I 
110TH CONGRESS 
1ST SESSION H. R. 2354 
To promote the national security and stability of the economy of the United 
States by reducing the dependence of the United States on oil through 
the use of alternative fuels and new technology, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 16, 2007 
Mr. VISCLOSKY introduced the following bill; which was referred to the Com-
mittee on Energy and Commerce, and in addition to the Committees on 
Ways and Means, Transportation and Infrastructure, Armed Services, 
Oversight and Government Reform, and Judiciary, for a period to be sub-
sequently determined by the Speaker, in each case for consideration of 
such provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To promote the national security and stability of the economy 
of the United States by reducing the dependence of the 
United States on oil through the use of alternative fuels 
and new technology, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘American Fuels Act of 2007’’. 
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(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Office of Energy Security. 
Sec. 3. Credit for production of qualified flexible fuel motor vehicles. 
Sec. 4. Incentives for the retail sale of alternative fuels as motor vehicle fuel. 
Sec. 5. Freedom for fuel franchisers. 
Sec. 6. Alternative diesel fuel content of diesel. 
Sec. 7. Excise tax credit for production of cellulosic biomass ethanol. 
Sec. 8. Incentive for Federal and State fleets for medium and heavy duty hy-
brids. 
Sec. 9. Credit for qualifying ethanol blending and processing equipment. 
Sec. 10. Public access to Federal alternative refueling stations. 
Sec. 11. Purchase of clean fuel buses. 
Sec. 12. Domestic fuel production volumes to meet Department of Defense 
needs. 
Sec. 13. Federal fleet energy conservation improvement. 
SEC. 2. OFFICE OF ENERGY SECURITY. 
(a) DEFINITIONS.—In this section: 
(1) DIRECTOR.—The term ‘‘Director’’ means 
the Director of Energy Security appointed under 
subsection (c)(1). 
(2) OFFICE.—The term ‘‘Office’’ means the Of-
fice of Energy Security established by subsection 
(b). 
(b) ESTABLISHMENT.—There is established in the 
Executive Office of the President the Office of Energy Se-
curity. 
(c) DIRECTOR.— 
(1) IN GENERAL.—The Office shall be headed 
by a Director, who shall be appointed by the Presi-
dent, by and with the advice and consent of the Sen-
ate. 
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(2) RATE OF PAY.—The Director shall be paid 
at a rate of pay equal to level I of the Executive 
Schedule under section 5312 of title 5, United 
States Code. 
(d) RESPONSIBILITIES.— 
(1) IN GENERAL.—The Office, acting through 
the Director, shall be responsible for overseeing all 
Federal energy security programs, including the co-
ordination of efforts of Federal agencies to assist the 
United States in achieving full energy independence. 
(2) SPECIFIC RESPONSIBILITIES.—In carrying 
out paragraph (1), the Director shall— 
(A) serve as head of the energy commu-
nity; 
(B) act as the principal advisor to the 
President, the National Security Council, the 
National Economic Council, the Domestic Pol-
icy Council, and the Homeland Security Council 
with respect to intelligence matters relating to 
energy security; 
(C) with request to budget requests and 
appropriations for Federal programs relating to 
energy security— 
(i) consult with the President and the 
Director of the Office of Management and 
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Budget with respect to each major Federal 
budgetary decision relating to energy secu-
rity of the United States; 
(ii) based on priorities established by 
the President, provide to the heads of de-
partments containing agencies or organiza-
tions within the energy community, and to 
the heads of such agencies and organiza-
tions, guidance for use in developing the 
budget for Federal programs relating to 
energy security; 
(iii) based on budget proposals pro-
vided to the Director by the heads of agen-
cies and organizations described in clause 
(ii), develop and determine an annual con-
solidated budget for Federal programs re-
lating to energy security; and 
(iv) present the consolidated budget, 
together with any recommendations of the 
Director and any heads of agencies and or-
ganizations described in clause (ii), to the 
President for approval; 
(D) establish and meet regularly with a 
council of business and labor leaders to develop 
and provide to the President and Congress rec-
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ommendations relating to the impact of energy 
supply and prices on economic growth; 
(E) submit to Congress an annual report 
that describes the progress of the United States 
toward the goal of achieving full energy inde-
pendence; and 
(F) carry out such other responsibilities as 
the President may assign. 
