[Congressional Record Volume 150, Number 126 (Thursday, October 7, 2004)]
[Senate]
[Pages S10708-S10713]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. MIKULSKI:
  S. 2914. A bill to amend the Internal Revenue Code of 1986 to provide 
incentives for alternative fuels and alternative fuel vehicles; to the 
Committee on Finance.
  Ms. MIKULSKI. Mr. President, I rise today to introduce the ``Common 
Sense Automobile Affordability Act Of 2004''. My colleagues from 
Maryland introduced a similar bill in the House. I believe in energy 
conservation. I also believe in job conservation. We can improve the 
fuel efficiency of our cars without sticking a knife through the hearts 
of our Nation's auto workers. That is what I am going to keep standing 
up for in the U.S. Senate.
  When I consider any energy proposal, I apply four criteria. First, 
the proposal must achieve real savings in oil consumption. Secondly, 
the proposal also must preserve U.S. jobs. Next, the proposal must be 
realizable and achievable. And, lastly, it must create incentives to 
help companies achieve these goals.
  I agree with the goals of energy efficient vehicle tax breaks--fuel 
efficiency and energy conservation. I believe we need to reduce our 
dependence on foreign oil. The U.S. imports about twenty million 
barrels of oil a day, roughly 40 percent of that goes to fuel cars and 
light trucks. Half of our oil is imported and a quarter of our oil is 
imported from the Persian Gulf. Reducing our dependence on foreign oil 
would make us more flexible in the war against terror.
  That's why I support the provisions of the energy bill that provide 
incentives for energy efficiency and fuel conservation. But, we need to 
be more fuel efficient in a way that doesn't cost American jobs.
  Our current tax breaks for energy efficient vehicles provides more 
help for foreign car manufacturers than U.S. car manufacturers. Small 
cars receive more tax breaks, and small cars are often made by foreign 
auto companies.
  Our current tax breaks penalize U.S. automakers, because current tax 
incentives are not geared toward the SUV's or light trucks that 
American consumers want and American companies make.
  Our domestic automakers have been weakened by the current recession. 
And, we can't rely on foreign manufacturers to provide American jobs. 
The United Auto Workers (UAW) has seen its membership drop 
significantly from 1980 through 2000 from 1.4 million members in 1980 
down to 670,000 today. That means that our auto workers are being left 
behind.
  I have seen it in Baltimore. Over 1,000 workers were recently laid 
off at the GM plant, and the plant went through another shutdown after 
slow sales. This is not just happening in Maryland. GM shut down 
fourteen of its twenty-nine North American assembly plans for at least 
a week last year.
  American workers are being laid off because, while automobile imports 
are rising, and our domestic auto share is falling, only 64 percent of 
cars bought in America are built in America. That's down from 73.9 
percent in 1994.
  We need common sense tax breaks that provide Americans with good 
jobs, reduce our dependence on foreign oil and help clean up the 
environment.
  That's why I'm introducing legislation that would repeal the sunsets 
on existing clean vehicle tax breaks and replace the existing clean 
fuels tax breaks after 2006 with a comprehensive set of new tax credits 
of up to $4,000. These tax breaks could be used to buy energy efficient 
vehicles, including hybrid vehicles, fuel cell vehicles, diesel ``lean 
burn'' vehicles, and alternative fuel vehicles. There are also 
additional bonuses for increased fuel conservation and fuel efficiency. 
My bill includes incentives for all the major clean fuel technologies. 
There are larger credits for trucks and transit buses that are often 
American made.
  I also support the Hydrogen Fuel Cell Act introduced by my colleague 
from North Dakota. This bill would provide research money for a 
hydrogen fuel cell vehicle tax research and development programs.
  We can have both energy conservation and job conservation. That's 
what I'm fighting for. It will take innovative solutions, improved 
technology, and the setting of realistic, achievable goals. That's what 
my legislation encourages. With the right incentives to increase demand 
for cutting edge technologies, to increase U.S. manufacturing capacity 
of fuel efficient vehicles, and to provide good paying jobs for 
Americans.
  I urge my colleagues to join me in supporting these goals and this 
bill.
  I ask unanimous consent that the text of my bill be inserted in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2914

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

     SECTION 1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Common 
     Sense Automobile Efficiency Act of 2004''.
       (b) Amendment of 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. REPEAL OF PHASEOUTS FOR QUALIFIED ELECTRIC VEHICLE 
                   CREDIT AND DEDUCTION FOR CLEAN-FUEL VEHICLES.

