Livestock energy investment credit

(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:

40B.

Renewable energy produced from livestock waste using EPA-verified technologies for the comprehensive environmental treatment of livestock waste

(a)

In general

For purposes of section 38, the livestock-derived renewable energy production credit for any taxable year is an amount equal to the product of— (1)$5.56, and (2)each million British thermal units (mmBtu) of livestock-derived renewable energy— (A)produced by the taxpayer— (i)from qualified energy feedstock, (ii)at a qualified facility during the 7-year period beginning on the date the facility was originally placed in service, and (iii)using an EPA-verified technology that provides comprehensive livestock waste treatment addressing significant reductions to nitrogen and phosphorus nutrient discharges, odor and air emissions including greenhouse gases and ammonia, methane, hydrogen sulfide and volatile organic compounds, 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

For purposes of this section— (1)

livestock-derived renewable energy

The term livestock-derived renewable energy means fuel which is derived by processing qualified energy feedstock. (2)

Qualified energy feedstock

(A)

In general

The term qualified energy feedstock means— (i)manure of livestock (including any litter, wood shavings, straw, rice hulls, bedding material, and other materials incidentally collected with the manure), (ii)any nonhazardous, organic agricultural or food industry byproduct or waste material (cellulosic or otherwise) derived from— (I)renewable biomass, (II)harvesting residue, (III)any waste or byproduct from fermentation processes, ethanol production, biodiesel production, slaughter of livestock, food production, food processing, or food service, or (IV)other organic wastes, byproducts, or sources, (iii)solid wood waste materials, including waste pallets, crates, dunnage, manufacturing and construction wood wastes, and tree trimmings, or (iv)agricultural or forestry crops. (B)

Renewable biomass

The term renewable biomass means materials from pre-commercial thinning or invasive species from National Forest System land and public lands (as defined in section 103 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702)) that— (i)(I)are byproducts of preventive treatments that are removed— (aa)to reduce or contain disease or insect infestation, or (bb)to restore ecosystem health, (II)would not otherwise be used for higher-value products, and (III)are harvested in accordance with applicable law and land management plans and the requirements for— (aa)old-growth maintenance, restoration, and management direction of paragraphs (2), (3), and (4) of subsection (e) of section 102 of the Healthy Forests Restoration Act of 2003 (16 U.S.C. 6512), and (bb)large tree retention of subsection (f) of that section, or (ii)any organic matter that is available on a renewable or recurring basis from non-Federal land or land belonging to an Indian or Indian tribe that is held in trust by the United States or subject to a restriction against alienation imposed by the United States, including— (I)renewable plant material (such as feed grains, other agricultural commodities, other plants and trees, and algae), and (II)waste material (such as crop residue, other vegetative waste material (including wood waste and wood residues), animal waste and byproducts (including fats, oils, greases, and manure), food waste, and yard waste). (C)

Livestock

The term livestock includes poultry, cattle, sheep, swine, goats, horses, mules, and other equines. (3)

Qualified facility

The term qualified facility means a facility— (A)which is owned by the taxpayer, (B)which is located in the United States, (C)which is originally placed in service before January 1, 2018, and (D)the livestock-derived renewable energy 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. (4)

EPA-verified technology

The term EPA-verified technology means any technology the performance of which is verified by the Environmental Technology Verification Program of the Environmental Protection Agency. (c)

Reduction of credit based on market price of btus

(1)

In general

If the market price per mmBtu’s exceeds $11, the amount otherwise applicable under subsection (a)(1) for the taxable year (without regard to paragraph (1)) shall be reduced (but not below zero) by the amount which bears the same ratio to the amount otherwise so applicable as such excess bears to $5. (2)

Rounding

Any reduction determined under subparagraph (A) which is not a multiple of 10 cents shall be rounded to the nearest multiple of 10 cents. (3)

Market price

For purposes of this paragraph, the market price per mmBtu for any taxable year shall be the daily average market price per mmBtu on the Chicago exchange during the 3-month period ending at the close of the preceding taxable year. (d)

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 livestock-derived renewable energy 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 livestock-derived renewable energy 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 livestock-derived renewable energy 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 livestock-derived renewable energy 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. (e)

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. (f)

Adjustment based on inflation

(1)

In general

The $5.56 amount in subsection (a)(1) and the $11 amount in subsection (c)(2)(A) shall each 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 such Code 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 livestock-derived renewable energy production credit under section 40B(a).

(c)

Credit allowed against amt

Section 38(c)(4)(B) of such Code 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 such Code is amended by inserting after the item relating to section 40A the following new item:

Sec. 40B. Renewable energy produced from livestock waste using EPA-verified technologies for the comprehensive environmental treatment of livestock waste..

(e)

Effective date

The amendments made by this section shall apply to energy produced, and sold or used, in taxable years beginning after the date of the enactment of this Act.