[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 587 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                 S. 587

   To promote the use of hydrogen fuel cell vehicles, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 11, 2003

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

_______________________________________________________________________

                                 A BILL


 
   To promote the use of hydrogen fuel cell vehicles, 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.

    This Act may be cited as the ``Hydrogen Transportation Wins Over 
Growing Reliance on Oil (H2 GROW) Act''.

SEC. 2. REFERENCES; TABLE OF CONTENTS.

    (a) References.--Except as otherwise expressly provided, whenever 
in this Act an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision of the 
Internal Revenue Code of 1986.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title.
Sec. 2. References; table of contents.
                  TITLE I--HYDROGEN FUEL CELL VEHICLES

Sec. 101. Fuel cell vehicle credit.
Sec. 102. No depreciation limit for hydrogen vehicles.
Sec. 103. Minimum Federal fleet requirement.
Sec. 104. Replacement of reliance on foreign oil through hydrogen 
                            powered fuel cells.
                        TITLE II--HYDROGEN FUEL

Sec. 201. Credit for retail sale of hydrogen fuel as motor vehicle 
                            fuel.
Sec. 202. Credit for production of hydrogen fuel.
Sec. 203. Tax holiday for hydrogen fuel.
Sec. 204. Sense of Congress regarding hydrogen fuel taxes.
Sec. 205. Hydrogen fueling fringe benefit.
Sec. 206. Exclusion of earnings from hydrogen fuel sales.
Sec. 207. Credit for use of ethanol or renewable motor fuel to produce 
                            hydrogen fuel.
               TITLE III--HYDROGEN FUELING INFRASTRUCTURE

Sec. 301. Credit for installation of hydrogen fueling stations.
Sec. 302. Exclusion of earnings from hydrogen fueling equipment sales.
Sec. 303. Extension of deduction for hydrogen fueling infrastructure.
Sec. 304. Deduction for refueling use of hydrogen fuel cells.
Sec. 305. Accelerated depreciation for qualified hydrogen fueling 
                            equipment.

                  TITLE I--HYDROGEN FUEL CELL VEHICLES

SEC. 101. FUEL CELL VEHICLE CREDIT.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
(relating to foreign tax credit, etc.) is amended by adding at the end 
the following new section:

``SEC. 30B. FUEL CELL VEHICLE CREDIT.

    ``(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 new qualified fuel cell motor vehicle credit determined 
under subsection (b).
    ``(b) New Qualified Fuel Cell Motor Vehicle Credit.--
            ``(1) In general.--For purposes of subsection (a), the new 
        qualified fuel cell motor vehicle credit determined under this 
        subsection with respect to a new qualified fuel cell motor 
        vehicle placed in service by the taxpayer during the taxable 
        year is equal to--
                    ``(A) in the case of any vehicle placed in service 
                before 2010, the lesser of--
                            ``(i) 25 percent of the retail sale price 
                        of such fuel cell motor vehicle, or
                            ``(ii) $50,000
                    ``(B) in the case of any vehicle placed in service 
                after 2009 and before 2012, the lesser of--
                            ``(i) 15 percent of the retail sale price 
                        of such fuel cell motor vehicle, or
                            ``(ii) $25,000, and
                    ``(C) in the case of any vehicle placed in service 
                after 2012, the lesser of--
                            ``(i) 5 percent of the retail sale price of 
                        such fuel cell motor vehicle, or
                            ``(ii) $10,000.
            ``(2) Increase for fuel efficiency.--
                    ``(A) In general.--The amount determined under 
                paragraph (1)(A) with respect to a new qualified fuel 
                cell motor vehicle which is a passenger automobile or 
                light truck shall be increased by--
                            ``(i) $1,000, if such vehicle achieves at 
                        least 125 percent but less than 150 percent of 
                        the 2000 model year city fuel economy,
                            ``(ii) $2,000, if such vehicle achieves at 
                        least 150 percent but less than 175 percent of 
                        the 2000 model year city fuel economy,
                            ``(iii) $3,000, if such vehicle achieves at 
                        least 175 percent but less than 200 percent of 
                        the 2000 model year city fuel economy,
                            ``(iv) $4,000, if such vehicle achieves at 
                        least 200 percent but less than 225 percent of 
                        the 2000 model year city fuel economy, and
                            ``(v) $5,000, if such vehicle achieves at 
                        least 225 percent of the 2000 model year city 
                        fuel economy.
                    ``(B) 2000 model year city fuel economy.--For 
                purposes of subparagraph (A), the 2000 model year city 
                fuel economy with respect to a vehicle shall be 
                determined in accordance with the following tables:
                            ``(i) In the case of a passenger 
                        automobile:
                                               The 2000 model year city
``If vehicle inertia weight class                      fuel economy is:
        is:
    1,500 or 1,750 lbs............................            43.7 mpg 
    2,000 lbs.....................................            38.3 mpg 
    2,250 lbs.....................................            34.1 mpg 
    2,500 lbs.....................................            30.7 mpg 
    2,750 lbs.....................................            27.9 mpg 
    3,000 lbs.....................................            25.6 mpg 
    3,500 lbs.....................................            22.0 mpg 
    4,000 lbs.....................................            19.3 mpg 
    4,500 lbs.....................................            17.2 mpg 
    5,000 lbs.....................................            15.5 mpg 
    5,500 lbs.....................................            14.1 mpg 
    6,000 lbs.....................................            12.9 mpg 
    6,500 lbs.....................................            11.9 mpg 
    7,000 to 8,500 lbs............................            11.1 mpg.
                            ``(ii) In the case of a light truck:

                                               The 2000 model year city
``If vehicle inertia weight class                      fuel economy is:
        is:
    1,500 or 1,750 lbs............................            37.6 mpg 
    2,000 lbs.....................................            33.7 mpg 
    2,250 lbs.....................................            30.6 mpg 
    2,500 lbs.....................................            28.0 mpg 
    2,750 lbs.....................................            25.9 mpg 
    3,000 lbs.....................................            24.1 mpg 
    3,500 lbs.....................................            21.3 mpg 
    4,000 lbs.....................................            19.0 mpg 
    4,500 lbs.....................................            17.3 mpg 
    5,000 lbs.....................................            15.8 mpg 
    5,500 lbs.....................................            14.6 mpg 
    6,000 lbs.....................................            13.6 mpg 
    6,500 lbs.....................................            12.8 mpg 
    7,000 to 8,500 lbs............................            12.0 mpg.
                    ``(C) Vehicle inertia weight class.--For purposes 
                of subparagraph (B), the term `vehicle inertia weight 
                class' has the same meaning as when defined in 
                regulations prescribed by the Administrator of the 
                Environmental Protection Agency for purposes of the 
                administration of title II of the Clean Air Act (42 
                U.S.C. 7521 et seq.).
            ``(3) New qualified fuel cell motor vehicle.--For purposes 
        of this subsection, the term `new qualified fuel cell motor 
        vehicle' means a motor vehicle--
                    ``(A) which is propelled by power derived from 1 or 
                more cells which convert chemical energy directly into 
                electricity by combining oxygen with hydrogen fuel 
                which is stored on board the vehicle in any form and 
                may or may not require reformation prior to use,
                    ``(B) which, in the case of a passenger automobile 
                or light truck for 2003 and later model vehicles, has 
                received a certificate of conformity under the Clean 
                Air Act and meets or exceeds the equivalent qualifying 
                California low emission vehicle standard under section 
                243(e)(2) of the Clean Air Act for that make and model 
                year,
                    ``(C) the original use of which commences with the 
                taxpayer,
                    ``(D) which is acquired for use or lease by the 
                taxpayer and not for resale, and
                    ``(E) which is made by a manufacturer.
    ``(c) Application With Other Credits.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the sum of the regular tax plus the tax imposed by 
        section 55, over
            ``(2) the sum of the credits allowable under sections 27, 
        29, and 30A, for the taxable year.
    ``(d) Credit May Be Transferred.--
            ``(1) In general.--A taxpayer may transfer the credit 
        allowable under this section through an assignment. Such 
        transfer may be revoked only with the consent of the Secretary.
            ``(2) Regulations.--The Secretary shall prescribe such 
        regulations as necessary to ensure that any credit described in 
        paragraph (1) is claimed once and not reassigned by an assignee 
        described in paragraph (1).
    ``(e) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Motor vehicle.--The term `motor vehicle' has the 
        meaning given such term by section 30(c)(2).
            ``(2) City fuel economy.--The Secretary of Energy shall 
        calculate the city fuel economy of fuel cell motor vehicles 
        which are passenger automobiles and light trucks in a manner 
        consistent with the procedures for calculating the fuel economy 
        for alternative fuel automobiles under section 32905(a) of 
        title 49, United States Code.
            ``(3) Retail sales price.--The retail sales price for any 
        vehicle shall be determined under the rules of section 4052(b).
            ``(4) Other terms.--The terms `automobile', `passenger 
        automobile', `light truck', and `manufacturer' have the 
        meanings given such terms in regulations prescribed by the 
        Administrator of the Environmental Protection Agency for 
        purposes of the administration of title II of the Clean Air Act 
        (42 U.S.C. 7521 et seq.).
            ``(5)  Reduction in basis.--For purposes of this subtitle, 
        the basis of any property for which a credit is allowable under 
        subsection (a) shall be reduced by the amount of such credit so 
        allowed (determined without regard to subsection (c)).
            ``(6) Recapture.--
                    ``(A) In general.--The Secretary shall, by 
                regulations, provide for recapturing the benefit of any 
                credit allowable under subsection (a) with respect to 
                any property which ceases to be property eligible for 
                such credit (including recapture in the case of a lease 
                period of less than the economic life of a vehicle).
                    ``(B) Economic life.--The regulations provided by 
                the Secretary pursuant to subparagraph (A) shall 
                provide that the economic life of a vehicle is 4 years.
            ``(7) Property used outside united states, etc., not 
        qualified.--No credit shall be allowed under subsection (a) 
        with respect to any property referred to in section 50(b) or 
        with respect to the portion of the cost of any property taken 
        into account under section 179.
            ``(8) Election to not 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.
            ``(9) Carryback and carryforward allowed.--
                    ``(A) In general.--If the credit amount allowable 
                under subsection (a) for a taxable year exceeds the 
                amount of the limitation under subsection (c) for such 
                taxable year (in this paragraph referred to as the 
                `unused credit year'), such excess shall be allowed as 
                a credit carryback for each of the 3 taxable years 
                beginning after January 1, 2003, which precede the 
                unused credit year and a credit carryforward for each 
                of the 20 taxable years which succeed the unused credit 
                year.
                    ``(B) Rules.--Rules similar to the rules of section 
                39 shall apply with respect to the credit carryback and 
                credit carryforward under subparagraph (A).
            ``(10) Interaction with air quality and motor vehicle 
        safety standards.--Unless otherwise provided in this section, a 
        motor vehicle shall not be considered eligible for a credit 
        under this section unless such vehicle is in compliance with--
                    ``(A) the applicable provisions of the Clean Air 
                Act for the applicable make and model year of the 
                vehicle (or applicable air quality provisions of State 
                law in the case of a State which has adopted such 
                provision under a waiver under section 209(b) of the 
                Clean Air Act), and
                    ``(B) the motor vehicle safety provisions of 
                sections 30101 through 30169 of title 49, United States 
                Code.
    ``(f) Regulations.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Secretary shall promulgate such regulations as necessary to 
        carry out the provisions of this section.
            ``(2) Coordination in prescription of certain 
        regulations.--The Secretary of the Treasury, in coordination 
        with the Secretary of Transportation and the Administrator of 
        the Environmental Protection Agency, shall prescribe such 
        regulations as necessary to determine whether a motor vehicle 
        meets the requirements to be eligible for a credit under this 
        section.
    ``(g) Termination.--This section shall not apply to any property 
placed in service after December 31, 2015.''.
    (b) Conforming Amendments.--
            (1) Section 1016(a) is amended by striking ``and'' at the 
        end of paragraph (27), by striking the period at the end of 
        paragraph (28) and inserting ``, and'', and by adding at the 
        end the following new paragraph:
            ``(29) to the extent provided in section 30B(e)(5).''.
            (2) Section 55(c)(2) is amended by inserting ``30B(c),'' 
        after ``30(b)(3),''.
            (3) Section 6501(m) is amended by inserting ``30B(e)(8),'' 
        after ``30(d)(4),''.
            (4) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 30A the following new item:

