Energy Policy Act of 2005
On August 8, 2005, President Bush signed the Energy Policy Act (EPAct) of 2005. The table below summarizes sections of EPAct 2005 that are of interest to Clean Cities stakeholders. Some provisions require further action by the appropriate agency (e.g., tax credit determinations by the Internal Revenue Service). If further action has been taken by a federal agency you can locate that information on our State and Federal Incentives and Laws Web page. Keep in mind that legislation "authorizes" funding for activities, but the funding must still be "appropriated" through the federal budgeting process. The authorized funding represents ceiling amounts that federal agencies may request for the defined activity. A broader summary of What the Energy Bill Means to You is also available on our Web site. View full text of EPAct 2005 (PDF 3 MB). Download Adobe Reader.
| Section | Description |
|---|---|
| Section 701 Federal Fleet Dual-Fuel Vehicles: Fuel Use Requirement | Requires federal fleets to use alternative fuels in dual-fuel vehicles unless the Secretary of Energy determines an agency qualifies for a waiver. Grounds for a waiver are: alternative fuel is not reasonably available to the fleet and the cost of alternative fuel is unreasonably more expensive that convention fuel. For more information, visit www.eere.energy.gov/vehiclesandfuels/epact/federal/index.html, or e-mail fed_fleets@afdc.nrel.gov. |
| Section 702 Federal Fleets Incremental Cost Distribution | Requires the U.S. General Services Administration (and other federal agencies that procure vehicles for fleets) to spread the incremental vehicle costs of all vehicles. This mandate modifies 42 USC 13212 (EPAct 1992 Section 303). |
| Section 703 Alternative Compliance for State and Alternative Fuel Provider Fleets | Expands compliance options under EPAct 1992 by allowing fleets to choose a petroleum reduction path in lieu of acquiring AFVs. Interested fleets must obtain a waiver from the U.S. Department of Energy (DOE). To receive a waiver, fleets must prove to DOE that they will achieve petroleum reductions equivalent to their alternative fuel vehicles (AFVs) running on alternative fuels 100% of the time. For more information, visit the www.eere.energy.gov/vehiclesandfuels/epact/state/index.html, or call the Regulatory Information Line at (202) 586-9171. |
| Section 704 Review of EPAct 1992 Programs: DOE Report | Requires DOE to submit a report to Congress 180 days after the new legislation was enacted. The report must examine and discuss the number of AFVs acquired by covered fleets, the amount of alternative fuel used in AFVs acquired by fleets covered by EPAct, the amount of petroleum displaced by covered fleets, the cost of compliance with EPAct, obstacles preventing compliance with EPAct and the use of alternative fuels, and projected impacts of the EPAct amendments of 2005. |
| Section 705 Federal Agency Annual Reports to Congress | Changes the date when annual agency reports for Executive Order 13149 compliance are due to Congress. The new date is February 15 of each year. |
| Section 706 Joint Flexible Fuel/Hybrid Vehicle Commercialization Initiative | Directs DOE to establish a research program to advance the commercialization of hybrid flexible fuel vehicles or plug-in hybrid flexible fuel vehicles. The Act requires vehicles to achieve at least 250 miles per petroleum gallon. A total of $40 million is authorized for the program ($3 million in fiscal year (FY) 2006, $7 million in FY 2007, $10 million in FY 2008, and $20 million in fiscal year 2009). |
| Section 707 Excluded Vehicles: Electric Utility Emergency Vehicles | Clarifies that excluded emergency vehicles include those used directly to repair transmission lines and restore electric service as determined by the Secretary of Energy. |
| Section 711 Hybrid Vehicles | Directs DOE to accelerate efforts to improve technologies (including batteries) used in hybrid vehicles. |
| Section 712 Efficient Hybrid and Advanced Diesel Vehicles | Directs DOE to establish a program to encourage the domestic production and sale of efficient hybrid and advanced diesel vehicles. The Act authorizes "such funds as necessary" from 2006 to 2015. |
| Sections 721-723 Advanced Vehicles Demonstration and Pilot Program | Establishes a competitive grant program, administered by Clean Cities, to fund up to 30 geographically dispersed advanced vehicle demonstration projects. EPAct 2005 authorizes $200 million (until expended) for this program. Grant recipients will be limited to state and local government agencies and metropolitan transportation authorities. Applications must include a registered participant in the Clean Cities initiative. Participants can be public or private entities. Projects are limited to $15 million with 50% cost share. Grant funds can pay for:
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| Section 742 Diesel Truck Retrofit and Fleet Modernization Program | Authorizes the U.S. Environmental Protection Agency (EPA), in consultation with DOE, to administer a competitive grant program for modernizing fleets and retrofitting diesel trucks. Grants will be awarded with preference to state or local governments that allocate funds for major hauling operations, particularly at ports. A 50% cost share is required. Trucks being replaced must be model year 1998 or older. EPAct of 2005 authorizes $20 million in 2006, $35 million in 2007, $45 million in 2008, and such sums as necessary for 2008-2010. |
