Short title; amendment of 1986 Code; table of contents

(a)

Short title

This Act may be cited as the

Expanding Industrial Energy Efficiency Incentives Act of 2009

. (b)

Amendment of 1986 Code

Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. (c)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.

Sec. 2. Modifications in credit for combined heat and power system property.

Sec. 3. Motor energy efficiency improvement tax credit.

Sec. 4. Credit for replacement of CFC refrigerant chiller.

Sec. 5. Qualifying efficient industrial process water use project credit.

Modifications in credit for combined heat and power system property

(a)

Modification of certain capacity limitations

Subparagraph (B) of section 48(c)(3) is amended— (1)by striking 15 megawatts in clause (ii) and inserting 25 megawatts, (2)by striking 20,000 horsepower in clause (ii) and inserting 34,000 horsepower, and (3)by striking clause (iii). (b)

Nonapplication of certain rules

Subparagraph (C) of section 48(c)(3) is amended by adding at the end the following new clause:

(iv)

Nonapplication of certain rules

For purposes of determining if the term combined heat and power system property includes technologies which generate electricity or mechanical power using back-pressure steam turbines in place of existing pressure-reducing valves or which make use of waste heat from industrial processes such as by using organic rankine, stirling, or kalina heat engine systems, subparagraph (A) shall be applied without regard to clause (ii).

(c)

Effective date

The amendments made by this section shall apply to periods after the date of the enactment of this Act, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

Motor energy efficiency improvement tax credit

(a)

In general

Subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section:

45R.

Motor energy efficiency improvement tax credit

(a)

In general

For purposes of section 38, the motor energy efficiency improvement tax credit determined under this section for the taxable year is an amount equal to $120 multiplied by the motor horsepower of an appliance, machine, or equipment— (1)manufactured in such taxable year by a manufacturer which incorporates an advanced motor system into a newly designed appliance, machine, or equipment or into a redesigned appliance, machine, or equipment which did not previously make use of the advanced motor system, or (2)placed back into service in such taxable year by an end user which upgrades an existing appliance, machine, or equipment with an advanced motor system.

For any advanced motor system with a total horsepower of less than 10, such motor energy efficiency improvement tax credit is an amount which bears the same ratio to $120 as 1 horsepower bears to such total horsepower.

(b)

Advanced motor system

For purposes of this section, the term advanced motor system means a motor and any required associated electronic control which— (1)offers variable or multiple speed operation, and (2)uses permanent magnet technology, electronically commutated motor technology, switched reluctance motor technology, or such other motor systems technologies as determined by the Secretary of Energy. (c)

Aggregate per taxpayer limitation

(1)

In general

The amount of the credit determined under this section for any taxpayer for any taxable year shall not exceed the excess (if any) of $2,000,000 over the aggregate credits allowed under this section with respect to such taxpayer for all prior taxable years. (2)

Aggregation rules

For purposes of this section, all persons treated as a single employer under subsections (a) and (b) of section 52 shall be treated as 1 taxpayer. (d)

Special rules

(1)

Basis reduction

For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed. (2)

No double benefit

No other credit shall be allowable under this chapter for property with respect to which a credit is allowed under this section. (3)

Property used outside United States not qualified

No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1). (e)

Application

This section shall not apply to property manufactured or placed back into service before the date which is 6 months after the date of the enactment of this section or after December 31, 2013.

(b)

Conforming amendments

(1)Section 38(b) is amended by striking plus at the end of paragraph (34), by striking the period at the end of paragraph (35) and inserting , plus, and by adding at the end the following new paragraph:

(36)the motor energy efficiency improvement tax credit determined under section 45R.

(2)Section 1016(a) 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 45R(d)(1).

(3)The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

Sec. 45R. Motor energy efficiency improvement tax credit.

(c)

Effective date

The amendments made by this section shall apply to property manufactured or placed back into service after the date which is 6 months after the date of the enactment of this Act.

Credit for replacement of CFC refrigerant chiller

(a)

In general

Subpart D of part IV of subchapter A of chapter 1, as amended by this Act, is amended by adding at the end the following new section:

45S.

CFC chiller replacement credit

(a)

In general

For purposes of section 38, the CFC chiller replacement credit determined under this section for the taxable year is an amount equal to— (1)$150 multiplied by the tonnage rating of a CFC chiller replaced with a new efficient chiller that is placed in service by the taxpayer during the taxable year, plus (2)if all chilled water distribution pumps connected to the new efficient chiller include variable frequency drives, $100 multiplied by any tonnage downsizing. (b)

CFC chiller

For purposes of this section, the term CFC chiller includes property which— (1)was installed after 1980 and before 1993, (2)utilizes chlorofluorocarbon refrigerant, and (3)until replaced by a new efficient chiller, has remained in operation and utilized for cooling a commercial building. (c)

New efficient chiller

For purposes of this section, the term new efficient chiller includes a water-cooled chiller which is certified to meet efficiency standards effective on January 1, 2010, as defined in table 6.8.1c in Addendum M to Standard 90.1–2007 of the American Society of Heating, Refrigerating, and Air Conditioning Engineers. (d)

Tonnage downsizing

For purposes of this section, the term tonnage downsizing means the amount by which the tonnage rating of the CFC chiller exceeds the tonnage rating of the new efficient chiller. (e)

Energy audit

As a condition of receiving a tax credit under this section, an energy audit shall be performed on the building prior to installation of the new efficient chiller, identifying cost-effective energy-saving measures, particularly measures that could contribute to chiller downsizing. The audit shall satisfy criteria that shall be issued by the Secretary of Energy. (f)

Property used by tax-Exempt entity

In the case of a CFC chiller replaced by a new efficient chiller the use of which is described in paragraph (3) or (4) of section 50(b), the person who sold such new efficient chiller to the entity shall be treated as the taxpayer that placed in service the new efficient chiller that replaced the CFC chiller, but only if such person clearly discloses to such entity in a document the amount of any credit allowable under subsection (a) and the person certifies to the Secretary that the person reduced the price the entity paid for such new efficient chiller by the entire amount of such credit. (g)

Termination

This section shall not apply to replacements made after December 31, 2012.

