[Congressional Record Volume 156, Number 70 (Tuesday, May 11, 2010)]
[Senate]
[Pages S3539-S3541]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mrs. FEINSTEIN (for herself and Mr. Brown of Ohio):
S. 3336. A bill to amend the internal Revenue Code of 1986 to provide
for the treatment of bonds issued to finance renewable energy resources
facilities, conservation and efficiency facilities, and other specified
greenhouse gas emission technologies; to the Committee on Finance.
Mrs. FEINSTEIN. Mr. President, I rise to introduce the Private
Activity Renewable Energy Bonds Act, legislation to enable low-cost
Private Activity Bond financing for businesses and local governments
which seek to create renewable, clean and efficient sources of energy.
The bill is cosponsored by Senator Brown of Ohio. In the United
States House of Representatives, Congressman Mike Thompson has
introduced a bipartisan companion bill cosponsored by Representatives
Dean Heller and Mary Bono Mack.
The bill is supported by a host of business and government leaders
and renewable energy companies including the Solar Energy Industries
Association, Solar Millennium, Nano Solar, the National Association of
Energy Service Companies, EnLink GeoEnergy, Johnson Controls, A123
Systems, the Center for Energy Efficiency and Renewable Technologies,
and the U.S. Fuel Cell Council, as well as California Treasurer Bill
Lockyer.
The bill provides businesses access to low interest tax free Private
Activity Bonds, in order to fund projects that generate renewable
energy; produce energy or water savings, or; develop highly efficient
vehicles.
To promote such activity in a fiscally responsible manner, the
legislation caps the value of bonds at $2.5 billion annually. This
represents the investment necessary to replace at least one percent of
U.S. electricity generation with renewable sources over the next ten
years.
Private Activity Bonds have long been used to generate private
involvement and investment in critically important infrastructure for
our Nation--from wharves to airports, intercity rail to solid waste
disposal facilities and hospitals.
In this century, however, we have new national goals.
Renewable, clean and efficient energy projects will produce jobs, get
our economy back-on-track and sustain us as the global leader of a
greener century.
These projects, however, require significant front-end capital
investment to which the federal government cannot be the sole provider.
Private Activity Bonds can prove a critical tool in garnering private
investment, because their interest rates typically run a few percent
points under commercially available loans.
Investors have long responded to this type of incentive. According to
the IRS, Private Activity Bond issuance in 2007 was over $130 billion--
supplying capital to our markets, providing the financing to get
projects off the ground.
Projects financed in part by Private Activity Bonds include additions
to the San Jose and San Francisco International Airports, the Capitol
Beltway High Occupancy Vehicle lanes, infrastructure improvements to
the Port of Seattle, and upgrades to Children's Hospital of Orange
County, Catholic Healthcare West in San Francisco, and many, many
important facilities and projects.
With proper access to capital, we've already seen partnerships
between States, municipalities and businesses develop into successful
renewable energy programs.
In California, Energy Financing Districts finance residents who
choose to install clean energy projects such as distributed solar
panels on their homes.
The cost of the solar panel installation or other device is paid back
through an increase in property tax only for those property owners who
choose to participate in the program.
Now, going solar or installing a geothermal heat pump, which once
cost tens of thousands of dollars upfront, has little or no upfront
cost to the property owner. It is no wonder why 150 of these programs
have been established throughout the country.
This low cost solar opportunity is just one example of the type of
programs this bill seeks to support. In partnership, businesses and
local governments will develop new and innovative was to create the new
high quality jobs of the 21st century.
This Congress and this President have outlined goals to ensure this
country leads the world in the creation of a robust, green economy.
This bill looks to connect that laudable goal with proven financing
tools to get us there by aligning private sector investment power and
job growth with good public policy.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 3336
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 ``Private Activity Renewable
Energy Bonds Act''.
SEC. 2. TREATMENT OF BONDS ISSUED TO FINANCE RENEWABLE ENERGY
RESOURCE FACILITIES AND CONSERVATION AND
EFFICIENCY FACILITIES AND OTHER SPECIFIED
GREENHOUSE GAS EMISSION TECHNOLOGIES.
(a) In General.--Section 142(a) of the Internal Revenue
Code of 1986 is amended by striking ``or'' at the end of
paragraph (14), by striking the period at the end of
paragraph (15) and inserting a comma, and by inserting after
paragraph (15) the following new paragraphs:
``(16) renewable energy resource facilities,
``(17) conservation and efficiency facilities and projects,
or
``(18) high efficiency vehicles and related facilities or
projects.''.
