,,ii  #aadth ,,congress  #ast ,session  
,s4 #bcec  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,december #c1  
#bjae ,mr4 ,grassley 7for himself and   
,ms4 ,cantwell7 introduced the following
 bill2 which was read twice and referred
 to the ,committee on ,finance  ,a      
,,bill  ,to amend the ,internal ,revenue
 ,code of #aihf to extend and modify the
 incentives for biodiesel4  #a4 ,short  
title  ,this ,act may be cited as the   
,biodiesel ,tax ,incentive ,reform and  
,extension ,act of #bjae4  #b4          
,extension and reform of biodiesel tax  
incentives  7a7 ,extension of current   
law incentives  7#a7 ,income tax credit 
,subsection 7g7 of section #dj;,a is    
amended by striking ,december #ca1 #bjad
 and inserting ,march #ca1 #bjaf4  7#b7 
,excise tax incentives  7,a7 ,in general
 ,paragraph 7#f7 of section #fdbf7;c7 is
 amended by striking ,december #ca1     
#bjad and inserting ,march #ca1 #bjaf4  
7,b7 ,payments ,subparagraph 7,b7 of    
section #fdbg7;e77#f7 is amended by     

striking ,december #ca1 #bjad and       
inserting ,march #ca1 #bjaf4  7,c7      
,special rule for certain periods during
 #bjae ,notwithstanding any other       
provision of law1 in the case of any    
biodiesel mixture credit properly       
determined under section #fdbf7;c7 of   
the ,internal ,revenue ,code of #aihf   
for periods after ,december #ca1 #bjad1 
and on or before the last day of the    
first calendar quarter ending after the 
date of the enactment of this ,act1 such
 credit shall be allowed1 and any refund
 or payment attributable to such credit 
7including any payment under section    
#fdbg7;e7 of such ,code7 shall be made1 
only in such manner as the ,secretary of
 the ,treasury 7or the ,secretary's     
delegate7 shall provide4 ,such          
,secretary shall issue guidance within  
#cj days after the date of the enactment
 of this ,act providing for a one-time  
submission of claims covering periods   
described in the preceding sentence4    
,such guidance shall provide for a      

#ahj-;day period for the submission of  
such claims 7in such manner as          
prescribed by such ,secretary7 to begin 
not later than #cj days after such      
guidance is issued4 ,such claims shall  
be paid by such ,secretary not later    
than #fj days after receipt4 ,if such   
,secretary has not paid pursuant to a   
claim filed under this subsection within
 #fj days after the date of the filing  
of such claim1 the claim shall be paid  
with interest from such date determined 
by using the overpayment rate and method
 under section #ffba of such ,code4     
7#c7 ,effective date ,the amendments    
made by this subsection shall apply to  
fuel sold or used after ,december #ca1  
#bjad4  7b7 ,reform of credit  7#a7     
,income tax credit  7,a7 ,in general ,so
 much of section #dj;,a as precedes     
subsection 7c7 is amended to read as    
follows3  #dj;,a4 ,biodiesel fuels      
credit  7a7 ,in general ,for purposes of
 section #ch1 the biodiesel fuels credit
 determined under this section for the  

taxable year is #a4jj for each gallon of
 biodiesel produced by the taxpayer     
which during the taxable year--  7#a7 is
 sold by the taxpayer to another        
person--  7,a7 for use by such other    
person's trade or business as a fuel or 
in the production of a qualified        
biodiesel mixture 7other than casual    
off-farm production71 or  7,b7 who sells
 such biodiesel at retail to another    
person and places such biodiesel in the 
fuel tank of such other person1 or  7#b7
 is used by such taxpayer for any       
purpose described in paragraph 7#a74    
7b7 ,increased credit for small         
producers  7#a7 ,in general ,in the case
 of any eligible small biodiesel        
producer1 subsection 7a7 shall be       
applied by increasing the dollar amount 
contained therein by #aj cents4  7#b7   
,limitation ,paragraph 7#a7 shall only  
apply with respect to the first         
#ae1jjj1jjj gallons of biodiesel        
produced by any eligible small biodiesel
 producer during any taxable year4  4   