| Section 743 Fuel Cell School Buses | Establishes a DOE demonstration program involving fuel cell school bus manufacturers and at least two units of local government currently using natural gas school buses. The non-federal cost share will be at least 20% of infrastructure and 50% of vehicles. EPAct 2005 authorizes $25 million for fiscal years 2006-2009. |
| Section 754 Diesel Fueled Vehicles: Meeting Tier 2 Standards | Directs DOE to accelerate efforts to ensure that diesel vehicles meet Tier 2 standards. The goal is to improve combustion and after-treatment technologies and enable diesel technologies by 2010. |
| Section 756 Heavy-Duty Vehicle Idle Reduction Analysis and Deployment Program | Directs EPA to conduct analysis on emissions reduced and fuel saved as a result of idle reduction (IR) measures. It also requires EPA, in consultation with the U.S. Department of Transportation (DOT), to develop a deployment program that supports the deployment of IR technologies and promotes improved air quality and reduced emissions. A cost share of 50% is provided by non-federal entities. EPAct 2005 authorizes $19.5 million in 2006, $30 million in 2007, and $45 million in 2008. |
| Section 757 Biodiesel Engine Testing Program | Directs DOE to work with engine manufacturers and fuel injection manufacturers to test biodiesel in advanced diesel fuel engines, determine impacts of different biodiesel blendstocks, and study the emissions and warranty impacts of different blendstocks. EPAct 2005 authorizes $5 million each year from 2006-2010. |
| Section 758 Ultra-Efficient Engine Technology for Aircraft | Directs DOE to enter into a cooperative agreement with NASA (National Aeronautics and Space Administration) for the development of ultra-efficient engine technologies for aircraft. The goal is a 10% efficiency improvement and a 70% reduction of NOx during take off and landing. The agreement will also explore advanced concepts including hybrid fuel cells systems and alternative fuels in turbines. EPAct 2005 authorizes $50 million per year for 2006-2010. |
| Section 759 Fuel Economy Incentive Requirements | Requires automobile manufacturers to label all dual-fuel (bi-fuel and flex-fuel) vehicles to inform owners that the vehicle can be operated on an alternative fuel. If any dual-fuel automobile is not labeled, it is ineligible to receive the fuel economy incentives included in Section 32906(a) and (b) of U.S. Code (http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=browse_usc&docid=Cite:+49USC32905) Title 49, Subtitle VI, Part C, Chapter 329. This requirement applies to dual-fuel automobiles manufactured on or after September 1, 2006. |
| Section 771 Fuel Economy Standards | Authorizes additional funding to support National Highway Traffic Safety Administration (NHTSA) work on fuel economy standards. EPAct 2005 authorizes $3.5 million each year 2006-2010. |
| Section 772 Extension of Maximum Increase for Alternative Fueled Vehicles | Modifies the incentives for dual-fuel AFVs by extending the current CAFE (corporate average fuel economy) credits for dual-fuel AFVs through 2010. It also authorized NHTSA to consider extending the incentives through 2014. |
| Section 773 Study of Reducing Use of Fuel for Automobiles | Directs NHTSA to study feasibility and effects of significantly reducing petroleum consumed by automobiles by model year 2014. The study will examine and make recommendations regarding the current CAFE requirements; ways automakers can contribute toward achieving significant reductions; potential impacts fuel cell vehicles can make toward petroleum reduction; and the effects petroleum reduction would have on gasoline supplies, the auto industry, motor vehicle safety, and air quality. The report is due to Congress in August 2006. |
| Section 774 Update Fuel Economy Test Procedures | Requires EPA to evaluate and/or adjust fuel economy test procedures to reflect real-world driving scenarios (higher speeds, faster acceleration, temperature variation, use of air conditioning, etc.). |
| Section 782 Federal and State Procurement of Fuel Cell Vehicles and Hydrogen Energy Systems | Requires federal fleets to begin leasing or purchasing fuel cell vehicles and hydrogen energy systems no later than January 1, 2010. DOE shall provide incremental cost funding and may provide exemptions if the vehicles are not available or appropriate for fleet needs. EPAct 2005 authorizes $15 million 2008, $25 million in 2009, $65 million in 2010, and such sums as are necessary each year in 2011-2015. |
| Section 791-797 Diesel Emission Reductions | Establishes a program to make grants and loans available to state and local government agencies and non-profit organizations for reducing emissions from diesel engines. The program focuses on replacing/retrofitting engines in non-attainment areas and requires that at least 50% of federal program funds be used toward public fleets. EPA or California Air Resources Board certified or verified technologies qualify. Natural gas vehicle repowers and replacements are also eligible. EPAct 2005 authorizes $200 million per year for 2006-2010. |
| Section 1341 Alternative Motor Vehicle Credit | Provides a tax credit to purchasers of new dedicated AFVs. The tax credit equals 50% of the incremental cost of the vehicle, plus an additional 30% of the incremental cost for vehicles with near-zero emissions (SULEV or Bin 2 for vehicles <14,001 lb GVWR). The credit is available on the purchase of light-, medium-, and heavy-duty vehicles and fuel-cell, hybrid, and dedicated natural gas, propane, and hydrogen vehicles. Light-duty lean burn diesel vehicles are also eligible.
