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 for the taxable year is the credit amount
        determined under paragraph (2) with respect to a new advanced
        lean burn technology motor vehicle placed in service by the
        taxpayer during the taxable year.
            ``(2) Credit amount.--
                    ``(A) Fuel economy.--
                          ``(i) In general.--The credit amount
                      determined under this paragraph shall be
                      determined in accordance with the following table:

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

                          ``(ii) 2002 model year city fuel economy.--For
                      purposes of clause (i), the 2002 model year city
                      fuel economy with respect to a vehicle shall be
                      determined on a gasoline gallon equivalent basis
                      as determined by the Administrator of the
                      Environmental Protection Agency using the tables
                      provided in subsection (b)(2)(B) with respect to
                      such vehicle.
                    ``(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 whiThe conservation credit amount is--.......
    achieves a lifetime fuel savings
    (expressed in gallons of gasoline)
    of--
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,

[[Page 119 STAT. 1042]]

                          ``(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 for the taxable year is the credit amount determined
        under paragraph (2) with respect to a new qualified hybrid motor
        vehicle placed in service by the taxpayer during the taxable
        year.
            ``(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).

[[Page 119 STAT. 1043]]

                          ``(ii) Applicable percentage.--For purposes of
                      clause (i), the applicable percentage is--
                                    ``(I) 20 percent if the vehicle
                                achieves an increase in city fuel
                                economy relative to a comparable vehicle
                                of at least 30 percent but less than 40
                                percent,
                                    ``(II) 30 percent if the vehicle
                                achieves such an increase of at least 40
                                percent but less than 50 percent, and
                                    ``(III) 40 percent if the vehicle
                                achieves such an increase of at least 50
                                percent.
                          ``(iii) Qualified incremental hybrid cost.--
                      For purposes of this subparagraph, the qualified
                      incremental hybrid cost of any vehicle is equal to
                      the amount of the excess of the manufacturer's
                      suggested retail price for such vehicle over such
                      price for a comparable vehicle, to the extent such
                      amount does not exceed--
                                    ``(I) $7,500, if such vehicle has a
                                gross vehicle weight rating of not more
                                than 14,000 pounds,
                                    ``(II) $15,000, if such vehicle has
                                a gross vehicle weight rating of more
                                than 14,000 pounds but not more than
                                26,000 pounds, and
                                    ``(III) $30,000, if such vehicle has
                                a gross vehicle weight rating of more
                                than 26,000 pounds.
                          ``(iv) Comparable vehicle.--For purposes of
                      this subparagraph, the term `comparable vehicle'
                      means, with respect to any new qualified hybrid
                      motor vehicle, any vehicle which is powered solely
                      by a gasoline or diesel internal combustion engine
                      and which is comparable in weight, size, and use
                      to such vehicle.
                          ``(v) Certification.--A certification
                      described in clause (i) shall be made by the
                      manufacturer and shall be determined in accordance
                      with guidance prescribed by the Secretary. Such
                      guidance shall specify procedures and methods for
                      calculating fuel economy savings and incremental
                      hybrid costs.
            ``(3) New qualified hybrid motor vehicle.--For purposes of
        this subsection--
                    ``(A) In general.--The term `new qualified hybrid
                motor vehicle' means a motor vehicle--
                          ``(i) which draws propulsion energy from
                      onboard sources of stored energy which are both--
                                    ``(I) an internal combustion or heat
                                engine using consumable fuel, and
                                    ``(II) a rechargeable energy storage
                                system,
                          ``(ii) which, in the case of a vehicle to
                      which paragraph (2)(A) applies, has received a
                      certificate of conformity under the Clean Air Act
                      and meets or exceeds the equivalent qualifying
                      California low emission vehicle standard under
                      section 243(e)(2) of the Clean Air Act for that
                      make and model year, and
                                    ``(I) in the case of a vehicle
                                having a gross vehicle weight rating of
                                6,000 pounds or less, the Bin 5 Tier II
                                emission standard established in
                                regulations prescribed by the
                                Administrator of the Environmental
                                Protection Agency under section

[[Page 119 STAT. 1044]]

                                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 <<NOTE: Applicability.>> 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 of more than 8,500 pounds and not
                                more than 14,000 pounds, and
                                    ``(III) 15 percent in the case of a
                                vehicle in excess of 14,000 pounds,
                          ``(iv) <<NOTE: Applicability.>> 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 <<NOTE: Applicability.>> 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

[[Page 119 STAT. 1045]]

                      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) 50 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 weighs more than
        14,000 pounds gross vehicle weight rating, the most stringent
        standard available shall be such standard available for
        certification on the date of the enactment of the Energy Tax
        Incentives Act of 2005.
            ``(3) Incremental cost.--For purposes of this subsection,
        the incremental cost of any new qualified alternative fuel motor
        vehicle is equal to the amount of the excess of the
        manufacturer's suggested retail price for such vehicle over such
        price for a gasoline or diesel fuel motor vehicle of the same
        model, to the extent such amount does not exceed--
                    ``(A) $5,000, if such vehicle has a gross vehicle
                weight rating of not more than 8,500 pounds,
                    ``(B) $10,000, if such vehicle has a gross vehicle
                weight rating of more than 8,500 pounds but not more
                than 14,000 pounds,
                    ``(C) $25,000, if such vehicle has a gross vehicle
                weight rating of more than 14,000 pounds but not more
                than 26,000 pounds, and
                    ``(D) $40,000, if such vehicle has a gross vehicle
                weight rating of more than 26,000 pounds.
            ``(4) New qualified alternative fuel motor vehicle.--For
        purposes of this subsection--
                    ``(A) In general.--The term `new qualified
                alternative fuel motor vehicle' means any motor
                vehicle--
                          ``(i) which is only capable of operating on an
                      alternative fuel,

[[Page 119 STAT. 1046]]

                          ``(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.

[[Page 119 STAT. 1047]]

    ``(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 December 31, 2005, is at
        least 60,000.
            ``(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 <<NOTE: Applicability.>> 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 (described in subsection (d)(2)(A)) and any new
        advanced lean burn technology motor vehicle.

    ``(g) Application With Other Credits.--
            ``(1) Business credit treated as part of general business
        credit.--So much of the credit which would be allowed under
        subsection (a) for any taxable year (determined without regard
        to this subsection) that is attributable to property of a
        character subject to an allowance for depreciation shall be
        treated as a credit listed in section 38(b) for such taxable
        year (and not allowed under subsection (a)).
            ``(2) Personal credit.--The credit allowed under subsection
        (a) (after the application of paragraph (1)) for any taxable
        year shall not exceed the excess (if any) of--
                    ``(A) the regular tax reduced by the sum of the
                credits allowable under subpart A and sections 27 and
                30, over
                    ``(B) the tentative minimum tax for the taxable
                year.

    ``(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) City fuel economy.--The city fuel economy with respect
        to any vehicle shall be measured in a manner which is
        substantially similar to the manner city fuel economy is
        measured in accordance with procedures under part 600 of

[[Page 119 STAT. 1048]]

        subchapter Q of chapter I of title 40, Code of Federal
        Regulations, as in effect on the date of the enactment of this
        section.
            ``(3) Other terms.--The terms `automobile', `passenger
        automobile', `medium duty passenger vehicle', `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.).
            ``(4) Reduction in basis.--For purposes of this subtitle,
        the basis of any property for which a credit is allowable under
        subsection (a) shall be reduced by the amount of such credit so
        allowed (determined without regard to subsection (g)).
            ``(5) No double benefit.--The amount of any deduction or
        other credit allowable under this chapter--
                    ``(A) for any incremental cost taken into account in
                computing the amount of the credit determined under
                subsection (e) shall be reduced by the amount of such
                credit attributable to such cost, and
                    ``(B) with respect to a vehicle described under
                subsection (b) or (c), shall be reduced by the amount of
                credit allowed under subsection (a) for such vehicle for
                the taxable year.
            ``(6) Property used by tax-exempt entity.--In the case of a
        vehicle whose use is described in paragraph (3) or (4) of
        section 50(b) and which is not subject to a lease, the person
        who sold such vehicle to the person or entity using such vehicle
        shall be treated as the taxpayer that placed such vehicle in
        service, but only if such person clearly discloses to such
        person or entity in a document the amount of any credit
        allowable under subsection (a) with respect to such vehicle
        (determined without regard to subsection (g)).
            ``(7) Property used outside united states, etc., not
        qualified.--No credit shall be allowable under subsection (a)
        with respect to any property referred to in section 50(b)(1) or
        with respect to the portion of the cost of any property taken
        into account under section 179.
            ``(8) Recapture.--The <<NOTE: Regulations.>> 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).
            ``(9) Election to not take credit.--No credit shall be
        allowed under subsection (a) for any vehicle if the taxpayer
        elects to not have this section apply to such vehicle.
            ``(10) Interaction with air quality and motor vehicle safety
        standards.--Unless otherwise provided in this section, a motor
        vehicle shall not be considered eligible for a credit under this
        section unless such vehicle is in compliance with--
                    ``(A) the applicable provisions of the Clean Air Act
                for the applicable make and model year of the vehicle
                (or applicable air quality provisions of State law in
                the case of a State which has adopted such provision
                under a waiver under section 209(b) of the Clean Air
                Act), and
                    ``(B) the motor vehicle safety provisions of
                sections 30101 through 30169 of title 49, United States
                Code.

    ``(i) Regulations.--

[[Page 119 STAT. 1049]]

            ``(1) In general.--Except as provided in paragraph (2), the
        Secretary shall promulgate such regulations as necessary to
        carry out the provisions of this section.
            ``(2) Coordination in prescription of certain regulations.--
        The Secretary of the Treasury, in coordination with the
        Secretary of Transportation and the Administrator of the
        Environmental Protection Agency, shall prescribe such
        regulations as necessary to determine whether a motor vehicle
        meets the requirements to be eligible for a credit under this
        section.

