[Congressional Record (Bound Edition), Volume 156 (2010), Part 12]
[House]
[Pages 16828-16832]
[From the U.S. Government Publishing Office, www.gpo.gov]




            ALGAE-BASED RENEWABLE FUEL PROMOTION ACT OF 2010

  Mr. VAN HOLLEN. Madam Speaker, I move to suspend the rules and pass 
the bill (H.R. 4168) 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

[[Page 16829]]

and the special allowance for cellulosic biofuel plant property, as 
amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 4168

       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 ``Algae-based Renewable Fuel 
     Promotion Act of 2010''.

     SEC. 2. ALGAE TREATED AS A QUALIFIED FEEDSTOCK FOR PURPOSES 
                   OF THE CELLULOSIC BIOFUEL PRODUCER CREDIT, ETC.

       (a) In General.--Subclause (I) of section 40(b)(6)(E)(i) of 
     the Internal Revenue Code of 1986 is amended to read as 
     follows:

       ``(I) is derived solely from qualified feedstocks, and''.

       (b) Qualified Feedstock; Special Rules for Algae.--
     Paragraph (6) of section 40(b) of such Code is amended by 
     redesignating subparagraphs (F), (G), and (H) as 
     subparagraphs (H), (I), and (J), respectively, and by 
     inserting after subparagraph (E) the following new 
     subparagraphs:
       ``(F) Qualified feedstock.--For purposes of this paragraph, 
     the term `qualified feedstock' means--
       ``(i) any lignocellulosic or hemicellulosic matter that is 
     available on a renewable or recurring basis, and
       ``(ii) any cultivated algae, cyanobacteria, or lemna.
       ``(G) Special rules for algae.--In the case of fuel which 
     is derived from feedstock described in subparagraph (F)(ii) 
     and which is sold by the taxpayer to another person for 
     refining by such other person into a fuel which meets the 
     requirements of subparagraph (E)(i)(II)--
       ``(i) such sale shall be treated as described in 
     subparagraph (C)(i),
       ``(ii) such fuel shall be treated as meeting the 
     requirements of subparagraph (E)(i)(II) in the hands of such 
     taxpayer, and
       ``(iii) except as provided in this subparagraph, such fuel 
     (and any fuel derived from such fuel) shall not be taken into 
     account under subparagraph (C) with respect to the taxpayer 
     or any other person.''.
       (c) Algae Treated as a Qualified Feedstock for Purposes of 
     Bonus Depreciation for Biofuel Plant Property.--
       (1) In general.--Subparagraph (A) of section 168(l)(2) of 
     such Code is amended by striking ``solely to produce 
     cellulosic biofuel'' and inserting ``solely to produce second 
     generation biofuel (as defined in section 40(b)(6)(E)''.
       (2) Conforming amendments.--Subsection (l) of section 168 
     of such Code is amended--
       (A) by striking ``cellulosic biofuel'' each place it 
     appears in the text thereof and inserting ``second generation 
     biofuel'',
       (B) by striking paragraph (3) and redesignating paragraphs 
     (4) through (8) as paragraphs (3) through (7), respectively,
       (C) by striking ``Cellulosic'' in the heading of such 
     subsection and inserting ``Second Generation'', and
       (D) by striking ``cellulosic'' in the heading of paragraph 
     (2) and inserting ``second generation''.
       (d) Conforming Amendments.--
       (1) Section 40 of such Code, as amended by subsection (b), 
     is amended--
       (A) by striking ``cellulosic biofuel'' each place it 
     appears in the text thereof and inserting ``second generation 
     biofuel'',
       (B) by striking ``Cellulosic'' in the headings of 
     subsections (b)(6), (b)(6)(E), and (d)(3)(D) and inserting 
     ``Second generation'', and
       (C) by striking ``cellulosic'' in the headings of 
     subsections (b)(6)(C), (b)(6)(D), (b)(6)(H), (d)(6), and 
     (e)(3) and inserting ``second generation''.
       (2) Clause (ii) of section 40(b)(6)(E) of such Code is 
     amended by striking ``Such term shall not'' and inserting 
     ``The term `second generation biofuel' shall not''.
       (3) Paragraph (1) of section 4101(a) of such Code is 
     amended by striking ``cellulosic biofuel'' and inserting 
     ``second generation biofuel''.
       (e) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to fuels sold or 
     used after the date of the enactment of this Act.
       (2) Application to bonus depreciation.--The amendments made 
     by subsection (c) shall apply to property placed in service 
     after the date of the enactment of this Act.

