[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5509 Introduced in House (IH)]








109th CONGRESS
  2d Session
                                H. R. 5509

 To amend the Internal Revenue Code of 1986 to clarify the tax credit 
            for electricity produced from open-loop biomass.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 25, 2006

  Mr. Nunes 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 clarify the tax credit 
            for electricity produced from open-loop biomass.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. CLARIFICATION OF CREDIT FOR ELECTRICITY PRODUCED FROM OPEN-
              LOOP BIOMASS.

    (a) Removal of Requirement for Segregation of Open-Loop Biomass 
From Other Waste.--Clause (ii) of section 45(c)(3)(A) of the Internal 
Revenue Code of 1986 (defining open-loop biomass) is amended by 
striking ``which is segregated from other waste materials and''.
    (b) Limitation Based on Biomass Cofiring With Nonqualified Fuel.--
Subsection (b) of section 45 of such Code (relating to limitations and 
adjustments) is amended by adding at the end the following new 
paragraph:
            ``(5) Open-loop biomass cofired with nonqualified fuel.--
                    ``(A) In general.--In the case of electricity 
                produced by a facility described in subsection (d)(3), 
                the credit determined under subsection (a) shall be the 
                applicable percentage of such credit, determined 
                without regard to this paragraph and after the 
                application of paragraphs (1), (3), and (4) of this 
                subsection.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage is 100 
                percent, reduced by the number of percentage points of 
                excess nonqualified fuel consumption for the taxable 
                year. In the event the percentage points of excess 
                nonqualified fuel consumption exceeds 20 percent in the 
                taxable year, the credit under subsection (a) shall be 
                zero for that taxable year.
                    ``(C) Excess nonqualified fuel consumption.--The 
                term `excess nonqualified fuel consumption' means, with 
                respect to any facility, the excess (if any) of the 
                nonqualified fuel consumption percentage for such 
                facility for the taxable year over 5 percent.
                    ``(D) Nonqualified fuel consumption percentage.--
                The term `nonqualified fuel consumption percentage' 
                means, with respect to a facility described in 
                subsection (d)(3), the ratio (expressed as a 
                percentage) which the quantity of fuel which is not 
                open-loop biomass consumed for a taxable year by such 
                facility bears to the total fuel consumed by such 
                facility for such taxable year.
                    ``(E) Determination based on weight.--For purposes 
                of this paragraph, the determination of fuel consumed 
                shall be based on the weight of such fuel.''.
    (c) Increments of Additional Capacity.--Subparagraph (A) of section 
45(d)(3) of such Code (defining open-loop biomass facilities) is 
amended by adding at the end the following new flush sentence: ``Such 
term shall include a new unit placed in service in connection with a 
facility placed in service on or before the date of the enactment of 
this sentence, but only to the extent of the increased amount of 
electricity produced at the facility by reason of such new unit. For 
purposes of subsection (b)(5), the new unit shall be treated as a 
separate facility.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to electricity produced and sold after December 31, 2004.
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