Text: S.162 — 110th Congress (2007-2008)All Information (Except Text)

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Introduced in Senate (01/04/2007)


110th CONGRESS
1st Session
S. 162


To amend the Internal Revenue Code of 1986 to modify the alcohol credit and the alternative fuel credit, to amend the Clean Air Act to promote the installation of fuel pumps for E–85 fuel, to amend title 49 of the United States Code to require the manufacture of dual fueled automobiles, and for other purposes.


IN THE SENATE OF THE UNITED STATES

January 4, 2007

Mr. Lugar introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To amend the Internal Revenue Code of 1986 to modify the alcohol credit and the alternative fuel credit, to amend the Clean Air Act to promote the installation of fuel pumps for E–85 fuel, to amend title 49 of the United States Code to require the manufacture of dual fueled automobiles, and for other purposes.

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 “National Fuels Initiative ”.

(b) Table of contents.—The table of contents of this Act is as follows:


Sec. 1. Short title; table of contents.

Sec. 2. Findings.

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

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

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

Sec. 104. Requirement to manufacture dual fueled automobiles.

Sec. 105. Definition of automobile.

Sec. 106. Average fuel economy standards.

Sec. 107. Credit trading and compliance.

Sec. 108. Consumer tax credit.

Sec. 109. Advanced technology motor vehicles manufacturing credit.

Sec. 201. Definitions.

Sec. 202. Informing public.

Sec. 203. Labeling.

Sec. 204. Collection facilities.

Sec. 205. Information exchange.

Sec. 206. Used oil from Federal agencies.

Sec. 207. Used oil in space heaters.

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

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

SEC. 2. Findings.

Congress makes the following findings:

(1) The national security and economic prosperity of the United States is threatened by our oil dependence, and the reliance of the United States on oil imports impinges on our foreign policy. Adversarial regimes rich in oil and natural gas are using their energy supplies as leverage against import-dependent countries and are using increased revenues from oil and gas exports to gain international influence, fund anti-American appeals, entrench authoritarianism, and support terrorism.

(2) Global competition for oil reserves is increasing as supply is depleted, demand increases, and foreign governments attempt to exert more control over reserves. Supplies of oil are vulnerable to disruption resulting from war, political manipulation, natural disasters, and terrorist attacks. A major loss in oil supply could result in a price shock extremely damaging to the economy of the United States and our way of life, and competition over scarce resources could create conflict.

(3) Inefficient and unclean use of oil damages the environment and worsens the threat of global climate change.

SEC. 101. Declaration of United States policy on the development and use of renewable alternative fuels.

Congress declares that:

(1) It is the policy of the United States to reduce dependence on imported oil through increased efficiency and diversification of fuel sources through dramatically expanded use of clean alternative fuels. Such a reduction will increase the foreign policy flexibility of the United States, make the United States less vulnerable to oil supply disruption, and promote economic growth. The United States will continue to promote research and development of a range of alternatives fuels, and it will implement policies to accelerate the deployment and commercialization of existing efficiency and alternative fuels technologies.

(2) It is the policy goal of the United States to produce and utilize the equivalent of at least 100,000,000,000 gallons of renewable fuel per year by 2025. This amount of renewable fuel, along with innovation in fuel efficiency, will substantially reduce the need for oil imports in the United States.

(3) It is the policy of the United States to promote the development of a global biofuels market through partnerships with other nations and to reduce trade barriers for renewable fuels.

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

(a) Income tax credit for alcohol.—

(1) RATE BASED ON PRICE OF OIL.—Section 40 of the Internal Revenue Code of 1986 (relating to alcohol used as fuel) is amended by striking “60 cents” each place it appears and inserting “the applicable amount”.

(2) APPLICABLE AMOUNT.—Subsection (h) of section 40 of such Code is amended to read as follows:

“(h) Applicable amount.—For purposes of this section—

“(1) IN GENERAL.—The term ‘applicable amount’ means, with respect to any quarter—

“(A) five cents for each $1 (or any fraction thereof) by which $45 exceeds—

“(i) in the case of the alcohol mixture credit, the average price of a barrel of oil for the quarter during which the qualified mixture used is sold or used, and

“(ii) in the case of the alcohol credit, the average price of a barrel of oil for the quarter during which the alcohol was sold or used, and

“(B) $0 for any quarter in which the price of a barrel of oil is greater than $45.

“(2) SPECIAL RULE FOR CERTAIN TAXPAYERS.—

“(A) IN GENERAL.—In the case of any alcohol or qualified mixture sold or used before January 1, 2011, by an applicable taxpayer, the applicable amount is—

“(i) 60 cents in the case of a qualified mixture in which none of the alcohol consists of ethanol, and

“(ii) 51 cents in any other case.

“(B) APPLICABLE TAXPAYER.—For purposes of subparagraph (A), the term ‘applicable taxpayer’ means a taxpayer who, on the day before the date of the enactment of the National Fuels Initiative, is in the trade or business of producing qualified mixtures or selling alcohol at retail for use as a fuel.

“(3) OTHER RULES.—For purposes of this subsection—

“(A) DETERMINATION OF AVERAGE PRICE.—The average price of a barrel of oil shall be determined under regulations prescribed by the Secretary.

“(B) BARREL.—The term ‘barrel’ means 42 United States gallons.”.

(3) MODIFICATION OF SMALL ETHANOL PRODUCER CREDIT.—Paragraph (1) of section 40(g) of such Code is amended by adding at the end the following new sentence: “Such term shall not include any person who is not in the trade or business of producing alcohol (as defined in subsection (d)(1)(A) without regard to clauses (i) and (ii)) before the date of the enactment of this Act.”.