        ``Sec. 30B. Fuel cell vehicle credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2002, in taxable 
years ending after such date.

SEC. 102. NO DEPRECIATION LIMIT FOR HYDROGEN VEHICLES.

    (a) In General.--Paragraph (1) of section 280F(a) (relating to 
limitation on amount of depreciation for luxury automobiles) is amended 
by adding at the end the following new subparagraph--
                    ``(D) Hydrogen Vehicles.--Subparagraph (A) shall 
                not apply to any motor vehicle with respect to which a 
                credit is allowable under section 30B.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2002, in taxable years 
ending after such date.

SEC. 103. MINIMUM FEDERAL FLEET REQUIREMENT.

    (a) Section 303(b) of the Energy Policy Act of 1992 (42 U.S.C. 
13212(b)) is amended by adding at the end the following:
            ``(4) Hydrogen fuel cell vehicles.--
                    ``(A) In each of the fiscal years specified in the 
                following table, not fewer than the specified 
                percentage of the number of vehicles acquired under 
                paragraph (1)(D) for any Federal fleet of the specified 
                size shall be hydrogen fuel cell vehicles that meet 
                standards for performance, reliability, cost, and 
                maintenance established by the Secretary of Energy 
                (unless the Secretary determines, after making best 
                efforts to acquire such vehicles in a fiscal year, that 
                such vehicles are not available at a purchase price 
                that is less than 150 percent of the purchase price of 
other comparable alternative fueled vehicles):

 
 
        ``Fleet size:                Fiscal year:           Percentage:
 
 
100 or more.................      2006, 2007............           5
100 or more.................      2008, 2009............          10
100 or more.................      2010, 2011............          20
 50 or more.................      2012, 2013............         20.
 

                    ``(B) For purposes of this paragraph, the term 
                `comparable alternative fueled vehicle' means a motor 
                vehicle that is powered solely by natural gas, fuels 
                derived from biological materials, electricity, or any 
                other fuel (other than hydrogen) that the Secretary of 
                Energy determines is not petroleum or petroleum-derived 
                and would yield substantial energy security and 
                substantial environmental benefits.''.
    (b) Refueling.--Section 304 of the Energy Policy Act of 1992 (42 
U.S.C. 13213) is amended--
            (1) by redesignating subsection (b) as subsection (c);
            (2) in the second sentence of subsection (a), by striking 
        ``If publicly'' and inserting the following:
    ``(b) Commercial Arrangements.--
            ``(1) In general.--If publicly''; and
            (3) in subsection (b) (as designated by paragraph (2)), by 
        adding at the end the following:
            ``(2) Mandatory arrangements.--
                    ``(A) In general.--In a case in which publicly 
                available fueling facilities are not convenient or 
                accessible to the locations of 2 or more Federal fleets 
                for which hydrogen fuel cell vehicles are required to 
                be purchased under section 303(b)(4), the Federal 
                agency for which the Federal fleets are maintained (or 
                the Federal agencies for which the Federal fleets are 
                maintained, acting jointly under a memorandum of 
                agreement providing for cost sharing) shall enter into 
                a commercial arrangement as provided in paragraph (1).
                    ``(B) Sunset.--Subparagraph (A) ceases to be 
                effective at the end of fiscal year 2013.''.

