< Back to H.R. 5142 (111th Congress, 2009–2010)

Text of the Grow a Renewable Energy Economy Now--Jumpstart Other Biofuels Act of 2010

This bill was introduced on April 26, 2010, in a previous session of Congress, but was not enacted. The text of the bill below is as of Apr 26, 2010 (Introduced).

Source: GPO

I

111th CONGRESS

2d Session

H. R. 5142

IN THE HOUSE OF REPRESENTATIVES

April 26, 2010

(for herself, Mr. Schauer, and Mr. Bilbray) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide for an investment tax credit for biofuel facilities, and for other purposes.

1.

Short title

This Act may be cited as the Grow a Renewable Energy Economy Now—Jumpstart Other Biofuels Act of 2010.

2.

Allowance of investment tax credit for certain cellulosic and algae-based biofuel facilities

(a)

In general

Subsection (a) of section 48 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(6)

Election to treat qualified cellulosic and algae-based biofuel facility as energy property

(A)

In general

In the case of any qualified property which is part of a qualified cellulosic and algae-based biofuel facility—

(i)

such property shall be treated as energy property for purposes of this section, and

(ii)

the energy percentage with respect to such property shall be 30 percent.

(B)

Denial of production credit

No credit shall be allowed under section 40 for any taxable year with respect to any qualified investment credit cellulosic and algae-based biofuel facility.

(C)

Qualified investment credit cellulosic and algae-based biofuel facility

For purposes of this paragraph, the term qualified cellulosic and algae-based biofuel facility means a facility constructed with the primary purpose of the production of transportation-grade qualified cellulosic biofuel production (as defined in subparagraph (C) of section 40(b)(6)) or qualified algae-based biofuel production (as defined in section (F) of such section) if no credit has been allowed under section 40 with respect to such facility and the taxpayer makes an irrevocable election to have this paragraph apply to such facility.

(D)

Termination

No election may be made under subparagraph (C) after December 31, 2016.

.

(b)

Special Allowance for Cellulosic Biofuel Plant Property

(1)

Extension of

Paragraphs (2)(D) and (5)(B) of section 168(l) of such Code are each amended by striking January 1, 2013 and inserting January 1, 2017.

(2)

Coordination with credit

Section 168(l)(8) of such Code is amended by inserting or under section 48(a)(6)(C) (relating to election to treat qualified cellulosic and algae-based biofuel facility as energy property) before the period at the end.

(c)

Conforming amendment

Section 48(a)(3) of such Code is amended by striking section 45 and inserting section 40 or 45.

(d)

Effective date

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

3.

Inclusion of algae-based biofuel in definition of cellulosic biofuel

(a)

Cellulosic biofuel producer credit

(1)

General rule

Paragraph (4) of section 40(a) of the Internal Revenue Code of 1986 is amended by inserting and algae-based after cellulosic.

(2)

Definitions

Paragraph (6) of section 40(b) of such Code is amended—

(A)

by inserting and algae-based after Cellulosic in the heading,

(B)

by striking subparagraph (A) and inserting the following:

(A)

In general

The cellulosic and algae-based biofuel producer credit of any taxpayer is an amount equal to the applicable amount for each gallon of—

(i)

qualified cellulosic biofuel production, and

(ii)

qualified algae-based biofuel production.

,

(C)

by redesignating subparagraphs (F), (G), and (H) as subparagraphs (I), (J), and (K), respectively,

(D)

by inserting and algae-based after cellulosic in the heading of subparagraph (I), as so redesignated,

(E)

by inserting or algae-based biofuel, whichever is appropriate, after cellulosic biofuel in subparagraph (J), as so redesignated,

(F)

by inserting and qualified algae-based biofuel production after qualified cellulosic biofuel production in subparagraph (K), as so redesignated, and

(G)

by inserting after subparagraph (E) the following new subparagraphs:

(F)

Qualified algae-based biofuel production

For purposes of this section, the term qualified algae-based biofuel production means any algae-based biofuel which is produced by the taxpayer, and which during the taxable year—

(i)

is sold by the taxpayer to another person—

(I)

for use by such other person in the production of a qualified algae-based biofuel mixture in such other person's trade or business (other than casual off-farm production),

(II)

for use by such other person as a fuel in a trade or business, or

(III)

who sells such algae-based biofuel at retail to another person and places such algae-based biofuel in the fuel tank of such other person, or

(ii)

is used or sold by the taxpayer for any purpose described in clause (i).

