[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1154 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 1154

         To promote biogas production, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 18, 2007

   Mr. Nelson of Nebraska (for himself and Mr. Craig) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
         To promote biogas production, and for other purposes.

    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 ``Biogas Production Incentive Act of 
2007''.

SEC. 2. CREDIT FOR PRODUCTION OF BIOGAS FROM CERTAIN RENEWABLE 
              FEEDSTOCKS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 40A the following new section:

``SEC. 40B. BIOGAS PRODUCED FROM CERTAIN RENEWABLE FEEDSTOCKS.

    ``(a) General Rule.--For purposes of section 38, the qualified 
biogas production credit for any taxable year is an amount equal to the 
product of--
            ``(1) $4.27, and
            ``(2) each million British thermal units (mmBtu) of 
        biogas--
                    ``(A) produced by the taxpayer--
                            ``(i) from qualified energy feedstock, and
                            ``(ii) at a qualified facility during the 
                        7-year period beginning on the date the 
                        facility was originally placed in service, and
                    ``(B) either--
                            ``(i) sold by the taxpayer to an unrelated 
                        person during the taxable year, or
                            ``(ii) used by the taxpayer during the 
                        taxable year.
    ``(b) Definitions.--
            ``(1) Biogas.--The term `biogas' means a gas that--
                    ``(A) is derived by processing qualified energy 
                feedstock in an anaerobic digester, and
                    ``(B) contains--
                            ``(i) at least 60 percent methane, and
                            ``(ii) carbon dioxide and trace gases.
            ``(2) Qualified energy feedstock.--
                    ``(A) In general.--The term `qualified energy 
                feedstock' means--
                            ``(i) manure of agricultural livestock, 
                        including litter, wood shavings, straw, rice 
                        hulls, bedding material, and other materials 
                        incidentally collected with the manure,
                            ``(ii) any nonhazardous, cellulosic, or 
                        other organic agricultural or food industry 
                        byproduct or waste material that is derived 
                        from--
                                    ``(I) harvesting residues,
                                    ``(II) wastes or byproducts from 
                                fermentation processes, ethanol 
                                production, biodiesel production, 
                                slaughter of agricultural livestock, 
                                food production, food processing, or 
                                food service, or
                                    ``(III) other organic wastes, 
                                byproducts, or sources, or
                            ``(iii) solid wood waste materials, 
                        including waste pallets, crates, dunnage, 
                        manufacturing and construction wood wastes, and 
                        landscape or right-of-way tree trimmings.
                    ``(B) Exclusions.--The term `qualified energy 
                feedstock' does not include--
                            ``(i) pressure-treated, chemically-treated, 
                        or painted wood wastes,
                            ``(ii) municipal solid waste,
                            ``(iii) landfills, or
                            ``(iv) paper that is commonly recycled.
                    ``(C) Agricultural livestock.--The term 
                `agricultural livestock' means poultry, cattle, sheep, 
                swine, goats, horses, mules, and other equines.
            ``(3) Qualified facility.--The term `qualified facility' 
        means a facility that--
                    ``(A) uses anaerobic digesters to process qualified 
                energy feedstock into biogas,
                    ``(B) is owned by the taxpayer,
                    ``(C) is located in the United States,
                    ``(D) is originally placed in service before 
                January 1, 2018, and
                    ``(E) the biogas output of which is--
                            ``(i) marketed through interconnection with 
                        a gas distribution or transmission pipeline, or
                            ``(ii) used on-site or off-site in a 
                        quantity that is sufficient to offset the 
