[Congressional Record (Bound Edition), Volume 156 (2010), Part 12]
[House]
[Pages 16828-16832]
[From the U.S. Government Publishing Office, www.gpo.gov]
ALGAE-BASED RENEWABLE FUEL PROMOTION ACT OF 2010
Mr. VAN HOLLEN. Madam Speaker, I move to suspend the rules and pass
the bill (H.R. 4168) to amend the Internal Revenue Code of 1986 to
expand the definition of cellulosic biofuel to include algae-based
biofuel for purposes of the cellulosic biofuel producer credit
[[Page 16829]]
and the special allowance for cellulosic biofuel plant property, as
amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 4168
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 ``Algae-based Renewable Fuel
Promotion Act of 2010''.
SEC. 2. 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 from qualified feedstocks, and''.
(b) Qualified Feedstock; Special Rules for Algae.--
Paragraph (6) of section 40(b) of such Code is amended by
redesignating subparagraphs (F), (G), and (H) as
subparagraphs (H), (I), and (J), 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 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
such Code 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 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 such Code, as amended by subsection (b),
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. 3. PAYGO COMPLIANCE.
The budgetary effects of this Act, for the purpose of
complying with the Statutory Pay-As-You-Go-Act of 2010, shall
be determined by reference to the latest statement titled
``Budgetary Effects of PAYGO Legislation'' for this Act,
submitted for printing in the Congressional Record by the
Chairman of the House Budget Committee, provided that such
statement has been submitted prior to the vote on passage.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Maryland (Mr. Van Hollen) and the gentleman from Michigan (Mr. Camp)
each will control 20 minutes.
The Chair recognizes the gentleman from Maryland.
General Leave
Mr. VAN HOLLEN. Madam Speaker, I ask unanimous consent that all
Members have 5 legislative days to revise and extend their remarks and
include any extraneous material in the Congressional Record.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Maryland?
There was no objection.
Mr. VAN HOLLEN. Madam Speaker, Americans across the Nation are
increasingly interested in the contribution that clean, homegrown fuels
can make to our environment, economic development, and energy security.
Additionally, I hear from many of my constituents that they believe
Federal policy should move toward the development of biofuels that do
not compete with food and otherwise operate on a feedstock and
technology-neutral basis.
Today's legislation advances those goals by including algae as a
qualified feedstock under the existing cellulosic biofuel credit. It is
forward-looking legislation that recognizes the rapidly evolving nature
of the advanced biofuels industry and the demonstrated potential of
biofuels made from algae.
With that, I yield 5 minutes to my colleague Congressman Harry Teague
of New Mexico and thank him for his extraordinary leadership on this
bipartisan initiative.
Mr. TEAGUE. Madam Speaker, I am an oil man. I always have been and
always will be. When I was 9 years old, we moved from Caddo County,
Oklahoma, to Hobbs, New Mexico, so my daddy could get a job in the oil
patch. A few years later, at age 17, with my parents sick and the bills
still needing to get paid, I went to work in the oil fields to earn a
paycheck and support the family. Eventually, I built a small business
from the ground up; and we employed 250 people, drilling oil and gas
wells for other people and fixing them when they were broke.
Most every hamburger that I have ever had has come somehow from
American oil and gas. The industry employs almost 20,000 people in New
Mexico. It's a critical source of wealth, jobs, energy, and education
funding in my State; and I've been proud to fight for New Mexico oil
and gas in Congress.
While New Mexico has been successful developing its oil and gas
resources, we have failed to develop the diverse alternative energy
resources that my State also possesses in great abundance. And,
unfortunately for thousands of New Mexicans looking for work today, we
have failed to create those alternative energy jobs.
Madam Speaker, if we want to create our energy jobs here in America
and stop sending a billion dollars to countries like Saudi Arabia and
Venezuela every day, we need a ``Do it all, do it in America'' energy
policy. We need to drill for more oil and natural gas. We need to build
new nuclear facilities. We need to capture the wind, the sun, and the
Earth's geothermal heat for electricity. We need to produce billions of
gallons of liquid biofuels to burn in cars, trucks, and airplane
engines, and we need to do it right here in America.
Madam Speaker, a pillar of a ``Do it all, do it in America'' approach
to energy is producing biofuels from algae. Algal biofuels have high
energy density and the near-term potential to produce more energy in a
small footprint than earlier generation biofuels. They can be grown
using brackish water not suitable for human consumption and on land not
suitable for agriculture. And all the algae needs is ample sunlight and
a source of nutrition, like cow manure, to grow and get fat with oil.
