I 

111TH CONGRESS 

1ST SESSION H. R. 907 

To amend the Internal Revenue Code of 1986 to provide for a livestock 

energy investment credit. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 4, 2009 

Mr. TERRY 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 

for a livestock energy investment credit. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. LIVESTOCK ENERGY INVESTMENT CREDIT. 

4 (a) IN GENERAL.—Subpart D of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of 

6 1986 is amended by inserting after section 40A the fol7 lowing new section: 

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1 ‘‘SEC. 40B. RENEWABLE ENERGY PRODUCED FROM LIVE2 STOCK WASTE USING EPA-VERIFIED TECH3 NOLOGIES FOR THE COMPREHENSIVE ENVI4 RONMENTAL TREATMENT OF LIVESTOCK 

5 WASTE. 

6 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

7 livestock-derived renewable energy production credit for 

8 any taxable year is an amount equal to the product of— 

9 ‘‘(1) $5.56, and 

10 ‘‘(2) each million British thermal units 

11 (mmBtu) of livestock-derived renewable energy— 

12 ‘‘(A) produced by the taxpayer— 

13 ‘‘(i) from qualified energy feedstock, 

14 ‘‘(ii) at a qualified facility during the 

15 7-year period beginning on the date the fa16 cility was originally placed in service, and 

17 ‘‘(iii) using an EPA-verified tech18 nology that provides comprehensive live19 stock waste treatment addressing signifi20 cant reductions to nitrogen and phos21 phorus nutrient discharges, odor and air 

22 emissions including greenhouse gases and 

23 ammonia, methane, hydrogen sulfide and 

24 volatile organic compounds, and 

25 ‘‘(B) either— 

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1 ‘‘(i) sold by the taxpayer to an unre2 lated person during the taxable year, or 

3 ‘‘(ii) used by the taxpayer during the 

4 taxable year. 

5 ‘‘(b) DEFINITIONS.—For purposes of this section— 

6 ‘‘(1) LIVESTOCK-DERIVED RENEWABLE EN7 ERGY.—The term ‘livestock-derived renewable en8 ergy’ means fuel which is derived by processing 

9 qualified energy feedstock. 

10 ‘‘(2) QUALIFIED ENERGY FEEDSTOCK.— 

11 ‘‘(A) IN GENERAL.—The term ‘qualified 

12 energy feedstock’ means— 

13 ‘‘(i) manure of livestock (including 

14 any litter, wood shavings, straw, rice hulls, 

15 bedding material, and other materials inci16 dentally collected with the manure), 

17 ‘‘(ii) any nonhazardous, organic agri18 cultural or food industry byproduct or 

19 waste material (cellulosic or otherwise) de20 rived from— 

21 ‘‘(I) renewable biomass, 

22 ‘‘(II) harvesting residue, 

23 ‘‘(III) any waste or byproduct 

24 from fermentation processes, ethanol 

25 production, biodiesel production, 

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1 slaughter of livestock, food produc2 tion, food processing, or food service, 

3 or 

4 ‘‘(IV) other organic wastes, by5 products, or sources, 

6 ‘‘(iii) solid wood waste materials, in7 cluding waste pallets, crates, dunnage, 

8 manufacturing and construction wood 

9 wastes, and tree trimmings, or 

10 ‘‘(iv) agricultural or forestry crops. 

11 ‘‘(B) RENEWABLE BIOMASS.—The term 

12 ‘renewable biomass’ means materials from pre13 commercial thinning or invasive species from 

14 National Forest System land and public lands 

15 (as defined in section 103 of the Federal Land 

16 Policy and Management Act of 1976 (43 U.S.C. 

17 1702)) that— 

18 ‘‘(i)(I) are byproducts of preventive 

19 treatments that are removed— 

20 ‘‘(aa) to reduce or contain dis21 ease or insect infestation, or 

22 ‘‘(bb) to restore ecosystem 

23 health, 

24 ‘‘(II) would not otherwise be used for 

25 higher-value products, and 

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1 ‘‘(III) are harvested in accordance 

