II 

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. 

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 ‘‘Biogas Production In5 centive Act of 2009’’. 

6 SEC. 2. CREDIT FOR PRODUCTION OF BIOGAS FROM CER7 TAIN RENEWABLE FEEDSTOCKS. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 

10 1986 is amended by inserting after section 45Q the fol11 lowing new section: 


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1 ‘‘SEC. 45R. BIOGAS PRODUCED FROM CERTAIN RENEWABLE 

2 FEEDSTOCKS. 

3 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

4 the qualified biogas production credit for any taxable year 

5 is an amount equal to the product of— 

6 ‘‘(1) $4.27, and 

7 ‘‘(2) each million British thermal unit (mmBtu) 

8 of biogas— 

9 ‘‘(A) produced by the taxpayer— 

10 ‘‘(i) from qualified energy feedstock, 

11 and 

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

13 10-year period beginning on the date the 

14 facility was originally placed in service, and 

15 ‘‘(B) either— 

16 ‘‘(i) sold by the taxpayer to an unre17 lated person during the taxable year, or 

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

19 taxable year. 

20 ‘‘(b) DEFINITIONS.— 

21 ‘‘(1) BIOGAS.—The term ‘biogas’ means a gas 

22 that— 

23 ‘‘(A) is derived by processing qualified en24 ergy feedstock, and 

25 ‘‘(B) contains at least 50 percent methane. 

26 ‘‘(2) QUALIFIED ENERGY FEEDSTOCK.— 


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

2 energy feedstock’ means— 

3 ‘‘(i) manure of agricultural livestock, 

4 including litter, wood shavings, straw, rice 

5 hulls, bedding material, and other mate6 rials incidentally collected with the ma7 nure, 

8 ‘‘(ii) any nonhazardous, cellulosic, or 

9 other organic agricultural or food industry 

10 by-product or waste material that is de11 rived from— 

12 ‘‘(I) renewable biomass, 

13 ‘‘(II) harvesting residues, 

14 ‘‘(III) wastes or byproducts from 

15 fermentation processes, ethanol pro16 duction, biodiesel production, slaugh17 ter of agricultural livestock, food pro18 duction, food processing, or food serv19 ice, or 

20 ‘‘(IV) other organic wastes, by21 products, or sources, 

22 ‘‘(iii) solid wood waste materials, in23 cluding waste pallets, crates, dunnage, 

24 manufacturing and construction wood 


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1 wastes, and landscape or right-of-way tree 

2 trimmings, or 

3 ‘‘(iv) landfill waste, sewage waste 

4 treatment materials, or other organic ma5 terials. 

6 ‘‘(B) RENEWABLE BIOMASS.—The term 

7 ‘renewable biomass’ means— 

8 ‘‘(i) materials from pre-commercial 

9 thinning or invasive species from National 

10 Forest System land and public lands (as 

11 defined in section 103 of the Federal Land 

12 Policy and Management Act of 1976 (43 

13 U.S.C. 1702)) that— 

14 ‘‘(I) are byproducts of preventive 

15 treatments that are removed to reduce 

16 or contain disease or insect infestation 

17 to restore ecosystem health, 

18 ‘‘(II) would not otherwise be used 

19 for higher-value products, and 

20 ‘‘(III) are harvested in accord21 ance with applicable law and land 

22 management plans and the require23 ments for old-growth maintenance, 

24 restoration, and management direc25 tion of paragraphs (2), (3), and (4) of 


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1 subsection (e) of section 102 of the 

2 Healthy Forests Restoration Act of 

3 2003 (16 U.S.C. 6512) and large tree 

4 retention of subsection (f) of that sec5 tion, or 

6 ‘‘(ii) any organic matter that is avail7 able on a renewable or recurring basis 

8 from non-Federal land or land belonging to 

9 an Indian or Indian tribe that is held in 

10 trust by the United States or subject to a 

11 restriction against alienation imposed by 

12 the United States, including— 

13 ‘‘(I) renewable plant material 

14 (such as feed grains, other agricul15 tural commodities, other plants and 

16 trees, and algae), and 

17 ‘‘(II) waste material (such as 

18 crop residue, other vegetative waste 

19 material (including wood waste and 

20 wood residues), animal waste and by21 products (including fats, oils, greases, 

22 and manure), food waste, and yard 

23 waste). 

24 ‘‘(C) AGRICULTURAL LIVESTOCK.—The 

25 term ‘agricultural livestock’ means poultry, catVerDate Nov 24 2008 07:31 Jan 23, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S306.IS S306

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1 tle, sheep, swine, goats, horses, mules, and 

2 other equines. 

3 ‘‘(3) QUALIFIED FACILITY.—The term ‘quali4 fied facility’ means a facility that— 

5 ‘‘(A) uses anaerobic digesters, gasification, 

6 or other biological, chemical, or thermal proc7 esses to convert qualified energy feedstock into 

8 biogas, 

9 ‘‘(B) is owned by the taxpayer, 

10 ‘‘(C) is located in the United States, 

11 ‘‘(D) is originally placed in service before 

12 January 1, 2017, and 

13 ‘‘(E) the biogas output of which is— 

14 ‘‘(i) marketed through interconnection 

15 with a gas distribution or transmission 

16 pipeline, or 

17 ‘‘(ii) reasonably expected to be used in 

18 a quantity sufficient to offset the consump19 tion of 5,000 mmBtu annually of commer20 cially marketed fuel derived from coal, 

21 crude oil, natural gas, propane, or other 

22 fossil fuels. 

23 ‘‘(c) SPECIAL RULES.—For purposes of this sec24 tion— 


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1 ‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX2 PAYER.—In the case of a facility in which more than 

3 1 person has an ownership interest, except to the ex4 tent provided in regulations prescribed by the Sec5 retary, production from the qualified facility shall be 

6 allocated among such persons in proportion to their 

7 respective ownership interests in the gross sales 

8 from such qualified facility. 

