Reid's proposal is designed to secure enough Democrat and Republican votes to pass, possibly before the Senate's August recess starts at the end of this week. Experts point out that it was scaled back, most notably removing all mention of climate change, which has proved contentious to lawmakers and voters alike. And it's not even a done deal that this new proposal will pass.

Still, NGVAmerica, an advocate group for natural gas vehicles, was heartened by the inclusion of pro-natural gas language for light-, medium- and heavy-duty vehicles that the organization said will encourage more more fleets to make the switch.

"Study after study shows that this country has tremendous natural gas resources," said Richard Kolodziej, executive director of NGVAmerica, in a statement following the release of Reid's draft summary of the proposed legislation. "Using natural gas as a transportation fuel increases energy security, creates jobs, provides cleaner air and reduces greenhouse gas emissions."

The proposed legislation would establish a Natural Gas Vehicle and Infrastructure Development Program within the Department of Energy.  In addition to the rebates, the bill would provide grants for infrastructure development and research and development projects and would establish a loan program to enhance domestic manufacturing of natural gas vehicles and components.

"We expect this to spur manufacturers to produce even more natural gas models," Kolodziej added.

The provisions could be a boon to the school bus CNG and propane industry. Blue Bird announced late last month that more than 1,000 of its propane-powered Type C conventional Vision school buses are currently being used by school districts nationwide. Several hundred of these school buses have been purchased in Texas, where the Railroad Commission of Texas has been a major supporter of propane for the last few years, spearheaded by Commissioner Michael L. Williams. A $860,000 Propane Education and Research Council grant in 2008 spurred many of these purchases as have part of the $30 million Texas Emissions Reduction Plan and fund from the State Energy Conservation Office.

While Blue Bird also announced that it is expecting to begin manufacturing of the propane-powered Type A Micro Bird this fall, Collins Bus Corporation, the largest producer of small school buses in North America, announced its propane NexBus received certification and is currently in production.

Los Angeles Unified has been one of the largest purchasers of both CNG and propane school buses over the last several years, including about 300 over the last year. Also last year, one of LAUSD's contractors, Student Transportation of America, completed the installation of a new propane fueling station at one of the bus yards used by the company.