section 

19 6427(e) is amended by inserting ‘‘and’’ at the end 

20 of subparagraph (B), by striking subparagraphs (C) 

21 and (D), and by inserting after subparagraph (B) 

22 the following: 

23 ‘‘(C) any alternative fuel or alternative fuel 

24 mixture (as defined in subsection (d)(3) or 


bajohnson on PROD1PC77 with BILLS
15 

•S 162 IS

1 (e)(3) of section 6426) sold or used after Sep2 tember 30, 2020.’’. 

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

4 this section shall apply to fuel used or sold in quarters 

5 beginning after the date of the enactment of this Act. 

6 SEC. 103. INSTALLATION OF E–85 FUEL PUMPS BY MAJOR 

7 OIL COMPANIES AT OWNED STATIONS AND 

8 BRANDED STATIONS. 

9 Section 211(o) of the Clean Air Act (42 U.S.C. 

10 7545(o)) is amended by adding at the end the following: 

11 ‘‘(11) INSTALLATION OF E–85 FUEL PUMPS BY

12 MAJOR OIL COMPANIES AT OWNED STATIONS AND

13 BRANDED STATIONS.— 

14 ‘‘(A) DEFINITIONS.—In this paragraph: 

15 ‘‘(i) E–85 FUEL.—The term ‘E–85 

16 fuel’ means a blend of gasoline approxi17 mately 85 percent of the content of which 

18 is derived from ethanol produced in the 

19 United States. 

20 ‘‘(ii) MAJOR OIL COMPANY.—The 

21 term ‘major oil company’ means any per22 son that, individually or together with any 

23 other person with respect to which the per24 son has an affiliate relationship or signifi25 cant ownership interest, has not less than 


bajohnson on PROD1PC77 with BILLS
16 

•S 162 IS

1 4,500 retail station outlets according to 

2 the latest publication of the Petroleum 

3 News Annual Factbook. 

4 ‘‘(iii) SECRETARY.—The term ‘Sec5 retary’ means the Secretary of Energy, 

6 acting in consultation with the Adminis7 trator of the Environmental Protection 

8 Agency and the Secretary of Agriculture. 

9 ‘‘(B) REGULATIONS.—The Secretary shall 

10 promulgate regulations to ensure that each 

11 major oil company that sells or introduces gaso12 line into commerce in the United States 

13 through wholly-owned stations or branded sta14 tions installs or otherwise makes available 1 or 

15 more pumps that dispense E–85 fuel (including 

16 any other equipment necessary, such as includ17 ing tanks, to ensure that the pumps function 

18 properly) at not less than the applicable per19 centage of the wholly-owned stations and the 

20 branded stations of the major oil company spec21 ified in subparagraph (C). 

22 ‘‘(C) APPLICABLE PERCENTAGE.—For the 

23 purpose of subparagraph (B), the applicable 

24 percentage of the wholly-owned stations and the 


bajohnson on PROD1PC77 with BILLS
17 

•S 162 IS

1 branded stations shall be determined in accord2 ance with the following table: 

Applicable percentage of 

wholly-owned stations and 

branded stations

‘‘Calendar year: (percent): 

2008 ......................................................................................... 5

2009 ......................................................................................... 10

2010 ......................................................................................... 15

2011 ......................................................................................... 20

2012 ......................................................................................... 25

2013 ......................................................................................... 30

2014 ......................................................................................... 35

2015 ......................................................................................... 40

2016 ......................................................................................... 45

2017 and each calendar year thereafter .................................. 50. 

3 ‘‘(D) GEOGRAPHIC DISTRIBUTION.— 

4 ‘‘(i) IN GENERAL.—Subject to clause 

5 (ii), in promulgating regulations under 

6 subparagraph (B), the Secretary shall en7 sure that each major oil company described 

8 in subparagraph (B) installs or otherwise 

9 makes available 1 or more pumps that dis10 pense E–85 fuel at not less than a min11 imum percentage (specified in the regula12 tions) of the wholly-owned stations and the 

13 branded stations of the major oil company 

14 in each State. 

15 ‘‘(ii) REQUIREMENT.—In specifying 

16 the minimum percentage under clause (i), 

17 the Secretary shall ensure that each major 

18 oil company installs or otherwise makes 

19 available 1 or more pumps described in 


bajohnson on PROD1PC77 with BILLS
18 

•S 162 IS

1 that clause in each State in which the 

2 major oil company operates. 

3 ‘‘(E) FINANCIAL RESPONSIBILITY.—In 

4 promulgating regulations under subparagraph 

5 (B), the Secretary shall ensure that each major 

6 oil company described in that subparagraph as7 sumes full financial responsibility for the costs 

8 of installing or otherwise making available the 

9 pumps described in that subparagraph and any 

10 other equipment necessary (including tanks) to 

11 ensure that the pumps function properly. 

12 ‘‘(F) PRODUCTION CREDITS FOR EXCEED13 ING E–85 FUEL PUMPS INSTALLATION REQUIRE14 MENT.— 

15 ‘‘(i) EARNING AND PERIOD FOR AP16 PLYING CREDITS.—If the percentage of the 

17 wholly-owned stations and the branded sta18 tions of a major oil company at which the 

19 major oil company installs E–85 fuel 

20 pumps in a particular calendar year ex21 ceeds the percentage required under sub22 paragraph (C), the major oil company 

23 earns credits under this paragraph, which 

24 may be applied to any of the 3 consecutive 

25 calendar years immediately after the calVerDate Aug 31 2005 05:06 Jan 14, 2007 Jkt 059200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\S162.IS S162

bajohnson on PROD1PC77 with BILLS
19 

•S 162 IS

1 endar year for which the credits are 

2 earned. 

3 ‘‘(ii) TRADING CREDITS.—Subject to 

4 clause (iii), a major oil company that has 

5 earned credits under clause (i) may sell 

6 credits to another major oil company to en7 able the purchaser to meet the requirement 

8 under subparagraph (C). 

9 ‘‘(iii) EXCEPTION.—A major oil com10 pany may not use credits purchased under 

11 clause (ii) to fulfill the geographic distribu12 tion requirement in subparagraph (D).’’. 

