[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 133 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                 S. 133

 To promote the national security and stability of the economy of the 
 United States by reducing the dependence of the United States on oil 
through the use of alternative fuels and new technology, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 4, 2007

   Mr. Obama (for himself, Mr. Lugar, and Mr. Harkin) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
 To promote the national security and stability of the economy of the 
 United States by reducing the dependence of the United States on oil 
through the use of alternative fuels and new technology, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``American Fuels Act 
of 2007''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Office of Energy Security.
Sec. 3. Credit for production of qualified flexible fuel motor 
                            vehicles.
Sec. 4. Incentives for the retail sale of alternative fuels as motor 
                            vehicle fuel.
Sec. 5. Freedom for fuel franchisers.
Sec. 6. Alternative diesel fuel content of diesel.
Sec. 7. Excise tax credit for production of cellulosic biomass ethanol.
Sec. 8. Incentive for Federal and State fleets for medium and heavy 
                            duty hybrids.
Sec. 9. Credit for qualifying ethanol blending and processing 
                            equipment.
Sec. 10. Public access to Federal alternative refueling stations.
Sec. 11. Purchase of clean fuel buses.
Sec. 12. Domestic fuel production volumes to meet Department of Defense 
                            needs.
Sec. 13. Federal fleet energy conservation improvement.

SEC. 2. OFFICE OF ENERGY SECURITY.

    (a) Definitions.--In this section:
            (1) Director.--The term ``Director'' means the Director of 
        Energy Security appointed under subsection (c)(1).
            (2) Office.--The term ``Office'' means the Office of Energy 
        Security established by subsection (b).
    (b) Establishment.--There is established in the Executive Office of 
the President the Office of Energy Security.
    (c) Director.--
            (1) In general.--The Office shall be headed by a Director, 
        who shall be appointed by the President, by and with the advice 
        and consent of the Senate.
            (2) Rate of pay.--The Director shall be paid at a rate of 
        pay equal to level I of the Executive Schedule under section 
        5312 of title 5, United States Code.
    (d) Responsibilities.--
            (1) In general.--The Office, acting through the Director, 
        shall be responsible for overseeing all Federal energy security 
        programs, including the coordination of efforts of Federal 
        agencies to assist the United States in achieving full energy 
        independence.
            (2) Specific responsibilities.--In carrying out paragraph 
        (1), the Director shall--
                    (A) serve as head of the energy community;
                    (B) act as the principal advisor to the President, 
                the National Security Council, the National Economic 
                Council, the Domestic Policy Council, and the Homeland 
                Security Council with respect to intelligence matters 
                relating to energy security;
                    (C) with request to budget requests and 
                appropriations for Federal programs relating to energy 
                security--
                            (i) consult with the President and the 
                        Director of the Office of Management and Budget 
                        with respect to each major Federal budgetary 
                        decision relating to energy security of the 
                        United States;
                            (ii) based on priorities established by the 
                        President, provide to the heads of departments 
                        containing agencies or organizations within the 
                        energy community, and to the heads of such 
                        agencies and organizations, guidance for use in 
                        developing the budget for Federal programs 
                        relating to energy security;
                            (iii) based on budget proposals provided to 
                        the Director by the heads of agencies and 
                        organizations described in clause (ii), develop 
                        and determine an annual consolidated budget for 
                        Federal programs relating to energy security; 
                        and
                            (iv) present the consolidated budget, 
                        together with any recommendations of the 
                        Director and any heads of agencies and 
                        organizations described in clause (ii), to the 
                        President for approval;
                    (D) establish and meet regularly with a council of 
                business and labor leaders to develop and provide to 
                the President and Congress recommendations relating to 
                the impact of energy supply and prices on economic 
                growth;
                    (E) submit to Congress an annual report that 
                describes the progress of the United States toward the 
                goal of achieving full energy independence; and
                    (F) carry out such other responsibilities as the 
                President may assign.
    (e) Staff.--
            (1) In general.--The Director may, without regard to the 
        civil service laws (including regulations), appoint and 
        terminate such personnel as are necessary to enable the 
        Director to carry out the responsibilities of the Director 
        under this section.
            (2) Compensation.--
                    (A) In general.--Except as provided in subparagraph 
                (B), the Director may fix the compensation of personnel 
                without regard to the provisions of chapter 51 and 
                subchapter III of chapter 53 of title 5, United States 
                Code, relating to classification of positions and 
                General Schedule pay rates.
                    (B) Maximum rate of pay.--The rate of pay for the 
                personnel appointed by the Director shall not exceed 
                the rate payable for level V of the Executive Schedule 
                under section 5316 of title 5, United States Code.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.

SEC. 3. CREDIT FOR PRODUCTION OF QUALIFIED FLEXIBLE FUEL MOTOR 
              VEHICLES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45O. PRODUCTION OF QUALIFIED FLEXIBLE FUEL MOTOR VEHICLES.

