(v) Section 1400C(d)(2) is amended by 
striking ‘‘and 25D’’ and inserting ‘‘25D, and 
30D’’. 
(B) Section 1016(a) is amended by strik-
ing ‘‘and’’ at the end of paragraph (35), by 
striking the period at the end of paragraph (36) 
and inserting ‘‘, and’’, and by adding at the end 
the following new paragraph: 
‘‘(37) to the extent provided in section 
30D(e)(1).’’. 
(C) Section 6501(m) is amended by insert-
ing ‘‘30D(f)(4),’’ after ‘‘30C(e)(5),’’. 
(D) The table of sections for subpart B of 
part IV of subchapter A of chapter 1 is amend-
ed by adding at the end the following new item: 
‘‘Sec. 30D. New qualified plug-in electric drive motor vehicles.’’. 
(5) TREATMENT OF ALTERNATIVE MOTOR VE-
HICLE CREDIT AS A PERSONAL CREDIT.— 
(A) IN GENERAL.—Paragraph (2) of sec-
tion 30B(g) is amended to read as follows: 
‘‘(2) PERSONAL
CREDIT.—The credit allowed 
under subsection (a) for any taxable year (after ap-
plication of paragraph (1)) shall be treated as a 
credit allowable under subpart A for such taxable 
year.’’. 
(B) CONFORMING AMENDMENTS.— 
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(i) Subparagraph (A) of section 
30C(d)(2) is amended by striking ‘‘sections 
27, 30, and 30B’’ and inserting ‘‘sections 
27 and 30’’. 
(ii) Paragraph (3) of section 55(c) is 
amended by striking ‘‘30B(g)(2),’’. 
(6) EFFECTIVE DATE.— 
(A) IN
GENERAL.—Except as otherwise 
provided in this subsection, the amendments 
made by this section shall apply to taxable 
years beginning after December 31, 2008. 
(B) TREATMENT OF ALTERNATIVE MOTOR 
VEHICLE CREDIT AS PERSONAL CREDIT.—The 
amendments made by paragraph (5) shall apply 
to taxable years beginning after December 31, 
2007. 
(d) FLEXIBLE FUEL VEHICLE CREDIT.— 
(1) IN GENERAL.—Subpart B of part IV of 
subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 (relating to foreign tax credit, etc.), as 
amended by this Act, is amended by adding at the 
end the following new section: 
‘‘SEC. 30E. FLEXIBLE FUEL VEHICLE CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this chapter 
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for the taxable year an amount equal to the GEM flexible 
fuel vehicle credit. 
‘‘(b) GEM FLEXIBLE FUEL VEHICLE CREDIT.— 
‘‘(1) IN GENERAL.—For the purposes of sub-
section (a), the GEM flexible fuel vehicle credit de-
termined under this subsection for the taxable year 
is the credit amount determined under paragraph 
(2) with respect to a GEM flexible fuel vehicle 
placed in service by the taxpayer during the taxable 
year. 
‘‘(2) CREDIT AMOUNT.—In the case of a new 
qualified GEM flexible fuel vehicle which is a pas-
senger automobile or light truck and which has a 
gross vehicle weight rating of not more than 8,500 
pounds, the amount shall be $1,000. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) GEM
FLEXIBLE
FUEL
VEHICLE.—The 
term ‘GEM flexible fuel vehicle’ means a motor vehi-
cle warrantied by its manufacturer to operate on any 
combination of gasoline, E85, M85, biodiesel, and 
hydrogen and its blends. 
‘‘(2) E85.—The term ‘E85’ means a fuel blend 
containing 85 percent ethanol and 15 percent gaso-
line by volume. 
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‘‘(3) M85.—The term ‘M85’ means a fuel blend 
containing 85 percent methanol and 15 percent gas-
oline by volume.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part IV of subchapter A of 
chapter 1 of the Internal Revenue Code of 1986 (re-
lating to foreign tax credit, etc.), is amended by add-
ing at the end the following new item: 
‘‘Sec. 30E. Flexible fuel vehicle credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2006, in taxable years ending after such 
date. 
SEC. 302. ADVANCED TECHNOLOGY MOTOR VEHICLES MAN-
UFACTURING CREDIT. 
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to foreign tax credit, etc.) is amended by 
adding at the end the following new section: 
‘‘SEC. 30F. ADVANCED TECHNOLOGY MOTOR VEHICLES 
MANUFACTURING CREDIT. 
‘‘(a) CREDIT ALLOWED.—There shall be allowed as 
a credit against the tax imposed by this chapter for the 
taxable year an amount equal to the sum of— 
‘‘(1) in the case of a qualified investment of an 
eligible taxpayer for such taxable year relating to 
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new qualified plug-in electric drive motor vehicles, 
hybrid and clean burning vehicles, GEM flexible fuel 
vehicles, and fuel cell vehicles, 50 percent of so much 
of such qualified investment as does not exceed 
$150,000,000, and 
‘‘(2) in the case of any other qualified invest-
ment of an eligible taxpayer for such taxable year, 
35 percent of so much of such qualified investment 
as does not exceed $50,000,000. 
‘‘(b) QUALIFIED INVESTMENT.—For purposes of this 
section— 
‘‘(1) IN
GENERAL.—The qualified investment 
for any taxable year is equal to the incremental costs 
incurred during such taxable year— 
‘‘(A) to re-equip, expand, or establish any 
manufacturing facility of the eligible taxpayer 
to produce advanced technology motor vehicles 
or to produce eligible components, 
‘‘(B) for engineering integration of such 
vehicles and components as described in sub-
section (d), and 
‘‘(C) for research and development related 
to advanced technology motor vehicles and eligi-
ble components. 
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‘‘(2) ATTRIBUTION RULES.—In the event a fa-
cility of the eligible taxpayer produces both advanced 
technology motor vehicles and conventional motor 
vehicles, or eligible and non-eligible components, only 
the qualified investment attributable to production 
of advanced technology motor vehicles and eligible 
components shall be taken into account. 
‘‘(c) ADVANCED TECHNOLOGY MOTOR VEHICLES 
AND ELIGIBLE COMPONENTS.—For purposes of this sec-
tion— 
‘‘(1) ADVANCED
TECHNOLOGY
MOTOR
VEHI-
CLE.—The term ‘advanced technology motor vehicle’ 
means— 
‘‘(A) any new advanced lean burn tech-
nology motor vehicle (as defined in section 
30B(c)(3)), 
‘‘(B) any new qualified hybrid motor vehi-
cle (as defined in section 30B(d)(3)(A) and de-
termined without regard to any gross vehicle 
weight rating), 
‘‘(C) any new qualified plug-in electric 
drive motor vehicle (as defined in section 30D), 
‘‘(D) any new GEM flexible fuel vehicle, or 
‘‘(E) any new fuel cell vehicle. 
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‘‘(2) NEW FUEL CELL VEHICLE.—For purposes 
of this section, the term ‘new fuel cell vehicle’ means 
an on-road or nonroad vehicle that utilizes a fuel cell 
for propulsion or in combination with an on-board 
battery system (as defined in section 803 of the En-
ergy Policy Act of 2005 (42 U.S.C. 16152)). 