(b)

Conforming amendments

(1)Section 38(b), as amended by this Act, is amended by striking plus at the end of paragraph (35), by striking the period at the end of paragraph (36) and inserting , plus, and by adding at the end the following new paragraph:

(37)the CFC chiller replacement credit determined under section 45S.

(2)The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by this Act, is amended by adding at the end the following new item:

Sec. 45S. CFC chiller replacement credit.

(c)

Effective date

The amendments made by this section shall apply to replacements made after the date of the enactment of this Act.

Qualifying efficient industrial process water use project credit

(a)

In general

Section 46 is amended by striking and at the end of paragraph (4), by striking the period at the end of paragraph (5), and by adding at the end the following new paragraph:

(6)the qualifying efficient industrial process water use project credit.

(b)

Amount of credit

Subpart E of part IV of subchapter A of chapter 1 is amended by inserting after section 48C the following new section:

48D.

Qualifying efficient industrial process water use project credit

(a)

In general

(1)

Allowance of credit

For purposes of section 46, the qualifying efficient industrial process water use project credit for any taxable year is an amount equal to the applicable percentage of the qualified investment for such taxable year with respect to any qualifying efficient industrial process water use project of the taxpayer. (2)

Applicable percentage

For purposes of subsection (a), the applicable percentage is— (A)10 percent in the case of a qualifying efficient industrial process water use project which achieves a net energy consumption of less than 3,000 kilowatt hours per million gallons of water, and is placed in service before January 1, 2013, (B)20 percent in the case of a qualifying efficient industrial process water use project which achieves a net energy consumption of less than 2,000 kilowatt hours per million gallons of water, and (C)30 percent in the case of a qualifying efficient industrial process water use project which achieves a net energy consumption of less than 1,000 kilowatt hours per million gallons of water. (b)

Qualified investment

(1)

In general

For purposes of subsection (a), the qualified investment for any taxable year is the basis of eligible property placed in service by the taxpayer during such taxable year which is part of a qualifying efficient industrial process water use project. (2)

Exceptions

Such term shall not include any portion of the basis related to— (A)permitting, (B)land acquisition, or (C)infrastructure associated with sourcing or water discharge. (3)

Certain qualified progress expenditures rules made applicable

Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section. (4)

Special rule for subsidized energy financing

Rules similar to the rules of section 48(a)(4) (without regard to subparagraph (D) thereof) shall apply for purposes of this section. (5)

Limitation

The amount which is treated for all taxable years with respect to any qualifying efficient industrial process water use project with respect to any site shall not exceed $10,000,000. (c)

Definitions

(1)

Qualifying efficient industrial process water use project

The term qualifying efficient industrial process water use project means, with respect to any site, a project— (A)which replaces or modifies a system for the use of water or steam in the production of goods in the trade or business of manufacturing (including any system for the use of water derived from blow-down from cooling towers and steam systems in the generation of electric power at a site also used for the production of goods in the trade or business of manufacturing), and (B)which is designed to achieve— (i)a reduction of not less than 20 percent in water withdrawal and a reduction of not less than 10 percent of water discharge when compared to the existing water use at the site, or (ii)a reduction of not less than 10 percent in water withdrawal and a reduction of not less than 20 percent of water discharge when compared to the existing water use at the site. (2)

Eligible property

The term eligible property means any property— (A)which is part of a qualifying efficient industrial process water use project and which is necessary for the reduction in withdrawals or discharge described in paragraph (1)(B), (B)(i)the construction, reconstruction, or erection of which is completed by the taxpayer, or (ii)which is acquired by the taxpayer if the original use of such property commences with the taxpayer, and (C)with respect to which depreciation (or amortization in lieu of depreciation) is allowable. (3)

Net energy consumption

The term net energy consumption means the energy consumed, both on-site and off-site, with respect to the water described in paragraph (1)(A). Net energy consumption shall be normalized per unit of industrial output and measured under rules and procedures established by the Secretary, in consultation with the Administrator of the Environmental Protection Agency. (4)

Water discharge

The term water discharge means all water leaving the site via permitted or unpermitted surface water discharges, discharges to publicly owned treatment works, and shallow- or deep-injection (whether on-site or off-site). (5)

Water withdrawal

The term water withdrawal means all water taken for use at the site from on-site ground and surface water sources together with any water supplied to the site by a public water system. (d)

Termination

This section shall not apply to periods after December 31, 2014, under rules similar to the rules of section 48(m) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

(c)

Conforming amendments

(1)Section 49(a)(1)(C) is amended by striking and at the end of clause (iv), by striking the period at the end of clause (v) and inserting , and, and by adding after clause (v) the following new clause:

(vi)the basis of any property which is part of a qualifying efficient industrial use water project under section 48D.

(2)The table of sections for subpart E of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 48B the following new item:

Sec. 48D. Qualifying efficient industrial process water use project credit.

(d)

Effective date

The amendments made by this section shall apply to periods after January 1, 2011, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).