The qualified algae-based biofuel production of any taxpayer for any taxable year shall not include any alcohol which is purchased by the taxpayer and with respect to which such producer increases the proof of the alcohol by additional distillation.
(G)

Qualified algae-based biofuel mixture

For purposes of this paragraph, the term qualified algae-based biofuel mixture means a mixture of algae-based biofuel and gasoline or of algae-based biofuel and a special fuel which—

(i)

is sold by the person producing such mixture to any person for use as a fuel, or

(ii)

is used as a fuel by the person producing such mixture.

(H)

Algae-based biofuel

For purposes of this paragraph—

(i)

In general

The term algae-based biofuel means any liquid fuel, including gasoline, diesel, aviation fuel, and ethanol, which—

(I)

is produced from the biomass of algal organisms, and

(II)

meets the registration requirements for fuels and fuel additives established by the Environmental Protection Agency under section 211 of the Clean Air Act (42 U.S.C. 7545).

(ii)

Algal organism

The term algal organism means a single- or multi-cellular organism which is primarily aquatic and classified as a non-vascular plant, including microalgae, blue-green algae (cyanobacteria), and macroalgae (seaweeds).

(iii)

Exclusion of low-proof alcohol

Such term shall not include any alcohol with a proof of less than 150. The determination of the proof of any alcohol shall be made without regard to any added denaturants.

.

(3)

Conforming amendments

(A)

Subparagraph (D) of section 40(d)(3) of such Code is amended—

(i)

by inserting and algae-based after cellulosic in the heading,

(ii)

by inserting or (b)(6)(F) after (b)(6)(C) in clause (ii), and

(iii)

by inserting or algae-based after such cellulosic.

(B)

Paragraph (6) of section 40(d) of such Code is amended—

(i)

by inserting and algae-based after cellulosic in the heading, and

(ii)

by striking the first sentence and inserting No cellulosic and algae-based biofuel producer credit shall be determined under subsection (a) with respect to any cellulosic or algae-based biofuel unless such cellulosic or algae-based biofuel is produced in the United States and used as a fuel in the United States..

(C)

Paragraph (3) of section 40(e) of such Code is amended by inserting and algae-based after cellulosic in the heading.

(D)

Paragraph (1) of section 4101(a) of such Code is amended—

(i)

by inserting or algae-based after cellulosic, and

(ii)

by inserting and 40(b)(6)(H), respectively after section 40(b)(6)(E).

(b)

Special allowance for cellulosic biofuel plant property

Subsection (l) of section 168 of such Code is amended—

(1)

by inserting and algae-based after cellulosic in the heading,

(2)

by inserting and any qualified algae-based biofuel plant property after qualified cellulosic biofuel plant property in paragraph (1),

(3)

by redesignating paragraphs (4) through (8) as paragraphs (6) through (10), respectively,

(4)

by inserting or qualified algae-based biofuel plant property after cellulosic biofuel plant property in paragraph (7)(C), as so redesignated,

(5)

by striking with respect to and all that follows in paragraph (9), as so redesignated, and inserting with respect to any qualified cellulosic biofuel plant property and any qualified algae-based biofuel plant property which ceases to be such qualified property.,

(6)

by inserting or qualified algae-based biofuel plant property after cellulosic biofuel plant property in paragraph (10), as so redesignated, and

(7)

by inserting after paragraph (3) the following new paragraphs:

(4)

Qualified algae-based biofuel plant property

The term qualified algae-based biofuel plant property means property of a character subject to the allowance for depreciation—

(A)

which is used in the United States solely to produce algae-based biofuel,

(B)

the original use of which commences with the taxpayer after the date of the enactment of this paragraph,

(C)

which is acquired by the taxpayer by purchase (as defined in section 179(d)) after the date of the enactment of this paragraph, but only if no written binding contract for the acquisition was in effect on or before such date, and

(D)

which is placed in service by the taxpayer before January 1, 2017.

