[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5950 Introduced in House (IH)]








109th CONGRESS
  2d Session
                                H. R. 5950

  To repeal certain tax subsidies enacted by the Energy Policy Act of 
  2005 for oil and gas, to allow a credit against income tax for farm 
diesel expenses, and to allow a credit to farmers who produce biodiesel 
                          and agri-biodiesel.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 27, 2006

   Mr. Udall of New Mexico introduced the following bill; which was 
              referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
  To repeal certain tax subsidies enacted by the Energy Policy Act of 
  2005 for oil and gas, to allow a credit against income tax for farm 
diesel expenses, and to allow a credit to farmers who produce biodiesel 
                          and agri-biodiesel.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Family Farm Energy Relief Act of 
2006''.

SEC. 2. REPEAL OF TAX SUBSIDIES ENACTED BY THE ENERGY POLICY ACT OF 
              2005 FOR OIL AND GAS.

    (a) Repeal.--The following provisions, and amendments made by such 
provisions, of the Energy Policy Act of 2005 are hereby repealed:
            (1) Section 1323 (relating to temporary expensing for 
        equipment used in refining of liquid fuels).
            (2) Section 1324 (relating to pass through to owners of 
        deduction for capital costs incurred by small refiner 
        cooperatives in complying with Environmental Protection Agency 
        sulfur regulations).
            (3) Section 1325 (relating to natural gas distribution 
        lines treated as 15-year property).
            (4) Section 1326 (relating to natural gas gathering lines 
        treated as 7-year property).
            (5) Section 1328 (relating to determination of small 
        refiner exception to oil depletion deduction).
            (6) Section 1329 (relating to amortization of geological 
        and geophysical expenditures).
    (b) Administration of Internal Revenue Code of 1986.--The Internal 
Revenue Code of 1986 shall be applied and administered as if the 
provisions, and amendments, specified in subsection (a) had never been 
enacted.

SEC. 3. FARM DIESEL PURCHASES CREDIT.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 25D the 
following new section:

``SEC. 25E. FARM DIESEL EXPENSES CREDIT.

    ``(a) Allowance of Credit.--In the case of a qualified farmer, 
there shall be allowed as a credit against the tax imposed by this 
chapter for the taxable year an amount equal to 10 percent of the farm 
diesel expenses paid or incurred by the qualified farmer during the 
taxable year.
    ``(b) Qualified Farmer.--For purposes of this section, with respect 
to a taxable year, the term `qualified farmer' means an individual--
            ``(1) who is actively engaged in farming,
            ``(2) whose contributions to a farming operation during the 
        taxable year are at least commensurate with the individual's 
        claimed share of the profits or losses of the farming 
        operation, and
            ``(3) whose gross income from farming for the taxable year 
        is at least 75 percent of the individual's total gross income 
        from all sources for the taxable year.
    ``(c) Farm Diesel Expenses.--For purposes of this section, the term 
`farm diesel expenses' means amounts paid or incurred for the purchase 
of diesel fuel that is described in section 4082(a) and is intended to 
be used for farming purposes.
    ``(d) Termination.--This section shall not apply with respect to 
farm diesel expenses paid or incurred in taxable years beginning after 
December 31, 2009.''.
    (b) Clerical Amendment.--The table of items for subpart A of part 
IV of subchapter A of chapter 1 of such Code is amended by inserting 
after the item relating to section 25D the following new item:

``Sec. 25E. Farm diesel expenses credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to farm diesel expenses paid or incurred in taxable years 
beginning after the date of the enactment of this Act.

SEC. 4. INCREASE IN SMALL AGRI-BIODIESEL PRODUCER CREDIT FOR QUALIFIED 
              FARMERS.

