II 111th CONGRESS 1st Session S. 1250 IN THE SENATE OF THE UNITED STATES June 11, 2009 Mr. Nelson of Florida (for himself, Mr. Crapo, Mr. Bingaman, Mr. Bennet, Mr. Martinez, Mr. Cardin, and Mr. Brownback) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to expand the definition of cellulosic biofuel to include algae-based biofuel for purposes of the cellulosic biofuel producer credit and the special allowance for cellulosic biofuel plant property.

1.

Short title

This Act may be cited as the Algae-based Renewable Fuel Promotion Act of 2009.

2.

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 the Internal Revenue Code of 1986 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 December 31, 2008, (C)which is acquired by the taxpayer by purchase (as defined in section 179(d)) after December 31, 2008, 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, 2013. (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 December 31, 2008. (2)

Special allowance for cellulosic biofuel plant property

The amendments made by subsection (b) shall apply to property purchased and placed in service after December 31, 2008.