(4) EXTENSION OF CREDIT.—

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

(i) by striking “This section” and inserting “Except as provided in paragraph (2), this section”,

(ii) in subparagraph (A), by striking “2010” and inserting “2020”, and

(iii) in subparagraph (B), by striking “2011” and inserting “2021”.

(B) TERMINATION OF SMALL ETHANOL PRODUCER CREDIT.—

(i) IN GENERAL.—Subsection (e) of section 40 of such Code is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph:

“(2) SMALL ETHANOL PRODUCER CREDIT.—No credit shall be allowed under subsection (a)(3) for any sale or use—

“(A) for any period after December 31, 2010, or

“(B) for any period before January 1, 2011, during which the rates of tax under section 4081(a)(2)(A) are 4.3 cents per gallon.”.

(ii) CONFORMING AMENDMENT.—Section 40(e)(3) of such Code, as redesignated by clause (i), is amended by inserting “or (2)” after “paragraph (1)”.

(5) CONFORMING AMENDMENT.—Section 40(b) of such Code is amended by striking paragraph (3) and by redesignating paragraphs (4) and (5) as paragraph (3) and (4), respectively.

(b) Modifications to excise tax credit and payments for alcohol.—

(1) IN GENERAL.—Paragraph (2) of section 6426(b) of the Internal Revenue Code of 1986 is amended to read as follows:

“(2) APPLICABLE AMOUNT.—For purposes of this section—

“(A) IN GENERAL.—The term ‘applicable amount’ means, with respect to any quarter—

“(i) five cents for each $1 (or any fraction thereof) by which $45 exceeds the average price of a barrel of oil for the quarter during which the alcohol fuel mixture is sold or used, and

“(ii) $0 for any quarter in which the price of a barrel of oil is greater than $45.

“(B) SPECIAL RULE FOR CERTAIN TAXPAYERS.—

“(i) IN GENERAL.—In the case of any alcohol fuel mixture sold or used before January 1, 2011, by an applicable taxpayer, the applicable amount is—

“(I) 60 cents in the case of a qualified mixture in which none of the alcohol consists of ethanol, and

“(II) 51 cents in any other case.

“(ii) APPLICABLE TAXPAYER.—For purposes of subparagraph (A), the term ‘applicable taxpayer’ means a taxpayer who, on the day before the date of the enactment of the National Fuels Initiative, is in the trade or business of producing alcohol fuel mixtures.

“(C) OTHER RULES.—For purposes of this subsection—

“(i) DETERMINATION OF AVERAGE PRICE.—The average price of a barrel of oil shall be determined under regulations prescribed by the Secretary.

“(ii) BARREL.—The term ‘barrel’ means 42 United States gallons.”.

(2) EXTENSION.—

(A) ALCOHOL FUEL MIXTURE CREDIT.—Paragraph (5) of section 6426(b) of such Code is amended by striking “2010” and inserting “2020”.

(B) PAYMENTS.—Subparagraph (A) of section 6427(e)(5) of such Code is amended by striking “2010” and inserting “2020”.

(c) Modifications to excise tax and payments for alternative fuel.—

(1) ALTERNATIVE FUEL CREDIT.—

(A) RATE.—

(i) IN GENERAL.—Paragraph (1) of section 6426(d) of the Internal Revenue Code of 1986 is amended by striking “50 cents” and inserting “the applicable amount”.

(ii) APPLICABLE AMOUNT.—Subsection (d) of section 6426 of such Code is amended by redesignating paragraphs (2), (3), and (4) as paragraphs (3), (4), and (5), respectively, and by inserting after paragraph (1) the following new paragraph:

“(2) APPLICABLE AMOUNT.—For purposes of this section—

“(A) IN GENERAL.—The term ‘applicable amount’ means, with respect to any quarter—

“(i) five cents for each $1 (or any fraction thereof) by which $45 exceeds the average price of a barrel of oil for the quarter during which the alternative fuel is sold or used, and

“(ii) $0 for any quarter in which the price of a barrel of oil is greater than $45.

“(B) SPECIAL RULE FOR CERTAIN TAXPAYERS.—

“(i) IN GENERAL.—In the case of any alternative fuel sold or used before January 1, 2011, by an applicable taxpayer, the applicable amount is 50 cents.

“(ii) APPLICABLE TAXPAYER.—For purposes of subparagraph (A), the term ‘applicable taxpayer’ means a taxpayer who, on the day before the date of the enactment of the National Fuels Initiative, is in the trade or business of producing alternative fuels.

“(C) OTHER RULES.—For purposes of this subsection—

“(i) DETERMINATION OF AVERAGE PRICE.—The average price of a barrel of oil shall be determined under regulations prescribed by the Secretary.

“(ii) BARREL.—The term ‘barrel’ means 42 United States gallons.”.

(B) EXTENSION.—Paragraph (5) of section 6426(d) of such Code, as redesignated by subparagraph (A), is amended by striking “2009 (September 30, 2014, in the case of any sale or use involving liquified hydrogen)” and inserting “2020”.

(2) ALTERNATIVE FUEL MIXTURE CREDIT.—

(A) RATE.—

(i) IN GENERAL.—Paragraph (1) of section 6426(e) of the Internal Revenue Code of 1986 is amended by striking “50 cents” and inserting “the applicable amount”.

