I 
110TH CONGRESS 
1ST SESSION H. R. 2038 
To promote biogas production, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 25, 2007 
Mr. KIND (for himself and Mr. NUNES) introduced the following bill; which 
was referred to the Committee on Ways and Means, and in addition to 
the Committee on Agriculture, 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 promote biogas production, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Biogas Production In-
centive Act of 2007’’. 
SEC. 2. CREDIT FOR PRODUCTION OF BIOGAS FROM CER-
TAIN RENEWABLE FEEDSTOCKS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
1986 is amended by inserting after section 40A the fol-
lowing new section: 
‘‘SEC. 40B. 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 
units 
(mmBtu) of biogas— 
‘‘(A) produced by the taxpayer— 
‘‘(i) from qualified energy feedstock, 
and 
‘‘(ii) at a qualified facility during the 
7-year period beginning on the date the fa-
cility was originally placed in service, and 
‘‘(B) either— 
‘‘(i) sold by the taxpayer to an unre-
lated 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— 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
‘‘(A) is derived by processing qualified en-
ergy feedstock in an anaerobic digester, and 
‘‘(B) contains— 
‘‘(i) at least 60 percent methane, and 
‘‘(ii) carbon dioxide and trace gases. 
‘‘(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 mate-
rials incidentally collected with the ma-
nure, 
‘‘(ii) any nonhazardous, cellulosic, or 
other organic agricultural or food industry 
byproduct or waste material that is derived 
from— 
‘‘(I) harvesting residues, 
‘‘(II) wastes or byproducts from 
fermentation processes, ethanol pro-
duction, biodiesel production, slaugh-
ter of agricultural livestock, food pro-
duction, food processing, or food serv-
ice, or 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
‘‘(III) other organic wastes, by-
products, or sources, or 
‘‘(iii) solid wood waste materials, in-
cluding waste pallets, crates, dunnage, 
manufacturing 
and 
construction 
wood 
wastes, and landscape or right-of-way tree 
trimmings. 
‘‘(B) EXCLUSIONS.—The term ‘qualified 
energy feedstock’ does not include— 
‘‘(i) pressure-treated, chemically-treat-
ed, or painted wood wastes, 
‘‘(ii) municipal solid waste, 
‘‘(iii) landfills, or 
‘‘(iv) paper that is commonly recycled. 
‘‘(C) 
AGRICULTURAL
LIVESTOCK.—The 
term ‘agricultural livestock’ means poultry, cat-
tle, sheep, swine, goats, horses, mules, and 
other equines. 
‘‘(3) QUALIFIED FACILITY.—The term ‘quali-
fied facility’ means a facility that— 
‘‘(A) uses anaerobic digesters to process 
qualified energy feedstock into biogas, 
‘‘(B) is owned by the taxpayer, 
‘‘(C) is located in the United States, 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
‘‘(D) is originally placed in service before 
January 1, 2018, and 
‘‘(E) the biogas output of which is— 
‘‘(i) marketed through interconnection 
with a gas distribution or transmission 
pipeline, or 
‘‘(ii) used on-site or off-site in a quan-
tity that is sufficient to offset the con-
sumption of at least 6,570 mmBtu annu-
ally of commercially–marketed fuel derived 
from coal, crude oil, natural gas, propane, 
or other fossil fuel. 
‘‘(c) SPECIAL RULES.—For purposes of this sec-
tion— 
‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX-
PAYER.—In the case of a facility in which more than 
1 person has an ownership interest, except to the ex-
tent provided in regulations prescribed by the Sec-
retary, 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 reg-
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
ulations 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 Sec-
retary, rules similar to the rules of subsection (d) of 
section 52 shall apply. 
‘‘(4) COORDINATION WITH CREDIT FROM PRO-
DUCING
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 GOV-
ERNMENT-OWNED
FACILITIES
USING
POULTRY 
WASTE.—In the case of a facility using poultry 
waste to produce biogas and owned by a govern-
mental 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’. 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
‘‘(d) TRANSFERABILITY OF CREDIT.— 
‘‘(1) IN GENERAL.—A taxpayer may transfer 
the credit under this section through an assignment 
to any person. Such transfer may be revoked only 
with the consent of the Secretary. 