    ``(a) Allowance of Credit.--For purposes of section 38, in the case 
of a manufacturer, the qualified flexible fuel motor vehicle production 
credit determined under this section for any taxable year is an amount 
equal to the incremental flexible fuel motor vehicle cost for each 
qualified flexible fuel motor vehicle produced in the United States by 
the manufacturer during the taxable year.
    ``(b) Incremental Flexible Fuel Motor Vehicle Cost.--With respect 
to any qualified flexible fuel motor vehicle, the incremental flexible 
fuel motor vehicle cost is an amount equal to the lesser of--
            ``(1) the excess of--
                    ``(A) the cost of producing such qualified flexible 
                fuel motor vehicle, over
                    ``(B) the cost of producing such motor vehicle if 
                such motor vehicle was not a qualified flexible fuel 
                motor vehicle, or
            ``(2) $100.
    ``(c) Qualified Flexible Fuel Motor Vehicle.--For purposes of this 
section, the term `qualified flexible fuel motor vehicle' means a 
flexible fuel motor vehicle--
            ``(1) the production of which is not required for the 
        manufacturer to meet--
                    ``(A) the maximum credit allowable for vehicles 
                described in paragraph (2) in determining the fleet 
                average fuel economy requirements (as determined under 
                section 32904 of title 49, United States Code) of the 
                manufacturer for the model year ending in the taxable 
                year, or
                    ``(B) the requirements of any other provision of 
                Federal law, and
            ``(2) which is designed so that the vehicle is propelled by 
        an engine which can use as a fuel a gasoline mixture of which 
        85 percent (or another percentage of not less than 70 percent, 
        as the Secretary may determine, by rule, to provide for 
        requirements relating to cold start, safety, or vehicle 
        functions) of the volume of consists of ethanol.
    ``(d) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Motor vehicle.--The term `motor vehicle' has the 
        meaning given such term by section 30(c)(2).
            ``(2) Manufacturer.--The term `manufacturer' has the 
        meaning given such term 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) 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.
            ``(4) No double benefit.--The amount of any deduction or 
        credit allowable under this chapter (other than the credits 
        allowable under this section and section 30B) shall be reduced 
        by the amount of credit allowed under subsection (a) for such 
        vehicle for the taxable year.
            ``(5) Election not to take credit.--No credit shall be 
        allowed under subsection (a) for any vehicle if the taxpayer 
        elects to not have this section apply to such vehicle.
            ``(6) Termination.--This section shall not apply to any 
        vehicle produced after December 31, 2011.
            ``(7) Cross reference.--For an election to claim certain 
        minimum tax credits in lieu of the credit determined under this 
        section, see section 53(e).''.
    (b) Credit Allowed Against the Alternative Minimum Tax.--Section 
38(c)(4)(B) of the Internal Revenue Code of 1986 (defining specified 
credits) is amended by striking the period at the end of clause 
(ii)(II) and inserting ``, and'', and by adding at the end the 
following new clause:
                            ``(iii) the credit determined under section 
                        45O.''.
    (c) Election To Use Additional AMT Credit.--Section 53 of the 
Internal Revenue Code of 1986 (relating to credit for prior year 
minimum tax liability) is amended by adding at the end the following 
new subsection:
    ``(e) Additional Credit in Lieu of Flexible Fuel Motor Vehicle 
Credit.--
            ``(1) In general.--In the case of a taxpayer making an 
        election under this subsection for a taxable year, the amount 
        otherwise determined under subsection (c) shall be increased by 
        any amount of the credit determined under section 45O for such 
        taxable year which the taxpayer elects not to claim pursuant to 
        such election.
            ``(2) Election.--A taxpayer may make an election for any 
        taxable year not to claim any amount of the credit allowable 
        under section 45O with respect to property produced by the 
        taxpayer during such taxable year. An election under this 
        subsection may only be revoked with the consent of the 
        Secretary.
            ``(3) Credit refundable.--The aggregate increase in the 
        credit allowed by this section for any taxable year by reason 
        of this subsection shall for purposes of this title (other than 
        subsection (b)(2) of this section) be treated as a credit 
        allowed to the taxpayer under subpart C.''.
    (d) Conforming Amendments.--Section 38(b) of the Internal Revenue 
Code of 1986 is amended by striking ``plus'' at the end of paragraph 
(30), by striking the period at the end of paragraph (31) and inserting 
``, plus'', and by adding at the end the following new paragraph:
            ``(32) the qualified flexible fuel motor vehicle production 
        credit determined under section 45N, plus''.
    (e) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new item:

``Sec. 45O. Production of qualified flexible fuel motor vehicles.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to motor vehicles produced in model years ending after the date 
of the enactment of this Act.

SEC. 4. INCENTIVES FOR THE RETAIL SALE OF ALTERNATIVE FUELS AS MOTOR 
              VEHICLE FUEL.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by inserting after section 40A the following new 
section:

``SEC. 40B. CREDIT FOR RETAIL SALE OF ALTERNATIVE FUELS AS MOTOR 
              VEHICLE FUEL.

    ``(a) General Rule.--The alternative fuel retail sales credit for 
any taxable year is the applicable amount for each gallon of 
alternative fuel sold at retail by the taxpayer during such year.
    ``(b) Applicable Amount.--For purposes of this section, the 
applicable amount shall be determined in accordance with the following 
table:

``In the case of                                  The applicable amount
    any sale:                                      for each gallon is: 
    Before 2010...................................            35 cents 
    During 2010 or 2011...........................            20 cents 
    During 2012...................................            10 cents.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Alternative fuel.--The term `alternative fuel' means 
        any fuel at least 85 percent (or another percentage of not less 
        than 70 percent, as the Secretary may determine, by rule, to 
        provide for requirements relating to cold start, safety, or 
        vehicle functions) of the volume of which consists of ethanol.
            ``(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 
                alternative fuel (including any use after importation) 
                as a fuel to propel any qualified alternative fuel 
                motor vehicle (as defined in this section) before such 
                fuel is sold at retail, then such use shall be treated 
                in the same manner as if such fuel were sold at retail 
                as a fuel to propel such a vehicle by such person.
            ``(3) Qualified alternative fuel motor vehicle.--The term 
        `new qualified alternative fuel motor vehicle' means any motor 
        vehicle--
                    ``(A) which is capable of operating on an 
                alternative fuel,
                    ``(B) the original use of which commences with the 
                taxpayer,
                    ``(C) which is acquired by the taxpayer for use or 
                lease, but not for resale, and
                    ``(D) which is made by a manufacturer.
    ``(d) Election To Pass Credit.--A person which sells alternative 
fuel at retail may elect to pass the credit allowable under this 
section to the purchaser of such fuel or, in the event the purchaser is 
a tax-exempt entity or otherwise declines to accept such credit, to the 
person which supplied such fuel, under rules established by the 
Secretary.
    ``(e) 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.
    ``(f) Termination.--This section shall not apply to any fuel sold 
at retail after December 31, 2012.''.
    (b) Credit Treated as Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 (relating to current year business 
credit), as amended by section 4(d), is amended by striking ``plus'' at 
the end of paragraph (31), by striking the period at the end of 
paragraph (32) and inserting ``, plus'', and by adding at the end the 
following new paragraph:
            ``(33) the alternative fuel retail sales credit determined 
        under section 40B(a).''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 40A the 
following new item:

``Sec. 40B. Credit for retail sale of alternative fuels as motor 
                            vehicle fuel.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to fuel sold at retail after the date of enactment of this Act, 
in taxable years ending after such date.

SEC. 5. FREEDOM FOR FUEL FRANCHISERS.

    (a) Prohibition on Restriction of Installation of Alternative Fuel 
Pumps.--
            (1) In general.--Title I of the Petroleum Marketing 
        Practices Act (15 U.S.C. 2801 et seq.) is amended by adding at 
        the end the following:

``SEC. 107. PROHIBITION ON RESTRICTION OF INSTALLATION OF ALTERNATIVE 
              FUEL PUMPS.

