[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3654 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 3654

  To amend the Internal Revenue Code to allow a credit against income 
  tax, or, in the alternative, a special depreciation allowance, for 
 reuse and recycling property, to provide for tax-exempt financing of 
              recycling equipment, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 13, 2006

  Mr. Jeffords (for himself and Mr. Carper) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code to allow a credit against income 
  tax, or, in the alternative, a special depreciation allowance, for 
 reuse and recycling property, to provide for tax-exempt financing of 
              recycling equipment, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Recycling Investment Saves Energy'' 
or the ``RISE Act''.

SEC. 2. FINDINGS.

    The Senate finds the following:
            (1) Recycling means business in the United States, with 
        more than 56,000 reuse and recycling establishments that employ 
        over 1.1 million people, generating an annual payroll of nearly 
        $37 billion, and grossing over $236 billion in annual revenues. 
        On a per-ton basis, sorting and processing recyclables alone 
        sustain 10 times more jobs than landfilling or incineration.
            (2) By reducing the need to extract and process virgin raw 
        materials into manufacturing feedstock, reuse and recycling 
        helps achieve significant energy savings. For example:
                    (A) Taken together, the amount of energy wasted 
                from not recycling aluminum and steel cans, paper, 
                printed materials, glass, and plastic equals the annual 
                output of 15 medium sized power plants.
                    (B) The reuse of 500 steel drums per week yields 6 
                trillion Btu's per year, which is enough energy savings 
                to power a city the size of Colorado Springs, Colorado, 
                for 1 year.
            (3) Unfortunately, the United States recycling rate of many 
        consumer commodities, including aluminum, glass, and plastic, 
        are stagnant or declining, and businesses that rely on recycled 
        feedstock are finding it difficult to obtain the quantity and 
        quality of recycled materials needed. Increasingly, United 
        States manufacturing facilities that rely on recycled feedstock 
        are closing or forced to re-tool to use virgin materials.
            (4) The environmental impacts from reuse and recycling are 
        significant. Increased reuse and recycling would produce 
        significant environmental benefits, such as cleaner air, safer 
        water, and reduced production costs. For example:
                    (A) Between 2 and 5 percent of the waste stream is 
                reusable. Reuse prevents waste creation and adverse 
                impacts from disposal.
                    (B) On a per-ton basis, recycling of: office paper 
                prevents 60 pounds of air pollutants from being 
                released, saves 7,000 gallons of water, and 3.3 cubic 
                yards of landfill space; aluminum saves 10 cubic yards 
                of landfill space; plastic saves 30 cubic yards of 
                landfill space; glass prevents 7.5 pounds of air 
                pollutants from being released and saves 2 cubic yards 
                of landfill space; and steel saves 4 cubic yards of 
                landfill space.
            (5) A national investment in the reuse and recycling 
        industries is needed to preserve and expand America's reuse and 
        recycling infrastructure.

SEC. 3. CREDIT FOR REUSE AND RECYCLING PROPERTY.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business-related 
credits) is amended by adding at the end the following new section:

``SEC. 45N. CREDIT FOR QUALIFIED REUSE AND RECYCLING PROPERTY.

