Agriculture Environmental Stewardship Act of 2019

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. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Agriculture Environ- 4 mental Stewardship Act of 2019’’. 5 VerDate Sep 11 2014 02:40 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3744.IH H3744 kjohnson on DSK79L0C42 with BILLS 2 •HR 3744 IH SEC. 2. FINDINGS. 1 Congress finds the following: 2 (1) Incentives and encouragement for the con- 3 servation and appropriate handling of nutrients con- 4 tained in organic matter are necessary. 5 (2) Biogas systems will save Federal, State, and 6 local taxpayers money by converting waste into use- 7 ful products, such as fuel, fertilizer, thermal heat, 8 feedstock for hydrogen fuel cells, and renewable 9 chemicals. 10 (3) Manure resource recovery systems will save 11 Federal, State, and local taxpayers money by recov- 12 ering the nutrients contained in organic matter from 13 their source, rather than recovering the nutrients 14 after they have entered landfills or waterways. 15 SEC. 3. ENERGY CREDIT FOR QUALIFIED BIOGAS PROP- 16 ERTY AND QUALIFIED MANURE RESOURCE 17 RECOVERY PROPERTY. 18 (a) IN GENERAL.—Section 48(a)(3)(A) of the Inter- 19 nal Revenue Code of 1986 is amended by striking ‘‘or’’ 20 at the end of clause (vi) and by adding at the end the 21 following new clauses: 22 ‘‘(viii) qualified biogas property, or 23 ‘‘(ix) qualified manure resource recov- 24 ery property,’’. 25 VerDate Sep 11 2014 02:40 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3744.IH H3744 kjohnson on DSK79L0C42 with BILLS 3 •HR 3744 IH (b) 30-PERCENT CREDIT.—Section 48(a)(2)(A)(i) of 1 such Code is amended by striking ‘‘and’’ at the end of 2 subclause (III), by striking ‘‘and’’ at the end of subclause 3 (IV), and by adding at the end the following new sub- 4 clauses: 5 ‘‘(V) qualified biogas property, 6 and 7 ‘‘(VI) qualified manure resource 8 recovery property, and’’. 9 (c) DEFINITIONS.—Section 48(c) of such Code is 10 amended by adding at the end the following new para- 11 graphs: 12 ‘‘(5) QUALIFIED BIOGAS PROPERTY.— 13 ‘‘(A) IN GENERAL.—The term ‘qualified 14 biogas property’ means property comprising a 15 system which— 16 ‘‘(i) uses anaerobic digesters, or other 17 biological, chemical, thermal, or mechanical 18 processes (alone or in combination), to 19 convert biomass (as defined in section 20 45K(c)(3)) into a gas which consists of not 21 less than 52 percent methane, and 22 ‘‘(ii) captures such gas for use as a 23 fuel. 24 VerDate Sep 11 2014 02:40 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3744.IH H3744 kjohnson on DSK79L0C42 with BILLS 4 •HR 3744 IH ‘‘(B) INCLUSION OF CERTAIN CLEANING 1 AND CONDITIONING EQUIPMENT.—Such term 2 shall include any property which cleans and 3 conditions the gas referred to in subparagraph 4 (A) for use as a fuel. 5 ‘‘(C) TERMINATION.—No credit shall be 6 determined under this section with respect to 7 any qualified biogas property for any period 8 after December 31, 2021. 9 ‘‘(6) QUALIFIED MANURE RESOURCE RECOVERY 10 PROPERTY.— 11 ‘‘(A) IN GENERAL.—The term ‘qualified 12 manure resource recovery property’ means 13 property comprising a system which uses phys- 14 ical, biological, chemical, thermal, or mechanical 15 processes to recover the nutrients nitrogen and 16 phosphorus from a non-treated digestate or ani- 17 mal manure by reducing or separating at least 18 50 percent of the concentration of such nutri- 19 ents, excluding any reductions during the incin- 20 eration, storage, composting, or field application 21 of the non-treated digestate or animal manure. 22 ‘‘(B) INCLUSION OF CERTAIN PROCESSING 23 EQUIPMENT.—Such term shall include— 24 VerDate Sep 11 2014 02:40 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3744.IH H3744 kjohnson on DSK79L0C42 with BILLS 5 •HR 3744 IH ‘‘(i) any property which is used to re- 1 cover the nutrients referred to in subpara- 2 graph (A), such as— 3 ‘‘(I) biological reactors, 4 ‘‘(II) crystallizers, 5 ‘‘(III) reverse osmosis mem- 6 branes and other water purifiers, 7 ‘‘(IV) evaporators, 8 ‘‘(V) distillers, 9 ‘‘(VI) decanter centrifuges, and 10 ‘‘(VII) equipment that facilitates 11 the process of dissolved air flotation, 12 ammonia stripping, gasification, or 13 ozonation, and 14 ‘‘(ii) any thermal drier which treats 15 the nutrients recovered by the processes re- 16 ferred to in subparagraph (A). 17 ‘‘(C) TERMINATION.—No credit shall be 18 determined under this section with respect to 19 any qualified manure resource recovery prop- 20 erty for any period after December 31, 2021.’’