II 

111TH CONGRESS 

1ST SESSION S. 1250 

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. 

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 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Algae-based Renewable 

5 Fuel Promotion Act of 2009’’. 


smartinez on PROD1PC64 with BILLS
2 

•S 1250 IS

1 SEC. 2. INCLUSION OF ALGAE-BASED BIOFUEL IN DEFINI2 TION OF CELLULOSIC BIOFUEL. 

3 (a) CELLULOSIC BIOFUEL PRODUCER CREDIT.— 

4 (1) GENERAL RULE.—Paragraph (4) of section 

5 40(a) of the Internal Revenue Code of 1986 is 

6 amended by inserting ‘‘and algae-based’’ after ‘‘cel7 lulosic’’. 

8 (2) DEFINITIONS.—Paragraph (6) of section 

9 40(b) of such Code is amended— 

10 (A) by inserting ‘‘AND ALGAE-BASED’’ 

11 after ‘‘CELLULOSIC’’ in the heading, 

12 (B) by striking subparagraph (A) and in13 serting the following: 

14 ‘‘(A) IN GENERAL.—The cellulosic and 

15 algae-based biofuel producer credit of any tax16 payer is an amount equal to the applicable 

17 amount for each gallon of— 

18 ‘‘(i) qualified cellulosic biofuel produc19 tion, and 

20 ‘‘(ii) qualified algae-based biofuel pro21 duction.’’, 

22 (C) by redesignating subparagraphs (F), 

23 (G), and (H) as subparagraphs (I), (J), and 

24 (K), respectively, 


smartinez on PROD1PC64 with BILLS
3 

•S 1250 IS

1 (D) by inserting ‘‘AND ALGAE-BASED’’ 

2 after ‘‘CELLULOSIC’’ in the heading of subpara3 graph (I), as so redesignated, 

4 (E) by inserting ‘‘or algae-based biofuel, 

5 whichever is appropriate,’’ after ‘‘cellulosic 

6 biofuel’’ in subparagraph (J), as so redesig7 nated, 

8 (F) by inserting ‘‘and qualified algae-based 

9 biofuel production’’ after ‘‘qualified cellulosic 

10 biofuel production’’ in subparagraph (K), as so 

11 redesignated, and 

12 (G) by inserting after subparagraph (E) 

13 the following new subparagraphs: 

14 ‘‘(F) QUALIFIED ALGAE-BASED BIOFUEL

15 PRODUCTION.—For purposes of this section, 

16 the term ‘qualified algae-based biofuel produc17 tion’ means any algae-based biofuel which is 

18 produced by the taxpayer, and which during the 

19 taxable year— 

20 ‘‘(i) is sold by the taxpayer to another 

21 person— 

22 ‘‘(I) for use by such other person 

23 in the production of a qualified algae24 based biofuel mixture in such other 


smartinez on PROD1PC64 with BILLS
4 

•S 1250 IS

1 person’s trade or business (other than 

2 casual off-farm production), 

3 ‘‘(II) for use by such other per4 son as a fuel in a trade or business, 

5 or 

6 ‘‘(III) who sells such algae-based 

7 biofuel at retail to another person and 

8 places such algae-based biofuel in the 

9 fuel tank of such other person, or 

10 ‘‘(ii) is used or sold by the taxpayer 

11 for any purpose described in clause (i). 

12 The qualified algae-based biofuel production of 

13 any taxpayer for any taxable year shall not in14 clude any alcohol which is purchased by the 

15 taxpayer and with respect to which such pro16 ducer increases the proof of the alcohol by addi17 tional distillation. 

18 ‘‘(G) QUALIFIED ALGAE-BASED BIOFUEL

19 MIXTURE.—For purposes of this paragraph, the 

20 term ‘qualified algae-based biofuel mixture’ 

21 means a mixture of algae-based biofuel and gas22 oline or of algae-based biofuel and a special fuel 

23 which— 


smartinez on PROD1PC64 with BILLS
5 

•S 1250 IS

1 ‘‘(i) is sold by the person producing 

2 such mixture to any person for use as a 

3 fuel, or 

4 ‘‘(ii) is used as a fuel by the person 

5 producing such mixture. 

6 ‘‘(H) ALGAE-BASED BIOFUEL.—For pur7 poses of this paragraph— 

8 ‘‘(i) IN GENERAL.—The term ‘algae9 based biofuel’ means any liquid fuel, in10 cluding gasoline, diesel, aviation fuel, and 

11 ethanol, which— 

12 ‘‘(I) is produced from the bio13 mass of algal organisms, and 

14 ‘‘(II) meets the registration re15 quirements for fuels and fuel additives 

16 established by the Environmental Pro17 tection Agency under section 211 of 

18 the Clean Air Act (42 U.S.C. 7545). 

19 ‘‘(ii) ALGAL ORGANISM.—The term 

20 ‘algal organism’ means a single- or multi21 cellular organism which is primarily aquat22 ic and classified as a non-vascular plant, 

23 including microalgae, blue-green algae 

24 (cyanobacteria), and macroalgae (sea25 weeds). 


smartinez on PROD1PC64 with BILLS
6 

•S 1250 IS

1 ‘‘(iii) EXCLUSION OF LOW-PROOF AL2 COHOL.—Such term shall not include any 

3 alcohol with a proof of less than 150. The 

4 determination of the proof of any alcohol 

5 shall be made without regard to any added 

6 denaturants.’’. 

