I 
108TH CONGRESS 
1ST SESSION H. R. 3119
To amend the Internal Revenue Code of 1986 to allow a credit against 
income tax for biodiesel used as a fuel. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 17, 2003
Mr. HULSHOF (for himself, Mr. POMEROY, Mr. NUSSLE, Mr. YOUNG of Alas-
ka, Mr. OBERSTAR, Mr. STENHOLM, Mrs. EMERSON, Mr. GRAVES, Mr. 
SKELTON, Mr. AKIN, and Mr. BOEHNER) 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 allow a 
credit against income tax for biodiesel used as a fuel.
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 ‘‘Renewable Fuels and 
Transportation Infrastructure Enhancement Act of 
2003’’.
SEC. 2. ALCOHOL FUEL AND BIODIESEL MIXTURES EXCISE 
TAX CREDIT. 
(a) IN GENERAL.—Subchapter B of chapter 65 of the 
Internal Revenue Code of 1986 (relating to rules of special 
application) is amended by inserting after section 6425 
the following new section: 
‘‘SEC. 6426. CREDIT FOR ALCOHOL FUEL AND BIODIESEL 
MIXTURES. 
‘‘(a) ALLOWANCE OF CREDITS.—There shall be al-
lowed as a credit against the tax imposed by section 4081 
an amount equal to the sum of—
‘‘(1) the alcohol fuel mixture credit, plus 
‘‘(2) the biodiesel mixture credit. 
‘‘(b) ALCOHOL FUEL MIXTURE CREDIT.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the alcohol fuel mixture credit is the product 
of the applicable amount and the number of gallons 
of alcohol used by the taxpayer in producing any al-
cohol fuel mixture. 
‘‘(2) APPLICABLE AMOUNT.—For purposes of 
this subsection—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the applicable amount is 52 
cents (51 cents in the case of any sale or use 
after 2004).
‘‘(B) MIXTURES
NOT
CONTAINING
ETH-
ANOL.—In the case of an alcohol fuel mixture 
in which none of the alcohol consists of ethanol, 
the applicable amount is 60 cents. 
‘‘(3) ALCOHOL FUEL MIXTURE.—For purposes 
of this subsection, the term ‘alcohol fuel mixture’ 
means a mixture of alcohol and a taxable fuel 
which—
‘‘(A) is sold by the taxpayer producing 
such mixture to any person for use as a fuel, 
‘‘(B) is used as a fuel by the taxpayer pro-
ducing such mixture, or 
‘‘(C) is removed from the refinery by a 
person producing such mixture. 
‘‘(4) OTHER
DEFINITIONS.—For purposes of 
this subsection—
‘‘(A) ALCOHOL.—The term ‘alcohol’ in-
cludes methanol and ethanol but does not in-
clude—
‘‘(i) alcohol produced from petroleum, 
natural gas, or coal (including peat), or
‘‘(ii) alcohol with a proof of less than 
190 (determined without regard to any 
added denaturants).
Such term also includes an alcohol gallon equiv-
alent of ethyl tertiary butyl ether or other 
ethers produced from such alcohol. 
‘‘(B) TAXABLE FUEL.—The term ‘taxable 
fuel’ has the meaning given such term by sec-
tion 4083(a)(1). 
‘‘(5) TERMINATION.—This subsection shall not 
apply to any sale or use for any period after Decem-
ber 31, 2010. 
‘‘(c) BIODIESEL MIXTURE CREDIT.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the biodiesel mixture credit is the product of 
the applicable amount and the number of gallons of 
biodiesel used by the taxpayer in producing any 
qualified biodiesel mixture. 
‘‘(2) APPLICABLE AMOUNT.—For purposes of 
this subsection—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the applicable amount is 50 
cents. 
‘‘(B) AMOUNT FOR AGRI-BIODIESEL.—
‘‘(i) IN GENERAL.—Subject to clause 
(ii), in the case of any biodiesel which is 
agri-biodiesel, the applicable amount is 
$1.00.
