(a) Prohibition on foreign feedstocks.—
(1) IN GENERAL.—Section 45Z(f)(1)(A) is amended—
(A) in clause (i)(II)(bb), by striking “and” at the end,
(B) in clause (ii), by striking the period at the end and inserting “, and”, and
(C) by adding at the end the following new clause:
“(iii) such fuel is exclusively derived from a feedstock which was produced or grown in the United States, Mexico, or Canada.”.
(2) EFFECTIVE DATE.—The amendments made by this subsection shall apply to transportation fuel produced after December 31, 2025.
(b) Prohibition on negative emission rates.—
(1) IN GENERAL.—Section 45Z(b)(1) is amended—
(A) by striking subparagraph (C) and inserting the following:
“(C) ROUNDING OF EMISSIONS RATE.—The Secretary may round the emissions rates under subparagraph (B) to the nearest multiple of 5 kilograms of CO2e per mmBTU.”, and
(B) by adding at the end the following new subparagraph:
“(E) PROHIBITION ON NEGATIVE EMISSION RATES.—For purposes of this section, the emissions rate for a transportation fuel may not be less than zero.”.
(2) EFFECTIVE DATE.—The amendments made by this subsection shall apply to emissions rates published for transportation fuel produced after December 31, 2025.
(c) Determination of emissions rate.—
(1) IN GENERAL.—Section 45Z(b)(1)(B) is amended by adding at the end the following new clauses:
“(iv) EXCLUSION OF INDIRECT LAND USE CHANGES.—Notwithstanding clauses (i), (ii), and (iii), the emissions rate shall be adjusted as necessary to exclude any emissions attributed to indirect land use change. Any such adjustment shall be based on regulations or methodologies determined by the Secretary.
“(v) ANIMAL MANURES.—With respect to any transportation fuel which is derived from animal manure, the Secretary—
“(I) shall provide a distinct emissions rate with respect to such fuel based on the specific animal manure feedstock, which may include dairy manure, swine manure, poultry manure, or any other sources as are determined appropriate by the Secretary, and
“(II) notwithstanding subparagraph (E), may provide an emissions rate that is less than zero.”.
(2) CONFORMING AMENDMENT.—Section 45Z(b)(1)(B)(i) is amended by striking “clauses (ii) and (iii)” and inserting “clauses (ii), (iii), (iv), and (v)”.
(3) EFFECTIVE DATE.—The amendments made by this subsection shall apply to emissions rates published for transportation fuel produced after December 31, 2025.
(d) Extension of clean fuel production credit.—Section 45Z(g) is amended by striking “December 31, 2027” and inserting “December 31, 2029”.
(e) Preventing double credit.—Section 45Z(d)(5) is amended—
(1) in subparagraph (A)—
(A) in clause (ii), by striking “and” at the end,
(B) in clause (iii), by striking the period at the end and inserting “, and”, and
(C) by adding at the end the following new clause:
“(iv) is not produced from a fuel for which a credit under this section is allowable.”, and
(2) by adding at the end the following new subparagraph:
“(C) REGULATIONS AND GUIDANCE.—The Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of subparagraph (A)(iv).”.
(f) Sales to unrelated persons.—Section 45Z(f)(3) is amended by adding at the end the following: “The Secretary may prescribe additional related person rules similar to the rule described in the preceding sentence for entities which are not described in such sentence, including rules for related persons with respect to which the taxpayer has reason to believe will sell fuel to an unrelated person in a manner described in subsection (a)(4).”.
(g) Treatment of sustainable aviation fuel.—
(1) COORDINATION OF CREDITS.—
(A) IN GENERAL.—Section 6426(k) is amended by adding at the end the following new paragraph:
“(4) COORDINATION OF CREDITS.—With respect to any gallon of sustainable aviation fuel in a qualified mixture, this subsection shall not apply to any such gallon for which a credit under section 45Z is allowable (as determined without regard to subsection (a)(1)(A) of such section).”.