7 (3) CONFORMING AMENDMENTS.— 

8 (A) Subparagraph (D) of section 40(d)(3) 

9 of such Code is amended— 

10 (i) by inserting ‘‘AND ALGAE-BASED’’ 

11 after ‘‘CELLULOSIC’’ in the heading, 

12 (ii) by inserting ‘‘or (b)(6)(F)’’ after 

13 ‘‘(b)(6)(C)’’ in clause (ii), and 

14 (iii) by inserting ‘‘or algae-based’’ 

15 after ‘‘such cellulosic’’. 

16 (B) Paragraph (6) of section 40(d) of such 

17 Code is amended— 

18 (i) by inserting ‘‘AND ALGAE-BASED’’ 

19 after ‘‘CELLULOSIC’’ in the heading, and 

20 (ii) by striking the first sentence and 

21 inserting ‘‘No cellulosic and algae-based 

22 biofuel producer credit shall be determined 

23 under subsection (a) with respect to any 

24 cellulosic or algae-based biofuel unless such 

25 cellulosic or algae-based biofuel is produced 


smartinez on PROD1PC64 with BILLS
7 

•S 1250 IS

1 in the United States and used as a fuel in 

2 the United States.’’ 

3 (C) Paragraph (3) of section 40(e) of such 

4 Code is amended by inserting ‘‘AND ALGAE5 BASED’’ after ‘‘CELLULOSIC’’ in the heading. 

6 (D) Paragraph (1) of section 4101(a) of 

7 such Code is amended— 

8 (i) by inserting ‘‘or algae-based’’ after 

9 ‘‘cellulosic’’, and 

10 (ii) by inserting ‘‘and 40(b)(6)(H), re11 spectively’’ after ‘‘section 40(b)(6)(E)’’. 

12 (b) SPECIAL ALLOWANCE FOR CELLULOSIC BIOFUEL

13 PLANT PROPERTY.—Subsection (l) of section 168 of the 

14 Internal Revenue Code of 1986 is amended— 

15 (1) by inserting ‘‘AND ALGAE-BASED’’ after 

16 ‘‘CELLULOSIC’’ in the heading, 

17 (2) by inserting ‘‘and any qualified algae-based 

18 biofuel plant property’’ after ‘‘qualified cellulosic 

19 biofuel plant property’’ in paragraph (1), 

20 (3) by redesignating paragraphs (4) through 

21 (8) as paragraphs (6) through (10), respectively, 

22 (4) by inserting ‘‘or qualified algae-based 

23 biofuel plant property’’ after ‘‘cellulosic biofuel plant 

24 property’’ in paragraph (7)(C), as so redesignated, 


smartinez on PROD1PC64 with BILLS
8 

•S 1250 IS

1 (5) by striking ‘‘with respect to’’ and all that 

2 follows in paragraph (9), as so redesignated, and in3 serting ‘‘with respect to any qualified cellulosic 

4 biofuel plant property and any qualified algae-based 

5 biofuel plant property which ceases to be such quali6 fied property.’’, 

7 (6) by inserting ‘‘or qualified algae-based 

8 biofuel plant property’’ after ‘‘cellulosic biofuel plant 

9 property’’ in paragraph (10), as so redesignated, and 

10 (7) by inserting after paragraph (3) the fol11 lowing new paragraphs: 

12 ‘‘(4) QUALIFIED ALGAE-BASED BIOFUEL PLANT

13 PROPERTY.—The term ‘qualified algae-based biofuel 

14 plant property’ means property of a character sub15 ject to the allowance for depreciation— 

16 ‘‘(A) which is used in the United States 

17 solely to produce algae-based biofuel, 

18 ‘‘(B) the original use of which commences 

19 with the taxpayer after December 31, 2008, 

20 ‘‘(C) which is acquired by the taxpayer by 

21 purchase (as defined in section 179(d)) after 

22 December 31, 2008, but only if no written bind23 ing contract for the acquisition was in effect on 

24 or before such date, and 


smartinez on PROD1PC64 with BILLS
9 

•S 1250 IS

1 ‘‘(D) which is placed in service by the tax2 payer before January 1, 2013. 

3 ‘‘(5) ALGAE-BASED BIOFUEL.— 

4 ‘‘(A) IN GENERAL.—The term ‘algae-based 

5 biofuel’ means any liquid fuel which is produced 

6 from the biomass of algal organisms. 

7 ‘‘(B) ALGAL ORGANISM.—The term ‘algal 

8 organism’ means a single- or multi-cellular or9 ganism which is primarily aquatic and classified 

10 as a non-vascular plant, including microalgae, 

11 blue-green algae (cyanobacteria), and 

12 macroalgae (seaweeds).’’. 

13 (c) EFFECTIVE DATES.— 

14 (1) CELLULOSIC BIOFUEL PRODUCER CRED15 IT.—The amendments made by subsection (a) shall 

16 apply to fuel produced after December 31, 2008. 

17 (2) SPECIAL ALLOWANCE FOR CELLULOSIC

18 BIOFUEL PLANT PROPERTY.—The amendments 

19 made by subsection (b) shall apply to property pur20 chased and placed in service after December 31, 

21 2008. 

Æ 


smartinez on PROD1PC64 with BILLS