    ``(j) Termination.--This section shall not apply to any property
purchased after--
            ``(1) in the case of a new qualified fuel cell motor vehicle
        (as described in subsection (b)), December 31, 2014,
            ``(2) in the case of a new advanced lean burn technology
        motor vehicle (as described in subsection (c)) or a new
        qualified hybrid motor vehicle (as described in subsection
        (d)(2)(A)), December 31, 2010,
            ``(3) in the case of a new qualified hybrid motor vehicle
        (as described in subsection (d)(2)(B)), December 31, 2009, and
            ``(4) in the case of a new qualified alternative fuel
        vehicle (as described in subsection (e)), December 31, 2010.''.

    (b) Conforming Amendments.--
            (1) Section 38(b), as amended by this Act, is amended by
        striking ``plus'' at the end of paragraph (23), by striking the
        period at the end of paragraph (24) and inserting ``, and'', and
        by adding at the end the following new paragraph:
            ``(25) the portion of the alternative motor vehicle credit
        to which section 30B(g)(1) applies.''.
            (2) Section 1016(a), as amended by this Act, is amended by
        striking ``and'' at the end of paragraph (34), by striking the
        period at the end of paragraph (35) and inserting ``, and'', and
        by adding at the end the following new paragraph:
            ``(36) to the extent provided in section 30B(h)(4).''.
            (3) Section 55(c)(2), as amended by this Act, is amended by
        inserting ``30B(g)(2),'' after ``30(b)(2),''.
            (4) Section 6501(m) is amended by inserting ``30B(h)(9),''
        after ``30(d)(4),''.
            (5) The table of sections for subpart B of part IV of
        subchapter A of chapter 1 is amended by inserting after the item
        relating to section 30A the following new item:

``Sec. 30B. Alternative motor vehicle credit.''.

    (c) Effective Date.--The <<NOTE: 26 USC 30B note.>> amendments made
by this section shall apply to property placed in service after December
31, 2005, in taxable years ending after such date.

SEC. 1342. CREDIT FOR INSTALLATION OF ALTERNATIVE FUELING STATIONS.

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

``SEC. 30C. ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY CREDIT.

    ``(a) Credit Allowed.--There shall be allowed as a credit against
the tax imposed by this chapter for the taxable year an amount equal to
30 percent of the cost of any qualified alternative

[[Page 119 STAT. 1050]]

fuel vehicle refueling property placed in service by the taxpayer during
the taxable year.
    ``(b) Limitation.--The credit allowed under subsection (a) with
respect to any alternative fuel vehicle refueling property shall not
exceed--
            ``(1) $30,000 in the case of a property of a character
        subject to an allowance for depreciation, and
            ``(2) $1,000 in any other case.

    ``(c) Qualified Alternative Fuel Vehicle Refueling Property.--
            ``(1) In general.--Except as provided in paragraph (2), the
        term `qualified alternative fuel vehicle refueling property' has
        the meaning given to such term by section 179A(d), but only with
        respect to any fuel--
                    ``(A) at least 85 percent of the volume of which
                consists of one or more of the following: ethanol,
                natural gas, compressed natural gas, liquefied natural
                gas, liquefied petroleum gas, or hydrogen, or
                    ``(B) any mixture of biodiesel (as defined in
                section 40A(d)(1)) and diesel fuel (as defined in
                section 4083(a)(3)), determined without regard to any
                use of kerosene and containing at least 20 percent
                biodiesel.
            ``(2) Residential property.--In the case of any property
        installed on property which is used as the principal residence
        (within the meaning of section 121) of the taxpayer, paragraph
        (1) of section 179A(d) shall not apply.

    ``(d) Application With Other Credits.--
            ``(1) Business credit treated as part of general business
        credit.--So much of the credit which would be allowed under
        subsection (a) for any taxable year (determined without regard
        to this subsection) that is attributable to property of a
        character subject to an allowance for depreciation shall be
        treated as a credit listed in section 38(b) for such taxable
        year (and not allowed under subsection (a)).
            ``(2) Personal credit.--The credit allowed under subsection
        (a) (after the application of paragraph (1)) for any taxable
        year shall not exceed the excess (if any) of--
                    ``(A) the regular tax reduced by the sum of the
                credits allowable under subpart A and sections 27, 30,
                and 30B, over
                    ``(B) the tentative minimum tax for the taxable
                year.

    ``(e) Special Rules.--For purposes of this section--
            ``(1) Basis reduction.--The basis of any property shall be
        reduced by the portion of the cost of such property taken into
        account under subsection (a).
            ``(2) Property used by tax-exempt entity.--In the case of
        any qualified alternative fuel vehicle refueling property the
        use of which is described in paragraph (3) or (4) of section
        50(b) and which is not subject to a lease, the person who sold
        such property to the person or entity using such property shall
        be treated as the taxpayer that placed such property in service,
        but only if such person clearly discloses to such person or
        entity in a document the amount of any credit allowable under
        subsection (a) with respect to such property (determined without
        regard to subsection (d)).
            ``(3) Property used outside united states not qualified.--No
        credit shall be allowable under subsection (a) with

[[Page 119 STAT. 1051]]

        respect to any property referred to in section 50(b)(1) or with
        respect to the portion of the cost of any property taken into
        account under section 179.
            ``(4) Election not to take credit.--No credit shall be
        allowed under subsection (a) for any property if the taxpayer
        elects not to have this section apply to such property.
            ``(5) Recapture rules.--
        Rules <<NOTE: Applicability.>> similar to the rules of section
        179A(e)(4) shall apply.

    ``(f) Regulations.--The Secretary shall prescribe such regulations
as necessary to carry out the provisions of this section.
    ``(g) Termination.--This section shall not apply to any property
placed in service--
            ``(1) in the case of property relating to hydrogen, after
        December 31, 2014, and
            ``(2) in the case of any other property, after December 31,
        2009.''.

    (b) Conforming Amendments.--
            (1) Section 38(b), as amended by this Act, is amended by
        striking ``plus'' at the end of paragraph (24), by striking the
        period at the end of paragraph (25) and inserting ``, and'', and
        by adding at the end the following new paragraph:
            ``(26) the portion of the alternative fuel vehicle refueling
        property credit to which section 30C(d)(1) applies.''.
            (2) Section 1016(a), as amended by this Act, is amended by
        striking ``and'' at the end of paragraph (35), by striking the
        period at the end of paragraph (36) and inserting ``, and'', and
        by adding at the end the following new paragraph:
            ``(37) to the extent provided in section 30C(f).''.
            (3) Section 55(c)(2), as amended by this Act, is amended by
        inserting ``30C(d)(2),'' after ``30B(g)(2),''.
            (4) Section 6501(m) is amended by inserting ``30C(e)(5),''
        after ``30B(h)(9),''.
            (5) The table of sections for subpart B of part IV of
        subchapter A of chapter 1, as amended by this Act, is amended by
        inserting after the item relating to section 30B the following
        new item:

``Sec. 30C. Clean-fuel vehicle refueling property credit.''.

    (c) Effective Date.--The <<NOTE: 26 USC 30C note.>> amendments made
by this section shall apply to property placed in service after December
31, 2005, in taxable years ending after such date.

SEC. 1343. REDUCED MOTOR FUEL EXCISE TAX ON CERTAIN MIXTURES OF DIESEL
            FUEL.

    (a) In General.--Paragraph (2) of section 4081(a) is amended by
adding at the end the following:
                    ``(D) Diesel-water fuel emulsion.--
                In <<NOTE: Applicability.>> the case of diesel-water
                fuel emulsion at least 14 percent of which is water and
                with respect to which the emulsion additive is
                registered by a United States manufacturer with the
                Environmental Protection Agency pursuant to section 211
                of the Clean Air Act (as in effect on March 31, 2003),
                subparagraph (A)(iii) shall be applied by substituting
                `19.7 cents' for `24.3 cents'. The preceding sentence
                shall not apply to the removal, sale, or use of diesel-
                water fuel emulsion unless the person so removing,
                selling, or using such fuel is registered under section
                4101.''.

    (b) Special Rules for Diesel-Water Fuel Emulsions.--

[[Page 119 STAT. 1052]]

            (1) Refunds for tax-paid purchases.--Section <<NOTE: 26 USC
        6427.>> 6427 is amended by redesignating subsections (m) through
        (p) as subsections (n) through (q), respectively, and by
        inserting after subsection (l) the following new subsection:

    ``(m) Diesel Fuel Used to Produce Emulsion.--
            ``(1) In general.--Except as provided in subsection (k), if
        any diesel fuel on which tax was imposed by section 4081 at the
        regular tax rate is used by any person in producing an emulsion
        described in section 4081(a)(2)(D) which is sold or used in such
        person's trade or business, the Secretary shall pay (without
        interest) to such person an amount equal to the excess of the
        regular tax rate over the incentive tax rate with respect to
        such fuel.
            ``(2) Definitions.--For purposes of paragraph (1)--
                    ``(A) Regular tax rate.--The term `regular tax rate'
                means the aggregate rate of tax imposed by section 4081
                determined without regard to section 4081(a)(2)(D).
                    ``(B) Incentive tax rate.--The term `incentive tax
                rate' means the aggregate rate of tax imposed by section
                4081 determined with regard to section 4081(a)(2)(D).''.
            (2) Later separation of fuel.--Section 4081 (relating to
        imposition of tax) is amended by inserting after subsection (b)
        the following new subsection:

    ``(c) Later Separation of Fuel From Diesel-Water Fuel Emulsion.--If
any person separates the taxable fuel from a diesel-water fuel emulsion
on which tax was imposed under subsection (a) at a rate determined under
subsection (a)(2)(D) (or with respect to which a credit or payment was
allowed or made by reason of section 6427), such person shall be treated
as the refiner of such taxable fuel. The amount of tax imposed on any
removal of such fuel by such person shall be reduced by the amount of
tax imposed (and not credited or refunded) on any prior removal or entry
of such fuel.''.
            (3) Credit claims.--Paragraphs (1) and (2) of section
        6427(i) are both amended by inserting ``(m),'' after ``(l),''.

