[Pages S1968-S1971]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

By Mr. BAUCUS:
S. 2398. A bill to establish an Advanced Research Projects
Administration-Energy to initiate high risk, innovative energy research
to improve the energy security of the United States, to extend certain
energy tax incentives, and for other purposes; to the Committee on
Finance.
Mr. BAUCUS. Mr. President, in the years when I first began to serve
in Congress, America faced severe problems with supplies of oil. For
years, long gas lines, frustration, and questions about the security of
our oil supply drove the public debate.
Thirty years have passed. And, frankly, things have not changed all
that much. We still use gasoline and coal at staggering rates. And we
are still concerned about the security of our oil supply. We do not
have lines at gas stations. But last year, prices rose to levels
unimaginable just a few years ago.
Prices for gasoline, heating oil, electricity, and natural gas have
soared in recent years, hitting working families hard. In the past few
weeks, we have seen a terrorist attack on Saudi Arabian oil facilities.
We have seen oil workers kidnapped in Nigeria. We have seen
Venezuelan President Hugo Chavez threaten that he would cut off our
supply of oil from his country. And we have seen some question whether
Iran's role as an oil supplier keeps other countries from properly
addressing Iran's threat to nuclear proliferation.
Energy provides one of America's greatest challenges for the 21st
century. Our economy has been dependent on oil and coal for about 100
years. And since World War II, natural gas has become part of the
equation. Will we continue this dependency for the next 100 years?
The cost of energy will profoundly affect the future competitiveness
of the American economy. As the Chinese and Indian economies grow, so
will their demand for energy. And that will add further upward pressure
to energy prices.
To respond to the challenges of the new world economy, I am
introducing legislation in seven key areas to build a foundation for a
more competitive America. We must improve education, health care, trade
law enforcement, the tax code, and savings. And we must bring a greater
focus to energy research and development. Today, I introduce the Energy
Competitiveness Act of 2006.
We are trapped in an energy box. It is a box characterized by high
imports, ever-increasing prices for oil and natural gas, and
environmental danger. We must experiment with ways to break out of that
box. To break out, we need an energy research effort modeled after the
Manhattan Project, or the Apollo mission to the moon.
America has a brilliant record of gathering the best minds. We meet
challenges that may at first seem to be impossible. During World War
II, the Manhattan Project brought together brilliant physicists and
engineers to build an atomic bomb in 3 short years. And after President
Kennedy described his vision to a joint session of Congress in May of
1961, the Apollo space program put a man on the moon in just 8 years.
Looking back, these achievements were stunning. Both projects started
out with no guarantee of success. Each could have ended in utter
failure. Yet because of the talent, ingenuity, and focus of creative
minds, they both succeeded.
Breaking out of the energy box poses a similar challenge. Success is
not guaranteed. But we have got to give it our best shot.
Today I am introducing the Energy Competitiveness Act of 2006. My
legislation would create a new energy research agency. It would extend
key alternative energy tax relief. It would help our Nation face the
challenges of a newly competitive global economy. It would help to move
us into a new energy future.
We have the greatest research scientists on the planet. We have the
most technically talented workforce in the world. But we do not have
the vigor that we need in energy research. Energy research is a
backwater, compared to other research efforts in biotechnology,
medicine, computers, and defense-oriented projects.
With the Manhattan Project and the Apollo space program, America
proved that we can gather the best talent for a focused mission and
succeed. It is time that we begin a similar effort on energy.
We need to create a new agency to initiate cutting-edge, innovative
energy research and development aimed at taking us to a new energy
future. Doing so is essential to our effort to improve our economic
competitiveness.
The new agency is modeled on DARPA--the Defense Advanced Research
Projects Agency--in the Department of Defense. Among the revolutionary
technologies that DARPA has developed are the internet and stealth
technology for aircraft. DARPA has been a tremendous success.
The National Academy of Sciences, the National Academy of
Engineering, and the Institute of Medicine joined to form the Committee
on Prospering in the Global Economy of the 21st Century. Norm Augustine
chaired the Committee. Based on DARPA's achievements, last fall, the
Committee recommended the creation of an ARPA-E: Advanced Research
Projects Agency--Energy.
This was one of a number of recommendations that the Committee made
in its impressive report on the future competitive challenges that
America faces. The Committee recommended that ARPA-E be designed to

