[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1744 Introduced in House (IH)]






109th CONGRESS
  1st Session
                                H. R. 1744

 To amend the Internal Revenue Code of 1986 to provide incentives for 
            alternative fuels and alternative fuel vehicles.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 20, 2005

Mr. Ruppersberger introduced the following bill; which was referred to 
                    the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide incentives for 
            alternative fuels and alternative fuel vehicles.

    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 ``Common Sense Automobile Efficiency 
Act of 2005''.

SEC. 2. REPEAL OF PHASEOUTS FOR QUALIFIED ELECTRIC VEHICLES AND CLEAN-
              FUEL VEHICLES.

    (a) Qualified Electric Vehicles.--Subsection (b) of section 30 of 
the Internal Revenue Code of 1986 (relating to limitations) is amended 
by striking paragraph (2) and redesignating paragraph (3) as paragraph 
(2).
    (b) Clean-Fuel Vehicles and Certain Refueling Property.--Paragraph 
(1) of section 179A(b) of such Code (relating to qualified clean-fuel 
vehicle property) is amended to read as follows:
            ``(1) Qualified clean-fuel vehicle property.--The cost 
        which may be taken into account under subsection (a)(1)(A) with 
        respect to any motor vehicle shall not exceed--
                    ``(A) in the case of a motor vehicle not described 
                in subparagraph (B) or (C), $2,000,
                    ``(B) in the case of any truck or van with a gross 
                vehicle weight rating greater than 10,000 pounds but 
                not greater than 26,000 pounds, $5,000, or
                    ``(C) $50,000 in the case of--
                            ``(i) a truck or van with a gross vehicle 
                        weight rating greater than 26,000 pounds, or
                            ``(ii) any bus which has a seating capacity 
                        of at least 20 adults (not including the 
                        driver).''.
    (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. 3. SMALL ETHANOL PRODUCER CREDIT.

    (a) Definition of Small Ethanol Producer.--Section 40(g) of the 
Internal Revenue Code of 1986 (relating to definitions and special 
rules for eligible small ethanol producer credit) is amended by 
striking ``30,000,000'' each place it appears and inserting 
``60,000,000''.
    (b) Conforming Amendment.--Section 1388 of such Code (relating to 
definitions and special rules for cooperative organizations) is amended 
by adding at the end the following new subsection:
    ``(l) Cross Reference.--For provisions relating to the 
apportionment of the alcohol fuels credit between cooperative 
organizations and their patrons, see section 40(g)(6).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2004.

SEC. 4. NONAPPLICATION OF EXPORT EXEMPTION TO DELIVERY OF FUEL TO MOTOR 
              VEHICLES REMOVED FROM UNITED STATES.

    (a) In General.--Section 4221(d)(2) of the Internal Revenue Code of 
1986 (defining export) is amended by adding at the end the following 
new sentence: ``Such term does not include the delivery of a taxable 
fuel (as defined in section 4083(a)(1)) into a fuel tank of a motor 
vehicle which is shipped or driven out of the United States.''.
    (b) Conforming Amendments.--
            (1) Section 4041(g) of such Code (relating to other 
        exemptions) is amended by adding at the end the following new 
        sentence: ``Paragraph (3) shall not apply to the sale for 
        delivery of a liquid into a fuel tank of a motor vehicle which 
        is shipped or driven out of the United States.''.
            (2) Clause (iv) of section 4081(a)(1)(A) of such Code 
        (relating to tax on removal, entry, or sale) is amended by 
        inserting ``or at a duty-free sales enterprise (as defined in 
        section 555(b)(8) of the Tariff Act of 1930)'' after ``section 
        4101''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales or deliveries made after the date of the enactment of 
this Act.