     SEC. 3. PAYGO COMPLIANCE.

       The budgetary effects of this Act, for the purpose of 
     complying with the Statutory Pay-As-You-Go-Act of 2010, shall 
     be determined by reference to the latest statement titled 
     ``Budgetary Effects of PAYGO Legislation'' for this Act, 
     submitted for printing in the Congressional Record by the 
     Chairman of the House Budget Committee, provided that such 
     statement has been submitted prior to the vote on passage.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Maryland (Mr. Van Hollen) and the gentleman from Michigan (Mr. Camp) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Maryland.


                             General Leave

  Mr. VAN HOLLEN. Madam Speaker, I ask unanimous consent that all 
Members have 5 legislative days to revise and extend their remarks and 
include any extraneous material in the Congressional Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Maryland?
  There was no objection.
  Mr. VAN HOLLEN. Madam Speaker, Americans across the Nation are 
increasingly interested in the contribution that clean, homegrown fuels 
can make to our environment, economic development, and energy security. 
Additionally, I hear from many of my constituents that they believe 
Federal policy should move toward the development of biofuels that do 
not compete with food and otherwise operate on a feedstock and 
technology-neutral basis.
  Today's legislation advances those goals by including algae as a 
qualified feedstock under the existing cellulosic biofuel credit. It is 
forward-looking legislation that recognizes the rapidly evolving nature 
of the advanced biofuels industry and the demonstrated potential of 
biofuels made from algae.
  With that, I yield 5 minutes to my colleague Congressman Harry Teague 
of New Mexico and thank him for his extraordinary leadership on this 
bipartisan initiative.
  Mr. TEAGUE. Madam Speaker, I am an oil man. I always have been and 
always will be. When I was 9 years old, we moved from Caddo County, 
Oklahoma, to Hobbs, New Mexico, so my daddy could get a job in the oil 
patch. A few years later, at age 17, with my parents sick and the bills 
still needing to get paid, I went to work in the oil fields to earn a 
paycheck and support the family. Eventually, I built a small business 
from the ground up; and we employed 250 people, drilling oil and gas 
wells for other people and fixing them when they were broke.
  Most every hamburger that I have ever had has come somehow from 
American oil and gas. The industry employs almost 20,000 people in New 
Mexico. It's a critical source of wealth, jobs, energy, and education 
funding in my State; and I've been proud to fight for New Mexico oil 
and gas in Congress.
  While New Mexico has been successful developing its oil and gas 
resources, we have failed to develop the diverse alternative energy 
resources that my State also possesses in great abundance. And, 
unfortunately for thousands of New Mexicans looking for work today, we 
have failed to create those alternative energy jobs.
  Madam Speaker, if we want to create our energy jobs here in America 
and stop sending a billion dollars to countries like Saudi Arabia and 
Venezuela every day, we need a ``Do it all, do it in America'' energy 
policy. We need to drill for more oil and natural gas. We need to build 
new nuclear facilities. We need to capture the wind, the sun, and the 
Earth's geothermal heat for electricity. We need to produce billions of 
gallons of liquid biofuels to burn in cars, trucks, and airplane 
engines, and we need to do it right here in America.
  Madam Speaker, a pillar of a ``Do it all, do it in America'' approach 
to energy is producing biofuels from algae. Algal biofuels have high 
energy density and the near-term potential to produce more energy in a 
small footprint than earlier generation biofuels. They can be grown 
using brackish water not suitable for human consumption and on land not 
suitable for agriculture. And all the algae needs is ample sunlight and 
a source of nutrition, like cow manure, to grow and get fat with oil.
  Although the companies and researchers that are now producing algal 
biofuels have intensively experimented with various techniques and 
algae breeds over many years, when it comes down to it, getting oil out 
of algae is pretty simple: You dig a pond, line it, and fill it with 
water. You fill the pond with algae, keep them fed. When the algae are 
good and fat, you squeeze the oil out of the organisms. And depending 
on your technology, you put it right to use or refine it into gasoline, 
diesel, or jet fuel. Additionally, many algal biofuels are designed to 
function

