[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3596 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 3596

   To amend the Internal Revenue Code of 1986 to provide a credit to 
    certain concentrated animal feeding operations for the cost of 
          complying with environmental protection regulations.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 29, 2006

   Mr. Hagel introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to provide a credit to 
    certain concentrated animal feeding operations for the cost of 
          complying with environmental protection regulations.

    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 ``CAFO Tax Credit Act''.

SEC. 2. CREDIT FOR CONCENTRATED ANIMAL FEEDING OPERATIONS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following new section:

``SEC. 45N. CREDIT FOR EPA COMPLIANCE COSTS FOR CONCENTRATED ANIMAL 
              FEEDING OPERATIONS.

    ``(a) Allowance of Credit.--
            ``(1) In general.--For purposes of section 38, in the case 
        of an eligible taxpayer, the EPA compliance credit determined 
        under this section for the taxable year is an amount equal to 
        the applicable percentage of the qualified compliance costs 
        paid or incurred by the eligible taxpayer during the taxable 
        year.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage shall be determined as follows:

``If the amount of qualified                                           
  compliance costs paid or                                             
  incurred during the taxable                            The applicable
  year is:                                               percentage is:
        Not over $100,000......................................    100 
        Over $100,000 but not over $200,000....................     80 
        Over $200,000 but not over $400,000....................     60 
        Over $400,000..........................................     40.
    ``(b) Limitation.--The amount of credit allowed under subsection 
(a) for any taxable year shall not exceed $500,000.
    ``(c) Eligible Taxpayer.--For purposes of this section, the term 
`eligible taxpayer' means an owner or operator of a concentrated animal 
feeding operation (as defined under section 122.23 of title 40, Code of 
Federal Regulations).
    ``(d) Qualified Compliance Costs.--For purposes of this section--
            ``(1) In general.--The term `qualified compliance costs' 
        means costs paid or incurred for compliance with a national 
        pollutant discharge elimination system permit issued under 
        section 402 of the Federal Water Pollution Control Act (33 
        U.S.C. 1342).
            ``(2) Exclusion for amounts funded by grants, etc.--The 
        term `qualified compliance costs' shall not include any amount 
        to the extent such amount is funded by any grant, contract, or 
        otherwise by another person (or any governmental entity).
    ``(e) Special Rules.--
            ``(1) Reduction in basis.--For purposes of this subtitle, 
        if a credit is determined under this section for any 
        expenditure with respect to any property, the increase in basis 
        of such property which would (but for this subsection) result 
        from such expenditure shall be reduced by the amount of the 
        credit so determined.
            ``(2) When costs paid or incurred.--For purposes of this 
        section, a cost shall be treated as paid or incurred in the 
        year in which the taxpayer achieves compliance with the 
        national pollutant discharge elimination system permit issued 
        under section 402 of the Federal Water Pollution Control Act 
        (33 U.S.C. 1342).
            ``(3) Denial of double benefit.--No deduction or other 
        credit shall be allowed under this chapter for any amount taken 
        into account in determining the credit under this section.
    ``(f) Termination.--This section shall not apply to expenditures 
paid or incurred after December 31, 2010.''.
    (b) Credit Made Part of General Business Credit.--Section 38(b) of 
the Internal Revenue Code of 1986 is amended by striking ``and'' at the 
end of paragraph (29), by striking the period at the end of paragraph 
(30) and inserting ``, plus'', and by adding at the end the following 
new paragraph:
            ``(31) the EPA compliance credit determined under section 
        45N(a).''.
    (c) Conforming Amendments.--
            (1) Section 1016(a) of the Internal Revenue Code of 1986 is 
        amended by striking ``and'' at the end of paragraph (36), by 
        striking the period at the end of paragraph (37) and inserting 
        ``, and'', and by inserting after paragraph (37) the following 
        new paragraph:
            ``(38) to the extent provided in section 45N(e)(1).''.
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such Code is amended by adding at 
        the end the following new item:

``Sec. 45N. Credit for compliance costs for concentrated animal feeding 
                            operations.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to expenditures incurred after December 31, 2002.
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