SEC. 5. ALTERNATIVE MOTOR VEHICLE 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:

``SEC. 30B. ALTERNATIVE MOTOR 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 sum of--
            ``(1) the new qualified fuel cell motor vehicle credit 
        determined under subsection (b),
            ``(2) the new advanced lean burn technology motor vehicle 
        credit determined under subsection (c),
            ``(3) the new qualified hybrid motor vehicle credit 
        determined under subsection (d), and
            ``(4) the new qualified alternative fuel motor vehicle 
        credit determined under subsection (e).
    ``(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 shall be determined in accordance with the following 
        table:

 
                                                  The new qualified fuel
  ``In the case of a vehicle which has a gross      cell motor vehicle
           vehicle weight rating of--                  credit is--
 
Not more than 8,500 lbs........................                   $4,000
More than 8,500 lbs but not more than 14,000                     $10,000
 lbs...........................................
More than 14,000 lbs but not more than 26,000                    $20,000
 lbs...........................................
More than 26,000 lbs...........................                 $40,000.
 

            ``(2) Increase for fuel efficiency.--
                    ``(A) In general.--The amount determined under 
                paragraph (1) with respect to a new qualified fuel cell 
                motor vehicle which is a passenger automobile or light 
                truck shall be increased by the additional credit 
                amount.
                    ``(B) Additional credit amount.--For purposes of 
                subparagraph (A), the additional credit amount shall be 
                determined in accordance with the following table:

 
  ``In the case of a vehicle which achieves a
 fuel economy (expressed as a percentage of the   The additional credit
    2002 model year city fuel economy) of--            amount is--
 
At least 150 percent but less than 175 percent.                   $1,000
At least 175 percent but less than 200 percent.                   $1,500
At least 200 percent but less than 225 percent.                   $2,000
At least 225 percent but less than 250 percent.                   $2,500
At least 250 percent but less than 275 percent.                   $3,000
At least 275 percent but less than 300 percent.                   $3,500
At least 300 percent...........................                  $4,000.
 

            ``(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 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,
                    ``(B) which, in the case of a passenger automobile 
                or light truck, has received--
                            ``(i) 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, and
                            ``(ii) a certificate that such vehicle 
                        meets or exceeds the Bin 5 Tier II emission 
                        standard established in regulations prescribed 
                        by the Administrator of the Environmental 
                        Protection Agency under section 202(i) of the 
                        Clean Air Act for that make and model year 
                        vehicle,
                    ``(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) New Advanced Lean Burn Technology Motor Vehicle Credit.--
            ``(1) In general.--For purposes of subsection (a), the new 
        advanced lean burn technology motor vehicle credit determined 
        under this subsection with respect to a new advanced lean burn 
        technology motor vehicle placed in service by the taxpayer 
        during the taxable year is the credit amount determined under 
        paragraph (2).
            ``(2) Credit amount.--
                    ``(A) Fuel economy.--The credit amount determined 
                under this paragraph shall be determined in accordance 
                with the following table:

 
  ``In the case of a vehicle which achieves a
 fuel economy (expressed as a percentage of the   The credit amount is--
    2002 model year city fuel economy) of--
 
At least 125 percent but less than 150 percent.                     $400
At least 150 percent but less than l75 percent.                     $800
At least 175 percent but less than 200 percent.                   $1,200
At least 200 percent but less than 225 percent.                   $1,600
At least 225 percent but less than 250 percent.                   $2,000
At least 250 percent...........................                  $2,400.
 

                    ``(B) Conservation credit.--The amount determined 
                under subparagraph (A) with respect to a new advanced 
                lean burn technology motor vehicle shall be increased 
                by the conservation credit amount determined in 
                accordance with the following table:

 
  ``In the case of a vehicle which achieves a
 lifetime fuel savings (expressed in gallons of  The conservation credit
                 gasoline) of--                        amount is--
 
At least 1,200 but less than 1,800.............                     $250
At least 1,800 but less than 2,400.............                     $500
At least 2,400, but less than 3,000............                     $750
At least 3,000.................................                  $1,000.
 

