facility’ means a facility constructed with the 
primary purpose of the production of transpor-
tation-grade qualified cellulosic biofuel produc-
tion (as defined in subparagraph (C) of section 
40(b)(6)) or qualified algae-based biofuel pro-
duction (as defined in section (F) of such sec-
tion) if no credit has been allowed under section 
40 with respect to such facility and the tax-
payer makes an irrevocable election to have this 
paragraph apply to such facility. 
‘‘(D) TERMINATION.—No election may be 
made under subparagraph (C) after December 
31, 2016.’’. 
(b) SPECIAL ALLOWANCE FOR CELLULOSIC BIOFUEL 
PLANT PROPERTY.— 
(1) EXTENSION
OF.—Paragraphs (2)(D) and 
(5)(B) of section 168(l) of such Code are each 
amended by striking ‘‘January 1, 2013’’ and insert-
ing ‘‘January 1, 2017’’. 
(2) COORDINATION
WITH
CREDIT.—Section 
168(l)(8) of such Code is amended by inserting ‘‘or 
under section 48(a)(6)(C) (relating to election to 
treat qualified cellulosic and algae-based biofuel fa-
cility as energy property)’’ before the period at the 
end. 
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(c) CONFORMING AMENDMENT.—Section 48(a)(3) of 
such Code is amended by striking ‘‘section 45’’ and insert-
ing ‘‘section 40 or 45’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act. 
SEC. 3. INCLUSION OF ALGAE-BASED BIOFUEL IN DEFINI-
TION OF CELLULOSIC BIOFUEL. 
(a) CELLULOSIC BIOFUEL PRODUCER CREDIT.— 
(1) GENERAL RULE.—Paragraph (4) of section 
40(a) of the Internal Revenue Code of 1986 is 
amended by inserting ‘‘and algae-based’’ after ‘‘cel-
lulosic’’. 
(2) DEFINITIONS.—Paragraph (6) of section 
40(b) of such Code is amended— 
(A) by inserting ‘‘AND
ALGAE-BASED’’ 
after ‘‘CELLULOSIC’’ in the heading, 
(B) by striking subparagraph (A) and in-
serting the following: 
‘‘(A) IN
GENERAL.—The cellulosic and 
algae-based biofuel producer credit of any tax-
payer is an amount equal to the applicable 
amount for each gallon of— 
‘‘(i) qualified cellulosic biofuel produc-
tion, and 
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‘‘(ii) qualified algae-based biofuel pro-
duction.’’, 
(C) by redesignating subparagraphs (F), 
(G), and (H) as subparagraphs (I), (J), and 
(K), respectively, 
(D) by inserting ‘‘AND
ALGAE-BASED’’ 
after ‘‘CELLULOSIC’’ in the heading of subpara-
graph (I), as so redesignated, 
(E) by inserting ‘‘or algae-based biofuel, 
whichever is appropriate,’’ after ‘‘cellulosic 
biofuel’’ in subparagraph (J), as so redesig-
nated, 
(F) by inserting ‘‘and qualified algae-based 
biofuel production’’ after ‘‘qualified cellulosic 
biofuel production’’ in subparagraph (K), as so 
redesignated, and 
(G) by inserting after subparagraph (E) 
the following new subparagraphs: 
‘‘(F) QUALIFIED
ALGAE-BASED
BIOFUEL 
PRODUCTION.—For purposes of this section, 
the term ‘qualified algae-based biofuel produc-
tion’ means any algae-based biofuel which is 
produced by the taxpayer, and which during the 
taxable year— 
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‘‘(i) is sold by the taxpayer to another 
person— 
‘‘(I) for use by such other person 
in the production of a qualified algae- 
based biofuel mixture in such other 
person’s trade or business (other than 
casual off-farm production), 
‘‘(II) for use by such other per-
son as a fuel in a trade or business, 
or 
‘‘(III) who sells such algae-based 
biofuel at retail to another person and 
places such algae-based biofuel in the 
fuel tank of such other person, or 
‘‘(ii) is used or sold by the taxpayer 
for any purpose described in clause (i). 
The qualified algae-based biofuel production of 
any taxpayer for any taxable year shall not in-
clude any alcohol which is purchased by the 
taxpayer and with respect to which such pro-
ducer increases the proof of the alcohol by addi-
tional distillation. 
‘‘(G) QUALIFIED
ALGAE-BASED
BIOFUEL 
MIXTURE.—For purposes of this paragraph, the 
term ‘qualified algae-based biofuel mixture’ 
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means a mixture of algae-based biofuel and gas-
oline or of algae-based biofuel and a special fuel 
which— 
‘‘(i) is sold by the person producing 
such mixture to any person for use as a 
fuel, or 
‘‘(ii) is used as a fuel by the person 
producing such mixture. 