    ``(a) Allowance of Credit.--For purposes of section 38, the 
qualified reuse and recycling property credit determined under this 
section for the taxable year is an amount equal to 15 percent of the 
amount paid or incurred during the taxable year for the cost of 
qualified reuse and recycling property placed in service or leased by 
the taxpayer.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Qualified reuse and recycling property.--
                    ``(A) In general.--The term `qualified reuse and 
                recycling property' means any machinery and equipment 
                (not including buildings or real estate), along with 
                all appurtenances thereto, including software necessary 
                to operate such equipment, which is used exclusively to 
                collect, distribute, or recycle qualified reuse and 
                recyclable materials.
                    ``(B) Exclusion.--Such term does not include 
                rolling stock or other equipment used to transport 
                reuse and recyclable materials.
            ``(2) Qualified reuse and recyclable materials.--
                    ``(A) In general.--The term `qualified reuse and 
                recyclable materials' means scrap plastic, scrap 
                textiles, scrap rubber, scrap packaging, recovered 
                fiber, scrap ferrous and nonferrous metals, or 
                electronic waste generated by an individual or 
                business.
                    ``(B) Electronic waste.--For purposes of 
                subparagraph (A), the term `electronic waste' means--
                            ``(i) any cathode ray tube, flat panel 
                        screen, or similar video display device with a 
                        screen size greater than 4 inches measured 
                        diagonally, or
                            ``(ii) any central processing unit.
            ``(3) Recycling or recycle.--The term `recycling' or 
        `recycle' means that process (including sorting) by which worn 
        or superfluous materials are manufactured or processed into 
        specification grade commodities that are suitable for use as a 
        replacement or substitute for virgin materials in manufacturing 
        tangible consumer and commercial products, including packaging.
    ``(c) Amount Paid or Incurred.--For purposes of this section--
            ``(1) In general.--The term `amount paid or incurred' 
        includes installation costs.
            ``(2) Lease payments.--In the case of the leasing of 
        qualified reuse and recycling property by the taxpayer, the 
        term `amount paid or incurred' means the amount of the lease 
        payments due to be paid during the term of the lease occurring 
        during the taxable year other than such portion of such lease 
        payments attributable to interest, insurance, and taxes.
            ``(3) Grants, etc. excluded.--The term `amount paid or 
        incurred' shall not include any amount to the extent such 
        amount is funded by any grant, contract, or otherwise by 
        another person (or any governmental entity).
    ``(d) Election to Have Section Not Apply.--A taxpayer may elect for 
any taxable year to have this section not apply with respect to any 
qualified recycling property specified by the taxpayer.
    ``(e) Other Tax Deductions and Credits Available for Portion of 
Cost Not Taken Into Account for Credit Under This Section.--No 
deduction or other credit under this chapter shall be allowed with 
respect to the amount of the credit determined under this section.
    ``(f) Basis Adjustments.--For purposes of this subtitle, if a 
credit is allowed under this section for any amount paid or incurred 
with respect to any property, the increase in the basis of such 
property which would (but for this subsection) result from such 
expenditure shall be reduced by the amount of the credit so allowed.''.
    (b) Conforming Amendments.--
            (1) Credit made part of general business credit.--
        Subsection (b) of section 38 of the Internal Revenue Code of 
        1986 is amended by striking ``and'' at the end of paragraph 
        (29), by striking the period at the end of paragraph (30) and 
        inserting ``, plus'', and by adding at the end the following 
        new paragraph:
            ``(31) the qualified reuse and recycling property credit 
        determined under section 45N(a).''.
            (2) Subsection (a) of section 1016 of such Code is amended 
        by striking ``and'' at the end of paragraph (36), by striking 
        the period at the end of paragraph (37) and inserting ``; 
        and'', and by adding at the end the following new paragraph:
            ``(38) to the extent provided in section 45N(f), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 45N.''.
            (3) Section 6501(m) of such Code is amended by inserting 
        ``45N(d),'' after ``45C(d)(4),''.
            (4) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 45M the following new item:

``Sec. 45N. Credit for qualified reuse and recycling property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 4. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN REUSE AND RECYCLING 
              PROPERTY.

