SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Clean Fuels and Vehicles Act of 
2007''.

SEC. 2. FUEL WITH LOW LIFECYCLE GREENHOUSE GAS EMISSIONS; GREENHOUSE 
              GAS EMISSION REDUCTIONS.

    Title II of the Clean Air Act (42 U.S.C. 7581 et seq.) is amended 
by adding at the end the following:

``PART D--FUEL WITH LOW LIFECYCLE GREENHOUSE GAS EMISSIONS; GREENHOUSE 
                        GAS EMISSION REDUCTIONS

``SEC. 251. DEFINITIONS.

    ``In this part:
            ``(1) Greenhouse gas.--The term `greenhouse gas' means--
                    ``(A) carbon dioxide;
                    ``(B) methane;
                    ``(C) nitrous oxide;
                    ``(D) hydrofluorocarbons;
                    ``(E) perfluorocarbons; and
                    ``(F) sulfur hexafluoride.
            ``(2) Lifecycle greenhouse gas emissions.--The term 
        `lifecycle greenhouse gas emissions' means the aggregate 
        quantity of greenhouse gases emitted per unit of fuel from 
        production to use (including feedstock production or extraction 
        and distribution).
            ``(3) Major oil company.--The term `major oil company' has 
        the meaning given the term in section 105(b) of the Energy 
        Policy and Conservation Act (42 U.S.C. 6213(b)).
            ``(4) Motor vehicle.--The term `motor vehicle' has the 
        meaning given the term in section 216.

``SEC. 252. GREENHOUSE GAS EMISSION REDUCTIONS FROM FUELS AVAILABLE FOR 
              MOTOR VEHICLES.

    ``(a) Determination Process; Fuel Emissions Baseline.--
            ``(1) In general.--Not later than January 1, 2010, the 
        Administrator shall, by regulation--
                    ``(A) establish a determination process for use in 
                determining the lifecycle greenhouse gas emissions of a 
                fuel; and
                    ``(B) based on the aggregate quantity and variety 
                of fuels available for motor vehicles used in the 
                United States during calendar year 2007, determine the 
                average quantity of lifecycle greenhouse gas emissions 
                per unit of energy delivered to a motor vehicle 
                (referred to in this section as the `fuel emissions 
                baseline').
            ``(2) Considerations.--For purposes of determining the 
        lifecycle greenhouse gas emissions of a fuel under paragraph 
        (1), the Administrator shall consider--
                    ``(A) greenhouse gas emissions resulting from--
                            ``(i) production, extraction, distribution, 
                        transportation, and end use of the fuel;
                            ``(ii) issues relating to the end use 
                        efficiency of the fuel;
                            ``(iii) changes in land use and land cover 
                        resulting from an activity described in clause 
                        (i) with respect to the fuel; and
                            ``(iv) net climate impacts affecting the 
                        energy and agricultural sectors resulting from 
                        an activity described in clause (i) with 
                        respect to the fuel; and
                    ``(B) any other appropriate matters, as determined 
                by the Administrator.
            ``(3) Requirements.--The Administrator shall include in 
        regulations promulgated to carry out paragraph (1) procedures 
        by which the Administrator shall--
                    ``(A) determine the lifecycle greenhouse gas 
                emissions of a fuel and the fuel emissions baseline;
                    ``(B) make each determination described in 
                subparagraph (A), and information used in making the 
                determinations, available to consumers;
                    ``(C) label fuels with low lifecycle greenhouse gas 
                emissions; and
                    ``(D) provide information about adverse impacts of 
                the fuel on--
                            ``(i) land use and land cover;
                            ``(ii) water, soil, and air quality; and
                            ``(iii) public health.
    ``(b) Subsequent Average Lifecycle Greenhouse Gas Emissions.--Not 
later than June 1, 2013, and annually thereafter, based on the 
aggregate quantity and variety of fuel available for motor vehicles 
used in the United States during the preceding calendar year, the 
Administrator shall determine, in accordance with the regulations 
promulgated under subsection (a), the average quantity of lifecycle 
greenhouse gas emissions per unit of energy delivered to a motor 
vehicle through the use of a unit of fuel for motor vehicles for the 
preceding calendar year.
    ``(c) Required Reductions in Lifecycle Greenhouse Gas Emissions.--
            ``(1) Regulations.--The Administrator shall promulgate 
        regulations to establish a credit trading program to address 
        the lifecycle greenhouse gas emissions from fuels available for 
        use in motor vehicles.
            ``(2) Required emission reductions.--The Administrator 
        shall, by regulation, require each major oil company, refiner, 
        or fuel importer that produces, sells, or introduces gasoline 
        or other fuels available for use in motor vehicles into 
        commerce in the United States to reduce the average lifecycle 
        greenhouse gas emissions per unit of energy delivered to a 
        motor vehicle through fuel to a level that is--
                    ``(A) for calendar year 2015, 3 percent below the 
                fuel emissions baseline; and
                    ``(B) not later than every fifth calendar year 
                thereafter, 3 percent below the average quantity of 
                lifecycle greenhouse gas emissions per unit of energy 
                delivered to a vehicle allowed pursuant to this section 
                during the required fuel emissions level for the 
                preceding calendar year, as determined by the 
                Administrator under subsection (b).
            ``(3) Use of credits.--
                    ``(A) In general.--For the purpose of complying 
                with the required reductions in lifecycle greenhouse 
                gas emissions under this section, each major oil 
                company, fuel refiner, or fuel importer shall 
                demonstrate, on an annual basis, that the fuel mix 
                provided to the market by the company, refiner, or 
                importer meets the lifecycle greenhouse gas emission 
                level specified in subparagraphs (A) and (B) of 
                paragraph (2), including if necessary, by using credits 
                previously banked or purchased.
                    ``(B) Credits for additional reductions.--The 
                regulations promulgated to carry out this section shall 
                permit a provider of a fuel that achieves a greater 
                reduction in lifecycle greenhouse gas emissions than is 
                required under subparagraph (A) or (B) of paragraph (2) 
                for a particular compliance period to generate credits, 
                based on--
                            ``(i) the quantity of fuel provided; and
                            ``(ii) the difference between--
                                    ``(I) the greater reduction in 
                                lifecycle greenhouse gas emissions of 
                                the fuel under subparagraph (A) or (B) 
                                of paragraph (2); and
                                    ``(II) the minimum required 
                                reduction in lifecycle greenhouse gas 
                                emissions of the fuel under that 
                                subparagraph.
    ``(d) Statement of Congressional Intent.--It is the intent of 
Congress that, through implementation of this section--
            ``(1) an incentive will be created for the use, in lieu of 
        gasoline, of fuels having lower lifecycle greenhouse gas 
        emissions; and
            ``(2) fuels with the lowest lifecycle greenhouse gas 
        emissions will continue over time--
                    ``(A) to be improved;
                    ``(B) to become widely-available and competitive in 
                the marketplace; and
                    ``(C) to contribute to an overall reduction in 
                greenhouse gas emissions.

