[Congressional Record Volume 143, Number 74 (Tuesday, June 3, 1997)]
[Senate]
[Pages S5259-S5260]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. BOXER (for herself, Mrs. Feinstein and Mr. Kennedy):
  S. 829. A bill to amend the Internal Revenue Code of 1986 to 
encourage the production and use of clean-fuel vehicles, and for other 
purposes; to the Committee on Finance.


                   THE CLEAN-FUEL VEHICLE ACT OF 1997

  Mrs. BOXER. Mr. President, today I am introducing the Clean Fuel 
Vehicle Act of 1997 to provide a program of tax incentives and other 
changes to promote the use of clean fuel vehicles. I believe that, as a 
U.S. Senator, I have no greater responsibility than to support policies 
that will protect the health and safety of the American people. Today, 
I want to tell you why I believe that my bill, the Clean Fuel Vehicle 
Act, is an important part of meeting that responsibility.
  More than 43 million people in the United States live in areas that 
fail to meet EPA's air quality standards for carbon monoxide. We have 
13 million people in nonattainment areas for nitrogen oxide. And, in my 
State of California, nearly 26 million people live in a nonattainment 
area for one or more pollutants, out of a state of nearly 32 million 
people. Air pollution is a very serious problem. According to the EPA, 
the current annual average concentrations of fine particulate matter in 
southeast Los Angeles County may be responsible for up to 3,000 deaths 
annually, and more then 52,000 incidences of respiratory symptoms 
including 1,000 hospital admissions.
  Young children constitute the largest group at high risk from 
exposure to air pollutants. They breathe 50 percent more air by body 
weight than the average adult. In California alone there are over 6 
million children under the age of 14 and approximately 90 percent of 
them live in areas that fail to meet State and Federal standards. How 
are our children being affected? Studies show health effects ranging 
from 20 to 60 percent losses of lung capacity.
  So much of our air pollution problem comes from automobiles and other 
vehicles that burn fossil fuel. Sixty-five percent of carbon dioxide 
emissions and 47 percent of nitrogen oxide emissions come from cars and 
trucks.
  I believe we must reinvigorate--electrify if you will--our efforts 
for clean fuel vehicles. The role of the Federal Government should be 
to encourage the market for these vehicles for a limited period of time 
with tax incentives.
  The Clean Fuel Vehicle Act would make it easier for both individual 
car buyers and government purchasers of auto fleets to purchase clean 
fuel vehicles. In summary, the bill repeals the luxury excise tax on 
clean fuel vehicles--a $320 savings this year on a $40,000, factory-
built electric vehicle, and repeals the luxury tax depreciation cap. It 
provides a full tax credit of $4,000 on the purchase of an electric 
vehicle. It allows companies which lease electric vehicles to 
government agencies to take advantage of the tax incentives and pass on 
the savings. It makes electric buses and other heavy duty electric 
vehicles eligible for the same tax deduction already in place for other 
clean fuel buses and heavy duty equipment. It lowers the excise tax on 
liquified natural gas--used in heavy vehicles such as tractor-trailer 
rigs and buses--to the gasoline gallon equivalent of compressed natural 
gas so that it can be competitive with diesel fuel. And, it sunsets all 
these tax incentives by January 1, 2005.
  According to estimates by the Joint Committee on Taxation, the bill 
would cost only about $22 million over 5 years. My bill is endorsed by 
the Union of Concerned Scientists, the Electric Transportation 
Coaltion, and the Natural Gas Vehicle/USA.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 829

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

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Clean-Fuel 
     Vehicle Act of 1997''.
       (b) Reference to 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

     SEC. 2. EXEMPTION OF ELECTRIC AND OTHER CLEAN-FUEL MOTOR 
                   VEHICLES FROM LUXURY AUTOMOBILE CLASSIFICATION.