. 21 (d) DENIAL OF DOUBLE BENEFIT FOR QUALIFIED 22 BIOGAS PROPERTY.—Section 45(e) of such Code is 23 amended by adding at the end the following new para- 24 graph: 25 VerDate Sep 11 2014 02:40 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3744.IH H3744 kjohnson on DSK79L0C42 with BILLS 6 •HR 3744 IH ‘‘(12) COORDINATION WITH ENERGY CREDIT 1 FOR QUALIFIED BIOGAS PROPERTY.—The term 2 ‘qualified facility’ shall not include any facility which 3 produces electricity from gas produced by qualified 4 biogas property (as defined in section 48(c)(5)) if a 5 credit is determined under section 48 with respect to 6 such property for the taxable year or any prior tax- 7 able year.’’. 8 (e) EFFECTIVE DATE.—The amendments made by 9 this section shall apply to periods after December 31, 10 2018, in taxable years ending after such date, under rules 11 similar to the rules of section 48(m) of such Code (as in 12 effect on the day before the date of the enactment of the 13 Revenue Reconciliation Act of 1990). 14 SEC. 4. RENEWABLE ENERGY BONDS RELATING TO BIOGAS 15 PROPERTY AND MANURE RESOURCE RECOV- 16 ERY PROPERTY. 17 (a) IN GENERAL.—Part IV of subchapter A of chap- 18 ter 1 of the Internal Revenue Code of 1986 is amended 19 by adding at the end the following: 20 ‘‘Subpart H—Nonrefundable Credit to Holders of 21 Certain Bonds 22 ‘‘Sec. 54. Credit to holders of qualified renewable energy bonds. VerDate Sep 11 2014 02:40 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6211 E:\BILLS\H3744.IH H3744 kjohnson on DSK79L0C42 with BILLS 7 •HR 3744 IH ‘‘SEC. 54. CREDIT TO HOLDERS OF QUALIFIED RENEWABLE 1 ENERGY BONDS. 2 ‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 3 a qualified renewable energy bond on one or more credit 4 allowance dates of the bond during any taxable year, there 5 shall be allowed as a credit against the tax imposed by 6 this chapter for the taxable year an amount equal to 70 7 percent of the sum of the credits determined under sub- 8 section (b) with respect to such dates. 9 ‘‘(b) AMOUNT OF CREDIT.— 10 ‘‘(1) IN GENERAL.—The amount of the credit 11 determined under this subsection with respect to any 12 credit allowance date for a qualified renewable en- 13 ergy bond is 25 percent of the annual credit deter- 14 mined with respect to such bond. 15 ‘‘(2) ANNUAL CREDIT.—The annual credit de- 16 termined with respect to any qualified renewable en- 17 ergy bond is the product of— 18 ‘‘(A) the applicable credit rate, multiplied 19 by 20 ‘‘(B) the outstanding face amount of the 21 bond. 22 ‘‘(3) APPLICABLE CREDIT RATE.—For purposes 23 of paragraph (2), the applicable credit rate is the 24 rate which the Secretary estimates will permit the 25 issuance of qualified renewable energy bonds with a 26 VerDate Sep 11 2014 02:40 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3744.IH H3744 kjohnson on DSK79L0C42 with BILLS 8 •HR 3744 IH specified maturity or redemption date without dis- 1 count and without interest cost to the qualified 2 issuer. The applicable credit rate with respect to any 3 qualified renewable energy bond shall be determined 4 as of the first day on which there is a binding, writ- 5 ten contract for the sale or exchange of the bond. 6 ‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE- 7 DEMPTION.—In the case of a bond which is issued 8 during the 3-month period ending on a credit allow- 9 ance date, the amount of the credit determined 10 under this subsection with respect to such credit al- 11 lowance date shall be a ratable portion of the credit 12 otherwise determined based on the portion of the 3- 13 month period during which the bond is outstanding. 14 A similar rule shall apply when the bond is redeemed 15 or matures. 16 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— 17 ‘‘(1) IN GENERAL.—The credit allowed under 18 subsection (a) for any taxable year shall not exceed 19 the excess of— 20 ‘‘(A) the sum of the regular tax liability 21 (as defined in section 26(b)) plus the tax im- 22 posed by section 55, over 23 VerDate Sep 11 2014 02:40 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3744.IH H3744 kjohnson on DSK79L0C42 with BILLS 9 •HR 3744 IH ‘‘(B) the sum of the credits allowable 1 under this part (other than subpart C and this 2 subpart). 