109 HR 5509 IH: To amend the Internal Revenue Code of 1986 to clarify the U.S. House of Representatives 2006-05-25 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 2d Session H. R. 5509 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.

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.