``SEC. 253. GREENHOUSE GAS EMISSION REDUCTIONS FROM AUTOMOBILES.

    ``(a) Vehicle Emissions Baseline.--Not later than January 1, 2009, 
based on the aggregate quantity and variety of new automobiles sold in 
the United States during model year 2002 and the average greenhouse gas 
emissions from those new automobiles, the Administrator shall determine 
the average quantity of greenhouse gas emissions per vehicle mile 
(referred to in this section as the `new vehicle emissions baseline').
    ``(b) Subsequent Average Emissions From New Automobiles.--Not later 
than June 1, 2015, and annually thereafter, based on the aggregate 
quantity and variety of new automobiles sold in the United States 
during the preceding model year and the average greenhouse gas 
emissions from those new automobiles during the preceding model year, 
the Administrator shall determine the average quantity of greenhouse 
gas emissions per vehicle mile for the model year.
    ``(c) Required Reductions in Greenhouse Gas Emissions From 
Automobiles.--
            ``(1) In general.--The Administrator shall, by regulation, 
        require each manufacturer of automobiles for sale in the United 
        States to reduce the average quantity of greenhouse gas 
        emissions per vehicle mile of the aggregate quantity and 
        variety of automobiles manufactured by the manufacturer to a 
        level that is--
                    ``(A) for automobiles manufactured in model year 
                2016, 30 percent less than the new vehicle emissions 
                baseline; and
                    ``(B) not later than every fifth model year 
                thereafter, such percent as shall be specified by the 
                Administrator that is less than the average quantity of 
                greenhouse gas emissions per vehicle mile required for 
                the model year preceding that fifth model year, as 
                determined by the Administrator under subsection 
                (b).''.

SEC. 3. OPTIMIZED DUAL FUELED VEHICLES.