    (a) In General.--Section 168 of the Internal Revenue Code of 1986 
(relating to accelerated cost recovery system) is amended by adding at 
the end the following new subsection:
    ``(l) Special Allowance for Certain Reuse and Recycling Property.--
            ``(1) In general.--In the case of any qualified reuse and 
        recycling property--
                    ``(A) the depreciation deduction provided by 
                section 167(a) for the taxable year in which such 
                property is placed in service shall include an 
                allowance equal to 50 percent of the adjusted basis of 
                the qualified reuse and recycling property, and
                    ``(B) the adjusted basis of the qualified reuse and 
                recycling property shall be reduced by the amount of 
                such deduction before computing the amount otherwise 
                allowable as a depreciation deduction under this 
                chapter for such taxable year and any subsequent 
                taxable year.
            ``(2) Qualified reuse and recycling property.--For purposes 
        of this subsection--
                    ``(A) In general.--The term `qualified reuse and 
                recycling property' means any qualified reuse and 
                recycling property (as defined in section 45N(b)(1))--
                            ``(i) to which this section applies,
                            ``(ii) which has a useful life of at least 
                        5 years,
                            ``(iii) the original use of which commences 
                        with the taxpayer after December 31, 2005,
                            ``(iv) which is--
                                    ``(I) acquired by purchase (as 
                                defined in section 179(d)(2)) by an 
                                eligible taxpayer after December 31, 
                                2005, but only if no written binding 
                                contract for the acquisition was in 
                                effect before December 31, 2005, or
                                    ``(II) acquired by the eligible 
                                taxpayer pursuant to a written binding 
                                contract which was entered into after 
                                December 31, 2005.
                    ``(B) Exceptions.--
                            ``(i) Alternative depreciation property.--
                        The term `qualified property' shall not include 
                        any property to which the alternative 
                        depreciation system under subsection (g) 
                        applies, determined without regard to paragraph 
                        (7) of subsection (g) (relating to election to 
                        have system apply).
                            ``(ii) Election out.--If a taxpayer makes 
                        an election under this clause with respect to 
                        any class of property for any taxable year, 
                        this subsection shall not apply to all property 
                        in such class placed in service during such 
                        taxable year.
                    ``(C) Special rules.--
                            ``(i) Self-constructed property.--In the 
                        case of an eligible taxpayer manufacturing, 
                        constructing, or producing property for the 
                        eligible taxpayer's own use, the requirements 
                        of clause (iv) of subparagraph (A) shall be 
                        treated as met if the eligible taxpayer begins 
                        manufacturing, constructing, or producing the 
                        property after December 31, 2005.
                            ``(ii) Sale-leasebacks.--For purposes of 
                        subparagraph (A)(iii), if property--
                                    ``(I) is originally placed in 
                                service after December 31, 2005, by a 
                                person, and
                                    ``(II) sold and leased back by such 
                                person within 3 months after the date 
                                such property was originally placed in 
                                service,
                        such property shall be treated as originally 
                        placed in service not earlier than the date on 
                        which such property is used under the leaseback 
                        referred to in subclause (II).
                    ``(D) Deduction allowed in computing minimum tax.--
                For purposes of determining alternative minimum taxable 
                income under section 55, the deduction under subsection 
                (a) for qualified reuse and recycling property shall be 
                determined under this section without regard to any 
                adjustment under section 56.
            ``(3) Eligible taxpayer.--For purposes of this subsection, 
        the term `eligible taxpayer' means, with respect to any 
        qualified reuse and recycling property, any taxpayer which 
        elects not to have section 45N apply with respect to such 
        property.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2005.

SEC. 5. TAX-EXEMPT BOND FINANCING OF RECYCLING FACILITIES.

    (a) In General.--Section 142 of the Internal Revenue Code of 1986 
(defining exempt facility bond) is amended by adding at the end the 
following new subsection:
    ``(n) Solid Waste Disposal Facilities.--
            ``(1) In general.--For purposes of subsection (a)(6) only, 
        the term `solid waste disposal facilities' means any facility 
        used to perform a solid waste disposal function.
            ``(2) Solid waste disposal function.--
                    ``(A) In general.--For purposes of this subsection 
                only, the term `solid waste disposal function' means 
                the collection, separation, sorting, storage, 
                treatment, disassembly, handling, or processing of 
                solid waste in any manner designed to dispose of the 
                solid waste, including processing the solid waste into 
                a useful energy source or product.
                    ``(B) Extent of function.--For purposes of this 
                subsection only, the solid waste disposal function ends 
                at the later of--
                            ``(i) the point of final disposal of the 
                        solid waste,
                            ``(ii) immediately after the solid waste is 
                        incinerated to produce energy, or
                            ``(iii) the point at which the solid waste 
                        has been converted into a material or product 
                        that can be sold in the same manner as 
                        comparable material or product produced from 
                        virgin material.
                    ``(C) Functionally related and subordinate 
                facilities.--For purposes of this subsection only, in 
                the case of a facility used to perform both a solid 
                waste disposal function and another function--
                            ``(i) the costs of the facility allocable 
                        to the solid waste disposal function are 
                        determined using any reasonable method based 
                        upon facts and circumstances, and
                            ``(ii) if during the period that bonds 
                        issued as part of an issue described in 
                        subsection (a)(6) are outstanding with respect 
                        to any facility at least 65 percent of the 
                        materials processed in such facility are solid 
                        waste materials as measured by weight or 
                        volume, then all of the costs of the property 
                        used to perform such process are allocable to a 
                        solid waste disposal function.
            ``(3) Solid waste.--For purposes of this subsection only--
                    ``(A) In general.--The term `solid waste' means 
                garbage, refuse, or discarded solid materials, 
                including waste materials resulting from industrial, 
                commercial, agricultural, or community activities.
                    ``(B) Garbage, refuse or discarded solid 
                materials.--For purposes of subparagraph (A), the term 
                `garbage, refuse, or discarded solid materials' means 
                materials that are useless, unused, unwanted, or 
                discarded.
                    ``(C) Exclusion.--The term `solid waste' does not 
                include materials in domestic sewage, pollutants in 
                industrial or other water resources, or other liquid or 
                gaseous waste materials.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to bonds issued before, on, or after the date of the enactment of this 
Act.
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