(e) STAFF.— 
(1) IN GENERAL.—The Director may, without 
regard to the civil service laws (including regula-
tions), appoint and terminate such personnel as are 
necessary to enable the Director to carry out the re-
sponsibilities of the Director under this section. 
(2) COMPENSATION.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), the Director may fix the 
compensation of personnel without regard to 
the provisions of chapter 51 and subchapter III 
of chapter 53 of title 5, United States Code, re-
lating to classification of positions and General 
Schedule pay rates. 
(B) MAXIMUM RATE OF PAY.—The rate of 
pay for the personnel appointed by the Director 
shall not exceed the rate payable for level V of 
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the Executive Schedule under section 5316 of 
title 5, United States Code. 
(f) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated such sums as are nec-
essary to carry out this section. 
SEC. 3. CREDIT FOR PRODUCTION OF QUALIFIED FLEXIBLE 
FUEL MOTOR VEHICLES. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
‘‘SEC. 45O. PRODUCTION OF QUALIFIED FLEXIBLE FUEL 
MOTOR VEHICLES. 
‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec-
tion 38, in the case of a manufacturer, the qualified flexi-
ble fuel motor vehicle production credit determined under 
this section for any taxable year is an amount equal to 
the incremental flexible fuel motor vehicle cost for each 
qualified flexible fuel motor vehicle produced in the United 
States by the manufacturer during the taxable year. 
‘‘(b) INCREMENTAL FLEXIBLE FUEL MOTOR VEHI-
CLE COST.—With respect to any qualified flexible fuel 
motor vehicle, the incremental flexible fuel motor vehicle 
cost is an amount equal to the lesser of— 
‘‘(1) the excess of— 
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‘‘(A) the cost of producing such qualified 
flexible fuel motor vehicle, over 
‘‘(B) the cost of producing such motor ve-
hicle if such motor vehicle was not a qualified 
flexible fuel motor vehicle, or 
‘‘(2) $100. 
‘‘(c) QUALIFIED FLEXIBLE FUEL MOTOR VEHI-
CLE.—For purposes of this section, the term ‘qualified 
flexible fuel motor vehicle’ means a flexible fuel motor ve-
hicle— 
‘‘(1) the production of which is not required for 
the manufacturer to meet— 
‘‘(A) the maximum credit allowable for ve-
hicles described in paragraph (2) in determining 
the fleet average fuel economy requirements (as 
determined under section 32904 of title 49, 
United States Code) of the manufacturer for 
the model year ending in the taxable year, or 
‘‘(B) the requirements of any other provi-
sion of Federal law, and 
‘‘(2) which is designed so that the vehicle is 
propelled by an engine which can use as a fuel a 
gasoline mixture of which 85 percent (or another 
percentage of not less than 70 percent, as the Sec-
retary may determine, by rule, to provide for re-
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quirements relating to cold start, safety, or vehicle 
functions) of the volume of consists of ethanol. 
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.— 
For purposes of this section— 
‘‘(1) MOTOR VEHICLE.—The term ‘motor vehi-
cle’ has the meaning given such term by section 
30(c)(2). 
‘‘(2) MANUFACTURER.—The term ‘manufac-
turer’ has the meaning given such term in regula-
tions prescribed by the Administrator of the Envi-
ronmental Protection Agency for purposes of the ad-
ministration of title II of the Clean Air Act (42 
U.S.C. 7521 et seq.). 
‘‘(3) 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 paragraph) result from such expendi-
ture shall be reduced by the amount of the credit so 
allowed. 
‘‘(4) NO
DOUBLE
BENEFIT.—The amount of 
any deduction or credit allowable under this chapter 
(other than the credits allowable under this section 
and section 30B) shall be reduced by the amount of 
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credit allowed under subsection (a) for such vehicle 
for the taxable year. 
‘‘(5) ELECTION
NOT
TO
TAKE
CREDIT.—No 
credit shall be allowed under subsection (a) for any 
vehicle if the taxpayer elects to not have this section 
apply to such vehicle. 
‘‘(6) TERMINATION.—This section shall not 
apply to any vehicle produced after December 31, 
2011. 
