I 

110TH CONGRESS 

1ST SESSION H. R. 1217 

To amend the Internal Revenue Code of 1986 to provide a credit to certain 

concentrated animal feeding operations for the cost of complying with 

environmental protection regulations. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 27, 2007 

Mr. SMITH of Nebraska (for himself, Mr. HAYES, Mr. CONAWAY, and Mrs. 

MUSGRAVE) 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 

a credit to certain concentrated animal feeding operations for the cost of complying with environmental protection regulations. 

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 ‘‘CAFO Tax Credit Act 

5 of 2007’’. 


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1 SEC. 2. CREDIT FOR CONCENTRATED ANIMAL FEEDING OP2 ERATIONS. 

3 (a) IN GENERAL.—Subpart D of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of 

5 1986 (relating to business related credits) is amended by 

6 adding at the end the following new section: 

7 ‘‘SEC. 45O. CREDIT FOR EPA COMPLIANCE COSTS FOR CON8 CENTRATED ANIMAL FEEDING OPERATIONS. 

9 ‘‘(a) ALLOWANCE OF CREDIT.— 

10 ‘‘(1) IN GENERAL.—For purposes of section 38, 

11 in the case of an eligible taxpayer, the EPA compli12 ance credit determined under this section for the 

13 taxable year is an amount equal to the applicable 

14 percentage of the qualified compliance costs paid or 

15 incurred by the eligible taxpayer during the taxable 

16 year. 

17 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

18 of paragraph (1), the applicable percentage shall be 

19 determined as follows: 

‘‘If the amount of qualified The applicable 

compliance costs paid or incurred during the taxable year 

is: 

percentage is: 

Not over $100,000 ............................................................................. 100

Over $100,000 but not over $200,000 .............................................. 80

Over $200,000 but not over $400,000 .............................................. 60

Over $400,000 ................................................................................... 40. 

20 ‘‘(b) LIMITATION.—The amount of credit allowed 

21 under subsection (a) for any taxable year shall not exceed 

22 $500,000. 


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1 ‘‘(c) ELIGIBLE TAXPAYER.—For purposes of this sec2 tion, the term ‘eligible taxpayer’ means an owner or oper3 ator of a concentrated animal feeding operation (as de4 fined under section 122.23 of title 40, Code of Federal 

5 Regulations). 

6 ‘‘(d) QUALIFIED COMPLIANCE COSTS.—For purposes 

7 of this section— 

8 ‘‘(1) IN GENERAL.—The term ‘qualified compli9 ance costs’ means costs paid or incurred for compli10 ance with a national pollutant discharge elimination 

11 system permit issued under section 402 of the Fed12 eral Water Pollution Control Act (33 U.S.C. 1342). 

13 ‘‘(2) EXCLUSION FOR AMOUNTS FUNDED BY

14 GRANTS, ETC.—The term ‘qualified compliance 

15 costs’ shall not include any amount to the extent 

16 such amount is funded by any grant, contract, or 

17 otherwise by another person (or any governmental 

18 entity). 

19 ‘‘(e) SPECIAL RULES.— 

20 ‘‘(1) REDUCTION IN BASIS.—For purposes of 

21 this subtitle, if a credit is determined under this sec22 tion for any expenditure with respect to any prop23 erty, the increase in basis of such property which 

24 would (but for this subsection) result from such exVerDate Aug 31 2005 23:55 Mar 01, 2007 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1217.IH H1217

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1 penditure shall be reduced by the amount of the 

2 credit so determined. 

3 ‘‘(2) WHEN COSTS PAID OR INCURRED.—For 

4 purposes of this section, a cost shall be treated as 

5 paid or incurred in the year in which the taxpayer 

6 achieves compliance with the national pollutant dis7 charge elimination system permit issued under sec8 tion 402 of the Federal Water Pollution Control Act 

9 (33 U.S.C. 1342). 

10 ‘‘(3) DENIAL OF DOUBLE BENEFIT.—No deduc11 tion or other credit shall be allowed under this chap12 ter for any amount taken into account in deter13 mining the credit under this section. 

14 ‘‘(f) TERMINATION.—This section shall not apply to 

15 expenditures paid or incurred after December 31, 2014.’’. 

16 (b) CREDIT MADE PART OF GENERAL BUSINESS

17 CREDIT.—Section 38(b) of the Internal Revenue Code of 

18 1986 is amended by striking ‘‘plus’’ at the end of para19 graph (30), by striking the period at the end of paragraph 

20 (31) and inserting ‘‘, plus’’, and by adding at the end the 

21 following new paragraph: 

22 ‘‘(32) the EPA compliance credit determined 

23 under section 45O(a).’’. 

24 (c) CONFORMING AMENDMENTS.— 


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1 (1) Section 1016(a) of the Internal Revenue 

2 Code of 1986 is amended by striking ‘‘and’’ at the 

3 end of paragraph (36), by striking the period at the 

4 end of paragraph (37) and inserting ‘‘, and’’, and by 

5 inserting after paragraph (37) the following new 

6 paragraph: 

7 ‘‘(38) to the extent provided in section 

8 45O(e)(1).’’. 

9 (2) The table of sections for subpart D of part 

10 IV of subchapter A of chapter 1 of such Code is 

11 amended by adding at the end the following new 

12 item: 

‘‘Sec. 45O. Credit for compliance costs for concentrated animal feeding operations.’’. 

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

14 this section shall apply to expenditures paid or incurred 

15 after December 31, 2006. 

Æ 


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