‘‘(H) ALGAE-BASED
BIOFUEL.—For pur-
poses of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘algae- 
based biofuel’ means any liquid fuel, in-
cluding gasoline, diesel, aviation fuel, and 
ethanol, which— 
‘‘(I) is produced from the bio-
mass of algal organisms, and 
‘‘(II) meets the registration re-
quirements for fuels and fuel additives 
established by the Environmental Pro-
tection Agency under section 211 of 
the Clean Air Act (42 U.S.C. 7545). 
‘‘(ii) ALGAL
ORGANISM.—The term 
‘algal organism’ means a single- or multi- 
cellular organism which is primarily aquat-
ic and classified as a non-vascular plant, 
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including 
microalgae, 
blue-green 
algae 
(cyanobacteria), 
and 
macroalgae 
(sea-
weeds). 
‘‘(iii) EXCLUSION OF LOW-PROOF AL-
COHOL.—Such term shall not include any 
alcohol with a proof of less than 150. The 
determination of the proof of any alcohol 
shall be made without regard to any added 
denaturants.’’. 
(3) CONFORMING AMENDMENTS.— 
(A) Subparagraph (D) of section 40(d)(3) 
of such Code is amended— 
(i) by inserting ‘‘AND ALGAE-BASED’’ 
after ‘‘CELLULOSIC’’ in the heading, 
(ii) by inserting ‘‘or (b)(6)(F)’’ after 
‘‘(b)(6)(C)’’ in clause (ii), and 
(iii) by inserting ‘‘or algae-based’’ 
after ‘‘such cellulosic’’. 
(B) Paragraph (6) of section 40(d) of such 
Code is amended— 
(i) by inserting ‘‘AND ALGAE-BASED’’ 
after ‘‘CELLULOSIC’’ in the heading, and 
(ii) by striking the first sentence and 
inserting ‘‘No cellulosic and algae-based 
biofuel producer credit shall be determined 
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under subsection (a) with respect to any 
cellulosic or algae-based biofuel unless such 
cellulosic or algae-based biofuel is produced 
in the United States and used as a fuel in 
the United States.’’. 
(C) Paragraph (3) of section 40(e) of such 
Code is amended by inserting ‘‘AND
ALGAE- 
BASED’’ after ‘‘CELLULOSIC’’ in the heading. 
(D) Paragraph (1) of section 4101(a) of 
such Code is amended— 
(i) by inserting ‘‘or algae-based’’ after 
‘‘cellulosic’’, and 
(ii) by inserting ‘‘and 40(b)(6)(H), re-
spectively’’ after ‘‘section 40(b)(6)(E)’’. 
(b) SPECIAL ALLOWANCE FOR CELLULOSIC BIOFUEL 
PLANT PROPERTY.—Subsection (l) of section 168 of such 
Code is amended— 
(1) by inserting ‘‘AND ALGAE-BASED’’ after 
‘‘CELLULOSIC’’ in the heading, 
(2) by inserting ‘‘and any qualified algae-based 
biofuel plant property’’ after ‘‘qualified cellulosic 
biofuel plant property’’ in paragraph (1), 
(3) by redesignating paragraphs (4) through 
(8) as paragraphs (6) through (10), respectively, 
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the date of the enactment of this paragraph, 
but only if no written binding contract for the 
acquisition was in effect on or before such date, 
and 
‘‘(D) which is placed in service by the tax-
payer before January 1, 2017. 
‘‘(5) ALGAE-BASED BIOFUEL.— 
‘‘(A) IN GENERAL.—The term ‘algae-based 
biofuel’ means any liquid fuel which is produced 
from the biomass of algal organisms. 
‘‘(B) ALGAL ORGANISM.—The term ‘algal 
organism’ means a single- or multi-cellular or-
ganism which is primarily aquatic and classified 
as a non-vascular plant, including microalgae, 
blue-green 
algae 
(cyanobacteria), 
and 
macroalgae (seaweeds).’’. 
(c) EFFECTIVE DATES.— 
(1) CELLULOSIC
BIOFUEL
PRODUCER
CRED-
IT.—The amendments made by subsection (a) shall 
apply to fuel produced after the date of the enact-
ment of this Act. 
(2) SPECIAL
ALLOWANCE
FOR
CELLULOSIC 
BIOFUEL
PLANT
PROPERTY.—The 
amendments 
made by subsection (b) shall apply to property pur-
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chased and placed in service after the date of the en-
actment of this Act. 
SEC. 4. CRUDE TALL OIL INELIGIBLE FOR CELLULOSIC 
AND 
ALGAE-BASED 
BIOFUEL 
PRODUCER 
CREDIT. 