       (a) Credit for Qualified Electric Vehicles.--Subsection (b) 
     of section 30 (relating to limitations) is amended by 
     striking paragraph (2) and redesignating paragraph (3) as 
     paragraph (2).
       (b) Deduction for Clean-Fuel Vehicles and Certain Refueling 
     Property.--Paragraph (1) of section 179A(b) (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. ALTERNATIVE MOTOR VEHICLE CREDIT.

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

     ``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:

``In the case of a vehicle which has a gross vehicle wThe new qualified
                                                        fuel cell motor
                                                    vehicle credit is--
  Not more than 8,500 lbs...................................$4,000 ....

  More than 8,500 lbs but not more than 14,000 lbs.........$10,000 ....

[[Page S10709]]

  More than 14,000 lbs but not more than 26,000 lbs........$20,000 ....

  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 2002 model year city fuel economy) of--          
                                                                       
                                                         The additional
                                                          credit 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 2002 model year city fuel economy) of--          
                                                                       
                                                                       
                                                             The credit
                                                            amount is--
  At least 125 percent but less than 150 percent..............$400 ....

  At least 150 percent but less than 175 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 gasoline) of--                              
                                                       The conservation
                                                          credit 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 2004 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) $10,000, if such vehicle has a gross vehicle weight 
     rating of not more than 14,000 pounds,
       ``(II) $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
       ``(III) $40,000, 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

[[Page S10710]]

     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 2004 through 2007 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 this act.
       ``(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 on Number of New Qualified Hybrid and 
     Advanced Lean-Burn Technology Vehicles Eligible for Credit.--
       ``(1) In general.--In the case of a qualified vehicle sold 
     during the phaseout period, only the applicable percentage of 
     the credit otherwise allowable under subsection (c) or (d) 
     shall be allowed.
       ``(2) Phaseout period.--For purposes of this subsection, 
     the phaseout period is the period beginning with the second 
     calendar quarter following the calendar quarter which 
     includes the first date on which the number of qualified 
     vehicles manufactured by the manufacturer of the vehicle 
     referred to in paragraph (1) sold for use in the United 
     States after the date of the enactment of this section is at 
     least 80,000.
       ``(3) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage is--
       ``(A) 50 percent for the first 2 calendar quarters of the 
     phaseout period,
       ``(B) 25 percent for the 3d and 4th calendar quarters of 
     the phaseout period, and
       ``(C) 0 percent for each calendar quarter thereafter.
       ``(4) Controlled groups.--
       ``(A) In general.--For purposes of this subsection, all 
     persons treated as a single employer under subsection (a) or 
     (b) of section 52 or subsection (m) or (o) of section 414 
     shall be treated as a single manufacturer.
       ``(B) Inclusion of foreign corporations.--For purposes of 
     subparagraph (A), in applying subsections (a) and (b) of 
     section 52 to this section, section 1563 shall be applied 
     without regard to subsection (b)(2)(C) thereof.
       ``(5) Qualified vehicle.--For purposes of this subsection, 
     the term `qualified vehicle' means any new qualified hybrid 
     motor vehicle and any new advanced lean burn technology motor 
     vehicle.
       ``(g) 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.

[[Page S10711]]

       ``(h) 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 city
``If vehicle inertia weight class is:                  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 city
``If vehicle inertia weight class is:                  fuel 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.
       ``(i) 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.
       ``(j) 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, 2006,
       ``(2) in the case of a new advanced lean burn technology 
     motor vehicle or a new qualified hybrid motor vehicle, 
     December 31, 2008, and
       ``(3) in the case of a new qualified fuel cell motor 
     vehicle, December 31, 2012.''.
       (b) Conforming Amendments.--
       (1) Section 30(d) (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 (27), by striking the period at the end of 
     paragraph (28) and inserting ``, and'', and by adding at the 
     end the following:
       ``(29) to the extent provided in section 30B(h)(5).''.
       (3) Section 6501(m) 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 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.

     SEC. 4. SMALL ETHANOL PRODUCER CREDIT.

