I 

116TH CONGRESS 

1ST SESSION H. R. 3744 

To amend the Internal Revenue Code of 1986 to make qualified biogas 

property and qualified manure resource recovery property eligible for 

the energy credit and to permit renewable energy bonds to finance 

qualified biogas property, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 12, 2019 

Mr. KIND (for himself, Mr. REED, Mr. POCAN, Mrs. WALORSKI, Mr. WELCH, 

Mr. GALLAGHER, Mr. PETERS, Mr. SIMPSON, and Mr. COLLINS of New 

York) introduced the following bill; which was referred to the Committee 

on Ways and Means, and in addition to the Committee on Science, Space, 

and Technology, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to make 

qualified biogas property and qualified manure resource 

recovery property eligible for the energy credit and to 

permit renewable energy bonds to finance qualified 

biogas property, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Agriculture Environ5 mental Stewardship Act of 2019’’. 


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1 SEC. 2. FINDINGS. 

2 Congress finds the following: 

3 (1) Incentives and encouragement for the con4 servation and appropriate handling of nutrients con5 tained in organic matter are necessary. 

6 (2) Biogas systems will save Federal, State, and 

7 local taxpayers money by converting waste into use8 ful products, such as fuel, fertilizer, thermal heat, 

9 feedstock for hydrogen fuel cells, and renewable 

10 chemicals. 

11 (3) Manure resource recovery systems will save 

12 Federal, State, and local taxpayers money by recov13 ering the nutrients contained in organic matter from 

14 their source, rather than recovering the nutrients 

15 after they have entered landfills or waterways. 

16 SEC. 3. ENERGY CREDIT FOR QUALIFIED BIOGAS PROP17 ERTY AND QUALIFIED MANURE RESOURCE 

18 RECOVERY PROPERTY. 

19 (a) IN GENERAL.—Section 48(a)(3)(A) of the Inter20 nal Revenue Code of 1986 is amended by striking ‘‘or’’ 

21 at the end of clause (vi) and by adding at the end the 

22 following new clauses: 

23 ‘‘(viii) qualified biogas property, or 

24 ‘‘(ix) qualified manure resource recov25 ery property,’’. 


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1 (b) 30-PERCENT CREDIT.—Section 48(a)(2)(A)(i) of 

2 such Code is amended by striking ‘‘and’’ at the end of 

3 subclause (III), by striking ‘‘and’’ at the end of subclause 

4 (IV), and by adding at the end the following new sub5 clauses: 

6 ‘‘(V) qualified biogas property, 

7 and 

8 ‘‘(VI) qualified manure resource 

9 recovery property, and’’. 

10 (c) DEFINITIONS.—Section 48(c) of such Code is 

11 amended by adding at the end the following new para12 graphs: 

13 ‘‘(5) QUALIFIED BIOGAS PROPERTY.— 

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

15 biogas property’ means property comprising a 

16 system which— 

17 ‘‘(i) uses anaerobic digesters, or other 

18 biological, chemical, thermal, or mechanical 

19 processes (alone or in combination), to 

20 convert biomass (as defined in section 

21 45K(c)(3)) into a gas which consists of not 

22 less than 52 percent methane, and 

23 ‘‘(ii) captures such gas for use as a 

24 fuel. 


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1 ‘‘(B) INCLUSION OF CERTAIN CLEANING

2 AND CONDITIONING EQUIPMENT.—Such term 

3 shall include any property which cleans and 

4 conditions the gas referred to in subparagraph 

5 (A) for use as a fuel. 

6 ‘‘(C) TERMINATION.—No credit shall be 

7 determined under this section with respect to 

8 any qualified biogas property for any period 

9 after December 31, 2021. 

10 ‘‘(6) QUALIFIED MANURE RESOURCE RECOVERY

11 PROPERTY.— 

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

13 manure resource recovery property’ means 

14 property comprising a system which uses phys15 ical, biological, chemical, thermal, or mechanical 

16 processes to recover the nutrients nitrogen and 

17 phosphorus from a non-treated digestate or ani18 mal manure by reducing or separating at least 

19 50 percent of the concentration of such nutri20 ents, excluding any reductions during the incin21 eration, storage, composting, or field application 

22 of the non-treated digestate or animal manure. 

