I
107TH CONGRESS
1ST SESSION
H. R. 2303
To amend the Internal Revenue Code of 1986 to provide incentives to increase
the sale and use of certain ethanol and biodiesel fuels.
IN THE HOUSE OF REPRESENTATIVES
JUNE 25, 2001
Mr. LEWIS of Kentucky 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 provide
incentives to increase the sale and use of certain ethanol
and biodiesel fuels.
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 ‘‘Ethanol and Biodiesel
Promotion Act of 2001’’.
SEC. 2. CREDIT FOR PROPERTY USED IN THE RETAIL SALE,
OR BUSINESS USE, OF E85 ETHANOL AND
NEAT BIODIESEL.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business related credits) is amended by
adding at the end the following new section:
‘‘SEC. 45G. PROPERTY USED IN THE RETAIL SALE, OR BUSI-
NESS USE, OF E85 ETHANOL AND NEAT BIO-
DIESEL.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the E85 ethanol and biodiesel credit is an amount equal
to 50 percent of the basis of qualified fuel property placed
in service by the taxpayer during the taxable year.
‘‘(b) LIMITATION.—The credit allowed by subsection
(a) for any taxable year shall not exceed $50,000.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED FUEL PROPERTY.—The term
‘qualified fuel property’ means—
‘‘(A) qualified vehicle refueling property,
and
‘‘(B) qualified business use property.
‘‘(2) QUALIFIED
VEHICLE
REFUELING
PROP-
ERTY.—The term ‘qualified vehicle refueling prop-
erty’ means any property which would be qualified
clean-fuel vehicle refueling property, as defined in
section 179A(d), if the only clean-burning fuel re-
ferred to in such section were E85 ethanol and neat
biodiesel.
‘‘(3) QUALIFIED BUSINESS USE PROPERTY.—
The term ‘qualified business use property’ means
any property (not including a building and its struc-
tural components) if—
‘‘(A) such property is of a character sub-
ject to the allowance for depreciation,
‘‘(B) the original use of such property be-
gins with the taxpayer, and
‘‘(C) such property is used by the taxpayer
in the consumption of E85 ethanol or neat bio-
diesel in a trade of business of the taxpayer.
‘‘(4) E85 ETHANOL.—The term ‘E85 ethanol’
means any fuel at least 85 percent of which is eth-
anol.
‘‘(5) NEAT
BIODIESEL.—The term ‘neat bio-
diesel’ means diesel fuel at least 85 percent of which
is produced from a substance other than petroleum.
‘‘(d) TERMINATION.—This section shall not apply to
any property placed in service after December 31, 2007.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 38(b) of such Code is amended by
striking ‘‘plus’’ at the end of paragraph (14), by
striking the period at the end of paragraph (15) and
inserting ‘‘, plus’’, and by adding at the end the fol-
lowing:
‘‘(16) the E85 ethanol and biodiesel credit de-
termined under section 45G.’’.
(2) Section 39(d) of such Code (relating to
transitional rules) is amended by adding at the end
the following:
‘‘(11) NO CARRYBACK OF SECTION 45G CREDIT
BEFORE EFFECTIVE DATE.—No portion of the un-
used business credit for any taxable year which is
attributable to the credit determined under section
45G(a) may be carried back to a taxable year ending
before January 1, 2001.’’.
(3) The table of sections for subpart D of part
IV of subchapter A of chapter 1 of such Code is
amended by adding at the end the following:
‘‘Sec. 45G. Property used in the retail sale, or business use, of
E85 ethanol and neat biodiesel.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 3. CREDIT FOR RETAIL SALE OF E85 ETHANOL AND
NEAT BIODIESEL AS MOTOR VEHICLE FUEL.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business related credits) is amended by
adding at the end the following new section:
‘‘SEC. 45H. RETAIL SALE OF E85 ETHANOL AND NEAT BIO-
DIESEL AS MOTOR VEHICLE FUEL.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the E85 ethanol and biodiesel retail sales credit of any
taxpayer for any taxable year is the credit amount for each
gasoline gallon equivalent of E85 ethanol and neat bio-
diesel sold at retail by the taxpayer during such year as
a fuel to propel any qualified motor vehicle.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) CREDIT
AMOUNT.—The term ‘credit
amount’ means—
‘‘(A) in the case of E85 ethanol, the excess
of 60 cents over the blender amount applicable
under section 40(h) for the calendar year in
which the sale occurs, and
‘‘(B) in the case of neat biodiesel, 25
cents.
‘‘(2) E85 ETHANOL AND NEAT BIODIESEL.—
The terms ‘E85 ethanol’ and ‘neat biodiesel’ have
the respective meanings given such terms by section
45G.