(ii) APPLICABLE AMOUNT.—Subsection (e) of section 6426 of such Code is amended by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively, and by inserting after paragraph (1) the following new paragraph:

“(2) APPLICABLE AMOUNT.—For purposes of this section—

“(A) IN GENERAL.—The term ‘applicable amount’ means, with respect to any quarter—

“(i) five cents for each $1 (or any fraction thereof) by which $45 exceeds the average price of a barrel of oil for the quarter during which the alternative fuel mixture is sold or used, and

“(ii) $0 for any quarter in which the price of a barrel of oil is greater than $45.

“(B) SPECIAL RULE FOR CERTAIN TAXPAYERS.—

“(i) IN GENERAL.—In the case of any alternative fuel mixture sold or used before January 1, 2011, by an applicable taxpayer, the applicable amount is 50 cents.

“(ii) APPLICABLE TAXPAYER.—For purposes of subparagraph (A), the term ‘applicable taxpayer’ means a taxpayer who, on the day before the date of the enactment of the National Fuels Initiative, is in the trade or business of producing alternative fuel mixtures.

“(C) OTHER RULES.—For purposes of this subsection—

“(i) DETERMINATION OF AVERAGE PRICE.—The average price of a barrel of oil shall be determined under regulations prescribed by the Secretary.

“(ii) BARREL.—The term ‘barrel’ means 42 United States gallons.”.

(B) EXTENSION.—Paragraph (4) of section 6426(e) of such Code, as redesignated by subparagraph (A), is amended by striking “2009 (September 30, 2014, in the case of any sal or use involving liquified hydrogen)” and inserting “2020”.

(3) PAYMENTS.—Paragraph (5) of section 6427(e) is amended by inserting “and” at the end of subparagraph (B), by striking subparagraphs (C) and (D), and by inserting after subparagraph (B) the following:

“(C) any alternative fuel or alternative fuel mixture (as defined in subsection (d)(3) or (e)(3) of section 6426) sold or used after September 30, 2020.”.

(d) Effective date.—The amendments made by this section shall apply to fuel used or sold in quarters beginning after the date of the enactment of this Act.

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

Section 211(o) of the Clean Air Act (42 U.S.C. 7545(o)) is amended by adding at the end the following:

“(11) INSTALLATION OF E–85 FUEL PUMPS BY MAJOR OIL COMPANIES AT OWNED STATIONS AND BRANDED STATIONS.—

“(A) DEFINITIONS.—In this paragraph:

“(i) E–85 FUEL.—The term ‘E–85 fuel’ means a blend of gasoline approximately 85 percent of the content of which is derived from ethanol produced in the United States.

“(ii) MAJOR OIL COMPANY.—The term ‘major oil company’ means any person that, individually or together with any other person with respect to which the person has an affiliate relationship or significant ownership interest, has not less than 4,500 retail station outlets according to the latest publication of the Petroleum News Annual Factbook.

“(iii) SECRETARY.—The term ‘Secretary’ means the Secretary of Energy, acting in consultation with the Administrator of the Environmental Protection Agency and the Secretary of Agriculture.

“(B) REGULATIONS.—The Secretary shall promulgate regulations to ensure that each major oil company that sells or introduces gasoline into commerce in the United States through wholly-owned stations or branded stations installs or otherwise makes available 1 or more pumps that dispense E–85 fuel (including any other equipment necessary, such as including tanks, to ensure that the pumps function properly) at not less than the applicable percentage of the wholly-owned stations and the branded stations of the major oil company specified in subparagraph (C).

“(C) APPLICABLE PERCENTAGE.—For the purpose of subparagraph (B), the applicable percentage of the wholly-owned stations and the branded stations shall be determined in accordance with the following table:

“Applicable percentage of wholly-owned stations and branded stations
Calendar year: (percent):
2008 5
2009 10
2010 15
2011 20
2012 25
2013 30
2014 35
2015 40
2016 45
2017 and each calendar year thereafter 50.

“(D) GEOGRAPHIC DISTRIBUTION.—

“(i) IN GENERAL.—Subject to clause (ii), in promulgating regulations under subparagraph (B), the Secretary shall ensure that each major oil company described in subparagraph (B) installs or otherwise makes available 1 or more pumps that dispense E–85 fuel at not less than a minimum percentage (specified in the regulations) of the wholly-owned stations and the branded stations of the major oil company in each State.

“(ii) REQUIREMENT.—In specifying the minimum percentage under clause (i), the Secretary shall ensure that each major oil company installs or otherwise makes available 1 or more pumps described in that clause in each State in which the major oil company operates.

“(E) FINANCIAL RESPONSIBILITY.—In promulgating regulations under subparagraph (B), the Secretary shall ensure that each major oil company described in that subparagraph assumes full financial responsibility for the costs of installing or otherwise making available the pumps described in that subparagraph and any other equipment necessary (including tanks) to ensure that the pumps function properly.

“(F) PRODUCTION CREDITS FOR EXCEEDING E–85 FUEL PUMPS INSTALLATION REQUIREMENT.—

“(i) EARNING AND PERIOD FOR APPLYING CREDITS.—If the percentage of the wholly-owned stations and the branded stations of a major oil company at which the major oil company installs E–85 fuel pumps in a particular calendar year exceeds the percentage required under subparagraph (C), the major oil company earns credits under this paragraph, which may be applied to any of the 3 consecutive calendar years immediately after the calendar year for which the credits are earned.

“(ii) TRADING CREDITS.—Subject to clause (iii), a major oil company that has earned credits under clause (i) may sell credits to another major oil company to enable the purchaser to meet the requirement under subparagraph (C).