    ``(a) Definition.--In this section:
            ``(1) Alternative fuel.--The term `alternative fuel' means 
        any fuel--
                    ``(A) at least 85 percent of the volume of which 
                consists of ethanol, natural gas, compressed natural 
                gas, liquefied natural gas, liquefied petroleum gas, 
                hydrogen, or any combination of those fuels; or
                    ``(B) any mixture of biodiesel (as defined in 
                section 40A(d)(1) of the Internal Revenue Code of 1986) 
                and diesel fuel (as defined in section 4083(a)(3) of 
                the Internal Revenue Code of 1986), determined without 
                regard to any use of kerosene and containing at least 
                20 percent biodiesel.
            ``(2) Franchise-related document.--The term `franchise-
        related document' means--
                    ``(A) a franchise under this Act; and
                    ``(B) any other contract or directive of a 
                franchisor relating to terms or conditions of the sale 
                of fuel by a franchisee.
    ``(b) Prohibitions.--
            ``(1) In general.--Notwithstanding any provision of a 
        franchise-related document in effect on the date of enactment 
        of this section, no franchisee or affiliate of a franchisee 
        shall be restricted from--
                    ``(A) installing on the marketing premises of the 
                franchisee an alternative fuel pump;
                    ``(B) converting an existing tank and pump on the 
                marketing premises of the franchisee for alternative 
                fuel use;
                    ``(C) advertising (including through the use of 
                signage or logos) the sale of any alternative fuel; or
                    ``(D) selling alternative fuel in any specified 
                area on the marketing premises of the franchisee 
                (including any area in which a name or logo of a 
                franchisor or any other entity appears).
            ``(2) Enforcement.--Any restriction described in paragraph 
        (1) that is contained in a franchise-related document and in 
        effect on the date of enactment of this section--
                    ``(A) shall be considered to be null and void as of 
                that date; and
                    ``(B) shall not be enforced under section 105.
    ``(c) Exception to 3-Grade Requirement.--No franchise-related 
document that requires that 3 grades of gasoline be sold by the 
applicable franchisee shall prevent the franchisee from selling an 
alternative fuel in lieu of 1 grade of gasoline.''.
            (2) Conforming amendments.--
                    (A) In general.--Section 101(13) of the Petroleum 
                Marketing Practices Act (15 U.S.C. 2801(13)) is amended 
                by adjusting the indentation of subparagraph (C) 
                appropriately.
                    (B) Table of contents.--The table of contents of 
                the Petroleum Marketing Practices Act (15 U.S.C. 2801 
                note) is amended--
                            (i) by inserting after the item relating to 
                        section 106 the following:

``Sec. 107. Prohibition on restriction of installation of alternative 
                            fuel pumps.'';
                        and
                            (ii) by striking the item relating to 
                        section 202 and inserting the following:

``Sec. 202. Automotive fuel rating testing and disclosure 
                            requirements.''.
    (b) Application of Gasohol Competition Act of 1980.--Section 26 of 
the Clayton Act (15 U.S.C. 26a) is amended--
            (1) by redesignating subsection (c) as subsection (d);
            (2) by inserting after subsection (b) the following:
    ``(c) Restriction Prohibited.--For purposes of subsection (a), 
restricting the right of a franchisee to install on the premises of 
that franchisee qualified alternative fuel vehicle refueling property 
(as defined in section 30C(c) of the Internal Revenue Code of 1986) 
shall be considered an unlawful restriction.''; and
            (3) in subsection (d) (as redesignated by paragraph (1)), 
        by striking ``(d) As used in this section,'' and inserting the 
        following:

SEC. 6. ALTERNATIVE DIESEL FUEL CONTENT OF DIESEL.

    (a) Findings.--Congress finds that--
            (1) section 211(o) of the Clean Air Act (42 U.S.C. 7535(o)) 
        (as amended by section 1501 of the Energy Policy Act of 2005 
        (Public Law 109-58)) established a renewable fuel program under 
        which entities in the petroleum sector are required to blend 
        renewable fuels into motor vehicle fuel based on the gasoline 
        motor pool;
            (2) the need for energy diversification is greater as of 
        the date of enactment of this Act than it was only months 
        before the date of enactment of the Energy Policy Act (Public 
        Law 109-58; 119 Stat. 594); and
            (3)(A) the renewable fuel program under section 211(o) of 
        the Clean Air Act requires a small percentage of the gasoline 
        motor pool, totaling nearly 140,000,000,000 gallons, to contain 
        a renewable fuel; and
            (B) the small percentage requirement described in 
        subparagraph (A) does not include the 40,000,000,000-gallon 
        diesel motor pool.
    (b) Alternative Diesel Fuel Program for Diesel Motor Pool.--Section 
211 of the Clean Air Act (42 U.S.C. 7545) is amended by inserting after 
subsection (o) the following:
    ``(p) Alternative Diesel Fuel Program for Diesel Motor Pool.--
            ``(1) Definition of alternative diesel fuel.--
                    ``(A) In general.--In this subsection, the term 
                `alternative diesel fuel' means biodiesel (as defined 
                in section 312(f) of the Energy Policy Act of 1992 (42 
                U.S.C. 13220(f))) and any blending components derived 
                from alternative fuel (provided that only the 
                alternative fuel portion of any such blending component 
                shall be considered to be part of the applicable volume 
                under the alternative diesel fuel program established 
                by this subsection).
                    ``(B) Inclusions.--The term `alternative diesel 
                fuel' includes a diesel fuel substitute produced from--
                            ``(i) animal fat;
                            ``(ii) plant oil;
                            ``(iii) recycled yellow grease;
                            ``(iv) single-cell or microbial oil;
                            ``(v) thermal depolymerization;
                            ``(vi) thermochemical conversion;
                            ``(vii) a coal-to-liquid process (including 
                        the Fischer-Tropsch process) that provides for 
                        the sequestration of carbon emissions;
                            ``(viii) a diesel-ethanol blend of not less 
                        than 7 percent ethanol; or
                            ``(ix) sugar, starch, or cellulosic 
                        biomass.
            ``(2) Alternative diesel fuel program.--
                    ``(A) Regulations.--
                            ``(i) In general.--Not later than 1 year 
                        after the date of enactment of this subsection, 
                        the Administrator shall promulgate regulations 
                        to ensure that diesel sold or introduced into 
                        commerce in the United States (except in 
                        noncontiguous States or territories), on an 
                        annual average basis, contains the applicable 
                        volume of alternative diesel fuel determined in 
                        accordance with subparagraph (B).
                            ``(ii) Provisions of regulations.--
                        Regardless of the date of promulgation, the 
                        regulations promulgated under clause (i)--
                                    ``(I) shall contain compliance 
                                provisions applicable to refineries, 
                                blenders, distributors, and importers, 
                                as appropriate, to ensure that the 
                                requirements of this paragraph are met; 
                                but
                                    ``(II) shall not--
                                            ``(aa) restrict geographic 
                                        areas in which alternative 
                                        diesel fuel may be used; or
                                            ``(bb) impose any per-
                                        gallon obligation for the use 
                                        of alternative diesel fuel.
                            ``(iii) Requirement in case of failure to 
                        promulgate regulations.--If the Administrator 
                        fails to promulgate regulations under clause 
                        (i), the percentage of alternative diesel fuel 
                        in the diesel motor pool sold or dispensed to 
                        consumers in the United States, on a volume 
                        basis, shall be 0.6 percent for calendar year 
                        2009.
                    ``(B) Applicable volume.--
                            ``(i) Calendar years 2009 through 2016.--
                        For the purpose of subparagraph (A), the 
                        applicable volume for any of calendar years 
                        2009 through 2016 shall be determined in 
                        accordance with the following table:

