Farmer First Fuel Incentives Act
- Bill Number
- H.R. 2867
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-04-10: Referred to the House Committee on Ways and Means.
- Last Updated
- 2025-12-05T21:49:59Z
AI-Generated Summary
Summary of H.R. 2867: Farmer First Fuel Incentives Act
Purpose
This bill aims to support U.S. farmers and domestic clean fuel production by modifying tax incentives for low-emission transportation fuels. It promotes the use of American-grown or produced feedstocks (raw materials like crops or biomass used to make fuel), adjusts how emissions are calculated to favor domestic sources, extends the availability of tax credits, and refines measurement standards for greater accuracy.
Key Provisions
- Prohibition on Foreign Feedstocks (Section 2): Requires that clean fuels eligible for the tax credit must be made from feedstocks produced or grown in the United States. This applies to transportation fuel sold after December 31, 2024.
- Exclusion of Indirect Land Use Changes in Emissions Calculations (Section 3): Lifecycle greenhouse gas emissions (total emissions from production to use) for tax credit eligibility must exclude emissions from indirect land use changes—such as potential deforestation or land conversion elsewhere caused by increased U.S. crop demand. The Treasury Secretary will set rules for this adjustment, consulting the Environmental Protection Agency (EPA) and U.S. Department of Agriculture (USDA). This takes effect for emissions rates published for tax years starting after December 31, 2025.
- Extension of the Clean Fuel Production Credit (Section 4): Extends the tax credit for producing clean fuels from December 31, 2027, to December 31, 2034, giving producers more time to benefit from the incentive.
- Improved Precision in Emissions Factoring (Section 5): Changes the rounding of emissions factors (multipliers used to estimate fuel emissions) from 0.1 to 0.01 gallons of gasoline equivalent, allowing for more precise calculations. This applies to fuel produced after December 31, 2024.
Significant Changes to Existing Law
The bill amends Section 45Z of the Internal Revenue Code of 1986, which provides tax credits for clean fuel production based on emissions reductions:
- Adds a new requirement that only U.S.-sourced feedstocks qualify, shifting from the previous allowance of foreign sources.
- Introduces an exclusion for indirect land use changes in emissions assessments, potentially lowering calculated emissions for U.S. domestic fuels and making them more eligible for credits.
- Prolongs the credit's duration by seven years beyond the original sunset date.
- Enhances accuracy in emissions measurements by using finer rounding, which could slightly alter credit amounts for qualifying fuels.
Potential Impacts
- On Government Agencies: The IRS will administer expanded and extended tax credits, increasing oversight of claims. The Treasury, EPA, and USDA will collaborate on new emissions rules, potentially requiring updated guidance and data collection.
- On Citizens: U.S. farmers and rural communities may see boosted income from higher demand for domestic crops as feedstocks. Consumers could benefit from more stable or increased domestic clean fuel supplies, though fuel prices might be indirectly affected.
- On International Relations: Limits on foreign feedstocks could reduce U.S. imports of materials like soybeans or waste oils, straining trade with countries like Brazil or Argentina. This may encourage domestic production but could lead to trade disputes if seen as protectionist.
Main Stakeholders Affected
- U.S. Farmers and Agricultural Producers: Primary beneficiaries, as the bill prioritizes domestic feedstocks, potentially increasing demand for crops like corn, soybeans, and other biomass.
- Clean Fuel Producers (e.g., Biofuel Companies): Gain from the credit extension and adjusted emissions rules, but must source U.S. materials, raising costs if imports were cheaper.
- Taxpayers and Energy Consumers: Indirectly impacted through tax credit claims that reduce federal revenue (potentially increasing the deficit) and influence clean fuel availability.
- Foreign Suppliers: Negatively affected by the ban on using their feedstocks for U.S. tax credits, possibly shifting global markets.
- Environmental and Regulatory Groups: Involved in shaping emissions adjustments; the exclusion of indirect land use changes may spark debate on true environmental benefits.
Notable Legal, Constitutional, or Political Implications
- Legal: The changes are straightforward amendments to tax law, but the emissions exclusion relies on agency rulemaking, which could face challenges if not properly consulted or if deemed arbitrary. No direct constitutional issues, as it involves congressional taxing power.
- Constitutional: Relies on Congress's authority under Article I to regulate taxes and commerce, promoting domestic industry without overt trade barriers.
- Political: Positions as pro-farmer legislation, appealing to agricultural states, but may draw criticism for environmental leniency (by excluding indirect emissions) or protectionism. Could influence broader energy policy debates on balancing climate goals with economic nationalism.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (3)
Rep. Kaptur, Marcy [D-OH-9], Rep. Budzinski, Nikki [D-IL-13], Rep. Costa, Jim [D-CA-21]
Recent Actions
- 2025-04-10: Referred to the House Committee on Ways and Means.
- 2025-04-10: Introduced in House
- 2025-04-10: Introduced in House
Bill Versions
- Farmer First Fuel Incentives Act — issued 2025-04-10 — PDF (4 pages)