S 1185

112th CONGRESS
1st Session

S. 1185

To amend the Internal Revenue Code of 1986 to provide for a variable VEETC rate based on the price of crude oil, and for other purposes.

IN THE SENATE OF THE UNITED STATES

June 13, 2011

Mr. THUNE (for himself, Ms. KLOBUCHAR, Mr. GRASSLEY, Mr. JOHANNS, Mr. HOEVEN, Mr. FRANKEN, Mr. MORAN, Mr. LUGAR, Mr. NELSON of Nebraska, Mr. HARKIN, Mr. JOHNSON of South Dakota, Mr. KIRK, Mr. COATS, Mr. DURBIN, and Mrs. MCCASKILL) introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To amend the Internal Revenue Code of 1986 to provide for a variable VEETC rate based on the price of crude oil, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the `Ethanol Reform and Deficit Reduction Act'.

SEC. 2. VARIABLE VEETC RATE BASED ON PRICE OF CRUDE OIL.

    (a) Excise Tax Credit-

      (1) IN GENERAL- Subparagraph (A) of section 6426(b)(2) of the Internal Revenue Code of 1986 is amended--

        (A) by striking `and' at the end of clause (i),

        (B) by striking `calendar years beginning after 2008, 45 cents.' in clause (ii) and inserting `calendar quarters beginning after 2008 and before July 1, 2011, 45 cents, and', and

        (C) by adding at the end the following new clause:

          `(iii) in the case of calendar quarters beginning after June 30, 2011, the applicable rate determined in accordance with the following table:

`If the average price of crude oil

The applicable rate for

during the preceding calendar quarter is:

the calendar quarter is:

Not more than $50/barrel

--30 cents

More than $50 but not more than $60/barrel

--24 cents

More than $60 but not more than $70/barrel

--18 cents

More than $70 but not more than $80/barrel

--12 cents

More than $80 but not more than $90/barrel

--6 cents

More than $90/barrel

--0 cents.

          For purposes of the preceding table, the average price of crude oil for any calendar quarter shall be the average 3-month futures price on the New York Mercantile Exchange for light sweet crude oil for such calendar quarter. Each applicable rate under the preceding table shall be reduced by 2 cents for each calendar year beginning after 2011.'.

      (2) EXTENSION OF TAX CREDIT OR PAYMENT- Sections 6426(b)(6) and 6427(e)(6)(A) of such Code are each amended by striking `2011' and inserting `2014'.

    (b) Income Tax Credit-

      (1) IN GENERAL- The table contained in section 40(h)(2) of the Internal Revenue Code of 1986 is amended--

        (A) by striking `calendar year' in the heading for the first column,

        (B) by inserting `Calendar year' before `2001',

        (C) by inserting `Calendar year' before `2003',

        (D) by inserting `Calendar year' before `2005',

        (E) by inserting `Calendar years' before `2009',

        (F) by striking `2011' and inserting `the last calendar quarter beginning before July 1, 2011',

        (G) by striking the period at the end of the table, and

        (H) by adding at the end the following:
-----------------------------------------------------------------------------------------------------------------
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`Any 
calendar quarter beginning after June 30, 2011, and before 2015 1st applicable 
rate 2d applicable rate.'. 
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      (2) APPLICABLE RATES- Paragraph (3) of section 40(h) of such Code is amended to read as follows:

      `(3) APPLICABLE RATES- For purposes of this subsection, the 1st applicable rate and the 2d applicable rate shall be determined in accordance with the following table:
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`If 
the average price of crude oil during the preceding calendar quarter is: The 1st 
applicable rate for the calendar quarter is: The 2d applicable rate for the calendar 
quarter is: 
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Not 
more than $50/barrel 30 cents 22.20 cents 
More than $50 but not more 
than $60/barrel 24 cents 17.76 cents 
More than $60 but not more than 
$70/barrel 18 cents 13.33 cents 
More than $70 but not more than $80/barrel 
12 cents 8.88 cents 
More than $80 but not more than $90/barrel 6 cents 
4.44 cents 
More than $90/barrel 0 cents 0 cents. 
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      For purposes of the preceding table, the average price of crude oil for any calendar quarter shall be the average 3-month futures price on the New York Mercantile Exchange for light sweet crude oil for such calendar quarter. Each 1st applicable rate under the preceding table shall be reduced by 2 cents for each calendar year beginning after 2011 and each 2d applicable rate under such table shall be reduced by 1.48 cents for each such year.'.

