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Full Text of this Amendment

SA 3749. Mr. BAUCUS 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 1473, strike line 3 and all that follows through page 1480, line 3, and insert the following:
(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 alcohol producer credit.''.
(b) Small Cellulosic Alcohol Producer Credit.--
(1) IN GENERAL.--Subsection (b) of section 40 is amended by adding at the end the following new paragraph:
``(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 qualified cellulosic alcohol 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 alcohol production, plus
``(II) the amount of the credit in effect under subsection (b)(4) at the time of such production.
``(i) IN GENERAL.--No credit shall be allowed to any taxpayer under subparagraph (A) with respect to any qualified cellulosic alcohol production during the taxable year in excess of 60,000,000 gallons.
``(ii) AGGREGATION RULE.--For purposes of clause (i), 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.
``(iii) 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 clause (i) shall be applied at the entity level and at the partner or similar level.
``(D) QUALIFIED CELLULOSIC ALCOHOL PRODUCTION.--For purposes of this section, the term `qualified cellulosic alcohol production' means any cellulosic biomass alcohol 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 alcohol 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 biomass alcohol at retail to another person and places such cellulosic biomass alcohol 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 alcohol 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.
``(i) IN GENERAL.--The term `cellulosic biomass alcohol' has the meaning given such term under section 168(l)(3), but does not include any alcohol with a proof of less than 150.
``(ii) DETERMINATION OF PROOF.--The determination of the proof of any alcohol shall be made without regard to any added denaturants.
``(F) 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 paragraph.
``(G) APPLICATION OF PARAGRAPH.--This paragraph shall apply with respect to qualified cellulosic alcohol 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)(G)'' 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 ALCOHOL PRODUCER CREDIT.--Paragraph (1) shall not apply to the portion of the credit allowed under this section by reason of subsection (a)(4).''.
(c) Alcohol 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:
``(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)(D),

then there is hereby imposed on such person a tax equal to the applicable amount for each gallon of such cellulosic biomass alcohol.''.
(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) Alcohol Produced in the United States.--Section 40(d) is amended by adding at the end the following new paragraph:
``(6) SPECIAL RULE FOR SMALL CELLULOSIC ALCOHOL PRODUCERS.--No small cellulosic alcohol producer credit shall be determined under subsection (a) with respect to any alcohol unless such alcohol is produced in the United States.''.
(e) 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 15, 2007.)