       (a) Allocation of Alcohol Fuels Credit to Patrons of a 
     Cooperative.--Section 40(g) (relating to definitions and 
     special rules for eligible small ethanol producer credit) is 
     amended by adding at the end the following new paragraph:
       ``(6) Allocation of small ethanol producer credit to 
     patrons of cooperative.--
       ``(A) Election to allocate.--
       ``(i) In general.--In the case of a cooperative 
     organization described in section 1381(a), any portion of the 
     credit determined under subsection (a)(3) for the taxable 
     year may, at the election of the organization, be apportioned 
     pro rata among patrons of the organization on the basis of 
     the quantity or value of business done with or for such 
     patrons for the taxable year.
       ``(ii) Form and effect of election.--An election under 
     clause (i) for any taxable year shall be made on a timely 
     filed return for such year. Such election, once made, shall 
     be irrevocable for such taxable year.
       ``(B) Treatment of organizations and patrons.--The amount 
     of the credit apportioned to patrons under subparagraph (A)--
       ``(i) shall not be included in the amount determined under 
     subsection (a) with respect to the organization for the 
     taxable year, and
       ``(ii) shall be included in the amount determined under 
     subsection (a) for the taxable year of each patron for which 
     the patronage dividends for the taxable year described in 
     subparagraph (A) are included in gross income.
       ``(C) Special rule.--If the amount of a credit which has 
     been apportioned to any patron under this paragraph is 
     decreased for any reason--
       ``(i) such amount shall not increase the tax imposed on 
     such patron, and
       ``(ii) the tax imposed by this chapter on such organization 
     shall be increased by such amount.


[[Page S10712]]


     The increase under clause (ii) shall not be treated as tax 
     imposed by this chapter for purposes of determining the 
     amount of any credit under this chapter or for purposes of 
     section 55.''.
       (b) Definition of Small Ethanol Producer.--Section 40(g) 
     (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''.
       (c) Conforming Amendment.--Section 1388 (relating to 
     definitions and special rules for cooperative organizations) 
     is amended by adding at the end the following new subsection:
       ``(k) Cross Reference.--

  ``For provisions relating to the apportionment of the alcohol fuels 
credit between cooperative organizations and their patrons, see section 
40(g)(6).''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2003.

     SEC. 5. INCENTIVES FOR BIODIESEL.

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

     ``SEC. 40A. BIODIESEL USED AS FUEL.

       ``(a) General Rule.--For purposes of section 38, the 
     biodiesel fuels credit determined under this section for the 
     taxable year is an amount equal to the sum of--
       ``(1) the biodiesel mixture credit, plus
       ``(2) the biodiesel credit.
       ``(b) Definition of Biodiesel Mixture Credit and Biodiesel 
     Credit.--For purposes of this section--
       ``(1) Biodiesel mixture credit.--
       ``(A) In general.--The biodiesel mixture credit of any 
     taxpayer for any taxable year is 50 cents for each gallon of 
     biodiesel used by the taxpayer in the production of a 
     qualified biodiesel mixture.
       ``(B) Qualified biodiesel mixture.--The term `qualified 
     biodiesel mixture' means a mixture of biodiesel and a taxable 
     fuel (within the meaning of section 4083(a)(1)) which--
       ``(i) is sold by the taxpayer producing such mixture to any 
     person for use as a fuel, or
       ``(ii) is used as a fuel by the taxpayer producing such 
     mixture.
       ``(C) Sale or use must be in trade or business, etc.--
     Biodiesel used in the production of a qualified biodiesel 
     mixture shall be taken into account--
       ``(i) only if the sale or use described in subparagraph (B) 
     is in a trade or business of the taxpayer, and
       ``(ii) for the taxable year in which such sale or use 
     occurs.
       ``(D) Casual off-farm production not eligible.--No credit 
     shall be allowed under this section with respect to any 
     casual off-farm production of a qualified biodiesel mixture.
       ``(2) Biodiesel credit.--
       ``(A) In general.--The biodiesel credit of any taxpayer for 
     any taxable year is 50 cents for each gallon of biodiesel 
     which is not in a mixture and which during the taxable year--
       ``(i) is used by the taxpayer as a fuel in a trade or 
     business, or
       ``(ii) is sold by the taxpayer at retail to a person and 
     placed in the fuel tank of such person's vehicle.
       ``(B) User credit not to apply to biodiesel sold at 
     retail.--No credit shall be allowed under subparagraph (A)(i) 
     with respect to any biodiesel which was sold in a retail sale 
     described in subparagraph (A)(ii).
       ``(3) Credit for agri-biodiesel.--In the case of any 
     biodiesel which is agri-biodiesel, paragraphs (1)(A) and 
     (2)(A) shall be applied by substituting `$1.00' for `50 
     cents'.
       ``(4) Certification for biodiesel.--No credit shall be 
     allowed under this section unless the taxpayer obtains a 
     certification (in such form and manner as prescribed by the 
     Secretary) from the producer of the biodiesel which 
     identifies the product produced and the percentage of 
     biodiesel and agri-biodiesel in the product.
       ``(c) Coordination With Credit Against Excise Tax.--The 
     amount of the credit determined under this section with 
     respect to any biodiesel shall be properly reduced to take 
     into account any benefit provided with respect to such 
     biodiesel solely by reason of the application of section 
     6426.
       ``(d) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Biodiesel.--The term `biodiesel' means the monoalkyl 
     esters of long chain fatty acids derived from plant or animal 
     matter which meet--
       ``(A) the registration requirements for fuels and fuel 
     additives established by the Environmental Protection Agency 
     under section 211 of the Clean Air Act (42 U.S.C. 7545), and
       ``(B) the requirements of the American Society of Testing 
     and Materials D6751.
       ``(2) Agri-biodiesel.--The term `agri-biodiesel' means 
     biodiesel derived solely from virgin oils, including esters 
     derived from virgin vegetable oils from corn, soybeans, 
     sunflower seeds, cottonseeds, canola, crambe, rapeseeds, 
     safflowers, flaxseeds, rice bran, and mustard seeds, and from 
     animal fats.
       ``(3) Mixture or biodiesel not used as a fuel, etc.--
       ``(A) Mixtures.--If--
       ``(i) any credit was determined under this section with 
     respect to biodiesel used in the production of any qualified 
     biodiesel mixture, and
       ``(ii) any person--

