I 
114TH CONGRESS 
1ST SESSION H. R. 4181 
To amend the Internal Revenue Code of 1986 to modify the incentives 
for the production of biodiesel. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 3, 2015 
Mrs. NOEM (for herself, Mr. PASCRELL, and Mr. BLUM) 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 the production of 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 2015’’. 
SEC. 2. REFORM OF BIODIESEL INCOME TAX INCENTIVES. 
(a) IN GENERAL.—Section 40A of the Internal Rev-
enue Code of 1986 is amended to read as follows: 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘SEC. 40A. BIODIESEL PRODUCTION. 
‘‘(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 such producer to another per-
son— 
‘‘(A) for use by such other person’s trade 
or business (other than casual off-farm produc-
tion), 
‘‘(B) for use by such other person as a fuel 
in a trade or business, or 
‘‘(C) 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 or sold by such producer 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. 
‘‘(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. 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(c) COORDINATION WITH CREDIT AGAINST EXCISE 
TAX.—The amount of the credit determined under this 
section with respect to any biodiesel shall be reduced to 
take into account any benefit provided with respect to such 
biodiesel solely by reason of the application of section 
6426 or 6427(e). 
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) BIODIESEL.—The term ‘biodiesel’ means 
liquid fuel derived from biomass which meets— 
‘‘(A) the registration requirements for 
fuels and fuel additives established by the Envi-
ronmental Protection Agency under section 211 
of the Clean Air Act (42 U.S.C. 7545), and 
‘‘(B) the requirements of the American So-
ciety for Testing and Materials D6751. 
Such term shall not include any liquid with respect 
to which a credit may be determined under section 
40. 
‘‘(2) BIODIESEL NOT USED FOR A QUALIFIED 
PURPOSE.—If— 
‘‘(A) any credit was determined with re-
spect to any biodiesel under this section, and 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(B) any person does not use such bio-
diesel for the purpose 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. 
‘‘(3) 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. 
‘‘(4) LIMITATION TO BIODIESEL PRODUCED IN 
THE
UNITED
STATES.—No credit shall be deter-
mined under this section with respect to any bio-
diesel unless such biodiesel is produced in the United 
States from feedstocks approved for the Biomass- 
based Diesel program (biodiesel, renewable diesel, 
and renewable aviation fuel production under the 
Renewable Fuels Program as enacted by the Energy 
Independence and Security Act of 2007 (40 C.F.R. 
part 80.1426(f) and 80.1416)). For purposes of this 
paragraph, the term ‘United States’ includes any 
possession of the United States. 
‘‘(5) BIODIESEL TRANSFERS FROM AN IRS REG-
ISTERED BIODIESEL PRODUCTION FACILITY TO AN 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
IRS
REGISTERED
TERMINAL
OR
REFINERY.—The 
credit allowed under subsection (a) shall be allowed 
to the terminal or refinery referred to in section 
4081(a)(1)(B)(i) 
in 
instances 
where 
section 
4081(a)(1)(B)(iii) is applicable. The credit allowed 
under subsection (a) cannot be claimed by a ter-
minal or refinery on fuel upon which the credit was 
previously claimed by a biodiesel producer. 
‘‘(e) DEFINITIONS AND SPECIAL RULES FOR SMALL 
BIODIESEL PRODUCERS.— 
‘‘(1) ELIGIBLE SMALL BIODIESEL PRODUCER.— 
The term ‘eligible small biodiesel producer’ means a 
person who at all times during the taxable year has 
a productive capacity for biodiesel not in excess of 
60,000,000 gallons. 
‘‘(2) AGGREGATION
RULE.—For purposes of 
the 15,000,000 gallon limitation under subsection 
(b)(2) 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 (with-
in 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. 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(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 subsection (b)(2) 
and paragraph (1) shall be applied at the entity level 
and at the partner or similar level. 
‘‘(4) ALLOCATION.—For purposes of this sub-
section, 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 pre-
scribe such regulations as may be necessary— 
‘‘(A) to prevent the credit provided for in 
subsection (b) from directly or indirectly bene-
fitting any person with a direct or indirect pro-
ductive capacity of more than 60,000,000 gal-
lons of biodiesel during the taxable year, or 
‘‘(B) to prevent any person from directly 
or indirectly benefitting with respect to more 
than 15,000,000 gallons during the taxable 
year. 
‘‘(6) ALLOCATION OF SMALL BIODIESEL CREDIT 
TO PATRONS OF COOPERATIVE.— 
‘‘(A) ELECTION TO ALLOCATE.— 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(i) IN GENERAL.—In the case of a 
cooperative organization described in sec-
tion 1381(a), any portion of the increase 
determined under subsection (b) for the 
taxable year may, at the election of the or-
ganization, be apportioned 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. Such election shall not take 
effect unless the organization designates 
the apportionment as such in a written no-
tice mailed to its patrons during the pay-
ment period described in section 1382(d). 