23 ‘‘(B) INCLUSION OF CERTAIN PROCESSING

24 EQUIPMENT.—Such term shall include— 


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1 ‘‘(i) any property which is used to re2 cover the nutrients referred to in subpara3 graph (A), such as— 

4 ‘‘(I) biological reactors, 

5 ‘‘(II) crystallizers, 

6 ‘‘(III) reverse osmosis mem7 branes and other water purifiers, 

8 ‘‘(IV) evaporators, 

9 ‘‘(V) distillers, 

10 ‘‘(VI) decanter centrifuges, and 

11 ‘‘(VII) equipment that facilitates 

12 the process of dissolved air flotation, 

13 ammonia stripping, gasification, or 

14 ozonation, and 

15 ‘‘(ii) any thermal drier which treats 

16 the nutrients recovered by the processes re17 ferred to in subparagraph (A). 

18 ‘‘(C) TERMINATION.—No credit shall be 

19 determined under this section with respect to 

20 any qualified manure resource recovery prop21 erty for any period after December 31, 2021.’’. 

22 (d) DENIAL OF DOUBLE BENEFIT FOR QUALIFIED

23 BIOGAS PROPERTY.—Section 45(e) of such Code is 

24 amended by adding at the end the following new para25 graph: 


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1 ‘‘(12) COORDINATION WITH ENERGY CREDIT

2 FOR QUALIFIED BIOGAS PROPERTY.—The term 

3 ‘qualified facility’ shall not include any facility which 

4 produces electricity from gas produced by qualified 

5 biogas property (as defined in section 48(c)(5)) if a 

6 credit is determined under section 48 with respect to 

7 such property for the taxable year or any prior tax8 able year.’’. 

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

10 this section shall apply to periods after December 31, 

11 2018, in taxable years ending after such date, under rules 

12 similar to the rules of section 48(m) of such Code (as in 

13 effect on the day before the date of the enactment of the 

14 Revenue Reconciliation Act of 1990). 

15 SEC. 4. RENEWABLE ENERGY BONDS RELATING TO BIOGAS 

16 PROPERTY AND MANURE RESOURCE RECOV17 ERY PROPERTY. 

18 (a) IN GENERAL.—Part IV of subchapter A of chap19 ter 1 of the Internal Revenue Code of 1986 is amended 

20 by adding at the end the following: 

21 ‘‘Subpart H—Nonrefundable Credit to Holders of 

22 Certain Bonds 

‘‘Sec. 54. Credit to holders of qualified renewable energy bonds. 


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1 ‘‘SEC. 54. CREDIT TO HOLDERS OF QUALIFIED RENEWABLE 

2 ENERGY BONDS. 

3 ‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 

4 a qualified renewable energy bond on one or more credit 

5 allowance dates of the bond during any taxable year, there 

6 shall be allowed as a credit against the tax imposed by 

7 this chapter for the taxable year an amount equal to 70 

8 percent of the sum of the credits determined under sub9 section (b) with respect to such dates. 

10 ‘‘(b) AMOUNT OF CREDIT.— 

11 ‘‘(1) IN GENERAL.—The amount of the credit 

12 determined under this subsection with respect to any 

13 credit allowance date for a qualified renewable en14 ergy bond is 25 percent of the annual credit deter15 mined with respect to such bond. 

16 ‘‘(2) ANNUAL CREDIT.—The annual credit de17 termined with respect to any qualified renewable en18 ergy bond is the product of— 

19 ‘‘(A) the applicable credit rate, multiplied 

20 by 

21 ‘‘(B) the outstanding face amount of the 

22 bond. 

23 ‘‘(3) APPLICABLE CREDIT RATE.—For purposes 

24 of paragraph (2), the applicable credit rate is the 

25 rate which the Secretary estimates will permit the 

26 issuance of qualified renewable energy bonds with a 


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1 specified maturity or redemption date without dis2 count and without interest cost to the qualified 

3 issuer. The applicable credit rate with respect to any 

4 qualified renewable energy bond shall be determined 

5 as of the first day on which there is a binding, writ6 ten contract for the sale or exchange of the bond. 