‘‘(7) CROSS REFERENCE.—For an election to 
claim certain minimum tax credits in lieu of the 
credit determined under this section, see section 
53(e).’’. 
(b) CREDIT ALLOWED AGAINST THE ALTERNATIVE 
MINIMUM TAX.—Section 38(c)(4)(B) of the Internal Rev-
enue Code of 1986 (defining specified credits) is amended 
by striking ‘‘and’’ at the end of clause (i), by striking the 
period at the end of clause (ii)(II) and inserting ‘‘, and’’, 
and by adding at the end the following new clause: 
‘‘(iii) the credit determined under sec-
tion 45O.’’. 
(c) ELECTION TO USE ADDITIONAL AMT CREDIT.— 
Section 53 of the Internal Revenue Code of 1986 (relating 
to credit for prior year minimum tax liability) is amended 
by adding at the end the following new subsection: 
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‘‘(f) ADDITIONAL CREDIT IN LIEU OF FLEXIBLE 
FUEL MOTOR VEHICLE CREDIT.— 
‘‘(1) IN GENERAL.—In the case of a taxpayer 
making an election under this subsection for a tax-
able year, the amount otherwise determined under 
subsection (b) shall be increased by any amount of 
the credit determined under section 45O for such 
taxable year which the taxpayer elects not to claim 
pursuant to such election. 
‘‘(2) ELECTION.—A taxpayer may make an 
election for any taxable year not to claim any 
amount of the credit allowable under section 45O 
with respect to property produced by the taxpayer 
during such taxable year. An election under this sub-
section may only be revoked with the consent of the 
Secretary. 
‘‘(3) CREDIT REFUNDABLE.—The aggregate in-
crease in the credit allowed by this section for any 
taxable year by reason of this subsection shall for 
purposes of this title (other than subsection (b)(2) 
of this section) be treated as a credit allowed to the 
taxpayer under subpart C.’’. 
(d) CONFORMING AMENDMENTS.—Section 38(b) of 
the Internal Revenue Code of 1986 is amended by striking 
‘‘plus’’ at the end of paragraph (30), by striking the period 
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at the end of paragraph (31) and inserting ‘‘, plus’’, and 
by adding at the end the following new paragraph: 
‘‘(32) the qualified flexible fuel motor vehicle 
production 
credit 
determined 
under 
section 
45O(a).’’. 
(e) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by add-
ing at the end the following new item: 
‘‘Sec. 45O. Production of qualified flexible fuel motor vehicles.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to motor vehicles produced in 
model years ending after the date of the enactment of this 
Act. 
SEC. 4. INCENTIVES FOR THE RETAIL SALE OF ALTER-
NATIVE FUELS AS MOTOR VEHICLE FUEL. 
(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 
inserting after section 40A the following new section: 
‘‘SEC. 40B. CREDIT FOR RETAIL SALE OF ALTERNATIVE 
FUELS AS MOTOR VEHICLE FUEL. 
‘‘(a) GENERAL RULE.—The alternative fuel retail 
sales credit for any taxable year is the applicable amount 
for each gallon of alternative fuel sold at retail by the tax-
payer during such year. 
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‘‘(b) APPLICABLE AMOUNT.—For purposes of this 
section, the applicable amount shall be determined in ac-
cordance with the following table: 
‘‘In the case of 
The applicable amount 
any sale: 
for each gallon is: 
Before 2010 .............................................................................
35 cents
During 2010 or 2011 ...............................................................
20 cents
During 2012 ............................................................................
10 cents. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) ALTERNATIVE
FUEL.—The term ‘alter-
native fuel’ means any fuel at least 85 percent (or 
another percentage of not less than 70 percent, as 
the Secretary may determine, by rule, to provide for 
requirements relating to cold start, safety, or vehicle 
functions) of the volume of which consists of eth-
anol. 
‘‘(2) SOLD AT RETAIL.— 
‘‘(A) IN GENERAL.—The term ‘sold at re-
tail’ means the sale, for a purpose other than 
resale, after manufacture, production, or impor-
tation. 
‘‘(B) USE TREATED AS SALE.—If any per-
son uses alternative fuel (including any use 
after importation) as a fuel to propel any quali-
fied alternative fuel motor vehicle (as defined in 
this section) before such fuel is sold at retail, 
then such use shall be treated in the same man-
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