7,b7 ,definitions and special rules     
,section #dj;,a7d7 is amended by        
striking all that follows paragraph 7#a7
 and inserting the following3  7#b7     
,qualified biodiesel mixture2 biodiesel 
mixture  7,a7 ,qualified biodiesel      
mixture  7i7 ,in general ,the term      
qualified biodiesel mixture means a     
biodiesel mixture which is--  7,i7 sold 
by the producer of such mixture to any  
person for use as a fuel1 or  7,,ii7    
used by the producer of such mixture as 
a fuel4  7ii7 ,sale or use must be in   
trade or business1 etc ,a biodiesel     
mixture shall not be treated as a       
qualified biodiesel mixture unless the  
sale or use described in clause 7i7 is  
in a trade or business of the person    
producing the biodiesel mixture4  7,b7  
,biodiesel mixture ,the term biodiesel  
mixture means a mixture which consists  
of biodiesel and diesel fuel 7as defined
 in section #djhc7;a77#c771 determined  
without regard to any use of kerosene4  
7#c7 ,biodiesel not used for a qualified

 purpose ,if-- 7,a7 any credit was      
determined with respect to any biodiesel
 under this section1 and  7,b7 any      
person uses such biodiesel for a purpose
 not described in subsection 7a71  then 
there is hereby imposed on such person a
 tax equal to the product of the rate   
applicable under subsection 7a7 and the 
number of gallons of such biodiesel4    
7#d7 ,pass-thru in the case of estates  
and trusts ,under regulations prescribed
 by the ,secretary1 rules similar to the
 rules of subsection 7d7 of section #eb 
shall apply4  7#e7 ,limitation to       
biodiesel with connection to the united 
states  7,a7 ,in general ,no credit     
shall be determined under subsection 7a7
 with respect to biodiesel unless such  
biodiesel is produced in the ,united    
,states from qualified feedstocks4 ,for 
purposes of this paragraph1 the term    
,united ,states includes any possession 
of the ,united ,states4  7,b7 ,qualified
 feedstocks ,for purposes of            
subparagraph 7,a71 the term qualified   

feedstock means any feedstock which is  
allowable for a fuel that is assigned a 
,d-,code of #d under table #a of section
 #hj4adbf7;f7 of title #dj1 ,code of    
,federal ,regulations4  4  7,c7 ,rules  
for small biodiesel producers  7i7 ,in  
general ,section #dj;,a7e7 is amended-- 
7,i7 by striking agri-biodiesel each    
place it appears in paragraphs 7#a7 and 
7#e77;,a7 and inserting biodiesel1      
7,,ii7 by striking subsection           
7b77#d77;,c7 each place it appears in   
paragraphs 7#b7 and 7#c7 and inserting  
subsection 7b77#b71 and  7,,iii7 by     
striking subsection 7a77#c7 each place  
it appears in paragraphs 7#e77;,a71     
7#f77;,a77i71 and 7#f77;,b77i7 and      
inserting subsection 7b74  7ii7 ,the    
heading for subsection 7e7 of section   
#dj;,a is amended by striking           
agri-biodiesel and inserting biodiesel4 
7iii7 ,the headings for paragraphs 7#a7 
and 7#f7 of section #dj;,a7e7 are each  
amended by striking agri-biodiesel and  
inserting biodiesel4  7,d7 ,renewable   