       (a) In General.--Subsection (a) of section 4001 (relating 
     to imposition of tax) is amended to read as follows:
       ``(a) Imposition of Tax.--
       ``(1) In general.--There is hereby imposed on the 1st 
     retail sale of any passenger vehicle a tax equal to 10 
     percent of the price for which so sold to the extent such 
     price exceeds the applicable amount.
       ``(2) Applicable amount.--
       ``(A) In general.--Except as provided in subparagraphs (B) 
     and (C), the applicable amount is $30,000.
       ``(B) Qualified clean-fuel vehicle property.--In the case 
     of a passenger vehicle which is propelled by a fuel which is 
     not a clean-burning fuel to which is installed qualified 
     clean-fuel vehicle property (as defined in section 
     179A(c)(1)(A)) for purposes of

[[Page S5260]]

     permitting such vehicle to be propelled by a clean-burning 
     fuel, the applicable amount is equal to the sum of--
       ``(i) $30,000, plus
       ``(ii) the increase in the price for which the passenger 
     vehicle was sold (within the meaning of section 4002) due to 
     the installation of such property.
       ``(C) Purpose built passenger vehicle.--
       ``(i) In general.--In the case of a purpose built passenger 
     vehicle, the applicable amount is equal to 150 percent of 
     $30,000.
       ``(ii) Purpose built passenger vehicle.--For purposes of 
     clause (i), the term `purpose built passenger vehicle' means 
     a passenger vehicle produced by an original equipment 
     manufacturer and designed so that the vehicle may be 
     propelled primarily by electricity.''
       (b) Conforming Amendments.--
       (1) Subsection (e) of section 4001 (relating to inflation 
     adjustment) is amended to read as follows:
       ``(e) Inflation Adjustment.--
       ``(1) In general.--The $30,000 amount in subparagraphs (A), 
     (B)(i), and (C)(i) of subsection (a)(2) shall be increased by 
     an amount equal to--
       ``(A) $30,000, multiplied by
       ``(B) the cost-of-living adjustment under section 1(f)(3) 
     for the calendar year in which the vehicle is sold, 
     determined by substituting `calendar year 1990' for `calendar 
     year 1992' in subparagraph (B) thereof.
       ``(2) Rounding.--If any amount as adjusted under paragraph 
     (1) is not a multiple of $2,000, such amount shall be rounded 
     to the next lowest multiple of $2,000.''
       (2) Subsection (f) of section 4001 (relating to phasedown) 
     is amended by striking ``subsection (a)'' and inserting 
     ``subsection (a)(1)''.
       (3) Subparagraph (B) of section 4003(a)(2) is amended to 
     read as follows:
       ``(B) the appropriate applicable amount as determined under 
     section 4001(a)(2).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to sales and installations occurring and property 
     placed in service on or after the date of enactment of this 
     Act.

     SEC. 3. EXEMPTION OF THE INCREMENTAL COST OF A CLEAN FUEL 
                   VEHICLE FROM THE LIMITS ON DEPRECIATION FOR 
                   VEHICLES.

       (a) In General.--Section 280F(a)(1) (relating to limiting 
     depreciation on luxury automobiles) is amended by adding at 
     the end the following new subparagraph:
       ``(C) Special rule for certain clean-fuel passenger 
     automobiles.--
       ``(i) Modified automobiles.--In the case of a passenger 
     automobile which is propelled by a fuel which is not a clean-
     burning fuel to which is installed qualified clean-fuel 
     vehicle property (as defined in section 179A(c)(1)(A)) for 
     purposes of permitting such vehicle to be propelled by a 
     clean burning fuel (as defined in section 179A(e)(1)), the 
     depreciation deductions specified in subparagraph (A) shall 
     be increased by the incremental cost of the installed 
     qualified clean burning vehicle property as depreciated 
     pursuant to section 168 by applying the rules under 
     subsections (b)(1), (d)(1), and (e)(3)(B) thereof.
       ``(ii) Purpose built passenger vehicles.--In the case of a 
     purpose built passenger vehicle (as defined in section 
     4001(a)(2)(C)(ii)), the depreciation deductions specified in 
     subparagraph (A) shall be tripled.
       ``(iii) Incremental cost.--For purposes of clause (i), the 
     incremental cost shall be the equal of the lesser of--

       ``(I) the incremental cost of the installed qualified clean 
     fuel vehicle property (as so defined), or
       ``(II) the amount by which the total cost of the clean fuel 
     passenger automobile exceeds the sum of the amounts that 
     would be allowed under subparagraph (A) for the recovery 
     period determined by applying the rules under subsections 
     (d)(1) and (e)(3) of section 168.''

