[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 306 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                 S. 306

         To promote biogas production, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 22, 2009

 Mr. Nelson of Nebraska (for himself, Mr. Crapo, Mr. Wyden, Mr. Thune, 
  Mr. Brown, Mr. Johanns, and Ms. Stabenow) 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 
2009''.

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 45Q the following new section:

``SEC. 45R. 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 unit (mmBtu) of biogas--
                    ``(A) produced by the taxpayer--
                            ``(i) from qualified energy feedstock, and
                            ``(ii) at a qualified facility during the 
                        10-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, and
                    ``(B) contains at least 50 percent methane.
            ``(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 by-
                        product or waste material that is derived 
                        from--
                                    ``(I) renewable biomass,
                                    ``(II) harvesting residues,
                                    ``(III) wastes or byproducts from 
                                fermentation processes, ethanol 
                                production, biodiesel production, 
                                slaughter of agricultural 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 
                        landscape or right-of-way tree trimmings, or
                            ``(iv) landfill waste, sewage waste 
                        treatment materials, or other organic 
                        materials.
                    ``(B) Renewable biomass.--The term `renewable 
                biomass' means--
                            ``(i) 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) are byproducts of preventive 
                                treatments that are removed to reduce 
                                or contain disease or insect 
                                infestation 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 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 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) 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, gasification, or 
                other biological, chemical, or thermal processes to 
                convert 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, 2017, and
                    ``(E) the biogas output of which is--
                            ``(i) marketed through interconnection with 
                        a gas distribution or transmission pipeline, or
                            ``(ii) reasonably expected to be used in a 
                        quantity sufficient to offset the consumption 
                        of 5,000 mmBtu annually of commercially 
                        marketed fuel derived from coal, crude oil, 
                        natural gas, propane, or other fossil fuels.
    ``(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.--In the case of any facility which produce biogas 
        and which is 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) Special Rule for Public-Private Partnerships.--
            ``(1) In general.--In the case of facility which is owned 
        by a public-private partnership, any qualified public entity 
        which is a member of such partnership may transfer such 
        entity's allocation of the credit under subsection (a) to any 
        non-public entity which is a member of such partnership, except 
        that the aggregate allocations of such credit claimed by such 
        non-public entity shall be subject to the limitations under 
        subsections (b) and (c) and section 38(c).
            ``(2) Qualified public entity.--For purposes of this 
        subsection, the term `qualified public entity' means a Federal, 
        State, or local government entity, or any political subdivision 
        thereof, or a cooperative organization described in section 
        1381(a).
            ``(3) Verification of transfer of allocation.--A qualified 
        public entity that makes a transfer under paragraph (1), and a 
        non-public entity that receives an allocation under such a 
        transfer, shall provide verification of such transfer in such 
        manner and at such time as the Secretary shall prescribe.
    ``(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 2008. 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 (34), by striking the period at the end of paragraph 
(35) and inserting ``, plus'', and by adding at the end the following 
new paragraph:
            ``(36) the qualified biogas production credit under section 
        45R(a).''.
    (c) Coordination With Credit for Production Electricity From a 
Renewable Resource.--Section 45(e) of the Internal Revenue Code of 1986 
is amended by adding at the end the following new paragraph:
            ``(12) Coordination with credit for production of biogas.--
        The term `qualified facility' shall not include any facility 
        which produces electricity from biogas the production from 
        which is allowed a credit under section 45R for such taxable 
        year or any prior taxable year.''.
    (d) Credit Allowed Against AMT.--Section 38(c)(4)(B) of the 
Internal Revenue Code of 1986 is amended by redesignating clauses (vi) 
through (viii) as clauses (vii) through (ix), respectively, and by 
inserting after clause (v) the following new clause:
                            ``(vi) the credit determined under section 
                        45R.''.
    (e) 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 45Q the 
following new item:

``Sec. 45R. Biogas produced from certain renewable feedstocks.''.
    (f) 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.
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