    (c) Effective Date.--The <<NOTE: 26 USC 4081 note.>> amendments made
by this section shall take effect on January 1, 2006.

SEC. 1344. EXTENSION OF EXCISE TAX PROVISIONS AND INCOME TAX CREDIT FOR
            BIODIESEL.

    (a) In General.--Sections 40A(e), 6426(c)(6), and 6427(e)(4)(B) are
each amended by striking ``2006'' and inserting ``2008''.
    (b) Effective Date.--The <<NOTE: 26 USC 40A note.>> amendments made
by this section shall take effect on the date of the enactment of this
Act.

SEC. 1345. SMALL AGRI-BIODIESEL PRODUCER CREDIT.

    (a) In General.--Subsection (a) of section 40A (relating to
biodiesel used as a fuel) is amended to read as follows:
    ``(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, plus
            ``(3) in the case of an eligible small agri-biodiesel
        producer, the small agri-biodiesel producer credit.''.

    (b) Small Agri-Biodiesel Producer Credit Defined.--Section 40A(b)
(relating to definition of biodiesel mixture credit and

[[Page 119 STAT. 1053]]

biodiesel credit) is amended by adding at the end the following new
paragraph:
            ``(5) Small agri-biodiesel producer credit.--
                    ``(A) In general.--The small agri-biodiesel producer
                credit of any eligible small agri-biodiesel producer for
                any taxable year is 10 cents for each gallon of
                qualified agri-biodiesel production of such producer.
                    ``(B) Qualified agri-biodiesel production.--For
                purposes of this paragraph, the term `qualified agri-
                biodiesel production' means any agri-biodiesel
                (determined without regard to the last sentence of
                subsection (d)(2)) which is produced by an eligible
                small agri-biodiesel producer, and which during the
                taxable year--
                          ``(i) is sold by such producer to another
                      person--
                                    ``(I) for use by such other person
                                in the production of a qualified
                                biodiesel 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 agri-
                                biodiesel at retail to another person
                                and places such agri-biodiesel in the
                                fuel tank of such other person, or
                          ``(ii) is used or sold by such producer for
                      any purpose described in clause (i).
                    ``(C) Limitation.--The qualified agri-biodiesel
                production of any producer for any taxable year shall
                not exceed 15,000,000 gallons.''.

    (c) Definitions and Special Rules.--Section 40A is amended by
redesignating subsection (e) as subsection (f) and by inserting after
subsection (d) the following new subsection:
    ``(e) Definitions and Special Rules for Small Agri-Biodiesel
Producer Credit.--For purposes of this section--
            ``(1) Eligible small agri-biodiesel producer.--The term
        `eligible small agri-biodiesel producer' means a person who, at
        all times during the taxable year, has a productive capacity for
        agri-biodiesel not in excess of 60,000,000 gallons.
            ``(2) Aggregation rule.--For purposes of the 15,000,000
        gallon limitation under subsection (b)(5)(C) and the 60,000,000
        gallon limitation under paragraph (1), all members of the same
        controlled group of corporations (within the meaning of section
        267(f)) and all persons under common control (within the meaning
        of section 52(b) but determined by treating an interest of more
        than 50 percent as a controlling interest) shall be treated as 1
        person.
            ``(3) Partnership, s <<NOTE: Applicability.>> corporation,
        and other pass-thru entities.--In the case of a partnership,
        trust, S corporation, or other pass-thru entity, the limitations
        contained in subsection (b)(5)(C) and paragraph (1) shall be
        applied at the entity level and at the partner or similar level.
            ``(4) Allocation.--For purposes of this subsection, in the
        case of a facility in which more than 1 person has an interest,
        productive capacity shall be allocated among such persons in
        such manner as the Secretary may prescribe.
            ``(5) Regulations.--The Secretary may prescribe such
        regulations as may be necessary--

[[Page 119 STAT. 1054]]

                    ``(A) to prevent the credit provided for in
                subsection (a)(3) from directly or indirectly benefiting
                any person with a direct or indirect productive capacity
                of more than 60,000,000 gallons of agri-biodiesel during
                the taxable year, or
                    ``(B) to prevent any person from directly or
                indirectly benefiting with respect to more than
                15,000,000 gallons during the taxable year.
            ``(6) Allocation of small agri-biodiesel 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. Such election
                      shall not take effect unless the organization
                      designates the apportionment as such in a written
                      notice mailed to its patrons during the payment
                      period described in section 1382(d).
                    ``(B) Treatment of organizations and patrons.--
                          ``(i) Organizations.--The amount of the credit
                      not apportioned to patrons pursuant to
                      subparagraph (A) shall be included in the amount
                      determined under subsection (a)(3) for the taxable
                      year of the organization.
                          ``(ii) Patrons.--The amount of the credit
                      apportioned to patrons pursuant to subparagraph
                      (A) shall be included in the amount determined
                      under such subsection for the first taxable year
                      of each patron ending on or after the last day of
                      the payment period (as defined in section 1382(d))
                      for the taxable year of the organization or, if
                      earlier, for the taxable year of each patron
                      ending on or after the date on which the patron
                      receives notice from the cooperative of the
                      apportionment.
                          ``(iii) Special rules for decrease in credits
                      for taxable year.--If the amount of the credit of
                      the organization determined under such subsection
                      for a taxable year is less than the amount of such
                      credit shown on the return of the organization for
                      such year, an amount equal to the excess of--
                                    ``(I) such reduction, over
                                    ``(II) the amount not apportioned to
                                such patrons under subparagraph (A) for
                                the taxable year, shall be treated as an
                                increase in tax imposed by this chapter
                                on the organization. Such increase shall
                                not be treated as tax imposed by this
                                chapter for purposes of determining the
                                amount of any

[[Page 119 STAT. 1055]]

                                credit under this chapter or for
                                purposes of section 55.''.

    (d) Conforming Amendments.--
            (1) Paragraph (4) of section 40A(b) is amended by striking
        ``this section'' and inserting ``paragraph (1) or (2) of
        subsection (a)''.
            (2) The heading of subsection (b) of section 40A is amended
        by striking ``and Biodiesel Credit'' and inserting ``, Biodiesel
        Credit, and Small Agri-biodiesel Producer Credit''.
            (3) Paragraph (3) of section 40A(d) is amended by
        redesignating subparagraph (C) as subparagraph (D) and by
        inserting after subparagraph (B) the following new subparagraph:
                    ``(C) Producer credit.--If--
                          ``(i) any credit was determined under
                      subsection (a)(3), and
                          ``(ii) any person does not use such fuel for a
                      purpose described in subsection (b)(5)(B), then
                      there is hereby imposed on such person a tax equal
                      to 10 cents a gallon for each gallon of such agri-
                      biodiesel.''.

    (e) Effective Date.--The <<NOTE: 26 USC 40A note.>> amendments made
by this section shall apply to taxable years ending after the date of
the enactment of this Act.

SEC. 1346. RENEWABLE DIESEL.

    (a) In General.--Section 40A (relating to biodiesel used as fuel),
as amended by this Act, is amended by redesignating subsection (f) as
subsection (g) and by inserting after subsection (e) the following new
subsection:
    ``(f) Renewable Diesel.--For purposes of this title--
            ``(1) Treatment in the same manner as biodiesel.--Except as
        provided in paragraph (2), renewable diesel shall be treated in
        the same manner as biodiesel.
            ``(2) Exceptions.--
                    ``(A) Rate of <<NOTE: Applicability.>> credit.--
                Subsections (b)(1)(A) and (b)(2)(A) shall be applied
                with respect to renewable diesel by substituting `$1.00'
                for `50 cents'.
                    ``(B) Nonapplication of certain credits.--
                Subsections (b)(3) and (b)(5) shall not apply with
                respect to renewable diesel.
            ``(3) Renewable diesel defined.--The term `renewable diesel'
        means diesel fuel derived from biomass (as defined in section
        45K(c)(3)) using a thermal depolymerization process which
        meets--
                    ``(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 D975 or D396.''.

    (b) Clerical Amendments.--
            (1) The heading for section 40A is amended by inserting
        ``and renewable diesel'' after ``biodiesel''.
            (2) The item in the table of contents for subpart D of part
        IV of subchapter A of chapter 1 relating to section 40A is
        amended to read as follows:

``Sec. 40A. Biodiesel and renewable diesel used as fuel.''.

[[Page 119 STAT. 1056]]

    (c) Effective Date.--The <<NOTE: 26 USC 40A note.>> amendment made
by subsection (a) shall apply with respect to fuel sold or used after
December 31, 2005.

SEC. 1347. MODIFICATION OF SMALL ETHANOL PRODUCER CREDIT.

    (a) 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''.
    (b) Written Notice of Election to Allocate Credit to Patrons.--
Section 40(g)(6)(A)(ii) (relating to form and effect of election) is
amended by adding at the end the following new sentence: ``Such election
shall not take effect unless the organization designates the
apportionment as such in a written notice mailed to its patrons during
the payment period described in section 1382(d).''.
    (c) Effective Date.--The <<NOTE: 26 USC 40 note.>> amendments made
by this section shall apply to taxable years ending after the date of
the enactment of this Act.