            ``(3) New advanced lean burn technology motor vehicle.--For 
        purposes of this subsection, the term `new advanced lean burn 
        technology motor vehicle' means a passenger automobile or a 
        light truck--
                    ``(A) with an internal combustion engine which--
                            ``(i) is designed to operate primarily 
                        using more air than is necessary for complete 
                        combustion of the fuel,
                            ``(ii) incorporates direct injection,
                            ``(iii) achieves at least 125 percent of 
                        the 2002 model year city fuel economy, and
                            ``(iv) for 2005 and later model vehicles, 
                        has received a certificate that such vehicle 
                        meets or exceeds--
                                    ``(I) in the case of a vehicle 
                                having a gross vehicle weight rating of 
                                6,000 pounds or less, the Bin 5 Tier II 
                                emission standard established in 
                                regulations prescribed by the 
                                Administrator of the Environmental 
                                Protection Agency under section 202(i) 
                                of the Clean Air Act for that make and 
                                model year vehicle, and
                                    ``(II) in the case of a vehicle 
                                having a gross vehicle weight rating of 
                                more than 6,000 pounds but not more 
                                than 8,500 pounds, the Bin 8 Tier II 
                                emission standard which is so 
                                established,
                    ``(B) the original use of which commences with the 
                taxpayer,
                    ``(C) which is acquired for use or lease by the 
                taxpayer and not for resale, and
                    ``(D) which is made by a manufacturer.
            ``(4) Lifetime fuel savings.--For purposes of this 
        subsection, the term `lifetime fuel savings' means, in the case 
        of any new advanced lean burn technology motor vehicle, an 
        amount equal to the excess (if any) of--
                    ``(A) 120,000 divided by the 2002 model year city 
                fuel economy for the vehicle inertia weight class, over
                    ``(B) 120,000 divided by the city fuel economy for 
                such vehicle.
    ``(d) New Qualified Hybrid Motor Vehicle Credit.--
            ``(1) In general.--For purposes of subsection (a), the new 
        qualified hybrid motor vehicle credit determined under this 
        subsection with respect to a new qualified hybrid motor vehicle 
        placed in service by the taxpayer during the taxable year is 
        the credit amount determined under paragraph (2).
            ``(2) Credit amount.--
                    ``(A) Credit amount for passenger automobiles and 
                light trucks.--In the case of a new qualified hybrid 
                motor vehicle which is a passenger automobile or light 
                truck and which has a gross vehicle weight rating of 
                not more than 8,500 pounds, the amount determined under 
                this paragraph is the sum of the amounts determined 
                under clauses (i) and (ii).
                            ``(i) Fuel economy.--The amount determined 
                        under this clause is the amount which would be 
                        determined under subsection (c)(2)(A) if such 
                        vehicle were a vehicle referred to in such 
                        subsection.
                            ``(ii) Conservation credit.--The amount 
                        determined under this clause is the amount 
                        which would be determined under subsection 
                        (c)(2)(B) if such vehicle were a vehicle 
                        referred to in such subsection.
                    ``(B) Credit amount for other motor vehicles.--
                            ``(i) In general.--In the case of any new 
                        qualified hybrid motor vehicle to which 
                        subparagraph (A) does not apply, the amount 
                        determined under this paragraph is the amount 
                        equal to the applicable percentage of the 
                        qualified incremental hybrid cost of the 
                        vehicle as certified under clause (v).
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the applicable percentage is--
                                    ``(I) 20 percent if the vehicle 
                                achieves an increase in city fuel 
                                economy relative to a comparable 
                                vehicle of at least 30 percent but less 
                                than 40 percent,
                                    ``(II) 30 percent if the vehicle 
                                achieves such an increase of at least 
                                40 percent but less than 50 percent, 
                                and