“(iii) EXCEPTION.—A major oil company may not use credits purchased under clause (ii) to fulfill the geographic distribution requirement in subparagraph (D).”.

SEC. 104. Requirement to manufacture dual fueled automobiles.

(a) Requirement.—

(1) IN GENERAL.—Chapter 329 of title 49, United States Code, is amended by inserting after section 32902 the following:

§ 32902A. Requirement to manufacture dual fueled automobiles

“(a) Requirement.—Each manufacturer of new automobiles that are capable of operating on gasoline or diesel fuel shall ensure that the percentage of such automobiles, manufactured in any model year after model year 2007 and distributed in commerce for sale in the United States, which are dual fueled automobiles is equal to not less than the applicable percentage set forth in the following table:


“For the model year: The percentage of dual fueled automobiles manufactured shall be not less than:
  2008 10 percent
  2009 20 percent
  2010 30 percent
  2011 40 percent
  2012 50 percent
  2013 60 percent
  2014 70 percent
  2015 80 percent
  2016 90 percent
  2017 and beyond 100 percent

“(b) Production credits for exceeding flexible fuel automobile production requirement.—

“(1) EARNING AND PERIOD FOR APPLYING CREDITS.—If the number of dual fueled automobiles manufactured by a manufacturer in a particular model year exceeds the number required under subsection (a), the manufacturer earns credits under this section, which may be applied to any of the 3 consecutive model years immediately after the model year for which such credits are earned.

“(2) TRADING CREDITS.—A manufacturer that has earned credits under paragraph (1) may sell credits to another manufacturer to enable the purchaser to meet the requirement under subsection (a).”.

(2) TECHNICAL AMENDMENT.—The table of sections for chapter 329 of title 49, United States Code, is amended by inserting after the item relating to section 32902 the following:


“32902A. Requirement to manufacture dual fueled automobiles.”.

(b) Activities To promote the use of certain alternative fuels.—The Secretary of Transportation shall carry out activities to promote the use of fuel mixtures containing gasoline or diesel fuel and 1 or more alternative fuels, including a mixture containing at least 85 percent of methanol, denatured ethanol, and other alcohols by volume with gasoline or other fuels, to power automobiles in the United States.

SEC. 105. Definition of automobile.

(a) In general.—Section 32901(a)(3) of title 49, United States Code, is amended by striking “rated at—” and all that follows through the period at the end and inserting “rated at not more than 10,000 pounds gross vehicle weight.”.

(b) Fuel economy information.—Section 32908(a) of title 49, United States Code, is amended, by striking “section—” and all that follows through “(2)” and inserting “section, the term”.

(c) Effective date.—The amendments made by this section shall apply to model year 2009 and each subsequent model year.

SEC. 106. Average fuel economy standards.

(a) Standards.—Section 32902 of title 49, United States Code, is amended—

(1) in subsection (a)—

(A) in the header, by inserting “manufactured before model year 2012” after “Non-passenger automobiles”; and

(B) by adding at the end the following: “This subsection shall not apply to automobiles manufactured after model year 2011.”;

(2) in subsection (b)—

(A) in the header, by inserting “manufactured before model year 2012” after “Passenger automobiles”;

(B) by inserting “and before model year 2009” after “1984”; and

(C) by adding at the end the following: “Such standard shall be increased by 4 percent per year for model years 2009 through 2011 (rounded to the nearest 110 mile per gallon)”;

(3) by amending subsection (c) to read as follows:

“(c) Automobiles manufactured after model year 2011.—(1) Not later than 18 months before the beginning of each model year after model year 2011, the Secretary of Transportation shall prescribe, by regulation—

“(A) an average fuel economy standard for automobiles manufactured by a manufacturer in that model year; or

“(B) based on 1 or more vehicle attributes that relate to fuel economy—

“(i) separate standards for different classes of automobiles; or

“(ii) standards expressed in the form of a mathematical function.

“(2)(A) Except as provided under paragraphs (3) and (4) and subsection (d), standards under paragraph (1) shall attain a projected aggregate level of average fuel economy of 27.5 miles per gallon for all automobiles manufactured by all manufacturers for model year 2012.

“(B) The projected aggregate level of average fuel economy for model year 2013 and each succeeding model year shall be increased by 4 percent from the level for the prior model year (rounded to the nearest 1/10 mile per gallon).

“(C) Notwithstanding subparagraphs (A) and (B), the fleetwide average fuel economy standard for passenger automobiles manufactured by a manufacturer in a model year for that manufacturer’s domestic fleet and for its foreign fleet as calculated under section 32904 as in effect before the date of enactment of the National Fuels Initiative shall not be less than 92 percent of the average fuel economy projected by the Secretary for the combined domestic and foreign fleets manufactured by all manufacturers in that model year.

“(3) If the actual aggregate level of average fuel economy achieved by manufacturers for each of 3 consecutive model years is at least 5 percent less than the projected aggregate level of average fuel economy for such model year, the Secretary shall make appropriate adjustments to the standards prescribed under this subsection.

“(4)(A) Notwithstanding paragraphs (1) through (3) and subsection (b), the Secretary of Transportation may prescribe a lower average fuel economy standard for 1 or more model years if the Secretary of Transportation, in consultation with the Secretary of Energy, determines that the minimum standards prescribed under paragraph (2) or (3) or subsection (b) for each model year—

“(i) are technologically unachievable;

“(ii) cannot be achieved without materially reducing the overall safety of automobiles manufactured or sold in the United States; or

“(iii) is shown, by clear and convincing evidence, not to be cost effective.