SEC. 1348. SUNSET OF DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN
            REFUELING PROPERTY.

    Subsection (f) of section 179A (relating to termination) is amended
by striking ``December 31, 2006'' and inserting ``December 31, 2005''.

              Subtitle E--Additional Energy Tax Incentives

SEC. 1351. EXPANSION OF RESEARCH CREDIT.

    (a) Credit for Expenses Attributable to Certain Collaborative Energy
Research Consortia.--
            (1) In general.--Section 41(a) (relating to credit for
        increasing research activities) is amended by striking ``and''
        at the end of paragraph (1), by striking the period at the end
        of paragraph (2) and inserting ``, and'', and by adding at the
        end the following new paragraph:
            ``(3) 20 percent of the amounts paid or incurred by the
        taxpayer in carrying on any trade or business of the taxpayer
        during the taxable year (including as contributions) to an
        energy research consortium.''.
            (2) Energy research consortium defined.--Section 41(f)
        (relating to special rules) is amended by adding at the end the
        following new paragraph:
            ``(6) Energy research consortium.--
                    ``(A) In general.--The term `energy research
                consortium' means any organization--
                          ``(i) which is--
                                    ``(I) described in section 501(c)(3)
                                and is exempt from tax under section
                                501(a) and is organized and operated
                                primarily to conduct energy research, or
                                    ``(II) organized and operated
                                primarily to conduct energy research in
                                the public interest (within the meaning
                                of section 501(c)(3)),
                          ``(ii) which is not a private foundation,

[[Page 119 STAT. 1057]]

                          ``(iii) to which at least 5 unrelated persons
                      paid or incurred during the calendar year in which
                      the taxable year of the organization begins
                      amounts (including as contributions) to such
                      organization for energy research, and
                          ``(iv) to which no single person paid or
                      incurred (including as contributions) during such
                      calendar year an amount equal to more than 50
                      percent of the total amounts received by such
                      organization during such calendar year for energy
                      research.
                    ``(B) Treatment of persons.--All persons treated as
                a single employer under subsection (a) or (b) of section
                52 shall be treated as related persons for purposes of
                subparagraph (A)(iii) and as a single person for
                purposes of subparagraph (A)(iv).''.
            (3) Conforming amendment.--Section 41(b)(3)(C) is amended by
        inserting ``(other than an energy research consortium)'' after
        ``organization''.

    (b) Repeal of Limitation on Contract Research Expenses Paid to Small
Businesses, Universities, and Federal Laboratories.--Section 41(b)(3)
(relating to contract research expenses) is amended by adding at the end
the following new subparagraph:
                    ``(D) Amounts paid to eligible small businesses,
                universities, and federal laboratories.--
                          ``(i) In general.--In the case of amounts paid
                      by the taxpayer to--
                                    ``(I) an eligible small business,
                                    ``(II) an institution of higher
                                education (as defined in section
                                3304(f)), or
                                    ``(III)
                                an <<NOTE: Applicability.>> organization
                                which is a Federal laboratory,
                      for qualified research which is energy research,
                      subparagraph (A) shall be applied by substituting
                      `100 percent' for `65 percent'.
                          ``(ii) Eligible small business.--For purposes
                      of this subparagraph, the term `eligible small
                      business' means a small business with respect to
                      which the taxpayer does not own (within the
                      meaning of section 318) 50 percent or more of--
                                    ``(I) in the case of a corporation,
                                the outstanding stock of the corporation
                                (either by vote or value), and
                                    ``(II) in the case of a small
                                business which is not a corporation, the
                                capital and profits interests of the
                                small business.
                          ``(iii) Small business.--For purposes of this
                      subparagraph--
                                    ``(I) In general.--The term `small
                                business' means, with respect to any
                                calendar year, any person if the annual
                                average number of employees employed by
                                such person during either of the 2
                                preceding calendar years was 500 or
                                fewer. For purposes of the preceding
                                sentence, a preceding calendar year may
                                be taken into account only if the person
                                was in existence throughout the year.

[[Page 119 STAT. 1058]]

                                    ``(II) Startups, controlled groups,
                                and predecessors.--Rules similar to the
                                rules of subparagraphs (B) and (D) of
                                section 220(c)(4) shall apply for
                                purposes of this clause.
                          ``(iv) Federal laboratory.--For purposes of
                      this subparagraph, the term `Federal laboratory'
                      has the meaning given such term by section 4(6) of
                      the Stevenson-Wydler Technology Innovation Act of
                      1980 (15 U.S.C. 3703(6)), as in effect on the date
                      of the enactment of the Energy Tax Incentives Act
                      of 2005.''.

    (c) Effective Date.--The amendments made by this section shall apply
to amounts paid or incurred after the date of the enactment of this Act,
in taxable years ending after such date.

SEC. 1352. <<NOTE: 26 USC 41 note.>> NATIONAL ACADEMY OF SCIENCES STUDY
            AND REPORT.

    (a) Study.--Not <<NOTE: Contracts.>> later than 60 days after the
date of the enactment of this Act, the Secretary of the Treasury shall
enter into an agreement with the National Academy of Sciences under
which the National Academy of Sciences shall conduct a study to define
and evaluate the health, environmental, security, and infrastructure
external costs and benefits associated with the production and
consumption of energy that are not or may not be fully incorporated into
the market price of such energy, or into the Federal tax or fee or other
applicable revenue measure related to such production or consumption.

    (b) Report.--Not later than 2 years after the date on which the
agreement under subsection (a) is entered into, the National Academy of
Sciences shall submit to Congress a report on the study conducted under
subsection (a).

SEC. 1353. RECYCLING STUDY.

    (a) Study.--The Secretary of the Treasury, in consultation with the
Secretary of Energy, shall conduct a study--
            (1) to determine and quantify the energy savings achieved
        through the recycling of glass, paper, plastic, steel, aluminum,
        and electronic devices, and
            (2) to identify tax incentives which would encourage
        recycling of such material.

    (b) Report.--Not later than 1 year after the date of the enactment
of this Act, the Secretary of the Treasury shall submit to Congress a
report on the study conducted under subsection (a).

                 Subtitle F--Revenue Raising Provisions

SEC. 1361. OIL SPILL LIABILITY TRUST FUND FINANCING RATE.

    Section 4611(f) (relating to application of oil spill liability
trust fund financing rate) is amended to read as follows:
    ``(f) Application of Oil Spill Liability Trust Fund Financing
Rate.--
            ``(1) In general.--Except <<NOTE: Effective date.>> as
        provided in paragraphs (2) and (3), the Oil Spill Liability
        Trust Fund financing rate under subsection (c) shall apply on
        and after April 1, 2006, or if later, the date which is 30 days
        after the last day of any calendar quarter for which the
        Secretary estimates that, as of the close of that quarter, the
        unobligated balance in the Oil Spill Liability Trust Fund is
        less than $2,000,000,000.

[[Page 119 STAT. 1059]]

            ``(2) Fund balance.--The Oil Spill Liability Trust Fund
        financing rate shall not apply during a calendar quarter if the
        Secretary estimates that, as of the close of the preceding
        calendar quarter, the unobligated balance in the Oil Spill
        Liability Trust Fund exceeds $2,700,000,000.
            ``(3) Termination.--The Oil Spill Liability Trust Fund
        financing rate shall not apply after December 31, 2014.''.

SEC. 1362. EXTENSION OF LEAKING UNDERGROUND STORAGE TANK TRUST FUND
            FINANCING RATE.

    (a) In General.--Paragraph (3) of section 4081(d) (relating to
Leaking Underground Storage Tank Trust Fund financing rate) is amended
by striking ``2005'' and inserting ``2011''.
    (b) No Exemptions From Tax Except for Exports.--
            (1) In general.--Section 4082(a) (relating to exemptions for
        diesel fuel and kerosene) is amended by inserting ``(other than
        such tax at the Leaking Underground Storage Tank Trust Fund
        financing rate imposed in all cases other than for export)''
        after ``section 4081''.
            (2) Amendments relating to section 4041.--
                    (A) Subsections (a)(1)(B), (a)(2)(A), and (c)(2) of
                section 4041 are each amended by inserting ``(other than
                such tax at the Leaking Underground Storage Tank Trust
                Fund financing rate)'' after ``section 4081''.
                    (B) Section 4041(b)(1)(A) is amended by striking
                ``or (d)(1))''.
                    (C) Section 4041(d) is amended by adding at the end
                the following new paragraph:
            ``(5) Nonapplication of exemptions other than for exports.--
        For purposes of this section, the tax imposed under this
        subsection shall be determined without regard to subsections
        (f), (g) (other than with respect to any sale for export under
        paragraph (3) thereof), (h), and (l).''.
            (3) No refund.--
                    (A) In general.--Subchapter B of chapter 65 is
                amended by adding at the end the following new section:

``SEC. 6430. TREATMENT OF TAX IMPOSED AT LEAKING UNDERGROUND STORAGE
            TANK TRUST FUND FINANCING RATE.

    ``No refunds, credits, or payments shall be made under this
subchapter for any tax imposed at the Leaking Underground Storage Tank
Trust Fund financing rate, except in the case of fuels destined for
export.''.
                    (B) Clerical amendment.--The table of sections for
                subchapter B of chapter 65 is amended by adding at the
                end the following new item:

``Sec. 6430. Treatment of tax imposed at Leaking Underground Storage
           Tank Trust Fund financing rate.''.