‘‘(ii) CERTIFICATION
FOR
AGRI-BIO-
DIESEL.—Clause (i) shall apply only if the 
taxpayer described in paragraph (1) ob-
tains a certification (in such form and 
manner as prescribed by the Secretary) 
from the producer of the agri-biodiesel 
which identifies the product produced. 
‘‘(3) 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. 
‘‘(4) TERMINATION.—This subsection shall not 
apply to any sale or use for any period after Decem-
ber 31, 2005. 
‘‘(d) MIXTURE NOT USED AS A FUEL, ETC.—
‘‘(1) IMPOSITION OF TAX.—If—
‘‘(A) any credit was determined under this 
section with respect to alcohol or biodiesel used 
in the production of any alcohol fuel mixture or 
qualified biodiesel mixture, respectively, and 
‘‘(B) any person— 
‘‘(i) separates such alcohol or biodiesel 
from the mixture, or
‘‘(ii) without separation, uses the mix-
ture other than as a fuel,
then there is hereby imposed on such person a 
tax equal to the product of the applicable 
amount and the number of gallons of such alco-
hol or biodiesel. 
‘‘(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 paragraph (1) as if such tax 
were imposed by section 4081 and not by this sec-
tion.’’. 
(b) REGISTRATION REQUIREMENT.—Section 4101(a) 
of such Code (relating to registration) is amended by in-
serting ‘‘and every person producing biodiesel (as defined 
in section 40A(d)(1)) or alcohol (as defined in section 
6426(b)(4)(A))’’ after ‘‘4091’’. 
(c) CONFORMING AMENDMENTS.—
(1) Section 40(c) of such Code is amended by 
striking ‘‘section 4081(c), or section 4091(c)’’ and 
inserting ‘‘section 4091(c), section 6426, section 
6427(e), or section 6427(f)’’. 
(2) Section 40(d)(4)(B) of such Code is amend-
ed by striking ‘‘or 4081(c)’’. 
(3) Section 40(e)(1) of such Code is amended—
(A) by striking ‘‘2007’’ in subparagraph 
(A) and inserting ‘‘2010’’, and
(B) by striking ‘‘2008’’ in subparagraph 
(B) and inserting ‘‘2011’’. 
(4) Section 40(h) of such Code is amended—
(A) by striking ‘‘2007’’ in paragraph (1) 
and inserting ‘‘2010’’, and 
(B) by striking ‘‘, 2006, or 2007’’ in the 
table contained in paragraph (2) and inserting 
‘‘through 2010’’. 
(5) Section 4041(b)(2)(B) of such Code is 
amended by striking ‘‘a substance other than petro-
leum or natural gas’’ and inserting ‘‘coal (including 
peat)’’. 
(6) Paragraph (1) of section 4041(k) of such 
Code is amended to read as follows: 
‘‘(1) IN
GENERAL.—Under regulations pre-
scribed by the Secretary, in the case of the sale or 
use of any liquid at least 10 percent of which con-
sists 
of 
alcohol 
(as 
defined 
in 
section 
6426(b)(4)(A)), the rate of the tax imposed by sub-
section (c)(1) shall be the comparable rate under 
section 4091(c).’’. 
(7) Section 4081 of such Code is amended by 
striking subsection (c). 
(8) Paragraph (2) of section 4083(a) of such 
Code is amended to read as follows:
‘‘(2) GASOLINE.—The term ‘gasoline’—
‘‘(A) includes any gasoline blend, other 
than qualified methanol or ethanol fuel (as de-
fined in section 4041(b)(2)(B)) or a denaturant 
of alcohol (as defined in section 6426(b)(4)(A)), 
and 
‘‘(B) includes, to the extent prescribed in 
regulations—
‘‘(i) any gasoline blend stock, and 
‘‘(ii) any product commonly used as 
an additive in gasoline. 
For purposes of subparagraph (B)(i), the term ‘gas-
oline blend stock’ means any petroleum product 
component of gasoline.’’. 
