Credit for maintaining and enhancing hydroelectric facilities

(a)

In general

Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986, as amended by section 13702 of Public Law 117–169, is amended by inserting after section 48E the following new section:

48F.

Credit for maintaining and enhancing hydroelectric facilities

(a)

In general

For purposes of section 46, the credit for maintaining and enhancing hydroelectric facilities for any taxable year is an amount equal to 30 percent of the basis of any hydropower improvement property placed in service during such taxable year.(b)

Certain progress expenditure 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 date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of subsection (a).(c)

Hydropower improvement property

In this section, the term hydropower improvement property means property—(1)which—(A)adds or improves fish passage at a qualified dam,(B)maintains or improves the quality of the water retained or released by a qualified dam,(C)promotes downstream sediment transport processes and habitat maintenance with respect to a qualified dam,(D)upgrades, repairs, or reconstructs a qualified dam to meet Federal dam safety and security standards,(E)improves the public uses of, and access to, public waterways impacted by a qualified dam in a manner consistent with a license issued by the Federal Energy Regulatory Commission or a settlement agreement reached with the Federal Energy Regulatory Commission pursuant to such a license,(F)removes an obsolete river obstruction, or(G)places into service an approved remote dam, and(2)for which, prior to January 1, 2032, the taxpayer receives written approval with respect to any property described in paragraph (1) from the Federal Energy Regulatory Commission or State or local officials, as appropriate.(d)

Other definitions

In this section—(1)

Approved remote dam

The term approved remote dam means—(A)a hydroelectric dam which—(i)exclusively services communities not interconnected to the Electric Reliability Council of Texas, the Eastern Interconnection, or the Western Interconnection,(ii)was licensed by the Federal Energy Regulatory Commission before December 31, 2020, and(iii)does not contribute to atmosphere pollution, and(B)any qualified interconnection property (as defined in section 48(a)(8)(B)) associated with a dam described in subparagraph (A) which has a maximum net output of not greater than 20 megawatts. (2)

Fish passage

The term fish passage means, with respect to any qualified dam, any new or upgraded turbine, fishway, or other fish passage technology which improves fish migration and survival rates.(3)

Obsolete river obstruction

The term obsolete river obstruction means a qualified nonpowered dam (as defined in section 34(e)(3) of the Federal Power Act (16 U.S.C. 823e(e)(3))) no longer serving its intended purpose.(4)

Qualified dam

The term qualified dam means a hydroelectric dam that is licensed by the Federal Energy Regulatory Commission or legally operating without such a license before the date of enactment of this section.

(b)

Elective payment and transfer of credit

(1)

Elective payment

Section 6417 of the Internal Revenue Code of 1986, as added by section 13801(a) of Public Law 117–169, is amended—(A)in subsection (b), by adding at the end the following:

(13)The credit for maintaining and enhancing hydroelectric facilities under section 48F.

, and

(B)in subsection (d)(1)—(i)in subparagraph (E), by striking (C), or (D) each place it appears and inserting (C), (D), or (E),(ii)by redesignating subparagraph (E) (as amended by clause (i)) as subparagraph (F), and(iii)by inserting after subparagraph (D) the following:

(E)

Election with respect to credit for maintaining and enhancing hydroelectric facilities

If a taxpayer other than an entity described in subparagraph (A) makes an election under this subparagraph with respect to any taxable year in which such taxpayer has, after December 31, 2022, placed in service hydropower improvement property (as defined in section 48F(c)), such taxpayer shall be treated as an applicable entity for purposes of this section for such taxable year, but only with respect to the credit described in subsection (b)(13).

(2)

Transfer

Section 6418(f)(1)(A) of the Internal Revenue Code of 1986, as added by section 13801(b) of Public Law 117–169, is amended by adding at the end the following:

(xii)The credit for maintaining and enhancing hydroelectric facilities under section 48F.

(c)

Conforming amendments

(1)Section 46 of the Internal Revenue Code of 1986, as amended by section 13702(b)(1) of Public Law 117–169, is amended—(A)in paragraph (6), by striking and at the end,(B)in paragraph (7), by striking the period at the end and inserting , and, and(C)by adding at the end the following:

(8)the credit for maintaining and enhancing hydroelectric facilities.

(2)Section 49(a)(1)(C) of such Code, as amended by section 13702(b)(2) of Public Law 117–169, is amended—(A)in clause (vii), by striking and at the end,(B)in clause (viii), by striking the period at the end and inserting , and, and(C)by adding at the end the following:

(ix)the basis of any hydropower improvement property under section 48F.

(3)Section 50 of such Code is amended—(A)in subsection (a)(2)(E), as amended by section 13702(b) of Public Law 117–169, by striking or 48E(e) and inserting 48E(e), or 48F(b), and(B)in subsection (d)(2), as amended by section 13102(f)(5) of Public Law 117–169—(i)in the matter preceding subparagraph (A), by inserting or any hydropower improvement property (as defined in section 48F(c)) after any energy storage technology (as defined in section 48(c)(6)), and(ii)in subparagraph (B), by striking energy storage technology each place it appears and inserting energy storage technology or hydropower improvement property.(4)The table of sections for subpart E of part IV of subchapter A of chapter 1 of such Code, as amended by section 13702(b)(5) of Public Law 117–169, is amended by inserting after the item relating to section 48E the following new item:

Sec. 48F. Credit for maintaining and enhancing hydroelectric facilities.

(d)

Effective date

The amendments made by this section shall apply to property placed in service after December 31, 2022.