                                    ``(III) 40 percent if the vehicle 
                                achieves such an increase of at least 
                                50 percent.
                            ``(iii) Qualified incremental hybrid 
                        cost.--For purposes of this subparagraph, the 
                        qualified incremental hybrid cost of any 
                        vehicle is equal to the amount of the excess of 
                        the manufacturer's suggested retail price for 
                        such vehicle over such price for a comparable 
                        vehicle, to the extent such amount does not 
                        exceed--
                                    ``(I) $7,500, if such vehicle has a 
                                gross vehicle weight rating of not more 
                                than 14,000 pounds,
                                    ``(II) $15,000, if such vehicle has 
                                a gross vehicle weight rating of more 
                                than 14,000 pounds but not more than 
                                26,000 pounds, and
                                    ``(III) $30,000, if such vehicle 
                                has a gross vehicle weight rating of 
                                more than 26,000 pounds.
                            ``(iv) Comparable vehicle.--For purposes of 
                        this subparagraph, the term `comparable 
                        vehicle' means, with respect to any new 
                        qualified hybrid motor vehicle, any vehicle 
                        which is powered solely by a gasoline or diesel 
                        internal combustion engine and which is 
                        comparable in weight, size, and use to such 
                        vehicle.
                            ``(v) Certification.--A certification 
                        described in clause (i) shall be made by the 
                        manufacturer and shall be determined in 
                        accordance with guidance prescribed by the 
                        Secretary. Such guidance shall specify 
                        procedures and methods for calculating fuel 
                        economy savings and incremental hybrid costs.
            ``(3) New qualified hybrid motor vehicle.--For purposes of 
        this subsection--
                    ``(A) In general.--The term `new qualified hybrid 
                motor vehicle' means a motor vehicle--
                            ``(i) which draws propulsion energy from 
                        onboard sources of stored energy which are 
                        both--
                                    ``(I) an internal combustion or 
                                heat engine using consumable fuel, and
                                    ``(II) a rechargeable energy 
                                storage system,
                            ``(ii) which, in the case of a vehicle to 
                        which paragraph (2)(A) applies, 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, and
                                    ``(I) in the case of a vehicle 
                                having a gross vehicle weight rating of 
                                6,000 pounds or less, the Bin 5 Tier II 
                                emission standard established in 
                                regulations prescribed by the 
                                Administrator of the Environmental 
                                Protection Agency under section 202(i) 
                                of the Clean Air Act for that make and 
                                model year vehicle, and
                                    ``(II) in the case of a vehicle 
                                having a gross vehicle weight rating of 
                                more than 6,000 pounds but not more 
                                than 8,500 pounds, the Bin 8 Tier II 
                                emission standard which is so 
                                established,
                            ``(iii) which has a maximum available power 
                        of at least--
                                    ``(I) 4 percent in the case of a 
                                vehicle to which paragraph (2)(A) 
                                applies,
                                    ``(II) 10 percent in the case of a 
                                vehicle which has a gross vehicle 
                                weight rating or more than 8,500 pounds 
                                and not than 14,000 pounds, and
                                    ``(III) 15 percent in the case of a 
                                vehicle in excess of 14,000 pounds,
                            ``(iv) which, in the case of a vehicle to 
                        which paragraph (2)(B) applies, has an internal 
                        combustion or heat engine which has received a 
                        certificate of conformity under the Clean Air 
                        Act as meeting the emission standards set in 
                        the regulations prescribed by the Administrator 
                        of the Environmental Protection Agency for 2005 