      (3) EXTENSION OF TAX CREDIT- Section 40 of such Code is amended--

        (A) by striking `2011' in subsection (e)(1)(A) and inserting `2014',

        (B) by striking `2012' in subsection (e)(1)(B) and inserting `2015', and

        (C) by striking `2011' in subsection (h)(1) and inserting `2014'.

    (c) Repeal of Deadwood- Section 6426(b)(2) of the Internal Revenue Code of 1986 is amended by striking subparagraph (C).

    (d) Effective Date- The amendments made by this section shall apply to any sale, use, or removal for any period after June 30, 2011.

SEC. 3. EXTENSION AND MODIFICATION OF ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY CREDIT.

    (a) Extension- Subsection (g) of section 30C of the Internal Revenue Code of 1986 is amended by striking `placed in service--' and all that follows and inserting `placed in service after the earlier of December 31, 2016, or the date on which the Secretary certifies that at least 53,000 qualified alternative fuel refueling properties (other than properties described in subsection (c)(2)(C)) have been placed in service.'.

    (b) Only Certain Ethanol Blends Eligible for Credit- Subparagraph (A) of section 30C(c)(2) of the Internal Revenue Code of 1986 is amended to read as follows:

        `(A) Any fuel--

          `(i) at least 85 percent of the volume of which consists of one or more of the following: natural gas, compressed natural gas, liquified natural gas, liquefied petroleum gas, or hydrogen, or

          `(ii) at least 85 percent of the volume of which consists of--

            `(I) ethanol, or

            `(II) ethanol and gasoline or one or more of the fuels described in clause (i), but only if at least 15 percent and not more than 85 percent of the volume of such fuel consists of ethanol.'.

    (c) Credit for Dual-Use Refueling Property- Subsection (e) of section 30C of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

      `(6) DUAL-USE REFUELING PROPERTY-

        `(A) IN GENERAL- In the case of any dual-use refueling property, 100 percent of the cost of such property shall be treated as qualified alternative fuel refueling property if the taxpayer certifies, in such time and manner as the Secretary shall prescribe, that such property will be used in more than a de minimis capacity for the purposes described in section 179A(d)(3)(A) (applied as specified in subsection (c)(2)).

        `(B) RECAPTURE- If at any time within 5 years after the date of the certification under subparagraph (A) the dual-use refueling property ceases to be used as required under such subparagraph, 100 percent of the cost of such property shall be subject to recapture under paragraph (5).

        `(C) DUAL-USE REFUELING PROPERTY- For purposes of this paragraph, the term `dual-use refueling property' means property that is both qualified alternative fuel vehicle refueling property and property used--

          `(i) to store or dispense fuels not described in subsection (c)(2), or

          `(ii) to store fuels described in subsection (c)(2) for any purpose other than delivery of such fuel into the fuel tank of a motor vehicle.'.

    (d) Effective Date- The amendments made by this section shall apply to property placed in service after June 30, 2011.

SEC. 4. EXTENSION OF CELLULOSIC BIOFUEL PRODUCER CREDIT THROUGH 2014.

    (a) In General- Section 40(b)(6) of the Internal Revenue Code of 1986 is amended by striking subparagraph (H).

    (b) Conforming Amendment- Section 40(e) of the Internal Revenue Code of 1986 is amended by striking paragraph (3).

SEC. 5. EXTENSION OF SPECIAL DEPRECIATION ALLOWANCE FOR CELLULOSIC BIOFUEL PLANT PROPERTY.

    Subparagraph (D) of section 168(l)(2) of the Internal Revenue Code of 1986 is amended by striking `January 1, 2013' and inserting `January 1, 2015'.