(9) Section 6427 of such Code is amended by 
inserting after subsection (d) the following new sub-
section: 
‘‘(e) ALCOHOL OR BIODIESEL USED TO PRODUCE 
ALCOHOL FUEL AND BIODIESEL MIXTURES OR USED AS 
FUELS.—Except as provided in subsection (k)—
‘‘(1) USED TO PRODUCE A MIXTURE.—If any 
person produces a mixture described in section 6426 
in such person’s trade or business, the Secretary 
shall pay (without interest) to such person an 
amount equal to the alcohol fuel mixture credit or
the biodiesel mixture credit with respect to such mix-
ture. 
‘‘(2) USED AS FUEL.—If alcohol (as defined in 
section 40(d)(1)) or biodiesel (as defined in section 
40A(d)(1)) or agri-biodiesel (as defined in section 
40A(d)(2)) which is not in a mixture with a taxable 
fuel (as defined in section 4083(a)(1))—
‘‘(A) is used by any person as a fuel in a 
trade or business, or 
‘‘(B) is sold by any person at retail to an-
other person and placed in the fuel tank of such 
person’s vehicle, 
the Secretary shall pay (without interest) to such 
person an amount equal to the alcohol credit (as de-
termined under section 40(b)(2)) or the biodiesel 
credit (as determined under section 40A(b)(2)) with 
respect to such fuel. 
‘‘(3) COORDINATION WITH OTHER REPAYMENT 
PROVISIONS.—No amount shall be payable for any 
period under paragraph (1) with respect to any mix-
ture with respect to which an amount may be 
claimed by such person as a credit under section 
6426 for such period. 
‘‘(4) TERMINATION.—This subsection shall not 
apply with respect to—
‘‘(A) any alcohol fuel mixture (as defined 
in section 6426(b)(3)) or alcohol (as so defined) 
sold or used after December 31, 2010, and 
‘‘(B) any qualified biodiesel mixture (with-
in the meaning of section 6426(c)(1)) or bio-
diesel (as so defined) or agri-biodiesel (as so de-
fined) sold or used after December 31, 2005.’’. 
(10) Subsection (f) of section 6427 of such 
Code is amended to read as follows: 
‘‘(f) AVIATION FUEL USED TO PRODUCE CERTAIN 
ALCOHOL FUELS.—
‘‘(1) IN GENERAL.—Except as provided in sub-
section (k), if any aviation fuel on which tax was im-
posed by section 4091 at the regular tax rate is used 
by any person in producing a mixture described in 
section 4091(c)(1)(A) 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 ‘reg-
ular tax rate’ means the aggregate rate of tax
imposed by section 4091 determined without re-
gard to subsection (c) thereof. 
‘‘(B) INCENTIVE
TAX
RATE.—The term 
‘incentive tax rate’ means the aggregate rate of 
tax imposed by section 4091 with respect to 
fuel described in subsection (c)(2) thereof. 
‘‘(3) COORDINATION WITH OTHER REPAYMENT 
PROVISIONS.—No amount shall be payable under 
paragraph (1) with respect to any aviation fuel with 
respect to which an amount is payable under sub-
section (d) or (l). 
‘‘(4) TERMINATION.—This subsection shall not 
apply with respect to any mixture sold or used after 
September 30, 2007.’’. 
(11) Paragraphs (1) and (2) of section 6427(i) 
of such Code are amended by inserting ‘‘(f),’’ after 
‘‘(d),’’. 
(12) Section 6427(i)(3) of such Code is amend-
ed—
(A) by striking ‘‘subsection (f)’’ both 
places it appears in subparagraph (A) and in-
serting ‘‘subsection (e)(1)’’, 
(B) by striking ‘‘gasoline, diesel fuel, or 
kerosene used to produce a qualified alcohol 
mixture (as defined in section 4081(c)(3))’’ in
subparagraph (A) and inserting ‘‘a mixture de-
scribed in section 6426’’, 
(C) by striking ‘‘subsection (f)(1)’’ in sub-
paragraph 
(B) 
and 
inserting 
‘‘subsection 
(e)(1)’’, 
(D) by striking ‘‘20 days of the date of the 
filing of such claim’’ in subparagraph (B) and 
inserting ‘‘45 days of the date of the filing of 
such claim (20 days in the case of an electronic 
claim)’’, and 
(E) by striking ‘‘ALCOHOL MIXTURE’’ in 
the heading and inserting ‘‘ALCOHOL FUEL AND 
BIODIESEL MIXTURE’’. 