[[Page S1969]]

conduct transformative, out-of-the-box energy research.
My bill proposes that ARPA-E be a small agency with a total of 250
people. A minimum of 180 of them would be technical staff.
A director of the agency and four deputies would lead ARPA-E. I
propose that ARPA-E be funded at $300 million in fiscal year 2007, $600
million in 2008, $1.1 billion in 2009, $1.5 billion in 2010, and $2.0
billion in 2011.
We would require that the staff have a technical background. The
agency would use the Experimental Personnel Authority designed for
DARPA. That authority authorizes higher salaries than for typical
Federal employees, and faster hiring, so that the agency could get to
work quickly.
To keep the intense, innovative focus that we want, technical staff
would be limited to 3 to 4 years at the agency. Managers would be
limited to 4 to 6 years. The director could give both groups extended
terms of employment if the director so chose.
For contracts, the agency would use the DARPA procedure. That
procedure allows more flexible contracting arrangements than are
normally possible under the Federal Acquisition Regulations. To ensure
that ARPA-E would conduct innovative research, 75 percent of research
projects initiated by ARPA-E would not be peer reviewed.
The ARPA-E would be authorized to award cash prizes to encourage and
accelerate energy research accomplishments.
Finally, the bill would require a report by the end of fiscal year
2007 on whether ARPA-E would need its own energy research lab.
The Energy Competitiveness Act would also increase our commitment to
develop promising energy technologies. In the Energy Policy Act of
2005, last year's Energy bill, we established several important
incentives to foster new forms of energy production and to encourage
conservation.
America's investment in alternative energy and conservation lags well
behind that of other developed countries. The 2005 Energy bill put us
on the right track by expanding the tax credit for electricity from
renewable resources. It created incentives for coal gasification
technologies. It encouraged investment in refineries that can handle
North American feedstocks. And it established tax credits for energy-
efficient buildings and equipment.
Unfortunately, these provisions are either short-term or capped at
insufficient levels. The Energy Competitiveness Act that I introduce
today would bolster the first steps made in 2005. The bill that I
introduce today would extend these important provisions and increase
the amount of tax incentives available.
The bill would extend through 2010 the tax credit for electricity
produced from wind, biomass, geothermal, and other renewable sources.
It would also increase the volume caps on Clean Renewable Energy Bonds
and coal gasification tax credits.
The bill would make permanent enhanced depreciation for new refining
capacity that is capable of refining non-conventional feedstocks.
North America has abundant energy resources that could ease our
demand for oil from the Mideast. But today, many of our refineries are
incapable of processing heavier feedstocks, such as oil from shale or
tar sands. Making this provision permanent would provide the needed
certainty for long-term investments in capital intensive refining
projects.
The Energy Competitiveness Act that I introduce today would encourage
businesses to purchase alternative fuel and electric vehicles. And it
would extend through 2010 many of the incentives from the 2005 bill
that promote investment in energy-efficient buildings and equipment.
We are seeing exciting new efforts in America to strengthen our
energy competitiveness.
We need to build on this foundation by creating an aggressive energy
research agency that will push the limits of new technology and
discover alternative energy sources.
America has massive coal reserves. So coal gasification is receiving
greater attention. Gasification involves breaking down coal under heat
and pressure to create synthetic natural gas. We must address the
environmental issues. But if this technology can be improved, then
America will be able to take a huge step toward energy independence.
There are exciting developments in wind energy. In Montana, the
Judith Gap Wind Farm has been generating power at full capacity for
several weeks. The farm includes 90 wind turbines. Each turbine can
produce enough electricity for roughly 400 homes.
The entire farm can produce the electricity needed to supply 300,000
customers. Montana was one of nine States that put in place more than
100 megawatts of wind power generation in 2005. And my State ranks in
the top 15 States in the Nation for wind power capacity.
Fusion is another possible area where aggressive research could lead
to huge payoffs. Continuing research will help us to determine whether
energy production through fusion is a practical option.
Ethanol is also gaining as an alternative energy option. In 2005,
Americans invested more than $850 million in ethanol plants. Ford Motor
Company has plans for producing 250,000 vehicles in 2006 that will be
able to use several different types of fuel, including ethanol.
Brazil, with the help of ethanol, expects to become energy
independent this year. Ethanol accounts for 20 percent of Brazil's fuel
transport market. Seven out of every 10 cars in Brazil can run on
ethanol, gasoline, or a mixture of both.
In Iceland, all electricity generation is from renewable sources.
Iceland is now taking the next step, and has started an initiative to
replace the use of fossil fuels with hydrogen by 2050.
To achieve this, in 1999, Icelanders founded a public-private
partnership called Icelandic New Energy. This partnership is the main
driver in hydrogen energy research and implementation in Iceland.
Public hydrogen-fueled buses began service in December of last year.
And experiments continue with hydrogen-driven consumer motorcycles,
small cars, and fishing boats.
We live in a much larger and more complex nation than Iceland or
Brazil. But we can share their vision of a future fueled by alternative
energy and improved conservation.
There are also exciting developments in nanotechnology, solar power,
energy-efficient materials, biomass, and green buildings.
All of these are examples of possible directions for our Nation's
energy future. But we need a more aggressive and focused research and
development effort to push these alternatives. And we need an effort to
create scientific breakthroughs to supplement existing technologies.
We have got to give it our best shot. As President Franklin Roosevelt
said, we must conduct ``bold, persistent experimentation.''
Our economic security is at stake. Our ability to compete in the new
world economy is at stake.
ARPA-E will help us move forward on existing technologies. It will
help us to find new technologies that are not even imaginable today.
And the tax incentives will keep us on the right track until more
dramatic breakthroughs occur.
I urge my colleagues to look closely at this legislation.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:

S. 2398

Be it enacted by the Senate and House of Representatives 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 ``Energy
Competitiveness Act of 2006''.
(b) Table of Contents.--The table of contents of this Act
is as follows:

Sec. 1. Short title; table of contents.

TITLE I--ADVANCED RESEARCH PROJECTS ADMINISTRATION-ENERGY

Sec. 101. Advanced Research Projects Administration-Energy.

TITLE II--ENERGY TAX INCENTIVES

Subtitle A--Energy Infrastructure Tax Incentives

Sec. 201. Extension of credit for electricity produced from certain
renewable resources.
Sec. 202. Extension and expansion of credit to holders of clean
renewable energy bonds.
Sec. 203. Extension and expansion of qualifying advanced coal project
credit.

[[Page S1970]]

Sec. 204. Extension and expansion of qualifying gasification project
credit.

Subtitle B--Domestic Fossil Fuel Security

Sec. 211. Extension of election to expense certain refineries.

Subtitle C--Conservation and Energy Efficiency Provisions

Sec. 221. Extension of energy efficient commercial buildings deduction.
Sec. 222. Extension of new energy efficient home credit.
Sec. 223. Extension of residential energy efficient property credit.
Sec. 224. Extension of credit for business installation of qualified
fuel cells and stationary microturbine power plants.
Sec. 225. Extension of business solar investment tax credit.

Subtitle D--Alternative Fuels and Vehicles Incentives

Sec. 231. Extension of excise tax provisions and income tax credit for
biodiesel and alternative fuels.
Sec. 232. Exception from depreciation limitation for certain
alternative and electric passenger automobiles.

TITLE I--ADVANCED RESEARCH PROJECTS ADMINISTRATION-ENERGY

SEC. 101. ADVANCED RESEARCH PROJECTS ADMINISTRATION-ENERGY.

(a) Establishment.--There is established the Advanced
Research Projects Administration-Energy (referred to in this
section as ``ARPA-E'').
(b) Goals.--The goals of ARPA-E are to reduce the quantity
of energy the United States imports from foreign sources and
to improve the competitiveness of the United States economy
by--
(1) promoting revolutionary changes in the critical
technologies that would promote energy competitiveness;
(2) turning cutting-edge science and engineering into
technologies for energy and environmental application; and
(3) accelerating innovation in energy and the environment
for both traditional and alternative energy sources and in
energy efficiency mechanisms to--
(A) reduce energy use;
(B) decrease the reliance of the United States on foreign
energy sources; and
(C) improve energy competitiveness.
(c) Director.--
(1) In general.--ARPA-E shall be headed by a Director
(referred to in this section as the ``Director'') appointed
by the President.
(2) Positions at level v.--Section 5316 of title 5, United
States Code, is amended by adding at the end the following:
``Director, Advanced Research Projects Administration-
Energy.''.
(d) Duties.--
(1) In general.--In carrying out this section, the Director
shall award competitive grants, cooperative agreements, or
contracts to institutions of higher education, companies, or
consortia of such entities (which may include federally
funded research and development centers) to achieve the goal
described in subsection (b) through acceleration of--
(A) energy-related research;
(B) development of resultant techniques, processes, and
technologies, and related testing and evaluation; and
(C) demonstration and commercial application of the most
promising technologies and research applications.
(2) Small-business concerns.--The Director shall carry out
programs established under this section, to the maximum
extent practicable, in a manner that is similar to the Small
Business Innovation Research Program established under
section 9 of the Small Business Act (15 U.S.C. 638) to ensure
that small-business concerns are fully able to participate in
the programs.
(e) Personnel.--
(1) Program managers.--
(A) Appointment.--The Director shall appoint employees to
serve as program managers for each of the programs that are
established to carry out the duties of ARPA-E under this
section.
(B) Duties.--Program managers shall be responsible for--
(i) establishing research and development goals for the
program, as well as publicizing goals of the program to the
public and private sectors;
(ii) soliciting applications for specific areas of
particular promise, especially areas for which the private
sector cannot or will not provide funding;
(iii) selecting research projects for support under the
program from among applications submitted to ARPA-E, based
on--

