I 
114TH CONGRESS 
2D SESSION 
H. R. 5240 
To amend the Internal Revenue Code of 1986 to modify the incentives 
for biodiesel. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 13, 2016 
Mrs. NOEM (for herself, Mr. PASCRELL, Mr. PETERSON, Mr. LOEBSACK, Mr. 
SMITH of Nebraska, Mr. BLUM, and Mr. SMITH of Missouri) 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 modify 
the incentives for biodiesel. 
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 ‘‘Biodiesel Tax Incentive 
Reform and Extension Act of 2016’’. 
SEC. 2. REFORM OF BIODIESEL TAX INCENTIVES. 
(a) INCOME TAX CREDIT.— 
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(1) IN GENERAL.—So much of section 40A of 
the Internal Revenue Code as precedes subsection 
(c) is amended to read as follows: 
‘‘SEC. 40A. BIODIESEL FUELS CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 38, the 
biodiesel fuels credit determined under this section for the 
taxable year is $1.00 for each gallon of biodiesel produced 
by the taxpayer which during the taxable year— 
‘‘(1) is sold by the taxpayer to another per-
son— 
‘‘(A) for use by such other person’s trade 
or business as a fuel or in the production of a 
qualified biodiesel mixture (other than casual 
off-farm production), or 
‘‘(B) who sells such biodiesel at retail to 
another person and places such biodiesel in the 
fuel tank of such other person, or 
‘‘(2) is used by such taxpayer for any purpose 
described in paragraph (1). 
‘‘(b) INCREASED CREDIT FOR SMALL PRODUCERS.— 
‘‘(1) IN GENERAL.—In the case of any eligible 
small biodiesel producer, subsection (a) shall be ap-
plied by increasing the dollar amount contained 
therein by 10 cents. 
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‘‘(2) LIMITATION.—Paragraph (1) shall only 
apply with respect to the first 15,000,000 gallons of 
biodiesel produced by any eligible small biodiesel 
producer during any taxable year.’’. 
(2) DEFINITIONS AND SPECIAL RULES.—Sec-
tion 40A(d) of such Code is amended by striking all 
that follows paragraph (1) and inserting the fol-
lowing: 
‘‘(2) QUALIFIED
BIODIESEL
MIXTURE; BIO-
DIESEL MIXTURE.— 
‘‘(A) QUALIFIED BIODIESEL MIXTURE.— 
‘‘(i) IN GENERAL.—The term ‘quali-
fied biodiesel mixture’ means a biodiesel 
mixture which is— 
‘‘(I) sold by the producer of such 
mixture to any person for use as a 
fuel, or 
‘‘(II) used by the producer of 
such mixture as a fuel. 
‘‘(ii) SALE
OR
USE
MUST
BE
IN 
TRADE
OR
BUSINESS, ETC.—A biodiesel 
mixture shall not be treated as a qualified 
biodiesel mixture unless the sale or use de-
scribed in clause (i) is in a trade or busi-
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ness of the person producing the biodiesel 
mixture. 
‘‘(B) BIODIESEL
MIXTURE.—The term 
‘biodiesel mixture’ means a mixture which con-
sists of biodiesel and diesel fuel (as defined in 
section 4083(a)(3)), determined without regard 
to any use of kerosene. 
‘‘(3) BIODIESEL NOT USED FOR A QUALIFIED 
PURPOSE.—If— 
‘‘(A) any credit was determined with re-
spect to any biodiesel under this section, and 
‘‘(B) any person uses such biodiesel for a 
purpose not described in subsection (a), 
then there is hereby imposed on such person a tax 
equal to the product of the rate applicable under 
subsection (a) and the number of gallons of such 
biodiesel. 
‘‘(4) PASS-THRU IN THE CASE OF ESTATES AND 
TRUSTS.—Under regulations prescribed by the Sec-
retary, rules similar to the rules of subsection (d) of 
section 52 shall apply. 
‘‘(5) LIMITATION TO BIODIESEL WITH CONNEC-
TION TO THE UNITED STATES.— 
‘‘(A) IN GENERAL.—No credit shall be de-
termined under subsection (a) with respect to 
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biodiesel unless such biodiesel is produced in 
the United States from qualified feedstocks. 