7 ‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE8 DEMPTION.—In the case of a bond which is issued 

9 during the 3-month period ending on a credit allow10 ance date, the amount of the credit determined 

11 under this subsection with respect to such credit al12 lowance date shall be a ratable portion of the credit 

13 otherwise determined based on the portion of the 3- 

14 month period during which the bond is outstanding. 

15 A similar rule shall apply when the bond is redeemed 

16 or matures. 

17 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— 

18 ‘‘(1) IN GENERAL.—The credit allowed under 

19 subsection (a) for any taxable year shall not exceed 

20 the excess of— 

21 ‘‘(A) the sum of the regular tax liability 

22 (as defined in section 26(b)) plus the tax im23 posed by section 55, over 


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1 ‘‘(B) the sum of the credits allowable 

2 under this part (other than subpart C and this 

3 subpart). 

4 ‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 

5 credit allowable under subsection (a) exceeds the 

6 limitation imposed by paragraph (1) for such taxable 

7 year, such excess shall be carried to the succeeding 

8 taxable year and added to the credit allowable under 

9 subsection (a) for such taxable year (determined be10 fore the application of paragraph (1) for such suc11 ceeding taxable year). 

12 ‘‘(d) QUALIFIED RENEWABLE ENERGY BONDS.—For 

13 purposes of this subpart— 

14 ‘‘(1) IN GENERAL.—The term ‘qualified renew15 able energy bonds’ means any bond issued as part 

16 of an issue if— 

17 ‘‘(A) the bond is issued by a qualified 

18 issuer pursuant to an allocation by the Sec19 retary to such issuer of a portion of the na20 tional renewable energy bond limitation under 

21 paragraph (2), 

22 ‘‘(B) 100 percent of the available project 

23 proceeds of such issue are to be used for capital 

24 expenditures incurred by a governmental body, 

25 public power provider, or cooperative electric 


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1 company for property owned by the public 

2 power provider, a governmental body, or a coop3 erative electric company, as the case may be, 

4 that is— 

5 ‘‘(i) qualified biogas property (as de6 fined in section 48(c)(5)), or 

7 ‘‘(ii) a qualified manure resource re8 covery property (as defined in section 

9 48(c)(6)), 

10 ‘‘(C) the qualified issuer designates such 

11 bond for purposes of this section, and 

12 ‘‘(D) the issue meets the requirements of 

13 this section. 

14 ‘‘(2) LIMITATION ON AMOUNT OF BONDS DES15 IGNATED.— 

16 ‘‘(A) IN GENERAL.—The maximum aggre17 gate face amount of bonds which may be des18 ignated under paragraph (1)(C) by any issuer 

19 shall not exceed the limitation amount allocated 

20 under this paragraph to such issuer. 

21 ‘‘(B) NATIONAL LIMITATION ON AMOUNT

22 OF BONDS DESIGNATED.—There is a national 

23 renewable energy bond limitation of 

24 $800,000,000 which shall be allocated by the 


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1 Secretary as provided in subparagraph (C), ex2 cept that— 

‘‘(i) not more than 331 3 ⁄3 percent 

4 thereof may be allocated to projects of 

5 public power providers, 

‘‘(ii) not more than 331 6 ⁄3 percent 

7 thereof may be allocated to projects of gov8 ernmental bodies, and 

‘‘(iii) not more than 331 9 ⁄3 percent 

10 thereof may be allocated to projects of co11 operative electric companies. 

12 ‘‘(C) METHOD OF ALLOCATION.— 

13 ‘‘(i) ALLOCATION AMONG PUBLIC

14 POWER PROVIDERS.—After the Secretary 

15 determines the projects of public power 

16 providers which are appropriate for receiv17 ing an allocation of the national renewable 

18 energy bond limitation, the Secretary shall, 

19 to the maximum extent practicable, make 

20 allocations among such projects in such 

21 manner that the amount allocated to each 

22 such project bears the same ratio to the 

23 cost of such project as the limitation under 

24 subparagraph (B)(i) bears to the cost of all 

25 such projects. 