                        consumption of at least 50,000 mmBtu annually 
                        of commercially-marketed fuel derived from 
                        coal, crude oil, natural gas, propane, or other 
                        fossil fuel.
    ``(c) Special Rules.--For purposes of this section--
            ``(1) Production attributable to the taxpayer.--In the case 
        of a facility in which more than 1 person has an ownership 
        interest, except to the extent provided in regulations 
        prescribed by the Secretary, production from the qualified 
        facility shall be allocated among such persons in proportion to 
        their respective ownership interests in the gross sales from 
        such qualified facility.
            ``(2) Related persons.--Persons shall be treated as related 
        to each other if such persons would be treated as a single 
        employer under the regulations prescribed under section 52(b). 
        In the case of a corporation which is a member of an affiliated 
        group of corporations filing a consolidated return, such 
        corporation shall be treated as selling biogas to an unrelated 
        person if such biogas is sold to such a person by another 
        member of such group.
            ``(3) Pass-thru in the case of estates and trusts.--Under 
        regulations prescribed by the Secretary, rules similar to the 
        rules of subsection (d) of section 52 shall apply.
            ``(4) Coordination with credit from producing fuel from a 
        nonconventional source.--The amount of biogas produced and sold 
        or used by the taxpayer during any taxable year which is taken 
        into account under this section shall be reduced by the amount 
        of biogas produced and sold by the taxpayer in such taxable 
        year which is taken into account under section 45K.
            ``(5) Credit eligibility in the case of government-owned 
        facilities using poultry waste.--In the case of a facility 
        using poultry waste to produce biogas and owned by a 
        governmental unit, subparagraph (B) of subsection (b)(3) shall 
        be applied by substituting `is leased or operated by the 
        taxpayer' for `is owned by the taxpayer'.
    ``(d) Transferability of Credit.--
            ``(1) In general.--A taxpayer may transfer the credit under 
        this section through an assignment to any person. Such transfer 
        may be revoked only with the consent of the Secretary.
            ``(2) Regulations.--The Secretary shall prescribe such 
        regulations as necessary to ensure that any credit transferred 
        under paragraph (1) is claimed once and not reassigned by such 
        other person.
    ``(e) Adjustment Based on Inflation.--
            ``(1) In general.--The $4.27 amount under subsection (b)(1) 
        shall be adjusted by multiplying such amount by the inflation 
        adjustment factor for the calendar year in which the sale 
        occurs. If any amount as increased under the preceding sentence 
        is not a multiple of 0.1 cent, such amount shall be rounded to 
        the nearest multiple of 0.1 cent.
            ``(2) Computation of inflation adjustment factor.--
                    ``(A) In general.--The Secretary shall, not later 
                than April 1 of each calendar year, determine and 
                publish in the Federal Register the inflation 
                adjustment factor in accordance with this paragraph.
                    ``(B) Inflation adjustment factor.--The term 
                `inflation adjustment factor' means, with respect to a 
                calendar year, a fraction the numerator of which is the 
                GDP implicit price deflator for the preceding calendar 
                year and the denominator of which is the GDP implicit 
                price deflator for calendar year 2007. The term `GDP 
                implicit price deflator' means the most recent revision 
                of the implicit price deflator for the gross domestic 
                product as computed and published by the Department of 
                Commerce before March 15 of the calendar year.''.
    (b) Credit Treated as Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 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 qualified biogas production credit under section 
        40B(a).''.
    (c) Credit Allowed Against AMT.--Section 38(c)(4)(B) of the 
Internal Revenue Code of 1986 is amended by striking ``and'' at the end 
of clause (i), by striking the period at the end of clause (ii)(II) and 
inserting ``, and'', and by adding at the end the following new clause:
                            ``(iii) the credit determined under section 
                        40B.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 40A the 
following new item:

``Sec. 40B. Biogas produced from certain renewable feedstocks.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to biogas produced and sold or used in taxable years beginning 
after the date of the enactment of this Act.

SEC. 3. INCENTIVES FOR BIOGAS PRODUCTION.

    Title IX of the Farm Security and Rural Investment Act of 2002 (7 
U.S.C. 8101 et seq.) is amended by adding at the end the following:

``SEC. 9012. COUNTER-CYCLICAL PAYMENTS FOR THE PRODUCTION OF BIOGAS 
              FROM CERTAIN RENEWABLE FEEDSTOCK RESOURCES.

    ``(a) Definitions.--In this section:
            ``(1) Agricultural livestock.--The term `agricultural 
        livestock' means--
                    ``(A) poultry;
                    ``(B) cattle;
                    ``(C) sheep;
                    ``(D) swine;
                    ``(E) goats;
                    ``(F) horses;
                    ``(G) mules; and
                    ``(H) other equines.
            ``(2) Biogas.--The term `biogas' means a gas that--
                    ``(A) is produced at a qualified facility;
                    ``(B) is derived by processing qualified energy 
                feedstock in an anaerobic digester; and
                    ``(C) contains--
                            ``(i) at least 60 percent methane; and
                            ``(ii) carbon dioxide and trace gases.
            ``(3) Provider.--The term `provider' means a provider of 
        qualified energy feedstock, including a farmer, rancher, rural 
        small business, agricultural cooperative, and partnership.
            ``(4) Qualified biogas producer.--The term `qualified 
        biogas producer' means a person that operates a qualified 
        facility.
            ``(5) Qualified energy feedstock.--
                    ``(A) In general.--The term `qualified energy 
                feedstock' means--
                            ``(i) manure of agricultural livestock, 
                        including litter, wood shavings, straw, rice 
                        hulls, bedding material, and other materials 
                        incidentally collected with the manure;
                            ``(ii) any nonhazardous, cellulosic, or 
                        other organic agricultural or food industry 
                        byproduct or waste material that is derived 
                        from--
                                    ``(I) harvesting residues;
                                    ``(II) wastes or byproducts from 
                                fermentation processes, ethanol 
                                production, biodiesel production, 
                                slaughter of agricultural livestock, 
                                food production, food processing, or 
                                food service; or
                                    ``(III) other organic wastes, 
                                byproducts, or sources; or
                            ``(iii) solid wood waste materials, 
                        including waste pallets, crates, dunnage, 
                        manufacturing and construction wood wastes, and 
                        landscape or right-of-way tree trimmings.
                    ``(B) Exclusions.--The term `qualified energy 
                feedstock' does not include--
                            ``(i) pressure-treated, chemically-treated, 
                        or painted wood wastes;
                            ``(ii) municipal solid waste;
                            ``(iii) landfills; or
                            ``(iv) paper that is commonly recycled.
            ``(6) Qualified facility.--The term `qualified facility' 
        means a facility that--
                    ``(A) uses anaerobic digesters to process qualified 
                energy feedstock into biogas;
                    ``(B) is located in the United States; and
                    ``(C) the biogas output of which is--
                            ``(i) marketed through interconnection with 
                        a gas distribution or transmission pipeline; or
                            ``(ii) used on-site or off-site in a 
                        quantity that is sufficient to offset the 
                        consumption of at least 50,000 mmBtu annually 
                        of commercially-marketed fuel derived from 
                        coal, crude oil, natural gas, propane, or other 
                        fossil fuel.
    ``(b) Counter-Cyclical Payments.--
            ``(1) In general.--The Secretary shall use such funds of 
        the Commodity Credit Corporation as are necessary to make 
        counter-cyclical payments in accordance with this subsection to 
        qualified biogas producers for qualified facilities placed in 
        service before December 31, 2013.
            ``(2) Payment amount.--
                    ``(A) In general.--The amount of the payments 
                described in paragraph (1) shall be equal to the 
                product obtained by multiplying--
                            ``(i) the applicable amount calculated 
                        under subparagraph (B); and
                            ``(ii) the mmBtus of biogas that is 
                        produced in any year during the 10-year period 
                        beginning on the date on which the qualified 
                        facility is placed into service.
                    ``(B) Applicable amount.--The applicable amount 
                under subparagraph (A)(i) is the amount equal to 1.0 
                cent for every 1.0 cent that the annual average of 
                average daily prices of natural gas on the Henry Hub 
                Natural Gas Futures Market of the New York Mercantile 
                Exchange is below $7.50 per mmBtu, as adjusted for 
                inflation by the Secretary.
            ``(3) Payment timing.--The Secretary shall make payments 
        under this subsection once per calendar year, on a date 
        determined by the Secretary.
            ``(4) Use of payments.--As a condition on receipt of 
        payments under this subsection, a qualified biogas producer 