13 SEC. 104. REQUIREMENT TO MANUFACTURE DUAL FUELED 

14 AUTOMOBILES. 

15 (a) REQUIREMENT.— 

16 (1) IN GENERAL.—Chapter 329 of title 49, 

17 United States Code, is amended by inserting after 

18 section 32902 the following: 

19 ‘‘§ 32902A. Requirement to manufacture dual fueled 

20 automobiles 

21 ‘‘(a) REQUIREMENT.—Each manufacturer of new 

22 automobiles that are capable of operating on gasoline or 

23 diesel fuel shall ensure that the percentage of such auto24 mobiles, manufactured in any model year after model year 

25 2007 and distributed in commerce for sale in the United 


bajohnson on PROD1PC77 with BILLS
20 

•S 162 IS

1 States, which are dual fueled automobiles is equal to not 

2 less than the applicable percentage set forth in the fol3 lowing table: 

‘‘For the model year: 

The percentage of 

dual fueled automobiles manufactured shall be not 

less than: 

2008 ....................................................................... 10 percent

2009 ....................................................................... 20 percent

2010 ....................................................................... 30 percent

2011 ....................................................................... 40 percent

2012 ....................................................................... 50 percent

2013 ....................................................................... 60 percent

2014 ....................................................................... 70 percent

2015 ....................................................................... 80 percent

2016 ....................................................................... 90 percent

2017 and beyond .................................................... 100 percent. 

4 ‘‘(b) PRODUCTION CREDITS FOR EXCEEDING FLEXI5 BLE FUEL AUTOMOBILE PRODUCTION REQUIREMENT.— 

6 ‘‘(1) EARNING AND PERIOD FOR APPLYING

7 CREDITS.—If the number of dual fueled automobiles 

8 manufactured by a manufacturer in a particular 

9 model year exceeds the number required under sub10 section (a), the manufacturer earns credits under 

11 this section, which may be applied to any of the 3 

12 consecutive model years immediately after the model 

13 year for which such credits are earned. 

14 ‘‘(2) TRADING CREDITS.—A manufacturer that 

15 has earned credits under paragraph (1) may sell 

16 credits to another manufacturer to enable the pur17 chaser to meet the requirement under subsection 

18 (a).’’. 


bajohnson on PROD1PC77 with BILLS
21 

•S 162 IS

1 (2) TECHNICAL AMENDMENT.—The table of 

2 sections for chapter 329 of title 49, United States 

3 Code, is amended by inserting after the item relating 

4 to section 32902 the following: 

‘‘32902A. Requirement to manufacture dual fueled automobiles.’’. 

5 (b) ACTIVITIES TO PROMOTE THE USE OF CERTAIN

6 ALTERNATIVE FUELS.—The Secretary of Transportation 

7 shall carry out activities to promote the use of fuel mix8 tures containing gasoline or diesel fuel and 1 or more al9 ternative fuels, including a mixture containing at least 85 

10 percent of methanol, denatured ethanol, and other alcohols 

11 by volume with gasoline or other fuels, to power auto12 mobiles in the United States. 

13 SEC. 105. DEFINITION OF AUTOMOBILE. 

14 (a) IN GENERAL.—Section 32901(a)(3) of title 49, 

15 United States Code, is amended by striking ‘‘rated 

16 at—’’ and all that follows through the period at the end 

17 and inserting ‘‘rated at not more than 10,000 pounds 

18 gross vehicle weight.’’. 

19 (b) FUEL ECONOMY INFORMATION.—Section 

20 32908(a) of title 49, United States Code, is amended, by 

21 striking ‘‘section—’’ and all that follows through ‘‘(2)’’ 

22 and inserting ‘‘section, the term’’. 

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

24 this section shall apply to model year 2009 and each sub25 sequent model year. 


bajohnson on PROD1PC77 with BILLS
22 

•S 162 IS

1 SEC. 106. AVERAGE FUEL ECONOMY STANDARDS. 

2 (a) STANDARDS.—Section 32902 of title 49, United 

3 States Code, is amended— 

4 (1) in subsection (a)— 

5 (A) in the header, by inserting ‘‘MANUFAC6 TURED BEFORE MODEL YEAR 2012’’ after 

7 ‘‘NON-PASSENGER AUTOMOBILES’’; and 

8 (B) by adding at the end the following: 

9 ‘‘This subsection shall not apply to automobiles 

10 manufactured after model year 2011.’’; 

11 (2) in subsection (b)— 

12 (A) in the header, by inserting ‘‘MANUFAC13 TURED BEFORE MODEL YEAR 2012’’ after 

14 ‘‘PASSENGER AUTOMOBILES’’; 

15 (B) by inserting ‘‘and before model year 

16 2009’’ after ‘‘1984’’; and 

17 (C) by adding at the end the following: 

18 ‘‘Such standard shall be increased by 4 percent 

19 per year for model years 2009 through 2011 

(rounded to the nearest 1 20 ⁄10 mile per gallon)’’; 

21 (3) by amending subsection (c) to read as fol22 lows: 

23 ‘‘(c) AUTOMOBILES MANUFACTURED AFTER MODEL

24 YEAR 2011.—(1) Not later than 18 months before the be25 ginning of each model year after model year 2011, the 


bajohnson on PROD1PC77 with BILLS
23 

•S 162 IS

1 Secretary of Transportation shall prescribe, by regula2 tion— 

3 ‘‘(A) an average fuel economy standard for 

4 automobiles manufactured by a manufacturer in 

5 that model year; or 

6 ‘‘(B) based on 1 or more vehicle attributes that 

7 relate to fuel economy— 

8 ‘‘(i) separate standards for different class9 es of automobiles; or 

10 ‘‘(ii) standards expressed in the form of a 

11 mathematical function. 

12 ‘‘(2)(A) Except as provided under paragraphs (3) and 

13 (4) and subsection (d), standards under paragraph (1) 

14 shall attain a projected aggregate level of average fuel 

15 economy of 27.5 miles per gallon for all automobiles man16 ufactured by all manufacturers for model year 2012. 

17 ‘‘(B) The projected aggregate level of average fuel 

18 economy for model year 2013 and each succeeding model 

19 year shall be increased by 4 percent from the level for the 

20 prior model year (rounded to the nearest 1/10 mile per 

21 gallon). 

22 ‘‘(C) Notwithstanding subparagraphs (A) and (B), 

23 the fleetwide average fuel economy standard for passenger 

24 automobiles manufactured by a manufacturer in a model 

25 year for that manufacturer’s domestic fleet and for its forVerDate Aug 31 2005 05:06 Jan 14, 2007 Jkt 059200 PO 00000 Frm 00023 Fmt 6652 Sfmt 6201 E:\BILLS\S162.IS S162

bajohnson on PROD1PC77 with BILLS
24 

•S 162 IS

1 eign fleet as calculated under section 32904 as in effect 

2 before the date of enactment of the National Fuels Initia3 tive shall not be less than 92 percent of the average fuel 

4 economy projected by the Secretary for the combined do5 mestic and foreign fleets manufactured by all manufactur6 ers in that model year. 