diesel  7i7 ,in general ,paragraph 7#c7 
of section #dj;,a7f7 is amended to read 
as follows3  7#c7 ,renewable diesel     
defined  7,a7 ,in general ,the term     
renewable diesel means liquid fuel      
derived from biomass which--  7i7 is not
 a mono-alkyl ester1  7ii7 can be used  
in engines designed to operate on       
conventional diesel fuel1 and  7iii7    
meets the requirements for any ,grade   
,no4 #a-;,d fuel or ,grade ,no4 #b-;,d  
fuel covered under the ,american        
,society for ,testing and ,materials    
specification ,d-#ige-ac;a4  7,b7       
,exceptions ,such term shall not        
include-- 7i7 any liquid with respect to
 which a credit may be determined under 
section #dj1  7ii7 any fuel derived from
 coprocessing biomass with a feedstock  
which is not biomass1 or  7iii7 any fuel
 that is not chemically equivalent to   
petroleum diesel fuels that can meet    
fuel quality specifications applicable  
to diesel fuel1 gasoline1 or aviation   
fuel4  7,c7 ,biomass ,for purposes of   

this paragraph1 the term biomass has the
 meaning given such term by section     
#de,k7c77#c74  4  7ii7 ,conforming      
amendments ,section #dj;,a7f7 is        
amended--  7,i7 by striking ,subsection 
7b77#d7 in paragraph 7#b7 and inserting 
,subsection 7b71 and  7,,ii7 by striking
 paragraph 7#d7 and inserting the       
following3  7#d7 ,certain aviation fuel 
,except as provided paragraph 7#c77;,b71
 the term renewable diesel shall include
 fuel derived from biomass which meets  
the requirements of a ,department of    
,defense specification for military jet 
fuel or an ,american ,society of        
,testing and ,materials specification   
for aviation turbine fuel4  4  7,e7     
,termination ,subsection 7g7 of section 
#dj;,a1 as amended by subsection        
7a77#a71 is amended by striking ,march  
#ca1 #bjaf and inserting ,december #ca1 
#bjah4  7,f7 ,clerical amendment ,the   
table of sections for subpart ,d of part
 ,,iv of subchapter ,a of chapter #a is 
amended by striking the item relating to

 section #dj;,a and inserting the       
following new item3  ,sec4 #dj;,a4      
,biodiesel fuels credit4  4  7#b7       
,reform of excise tax credit  7,a7 ,in  
general ,subsection 7c7 of section      
#fdbf1 as amended by subsection         
7a77#b77;,a71 is amended to read as     
follows3  7c7 ,biodiesel production     
credit  7#a7 ,in general ,for purposes  
of this section1 the biodiesel          
production credit is #a4jj for each     
gallon of biodiesel produced by the     
taxpayer and which--  7,a7 is sold by   
such taxpayer to another person--  7i7  
for use by such other person's trade or 
business as a fuel or in the production 
of a qualified biodiesel mixture 7other 
than casual off-farm production71 or    
7ii7 who sells such biodiesel at retail 
to another person and places such       
biodiesel in the fuel tank of such other
 person1 or  7,b7 is used by such       
taxpayer for any purpose described in   
subparagraph 7,a74  7#b7 ,definitions   
,any term used in this subsection which 

is also used in section #dj;,a shall    
have the meaning given such term by     
section #dj;,a4  7#c7 ,termination ,this
 subsection shall not apply to any sale1
 use1 or removal after ,december #ca1   
#bjah4  4  7,b7 ,producer registration  
requirement ,subsection 7a7 of section  
#fdbf is amended by striking subsections
 7d7 and 7e7 in the flush sentence at   
the end and inserting subsections 7c71  
7d71 and 7e74  7,c7 ,recapture  7i7 ,in 
general ,subsection 7f7 of section #fdbf
 is amended-- 7,i7 by striking or       
biodiesel each place it appears in      
subparagraphs 7,a7 and 7,b77i7 of       
paragraph 7#a71  7,,ii7 by striking or  
biodiesel mixture in paragraph          
7#a77;,a71 and  7,,iii7 by redesignating
 paragraph 7#b7 as paragraph 7#c7 and by
 inserting after paragraph 7#a7 the     
following new paragraph3  7#b7          
,biodiesel ,if any credit was determined
 under this section or paid pursuant to 
section #fdbg7;e7 with respect to the   
production of any biodiesel and any     