‘‘(3) ELIGIBLE COMPONENTS.—The term ‘eligi-
ble component’ means any component inherent to 
any advanced technology motor vehicle, including— 
‘‘(A) with respect to any gasoline or diesel- 
electric new qualified hybrid motor vehicle— 
‘‘(i) electric motor or generator, 
‘‘(ii) power split device, 
‘‘(iii) power control unit, 
‘‘(iv) power controls, 
‘‘(v) integrated starter generator, or 
‘‘(vi) battery, 
‘‘(B) with respect to any hydraulic new 
qualified hybrid motor vehicle— 
‘‘(i) hydraulic accumulator vessel, 
‘‘(ii) hydraulic pump, or 
‘‘(iii) hydraulic pump-motor assembly, 
‘‘(C) with respect to any new advanced 
lean burn technology motor vehicle— 
‘‘(i) diesel engine, 
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‘‘(ii) turbocharger, 
‘‘(iii) fuel injection system, or 
‘‘(iv) after-treatment system, such as 
a particle filter or NOx absorber, 
‘‘(D) with respect to any new qualified 
plug-in electric drive motor vehicle— 
‘‘(i) battery, 
‘‘(ii) electric motor or generator, 
‘‘(iii) any power control unit which is 
designed specifically for use in a new quali-
fied plug-in electric drive motor vehicle, 
and 
‘‘(E) with respect to any advanced tech-
nology motor vehicle, any other component sub-
mitted for approval by the Secretary. 
‘‘(d) ENGINEERING INTEGRATION COSTS.—For pur-
poses of subsection (b)(1)(B), costs for engineering inte-
gration are costs incurred prior to the market introduction 
of advanced technology vehicles for engineering tasks re-
lated to— 
‘‘(1) establishing functional, structural, and 
performance requirements for component and sub-
systems to meet overall vehicle objectives for a spe-
cific application, 
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‘‘(2) designing interfaces for components and 
subsystems with mating systems within a specific ve-
hicle application, 
‘‘(3) designing cost effective, efficient, and reli-
able manufacturing processes to produce components 
and subsystems for a specific vehicle application, 
and 
‘‘(4) validating functionality and performance of 
components and subsystems for a specific vehicle ap-
plication. 
‘‘(e) ELIGIBLE TAXPAYER.—For purposes of this sec-
tion, the term ‘eligible taxpayer’ means any taxpayer if 
more than 50 percent of its gross receipts for the taxable 
year is derived from the manufacture of motor vehicles 
or any component parts of such vehicles. 
‘‘(f) LIMITATION BASED ON AMOUNT OF TAX.—The 
credit allowed under subsection (a) for the taxable year 
shall not exceed the excess of— 
‘‘(1) the sum of— 
‘‘(A) the regular tax liability (as defined in 
section 26(b)) for such taxable year, plus 
‘‘(B) the tax imposed by section 55 for 
such taxable year and any prior taxable year 
beginning after 1986 and not taken into ac-
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count under section 53 for any prior taxable 
year, over 
‘‘(2) the sum of the credits allowable under sub-
part A and sections 27, 30, and 30B for the taxable 
year. 
‘‘(g) REDUCTION IN BASIS.—For purposes of this 
subtitle, if a credit is allowed under this section for any 
expenditure with respect to any property, the increase in 
the basis of such property which would (but for this para-
graph) result from such expenditure shall be reduced by 
the amount of the credit so allowed. 
‘‘(h) NO DOUBLE BENEFIT.— 
‘‘(1) COORDINATION WITH OTHER DEDUCTIONS 
AND
CREDITS.—Except as provided in paragraph 
(2), the amount of any deduction or other credit al-
lowable under this chapter for any cost taken into 
account in determining the amount of the credit 
under subsection (a) shall be reduced by the amount 
of such credit attributable to such cost. 
‘‘(2) RESEARCH AND DEVELOPMENT COSTS.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), any amount described in 
subsection (b)(1)(C) taken into account in de-
termining the amount of the credit under sub-
section (a) for any taxable year shall not be 
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taken into account for purposes of determining 
the credit under section 41 for such taxable 
year. 
‘‘(B) COSTS TAKEN INTO ACCOUNT IN DE-
TERMINING
BASE
PERIOD
RESEARCH
EX-
PENSES.—Any amounts described in subsection 
(b)(1)(C) taken into account in determining the 
amount of the credit under subsection (a) for 
any taxable year which are qualified research 
expenses (within the meaning of section 41(b)) 
shall be taken into account in determining base 
period research expenses for purposes of apply-
ing section 41 to subsequent taxable years. 
‘‘(i) BUSINESS CARRYOVERS ALLOWED.—If the cred-
it allowable under subsection (a) for a taxable year exceeds 
the limitation under subsection (f) for such taxable year, 
such excess (to the extent of the credit allowable with re-
spect to property subject to the allowance for depreciation) 
shall be allowed as a credit carryback and carryforward 
under rules similar to the rules of section 39. 
‘‘(j) SPECIAL RULES.—For purposes of this section, 
rules similar to the rules of paragraphs (4) and (5) of sec-
tion 179A(e) and paragraphs (1) and (2) of section 41(f) 
shall apply. 
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‘‘(k) ELECTION NOT TO TAKE CREDIT.—No credit 
shall be allowed under subsection (a) for any property if 
the taxpayer elects not to have this section apply to such 
property. 
‘‘(l) REGULATIONS.—The Secretary shall prescribe 
such regulations as necessary to carry out the provisions 
of this section.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1016(a) of the Internal Revenue 
Code of 1986 is amended by striking ‘‘and’’ at the 
end of paragraph (36), by striking the period at the 
end of paragraph (37) and inserting ‘‘, and’’, and by 
adding at the end the following new paragraph: 
‘‘(38) to the extent provided in section 
30F(g).’’. 
(2) Section 6501(m) of such Code is amended 
by inserting ‘‘30F(k),’’ after ‘‘30C(e)(5),’’. 
(3) The table of sections for subpart B of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 30E the following new item: 
‘‘Sec. 30F. Advanced technology motor vehicles manufacturing credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts incurred in taxable 
years beginning after December 31, 2006. 
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SEC. 303. PRODUCTION TAX CREDIT FOR ANY COMMERCIAL 
VEHICLE THAT ATTAINS AN EPA FUEL ECON-
OMY STANDARD OF 100 MPG. 
(a) IN GENERAL.— 
Subpart D of part IV of subchapter A of chap-
ter 1 is amended by adding at the end the following 
new section: 
‘‘SEC. 45Q. VEHICLES ATTAINING EPA FUEL ECONOMY 
STANDARD OF 100 MPG. 
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to 50 percent of the 
cost of manufacturing any motor vehicle placed in service 
by the taxpayer during the taxable year that achieves a 
fuel economy standard of 100 miles per gallon, as deter-
mined by the Administrator of the Environmental Protec-
tion Agency. 
‘‘(b) LIMITATION.—No credit shall be allowed under 
subsection (a) to the taxpayer after the 5th taxable year 
beginning after the taxable year in which the taxpayer 
manufacturers the first motor vehicle described in sub-
section (a). 
‘‘(c) DEFINITIONS AND SPECIAL RULES.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, rules similar to the rules of section 30B(h) 
shall apply. 
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‘‘(2) CONTROLLED GROUPS.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, all persons treated as a single employer 
under subsection (a) or (b) of section 52 or 
subsection (m) or (o) of section 414 shall be 
treated as a single manufacturer. 
‘‘(B) INCLUSION
OF
FOREIGN
CORPORA-
TIONS.—For purposes of subparagraph (A), in 
applying subsections (a) and (b) of section 52 
to this section, section 1563 shall be applied 
without regard to subsection (b)(2)(C) thereof. 
‘‘(3) MOTOR VEHICLE.—For purposes of this 
section, the term ‘motor vehicle’ means any vehicle 
which is manufactured primarily for use on public 
streets, roads, and highways (not including a vehicle 
operated exclusively on a rail or rails) and which has 
at least 4 wheels. 
‘‘(4) DENIAL
OF
DOUBLE
BENEFIT.—The 
amount of any deduction or other credit allowable 
under this chapter for any cost taken into account 
in determining the amount of the credit under sub-
section (a) shall be reduced by the amount of such 
credit attributable to such cost.’’. 
