‘‘(3) which has received a certificate that such 
vehicle meets or exceeds the Bin 5 Tier II emission 
level established in regulations prescribed by the Ad-
ministrator of the Environmental Protection Agency 
under section 202(i) of the Clean Air Act for that 
make and model year vehicle. 
‘‘(d) SPECIAL RULES.—
‘‘(1) BASIS
REDUCTION.—The basis of any 
property for which a credit is allowable under sub-
section (a) shall be reduced by the amount of such 
credit. 
‘‘(2) RECAPTURE.—The Secretary shall, by reg-
ulations, provide for recapturing the benefit of any 
credit allowable under subsection (a) with respect to 
any property which ceases to be property eligible for 
such credit. 
‘‘(3) 
PROPERTY
USED
OUTSIDE
UNITED 
STATES, ETC. NOT QUALIFIED.—No credit shall be 
allowed under subsection (a) with respect to any 
property referred to in section 50(b) or with respect 
to the portion of the cost of any property taken into 
account under section 30, 179, or 179A. 
‘‘(e) CARRYFORWARD OF UNUSED CREDITS.—If the 
credit allowable under subsection (a) for any taxable year 
exceeds—
‘‘(1) the regular tax for the taxable year re-
duced by the sum of the credits allowable under sub-
part A and this part (other than this section), over 
‘‘(2) the tentative minimum tax for the taxable 
year, 
such excess shall be carried to the succeeding taxable year 
and added to the credit allowable under subsection (a) for 
such taxable year.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for such subpart B is amended by inserting after the item 
relating to section 30A the following new item: 
‘‘Sec. 30B. Fuel-efficiency vehicle credit.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 3. FUEL EFFICIENT VEHICLE ASSEMBLY CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to business-related credits) is amended by 
adding at the end the following new section: 
‘‘SEC. 45G. FUEL-EFFICIENT VEHICLE ASSEMBLY CREDIT. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
the fuel-efficient vehicle assembly credit determined under 
this section for the taxable year is an amount equal to 
the product of $2,000 and the number of qualified fuel-
efficient vehicles manufactured or produced in the United
States by the taxpayer during the taxable year for their 
1st retail sale. 
‘‘(b) QUALIFIED FUEL-EFFICIENT VEHICLE.—For 
purposes of subsection (a), the term ‘qualified fuel-effi-
cient vehicle’ has the meaning given to such term by sec-
tion 30B(c). 
‘‘(c) 1ST RETAIL SALE.—For purposes of subsection 
(a), the term ‘1st retail sale’ has the meaning given to 
such term by section 4002.’’. 
(b) CREDIT TO BE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38 of such Code (re-
lating to general business credit) is amended by striking 
‘‘plus’’ at the end of paragraph (14), by striking the period 
at the end of paragraph (15) and inserting ‘‘, plus’’, and 
by adding at the end the following new paragraph: 
‘‘(16) the fuel-efficient vehicle assembly credit 
determined under section 45G(a).’’. 
(c) CONFORMING AMENDMENT.—The table of sec-
tions for subpart D of part IV of subchapter A of chapter 
1 of the Internal Revenue Code of 1986 is amended by 
inserting after the item relating to section 45F the fol-
lowing new item:
‘‘Sec. 45G. Fuel-efficient vehicle assembly credit.’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act.
SEC. 4. LOAN GUARANTEES. 
(a) GENERAL AUTHORITY.—The Secretary of Energy 
may provide loan guarantees to manufacturers of motor 
vehicles or of motor vehicle engines for the purposes de-
scribed in subsection (b). 
(b) ELIGIBLE PURPOSES.—Loans guaranteed under 
this section shall be used for the costs of conversion from 
the manufacture of motor vehicles or engines achieving 
less than 40 miles per gallon of gasoline to the manufac-
ture of motor vehicles or engines achieving more than 40 
miles per gallon of gasoline. Such loans may not be used 
for advertising or promotional costs. 
(c) AGGREGATE AMOUNT OF LOAN GUARANTEES.—
The aggregate amount of loans that may be guaranteed 
under this section at any one time shall not exceed 
$1,000,000,000. 
