SA 3616. Mr. SALAZAR (for himself, Mr. Kerry, Ms. Stabenow, and Mr. Schumer) submitted an amendment intended to be proposed to amendment SA 3500 proposed by Mr. Harkin (for himself, Mr. Chambliss, Mr. Baucus, and Mr. Grassley) to the bill H.R. 2419, to provide for the continuation of agricultural programs through fiscal year 2012, and for other purposes; which was ordered to lie on the table; as follows:

Beginning on page 1472, line 1, strike all through page 1480, line 3, and insert the following:

PART II--ALCOHOL AND OTHER FUELS
SEC. 12311. EXPANSION OF SPECIAL ALLOWANCE TO CELLULOSIC BIOFUEL PLANT PROPERTY.
(a) In General.--Paragraph (3) of section 168(l) (relating to special allowance for cellulosic biomass ethanol plant property) is amended to read as follows:
``(3) CELLULOSIC BIOFUEL.--For purposes of this subsection, the term `cellulosic biofuel' means any alcohol, ether, ester, or hydrocarbon produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis.''.
(b) Conforming Amendments.--
(1) Subsection (l) of section 168 is amended by striking ``cellulosic biomass ethanol'' each place it appears and inserting ``cellulosic biofuel''.
(2) The heading of section 168(l) is amended by striking ``Cellulosic Biomass Ethanol'' and inserting ``Cellulosic Biofuel''.
(3) The heading of paragraph (2) of section 168(l) is amended by striking ``CELLULOSIC BIOMASS ETHANOL'' and inserting ``CELLULOSIC BIOFUEL''.
(c) Effective Date.--The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.
SEC. 12312. 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 (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 small cellulosic biofuel producer credit.''.
(b) Small Cellulosic Biofuel Producer Credit.--
(1) IN GENERAL.--Subsection (b) of section 40 is amended by adding at the end the following new paragraph:
``(6) SMALL CELLULOSIC BIOFUEL PRODUCER CREDIT.--
``(A) IN GENERAL.--In addition to any other credit allowed under this section, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the applicable amount for each gallon of not more than 60,000,000 gallons of qualified cellulosic biofuel production.
``(B) APPLICABLE AMOUNT.--For purposes of subparagraph (A), the applicable amount means the excess of--
``(i) $1.28, over
``(ii) the sum of--
``(I) the amount of the credit in effect for alcohol which is ethanol under subsection (b)(1) (without regard to subsection (b)(3)) at the time of the qualified cellulosic biofuel production, plus
``(II) 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 an eligible small cellulosic biofuel producer 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).
``(D) QUALIFIED CELLULOSIC BIOFUEL MIXTURE.--For purposes of this paragraph, the term `qualified cellulosic biofuel mixture' means a mixture of cellulosic biofuel and any petroleum fuel product 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) ADDITIONAL DISTILLATION EXCLUDED.--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.
``(F) APPLICATION OF PARAGRAPH.--This paragraph shall apply with respect to qualified cellulosic biofuel production after December 31, 2007, and before April 1, 2015.''.
(2) TERMINATION DATE NOT TO APPLY.--Subsection (e) of section 40 (relating to termination) is amended--
(A) by inserting ``or subsection (b)(6)(E)'' after ``by reason of paragraph (1)'' in paragraph (2), and
(B) by adding at the end the following new paragraph:
``(3) EXCEPTION FOR SMALL 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).''.
(c) Eligible Small Cellulosic Biofuel Producer.--Section 40 is amended by adding at the end the following new subsection:
``(i) Definitions and Special Rules for Small Cellulosic Biofuel Producer.--For purposes of this section--
``(1) IN GENERAL.--The term `eligible small cellulosic biofuel producer' means a person, who at all times during the taxable year, has a productive capacity for cellulosic biofuel not in excess of 60,000,000 gallons.
``(2) CELLULOSIC BIOFUEL.--
``(A) IN GENERAL.--The term `cellulosic biofuel' has the meaning given such term under section 168(l)(3), but does not include any alcohol with a proof of less than 150.
``(B) DETERMINATION OF PROOF.--The determination of the proof of any alcohol shall be made without regard to any added denaturants.
``(3) AGGREGATION RULE.--For purposes of the 60,000,000 gallon limitation under paragraph (1) and subsection (b)(6)(A), 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.
``(4) PARTNERSHIP, S CORPORATIONS, AND OTHER PASS-THRU ENTITIES.--In the case of a partnership, trust, S corporation, or other pass-thru entity, the limitation contained in paragraph (1) shall be applied at the entity level and at the partner or similar level.
``(5) 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.
``(6) REGULATIONS.--The Secretary may prescribe such regulations as may be necessary to prevent the credit provided for in subsection (a)(4) from directly or indirectly benefitting any person with a direct or indirect productive capacity of more than 60,000,000 gallons of cellulosic biofuel during the taxable year.
``(7) ALLOCATION OF SMALL CELLULOSIC PRODUCER CREDIT TO PATRONS OF COOPERATIVE.--Rules similar to the rules under subsection (g)(6) shall apply for purposes of this subsection.''.
(d) Cellulosic 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 by inserting after subparagraph (C) the following new subparagraph:
``(D) SMALL 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 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)''.
(e) Biofuel Produced in the United States.--Section 40(d), as amended by this section, is amended by adding at the end the following new paragraph:
``(6) SPECIAL RULE FOR SMALL CELLULOSIC BIOFUEL PRODUCERS.--No small cellulosic biofuel producer credit shall be determined under subsection (a) with respect to any biofuel unless such biofuel is produced in the United States.''.
(f) 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''.
(g) Effective Date.--The amendments made by this section shall apply to fuel produced after December 31, 2007.


(As printed in the Congressional Record for the Senate on Nov 13, 2007.)