7 ‘‘(3) If the actual aggregate level of average fuel 

8 economy achieved by manufacturers for each of 3 consecu9 tive model years is at least 5 percent less than the pro10 jected aggregate level of average fuel economy for such 

11 model year, the Secretary shall make appropriate adjust12 ments to the standards prescribed under this subsection. 

13 ‘‘(4)(A) Notwithstanding paragraphs (1) through (3) 

14 and subsection (b), the Secretary of Transportation may 

15 prescribe a lower average fuel economy standard for 1 or 

16 more model years if the Secretary of Transportation, in 

17 consultation with the Secretary of Energy, determines that 

18 the minimum standards prescribed under paragraph (2) 

19 or (3) or subsection (b) for each model year— 

20 ‘‘(i) are technologically unachievable; 

21 ‘‘(ii) cannot be achieved without materially re22 ducing the overall safety of automobiles manufac23 tured or sold in the United States; or 

24 ‘‘(iii) is shown, by clear and convincing evi25 dence, not to be cost effective. 


bajohnson on PROD1PC77 with BILLS
25 

•S 162 IS

1 ‘‘(B) If a lower standard is prescribed for a model 

2 year under subparagraph (A), such standard shall be the 

3 maximum standard that— 

4 ‘‘(i) is technologically achievable; 

5 ‘‘(ii) can be achieved without materially reduc6 ing the overall safety of automobiles manufactured 

7 or sold in the United States; and 

8 ‘‘(iii) is cost effective. 

9 ‘‘(5) In determining cost effectiveness under para10 graph (4)(A)(iii), the Secretary of Transportation shall 

11 take into account the total value to the Nation of reduced 

12 petroleum use, including the value of reducing external 

13 costs of petroleum use, using a value for such costs equal 

14 to 50 percent of the value of a gallon of gasoline saved 

15 or the amount determined in an analysis of the external 

16 costs of petroleum use that considers— 

17 ‘‘(A) value to consumers; 

18 ‘‘(B) economic security; 

19 ‘‘(C) national security; 

20 ‘‘(D) foreign policy; 

21 ‘‘(E) the impact of oil use— 

22 ‘‘(i) on sustained cartel rents paid to for23 eign suppliers; 


bajohnson on PROD1PC77 with BILLS
26 

•S 162 IS

1 ‘‘(ii) on long-run potential gross domestic 

2 product due to higher normal-market oil price 

3 levels, including inflationary impacts; 

4 ‘‘(iii) on import costs, wealth transfers, 

5 and potential gross domestic product due to in6 creased trade imbalances; 

7 ‘‘(iv) on import costs and wealth transfers 

8 during oil shocks; 

9 ‘‘(v) on macroeconomic dislocation and ad10 justment costs during oil shocks; 

11 ‘‘(vi) on the cost of existing energy security 

12 policies, including the management of the Stra13 tegic Petroleum Reserve; 

14 ‘‘(vii) on the timing and severity of the oil 

15 peaking problem; 

16 ‘‘(viii) on the risk, probability, size, and 

17 duration of oil supply disruptions; 

18 ‘‘(ix) on OPEC strategic behavior and 

19 long-run oil pricing; 

20 ‘‘(x) on the short term elasticity of energy 

21 demand and the magnitude of price increases 

22 resulting from a supply shock; 

23 ‘‘(xi) on oil imports, military costs, and re24 lated security costs, including intelligence, 


bajohnson on PROD1PC77 with BILLS
27 

•S 162 IS

1 homeland security, sea lane security and infra2 structure, and other military activities; 

3 ‘‘(xii) on oil imports, diplomatic and for4 eign policy flexibility, and connections to geo5 political strife, terrorism, and international de6 velopment activities; 

7 ‘‘(xiii) all relevant environmental hazards 

8 under the jurisdiction of the Environmental 

9 Protection Agency; and 

10 ‘‘(xiv) on well-to-wheels urban and local air 

11 emissions of ‘pollutants’ and their 

12 uninternalized costs; 

13 ‘‘(F) the impact of the oil or energy intensity 

14 of the United States economy on the sensitivity of 

15 the economy to oil price changes, including the mag16 nitude of gross domestic product losses in response 

17 to short term price shocks or long term price in18 creases; 

19 ‘‘(G) the impact of United States payments for 

20 oil imports on political, economic, and military devel21 opments in unstable or unfriendly oil exporting 

22 countries; 

23 ‘‘(H) the uninternalized costs of pipeline and 

24 storage oil seepage, and for risk of oil spills from 


bajohnson on PROD1PC77 with BILLS
28 

•S 162 IS

1 production, handling, and transport, and related 

2 landscape damage; and 

3 ‘‘(I) additional relevant factors, as determined 

4 by the Secretary. 

5 ‘‘(6) When considering the value to consumers of a 

6 gallon of gasoline saved, the Secretary of Transportation 

7 may not use a value less than the greatest of— 

8 ‘‘(A) the average national cost of a gallon of 

9 gasoline sold in the United States during the 12- 

10 month period ending on the date on which the new 

11 fuel economy standard is proposed; 

12 ‘‘(B) the most recent weekly estimate by the 

13 Energy Information Administration of the Depart14 ment of Energy of the average national cost of a 

15 gallon of gasoline (all grades) sold in the United 

16 States; or 

17 ‘‘(C) the gasoline prices projected by the En18 ergy Information Administration for the 20-year pe19 riod beginning in the year following the year in 

20 which the standards are established. 

21 ‘‘(7) In prescribing standards under this subsection, 

22 the Secretary may prescribe standards for 1 or more 

23 model years. 

24 ‘‘(8)(A) Not later than December 31, 2016, the Sec25 retary of Transportation, the Secretary of Energy, and the 


bajohnson on PROD1PC77 with BILLS
29 

•S 162 IS

1 Administrator of the Environmental Protection Agency 

2 shall submit a joint report to Congress on the state of 

3 global automotive efficiency technology development, and 

4 on the accuracy of tests used to measure fuel economy 

5 of automobiles under section 32904(c), utilizing the study 

6 and assessment of the National Academy of Sciences re7 ferred to in subparagraph (B). 