    (a) In General.--Paragraph (5) of section 40A(b) of the Internal 
Revenue Code of 1986 (relating to small agri-biodiesel producer credit) 
is amended by adding at the end the following new subparagraph:
                    ``(D) Increase for qualified farmers.--In the case 
                of an eligible small agri-biodiesel producer who is a 
                qualified farmer, subparagraph (A) shall be applied by 
                substituting `20 cents' for `10 cents'.''.
    (b) Qualified Farmer.--Subsection (e) of section 40A of such Code 
(relating to definitions and special rules for small agri-biodiesel 
producer credit) is amended by adding at the end the following new 
paragraph:
            ``(7) Qualified farmer.--With respect to a taxable year, 
        the term `qualified farmer' means an individual--
                    ``(A) who is actively engaged in farming,
                    ``(B) whose contributions to a farming operation 
                during the taxable year are at least commensurate with 
                the individual's claimed share of the profits or losses 
                of the farming operation, and
                    ``(C) whose gross income from farming for the 
                taxable year is at least 75 percent of the individual's 
                total gross income from all sources for the taxable 
                year.''.
    (c) Effective Date.--The amendments by this section shall apply to 
qualified agri-biodiesel production after December 31, 2006, in taxable 
years beginning after such date.

SEC. 5. ALLOWANCE OF SMALL BIODIESEL PRODUCER CREDIT FOR QUALIFIED 
              FARMERS.

    (a) In General.--Section 40A of the Internal Revenue Code of 1986 
(relating to biodiesel and renewable diesel used as fuel) is amended--
            (1) in subsection (a), by striking the period at the end of 
        paragraph (3) and inserting ``, plus'' and by adding at the end 
        the following new paragraph:
            ``(4) in the case of an eligible small biodiesel producer, 
        the small biodiesel producer credit.'',
            (2) in subsection (b), by adding at the end the following 
        new paragraph:
            ``(6) Small biodiesel producer credit.--
                    ``(A) In general.--The small biodiesel producer 
                credit of any eligible small biodiesel producer for any 
                taxable year is 10 cents for each gallon of qualified 
                biodiesel production of such producer.
                    ``(B) Qualified biodiesel production.--For purposes 
                of this paragraph, the term ``qualified biodiesel 
                production'' means any biodiesel which is produced by 
                an eligible small biodiesel producer, and which during 
                the taxable year--
                            ``(i) is sold by such producer to another 
                        person--
                                    ``(I) for use by such other person 
                                in the production of a qualified 
                                biodiesel 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 biodiesel at 
                                retail to another person and places 
                                such biodiesel in the fuel tank of such 
                                other person, or
                            ``(ii) is used or sold by such producer for 
                        any purpose described in clause (i).
                    ``(C) Limitation.--The qualified biodiesel 
                production of any producer for any taxable year shall 
                not exceed 15,000,000 gallons.'', and
            (3) by redesignating subsections (f) and (g) as subsections 
        (g) and (h), respectively, and by inserting after subsection 
        (e) the following new subsection:
    ``(f) Definitions and Special Rules for Small Biodiesel Producer 
Credit.--For purposes of this section--
            ``(1) Eligible small biodiesel producer.--
                    ``(A) In general.--The term ``eligible small 
                biodiesel producer'' means a qualified farmer who, at 
                all times during the taxable year, has a productive 
                capacity for biodiesel not in excess of 60,000,000 
                gallons.
                    ``(B) Qualified farmer.--With respect to a taxable 
                year, the term `qualified farmer' means an individual--
                            ``(i) who is actively engaged in farming,
                            ``(ii) whose contributions to a farming 
                        operation during the taxable year are at least 
                        commensurate with the individual's claimed 
                        share of the profits or losses of the farming 
                        operation, and
                            ``(iii) whose gross income from farming for 
                        the taxable year is at least 75 percent of the 
                        individual's total gross income from all 
                        sources for the taxable year.
            ``(2) Special rules.--Rules similar to the rules of 
        paragraphs (2), (3), (4), (5), and (6) of subsection (e) shall 
        apply to the small biodiesel producer credit.''.
    (b) Effective Date.--The amendments made by this section shall 
apply qualified biodiesel production beginning after December 31, 2006, 
in taxable years beginning after such date.
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