[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5858 Introduced in House (IH)]







110th CONGRESS
  2d Session
                                H. R. 5858

 To amend the Internal Revenue Code of 1986 to provide incentives for 
                         carbon sequestration.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 22, 2008

 Mr. Boswell introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide incentives for 
                         carbon sequestration.

    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 ``Combating Climate Change Through 
Individual Action Act of 2008''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Agricultural, grassland, and forestry practices play an 
        essential role in capturing atmospheric carbon and sequestering 
        it as soil organic matter.
            (2) Released carbon can be captured through improved 
        grassland management, tree planting, forest preservation, and 
        enhanced agronomic and irrigation practices.
            (3) Promoting increased natural carbon sinks could have a 
        significant impact on the world's projected carbon emissions 
        from the burning of fossil fuels.
            (4) Certain agricultural and forestry practices can reduce 
        greenhouse gases: (A) avoiding emissions by maintaining 
        existing carbon storage in trees and soils; (B) increasing 
        carbon storage by, e.g., tree planting, conversion from 
        conventional to conservation tillage practices on agricultural 
        lands;
            (5) The large potentials exist through known cropping and 
        land management practices such as adoption of no-till, reduced 
        fallow and use of cover crops, and conservation set-asides with 
        perennial grasses and trees.

SEC. 3. CARBON SEQUESTRATION AND SOIL CONSERVATION CREDIT.

    (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. 45O. CARBON SEQUESTRATION AND SOIL CONSERVATION.

    ``(a) In General.--For purposes of section 38, in the case of a 
taxpayer engaged in the business of farming, the credit determined 
under this section for the taxable year is an amount equal to 30 
percent of the qualified carbon sequestration and soil conservation 
expenditures for the taxable year which are paid or incurred with 
respect to the land used in such farming.
    ``(b) Limitation.--The credit allowed with respect to a taxpayer 
under this section for a taxable year shall not exceed an amount equal 
to $10,000, reduced by the sum of the credits allowed with respect to 
the taxpayer under subsection (a) for all preceding taxable years.
    ``(c) Qualified Carbon Sequestration and Soil Conservation 
Expenses.--For purposes of this section--
            ``(1) In general.--The term `qualified carbon sequestration 
        and soil conservation expenditures' means amounts paid or 
        incurred to sequester carbon and conserve soil, including--
                    ``(A) expenditures described in section 175(c),
                    ``(B) conservation tillage expenditures,
                    ``(C) cover cropping expenditures,
                    ``(D) amounts paid or incurred to increase the 
                nitrogen use efficiency (other than use of nitrogen 
                fertilizers) of land used in farming, and
                    ``(E) amounts paid or incurred for multiple year 
                rotations, including introduction of a perennial that 
                reduces carbon loss and tillage, builds soil tilth, and 
                increases carbon capture capacity.
            ``(2) Conservation tillage expenditures.--The term 
        `conservation tillage expenditures' means any expenditures paid 
        or incurred for a tilling and planting method in which at least 
        30 percent of the previous crop residue remains on the soil 
        after planting the current crop. Such term includes the 
        following tilling practices: no till, ridge till, minimum till, 
        and mulch till.
            ``(3) Cover cropping expenditures.--The term `cover 
        cropping expenditures' means expenditures paid or incurred for 
        the preparation and seeding of land for any grass, legume, or 
        small grain--
                    ``(A) which is not the primary crop of the 
                taxpayer,
                    ``(B) the primary purpose of which is to achieve 
                one or more of the following: reduction in erosion; 
                maintenance or improvement in soil fertility, tilth, 
                and structure,
                    ``(C) a purpose of which may be interruption of 
                pest cycles or conservation of water.
    ``(d) Per Acre Credit Alternative.--
            ``(1) In general.--Not later than 180 days after the date 
        of the enactment of this section, the Secretary shall, in 
        consultation with the Secretary of Agriculture, establish an 
        alternative procedure for determining the credit under 
        subsection (a), which, at the election of the taxpayer, shall 
        be treated as the amount determined under subsection (a).
            ``(2) Procedure described.--(A) The Secretary shall 
        establish credit amounts to apply to land used in farming on a 
        per acre basis with respect to each method of carbon 
        sequestration and soil conservation described in subsection 
        (c)(1).
            ``(B) Such credit amounts shall be based on the efficacy of 
        the method in sequestering carbon and preventing soil erosion.
            ``(C) No such credit amount may exceed $15 per acre.
            ``(D) The Secretary shall prescribe rules similar to the 
        rules of paragraphs (1) through (4) of subsection (e) to apply 
        for purposes of the procedure established under this 
        subsection.
            ``(3) Election.--An election to use such alternative method 
        shall be made in such form and manner as the Secretary may 
        prescribe, and shall apply to the taxable year for which made 
        and for all subsequent taxable years.
    ``(e) Definition and Special Rules.--
            ``(1) Land used in farming.--For purposes of this section, 
        land shall be treated as used in farming only if such land is 
        used (before or simultaneously with the expenditures described 
        in subsection (c)(1)) by the taxpayer or his tenant for the 
        production of crops, fruits, or other agricultural products or 
        for the sustenance of livestock.
            ``(2) Expenditures must be consistent with soil 
        conservation plan.--Notwithstanding any other provision of this 
        section, subsection (a) shall not apply to any expenditures 
        unless such expenditures are consistent with--
                    ``(A) the plan (if any) approved by the Soil 
                Conservation Service of the Department of Agriculture 
                for the area in which the land is located, or
                    ``(B) if there is no plan described in clause (i), 
                any soil conservation plan of a comparable State 
                agency.
            ``(3) Basis adjustment.--For purposes of this subtitle, if 
        a credit is determined under this section for any expenditure 
        with respect to any property, the increase in the basis of such 
        property which would (but for this paragraph) result from such 
        expenditure shall be reduced by the amount of the credit so 
        determined.
            ``(4) 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 taxable years 
beginning after December 31, 2013.''.
    (b) Credit Made Part of General Business Credit.--Subsection (b) of 
section 38 of such Code (relating to current year business credit) is 
amended by striking ``plus'' at the end of paragraph (30), by striking 
the period at the end of paragraph (31) and inserting ``plus'', and by 
adding at the end the following new paragraph:
            ``(32) the carbon sequestration and soil conservation 
        credit determined under section 45O(a).''.
    (c) Conforming Amendments.--Subsection (a) of section 1016 of such 
Code (relating to adjustments to basis) is amended by striking ``and'' 
at the end of paragraph (35), by striking the period at the end of 
paragraph (36) and inserting ``and'', and by adding at the end the 
following new paragraph:
            ``(37) to the extent provided in section 45O(e).''.
    (d) Clerical Amendment.--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. 45O. Carbon sequestration and soil conservation.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to expenditures paid or incurred after December 31, 2008.