‘‘(B) TREATMENT OF ORGANIZATIONS AND 
PATRONS.— 
‘‘(i) ORGANIZATIONS.—The amount of 
the credit not apportioned to patrons pur-
suant to subparagraph (A) shall be in-
cluded in the amount determined under 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
subsection (b) for the taxable year of the 
organization. 
‘‘(ii) PATRONS.—The amount of the 
credit apportioned to patrons pursuant to 
subparagraph (A) shall be included in the 
amount determined under such subsection 
for the first taxable year of each patron 
ending on or after the last day of the pay-
ment 
period 
(as 
defined 
in 
section 
1382(d)) for the taxable year of the orga-
nization or, if earlier, for the taxable year 
of each patron ending on or after the date 
on which the patron receives notice from 
the cooperative of the apportionment. 
‘‘(iii) SPECIAL RULES FOR DECREASE 
IN CREDITS FOR TAXABLE YEAR.—If the 
amount of the credit of the organization 
determined under such subsection for a 
taxable year is less than the amount of 
such credit shown on the return of the or-
ganization for such year, an amount equal 
to the excess of— 
‘‘(I) such reduction, over 
‘‘(II) the amount not apportioned 
to such patrons under subparagraph 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
(A) for the taxable year, shall be 
treated as an increase in tax imposed 
by this chapter on the organization. 
Such increase shall not be treated as tax 
imposed by this chapter for purposes of de-
termining the amount of any credit under 
this chapter or for purposes of section 55. 
‘‘(f) RENEWABLE DIESEL.—For purposes of this 
title— 
‘‘(1) TREATMENT
IN
THE
SAME
MANNER
AS 
BIODIESEL.—Renewable diesel shall be treated in 
the same manner as biodiesel. 
‘‘(2) RENEWABLE DIESEL DEFINED.— 
‘‘(A) IN GENERAL.—The term ‘renewable 
diesel’ means liquid fuel derived from biomass 
which— 
‘‘(i) is not a mono-alkyl ester, 
‘‘(ii) can be used in engines designed 
to operate on conventional diesel fuel, and 
‘‘(iii) meets the requirements of the 
American Society for Testing and Mate-
rials D–975–13a Grade No. 1–D or No. 2– 
D specifications. 
‘‘(B) CERTAIN
AVIATION
FUEL.—Except 
as provided in subparagraph (C), the term ‘re-
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
newable diesel’ shall include fuel derived from 
biomass (as defined in section 45K(c)(3)) which 
meets the requirements of a Department of De-
fense specification for military jet fuel or an 
American Society for Testing and Materials 
specification for aviation turbine fuel. 
‘‘(C) EXCEPTIONS.—The term ‘renewable 
diesel’ 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 (as defined in section 
45K(c)(3)) with a feedstock which is not 
biomass (as so defined), and 
‘‘(iii) any fuel unless such fuel is 
chemically indistinguishable from a petro-
leum-derived fuel that meets existing die-
sel, gasoline, or aviation fuel quality speci-
fications. 
‘‘(g) TERMINATION.—This section shall not apply to 
any sale or use after December 31, 2018. 
‘‘(h) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary for the purposes of 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
carrying out this section within 30 days after enactment 
of this Act.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by strik-
ing the item relating to section 40A and inserting the fol-
lowing new item: 
‘‘Sec. 40A. Biodiesel production.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to biodiesel sold or used after De-
cember 31, 2014. 
SEC. 3. REFORM OF BIODIESEL EXCISE TAX INCENTIVES. 
(a) IN GENERAL.—Subsection (c) of section 6426 of 
the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(c) BIODIESEL CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the biodiesel credit is $1.00 for each gallon of 
biodiesel produced by the taxpayer and which— 
‘‘(A) is sold by such producer to another 
person— 
‘‘(i) for use by 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 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(iii) 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 or sold by such producer for 
any purpose 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) BIODIESEL TRANSFERS FROM AN IRS REG-
ISTERED BIODIESEL PRODUCTION FACILITY TO AN 
IRS
REGISTERED
TERMINAL
OR
REFINERY.—The 
credit allowed under this subsection can be claimed 
by a registered terminal or refinery in instances 
where section 4081(a)(1)(B)(iii) is applicable. The 
credit allowed under this subsection cannot be 
claimed by a terminal or refinery on fuel upon which 
the credit was previously claimed by a biodiesel pro-
ducer. 
‘‘(4) TERMINATION.—This subsection shall not 
apply to any sale, use, or removal for any period 
after December 31, 2018.’’. 