                        through 2008 model year diesel heavy duty 
                        engines or ottocycle heavy duty engines, as 
                        applicable,
                            ``(v) the original use of which commences 
                        with the taxpayer,
                            ``(vi) which is acquired for use or lease 
                        by the taxpayer and not for resale, and
                            ``(vii) which is made by a manufacturer.
                Such term shall not include any vehicle which is not a 
                passenger automobile or light truck if such vehicle has 
                a gross vehicle weight rating of less than 8,500 
                pounds.
                    ``(B) Consumable fuel.--For purposes of 
                subparagraph (A)(i)(I), the term `consumable fuel' 
                means any solid, liquid, or gaseous matter which 
                releases energy when consumed by an auxiliary power 
                unit.
                    ``(C) Maximum available power.--
                            ``(i) Certain passenger automobiles and 
                        light trucks.--In the case of a vehicle to 
                        which paragraph (2)(A) applies, the term 
                        `maximum available power' means the maximum 
                        power available from the rechargeable energy 
                        storage system, during a standard 10 second 
                        pulse power or equivalent test, divided by such 
                        maximum power and the SAE net power of the heat 
                        engine.
                            ``(ii) Other motor vehicles.--In the case 
                        of a vehicle to which paragraph (2)(B) applies, 
                        the term `maximum available power' means the 
                        maximum power available from the rechargeable 
                        energy storage system, during a standard 10 
                        second pulse power or equivalent test, divided 
                        by the vehicle's total traction power. For 
                        purposes of the preceding sentence, the term 
                        `total traction power' means the sum of the 
                        peak power from the rechargeable energy storage 
                        system and the heat engine peak power of the 
                        vehicle, except that if such storage system is 
                        the sole means by which the vehicle can be 
                        driven, the total traction power is the peak 
                        power of such storage system.
    ``(e) New Qualified Alternative Fuel Motor Vehicle Credit.--
            ``(1) Allowance of credit.--Except as provided in paragraph 
        (5), the new qualified alternative fuel motor vehicle credit 
        determined under this subsection is an amount equal to the 
        applicable percentage of the incremental cost of any new 
        qualified alternative fuel motor vehicle placed in service by 
        the taxpayer during the taxable year.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage with respect to any new 
        qualified alternative fuel motor vehicle is--
                    ``(A) 40 percent, plus
                    ``(B) 30 percent, if such vehicle--
                            ``(i) has received a certificate of 
                        conformity under the Clean Air Act and meets or 
                        exceeds the most stringent standard available 
                        for certification under the Clean Air Act for 
                        that make and model year vehicle (other than a 
                        zero emission standard), or
                            ``(ii) has received an order certifying the 
                        vehicle as meeting the same requirements as 
                        vehicles which may be sold or leased in 
                        California and meets or exceeds the most 
                        stringent standard available for certification 
                        under the State laws of California (enacted in 
                        accordance with a waiver granted under section 
                        209(b) of the Clean Air Act) for that make and 
                        model year vehicle (other than a zero emission 
                        standard).
        For purposes of the preceding sentence, in the case of any new 
        qualified alternative fuel motor vehicle which has a gross 
        vehicle weight rating of more than 14,000 pounds, the most 
        stringent standard available shall be such standard available 
        for certification on the date of the enactment of the Common 
        Sense Automobile Efficiency Act of 2005.
            ``(3) Incremental cost.--For purposes of this subsection, 
        the incremental cost of any new qualified alternative fuel 
        motor vehicle is equal to the amount of the excess of the 
        manufacturer's suggested retail price for such vehicle over 
        such price for a gasoline or diesel fuel motor vehicle of the 
        same model, to the extent such amount does not exceed--
                    ``(A) $5,000, if such vehicle has a gross vehicle 