‘‘(2) REGULATIONS.—The Secretary shall pre-
scribe such regulations as necessary to ensure that 
any credit transferred under paragraph (1) is 
claimed once and not reassigned by such other per-
son. 
‘‘(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
ADJUST-
MENT FACTOR.— 
‘‘(A) IN GENERAL.—The Secretary shall, 
not later than April 1 of each calendar year, de-
termine and publish in the Federal Register the 
inflation adjustment factor in accordance with 
this paragraph. 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
‘‘(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 2007. 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 be-
fore March 15 of the calendar year.’’. 
(b) CREDIT TREATED AS BUSINESS CREDIT.—Sec-
tion 38(b) of the Internal Revenue Code of 1986 is amend-
ed by striking ‘‘plus’’ at the end of paragraph (30), by 
striking the period at the end of paragraph (31) and in-
serting ‘‘, plus’’, and by adding at the end the following 
new paragraph: 
‘‘(32) the qualified biogas production credit 
under section 40B(a).’’. 
(c) CREDIT
ALLOWED
AGAINST
AMT.—Section 
38(c)(4)(B) of the Internal Revenue Code of 1986 is 
amended by striking ‘‘and’’ at the end of clause (i), by 
striking the period at the end of clause (ii)(II) and insert-
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
ing ‘‘, and’’, and by adding at the end the following new 
clause: 
‘‘(iii) the credit determined under sec-
tion 40B.’’. 
(d) 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 in-
serting after the item relating to section 40A the following 
new item: 
‘‘Sec. 40B. Biogas produced from certain renewable feedstocks.’’. 
(e) 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 enact-
ment of this Act. 
SEC. 3. INCENTIVES FOR BIOGAS PRODUCTION. 
Title IX of the Farm Security and Rural Investment 
Act of 2002 (7 U.S.C. 8101 et seq.) is amended by adding 
at the end the following: 
‘‘SEC. 9012. COUNTER-CYCLICAL PAYMENTS FOR THE PRO-
DUCTION OF BIOGAS FROM CERTAIN RENEW-
ABLE FEEDSTOCK RESOURCES. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) AGRICULTURAL
LIVESTOCK.—The term 
‘agricultural livestock’ means— 
‘‘(A) poultry; 
‘‘(B) cattle; 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
‘‘(C) sheep; 
‘‘(D) swine; 
‘‘(E) goats; 
‘‘(F) horses; 
‘‘(G) mules; and 
‘‘(H) other equines. 
‘‘(2) BIOGAS.—The term ‘biogas’ means a gas 
that— 
‘‘(A) is produced at a qualified facility; 
‘‘(B) is derived by processing qualified en-
ergy feedstock in an anaerobic digester; and 
‘‘(C) contains— 
‘‘(i) at least 60 percent methane; and 
‘‘(ii) carbon dioxide and trace gases. 
‘‘(3) PROVIDER.—The term ‘provider’ means a 
provider of qualified energy feedstock, including a 
farmer, rancher, rural small business, agricultural 
cooperative, and partnership. 
‘‘(4) QUALIFIED BIOGAS PRODUCER.—The term 
‘qualified biogas producer’ means a person that op-
erates a qualified facility. 
‘‘(5) QUALIFIED ENERGY FEEDSTOCK.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
energy feedstock’ means— 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
‘‘(i) manure of agricultural livestock, 
including litter, wood shavings, straw, rice 
hulls, bedding material, and other mate-
rials incidentally collected with the ma-
nure; 
‘‘(ii) any nonhazardous, cellulosic, or 
other organic agricultural or food industry 
byproduct or waste material that is derived 
from— 
‘‘(I) harvesting residues; 
‘‘(II) wastes or byproducts from 
fermentation processes, ethanol pro-
duction, biodiesel production, slaugh-
ter of agricultural livestock, food pro-
duction, food processing, or food serv-
ice; or 
‘‘(III) other organic wastes, by-
products, or sources; or 
‘‘(iii) solid wood waste materials, in-
cluding waste pallets, crates, dunnage, 
manufacturing 
and 
construction 
wood 
wastes, and landscape or right-of-way tree 
trimmings. 
