S. 3581 (112th): A bill to amend the Internal Revenue Code of 1986 to modify the credit for carbon dioxide ...

...sequestration.

112th Congress, 2011–2013. Text as of Sep 20, 2012 (Introduced).

Status & Summary | PDF | Source: GPO

II

112th CONGRESS

2d Session

S. 3581

IN THE SENATE OF THE UNITED STATES

September 20, 2012

(for himself, Mr. Enzi, and Mr. Rockefeller) 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 modify the credit for carbon dioxide sequestration.

1.

Modifications to carbon dioxide sequestration credit

(a)

Allocation and certification of credit

(1)

In general

Subsection (e) of section 45Q of the Internal Revenue Code of 1986 is amended to read as follows:

(e)

Limitation

(1)

Allocation limitation

No credit shall be allowed under subsection (a) with respect to qualified carbon dioxide captured by carbon capture equipment at a qualified facility for the amount of qualified carbon dioxide captured by such carbon capture equipment in excess of—

(A)

the portion of the national limitation allocated with respect to such carbon capture equipment under subsection (f), over

(B)

the amount of qualified carbon dioxide captured by such carbon capture equipment during periods after July 31, 2013.

(2)

National limitation

For purposes of paragraph (1)(A), the national limitation is the excess of—

(A)

75,000,000 metric tons of qualified carbon dioxide, over

(B)

the number of metric tons of qualified carbon dioxide captured before August 1, 2013, for which a credit under subsection (a) was allowed.

.

(2)

Allocation and certification

Section 45Q of such Code is amended by adding at the end the following new subsection:

(f)

Allocation for and certification of carbon capture projects

(1)

Establishment of procedures

Not later than July 1, 2013, the Secretary shall establish, by regulation, processes and procedures—

(A)

for allocating the national limitation under subsection (e)(2) to projects for placing carbon capture equipment in service at qualified facilities, and

(B)

for certifying projects for which an allocation has been made under subparagraph (A).

(2)

Allocations

(A)

Application

Each applicant for an allocation under this subsection shall submit an application to the Secretary under such terms and conditions as are established by the Secretary in regulations.

(B)

Priority

The Secretary shall rank applications received under subparagraph (A) in the following order:

(i)

Applicants with applications received by the Secretary on an earlier date shall be given higher priority than applicants with applications received on a later date. For purposes of this clause, any application received before the date that is 30 days after the procedures and processes described in paragraph (1) are established shall be considered to have been received on such date.

(ii)

In the case of applications received on the same date, those applicants concurrently applying for certification shall be given higher priority.

(iii)

In the case of applications received on the same date and concurrently applying for certification, those projects with the earlier date by which construction commenced shall be given higher priority.

(C)

Allocation to applicants

Subject to subparagraph (D), the Secretary shall allocate tonnage to each applicant—

(i)

based on the amount requested on the application, and

(ii)

in order of the rank of the application under subparagraph (B),

until the amount of tonnage available under this section is exhausted. Projects for which no or a partial allocation is made shall retain their ranking and shall be eligible to receive an allocation of tonnage previously allocated that is forfeited or recaptured.
(D)

Limitation

The Secretary may not allocate to any project more than the lesser of—

(i)

the number of metric tons of qualified carbon dioxide projected to be captured at the qualified facility under the project during the 10-year period beginning on the date on which such project is placed in service,

(ii)

the number of metric tons of qualified carbon dioxide projected to be captured at the qualified facility under the project—

(I)

which are subject to a written, binding contract for disposal in secure geological storage (whether or not used as a tertiary injectant), or

(II)

for which there is a plan for such disposal by the applicant, or

(iii)

15,000,000 metric tons of qualified carbon dioxide.

(E)

Reduction for prior credits

The amount of any allocation under subparagraph (C) to any project shall be reduced by the number of metric tons of carbon dioxide captured by the carbon capture equipment with respect to such project before August 1, 2013, for which a credit was allowed under subsection (a).

(3)

Certification

(A)

In general

No credit shall be allowed under subsection (a) with respect to any project for using carbon capture equipment to capture qualified carbon dioxide at a qualified facility before the date on which such project is certified under this paragraph.

(B)

Application for certification

Each project which is allocated a portion of the national limitation shall submit an application for certification to the Secretary containing such information as the Secretary may require. Such application shall be submitted—

(i)

not later than—

(I)

6 months after the date on which such project receives an allocation, and

(II)

30 days after the later of the date on which the regulations, processes, and procedures are established under paragraph (1) or the construction start date, and

(ii)

not earlier than the construction start date.