(I) the scientific and technical merit of the proposed
projects;
(II) the demonstrated capabilities of the applicants to
successfully carry out the proposed research project; and
(III) such other criteria as are established by the
Director; and

(iv) monitoring the progress of projects supported under
the program.
(2) Other personnel.--
(A) In general.--Subject to subparagraph (B), the Director
shall appoint such employees as are necessary to carry out
the duties of ARPA-E under this section.
(B) Limitations.--The Director shall appoint not more than
250 employees to carry out the duties of ARPA-E under this
section, including not less than 180 technical staff, of
which--
(i) not less than 20 staff shall be senior technical
managers (including program managers designated under
paragraph (1)); and
(ii) not less than 80 staff shall be technical program
managers.
(3) Experimental personnel authority.--In appointing
personnel for ARPA-E, the Director shall have the hiring and
management authorities described in section 1101 of the Strom
Thurmond National Defense Authorization Act for Fiscal Year
1999 (Public Law 105-261; 5 U.S.C. 3104 note).
(4) Maximum duration of employment.--
(A) Program managers and senior technical managers.--
(i) In general.--Subject to clause (ii), a program manager
and a senior technical manager appointed under this
subsection shall serve for a term not to exceed 4 years after
the date of appointment.
(ii) Extensions.--The Director may extend the term of
employment of a program manager or a senior technical manager
appointed under this subsection for not more than 4 years
through 1 or more 2-year terms.
(B) Technical program managers.--A technical program
manager appointed under this subsection shall serve for a
term not to exceed 6 years after the date of appointment.
(5) Location.--The office of an officer or employee of
ARPA-E shall not be located in the headquarters of the
Department of Energy.
(f) Transactions Other Than Contracts and Grants.--
(1) In general.--To carry out projects through ARPA-E, the
Director may enter into transactions (other than contracts,
cooperative agreements, and grants) to carry out advanced
research projects under this section under similar terms and
conditions as the authority is exercised under section 646(g)
of the Department of Energy Organization Act (42 U.S.C.
7256(g)).
(2) Peer review.--Peer review shall not be required for 75
percent of the research projects carried out by the Director
under this section.
(g) Prizes for Advanced Technology Achievements.--The
Director may carry out a program to award cash prizes in
recognition of outstanding achievements in basic, advanced,
and applied research, technology development, and prototype
development that have the potential for application to the
performance of the mission of ARPA-E under similar terms and
conditions as the authority is exercised under section 1008
of the Energy Policy Act of 2005 (42 U.S.C. 16396).
(h) Coordination of Activities.--The Director--
(1) shall ensure that the activities of ARPA-E are
coordinated with activities of Department of Energy offices
and outside agencies; and
(2) may carry out projects jointly with other agencies.
(i) Report.--Not later than September 30, 2007, the
Director shall submit to Congress a report on the activities
of ARPA-E under this section, including a recommendation on
whether ARPA-E needs an energy research laboratory.
(j) Authorization of Appropriations.--There are authorized
to be appropriated to carry out this section--
(1) $300,000,000 for fiscal year 2007;
(2) $600,000,000 for fiscal year 2008;
(3) $1,100,000,000 for fiscal year 2009;
(4) $1,500,000,000 for fiscal year 2010; and
(5) $2,000,000,000 for fiscal year 2011.