(d) LIMITATION ON LOAN GUARANTEE SIZE.—The 
Secretary shall not guarantee a loan under this section 
for an amount greater than $100,000,000. 
(e) RATES OF INTEREST.—The Secretary shall not 
make a loan guarantee under this section if the interest 
rate for the loan exceeds that which the Secretary deter-
mines to be reasonable, taking into consideration the pre-
vailing interest rates and customary fees incurred under 
similar obligations in the private capital market.
(f) ABILITY TO REPAY.—The Secretary shall not 
make a loan guarantee under this section unless the Sec-
retary has made a finding in writing that the recipient 
of the loan is likely to be able to repay the loan according 
to its terms. 
(g) APPLICATIONS.—The Secretary shall prescribe 
the form and contents required of applications for assist-
ance under this section, to enable the Secretary to deter-
mine the eligibility of the applicant’s proposal, and shall 
establish terms and conditions for loan guarantees made 
under this section. 
(h) FULL FAITH AND CREDIT.—All guarantees en-
tered into by the Secretary under this section shall con-
stitute general obligations of the United States backed by 
the full faith and credit of the United States. 
(i) MODIFICATIONS.—The Secretary may approve the 
modification of any term or condition of a loan guarantee 
or loan guarantee commitment, including the rate of inter-
est, time of payment of interest or principal, or security 
requirements, if the Secretary finds in writing that—
(1) the modification is equitable and is in the 
overall best interests of the United States; and
(2) consent has been obtained from the appli-
cant and the holder of the obligation.
(j) DEFAULT.—The Secretary shall prescribe regula-
tions setting forth procedures in the event of default on 
a loan guaranteed under this section. The Secretary shall 
ensure that each loan guarantee made under this section 
contains terms and conditions that provide that—
(1) if a payment of principal or interest under 
the loan is in default for more than 30 days, the 
Secretary shall pay to the holder of the obligation, 
or the holder’s agent, the amount of unpaid guaran-
teed interest; 
(2) if the default has continued for more than 
90 days, the Secretary shall pay to the holder of the 
obligation, or the holder’s agent, 90 percent of the 
unpaid guaranteed principal; 
(3) after final resolution of the default, through 
liquidation or otherwise, the Secretary shall pay to 
the holder of the obligation, or the holder’s agent, 
any remaining amounts guaranteed but which were 
not recovered through the default’s resolution; 
(4) the Secretary shall not be required to make 
any payment under paragraphs (1) through (3) if 
the Secretary finds, before the expiration of the peri-
ods described in such paragraphs, that the default 
has been remedied; and
(5) the holder of the obligation shall not receive 
payment or be entitled to retain payment in a total 
amount which, together with all other recoveries (in-
cluding any recovery based upon a security interest 
in equipment or facilities) exceeds the actual loss of 
such holder. 
(k) RIGHTS OF THE SECRETARY.—
(1) SUBROGATION.—If the Secretary makes 
payment to a holder, or a holder’s agent, under sub-
section (j) in connection with a loan guarantee made 
under this section, the Secretary shall be subrogated 
to all of the rights of the holder with respect to the 
obligor under the loan. 
(2) DISPOSITION
OF
PROPERTY.—The Sec-
retary may complete, recondition, reconstruct, ren-
ovate, repair, maintain, operate, charter, rent, sell, 
or otherwise dispose of any property or other inter-
ests obtained pursuant to this section. The Secretary 
shall not be subject to any Federal or State regu-
latory requirements when carrying out this para-
graph. 
(l) ACTION AGAINST OBLIGOR.—The Secretary may 
bring a civil action in an appropriate Federal court in the 
name of the holder of the obligation in the event of a de-
fault on a loan guaranteed under this section. The holder
of a guarantee shall make available to the Secretary all 
records and evidence necessary to prosecute the civil ac-
tion. The Secretary may accept property in full or partial 
satisfaction of any sums owed as a result of a default. 