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1 ‘‘(ii) ALLOCATION AMONG GOVERN2 MENTAL BODIES AND COOPERATIVE ELEC3 TRIC COMPANIES.—The Secretary shall 

4 make allocations of the amount of the na5 tional renewable energy bond limitation de6 scribed in subparagraphs (B)(ii) and 

7 (B)(iii) among projects of governmental 

8 bodies and cooperative electric companies, 

9 respectively, in such manner as the Sec10 retary determines appropriate. 

11 ‘‘(e) DEFINITIONS.—For purposes of this section— 

12 ‘‘(1) QUALIFIED ISSUER.—The term ‘qualified 

13 issuer’ means a public power provider, a cooperative 

14 electric company, a governmental body, a renewable 

15 energy bond lender, or a not-for-profit electric utility 

16 which has received a loan or loan guarantee under 

17 the Rural Electrification Act. 

18 ‘‘(2) PUBLIC POWER PROVIDER.—The term 

19 ‘public power provider’ means a State utility with a 

20 service obligation, as such terms are defined in sec21 tion 217 of the Federal Power Act (as in effect on 

22 the date of the enactment of this paragraph). 

23 ‘‘(3) GOVERNMENTAL BODY.—The term ‘gov24 ernmental body’ means any State or Indian tribal 

25 government, or any political subdivision thereof. 


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1 ‘‘(4) COOPERATIVE ELECTRIC COMPANY.—The 

2 term ‘cooperative electric company’ means a mutual 

3 or cooperative electric company described in section 

4 501(c)(12) or section 1381(a)(2)(C). 

5 ‘‘(5) RENEWABLE ENERGY BOND LENDER.— 

6 The term ‘renewable energy bond lender’ means a 

7 lender which is a cooperative which is owned by, or 

8 has outstanding loans to, 100 or more cooperative 

9 electric companies and is in existence on February 

10 1, 2002, and shall include any affiliated entity which 

11 is controlled by such lender. 

12 ‘‘(f) OTHER DEFINITIONS.—For purposes of this 

13 subchapter— 

14 ‘‘(1) CREDIT ALLOWANCE DATE.—The term 

15 ‘credit allowance date’ means— 

16 ‘‘(A) March 15, 

17 ‘‘(B) June 15, 

18 ‘‘(C) September 15, and 

19 ‘‘(D) December 15. 

20 Such term includes the last day on which the bond 

21 is outstanding. 

22 ‘‘(2) BOND.—The term ‘bond’ includes any ob23 ligation. 


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1 ‘‘(3) STATE.—The term ‘State’ includes the 

2 District of Columbia and any possession of the 

3 United States. 

4 ‘‘(4) AVAILABLE PROJECT PROCEEDS.—The 

5 term ‘available project proceeds’ means— 

6 ‘‘(A) the excess of— 

7 ‘‘(i) the proceeds from the sale of an 

8 issue, over 

9 ‘‘(ii) the issuance costs financed by 

10 the issue (to the extent that such costs do 

11 not exceed 2 percent of such proceeds), 

12 and 

13 ‘‘(B) the proceeds from any investment of 

14 the excess described in subparagraph (A). 

15 ‘‘(g) CREDIT TREATED AS INTEREST.—For purposes 

16 of this subtitle, the credit determined under subsection (a) 

17 shall be treated as interest which is includible in gross in18 come. 

19 ‘‘(h) S CORPORATIONS AND PARTNERSHIPS.—In the 

20 case of a renewable energy bond held by an S corporation 

21 or partnership, the allocation of the credit allowed by this 

22 section to the shareholders of such corporation or partners 

23 of such partnership shall be treated as a distribution. 

24 ‘‘(i) BONDS HELD BY REAL ESTATE INVESTMENT

25 TRUSTS.—If any qualified renewable energy bond is held 


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1 by a real estate investment trust, the credit determined 

2 under subsection (a) shall be allowed to beneficiaries of 

3 such trust (and any gross income included under sub4 section (f) with respect to such credit shall be distributed 

5 to such beneficiaries) under procedures prescribed by the 

6 Secretary. 

7 ‘‘(j) CREDITS MAY BE STRIPPED.—Under regula8 tions prescribed by the Secretary— 

9 ‘‘(1) IN GENERAL.—There may be a separation 

10 (including at issuance) of the ownership of a quali11 fied renewable energy bond and the entitlement to 

12 the credit under this section with respect to such 

13 bond. In case of any such separation, the credit 

14 under this section shall be allowed to the person who 

15 on the credit allowance date holds the instrument ev16 idencing the entitlement to the credit and not to the 

17 holder of the bond. 

