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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.