Although the companies and researchers that are now producing algal
biofuels have intensively experimented with various techniques and
algae breeds over many years, when it comes down to it, getting oil out
of algae is pretty simple: You dig a pond, line it, and fill it with
water. You fill the pond with algae, keep them fed. When the algae are
good and fat, you squeeze the oil out of the organisms. And depending
on your technology, you put it right to use or refine it into gasoline,
diesel, or jet fuel. Additionally, many algal biofuels are designed to
function
[[Page 16830]]
on a drop-in basis, so you can pour green crude right into the pipeline
or tanker truck coming out of the oil patch. This means we can replace
imported oil with homegrown fuel without costly investments in new
refining and transportation infrastructure.
My district of southern New Mexico is among the many areas across the
country primed to become a center for algal biofuel production and job
creation. Our wide open spaces, ample sunlight, and brackish water make
us the perfect place to produce our Nation's next generation of
biofuels. We already have algal biofuel facilities in Dona Ana County
and Eddy County. Luna County will soon be home to another facility
which will create 700 jobs when it breaks ground this fall. The
potential, though, is so much greater. Algal biofuels are poised to
power America with homegrown energy on a large scale.
However, algal biofuels face an uneven playing field within our
Nation's energy policy framework, most notably in our tax code. Under
current law, algal biofuels do not qualify for tax incentives that
currently benefit other biofuels, like cellulosic biofuels.
When these tax laws were written, cellulosic biofuels and biodiesel
were the only renewable fuels on the lawmakers' radars and considered
capable of actually reducing America's dependence on foreign oil. Since
these laws were written, however, significant advances in the algae-
based fuel industry have readied algae for prime time. Now, because
algae has many advantages over cellulosic feedstocks and is operating
on a near-term commercialization timeline similar to cellulosic fuels,
algae-based fuel producers should receive tax incentives on par with
those currently received by cellulosic biofuel producers.
H.R. 4168, the Algae-based Renewable Fuel Promotion Act, simply gives
algal biofuels tax parity with cellulosic biofuels. The legislation
contains a limitation on the products that will qualify for the tax
incentives. They must be derived solely from qualifying feedstocks.
Qualifying feedstocks include, in addition to cellulosic materials,
cultivated algae, cyanobacteria, and lemna. Beyond that, the bill does
not distinguish among these feedstocks with regard to the manner of
cultivation, including nutrients or other inputs used to develop the
feedstock and the biofuel. It is the intent of this provision to
encompass all technologies using qualified feedstocks such as algae.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. VAN HOLLEN. Madam Speaker, I yield the gentleman another 2
minutes.
Mr. TEAGUE. Bottom line, tax parity will help algal biofuel producers
attract needed capital to produce energy right here at home and create
hundreds of thousands of jobs for new energy in New Mexico and across
this great country.
Madam Speaker, when Americans go to the pump to fill up their tanks
today, they are sending 70 cents of every dollar to other countries,
many of which don't like us very much, and are creating jobs in places
like Saudi Arabia and Venezuela. I don't want Americans to be creating
jobs for the supporters of Hugo Chavez when they use energy. We should
be creating energy jobs right here at home, employing American workers
to produce the energy our economy and military needs.
Passing this bill today is a step toward a ``Do it all, do it in
America'' energy policy. We can create American jobs and make our
country more secure by producing our energy right here at home. This is
a commonsense bipartisan bill that will create jobs and move America
toward energy independence.
I would like to thank Chairman Levin, Ranking Member Camp, and
members of the Ways and Means Committee for their support.
Mr. CAMP. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, this bill seeks to expand the eligibility for certain
current law tax benefits to algae-based fuels. Specifically, it would
make algae or algae plant property eligible for both the cellulosic
biofuel producer credit and for 50 percent bonus depreciation.
Regardless of whether Members believe these enhanced tax benefits for
algae are appropriate, I think it's important to make a few
observations about this bill, about the process under which we are
considering it, and about the majority's decision to make this the
centerpiece of its tax agenda during this, the final week of session.
With respect to the bill itself, I would note that these same algae-
related benefits, along with many other energy-related tax provisions,
were included as a part of Chairman Levin's much broader green jobs
discussion draft which had been expected to be formally considered by
the Ways and Means Committee as a package. It's worth asking why only
the algae-related provisions of that broader energy bill merit special
consideration in stand-alone legislation, which is quite unusual for
tax legislation from the committee, while the other provisions in that
broader bill languish without so much as a committee markup.
