CREDIT FOR PRODUCTION OF CELLULOSIC BIOFUEL.

SEC. 15321. CREDIT FOR PRODUCTION OF CELLULOSIC BIOFUEL.(a) In General.—Subsection (a) of section 40 (relating to alcohol used as fuel) is amended by striking “plus” at the end of paragraph (1), by striking “plus” at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting “, plus”, and by adding at the end the following new paragraph:“(4) the cellulosic biofuel producer credit.”.(b) Cellulosic Biofuel Producer Credit.—(1) In general.—Subsection (b) of section 40 is amended by adding at the end the following new paragraph:“(6) Cellulosic biofuel producer credit.—“(A) In general.—The cellulosic biofuel producer credit of any taxpayer is an amount equal to the applicable amount for each gallon of qualified cellulosic biofuel production.“(B) Applicable amount.—For purposes of subparagraph (A), the applicable amount means $1.01, except that such amount shall, in the case of cellulosic biofuel which is alcohol, be reduced by the sum of—“(i) the amount of the credit in effect for such alcohol under subsection (b)(1) (without regard to subsection (b)(3)) at the time of the qualified cellulosic biofuel production, plus“(ii) in the case of ethanol, the amount of the credit in effect under subsection (b)(4) at the time of such production.“(C) Qualified cellulosic biofuel production.—For purposes of this section, the term ‘qualified cellulosic biofuel production’ means any cellulosic biofuel which is produced by the taxpayer, and which during the taxable year—“(i) is sold by the taxpayer to another person—“(I) for use by such other person in the production of a qualified cellulosic biofuel 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 cellulosic biofuel at retail to another person and places such cellulosic biofuel in the fuel tank of such other person, or“(ii) is used or sold by the taxpayer for any purpose described in clause (i).The qualified cellulosic biofuel production of any taxpayer for any taxable year shall not include any alcohol which is purchased by the taxpayer and with respect to which such producer increases the proof of the alcohol by additional distillation.“(D) Qualified cellulosic biofuel mixture.—For purposes of this paragraph, the term ‘qualified cellulosic 122 STAT. 2275 biofuel mixture’ means a mixture of cellulosic biofuel and gasoline or of cellulosic biofuel and a special fuel which—“(i) is sold by the person producing such mixture to any person for use as a fuel, or“(ii) is used as a fuel by the person producing such mixture.“(E) Cellulosic biofuel.—For purposes of this paragraph—“(i) In general.—The term ‘cellulosic biofuel’ means any liquid fuel which—“(I) is produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis, and“(II) meets the registration requirements for fuels and fuel additives established by the Environmental Protection Agency under section 211 of the Clean Air Act (42 U.S.C. 7545).“(ii) Exclusion of low-proof alcohol.—Such term shall not include any alcohol with a proof of less than 150. The determination of the proof of any alcohol shall be made without regard to any added denaturants.“(F) Allocation of cellulosic biofuel producer credit to patrons of cooperative.—Rules similar to the rules under subsection (g)(6) shall apply for purposes of this paragraph.“(G) Registration requirement.—No credit shall be determined under this paragraph with respect to any taxpayer unless such taxpayer is registered with the Secretary as a producer of cellulosic biofuel under section 4101.“(H) Application of paragraph.—This paragraph shall apply with respect to qualified cellulosic biofuel production after December 31, 2008, and before January 1, 2013.”.(2) Termination date not to apply.—Subsection (e) of section 40 (relating to termination) is amended—(A) by inserting “or subsection (b)(6)(H)” after “by reason of paragraph (1)” in paragraph (2), and(B) by adding at the end the following new paragraph:“(3) Exception for cellulosic biofuel producer credit.—Paragraph (1) shall not apply to the portion of the credit allowed under this section by reason of subsection (a)(4).”.(3) Conforming amendments.—(A) Paragraph (1) of section 4101(a) is amended—(i) by striking “and every person” and inserting “, every person”, and(ii) by inserting “, and every person producing cellulosic biofuel (as defined in section 40(b)(6)(E))” after “section 6426(b)(4)(A))”.(B) The heading of section 40, and the item relating to such section in the table of sections for subpart D of part IV of subchapter A of chapter 1, are each amended by inserting “, etc.,” after “Alcohol”.(c) Biofuel Not Used as a Fuel, etc.—(1) In general.—Paragraph (3) of section 40(d) is amended by redesignating subparagraph (D) as subparagraph (E) and 122 STAT. 2276 by inserting after subparagraph (C) the following new subparagraph:“(D) Cellulosic biofuel producer credit.—If—“(i) any credit is allowed under subsection (a)(4), and“(ii) any person does not use such fuel for a purpose described in subsection (b)(6)(C),then there is hereby imposed on such person a tax equal to the applicable amount (as defined in subsection (b)(6)(B)) for each gallon of such cellulosic biofuel.”.(2) Conforming amendments.—(A) Subparagraph (C) of section 40(d)(3) is amended by striking “Producer” in the heading and inserting “Small ethanol producer”.(B) Subparagraph (E) of section 40(d)(3), as redesignated by paragraph (1), is amended by striking “or (C)” and inserting “(C), or (D)”.(d) Biofuel Produced in the United States.—Section 40(d) is amended by adding at the end the following new paragraph:“(6) Special rule for cellulosic biofuel producer credit.—No cellulosic biofuel producer credit shall be determined under subsection (a) with respect to any cellulosic biofuel unless such cellulosic biofuel is produced in the United States and used as a fuel in the United States. For purposes of this subsection, the term ‘United States’ includes any possession of the United States.”.(e) Waiver of Credit Limit for Cellulosic Biofuel Production by Small Ethanol Producers.—Section 40(b)(4)(C) is amended by inserting “(determined without regard to any qualified cellulosic biofuel production)” after “15,000,000 gallons”.(f) Denial of Double Benefit.—(1) Biodiesel.—Paragraph (1) of section 40A(d) is amended by adding at the end the following new flush sentence:“Such term shall not include any liquid with respect to which a credit may be determined under section 40.”.(2) Renewable diesel.—Paragraph (3) of section 40A(f) is amended by adding at the end the following new flush sentence:“Such term shall not include any liquid with respect to which a credit may be determined under section 40.”.(g) Effective Date.—The amendments made by this section shall apply to fuel produced after December 31, 2008.