SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Pollution Prevention 
Opportunity Act of 2001''.

SEC. 2. CREDIT FOR DRY OR WET CLEANING EQUIPMENT USING NONHAZARDOUS 
              PRIMARY PROCESS SOLVENTS.

    (a) In General.--Section 46 of the Internal Revenue Code of 1986 
(relating to amount of credit) is amended by striking ``and'' at the 
end of paragraph (2), by striking the period at the end of paragraph 
(3) and inserting ``, and'', and by adding at the end thereof the 
following paragraph:
            ``(4) the dry or wet cleaning equipment credit.''.
    (b) Dry or Wet Cleaning Equipment Credit.--Section 48 of the 
Internal Revenue Code of 1986 (relating to energy credit; reforestation 
credit) is amended by adding at the end the following new subsection:
    ``(c) Dry or Wet Cleaning Equipment Using Nonhazardous Primary 
Process Solvents.--
            ``(1) In general.--For purposes of section 46, the dry or 
        wet cleaning equipment credit for any taxable year is 20 
        percent of the basis of each qualified dry or wet cleaning 
        property placed in service during the taxable year (40 percent 
        of such basis in the case of such property placed in service in 
        an empowerment zone, enterprise community, or renewal 
        community).
            ``(2) Limitation.--The credit under this subsection for the 
        taxable year shall apply to qualified dry or wet cleaning 
        property placed in service during such year at each business 
        premise of the taxpayer.
            ``(3) Qualified dry or wet cleaning property.--For purposes 
        of this subsection, the term `qualified dry or wet cleaning 
        property' means equipment designed primarily to clean textiles 
        by professionals using special technology, detergents and 
        additives to minimize potential for adverse effects, or 
        appropriately dry or apply restorative finishing procedures to 
        such textiles if--
                    ``(A) such equipment does not use any hazardous 
                solvent as the primary process solvent,
                    ``(B) 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.
            ``(4) Primary process solvent.--For purposes of paragraph 
        (3), the term `primary process solvent' means the primary 
        liquid in which clothing, other fabric, and sensitive textiles 
        are cleaned or which is used to appropriately dry or apply 
        restorative finishing procedures to textiles, cleaned, 
        excluding detergent formulations.
            ``(5) Hazardous solvent.--For purposes of paragraph (3), 
        the term `hazardous solvent' means any solvent any portion of 
        which consists of a chlorinated solvent, a volatile organic 
        compound, or any other hazardous regulated substance, or which 
        contains any substance determined by the Administrator of the 
        Environmental Protection Agency, the Director of the National 
        Institute for Occupational Safety and Health, the Director of 
        the International Agency for Research on Cancer, the Director 
        of the National Institute of Environmental Health Sciences' 
        National Toxicology Program, or the director of any other 
        appropriate Federal agency to possess--
                    ``(A) carcinogenic potential in humans, or
                    ``(B) bioaccumulative properties.''.
    (c) Credit Allowed Against Regular and Minimum Tax.--
            (1) In general.--Section 38(c) of the Internal Revenue Code 
        of 1986 (relating to limitation based on amount of tax) is 
        amended by redesignating paragraph (3) as paragraph (4) and by 
        inserting after paragraph (2) the following:
            ``(3) Special rules for dry or wet cleaning equipment 
        credit.--
                    ``(A) In general.--In the case of the dry or wet 
                cleaning equipment credit--
                            ``(i) this section and section 39 shall be 
                        applied separately with respect to the credit, 
                        and
                            ``(ii) in applying paragraph (1) to the 
                        credit--
                                    ``(I) subparagraph (A) thereof 
                                shall not apply, and
                                    ``(II) the limitation under 
                                paragraph (1) (as modified by subclause 
                                (I)) shall be reduced by the credit 
                                allowed under subsection (a) for the 
                                taxable year (other than the dry or wet 
                                cleaning equipment credit).
                    ``(B) Dry or wet cleaning equipment credit.--For 
                purposes of this subsection, the term `dry or wet 
                cleaning equipment credit' means the credit allowable 
                under subsection (a) by reason of section 46(4).''.
            (2) Conforming amendment.--Subclause (II) of section 
        38(c)(2)(A)(ii) of such Code is amended by inserting ``or the 
        dry or wet cleaning equipment credit'' after ``employment 
        credit''.
    (d) Clerical Amendments.--
            (1) The section heading for section 48 of the Internal 
        Revenue Code of 1986 is amended to read as follows:

``SEC. 48. ENERGY CREDIT; REFORESTATION CREDIT; DRY OR WET CLEANING 
              EQUIPMENT CREDIT.''.

            (2) The item relating to section 48 in the table of 
        sections for subpart E of part IV of subchapter A of chapter 1 
        of such Code is amended to read as follows:

                              ``Sec. 48. Energy credit; reforestation 
                                        credit; dry or wet cleaning 
                                        equipment credit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service on or after January 1, 2001.
Small Business Pollution Prevention Opportunity Act of 2001 - Amends the Internal Revenue Code to establish a dry or wet cleaning equipment credit for any taxable year equivalent to 20 percent of the basis of each qualified dry or wet cleaning property placed in service during the year (40 percent of such basis in the case of such property placed in service in an empowerment zone, enterprise community, or renewal community) which is designed primarily to clean textiles if: (1) such equipment does not use any hazardous solvent as the primary process solvent; (2) the original use of such property commences with the taxpayer; and (3) with respect to which depreciation (or amortization in lieu of depreciation) is allowable.
A bill to amend the Internal Revenue Code of 1986 to allow a credit against income tax for dry and wet cleaning equipment which uses non-hazardous primary process solvents.