‘‘(B) EXCLUSIONS.—The term ‘qualified 
energy feedstock’ does not include— 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
‘‘(i) pressure-treated, chemically-treat-
ed, or painted wood wastes; 
‘‘(ii) municipal solid waste; 
‘‘(iii) landfills; or 
‘‘(iv) paper that is commonly recycled. 
‘‘(6) QUALIFIED FACILITY.—The term ‘quali-
fied facility’ means a facility that— 
‘‘(A) uses anaerobic digesters to process 
qualified energy feedstock into biogas; 
‘‘(B) is located in the United States; and 
‘‘(C) the biogas output of which is— 
‘‘(i) marketed through interconnection 
with a gas distribution or transmission 
pipeline; or 
‘‘(ii) used on-site or off-site in a quan-
tity that is sufficient to offset the con-
sumption of at least 50,000 mmBtu annu-
ally of commercially–marketed fuel derived 
from coal, crude oil, natural gas, propane, 
or other fossil fuel. 
‘‘(b) COUNTER-CYCLICAL PAYMENTS.— 
‘‘(1) IN
GENERAL.—The Secretary shall use 
such funds of the Commodity Credit Corporation as 
are necessary to make counter-cyclical payments in 
accordance with this subsection to qualified biogas 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
producers for qualified facilities placed in service be-
fore December 31, 2013. 
‘‘(2) PAYMENT AMOUNT.— 
‘‘(A) IN
GENERAL.—The amount of the 
payments described in paragraph (1) shall be 
equal to the product obtained by multiplying— 
‘‘(i) the applicable amount calculated 
under subparagraph (B); and 
‘‘(ii) the mmBtus of biogas that is 
produced in any year during the 10–year 
period beginning on the date on which the 
qualified facility is placed into service. 
‘‘(B) APPLICABLE AMOUNT.—The applica-
ble amount under subparagraph (A)(i) is the 
amount equal to 1.0 cent for every 1.0 cent 
that the annual average of average daily prices 
of natural gas on the Henry Hub Natural Gas 
Futures Market of the New York Mercantile 
Exchange is below $7.50 per mmBtu, as ad-
justed for inflation by the Secretary. 
‘‘(3) PAYMENT
TIMING.—The Secretary shall 
make payments under this subsection once per cal-
endar year, on a date determined by the Secretary. 
‘‘(4) USE OF PAYMENTS.—As a condition on re-
ceipt of payments under this subsection, a qualified 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
biogas producer shall agree to use the payments first 
to pay down loans and other obligations incurred by 
the qualified biogas producer for the physical facili-
ties designed, built, and used to produce biogas. 
‘‘(c) TRANSPORTATION COSTS.— 
‘‘(1) DEFINITION OF SECRETARY.—In this sub-
section, the term ‘Secretary’ means the Secretary, 
acting in consultation with the Secretary of Energy 
and the Administrator of the Environmental Protec-
tion Agency. 
‘‘(2) IN GENERAL.—The Secretary shall make 
loans, loan guarantees, and grants to providers— 
‘‘(A) for collecting qualified energy feed-
stock and transporting the feedstock to a quali-
fied facility that produces biogas using manure 
of agricultural livestock from multiple, smaller 
farming operations, as determined by the Sec-
retary; or 
‘‘(B) for the purchase or construction of 
equipment or facilities used in connection with 
the collection and transportation under sub-
paragraph (A). 