       ``(I) separates the biodiesel from the mixture, or

       ``(II) without separation, uses the mixture other than as a 
     fuel,

     then there is hereby imposed on such person a tax equal to 
     the product of the rate applicable under subsection (b)(1)(A) 
     and the number of gallons of such biodiesel in such mixture.
       ``(B) Biodiesel.--If--
       ``(i) any credit was determined under this section with 
     respect to the retail sale of any biodiesel, and
       ``(ii) any person mixes such biodiesel or uses such 
     biodiesel other than as a fuel,
     then there is hereby imposed on such person a tax equal to 
     the product of the rate applicable under subsection (b)(2)(A) 
     and the number of gallons of such biodiesel.
       ``(C) Applicable laws.--All provisions of law, including 
     penalties, shall, insofar as applicable and not inconsistent 
     with this section, apply in respect of any tax imposed under 
     subparagraph (A) or (B) as if such tax were imposed by 
     section 4081 and not by this chapter.
       ``(4) 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.
       ``(e) Termination.--This section shall not apply to any 
     sale or use after December 31, 2005.''.
       (b) Credit Treated as Part of General Business Credit.--
     Section 38(b) (relating to current year business credit) is 
     amended by striking ``plus'' at the end of paragraph (16), by 
     striking the period at the end of paragraph (17) and 
     inserting ``, plus'', and by adding at the end the following 
     new paragraph:
       ``(18) the biodiesel fuels credit determined under section 
     40A(a).''.
       (c) Conforming Amendments.--
       (1)(A) Section 87 is amended to read as follows:

     ``SEC. 87. ALCOHOL AND BIODIESEL FUELS CREDITS.

       ``Gross income includes--
       ``(1) the amount of the alcohol fuels credit determined 
     with respect to the taxpayer for the taxable year under 
     section 40(a), and
       ``(2) the biodiesel fuels credit determined with respect to 
     the taxpayer for the taxable year under section 40A(a).''.
       (B) The item relating to section 87 in the table of 
     sections for part II of subchapter B of chapter 1 is amended 
     by striking ``fuel credit'' and inserting ``and biodiesel 
     fuels credits''.
       (2) Section 196(c) is amended by striking ``and'' at the 
     end of paragraph (9), by striking the period at the end of 
     paragraph (10) and inserting ``, and'', and by adding at the 
     end the following new paragraph:
       ``(11) the biodiesel fuels credit determined under section 
     40A(a).''.
       (3) The table of sections for subpart D of part IV of 
     subchapter A of chapter 1 is amended by adding after the item 
     relating to section 40 the following new item:

``Sec. 40A. Biodiesel used as fuel.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to fuel produced, and sold or used, after 
     December 31, 2003, in taxable years ending after such date.

     SEC. 6. ALCOHOL FUEL AND BIODIESEL MIXTURES EXCISE TAX 
                   CREDIT.