    (c) Certain Refunds and Credits Not Charged to LUST Trust Fund.--
Subsection (c) of section 9508 (relating to Leaking Underground Storage
Tank Trust Fund) is amended to read as follows:
    ``(c) Expenditures.--Amounts in the Leaking Underground Storage Tank
Trust Fund shall be available, as provided in appropriation Acts, only
for purposes of making expenditures to carry out section 9003(h) of the
Solid Waste Disposal Act as in effect

[[Page 119 STAT. 1060]]

on the date of the enactment of the Superfund Amendments and
Reauthorization Act of 1986.''.
    (d) Effective <<NOTE: 26 USC 4041 note.>> Dates.--
            (1) In general.--Except as provided in paragraph (2), the
        amendments made by this section shall take effect on October 1,
        2005.
            (2) No exemption.--The amendments made by subsection (b)
        shall apply to fuel entered, removed, or sold after September
        30, 2005.

SEC. 1363. MODIFICATION OF RECAPTURE RULES FOR AMORTIZABLE SECTION 197
            INTANGIBLES.

    (a) In General.--Subsection (b) of section 1245 (relating to gain
from dispositions of certain depreciable property) is amended by adding
at the end the following new paragraph:
            ``(9) Disposition of amortizable section 197 intangibles.--
                    ``(A) In general.--If a taxpayer disposes of more
                than 1 amortizable section 197 intangible (as defined in
                section 197(c)) in a transaction or a series of related
                transactions, all such amortizable 197 intangibles shall
                be treated as 1 section 1245 property for purposes of
                this section.
                    ``(B) Exception.--Subparagraph (A) shall not apply
                to any amortizable section 197 intangible (as so
                defined) with respect to which the adjusted basis
                exceeds the fair market value.''.

    (b) Effective Date.--The <<NOTE: 26 USC 1245 note.>> amendment made
by this section shall apply to dispositions of property after the date
of the enactment of this Act.

SEC. 1364. CLARIFICATION OF TIRE EXCISE TAX.

    (a) In General.--Section 4072(e) (defining super single tire) is
amended by adding at the end the following: ``Such term shall not
include any tire designed for steering.''
    (b) Effective Date.--The <<NOTE: 26 USC 4072 note.>> amendment made
by this section shall take effect as if included in section 869 of the
American Jobs Creation Act of 2004.

    (c) Study.--
            (1) In general.--With <<NOTE: Effective date.>> respect to
        the 1-year period beginning on January 1, 2006, the Secretary of
        the Treasury shall conduct a study to determine--
                    (A) the amount of tax collected during such period
                under section 4071 of the Internal Revenue Code of 1986
                with respect to each class of tire, and
                    (B) the number of tires in each such class on which
                tax is imposed under such section during such period.
            (2) Report.--Not later than July 1, 2007, the Secretary of
        the Treasury shall submit to Congress a report on the study
        conducted under paragraph (1).

[[Page 119 STAT. 1061]]

                        TITLE XIV--MISCELLANEOUS

                         Subtitle A--In General

SEC. 1401. SENSE OF CONGRESS ON RISK ASSESSMENTS.

    Subtitle B of title XXX of the Energy Policy Act of 1992 is amended
by adding at the end the following new section:

``SEC. 3022. <<NOTE: 42 USC 13557.>> SENSE OF CONGRESS ON RISK
            ASSESSMENTS.

    ``It is the sense of Congress that Federal agencies conducting
assessments of risks to human health and the environment from energy
technology, production, transport, transmission, distribution, storage,
use, or conservation activities shall use sound and objective scientific
practices in assessing such risks, shall consider the best available
science (including peer reviewed studies), and shall include a
description of the weight of the scientific evidence concerning such
risks.''.

SEC. 1402. <<NOTE: 42 USC 16491.>> ENERGY PRODUCTION INCENTIVES.

    (a) In General.--A State may provide to any entity--
            (1) a credit against any tax or fee owed to the State under
        a State law, or
            (2) any other tax incentive,

determined by the State to be appropriate, in the amount calculated
under and in accordance with a formula determined by the State, for
production described in subsection (b) in the State by the entity that
receives such credit or such incentive.
    (b) Eligible Entities.--Subsection
(a) <<NOTE: Applicability.>> shall apply with respect to the production
in the State of electricity from coal mined in the State and used in a
facility, if such production meets all applicable Federal and State laws
and if such facility uses scrubbers or other forms of clean coal
technology.

    (c) Effect on Interstate Commerce.--Any action taken by a State in
accordance with this section with respect to a tax or fee payable, or
incentive applicable, for any period beginning after the date of the
enactment of this Act shall--
            (1) be considered to be a reasonable regulation of commerce;
        and
            (2) not be considered to impose an undue burden on
        interstate commerce or to otherwise impair, restrain, or
        discriminate, against interstate commerce.

SEC. 1403. <<NOTE: 42 USC 16492.>> REGULATION OF CERTAIN OIL USED IN
            TRANSFORMERS.

    Notwithstanding any other provision of law, or rule promulgated by
the Environmental Protection Agency, vegetable oil made from soybeans
and used in electric transformers as thermal insulation shall not be
regulated as an oil identified under section 2(a)(1)(B) of the Edible
Oil Regulatory Reform Act (33 U.S.C. 2720(a)(1)(B)).

SEC. 1404. PETROCHEMICAL AND OIL REFINERY FACILITY HEALTH ASSESSMENT.

    (a) Establishment.--The Secretary shall conduct a study of direct
and significant health impacts to persons resulting from living in
proximity to petrochemical and oil refinery facilities. The Secretary
shall consult with the Director of the National Cancer Institute and
other Federal Government bodies with expertise in

[[Page 119 STAT. 1062]]

the field it deems appropriate in the design of such study. The study
shall be conducted according to sound and objective scientific practices
and present the weight of the scientific evidence. The Secretary shall
obtain scientific peer review of the draft study.
    (b) Report to Congress.--The Secretary shall transmit the results of
the study to Congress within 6 months of the enactment of this section.
    (c) Authorization of Appropriations.--There are authorized to be
appropriated to the Secretary for activities under this section such
sums as are necessary for the completion of the study.

SEC. 1405. <<NOTE: 42 USC 16493.>> NATIONAL PRIORITY PROJECT
            DESIGNATION.

    (a) Designation of National Priority Projects.--
            (1) In general.--There is established the National Priority
        Project Designation (referred to in this section as the
        ``Designation''), which shall be evidenced by a medal bearing
        the inscription ``National Priority Project''.
            (2) Design and materials.--The medal shall be of such design
        and materials and bear such additional inscriptions as the
        President may prescribe.

    (b) Making <<NOTE: President.>> and Presentation of Designation.--
            (1) In general.--The President, on the basis of
        recommendations made by the Secretary, shall annually designate
        organizations that have--
                    (A) advanced the field of renewable energy
                technology and contributed to North American energy
                independence; and
                    (B) <<NOTE: Certification.>> been certified by the
                Secretary under subsection (e).
            (2) Presentation.--The President shall designate projects
        with such ceremonies as the President may prescribe.
            (3) Use of designation.--An organization that receives a
        Designation under this section may publicize the Designation of
        the organization as a National Priority Project in advertising.
            (4) Categories in which the designation may be given.--
        Separate Designations shall be made to qualifying projects in
        each of the following categories:
                    (A) Wind and biomass energy generation projects.
                    (B) Photovoltaic and fuel cell energy generation
                projects.
                    (C) Energy efficient building and renewable energy
                projects.
                    (D) First-in-Class projects.

    (c) Selection Criteria.--
            (1) In general.--Certification and selection of the projects
        to receive the Designation shall be based on criteria
        established under this subsection.
            (2) Wind, biomass, and building projects.--In the case of a
        wind, biomass, or building project, the project shall
        demonstrate that the project will install not less than 30
        megawatts of renewable energy generation capacity.
            (3) Solar photovoltaic and fuel cell projects.--In the case
        of a solar photovoltaic or fuel cell project, the project shall
        demonstrate that the project will install not less than 3
        megawatts of renewable energy generation capacity.

[[Page 119 STAT. 1063]]

            (4) Energy efficient building and renewable energy
        projects.--In the case of an energy efficient building or
        renewable energy project, in addition to meeting the criteria
        established under paragraph (2), each building project shall
        demonstrate that the project will--
                    (A) comply with third-party certification standards
                for high-performance, sustainable buildings;
                    (B) use whole-building integration of energy
                efficiency and environmental performance design and
                technology, including advanced building controls;
                    (C) use renewable energy for at least 50 percent of
                the energy consumption of the project;
                    (D) comply with applicable Energy Star standards;
                and
                    (E) include at least 5,000,000 square feet of
                enclosed space.
            (5) First-in-class use.--Notwithstanding paragraphs (2)
        through (4), a new building project may qualify under this
        section if the Secretary determines that the project--
                    (A) represents a First-In-Class use of renewable
                energy; or
                    (B) otherwise establishes a new paradigm of building
                integrated renewable energy use or energy efficiency.

    (d) Application.--
            (1) Initial applications.--No <<NOTE: Deadline. Federal
        Register, publication. Guidelines.>> later than 120 days after
        the date of enactment of this Act, and annually thereafter, the
        Secretary shall publish in the Federal Register an invitation
        and guidelines for submitting applications, consistent with this
        section.
            (2) Contents.--The application shall describe the project,
        or planned project, and the plans to meet the criteria
        established under subsection (c).