‘‘(3) ELIGIBILITY.—To be eligible to receive a 
grant under this subsection, a provider shall— 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
‘‘(A) demonstrate financial need, as deter-
mined by the Secretary; and 
‘‘(B) submit to the Secretary a description 
of— 
‘‘(i) the terms and conditions of the 
commitment by a qualified facility to ac-
cept the qualified energy feedstock from 
the provider; 
‘‘(ii) the location of the qualified facil-
ity; and 
‘‘(iii) a plan for environmentally-sound 
and 
economically-sustainable 
continued 
transportation of the qualified energy feed-
stock. 
‘‘(4) COST SHARING.— 
‘‘(A) IN GENERAL.— 
‘‘(i) GRANTS.—The amount of a grant 
under this subsection shall not exceed 75 
percent of the annual cost of the activity 
funded under paragraph (2)(A). 
‘‘(ii) MAXIMUM
AMOUNT
OF
COM-
BINED GRANT AND LOAN.—The combined 
amount of a grant and loan made or guar-
anteed for purchase or construction of 
equipment used in connection with trans-
VerDate Aug 31 2005 
00:12 Apr 27, 2007
Jkt 059200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
port of qualified energy feedstock shall not 
exceed 75 percent of the cost of the activ-
ity funded under paragraph (2)(B). 
‘‘(B) 
FACTORS.—In 
determining 
the 
amount of a grant or loan, the Secretary shall 
take into consideration, as applicable— 
‘‘(i) the size, location, and biogas pro-
duction efficiency of the qualified facility; 
‘‘(ii) the estimated quantity of biogas 
to be produced by the qualified facility; 
‘‘(iii) the number of farms, ranches, 
or small rural businesses within a reason-
able distance of the qualified facility, as 
determined by the Secretary; 
‘‘(iv) the expected environmental bene-
fits of producing biogas from qualified en-
ergy feedstocks by the qualified facility; 
and 
‘‘(v) such other factors as the Sec-
retary determines to be appropriate. 
‘‘(5) INTEREST RATE.— 
‘‘(A) IN GENERAL.—A loan made by the 
Secretary under this subsection shall bear inter-
est at the rate equivalent to the rate of interest 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
charged on Treasury securities of comparable 
maturity on the date the loan is approved. 
‘‘(B) DURATION.—The interest rate for 
each loan will remain in effect for the term of 
the loan. 
‘‘(6) FUNDING.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of law, on October 1, 2007, and 
on each October 1 thereafter through October 
1, 2011, out of any funds in the Treasury not 
otherwise appropriated, the Secretary of the 
Treasury shall transfer to the Secretary to 
carry out this subsection $10,000,000, to re-
main available until expended. 
‘‘(B) RECEIPT
AND
ACCEPTANCE.—The 
Secretary shall be entitled to receive, shall ac-
cept, and shall use to carry out this subsection 
the funds transferred under subparagraph (A), 
without further appropriation. 
‘‘(d) IMPLEMENTATION.— 
‘‘(1) IN GENERAL.—Not later than 180 days 
after the date of enactment of this section, the Sec-
retary shall promulgate such regulations as are nec-
essary to implement this section, including a notice 
describing the method by which the Secretary deter-
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS
mines and adjusts the average price under sub-
section (b)(2)(B). 
‘‘(2) PROCEDURE.—The promulgation of the 
regulations and administration of this section shall 
be made without regard to— 
‘‘(A) the notice and comment provisions of 
section 553 of title 5, United States Code; 
‘‘(B) the Statement of Policy of the Sec-
retary of Agriculture effective July 24, 1971 
(36 Fed. Reg. 13804), relating to notices of 
proposed rulemaking and public participation in 
rulemaking; and 
‘‘(C) chapter 35 of title 44, United States 
Code (commonly known as the ‘Paperwork Re-
duction Act’).’’. 
Æ 
VerDate Aug 31 2005 
21:17 Apr 26, 2007
Jkt 059200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6301
E:\BILLS\H2038.IH
H2038
ycherry on PROD1PC64 with BILLS