18 ‘‘(2) CERTAIN RULES TO APPLY.—In the case 

19 of a separation described in paragraph (1), the rules 

20 of section 1286 shall apply to the qualified renew21 able energy bond as if it were a stripped bond and 

22 to the credit under this section as if it were a 

23 stripped coupon.’’. 


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1 (b) PAYMENTS TO ISSUERS.—Subchapter B of chap2 ter 65 of such Code is amended by adding at the end the 

3 following: 

4 ‘‘SEC. 6431. CREDIT FOR QUALIFIED RENEWABLE ENERGY 

5 BONDS ALLOWED TO ISSUER. 

6 ‘‘(a) IN GENERAL.—The issuer of a qualified renew7 able energy bond (as defined in section 54(d)) shall be al8 lowed a credit with respect to each interest payment under 

9 such bond which shall be payable by the Secretary as pro10 vided in subsection (b). 

11 ‘‘(b) PAYMENT OF CREDIT.—The Secretary shall pay 

12 (contemporaneously with each interest payment date 

13 under such bond) to the issuer of such bond (or to any 

14 person who makes such interest payments on behalf of the 

15 issuer) 35 percent of the interest payable under such bond 

16 on such date. 

17 ‘‘(c) APPLICATION OF ARBITRAGE RULES.—For pur18 poses of section 148, the yield on such bonds shall be re19 duced by the credit allowed under this section. 

20 ‘‘(d) INTEREST PAYMENT DATE.—For purposes of 

21 this subsection, the term ‘interest payment date’ means 

22 each date on which interest is payable by the issuer under 

23 the terms of the bond.’’. 

24 (c) CONFORMING AMENDMENTS.— 


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1 (1) The table of subparts for part IV of sub2 chapter A of chapter 1 of such Code is amended by 

3 adding at the end the following new item: 

‘‘SUBPART H. NONREFUNDABLE CREDIT TO HOLDERS OF CERTAIN BONDS.’’. 

4 (2) The table of sections for subchapter B of 

5 chapter 65 of such Code is amended by adding at 

6 the end the following new item: 

‘‘Sec. 6431. Credit for qualified renewable energy bonds allowed to issuer.’’. 

7 (3) Section 6211(b)(4)(A) of such Code is 

8 amended by striking ‘‘and 36B, 168(k)(4)’’ and in9 serting ‘‘36B, 168(k)(4), and 6431’’. 

10 (4) Section 6401(b)(1) of such Code is amend11 ed by striking ‘‘and G’’ and inserting ‘‘G, and H’’. 

12 (d) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to bonds issued after the date of 

14 the enactment of this Act. 

15 SEC. 5. STUDY OF BIOGAS AND NUTRIENT REUSE. 

16 (a) IN GENERAL.—The Secretary of the Treasury 

17 shall enter into an agreement with the National Renewable 

18 Energy Laboratory to undertake a study of biogas that 

19 addresses the following: 

20 (1) The quality of biogas, including a compari21 son of biogas to natural gas and the identification 

22 of any components of biogas which make biogas un23 suitable for injection into existing natural gas pipe24 lines. 


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1 (2) Methods for obtaining the highest energy 

2 content in biogas, including the use of co-digestion 

3 and identifying the optimal feed mixture. 

4 (3) Recommendations for the expansion of 

5 biogas production, including an analysis of the ex6 tent to which increasing the methane content of 

7 biogas would result in the greater use of biogas and 

8 an analysis of how the expanded use of biogas could 

9 help meet the growing energy needs of the United 

10 States. 

11 (4) Methods for productive use of nutrients re12 covered from qualified manure resource recovery 

13 property that benefits the agricultural economy. 

14 (b) REPORT.—Not later than 2 years after the date 

15 of the enactment of this Act, the Secretary shall submit 

16 to Congress a report on the study conducted under sub17 section (a). 

Æ 


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