‘‘(3) GASOLINE
GALLON
EQUIVALENT.—The
term ‘gasoline gallon equivalent’ means, with respect
to any alternative fuel, the amount (determined by
the Secretary) of such fuel having a Btu content of
114,000.
‘‘(4) QUALIFIED MOTOR VEHICLE.—The term
‘qualified motor vehicle’ means any motor vehicle (as
defined in section 179A(e)(2)) which meets any ap-
plicable Federal or State emissions standards with
respect to each fuel by which such vehicle is de-
signed to be propelled.
‘‘(5) SOLD AT RETAIL.—
‘‘(A) IN GENERAL.—The term ‘sold at re-
tail’ means the sale, for a purpose other than
resale, after manufacture, production, or impor-
tation.
‘‘(B) USE TREATED AS SALE.—If any per-
son uses E85 ethanol or neat biodiesel as a fuel
to propel any qualified motor vehicle (including
any use after importation) before such fuel is
sold at retail, then such use shall be treated in
the same manner as if such fuel were sold at
retail as a fuel to propel such a vehicle by such
person.
‘‘(c) NO DOUBLE BENEFIT.—The amount of any de-
duction or credit allowable under this chapter for any fuel
taken into account in computing the amount of the credit
determined under subsection (a) shall be reduced by the
amount of such credit attributable to such fuel.
‘‘(d) PASS-THRU IN THE CASE OF ESTATES AND
TRUSTS.—Under regulations prescribed by the Secretary,
rules similar to the rules of subsection (d) of section 52
shall apply.
‘‘(e) TERMINATION.—This section shall not apply to
any fuel sold at retail after December 31, 2007.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 38(b) of such Code is amended by
striking ‘‘plus’’ at the end of paragraph (15), by
striking the period at the end of paragraph (16) and
inserting ‘‘, plus’’, and by adding at the end the fol-
lowing:
‘‘(17) the E85 ethanol and biodiesel retail sales
credit determined under section 45H.’’.
(2) Section 39(d) of such Code (relating to
transitional rules) is amended by adding at the end
the following:
‘‘(12) NO CARRYBACK OF SECTION 45H CREDIT
BEFORE EFFECTIVE DATE.—No portion of the un-
used business credit for any taxable year which is
attributable to the credit determined under section
45H(a) may be carried back to a taxable year end-
ing before January 1, 2001.’’.
(3) The table of sections for subpart D of part
IV of subchapter A of chapter 1 of such Code is
amended by adding at the end the following:
‘‘Sec. 45G. Retail sale of E85 ethanol and neat biodiesel as motor
vehicle fuel.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to fuel sold at retail after Decem-
ber 31, 2001, in taxable years ending after such date.
SEC. 4. SMALL ETHANOL PRODUCER CREDIT.
(a) ALLOCATION OF ALCOHOL FUELS CREDIT TO
PATRONS OF A COOPERATIVE.—Section 40(g) Internal
Revenue Code of 1986 (relating to definitions and special
rules for eligible small ethanol producer credit) is amended
by adding at the end the following:
‘‘(6) ALLOCATION
OF
SMALL
ETHANOL
PRO-
DUCER CREDIT TO PATRONS OF COOPERATIVE.—
‘‘(A) ELECTION TO ALLOCATE.—
‘‘(i) IN
GENERAL.—Notwithstanding
paragraph (4), in the case of a cooperative
organization described in section 1381(a),
any portion of the credit determined under
subsection (a)(3) for the taxable year may,
at the election of the organization, be ap-
portioned pro rata among patrons of the
organization on the basis of the quantity
or value of business done with or for such
patrons for the taxable year.
‘‘(ii) FORM
AND
EFFECT
OF
ELEC-
TION.—An election under clause (i) for any
taxable year shall be made on a timely
filed return for such year. Such election,
once made, shall be irrevocable for such
taxable year.
‘‘(iii) SPECIAL
RULE
FOR
TAXABLE
YEARS
PRIOR
TO
ENACTMENT
OF
PARA-
GRAPH.—Notwithstanding clause (ii), an
election for any taxable year ending prior
to the date of the enactment of this para-
graph may be made at any time before the
expiration of the 3-year period beginning
on the last date prescribed by law for filing
the return of the taxpayer for such taxable
year (determined without regard to exten-
sions) by filing an amended return for
such year.
‘‘(B) TREATMENT OF ORGANIZATIONS AND
PATRONS.—The amount of the credit appor-
tioned to patrons under subparagraph (A)—
‘‘(i) shall not be included in the
amount determined under subsection (a)