(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Section 38(b) is amended— 
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(1) by striking the period at the end of para-
graph (32) and inserting ‘‘, plus’’, and 
(2) by adding at the end the following new 
paragraph: 
‘‘(33) the credit to which section 30G applies.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 304. CREDIT FOR PRODUCTION OF CELLULOSIC 
BIOFUEL. 
(a) IN GENERAL.—Subsection (a) of section 40 is 
amended by striking ‘‘plus’’ at the end of paragraph (1), 
by striking ‘‘plus’’ at the end of paragraph (2), by striking 
the period at the end of paragraph (3) and inserting ‘‘, 
plus’’, and by adding at the end the following new para-
graph: 
‘‘(4) the cellulosic biofuel producer credit.’’. 
(b) CELLULOSIC BIOFUEL PRODUCER CREDIT.— 
(1) IN GENERAL.—Subsection (b) of section 40 
is amended by adding at the end the following new 
paragraph: 
‘‘(6) CELLULOSIC BIOFUEL PRODUCER CRED-
IT.— 
‘‘(A) IN GENERAL.—The cellulosic biofuel 
producer credit of any taxpayer is an amount 
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equal to the applicable amount for each gallon 
of qualified cellulosic biofuel production. 
‘‘(B) APPLICABLE AMOUNT.—For purposes 
of subparagraph (A), the applicable amount 
means $1.01, except that such amount shall, in 
the case of cellulosic biofuel which is alcohol, be 
reduced by the sum of— 
‘‘(i) the amount of the credit in effect 
for such alcohol under subsection (b)(1) 
(without regard to subsection (b)(3)) at 
the time of the qualified cellulosic biofuel 
production, plus 
‘‘(ii) in the case of ethanol, the 
amount of the credit in effect under sub-
section (b)(4) at the time of such produc-
tion. 
‘‘(C) QUALIFIED
CELLULOSIC
BIOFUEL 
PRODUCTION.—For purposes of this section, 
the term ‘qualified cellulosic biofuel production’ 
means any cellulosic biofuel which is produced 
by the taxpayer, and which during the taxable 
year— 
‘‘(i) is sold by the taxpayer to another 
person— 
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‘‘(I) for use by such other person 
in the production of a qualified cel-
lulosic biofuel mixture in such other 
person’s trade or business (other than 
casual off-farm production), 
‘‘(II) for use by such other per-
son as a fuel in a trade or business, 
or 
‘‘(III) who sells such cellulosic 
biofuel at retail to another person and 
places such cellulosic biofuel in the 
fuel tank of such other person, or 
‘‘(ii) is used or sold by the taxpayer 
for any purpose described in clause (i). 
The qualified cellulosic biofuel production of 
any taxpayer for any taxable year shall not in-
clude any alcohol which is purchased by the 
taxpayer and with respect to which such pro-
ducer increases the proof of the alcohol by addi-
tional distillation. 
‘‘(D) QUALIFIED
CELLULOSIC
BIOFUEL 
MIXTURE.—For purposes of this paragraph, the 
term ‘qualified cellulosic biofuel mixture’ means 
a mixture of cellulosic biofuel and gasoline or of 
cellulosic biofuel and a special fuel which— 
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‘‘(i) is sold by the person producing 
such mixture to any person for use as a 
fuel, or 
‘‘(ii) is used as a fuel by the person 
producing such mixture. 
‘‘(E) CELLULOSIC
BIOFUEL.—For pur-
poses of this paragraph— 
‘‘(i) IN
GENERAL.—The term ‘cel-
lulosic biofuel’ means any liquid fuel 
which— 
‘‘(I) 
is 
produced 
from 
any 
lignocellulosic or hemicellulosic matter 
that is available on a renewable or re-
curring basis, and 
‘‘(II) meets the registration re-
quirements for fuels and fuel additives 
established by the Environmental Pro-
tection Agency under section 211 of 
the Clean Air Act (42 U.S.C. 7545). 
‘‘(ii) EXCLUSION OF LOW-PROOF AL-
COHOL.—Such term shall not include any 
alcohol with a proof of less than 150. The 
determination of the proof of any alcohol 
shall be made without regard to any added 
denaturants. 
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‘‘(F) 
ALLOCATION
OF
CELLULOSIC 
BIOFUEL PRODUCER CREDIT TO PATRONS OF 
COOPERATIVE.—Rules similar to the rules 
under subsection (g)(6) shall apply for purposes 
of this paragraph. 
‘‘(G) REGISTRATION
REQUIREMENT.—No 
credit shall be determined under this paragraph 
with respect to any taxpayer unless such tax-
payer is registered with the Secretary as a pro-
ducer of cellulosic biofuel under section 4101. 
‘‘(H) APPLICATION OF PARAGRAPH.—This 
paragraph shall apply with respect to qualified 
cellulosic biofuel production after December 31, 
2008.’’. 
(2) TERMINATION DATE NOT TO APPLY.—Sub-
section (e) of section 40 is amended— 
(A) by inserting ‘‘or subsection (b)(6)(H)’’ 
after ‘‘by reason of paragraph (1)’’ in para-
graph (2), and 
(B) by adding at the end the following new 
paragraph: 
‘‘(3) EXCEPTION
FOR
CELLULOSIC
BIOFUEL 
PRODUCER CREDIT.—Paragraph (1) shall not apply 
to the portion of the credit allowed under this sec-
tion by reason of subsection (a)(4).’’. 
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(3) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 4101(a) is 
amended— 
(i) by striking ‘‘and every person’’ and 
inserting ‘‘, every person’’, and 
(ii) by inserting ‘‘, and every person 
producing cellulosic biofuel (as defined in 
section 
40(b)(6)(E))’’ 
after 
‘‘section 
6426(b)(4)(A))’’. 
(B) The heading of section 40, and the 
item relating to such section in the table of sec-
tions for subpart D of part IV of subchapter A 
of chapter 1, are each amended by inserting ‘‘, 
etc.,’’ after ‘‘Alcohol’’. 
(c) BIOFUEL NOT USED AS A FUEL, ETC.— 
(1) IN
GENERAL.—Paragraph (3) of section 
40(d) is amended by redesignating subparagraph 
(D) as subparagraph (E) and by inserting after sub-
paragraph (C) the following new subparagraph: 
‘‘(D) CELLULOSIC
BIOFUEL
PRODUCER 
CREDIT.—If— 
‘‘(i) any credit is allowed under sub-
section (a)(4), and 
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‘‘(ii) any person does not use such 
fuel for a purpose described in subsection 
(b)(6)(C), 
then there is hereby imposed on such person a 
tax equal to the applicable amount (as defined 
in subsection (b)(6)(B)) for each gallon of such 
cellulosic biofuel.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Subparagraph (C) of section 40(d)(3) 
is amended by striking ‘‘PRODUCER’’ in the 
heading and inserting ‘‘SMALL ETHANOL PRO-
DUCER’’. 
(B) Subparagraph (E) of section 40(d)(3), 
as redesignated by paragraph (1), is amended 
by striking ‘‘or (C)’’ and inserting ‘‘(C), or 
(D)’’. 
(d) BIOFUEL PRODUCED IN THE UNITED STATES.— 
Section 40(d) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(6) SPECIAL RULE FOR CELLULOSIC BIOFUEL 
PRODUCER CREDIT.—No cellulosic biofuel producer 
credit shall be determined under subsection (a) with 
respect to any cellulosic biofuel unless such cellulosic 
biofuel is produced in the United States and used as 
a fuel in the United States. For purposes of this 
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subsection, the term ‘United States’ includes any 
possession of the United States.’’. 
(e) WAIVER
OF CREDIT LIMIT
FOR CELLULOSIC 
BIOFUEL
PRODUCTION
BY
SMALL
ETHANOL
PRO-
DUCERS.—Section 40(b)(4)(C) is amended by inserting 
‘‘(determined without regard to any qualified cellulosic 
biofuel production)’’ after ‘‘15,000,000 gallons’’. 
