I 
109TH CONGRESS 
2D SESSION 
H. R. 5509 
To amend the Internal Revenue Code of 1986 to clarify the tax credit 
for electricity produced from open-loop biomass. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 25, 2006 
Mr. NUNES 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 clarify 
the tax credit for electricity produced from open-loop 
biomass. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. CLARIFICATION OF CREDIT FOR ELECTRICITY 
PRODUCED FROM OPEN-LOOP BIOMASS. 
(a) REMOVAL OF REQUIREMENT FOR SEGREGATION 
OF OPEN-LOOP BIOMASS FROM OTHER WASTE.—Clause 
(ii) of section 45(c)(3)(A) of the Internal Revenue Code 
of 1986 (defining open-loop biomass) is amended by strik-
ing ‘‘which is segregated from other waste materials and’’. 
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(b) LIMITATION BASED ON BIOMASS COFIRING WITH 
NONQUALIFIED FUEL.—Subsection (b) of section 45 of 
such Code (relating to limitations and adjustments) is 
amended by adding at the end the following new para-
graph: 
‘‘(5) OPEN-LOOP BIOMASS COFIRED WITH NON-
QUALIFIED FUEL.— 
‘‘(A) IN GENERAL.—In the case of elec-
tricity produced by a facility described in sub-
section (d)(3), the credit determined under sub-
section (a) shall be the applicable percentage of 
such credit, determined without regard to this 
paragraph and after the application of para-
graphs (1), (3), and (4) of this subsection. 
‘‘(B) 
APPLICABLE
PERCENTAGE.—For 
purposes of subparagraph (A), the applicable 
percentage is 100 percent, reduced by the num-
ber of percentage points of excess nonqualified 
fuel consumption for the taxable year. In the 
event the percentage points of excess non-
qualified fuel consumption exceeds 20 percent 
in the taxable year, the credit under subsection 
(a) shall be zero for that taxable year. 
‘‘(C) EXCESS NONQUALIFIED FUEL CON-
SUMPTION.—The term ‘excess nonqualified fuel 
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consumption’ means, with respect to any facil-
ity, the excess (if any) of the nonqualified fuel 
consumption percentage for such facility for the 
taxable year over 5 percent. 
‘‘(D) NONQUALIFIED FUEL CONSUMPTION 
PERCENTAGE.—The term ‘nonqualified fuel 
consumption percentage’ means, with respect to 
a facility described in subsection (d)(3), the 
ratio (expressed as a percentage) which the 
quantity of fuel which is not open-loop biomass 
consumed for a taxable year by such facility 
bears to the total fuel consumed by such facility 
for such taxable year. 
‘‘(E) 
DETERMINATION
BASED
ON 
WEIGHT.—For purposes of this paragraph, the 
determination of fuel consumed shall be based 
on the weight of such fuel.’’. 
(c) INCREMENTS OF ADDITIONAL CAPACITY.—Sub-
paragraph (A) of section 45(d)(3) of such Code (defining 
open-loop biomass facilities) is amended by adding at the 
end the following new flush sentence: ‘‘Such term shall 
include a new unit placed in service in connection with 
a facility placed in service on or before the date of the 
enactment of this sentence, but only to the extent of the 
increased amount of electricity produced at the facility by 
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reason of such new unit. For purposes of subsection 
(b)(5), the new unit shall be treated as a separate facil-
ity.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to electricity produced and sold 
after December 31, 2004. 
Æ 
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