[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 3352 Introduced in Senate (IS)]

112th CONGRESS
  2d Session
                                S. 3352

   To amend the Internal Revenue Code of 1986 to improve and extend 
     certain energy-related tax provisions, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 28, 2012

 Mr. Bingaman (for himself, Ms. Snowe, and Mrs. Feinstein) introduced 
the following bill; which was read twice and referred to the Committee 
                               on Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to improve and extend 
     certain energy-related tax provisions, 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; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Expanding 
Industrial Energy and Water Efficiency Incentives Act of 2012''.
    (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.
Sec. 6. Investment tax credit for biomass heating property.

SEC. 2. MODIFICATIONS IN CREDIT FOR COMBINED HEAT AND POWER SYSTEM 
              PROPERTY.

    (a) Modification of Certain Capacity Limitations.--Section 
48(c)(3)(B) 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.--Section 48(c)(3)(C) 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).

SEC. 3. 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:

``SEC. 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 and drive 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 and drive 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 and drive system.
For any advanced motor and drive 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 such total horsepower 
bears to 1 horsepower.
    ``(b) Advanced Motor and Drive System.--For purposes of this 
section, the term `advanced motor and drive 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, synchronous reluctance, or such other motor and 
        drive 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, 2015.''.
    (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.

SEC. 4. 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:

``SEC. 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, 2015.''.
    (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.

SEC. 5. 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:

``SEC. 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)--
                    ``(A) In general.--The applicable percentage is--
                            ``(i) 10 percent in the case of a 
                        qualifying efficient industrial process water 
                        use project which achieves a 25 percent or 
                        greater (but less than 50 percent) reduction in 
                        water use for industrial purposes,
                            ``(ii) 20 percent in the case of a 
                        qualifying efficient industrial process water 
                        use project which achieves a 50 percent or 
                        greater (but less than 75 percent) reduction in 
                        water use for industrial purposes, and
                            ``(iii) 30 percent in the case of a 
                        qualifying efficient industrial process water 
                        use project which achieves a 75 percent or 
                        greater reduction in water use for industrial 
                        purposes.
                    ``(B) Water use.--For purposes of subparagraph 
                (A)--
                            ``(i) Measurement of reduction in water 
                        use.--
                                    ``(I) In general.--The taxpayer 
                                shall elect one of the methods 
                                specified in clause (ii) for measuring 
                                the reduction in water use achieved by 
                                a qualifying efficient industrial 
                                process water use project.
                                    ``(II) Irrevocable election.--An 
                                election under subclause (I), once made 
                                with respect to a qualifying efficient 
                                industrial process water use project, 
                                shall apply to the taxable year for 
                                which made and all subsequent taxable 
                                years, and may not be revoked.
                                    ``(III) Projected savings.--The 
                                credit under subsection (a) may be 
                                claimed on the basis of a reduction in 
                                water use which is projected, by a 
                                registered professional engineer who is 
                                not a related person (within the 
                                meaning of section 144(a)(3)(A)) to the 
                                taxpayer or the installer of eligible 
                                property, to be achieved by a 
                                qualifying efficient industrial process 
                                water use project. Such projection, if 
                                used as a basis for determining the 
                                credit under subsection (a), shall be 
                                included with the return of tax.
                            ``(ii) Methods specified.--The methods 
                        specified in this clause are--
                                    ``(I) a measurement of the 
                                percentage reduction in water use per 
                                unit of product manufactured by the 
                                taxpayer, and
                                    ``(II) a measurement of the 
                                percentage reduction in water use per 
                                pound of product manufactured by the 
                                taxpayer.
    ``(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 not directly associated with 
                the implementation of the technology or process 
                improvements of the qualifying efficient industrial 
                process water use project.
            ``(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.--For purposes of this section--
            ``(1) Qualifying efficient industrial process water use 
        project.--
                    ``(A) In general.--The term `qualifying efficient 
                industrial process water use project' means, with 
                respect to any site, a project which retrofits or 
                expands an existing facility to implement technology or 
                process improvements which are designed to reduce water 
                use for systems that use any form of water in the 
                production of goods in the manufacturing sector (as 
                defined in North American Industrial Classification 
                System codes 31, 32, and 33), including any system that 
                uses water for heating, cooling, or energy production 
                for the production of goods in the trade or business of 
                manufacturing. Such term shall not include a project 
                which alters an existing facility to change the type of 
                goods produced by such facility.
                    ``(B) Systems.--For purposes of subparagraph (A), 
                the term `system' does not include any system which 
                does not encompass 1 or more complete processes.
            ``(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 water use described in 
                paragraph (1),
                    ``(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) Water use.--
                    ``(A) In general.--The term `water use' means all 
                water taken for use at the site directly from ground 
                and surface water sources together with any water 
                supplied to the site by a regulated water system.
                    ``(B) Regulated water system.--The term `regulated 
                water system' means a system that supplies water that 
                has been treated to potable standards.
    ``(d) Termination.--This section shall not apply to periods after 
December 31, 2016, 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, 2013, 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).

SEC. 6. INVESTMENT TAX CREDIT FOR BIOMASS HEATING PROPERTY.

    (a) In General.--Subparagraph (A) of section 48(a)(3) is amended by 
striking ``or'' at the end of clause (vi), by inserting ``or'' at the 
end of clause (vii), and by inserting after clause (vii) the following 
new clause:
                            ``(viii) open-loop biomass (within the 
                        meaning of section 45(c)(3)) heating property, 
                        including boilers or furnaces which operate at 
                        output efficiencies of not less than 65 percent 
                        (measured by the higher heating value of the 
                        fuel) and which provide thermal energy in the 
                        form of heat, hot water, or steam for space 
                        heating, air conditioning, domestic hot water, 
                        or industrial process heat, but only with 
                        respect to periods ending before January 1, 
                        2016,''.
    (b) 30 Percent and 15 Percent Credits.--
            (1) In general.--Subparagraph (A) of section 48(a)(2) is 
        amended--
                    (A) by redesignating clause (ii) as clause (iii),
                    (B) by inserting after clause (i) the following new 
                clause:
                            ``(ii) except as provided in clause (i)(V), 
                        15 percent in the case of energy property 
                        described in paragraph (3)(A)(viii), and'', and
                    (C) by inserting ``or (ii)'' after ``clause (i)'' 
                in clause (iii), as so redesignated.
            (2) Increased credit for greater efficiency.--Clause (i) of 
        section 48(a)(2)(A) is amended by striking ``and'' at the end 
        of subclause (III) and by inserting after subclause (IV) the 
        following new subclause:
                                    ``(V) energy property described in 
                                paragraph (3)(A)(viii) which operates 
                                at an output efficiency of not less 
                                than 80 percent (measured by the higher 
                                heating value of the fuel),''.
    (c) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this Act, in 
taxable years ending after such date, 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).
                                 <all>