TITLE II--ENERGY TAX INCENTIVES

Subtitle A--Energy Infrastructure Tax Incentives

SEC. 201. EXTENSION OF CREDIT FOR ELECTRICITY PRODUCED FROM
CERTAIN RENEWABLE RESOURCES.

Section 45(d) of the Internal Revenue Code of 1986
(relating to qualified facilities) is amended by striking
``2008'' each place it appears and inserting ``2011''.

SEC. 202. EXTENSION AND EXPANSION OF CREDIT TO HOLDERS OF
CLEAN RENEWABLE ENERGY BONDS.

(a) In General.--Section 54(m) of the Internal Revenue Code
of 1986 (relating to termination) is amended by striking
``2007'' and inserting ``2010''.
(b) Annual Volume Cap for Bonds Issued During Extension
Period.--Paragraph (1) of section 54(f) of the Internal
Revenue Code of 1986 (relating to limitation on amount of
bonds designated) is amended to read as follows:
``(1) National limitation.--
``(A) Initial national limitation.--With respect to bonds
issued after December 31, 2005, and before January 1, 2008,
there is a national clean renewable energy bond limitation of
$800,000,000.
``(B) Annual national limitation.--With respect to bonds
issued after December 31, 2007, and before January 1, 2011,
there is a national clean renewable energy bond limitation
for each calendar year of $800,000,000.''.
(c) Effective Date.--The amendments made by this section
shall apply to bonds issued after the date of the enactment
of this Act.

SEC. 203. EXTENSION AND EXPANSION OF QUALIFYING ADVANCED COAL
PROJECT CREDIT.

(a) In General.--Section 48A(d)(3)(A) of the Internal
Revenue Code of 1986 (relating to aggregate credits) is
amended by striking ``$1,300,000,000'' and inserting
``$1,800,000,000''.
(b) Authorization of Additional Integrated Gasification
Combined Cycle Projects.--Subparagraph (B) of section
48A(d)(3) of te Internal Revenue Code of 1986 (relating to
aggregate credits) is amended to read as follows:

[[Page S1971]]

``(B) Particular projects.--Of the dollar amount in
subparagraph (A), the Secretary is authorized to certify--
``(i) $800,000,000 for integrated gasification combined
cycle projects the application for which is submitted during
the period described in paragraph (2)(A)(i),
``(ii) $500,000,000 for projects which use other advanced
coal-based generation technologies the application for which
is submitted during the period described in paragraph
(2)(A)(i), and
``(iii) $500,000,000 for integrated gasification combined
cycle projects the application for which is submitted during
the period described in paragraph (2)(A)(ii).''.
(c) Application Period for Additional Projects.--
Subparagraph (A) of section 48A(d)(2) of the Internal Revenue
Code of 1986 (relating to certification) is amended to read
as follows:
``(A) Application period.--Each applicant for certification
under this paragraph shall submit an application meeting the
requirements of subparagraph (B). An applicant may only
submit an application--
``(i) for an allocation from the dollar amount specified in
clause (i) or (ii) of paragraph (3)(A) during the 3-year
period beginning on the date the Secretary establishes the
program under paragraph (1), and
``(ii) for an allocation from the dollar amount specified
in paragraph (3)(A)(iii) during the 3-year period beginning
at the termination of the period described in clause (i).''.
(d) Effective Date.--The amendments made by this section
shall take effect as if included in the amendments made by
section 1307 of the Energy Policy Act of 2005.

SEC. 204. EXTENSION AND EXPANSION OF QUALIFYING GASIFICATION
PROJECT CREDIT.

(a) In General.--Section 48B(d)(1) of the Internal Revenue
Code of 1986 (relating to qualifying gasification project
program) is amended by striking ``$350,000,000'' and
inserting ``$850,000,000''.
(b) Effective Date.--The amendment made by this section
shall take effect as if included in the amendments made by
section 1307 of the Energy Policy Act of 2005.

Subtitle B--Domestic Fossil Fuel Security

SEC. 211. EXTENSION OF ELECTION TO EXPENSE CERTAIN
REFINERIES.