For non-tax-paying entities, the credit can be passed back to the vehicle seller. The tax credit can be applied to vehicle purchases made after December 31, 2005. It expires December 31, 2010. This legislation replaces the Clean Fuel Tax Credit, which expires December 31, 2005. |
| Section 1341 Fuel Cell Motor Vehicle Credit | Provides a base tax credit of $8,000 for the purchase of light-duty fuel cell vehicles (< 8,501 lb GVWR). The $8,000 credit is valid until December 31, 2009. After that, the credit is $4,000. To qualify, the vehicles must meet at least Bin 5 Tier II emission levels. Base tax credits are also available for medium- and heavy-duty fuel cell vehicles. The Internal Revenue Service will determine the credit amount based on a sliding scale by vehicle weight. The credit is available until December 31, 2014. For tax-exempt entities, the credit can be passed back to the vehicle seller. |
| Section 1341 Hybrid Motor Vehicle Credit | Provides a fuel economy and conservation credit for light-duty hybrid vehicles and trucks (<8,501 lb GVWR). The fuel economy credit is based on the following efficiency gains over model year 2002 baselines.
The conservation credit increases the fuel economy credit based on the following lifetime fuel savings:
Heavy-duty hybrid vehicles are subject to the following incremental cost limitations:
The credit will phase out after a manufacturer has sold 60,000 qualified vehicles. The phase out period begins with the second calendar quarter following the calendar quarter, which includes the first date the number of qualified hybrid vehicles manufactured by the manufacturer is sold, is at least 60,000. |
| Section 1342 Alternative Fuel Infrastructure Tax Credit | Provides a tax credit equal to 30% of the cost alternative refueling property, up to $30,000 for business property. Qualifying alternative fuels are natural gas, propane, hydrogen, E85, or biodiesel blends of B20 or more. Buyers of residential refueling equipment can receive a tax credit for $1,000. For non-tax-paying entities, the credit can be passed back to the equipment seller. The credit is effective on purchases put into service after December 31, 2005. It expires December 31, 2009 (hydrogen purchases expire in 2014). This legislation replaces the Tax Deduction Timeline for the refueling property tax deduction extended by the Working Families Tax Relief Act of 2004. |
| Section 1344 Biodiesel Excise Tax |
Extends the tax credit for biodiesel producers established in the American Jobs Creation Act of 2004 (Public Law 108-357) through 2008. The tax credit is $.50 per gallon of waste-grease biodiesel and $1.00 for agribiodiesel. If the fuel is used in a mixture, the credit is 1 cent per percentage point of agribiodiesel used or 1/2 cent per percentage point of waste-grease biodiesel. |
| Section 1345 Small Agribiodiesel Producer Credit |
Provides a $.10 tax credit for each gallon of biodiesel produced by small producers (i.e. production capacity of less than 60 million gallons annually). This tax credit is capped after the first 15 million gallons produced annually. |
| Section 1346 Renewable Diesel Tax Credit |
Amends the biodiesel tax credits to include renewable diesel fuel, which is derived from biomass by a thermal depolymerization process. The credit is $1 per gallon of renewable diesel. To qualify, the fuel must meet ASTM D975 or D396. |
| Section 1347 Small Ethanol Producer Credit |
Changes the definition of a "small ethanol producer" to a production capacity of up to 60 million gallons (instead of 30 million gallons). |
| Section 1348 Clean Fuel Tax Deduction |
Revises the sunset date of the clean fuel vehicle and refueling property tax deductions (Section 179A) to December 31, 2005. This incentive was initially made available to business or personal taxpayers under EPAct 1992, Public Law-102-486, Title XIX-Revenue Provisions, Section 179A. Under Section 179A, the Clean Fuel Tax Deductions were scheduled to expire on December 31, 2004. The Working Families Tax Relief Act of 2005 had extended the tax deduction through December 31, 2006. |
| Section 1823 Alternative Fuels Report Hythane and Biodiesel |
Directs DOE to report on the potential for hythane and biodiesel to become large-scale sustainable alternative fuels. The report will include assessments of the environmental and energy security benefits of biodiesel and activities necessary to make hythane a competitive transportation fuel. DOE may issue grants to universities or colleges to assist in the report. The report is due to Congress in August 2006. |
| Section 1825 Fuel Cell and Hydrogen Technology Study |
Directs DOE enter into contract with the National Academy of Sciences and National Research Council to carry out a study that provides a budget roadmap for fuel cell technologies and the transition from petroleum to hydrogen in a significant percentage of vehicles sold by 2020. |
| Section 1831 Review of EPAct of 1992 |
Requires DOE to submit a report to Congress 180 days after EPAct 2005 was enacted. The report must examine and discuss the number of AFVs acquired by covered fleets, the amount of alternative fuel used in AFVs acquired by fleets covered by EPAct 1992, the amount of petroleum displaced by covered fleets, the cost of compliance with EPAct, obstacles preventing compliance with EPAct and the use of alternative fuels, and projected impacts of the EPAct 2005. |