[[Page 16830]]

on a drop-in basis, so you can pour green crude right into the pipeline 
or tanker truck coming out of the oil patch. This means we can replace 
imported oil with homegrown fuel without costly investments in new 
refining and transportation infrastructure.
  My district of southern New Mexico is among the many areas across the 
country primed to become a center for algal biofuel production and job 
creation. Our wide open spaces, ample sunlight, and brackish water make 
us the perfect place to produce our Nation's next generation of 
biofuels. We already have algal biofuel facilities in Dona Ana County 
and Eddy County. Luna County will soon be home to another facility 
which will create 700 jobs when it breaks ground this fall. The 
potential, though, is so much greater. Algal biofuels are poised to 
power America with homegrown energy on a large scale.
  However, algal biofuels face an uneven playing field within our 
Nation's energy policy framework, most notably in our tax code. Under 
current law, algal biofuels do not qualify for tax incentives that 
currently benefit other biofuels, like cellulosic biofuels.
  When these tax laws were written, cellulosic biofuels and biodiesel 
were the only renewable fuels on the lawmakers' radars and considered 
capable of actually reducing America's dependence on foreign oil. Since 
these laws were written, however, significant advances in the algae-
based fuel industry have readied algae for prime time. Now, because 
algae has many advantages over cellulosic feedstocks and is operating 
on a near-term commercialization timeline similar to cellulosic fuels, 
algae-based fuel producers should receive tax incentives on par with 
those currently received by cellulosic biofuel producers.
  H.R. 4168, the Algae-based Renewable Fuel Promotion Act, simply gives 
algal biofuels tax parity with cellulosic biofuels. The legislation 
contains a limitation on the products that will qualify for the tax 
incentives. They must be derived solely from qualifying feedstocks. 
Qualifying feedstocks include, in addition to cellulosic materials, 
cultivated algae, cyanobacteria, and lemna. Beyond that, the bill does 
not distinguish among these feedstocks with regard to the manner of 
cultivation, including nutrients or other inputs used to develop the 
feedstock and the biofuel. It is the intent of this provision to 
encompass all technologies using qualified feedstocks such as algae.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. VAN HOLLEN. Madam Speaker, I yield the gentleman another 2 
minutes.
  Mr. TEAGUE. Bottom line, tax parity will help algal biofuel producers 
attract needed capital to produce energy right here at home and create 
hundreds of thousands of jobs for new energy in New Mexico and across 
this great country.
  Madam Speaker, when Americans go to the pump to fill up their tanks 
today, they are sending 70 cents of every dollar to other countries, 
many of which don't like us very much, and are creating jobs in places 
like Saudi Arabia and Venezuela. I don't want Americans to be creating 
jobs for the supporters of Hugo Chavez when they use energy. We should 
be creating energy jobs right here at home, employing American workers 
to produce the energy our economy and military needs.
  Passing this bill today is a step toward a ``Do it all, do it in 
America'' energy policy. We can create American jobs and make our 
country more secure by producing our energy right here at home. This is 
a commonsense bipartisan bill that will create jobs and move America 
toward energy independence.
  I would like to thank Chairman Levin, Ranking Member Camp, and 
members of the Ways and Means Committee for their support.
  Mr. CAMP. Madam Speaker, I yield myself such time as I may consume.
  Madam Speaker, this bill seeks to expand the eligibility for certain 
current law tax benefits to algae-based fuels. Specifically, it would 
make algae or algae plant property eligible for both the cellulosic 
biofuel producer credit and for 50 percent bonus depreciation.
  Regardless of whether Members believe these enhanced tax benefits for 
algae are appropriate, I think it's important to make a few 
observations about this bill, about the process under which we are 
considering it, and about the majority's decision to make this the 
centerpiece of its tax agenda during this, the final week of session. 
With respect to the bill itself, I would note that these same algae-
related benefits, along with many other energy-related tax provisions, 
were included as a part of Chairman Levin's much broader green jobs 
discussion draft which had been expected to be formally considered by 
the Ways and Means Committee as a package. It's worth asking why only 
the algae-related provisions of that broader energy bill merit special 
consideration in stand-alone legislation, which is quite unusual for 
tax legislation from the committee, while the other provisions in that 
broader bill languish without so much as a committee markup.

