US Codex
Bill
Notes

Title II — Clean fuel tax credits

S. 1288 · 116th Congress · May 2, 2019 · Lineage

II Clean fuel tax credits

Sec. 201 Clean fuel production credit

(a)
In general— Subpart D of part IV of subchapter A of chapter 1, as amended by section 101, is amended by adding at the end the following new section:

“45U. Clean fuel production credit

“(a) Amount of credit

“(1) In general—For purposes of section 38, the clean fuel production credit for any taxable year is an amount equal to the product of—

“(A) $1.00 per gallon with respect to any transportation fuel which is—

“(i) produced by the taxpayer at a qualified facility, and

“(ii) sold or used by the taxpayer in a manner described in paragraph (2), and

“(B) the emissions factor for such fuel (as determined under subsection (b)(2)).

“(2) Sale or use—For purposes of paragraph (1)(A)(ii), the transportation fuel is sold or used in a manner described in this paragraph if such fuel is—

“(A) sold by the taxpayer to an unrelated person—

“(i) for use by such person in the production of a fuel mixture,

“(ii) for use by such person in a trade or business, or

“(iii) who sells such fuel at retail to another person and places such fuel in the fuel tank of such other person, or

“(B) used or sold by the taxpayer for any purpose described in subparagraph (A).

“(3) Rounding—If any amount determined under paragraph (1) is not a multiple of 0.1 cent, such amount shall be rounded to the nearest multiple of 0.1 cent.

“(b) Emissions factors

“(1) Emissions factor

“(A) In general—The emissions factor of a transportation fuel shall be an amount equal to the quotient of—

“(i) an amount (not less than zero) equal to—

“(I) 75, minus

“(II) the emissions rate for such fuel, divided by

“(ii) 75.

“(B) Establishment of safe harbor emissions rate—The Secretary, in consultation with the Administrator of the Environmental Protection Agency, shall establish the safe harbor emissions rate for similar types and categories of transportation fuels based on the amount of lifecycle greenhouse gas emissions (as described in section 211(o)(1)(H) of the Clean Air Act (42 U.S.C. 7545(o)(1)(H)), as in effect on the date of the enactment of this section) for such fuels, expressed as kilograms of CO2e per mmBTU, which a taxpayer may elect to use for purposes of this section.

“(C) Rounding of safe harbor emissions rate—The Secretary may round the safe harbor emissions rates under subparagraph (B) to the nearest multiple of 7.50 kilograms of CO2e per mmBTU, except that, in the case of an emissions rate that is less than 3.75 kilograms of CO2e per mmBTU, the Secretary may round such rate to zero.

“(D) Provisional safe harbor emissions rate

“(i) In general—In the case of any transportation fuel for which a safe harbor emissions rate has not been established by the Secretary, a taxpayer producing such fuel may file a petition with the Secretary for determination of the safe harbor emissions rate with respect to such fuel.

“(ii) Establishment of provisional and final safe harbor emissions rate—In the case of a transportation fuel for which a petition described in clause (i) has been filed, the Secretary, in consultation with the Administrator of the Environmental Protection Agency, shall—

“(I) not later than 12 months after the date on which the petition was filed, provide a provisional safe harbor emissions rate for such fuel which a taxpayer may use for purposes of this section, and

“(II) not later than 24 months after the date on which the petition was filed, establish the safe harbor emissions rate for such fuel.

“(E) Rounding—If any amount determined under subparagraph (A) is not a multiple of 0.1, such amount shall be rounded to the nearest multiple of 0.1.

“(2) Publishing safe harbor emissions rate—The Secretary, in consultation with the Administrator of the Environmental Protection Agency, shall publish a table that sets forth the safe harbor emissions rate (as established pursuant to paragraph (1)) for similar types and categories of transportation fuels.

“(c) Inflation adjustment

“(1) In general—In the case of calendar years beginning after 2021, the $1.00 amount in subsection (a)(1)(A) shall be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale or use of the transportation fuel occurs. If any amount as increased under the preceding sentence is not a multiple of 1 cent, such amount shall be rounded to the nearest multiple of 1 cent.

“(2) Inflation adjustment factor—For purposes of paragraph (1), the inflation adjustment factor shall be the inflation adjustment factor determined and published by the Secretary pursuant to section 45T(d), determined by substituting “calendar year 2020” for “calendar year 1992” in paragraph (3) thereof.

