H. R. 6—458
respect to any property referred to in section 50(b)(1) or with 
respect to the portion of the cost of any property taken into 
account under section 179. 
‘‘(4) ELECTION NOT TO TAKE CREDIT.—No credit shall be 
allowed under subsection (a) for any property if the taxpayer 
elects not to have this section apply to such property. 
‘‘(5) RECAPTURE RULES.—Rules similar to the rules of sec-
tion 179A(e)(4) shall apply. 
‘‘(f) REGULATIONS.—The Secretary shall prescribe such regula-
tions as necessary to carry out the provisions of this section. 
‘‘(g) TERMINATION.—This section shall not apply to any property 
placed in service— 
‘‘(1) in the case of property relating to hydrogen, after 
December 31, 2014, and 
‘‘(2) in the case of any other property, after December 
31, 2009.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 38(b), as amended by this Act, is amended 
by striking ‘‘plus’’ at the end of paragraph (24), by striking 
the period at the end of paragraph (25) and inserting ‘‘, and’’, 
and by adding at the end the following new paragraph: 
‘‘(26) the portion of the alternative fuel vehicle refueling 
property credit to which section 30C(d)(1) applies.’’. 
(2) Section 1016(a), as amended by this Act, is amended 
by striking ‘‘and’’ at the end of paragraph (35), by striking 
the period at the end of paragraph (36) and inserting ‘‘, and’’, 
and by adding at the end the following new paragraph: 
‘‘(37) to the extent provided in section 30C(f).’’. 
(3) Section 55(c)(2), as amended by this Act, is amended 
by inserting ‘‘30C(d)(2),’’ after ‘‘30B(g)(2),’’. 
(4) Section 6501(m) is amended by inserting ‘‘30C(e)(5),’’ 
after ‘‘30B(h)(9),’’. 
(5) The table of sections for subpart B of part IV of sub-
chapter A of chapter 1, as amended by this Act, is amended 
by inserting after the item relating to section 30B the following 
new item:
‘‘Sec. 30C. Clean-fuel vehicle refueling property credit.’’.
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to property placed in service after December 31, 2005, 
in taxable years ending after such date. 
SEC. 1343. REDUCED MOTOR FUEL EXCISE TAX ON CERTAIN MIXTURES 
OF DIESEL FUEL. 
(a) IN GENERAL.—Paragraph (2) of section 4081(a) is amended 
by adding at the end the following: 
‘‘(D) DIESEL-WATER
FUEL
EMULSION.—In the case of 
diesel-water fuel emulsion at least 14 percent of which 
is water and with respect to which the emulsion additive 
is registered by a United States manufacturer with the 
Environmental Protection Agency pursuant to section 211 
of the Clean Air Act (as in effect on March 31, 2003), 
subparagraph (A)(iii) shall be applied by substituting ‘19.7 
cents’ for ‘24.3 cents’. The preceding sentence shall not 
apply to the removal, sale, or use of diesel-water fuel emul-
sion unless the person so removing, selling, or using such 
fuel is registered under section 4101.’’. 
(b) SPECIAL RULES FOR DIESEL-WATER FUEL EMULSIONS.—
H. R. 6—459
(1) REFUNDS FOR TAX-PAID PURCHASES.—Section 6427 is 
amended by redesignating subsections (m) through (p) as sub-
sections (n) through (q), respectively, and by inserting after 
subsection (l) the following new subsection: 
‘‘(m) DIESEL FUEL USED TO PRODUCE EMULSION.— 
‘‘(1) IN GENERAL.—Except as provided in subsection (k), 
if any diesel fuel on which tax was imposed by section 4081 
at the regular tax rate is used by any person in producing 
an emulsion described in section 4081(a)(2)(D) which is sold 
or used in such person’s trade or business, the Secretary shall 
pay (without interest) to such person an amount equal to the 
excess of the regular tax rate over the incentive tax rate with 
respect to such fuel. 
‘‘(2) DEFINITIONS.—For purposes of paragraph (1)— 
‘‘(A) REGULAR TAX RATE.—The term ‘regular tax rate’ 
means the aggregate rate of tax imposed by section 4081 
determined without regard to section 4081(a)(2)(D). 
‘‘(B) INCENTIVE
TAX
RATE.—The term ‘incentive tax 
rate’ means the aggregate rate of tax imposed by section 
4081 determined with regard to section 4081(a)(2)(D).’’. 
(2) LATER
SEPARATION
OF
FUEL.—Section 4081 (relating 
to imposition of tax) is amended by inserting after subsection 
(b) the following new subsection: 
‘‘(c) LATER SEPARATION OF FUEL FROM DIESEL-WATER FUEL 
EMULSION.—If any person separates the taxable fuel from a diesel-
water fuel emulsion on which tax was imposed under subsection 
(a) at a rate determined under subsection (a)(2)(D) (or with respect 
to which a credit or payment was allowed or made by reason 
of section 6427), such person shall be treated as the refiner of 
such taxable fuel. The amount of tax imposed on any removal 
of such fuel by such person shall be reduced by the amount of 
tax imposed (and not credited or refunded) on any prior removal 
or entry of such fuel.’’. 