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

10 treated as related to each other if such persons 

11 would be treated as a single employer under the reg12 ulations prescribed under section 52(b). In the case 

13 of a corporation which is a member of an affiliated 

14 group of corporations filing a consolidated return, 

15 such corporation shall be treated as selling biogas to 

16 an unrelated person if such biogas is sold to such a 

17 person by another member of such group. 

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

19 TRUSTS.—Under regulations prescribed by the Sec20 retary, rules similar to the rules of subsection (d) of 

21 section 52 shall apply. 

22 ‘‘(4) COORDINATION WITH CREDIT FROM PRO23 DUCING FUEL FROM A NONCONVENTIONAL

24 SOURCE.—The amount of biogas produced and sold 

25 or used by the taxpayer during any taxable year 


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1 which is taken into account under this section shall 

2 be reduced by the amount of biogas produced and 

3 sold by the taxpayer in such taxable year which is 

4 taken into account under section 45K. 

5 ‘‘(5) CREDIT ELIGIBILITY IN THE CASE OF GOV6 ERNMENT-OWNED FACILITIES.—In the case of any 

7 facility which produce biogas and which is owned by 

8 a governmental unit, subparagraph (B) of subsection 

9 (b)(3) shall be applied by substituting ‘is leased or 

10 operated by the taxpayer’ for ‘is owned by the tax11 payer’. 

12 ‘‘(d) SPECIAL RULE FOR PUBLIC-PRIVATE PART13 NERSHIPS.— 

14 ‘‘(1) IN GENERAL.—In the case of facility which 

15 is owned by a public-private partnership, any quali16 fied public entity which is a member of such part17 nership may transfer such entity’s allocation of the 

18 credit under subsection (a) to any non-public entity 

19 which is a member of such partnership, except that 

20 the aggregate allocations of such credit claimed by 

21 such non-public entity shall be subject to the limita22 tions under subsections (b) and (c) and section 

23 38(c). 

24 ‘‘(2) QUALIFIED PUBLIC ENTITY.—For pur25 poses of this subsection, the term ‘qualified public 


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1 entity’ means a Federal, State, or local government 

2 entity, or any political subdivision thereof, or a coop3 erative organization described in section 1381(a). 

4 ‘‘(3) VERIFICATION OF TRANSFER OF ALLOCA5 TION.—A qualified public entity that makes a trans6 fer under paragraph (1), and a non-public entity 

7 that receives an allocation under such a transfer, 

8 shall provide verification of such transfer in such 

9 manner and at such time as the Secretary shall pre10 scribe. 

11 ‘‘(e) ADJUSTMENT BASED ON INFLATION.— 

12 ‘‘(1) IN GENERAL.—The $4.27 amount under 

13 subsection (b)(1) shall be adjusted by multiplying 

14 such amount by the inflation adjustment factor for 

15 the calendar year in which the sale occurs. If any 

16 amount as increased under the preceding sentence is 

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

18 rounded to the nearest multiple of 0.1 cent. 

19 ‘‘(2) COMPUTATION OF INFLATION ADJUST20 MENT FACTOR.— 

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

22 not later than April 1 of each calendar year, de23 termine and publish in the Federal Register the 

24 inflation adjustment factor in accordance with 

25 this paragraph. 


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1 ‘‘(B) INFLATION ADJUSTMENT FACTOR.— 

2 The term ‘inflation adjustment factor’ means, 

3 with respect to a calendar year, a fraction the 

4 numerator of which is the GDP implicit price 

5 deflator for the preceding calendar year and the 

6 denominator of which is the GDP implicit price 

7 deflator for calendar year 2008. The term 

8 ‘GDP implicit price deflator’ means the most 

9 recent revision of the implicit price deflator for 

10 the gross domestic product as computed and 

11 published by the Department of Commerce be12 fore March 15 of the calendar year.’’. 

13 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec14 tion 38(b) of the Internal Revenue Code of 1986 is amend15 ed by striking ‘‘plus’’ at the end of paragraph (34), by 

16 striking the period at the end of paragraph (35) and in17 serting ‘‘, plus’’, and by adding at the end the following 

18 new paragraph: 

19 ‘‘(36) the qualified biogas production credit 

20 under section 45R(a).’’. 

21 (c) COORDINATION WITH CREDIT FOR PRODUCTION

22 ELECTRICITY FROM A RENEWABLE RESOURCE.—Section 

23 45(e) of the Internal Revenue Code of 1986 is amended 

24 by adding at the end the following new paragraph: 


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1 ‘‘(12) COORDINATION WITH CREDIT FOR PRO2 DUCTION OF BIOGAS.—The term ‘qualified facility’ 

3 shall not include any facility which produces elec4 tricity from biogas the production from which is al5 lowed a credit under section 45R for such taxable 

6 year or any prior taxable year.’’. 

7 (d) CREDIT ALLOWED AGAINST AMT.—Section 

8 38(c)(4)(B) of the Internal Revenue Code of 1986 is 

9 amended by redesignating clauses (vi) through (viii) as 

10 clauses (vii) through (ix), respectively, and by inserting 

11 after clause (v) the following new clause: 

12 ‘‘(vi) the credit determined under sec13 tion 45R.’’. 

14 (e) CLERICAL AMENDMENT.—The table of sections 

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

16 of the Internal Revenue Code of 1986 is amended by in17 serting after the item relating to section 45Q the following 

18 new item: 

‘‘Sec. 45R. Biogas produced from certain renewable feedstocks.’’. 

19 (f) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to biogas produced and sold or 

21 used in taxable years beginning after the date of the enact22 ment of this Act. 

Æ 


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