To amend the Internal Revenue Code of 1986 to provide a credit for qualifying clean technology engines.

July 23, 2003

Mr. RADANOVICH (for himself, Mr. NUNES, Mr. CARDOZA, Mr. OSE, and Mr. DOOLEY of California) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to provide a credit for qualifying clean technology engines.

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Clean Engine Technology Act of 2003'.

SEC. 2. CREDIT FOR QUALIFYING CLEAN TECHNOLOGY ENGINES.

(a) IN GENERAL- Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to foreign tax credit, etc.) is amended by adding at the end the following new section:

`SEC. 30B. CREDIT FOR QUALIFYING CLEAN TECHNOLOGY ENGINES.

`(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 25 percent of the cost of each qualifying clean technology engine placed in service during the taxable year by any taxpayer in connection with such taxpayer's trade or business.

`(b) LIMITATION-

`(1) IN GENERAL- The credit allowed under subsection (a) shall not exceed $15,000 for any taxpayer for any taxable year.

`(2) MAXIMUM CREDIT PER TON- The credit allowed under subsection (a) shall not exceed $13,600 for each ton of emissions eliminated, as determined by regulations promulgated by the Secretary.

`(c) DEFINITIONS AND SPECIAL RULES- For purposes of this section--

`(1) QUALIFYING CLEAN TECHNOLOGY ENGINE-

`(A) IN GENERAL- The term `qualifying clean technology engine' means an engine--

`(i) which replaces a diesel engine (which is not a qualifying clean technology engine) used by the taxpayer immediately before such engine is placed in service,

`(ii) which is used--

`(I) in a heavy duty truck or a bus, or

`(II) for off-highway use,

`(iii) 75 percent of emissions from which are in an area designated as a severe or extreme 1 hour ozone nonattainment area (as determined by the Administrator of the Environmental Protection Agency) as of the date of the enactment of this section,

`(iv) which--

`(I) emits at least 30 percent fewer ozone forming pollutants than the engine which it replaces, and

`(II) meets any Federal and State pollution control requirements applicable to the year in which such engine is placed in service, and

`(v) which is certified as meeting the requirements of this section by the local air pollution control authority in such area.

`(B) ENGINES IN NEW MOTOR VEHICLES INCLUDED-

`(i) IN GENERAL- Such term includes an engine that otherwise meets the requirements of subparagraph (A) and is in a new motor vehicle purchased by the taxpayer which replaces a motor vehicle with a diesel engine (which is not a qualifying clean technology engine) used by the taxpayer immediately before such new motor vehicle is placed in service.

`(ii) ENGINE IN NEW VEHICLE REPLACES ENGINE IN OLD VEHICLE- For purposes of this section, a qualifying clean technology engine in a new motor vehicle shall be considered to have replaced the engine in the vehicle used by the taxpayer immediately before the new motor vehicle is placed in service.

`(2) OLD ENGINE MUST BE DESTROYED- No credit shall be allowed under subsection (a) unless the taxpayer destroys or otherwise retires the engine which is replaced by the qualifying clean technology engine.

`(d) APPLICATION WITH OTHER CREDITS- The credit allowed under subsection (a) for any taxable year shall not exceed the excess (if any) of--

`(1) the regular tax for the taxable year reduced by the sum of the credits allowable under subpart A and sections 27, 29, and 30, over

`(2) the tentative minimum tax for the taxable year.

`(e) BASIS REDUCTION- For purposes of this title, the basis of any property shall be reduced by the portion of the cost of such property taken into account under subsection (a).

`(f) NO DOUBLE BENEFIT- The amount of any deduction or other credit allowable under this chapter for any cost taken into account in computing the amount of the credit determined under subsection (a) shall be reduced by the amount of such credit attributable to such cost.

`(g) CARRYBACK AND CARRYFORWARD ALLOWED-

`(1) IN GENERAL- If the credit allowable under subsection (a) for a taxable year exceeds the amount of the limitation under subsection (d) for such taxable year (in this paragraph referred to as the `unused credit year'), such excess shall be a credit carryback to each of the 3 taxable years preceding the unused credit year and a credit carryforward to each of the 20 taxable years following unused credit year, except that no excess may be carried to a taxable year beginning before the date of the enactment of this paragraph.

`(2) RULES- Rules similar to the rules of section 39 shall apply with respect to the credit carryback and credit carryforward under paragraph (1).

`(h) OTHER SPECIAL RULES- Rules similar to the rules of paragraphs (4) and (5) of section 179A(e) shall apply.

`(i) REGULATIONS- The Secretary shall, after consulting with the Administrator of the Environmental Protection Agency and the California Air Resources Board, prescribe such regulations as necessary to carry out the provisions of this section.

`(j) TERMINATION- This section shall not apply to any property placed in service after December 31, 2009.'.

(b) CONFORMING AMENDMENTS-

(1) Section 1016(a) of such Code is amended by striking `and' at the end of paragraph (27), by striking the period at the end of paragraph (28) and inserting `, and', and by adding at the end the following new paragraph:

`(29) to the extent provided in section 30B(e).'.

(2) Section 55(c)(2) of such Code is amended by inserting `30B(d),' after `30(b)(3),'.

(3) The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 30A the following new item:

`30B. Credit for qualifying clean technology engines.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.

END