3 ‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 4 credit allowable under subsection (a) exceeds the 5 limitation imposed by paragraph (1) for such taxable 6 year, such excess shall be carried to the succeeding 7 taxable year and added to the credit allowable under 8 subsection (a) for such taxable year (determined be- 9 fore the application of paragraph (1) for such suc- 10 ceeding taxable year). 11 ‘‘(d) QUALIFIED RENEWABLE ENERGY BONDS.—For 12 purposes of this subpart— 13 ‘‘(1) IN GENERAL.—The term ‘qualified renew- 14 able energy bonds’ means any bond issued as part 15 of an issue if— 16 ‘‘(A) the bond is issued by a qualified 17 issuer pursuant to an allocation by the Sec- 18 retary to such issuer of a portion of the na- 19 tional renewable energy bond limitation under 20 paragraph (2), 21 ‘‘(B) 100 percent of the available project 22 proceeds of such issue are to be used for capital 23 expenditures incurred by a governmental body, 24 public power provider, or cooperative electric 25 VerDate Sep 11 2014 02:40 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3744.IH H3744 kjohnson on DSK79L0C42 with BILLS 10 •HR 3744 IH company for property owned by the public 1 power provider, a governmental body, or a coop- 2 erative electric company, as the case may be, 3 that is— 4 ‘‘(i) qualified biogas property (as de- 5 fined in section 48(c)(5)), or 6 ‘‘(ii) a qualified manure resource re- 7 covery property (as defined in section 8 48(c)(6)), 9 ‘‘(C) the qualified issuer designates such 10 bond for purposes of this section, and 11 ‘‘(D) the issue meets the requirements of 12 this section. 13 ‘‘(2) LIMITATION ON AMOUNT OF BONDS DES- 14 IGNATED.— 15 ‘‘(A) IN GENERAL.—The maximum aggre- 16 gate face amount of bonds which may be des- 17 ignated under paragraph (1)(C) by any issuer 18 shall not exceed the limitation amount allocated 19 under this paragraph to such issuer. 20 ‘‘(B) NATIONAL LIMITATION ON AMOUNT 21 OF BONDS DESIGNATED.—There is a national 22 renewable energy bond limitation of 23 $800,000,000 which shall be allocated by the 24 VerDate Sep 11 2014 02:40 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3744.IH H3744 kjohnson on DSK79L0C42 with BILLS 11 •HR 3744 IH Secretary as provided in subparagraph (C), ex- 1 cept that— 2 ‘‘(i) not more than 331⁄3 percent 3 thereof may be allocated to projects of 4 public power providers, 5 ‘‘(ii) not more than 331⁄3 percent 6 thereof may be allocated to projects of gov- 7 ernmental bodies, and 8 ‘‘(iii) not more than 331⁄3 percent 9 thereof may be allocated to projects of co- 10 operative electric companies. 11 ‘‘(C) METHOD OF ALLOCATION.— 12 ‘‘(i) ALLOCATION AMONG PUBLIC 13 POWER PROVIDERS.—After the Secretary 14 determines the projects of public power 15 providers which are appropriate for receiv- 16 ing an allocation of the national renewable 17 energy bond limitation, the Secretary shall, 18 to the maximum extent practicable, make 19 allocations among such projects in such 20 manner that the amount allocated to each 21 such project bears the same ratio to the 22 cost of such project as the limitation under 23 subparagraph (B)(i) bears to the cost of all 24 such projects. 25 VerDate Sep 11 2014 02:40 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3744.IH H3744 kjohnson on DSK79L0C42 with BILLS 12 •HR 3744 IH ‘‘(ii) ALLOCATION AMONG GOVERN- 1 MENTAL BODIES AND COOPERATIVE ELEC- 2 TRIC COMPANIES.—The Secretary shall 3 make allocations of the amount of the na- 4 tional renewable energy bond limitation de- 5 scribed in subparagraphs (B)(ii) and 6 (B)(iii) among projects of governmental 7 bodies and cooperative electric companies, 8 respectively, in such manner as the Sec- 9 retary determines appropriate. 10 ‘‘(e) DEFINITIONS.—For purposes of this section— 11 ‘‘(1) QUALIFIED ISSUER.—The term ‘qualified 12 issuer’ means a public power provider, a cooperative 13 electric company, a governmental body, a renewable 14 energy bond lender, or a not-for-profit electric utility 15 which has received a loan or loan guarantee under 16 the Rural Electrification Act. 17 ‘‘(2) PUBLIC POWER PROVIDER.—The term 18 ‘public power provider’ means a State utility with a 19 service obligation, as such terms are defined in sec- 20 tion 217 of the Federal Power Act (as in effect on 21 the date of the enactment of this paragraph). 22 ‘‘(3) GOVERNMENTAL BODY.—The term ‘gov- 23 ernmental body’ means any State or Indian tribal 24 government, or any political subdivision thereof. 25 VerDate Sep 11 2014 02:40 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H3744.IH H3744 kjohnson on DSK79L0C42 with BILLS 13 • [Text truncated for display. 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