Bioenergy Innovation, Optional Fuel Utilization, and Energy Legacy (BIOFUEL) Act of 2006

Bioenergy Innovation, Optional Fuel Utilization, and Energy Legacy (BIOFUEL) Act of 2006 - Amends the Clean Air Act to revise the schedule for the volume of renewable fuels, the volume for cellulosic biomass, and the volume of biodiesel.

Amends federal transportation law to require manufacturers of new dual fueled automobiles to ensure that the percentage of the total of such automobiles, manufactured and distributed in commerce for sale in the United States, meets prescribed percentages for specified model years.

Directs the Secretary of Energy to require motor fuel retailers in each geographic region the Secretary establishes, when flexible-fuel vehicle market penetrations reach a certain level, to install an E-85 fuel pump or pumps at their retail fuel facilities.

Establishes in the Treasury a Alternative Fuel Infrastructure Fund to implement a related grant program.

Directs the Secretary of Agriculture to establish a renewable energy strategic feedstock reserve program to purchase and store agricultural commodities with their producers.

Amends the Farm Security and Rural Investment Act of 2002 to: (1) redefine bioenergy as ethanol derived from cellulosic feedstocks; and (2) reauthorize the Department of Agriculture bioenergy program.

Amends the Consolidated Farm and Rural Development Act to authorize the Secretary of Agriculture to make loans to enable eligible farmers, ranchers, and certain domestic entities controlled by them to create or expand facilities designed to convert agricultural commodities into fuel.

Prohibits the Secretary from requiring a lender to obtain an unsubordinated interest in a borrower's farming or ranching operation as a prerequisite to a federal loan guarantee.

Amends the Farm Credit Act of 1971 to declare eligible for credit assistance certain associations of farmers, producers, or harvesters of aquatic products engaged in commercial activities related to renewable energy products.

Instructs the Secretary of Energy to establish a research and development program related to: (1) ethanol production; (2) extraction of energy from biological sources; (3) biomass gasification; and (4) new vehicle efficiency technologies.

Instructs the Secretary of Energy to establish a biofuels production facility grant program.

Expresses the sense of Congress that Congress should enact policies that: (1) reduce greenhouse gas emissions; and (2) encourage systems that compensate American agricultural producers for the beneficial role that they play in reducing greenhouse gases and sequestering carbon from the atmosphere.

Amends the Internal Revenue Code to: (1) extend tax credits for ethanol and biodiesel; (2) increase tax credits for refueling property for ethanol and biodiesel; and (3) increase the small ethanol producer credit.

Revises requirements for infrastructure bonds for facilities producing motor vehicle fuel from biomass.