person uses such biodiesel for a purpose
 not described in subsection 7c77#a71   
then there is hereby imposed on such    
person a tax equal to #a for each gallon
 of such biodiesel4  4  7ii7 ,conforming
 amendments  7,i7 ,paragraph 7#c7 of    
section #fdbf7;f71 as redesignated by   
clause 7i77,,iii71 is amended by        
inserting or 7#b7 after paragraph 7#a74 
7,,ii7 ,the heading for paragraph 7#a7  
of section #fdbf7;f7 is amended by      
striking ,imposition of tax and         
inserting ,in general4  7,d7 ,limitation
 ,section #fdbf7;i7 is amended-- 7i7 in 
paragraph 7#b7--  7,i7 by striking      
biodiesel or1 and  7,,ii7 by striking   
,biodiesel and in the heading1 and  7ii7
 by inserting after paragraph 7#b7 the  
following new paragraph3  7#c7          
,biodiesel ,no credit shall be          
determined under subsection 7a7 with    
respect to biodiesel unless such        
biodiesel is produced in the ,united    
,states from qualified feedstocks 7as   
defined in section #dj;,a7d77#e77;,b774 

4  7,e7 ,clerical amendments  7i7 ,the  
heading of section #fdbf is amended by  
striking alcohol fuel1 biodiesel1 and   
alternative fuel mixtures and inserting 
alcohol fuel mixtures1 biodiesel        
production1 and alternative fuel        
mixtures4  7ii7 ,the item relating to   
section #fdbf in the table of sections  
for subchapter ,b of chapter #fe is     
amended by striking alcohol fuel1       
biodiesel1 and alternative fuel mixtures
 and inserting alcohol fuel mixtures1   
biodiesel production1 and alternative   
fuel mixtures4  7#c7 ,reform of excise  
payments of credit  ,subsection 7e7 of  
section #fdbg is amended-- 7,a7 by      
striking or the biodiesel mixture credit
 in paragraph 7#a71  7,b7 by            
redesignating paragraphs 7#c7 through   
7#f7 as paragraphs 7#d7 through 7#g71   
respectively1 and by inserting after    
paragraph 7#b7 the following new        
paragraph3  7#c7 ,biodiesel production  
credit ,if any person produces biodiesel
 and sells or uses such biodiesel as    

provided in section #fdbf7;c77#a71 the  
,secretary shall pay 7without interest7 
to such person an amount equal to the   
biodiesel production credit with respect
 to such biodiesel4  1  7,c7 by striking
 paragraph 7#a7 or 7#b7 each place it   
appears in paragraphs 7#d7 and 7#f71 as 
redesignated by subparagraph 7,b71 and  
inserting paragraph 7#a71 7#b71 or 7#c71
  7,d7 by striking alternative fuel each
 place it appears in paragraphs 7#d7 and
 7#f71 as redesignated by subparagraph  
7,b71 and inserting fuel1 and  7,e7 in  
paragraph 7#g77;,b7 7as amended by      
subsection 7a77#b77;,b7 and redesignated
 by subparagraph 7,b77 7#b7-- 7i7 by    
striking biodiesel mixture 7as defined  
in section #fdbf7;c77#c77 and inserting 
biodiesel 7within the meaning of section
 #dj;,a71 and  7ii7 by striking ,march  
#ca1 #bjaf and inserting ,december #ca1 
#bjah4  7#d7 ,guidance ,not later than  
#cj days after the date of the enactment
 of this ,act1 the ,secretary of the    
,treasury1 or the ,secretary's delegate1

 shall issue preliminary guidance with  
respect to the amendments made by this  
subsection4  7#e7 ,effective date ,the  
amendments made by this subsection shall
 apply to fuel sold or used after ,march
 #ca1 #bjaf4