(13) Section 6427(o) of such Code is amend-
ed—
(A) by striking paragraph (1) and insert-
ing the following new paragraph: 
‘‘(1) any tax is imposed by section 4081, and’’, 
(B) by striking ‘‘such gasohol’’ in para-
graph (2) and inserting ‘‘the alcohol fuel mix-
ture (as defined in section 6426(b)(3))’’, 
(C) by striking ‘‘gasohol’’ both places it 
appears in the matter following paragraph (2) 
and inserting ‘‘alcohol fuel mixture’’, and
(D) by striking ‘‘GASOHOL’’ in the heading 
and inserting ‘‘ALCOHOL FUEL MIXTURE’’. 
(14) Section 9503(b)(1) of such Code is amend-
ed by adding at the end the following new flush sen-
tence: 
‘‘For purposes of this paragraph, taxes received 
under sections 4041 and 4081 shall be determined 
without reduction for credits under section 6426.’’. 
(15) Section 9503(b)(4) of such Code is amend-
ed—
(A) by adding ‘‘or’’ at the end of subpara-
graph (C), 
(B) by striking the comma at the end of 
subparagraph (D)(iii) and inserting a period, 
and 
(C) by striking subparagraphs (E) and 
(F). 
(16) Section 9503(c)(2)(A)(i)(III) of such Code 
is amended by inserting ‘‘(other than subsection (e) 
thereof)’’ after ‘‘section 6427’’. 
(17) Section 9503(e)(2) of such Code is amend-
ed by striking subparagraph (B) and by redesig-
nating subparagraphs (C), (D), and (E) as subpara-
graphs (B), (C), and (D), respectively.
(18) The table of sections for subchapter B of 
chapter 65 of such Code is amended by inserting 
after the item relating to section 6425 the following 
new item:
‘‘Sec. 6426. Credit for alcohol fuel and biodiesel mixtures.’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to fuel sold or used after December 31, 
2003. 
(2) REPEAL OF GENERAL FUND RETENTION OF 
CERTAIN
ALCOHOL
FUELS
TAXES.—The amend-
ments made by subsection (c)(15) shall apply to fuel 
sold or used after September 30, 2003. 
(e) FORMAT
FOR FILING.—The Secretary of the 
Treasury shall describe the electronic format for filing 
claims described in section 6427(i)(3)(B) of the Internal 
Revenue Code of 1986 (as amended by subsection 
(b)(12)(C)) not later than October 31, 2003. 
SEC. 3. INCENTIVES FOR 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 
inserting after section 40 the following new section:
‘‘SEC. 40A. BIODIESEL USED AS FUEL. 
‘‘(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. 
‘‘(b) DEFINITION OF BIODIESEL MIXTURE CREDIT 
AND BIODIESEL CREDIT.—For purposes of this section—
‘‘(1) BIODIESEL MIXTURE CREDIT.—
‘‘(A) IN GENERAL.—The biodiesel mixture 
credit of any taxpayer for any taxable year is 
50 cents for each gallon of biodiesel used by the 
taxpayer in the production of a qualified bio-
diesel mixture. 
‘‘(B) QUALIFIED
BIODIESEL
MIXTURE.—
The term ‘qualified biodiesel mixture’ means a 
mixture of biodiesel and diesel fuel which—
‘‘(i) is sold by the taxpayer producing 
such mixture to any person for use as a 
fuel, 
‘‘(ii) is used as a fuel by the taxpayer 
producing such mixture, or 
‘‘(iii) is removed from the refinery by 
a person producing such mixture. 
‘‘(C) SALE OR USE MUST BE IN TRADE OR 
BUSINESS, ETC.—Biodiesel used in the produc-