I 

109TH CONGRESS 

2D SESSION H. R. 5509 

To amend the Internal Revenue Code of 1986 to clarify the tax credit 

for electricity produced from open-loop biomass. 

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

3 SECTION 1. CLARIFICATION OF CREDIT FOR ELECTRICITY 

4 PRODUCED FROM OPEN-LOOP BIOMASS. 

5 (a) REMOVAL OF REQUIREMENT FOR SEGREGATION

6 OF OPEN-LOOP BIOMASS FROM OTHER WASTE.—Clause 

7 (ii) of section 45(c)(3)(A) of the Internal Revenue Code 

8 of 1986 (defining open-loop biomass) is amended by strik9 ing ‘‘which is segregated from other waste materials and’’. 


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1 (b) LIMITATION BASED ON BIOMASS COFIRING WITH

2 NONQUALIFIED FUEL.—Subsection (b) of section 45 of 

3 such Code (relating to limitations and adjustments) is 

4 amended by adding at the end the following new para5 graph: 

6 ‘‘(5) OPEN-LOOP BIOMASS COFIRED WITH NON7 QUALIFIED FUEL.— 

8 ‘‘(A) IN GENERAL.—In the case of elec9 tricity produced by a facility described in sub10 section (d)(3), the credit determined under sub11 section (a) shall be the applicable percentage of 

12 such credit, determined without regard to this 

13 paragraph and after the application of para14 graphs (1), (3), and (4) of this subsection. 

15 ‘‘(B) APPLICABLE PERCENTAGE.—For 

16 purposes of subparagraph (A), the applicable 

17 percentage is 100 percent, reduced by the num18 ber of percentage points of excess nonqualified 

19 fuel consumption for the taxable year. In the 

20 event the percentage points of excess non21 qualified fuel consumption exceeds 20 percent 

22 in the taxable year, the credit under subsection 

23 (a) shall be zero for that taxable year. 

24 ‘‘(C) EXCESS NONQUALIFIED FUEL CON25 SUMPTION.—The term ‘excess nonqualified fuel 


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1 consumption’ means, with respect to any facil2 ity, the excess (if any) of the nonqualified fuel 

3 consumption percentage for such facility for the 

4 taxable year over 5 percent. 

5 ‘‘(D) NONQUALIFIED FUEL CONSUMPTION

6 PERCENTAGE.—The term ‘nonqualified fuel 

7 consumption percentage’ means, with respect to 

8 a facility described in subsection (d)(3), the 

9 ratio (expressed as a percentage) which the 

10 quantity of fuel which is not open-loop biomass 

11 consumed for a taxable year by such facility 

12 bears to the total fuel consumed by such facility 

13 for such taxable year. 

14 ‘‘(E) DETERMINATION BASED ON

15 WEIGHT.—For purposes of this paragraph, the 

16 determination of fuel consumed shall be based 

17 on the weight of such fuel.’’. 

18 (c) INCREMENTS OF ADDITIONAL CAPACITY.—Sub19 paragraph (A) of section 45(d)(3) of such Code (defining 

20 open-loop biomass facilities) is amended by adding at the 

21 end the following new flush sentence: ‘‘Such term shall 

22 include a new unit placed in service in connection with 

23 a facility placed in service on or before the date of the 

24 enactment of this sentence, but only to the extent of the 

25 increased amount of electricity produced at the facility by 


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1 reason of such new unit. For purposes of subsection 

2 (b)(5), the new unit shall be treated as a separate facil3 ity.’’. 

4 (d) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to electricity produced and sold 

6 after December 31, 2004. 

Æ 


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