(b) Renewable Energy Resource Facility.--Section 142 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new subsection:
``(n) Renewable Energy Resource Facilities.--For purposes
of subsection (a)(16)--
``(1) In general.--The term `renewable energy resource
facility' means--
[[Page S3540]]
``(A) any facility used to produce electric or thermal
energy (including a distributed generation facility) from--
``(i) solar, wind, or geothermal energy,
``(ii) marine and hydrokinetic renewable energy,
``(iii) incremental hydropower,
``(iv) biogas and solids produced in the wastewater
treatment process, or
``(v) biomass (as defined in section 203(b)(1) of the
Energy Policy Act of 2005 (42 U.S.C. 15852(b)(1))),
``(B) any facility used to produce biogas, or
``(C) any facility or project used for the manufacture of
facilities referred to in subparagraph (A) or (B).
``(2) Special requirements for facilities producing
biogas.--
``(A) In general.--A facility shall not be treated as
described in paragraph (1)(B), unless the biogas produced--
``(i) is of pipeline quality and distributed into a vehicle
for transportation or into an intrastate, interstate, or LDC
pipeline system, or
``(ii) is used to produce onsite electricity or hydrogen
fuel for use in vehicular or stationary fuel cell
applications and has a British thermal unit content of at
least 500 per cubic foot.
``(B) Pipeline quality.--For purposes of subparagraph
(A)(i), with respect to biogas, the term `pipeline quality'
means biogas with a British thermal unit content of at least
930 per cubic foot.
``(3) Definitions.--For purposes of this subsection--
``(A) Geothermal energy.--The term `geothermal energy'
means energy derived from a geothermal deposit (within the
meaning of section 613(e)(2)) or from geothermal heat pumps.
``(B) Marine and hydrokinetic renewable energy.--The term
`marine and hydrokinetic renewable energy' has the meaning
given such term in section 45(c)(10).
``(C) Incremental hydropower.--The term `incremental
hydropower' means additional energy generated as a result of
efficiency improvements or capacity additions to existing
hydropower facilities made on or after the date of enactment
of this subsection. The term `incremental hydropower' does
not include additional energy generated as a result of
operational changes not directly associated with efficiency
improvements or capacity additions.
``(D) Biogas.--The term `biogas' means a gaseous fuel
derived from landfill, municipal solid waste, food waste,
wastewater or biosolids, or biomass (as defined in section
203(b)(1) of the Energy Policy Act of 2005 (42 U.S.C.
15852(b))).
``(4) Special rules for energy loan tax assessment
financing.--
``(A) In general.--In the case of any renewable recovery
energy resource facility provided from the proceeds of a bond
secured by any tax assessment loan upon real property, the
term `facility' in paragraph (1) includes--
``(i) a prepayment for the principal purpose of purchasing
electricity from renewable energy resource property, and
``(ii) a prepayment of a lease or license of such property,
but only if the prepayment agreement provides that it shall
not be canceled prior to the expiration of the tax assessment
loan.
``(B) Tax assessment loan.--For purposes of subparagraph
(A), the term `tax assessment loan' shall mean a governmental
assessment, special tax, or similar charge upon real
property.''.
(c) Conservation and Efficiency Facility or Project.--
Section 142 of the Internal Revenue Code of 1986, as amended
by subsection (b), is amended by adding at the end the
following new subsection:
``(o) Conservation and Efficiency Facilities and
Projects.--
``(1) In general.--For purposes of subsection (a)(17), the
term `conservation and efficiency facility or project'
means--
``(A) any facility used for the conservation or the
efficient use of energy, including energy efficient
retrofitting of existing buildings, or for the efficient
storage, transmission, or distribution of energy, including
any facility or project designed to implement smart grid
technologies (as described in title XIII of the Energy
Independence and Security Act of 2007, or individual
components of such technologies as listed in section 1301 of
such Act),
``(B) any facility used for the conservation of or the
efficient use of water, including--
``(i) any facility or project designed to--
``(I) reduce the demand for water,
``(II) improve efficiency in use and reduce losses and
waste of water, including water reuse, and
``(III) improve land management practices to conserve
water, or
``(ii) any individual component of a facility or project
referred to in clause (i), or
``(C) any facility or project used for the manufacture of
facilities referred to in subparagraphs (A) and (B).
For purposes of subparagraph (B)(i), facility or project does
not include any facility or project that stores water.
``(2) Special rules for energy loan tax assessment
financing.--
``(A) In general.--In the case of any conservation and
efficiency facility or project provided from the proceeds of
a bond secured by any tax assessment loan upon real property,
the term `facility' in paragraph (1)(A) includes--
``(i) a prepayment for the principal purpose of purchasing
electricity from conservation and efficiency property, and
``(ii) a prepayment of a lease or license of such property,
but only if the prepayment agreement provides that it shall
not be canceled prior to the expiration of the tax assessment
loan.
``(B) Tax assessment loan.--For purposes of subparagraph
(A), the term `tax assessment loan' shall mean a governmental
assessment, special tax or similar charge upon real
property.''.