    (a) Optimized Dual Fueled Automobiles.--Section 32901(a) of title 
49, United States Code, is amended--
            (1) by striking paragraph (2) and inserting the following:
            ``(2) `alternative fueled automobile' means an automobile 
        that is--
                    ``(A) a dedicated automobile;
                    ``(B) a dual fueled automobile; or
                    ``(C) an optimized dual fueled automobile.''; and
            (2) by adding at the end the following:
            ``(17) `optimized dual fueled automobile' means an 
        automobile that--
                    ``(A) is capable of operating on alternative fuel 
                and on gasoline or diesel fuel;
                    ``(B) can satisfactorily operate throughout a 
                Federal testing procedure exclusively on alternative 
                fuel, when fueled with the maximum alternative fuel 
                capacity, as determined by the Administrator of the 
                Environmental Protection Agency; and
                    ``(C) when operated on alternative fuel, achieves 
                an average fuel economy that is not less than 20 
                percent greater, on a gallon of gasoline-equivalent 
                energy basis, than the fuel economy of the same 
                automobile operated on gasoline or diesel fuel.''.
    (b) Fuel Economy Calculation for Optimized Dual Fuel Automobiles.--
Section 32905 of title 49, United States Code, is amended--
            (1) in subsection (b)--
                    (A) by redesignating paragraphs (1) and (2) as 
                subparagraphs (A) and (B), respectively, and indenting 
                the subparagraphs appropriately;
                    (B) by striking ``title, for any'' and inserting 
                ``title--
            ``(1) for any'';
                    (C) in paragraph (1)(B) (as designated and 
                redesignated by subparagraphs (A) and (B)), by striking 
                ``fuel.'' and inserting ``fuel; and''; and
                    (D) by adding at the end the following:
            ``(2) for any model of dual fueled automobile manufactured 
        by a manufacturer in any of model years 2011 through 2015, the 
        Administrator of the Environmental Protection Agency shall 
        measure the fuel economy for that model by dividing 1.0 by the 
        sum obtained by adding--
                    ``(A) for optimized dual fueled automobiles, the 
                sum obtained by adding--
                            ``(i) .5 divided by the fuel economy 
                        measured under section 32904(c), when operating 
                        the model on gasoline and diesel fuel; and
                            ``(ii) .5 divided by the fuel economy 
                        measured under subsection (a), when operating 
                        the model on alternative fuel; and
                    ``(B) for dual fueled automobiles other than 
                optimized dual fueled automobiles, values that reflect 
                the actual use of gasoline and diesel fuel relative to 
                alternative fuel in the models based on a determination 
                made by the Administrator, taking into account 
                alternative fuel sales and total number of models of 
                dual fueled vehicles other than optimized dual fueled 
                automobiles.''; and
            (2) by striking subsection (f).
    (c) Year Modification.--Section 32906(a) of title 49, United States 
Code, is amended--
            (1) in paragraph (1)--
                    (A) by striking ``(1)(A) For'' and inserting ``(1) 
                For'';
                    (B) by striking ``2010'' and inserting ``2015''; 
                and
                    (C) by striking subparagraph (B); and
            (2) in paragraph (2), by striking
        ``described--'' and all that follows through subparagraph (B) 
        and inserting ``described in paragraph (1) is more than 1.2 
        miles per gallon, the limitation in that paragraph shall 
        apply.''.
    (d) Increasing Consumer Awareness of Alternative Fuel Vehicles.--
Section 32908 of title 49, United States Code, is amended by adding at 
the end the following:
    ``(g) Increasing Consumer Awareness of Flexible Fuel Vehicles.--The 
Secretary of Transportation shall promulgate regulations that--
            ``(1) require each manufacturer that manufactures 
        alternative fuel vehicles that run on fuels with low lifecycle 
        greenhouse gas emissions to install a green-colored fuel cap on 
        each alternative fuel vehicle to distinguish the vehicle from 
        vehicles that do not use low lifecycle greenhouse gas-emitting 
        alternative fuels; and
            ``(2) prohibit a manufacturer from installing a green-
        colored fuel cap on an automobile manufactured by the 
        manufacturer that does not run on a low lifecycle greenhouse 
        gas-emitting alternative fuel.''.
Output: Clean Fuels and Vehicles Act of 2007 - Amends the Clean Air Act to require the Administrator of the Environmental Protection Agency (EPA) to: (1) establish a process for determining the lifecycle greenhouse gas (GHG) emissions of a fuel; and (2) determine the average quantity of lifecycle GHG emissions per unit of energy delivered to a motor vehicle, or the fuel emission baseline.

Requires the Administrator to include in regulations procedures by which the Administrator shall: (1) determine the lifecycle GHG emissions of a fuel and the fuel emissions baseline; (2) make such determinations and related information available to consumers; (3) label fuels with low lifecycle GHG emissions; and (4) provide information about adverse impacts of the fuel on land use and land cover, water, soil, and air quality, and public health.

Directs the Administrator to: (1) establish a credit trading program to address the lifecycle GHG emissions from fuels available for use in motor vehicles; and (2) require each major oil company, refiner, or fuel importer that produces or sells fuels available for use in motor vehicles to reduce the average lifecycle GHG emissions per unit of energy delivered to a motor vehicle through fuel to specified levels.

Permits a provider of a fuel that achieves a greater than required reduction in lifecycle GHG emissions to generate credits.

Directs the Administrator to: (1) determine the average quantity of GHG emissions per mile for new vehicles; and (2) require each automobile manufacturer to reduce the average quantity of GHG emissions per vehicle mile of the aggregate quantity and variety of automobiles to specified levels.

Redefines the term "alternative fueled automobile" to mean an automobile that is a dedicated, dual fueled, or optimized dual fueled automobile.

Specifies a formula the Administrator shall use to measure the fuel economy for any model of dual fueled automobile manufactured in model years 2001-2015.

Extends through model years up to 2015 the maximum increase in average fuel economy for a manufacturer attributable to dual fueled automobiles of 1.2 miles a gallon.

Requires the Secretary of Transportation to: (1) require each manufacturer of alternative fuel vehicles that run on fuels with low lifecycle GHG emissions to install a green fuel cap on such vehicles; and (2) prohibit a manufacturer from installing a green cap on an automobile that does not run on such fuel.