8 ‘‘(B) The Secretary shall enter into appropriate ar9 rangements with the National Academy of Sciences to con10 duct a comprehensive study of the technological opportuni11 ties to enhance fuel economy and an analysis and assess12 ment of the accuracy of fuel economy tests used by the 

13 Administrator of the Environmental Protection Agency to 

14 measure fuel economy for each model under section 

15 32904(c). Such analysis and assessment shall identify any 

16 additional factors or methods that should be included in 

17 tests to measure fuel economy for each model to more ac18 curately reflect actual fuel economy of automobiles. The 

19 Secretary and the Administrator of the Environmental 

20 Protection Agency shall furnish, at the request of the 

21 Academy, any information which the Academy determines 

22 to be necessary to conduct the study, analysis, and assess23 ment under this subparagraph. 

24 ‘‘(C) The report submitted under subparagraph (A) 

25 shall include— 


bajohnson on PROD1PC77 with BILLS
30 

•S 162 IS

1 ‘‘(i) the study of the National Academy of 

2 Sciences referred to in subparagraph (B); and 

3 ‘‘(ii) an assessment by the Secretary of techno4 logical opportunities to enhance fuel economy and 

5 opportunities to increase overall fleet safety. 

6 ‘‘(D) The report submitted under subparagraph (A) 

7 shall identify and examine additional opportunities to re8 form the regulatory structure under this chapter, includ9 ing approaches that seek to merge vehicle and fuel require10 ments into a single system that achieves equal or greater 

11 reduction in petroleum use and environmental benefits. 

12 ‘‘(E) The report submitted under subparagraph (A) 

13 shall— 

14 ‘‘(i) include conclusions reached by the Admin15 istrator of the Environmental Protection Agency, as 

16 a result of detailed analysis and public comment, on 

17 the accuracy of current fuel economy tests; 

18 ‘‘(ii) identify any additional factors that the Ad19 ministrator determines should be included in tests to 

20 measure fuel economy for each model to more accu21 rately reflect actual fuel economy of automobiles; 

22 and 

23 ‘‘(iii) include a description of options, formu24 lated by the Secretary and the Administrator, to in25 corporate such additional factors in fuel economy 


bajohnson on PROD1PC77 with BILLS
31 

•S 162 IS

1 tests in a manner that will not effectively increase 

2 or decrease average fuel economy for any automobile 

3 manufacturer. 

4 ‘‘(F) There is authorized to be appropriated to the 

5 Secretary such amounts as are required to carry out the 

6 study, analysis, and assessment required by subparagraph 

7 (B).’’; and 

8 (4) in subsection (g)(2), by striking ‘‘(and sub9 mit the amendment to Congress when required 

10 under subsection (c)(2) of this section)’’. 

11 (b) CONFORMING AMENDMENTS.— 

12 (1) IN GENERAL.—Chapter 329 of title 49, 

13 United States Code, is amended— 

14 (A) in section 32903— 

15 (i) by striking ‘‘passenger’’ each place 

16 it appears; 

17 (ii) by striking ‘‘section 32902(b)–(d) 

18 of this title’’ each place it appears and in19 serting ‘‘subsection (c) or (d) of section 

20 32902’’; 

21 (iii) by striking subsection (e); and 

22 (iv) by redesignating subsection (f) as 

23 subsection (e); and 

24 (B) in section 32904(a)— 


bajohnson on PROD1PC77 with BILLS
32 

•S 162 IS

1 (i) by striking ‘‘passenger’’ each place 

2 it appears; and 

3 (ii) in paragraph (1), by striking 

4 ‘‘subject to’’ and all that follows through 

5 ‘‘section 32902(b)–(d) of this title’’ and in6 serting ‘‘subsection (c) or (d) of section 

7 32902’’. 

8 (2) EFFECTIVE DATE.—The amendments made 

9 by paragraph (1) shall apply to automobiles manu10 factured after model year 2011. 

11 SEC. 107. CREDIT TRADING AND COMPLIANCE. 

12 (a) CREDIT TRADING.—Section 32903(a) of title 49, 

13 United States Code, is amended— 

14 (1) by inserting ‘‘Credits earned by a manufac15 turer under this section may be sold to any other 

16 manufacturer and used as if earned by that manu17 facturer; except that credits earned by a manufac18 turer described in section 32904(b)(1)(A)(i) may not 

19 be sold to or purchased by a manufacturer described 

20 in 32904(b)(1)(A)(ii),’’ after ‘‘earns credits.’’; and 

21 (2) by striking ‘‘3 consecutive model years im22 mediately’’ each place it appears and inserting 

23 ‘‘model years’’. 

24 (b) TREATMENT OF IMPORTS.— 


bajohnson on PROD1PC77 with BILLS
33 

•S 162 IS

1 (1) CONFORMING AMENDMENT.—Section 

2 32904(b) is amended by striking ‘‘passenger’’ each 

3 place it appears. 

4 (2) APPLICABILITY.—The amendments made 

5 by paragraph (1) shall apply to automobiles manu6 factured after model year 2011. 

7 (c) MULTI-YEAR COMPLIANCE PERIOD.—Section 

8 32904(c) of such title is amended— 

9 (1) by inserting ‘‘(1)’’ before ‘‘The Adminis10 trator’’; and 

11 (2) by adding at the end the following: 

12 ‘‘(2) The Secretary, by rule, may allow a manufac13 turer to elect a multi-year compliance period of not more 

14 than 4 consecutive model years in lieu of the single model 

15 year compliance period otherwise applicable under this 

16 chapter.’’. 

17 SEC. 108. CONSUMER TAX CREDIT. 

18 (a) ELIMINATION ON NUMBER OF NEW QUALIFIED

19 HYBRID AND ADVANCED LEAN BURN TECHNOLOGY VE20 HICLES ELIGIBLE FOR ALTERNATIVE MOTOR VEHICLE

21 CREDIT.— 

22 (1) IN GENERAL.—Section 30B of the Internal 

23 Revenue Code of 1986 is amended— 

24 (A) by striking subsection (f); and 


bajohnson on PROD1PC77 with BILLS
34 

•S 162 IS

1 (B) by redesignating subsections (g) 

2 through (j) as subsections (f) through (i), re3 spectively. 

4 (2) CONFORMING AMENDMENTS.— 

5 (A) Paragraphs (4) and (6) of section 

6 30B(h) of such Code are each amended by 

7 striking ‘‘(determined without regard to sub8 section (g))’’ and inserting ‘‘determined without 

9 regard to subsection (f))’’. 

10 (B) Section 38(b)(25) of such Code is 

11 amended by striking ‘‘section 30B(g)(1)’’ and 

12 inserting ‘‘section 30B(f)(1)’’. 