    (e) Certification.--
            (1) In general.--Not <<NOTE: Deadline.>> later than 60 days
        after the application period described in subsection (d), and
        annually thereafter, the Secretary shall certify projects that
        are reasonably expected to meet the criteria established under
        subsection (c).
            (2) Certified projects.--The Secretary shall designate
        personnel of the Department to work with persons carrying out
        each certified project and ensure that the personnel--
                    (A) provide each certified project with guidance in
                meeting the criteria established under subsection (c);
                    (B) identify programs of the Department, including
                National Laboratories and Technology Centers, that will
                assist each project in meeting the criteria established
                under subsection (c); and
                    (C) ensure that knowledge and transfer of the most
                current technology between the applicable resources of
                the Federal Government (including the National
                Laboratories and Technology Centers, the Department, and
                the Environmental Protection Agency) and the certified
                projects is being facilitated to accelerate
                commercialization of work developed through those
                resources.

    (f) Authorization of Appropriations.--There are authorized to be
appropriated such sums as are necessary to carry out this section for
each of fiscal years 2006 through 2010.

[[Page 119 STAT. 1064]]

SEC. 1406. COLD CRACKING.

    (a) Study.--The Secretary shall conduct a study of the application
of radiation to petroleum at standard temperature and pressure to refine
petroleum products, whose objective shall be to increase the economic
yield from each barrel of oil.
    (b) Goals.--The goals of the study shall include--
            (1) increasing the value of our current oil supply;
            (2) reducing the capital investment cost for cracking oil;
            (3) reducing the operating energy cost for cracking oil; and
            (4) reducing sulfur content using an environmentally
        responsible method.

    (c) Authorization of Appropriations.--There are authorized to be
appropriated to carry out this section $250,000 for fiscal year 2006.

SEC. 1407. <<NOTE: 42 USC 16494.>> OXYGEN-FUEL.

    (a) Program.--The Secretary shall establish a program on oxygen-fuel
systems. If feasible, the program shall include renovation of at least
one existing large unit and one existing small unit, and construction of
one new large unit and one new small unit.
    (b) Authorization of Appropriations.--There are authorized to be
appropriated to the Secretary for carrying out this section--
            (1) $100,000,000 for fiscal year 2006;
            (2) $100,000,000 for fiscal year 2007; and
            (3) $100,000,000 for fiscal year 2008.

    (c) Definitions.--For purposes of this section--
            (1) the term ``large unit'' means a unit with a generating
        capacity of 100 megawatts or more;
            (2) the term ``oxygen-fuel systems'' means systems that
        utilize fuel efficiency benefits of oil, gas, coal, and biomass
        combustion using substantially pure oxygen, with high flame
        temperatures and the exclusion of air from the boiler, in
        industrial or electric utility steam generating units; and
            (3) the term ``small unit'' means a unit with a generating
        capacity in the 10-50 megawatt range.

            Subtitle B--Set <<NOTE: Set America Free Act of
2005. Canada. Mexico.>> America Free

SEC. 1421. SHORT TITLE.

    This subtitle may be cited as the ``Set America Free Act of 2005''
or the ``SAFE Act''.

SEC. 1422. PURPOSE.

    The purpose of this subtitle is to establish a United States
commission to make recommendations for a coordinated and comprehensive
North American energy policy that will achieve energy self-sufficiency
by 2025 within the three contiguous North American nation area of
Canada, Mexico, and the United States.

SEC. 1423. UNITED STATES COMMISSION ON NORTH AMERICAN ENERGY FREEDOM.

    (a) Establishment.--There is hereby established the United States
Commission on North American Energy Freedom (in this subtitle referred
to as the ``Commission''). The Federal Advisory

[[Page 119 STAT. 1065]]

Committee Act (5 U.S.C. App.), except sections 3, 7, and 12, does not
apply to the Commission.
    (b) <<NOTE: President.>> Membership.--
            (1) Appointment.--The Commission shall be composed of 16
        members appointed by the President from among individuals
        described in paragraph (2) who are knowledgeable on energy
        issues, including oil and gas exploration and production, crude
        oil refining, oil and gas pipelines, electricity production and
        transmission, coal, unconventional hydrocarbon resources, fuel
        cells, motor vehicle power systems, nuclear energy, renewable
        energy, biofuels, energy efficiency, and energy conservation.
        The membership of the Commission shall be balanced by area of
        expertise to the extent consistent with maintaining the highest
        level of expertise on the Commission. Members of the Commission
        may be citizens of Canada, Mexico, or the United States, and the
        President shall ensure that citizens of all three nations are
        appointed to the Commission.
            (2) Nominations.--The <<NOTE: Deadline.>> President shall
        appoint the members of the Commission within 60 days after the
        effective date of this Act, including individuals nominated as
        follows:
                    (A) Four members shall be appointed from amongst
                individuals independently determined by the President to
                be qualified for appointment.
                    (B) Four members shall be appointed from a list of
                eight individuals who shall be nominated by the majority
                leader of the Senate in consultation with the chairman
                of the Committee on Energy and Natural Resources of the
                Senate.
                    (C) Four members shall be appointed from a list of
                eight individuals who shall be nominated by the Speaker
                of the House of Representatives in consultation with the
                chairmen of the Committees on Energy and Commerce and
                Resources of the House of Representatives.
                    (D) Two members shall be appointed from a list of
                four individuals who shall be nominated by the minority
                leader of the Senate in consultation with the ranking
                Member of the Committee on Energy and Natural Resources
                of the Senate.
                    (E) Two members shall be appointed from a list of
                four individuals who shall be nominated by the minority
                leader of the House in consultation with the ranking
                Members of the Committees on Energy and Commerce and
                Resources of the House of Representatives.
            (3) Chairman.--The chairman of the Commission shall be
        selected by the President. The chairman of the Commission shall
        be responsible for--
                    (A) the assignment of duties and responsibilities
                among staff personnel and their continuing supervision;
                and
                    (B) the use and expenditure of funds available to
                the Commission.
            (4) Vacancies.--Any vacancy on the Commission shall be
        filled in the same manner as the original incumbent was
        appointed.

    (c) Resources.--In carrying out its functions under this section,
the Commission--
            (1) is authorized to secure directly from any Federal agency
        or department any information it deems necessary to carry

[[Page 119 STAT. 1066]]

        out its functions under this Act, and each such agency or
        department is authorized to cooperate with the Commission and,
        to the extent permitted by law, to furnish such information
        (other than information described in section 552(b)(1)(A) of
        title 5, United States Code) to the Commission, upon the request
        of the Commission;
            (2) may enter into contracts, subject to the availability of
        appropriations for contracting, and employ such staff experts
        and consultants as may be necessary to carry out the duties of
        the Commission, as provided by section 3109 of title 5, United
        States Code; and
            (3) <<NOTE: Establishment.>> shall establish a
        multidisciplinary science and technical advisory panel of
        experts in the field of energy to assist the Commission in
        preparing its report, including ensuring that the scientific and
        technical information considered by the Commission is based on
        the best scientific and technical information available.

    (d) Staffing.--The chairman of the Commission may, without regard to
the civil service laws and regulations, appoint and terminate an
executive director and such other additional personnel as may be
necessary for the Commission to perform its duties. The executive
director shall be compensated at a rate not to exceed the rate payable
for Level IV of the Executive Schedule under chapter 5136 of title 5,
United States Code. The chairman shall select staff from among qualified
citizens of Canada, Mexico, and the United States of America.
    (e) Meetings.--
            (1) Administration.--All meetings of the Commission shall be
        open to the public, except that a meeting or any portion of it
        may be closed to the public if it concerns matters or
        information described in section 552b(c) of title 5, United
        States Code. Interested persons shall be permitted to appear at
        open meetings and present oral or written statements on the
        subject matter of the meeting. The Commission may administer
        oaths or affirmations to any person appearing before it.
            (2) Notice; minutes; public availability of documents.--
                    (A) Notice.--All open meetings of the Commission
                shall be preceded by timely public notice in the Federal
                Register of the time, place, and subject of the meeting.
                    (B) Minutes.--Minutes of each meeting shall be kept
                and shall contain a record of the people present, a
                description of the discussion that occurred, and copies
                of all statements filed. Subject to section 552 of title
                5, United States Code, the minutes and records of all
                meetings and other documents that were made available to
                or prepared for the Commission shall be available for
                public inspection and copying at a single location in
                the offices of the Commission.
            (3) Initial meeting.--The <<NOTE: Deadline.>> Commission
        shall hold its first meeting within 30 days after all 16 members
        have been appointed.

    (f) Report.--Within 12 months after the effective date of this Act,
the Commission shall submit to Congress and the President a final report
of its findings and recommendations regarding North American energy
freedom.

[[Page 119 STAT. 1067]]

    (g) Administrative Procedure for Report and Review.--Chapter 5 and
chapter 7 of title 5, United States Code, do not apply to the
preparation, review, or submission of the report required by subsection
(f).
    (h) Termination.--The Commission shall cease to exist 90 days after
the date on which it submits its final report.
    (i) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this chapter a total of $10,000,000 for the 2
fiscal-year period beginning with fiscal year 2005, such sums to remain
available until expended.

SEC. 1424. <<NOTE: Deadline. President.>> NORTH AMERICAN ENERGY FREEDOM
            POLICY.

    Within 90 days after receiving and considering the report and
recommendations of the Commission under section 1423, the President
shall submit to Congress a statement of proposals to implement or
respond to the Commission's recommendations for a coordinated,
comprehensive, and long-range national policy to achieve North American
energy freedom by 2025.

                    TITLE XV--ETHANOL AND MOTOR FUELS

                     Subtitle A--General Provisions

SEC. 1501. RENEWABLE CONTENT OF GASOLINE.