(d) High Efficiency Vehicles and Related Facilities or
Projects.--Section 142 of the Internal Revenue Code of 1986,
as amended by subsections (b) and (c), is amended by adding
at the end the following new subsection:
``(p) High Efficiency Vehicles and Related Facilities or
Projects.--For purposes of subsection (a)(18)--
``(1) High efficiency vehicles.--The term `high efficiency
vehicle' means any vehicle that will exceed by at least 150
percent the average combined fuel economy for vehicles with
substantially similar attributes in the model year in which
the production of such vehicle is expected to begin at the
facility.
``(2) Facilities related to high efficiency vehicles.--A
facility or project is related to a high efficiency vehicle
if the facility is any real or personal property to be used
in the design, technology transfer, manufacture, production,
assembly, distribution, recharging or refueling, or service
of high efficiency vehicles.''.
(e) National Limitation on Amount of Renewable Energy
Bonds.--Section 142 of the Internal Revenue Code of 1986, as
amended by subsections (b), (c), and (d), is amended by
adding at the end the following new subsection:
``(q) National Limitation on Amount of Renewable Energy
Bonds.--
``(1) In general.--An issue shall not be treated as an
issue described in paragraph (16), (17), or (18) of
subsection (a) if the aggregate face amount of bonds issued
by the State pursuant thereto (when added to the aggregate
face amount of bonds previously so issued during the calendar
year) exceeds the amount allocated to the State by the
Secretary under paragraph (2) for such calendar year.
``(2) Allocation rules.--
``(A) Allocation among states by population.--The Secretary
shall allocate authority to issue bonds described in
paragraph (16), (17), or (18) of subsection (a) to each State
by population for each calendar year in an aggregate amount
to all States not to exceed $2,500,000,000.
``(B) State allocation.--The State may allocate the amount
allocated to the State under subparagraph (A) for any
calendar year among facilities or projects described in
paragraphs (16), (17), and (18) of subsection (a) in such
manner as the State determines appropriate.
``(C) Unused renewable energy bond carryover to be
allocated among qualified states.--
``(i) In general.--Any unused bond allocation for any State
for any calendar year under subparagraph (A) shall carryover
to the succeeding calendar year and be assigned to the
Secretary for allocation among qualified States for the
succeeding calendar year.
``(ii) Unused bond allocation carryover.--For purposes of
this subparagraph, unused bond allocations are bond
allocations described in subparagraph (A) of any State which
remain unused by November 1 of any calendar year.
``(iii) Formula for allocation of unused bond allocation
carryovers among qualified states.--The amount allocated
under this subparagraph to a qualified State for any calendar
year shall bear the same ratio to all States from the
preceding calendar year under subparagraph (A), excluding
States which are not a qualified State.
``(iv) Timing of allocation.--The Secretary shall allocate
the unused bond allocation carried over from the preceding
year among qualified States not later than March 1 of the
succeeding year.
``(v) Qualified state.--For purposes of this subparagraph,
the term `qualified State' means, with respect to a calendar
year, any State--
``(I) which allocated its entire bond allocation under
subparagraph (A) for the preceding calendar year, and
``(II) for which a request is made (not later than August 1
of the calendar year) to receive an allocation under clause
(iii).
``(vi) Reporting.--States shall report annually to the
Secretary on their use of bonds described in paragraph (16),
(17), and (18) of subsection (a), including description of
projects, amount spent per project, total amount of unused
bonds, and expected greenhouse gas or water savings per
project with a description of how such savings were
calculated. Such reporting shall be submitted not later than
November 1 of any calendar year.''.
(f) Coordination With Section 45.--Paragraph (3) of section
45(b) of the Internal Revenue Code of 1986 is amended by
adding at the end the following new sentence: ``Clause (ii)
of subparagraph (A) shall not apply with respect to any
facility described in paragraph (16), (17), or (18) of
section 142(a).''.
(g) Coordination With Section 45K.--Subparagraph (A) of
section 45K(b)(3) of the Internal Revenue Code of 1986 is
amended by adding at the end the following flush sentence:
[[Page S3541]]
``Subclause (II) of clause (i) shall not apply with respect
to any facility described in paragraph (16), (17), or (18) of
section 142(a).''.
(h) Coordination With Section 48.--Subparagraph (A) of
section 48(a)(4) of the Internal Revenue Code of 1986 is
amended by adding at the end the following flush sentence:
``Clause (ii) shall not apply with respect to any facility
described in paragraph (16), (17), or (18) of section
142(a).''.
(i) Coordination With Section 146(g)(3).--Section 146(g)(3)
of the Internal Revenue Code of 1986 is amended by striking
``or (15)'' and inserting ``(15), (16), (17), or (18)''.
(j) Effective Date.--The amendments made by this section
shall apply to obligations issued after the date of the
enactment of this Act.
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