To amend the Internal Revenue Code of 1986 to extend and modify the credit for electricity produced from biomass, and for other purposes.

February 13, 2003

Mr. HERGER (for himself, Mr. MATSUI, Mr. MCCRERY, Mr. OSE, Mr. KENNEDY of Minnesota, and Mr. HUNTER) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to extend and modify the credit for electricity produced from biomass, 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 `Biomass Energy Equity Act of 2003'.

SEC. 2. CREDIT FOR ELECTRICITY PRODUCED FROM BIOMASS.

(a) EXTENSION AND MODIFICATION OF PLACED-IN-SERVICE RULES- Paragraph (3) of section 45(c) of the Internal Revenue Code of 1986 is amended--

(1) by striking subparagraph (B) and inserting the following new subparagraph:

`(B) CLOSED-LOOP BIOMASS FACILITY- In the case of a facility using closed-loop biomass to produce electricity, the term `qualified facility' means any facility--

`(i) owned by the taxpayer which is originally placed in service after December 31, 1992, and before January 1, 2008, or

`(ii) owned by the taxpayer which is originally placed in service on or before December 31, 1992, and modified to use closed-loop biomass to co-fire with coal before January 1, 2008.',

(2) by striking `2004' in subparagraph (C) and inserting `2008', and

(3) by adding at the end the following new subparagraphs:

`(D) BIOMASS FACILITIES- In the case of a facility using biomass (other than closed-loop biomass) to produce electricity, the term `qualified facility' means any facility owned by the taxpayer which is originally placed in service before January 1, 2008.

`(E) SPECIAL RULES- In the case of a qualified facility described in subparagraph (B)(ii) or (D)--

`(i) the 10-year period referred to in subsection (a) shall be treated as beginning no earlier than the date of the enactment of this paragraph,

`(ii) subsection (b)(3) shall not apply to any such facility originally placed in service before January 1, 1997, and

`(iii) if such a facility is leased and the operator thereof is the lessee, such lessee (and not the owner) shall be treated for purposes of this section as owning such facility.'

(b) BIOMASS FACILITIES-

(1) IN GENERAL- Section 45(c)(1) of the Internal Revenue Code of 1986 (defining qualified energy resources) is amended--

(A) by striking `and' at the end of subparagraph (B),

(B) by striking the period at the end of subparagraph (C) and inserting `, and', and

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

`(D) biomass (other than closed-loop biomass).'.

(2) BIOMASS DEFINED- Section 45(c) of such Code (relating to definitions) is amended by adding at the end the following new paragraph:

`(5) BIOMASS- The term `biomass' means any solid, nonhazardous, cellulosic waste material which is segregated from other waste materials and which is derived from--

`(A) any of the following forest-related resources: mill residues, precommercial thinnings, slash, and brush, but not including old-growth timber (other than old-growth timber which has been permitted or contracted for removal by any appropriate Federal authority through the National Environmental Policy Act or by any appropriate State authority),

`(B) solid wood waste materials, including waste pallets, crates, dunnage, manufacturing and construction wood wastes (other than pressure-treated, chemically-treated, or painted wood wastes), and landscape or right-of-way tree trimmings, but not including municipal solid waste (garbage), gas derived from the biodegradation of solid waste, or paper that is commonly recycled, or

`(C) agriculture sources, including orchard tree crops, vineyard, grain, legumes, sugar, and other crop by-products or residues.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to electricity sold after the date of the enactment of this Act.

END