``Applicable volume of Alternative 
        diesel fuel in diesel motor 
        pool (in millions of                             Calendar year:
        gallons):
        250....................................................   2009 
        500....................................................   2010 
        750....................................................   2011 
        1,000..................................................   2012 
        1,250..................................................   2013 
        1,500..................................................   2014 
        1,750..................................................   2015 
        2,000..................................................   2016.
                            ``(ii) Calendar year 2017 and thereafter.--
                        The applicable volume for calendar year 2017 
                        and each calendar year thereafter shall be 
                        determined by the Administrator, in 
                        coordination with the Secretary of Agriculture 
                        and the Secretary of Energy, based on a review 
                        of the implementation of the program during 
                        calendar years 2009 through 2016, including a 
                        review of--
                                    ``(I) the impact of the use of 
                                alternative diesel fuels on the 
                                environment, air quality, energy 
                                security, job creation, and rural 
                                economic development; and
                                    ``(II) the expected annual rate of 
                                future production of alternative diesel 
                                fuels to be used as a blend component 
                                or replacement to the diesel motor 
                                pool.
                            ``(iii) Minimum applicable volume.--For the 
                        purpose of subparagraph (A), the applicable 
                        volume for calendar year 2017 and each calendar 
                        year thereafter shall be equal to the product 
                        obtained by multiplying--
                                    ``(I) the number of gallons of 
                                diesel that the Administrator estimates 
                                will be sold or introduced into 
                                commerce during the calendar year; and
                                    ``(II) the ratio that--
                                            ``(aa) 2,000,000,000 
                                        gallons of alternative diesel 
                                        fuel; bears to
                                            ``(bb) the number of 
                                        gallons of diesel sold or 
                                        introduced into commerce during 
                                        calendar year 2016.
            ``(3) Applicable percentages.--
                    ``(A) Provision of estimate of volumes of diesel 
                sales.--Not later than October 31 of each of calendar 
                years 2008 through 2016, the Administrator of the 
                Energy Information Administration shall provide to the 
                Administrator an estimate, with respect to the 
                following calendar year, of the volumes of diesel 
                projected to be sold or introduced into commerce in the 
                United States.
                    ``(B) Determination of applicable percentages.--
                            ``(i) In general.--Not later than November 
                        30 of each of calendar years 2009 through 2016, 
                        based on the estimate provided under 
                        subparagraph (A), the Administrator shall 
                        determine and publish in the Federal Register, 
                        with respect to the following calendar year, 
                        the alternative diesel fuel obligation that 
                        ensures that the requirements of paragraph (2) 
                        are met.
                            ``(ii) Required elements.--The alternative 
                        diesel fuel obligation determined for a 
                        calendar year under clause (i) shall--
                                    ``(I) be applicable to refineries, 
                                blenders, and importers, as 
                                appropriate;
                                    ``(II) be expressed in terms of a 
                                volume percentage of diesel sold or 
                                introduced into commerce in the United 
                                States; and
                                    ``(III) subject to subparagraph 
                                (C), consist of a single applicable 
                                percentage that applies to all 
                                categories of persons described in 
                                subclause (I).
                    ``(C) Adjustments.--In determining the applicable 
                percentage for a calendar year, the Administrator shall 
                make adjustments to prevent the imposition of redundant 
                obligations on any person described in subparagraph 
                (B)(ii)(I).
            ``(4) Credit program.--
                    ``(A) In general.--The regulations promulgated 
                pursuant to paragraph (2)(A) shall provide for the 
                generation of an appropriate amount of credits by any 
                person that refines, blends, or imports diesel that 
                contains a quantity of alternative diesel fuel that is 
                greater than the quantity required under paragraph (2).
                    ``(B) Use of credits.--A person that generates a 
                credit under subparagraph (A) may use the credit, or 
                transfer all or a portion of the credit to another 
                person, for the purpose of complying with regulations 
                promulgated pursuant to paragraph (2).
                    ``(C) Duration of credits.--A credit generated 
                under this paragraph shall be valid during the 1-year 
                period beginning on the date on which the credit is 
                generated.
                    ``(D) Inability to generate or purchase sufficient 
                credits.--The regulations promulgated pursuant to 
                paragraph (2)(A) shall include provisions allowing any 
                person that is unable to generate or purchase 
                sufficient credits under subparagraph (A) to meet the 
                requirements of paragraph (2) by carrying forward a 
                credit generated during a previous year on the 
                condition that the person, during the calendar year 
                following the year in which the alternative diesel fuel 
                deficit is created--
                            ``(i) achieves compliance with the 
                        alternative diesel fuel requirement under 
                        paragraph (2); and
                            ``(ii) generates or purchases additional 
                        credits under subparagraph (A) to offset the 
                        deficit of the previous year.
            ``(5) Waivers.--
                    ``(A) In general.--The Administrator, in 
                consultation with the Secretary of Agriculture and the 
                Secretary of Energy, may waive the requirements of 
                paragraph (2) in whole or in part on receipt of a 
                petition of 1 or more States by reducing the national 
                quantity of alternative diesel fuel for the diesel 
                motor pool required under paragraph (2) based on a 
                determination by the Administrator, after public notice 
                and opportunity for comment, that--
                            ``(i) implementation of the requirement 
                        would severely harm the economy or environment 
                        of a State, a region, or the United States; or
                            ``(ii) there is an inadequate domestic 
                        supply of alternative diesel fuel.
                    ``(B) Petitions for waivers.--Not later than 90 
                days after the date on which the Administrator receives 
                a petition under subparagraph (A), the Administrator, 
                in consultation with the Secretary of Agriculture and 
                the Secretary of Energy, shall approve or disapprove 
                the petition.
                    ``(C) Termination of waivers.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), a waiver under subparagraph (A) 
                        shall terminate on the date that is 1 year 
                        after the date on which the waiver is provided.
                            ``(ii) Exception.--The Administrator, in 
                        consultation with the Secretary of Agriculture 
                        and the Secretary of Energy, may extend a 
                        waiver under subparagraph (A), as the 
                        Administrator determines to be appropriate.''.
    (c) Penalties and Enforcement.--Section 211(d) of the Clean Air Act 
(42 U.S.C. 7545(d)) is amended--
            (1) in paragraph (1), by striking ``or (o)'' each place it 
        appears and inserting ``(o), or (p)''; and
            (2) in paragraph (2), by striking ``and (o)'' each place it 
        appears and inserting ``(o), and (p)''.
    (d) Technical Amendments.--Section 211 of the Clean Air Act (42 
U.S.C. 7545) is amended--
            (1) in subsection (i)(4), by striking ``section 324'' each 
        place it appears and inserting ``section 325'';
            (2) in subsection (k)(10), by indenting subparagraphs (E) 
        and (F) appropriately;
            (3) in subsection (n), by striking ``section 219(2)'' and 
        inserting ``section 216(2)'';
            (4) by redesignating the second subsection (r) and 
        subsection (s) as subsections (s) and (t), respectively; and
            (5) in subsection (t)(1) (as redesignated by paragraph 
        (4)), by striking ``this subtitle'' and inserting ``this 
        part''.