13 (C) Section 55(c)(2) of such Code is 

14 amended by striking ‘‘section 30B(g)(2)’’ and 

15 inserting ‘‘section 30B(f)(2)’’. 

16 (D) Section 1016(a)(36) of such Code is 

17 amended by striking ‘‘section 30B(h)(4)’’ and 

18 inserting ‘‘section 30B(g)(4)’’. 

19 (E) Section 6501(m) of such Code is 

20 amended by striking ‘‘section 30B(h)(9)’’ and 

21 inserting ‘‘section 30B(g)(9)’’. 

22 (b) EXTENSION OF ALTERNATIVE VEHICLE CREDIT

23 FOR NEW QUALIFIED HYBRID MOTOR VEHICLES.—Para24 graph (3) of section 30B(i) of such Code (as redesignated 


bajohnson on PROD1PC77 with BILLS
35 

•S 162 IS

1 by subsection (a)) is amended by striking ‘‘December 31, 

2 2009’’ and inserting ‘‘December 31, 2010’’. 

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

4 this section shall apply to property placed in service after 

5 December 31, 2005, in taxable years ending after such 

6 date. 

7 SEC. 109. ADVANCED TECHNOLOGY MOTOR VEHICLES MAN8 UFACTURING CREDIT. 

9 (a) IN GENERAL.—Subpart B of part IV of sub10 chapter A of chapter 1 of the Internal Revenue Code of 

11 1986 (relating to foreign tax credit, etc.) is amended by 

12 adding at the end the following new section: 

13 ‘‘SEC. 30D. ADVANCED TECHNOLOGY MOTOR VEHICLES 

14 MANUFACTURING CREDIT. 

15 ‘‘(a) CREDIT ALLOWED.—There shall be allowed as 

16 a credit against the tax imposed by this chapter for the 

17 taxable year an amount equal to 35 percent of the quali18 fied investment of an eligible taxpayer for such taxable 

19 year. 

20 ‘‘(b) QUALIFIED INVESTMENT.—For purposes of this 

21 section— 

22 ‘‘(1) IN GENERAL.—The qualified investment 

23 for any taxable year is equal to the incremental costs 

24 incurred during such taxable year— 


bajohnson on PROD1PC77 with BILLS
36 

•S 162 IS

1 ‘‘(A) to re-equip, expand, or establish any 

2 manufacturing facility in the United States of 

3 the eligible taxpayer to produce advanced tech4 nology motor vehicles or to produce eligible 

5 components, 

6 ‘‘(B) for engineering integration performed 

7 in the United States of such vehicles and com8 ponents as described in subsection (d), 

9 ‘‘(C) for research and development per10 formed in the United States related to advanced 

11 technology motor vehicles and eligible compo12 nents, and 

13 ‘‘(D) for employee retraining with respect 

14 to the manufacturing of such vehicles or compo15 nents (determined without regard to wages or 

16 salaries of such retrained employees). 

17 ‘‘(2) ATTRIBUTION RULES.—In the event a fa18 cility of the eligible taxpayer produces both advanced 

19 technology motor vehicles and conventional motor 

20 vehicles, or eligible and non-eligible components, only 

21 the qualified investment attributable to production 

22 of advanced technology motor vehicles and eligible 

23 components shall be taken into account. 

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


bajohnson on PROD1PC77 with BILLS
37 

•S 162 IS

1 ‘‘(1) ADVANCED TECHNOLOGY MOTOR VEHI2 CLE.—The term ‘advanced technology motor vehicle’ 

3 means— 

4 ‘‘(A) any qualified electric vehicle (as de5 fined in section 30(c)(1)), 

6 ‘‘(B) any new qualified fuel cell motor ve7 hicle (as defined in section 30B(b)(3)), 

8 ‘‘(C) any new advanced lean burn tech9 nology motor vehicle (as defined in section 

10 30B(c)(3)), 

11 ‘‘(D) any new qualified hybrid motor vehi12 cle (as defined in section 30B(d)(2)(A) and de13 termined without regard to any gross vehicle 

14 weight rating), 

15 ‘‘(E) any new qualified alternative fuel 

16 motor vehicle (as defined in section 30B(e)(4), 

17 including any mixed-fuel vehicle (as defined in 

18 section 30B(e)(5)(B)), and 

19 ‘‘(F) any other motor vehicle using electric 

20 drive transportation technology (as defined in 

21 paragraph (3)). 

22 ‘‘(2) ELECTRIC DRIVE TRANSPORTATION TECH23 NOLOGY.—The term ‘electric drive transportation 

24 technology’ means technology used by vehicles that 

25 use an electric motor for all or part of their motive 


bajohnson on PROD1PC77 with BILLS
38 

•S 162 IS

1 power and that may or may not use off-board elec2 tricity, such as battery electric vehicles, fuel cell ve3 hicles, engine dominant hybrid electric vehicles, plug4 in hybrid electric vehicles, and plug-in hybrid fuel 

5 cell vehicles. 

6 ‘‘(3) ELIGIBLE COMPONENTS.—The term ‘eligi7 ble component’ means any component inherent to 

8 any advanced technology motor vehicle, including— 

9 ‘‘(A) with respect to any gasoline or diesel10 electric new qualified hybrid motor vehicle— 

11 ‘‘(i) electric motor or generator; 

12 ‘‘(ii) power split device; 

13 ‘‘(iii) power control unit; 

14 ‘‘(iv) power controls; 

15 ‘‘(v) integrated starter generator; or 

16 ‘‘(vi) battery; 

17 ‘‘(B) with respect to any hydraulic new 

18 qualified hybrid motor vehicle— 

19 ‘‘(i) accumulator or other energy stor20 age device; 

21 ‘‘(ii) hydraulic pump; 

22 ‘‘(iii) hydraulic pump-motor assembly; 

23 ‘‘(iv) power control unit; and 

24 ‘‘(v) power controls; 


bajohnson on PROD1PC77 with BILLS
39 

•S 162 IS

1 ‘‘(C) with respect to any new advanced 

2 lean burn technology motor vehicle— 

3 ‘‘(i) diesel engine; 

4 ‘‘(ii) turbo charger; 

5 ‘‘(iii) fuel injection system; or 

6 ‘‘(iv) after-treatment system, such as 

7 a particle filter or NOX absorber; and 

8 ‘‘(D) with respect to any advanced tech9 nology motor vehicle, any other component sub10 mitted for approval by the Secretary. 