“(d) Credit phase-Out

“(1) In general—If the Secretary, in consultation with the Secretary of Energy and the Administrator of the Environmental Protection Agency, determines that the greenhouse gas emissions from transportation fuel produced and sold at retail annually in the United States are equal to or less than 50 percent of the greenhouse gas emissions from transportation fuel produced and sold at retail in the United States during calendar year 2019, the amount of the clean fuel production credit under this section for any qualified facility placed in service during a calendar year described in paragraph (2) shall be equal to the product of—

“(A) the amount of the credit determined under subsection (a) without regard to this subsection, multiplied by

“(B) the phase-out percentage under paragraph (2).

“(2) Phase-out percentage—The phase-out percentage under this paragraph is equal to—

“(A) for a facility placed in service during the first calendar year following the calendar year in which the determination described in paragraph (1) is made, 75 percent,

“(B) for a facility placed in service during the second calendar year following such determination year, 50 percent,

“(C) for a facility placed in service during the third calendar year following such determination year, 25 percent, and

“(D) for a facility placed in service during any calendar year subsequent to the year described in subparagraph (C), 0 percent.

“(e) Definitions—In this section:

“(1) mmBTU—The term mmBTU means 1,000,000 British thermal units.

“(2) CO2e—The term CO2e means, with respect to any greenhouse gas, the equivalent carbon dioxide (as determined based on relative global warming potential).

“(3) Greenhouse gas—The term greenhouse gas has the same meaning given that term under section 211(o)(1)(G) of the Clean Air Act (42 U.S.C. 7545(o)(1)(G)), as in effect on the date of the enactment of this section.

“(4) Qualified facility

“(A) In general—Subject to subparagraphs (B) and (C), the term qualified facility means a facility used for the production of transportation fuels.

“(B) 10-year production credit—For purposes of this section, a facility shall only qualify as a qualified facility—

“(i) in the case of a facility that is originally placed in service after December 31, 2020, for the 10-year period beginning on the date such facility is placed in service, or

“(ii) in the case of a facility that is originally placed in service before January 1, 2021, for the 10-year period beginning on January 1, 2021.

“(5) Transportation fuel—The term transportation fuel means a fuel which is suitable for use as a fuel in a highway vehicle or aircraft.

“(f) Final guidance—Not later than January 1, 2020, the Secretary, in consultation with the Administrator of the Environmental Protection Agency, shall issue final guidance regarding implementation of this section, including calculation of emissions factors for transportation fuel, the table described in subsection (b)(2), and the determination of clean fuel production credits under this section.

“(g) Special rules

“(1) Only registered production in the United States taken into account

“(A) In general—No clean fuel production credit shall be determined under subsection (a) with respect to any transportation fuel unless—

“(i) the taxpayer is registered as a producer of clean fuel under section 4101 at the time of production, and

“(ii) such fuel is produced in the United States.

“(B) United States—For purposes of this paragraph, the term “United States” includes any possession of the United States.

“(2) Production attributable to the taxpayer—In the case of a facility in which more than 1 person has an ownership interest, except to the extent provided in regulations prescribed by the Secretary, production from the facility shall be allocated among such persons in proportion to their respective ownership interests in the gross sales from such facility.

“(3) Related persons—Persons shall be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section 52(b). In the case of a corporation which is a member of an affiliated group of corporations filing a consolidated return, such corporation shall be treated as selling fuel to an unrelated person if such fuel is sold to such a person by another member of such group.

“(4) Pass-thru in the case of estates and trusts—Under regulations prescribed by the Secretary, rules similar to the rules of subsection (d) of section 52 shall apply.

“(5) Allocation of credit to patrons of agricultural cooperative

“(A) Election to allocate

“(i) In general—In the case of an eligible cooperative organization, any portion of the credit determined under subsection (a) for the taxable year may, at the election of the organization, be apportioned among patrons of the organization on the basis of the amount of business done by the patrons during 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—The amount of the credit apportioned to any patrons under subparagraph (A)—

“(i) shall not be included in the amount determined under subsection (a) with respect to the organization for the taxable year, and

“(ii) shall be included in the amount determined under subsection (a) for the 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.