SEC. 6. ALGAE TREATED AS A QUALIFIED FEEDSTOCK FOR PURPOSES OF THE CELLULOSIC BIOFUEL PRODUCER CREDIT, ETC.

    (a) In General- Subclause (I) of section 40(b)(6)(E)(i) of the Internal Revenue Code of 1986 is amended to read as follows:

            `(I) is derived solely by, or from, qualified feedstocks, and'.

    (b) Qualified Feedstock; Special Rules for Algae- Paragraph (6) of section 40(b) of the Internal Revenue Code of 1986, as amended by this Act, is amended by redesignating subparagraphs (F) and (G) as subparagraphs (H) and (I), respectively, and by inserting after subparagraph (E) the following new subparagraphs:

        `(F) QUALIFIED FEEDSTOCK- For purposes of this paragraph, the term `qualified feedstock' means--

          `(i) any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis, and

          `(ii) any cultivated algae, cyanobacteria, or lemna.

        `(G) SPECIAL RULES FOR ALGAE- In the case of fuel which is derived by, or from, feedstock described in subparagraph (F)(ii) and which is sold by the taxpayer to another person for refining by such other person into a fuel which meets the requirements of subparagraph (E)(i)(II)--

          `(i) such sale shall be treated as described in subparagraph (C)(i),

          `(ii) such fuel shall be treated as meeting the requirements of subparagraph (E)(i)(II) in the hands of such taxpayer, and

          `(iii) except as provided in this subparagraph, such fuel (and any fuel derived from such fuel) shall not be taken into account under subparagraph (C) with respect to the taxpayer or any other person.'.

    (c) Algae Treated as a Qualified Feedstock for Purposes of Bonus Depreciation for Biofuel Plant Property-

      (1) IN GENERAL- Subparagraph (A) of section 168(l)(2) of the Internal Revenue Code of 1986 is amended by striking `solely to produce cellulosic biofuel' and inserting `solely to produce second generation biofuel (as defined in section 40(b)(6)(E))'.

      (2) CONFORMING AMENDMENTS- Subsection (l) of section 168 of such Code, as amended by this Act, is amended--

        (A) by striking `cellulosic biofuel' each place it appears in the text thereof and inserting `second generation biofuel',

        (B) by striking paragraph (3) and redesignating paragraphs (4) through (8) as paragraphs (3) through (7), respectively,

        (C) by striking `Cellulosic' in the heading of such subsection and inserting `Second Generation', and

        (D) by striking `CELLULOSIC' in the heading of paragraph (2) and inserting `SECOND GENERATION'.

    (d) Conforming Amendments-

      (1) Section 40 of the Internal Revenue Code of 1986, as amended by this Act, is amended--

        (A) by striking `cellulosic biofuel' each place it appears in the text thereof and inserting `second generation biofuel',

        (B) by striking `CELLULOSIC' in the headings of subsections (b)(6), (b)(6)(E), and (d)(3)(D) and inserting `SECOND GENERATION', and

        (C) by striking `CELLULOSIC' in the headings of subsections (b)(6)(C), (b)(6)(D), (b)(6)(H), (d)(6), and (e)(3) and inserting `SECOND GENERATION'.

      (2) Clause (ii) of section 40(b)(6)(E) of such Code is amended by striking `Such term shall not' and inserting `The term `second generation biofuel' shall not'.

      (3) Paragraph (1) of section 4101(a) of such Code is amended by striking `cellulosic biofuel' and inserting `second generation biofuel'.

    (e) Effective Date-

      (1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to fuels sold or used after the date of the enactment of this Act.

      (2) APPLICATION TO BONUS DEPRECIATION- The amendments made by subsection (c) shall apply to property placed in service after the date of the enactment of this Act.

SEC. 7. BUDGETARY EFFECTS.

    (a) PAYGO Scorecard- The budgetary effects of this Act shall not be entered on either PAYGO scorecard maintained pursuant to section 4(d) of the Statutory Pay-As-You-Go Act of 2010.

    (b) Senate PAYGO Scorecard- The budgetary effects of this Act shall not be recorded on any PAYGO scorecard maintained for purposes of section 201 of S. Con. Res. 21 (110th Congress).

END