11 ‘‘(4) ELIGIBLE TAXPAYER.—The term ‘eligible 

12 taxpayer’ means any taxpayer if more than 20 per13 cent of the taxpayer’s gross receipts for the taxable 

14 year is derived from the manufacture of motor vehi15 cles or any component parts of such vehicles. 

16 ‘‘(d) ENGINEERING INTEGRATION COSTS.—For pur17 poses of subsection (b)(1)(B), costs for engineering inte18 gration are costs incurred prior to the market introduction 

19 of advanced technology vehicles for engineering tasks re20 lated to— 

21 ‘‘(1) establishing functional, structural, and 

22 performance requirements for component and sub23 systems to meet overall vehicle objectives for a spe24 cific application, 


bajohnson on PROD1PC77 with BILLS
40 

•S 162 IS

1 ‘‘(2) designing interfaces for components and 

2 subsystems with mating systems within a specific ve3 hicle application, 

4 ‘‘(3) designing cost effective, efficient, and reli5 able manufacturing processes to produce components 

6 and subsystems for a specific vehicle application, 

7 and 

8 ‘‘(4) validating functionality and performance of 

9 components and subsystems for a specific vehicle ap10 plication. 

11 ‘‘(e) LIMITATION BASED ON AMOUNT OF TAX.—The 

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

13 shall not exceed the excess of— 

14 ‘‘(1) the sum of— 

15 ‘‘(A) the regular tax liability (as defined in 

16 section 26(b)) for such taxable year, plus 

17 ‘‘(B) the tax imposed by section 55 for 

18 such taxable year and any prior taxable year 

19 beginning after 1986 and not taken into ac20 count under section 53 for any prior taxable 

21 year, over 

22 ‘‘(2) the sum of the credits allowable under sub23 part A and sections 27, 30, and 30B for the taxable 

24 year. 


bajohnson on PROD1PC77 with BILLS
41 

•S 162 IS

1 ‘‘(f) REDUCTION IN BASIS.—For purposes of this 

2 subtitle, if a credit is allowed under this section for any 

3 expenditure with respect to any property, the increase in 

4 the basis of such property which would (but for this para5 graph) result from such expenditure shall be reduced by 

6 the amount of the credit so allowed. 

7 ‘‘(g) NO DOUBLE BENEFIT.— 

8 ‘‘(1) COORDINATION WITH OTHER DEDUCTIONS

9 AND CREDITS.—Except as provided in paragraph 

10 (2), the amount of any deduction or other credit al11 lowable under this chapter for any cost taken into 

12 account in determining the amount of the credit 

13 under subsection (a) shall be reduced by the amount 

14 of such credit attributable to such cost. 

15 ‘‘(2) RESEARCH AND DEVELOPMENT COSTS.— 

16 ‘‘(A) IN GENERAL.—Except as provided in 

17 subparagraph (B), any amount described in 

18 subsection (b)(1)(C) taken into account in de19 termining the amount of the credit under sub20 section (a) for any taxable year shall not be 

21 taken into account for purposes of determining 

22 the credit under section 41 for such taxable 

23 year. 

24 ‘‘(B) COSTS TAKEN INTO ACCOUNT IN DE25 TERMINING BASE PERIOD RESEARCH EXVerDate Aug 31 2005 05:06 Jan 14, 2007 Jkt 059200 PO 00000 Frm 00041 Fmt 6652 Sfmt 6201 E:\BILLS\S162.IS S162

bajohnson on PROD1PC77 with BILLS
42 

•S 162 IS

1 PENSES.—Any amounts described in subsection 

2 (b)(1)(C) taken into account in determining the 

3 amount of the credit under subsection (a) for 

4 any taxable year which are qualified research 

5 expenses (within the meaning of section 41(b)) 

6 shall be taken into account in determining base 

7 period research expenses for purposes of apply8 ing section 41 to subsequent taxable years. 

9 ‘‘(h) BUSINESS CARRYOVERS ALLOWED.—If the 

10 credit allowable under subsection (a) for a taxable year 

11 exceeds the limitation under subsection (e) for such tax12 able year, such excess (to the extent of the credit allowable 

13 with respect to property subject to the allowance for depre14 ciation) shall be allowed as a credit carryback to each of 

15 the 15 taxable years immediately preceding the unused 

16 credit year and as a carryforward to each of the 20 taxable 

17 years immediately following the unused credit year. 

18 ‘‘(i) SPECIAL RULES.—For purposes of this section, 

19 rules similar to the rules of section 179A(e)(4) and para20 graphs (1) and (2) of section 41(f) shall apply 

21 ‘‘(j) ELECTION NOT TO TAKE CREDIT.—No credit 

22 shall be allowed under subsection (a) for any property if 

23 the taxpayer elects not to have this section apply to such 

24 property. 


bajohnson on PROD1PC77 with BILLS
43 

•S 162 IS

1 ‘‘(k) REGULATIONS.—The Secretary shall prescribe 

2 such regulations as necessary to carry out the provisions 

3 of this section. 

4 ‘‘(l) TERMINATION.—This section shall not apply to 

5 any qualified investment after December 31, 2010.’’. 

6 (b) CONFORMING AMENDMENTS.— 

7 (1) Section 1016(a) of the Internal Revenue 

8 Code of 1986 is amended by striking ‘‘and’’ at the 

9 end of paragraph (36), by striking the period at the 

10 end of paragraph (37) and inserting ‘‘, and’’, and by 

11 adding at the end the following new paragraph: 

12 ‘‘(38) to the extent provided in section 

13 30D(g).’’. 

14 (2) Section 6501(m) of such Code is amended 

15 by inserting ‘‘30D(k),’’ after ‘‘30C(e)(5),’’. 

16 (3) The table of sections for subpart B of part 

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

18 amended by inserting after the item relating to sec19 tion 30C the following new item: 

‘‘Sec. 30D. Advanced technology motor vehicles manufacturing credit.’’. 

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

21 this section shall apply to amounts incurred in taxable 

22 years beginning after December 31, 1999. 


bajohnson on PROD1PC77 with BILLS
44 

•S 162 IS

1 TITLE II—USED OIL RE2 REFINING AND REUSE 

3 SEC. 201. DEFINITIONS. 

4 In this title: 

5 (1) ADMINISTRATOR.—The term ‘‘Adminis6 trator’’ means the Administrator of the Environ7 mental Protection Agency. 

8 (2) RE-REFINE.—The term ‘‘re-refine’’, with re9 spect to the treatment of used oil, means the process 

10 by which the physical and chemical contaminants 

11 contained in used oil as a result of previous use are 

12 removed to produce lubricating oil or another oil. 