If the Secretary receives, through the sale or other disposi-
tion of such property, an amount greater than the aggre-
gate of—
(1) the amount paid to the holder of a guar-
antee under subsection (j); and 
(2) any other cost to the United States of rem-
edying the default, 
the Secretary shall pay such excess to the obligor. 
(m) BREACH OF CONDITIONS.—The Attorney Gen-
eral shall commence a civil action in an appropriate Fed-
eral court to enjoin any activity which the Secretary finds 
is in violation of this section, regulations issued hereunder, 
or any conditions which were duly agreed to, and to secure 
any other appropriate relief. 
(n) ATTACHMENT.—No attachment or execution may 
be issued against the Secretary, or any property in the 
control of the Secretary, prior to the entry of final judg-
ment to such effect in any State, Federal, or other court. 
(o) INVESTIGATION CHARGE.—The Secretary may 
charge and collect from each applicant a reasonable charge 
for appraisal of the value of the equipment or facilities
for which the loan guarantee is sought, and for making 
necessary determinations and findings. Such charge shall 
not aggregate more than one-half of 1 percent of the prin-
cipal amount of the obligation. 
(p) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to the Secretary of En-
ergy for carrying out this section such sums as may be 
necessary for fiscal years 2003 through 2007. 
(q) DEFINITIONS.—For purposes of this section: 
(1) The term ‘‘loan guarantee’’ means any 
guarantee, insurance, or other pledge with respect to 
the payment of all or a part of the principal or inter-
est on any debt obligation of a non-Federal borrower 
to a non-Federal lender, but does not include the in-
surance of deposits, shares, or other withdrawable 
accounts in financial institutions. 
(2) The term ‘‘loan guarantee commitment’’ 
means a binding agreement by the Secretary of En-
ergy to make a loan guarantee when specified condi-
tions are fulfilled by the borrower, the lender, or any 
other party to the guarantee agreement. 
(3) The term ‘‘modification’’ means any Gov-
ernment action that alters the estimated cost of an 
outstanding loan guarantee (or loan guarantee com-
mitment) from the current estimate of cash flows.
This includes the sale of loan assets, with or without 
recourse, and the purchase of guaranteed loans. This 
also includes any action resulting from new legisla-
tion, or from the exercise of administrative discre-
tion under existing law, that directly or indirectly al-
ters the estimated cost of outstanding loan guaran-
tees (or loan guarantee commitments) such as a 
change in collection procedures. 
SEC. 
5. 
PERMANENT 
EXTENSION 
OF 
RESEARCH
CREDIT. 
(a) IN GENERAL.—Section 41 of the Internal Rev-
enue Code of 1986 (relating to credit for increasing re-
search activities) is amended by striking subsection (h). 
(b) CONFORMING AMENDMENT.—Paragraph (1) of 
section 45C(b) of such Code is amended by striking sub-
paragraph (D). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
the date of the enactment of this Act. 
SEC. 6. INCREASE IN RATES OF ALTERNATIVE INCRE-
MENTAL CREDIT. 
(a) IN GENERAL.—Subparagraph (A) of section 
41(c)(4) of the Internal Revenue Code of 1986 (relating 
to election of alternative incremental credit) is amended—
(1) by striking ‘‘2.65 percent’’ and inserting ‘‘3 
percent’’, 
(2) by striking ‘‘3.2 percent’’ and inserting ‘‘4 
percent’’, and 
(3) by striking ‘‘3.75 percent’’ and inserting ‘‘5 
percent’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 7. EXCLUSION OF QUALIFIED FUEL-EFFICIENT VEHI-
CLES 
FROM 
CALCULATION 
OF 
AVERAGE 
FUEL ECONOMY OF A MANUFACTURER. 
Section 32904(a) of title 49, United States Code, is 
amended by adding at the end the following: 
‘‘(3) In calculating the average fuel economy of a 
manufacturer under paragraph (1), the Administrator 
shall not consider any automobile manufactured by the 
manufacturer for which a credit is allowed under section 
38(a)(16) of the Internal Revenue Code of 1986.’’.
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