SEC. 104. REPLACEMENT OF RELIANCE ON FOREIGN OIL THROUGH HYDROGEN 
              POWERED FUEL CELLS.

    (a) Goal.--It shall be a goal to replace reliance on 30,000,000 
barrels of foreign oil through the use of hydrogen powered fuel cells 
by December 31, 2012.
    (b) Fuel Cell Motor Vehicle Defined.--For the purposes of this 
section, the term ``fuel cell motor vehicle'' means a motor vehicle 
that is propelled by power derived from one or more cells which convert 
chemical energy directly into electricity by combining oxygen with 
hydrogen fuel which is stored on board the vehicle in any form and may 
or may not require reformation prior to use.
    (c) Advisory Commission on Achievement of Goal.--
            (1) Establishment and duties.--
                    (A) Establishment.--The Secretary of Transportation 
                shall establish an advisory commission to provide the 
                Secretary and Congress with advice regarding the 
                commercialization of fuel cell motor vehicles, 
                including the achievement of the goal set forth in 
                subsection (a).
                    (B) Duties.--The commission shall have the 
                following duties:
                            (i) Make recommendations for uniform 
                        industry codes and standards for fuel cell 
                        motor vehicles and hydrogen fueling equipment 
                        or a process for developing such codes and 
                        standards.
                            (ii) Make recommendations on how to achieve 
                        the goal set forth in subsection (a).
                            (iii) Identify any impediments to achieving 
                        such goal.
                            (iv) Make any other recommendations 
                        relating to such goal that the commission 
                        determines appropriate.
            (2) Membership and chairman.--The commission shall be 
        composed of 5 members appointed by the Secretary, as follows:
                    (A) One representative of fuel cell motor vehicle 
                manufacturers in the United States.
                    (B) One representative of fuel cell motor vehicle 
                manufacturers outside the United States.
                    (C) One person from academia who is a scientist 
                with particular expertise in--
                            (i) fuel cell technology for the propulsion 
                        of motor vehicles; and
                            (ii) the manufacture of fuel cell motor 
                        vehicles.
                    (D) One representative of an environmental 
                protection interest group having a significantly 
                numerous nationwide membership in the United States.
                    (E) One representative of the Secretary, who shall 
                serve as Chairman of the commission.
            (3) Period of appointment; vacancies.--Members shall be 
        appointed for the life of the commission. Any vacancy in the 
        commission shall not affect its powers, but shall be filled in 
        the same manner as the original appointment.
            (4) Meetings.--
                    (A) Scheduling.--
                            (i) In general.--The commission shall meet 
                        at the call of the Chairman.
                            (ii) Mandatory meeting if goal not met.--If 
                        the goal specified in subsection (a) is not 
                        achieved by December 31, 2013, the commission 
                        shall meet not later than January 31, 2014, and 
                        within 90 days of such meeting shall make 
                        recommendations to the Secretary and Congress 
                        on how to achieve such goal at the earliest 
                        possible date.
                    (B) Quorum.--A majority of the members of the 
                commission shall constitute a quorum, but a lesser 
                number of members may hold hearings.
            (5) Powers.--
                    (A) Hearings.--The commission may hold such 
                hearings, sit and act at such times and places, take 
                such testimony, and receive such evidence as the 
commission considers advisable to carry out this section.
                    (B) Information from federal agencies.--The 
                commission may secure directly from any Federal 
                department or agency such information as the commission 
                considers necessary to carry out this section. Upon 
                request of the Chairman of the commission, the head of 
                such department or agency shall furnish such 
                information to the commission.
                    (C) Postal services.--The commission may use the 
                United States mails in the same manner and under the 
                same conditions as other departments and agencies of 
                the Federal Government.
            (6) Personnel matters.--
                    (A) Compensation of Members.--Each member of the 
                commission who is not an officer or employee of the 
                Federal Government shall be compensated at a rate equal 
                to the daily equivalent of the annual rate of basic pay 
                prescribed for level IV of the Executive Schedule under 
                section 5315 of title 5, United States Code, for each 
                day (including travel time) during which such member is 
                engaged in the performance of the duties of the 
                commission. All members of the commission who are 
                officers or employees of the United States shall serve 
                without compensation in addition to that received for 
                their services as officers or employees of the United 
                States.
                    (B) Travel expenses.--The members of the commission 
                shall be allowed travel expenses, including per diem in 
                lieu of subsistence, at rates authorized for employees 
                of agencies under subchapter I of chapter 57 of title 
                5, United States Code, while away from their homes or 
                regular places of business in the performance of 
                services for the commission.
                    (C) Staff.--
                            (i) In general.--The Chairman of the 
                        commission may, without regard to the civil 
                        service laws and regulations, appoint and 
                        terminate an executive director and such other 
                        additional personnel as may be necessary to 
                        enable the commission to perform its duties. 
                        The employment of an executive director shall 
                        be subject to confirmation by the commission.
                            (ii) Compensation.--The Chairman of the 
                        commission may fix the compensation of the 
                        executive director and other personnel without 
                        regard to chapter 51 and subchapter III of 
                        chapter 53 of title 5, United States Code, 
                        relating to classification of positions and 
                        General Schedule pay rates, except that the 
                        rate of pay for the executive director and 
                        other personnel may not exceed the rate payable 
                        for level V of the Executive Schedule under 
                        section 5316 of such title.
                    (D) Detail of government employees.--Any Federal 
                Government employee may be detailed to the commission 
                without reimbursement, and such detail shall be without 
                interruption or loss of civil service status or 
                privilege.
                    (E) Procurement of temporary and intermittent 
                services.--The Chairman of the commission may procure 
                temporary and intermittent services under section 
                3109(b) of title 5, United States Code, at rates for 
                individuals which do not exceed the daily equivalent of 
                the annual rate of basic pay prescribed for level V of 
                the Executive Schedule under section 5316 of such 
                title.
            (7) Termination of commission.--The commission shall 
        terminate on the earlier of--
                    (A) the date that is 90 days after the date on 
                which the commission submits to the Secretary of 
                Transportation and Congress a finding that the goal set 
                forth in subsection (a) has been achieved; or
                    (B) the date that is 90 days after the date on 
                which the commission submits the recommendations 
                required under clause (ii) of paragraph (4)(A).