13 (3) RE-REFINERY.—The term ‘‘re-refinery’’ 

14 means a plant or facility used for the purpose of re15 refining used oil. 

16 (4) REUSE.—The term ‘‘reuse’’, with respect to 

17 used oil, means any process by which oil is used 

18 after the original use of the oil, including through 

19 re-refining, reprocessing, or reclaiming. 

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

21 the Secretary of Energy. 

22 (6) USED OIL.—The term ‘‘used oil’’ means any 

23 oil that has been refined from crude oil, or any syn24 thetic oil, that is contaminated by a physical or 

25 chemical impurity as a result of the use of the oil. 


bajohnson on PROD1PC77 with BILLS
45 

•S 162 IS

1 SEC. 202. INFORMING PUBLIC. 

2 The Secretary shall develop a program under which 

3 the Secretary shall provide to the public information about 

4 the benefits of collecting, re-refining, and otherwise 

5 reusing used oil, including through— 

6 (1) the establishment of a website providing— 

7 (A) a description of the benefits of re-re8 fining or otherwise reusing used oil; 

9 (B) a list of used oil collection facilities, re10 refiners, and other entities that reuse used oil; 

11 and 

12 (C) links to State and local websites con13 taining other appropriate information; 

14 (2) publication and distribution of educational 

15 materials, in English and other languages, describ16 ing— 

17 (A) the benefits of collecting, re-refining, 

18 and otherwise reusing used oil; and 

19 (B) methods for ensuring the safe collec20 tion, storage, transportation, and reuse of used 

21 oil; and 

22 (3) submission to Congress and publication of 

23 an annual report describing measures carried out 

24 during the preceding calendar year to increase the 

25 collection, re-refining, and other reuse of used oil, 

26 including estimates of the energy resources saved, 


bajohnson on PROD1PC77 with BILLS
46 

•S 162 IS

1 and the quantity of emissions reduced, through 

2 those measures. 

3 SEC. 203. LABELING. 

4 Not later than January 1, 2009, the Secretary shall 

5 develop proposed guidelines, to take effect not later than 

6 January 1, 2010, for the labeling of re-refined lubricating 

7 oil, including establishment, and guidelines for use, of a 

8 re-refined label to be approved by the Secretary for lubri9 cating oil that— 

10 (1) meets industry standards as in effect on the 

11 date of enactment of this Act; and 

12 (2) contains base oil composed of not less than 

13 50 percent re-refined lubricating oil. 

14 SEC. 204. COLLECTION FACILITIES. 

15 The Secretary, in cooperation with the Administrator, 

16 shall establish— 

17 (1) guidelines for the collection of used oil by 

18 facilities in an environmentally safe manner; and 

19 (2) a process by which facilities may be certified 

20 to collect used oil as part of a national used oil col21 lection network. 

22 SEC. 205. INFORMATION EXCHANGE. 

23 (a) IN GENERAL.—The Secretary, in cooperation 

24 with the Administrator, shall develop a program to facili25 tate the exchange of information among State and local 


bajohnson on PROD1PC77 with BILLS
47 

•S 162 IS

1 agencies and the public concerning re-refining and other 

2 means of reusing used oil to enhance energy conservation 

3 and emissions reduction, including through— 

4 (1) the establishment of a clearinghouse for ap5 plicable data and reports; 

6 (2) the development of best management prac7 tices; and 

8 (3) the convening of periodic conferences relat9 ing to re-refining and other reuse of used oil. 

10 (b) RURAL AND FARMING COMMUNITIES.—In car11 rying out subsection (a), the Secretary shall ensure that— 

12 (1) opportunities for re-refining and other reuse 

13 of used oil in rural and farming communities are ap14 propriately considered; and 

15 (2) information regarding appropriate and cost16 effective measures to encourage those opportunities 

17 is made available to State and local agencies and the 

18 public. 

19 SEC. 206. USED OIL FROM FEDERAL AGENCIES. 

20 (a) IN GENERAL.—Not later than 2 years after the 

21 date of enactment of this Act, the Secretary, in consulta22 tion with the Administrator of General Services, shall pro23 mulgate regulations requiring all Federal agencies and de24 partments— 


bajohnson on PROD1PC77 with BILLS
48 

•S 162 IS

1 (1) to collect used oil produced by the agencies 

2 and departments, including used oil derived from 

3 federally owned and operated vehicles; and 

4 (2) to re-refine and reuse that used oil in ac5 cordance with the regulations. 

6 (b) REQUIREMENTS.—The regulations promulgated 

7 pursuant to subsection (a) shall establish a preference by 

8 the Federal Government in the use and disposal of used 

9 oil, in a manner that does not constitute a threat to public 

10 health or the environment and that conserves energy and 

11 materials to the maximum extent practicable— 

12 (1) first, for re-refining used oil, unless the re13 refining— 

14 (A) is not reasonably available; or 

15 (B) involves unreasonable costs compared 

16 to other methods of reuse; 

17 (2) second, for other reuse of used oil, including 

18 burning the used oil for energy recovery; and 

19 (3) third, for the disposal of used oil. 

20 SEC. 207. USED OIL IN SPACE HEATERS. 

21 (a) DEFINITION OF SPACE HEATER.—In this section, 

22 the term ‘‘space heater’’ means a heating device with a 

23 production capacity of at least 500,000 Btus per hour that 

24 is capable of burning used oil or other fuel. 


bajohnson on PROD1PC77 with BILLS
49 

•S 162 IS

1 (b) STUDY.—The Administrator shall conduct a 

2 study of the hazards to public health that the Adminis3 trator reasonably anticipates to occur as a result of emis4 sions covered by the Clean Air Act (42 U.S.C. 7401 et 

5 seq.) from space heaters that burn used oil, for energy 

6 recovery or other purposes. 

7 (c) REPORT.—Not later than 270 days after the date 

8 of enactment of this Act, the Administrator shall submit 

9 to Congress a report describing the results of the study 

10 under subsection (b), including— 

11 (1) a determination by the Administrator as to 

12 whether any category of new or existing space heat13 ers poses a risk to human health or the environment; 

14 and 

15 (2) a description of alternative control strate16 gies for space heater emissions that could require 

17 regulation under this section. 