“(C) Special rules for decrease in credits for taxable year—If the amount of the credit of a cooperative organization determined under subsection (a) for a taxable year is less than the amount of such credit shown on the return of the cooperative 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,

“(D) Eligible cooperative defined—For purposes of this section the term eligible cooperative means a cooperative organization described in section 1381(a) which is owned more than 50 percent by agricultural producers or by entities owned by agricultural producers. For this purpose an entity owned by an agricultural producer is one that is more than 50 percent owned by agricultural producers.”

(b)
Conforming amendments—
(1)
Section 38(b), as amended by section 101, is amended—
(A)
in paragraph (32), by striking “plus” at the end,
(B)
in paragraph (33), by striking the period at the end and inserting “, plus”, and
(C)
by adding at the end the following new paragraph:

“(34) the clean fuel production credit determined under section 45U(a).”

(2)
The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by section 101, is amended by adding at the end the following new item:
(3)
Section 4101(a)(1) is amended by inserting “every person producing a fuel eligible for the clean fuel production credit (pursuant to section 45U),” after “section 6426(b)(4)(A)),”.
(c)
Effective date— The amendments made by this section shall apply to transportation fuel produced after December 31, 2020.

Sec. 202 Temporary extension of existing fuel and transportation incentives

(a)
Alternative motor vehicle credit for fuel cell motor vehicles—
(1)
In general— Section 30B(k) is amended—
(A)
by striking paragraph (1), and
(B)
by redesignating paragraphs (2) through (4) as paragraphs (1) through (3), respectively.
(2)
Phaseout— Section 30B is amended by adding at the end the following:

“(l) Credit phase-Out for new qualified fuel cell motor vehicles

“(1) In general—Following a determination by the Secretary under section 45U(d)(1) that the greenhouse gas emissions from transportation fuel produced and sold at retail annually in the United States are equal to or less than 50 percent of the greenhouse gas emissions from transportation fuel produced and sold at retail in the United States during calendar year 2019, the amount of the new qualified fuel cell motor vehicle credit under this section for any new qualified fuel cell motor vehicle purchased during a calendar year described in paragraph (2) shall be equal to the product of—

“(A) the amount of the credit determined under subsection (b) without regard to this subsection, multiplied by

“(B) the phase-out percentage under paragraph (2).

“(2) Phase-out percentage—The phase-out percentage under this paragraph is equal to—

“(A) for a vehicle purchased during the first calendar year following the calendar year in which the determination described in paragraph (1) is made, 75 percent,

“(B) for a vehicle purchased during the second calendar year following such determination year, 50 percent,

“(C) for a vehicle purchased during the third calendar year following such determination year, 25 percent, and

“(D) for a vehicle purchased during any calendar year subsequent to the year described in subparagraph (C), 0 percent.”

(3)
Effective date— The amendments made by this subsection shall apply to property purchased after December 31, 2017.
(b)
Alternative fuel vehicle refueling property credit—
(1)
In general— Paragraph (1) of section 30C(g) is amended by striking “December 31, 2017” and inserting “December 31, 2020”.
(2)
Effective date— The amendments made by this subsection shall apply to property placed in service after December 31, 2017.
(c)
New qualified plug-In electric drive motor vehicles—
(1)
2- and 3-wheeled plug-in electric vehicles—
(A)
In general— Clause (ii) of section 30D(g)(3)(E) is amended by striking “in the case of a vehicle that has 2 wheels, after December 31, 2014, and before January 1, 2018” and inserting “after December 31, 2014”.
(B)
Effective date— The amendments made by this paragraph shall apply to vehicles acquired after December 31, 2017.
(2)
Elimination on limitation on number of vehicles eligible for credit—
(A)
In general— Section 30D, as amended by paragraph (1), is amended—
(i)
by striking subsection (e), and
(ii)
by redesignating subsections (f) and (g) as subsections (e) and (f), respectively.
(B)
Conforming amendment— Paragraph (37) of section 1016(a) is amended by striking “section 30D(f)(1)” and inserting “section 30D(e)(1)”.
(C)
Effective date— The amendments made by this paragraph shall apply to vehicles sold after the date of the enactment of this Act.
(3)
Phaseout— Section 30D, as amended by paragraph (2), is amended by adding at the end the following:

“(g) Credit phase-Out for new qualified plug-In electric drive motor vehicles

“(1) In general—Following a determination by the Secretary under section 45U(d)(1) that the greenhouse gas emissions from transportation fuel produced and sold at retail annually in the United States are equal to or less than 50 percent of the greenhouse gas emissions from transportation fuel produced and sold at retail in the United States during calendar year 2019, the amount of the credit allowed under this section for any new qualified plug-in electric drive motor vehicle sold or qualified 2- or 3-wheeled plug-in electric vehicle acquired during a calendar year described in paragraph (2) shall be equal to the product of—

“(A) the amount of the credit determined under subsection (a) without regard to this subsection, multiplied by

“(B) the phase-out percentage under paragraph (2).

“(2) Phase-out percentage—The phase-out percentage under this paragraph is equal to—

“(A) for a vehicle sold or acquired during the first calendar year following the calendar year in which the determination described in paragraph (1) is made, 75 percent,

“(B) for a vehicle sold or acquired during the second calendar year following such determination year, 50 percent,

“(C) for a vehicle sold or acquired during the third calendar year following such determination year, 25 percent, and

“(D) for a vehicle sold or acquired during any calendar year subsequent to the year described in subparagraph (C), 0 percent.”

(d)
Second generation biofuel producer credit—
(1)
In general— Section 40(b)(6)(J)(i) is amended by striking “2018” and inserting “2021”.
(2)
Effective date— The amendments made by this subsection shall apply to qualified second generation biofuel production after December 31, 2017.
(e)
Biodiesel and renewable diesel used as fuel—
(1)
In general— Section 40A(g) is amended by striking “2017” and inserting “2020”.
(2)
Effective date— The amendments made by this subsection shall apply to fuel sold or used after December 31, 2017.
(f)
Credit for biodiesel and alternative fuel mixtures—
(1)
In general— Section 6426 is amended—
(A)
in subsection (c)(6), by striking “2017” and inserting “2020”,
(B)
in subsection (d)—
(i)
in paragraph (2)(D), by striking “liquefied”, and
(ii)
in paragraph (5), by striking “2017” and inserting “2020”, and
(C)
in subsection (e), by amending paragraph (3) to read as follows:

“(3) Termination—This subsection shall not apply to any sale or use for any period after—

“(A) in the case of any alternative fuel mixture sold or used by the taxpayer for the purposes described in subsection (d)(1), December 31, 2020,

“(B) in the case of any sale or use involving hydrogen that is not for the purposes described in subsection (d)(1), December 31, 2020, and

“(C) in the case of any sale or use not described in subparagraph (A) or (B), December 31, 2017.”

(2)
Clarification of rules regarding alternative fuel mixture credit— Paragraph (2) of section 6426(e) of the Internal Revenue Code of 1986 is amended by striking “mixture of alternative fuel” and inserting “mixture of alternative fuel (other than a fuel described in subparagraph (A), (C), or (F) of subsection (d)(2))”.
(3)
Effective date—
(A)
In general— The amendments made by paragraph (1) shall apply to fuel sold or used after December 31, 2017.
(B)
Clarification of rules regarding alternative fuel mixture credit— The amendment made by paragraph (2) shall apply to—
(i)
fuel sold or used on or after the date of the enactment of this Act, and
(ii)
fuel sold or used before such date of enactment, but only to the extent that credits and claims of credit under section 6426(e) of the Internal Revenue Code of 1986 with respect to such sale or use have not been paid or allowed as of such date.
(4)
Special rule for certain periods— Notwithstanding any other provision of law, in the case of—
(A)
any biodiesel mixture credit properly determined under section 6426(c) of the Internal Revenue Code of 1986 for the periods after December 31, 2017, and before the date of the enactment of this Act, and
(B)
any alternative fuel credit properly determined under section 6426(d) of such Code for such periods,
(g)
Biodiesel, biodiesel mixtures, and alternative fuels—
(1)
In general— Section 6427(e)(6) is amended—
(A)
in subparagraph (B), by striking “2017” and inserting “2020”, and
(B)
in subparagraph (C), by striking “2017” and inserting “2020”.
(2)
Effective date— The amendments made by this subsection shall apply to fuel sold or used after December 31, 2017.