Clean Fuels Vehicle Act of 2021
Bill: S.2267 | Sponsor: Sen. Klobuchar, Amy (D-MN)
Policy area: Taxation

Summary:
Clean Fuels Vehicle Act of 2021
This bill allows a new business-related tax credit through 2031 for the production of flexible fuel vehicles (i.e., motor vehicles engineered and designed to be operated on a petroleum fuel and on a methanol or ethanol fuel, or on any mixtures of such fuels). The amount of such credit in a taxable year is equal to the product of $200, and the number of vehicles produced and sold by the taxpayer to an unrelated person in the United States.
The bill also repeals limitations on manufacturing incentives for dual fuel automobiles and repeals the maximum fuel economy increase for alternative fuel automobiles.

To amend the Internal Revenue Code of 1986 to provide a tax credit for 
the production of flexible fuel vehicles, and to amend title 49, United 
     States Code, to restore certain flexible fuel vehicle credits.

    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 Fuels Vehicle Act of 2021''.

SEC. 2. FLEXIBLE FUEL VEHICLE PRODUCTION TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45U. FLEXIBLE FUEL VEHICLE PRODUCTION CREDIT.

    ``(a) In General.--For purposes of section 38, in the case of a 
manufacturer, the flexible fuel vehicle production credit for any 
taxable year shall be an amount equal to the product of--
            ``(1) $200, and
            ``(2) the number of qualified flexible fuel vehicles--
                    ``(A) produced by the taxpayer, and
                    ``(B) sold by the taxpayer to an unrelated person 
                in the United States during the taxable year.
    ``(b) Limitation.--The number of qualified flexible fuel vehicles 
taken into account for any taxable year shall not exceed 25 percent of 
the sum of--
            ``(1) the total number of light duty vehicles produced for 
        model years ending in such taxable year, plus
            ``(2) the total number of light duty trucks produced for 
        model years ending in such taxable year.
    ``(c) Qualified Flexible Fuel Vehicle.--For purposes of this 
section--
            ``(1) In general.--The term `qualified flexible fuel 
        vehicle' means a motor vehicle--
                    ``(A) which is engineered and designed to be 
                operated--
                            ``(i) on a petroleum fuel and on a methanol 
                        or ethanol fuel, or
                            ``(ii) on any mixture of the petroleum fuel 
                        and methanol or ethanol, and
                    ``(B) which meets the requirements for a flexible 
                fuel vehicle as are prescribed by the Administrator of 
                the Environmental Protection Agency for purposes of 
                title of the administration of title II of the Clean 
                Air Act (42 U.S.C. 7521 et seq.).
            ``(2) Motor vehicle.--The term `motor vehicle' means any 
        vehicle which is manufactured primarily for use on public 
        streets, roads, and highways (not including a vehicle operated 
        exclusively on a rail or rails) and which has at least 4 
        wheels.
    ``(d) Other Definitions and Rules.--
            ``(1) Manufacturer; other terms.--The terms `manufacturer', 
        `light duty vehicle', `light duty truck', and `model year' have 
        the meanings given such terms in regulations prescribed by the 
        Administrator of the Environmental Protection Agency for 
        purposes of the administration of title II of the Clean Air Act 
        (42 U.S.C. 7521 et seq.).
            ``(2) 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 a vehicle to an 
        unrelated person if such vehicle is sold to such a person by 
        another member of such group.
    ``(e) Termination.--This section shall not apply to any flexible 
fuel vehicle produced for any model year ending after 2031.''.
    (b) Part of General Business Credit.--Section 38(b) of such Code is 
amended by striking ``plus'' at the end of paragraph (32), by striking 
the period at the end of paragraph (33) and inserting ``, plus'', and 
by adding at the end the following new paragraph:
            ``(34) the flexible fuel vehicle production credit 
        determined under section 45U(a).''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following new item:

``Sec. 45U. Flexible fuel vehicle production credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to vehicles produced and sold after the date of the enactment of 
this Act, in taxable years ending after such date.

SEC. 3. RESTORATION OF CERTAIN FLEXIBLE FUEL VEHICLE CREDITS.

    (a) Restoration of Manufacturing Incentives for Dual Fueled 
Automobiles.--Section 32905(b) of title 49, United States Code, is 
amended, in the matter preceding paragraph (1), by striking ``in model 
years 1993 through 2019''.
    (b) Repeal of Maximum Fuel Economy Increase for Alternative Fuel 
Automobiles.--
            (1) In general.--Section 32906 of title 49, United States 
        Code, is repealed.
            (2) Clerical amendment.--The analysis for chapter 329 of 
        part C of subtitle VI of title 49, United States Code, is 
        amended by striking the item relating to section 32906.
    (c) Testing Procedures Under the Clean Air Act.--Section 206 of the 
Clean Air Act (42 U.S.C. 7525) is amended--
            (1) in subsection (h), by striking ``subsection (a) and (b) 
        of this section'' and inserting ``subsections (a) and (b)''; 
        and
            (2) by adding at the end the following:
    ``(i) Not later than 180 days after the date of enactment of this 
subsection, the Administrator shall review the regulations under 
subsections (a) and (b) relating to the testing of motor vehicles and 
motor vehicle engines to ensure such testing is in accordance with 
section 32905(b) of title 49, United States Code.''.
    (d) Conforming Amendments.--
            (1) Section 32901(c)(1) of title 49, United States Code, is 
        amended, in the first sentence, by striking ``under sections 
        32905 and 32906 of this title'' and inserting ``under section 
        32905''.
            (2) Section 32905 of title 49, United States Code, is 
        amended by striking subsection (g).
            (3) Section 32908(g)(3) of title 49, United States Code, is 
        amended by striking the second sentence.
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