18 SEC. 208. EXTENSION AND MODIFICATION OF ELECTION TO 

19 EXPENSE CERTAIN REFINERIES. 

20 (a) MODIFICATION OF DEFINITION OF QUALIFIED

21 REFINERY.— 

22 (1) IN GENERAL.—Subsection (d) of section 

23 179C of the Internal Revenue Code of 1986 is 

24 amended to read as follows: 


bajohnson on PROD1PC77 with BILLS
50 

•S 162 IS

1 ‘‘(d) QUALIFIED REFINERY.—For purposes of this 

2 section, the term ‘qualified refinery’ means any refinery 

3 located in the United States which is designed to serve 

4 the primary purpose of— 

5 ‘‘(1) processing liquid fuel from crude oil or 

6 qualified fuels (as defined in section 45K(c)), or 

7 ‘‘(2) processing non-virgin lube oil from used, 

8 refined products (including used lube oil originally 

9 derived from crude oil or qualified fuels).’’. 

10 (2) CONFORMING AMENDMENTS.— 

11 (A) Section 179C(e) of such Code amend12 ed— 

13 (i) in paragraph (1), by inserting ‘‘vir14 gin’’ before ‘‘lube oil’’, and 

15 (ii) in paragraph (2), by inserting ‘‘or 

16 other products from used refined prod17 ucts’’ and ‘‘section 45K(c))’’. 

18 (B) Section 179C(f)(1) of such Code is 

19 amended by inserting ‘‘virgin’’ before ‘‘lube oil 

20 facility’’. 

21 (b) SPECIAL RULE FOR QUALIFIED REFINERIES

22 PROCESSING USED PRODUCTS.—Paragraph (1) of section 

23 179C(c) of the Internal Revenue Code of 1986 is amended 

24 by adding at the end the following new paragraph: 


bajohnson on PROD1PC77 with BILLS
51 

•S 162 IS

1 ‘‘(4) SPECIAL RULE FOR QUALIFIED REFIN2 ERIES PROCESSING USED PRODUCTS.—In the case of 

3 a qualified refinery described in subsection (d)(2), 

4 paragraph (1) shall be applied— 

5 ‘‘(A) by substituting ‘2014’ for ‘2012’ in 

6 subparagraph (B), 

7 ‘‘(B) by substituting ‘January 4, 2007’ for 

8 ‘June 14, 2005’ in subparagraphs (E) and (F), 

9 and 

10 ‘‘(C) by substituting ‘2010’ for ‘2008’ each 

11 place it appears in subparagraph (F).’’. 

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

13 this section shall apply to property placed in service after 

14 the date of the enactment of this Act. 

15 SEC. 209. CREDIT FOR RE-REFINED LUBRICATING OIL 

16 FEEDSTOCK. 

17 (a) IN GENERAL.—Subpart B of part IV of sub18 chapter A of chapter 1 of the Internal Revenue Code of 

19 1986 (relating to other credits) is amended by adding at 

20 the end the following new section: 

21 ‘‘SEC. 30D. CREDIT FOR RE-REFINED LUBRICATING OIL 

22 FEEDSTOCK. 

23 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al24 lowed as a credit against the tax imposed by this chapter 

25 for the taxable year an amount equal to the product of— 


bajohnson on PROD1PC77 with BILLS
52 

•S 162 IS

1 ‘‘(1) 20 cents, and 

2 ‘‘(2) the excess of— 

3 ‘‘(A) number of gallons of qualified re-re4 fined lubricating oil feedstock sold by the tax5 payer to a qualified re-refined lubricating oil 

6 producer during the taxable year, over 

7 ‘‘(B) the highest number of gallons of 

8 qualified re-refined lubricating oil feedstock sold 

9 by the taxpayer to a qualified re-refined lubri10 cating oil producer in any preceding taxable 

11 year beginning after December 31, 2006. 

12 ‘‘(b) QUALIFIED RE-REFINED LUBRICATING OIL

13 FEEDSTOCK.—For purposes of this section— 

14 ‘‘(1) IN GENERAL.—The term ‘qualified re-re15 fined lubricating oil feedstock’ means used lubri16 cating oil which is certified by the qualified re-re17 fined lubricating oil producer to which it is sold as 

18 suitable for re-refining for use in engines. 

19 ‘‘(2) CERTIFICATIONS.— 

20 ‘‘(A) LIMITATION ON AMOUNT CER21 TIFIED.— 

22 ‘‘(i) IN GENERAL.—The amount of 

23 used lubricating oil which may be certified 

24 by a qualified re-refined lubricating oil pro25 ducer for any calendar year may not exVerDate Aug 31 2005 05:06 Jan 14, 2007 Jkt 059200 PO 00000 Frm 00052 Fmt 6652 Sfmt 6201 E:\BILLS\S162.IS S162

bajohnson on PROD1PC77 with BILLS
53 

•S 162 IS

1 ceed the refining capacity of such qualified 

2 re-refining lubricating oil producer for such 

3 calendar year. 

4 ‘‘(ii) NONCOMPLIANCE WITH POLLU5 TION LAWS.—For purposes of clause (i), 

6 under regulations prescribed by the Sec7 retary, the refining capacity of any refinery 

8 which is not in material compliance with 

9 the applicable State and Federal pollution 

10 prevention, control, and permit require11 ments for any period of time during a cal12 endar year shall be reduced in proportion 

13 to the period of time during which such re14 finery is not in material compliance with 

15 such requirements. 

16 ‘‘(B) REPORTS.—Each qualified re-refined 

17 lubricating oil producer shall file such reports 

18 regarding certifications as the Secretary may by 

19 regulations prescribe. 

20 ‘‘(c) QUALIFIED RE-REFINED LUBRICATING OIL

21 PRODUCER.—For purposes of this section, the term 

22 ‘qualified re-refined lubricating oil producer’ means any 

23 person who— 

24 ‘‘(1) produces a base oil manufactured from at 

25 least 95 percent used lubricating oil and not more 


bajohnson on PROD1PC77 with BILLS
54 

•S 162 IS

1 than 2 percent of previously unused lubricating oil 

2 by a re-refining process which effectively removes 

3 physical and chemical impurities and spent and 

4 unspent additives, and 

5 ‘‘(2) is registered with the Secretary as a quali6 fied re-refined lubricating oil producer.’’. 

7 (b) CLERICAL AMENDMENT.—The table of sections 

8 for subpart B of part IV of subchapter A of chapter 1 

9 of such Code is amended by inserting at the end the fol10 lowing new item: 

‘‘Sec. 30D. Credit for re-refined lubricating oil feedstock.’’. 

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

12 this section shall apply to production after the date of the 

13 enactment of this Act. 

Æ 


bajohnson on PROD1PC77 with BILLS