                weight rating of not more than 8,500 pounds,
                    ``(B) $10,000, if such vehicle has a gross vehicle 
                weight rating of more than 8,500 pounds but not more 
                than 14,000 pounds,
                    ``(C) $25,000, if such vehicle has a gross vehicle 
                weight rating of more than 14,000 pounds but not more 
                than 26,000 pounds, and
                    ``(D) $40,000, if such vehicle has a gross vehicle 
                weight rating of more than 26,000 pounds.
            ``(4) New qualified alternative fuel motor vehicle.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `new qualified 
                alternative fuel motor vehicle' means any motor 
                vehicle--
                            ``(i) which is only capable of operating on 
                        an alternative fuel,
                            ``(ii) the original use of which commences 
                        with the taxpayer,
                            ``(iii) which is acquired by the taxpayer 
                        for use or lease, but not for resale, and
                            ``(iv) which is made by a manufacturer.
                    ``(B) Alternative fuel.--The term `alternative 
                fuel' means compressed natural gas, liquefied natural 
                gas, liquefied petroleum gas, hydrogen, and any liquid 
                at least 85 percent of the volume of which consists of 
                methanol.
            ``(5) Credit for mixed-fuel vehicles.--
                    ``(A) In general.--In the case of a mixed-fuel 
                vehicle placed in service by the taxpayer during the 
                taxable year, the credit determined under this 
                subsection is an amount equal to--
                            ``(i) in the case of a 75/25 mixed-fuel 
                        vehicle, 70 percent of the credit which would 
                        have been allowed under this subsection if such 
                        vehicle was a qualified alternative fuel motor 
                        vehicle, and
                            ``(ii) in the case of a 90/10 mixed-fuel 
                        vehicle, 90 percent of the credit which would 
                        have been allowed under this subsection if such 
                        vehicle was a qualified alternative fuel motor 
                        vehicle.
                    ``(B) Mixed-fuel vehicle.--For purposes of this 
                subsection, the term `mixed-fuel vehicle' means any 
                motor vehicle described in subparagraph (C) or (D) of 
                paragraph (3), which--
                            ``(i) is certified by the manufacturer as 
                        being able to perform efficiently in normal 
                        operation on a combination of an alternative 
                        fuel and a petroleum-based fuel,
                            ``(ii) either--
                                    ``(I) has received a certificate of 
                                conformity under the Clean Air Act, or
                                    ``(II) has received an order 
                                certifying the vehicle as meeting the 
                                same requirements as vehicles which may 
                                be sold or leased in California and 
                                meets or exceeds the low emission 
                                vehicle standard under section 88.105-
                                94 of title 40, Code of Federal 
                                Regulations, for that make and model 
                                year vehicle,
                            ``(iii) the original use of which commences 
                        with the taxpayer,
                            ``(iv) which is acquired by the taxpayer 
                        for use or lease, but not for resale, and
                            ``(v) which is made by a manufacturer.
                    ``(C) 75/25 mixed-fuel vehicle.--For purposes of 
                this subsection, the term `75/25 mixed-fuel vehicle' 
                means a mixed-fuel vehicle which operates using at 
                least 75 percent alternative fuel and not more than 25 
                percent petroleum-based fuel.
                    ``(D) 90/10 mixed-fuel vehicle.--For purposes of 
                this subsection, the term `90/10 mixed-fuel vehicle' 
                means a mixed-fuel vehicle which operates using at 
                least 90 percent alternative fuel and not more than 10 
                percent petroleum-based fuel.
    ``(f) 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 the regular tax liability (as defined in 
        section 26(b)) plus the tax imposed by section 55, over
            ``(2) the sum of the credits allowable under subpart A and 
        sections 27 and 30 for the taxable year.
    ``(g) 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) 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.).
            ``(3) 2002 model year city fuel economy.--
                    ``(A) In general.--The 2002 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 2002 model year
     ``If vehicle inertia weight class is:        city fuel economy is:
 