(f) DENIAL OF DOUBLE BENEFIT.— 
(1) BIODIESEL.—Paragraph (1) of section 
40A(d) is amended by adding at the end the fol-
lowing new flush sentence: 
‘‘Such term shall not include any liquid with respect 
to which a credit may be determined under section 
40.’’. 
(2) RENEWABLE
DIESEL.—Paragraph (3) of 
section 40A(f) is amended by adding at the end the 
following new flush sentence: 
‘‘Such term shall not include any liquid with respect 
to which a credit may be determined under section 
40.’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to fuel produced after December 
31, 2008. 
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SEC. 305. ESTABLISH A PERMANENT PRODUCTION TAX 
CREDIT FOR HYDROGEN FUELS. 
(a) 
HYDROGEN
INFRASTRUCTURE
AND
FUEL 
COSTS.— 
(1) IN GENERAL.—Subpart B of part IV of 
subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 (relating to foreign tax credit, etc.) is 
amended by adding at the end the following new sec-
tion: 
‘‘SEC. 
30G. 
HYDROGEN 
INFRASTRUCTURE 
AND 
FUEL 
COSTS. 
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the sum of— 
‘‘(1) the hydrogen infrastructure costs credit 
determined under subsection (b), and 
‘‘(2) the hydrogen fuel costs credit determined 
under subsection (c). 
‘‘(b) HYDROGEN INFRASTRUCTURE COSTS CRED-
IT.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), the hydrogen infrastructure costs credit deter-
mined under this subsection with respect to each eli-
gible hydrogen production and distribution facility of 
the taxpayer is an amount equal to 30 percent of so 
much of the infrastructure costs for the taxable year 
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as does not exceed $200,000 with respect to such fa-
cility. 
‘‘(2) ELIGIBLE
HYDROGEN
PRODUCTION
AND 
DISTRIBUTION FACILITY.—For purposes of this sub-
section, the term ‘eligible hydrogen production and 
distribution facility’ means a hydrogen production 
and distribution facility which is placed in service 
after December 31, 2005. 
‘‘(c) HYDROGEN FUEL COSTS CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), the hydrogen fuel costs credit determined under 
this subsection with respect to each eligible hydrogen 
device of the taxpayer is an amount equal to the 
qualified hydrogen expenditure amounts with respect 
to such device. 
‘‘(2) QUALIFIED
HYDROGEN
EXPENDITURE 
AMOUNT.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
hydrogen expenditure amount’ means, with re-
spect to each eligible hydrogen energy conver-
sion device of the taxpayer with a production 
capacity of not more than 25 kilowatts of elec-
tricity, the lesser of— 
‘‘(i) 30 percent of the amount paid or 
incurred by the taxpayer during the tax-
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able year for hydrogen which is consumed 
by such device, and 
‘‘(ii) $2,000. 
In the case of any device which is not owned by 
the taxpayer at all times during the taxable 
year, the $2,000 amount in clause (ii) shall be 
reduced by an amount which bears the same 
ratio to $2,000 as the portion of the year which 
such device is not owned by the taxpayer bears 
to the entire year. 
‘‘(B) HIGHER
LIMITATION
FOR
DEVICES 
WITH
MORE
PRODUCTION
CAPACITY.—In the 
case of any eligible hydrogen energy conversion 
device with a production capacity of— 
‘‘(i) more than 25 but less than 100 
kilowatts of electricity, subparagraph (A) 
shall be applied by substituting ‘$4,000’ 
for ‘$2,000’ each place it appears, and 
‘‘(ii) not less than 100 kilowatts of 
electricity, subparagraph (A) shall be ap-
plied by substituting ‘$6,000’ for ‘$2,000’ 
each place it appears. 
‘‘(3) ELIGIBLE
HYDROGEN
ENERGY
CONVER-
SION DEVICES.—For purposes of this subsection— 
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‘‘(A) IN GENERAL.—The term ‘eligible hy-
drogen energy conversion device’ means, with 
respect to any taxpayer, any hydrogen energy 
conversion device which— 
‘‘(i) is placed in service after Decem-
ber 31, 2004, and 
‘‘(ii) is wholly owned by the taxpayer 
during the taxable year. 
If an owner of a device (determined without re-
gard to this subparagraph) provides to the pri-
mary user of such device a written statement 
that such user shall be treated as the owner of 
such device for purposes of this section, then 
such user (and not such owner) shall be so 
treated. 
‘‘(B) HYDROGEN
ENERGY
CONVERSION 
DEVICE.—The term ‘hydrogen energy conver-
sion device’ means— 
‘‘(i) any electrochemical device which 
converts hydrogen into electricity, and 
‘‘(ii) any combustion engine which 
burns hydrogen as a fuel. 
‘‘(d) REDUCTION IN BASIS.—For purposes of this 
subtitle, if a credit is allowed under this section for any 
expenditure with respect to any property, the increase in 
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the basis of such property which would (but for this para-
graph) result from such expenditure shall be reduced by 
the amount of the credit so allowed. 
‘‘(e) APPLICATION WITH OTHER CREDITS.— 
‘‘(1) BUSINESS CREDIT TREATED AS PART OF 
GENERAL BUSINESS CREDIT.—So much of the credit 
which would be allowed under subsection (a) for any 
taxable year (determined without regard to this sub-
section) that is attributable to amounts which (but 
for subsection (g) would be allowed as a deduction 
under section 162 shall be treated as a credit listed 
in section 38(b) for such taxable year (and not al-
lowed under subsection (a)). 
‘‘(2) PERSONAL
CREDIT.—The credit allowed 
under subsection (a) (after the application of para-
graph (1)) for any taxable year shall not exceed the 
excess (if any) of— 
‘‘(A) the regular tax liability (as defined in 
section 26(b)) reduced by the sum of the credits 
allowable under subpart A and sections 27, 30, 
30B, and 30C, over 
‘‘(B) the tentative minimum tax for the 
taxable year. 
‘‘(f) DENIAL OF DOUBLE BENEFIT.—The amount of 
any deduction or other credit allowable under this chapter 
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for any cost taken into account in determining the amount 
of the credit under subsection (a) shall be reduced by the 
amount of such credit attributable to such cost. 
‘‘(g) RECAPTURE.—The Secretary shall, by regula-
tions, provided for recapturing the benefit of any credit 
allowable under subsection (a) with respect to any prop-
erty which ceases to be property eligible for such credit. 
‘‘(h) ELECTION NOT TO TAKE CREDIT.—No credit 
shall be allowed under subsection (a) for any property if 
the taxpayer elects not to have this section apply to such 
property. 
‘‘(i) REGULATIONS.—The Secretary shall prescribe 
such regulations as necessary to carry out the provisions 
of this section.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 38(b) of the Internal Revenue 
Code of 1986 is amended by striking ‘‘plus’’ at 
the end of paragraph (32), by striking the pe-
riod at the end of paragraph (33) and inserting 
‘‘plus’’, and by adding at the end the following 
new paragraph: 
‘‘(34) the portion of the hydrogen infrastruc-
ture and fuel credit to which section 30D(e)(1) ap-
plies.’’. 
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(B) Section 55(c)(3) of such Code is 
amended 
by 
inserting 
‘‘30D(e)(2),’’ 
after 
‘‘30C(d)(2),’’. 
(C) Section 1016(a) of such Code is 
amended by striking ‘‘and’’ at the end of para-
graph (37), by striking the period at the end of 
paragraph (38) and inserting ‘‘, and’’, and by 
adding at the end the following new paragraph: 
‘‘(39) to the extent provided in section 
30G(d).’’. 
(D) Section 6501(m) of such Code is 
amended 
by 
inserting 
‘‘30D(h),’’ 
after 
‘‘30C(e)(5),’’. 