“(B) If a lower standard is prescribed for a model year under subparagraph (A), such standard shall be the maximum standard that—

“(i) is technologically achievable;

“(ii) can be achieved without materially reducing the overall safety of automobiles manufactured or sold in the United States; and

“(iii) is cost effective.

“(5) In determining cost effectiveness under paragraph (4)(A)(iii), the Secretary of Transportation shall take into account the total value to the Nation of reduced petroleum use, including the value of reducing external costs of petroleum use, using a value for such costs equal to 50 percent of the value of a gallon of gasoline saved or the amount determined in an analysis of the external costs of petroleum use that considers—

“(A) value to consumers;

“(B) economic security;

“(C) national security;

“(D) foreign policy;

“(E) the impact of oil use—

“(i) on sustained cartel rents paid to foreign suppliers;

“(ii) on long-run potential gross domestic product due to higher normal-market oil price levels, including inflationary impacts;

“(iii) on import costs, wealth transfers, and potential gross domestic product due to increased trade imbalances;

“(iv) on import costs and wealth transfers during oil shocks;

“(v) on macroeconomic dislocation and adjustment costs during oil shocks;

“(vi) on the cost of existing energy security policies, including the management of the Strategic Petroleum Reserve;

“(vii) on the timing and severity of the oil peaking problem;

“(viii) on the risk, probability, size, and duration of oil supply disruptions;

“(ix) on OPEC strategic behavior and long-run oil pricing;

“(x) on the short term elasticity of energy demand and the magnitude of price increases resulting from a supply shock;

“(xi) on oil imports, military costs, and related security costs, including intelligence, homeland security, sea lane security and infrastructure, and other military activities;

“(xii) on oil imports, diplomatic and foreign policy flexibility, and connections to geopolitical strife, terrorism, and international development activities;

“(xiii) all relevant environmental hazards under the jurisdiction of the Environmental Protection Agency; and

“(xiv) on well-to-wheels urban and local air emissions of ‘pollutants’ and their uninternalized costs;

“(F) the impact of the oil or energy intensity of the United States economy on the sensitivity of the economy to oil price changes, including the magnitude of gross domestic product losses in response to short term price shocks or long term price increases;

“(G) the impact of United States payments for oil imports on political, economic, and military developments in unstable or unfriendly oil exporting countries;

“(H) the uninternalized costs of pipeline and storage oil seepage, and for risk of oil spills from production, handling, and transport, and related landscape damage; and

“(I) additional relevant factors, as determined by the Secretary.

“(6) When considering the value to consumers of a gallon of gasoline saved, the Secretary of Transportation may not use a value less than the greatest of—

“(A) the average national cost of a gallon of gasoline sold in the United States during the 12-month period ending on the date on which the new fuel economy standard is proposed;

“(B) the most recent weekly estimate by the Energy Information Administration of the Department of Energy of the average national cost of a gallon of gasoline (all grades) sold in the United States; or

“(C) the gasoline prices projected by the Energy Information Administration for the 20-year period beginning in the year following the year in which the standards are established.

“(7) In prescribing standards under this subsection, the Secretary may prescribe standards for 1 or more model years.

“(8)(A) Not later than December 31, 2016, the Secretary of Transportation, the Secretary of Energy, and the Administrator of the Environmental Protection Agency shall submit a joint report to Congress on the state of global automotive efficiency technology development, and on the accuracy of tests used to measure fuel economy of automobiles under section 32904(c), utilizing the study and assessment of the National Academy of Sciences referred to in subparagraph (B).

“(B) The Secretary shall enter into appropriate arrangements with the National Academy of Sciences to conduct a comprehensive study of the technological opportunities to enhance fuel economy and an analysis and assessment of the accuracy of fuel economy tests used by the Administrator of the Environmental Protection Agency to measure fuel economy for each model under section 32904(c). Such analysis and assessment shall identify any additional factors or methods that should be included in tests to measure fuel economy for each model to more accurately reflect actual fuel economy of automobiles. The Secretary and the Administrator of the Environmental Protection Agency shall furnish, at the request of the Academy, any information which the Academy determines to be necessary to conduct the study, analysis, and assessment under this subparagraph.

“(C) The report submitted under subparagraph (A) shall include—

“(i) the study of the National Academy of Sciences referred to in subparagraph (B); and

“(ii) an assessment by the Secretary of technological opportunities to enhance fuel economy and opportunities to increase overall fleet safety.

“(D) The report submitted under subparagraph (A) shall identify and examine additional opportunities to reform the regulatory structure under this chapter, including approaches that seek to merge vehicle and fuel requirements into a single system that achieves equal or greater reduction in petroleum use and environmental benefits.

“(E) The report submitted under subparagraph (A) shall—

“(i) include conclusions reached by the Administrator of the Environmental Protection Agency, as a result of detailed analysis and public comment, on the accuracy of current fuel economy tests;

“(ii) identify any additional factors that the Administrator determines should be included in tests to measure fuel economy for each model to more accurately reflect actual fuel economy of automobiles; and

“(iii) include a description of options, formulated by the Secretary and the Administrator, to incorporate such additional factors in fuel economy tests in a manner that will not effectively increase or decrease average fuel economy for any automobile manufacturer.

“(F) There is authorized to be appropriated to the Secretary such amounts as are required to carry out the study, analysis, and assessment required by subparagraph (B).”; and

(4) in subsection (g)(2), by striking “(and submit the amendment to Congress when required under subsection (c)(2) of this section)”.