       (a) In General.--Subchapter B of chapter 65 (relating to 
     rules of special application) is amended by inserting after 
     section 6425 the following new section:

     ``SEC. 6426. CREDIT FOR ALCOHOL FUEL AND BIODIESEL MIXTURES.

       ``(a) Allowance of Credits.--There shall be allowed as a 
     credit against the tax imposed by section 4081 an amount 
     equal to the sum of--
       ``(1) the alcohol fuel mixture credit, plus
       ``(2) the biodiesel mixture credit.
       ``(b) Alcohol Fuel Mixture Credit.--
       ``(1) In general.--For purposes of this section, the 
     alcohol fuel mixture credit is the product of the applicable 
     amount and the number of gallons of alcohol used by the 
     taxpayer in producing any alcohol fuel mixture for sale or 
     use in a trade or business of the taxpayer.
       ``(2) Applicable amount.--For purposes of this subsection--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the applicable amount is 52 cents (51 cents in the case of 
     any sale or use after 2004).
       ``(B) Mixtures not containing ethanol.--In the case of an 
     alcohol fuel mixture in which none of the alcohol consists of 
     ethanol, the applicable amount is 60 cents.
       ``(3) Alcohol fuel mixture.--For purposes of this 
     subsection, the term `alcohol fuel mixture' means a mixture 
     of alcohol and a taxable fuel which--
       ``(A) is sold by the taxpayer producing such mixture to any 
     person for use as a fuel,
       ``(B) is used as a fuel by the taxpayer producing such 
     mixture, or
       ``(C) is removed from the refinery by a person producing 
     such mixture.
       ``(4) Other definitions.--For purposes of this subsection--
       ``(A) Alcohol.--The term `alcohol' includes methanol and 
     ethanol but does not include--
       ``(i) alcohol produced from petroleum, natural gas, or coal 
     (including peat), or
       ``(ii) alcohol with a proof of less than 190 (determined 
     without regard to any added denaturants).

     Such term also includes an alcohol gallon equivalent of ethyl 
     tertiary butyl ether or other ethers produced from such 
     alcohol.
       ``(B) Taxable fuel.--The term `taxable fuel' has the 
     meaning given such term by section 4083(a)(1).

[[Page S10713]]

       ``(5) Termination.--This subsection shall not apply to any 
     sale, use, or removal for any period after December 31, 2010.
       ``(c) Biodiesel Mixture Credit.--
       ``(1) In general.--For purposes of this section, the 
     biodiesel mixture credit is the product of the applicable 
     amount and the number of gallons of biodiesel used by the 
     taxpayer in producing any biodiesel mixture for sale or use 
     in a trade or business of the taxpayer.
       ``(2) Applicable amount.--For purposes of this subsection--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the applicable amount is 50 cents.
       ``(B) Amount for agri-biodiesel.--In the case of any 
     biodiesel which is agri-biodiesel, the applicable amount is 
     $1.00.
       ``(3) Biodiesel mixture.--For purposes of this section, the 
     term `biodiesel mixture' means a mixture of biodiesel and a 
     taxable fuel which--
       ``(A) is sold by the taxpayer producing such mixture to any 
     person for use as a fuel,
       ``(B) is used as a fuel by the taxpayer producing such 
     mixture, or
       ``(C) is removed from the refinery by a person producing 
     such mixture.
       ``(4) Certification for biodiesel.--No credit shall be 
     allowed under this section unless the taxpayer obtains a 
     certification (in such form and manner as prescribed by the 
     Secretary) from the producer of the biodiesel which 
     identifies the product produced and the percentage of 
     biodiesel and agri-biodiesel in the product.
       ``(5) Other definitions.--Any term used in this subsection 
     which is also used in section 40A shall have the meaning 
     given such term by section 40A.
       ``(6) Termination.--This subsection shall not apply to any 
     sale, use, or removal for any period after December 31, 2005.
       ``(d) Mixture Not Used as a Fuel, Etc.--
       ``(1) Imposition of tax.--If--
       ``(A) any credit was determined under this section with 
     respect to alcohol or biodiesel used in the production of any 
     alcohol fuel mixture or biodiesel mixture, respectively, and
       ``(B) any person--
       ``(i) separates the alcohol or biodiesel from the mixture, 
     or
       ``(ii) without separation, uses the mixture other than as a 
     fuel,

