August 4, 2025

Treasury Secretary Scott Bessent
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

Commissioner Billy Long
Internal Revenue Service (IRS)
1111 Constitution Ave., NW
Washington, DC 20224 

Dear Secretary Bessent and Commissioner Long:

The undersigned groups urge the Treasury Department and Internal Revenue Service (IRS) to solicit and accept public comment on modifications made to the Section 45Z Clean Fuel Production Credit within Public Law 119-21.

The FY25 budget reconciliation bill, specifically Section 70521, made several significant modifications to the 45Z tax credit, including:  

1. Reducing the per-gallon tax credit for sustainable aviation fuel,
2. Limiting tax credit eligibility to feedstocks produced or grown in the U.S., Mexico, or Canada,
3. Prohibiting negative emission rates, with the exception of fuels derived from animal manure feedstocks,
4. Providing for a distinct emissions rate for fuels derived from animal manure feedstocks,
5. Excluding consideration of emissions associated with indirect land use changes (ILUC) within carbon intensity calculations required to assess 45Z tax credit eligibility,
6. Making secondary fuels ineligible for the tax credit if they are created from fuels which are already eligible for the credit,
7. Extending and modifying the small agri-biodiesel credit and allowing it to stack with 45Z, and
8. Extending the tax credit from 2027 to 2029.

Regarding the ILUC provision in particular, the statute states, “Any such adjustment shall be based on regulations or methodologies determined by the Secretary.” Given the complexity of such calculations and their impacts on consumers, taxpayers, and the environment, acceptance of public comments will help inform future regulations and IRS guidance on the clean fuel production credit.

The IRS accepted public comment when implementing the initial version of 45Z contained within the Inflation Reduction Act of 2022, which many of the undersigned groups commented on during that time. We urge the IRS to also seek and accept public comments on recent, significant modifications to 45Z within P.L. 119-21.

Thank you for your consideration of our request.

Sincerely,

Clean Air Task Force Action
National Taxpayers Union
Taxpayers for Common Sense
Friends of the Earth
R Street Institute
ActionAid USA