S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  7452

                            I N  S E N A T E

                              May 15, 2014
                               ___________

Introduced  by  Sen.  GIPSON -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations

AN ACT to amend the tax law, in relation to  biofuel  production  credit
  for production of biomethane

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 28 of the tax law, as added by section 1 of part  X
of chapter 62 of the laws of 2006, is renumbered section 38-a.
  S 2. Subdivisions (a) and (b) of section 38-a of the tax law, subdivi-
sion  (a) as amended by section 1 of part K of chapter 59 of the laws of
2012, subdivision (b) as added by section 1 of part X of chapter  62  of
the laws of 2006, such section as renumbered by section one of this act,
are amended to read as follows:
  (a)  General.  A taxpayer subject to tax under article nine, nine-A or
twenty-two of this chapter shall be allowed a credit  against  such  tax
pursuant  to  the  provisions  referenced  in  subdivision  (d)  of this
section. The credit (or pro rata share of earned credit in the case of a
partnership) for each gallon of biofuel produced at a biofuel  plant  on
or  after  January first, two thousand six shall equal fifteen cents per
gallon OR TWENTY-FIVE CENTS PER  GALLON  FOR  PRODUCTION  OF  BIOMETHANE
after  the  production  of  the  first  forty  thousand gallons per year
presented to market. The credit under this section shall  be  capped  at
two and one-half million dollars per taxpayer per taxable year for up to
no  more  than  four consecutive taxable years per biofuel plant. If the
taxpayer is a partner in a partnership or shareholder of a  New  York  S
corporation,  then  the  cap  imposed by the preceding sentence shall be
applied at the entity level, so that the aggregate credit allowed to all
the partners or shareholders of each such entity  in  the  taxable  year
does not exceed two and one-half million dollars. The tax credit allowed
pursuant  to  this section shall apply to taxable years beginning before
January first, two thousand twenty.
  (b) Definitions. For the purpose of this section, the following  terms
shall have the following meanings:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD15148-01-4

S. 7452                             2

  (1)  "Biofuel" means a fuel which includes biodiesel [and], ethanol OR
BIOMETHANE.
  (2)  The  term  "biodiesel" shall mean a fuel comprised exclusively of
mono-alkyl esters of long chain fatty acids derived from vegetable  oils
or animal fats, designated B100, which meets the specifications of Amer-
ican Society of Testing and Materials designation D 6751-02.
  (3)  The  term  "ethanol" shall mean ethyl alcohol manufactured in the
United States and its territories and sold (i) for fuel  use  and  which
has  been  rendered  unfit  for  beverage  use  in a manner and which is
produced at a facility approved by the federal bureau of alcohol, tobac-
co and firearms for the production of ethanol for fuel, or (ii) as dena-
tured ethanol used by blenders and  refiners  which  has  been  rendered
unfit  for  beverage use.  The term "biofuel" may also include any other
standard approved by the New York state energy and research  development
authority.
  [(2)]  (4)  THE TERM "BIOMETHANE" SHALL MEAN BIOGASES THAT ARE EMITTED
AS ORGANIC WASTES THAT BREAK DOWN IN AIRLESS ENVIRONMENTS. BIOMETHANE IS
PRODUCED FROM A VARIETY OF  BIOMASS  AND/OR  BIOGAS  SOURCES,  INCLUDING
LANDFILL  GAS, SOLID WASTE, MUNICIPAL WASTEWATER AND AGRICULTURAL MANURE
VIA AIRLESS TANKS CALLED ANAEROBIC DIGESTERS. IT CAN  ALSO  BE  PRODUCED
FROM  OTHER  SOURCES SUCH AS FORESTRY AND AGRICULTURAL WASTE THROUGH THE
PROCESS OF THERMAL GASIFICATION AND METHANATION, ALTHOUGH THESE TECHNOL-
OGIES ARE NOT YET WIDELY USED. BIOMETHANE IS A  RENEWABLE  FUEL,  EASILY
DISTRIBUTED THROUGH EXISTING INFRASTRUCTURE AND IS SUITABLE FOR APPLICA-
TIONS FROM LIGHT-DUTY VEHICLES TO HEAVY-DUTY FREIGHT TRUCKS.
  (5)  "Biofuel  plant"  means a commercial facility located in New York
state at which one or more biofuels are produced.  FOR THE  PURPOSES  OF
THIS SECTION, ANY COMMERCIAL FACILITY WHERE BIOMETHANE IS PRODUCED SHALL
BE CONSIDERED A SEPARATE BIOFUEL PLANT.
  S  3.  Section 187-c of the tax law, as amended by section 2 of part K
of chapter 59 of the laws of 2012, is amended to read as follows:
  S 187-c. Biofuel production credit. A  taxpayer  shall  be  allowed  a
credit   to   be   computed   as   provided  in  section  [twenty-eight]
THIRTY-EIGHT-A of this chapter, [as added by part X of chapter sixty-two
of the laws of two thousand six,] against the tax imposed by this  arti-
cle.  Provided,  however, that the amount of such credit allowed against
the tax imposed by section one hundred eighty-four of this article shall
be the excess of the amount of such credit over the amount of any credit
allowed by this section against the tax imposed by section  one  hundred
eighty-three  of  this  article. In no event shall the credit under this
section be allowed in an amount which will reduce  the  tax  payable  to
less than the applicable minimum tax fixed by section one hundred eight-
y-three  or  one  hundred  eighty-five of this article. If, however, the
amount of the credit allowed under this section  for  any  taxable  year
reduces  the tax to such amount, the excess shall be treated as an over-
payment of tax to  be  credited  or  refunded  in  accordance  with  the
provisions  of section six hundred eighty-six of this chapter. Provided,
however, the provisions of subsection (c) of section one thousand eight-
y-eight of this chapter notwithstanding, no interest shall be paid ther-
eon. The tax credit allowed pursuant to  this  section  shall  apply  to
taxable years beginning before January first, two thousand twenty.
  S  4. Section 187-c of the tax law, as amended by section 15 of part S
of chapter 59 of the laws of 2014, is amended to read as follows:
  S 187-c. Biofuel production credit. A  taxpayer  shall  be  allowed  a
credit   to   be   computed   as   provided  in  section  [twenty-eight]
THIRTY-EIGHT-A of this chapter, [as added by part X of chapter sixty-two