1,500 or 1,750 lbs.............................                 45.2 mpg
2,000 lbs......................................                 39.6 mpg
2,250 lbs......................................                 35.2 mpg
2,500 lbs......................................                 31.7 mpg
2,750 lbs......................................                 28.8 mpg
3,000 lbs......................................                 26.4 mpg
3,500 lbs......................................                 22.6 mpg
4,000 lbs......................................                 19.8 mpg
4,500 lbs......................................                 17.6 mpg
5,000 lbs......................................                 15.9 mpg
5,500 lbs......................................                 14.4 mpg
6,000 lbs......................................                 13.2 mpg
6,500 lbs......................................                 12.2 mpg
7,000 to 8,500 lbs.............................                11.3 mpg.
 

                            ``(ii) In the case of a light truck:

 
                                                   The 2002 model year
     ``If vehicle inertia weight class is:           city economy is:
 
1,500 or 1,750 lbs.............................                 39.4 mpg
2,000 lbs......................................                 35.2 mpg
2,250 lbs......................................                 31.8 mpg
2,500 lbs......................................                 29.0 mpg
2,750 lbs......................................                 26.8 mpg
3,000 lbs......................................                 24.9 mpg
3,500 lbs......................................                 21.8 mpg
4,000 lbs......................................                 19.4 mpg
4,500 lbs......................................                 17.6 mpg
5,000 lbs......................................                 16.1 mpg
5,500 lbs......................................                 14.8 mpg
6,000 lbs......................................                 13.7 mpg
6,500 lbs......................................                 12.8 mpg
7,000 to 8,500 lbs.............................                12.1 mpg.
 

                    ``(B) Vehicle inertia weight class.--For purposes 
                of subparagraph (A), 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.).
            ``(4) Fuel economy.--Fuel economy with respect to any 
        vehicle shall be measured under rules similar to the rules 
        under section 4064(c).
            ``(5) 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.
            ``(6) No double benefit.--The amount of any deduction or 
        credit allowable under this chapter (other than the credits 
        allowable under this section and section 30) shall be reduced 
        by the amount of credit allowed under subsection (a) for such 
        vehicle for the taxable year.
            ``(7) Recapture.--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).
            ``(8) 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.
            ``(9) Election not to take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects to not have this section apply to such vehicle.
            ``(10) Business carryovers allowed.--If the credit 
        allowable under subsection (a) for a taxable year exceeds the 
        limitation under subsection (g) 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 and carryforward under rules 
        similar to the rules of section 39.
            ``(11) Interaction with 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 the motor 
        vehicle safety provisions of sections 30101 through 30169 of 
        title 49, United States Code.
    ``(h) Regulations.--
            ``(1) In general.--The Secretary shall promulgate such 
        regulations as necessary to carry out the provisions of this 
        section.
            ``(2) Determination of motor vehicle eligibility.--The 
        Secretary, after 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.
    ``(i) Termination.--This section shall not apply to any property 
placed in service after--
            ``(1) in the case of a new qualified alternative fuel motor 
        vehicle, December 31, 2007,
            ``(2) in the case of a new advanced lean burn technology 
        motor vehicle or a new qualified hybrid motor vehicle, December 
        31, 2009, and
            ``(3) in the case of a new qualified fuel cell motor 
        vehicle, December 31, 2013.''.
    (b) Conforming Amendments.--
            (1) Section 30(d) of such Code (relating to special rules) 
        is amended by adding at the end the following new paragraphs:
            ``(5) No double benefit.--No credit shall be allowed under 
        this section for any motor vehicle for which a credit is also 
        allowed under section 30B.''.
            (2) Section 1016(a) is amended by striking ``and'' at the 
        end of paragraph (30), by striking the period at the end of 
        paragraph (31) and inserting ``, and'', and by adding at the 
        end the following:
            ``(32) to the extent provided in section 30B(h)(5).''.
            (3) Section 6501(m) of such Code is amended by inserting 
        ``30B(h)(9),'' after ``30(d)(4),''.
            (4) 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 30A the following:

``Sec. 30B. Alternative motor vehicle credit.''.
    (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, in taxable years ending after such date.
    (d) Sticker Information Required at Retail Sale.--
            (1) In general.--The Secretary of the Treasury shall issue 
        regulations under which each qualified vehicle sold at retail 
        shall display a notice--
                    (A) that such vehicle is a qualified vehicle, and
                    (B) that the buyer may not benefit from the credit 
                allowed under section 30B of the Internal Revenue Code 
                of 1986 if such buyer has insufficient tax liability.
            (2) Qualified vehicle.--For purposes of paragraph (1), the 
        term ``qualified vehicle'' means a vehicle with respect to 
        which a credit is allowed under section 30B of the Internal 
        Revenue Code of 1986.
                                 <all>