For purposes of this paragraph, the term 
‘United States’ includes any possession of the 
United States. 
‘‘(B) QUALIFIED FEEDSTOCKS.—For pur-
poses of subparagraph (A), the term ‘qualified 
feedstock’ means any feedstock which is allow-
able for a fuel that is assigned a D–Code of 4 
under section 80.1426(f) of title 40, Code of 
Federal Regulations.’’. 
(3) RULES
FOR
SMALL
BIODIESEL
PRO-
DUCERS.— 
(A) IN GENERAL.—Section 40A(e) of such 
Code is amended— 
(i) by striking ‘‘agri-biodiesel’’ each 
place it appears in paragraphs (1) and 
(5)(A) and inserting ‘‘biodiesel’’, 
(ii) by striking ‘‘subsection (b)(4)(C)’’ 
each place it appears in paragraphs (2) 
and (3) and inserting ‘‘subsection (b)(2)’’, 
and 
(iii) by striking ‘‘subsection (a)(3)’’ 
each place it appears in paragraphs (5)(A), 
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‘‘(B) EXCEPTIONS.—Such term shall not 
include— 
‘‘(i) any liquid with respect to which 
a credit may be determined under section 
40, 
‘‘(ii) any fuel derived from coproc-
essing biomass with a feedstock which is 
not biomass, or 
‘‘(iii) any fuel that is not chemically 
equivalent to petroleum diesel fuels that 
can meet fuel quality specifications appli-
cable to diesel fuel, gasoline, or aviation 
fuel. 
‘‘(C) BIOMASS.—For purposes of this 
paragraph, the term ‘biomass’ has the meaning 
given such term by section 45K(c)(3).’’. 
(B) CONFORMING AMENDMENTS.—Section 
40A(f) of such Code is amended— 
(i) by striking ‘‘Subsection (b)(4)’’ in 
paragraph (2) and inserting ‘‘Subsection 
(b)’’, and 
(ii) by striking paragraph (4) and in-
serting the following: 
‘‘(4) CERTAIN AVIATION FUEL.—Except as pro-
vided paragraph (3)(B), the term ‘renewable diesel’ 
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shall include fuel derived from biomass which meets 
the requirements of a Department of Defense speci-
fication for military jet fuel or an American Society 
for Testing and Materials specification for aviation 
turbine fuel.’’. 
(5) EXTENSION.—Subsection (g) of section 40A 
of such Code is amended by striking ‘‘December 31, 
2016’’ and inserting ‘‘December 31, 2019’’. 
(6) CLERICAL AMENDMENT.—The table of sec-
tions for subpart D of part IV of subchapter A of 
chapter 1 of such Code is amended by striking the 
item relating to section 40A and inserting the fol-
lowing new item: 
‘‘Sec. 40A. Biodiesel fuels credit.’’. 
(b) REFORM OF EXCISE TAX CREDIT.— 
(1) IN
GENERAL.—Subsection (c) of section 
6426 of the Internal Revenue Code of 1986 is 
amended to read as follows: 
‘‘(c) BIODIESEL PRODUCTION CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the biodiesel production credit is $1.00 for each 
gallon of biodiesel produced by the taxpayer and 
which— 
‘‘(A) is sold by such taxpayer to another 
person— 
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‘‘(i) for use by such other person’s 
trade or business as a fuel or in the pro-
duction of a qualified biodiesel mixture 
(other than casual off-farm production), or 
‘‘(ii) who sells such biodiesel at retail 
to another person and places such biodiesel 
in the fuel tank of such other person, or 
‘‘(B) is used by such taxpayer for any pur-
pose described in subparagraph (A). 
‘‘(2) DEFINITIONS.—Any term used in this sub-
section which is also used in section 40A shall have 
the meaning given such term by section 40A. 
‘‘(3) TERMINATION.—This subsection shall not 
apply to any sale, use, or removal after December 
31, 2019.’’. 
