Restoring Fuel Market Freedom Act of 2025

Bill Number

H.R. 311

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-01-09: Referred to the House Committee on Ways and Means.

Last Updated

2026-04-28T16:31:18Z

AI-Generated Summary

Purpose

The "Restoring Fuel Market Freedom Act of 2025" (H.R. 311) aims to eliminate several tax credits and related provisions in the Internal Revenue Code of 1986 that incentivize the production and use of alternative and clean fuels, such as alcohol-based fuels, biodiesel, sustainable aviation fuel, and clean transportation fuels. The goal is to reduce federal subsidies for these fuels and promote a freer market for traditional energy sources.

Key Provisions

• Repeal of Alcohol Fuels Credit (Section 2): Eliminates Section 40, which provided tax credits for alcohol fuels like ethanol. Includes conforming changes to related code sections (e.g., Sections 25C, 38, 87) to remove references and adjust definitions. Applies to fuels produced after enactment.
• Repeal of Biodiesel Fuels Credit (Section 3): Removes Section 40A, covering biodiesel production credits. Makes adjustments to Sections 25C, 30C, 38, and others. Applies to fuels sold or used after enactment.
• Repeal of Sustainable Aviation Fuel Credit (Section 4): Strikes Section 40B, which offered credits for low-emission aviation fuels. Updates Sections 38, 87, 56, and 6426 accordingly. Applies to fuel sold or used after enactment.
• Repeal of Clean Fuel Production Credit (Section 5): Deletes Section 45Z, a credit for producing clean transportation fuels with low greenhouse gas emissions. Amends Sections 6417 and 6418, and repeals a related provision in Public Law 117-169. Applies to fuels produced after enactment.
• Repeal of Alcohol Fuel, Biodiesel, and Alternative Fuel Mixtures Credit (Section 6): Repeals Section 6426, which allowed credits for mixing these fuels with gasoline or diesel. Includes changes to Sections 4101, 4104, 6427, and 9503. Applies to fuel used or sold after enactment.
• Repeal of Expired Provisions for Non-Taxable Fuel Payments (Section 7): Removes Section 6427(e), which handled payments for certain fuels not used in taxable activities (already expired but retained in code). Adjusts related sections like 40A, 40B, and 4104. Applies to fuel sold or used after enactment.
• General Elements: The bill cites the Internal Revenue Code of 1986 and includes effective dates tied to the date of enactment. It was introduced on January 9, 2025, by Representatives Perry, Ogles, and Burlison, and referred to the House Committee on Ways and Means.

Significant Changes to Existing Law

• Directly repeals six key sections (40, 40A, 40B, 45Z, 6426, and 6427(e)) that provided financial incentives for producing or blending alternative fuels, effectively ending these tax benefits.
• Introduces numerous "conforming amendments" to over 20 other code sections, ensuring consistency by removing cross-references, updating definitions (e.g., for biodiesel or sustainable aviation fuel), and freezing certain rules to their pre-enactment status.
• Shifts some administrative requirements, such as registration for fuel producers under Section 4101, by narrowing them to exclude repealed credits.
• No new credits or incentives are added; the focus is solely on elimination.

Potential Impacts

• On Government Agencies: The Internal Revenue Service (IRS) and Department of the Treasury would see reduced administrative burdens from processing these credits, potentially lowering enforcement and compliance costs. However, it could increase revenue by eliminating subsidy expenditures, estimated in billions annually based on prior credit usage.
• On Citizens and Businesses: Fuel producers and blenders (e.g., ethanol or biodiesel manufacturers) lose tax breaks, possibly raising production costs and prices for alternative fuels. Consumers might face higher costs for blended fuels at pumps or in aviation, but could benefit from lower overall tax burdens if savings are passed on. Traditional fossil fuel industries may gain a competitive edge.
• On International Relations: Minimal direct impact, though it could affect U.S. commitments under global climate agreements (e.g., reducing incentives for low-carbon fuels might slow progress on emissions reductions). Imports of foreign biofuels could decline without credits, influencing trade with biofuel-exporting countries like Brazil.

Main Stakeholders Affected

• Fuel Producers and Importers: Companies in ethanol, biodiesel, sustainable aviation fuel, and clean fuel sectors (e.g., renewable energy firms) face loss of incentives, potentially harming profitability and investment.
• Taxpayers and Consumers: Individuals and businesses using or purchasing alternative fuels may see increased costs; general taxpayers could experience indirect savings from reduced federal spending.
• Energy and Aviation Industries: Airlines and fuel blenders lose credits for sustainable options, while oil and gas companies might benefit from less competition.
• Environmental and Advocacy Groups: Organizations focused on clean energy or climate change could oppose the repeals, as they undermine efforts to transition from fossil fuels.
• Government Entities: IRS for tax administration; Environmental Protection Agency (EPA) for related fuel standards and consultations.

Notable Legal, Constitutional, or Political Implications

• Legal: The repeals are straightforward amendments to the tax code, with clear effective dates to avoid retroactive effects. No challenges to enforceability are evident, but disputes could arise over "conforming amendments" if they inadvertently affect unrelated provisions. Terms like "biodiesel" (plant- or animal-based diesel substitute) and "sustainable aviation fuel" (low-emission drop-in fuel for planes) are preserved in frozen definitions.
• Constitutional: No apparent issues; tax policy changes are within Congress's authority under Article I. However, abrupt repeal could raise due process concerns for ongoing credit claims if not handled via transition rules (none specified here).
• Political: Signals a shift toward deregulation in energy markets, potentially polarizing debates on climate policy versus economic freedom. As a partisan-introduced bill (by Republican representatives), it may fuel discussions on federal subsidies, with implications for broader energy legislation like the Inflation Reduction Act.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Perry, Scott [R-PA-10]

Cosponsors (2)

Rep. Ogles, Andrew [R-TN-5], Rep. Burlison, Eric [R-MO-7]

Recent Actions

• 2025-01-09: Referred to the House Committee on Ways and Means.
• 2025-01-09: Introduced in House
• 2025-01-09: Introduced in House

Bill Versions

• Restoring Fuel Market Freedom Act of 2025 — issued 2025-01-09 — PDF (10 pages)