                        TITLE II--HYDROGEN FUEL

SEC. 201. CREDIT FOR RETAIL SALE OF HYDROGEN FUEL AS MOTOR VEHICLE 
              FUEL.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits) is amended by inserting after 
section 40 the following new section:

``SEC. 40A. CREDIT FOR RETAIL SALE OF HYDROGEN AS MOTOR VEHICLE FUEL.

    ``(a) General Rule.--For purposes of section 38, the hydrogen fuel 
retail sales credit for any taxable year is an amount equal to the 
greater of--
            ``(1) 20 percent of the price of hydrogen, or
            ``(2) 50 cents for each quantity of hydrogen having a Btu 
        content of 115,000,
sold at retail by the taxpayer during such year as a fuel to propel any 
hydrogen fuel cell vehicle.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Hydrogen fuel cell vehicle.--The term `hydrogen fuel 
        cell vehicle' has the meaning given such term in section 136A.
            ``(2) Sold at retail.--
                    ``(A) In general.--The term `sold at retail' means 
                the sale, for a purpose other than resale, after 
                manufacture, production, or importation.
                    ``(B) Use treated as sale.--If any person uses 
                hydrogen (including any use after importation) as a 
                fuel to propel any motor vehicle (as defined in section 
                30(c)(2)) before such fuel is sold at retail, then such 
                use shall be treated in the same manner as if such fuel 
                were sold at retail as a fuel to propel such a vehicle 
                by such person.
    ``(c) Pass-Thru in the Case of Estates and Trusts.--Under 
regulations prescribed by the Secretary, rules similar to the rules of 
subsection (d) of section 52 shall apply.
    ``(d) Termination.--This section shall not apply to any fuel sold 
at retail after December 31, 2013.''.
    (b) Credit Treated as Business Credit.--Section 38(b) (relating to 
current year business credit) is amended by striking ``plus'' at the 
end of paragraph (14), by striking the period at the end of paragraph 
(15) and inserting ``, plus'', and by adding at the end the following 
new paragraph:
            ``(16) the hydrogen fuel retail sales credit determined 
        under section 40A(a).''.
    (c) Transitional Rule.--Section 39(d) (relating to transitional 
rules) is amended by adding at the end the following new paragraph:
            ``(11) No carryback of section 40a credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the hydrogen fuel retail sales 
        credit determined under section 40A(a) may be carried back to a 
        taxable year ending before January 1, 2003.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 40 the following new item:

        ``Sec. 40A. Credit for retail sale of hydrogen as motor vehicle 
                            fuel.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to fuel sold at retail after December 31, 2002, in taxable years 
ending after such date.

SEC. 202. CREDIT FOR PRODUCTION OF HYDROGEN FUEL.

