II 

117TH CONGRESS 

1ST SESSION S. 2262 

To amend the Internal Revenue Code of 1986 to establish an income tax 

credit for the sale or blending of certain fuels containing ethanol. 

IN THE SENATE OF THE UNITED STATES 

JUNE 24, 2021 

Ms. KLOBUCHAR (for herself and Mr. THUNE) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to establish 

an income tax credit for the sale or blending of certain 

fuels containing ethanol. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Low Carbon Biofuel 

5 Credit Act’’. 

6 SEC. 2. CREDIT FOR SALE OR BLENDING OF ETHANOL 

7 FUELS. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 is amended by adding at the end the following new 

2 section: 

3 ‘‘SEC. 45U. CREDIT FOR SALE OR BLENDING OF ETHANOL 

4 FUELS. 

5 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

6 ethanol fuel credit determined under this section for any 

7 taxable year is an amount equal to— 

8 ‘‘(1) in the case of an applicable taxpayer which 

9 is described in subsection (b)(1)(A)— 

10 ‘‘(A) for each gallon of E15 blended by 

11 such taxpayer, 5 cents, and 

12 ‘‘(B) for each gallon of fuel blended by 

13 such taxpayer which contains more than 15 vol14 ume percent ethanol, 10 cents, and 

15 ‘‘(2) subject to subsection (c), in the case of an 

16 applicable taxpayer which is described in subsection 

17 (b)(1)(B)— 

18 ‘‘(A) for each gallon of E15 sold by such 

19 taxpayer, 5 cents, and 

20 ‘‘(B) for each gallon of fuel sold by such 

21 taxpayer which contains more than 15 volume 

22 percent ethanol, 10 cents. 

23 ‘‘(b) DEFINITIONS.—For purposes of this section— 

24 ‘‘(1) APPLICABLE TAXPAYER.—The term ‘appli25 cable taxpayer’ means— 


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1 ‘‘(A) an oxygenate blender (as defined in 

2 section 1090.80 of title 40, Code of Federal 

3 Regulations), and 

4 ‘‘(B) a retailer (as defined in paragraph 

5 (7) of section 101 of the Petroleum Marketing 

6 Practices Act (15 U.S.C. 2801)). 

7 ‘‘(2) E15.—The term ‘E15’ means gasoline 

8 that contains more than 13 and no more than 15 

9 volume percent ethanol. 

10 ‘‘(c) ELECTION.— 

11 ‘‘(1) IN GENERAL.— 

12 ‘‘(A) ELECTION BY OXYGENATE BLEND13 ER.—Subsection (a)(1) shall apply with respect 

14 to any gallon of fuel described in such sub15 section only if the applicable taxpayer described 

16 in subsection (b)(1)(A) elects to have such sub17 section apply with respect to such gallon of fuel. 

18 ‘‘(B) NOTIFICATION.—The applicable tax19 payer described in subparagraph (A) shall pro20 vide notice of their election with respect to any 

21 gallon of fuel described in such subparagraph to 

22 any applicable taxpayer described in subsection 

23 (b)(1)(B) to which such fuel is sold, with such 

24 notice to be provided on or before the date of 

25 such sale. 


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1 ‘‘(2) CREDIT FOR RETAILER AVAILABLE ONLY

2 IF NOT CLAIMED BY OXYGENATE BLENDER.—Sub3 section (a)(2) shall apply with respect to any gallon 

4 of fuel described in such subsection only if the appli5 cable taxpayer described in subsection (b)(1)(A) has 

6 not elected (pursuant to paragraph (1)) to apply 

7 subsection (a)(1) with respect to such gallon of fuel. 

8 ‘‘(d) REFUNDABLE CREDIT FOR SMALL RETAIL9 ERS.—For purposes of this title, in the case of a retailer 

10 with not greater than 5 retail locations at the close of the 

11 taxable year, the credit allowed under subsection (a)(2) 

12 for such taxable year shall be treated as a credit allowable 

13 under subpart C (and not allowable under this subpart) 

14 for such taxable year. 

15 ‘‘(e) TRANSFER OF CREDIT.— 

16 ‘‘(1) IN GENERAL.—Subject to such regulations 

17 or other guidance as the Secretary determines nec18 essary or appropriate, if, with respect to the credit 

19 allowed under subsection (a) for any taxable year, 

20 the applicable taxpayer elects the application of this 

21 subsection for such taxable year with respect to all 

22 (or any portion specified in such election) of such 

23 credit, the eligible entity specified in such election, 

24 and not the applicable taxpayer, shall be treated as 


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1 the taxpayer for purposes of this title with respect 

2 to such credit (or such portion thereof). 

3 ‘‘(2) ELIGIBLE ENTITY.—For purposes of this 

4 subsection, the term ‘eligible entity’ means any per5 son within the supply chain for fuel described in 

6 such section (a).’’. 

7 (b) CREDIT TO BE PART OF GENERAL BUSINESS

8 CREDIT.—Subsection (b) of section 38 of the Internal 

9 Revenue Code of 1986 is amended by striking ‘‘plus’’ at 

10 the end of paragraph (32), by striking the period at the 

11 end of paragraph (33) and inserting ‘‘, plus’’, and by add12 ing at the end the following new paragraph: 

13 ‘‘(34) the credit for sale or blending of ethanol 

14 fuels under section 45U to which subsection (d) of 

15 such section does not apply.’’. 

16 (c) CONFORMING AMENDMENT.—The table of sec17 tions for subpart D of part IV of subchapter A of chapter 

18 1 of the Internal Revenue Code of 1986 is amended by 

19 adding at the end the following new item: 

‘‘Sec. 45U. Credit for sale or blending of ethanol fuels.’’. 

20 (d) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to fuel blended or sold after De22 cember 31, 2021. 

Æ 


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