2 with applicable law and land management 

3 plans and the requirements for— 

4 ‘‘(aa) old-growth maintenance, 

5 restoration, and management direc6 tion of paragraphs (2), (3), and (4) of 

7 subsection (e) of section 102 of the 

8 Healthy Forests Restoration Act of 

9 2003 (16 U.S.C. 6512), and 

10 ‘‘(bb) large tree retention of sub11 section (f) of that section, or 

12 ‘‘(ii) any organic matter that is avail13 able on a renewable or recurring basis 

14 from non-Federal land or land belonging to 

15 an Indian or Indian tribe that is held in 

16 trust by the United States or subject to a 

17 restriction against alienation imposed by 

18 the United States, including— 

19 ‘‘(I) renewable plant material 

20 (such as feed grains, other agricul21 tural commodities, other plants and 

22 trees, and algae), and 

23 ‘‘(II) waste material (such as 

24 crop residue, other vegetative waste 

25 material (including wood waste and 

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1 wood residues), animal waste and by2 products (including fats, oils, greases, 

3 and manure), food waste, and yard 

4 waste). 

5 ‘‘(C) LIVESTOCK.—The term ‘livestock’ in6 cludes poultry, cattle, sheep, swine, goats, 

7 horses, mules, and other equines. 

8 ‘‘(3) QUALIFIED FACILITY.—The term ‘quali9 fied facility’ means a facility— 

10 ‘‘(A) which is owned by the taxpayer, 

11 ‘‘(B) which is located in the United States, 

12 ‘‘(C) which is originally placed in service 

13 before January 1, 2018, and 

14 ‘‘(D) the livestock-derived renewable en15 ergy output of which is— 

16 ‘‘(i) marketed through interconnection 

17 with a gas distribution or transmission 

18 pipeline, or 

19 ‘‘(ii) used on-site or off-site in a quan20 tity that is sufficient to offset the con21 sumption of at least 50,000 mmBtu annu22 ally of commercially marketed fuel derived 

23 from coal, crude oil, natural gas, propane, 

24 or other fossil fuel. 

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1 ‘‘(4) EPA-VERIFIED TECHNOLOGY.—The term 

2 ‘EPA-verified technology’ means any technology the 

3 performance of which is verified by the Environ4 mental Technology Verification Program of the En5 vironmental Protection Agency. 

6 ‘‘(c) REDUCTION OF CREDIT BASED ON MARKET

7 PRICE OF BTUS.— 

8 ‘‘(1) IN GENERAL.—If the market price per 

9 mmBtu’s exceeds $11, the amount otherwise appli10 cable under subsection (a)(1) for the taxable year 

11 (without regard to paragraph (1)) shall be reduced 

12 (but not below zero) by the amount which bears the 

13 same ratio to the amount otherwise so applicable as 

14 such excess bears to $5. 

15 ‘‘(2) ROUNDING.—Any reduction determined 

16 under subparagraph (A) which is not a multiple of 

17 10 cents shall be rounded to the nearest multiple of 

18 10 cents. 

19 ‘‘(3) MARKET PRICE.—For purposes of this 

20 paragraph, the market price per mmBtu for any tax21 able year shall be the daily average market price per 

22 mmBtu on the Chicago exchange during the 3- 

23 month period ending at the close of the preceding 

24 taxable year. 

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1 ‘‘(d) SPECIAL RULES.—For purposes of this sec2 tion— 

3 ‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX4 PAYER.—In the case of a facility in which more than 

5 1 person has an ownership interest, except to the ex6 tent provided in regulations prescribed by the Sec7 retary, production from the qualified facility shall be 

8 allocated among such persons in proportion to their 

9 respective ownership interests in the gross sales 

10 from such qualified facility. 

11 ‘‘(2) RELATED PERSONS.—Persons shall be 

12 treated as related to each other if such persons 

13 would be treated as a single employer under the reg14 ulations prescribed under section 52(b). In the case 

15 of a corporation which is a member of an affiliated 

16 group of corporations filing a consolidated return, 

17 such corporation shall be treated as selling livestock18 derived renewable energy to an unrelated person if 

19 such biogas is sold to such a person by another 

20 member of such group. 