(b) Conforming amendments.—

(1) IN GENERAL.—Chapter 329 of title 49, United States Code, is amended—

(A) in section 32903—

(i) by striking “passenger” each place it appears;

(ii) by striking “section 32902(b)–(d) of this title” each place it appears and inserting “subsection (c) or (d) of section 32902”;

(iii) by striking subsection (e); and

(iv) by redesignating subsection (f) as subsection (e); and

(B) in section 32904(a)—

(i) by striking “passenger” each place it appears; and

(ii) in paragraph (1), by striking “subject to” and all that follows through “section 32902(b)–(d) of this title” and inserting “subsection (c) or (d) of section 32902”.

(2) EFFECTIVE DATE.—The amendments made by paragraph (1) shall apply to automobiles manufactured after model year 2011.

SEC. 107. Credit trading and compliance.

(a) Credit trading.—Section 32903(a) of title 49, United States Code, is amended—

(1) by inserting “Credits earned by a manufacturer under this section may be sold to any other manufacturer and used as if earned by that manufacturer; except that credits earned by a manufacturer described in section 32904(b)(1)(A)(i) may not be sold to or purchased by a manufacturer described in 32904(b)(1)(A)(ii),” after “earns credits.”; and

(2) by striking “3 consecutive model years immediately” each place it appears and inserting “model years”.

(b) Treatment of imports.—

(1) CONFORMING AMENDMENT.—Section 32904(b) is amended by striking “passenger” each place it appears.

(2) APPLICABILITY.—The amendments made by paragraph (1) shall apply to automobiles manufactured after model year 2011.

(c) Multi-year compliance period.—Section 32904(c) of such title is amended—

(1) by inserting “(1)” before “The Administrator”; and

(2) by adding at the end the following:

“(2) The Secretary, by rule, may allow a manufacturer to elect a multi-year compliance period of not more than 4 consecutive model years in lieu of the single model year compliance period otherwise applicable under this chapter.”.

SEC. 108. Consumer tax credit.

(a) Elimination on number of new qualified hybrid and advanced lean burn technology vehicles eligible for alternative motor vehicle credit.—

(1) IN GENERAL.—Section 30B of the Internal Revenue Code of 1986 is amended—

(A) by striking subsection (f); and

(B) by redesignating subsections (g) through (j) as subsections (f) through (i), respectively.

(2) CONFORMING AMENDMENTS.—

(A) Paragraphs (4) and (6) of section 30B(h) of such Code are each amended by striking “(determined without regard to subsection (g))” and inserting “determined without regard to subsection (f))”.

(B) Section 38(b)(25) of such Code is amended by striking “section 30B(g)(1)” and inserting “section 30B(f)(1)”.

(C) Section 55(c)(2) of such Code is amended by striking “section 30B(g)(2)” and inserting “section 30B(f)(2)”.

(D) Section 1016(a)(36) of such Code is amended by striking “section 30B(h)(4)” and inserting “section 30B(g)(4)”.

(E) Section 6501(m) of such Code is amended by striking “section 30B(h)(9)” and inserting “section 30B(g)(9)”.

(b) Extension of alternative vehicle credit for new qualified hybrid motor vehicles.—Paragraph (3) of section 30B(i) of such Code (as redesignated by subsection (a)) is amended by striking “December 31, 2009” and inserting “December 31, 2010”.

(c) Effective date.—The amendments made by this section shall apply to property placed in service after December 31, 2005, in taxable years ending after such date.

SEC. 109. Advanced technology motor vehicles manufacturing credit.

(a) 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 section:

“SEC. 30D. 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 35 percent of the qualified investment of an eligible taxpayer for such taxable year.

“(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 in the United States of the eligible taxpayer to produce advanced technology motor vehicles or to produce eligible components,

“(B) for engineering integration performed in the United States of such vehicles and components as described in subsection (d),

“(C) for research and development performed in the United States related to advanced technology motor vehicles and eligible components, and

“(D) for employee retraining with respect to the manufacturing of such vehicles or components (determined without regard to wages or salaries of such retrained employees).

“(2) ATTRIBUTION RULES.—In the event a facility 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) Definitions.—In this section:

“(1) ADVANCED TECHNOLOGY MOTOR VEHICLE.—The term ‘advanced technology motor vehicle’ means—

“(A) any qualified electric vehicle (as defined in section 30(c)(1)),

“(B) any new qualified fuel cell motor vehicle (as defined in section 30B(b)(3)),

“(C) any new advanced lean burn technology motor vehicle (as defined in section 30B(c)(3)),

“(D) any new qualified hybrid motor vehicle (as defined in section 30B(d)(2)(A) and determined without regard to any gross vehicle weight rating),

“(E) any new qualified alternative fuel motor vehicle (as defined in section 30B(e)(4), including any mixed-fuel vehicle (as defined in section 30B(e)(5)(B)), and

“(F) any other motor vehicle using electric drive transportation technology (as defined in paragraph (3)).

“(2) ELECTRIC DRIVE TRANSPORTATION TECHNOLOGY.—The term ‘electric drive transportation technology’ means technology used by vehicles that use an electric motor for all or part of their motive power and that may or may not use off-board electricity, such as battery electric vehicles, fuel cell vehicles, engine dominant hybrid electric vehicles, plug-in hybrid electric vehicles, and plug-in hybrid fuel cell vehicles.