(a) IN GENERAL.—Paragraph (6) of section 40(b) of 
the Internal Revenue Code of 1986 is amended by redesig-
nating subparagraphs (I), (J), and (K), as designated by 
section 3(a)(2)(C) of this Act, as subparagraphs (J), (K), 
and (L), respectively, and by inserting after subparagraph 
(H) the following new subparagraph: 
‘‘(I) EXCLUSION OF CERTAIN PROCESSED 
FUELS
WITH
A
HIGH
ACID
CONTENT.—The 
terms 
‘cellulosic 
biofuel’ 
and 
‘algae-based 
biofuel’ shall not include any processed fuel 
with an acid number greater than 25. For pur-
poses of the preceding sentence, the term ‘proc-
essed fuel’ means any fuel other than a fuel— 
‘‘(i) more than 4 percent of which (de-
termined by weight) is any combination of 
water and sediment, or 
‘‘(ii) the ash content of which is more 
than 1 percent (determined by weight).’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to fuels sold or used on or after 
the date of the enactment of this Act. 
SEC. 5. EXTENSION OF CELLULOSIC AND ALGAE-BASED 
BIOFUEL PRODUCER CREDIT. 
Subparagraph (L) of section 40(b)(6) of the Internal 
Revenue Code of 1986, as amended by sections 3 and 4 
of this Act, is amended by striking ‘‘January 1, 2013’’ 
and inserting ‘‘January 1, 2017’’. 
SEC. 6. ELECTIVE PAYMENT FOR CELLULOSIC AND ALGAE- 
BASED BIOFUEL FACILITY PROPERTY. 
(a) IN GENERAL.—Chapter 65 of the Internal Rev-
enue Code of 1986 (relating to abatements, credits, and 
refunds) is amended by adding at the end the following 
new subchapter: 
‘‘Subchapter C—Direct Payment Provisions 
‘‘Sec. 6451. Elective payment for cellulosic and algae-based biofuel facility 
property. 
‘‘SEC. 6451. ELECTIVE PAYMENT FOR CELLULOSIC AND 
ALGAE-BASED BIOFUEL FACILITY PROPERTY. 
‘‘(a) IN GENERAL.—Any person making an election 
under this section with respect to any specified cellulosic 
and algae-based biofuel facility property originally placed 
in service by such person during the taxable year shall 
be treated as making a payment, against the tax imposed 
by subtitle A for the taxable year equal to 30 percent of 
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the basis of such property. Such payment shall be treated 
as made on the later of the due date of the return of such 
tax or the date on which such return is filed. 
‘‘(b) SPECIFIED CELLULOSIC
AND ALGAE-BASED 
BIOFUEL FACILITY PROPERTY.—For purposes of this sec-
tion, the term ‘specified cellulosic and algae-based biofuel 
facility property’ means a qualified cellulosic and algae- 
based biofuel facility (as defined by section 48(a)(6)(C) 
which— 
‘‘(1) is property of a character subject to an al-
lowance for depreciation, and 
‘‘(2) is originally placed in service before Janu-
ary 1, 2017. 
‘‘(c) SPECIAL
RULES
FOR
CERTAIN
NON-TAX-
PAYERS.— 
‘‘(1) DENIAL
OF
PAYMENT.—Subsection (a) 
shall not apply with respect to any property origi-
nally placed in service by— 
‘‘(A) any governmental entity, 
‘‘(B) any organization described in section 
501(c) or 401(a) and exempt from tax under 
section 501(a), or 
‘‘(C) any entity referred to in paragraph 
(4) of section 54(j), or 
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‘‘(D) any partnership or other pass-thru 
entity any partner (or other holder of an equity 
or profits interest) of which is described in 
paragraph (1), (2), or (3). 
‘‘(2) EXCEPTION FOR PROPERTY USED IN UN-
RELATED
TRADE
OR
BUSINESS.—Paragraph (1) 
shall not apply with respect to any property origi-
nally placed in service by an entity described in sec-
tion 511(a)(2) if substantially all of the income de-
rived from such property by such entity is unrelated 
business taxable income (as defined in section 512). 
‘‘(3) SPECIAL RULES FOR PARTNERSHIPS AND 
S CORPORATIONS.—In the case of property originally 
placed in service by a partnership or an S corpora-
tion— 
‘‘(A) the election under subsection (a) may 
be made only by such partnership or S corpora-
tion, 
‘‘(B) such partnership or S corporation 
shall be treated as making the payment referred 
to in subsection (a) only to the extent of the 
proportionate share of such partnership or S 
corporation as is owned by persons who would 
be treated as making such payment if the prop-
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