    (a) In General.--Section 211 of the Clean Air Act (42 U.S.C. 7545)
is amended--
            (1) by redesignating subsection (o) as subsection (r); and
            (2) by inserting after subsection (n) the following:

    ``(o) Renewable Fuel Program.--
            ``(1) Definitions.--In this section:
                    ``(A) 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--
                          ``(i) dedicated energy crops and trees;
                          ``(ii) wood and wood residues;
                          ``(iii) plants;
                          ``(iv) grasses;
                          ``(v) agricultural residues;
                          ``(vi) fibers;
                          ``(vii) animal wastes and other waste
                      materials; and
                          ``(viii) municipal solid waste.
                The term also includes any ethanol produced in
                facilities where animal wastes or other waste materials
                are digested or otherwise used to displace 90 percent or
                more of the fossil fuel normally used in the production
                of ethanol.
                    ``(B) Waste derived ethanol.--The term `waste
                derived ethanol' means ethanol derived from--
                          ``(i) animal wastes, including poultry fats
                      and poultry wastes, and other waste materials; or
                          ``(ii) municipal solid waste.
                    ``(C) Renewable fuel.--

[[Page 119 STAT. 1068]]

                          ``(i) In general.--The term `renewable fuel'
                      means motor vehicle fuel that--
                                    ``(I)(aa) 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
                                    ``(bb) is natural gas produced from
                                a biogas source, including a landfill,
                                sewage waste treatment plant, feedlot,
                                or other place where decaying organic
                                material is found; and
                                    ``(II) is used to replace or reduce
                                the quantity of fossil fuel present in a
                                fuel mixture used to operate a motor
                                vehicle.
                          ``(ii) Inclusion.--The term `renewable fuel'
                      includes--
                                    ``(I) cellulosic biomass ethanol and
                                `waste derived ethanol'; and
                                    ``(II) 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
                                renewable fuel (provided that only the
                                renewable fuel portion of any such
                                blending component shall be considered
                                part of the applicable volume under the
                                renewable fuel program established by
                                this subsection).
                    ``(D) Small refinery.--The term `small refinery'
                means a refinery for which the average aggregate daily
                crude oil throughput for a calendar year (as determined
                by dividing the aggregate throughput for the calendar
                year by the number of days in the calendar year) does
                not exceed 75,000 barrels.
            ``(2) Renewable fuel program.--
                    ``(A) Regulations.--
                          ``(i) In general.--
                      Not <<NOTE: Deadline.>> later than 1 year after
                      the date of enactment of this paragraph, the
                      Administrator shall promulgate regulations to
                      ensure that gasoline 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
                      renewable fuel determined in accordance with
                      subparagraph (B).
                          ``(ii) Noncontiguous state opt-in.--
                                    ``(I) In general.--On the petition
                                of a noncontiguous State or territory,
                                the Administrator may allow the
                                renewable fuel program established under
                                this subsection to apply in the
                                noncontiguous State or territory at the
                                same time or any time after the
                                Administrator promulgates regulations
                                under this subparagraph.
                                    ``(II) Other actions.--In carrying
                                out this clause, the Administrator may--
                                            ``(aa) issue or revise
                                        regulations under this
                                        paragraph;
                                            ``(bb) establish applicable
                                        percentages under paragraph (3);

[[Page 119 STAT. 1069]]

                                            ``(cc) provide for the
                                        generation of credits under
                                        paragraph (5); and
                                            ``(dd) take such other
                                        actions as are necessary to
                                        allow for the application of the
                                        renewable fuels program in a
                                        noncontiguous State or
                                        territory.
                          ``(iii) 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 renewable fuel
                                        may be used; or
                                            ``(bb) impose any per-gallon
                                        obligation for the use of
                                        renewable fuel.
                          ``(iv) Requirement in case of failure to
                      promulgate regulations.--If the Administrator does
                      not promulgate regulations under clause (i), the
                      percentage of renewable fuel in gasoline sold or
                      dispensed to consumers in the United States, on a
                      volume basis, shall be 2.78 percent for calendar
                      year 2006.
                    ``(B) Applicable volume.--
                          ``(i) Calendar years 2006 through 2012.--For
                      the purpose of subparagraph (A), the applicable
                      volume for any of calendar years 2006 through 2012
                      shall be determined in accordance with the
                      following table:

                              Applicable volume of renewable fuel.......
                ``Calendar yea(in billions of gallons):.................
                2006                                                 4.0
                2007                                                 4.7
                2008                                                 5.4
                2009                                                 6.1
                2010                                                 6.8
                2011                                                 7.4
                2012                                                7.5.

                          ``(ii) Calendar year 2013 and thereafter.--
                      Subject to clauses (iii) and (iv), for the
                      purposes of subparagraph (A), the applicable
                      volume for calendar year 2013 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 2006 through 2012, including
                      a review of--
                                    ``(I) the impact of the use of
                                renewable fuels on the environment, air
                                quality, energy security, job creation,
                                and rural economic development; and
                                    ``(II) the expected annual rate of
                                future production of renewable fuels,
                                including cellulosic ethanol.

[[Page 119 STAT. 1070]]

                          ``(iii) Minimum quantity derived from
                      cellulosic biomass.--For calendar year 2013 and
                      each calendar year thereafter--
                                    ``(I) the applicable volume referred
                                to in clause (ii) shall contain a
                                minimum of 250,000,000 gallons that are
                                derived from cellulosic biomass; and
                                    ``(II) the 2.5-to-1 ratio referred
                                to in paragraph (4) shall not apply.
                          ``(iv) Minimum applicable volume.--For the
                      purpose of subparagraph (A), the applicable volume
                      for calendar year 2013 and each calendar year
                      thereafter shall be equal to the product obtained
                      by multiplying--
                                    ``(I) the number of gallons of
                                gasoline that the Administrator
                                estimates will be sold or introduced
                                into commerce in the calendar year; and
                                    ``(II) the ratio that--
                                            ``(aa) 7,500,000,000 gallons
                                        of renewable fuel; bears to
                                            ``(bb) the number of gallons
                                        of gasoline sold or introduced
                                        into commerce in calendar year
                                        2012.
            ``(3) Applicable <<NOTE: Deadlines.>> percentages.--
                    ``(A) Provision of estimate of volumes of gasoline
                sales.--Not later than October 31 of each of calendar
                years 2005 through 2011, the Administrator of the Energy
                Information Administration shall provide to the
                Administrator of the Environmental Protection Agency an
                estimate, with respect to the following calendar year,
                of the volumes of gasoline 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 2005 through 2012, based
                      on the estimate provided under subparagraph (A),
                      the Administrator of the Environmental Protection
                      Agency shall determine and publish in the Federal
                      Register, with respect to the following calendar
                      year, the renewable fuel obligation that ensures
                      that the requirements of paragraph (2) are met.
                          ``(ii) Required elements.--The renewable 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 gasoline sold or
                                introduced into commerce in the United
                                States; and
                                    ``(III) subject to subparagraph
                                (C)(i), consist of a single applicable
                                percentage that applies to all
                                categories of persons specified in
                                subclause (I).
                    ``(C) Adjustments.--In determining the applicable
                percentage for a calendar year, the Administrator shall
                make adjustments--
                          ``(i) to prevent the imposition of redundant
                      obligations on any person specified in
                      subparagraph (B)(ii)(I); and

[[Page 119 STAT. 1071]]

                          ``(ii) to account for the use of renewable
                      fuel during the previous calendar year by small
                      refineries that are exempt under paragraph (9).
            ``(4) Cellulosic biomass ethanol or waste derived ethanol.--
        For the purpose of paragraph (2), 1 gallon of cellulosic biomass
        ethanol or waste derived ethanol shall be considered to be the
        equivalent of 2.5 gallons of renewable fuel.
            ``(5) Credit program.--
                    ``(A) In general.--The regulations promulgated under
                paragraph (2)(A) shall provide--
                          ``(i) for the generation of an appropriate
                      amount of credits by any person that refines,
                      blends, or imports gasoline that contains a
                      quantity of renewable fuel that is greater than
                      the quantity required under paragraph (2);
                          ``(ii) for the generation of an appropriate
                      amount of credits for biodiesel; and
                          ``(iii) for the generation of credits by small
                      refineries in accordance with paragraph (9)(C).
                    ``(B) Use of credits.--A person that generates
                credits under subparagraph (A) may use the credits, or
                transfer all or a portion of the credits to another
                person, for the purpose of complying with paragraph (2).
                    ``(C) Duration of credits.--A credit generated under
                this paragraph shall be valid to show compliance for the
                12 months as of the date of generation.
                    ``(D) Inability to generate or purchase sufficient
                credits.--The regulations promulgated under paragraph
                (2)(A) shall include provisions allowing any person that
                is unable to generate or purchase sufficient credits to
                meet the requirements of paragraph (2) to carry forward
                a renewable fuel deficit on condition that the person,
                in the calendar year following the year in which the
                renewable fuel deficit is created--
                          ``(i) achieves compliance with the renewable
                      fuel requirement under paragraph (2); and
                          ``(ii) generates or purchases additional
                      renewable fuel credits to offset the renewable
                      fuel deficit of the previous year.
            ``(6) Seasonal variations in renewable fuel use.--
                    ``(A) Study.--For each of calendar years 2006
                through 2012, the Administrator of the Energy
                Information Administration shall conduct a study of
                renewable fuel blending to determine whether there are
                excessive seasonal variations in the use of renewable
                fuel.
                    ``(B) Regulation of excessive seasonal variations.--
                If, for any calendar year, the Administrator of the
                Energy Information Administration, based on the study
                under subparagraph (A), makes the determinations
                specified in subparagraph (C), the Administrator of the
                Environmental Protection Agency shall promulgate
                regulations to ensure that 25 percent or more of the
                quantity of renewable fuel necessary to meet the
                requirements of paragraph (2) is used during each of the
                2 periods specified in subparagraph (D) of each
                subsequent calendar year.
                    ``(C) Determinations.--The determinations referred
                to in subparagraph (B) are that--