SEC. 7. EXCISE TAX CREDIT FOR PRODUCTION OF CELLULOSIC BIOMASS ETHANOL.

    (a) Allowance of Excise Tax Credit.--
            (1) In general.--Section 6426 of the Internal Revenue Code 
        of 1986 (relating to credit for alcohol fuel, biodiesel, and 
        alternative fuel mixtures) is amended by redesignating 
        subsections (f) and (g) as subsections (g) and (h), 
        respectively, and by inserting after subsection (e) the 
        following new subsection:
    ``(f) Cellulosic Biomass Ethanol Credit.--
            ``(1) In general.--For purposes of this section, in the 
        case of a cellulosic biomass ethanol producer, the cellulosic 
        biomass ethanol credit is the product of--
                    ``(A) the product of 51 cents times the equivalent 
                number of gallons of renewable fuel specified in 
                section 211(o)(4) of the Clean Air Act, times
                    ``(B) the number of gallons of qualified cellulosic 
                biomass ethanol fuel production of such producer.
            ``(2) Definitions.--
                    ``(A) Cellulosic biomass ethanol.--The term 
                `cellulosic biomass ethanol' has the meaning given such 
                term under section 211(o)(1)(A) of the Clean Air Act.
                    ``(B) Qualified cellulosic biomass ethanol fuel 
                production.--The term `qualified cellulosic biomass 
                ethanol fuel production' means any alcohol which is 
                cellulosic biomass ethanol which during the taxable 
                year--
                            ``(i) is sold by the producer to another 
                        person --
                                    ``(I) for use by such other person 
                                in the production of an alcohol fuel 
                                mixture in such other person's trade or 
                                business (other than casual off-farm 
                                production),
                                    ``(II) for use by such other person 
                                as a fuel in a trade or business, or
                                    ``(III) who sells such cellulosic 
                                biomass ethanol at retail to another 
                                person and places such ethanol in the 
                                fuel tank of such other person, or
                            ``(ii) is used or sold by the producer for 
                        any purpose described in clause (i).
            ``(3) Denial of double benefit.--No credit shall be allowed 
        under subsection (b) or (c) to any taxpayer with respect to any 
        fuel to the extent that a credit has been allowed with respect 
        to such fuel to any taxpayer under this subsection or a payment 
        has been made with respect to such fuel under section 6427(e).
            ``(4) Termination.--This section shall not apply to any 
        sale or use for any period after December 31, 2008.''.
            (2) Conforming amendments.--
                    (A) Section 6426(a) of such Code is amended--
                            (i) by striking ``subsection (d)'' in 
                        paragraph (2) and inserting ``subsections (d) 
                        and (f)'', and
                            (ii) by striking ``and (e)'' in the last 
                        sentence and inserting ``, (e), and (f)''.
                    (B) The heading for section 6426 of such Code is 
                amended to read as follows:

``SEC. 6426. CREDIT FOR CERTAIN FUELS AND FUEL MIXTURES.''.

                    (C) The table of section for subchapter B of 
                chapter 65 of such Code is amended by striking the item 
                relating to section 6426 and inserting the following 
                new item:

``Sec. 6426. Credit for certain fuels and fuel mixtures.''.
    (b) Cellulosic Biomass Ethanol Not Used for a Taxable Purpose.--
            (1) In general.--Section 6427(e) of the Internal Revenue 
        Code of 1986 is amended by redesignating paragraphs (3) through 
        (5) as paragraphs (4) through (6), respectively, and by 
        inserting after paragraph (2) the following new paragraph:
            ``(3) Cellulosic biomass ethanol.--If any person sells or 
        uses cellulosic biomass ethanol (as defined in section 
        6426(f)(2)(A)) for a purpose described in section 6426(f)(2)(B) 
        in such person's trade or business, the Secretary shall pay 
        (without interest) to such person an amount equal to the 
        cellulosic biomass ethanol credit with respect to such fuel.''.
            (2) Denial of double benefit.--Paragraph (4) of section 
        6427(e) of such Code, as redesignated by paragraph (1), is 
        amended to read as follows:
            ``(4) Coordination with other repayment provisions.--
                    ``(A) In general.--No amount shall be payable under 
                paragraph (1), (2), or (3) with respect to any mixture, 
                alternative fuel, or cellulosic biomass ethanol with 
                respect to which an amount is allowed as a credit under 
                section 6426.
                    ``(B) Cellulosic biomass ethanol.--No amount shall 
                be payable under paragraph (1) or (2) with respect to 
                any cellulosic biomass ethanol if a payment has been 
                made with respect to such ethanol under paragraph 
                (3).''.
            (3) Termination.--Paragraph (6) of section 6427(e) of such 
        Code, as redesignated by paragraph (1), is amended by striking 
        ``and'' at the end of subparagraph (C), by striking the period 
        at the end of subparagraph (D) and inserting ``, and'', and by 
        adding at the end the following new subparagraph:
                    ``(E) any cellulosic biomass ethanol credit (as 
                defined in section 6426(f)(2)(A)) sold or used after 
                December 31, 2008.''.
            (4) Conforming amendment.--Paragraph (5) of section 6427(e) 
        of such Code, as redesignated by paragraph (1), is amended by 
        striking ``or alternative fuel mixture credit'' and inserting 
        ``, alternative fuel mixture credit, or cellulosic biomass 
        ethanol credit''.
    (c) Effective Date.--The amendments made by this section shall 
apply to fuel sold or used after the date of the enactment of this Act.