    (a) Hydrogen Produced From Any Source.--Section 29 (relating to 
credit for producing fuel from nonconventional sources) is amended by 
adding at the end the following new subsection:
    ``(h) Hydrogen Fuel.--
            ``(1) Hydrogen fuel produced from any source.--There shall 
        be allowed as a credit against the tax imposed by this chapter 
        for the taxable year an amount equal to--
                    ``(A) $10, multiplied by
                    ``(B) each quantity of hydrogen having a Btu 
                content of 5,800,000--
                            ``(i) sold by the taxpayer to an unrelated 
                        person during the taxable year, and
                            ``(ii) the production of which is 
                        attributable to the taxpayer.
            ``(2) Additional credit for production from renewable 
        sources.--
                    ``(A) In general.--In the case of hydrogen which is 
                produced from a renewable source, paragraph (1)(A) 
                shall be applied by substituting `$20' for `$10'.
                    ``(B) Renewable source.--
                            ``(i) In general.--The term `renewable 
                        source' means solar, wind, ocean, geothermal 
                        energy, biomass, landfill gas, or incremental 
                        hydropower.
                            ``(ii) Incremental hydropower.--The term 
                        `incremental hydropower' means additional 
                        generating capacity achieved from increased 
                        efficiency or additions of new capacity at a 
                        hydroelectric facility in existence on the date 
                        of enactment of this paragraph.
            ``(3) Exclusion on sale for certain uses.--No credit shall 
        be allowed under this subsection for hydrogen fuel sold by the 
        taxpayer the use of which is for the production or refining of 
        other petroleum products.
            ``(4) Termination.--This subsection shall not apply to 
        hydrogen fuel produced after December 31, 2013.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to hydrogen produced after December 31, 2002, in taxable years 
ending after such date.

SEC. 203. TAX HOLIDAY FOR HYDROGEN FUEL.

    (a) In General.--Subchapter B of chapter 65 (relating to 
abatements, credits, and refunds) is amended by adding at the end the 
following new section:

``SEC. 6429. FUELS USED IN HYDROGEN POWERED VEHICLES.

    ``(a) In General.--If any fuel taxable under section 4041 (relating 
to imposition of tax on special fuels) or 4081 (relating to imposition 
of tax on gasoline) is used to produce hydrogen as a means of 
propelling a hydrogen fuel cell vehicle during the applicable period, 
the Secretary shall pay (without interest) to the ultimate purchaser of 
such fuel an amount equal to the amount determined by multiplying the 
number of gallons so used by the rate at which tax was imposed on such 
fuel under section 4041 or 4081.
    ``(b) Applicable Period.--The term `applicable period' means the 
period beginning after December 31, 2002, and ending before January 1, 
2014.
    ``(c) Hydrogen Fuel Cell Vehicle.--The term `hydrogen fuel cell 
vehicle' has the meaning given such term by section 136A(b)(1).''.
    (b) Conforming Amendment.--The table of sections for subchapter B 
of chapter 65 is amended by inserting after the item relating to 
section 6428 the following new item:

        ``Sec. 6429. Fuels used in hydrogen powered vehicles.''.

SEC. 204. SENSE OF CONGRESS REGARDING HYDROGEN FUEL TAXES.

    It is the sense of Congress that no tax should be imposed on 
hydrogen fuel before January 1, 2014.

SEC. 205. HYDROGEN FUELING FRINGE BENEFIT.

    (a) In General.--Paragraph (1) of section 132(c) (relating to 
qualified employee discounts) is amended by striking ``or'' at the end 
of subparagraph (A), by striking the period and inserting ``, or'' at 
the end of subparagraph (B), and by adding at the end the following new 
subparagraph:
                    ``(C) in the case of hydrogen fuel, 50 percent of 
                the price at which such fuel is being offered by the 
                employer to customers.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 206. EXCLUSION OF EARNINGS FROM HYDROGEN FUEL SALES.

    (a) In General.--Part III of subchapter B of chapter 1 (relating to 
items specifically excluded from gross income) is amended by inserting 
after section 136 the following new section:

``SEC. 136A. INCOME FROM HYDROGEN FUEL SALES.

    ``(a) Exclusion.--Gross income shall not include income 
attributable to the sale of hydrogen fuel sold for use in a hydrogen 
fuel cell vehicle.
    ``(b) Definition of Hydrogen Fuel Cell Vehicle.--For purposes of 
this section, the term `hydrogen fuel cell vehicle' means a motor 
vehicle (as defined in section 30(c)(2)) which is propelled by power 
derived from 1 or more cells which convert chemical energy directly 
into electricity by combining oxygen with hydrogen fuel which is stored 
on board the vehicle in any form and may or may not require reformation 
prior to use.
    ``(c) Termination.--This section shall not apply to income 
attributable to sales after December 31, 2013.''.
    (b) Conforming Amendment.--The table of sections for subpart B of 
part III of subchapter B of chapter 1 is amended by inserting after the 
item relating to section 136 the following new item:

        ``Sec. 136A. Income from hydrogen fuel sales.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to income received after December 31, 2002, in taxable years 
ending after such date.

SEC. 207. CREDIT FOR USE OF ETHANOL OR RENEWABLE MOTOR FUEL TO PRODUCE 
              HYDROGEN FUEL.

    (a) Definitions.--In this section:
            (1) Gallon-equivalent unit.--The term ``gallon-equivalent 
        unit'' means a quantity of ethanol or renewable motor fuel used 
        in the production of hydrogen fuel that the Secretary of Energy 
        determines is equivalent in energy value to the use of a gallon 
        of ethanol or renewable motor fuel (whichever is applicable) 
        used in the production of motor fuel.
            (2) Hydrogen fuel.--The term ``hydrogen fuel'' means 
        hydrogen fuel produced for use in a hydrogen fuel vehicle.
    (b) Credit for Use of Hydrogen Fuel.--In satisfaction of all or 
part of the requirement under any Federal law (enacted before, on, or 
after the date of enactment of this Act) under which a refiner of motor 
fuel is required to use a gallon of ethanol or renewable motor fuel in 
the production of motor fuel in any year or an importer of motor fuel 
is required to import a gallon of ethanol (including ethanol blended 
with motor fuel) or renewable motor fuel in any year, a refiner or 
importer shall receive credit for 100 gallons of ethanol or renewable 
motor fuel (whichever is applicable) for each gallon-equivalent unit 
used to produce refined or imported hydrogen fuel.

