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Nitrogen Fixation - Fixation means that the nitrogen that makes up almost 80 percent of our air is converted to a soluble ionic form by the action of the bacteria and actinomycetes within the nodules on the roots. Some free-living soil bacteria can also fix nitrogen. (See TROUBLES IN THE RHIZOSPHERE, SHIGO, 1996) A small fern in the genus Azolla lives in rice fields. Nodule-forming bacteria on the ferns fix nitrogen. Nitrogen fixation can also go on inside sugar cane. Charlie the squirrel likes and eats sugar cane. Actinorhizae are structures made up of tree tissues and actinomycetes. They fix nitrogen.