(5)

Algae-based biofuel

(A)

In general

The term algae-based biofuel means any liquid fuel which is produced from the biomass of algal organisms.

(B)

Algal organism

The term algal organism means a single- or multi-cellular organism which is primarily aquatic and classified as a non-vascular plant, including microalgae, blue-green algae (cyanobacteria), and macroalgae (seaweeds).

.

(c)

Effective dates

(1)

Cellulosic biofuel producer credit

The amendments made by subsection (a) shall apply to fuel produced after the date of the enactment of this Act.

(2)

Special allowance for cellulosic biofuel plant property

The amendments made by subsection (b) shall apply to property purchased and placed in service after the date of the enactment of this Act.

4.

Crude tall oil ineligible for cellulosic and algae-based biofuel producer credit

(a)

In general

Paragraph (6) of section 40(b) of the Internal Revenue Code of 1986 is amended by redesignating subparagraphs (I), (J), and (K), as designated by section 3(a)(2)(C) of this Act, as subparagraphs (J), (K), and (L), respectively, and by inserting after subparagraph (H) the following new subparagraph:

(I)

Exclusion of certain processed fuels with a high acid content

The terms cellulosic biofuel and algae-based biofuel shall not include any processed fuel with an acid number greater than 25. For purposes of the preceding sentence, the term processed fuel means any fuel other than a fuel—

(i)

more than 4 percent of which (determined by weight) is any combination of water and sediment, or

(ii)

the ash content of which is more than 1 percent (determined by weight).

.

(b)

Effective date

The amendment made by this section shall apply to fuels sold or used on or after the date of the enactment of this Act.

5.

Extension of cellulosic and algae-based biofuel producer credit

Subparagraph (L) of section 40(b)(6) of the Internal Revenue Code of 1986, as amended by sections 3 and 4 of this Act, is amended by striking January 1, 2013 and inserting January 1, 2017.

6.

Elective payment for cellulosic and algae-based biofuel facility property

(a)

In general

Chapter 65 of the Internal Revenue Code of 1986 (relating to abatements, credits, and refunds) is amended by adding at the end the following new subchapter:

C

Direct payment provisions

Sec. 6451. Elective payment for cellulosic and algae-based biofuel facility property.

6451.

Elective payment for cellulosic and algae-based biofuel facility property

(a)

In general

Any person making an election under this section with respect to any specified cellulosic and algae-based biofuel facility property originally placed in service by such person during the taxable year shall be treated as making a payment, against the tax imposed by subtitle A for the taxable year equal to 30 percent of the basis of such property. Such payment shall be treated as made on the later of the due date of the return of such tax or the date on which such return is filed.

(b)

Specified cellulosic and algae-Based biofuel facility property

For purposes of this section, the term specified cellulosic and algae-based biofuel facility property means a qualified cellulosic and algae-based biofuel facility (as defined by section 48(a)(6)(C) which—

(1)

is property of a character subject to an allowance for depreciation, and

(2)

is originally placed in service before January 1, 2017.

(c)

Special rules for certain non-Taxpayers

(1)

Denial of payment

Subsection (a) shall not apply with respect to any property originally placed in service by—

(A)

any governmental entity,

(B)

any organization described in section 501(c) or 401(a) and exempt from tax under section 501(a), or

(C)

any entity referred to in paragraph (4) of section 54(j), or

(D)

any partnership or other pass-thru entity any partner (or other holder of an equity or profits interest) of which is described in paragraph (1), (2), or (3).