For purposes of this subparagraph, the term construction start date means the earlier of the first date on which physical work on the project of a significant nature is undertaken or the date by which 5 percent or more of the total cost of the project has been spent.
(C)

Revocation of certification

(i)

Materially inaccurate representations

The Secretary may revoke a certification under this paragraph if the Secretary determines that an applicant has made a materially inaccurate representation with respect to the project.

(ii)

Failure to timely place equipment in service

A certification under this paragraph shall be revoked in any case in which carbon capture equipment with respect to the project is not placed in service—

(I)

before the date which is 5 years after the date on which the allocation was issued, in the case of a new industrial facility, or

(II)

before the date which is 3 years after the date on which the allocation was issued, in the case of a modification of an existing industrial facility.

(D)

Reallocation

In any case—

(i)

in which a certification is revoked under subparagraph (C), or

(ii)

in which a taxpayer to whom an allocation is made under paragraph (2) fails to obtain certification for a project under this paragraph,

the amount of national limitation which was allocated to such project under paragraph (2) shall be reallocated under such rules as established by the Secretary under regulations.
(4)

Public disclosure

(A)

In general

The Secretary shall, within 30 days of making any allocation, certification, revocation, or change in the ranking of projects, publicly disclose the amount of such allocation, a description of the project for which such allocation, certification, or revocation was made, and the change in the ranking of projects, as the case may be.

(B)

Annual report

The Secretary shall issue an annual report summarizing credits allocated and available for allocation.

.

(3)

Conforming amendments

(A)

Paragraph (2) of section 45Q(c) of such Code is amended by inserting which is part of a project which is certified under subsection (f)(3) after carbon capture equipment.

(B)

Paragraph (3) of section 45Q(c) of such Code is amended by striking which and inserting at which such carbon capture equipment.

(b)

10-Year credit limitation

Section 45Q(a) of the Internal Revenue Code of 1986 is amended—

(1)

in paragraph (1)(A), by inserting during the 10-year period beginning on the later of the date on which the carbon capture equipment described in subsection (c)(1) is placed in service or the date on which the project with respect to such carbon capture equipment was certified under subsection (f)(3) after qualified facility, and

(2)

in paragraph (2)(A), by inserting during the 10-year period beginning on the later of the date on which the carbon capture equipment described in subsection (c)(1) is placed in service or the date on which the project with respect to such carbon capture equipment was certified under subsection (f)(3) after qualified facility.

(c)

Definition of carbon capture equipment

Section 45Q(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(8)

Carbon capture equipment

The term carbon capture equipment means equipment to capture and pressurize qualified carbon dioxide.

.

(d)

Credit allowed to taxpayer performing carbon capture

(1)

In general

Paragraph (5) of section 45Q(d) of the Internal Revenue Code of 1986 is amended to read as follows:

(5)

Person to whom credit is allowable

(A)

In general

Except as provided in subparagraph (B) or in regulations prescribed by the Secretary, any credit under this section shall be allowed to the taxpayer who—

(i)

captures the qualified carbon dioxide, and

(ii)

through contract or otherwise, disposes of the qualified carbon dioxide in a manner meeting the requirements of paragraph (1)(B) or (2)(C) of subsection (a), as the case may be.

(B)

Election to allow credit to person disposing carbon dioxide

If the person described in subparagraph (A) makes an election under this subparagraph in such manner as the Secretary may prescribe by regulations, the credit under this section—

(i)

shall be allowable to the person that disposes of qualified carbon dioxide in a manner meeting the requirements of paragraph (1)(B) or (2)(C) of subsection (a), as the case may be, and

(ii)

shall not be allowable to the person described in subparagraph (A).

.

(2)

Conforming amendments

(A)

Section 45Q(a) of such Code is amended by striking by the taxpayer each place it appears in paragraph (1)(B), (2)(B), and (2)(C).

(B)

Section 45Q(c) of such Code, as amended by subsection (a), is amended by striking paragraph (1) and redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively.

(e)

Rules relating to credit recapture

Paragraph (6) of section 45Q(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new sentence: Notwithstanding section 7805(b), any regulation issued pursuant to this paragraph shall apply only with respect to qualified carbon dioxide captured or disposed of after the date on which such regulation is filed with the Federal Register..

(f)

Effective date

The amendments made by this section shall apply to carbon dioxide captured after July 31, 2013.