S. 7452                             3

of the laws of two thousand six,] against the tax imposed by this  arti-
cle.  Provided,  however, that the amount of such credit allowed against
the tax imposed by section one hundred eighty-four of this article shall
be the excess of the amount of such credit over the amount of any credit
allowed  by  this section against the tax imposed by section one hundred
eighty-three of this article. In no event shall the  credit  under  this
section  be  allowed  in  an amount which will reduce the tax payable to
less than the applicable minimum tax fixed by section one hundred eight-
y-three of this article. If, however, the amount of the  credit  allowed
under  this section for any taxable year reduces the tax to such amount,
the excess shall be treated as an overpayment of tax to be  credited  or
refunded in accordance with the provisions of section six hundred eight-
y-six  of  this chapter. Provided, however, the provisions of subsection
(c) of section one thousand eighty-eight of this  chapter  notwithstand-
ing,  no interest shall be paid thereon. The tax credit allowed pursuant
to this section shall apply to taxable years  beginning  before  January
first, two thousand twenty.
  S  5.  Subdivision  38  of  section  210 of the tax law, as amended by
section 3 of part K of chapter 59 of the laws of  2012,  is  amended  to
read as follows:
  38.  Biofuel  production credit. A taxpayer shall be allowed a credit,
to be computed as provided in section [twenty-eight]  THIRTY-EIGHT-A  of
this  chapter,  [as  added by part X of chapter sixty-two of the laws of
two thousand six,] against the tax imposed by this article.  The  credit
allowed under this subdivision for any taxable year shall not reduce the
tax  due for such year to less than the higher of the amounts prescribed
in paragraphs (c) and (d) of subdivision one of this  section.  However,
if  the  amount of credit allowed under this subdivision for any taxable
year reduces the tax to such amount,  any  amount  of  credit  thus  not
deductible  in  such  taxable year shall be treated as an overpayment of
tax to be credited or refunded in  accordance  with  the  provisions  of
section  one thousand eighty-six of this chapter. Provided, however, the
provisions of subsection (c) of section  one  thousand  eighty-eight  of
this chapter notwithstanding, no interest shall be paid thereon. The tax
credit  allowed  pursuant  to  this section shall apply to taxable years
beginning before January first, two thousand twenty.
  S 6. Subsection (jj) of section 606 of the  tax  law,  as  amended  by
section  4  of  part  K of chapter 59 of the laws of 2012, is amended to
read as follows:
  (jj) Biofuel production credit. A taxpayer shall be allowed  a  credit
to  be  computed as provided in section [twenty-eight] THIRTY-EIGHT-A of
this chapter, [as added by part X of chapter sixty-two of  the  laws  of
two  thousand  six,]  against  the  tax  imposed by this article. If the
amount of the credit allowed under this subsection for any taxable  year
shall  exceed  the  taxpayer's  tax  for  such year, the excess shall be
treated as an overpayment of tax to be credited or refunded  in  accord-
ance with the provisions of section six hundred eighty-six of this arti-
cle,  provided, however, that no interest shall be paid thereon. The tax
credit allowed pursuant to this section shall  apply  to  taxable  years
beginning before January first, two thousand twenty.
  S  7.  Subdivision  24  of  section  210-B of the tax law, as added by
section 17 of part A of chapter 59 of the laws of 2014,  is  amended  to
read as follows:
  24.  Biofuel  production  credit.  (a)  General.  A  taxpayer shall be
allowed a credit, to be computed as provided in  section  [twenty-eight]
THIRTY-EIGHT-A  of this chapter [added as part X of chapter sixty-two of

S. 7452                             4

the laws of two thousand six,] against the tax imposed by this  article.
The credit allowed under this subdivision for any taxable year shall not
reduce  the  tax due for such year to less than the fixed dollar minimum
amount  prescribed  in  paragraph  (d) of subdivision one of section two
hundred ten of this article. However, if the amount  of  credit  allowed
under  this  subdivision  for  any  taxable year reduces the tax to such
amount or if the taxpayer otherwise pays tax based on the  fixed  dollar
minimum amount, any amount of credit thus not deductible in such taxable
year  shall  be  treated  as  an  overpayment  of  tax to be credited or
refunded in accordance with  the  provisions  of  section  one  thousand
eighty-six  of  this  chapter.  Provided,  however,  the  provisions  of
subsection (c) of section one  thousand  eighty-eight  of  this  chapter
notwithstanding,  no  interest  shall  be  paid  thereon. The tax credit
allowed pursuant to this section shall apply to taxable years  beginning
before January first, two thousand twenty.
  S 8. This act shall take effect immediately; provided however that the
amendments  to section 187-c of the tax law made by section four of this
act shall take effect on the same date as section 15 of part S of  chap-
ter  59  of  the  laws of 2014 takes effect; provided, further, that the
amendments to subdivision 38 of section 210  of  the  tax  law  made  by
section five of this act shall not affect the repeal of such subdivision
and  shall  be  deemed  repealed  therewith;  provided, further that the
amendment to subdivision 24 of section 210-b of the tax law  shall  take
effect on the same date and same manner as section 17 of part A of chap-
ter 59 of the laws of 2014, takes effect.