                              {time}  1720

  If Ways and Means had actually held a mark-up on these algae-related 
provisions, Members could have fully explored whether it is advisable 
to expand the cellulosic biofuel producer credit, a credit that has 
proved controversial over the past several years.
  Indeed, Members of both parties supported efforts to close a major 
potential loophole in that credit that could have permitted ``black 
liquor,'' an alternative fuel created as a byproduct of the paper-
making process to qualify. Given such recent, high-profile alarm about 
potential abuse of the cellulosic biofuel producer credit, one would 
think that efforts to further expand the credit would be pursued only 
after consideration and a formal Ways and Means Committee mark-up under 
regular order. I think we do the best work when we proceed under 
regular order. But, instead, these provisions have been rushed directly 
to the floor.
  But what is most disturbing about the tax debate we are having here 
today is what we are not debating. Rather than using this last week of 
session prior to the election to prevent a massive $3.8 trillion tax 
increase from taking effect at the end of the year, the majority's tax 
agenda for this final week, instead centers on a bill that provides tax 
benefits for algae. And let me repeat: instead of protecting American 
families, seniors and investors and small businesses from a job-
killing, $3.8 trillion tax hike, we are here debating tax benefits for 
algae.
  Madam Speaker, governing is about setting priorities, and the 
majority's tax agenda for the week shows just how out of line the 
majority's priorities are with those of the American people.
  Madam Speaker, I yield such time as he may consume to the gentleman 
from California (Mr. Bilbray).
  Mr. BILBRAY. I thank the ranking member. I appreciate the fact of 
this bill being brought forward.
  Madam Speaker, I know there is very little being brought forward, but 
at least we have something to discuss today. And I have to agree with 
my colleague that we wish the general tax cut, something that we hear 
all around, the American people want us to talk about.
  But this is an item that hasn't been talked about enough anywhere. 
And I want to thank my colleague from New Mexico for cosponsoring this 
with me. And I want to congratulate the gentleman's State of New Mexico 
because, I tell you something, as a Californian, I am sort of envious. 
California spent lots of money on our universities, lots of money on 
our research. We have some of the best scientists in the world. And as 
the gentleman from New Mexico knows, our scientists in San Diego 
developed the ability to create this algae fuel, but, sadly, because of 
California's regulations and the lack of reform and its government 
oversight, the scientists in San Diego had to pack up and go to New 
Mexico to be able to produce this product. And the jobs will be created 
in New Mexico in the production because California hasn't reformed its 
government regulatory oversight.

[[Page 16831]]