        shall agree to use the payments first to pay down loans and 
        other obligations incurred by the qualified biogas producer for 
        the physical facilities designed, built, and used to produce 
        biogas.
    ``(c) Transportation Costs.--
            ``(1) Definition of secretary.--In this subsection, the 
        term `Secretary' means the Secretary, acting in consultation 
        with the Secretary of Energy and the Administrator of the 
        Environmental Protection Agency.
            ``(2) In general.--The Secretary shall make loans, loan 
        guarantees, and grants to providers--
                    ``(A) for collecting qualified energy feedstock and 
                transporting the feedstock to a qualified facility that 
                produces biogas using manure of agricultural livestock 
                from multiple, smaller farming operations, as 
                determined by the Secretary; or
                    ``(B) for the purchase or construction of equipment 
                or facilities used in connection with the collection 
                and transportation under subparagraph (A).
            ``(3) Eligibility.--To be eligible to receive a grant under 
        this subsection, a provider shall--
                    ``(A) demonstrate financial need, as determined by 
                the Secretary; and
                    ``(B) submit to the Secretary a description of--
                            ``(i) the terms and conditions of the 
                        commitment by a qualified facility to accept 
                        the qualified energy feedstock from the 
                        provider;
                            ``(ii) the location of the qualified 
                        facility; and
                            ``(iii) a plan for environmentally-sound 
                        and economically-sustainable continued 
                        transportation of the qualified energy 
                        feedstock.
            ``(4) Cost sharing.--
                    ``(A) In general.--
                            ``(i) Grants.--The amount of a grant under 
                        this subsection shall not exceed 75 percent of 
                        the annual cost of the activity funded under 
                        paragraph (2)(A).
                            ``(ii) Maximum amount of combined grant and 
                        loan.--The combined amount of a grant and loan 
                        made or guaranteed for purchase or construction 
                        of equipment used in connection with transport 
                        of qualified energy feedstock shall not exceed 
                        75 percent of the cost of the activity funded 
                        under paragraph (2)(B).
                    ``(B) Factors.--In determining the amount of a 
                grant or loan, the Secretary shall take into 
                consideration, as applicable--
                            ``(i) the size, location, and biogas 
                        production efficiency of the qualified 
                        facility;
                            ``(ii) the estimated quantity of biogas to 
                        be produced by the qualified facility;
                            ``(iii) the number of farms, ranches, or 
                        small rural businesses within a reasonable 
                        distance of the qualified facility, as 
                        determined by the Secretary;
                            ``(iv) the expected environmental benefits 
                        of producing biogas from qualified energy 
                        feedstocks by the qualified facility; and
                            ``(v) such other factors as the Secretary 
                        determines to be appropriate.
            ``(5) Interest rate.--
                    ``(A) In general.--A loan made by the Secretary 
                under this subsection shall bear interest at the rate 
                equivalent to the rate of interest charged on Treasury 
                securities of comparable maturity on the date the loan 
                is approved.
                    ``(B) Duration.--The interest rate for each loan 
                will remain in effect for the term of the loan.
            ``(6) Funding.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, on October 1, 2007, and on each 
                October 1 thereafter through October 1, 2011, out of 
                any funds in the Treasury not otherwise appropriated, 
                the Secretary of the Treasury shall transfer to the 
                Secretary to carry out this subsection $10,000,000, to 
                remain available until expended.
                    ``(B) Receipt and acceptance.--The Secretary shall 
                be entitled to receive, shall accept, and shall use to 
                carry out this subsection the funds transferred under 
                subparagraph (A), without further appropriation.
    ``(d) Implementation.--
            ``(1) In general.--Not later than 180 days after the date 
        of enactment of this section, the Secretary shall promulgate 
        such regulations as are necessary to implement this section, 
        including a notice describing the method by which the Secretary 
        determines and adjusts the average price under subsection 
        (b)(2)(B).
            ``(2) Procedure.--The promulgation of the regulations and 
        administration of this section shall be made without regard 
        to--
                    ``(A) the notice and comment provisions of section 
                553 of title 5, United States Code;
                    ``(B) the Statement of Policy of the Secretary of 
                Agriculture effective July 24, 1971 (36 Fed. Reg. 
                13804), relating to notices of proposed rulemaking and 
                public participation in rulemaking; and
                    ``(C) chapter 35 of title 44, United States Code 
                (commonly known as the `Paperwork Reduction Act').''.
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