               TITLE III--HYDROGEN FUELING INFRASTRUCTURE

SEC. 301. CREDIT FOR INSTALLATION OF HYDROGEN FUELING STATIONS.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
(relating to foreign tax credit, etc.), as amended by this Act, is 
amended by adding at the end the following new section:

``SEC. 30C. HYDROGEN FUEL CELL VEHICLE REFUELING PROPERTY 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 
50 percent of the amount paid or incurred by the taxpayer during the 
taxable year for qualified hydrogen fuel cell vehicle refueling 
property and the installation thereof.
    ``(b) Year Credit Allowed.--The credit allowed under subsection (a) 
shall be allowed in the taxable year in which the qualified hydrogen 
fuel cell vehicle refueling property is placed in service by the 
taxpayer.
    ``(c) Definition of Qualified Hydrogen Fuel Cell Vehicle Refueling 
Property.--The term `qualified hydrogen fuel cell vehicle refueling 
property' means any property (not including a building and its 
structural components) if--
            ``(1) such property is of a character subject to the 
        allowance for depreciation,
            ``(2) the original use of such property begins with the 
        taxpayer, and
            ``(3) such property is for the production, storage, or 
        dispensing of hydrogen fuel into the fuel tank of a motor 
        vehicle propelled by such fuel.
    ``(d) Application With Other Credits.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and sections 27, 
        29, 30, and 30B, over
            ``(2) the tentative minimum tax for the taxable year.
    ``(e) Basis Reduction.--For purposes of this title, the basis of 
any property shall be reduced by the portion of the cost of such 
property taken into account under subsection (a).
    ``(f) No Double Benefit.--No deduction shall be allowed under 
section 179A or 179B with respect to any property with respect to which 
a credit is allowed under subsection (a).
    ``(g) Carryforward Allowed.--
            ``(1) In general.--If the credit amount allowable under 
        subsection (a) for a taxable year exceeds the amount of the 
        limitation under subsection (d) for such taxable year (referred 
        to as the `unused credit year' in this subsection), such excess 
        shall be allowed as a credit carryforward for each of the 20 
        taxable years following the unused credit year.
            ``(2) Rules.--Rules similar to the rules of section 39 
        shall apply with respect to the credit carryforward under 
        paragraph (1).
    ``(h) Special Rules.--Rules similar to the rules of paragraphs (4) 
and (5) of section 179A(e) shall apply.
    ``(i) Regulations.--The Secretary shall prescribe such regulations 
as necessary to carry out the provisions of this section.
    ``(j) Termination.--This section shall not apply to any property 
placed in service after December 31, 2013.''.
    (b) Conforming Amendments.--
            (1) Section 1016(a), as amended by this Act, is amended by 
        striking ``and'' at the end of paragraph (28), by striking the 
        period at the end of paragraph (29) and inserting ``, and'', 
        and by adding at the end the following new paragraph:
            ``(30) to the extent provided in section 30C(e).''.
    (2) Section 55(c)(2), as amended by this Act, is amended by 
inserting ``30C(d),'' after ``30B(c),''.
    (3) The table of sections for subpart B of part IV of subchapter A 
of chapter 1, as amended by this Act, is amended by inserting after the 
item relating to section 30B the following new item:

        ``Sec. 30C. Hydrogen fuel cell vehicle refueling property 
                            credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 30, 2002, in 
taxable years ending after such date.

SEC. 302. EXCLUSION OF EARNINGS FROM HYDROGEN FUELING EQUIPMENT SALES.

    (a) In General.--Subsection (a) of section 136A (as added by 
section 206) is amended--
            (1) by striking ``of hydrogen'' and inserting ``of--
            ``(1) hydrogen'',
            (2) by striking the period and inserting ``, and'', and
            (3) by inserting at the end the following new paragraph:
            ``(2) hydrogen fueling equipment suitable for vehicle 
        refueling.''.
    (b) Definition of Hydrogen Fueling Equipment.--Subsection (b) of 
section 136A (as added by section 206) is amended--
            (1) by striking ``Definition of Hydrogen Fuel Cell 
        Vehicle.--'' and inserting ``Definitions.--
            ``(1) Hydrogen fuel cell vehicle.--'', and
            (2) by inserting at the end the following new paragraph:
            ``(2) Hydrogen fueling equipment.--For purposes of this 
        section, the term `hydrogen fueling equipment' means equipment 
        used in the process of reforming, storing, supplying, or 
        replenishing hydrogen fuel used in a hydrogen fuel cell 
        vehicle.''.
    (c) Conforming Amendments.--
            (1) Section heading.--The heading of section 136A is 
        amended by inserting ``and hydrogen fueling equipment'' before 
        ``sales''.
            (2) Table of sections.--The item relating to section 136A 
        in the table of sections for subpart B of part III of 
        subchapter B of chapter 1 is amended to read as follows:

        ``Sec. 136A. Income from hydrogen fuel and hydrogen fueling 
                            equipment sales.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 303. EXTENSION OF DEDUCTION FOR HYDROGEN FUELING INFRASTRUCTURE.