  And I think that is a challenge for all of us to look at that, 
hopefully, as the Federal Government will set an example that jobs 
aren't being taken overseas, because we are quick to write checks and 
maybe do research, but we are not quick at making the private sector 
viable to be able to create the jobs that all of us know the American 
people are desperate for.
  You know, the algae-based fuel is one of the most promising fuels, 
Madam Speaker, when we talk about the next generation, second or third 
generation biofuels. We all know, any reasonable person knows, that the 
mandates of adding renewable fuels in our fuel stream, the mandate that 
you cannot sell legally gasoline in the United States unless it has a 
10 or 8 percent by volume content of renewable fuels, that mandate 
never, ever meant to leave us with first generation renewable fuels. We 
all knew that first generation was a necessity, something we had to get 
through, something that was expensive, maybe not as environmentally 
friendly as we like, but a transition we hoped would come eventually.
  Algae fuel has the capability of building that bridge to the future 
to lead the first generation renewables behind and move forward. The 
fact is that algae fuel is not only highly effective; algae fuel equals 
the fossil fuel one-to-one in energy capabilities.
  The fact is that algae fuel, as it gets developed, is capable of not 
just driving our cars, but flying our airplanes, of actually replacing 
diesel. Algae fuel has the capability of total compatibility with the 
existing infrastructure. Unlike other fuels, you do not have to ship 
algae fuel by truck from one location to the other, thus creating a 
whole new group of environmental and air pollution problems. You can 
transport it within the pipe systems that exist today. You can refine 
it in the refineries that exist today.
  Algae fuel has the capability of being 1, 2 percent, or 90 percent of 
the fuel stream within the existing infrastructure. It is totally 
compatible to be phased in, a huge benefit that does not exist with the 
first generation.
  Algae fuel has the ability to consume and sequester massive amounts 
of CO2, something that other fuels do not have the 
capability of doing along the line at the capability that they have 
here. And the drop-in capability and the capability is something we do 
not talk enough about.
  Algae fuels have been tested. We have had one aircraft that flew with 
algae fuel and not only was compatible, but was 4 percent more 
efficient than fossil fuels of comparable weight and volume.
  And the fact is, Madam Speaker, that we have the ability now to even 
the playing field when it comes to taxes. Why should Washington 
continue to choose winners and have alternatives that should be allowed 
to win hamstrung and punished because they weren't here with their 
lobbyists years ago when these laws were passed?
  This bill helps to correct the mistakes made in the past in our tax 
laws where Washington was choosing some to be winners and cutting out 
other people from participating in the system. We should allow winners 
to earn the right to be called winners and not be anointed by 
Washington or the legislators here in Washington. We should allow the 
technology and the products to compete on an open market, but equal tax 
benefits for everyone to be able to prove that America allows people to 
be innovative, to be creative, and we will not punish them just because 
they went down one technological road rather than the other.
  Our Tax Code should be equal. It should be neutral, and it should be 
outcome-based, not profit-based and, most importantly, not Washington 
lobbying-based. This bill now equalizes that to some degree; and that 
degree, I think is appropriate at this time.
  So it may not be doing everything we would like to do this week. It 
is not going to accomplish what I know we all know the American people 
want us to get accomplished before January 1 of 2011, but it does take 
a step in the right direction, helps to correct the mistake.
  And yes, Congressman, I will go back to talk to Arnold Schwarzenegger 
and say, damn it, we have got to change our regulation so we can 
produce this algae in California so you don't get all the jobs from 
this great technology breakthrough.
  Mr. CAMP. I yield back the balance of my time.
  Mr. McNERNEY. Madam Speaker, the House of Representatives passed H.R. 
4168, the Algae-based Renewable Fuel Promotion Act of 2009, a bill I am 
pleased to support. I would like to thank Mr. Teague for his efforts to 
incentivize the production of environmentally-friendly biofuels. Mr. 
Teague worked across party lines to advance bipartisan legislation, and 
he deserves recognition for his leadership.
  H.R. 4168 is a significant step forward, but I believe that 
additional refinements could help incentivize a broader array of 
environmentally friendly, economically viable biofuels. As we continue 
working to fine tune this legislation and related proposals, we should 
seek to ensure that federal tax policy treats all viable technologies 
fairly and equitably. I look forward to working with Mr. Teague, Mr. 
Bilbray, and other interested members to make sure that algal biofuels 
produced in Northern California fully benefit from this bill.
  Developing new sources of cellulosic biofuels is beneficial to the 
environment, the economy, and national security. I thank the authors of 
H.R. 4168 for their efforts.
  Mr. VAN HOLLEN. Madam Speaker, again, I want to thank the gentleman 
from New Mexico (Mr. Teague) for this initiative and just respond to a 
couple of the points raised by Mr. Camp, the ranking member of the Ways 
and Means Committee.
  First, this piece of the energy bill was brought to the floor for two 
reasons. Number one, it has strong bipartisan support, as you heard. In 
addition to Mr. Bilbray, Mrs. Bono Mack and Mr. Dreier are cosponsors 
of the legislation.
  And, secondly, this piece has no cost associated with it. And so 
those two aspects of the bill made it a good candidate for coming 
forward.
  Secondly, given the other comments made by the gentleman with respect 
to the importance of moving forward on tax relief for small businesses 
and others around the country, I would just remind the gentleman that 
just last Thursday, on the floor of this House, we had a vote on a bill 
for small business lending to make sure that we increased credit to 
struggling small businesses around the country to make sure that they 
could make payroll, to make sure that they could take on the costs that 
they needed to expand. And part of that bill also contained significant 
tax relief for small businesses.
  And it was ironic that many of our Republican colleagues were off-
site at a small business venture, and then came back to the Hill to 
vote against that bill, a bill that the Republican Senator, retiring 
Republican Senator from Ohio, Senator Voinovich said was important to 
small businesses, and has said it is time to put aside politics and get 
this done.

                              {time}  1730

  I am very pleased that the result of the action taken in this House 
and the Senate was the President signed that bill yesterday so that 
small businesses can have access to credit and small businesses will 
get the tax relief they need.
  We look forward in this body to being able to move on to make sure 
that middle class taxpayers, 98 percent of the American people, can get 
tax relief without being held hostage to the demand of the Senate 
Republican leader that we also provide budget-busting tax breaks to the 
folks at the very top, adding $700 billion to the deficit over the next 
10 years, which is fiscally reckless and which, in the long term, will 
crimp economic and job growth.
  Mr. VAN HOLLEN. Madam Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Maryland (Mr. Van Hollen) that the House suspend the 
rules and pass the bill, H.R. 4168, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

[[Page 16832]]



                          ____________________