(3) CONFORMING AMENDMENTS.—
(A) Section 39(d) of such Code is amended
by adding at the end the following new para-
graph:
‘‘(11) NO
CARRYBACK
OF
BIODIESEL
FUELS
CREDIT BEFORE JANUARY 1, 2003.—No portion of
the unused business credit for any taxable year
which is attributable to the biodiesel fuels credit de-
termined under section 40A may be carried back to
a taxable year beginning before January 1, 2003.’’.
(B) Section 196(c) of such Code is amend-
ed by redesignating paragraphs (4) through
(10) as paragraphs (5) through (11), respec-
tively, and by inserting after paragraph (3) the
following new paragraph:
‘‘(4) the biodiesel fuels credit determined under
section 40A(a),’’.
(C) Section 6501(m) of such Code is
amended by inserting ‘‘40A(e),’’ after ‘‘40(f),’’.
(D) The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such
Code is amended by inserting after the item re-
lating to section 40 the following new item:
‘‘Sec. 40A. Biodiesel used as fuel.’’.
(4) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after December 31, 2002.
(b) REDUCTION OF MOTOR FUEL EXCISE TAXES ON
BIODIESEL MIXTURES.—
(1) IN GENERAL.—Section 4081 of such Code
(relating to manufacturers tax on petroleum prod-
ucts) is amended by adding at the end the following
new subsection:
‘‘(f) BIODIESEL MIXTURES.—Under regulations pre-
scribed by the Secretary—
‘‘(1) IN GENERAL.—In the case of the removal
or entry of a qualified biodiesel mixture, the rate of
tax under subsection (a) shall be the otherwise appli-
cable rate reduced by the biodiesel mixture rate (if
any) applicable to the mixture.
‘‘(2) TAX PRIOR TO MIXING.—In the case of the
removal or entry of diesel fuel for use in producing
at the time of such removal or entry a qualified bio-
diesel mixture, the rate of tax under subsection (a)
shall be the rate determined under paragraph (1),
divided by a percentage equal to 100 percent minus
the percentage of biodiesel which will be in the mix-
ture.
‘‘(3) DEFINITIONS.—For purposes of this sub-
section, any term used in this subsection which is
also used in section 40A shall have the meaning
given such term by section 40A.
‘‘(4) CERTAIN RULES TO APPLY.—Rules similar
to the rules of paragraphs (6) and (7) of subsection
(c) shall apply for purposes of this subsection.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 4041 of such Code is amended
by adding at the end the following new sub-
section:
‘‘(n) BIODIESEL MIXTURES.—Under regulations pre-
scribed by the Secretary, in the case of the sale or use
of a qualified biodiesel mixture (as defined in section
40A(b)(2)), the rates under paragraphs (1) and (2) of
subsection (a) shall be the otherwise applicable rates, re-
duced by any applicable biodiesel mixture rate (as defined
in section 40A(b)(1)(B)).’’.
(B) Section 6427 of such Code is amended
by redesignating subsection (p) as subsection
(q) and by inserting after subsection (o) the fol-
lowing new subsection:
‘‘(p) BIODIESEL MIXTURES.—Except as provided in
subsection (k), if any diesel fuel on which tax was imposed
by section 4081 at a rate not determined under section
4081(f) is used by any person in producing a qualified
biodiesel mixture (as defined in section 40A(b)(2)) which
is sold or used in such person’s trade or business, the Sec-
retary shall pay (without interest) to such person an
amount equal to the per gallon applicable biodiesel mix-
ture rate (as defined in section 40A(b)(1)(B)) with respect
to such fuel.’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to any fuel sold after
December 31, 2002.
(c) HIGHWAY TRUST FUND HELD HARMLESS.—
There are hereby transferred (from time to time) from the
funds of the Commodity Credit Corporation amounts de-
termined by the Secretary of the Treasury to be equivalent
to the reductions that would occur (but for this sub-
section) in the receipts of the Highway Trust Fund by
reason of the amendments made by this section.
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