[[Page 119 STAT. 1072]]

                          ``(i) less than 25 percent of the quantity of
                      renewable fuel necessary to meet the requirements
                      of paragraph (2) has been used during 1 of the 2
                      periods specified in subparagraph (D) of the
                      calendar year;
                          ``(ii) a pattern of excessive seasonal
                      variation described in clause (i) will continue in
                      subsequent calendar years; and
                          ``(iii) promulgating regulations or other
                      requirements to impose a 25 percent or more
                      seasonal use of renewable fuels will not prevent
                      or interfere with the attainment of national
                      ambient air quality standards or significantly
                      increase the price of motor fuels to the consumer.
                    ``(D) Periods.--The 2 periods referred to in this
                paragraph are--
                          ``(i) April through September; and
                          ``(ii) January through March and October
                      through December.
                    ``(E) Exclusion.--Renewable fuel blended or consumed
                in calendar year 2006 in a State that has received a
                waiver under section 209(b) shall not be included in the
                study under subparagraph (A).
                    ``(F) State exemption from seasonality
                requirements.--Notwithstanding any other provision of
                law, the seasonality requirement relating to renewable
                fuel use established by this paragraph shall not apply
                to any State that has received a waiver under section
                209(b) or any State dependent on refineries in such
                State for gasoline supplies.
            ``(7) 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 petition by one or
                more States by reducing the national quantity of
                renewable fuel required under paragraph (2)--
                          ``(i) based on a determination by the
                      Administrator, after public notice and opportunity
                      for comment, that implementation of the
                      requirement would severely harm the economy or
                      environment of a State, a region, or the United
                      States; or
                          ``(ii) based on a determination by the
                      Administrator, after public notice and opportunity
                      for comment, that there is an inadequate domestic
                      supply.
                    ``(B) Petitions for waivers.--
                The <<NOTE: Deadline.>> Administrator, in consultation
                with the Secretary of Agriculture and the Secretary of
                Energy, shall approve or disapprove a State petition for
                a waiver of the requirements of paragraph (2) within 90
                days after the date on which the petition is received by
                the Administrator.
                    ``(C) Termination of waivers.--A waiver granted
                under subparagraph (A) shall terminate after 1 year, but
                may be renewed by the Administrator after consultation
                with the Secretary of Agriculture and the Secretary of
                Energy.
            ``(8) Study and waiver for initial year of program.--

[[Page 119 STAT. 1073]]

                    ``(A) In general.--Not <<NOTE: Deadline.>> later
                than 180 days after the date of enactment of this
                paragraph, the Secretary of Energy shall conduct for the
                Administrator a study assessing whether the renewable
                fuel requirement under paragraph (2) will likely result
                in significant adverse impacts on consumers in 2006, on
                a national, regional, or State basis.
                    ``(B) Required evaluations.--The study shall
                evaluate renewable fuel--
                          ``(i) supplies and prices;
                          ``(ii) blendstock supplies; and
                          ``(iii) supply and distribution system
                      capabilities.
                    ``(C) Recommendations by the secretary.--Based on
                the results of the study, the Secretary of Energy shall
                make specific recommendations to the Administrator
                concerning waiver of the requirements of paragraph (2),
                in whole or in part, to prevent any adverse impacts
                described in subparagraph (A).
                    ``(D) Waiver.--
                          ``(i) In general.--
                      Not <<NOTE: Deadline.>> later than 270 days after
                      the date of enactment of this paragraph, the
                      Administrator shall, if and to the extent
                      recommended by the Secretary of Energy under
                      subparagraph (C), waive, in whole or in part, the
                      renewable fuel requirement under paragraph (2) by
                      reducing the national quantity of renewable fuel
                      required under paragraph (2) in calendar year
                      2006.
                          ``(ii) No effect on waiver authority.--Clause
                      (i) does not limit the authority of the
                      Administrator to waive the requirements of
                      paragraph (2) in whole, or in part, under
                      paragraph (7).
            ``(9) Small refineries.--
                    ``(A) Temporary exemption.--
                          ``(i) In general.--The requirements of
                      paragraph (2) shall not apply to small refineries
                      until calendar year 2011.
                          ``(ii) Extension of exemption.--
                                    ``(I) <<NOTE: Deadline.>> Study by
                                secretary of energy.--Not later than
                                December 31, 2008, the Secretary of
                                Energy shall conduct for the
                                Administrator a study to determine
                                whether compliance with the requirements
                                of paragraph (2) would impose a
                                disproportionate economic hardship on
                                small refineries.
                                    ``(II) Extension of exemption.--In
                                the case of a small refinery that the
                                Secretary of Energy determines under
                                subclause (I) would be subject to a
                                disproportionate economic hardship if
                                required to comply with paragraph (2),
                                the Administrator shall extend the
                                exemption under clause (i) for the small
                                refinery for a period of not less than 2
                                additional years.
                    ``(B) Petitions based on disproportionate economic
                hardship.--
                          ``(i) Extension of exemption.--A small
                      refinery may at any time petition the
                      Administrator for an extension of the exemption
                      under subparagraph (A) for the reason of
                      disproportionate economic hardship.

[[Page 119 STAT. 1074]]

                          ``(ii) Evaluation of petitions.--In evaluating
                      a petition under clause (i), the Administrator, in
                      consultation with the Secretary of Energy, shall
                      consider the findings of the study under
                      subparagraph (A)(ii) and other economic factors.
                          ``(iii) Deadline for action on petitions.--The
                      Administrator shall act on any petition submitted
                      by a small refinery for a hardship exemption not
                      later than 90 days after the date of receipt of
                      the petition.
                    ``(C) Credit program.--If a small refinery notifies
                the Administrator that the small refinery waives the
                exemption under subparagraph (A), the regulations
                promulgated under paragraph (2)(A) shall provide for the
                generation of credits by the small refinery under
                paragraph (5) beginning in the calendar year following
                the date of notification.
                    ``(D) Opt-in for small refineries.--A small refinery
                shall be subject to the requirements of paragraph (2) if
                the small refinery notifies the Administrator that the
                small refinery waives the exemption under subparagraph
                (A).
            ``(10) Ethanol market concentration analysis.--
                    ``(A) Analysis.--
                          ``(i) In general.--
                      Not <<NOTE: Deadline.>> later than 180 days after
                      the date of enactment of this paragraph, and
                      annually thereafter, the Federal Trade Commission
                      shall perform a market concentration analysis of
                      the ethanol production industry using the
                      Herfindahl-Hirschman Index to determine whether
                      there is sufficient competition among industry
                      participants to avoid price-setting and other
                      anticompetitive behavior.
                          ``(ii) Scoring.--For the purpose of scoring
                      under clause (i) using the Herfindahl-Hirschman
                      Index, all marketing arrangements among industry
                      participants shall be considered.
                    ``(B) Report.--Not later than December 1, 2005, and
                annually thereafter, the Federal Trade Commission shall
                submit to Congress and the Administrator a report on the
                results of the market concentration analysis performed
                under subparagraph (A)(i).''.

    (b) Penalties and Enforcement.--Section 211(d) of the Clean Air Act
(42 U.S.C. 7545(d)) is amended--
            (1) in paragraph (1)--
                    (A) in the first sentence, by striking ``or (n)''
                each place it appears and inserting ``(n), or (o)''; and
                    (B) in the second sentence, by striking ``or (m)''
                and inserting ``(m), or (o)''; and
            (2) in the first sentence of paragraph (2), by striking
        ``and (n)'' each place it appears and inserting ``(n), and
        (o)''.

    (c) Exclusion From Ethanol Waiver.--Section 211(h) of the Clean Air
Act (42 U.S.C. 7545(h)) is amended--
            (1) by redesignating paragraph (5) as paragraph (6); and
            (2) by inserting after paragraph (4) the following:
            ``(5) Exclusion from ethanol waiver.--
                    ``(A) Promulgation
                of <<NOTE: Notification.>> regulations.--Upon
                notification, accompanied by supporting documentation,
                from the Governor of a State that the Reid vapor
                pressure limitation established by paragraph (4) will
                increase emissions that contribute to air pollution in
                any area in the State, the

[[Page 119 STAT. 1075]]

                Administrator shall, by regulation, apply, in lieu of
                the Reid vapor pressure limitation established by
                paragraph (4), the Reid vapor pressure limitation
                established by paragraph (1) to all fuel blends
                containing gasoline and 10 percent denatured anhydrous
                ethanol that are sold, offered for sale, dispensed,
                supplied, offered for supply, transported, or introduced
                into commerce in the area during the high ozone season.
                    ``(B) Deadline for promulgation.--The Administrator
                shall promulgate regulations under subparagraph (A) not
                later than 90 days after the date of receipt of a
                notification from a Governor under that subparagraph.
                    ``(C) Effective date.--
                          ``(i) In general.--With respect to an area in
                      a State for which the Governor submits a
                      notification under subparagraph (A), the
                      regulations under that subparagraph shall take
                      effect on the later of--
                                    ``(I) the first day of the first
                                high ozone season for the area that
                                begins after the date of receipt of the
                                notification; or
                                    ``(II) 1 year after the date of
                                receipt of the notification.
                          ``(ii) Extension of effective date based on
                      determination of insufficient supply.--
                                    ``(I) In general.--
                                If, <<NOTE: Regulations.>> after receipt
                                of a notification with respect to an
                                area from a Governor of a State under
                                subparagraph (A), the Administrator
                                determines, on the Administrator's own
                                motion or on petition of any person and