SEC. 4. QUALIFYING PLANTING EXPENDITURE CREDIT.

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

``SEC. 30D. QUALIFIED PLANTING EXPENDITURE CREDIT.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to 10 percent of the qualified planting expenditures of the 
taxpayer for the taxable year.
    ``(b) Limitations.--The amount taken into account under subsection 
(a) for any taxable year shall not exceed--
            ``(1) in the case of expenditures paid or incurred by the 
        taxpayer with respect to an area which is included under 
        section 121 as part of the taxpayer's principal residence, 
        $5,000,
            ``(2) in the case of expenditures paid or incurred by the 
        taxpayer in the course of, or with respect to, a trade or 
        business carried on by the taxpayer, $50,000, and
            ``(3) in any other case, zero.
    ``(c) Qualified Planting Expenditures.--For purposes of this 
section--
            ``(1) In general.--The term `qualifying planting 
        expenditures' means expenditures paid or incurred--
                    ``(A) for the purchase and planting of any tree, 
                plant, shrub, or bush which meets the requirements of 
                paragraph (2), and
                    ``(B) for the purchase and installation of a 
                vegetated roof system.
        Such term shall not include expenditures relating to any 
        property which is held by the taxpayer for use in a trade or 
        business or for the production of income, or which is property 
        described in section 1221(a)(1) in the hands of the taxpayer.
            ``(2) Trees, plants, shrubs, or bushes.--A tree, plant, 
        shrub, or bush satisfies the requirements of the paragraph if 
        such tree, plant, shrub, or bush is certified, in accordance 
        with guidance prescribed by the Secretary (after consultation 
        with the Administrator of the Environmental Protection Agency 
        and the Secretary of Agriculture), to be quick-growing, 
        appropriate for the region in which it is planted, and 
        effective in capturing carbon.
            ``(3) Vegetated roof system.--The term `vegetated roof 
        system' means a system by which vegetation growing in a 
        substrate is integrated with the roof (or portion thereof) of a 
        building owned by the taxpayer.
    ``(d) Application With Other Credits.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax liability (as defined in section 
        26(b)) reduced by the sum of the credits allowable under 
        subpart A and sections 27, 30, 30B, and 30C, over
            ``(2) the tentative minimum tax for the taxable year.
    ``(e) Definition and Special Rules.--For purposes of this section--
            ``(1) Principal residence.--The term `principal residence' 
        has the same meaning as when used in section 121, except that 
        no ownership requirement shall be imposed.
            ``(2) Joint occupancy, cooperative housing corporations, 
        and condominium management associations.--Rules similar to the 
        rules of paragraphs (4), (5), and (6) of section 25D(e) shall 
        apply.
            ``(3) Expenditures outside united states.--The credit under 
        this section shall not be allowed with respect to expenditures 
        paid or incurred for areas located outside the United States.
            ``(4) Basis adjustment.--For purposes of this subtitle, if 
        a credit is allowed under this section for an expenditure, the 
        increase in basis which would result (but for this subsection) 
        from such expenditure shall be reduced by the amount of credit 
        allowed under this section.
    ``(f) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2013.''.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 1016, as amended by section 
        3, 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 adding at the end the following new 
        paragraph:
            ``(38) to the extent provided in section 30D(e)(4).''.
            (2) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 30C the following new item:

``Sec. 30D. Qualified planting expenditure credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenditures paid or incurred after December 31, 2008.

SEC. 5. GRASSLAND, RANGELAND, AND FOREST CONSERVATION CREDIT.

    (a) In General.--Not later than 180 days after the date of the 
enactment of this Act, the Secretary of the Treasury, in consultation 
with the Department of Agriculture, shall establish an appropriate tax 
credit, with respect to land located in the United States, for--
            (1) the conversion of cropland to pasture for grazing 
        purposes or to grassland or rangeland, and
            (2) reforestation and afforestation of land--
                    (A) which is not held by the taxpayer for the 
                planting, cultivating, caring for, and cutting of trees 
                for sale or use in the commercial production of timber 
                products, and
                    (B) with trees which are not held by the taxpayer 
                for use in a trade or business or for the production of 
                income.
    (b) Other Rules Relating to Credit.--
            (1) Credit to be per acre.--The Secretary shall establish 
        credit amounts to apply to land on a per acre basis with 
        respect to each method of conservation described in subsection 
        (a).
            (2) Pursuant to approved plan.--Such methods must be 
        pursuant to a plan submitted by the taxpayer and approved by 
        the Secretaries of the Treasury and Agriculture.
            (3) Basis for credit amounts.--Credit amount shall be based 
        on--
                    (A) the efficacy of the method in sequestering 
                carbon and preventing soil erosion,
                    (B) the expenditures relating to such method, and
                    (C) the number of years the taxpayer certifies to 
                the Secretary or ensures (by conservation easement or 
                otherwise) that the applicable land will remain subject 
                to the approved plan.
            (4) Recapture.--The Secretary shall provide for recapturing 
        the benefit of any credit allowed under this section with 
        respect to any property that ceases to be used in accordance 
        with the approved plan.
            (5) Denial of double benefit and basis adjustment.--The 
        Secretary shall provide--
                    (A) an appropriate basis adjustment for property 
                with respect to which such credit is allowed, and
                    (B) rules disallowing such deductions and other 
                credits as may be appropriate to avoid allowing 
                additional tax benefits for the same conservation 
                method or expenses.
    (c) Effective Date.--The credit established by the Secretary shall 
apply to taxable years beginning after December 31, 2008.

SEC. 6. CARBON SEQUESTRATION CREDIT REPORT.

    (a) In General.--In the case of any substantial change in the 
carbon sequestration market (including the enactment into law of a 
carbon cap and trade program), the Secretary of the Treasury shall, in 
consultation with any appropriate Federal officers, study such change 
and any effect of such change on the efficiency of, and need for, the 
credits allowed under section 5 of this Act and sections 45O and 30D of 
the Internal Revenue Code of 1986.
    (b) Report.--As soon as practicable after sufficient opportunity to 
observe the effect of such change in the carbon sequestration market, 
the Secretary shall submit a report to Congress containing the results 
of the study conducted under subsection (a) and any recommendations of 
the Secretary for modifying such credits based on such results.
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