    Section 179A(f) (relating to the termination of deductions for 
clean-fuel vehicles and certain refueling property) is amended--
            (1) by striking ``This section'' and inserting:
            ``(1) Qualified clean-fuel vehicle property.--The deduction 
        under subparagraph (A) of subsection (a)(1)'', and
            (2) by adding at the end the following:
            ``(2) Qualified clean-fuel vehicle refueling property.--The 
        deduction under subparagraph (B) of subsection (a)(1) shall not 
        apply to any property placed in service after December 31, 
        2013.''.

SEC. 304. DEDUCTION FOR REFUELING USE OF HYDROGEN FUEL CELLS.

    (a) In General.--Part VI of subchapter B of chapter 1 (relating to 
itemized deduction for individuals and corporations) is amended by 
adding after section 179A the following new section:

``SEC. 179B. DEDUCTION FOR COPRODUCTION OF HYDROGEN FUEL CELLS.

    ``(a) In General.--There shall be allowed as a deduction an amount 
equal to the cost of any qualified hydrogen refueling property in the 
taxable year.
    ``(b) Limitation.--The aggregate amount which may be taken into 
account under this section with respect to any qualified hydrogen 
refueling property shall not exceed the excess (if any) of--
            ``(1) $300,000, over
            ``(2) the aggregate amount taken into account under this 
        section for the qualified hydrogen refueling property for all 
        preceding taxable years.
    ``(c) Definitions.--For the purposes of this section--
            ``(1) Qualified hydrogen refueling property.--
                    ``(A) In general.--The term `qualified hydrogen 
                refueling property' means a building that--
                            ``(i) uses hydrogen fuel cells to provide 
                        power to the building,
                            ``(ii) has facilities that allow hydrogen 
                        to be used for public refueling of hydrogen 
                        fuel cell vehicles, and
                            ``(iii) has a building plan filed with the 
                        Secretary in accordance with such regulations 
                        as the Secretary may prescribe.
                    ``(B) Building.--As used in paragraph (1), the term 
                `building' means any building, except that such 
                building may not be within .5 miles of another 
                qualified hydrogen refueling property with respect to 
                which a credit under this section is allowed to the 
                taxpayer.
            ``(2) Hydrogen fuel cell vehicle.--The term `hydrogen fuel 
        cell vehicle' has the meaning given such term in section 
        136A(b)(1).
    ``(d) Recapture.--The Secretary shall, by regulations, provide for 
recapturing the benefit of the deduction allowable under this section 
if such qualified hydrogen refueling property is not placed in service.
    ``(e) Termination.--This section shall not apply to any property 
placed in service after December 31, 2013.''.
    (b) Conforming Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 is amended by inserting after the item 
relating to section 179A the following new item:

        ``Sec. 179B. Deduction for coproduction of hydrogen fuel 
                            cells.''.
    (c) Effective Date.--The amendments made by this section shall 
apply in taxable years beginning after December 31, 2002.

SEC. 305. ACCELERATED DEPRECIATION FOR QUALIFIED HYDROGEN FUELING 
              EQUIPMENT.

    (a) Recovery Period.--Subparagraph (B) of section 168(e)(3) 
(relating to 5-year property) is amended by striking ``and'' in clause 
(v), by striking the period and inserting ``, and'' in subclause (III) 
of clause (vi), and by adding at the end the following new clause:
                    ``(vii) any qualified hydrogen fueling equipment, 
                as defined in subsection (l)(2).''.
    (b) Depreciation Allowance.--Section 168 is amended by adding at 
the end the following new subsection:
    ``(l) Special Allowance for Investments in Reformers and Other 
Hydrogen Fueling Appliances.--
            ``(1) Additional allowance.--In the case of qualified 
        hydrogen fueling equipment--
                    ``(A) the depreciation deduction provided by 
                section 167(a) for the taxable year in which such 
                property is placed in service shall include an 
                allowance equal to 25 percent of the adjusted basis of 
                the qualified hydrogen fueling equipment, and
                    ``(B) the adjusted basis of the qualified property 
                shall be reduced by the amount of such deduction before 
                computing the amount otherwise allowable as a 
                depreciation deduction under this chapter for such 
                taxable year and any subsequent taxable year.
            ``(2) Qualified hydrogen fueling equipment.--For purposes 
        of this subsection:
                    ``(A) In general.--The term `qualified hydrogen 
                fueling equipment' means storage containers, reformers, 
                fuel processors, and hydrogen compressors.
                    ``(B) Reformer.--The term `reformer' means a device 
                used to produce or extract hydrogen from another source 
                in order to provide hydrogen fuel to power a hydrogen 
                fuel cell vehicle (as defined in section 136A(b)(1)).
            ``(3) Termination.--This subsection shall not apply to 
        equipment placed in service after December 31, 2007.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.
                                 <all>