(E) The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of such 
Code is amended by inserting after the item re-
lating to section 30C the following new item: 
‘‘Sec. 30G. Hydrogen infrastructure and fuel costs.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this section shall apply to amounts paid or in-
curred after December 31, 2007, in taxable years 
ending after such date. 
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SEC. 306. RATE OF CREDIT FOR ALTERNATIVE FUEL VEHI-
CLE 
REFUELING 
PROPERTY 
INCREASED 
FROM 30 TO 60 PERCENT. 
(a) IN GENERAL.—Subsection (a) of section 30C of 
such Code is amended by striking ‘‘30 percent’’ and in-
serting ‘‘60 percent’’. 
(b) REPEAL OF TERMINATION.—Section 30C of such 
Code is amended by striking subsection (q). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act. 
SEC. 307. USE OF CAFE´
PENALTIES TO SUPPORT THE 
CLEAN CITIES INITIATIVE. 
Section 32912 of title 49, United States Code, is 
amended by adding at the end the following: 
‘‘(e) PETROLEUM REDUCTION TRUST FUND.—(1) 
There is established in the Treasury of the United States 
a trust fund, to be known as the Petroleum Reduction 
Trust Fund, consisting of such amounts as are deposited 
into the Trust Fund under paragraph (2) and any interest 
earned on investment of amounts in the Trust Fund. 
‘‘(2) The Secretary of Transportation shall remit 90 
percent of the amount collected in civil penalties under 
this section to the Trust Fund. 
‘‘(3) The Secretary of Energy may obligate such 
sums as are available in the Trust Fund for the Clean 
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Cities grant program to increase the number of locations 
at which consumers may purchase fuel containing ethanol, 
biodiesel, and other alternative fuels.’’. 
SEC. 308. EXCLUSION FROM HEAVY TRUCK TAX FOR IDLING 
REDUCTION UNITS AND ADVANCED INSULA-
TION. 
(a) IN GENERAL.—Section 4053 is amended by add-
ing at the end the following new paragraphs: 
‘‘(9) IDLING REDUCTION DEVICE.—Any device 
or system of devices which 
‘‘(A) is designed to provide to a vehicle 
those services (such as heat, air conditioning, or 
electricity) that would otherwise require the op-
eration of the main drive engine while the vehi-
cle is temporarily parked or remains stationary 
using one or more devices affixed to a tractor, 
and 
‘‘(B) is certified by the Secretary of En-
ergy, in consultation with the Administrator of 
the Environmental Protection Agency and the 
Secretary of Transportation, to reduce idling of 
such vehicle at a motor vehicle rest stop or 
other location where such vehicles are tempo-
rarily parked or remain stationary. 
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‘‘(10) ADVANCED INSULATION.—Any insulation 
that has an R value of not less than R35 per inch.’’. 
(b) MAINTENANCE
OF TRUST FUNDS DEPOSITS; 
AMOUNTS APPROPRIATED TO TRUST FUND TREATED AS 
TAXES.— 
(1) IN
GENERAL.—There is hereby appro-
priated (out of any money in the Treasury not other-
wise appropriated) to the Highway Trust Fund 
which would (but for this subsection) receive reduced 
revenues as a result of the amendment made by sub-
section (a) an amount equal to such reduction in 
revenues. Amounts appropriated by the preceding 
sentence to any trust fund— 
(A) shall be transferred from the general 
fund at such times and in such manner as to 
replicate to the extent possible the transfers 
which would have occurred had subsection (a) 
not been enacted, and 
(B) shall be treated for all purposes of 
Federal law as taxes received under section 
4051 of the Internal Revenue Code of 1986. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to sales or installations after the 
date of the enactment of this Act. 
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SEC. 
309. 
ADVANCED 
HYDROGEN 
STORAGE 
TECH-
NOLOGIES. 
(a) IN GENERAL.—The Secretary shall carry out a 
program of research, development, demonstration, and 
commercial application for technologies to enable practical 
onboard storage of hydrogen for use as a fuel for light- 
duty motor vehicles. 
(b) OBJECTIVE.—The Secretary shall design the pro-
gram under this section to develop practical hydrogen 
storage technologies that would enable a hydrogen-fueled 
light-duty motor vehicle to travel 300 miles before refuel-
ing. 
SEC. 310. PLUG-IN ELECTRIC DRIVE VEHICLE TECHNOLOGY 
PROGRAM. 
(a) BATTERY.—In this section, the term ‘‘battery’’ 
means a device or system for the electrochemical storage 
of energy. 
(b) PROGRAM.—The Secretary of Energy shall con-
duct a program of research, development, demonstration, 
and commercial application on technologies needed for the 
development of plug-in electric drive vehicles including— 
(1) high capacity, high efficiency batteries, to— 
(A) improve battery life, energy storage ca-
pacity, and power delivery capacity, and lower 
cost; and 
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(B) minimize waste and hazardous mate-
rial production in the entire value chain, includ-
ing after the end of the useful life of the bat-
teries; 
(2) high efficiency onboard and offboard charg-
ing components; 
(3) high power drive train systems for pas-
senger and commercial vehicles and for supporting 
equipment; 
(4) onboard energy management systems, power 
trains, and systems integration for plug-in electric 
drive vehicles, flexible fuel vehicles, and hybrid and 
lean burn vehicles, including efficient cooling sys-
tems and systems that minimize the emissions pro-
file of such vehicles; and 
(5) lightweight materials, including research, 
development, demonstration, and commercial appli-
cation to reduce the cost of materials such as steel 
alloys and carbon fibers. 
(c) PLUG-IN
ELECTRIC
DRIVE
VEHICLE
DEM-
ONSTRATION PROGRAM.— 
(1) ESTABLISHMENT.—The Secretary shall es-
tablish a competitive grant pilot demonstration pro-
gram to provide not more than 25 grants annually 
to State governments, local governments and public 
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entities, metropolitan transportation authorities, or 
combinations thereof to carry out a project or 
projects for demonstration of plug-in electric drive 
vehicles. 
(2) APPLICATIONS.— 
(A) REQUIREMENTS.—The Secretary shall 
issue requirements for applying for grants 
under the demonstration pilot program. The 
Secretary shall require that applications, at a 
minimum, include a description of how data will 
be— 
(i) collected on the— 
(I) performance of the vehicle or 
vehicles and the components, includ-
ing the battery, energy management, 
and charging systems, under various 
driving speeds, trip ranges, traffic, 
and other driving conditions; 
(II) costs of the vehicle or vehi-
cles, including acquisition, operating, 
and maintenance costs, and how the 
project or projects will be self-sus-
taining after Federal assistance is 
completed; and 
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(III) emissions of the vehicle or 
vehicles, including greenhouse gases, 
and the amount of petroleum dis-
placed as a result of the project or 
projects; and 
(ii) summarized for dissemination to 
the Department, other grantees, and the 
public. 
(B) PARTNERS.—An applicant under sub-
paragraph (A) may carry out a project or 
projects under the pilot program in partnership 
with one or more private or nonprofit entities, 
which may include institutions of higher edu-
cation, including Historically Black Colleges 
and Universities, Hispanic Serving Institutions, 
and other minority-serving institutions. 
(3) SELECTION CRITERIA.— 
(A) PREFERENCE.—When making awards 
under this subsection, the Secretary shall con-
sider each applicant’s previous experience in-
volving plug-in electric drive vehicles and shall 
give preference to proposals that— 
(i) provide the greatest demonstration 
per award dollar, with preference increas-
ing as the number of miles that a plug-in 
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hybrid electric vehicle can be propelled 
solely on electric power under city driving 
conditions increases; and 
(ii) maximize the non-Federal share of 
project funding and demonstrate the great-
est likelihood that each project proposed in 
the application will be maintained or ex-
panded after Federal assistance under this 
subsection is completed. 