SEC. 8. INCENTIVE FOR FEDERAL AND STATE FLEETS FOR MEDIUM AND HEAVY 
              DUTY HYBRIDS.

    Section 301 of the Energy Policy Act of 1992 (42 U.S.C. 13211) is 
amended--
            (1) in paragraph (3), by striking ``or a dual fueled 
        vehicle'' and inserting ``, a dual fueled vehicle, or a medium 
        or heavy duty vehicle that is a hybrid vehicle'';
            (2) by redesignating paragraphs (11), (12), (13), and (14) 
        as paragraphs (12), (14), (15), and (16), respectively;
            (3) by inserting after paragraph (10) the following:
            ``(11) the term `hybrid vehicle' means a vehicle powered 
        both by a diesel or gasoline engine and an electric motor that 
        is recharged as the vehicle operates;''; and
            (4) by inserting after paragraph (12) (as redesignated by 
        paragraph (2)) the following:
            ``(13) the term `medium or heavy duty vehicle' means a 
        vehicle that--
                    ``(A) in the case of a medium duty vehicle, has a 
                gross vehicle weight rating of more than 8,500 pounds 
                but not more than 14,000 pounds; and
                    ``(B) in the case of a heavy duty vehicle, has a 
                gross vehicle weight rating of more than 14,000 
                pounds;''.

SEC. 9. CREDIT FOR QUALIFYING ETHANOL BLENDING AND PROCESSING 
              EQUIPMENT.

    (a) Allowance of Qualifying Ethanol Blending and Processing 
Equipment Credit.--Section 46 of the Internal Revenue Code of 1986 
(relating to amount of credit) is amended by striking ``and'' at the 
end of paragraph (3), by striking the period at the end of paragraph 
(4) and inserting ``, and'', and by adding at the end the following new 
paragraph:
            ``(5) the qualifying ethanol blending and processing 
        equipment credit.''.
    (b) Amount of Qualifying Ethanol Blending and Processing Equipment 
Credit.--Subpart E of part IV of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 (relating to rules for computing 
investment credit) is amended by inserting after section 48B the 
following new section:

``SEC. 48C. QUALIFYING ETHANOL BLENDING AND PROCESSING EQUIPMENT.

    ``(a) In General.--For purposes of section 46, the qualifying 
ethanol blending and processing equipment credit for any taxable year 
is an amount equal to 50 percent of the basis of the qualifying ethanol 
blending and processing equipment placed in service at a qualifying 
facility during such taxable year.
    ``(b) Limitation.--The credit allowed under subsection (a) for 
qualifying ethanol blending and processing equipment placed in service 
at any 1 qualifying facility during any taxable year shall not exceed 
$2,000,000.
    ``(c) Qualifying Ethanol Blending and Processing Equipment.--For 
purposes of this section, the term `qualifying ethanol blending and 
processing equipment' means any technology installed in or on a 
qualifying facility for blending ethanol with petroleum fuels for the 
purpose of direct retail sale, including in-line blending equipment, 
storage tanks, pumps and piping for denaturants, and load-out 
equipment.
    ``(d) Qualifying Facility.--For purposes of this section, the term 
`qualifying facility' means any facility which produces not less than 
1,000,000 gallons of ethanol during the taxable year.
    ``(e) Special Rule for Certain Subsidized Property.--Rules similar 
to section 48(a)(4) shall apply for purposes of this section.
    ``(f) Certain Qualified Progress Expenditures Rules Made 
Applicable.--Rules similar to the rules of subsections (c)(4) and (d) 
of section 46 (as in effect on the day before the enactment of the 
Revenue Reconciliation Act of 1990) shall apply for purposes of this 
subsection.
    ``(g) Termination.--This section shall not apply to property placed 
in service after December 31, 2014.''.
    (c) Recapture of Credit Where Emissions Reduction Offset Is Sold.--
Paragraph (1) of section 50(a) of the Internal Revenue Code of 1986 is 
amended by redesignating subparagraph (B) as subparagraph (C) and by 
inserting after subparagraph (A) the following new subparagraph:
                    ``(B) Special rule for qualifying ethanol blending 
                and processing equipment.--For purposes of subparagraph 
                (A), any investment property which is qualifying 
                ethanol blending and processing equipment (as defined 
                in section 48C(c)) shall cease to be investment credit 
                property with respect to a taxpayer if such taxpayer 
                receives a payment in exchange for a credit for 
                emission reductions attributable to such qualifying 
                pollution control equipment for purposes of an offset 
                requirement under part D of title I of the Clean Air 
                Act.''.
    (d) Special Rule for Basis Reduction; Recapture of Credit.--
Paragraph (3) of section 50(c) of the Internal Revenue Code of 1986 
(relating to basis adjustment to investment credit property) is amended 
by inserting ``or qualifying ethanol blending and processing equipment 
credit'' after ``energy credit''.
    (e) Certain Nonrecourse Financing Excluded From Credit Base.--
Section 49(a)(1)(C) of the Internal Revenue Code of 1986 (defining 
credit base) is amended by striking ``and'' at the end of clause (iii), 
by striking the period at the end of clause (iv) and inserting ``, 
and'', and by adding at the end the following new clause:
                            ``(v) the basis of any property which is 
                        part of any qualifying ethanol blending and 
                        processing equipment under section 48C.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2007, in taxable 
years ending after such date, under rules similar to the rules of 
section 48(m) of the Internal Revenue Code of 1986 (as in effect on the 
day before the date of the enactment of the Revenue Reconciliation Act 
of 1990).

SEC. 10. PUBLIC ACCESS TO FEDERAL ALTERNATIVE REFUELING STATIONS.