21 ‘‘(3) PASS-THRU IN THE CASE OF ESTATES AND

22 TRUSTS.—Under regulations prescribed by the Sec23 retary, rules similar to the rules of subsection (d) of 

24 section 52 shall apply. 

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1 ‘‘(4) COORDINATION WITH CREDIT FROM PRO2 DUCING FUEL FROM A NONCONVENTIONAL

3 SOURCE.—The amount of livestock-derived renew4 able energy produced and sold or used by the tax5 payer during any taxable year which is taken into 

6 account under this section shall be reduced by the 

7 amount of livestock-derived renewable energy pro8 duced and sold by the taxpayer in such taxable year 

9 which is taken into account under section 45K. 

10 ‘‘(5) CREDIT ELIGIBILITY IN THE CASE OF GOV11 ERNMENT-OWNED FACILITIES USING POULTRY

12 WASTE.—In the case of a facility using poultry 

13 waste to produce livestock-derived renewable energy 

14 and owned by a governmental unit, subparagraph 

15 (B) of subsection (b)(3) shall be applied by sub16 stituting ‘is leased or operated by the taxpayer’ for 

17 ‘is owned by the taxpayer’. 

18 ‘‘(e) TRANSFERABILITY OF CREDIT.— 

19 ‘‘(1) IN GENERAL.—A taxpayer may transfer 

20 the credit under this section through an assignment 

21 to any person. Such transfer may be revoked only 

22 with the consent of the Secretary. 

23 ‘‘(2) REGULATIONS.—The Secretary shall pre24 scribe such regulations as necessary to ensure that 

25 any credit transferred under paragraph (1) is 

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1 claimed once and not reassigned by such other per2 son. 

3 ‘‘(f) ADJUSTMENT BASED ON INFLATION.— 

4 ‘‘(1) IN GENERAL.—The $5.56 amount in sub5 section (a)(1) and the $11 amount in subsection 

6 (c)(2)(A) shall each be adjusted by multiplying such 

7 amount by the inflation adjustment factor for the 

8 calendar year in which the sale occurs. If any 

9 amount as increased under the preceding sentence is 

10 not a multiple of 0.1 cent, such amount shall be 

11 rounded to the nearest multiple of 0.1 cent. 

12 ‘‘(2) COMPUTATION OF INFLATION ADJUST13 MENT FACTOR.— 

14 ‘‘(A) IN GENERAL.—The Secretary shall, 

15 not later than April 1 of each calendar year, de16 termine and publish in the Federal Register the 

17 inflation adjustment factor in accordance with 

18 this paragraph. 

19 ‘‘(B) INFLATION ADJUSTMENT FACTOR.— 

20 The term ‘inflation adjustment factor’ means, 

21 with respect to a calendar year, a fraction the 

22 numerator of which is the GDP implicit price 

23 deflator for the preceding calendar year and the 

24 denominator of which is the GDP implicit price 

25 deflator for calendar year 2007. The term 

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1 ‘GDP implicit price deflator’ means the most 

2 recent revision of the implicit price deflator for 

3 the gross domestic product as computed and 

4 published by the Department of Commerce be5 fore March 15 of the calendar year.’’. 

6 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec7 tion 38(b) of such Code is amended by striking ‘‘plus’’ 

8 at the end of paragraph (30), by striking the period at 

9 the end of paragraph (31) and inserting ‘‘, plus’’, and by 

10 adding at the end the following new paragraph: 

11 ‘‘(32) the livestock-derived renewable energy 

12 production credit under section 40B(a).’’. 

13 (c) CREDIT ALLOWED AGAINST AMT.—Section 

14 38(c)(4)(B) of such Code is amended by striking ‘‘and’’ 

15 at the end of clause (i), by striking the period at the end 

16 of clause (ii)(II) and inserting ‘‘, and’’, and by adding at 

17 the end the following new clause: 

18 ‘‘(iii) the credit determined under sec19 tion 40B.’’. 

20 (d) CLERICAL AMENDMENT.—The table of sections 

21 for subpart D of part IV of subchapter A of chapter 1 

22 of such Code is amended by inserting after the item relat23 ing 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.’’. 

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1 (e) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to energy produced, and sold or 

3 used, in taxable years beginning after the date of the en4 actment of this Act. 

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