(2)

Exception for property used in unrelated trade or business

Paragraph (1) shall not apply with respect to any property originally placed in service by an entity described in section 511(a)(2) if substantially all of the income derived from such property by such entity is unrelated business taxable income (as defined in section 512).

(3)

Special rules for partnerships and S corporations

In the case of property originally placed in service by a partnership or an S corporation—

(A)

the election under subsection (a) may be made only by such partnership or S corporation,

(B)

such partnership or S corporation shall be treated as making the payment referred to in subsection (a) only to the extent of the proportionate share of such partnership or S corporation as is owned by persons who would be treated as making such payment if the property were originally placed in service by such persons, and

(C)

the return required to be made by such partnership or S corporation under section 6031 or 6037 (as the case may be) shall be treated as a return of tax for purposes of subsection (a).

For purposes of subparagraph (B), rules similar to the rules of section 168(h)(6) (other than subparagraph (F) thereof) shall apply.
(d)

Coordination with production and investment credits

In the case of any property with respect to which an election is made under this section—

(1)

Denial of production and investment credits

No credit shall be determined under section 40 or 48 with respect to such property for the taxable year in which such property is originally placed in service or any subsequent taxable year.

(2)

Reduction of payment by progress expenditures already taken into account

The amount of the payment treated as made under subsection (a) with respect to such property shall be reduced by the aggregate amount of credits determined under section 48 with respect to such property for all taxable years preceding the taxable year in which such property is originally placed in service.

(e)

Other definitions and special rules

For purposes of this section—

(1)

Other definitions

Terms used in this section which are also used in section 48 shall have the same meaning for purposes of this section as when used in such section.

(2)

Application of recapture rules, etc

Except as otherwise provided by the Secretary—

(A)

In general

Except as otherwise provided in this paragraph, rules similar to the rules of section 50 shall apply.

(B)

Exception to limitation on real estate investment trusts, etc

Paragraph (1) of section 50(d) shall not apply.

(3)

Provision of information

A person shall not be treated as having elected the application of this section unless the taxpayer provides such information as the Secretary (in consultation with the Secretary of Energy) may require for purposes of verifying the proper amount to be treated as a payment under subsection (a) and evaluating the effectiveness of this section.

(4)

Exclusion from gross income

Any credit or refund allowed or made by reason of this section shall not be includible in gross income or alternative minimum taxable income.

.

(b)

Conforming amendments

(1)

Subparagraph (A) of section 6211(b)(4)(A) of such Code is amended by inserting and subchapter C of chapter 65 (including any payment treated as made under such subchapter) after 6431.

(2)

Subparagraph (B) of section 6425(c)(1) of such Code is amended—

(A)

by striking the credits and inserting

the sum of—

(i)

the credits

,

(B)

by striking the period at the end of clause (i) thereof (as amended by this paragraph) and inserting , plus, and

(C)

by adding at the end the following new clause:

(ii)

the payments treated as made under subchapter C of chapter 65.

.

(3)

Paragraph (4) of section 6654(f) of such Code is amended—

(A)

by striking the credits and inserting

the sum of—

(A)

the credits

,

(B)

by striking the period at the end of subparagraph (A) thereof (as amended by this paragraph) and inserting , and, and

(C)

by adding at the end the following new subparagraph:

(B)

the payments treated as made under subchapter C of chapter 65.

.

(4)

Subparagraph (B) of section 6655(g)(1) of such Code is amended—

(A)

by striking the credits and inserting

the sum of—

(i)

the credits

,

(B)

by striking the period at the end of clause (i) thereof (as amended by this paragraph) and inserting , plus, and

(C)

by adding at the end the following new clause:

(ii)

the payments treated as made under subchapter C of chapter 65.

.

(5)

Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting , or from the provisions of subchapter C of chapter 65 of such Code before the period at the end.

(6)

The table of subchapters for chapter 65 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

Subchapter C. Direct payment provisions.

.

(c)

Effective date

The amendments made by this section shall apply to property originally placed in service after the date of the enactment of this Act.