(B) BREADTH OF DEMONSTRATIONS.—In 
awarding grants under this subsection, the Sec-
retary shall ensure the program will dem-
onstrate plug-in electric drive vehicles under 
various circumstances, including— 
(i) driving speeds; 
(ii) trip ranges; 
(iii) driving conditions; 
(iv) climate conditions; and 
(v) topography, 
to optimize understanding and function of plug- 
in hybrid electric vehicles. 
(4) PILOT PROJECT REQUIREMENTS.— 
(A) SUBSEQUENT FUNDING.—An applicant 
that has received a grant in one year may apply 
for additional funds in subsequent years, but 
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the Secretary shall not provide more than 
$10,000,000 in Federal assistance under the 
pilot program to any applicant for the period 
encompassing fiscal years 2007 through fiscal 
year 2011. 
(B) INFORMATION.—The Secretary shall 
establish mechanisms to ensure that the infor-
mation and knowledge gained by participants in 
the pilot program are shared among the pilot 
program participants and are available to other 
interested parties, including other applicants. 
(5) AWARD AMOUNTS.—The Secretary shall de-
termine grant amounts, but the maximum size of 
grants shall decline as the cost of producing plug-in 
electric drive vehicles declines or the cost of con-
verting a hybrid electric vehicle to a plug-in electric 
drive vehicle declines. 
(d) COST SHARING.—The Secretary shall carry out 
the program under this section in compliance with section 
988(a) through (d) and section 989 of the Energy Policy 
Act of 2005 (42 U.S.C. 16352(a) through (d) and 16353). 
(e) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to the Secretary— 
(1) 
for 
carrying 
out 
subsection 
(c), 
$100,000,000 for fiscal year 2008 and such sums as 
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may be necessary for each of the fiscal years 2009 
through 2011; and 
(2) 
for 
carrying 
out 
subsection 
(d), 
$50,000,000 for fiscal year 2008 and such sums as 
may be necessary for each of the fiscal years 2009 
through 2011. 
TITLE 
IV—REDUCING 
CON-
SUMER ENERGY AND GASO-
LINE COSTS 
SEC. 401. REFUNDABLE EMPLOYER CREDIT FOR PRO-
VIDING TAX-FREE TRANSIT PASSES TO EM-
PLOYEES. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to refundable credits) is amended by insert-
ing after section 35 the following new section: 
‘‘SEC. 35A. EMPLOYERS PROVIDING TAX-FREE TRANSIT 
PASSES TO EMPLOYEES. 
‘‘(a) IN GENERAL.—In the case of an employer, there 
shall be allowed as a credit against the tax imposed by 
this subtitle for the taxable year an amount equal to 50 
percent of the amount paid or incurred by the taxpayer 
during the taxable year— 
‘‘(1) for transit passes provided to employees of 
such employer, and 
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‘‘(2) as cash reimbursements made to such em-
ployees for transit passes purchased by such employ-
ees. 
‘‘(b) LIMITATION TO TAX-FREE TRANSIT PASSES.— 
Subsection (a) shall apply to a transit pass (or reimburse-
ment) provided to an employee only to the extent that the 
employer reasonably expects that the value of such pass 
(or the amount of such reimbursement) is excludable from 
such employee’s income under section 132. 
‘‘(c) EXCLUSION
OF NONTAXPAYERS.—Subsection 
(a) shall not apply to any employer which is exempt from 
the tax imposed by this chapter with respect to the activity 
in which the employee is performing services for the em-
ployer. 
‘‘(d) DEFINITIONS.—Terms used in this section shall 
have the respective meanings given such terms by section 
132.’’. 
(b) DENIAL OF DOUBLE BENEFIT.—Section 280C of 
such Code is amended by adding at the end the following 
new subsection: 
‘‘(g) EMPLOYER CREDIT FOR PROVIDING TAX-FREE 
TRANSIT PASSES TO EMPLOYEES.—No deduction shall be 
allowed for that portion of the expenses (otherwise allow-
able as a deduction) taken into account in determining the 
credit under section 35A for the taxable year which is 
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equal to the amount of the credit allowable for such tax-
able year under section 35A(a).’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for such subpart C is amended by inserting after the item 
relating to section 35 the following new item: 
‘‘Sec. 35A. Employers providing tax-free transit passes to employees.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transit passes provided after the 
date of the enactment of this Act in taxable years ending 
after such date. 
SEC. 402. REDUCTION IN NUMBER OF BOUTIQUE FUELS. 
Section 211(c)(4)(C) of the Clean Air Act (42 U.S.C. 
7545(c)(4)(C)) is amended as follows: 
(1) By redesignating the clause (v) added by 
section 1541(b) of the Energy Policy Act of 2005 
(Public Law 109–58; 119 Stat. 1106) as clause (vi). 
(2) In clause (vi) (as so redesignated)— 
(A) in subclause (I) by striking ‘‘approved 
under this paragraph as of September 1, 2004, 
in all State implementation plans’’ and by in-
serting in lieu there of ‘‘set forth on the list 
published under subclause (II) (or on the re-
vised list referred to in subclause (III) if the list 
has been revised)’’; 
(B) by amending subclause (III) to read as 
follows: 
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‘‘(III) The Administrator shall, after notice 
and opportunity for comment, remove a fuel 
from the list published under subclause (II) if 
the Administrator determines that such fuel has 
ceased to be included in any State implementa-
tion plan or is identical to a Federal fuel con-
trol or prohibition promulgated and imple-
mented by the Administrator. The Adminis-
trator shall publish a revised list reflecting the 
reduction in the number of fuels.’’; and 
(C) by amending subclause (IV) to read as 
follows: 
‘‘(IV) Subclause (I) shall not 
limit the Administrator’s author-
ity to approve a control or prohi-
bition respecting any new fuel 
under this paragraph in a State 
implementation plan or revision 
to a State implementation plan if 
such new fuel completely replaces 
a fuel on the list published under 
subclause (II) (or the revised list 
referred to in subclause (III) if 
the list has been revised) and if 
the Administrator, after consulta-
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tion with the Secretary of En-
ergy, publishes in the Federal 
Register after notice and com-
ment a finding that, in the Ad-
ministrator’s judgment, such con-
trol or prohibition respecting 
such new fuel will not cause fuel 
supply or distribution interrup-
tions or have a significant ad-
verse impact on fuel producibility 
in the affected area or contiguous 
areas.’’. 
SEC. 403. GREEN SCHOOLS GRANT PROGRAM. 
(a) ESTABLISHMENT.—From the amounts appro-
priated under subsection (c), the Administrator of the En-
vironmental Protection Agency shall establish a program 
to make grants of not more than $10,000 to local edu-
cational agencies that meet the matching-funds require-
ment in subsection (b) for each green school construction 
and improvement project. 
(b) MATCHING FUNDS.—To be eligible to receive a 
grant under subsection (a), a local educational agency 
shall fund at least 50 percent of the costs of the project 
described in subsection (a) with non-Federal sources. 
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(c) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to the Administrator of 
the Environmental Protection Agency for carrying out this 
section, $5,000,000 for each of the fiscal years 2009 
through 2013. 
(d) DEFINITIONS.—For purposes of this section— 
(1) the term ‘‘green school construction and im-
provements’’ means construction methods, systems, 
technologies, or facility improvements that create a 
healthy learning environment while saving natural 
resources and money, including— 
(A) sustainable site improvements; 
(B) water conservation strategies or sys-
tems; 
(C) energy conservation strategies or sys-
tems; 
(D) sustainable materials, including low- 
emitting, reused, recycled, regionally harvested, 
and rapidly renewable materials; and 
(E) strategies or systems that improve in-
door environmental quality, including improve-
ments to acoustics, ventilation, thermal com-
fort, daylighting, and mold prevention; and 
(2) the term ‘‘local educational agency’’ has the 
meaning given that term in section 9101 of the Ele-
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mentary and Secondary Education Act of 1965 (20 
U.S.C. 7801). 