“(3) ELIGIBLE COMPONENTS.—The term ‘eligible 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) accumulator or other energy storage device;

“(ii) hydraulic pump;

“(iii) hydraulic pump-motor assembly;

“(iv) power control unit; and

“(v) power controls;

“(C) with respect to any new advanced lean burn technology motor vehicle—

“(i) diesel engine;

“(ii) turbo charger;

“(iii) fuel injection system; or

“(iv) after-treatment system, such as a particle filter or NOX absorber; and

“(D) with respect to any advanced technology motor vehicle, any other component submitted for approval by the Secretary.

“(4) ELIGIBLE TAXPAYER.—The term ‘eligible taxpayer’ means any taxpayer if more than 20 percent of the taxpayer’s gross receipts for the taxable year is derived from the manufacture of motor vehicles or any component parts of such vehicles.

“(d) Engineering integration costs.—For purposes of subsection (b)(1)(B), costs for engineering integration are costs incurred prior to the market introduction of advanced technology vehicles for engineering tasks related to—

“(1) establishing functional, structural, and performance requirements for component and subsystems to meet overall vehicle objectives for a specific application,

“(2) designing interfaces for components and subsystems with mating systems within a specific vehicle application,

“(3) designing cost effective, efficient, and reliable 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 application.

“(e) 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 account under section 53 for any prior taxable year, over

“(2) the sum of the credits allowable under subpart A and sections 27, 30, and 30B for the taxable year.

“(f) 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 expenditure shall be reduced by the amount of the credit so allowed.

“(g) No double benefit.—

“(1) COORDINATION WITH OTHER DEDUCTIONS AND CREDITS.—Except as provided in paragraph (2), 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 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 determining the amount of the credit under subsection (a) for any taxable year shall not be taken into account for purposes of determining the credit under section 41 for such taxable year.

“(B) COSTS TAKEN INTO ACCOUNT IN DETERMINING BASE PERIOD RESEARCH EXPENSES.—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 applying section 41 to subsequent taxable years.

“(h) Business carryovers allowed.—If the credit allowable under subsection (a) for a taxable year exceeds the limitation under subsection (e) for such taxable year, such excess (to the extent of the credit allowable with respect to property subject to the allowance for depreciation) shall be allowed as a credit carryback to each of the 15 taxable years immediately preceding the unused credit year and as a carryforward to each of the 20 taxable years immediately following the unused credit year.

“(i) Special rules.—For purposes of this section, rules similar to the rules of section 179A(e)(4) and paragraphs (1) and (2) of section 41(f) shall apply

“(j) 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.

“(k) Regulations.—The Secretary shall prescribe such regulations as necessary to carry out the provisions of this section.

“(l) Termination.—This section shall not apply to any qualified investment after December 31, 2010.”.

(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 30D(g).”.

(2) Section 6501(m) of such Code is amended by inserting “30D(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 section 30C the following new item:


“Sec. 30D. 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, 1999.

SEC. 201. Definitions.

In this title:

(1) ADMINISTRATOR.—The term “Administrator” means the Administrator of the Environmental Protection Agency.

(2) RE-REFINE.—The term “re-refine”, with respect to the treatment of used oil, means the process by which the physical and chemical contaminants contained in used oil as a result of previous use are removed to produce lubricating oil or another oil.

(3) RE-REFINERY.—The term “re-refinery” means a plant or facility used for the purpose of re-refining used oil.

(4) REUSE.—The term “reuse”, with respect to used oil, means any process by which oil is used after the original use of the oil, including through re-refining, reprocessing, or reclaiming.

(5) SECRETARY.—The term “Secretary” means the Secretary of Energy.

(6) USED OIL.—The term “used oil” means any oil that has been refined from crude oil, or any synthetic oil, that is contaminated by a physical or chemical impurity as a result of the use of the oil.

SEC. 202. Informing public.

The Secretary shall develop a program under which the Secretary shall provide to the public information about the benefits of collecting, re-refining, and otherwise reusing used oil, including through—

(1) the establishment of a website providing—

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

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

(C) links to State and local websites containing other appropriate information;

(2) publication and distribution of educational materials, in English and other languages, describing—

(A) the benefits of collecting, re-refining, and otherwise reusing used oil; and

(B) methods for ensuring the safe collection, storage, transportation, and reuse of used oil; and

(3) submission to Congress and publication of an annual report describing measures carried out during the preceding calendar year to increase the collection, re-refining, and other reuse of used oil, including estimates of the energy resources saved, and the quantity of emissions reduced, through those measures.

SEC. 203. Labeling.

Not later than January 1, 2009, the Secretary shall develop proposed guidelines, to take effect not later than January 1, 2010, for the labeling of re-refined lubricating oil, including establishment, and guidelines for use, of a re-refined label to be approved by the Secretary for lubricating oil that—

(1) meets industry standards as in effect on the date of enactment of this Act; and

(2) contains base oil composed of not less than 50 percent re-refined lubricating oil.

SEC. 204. Collection facilities.

The Secretary, in cooperation with the Administrator, shall establish—

(1) guidelines for the collection of used oil by facilities in an environmentally safe manner; and

(2) a process by which facilities may be certified to collect used oil as part of a national used oil collection network.

SEC. 205. Information exchange.

(a) In general.—The Secretary, in cooperation with the Administrator, shall develop a program to facilitate the exchange of information among State and local agencies and the public concerning re-refining and other means of reusing used oil to enhance energy conservation and emissions reduction, including through—

(1) the establishment of a clearinghouse for applicable data and reports;

(2) the development of best management practices; and

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

(b) Rural and farming communities.—In carrying out subsection (a), the Secretary shall ensure that—

(1) opportunities for re-refining and other reuse of used oil in rural and farming communities are appropriately considered; and

(2) information regarding appropriate and cost-effective measures to encourage those opportunities is made available to State and local agencies and the public.