       (b) Effective Date.--The amendments made by this section 
     shall apply to sales and installations occurring and property 
     placed in service on or after the date of enactment of this 
     Act and before January 1, 2005.

     SEC. 4. GOVERNMENTAL USE RESTRICTION MODIFIED FOR ELECTRIC 
                   VEHICLES.

       (a) In General.--Paragraph (3) of section 30(d) (relating 
     to special rules) is amended by inserting ``(without regard 
     to paragraph (4)(A)(i) thereof)'' after ``section 50(b)''.
       (b) Conforming Amendment.--Paragraph (5) of section 179A(e) 
     (relating to other definitions and special rules) is amended 
     by inserting ``(without regard to paragraph (4)(A)(i) thereof 
     in the case of a qualified electric vehicle described in 
     subclause (I) or (II) of subsection (b)(1)(A)(iii) of this 
     section)'' after ``section 50(b)''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to property placed in service on or after the 
     date of enactment of this Act.

     SEC. 5. LARGE ELECTRIC TRUCKS, VANS, AND BUSES ELIGIBLE FOR 
                   DEDUCTION FOR CLEAN-FUEL VEHICLES.

       (a) In General.--Paragraph (3) of section 179A(c) (defining 
     qualified clean-fuel vehicle property) is amended by 
     inserting ``, other than any vehicle described in subclause 
     (I) or (II) of subsection (b)(1)(A)(iii)'' after ``section 
     30(c))''.
       (b) Denial of Credit.--Subsection (c) of section 30 
     (relating to credit for qualified electric vehicles)is 
     amended by adding at the end the following new paragraph:
       ``(3) Denial of credit for vehicles for which deduction 
     allowable.--The term `qualified electric vehicle' shall not 
     include any vehicle described in subclause (I) or (II) of 
     section 179A(b)(1)(A)(iii).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service on or after the 
     date of enactment of this Act.

     SEC. 6. ELECTRIC VEHICLE CREDIT AMOUNT AND APPLICATION 
                   AGAINST ALTERNATIVE MINIMUM TAX.

       (a) In General.--Subsection (a) of section 30 (relating to 
     credit for qualified electric vehicles) is amended by 
     striking ``10 percent of''.
       (b) Application Against Alternative Minimum Tax.--Section 
     30(b) (relating to limitations) is amended by striking 
     paragraph (3).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 7. RATE OF TAX ON LIQUEFIED NATURAL GAS TO BE EQUIVALENT 
                   TO RATE OF TAX ON COMPRESSED NATURAL GAS.

       (a) In General.--Paragraph (3) of section 4041(a) (relating 
     to diesel fuel and special motor fuels) is amended--
       (1) by striking subparagraph (A) and inserting the 
     following new subparagraph:
       ``(A) Imposition of tax.--
       ``(i) In general.--There is hereby imposed a tax on 
     compressed or liquefied natural gas--

       ``(I) sold by any person to an owner, lessee, or other 
     operator of a motor vehicle or motorboat for use as a fuel in 
     such motor vehicle or motorboat, or
       ``(II) used by any person as a fuel in a motor vehicle or 
     motorboat unless there was a taxable sale of such gas under 
     subclause (I).

       ``(ii) Rate of tax.--The rate of tax imposed by this 
     paragraph shall be--

       ``(I) in the case of compressed natural gas, 48.54 cents 
     per MCF (determined at standard temperature and pressure), 
     and
       ``(II) in the case of liquefied natural gas, 3.54 cents per 
     gallon.'', and

       (2) by inserting ``or liquefied'' after ``Compressed'' in 
     the heading.
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 4041(a)(2) is amended by 
     striking ``other than a Kerosene'' and inserting ``other than 
     liquefied natural gas, kerosene''.
       (2) The heading for section 9503(f)(2)(D) is amended by 
     inserting ``or liquefied'' after ``Compressed''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act.
                                 ______