     then there is hereby imposed on such person a tax equal to 
     the product of the applicable amount and the number of 
     gallons of such alcohol or biodiesel.
       ``(2) Applicable laws.--All provisions of law, including 
     penalties, shall, insofar as applicable and not inconsistent 
     with this section, apply in respect of any tax imposed under 
     paragraph (1) as if such tax were imposed by section 4081 and 
     not by this section.
       ``(e) Coordination With Exemption From Excise Tax.--Rules 
     similar to the rules under section 40(c) shall apply for 
     purposes of this section.''.
       (b) Registration Requirement.--Section 4101(a) (relating to 
     registration) is amended by inserting ``and every person 
     producing biodiesel (as defined in section 40A(d)(1)) or 
     alcohol (as defined in section 6426(b)(4)(A))'' after 
     ``4091''.
       (c) Additional Amendments.--
       (1) Section 40(c) is amended by striking ``or section 
     4091(c)'' and inserting ``section 4091(c), or section 6426''.
       (2) Section 40(e)(1) is amended--
       (A) by striking ``2007'' in subparagraph (A) and inserting 
     ``2010'', and
       (B) by striking ``2008'' in subparagraph (B) and inserting 
     ``2011''.
       (3) Section 40(h) is amended--
       (A) by striking ``2007'' in paragraph (1) and inserting 
     ``2010'', and
       (B) by striking ``, 2006, or 2007'' in the table contained 
     in paragraph (2) and inserting ``through 2010''.
       (4)(A) Subpart C of part III of subchapter A of chapter 32 
     is amended by adding at the end the following new section:

     ``SEC. 4104. INFORMATION REPORTING FOR PERSONS CLAIMING 
                   CERTAIN TAX BENEFITS.

       ``(a) In General.--The Secretary shall require any person 
     claiming tax benefits under the provisions of section 34, 40, 
     40A, 4041(b)(2), 4041(k), 4081(c), 6426, or 6427(f) to file a 
     quarterly return (in such manner as the Secretary may 
     prescribe) providing such information relating to such 
     benefits and the coordination of such benefits as the 
     Secretary may require to ensure the proper administration and 
     use of such benefits.
       ``(b) Enforcement.--With respect to any person described in 
     subsection (a) and subject to registration requirements under 
     this title, rules similar to rules of section 4222(c) shall 
     apply with respect to any requirement under this section.''.
       (B) The table of sections for subpart C of part III of 
     subchapter A of chapter 32 is amended by adding at the end 
     the following new item:

``Sec. 4104. Information reporting for persons claiming certain tax 
              benefits.''.
       (5) Section 6427(i)(3) is amended--
       (A) by adding at the end of subparagraph (A) the following 
     new flush sentence:
     ``In the case of an electronic claim, this subparagraph shall 
     be applied without regard to clause (i).'', and
       (B) by striking ``20 days of the date of the filing of such 
     claim'' in subparagraph (B) and inserting ``45 days of the 
     date of the filing of such claim (20 days in the case of an 
     electronic claim)''.
       (6) Section 9503(b)(1) is amended by adding at the end the 
     following new flush sentence:

     ``For purposes of this paragraph, taxes received under 
     sections 4041 and 4081 shall be determined without reduction 
     for credits under section 6426.''.
       (d) Clerical Amendment.--The table of sections for 
     subchapter B of chapter 65 is amended by inserting after the 
     item relating to section 6425 the following new item:

``Sec. 6426. Credit for alcohol fuel and biodiesel mixtures.''.

       (e) Effective Dates.--
       (1) In general.--Except as provided in paragraphs (2) and 
     (3), the amendments made by this section shall apply to fuel 
     sold, used, or removed after December 31, 2003.
       (2) Subsection (c)(4).--The amendments made by subsection 
     (c)(4) shall take effect on January 1, 2004.
       (3) Subsection (c)(5).--The amendments made by subsection 
     (c)(5) shall apply to claims filed after December 31, 2004.
       (f) Format for Filing.--The Secretary of the Treasury shall 
     prescribe the electronic format for filing claims described 
     in section 6427(i)(3)(B) of the Internal Revenue Code of 1986 
     (as amended by subsection (c)(5)(A)) not later than December 
     31, 2004.

     SEC. 7. NONAPPLICATION OF EXPORT EXEMPTION TO DELIVERY OF 
                   FUEL TO MOTOR VEHICLES REMOVED FROM UNITED 
                   STATES.

       (a) In General.--Section 4221(d)(2) (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) (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) (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.
                                 ______