(2) 
PRODUCER
REGISTRATION
REQUIRE-
MENT.—Subsection (a) of section 6426 of such Code 
is amended by striking ‘‘subsections (d) and (e)’’ in 
the flush sentence at the end and inserting ‘‘sub-
sections (c), (d), and (e)’’. 
(3) RECAPTURE.— 
(A) IN GENERAL.—Subsection (f) of sec-
tion 6426 of such Code is amended— 
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(i) by striking ‘‘or biodiesel’’ each 
place it appears in subparagraphs (A) and 
(B)(i) of paragraph (1), 
(ii) by striking ‘‘or biodiesel mixture’’ 
in paragraph (1)(A), and 
(iii) by redesignating paragraph (2) as 
paragraph (3) and by inserting after para-
graph (1) the following new paragraph: 
‘‘(2) BIODIESEL.—If any credit was determined 
under this section or paid pursuant to section 
6427(e) with respect to the production of any bio-
diesel and any person uses such biodiesel for a pur-
pose not described in subsection (c)(1), then there is 
hereby imposed on such person a tax equal to $1 for 
each gallon of such biodiesel.’’. 
(B) CONFORMING AMENDMENTS.— 
(i) Paragraph (3) of section 6426(f) 
of such Code, as redesignated by subpara-
graph (A)(iii), is amended by inserting ‘‘or 
(2)’’ after ‘‘paragraph (1)’’. 
(ii) The heading for paragraph (1) of 
section 6426(f) of such Code is amended 
by striking ‘‘IMPOSITION OF TAX’’ and in-
serting ‘‘IN GENERAL’’. 
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(4) LIMITATION.—Section 6426(i) of such Code 
is amended— 
(A) in paragraph (2)— 
(i) by striking ‘‘biodiesel or’’, and 
(ii) by striking ‘‘BIODIESEL AND’’ in 
the heading, and 
(B) by inserting after paragraph (2) the 
following new paragraph: 
‘‘(3) BIODIESEL.—No credit shall be deter-
mined under subsection (a) with respect to biodiesel 
unless such biodiesel is produced in the United 
States from qualified feedstocks (as defined in sec-
tion 40A(d)(5)(B)).’’. 
(5) CLERICAL AMENDMENTS.— 
(A) The heading of section 6426 of such 
Code is amended by striking ‘‘ALCOHOL 
FUEL, 
BIODIESEL, 
AND
ALTERNATIVE 
FUEL MIXTURES’’ and inserting ‘‘ALCOHOL 
FUEL MIXTURES, BIODIESEL PRODUCTION, 
AND ALTERNATIVE FUEL MIXTURES’’. 
(B) The item relating to section 6426 in 
the table of sections for subchapter B of chap-
ter 65 of such Code is amended by striking ‘‘al-
cohol fuel, biodiesel, and alternative fuel mix-
tures’’ and inserting ‘‘alcohol fuel mixtures, bio-
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diesel production, and alternative fuel mix-
tures’’. 
(c) REFORM OF EXCISE PAYMENTS.—Subsection (e) 
of section 6427 of such Code is amended— 
(1) by striking ‘‘or the biodiesel mixture credit’’ 
in paragraph (1), 
(2) by redesignating paragraphs (3) through 
(6) as paragraphs (4) through (7), respectively, and 
by inserting after paragraph (2) the following new 
paragraph: 
‘‘(3) BIODIESEL PRODUCTION CREDIT.—If any 
person produces biodiesel and sells or uses such bio-
diesel as provided in section 6426(c)(1), the Sec-
retary shall pay (without interest) to such person an 
amount equal to the biodiesel production credit with 
respect to such biodiesel.’’, 
(3) by striking ‘‘paragraph (1) or (2)’’ each 
place it appears in paragraphs (4) and (6), as redes-
ignated by paragraph (2), and inserting ‘‘paragraph 
(1), (2), or (3)’’, 
(4) by striking ‘‘alternative fuel’’ each place it 
appears in paragraphs (4) and (6), as redesignated 
by paragraph (2), and inserting ‘‘fuel’’, and 
(5) in paragraph (7)(B), as redesignated by 
paragraph (2)— 
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