SEC. 404. EXTENSION AND GREENING OF QUALIFIED ZONE 
ACADEMY BONDS. 
(a) EXTENSION.—Paragraph (1) of 1397E(e) of the 
Internal Revenue Code of 1986 (relating to limitation on 
amount of bonds designated) is amended by striking 
‘‘1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 
and 2007’’ and inserting ‘‘each of calendar years 1998 
through 2012’’. 
(b) GREENING.—Paragraph (5) of section 1397E(d) 
of such Code (defining qualified purpose) is amended by 
adding at the end the following new sentence: 
‘‘In the case of bonds issued after the date of the 
enactment of this sentence, any rehabilitation, re-
pair, or provision of equipment shall be treated as 
a qualified purpose only if such rehabilitation, re-
pair, or provision, as the case may be, is described 
in section 403(d) of the Apollo Energy Independence 
Act of 2008, as in effect on such date.’’. 
(c) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to obligations issued after De-
cember 31, 2007. 
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SEC. 405. STUDY ON THE REDUCTION OF ENERGY COSTS IN 
PUBLIC SCHOOLS. 
(a) STUDY.—Not later than 3 months after the date 
of enactment of this Act, the Secretary of Energy, in con-
sultation with the Secretary of Education, shall conduct 
a study to evaluate the daily and seasonal energy costs 
in public schools and how such schools can best utilize the 
public school calendar to reduce such energy costs. 
(b) REPORT.—Not later than 2 years after the com-
mencement of the study required by subsection (a), the 
Secretary of Energy, in consultation with the Secretary 
of Education, shall submit a report to each House of Con-
gress containing the results of such study and rec-
ommendations regarding— 
(1) the optimal time public schools in each 
State should start and end the school day based on 
the geographic locations of, and average monthly 
temperatures and other climate factors in the areas 
surrounding, such schools; and 
(2) the optimal school calendar for public 
schools in each State to reduce the energy costs of 
such schools by at least 5 percent each calendar 
year. 
(c) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to the Secretary of En-
ergy for carrying out this section, $500,000 for fiscal year 
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2009, and such sums as are necessary for each fiscal year 
thereafter. 
(d) DEFINITION.—For purposes of this section, the 
term ‘‘public school’’ has the meaning given such term in 
section 5145 of the Elementary and Secondary Education 
Act of 1965 (20 U.S.C. 7217d). 
SEC. 406. ETHANOL. 
(a) IN GENERAL.—Subchapter II of chapter 99 of 
the Harmonized Tariff Schedule of the United States is 
amended by inserting in numerical sequence the following 
new heading: 
‘‘ 
9902.05.40 
Ethyl alcohol (provided for in 
subheadings 2207.10.60 and 
2207.20) or any mixture con-
taining such ethyl alcohol 
(provided for in heading 2710 
or 3824) if such ethyl alcohol 
or mixture is to be used as a 
fuel or in producing a mix-
ture of gasoline and alcohol, 
a mixture of a special fuel 
and alcohol, or any other 
mixture to be used as fuel 
(including motor fuel pro-
vided for in subheading 
2710.11.15, 2710.19.15 or 
2710.19.21), or is suitable 
for any such uses ..................
Free 
Free 
Free 
On or before 
12/31/2010
’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) applies with respect to goods entered, or 
withdrawn from warehouse for consumption, on or after 
the 15th day after the date of the enactment of this Act. 
(c) EFFECT ON HEADING 9901.00.50.—During the 
period beginning on the effective date under subsection (b) 
and ending on December 31, 2010, heading 9901.00.50 
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of the Harmonized Tariff Schedule of the United States 
is not effective. 
TITLE V—OFFSETS 
SEC. 501. FY09 COST. 
(a) MORATORIUM
ON
CONSIDERATION
OF
EAR-
MARKS.— 
(1) IN THE HOUSE.—In the 110th Congress, it 
shall not be in order to consider a bill, joint resolu-
tion, amendment, or conference report containing a 
congressional earmark, limited tax benefit, or limited 
tariff benefit (as such terms are defined by clause 9 
of rule XXI of the Rules of the House of Represent-
atives). 
(2) DEFINITION.—For purposes of this sub-
section, the term ‘‘earmark’’ shall include congres-
sional earmarks, congressionally directed spending 
items, limited tax benefits, or limited tariff benefits 
as those terms are defined by clause 9 of rule XXI 
of the Rules of the House of Representatives and 
rule XLIV of the Standing Rules of the Senate. 
Nothing in this subsection shall confine the study of 
the joint select committee or otherwise limit its rec-
ommendations. 
(b) REVISION OF CONCURRENT RESOLUTION ON THE 
BUDGET.— 
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(1) Upon the enactment of this Act, the chair-
men of the Committees on the Budget of the House 
and the Senate shall reduce the allocation of new 
budget authority and the outlays flowing therefrom 
to the Committees on Appropriations of the House 
and the Senate set forth pursuant to section 302(a) 
of the Congressional Budget Act of 1974 for fiscal 
year 2009 by $14.8 billion. 
(2) The chairmen of the Committees on the 
Budget of the House and the Senate shall make any 
other necessary and conforming adjustments in the 
concurrent resolution on the budget for fiscal year 
2009. 
SEC. 502. CONSERVATION OF RESOURCES FEES. 
(a) ESTABLISHMENT OF FEES.— 
(1) IN GENERAL.—Not later than 60 days after 
the date of enactment of this Act, the Secretary of 
the Interior by regulation shall establish— 
(A) a conservation of resources fee for pro-
ducing Federal oil and gas leases in the Gulf of 
Mexico; and 
(B) a conservation of resources fee for 
nonproducing Federal oil and gas leases in the 
Gulf of Mexico. 
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(2) PRODUCING LEASE FEE TERMS.—The fee 
under paragraph (1)(A)— 
(A) subject to subparagraph (C), shall 
apply to covered leases that are producing 
leases; 
(B) shall be set at $9 per barrel for oil and 
$1.25 per million Btu for gas, respectively, in 
2005 dollars; and 
(C) shall apply only to production of oil or 
gas occurring— 
(i) in any calendar year in which the 
arithmetic average of the daily closing 
prices for light sweet crude oil on the New 
York Mercantile Exchange (NYMEX) ex-
ceeds $34.73 per barrel for oil and $4.34 
per million Btu for gas in 2005 dollars; 
and 
(ii) on or after October 1, 2006. 
(3) NONPRODUCING LEASE FEE TERMS.—The 
fee under paragraph (1)(B)— 
(A) subject to subparagraph (C), shall 
apply to leases that are nonproducing leases; 
(B) shall be set at $3.75 per acre per year 
in 2005 dollars; and 
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(C) shall apply on and after October 1, 
2006. 
(4) TREATMENT OF RECEIPTS.—Amounts re-
ceived by the United States as fees under this sub-
section shall be treated as offsetting receipts. 
(b) COVERED LEASE DEFINED.—In this section the 
term ‘‘covered lease’’ means a lease for oil or gas produc-
tion in the Gulf of Mexico that is— 
(1) in existence on the date of enactment of this 
Act; 
(2) issued by the Department of the Interior 
under section 304 of the Outer Continental Shelf 
Deep Water Royalty Relief Act (43 U.S.C. 1337 
note; Public Law 104–58); and 
(3) not subject to limitations on royalty relief 
based on market price that are equal to or less than 
the price thresholds described in clauses (v) through 
(vii) of section 8(a)(3)(C) of the Outer Continental 
Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)). 
(c) ROYALTY SUSPENSION PROVISIONS.—The Sec-
retary of the Interior shall agree to a request by any lessee 
to amend any lease issued for Central and Western Gulf 
of Mexico tracts during the period of January 1, 1998, 
through December 31, 1999, to incorporate price thresh-
olds applicable to royalty suspension provisions, or amend 
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existing price thresholds, in the amount of $34.73 per bar-
rel (2005 dollars) for oil and for natural gas of $4.34 per 
million Btu (2005 dollars). 