{time} 1720
If Ways and Means had actually held a mark-up on these algae-related
provisions, Members could have fully explored whether it is advisable
to expand the cellulosic biofuel producer credit, a credit that has
proved controversial over the past several years.
Indeed, Members of both parties supported efforts to close a major
potential loophole in that credit that could have permitted ``black
liquor,'' an alternative fuel created as a byproduct of the paper-
making process to qualify. Given such recent, high-profile alarm about
potential abuse of the cellulosic biofuel producer credit, one would
think that efforts to further expand the credit would be pursued only
after consideration and a formal Ways and Means Committee mark-up under
regular order. I think we do the best work when we proceed under
regular order. But, instead, these provisions have been rushed directly
to the floor.
But what is most disturbing about the tax debate we are having here
today is what we are not debating. Rather than using this last week of
session prior to the election to prevent a massive $3.8 trillion tax
increase from taking effect at the end of the year, the majority's tax
agenda for this final week, instead centers on a bill that provides tax
benefits for algae. And let me repeat: instead of protecting American
families, seniors and investors and small businesses from a job-
killing, $3.8 trillion tax hike, we are here debating tax benefits for
algae.
Madam Speaker, governing is about setting priorities, and the
majority's tax agenda for the week shows just how out of line the
majority's priorities are with those of the American people.
Madam Speaker, I yield such time as he may consume to the gentleman
from California (Mr. Bilbray).
Mr. BILBRAY. I thank the ranking member. I appreciate the fact of
this bill being brought forward.
Madam Speaker, I know there is very little being brought forward, but
at least we have something to discuss today. And I have to agree with
my colleague that we wish the general tax cut, something that we hear
all around, the American people want us to talk about.
But this is an item that hasn't been talked about enough anywhere.
And I want to thank my colleague from New Mexico for cosponsoring this
with me. And I want to congratulate the gentleman's State of New Mexico
because, I tell you something, as a Californian, I am sort of envious.
California spent lots of money on our universities, lots of money on
our research. We have some of the best scientists in the world. And as
the gentleman from New Mexico knows, our scientists in San Diego
developed the ability to create this algae fuel, but, sadly, because of
California's regulations and the lack of reform and its government
oversight, the scientists in San Diego had to pack up and go to New
Mexico to be able to produce this product. And the jobs will be created
in New Mexico in the production because California hasn't reformed its
government regulatory oversight.
[[Page 16831]]
And I think that is a challenge for all of us to look at that,
hopefully, as the Federal Government will set an example that jobs
aren't being taken overseas, because we are quick to write checks and
maybe do research, but we are not quick at making the private sector
viable to be able to create the jobs that all of us know the American
people are desperate for.
You know, the algae-based fuel is one of the most promising fuels,
Madam Speaker, when we talk about the next generation, second or third
generation biofuels. We all know, any reasonable person knows, that the
mandates of adding renewable fuels in our fuel stream, the mandate that
you cannot sell legally gasoline in the United States unless it has a
10 or 8 percent by volume content of renewable fuels, that mandate
never, ever meant to leave us with first generation renewable fuels. We
all knew that first generation was a necessity, something we had to get
through, something that was expensive, maybe not as environmentally
friendly as we like, but a transition we hoped would come eventually.
Algae fuel has the capability of building that bridge to the future
to lead the first generation renewables behind and move forward. The
fact is that algae fuel is not only highly effective; algae fuel equals
the fossil fuel one-to-one in energy capabilities.
The fact is that algae fuel, as it gets developed, is capable of not
just driving our cars, but flying our airplanes, of actually replacing
diesel. Algae fuel has the capability of total compatibility with the
existing infrastructure. Unlike other fuels, you do not have to ship
algae fuel by truck from one location to the other, thus creating a
whole new group of environmental and air pollution problems. You can
transport it within the pipe systems that exist today. You can refine
it in the refineries that exist today.
Algae fuel has the capability of being 1, 2 percent, or 90 percent of
the fuel stream within the existing infrastructure. It is totally
compatible to be phased in, a huge benefit that does not exist with the
first generation.
Algae fuel has the ability to consume and sequester massive amounts
of CO2, something that other fuels do not have the
capability of doing along the line at the capability that they have
here. And the drop-in capability and the capability is something we do
not talk enough about.