SEC. 206. Used oil from Federal agencies.

(a) In general.—Not later than 2 years after the date of enactment of this Act, the Secretary, in consultation with the Administrator of General Services, shall promulgate regulations requiring all Federal agencies and departments—

(1) to collect used oil produced by the agencies and departments, including used oil derived from federally owned and operated vehicles; and

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

(b) Requirements.—The regulations promulgated pursuant to subsection (a) shall establish a preference by the Federal Government in the use and disposal of used oil, in a manner that does not constitute a threat to public health or the environment and that conserves energy and materials to the maximum extent practicable—

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

(A) is not reasonably available; or

(B) involves unreasonable costs compared to other methods of reuse;

(2) second, for other reuse of used oil, including burning the used oil for energy recovery; and

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

SEC. 207. Used oil in space heaters.

(a) Definition of space heater.—In this section, the term “space heater” means a heating device with a production capacity of at least 500,000 Btus per hour that is capable of burning used oil or other fuel.

(b) Study.—The Administrator shall conduct a study of the hazards to public health that the Administrator reasonably anticipates to occur as a result of emissions covered by the Clean Air Act (42 U.S.C. 7401 et seq.) from space heaters that burn used oil, for energy recovery or other purposes.

(c) Report.—Not later than 270 days after the date of enactment of this Act, the Administrator shall submit to Congress a report describing the results of the study under subsection (b), including—

(1) a determination by the Administrator as to whether any category of new or existing space heaters poses a risk to human health or the environment; and

(2) a description of alternative control strategies for space heater emissions that could require regulation under this section.

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

(a) Modification of definition of qualified refinery.—

(1) IN GENERAL.—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—

“(1) processing liquid fuel from crude oil or qualified fuels (as defined in section 45K(c)), or

“(2) processing non-virgin lube oil from used, refined products (including used lube oil originally derived from crude oil or qualified fuels).”.

(2) CONFORMING AMENDMENTS.—

(A) Section 179C(e) of such Code amended—

(i) in paragraph (1), by inserting “virgin” before “lube oil”, and

(ii) in paragraph (2), by inserting “or other products from used refined products” and “section 45K(c))”.

(B) Section 179C(f)(1) of such Code is amended by inserting “virgin” before “lube oil facility”.

(b) Special rule for qualified refineries processing used products.—Paragraph (1) of section 179C(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

“(4) SPECIAL RULE FOR QUALIFIED REFINERIES PROCESSING USED PRODUCTS.—In the case of a qualified refinery described in subsection (d)(2), paragraph (1) shall be applied—

“(A) by substituting ‘2014’ for ‘2012’ in subparagraph (B),

“(B) by substituting ‘January 4, 2007’ for ‘June 14, 2005’ in subparagraphs (E) and (F), and

“(C) by substituting ‘2010’ for ‘2008’ each place it appears in subparagraph (F).”.

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

(a) In general.—Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to other credits) is amended by adding at the end the following new section:

“SEC. 30D. Credit for re-refined lubricating oil feedstock.

“(a) Allowance of credit.—There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the product of—

“(1) 20 cents, and

“(2) the excess of—

“(A) number of gallons of qualified re-refined lubricating oil feedstock sold by the taxpayer to a qualified re-refined lubricating oil producer during the taxable year, over

“(B) the highest number of gallons of qualified re-refined lubricating oil feedstock sold by the taxpayer to a qualified re-refined lubricating oil producer in any preceding taxable year beginning after December 31, 2006.

“(b) Qualified re-refined lubricating oil feedstock.—For purposes of this section—

“(1) IN GENERAL.—The term ‘qualified re-refined lubricating oil feedstock’ means used lubricating oil which is certified by the qualified re-refined lubricating oil producer to which it is sold as suitable for re-refining for use in engines.

“(2) CERTIFICATIONS.—

“(A) LIMITATION ON AMOUNT CERTIFIED.—

“(i) IN GENERAL.—The amount of used lubricating oil which may be certified by a qualified re-refined lubricating oil producer for any calendar year may not exceed the refining capacity of such qualified re-refining lubricating oil producer for such calendar year.

“(ii) NONCOMPLIANCE WITH POLLUTION LAWS.—For purposes of clause (i), under regulations prescribed by the Secretary, the refining capacity of any refinery which is not in material compliance with the applicable State and Federal pollution prevention, control, and permit requirements for any period of time during a calendar year shall be reduced in proportion to the period of time during which such refinery is not in material compliance with such requirements.

“(B) REPORTS.—Each qualified re-refined lubricating oil producer shall file such reports regarding certifications as the Secretary may by regulations prescribe.

“(c) Qualified re-refined lubricating oil producer.—For purposes of this section, the term ‘qualified re-refined lubricating oil producer’ means any person who—

“(1) produces a base oil manufactured from at least 95 percent used lubricating oil and not more than 2 percent of previously unused lubricating oil by a re-refining process which effectively removes physical and chemical impurities and spent and unspent additives, and

“(2) is registered with the Secretary as a qualified re-refined lubricating oil producer.”.

(b) Clerical amendment.—The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code is amended by inserting at the end the following new item:


“Sec. 30D. Credit for re-refined lubricating oil feedstock.”.

(c) Effective date.—The amendments made by this section shall apply to production after the date of the enactment of this Act.