SEC. 503. REDUCTION IN PAYMENT ACRES FOR DIRECT 
AND COUNTER-CYCLICAL PAYMENTS UNDER 
DEPARTMENT OF AGRICULTURE COMMODITY 
PROGRAMS. 
(a) PROGRAM CROPS.—Section 1001(11) of the 
Food, Conservation, and Energy Act of 2008 (7 U.S.C. 
8702(11)) is amended— 
(1) in subparagraph (A), by striking ‘‘85 per-
cent’’ and inserting ‘‘84 percent’’; and 
(2) in subparagraph (B), by striking ‘‘83.3 per-
cent’’ and inserting ‘‘82.3 percent’’. 
(b) PEANUTS.—Section 1301(5) of the Food, Con-
servation, and Energy Act of 2008 (7 U.S.C. 8751(5)) is 
amended— 
(1) in subparagraph (A), by striking ‘‘85 per-
cent’’ and inserting ‘‘84 percent’’; and 
(2) in subparagraph (B), by striking ‘‘83.3 per-
cent’’ and inserting ‘‘82.3 percent’’. 
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SEC. 504. REDUCTION IN MAXIMUM AMOUNT OF DIRECT, 
COUNTER-CYCLICAL, AND ACRE PAYMENTS 
PAID TO PRODUCERS UNDER DEPARTMENT 
OF AGRICULTURE COMMODITY PROGRAMS. 
(a) PROGRAM CROPS.—Section 1001(b) of the Food 
Security Act of 1985 (7 U.S.C. 1308(b)) is amended— 
(1) in paragraph (1)(A), by striking ‘‘$40,000’’ 
and inserting ‘‘$20,000’’; 
(2) in paragraph (2), by striking ‘‘$65,000’’ 
and inserting ‘‘$32,500’’; and 
(3) in paragraph (3)(A), by striking ‘‘$65,000’’ 
and inserting ‘‘$32,500’’. 
(b) PEANUTS.—Section 1001(c) of the Food Security 
Act of 1985 (7 U.S.C. 1308(b)) is amended— 
(1) in paragraph (1)(A), by striking ‘‘$40,000’’ 
and inserting ‘‘$20,000’’; 
(2) in paragraph (2), by striking ‘‘$65,000’’ 
and inserting ‘‘$32,500’’; and 
(3) in paragraph (3)(A), by striking ‘‘$65,000’’ 
and inserting ‘‘$32,500’’. 
SEC. 
505. 
CONSOLIDATION 
OF 
MILITARY 
EXCHANGE 
STORES SYSTEM. 
(a) CONSOLIDATION.—Section 2487(b) of title 10, 
United States Code, is amended— 
(1) by redesignating paragraph (2) as para-
graph (3); and 
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(2) by inserting after paragraph (1) the fol-
lowing new paragraph: 
‘‘(2) Not later than two years after the date of the 
enactment of the Apollo Energy Independence Act of 
2008, the Secretary of Defense shall complete the consoli-
dation of the exchange stores system, including the Army 
and Air Force Exchange Service, the Navy Exchange 
Service Command, and Marine Corps exchanges, into a 
single administrative entity to improve efficiencies and en-
hance customer service.’’. 
(b) OPERATING COSTS.—Section 2491(b) of title 10, 
United States Code, is amended by adding at the end the 
following new sentence: ‘‘Following consolidation of the ex-
change stores system, as required by section 2487(b) of 
this title, all operating costs of the exchange stores system 
shall be covered by sales revenues generated by the system 
or other nonappropriated fund instrumentalities of the De-
partment of Defense.’’. 
SEC. 506. REVISED PRICING STRUCTURE FOR DEPOT- 
LEVEL ACTIVITIES OF THE DEPARTMENT OF 
DEFENSE. 
(a) PRICING POLICY.—Chapter 146 of title 10, 
United States Code, is amended by inserting after section 
2470 the following new section: 
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‘‘§ 2471. Depot-level activities of the Department of 
Defense: pricing policy for services ren-
dered 
‘‘A depot-level activity of the Department of Defense 
may charge only for the incremental cost of repairs pro-
vided by the depot-level activity instead of including 
charges for components (called depot-level repairables) for 
labor, materials, and transportation and a share of the 
fixed costs of overhead. Fixed costs, including overhead, 
shall be covered by an annual flat fee to customers.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
at the beginning of such chapter is amended by inserting 
after the item relating to section 2470 the following new 
item: 
‘‘2471. Depot-level activities of the Department of Defense: pricing policy for 
services rendered.’’. 
SEC. 507. RESTRICT UNIVERSAL SERVICE FUND SUPPORT 
TO 2 CONNECTIONS PER HOUSEHOLD. 
(a) IN GENERAL.—Section 254(c) of the Communica-
tions Act of 1934 (47 U.S.C. 254(c)) is amended by add-
ing at the end the following new paragraph: 
‘‘(4) EXCEPTION.—In carrying out paragraph 
(1), the Commission shall promulgate regulations to 
specifically exclude the receipt of universal service 
support by any eligible telecommunications carrier 
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where such support would provide for more than 2 
connections per household.’’. 
(b) DISPOSITION OF SAVINGS.— 
(1) SAVINGS CALCULATION.—The Commission 
shall direct the Administrator to determine the 
amount of the net savings resulting from the imple-
mentation of section 254(c)(4) of the Communica-
tions Act of 1934 (as added by subsection (a)). 
(2) REMISSION TO THE TREASURY.—The Com-
mission shall direct the Administrator to remit to 
the Treasury of the United States an amount equiv-
alent to the amount determined under paragraph 
(1). 
(3) NO
RECALCULATION.—The Commission 
shall direct the Administrator to not make any ad-
justment to the amount of universal service support 
contributed by telecommunications carriers under 
section 254(d) of the Communications Act of 1934 
(47 U.S.C. 254(d)) to take into account the cost 
savings resulting from section 254(c)(4) of such Act. 
(c) DEFINITIONS.—In this section: 
(1) ADMINISTRATOR.—The term ‘‘Adminis-
trator’’ means the Administrator designated by the 
Commission to administer Federal universal service 
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support programs pursuant to section 254 of the 
Communications Act of 1934 (47 U.S.C. 254). 
(2) COMMISSION.—The term ‘‘Commission’’ 
means the Federal Communications Commission. 
SEC. 508. IMPROVE TREASURY PAYMENT TRANSACTION IN-
TEGRITY. 
Section 1113(k)(1) of the Right to Financial Privacy 
Act of 1978 (12 U.S.C. 3413(k)(1)) is amended by insert-
ing ‘‘or for purposes of tracing or recovering improper 
payments and collections by the Secretary of the Treas-
ury’’ before the period at the end. 
SEC. 509. MODERNIZE TREASURY CASH INVESTMENT PRAC-
TICES. 
Section 323 of title 31, United States Code, is 
amended by adding at the end the following new sub-
section: 
‘‘(d) REPURCHASE MARKET INVESTMENTS.—In ad-
dition to the investments authorized under subsection (a), 
the Secretary may invest any part of the operating cash 
of the Treasury in repurchase transactions with acceptable 
parties in the repurchase market.’’. 
SEC. 510. FOOD SAFETY AND INSPECTION SERVICE USER 
FEES. 
The Secretary of Agriculture shall establish and col-
lect user fees for inspection services provided under the 
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Federal Meat Inspection Act (21 U.S.C. 601 et seq.), the 
Poultry Products Inspection Act (21 U.S.C. 451 et seq.), 
and the Egg Products Inspection Act (21 U.S.C. 1031 et 
seq.). 
Æ 
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