II 

109TH CONGRESS 

2D SESSION S. 3840 

To amend the Internal Revenue Code of 1986 to provide a tax incentive 

to produce ethanol in high-consumption, low-production States, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 5, 2006 

Mr. SCHUMER 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 provide 

a tax incentive to produce ethanol in high-consumption, 

low-production States, and for other purposes. 

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 ‘‘Ethanol Stimulus Act 

5 of 2006’’. 

6 SEC. 2. ETHANOL PRODUCTION TAX INCENTIVES IN HIGH7 CONSUMPTION, LOW-PRODUCTION STATES. 

8 (a) IN GENERAL.—Section 40(b)(4) of the Internal 

9 Revenue Code of 1986 (relating to small ethanol producer 


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1 credit) is amended by adding at the end the following new 

2 subparagraph: 

3 ‘‘(E) CREDIT FOR ETHANOL PRODUCTION

4 IN TWO-TWO STATES.— 

5 ‘‘(i) IN GENERAL.—In the case of 

6 qualified ethanol production by any eligible 

7 small ethanol producer in all eligible eth8 anol production facilities of such pro9 ducer— 

10 ‘‘(I) subparagraph (A) shall be 

11 applied by substituting ‘20 cents’ for 

12 ‘10 cents’, and 

13 ‘‘(II) subparagraph (C) shall be 

14 applied by substituting ‘50,000,000 

15 gallons’ for ‘15,000,000 gallons’. 

16 ‘‘(ii) 5-YEAR PER FACILITY LIMITA17 TION ON CREDIT AMOUNT.—With respect 

18 to each eligible ethanol production facility, 

19 the credit determined under this section by 

20 reason of this subparagraph shall apply to 

21 production from such facility for the pe22 riod— 

23 ‘‘(I) beginning with the taxable 

24 year during which production from 

25 such facility begins, and 


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1 ‘‘(II) ending on the last day of 

2 the fourth taxable year following the 

3 taxable year described in subclause 

4 (I). 

5 ‘‘(iii) ELIGIBLE ETHANOL PRODUC6 TION FACILITY.—For purposes of this sub7 paragraph, the term ‘eligible ethanol pro8 duction facility’ means any ethanol produc9 tion facility the original use of which com10 mences with the taxpayer and— 

11 ‘‘(I) which is acquired by pur12 chase (as defined in section 

13 179(d)(2)) by the taxpayer after Au14 gust 8, 2005, and before August 9, 

15 2010, but only if no written binding 

16 contract for the acquisition was in ef17 fect before August 9, 2005, 

18 ‘‘(II) which is acquired by the 

19 taxpayer pursuant to a written bind20 ing contract which was entered into 

21 after August 8, 2005, and before Au22 gust 9, 2010, or 

23 ‘‘(III) in the case of a taxpayer 

24 constructing property for the tax25 payer’s own use, the construction of 


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1 which begins after August 8, 2005, 

2 and before August 9, 2010, 

3 in a State which is a two-two State on the 

4 date of such purchase under subclause (I), 

5 of such written binding contract under 

6 subclause (II), or the beginning of such 

7 construction under subclause (III). 

8 ‘‘(iv) TWO-TWO STATE.—For purposes 

9 of this subparagraph, the term ‘two-two 

10 State’ means for any period any State (as 

11 determined by the Energy Information Ad12 ministration) within which— 

13 ‘‘(I) is consumed more than 2 

14 percent of the aggregate amount of 

15 gasoline consumed in all States during 

16 such period, and 

17 ‘‘(II) is produced less than 2 per18 cent of the aggregate amount of eth19 anol produced in all States during 

20 such period.’’. 

21 (b) ELIGIBLE SMALL ETHANOL PRODUCER.—Sec22 tion 40(g)(1) of the Internal Revenue Code of 1986 (defin23 ing eligible small ethanol producer) is amended by insert24 ing ‘‘(150,000,000 gallons in the case of such productive 


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1 capacity in all two-two States (as defined in subsection 

2 (b)(4)(E)(iv))’’ after ‘‘60,000,000 gallons’’. 

3 (c) CONFORMING AMENDMENT.—Section 40(g)(2) of 

4 the Internal Revenue Code of 1986 is amended by striking 

5 ‘‘For purposes of the 15,000,000 gallon limitation under 

6 subsection (b)(4)(C) and the 60,000,000 gallon limitation 

7 under paragraph (1)’’ and inserting ‘‘For purposes of each 

8 gallon limitation under subsection (b)(4) and paragraph 

9 (1)’’. 

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

11 this section shall apply to ethanol produced in taxable 

12 years ending after the date of the enactment of this Act. 

Æ 


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