(B) EFFECTIVE DATE.—The amendment made by this paragraph shall apply to—
(i) fuel sold or used on or after the date of the enactment of this Act, and
(ii) fuel sold or used before the date of enactment of this Act, but only to the extent that claims for the credit under section 6426(k) of the Internal Revenue Code of 1986 with respect to such sale or use have not been paid or allowed as of such date.
(2) ELIMINATION OF SPECIAL RATE.—
(A) IN GENERAL.—Paragraph (3) of section 45Z(a) is amended to read as follows:
“(3) DEFINITION OF SUSTAINABLE AVIATION FUEL.—For purposes of this section, the term ‘sustainable aviation fuel’ means liquid fuel, the portion of which is not kerosene, which is sold for use in an aircraft and which—
“(A) meets the requirements of—
“(i) ASTM International Standard D7566, or
“(ii) the Fischer Tropsch provisions of ASTM International Standard D1655, Annex A1, and
“(B) is not derived from palm fatty acid distillates or petroleum.”.
(B) CONFORMING AMENDMENT.—Section 45Z(c)(1) is amended by striking “, the $1.00 amount in subsection (a)(2)(B), the 35 cent amount in subsection (a)(3)(A)(i), and the $1.75 amount in subsection (a)(3)(A)(ii)” and inserting “and the $1.00 amount in subsection (a)(2)(B)”.
(C) EFFECTIVE DATE.—The amendments made by this paragraph shall apply to fuel produced after December 31, 2025.
(h) Sustainable aviation fuel credit.—Section 6426(k), as amended by the preceding provisions of this Act, is amended by adding at the end the following new paragraph:
“(5) TERMINATION.—This subsection shall not apply to any sale or use for any period after September 30, 2025.”.
(i) Registration of producers of fuel eligible for clean fuel production credit.—
(1) IN GENERAL.—Section 13704(b)(5) of Public Law 117–169 is amended by striking “after ‘section 6426(k)(3)),’” and inserting “after ‘section 40B),’”.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to transportation fuel produced after December 31, 2024.
(j) Extension and modification of small agri-biodiesel producer credit.—
(1) IN GENERAL.—Section 40A is amended—
(A) in subsection (b)(4)—
(i) in subparagraph (A), by striking “10 cents” and inserting “20 cents”,
(ii) in subparagraph (B), by inserting “in a manner which complies with the requirements under section 45Z(f)(1)(A)(iii)” after “produced by an eligible small agri-biodiesel producer”, and
(iii) by adding at the end the following new subparagraph:
“(D) COORDINATION WITH CLEAN FUEL PRODUCTION CREDIT.—The credit determined under this paragraph with respect to any gallon of fuel shall be in addition to any credit determined under section 45Z with respect to such gallon of fuel.”, and
(B) in subsection (g), by inserting “(or, in the case of the small agri-biodiesel producer credit, any sale or use after December 31, 2026)” after “December 31, 2024”.
(2) TRANSFER OF CREDIT.—Section 6418(f)(1)(A) is amended by adding at the end the following new clause:
“(xii) So much of the biodiesel fuels credit determined under section 40A which consists of the small agri-biodiesel producer credit determined under subsection (b)(4) of such section.”.
(3) EFFECTIVE DATE.—The amendments made by this subsection shall apply to fuel sold or used after June 30, 2025.
(k) Restrictions relating to prohibited foreign entities.—
(1) IN GENERAL.—Section 45Z(f) is amended by adding at the end the following new paragraph:
“(8) RESTRICTIONS RELATING TO PROHIBITED FOREIGN ENTITIES.—
“(A) IN GENERAL.—No credit shall be determined under subsection (a) for any taxable year beginning after the date of enactment of this paragraph if the taxpayer is a specified foreign entity (as defined in section 7701(a)(51)(B)).
“(B) OTHER PROHIBITED FOREIGN ENTITIES.—No credit shall be determined under subsection (a) for any taxable year beginning after the date which is 2 years after the date of enactment of this paragraph if the taxpayer is a foreign-influenced entity (as defined in section 7701(a)(51)(D), without regard to clause (i)(II) thereof).”.
(2) EFFECTIVE DATE.—The amendment made by this subsection shall apply to taxable years beginning after the date of enactment of this Act.