(3) CREDIT
CLAIMS.—Paragraphs (1) and (2) of section 
6427(i) are both amended by inserting ‘‘(m),’’ after ‘‘(l),’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall take effect on January 1, 2006. 
SEC. 1344. EXTENSION OF EXCISE TAX PROVISIONS AND INCOME TAX 
CREDIT FOR BIODIESEL. 
(a) IN GENERAL.—Sections 40A(e), 6426(c)(6), and 6427(e)(4)(B) 
are each amended by striking ‘‘2006’’ and inserting ‘‘2008’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall take effect on the date of the enactment of this Act. 
SEC. 1345. SMALL AGRI-BIODIESEL PRODUCER CREDIT. 
(a) IN GENERAL.—Subsection (a) of section 40A (relating to 
biodiesel used as a fuel) is amended to read as follows: 
‘‘(a) GENERAL RULE.—For purposes of section 38, the biodiesel 
fuels credit determined under this section for the taxable year 
is an amount equal to the sum of— 
‘‘(1) the biodiesel mixture credit, plus 
‘‘(2) the biodiesel credit, plus 
‘‘(3) in the case of an eligible small agri-biodiesel producer, 
the small agri-biodiesel producer credit.’’. 
(b) SMALL AGRI-BIODIESEL PRODUCER CREDIT DEFINED.—Sec-
tion 40A(b) (relating to definition of biodiesel mixture credit and
H. R. 6—460
biodiesel credit) is amended by adding at the end the following 
new paragraph: 
‘‘(5) SMALL AGRI-BIODIESEL PRODUCER CREDIT.— 
‘‘(A) IN GENERAL.—The small agri-biodiesel producer 
credit of any eligible small agri-biodiesel producer for any 
taxable year is 10 cents for each gallon of qualified agri-
biodiesel production of such producer. 
‘‘(B) QUALIFIED AGRI-BIODIESEL PRODUCTION.—For pur-
poses of this paragraph, the term ‘qualified agri-biodiesel 
production’ means any agri-biodiesel (determined without 
regard to the last sentence of subsection (d)(2)) which is 
produced by an eligible small agri-biodiesel producer, and 
which during the taxable year— 
‘‘(i) is sold by such producer to another person— 
‘‘(I) for use by such other person in the produc-
tion of a qualified biodiesel mixture in such other 
person’s trade or business (other than casual off-
farm production), 
‘‘(II) for use by such other person as a fuel 
in a trade or business, or 
‘‘(III) who sells such agri-biodiesel at retail 
to another person and places such agri-biodiesel 
in the fuel tank of such other person, or 
‘‘(ii) is used or sold by such producer for any pur-
pose described in clause (i). 
‘‘(C) LIMITATION.—The qualified agri-biodiesel produc-
tion of any producer for any taxable year shall not exceed 
15,000,000 gallons.’’. 
(c) DEFINITIONS AND SPECIAL RULES.—Section 40A is amended 
by redesignating subsection (e) as subsection (f) and by inserting 
after subsection (d) the following new subsection: 
‘‘(e) DEFINITIONS
AND SPECIAL RULES
FOR SMALL AGRI-BIO-
DIESEL PRODUCER CREDIT.—For purposes of this section— 
‘‘(1) ELIGIBLE SMALL AGRI-BIODIESEL PRODUCER.—The term 
‘eligible small agri-biodiesel producer’ means a person who, 
at all times during the taxable year, has a productive capacity 
for agri-biodiesel not in excess of 60,000,000 gallons. 
‘‘(2) AGGREGATION RULE.—For purposes of the 15,000,000 
gallon limitation under subsection (b)(5)(C) and the 60,000,000 
gallon limitation under paragraph (1), all members of the same 
controlled group of corporations (within the meaning of section 
267(f)) and all persons under common control (within the 
meaning of section 52(b) but determined by treating an interest 
of more than 50 percent as a controlling interest) shall be 
treated as 1 person. 
‘‘(3) PARTNERSHIP, S CORPORATION, AND OTHER PASS-THRU 
ENTITIES.—In the case of a partnership, trust, S corporation, 
or other pass-thru entity, the limitations contained in sub-
section (b)(5)(C) and paragraph (1) shall be applied at the 
entity level and at the partner or similar level. 
‘‘(4) ALLOCATION.—For purposes of this subsection, in the 
case of a facility in which more than 1 person has an interest, 
productive capacity shall be allocated among such persons in 
such manner as the Secretary may prescribe. 
‘‘(5) REGULATIONS.—The Secretary may prescribe such 
regulations as may be necessary—