I 
109TH CONGRESS 
2D SESSION 
H. R. 5950 
To repeal certain tax subsidies enacted by the Energy Policy Act of 2005 
for oil and gas, to allow a credit against income tax for farm diesel 
expenses, and to allow a credit to farmers who produce biodiesel and 
agri-biodiesel. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 27, 2006 
Mr. UDALL of New Mexico introduced the following bill; which was referred 
to the Committee on Ways and Means 
A BILL 
To repeal certain tax subsidies enacted by the Energy Policy 
Act of 2005 for oil and gas, to allow a credit against 
income tax for farm diesel expenses, and to allow a 
credit to farmers who produce biodiesel and agri-bio-
diesel. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Family Farm Energy 
Relief Act of 2006’’. 
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SEC. 2. REPEAL OF TAX SUBSIDIES ENACTED BY THE EN-
ERGY POLICY ACT OF 2005 FOR OIL AND GAS. 
(a) REPEAL.—The following provisions, and amend-
ments made by such provisions, of the Energy Policy Act 
of 2005 are hereby repealed: 
(1) Section 1323 (relating to temporary expens-
ing for equipment used in refining of liquid fuels). 
(2) Section 1324 (relating to pass through to 
owners of deduction for capital costs incurred by 
small refiner cooperatives in complying with Envi-
ronmental Protection Agency sulfur regulations). 
(3) Section 1325 (relating to natural gas dis-
tribution lines treated as 15-year property). 
(4) Section 1326 (relating to natural gas gath-
ering lines treated as 7-year property). 
(5) Section 1328 (relating to determination of 
small refiner exception to oil depletion deduction). 
(6) Section 1329 (relating to amortization of 
geological and geophysical expenditures). 
(b) ADMINISTRATION OF INTERNAL REVENUE CODE 
OF 1986.—The Internal Revenue Code of 1986 shall be 
applied and administered as if the provisions, and amend-
ments, specified in subsection (a) had never been enacted. 
SEC. 3. FARM DIESEL PURCHASES CREDIT. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
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1986 (relating to nonrefundable personal credits) is 
amended by inserting after section 25D the following new 
section: 
‘‘SEC. 25E. FARM DIESEL EXPENSES CREDIT. 
‘‘(a) ALLOWANCE
OF CREDIT.—In the case of a 
qualified farmer, there shall be allowed as a credit against 
the tax imposed by this chapter for the taxable year an 
amount equal to 10 percent of the farm diesel expenses 
paid or incurred by the qualified farmer during the taxable 
year. 
‘‘(b) QUALIFIED FARMER.—For purposes of this sec-
tion, with respect to a taxable year, the term ‘qualified 
farmer’ means an individual— 
‘‘(1) who is actively engaged in farming, 
‘‘(2) whose contributions to a farming operation 
during the taxable year are at least commensurate 
with the individual’s claimed share of the profits or 
losses of the farming operation, and 
‘‘(3) whose gross income from farming for the 
taxable year is at least 75 percent of the individual’s 
total gross income from all sources for the taxable 
year. 
‘‘(c) FARM DIESEL EXPENSES.—For purposes of this 
section, the term ‘farm diesel expenses’ means amounts 
paid or incurred for the purchase of diesel fuel that is de-
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scribed in section 4082(a) and is intended to be used for 
farming purposes. 
‘‘(d) TERMINATION.—This section shall not apply 
with respect to farm diesel expenses paid or incurred in 
taxable years beginning after December 31, 2009.’’. 
(b) CLERICAL AMENDMENT.—The table of items for 
subpart A of part IV of subchapter A of chapter 1 of such 
Code is amended by inserting after the item relating to 
section 25D the following new item: 
‘‘Sec. 25E. Farm diesel expenses credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to farm diesel expenses paid or 
incurred in taxable years beginning after the date of the 
enactment of this Act. 
SEC. 4. INCREASE IN SMALL AGRI-BIODIESEL PRODUCER 
CREDIT FOR QUALIFIED FARMERS. 
(a) IN GENERAL.—Paragraph (5) of section 40A(b) 
of the Internal Revenue Code of 1986 (relating to small 
agri-biodiesel producer credit) is amended by adding at the 
end the following new subparagraph: 
‘‘(D) INCREASE
FOR
QUALIFIED
FARM-
ERS.—In the case of an eligible small agri-bio-
diesel producer who is a qualified farmer, sub-
paragraph (A) shall be applied by substituting 
‘20 cents’ for ‘10 cents’.’’. 
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(b) QUALIFIED FARMER.—Subsection (e) of section 
40A of such Code (relating to definitions and special rules 
for small agri-biodiesel producer credit) is amended by 
adding at the end the following new paragraph: 
‘‘(7) QUALIFIED FARMER.—With respect to a 
taxable year, the term ‘qualified farmer’ means an 
individual— 
‘‘(A) who is actively engaged in farming, 
‘‘(B) whose contributions to a farming op-
eration during the taxable year are at least 
commensurate with the individual’s claimed 
share of the profits or losses of the farming op-
eration, and 
‘‘(C) whose gross income from farming for 
the taxable year is at least 75 percent of the in-
dividual’s total gross income from all sources 
for the taxable year.’’. 
(c) EFFECTIVE DATE.—The amendments by this sec-
tion shall apply to qualified agri-biodiesel production after 
December 31, 2006, in taxable years beginning after such 
date. 
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