(b) PAYMENT OF CREDIT.—Subsection (e) of section 
6427 of the Internal Revenue Code of 1986 is amended— 
(1) by striking ‘‘or the biodiesel mixture credit’’ 
in paragraph (1), 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
(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 CREDIT.—If any person pro-
duces biodiesel and sells or uses such biodiesel as 
provided in section 6426(c), the Secretary shall pay 
(without interest) to such person an amount equal to 
the biodiesel 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’’, 
(5) by striking ‘‘biodiesel mixture (as defined in 
section 6426(c)(3))’’ in paragraph (7)(B), as so re-
designated, and inserting ‘‘biodiesel (within the 
meaning of section 40A)’’, and 
(6) by striking ‘‘2014’’ in paragraph (7)(B), as 
so redesignated, and inserting ‘‘2018’’. 
(c) TAX IMPOSED ON SALE BY PERSONS CLAIMING 
EXCISE TAX CREDIT.—Subparagraph (A) of section 
4081(a)(1) is amended by striking ‘‘and’’ at the end of 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
clause (iii), by striking the period at the end of clause (iv) 
and inserting ‘‘, and’’, and by adding at the end the fol-
lowing new clause: 
‘‘(v) the sale of biodiesel to any per-
son by any person properly claiming the 
credit under section 6426(c) with respect 
to the biodiesel so sold.’’. 
(d) EXEMPTION
FOR
BIODIESEL
TRANSFERRED 
FROM A REGISTERED PRODUCER TO A REGISTERED TER-
MINAL
OR REFINERY.—Subparagraph (B) of section 
4081(a)(1) of the Internal Revenue Code of 1986 is 
amended— 
(1) by striking ‘‘clause (ii)’’ in clause (i) and in-
serting ‘‘clauses (ii) and (iii)’’, and 
(2) by adding at the end the following new 
clause: 
‘‘(iii) EXEMPTIONS
FOR
BIODIESEL 
TRANSFERRED FROM A REGISTERED PRO-
DUCER TO A REGISTERED TERMINAL OR 
REFINERY.—The tax imposed by this para-
graph shall not apply to any removal or 
entry of biodiesel (as defined in section 
40A(d)(1)) transferred in bulk by rail, 
truck, pipeline, or vessel to a terminal or 
refinery if— 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(I) such biodiesel was produced 
by a person who is registered under 
section 4101 as a producer of bio-
diesel and who provides reporting 
under the ExStars fuel reporting sys-
tem of the Internal Revenue Service, 
and 
‘‘(II) the operator of such ter-
minal or refinery is registered under 
section 4101.’’. 
(e) PRODUCER
REGISTRATION
REQUIREMENT.— 
Subsection (a) of section 6426 of the Internal Revenue 
Code of 1986 is amended by striking ‘‘subsections (d) and 
(e)’’ in the flush sentence at the end and inserting ‘‘sub-
sections (c), (d), and (e)’’. 
(f) RECAPTURE.—Subsection (f) of section 6426 of 
the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(f) RECAPTURE OF BIODIESEL CREDIT.— 
‘‘(1) IN GENERAL.—If any credit was deter-
mined under this section with respect to the produc-
tion of any biodiesel and any person does not use 
such biodiesel for a purpose described in subsection 
(c)(1), then there is hereby imposed on such person 
a tax equal to $1 for each gallon of such biodiesel. 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS
‘‘(2) APPLICABLE LAWS.—All provisions of law, 
including penalties, shall, insofar as applicable and 
not inconsistent with this section, apply in respect of 
any tax imposed under this subsection as if such tax 
were imposed by section 4081 and not by this sec-
tion.’’. 
(g) CLERICAL AMENDMENTS.— 
(1) The heading of section 6426 of the Internal 
Revenue Code of 1986 is amended by striking ‘‘AL-
COHOL FUEL, BIODIESEL, AND ALTERNATIVE 
FUEL MIXTURES’’ and inserting ‘‘ALCOHOL FUEL 
MIXTURES, BIODIESEL PRODUCTION, AND AL-
TERNATIVE FUEL MIXTURES’’. 
(2) The item relating to section 6426 in the 
table of sections for subchapter B of chapter 65 of 
such Code is amended by striking ‘‘alcohol fuel, bio-
diesel, and alternative fuel mixtures’’ and inserting 
‘‘alcohol fuel mixtures, biodiesel production, and al-
ternative fuel mixtures’’. 
(h) EFFECTIVE DATE.—The amendments made by 
this section shall apply to biodiesel sold or used after De-
cember 31, 2014. 
Æ 
VerDate Sep 11 2014 
02:06 Dec 05, 2015
Jkt 059200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6301
E:\BILLS\H4181.IH
H4181
SSpencer on DSK4SPTVN1PROD with BILLS