Algae fuels have been tested. We have had one aircraft that flew with
algae fuel and not only was compatible, but was 4 percent more
efficient than fossil fuels of comparable weight and volume.
And the fact is, Madam Speaker, that we have the ability now to even
the playing field when it comes to taxes. Why should Washington
continue to choose winners and have alternatives that should be allowed
to win hamstrung and punished because they weren't here with their
lobbyists years ago when these laws were passed?
This bill helps to correct the mistakes made in the past in our tax
laws where Washington was choosing some to be winners and cutting out
other people from participating in the system. We should allow winners
to earn the right to be called winners and not be anointed by
Washington or the legislators here in Washington. We should allow the
technology and the products to compete on an open market, but equal tax
benefits for everyone to be able to prove that America allows people to
be innovative, to be creative, and we will not punish them just because
they went down one technological road rather than the other.
Our Tax Code should be equal. It should be neutral, and it should be
outcome-based, not profit-based and, most importantly, not Washington
lobbying-based. This bill now equalizes that to some degree; and that
degree, I think is appropriate at this time.
So it may not be doing everything we would like to do this week. It
is not going to accomplish what I know we all know the American people
want us to get accomplished before January 1 of 2011, but it does take
a step in the right direction, helps to correct the mistake.
And yes, Congressman, I will go back to talk to Arnold Schwarzenegger
and say, damn it, we have got to change our regulation so we can
produce this algae in California so you don't get all the jobs from
this great technology breakthrough.
Mr. CAMP. I yield back the balance of my time.
Mr. McNERNEY. Madam Speaker, the House of Representatives passed H.R.
4168, the Algae-based Renewable Fuel Promotion Act of 2009, a bill I am
pleased to support. I would like to thank Mr. Teague for his efforts to
incentivize the production of environmentally-friendly biofuels. Mr.
Teague worked across party lines to advance bipartisan legislation, and
he deserves recognition for his leadership.
H.R. 4168 is a significant step forward, but I believe that
additional refinements could help incentivize a broader array of
environmentally friendly, economically viable biofuels. As we continue
working to fine tune this legislation and related proposals, we should
seek to ensure that federal tax policy treats all viable technologies
fairly and equitably. I look forward to working with Mr. Teague, Mr.
Bilbray, and other interested members to make sure that algal biofuels
produced in Northern California fully benefit from this bill.
Developing new sources of cellulosic biofuels is beneficial to the
environment, the economy, and national security. I thank the authors of
H.R. 4168 for their efforts.
Mr. VAN HOLLEN. Madam Speaker, again, I want to thank the gentleman
from New Mexico (Mr. Teague) for this initiative and just respond to a
couple of the points raised by Mr. Camp, the ranking member of the Ways
and Means Committee.
First, this piece of the energy bill was brought to the floor for two
reasons. Number one, it has strong bipartisan support, as you heard. In
addition to Mr. Bilbray, Mrs. Bono Mack and Mr. Dreier are cosponsors
of the legislation.
And, secondly, this piece has no cost associated with it. And so
those two aspects of the bill made it a good candidate for coming
forward.
Secondly, given the other comments made by the gentleman with respect
to the importance of moving forward on tax relief for small businesses
and others around the country, I would just remind the gentleman that
just last Thursday, on the floor of this House, we had a vote on a bill
for small business lending to make sure that we increased credit to
struggling small businesses around the country to make sure that they
could make payroll, to make sure that they could take on the costs that
they needed to expand. And part of that bill also contained significant
tax relief for small businesses.
And it was ironic that many of our Republican colleagues were off-
site at a small business venture, and then came back to the Hill to
vote against that bill, a bill that the Republican Senator, retiring
Republican Senator from Ohio, Senator Voinovich said was important to
small businesses, and has said it is time to put aside politics and get
this done.
{time} 1730
I am very pleased that the result of the action taken in this House
and the Senate was the President signed that bill yesterday so that
small businesses can have access to credit and small businesses will
get the tax relief they need.
We look forward in this body to being able to move on to make sure
that middle class taxpayers, 98 percent of the American people, can get
tax relief without being held hostage to the demand of the Senate
Republican leader that we also provide budget-busting tax breaks to the
folks at the very top, adding $700 billion to the deficit over the next
10 years, which is fiscally reckless and which, in the long term, will
crimp economic and job growth.
Mr. VAN HOLLEN. Madam Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Maryland (Mr. Van Hollen) that the House suspend the
rules and pass the bill, H.R. 4168, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
[[Page 16832]]
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