    (a) Definitions.--In this section:
            (1) Alternative fuel refueling station.--The term 
        ``alternative fuel refueling station'' has the meaning given 
        the term ``qualified alternative fuel vehicle refueling 
        property'' in section 30C(c)(1) of the Internal Revenue Code of 
        1986.
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.
    (b) Access to Federal Alternative Refueling Stations.--Not later 
than 18 months after the date of enactment of this Act--
            (1) except as provided in subsection (d)(1), any Federal 
        property that includes at least 1 fuel refueling station shall 
        include at least 1 alternative fuel refueling station; and
            (2) except as provided in subsection (d)(2), any 
        alternative fuel refueling station located on property owned by 
        the Federal government shall permit full public access for the 
        purpose of refueling using alternative fuel.
    (c) Duration.--The requirements described in subsection (b) shall 
remain in effect until the sooner of--
            (1) the date that is 7 years after the date of enactment of 
        this Act; or
            (2) the date on which the Secretary determines that not 
        less than 5 percent of the commercial refueling infrastructure 
        in the United States offers alternative fuels to the general 
        public.
    (d) Exceptions.--
            (1) Waiver.--Subsection (b)(1) shall not apply to any 
        Federal property under the jurisdiction of a Federal agency if 
        the Secretary determines that alternative fuel is not 
        reasonably available to retail purchasers of the fuel, as 
        certified by the head of the agency to the Secretary.
            (2) National security exemption.--Subsection (b)(2) does 
        not apply to property of the Federal government that the 
        Secretary, in consultation with the Secretary of Defense, has 
        certified must be exempt for national security reasons.
    (e) Report.--Not later than October 31 of each year beginning after 
the date of enactment of this Act, the President shall submit to 
Congress a report that describes the progress of the agencies of the 
Federal Government (including the Executive Office of the President) in 
complying with--
            (1) the Energy Policy Act of 1992 (42 U.S.C. 13201 et 
        seq.);
            (2) Executive Order 13149 (65 Fed. Reg. 24595; relating to 
        greening the government through Federal fleet and 
        transportation efficiency); and
            (3) the fueling center requirements of this section.

SEC. 11. PURCHASE OF CLEAN FUEL BUSES.

    (a) In General.--Chapter 53 of title 49, United States Code, is 
amended by inserting after section 5325 the following:
``Sec. 5326. Purchase of clean fuel buses
    ``(a) Definitions.--In this section:
            ``(1) Alternative diesel fuel.--
                    ``(A) In general.--The term `alternative diesel 
                fuel' means--
                            ``(i) biodiesel (as defined in section 
                        312(f) of the Energy Policy Act of 1992 (42 
                        U.S.C. 13220(f))); and
                            ``(ii) any blending components derived from 
                        alternative fuel.
                    ``(B) Inclusions.--The term `alternative diesel 
                fuel' includes a diesel fuel substitute produced from--
                            ``(i) animal fat;
                            ``(ii) plant oil;
                            ``(iii) recycled yellow grease;
                            ``(iv) single-cell or microbial oil;
                            ``(v) thermal depolymerization;
                            ``(vi) thermochemical conversion;
                            ``(vii) a coal-to-liquid process (including 
                        the Fischer-Tropsch process) that provides for 
                        the sequestration of carbon emissions; or
                            ``(viii) a diesel-ethanol blend of not less 
                        than 7 percent ethanol.
            ``(2) Cellulosic biomass ethanol.--The term `cellulosic 
        biomass ethanol' means ethanol derived from any lignocellulosic 
        or hemicellulosic matter that is available on a renewable or 
        recurring basis, including--
                    ``(A) dedicated energy crops and trees;
                    ``(B) wood and wood residues;
                    ``(C) plants;
                    ``(D) grasses;
                    ``(E) agricultural residues;
                    ``(F) fibers;
                    ``(G) animal wastes and other waste materials; and
                    ``(H) municipal solid waste.
            ``(3) Clean fuel bus.--The term `clean fuel bus' means a 
        vehicle that--
                    ``(A) is capable of being powered by--
                            ``(i) compressed natural gas;
                            ``(ii) liquefied natural gas;
                            ``(iii) 1 or more batteries;
                            ``(iv) a fuel that is composed of at least 
                        85 percent ethanol (or another percentage of 
                        not less than 70 percent, as the Secretary may 
                        determine, by rule, to provide for requirements 
                        relating to cold start, safety, or vehicle 
                        functions);
                            ``(v) electricity (including a hybrid 
                        electric or plug-in hybrid electric vehicle);
                            ``(vi) a fuel cell;
                            ``(vii) a fuel that is composed of at least 
                        22 percent biodiesel (as defined in section 
                        312(f) of the Energy Policy Act of 1992 (42 
                        U.S.C. 13220(f)) (or another percentage of not 
                        less than 10 percent, as the Secretary may 
                        determine, by rule, to provide for requirements 
                        relating to cold start, safety, or vehicle 
                        functions);
                            ``(viii) ultra-low sulfur diesel; or
                            ``(ix) liquid fuel manufactured with a coal 
                        feedstock; and
                    ``(B) has been certified by the Administrator of 
                the Environmental Protection Agency to significantly 
                reduce harmful emissions, particularly in a 
                nonattainment area (as defined in section 171 of the 
                Clean Air Act (42 U.S.C. 7501)).
            ``(4) Qualified alternative fuel producer.--The term 
        `qualified alternative fuel producer' means a producer of 
        qualified fuels that, during the applicable taxable year--
                    ``(A) are sold by the producer to another person--
                            ``(i) for use by the person in the 
                        production of a mixture of qualified fuels in 
                        the trade or business of the person (other than 
                        casual off-farm production);
                            ``(ii) for use by the other person as a 
                        fuel in a trade or business; or
                            ``(iii) that--
                                    ``(I) sells to another person the 
                                qualified fuel at retail; and
                                    ``(II) places the qualified fuel in 
                                the fuel tank of the person that 
                                purchased the qualified fuel; or
                    ``(B) are used or sold by the producer for any 
                purpose described in subparagraph (A).
            ``(5) Qualified fuel.--The term `qualified fuel' includes--
                    ``(A) cellulosic biomass ethanol;
                    ``(B) ethanol produced in facilities in which 
                animal waste or other waste materials are digested or 
                otherwise used to displace at least 90 percent of the 
                fossil fuels that would otherwise be used in the 
                production of ethanol;
                    ``(C) renewable fuels;
                    ``(D) alternative diesel fuels;
                    ``(E) sugar, starch, or cellulosic biomass; and
                    ``(F) any other fuel that is not substantially 
                petroleum.
            ``(6) Renewable fuel.--The term `renewable fuel' means 
        fuel, at least 85 percent of the volume of which--
                    ``(A)(i) is produced from grain, starch, oilseeds, 
                vegetable, animal, or fish materials including fats, 
                greases, and oils, sugarcane, sugar beets, sugar 
                components, tobacco, potatoes, or other biomass; or
                    ``(ii) is natural gas produced from a biogas 
                source, including a landfill, sewage waste treatment 
                plant, feedlot, or other place in which decaying 
                organic material is found; and
                    ``(B) is used to substantially replace or reduce 
                the quantity of fossil fuel present in a fuel mixture 
                used to operate a motor vehicle.
    ``(b) Purchase of Buses.--Subject to subsections (c) and (d), 
beginning on the date that is 2 years after the date of enactment of 
this section, a bus purchased using funds made available from the Mass 
Transit Account of the Highway Trust Fund shall be a clean fuel bus.
    ``(c) Ultra-Low Sulfur Diesel.--
            ``(1) In general.--Except as provided in paragraph (2), not 
        more than 20 percent of the amount of the funds provided to a 
        recipient to purchase buses under this section may be used by 
        the recipient to purchase clean fuel buses that are capable of 
        being powered by a fuel described in clause (iv), (vii), 
        (viii), or (ix) of subsection (a)(3)(A).
            ``(2) Exception.--Paragraph (1) shall not apply if the 
        recipient enters into a 3-year purchase agreement with a 
        qualified alternative fuel producer to acquire qualified fuels 
        in a volume sufficient to power the clean fuel buses purchased 
        using amounts made available under this section.
    ``(d) Use of Certain Alternative Fuels.--
            ``(1) In general.--To be eligible to receive funds under 
        subsection (c)(2) for the purchase of a clean fuel bus that is 
        capable of being powered by a fuel described in clause (iv), 
        (vii), or (ix) of subsection (a)(3)(A), an applicant or 
        recipient shall submit to the Secretary--
                    ``(A) a certification that the applicant will 
                operate the clean fuel bus only with the fuel at all 
                times in accordance with the fuel capacity and use of 
                the fuel recommended by the manufacturer of the clean 
                fuel bus; and
                    ``(B) not later than 180 days after the purchase of 
                the clean fuel bus and every 180 days thereafter, a 
                report that documents that the fuel was used in 
                accordance with subparagraph (A) during the 180-day 
                period ending on the date of the report.
            ``(2) Noncompliance.--Failure of an applicant or recipient 
        of funds to provide the certification or documentation required 
        under paragraph (1) shall--
                    ``(A) be considered a violation of the agreement to 
                receive the funds; and
                    ``(B) require the applicant or recipient to 
                reimburse the Secretary the full amount of the funds 
                not later than 90 days after the Secretary has 
                determined that a violation has occurred.''.
    (b) Conforming Amendment.--The analysis for chapter 53 is amended 
by inserting after the item relating to section 5325 the following:

``5326. Clean fuel buses.''.

SEC. 12. DOMESTIC FUEL PRODUCTION VOLUMES TO MEET DEPARTMENT OF DEFENSE 
              NEEDS.

    Section 2922d of title 10, United States Code is amended--
            (1) in the heading, by striking ``and tar sands'' and 
        inserting ``tar sands, and other sources'';
            (2) in subsection (a), by striking ``fuel produced, in 
        whole or in part, from coal, oil shale, and tar sands (referred 
        to in this section as a `covered fuel') that are extracted by 
        either mining or in-situ methods and refined or otherwise 
        processed in the United States'' and inserting ``fuel produced, 
        in whole or in part, from coal, oil shale, and tar sands that 
        are extracted by either mining or in-situ methods and refined 
        or otherwise processed in the United States and fuel produced 
        in the United States using starch, sugar, cellulosic biomass, 
        plant or animal oils, or thermal chemical conversion, thermal 
        depolymerization, or thermal conversion processes (referred to 
        in this section as a `covered fuel')'';
            (3) in subsection (d), by striking ``1 or more years'' and 
        inserting ``up to 5 years'';
            (4) in subsection (e), by striking the period at the end 
        and inserting the following: ``, with consideration given to 
        military installations closed or realigned under a round of 
        defense base closure and realignment.''; and
            (5) by adding at the end the following new subsection:
    ``(f) Production Facilities for Covered Fuels.--The Secretary of 
Defense may enter into contracts or other agreements with private 
companies or other entities to develop and operate production 
facilities for covered fuels, and may provide for the construction or 
capital modification of production facilities for covered fuels.''.

SEC. 13. FEDERAL FLEET ENERGY CONSERVATION IMPROVEMENT.

    (a) Definitions.--Section 301 of the Energy Policy Act of 1992 (42 
U.S.C. 13211) is amended--
            (1) in paragraph (3), by inserting before the semicolon at 
        the end the following: ``, including a vehicle that is 
        propelled by electric drive transportation technology, engine 
        dominant hybrid electric technology, or plug-in hybrid 
        technology'';
            (2) in paragraph (13), by striking ``and'' after the 
        semicolon at the end;
            (3) in paragraph (14), by striking the period at the end 
        and inserting a semicolon; and
            (4) by adding at the end the following:
            ``(15) the term `electric drive transportation technology' 
        means--
                    ``(A) technology that uses an electric motor for 
                all or part of the motive power of a vehicle 
                (regardless of whether off-board electricity is used), 
                including--
                            ``(i) a battery electric vehicle;
                            ``(ii) a fuel cell vehicle;
                            ``(iii) an engine dominant hybrid electric 
                        vehicle;
                            ``(iv) a plug-in hybrid electric vehicle;
                            ``(v) a plug-in hybrid fuel cell vehicle; 
                        and
                            ``(vi) an electric rail vehicle; or
                    ``(B) technology that uses equipment for 
                transportation (including transportation involving any 
                mobile source of air pollution) that uses an electric 
                motor to replace an internal combustion engine for all 
                or part of the work of the equipment, including corded 
                electric equipment that is linked to transportation or 
                a mobile source of air pollution;
            ``(16) the term `engine dominant hybrid electric vehicle' 
        means an on-road or nonroad vehicle that--
                    ``(A) is propelled by an internal combustion engine 
                or heat engine using--
                            ``(i) any combustible fuel; and
                            ``(ii) an on-board, rechargeable storage 
                        device; and
                    ``(B) has no means of using an off-board source of 
                electricity; and
            ``(17) the term `plug-in hybrid electric vehicle' means an 
        on-road or nonroad vehicle that is propelled by an internal 
        combustion engine or heat engine using--
                    ``(A) any combustible fuel;
                    ``(B) an on-board, rechargeable storage device; and
                    ``(C) a means of using an off-board source of 
                electricity.''.
    (b) Minimum Federal Fleet Requirement.--Section 303(b)(1) of the 
Energy Policy Act of 1992 (42 U.S.C. 13212(b)(1)) is amended--
            (1) in subparagraph (C), by striking ``and'' after the 
        semicolon;
            (2) in subparagraph (D), by striking ``fiscal year 1999 and 
        thereafter,'' and inserting ``each of fiscal years 1999 through 
        2013; and''; and
            (3) by inserting after subparagraph (D) the following:
                    ``(E) 100 percent in fiscal year 2014 and 
                thereafter,''.
                                 <all>