(a) In General.--Section 179C(c)(1) of the Internal Revenue
Code of 1986 (defining qualified refinery property) is
amended--
(1) by striking ``and before January 1, 2012'' in
subparagraph (B) and inserting ``and, in the case of any
qualified refinery described in subsection (d)(1), before
January 1, 2012'', and
(2) by inserting ``if described in subsection (d)(1)''
after ``of which'' in subparagraph (F)(i).
(b) Conforming Amendment.--Subsection (d) of section 179C
of the Internal Revenue Code of 1986 is amended to read as
follows:
``(d) Qualified Refinery.--For purposes of this section,
the term `qualified refinery' means any refinery located in
the United States which is designed to serve the primary
purpose of processing liquid fuel from--
``(1) crude oil, or
``(2) qualified fuels (as defined in section 45K(c)).''.
(c) Effective Date.--The amendments made by this section
shall take effect as if included in the amendment made by
section 1323(a) of the Energy Policy Act of 2005.

Subtitle C--Conservation and Energy Efficiency Provisions

SEC. 221. EXTENSION OF ENERGY EFFICIENT COMMERCIAL BUILDINGS
DEDUCTION.

Section 179D(h) of the Internal Revenue Code of 1986
(relating to termination) is amended by striking ``2007'' and
inserting ``2010''.

SEC. 222. EXTENSION OF NEW ENERGY EFFICIENT HOME CREDIT.

(a) In General.--Subsection (g) of section 45L of the
Internal Revenue Code of 1986 (relating to new energy
efficient home credit) is amended to read as follows:
``(g) Termination.--This section shall not apply to--
``(1) any qualified new energy efficient home meeting the
energy saving requirements of subsection (c)(1) acquired
after December 31, 2010, and
``(2) any qualified new energy efficient home meeting the
energy saving requirements of paragraph (2) or (3) of
subsection (c) acquired after December 31, 2007.''.
(b) Effective Date.--The amendment made by this section
shall take effect as if included in the amendments made by
section 1332 of the Energy Policy Act of 2005.

SEC. 223. EXTENSION OF RESIDENTIAL ENERGY EFFICIENT PROPERTY
CREDIT.

Section 25D(g) of the Internal Revenue Code of 1986
(relating to termination) is amended by striking ``2007'' and
inserting ``2010''.

SEC. 224. EXTENSION OF CREDIT FOR BUSINESS INSTALLATION OF
QUALIFIED FUEL CELLS AND STATIONARY
MICROTURBINE POWER PLANTS.

Sections 48(c)(1)(E) and 48(c)(2)(E) of the Internal
Revenue Code of 1986 (relating to termination) are each
amended by striking ``2007'' and inserting ``2010''.

SEC. 225. EXTENSION OF BUSINESS SOLAR INVESTMENT TAX CREDIT.

Sections 48(a)(2)(A)(i)(II) and 48(a)(3)(A)(ii) of the
Internal Revenue Code of 1986 (relating to termination) are
each amended by striking ``2008'' and inserting ``2011''.

Subtitle D--Alternative Fuels and Vehicles Incentives

SEC. 231. EXTENSION OF EXCISE TAX PROVISIONS AND INCOME TAX
CREDIT FOR BIODIESEL AND ALTERNATIVE FUELS.

(a) Biodiesel.--Sections 40A(g), 6426(c)(6), and
6427(e)(5)(B) of the Internal Revenue Code of 1986 are each
amended by striking ``2008'' and inserting ``2010''.
(b) Alternative Fuel.--
(1) Fuels.--Sections 6426(d)(4) and 6427(e)(5)(C) of the
Internal Revenue Code of 1986 are each amended by striking
``September 30, 2009'' and inserting ``December 31, 2010''.
(2) Refueling property.--Section 30C(g) of such Code is
amended by striking ``2009'' and inserting ``2010''.
(c) Effective Date.--The amendments made by this section
shall take effect on January 1, 2007.

SEC. 232. EXCEPTION FROM DEPRECIATION LIMITATION FOR CERTAIN
ALTERNATIVE AND ELECTRIC PASSENGER AUTOMOBILES.

(a) In General.--Paragraph (1) of section 280F(a) of the
Internal Revenue Code of 1986 (relating to limitation) is
amended by adding at the end the following new subparagraph:
``(D) Special rule for certain alternative motor vehicles
and qualified electric vehicles.--Subparagraph (A) shall not
apply to any motor vehicle for which a credit is allowable
under section 30 or 30B.''.
(b) Conforming Amendment.--Subparagraph (C) of section
280F(a)(1) of the Internal Revenue Code of 1986 is amended by
striking clause (ii) and by redesignating clause (iii) as
clause (ii).
(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.

____________________