II 

111TH CONGRESS 

1ST SESSION S. 1639 

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 

AUGUST 6, 2009 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; 

4 TABLE OF CONTENTS. 

5 (a) SHORT TITLE.—This Act may be cited as the 

6 ‘‘Expanding Industrial Energy Efficiency Incentives Act 

7 of 2009’’. 

8 (b) AMENDMENT OF 1986 CODE.—Except as other9 wise expressly provided, whenever in this Act an amend10 ment or repeal is expressed in terms of an amendment 


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1 to, or repeal of, a section or other provision, the reference 

2 shall be considered to be made to a section or other provi3 sion of the Internal Revenue Code of 1986. 

4 (c) TABLE OF CONTENTS.—The table of contents for 

5 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. 

6 SEC. 2. MODIFICATIONS IN CREDIT FOR COMBINED HEAT 

7 AND POWER SYSTEM PROPERTY. 

8 (a) MODIFICATION OF CERTAIN CAPACITY LIMITA9 TIONS.—Section 48(c)(3)(B) is amended— 

10 (1) by striking ‘‘15 megawatts’’ in clause (ii) 

11 and inserting ‘‘25 megawatts’’, 

12 (2) by striking ‘‘20,000 horsepower’’ in clause 

13 (ii) and inserting ‘‘34,000 horsepower’’, and 

14 (3) by striking clause (iii). 

15 (b) NONAPPLICATION OF CERTAIN RULES.—Section 

16 48(c)(3)(C) is amended by adding at the end the following 

17 new clause: 

18 ‘‘(iv) NONAPPLICATION OF CERTAIN

19 RULES.—For purposes of determining if 

20 the term ‘combined heat and power system 

21 property’ includes technologies which gen22 erate electricity or mechanical power using 

23 back-pressure steam turbines in place of 


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1 existing pressure-reducing valves or which 

2 make use of waste heat from industrial 

3 processes such as by using organic 

4 rankine, stirling, or kalina heat engine sys5 tems, subparagraph (A) shall be applied 

6 without regard to clause (ii).’’. 

7 (c) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to periods after the date of the 

9 enactment of this Act, under rules similar to the rules of 

10 section 48(m) of the Internal Revenue Code of 1986 (as 

11 in effect on the day before the date of the enactment of 

12 the Revenue Reconciliation Act of 1990). 

13 SEC. 3. MOTOR ENERGY EFFICIENCY IMPROVEMENT TAX 

14 CREDIT. 

15 (a) IN GENERAL.—Subpart D of part IV of sub16 chapter A of chapter 1 is amended by adding at the end 

17 the following new section: 

18 ‘‘SEC. 45R. MOTOR ENERGY EFFICIENCY IMPROVEMENT 

19 TAX CREDIT. 

20 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

21 motor energy efficiency improvement tax credit deter22 mined under this section for the taxable year is an amount 

23 equal to $120 multiplied by the motor horsepower of an 

24 appliance, machine, or equipment— 


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1 ‘‘(1) manufactured in such taxable year by a 

2 manufacturer which incorporates an advanced motor 

3 system into a newly designed appliance, machine, or 

4 equipment or into a redesigned appliance, machine, 

5 or equipment which did not previously make use of 

6 the advanced motor system, or 

7 ‘‘(2) placed back into service in such taxable 

8 year by an end user which upgrades an existing ap9 pliance, machine, or equipment with an advanced 

10 motor system. 

11 For any advanced motor system with a total horsepower 

12 of less than 10, such motor energy efficiency improvement 

13 tax credit is an amount which bears the same ratio to 

14 $120 as 1 horsepower bears to such total horsepower. 

15 ‘‘(b) ADVANCED MOTOR SYSTEM.—For purposes of 

16 this section, the term ‘advanced motor system’ means a 

17 motor and any required associated electronic control 

18 which— 

19 ‘‘(1) offers variable or multiple speed operation, 

20 and 

21 ‘‘(2) uses permanent magnet technology, elec22 tronically commutated motor technology, switched 

23 reluctance motor technology, or such other motor 

24 systems technologies as determined by the Secretary 

25 of Energy. 


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1 ‘‘(c) AGGREGATE PER TAXPAYER LIMITATION.— 

2 ‘‘(1) IN GENERAL.—The amount of the credit 

3 determined under this section for any taxpayer for 

4 any taxable year shall not exceed the excess (if any) 

5 of $2,000,000 over the aggregate credits allowed 

6 under this section with respect to such taxpayer for 

7 all prior taxable years. 

8 ‘‘(2) AGGREGATION RULES.—For purposes of 

9 this section, all persons treated as a single employer 

10 under subsections (a) and (b) of section 52 shall be 

11 treated as 1 taxpayer. 

12 ‘‘(d) SPECIAL RULES.— 

13 ‘‘(1) BASIS REDUCTION.—For purposes of this 

14 subtitle, the basis of any property for which a credit 

15 is allowable under subsection (a) shall be reduced by 

16 the amount of such credit so allowed. 

17 ‘‘(2) NO DOUBLE BENEFIT.—No other credit 

18 shall be allowable under this chapter for property 

19 with respect to which a credit is allowed under this 

20 section. 

21 ‘‘(3) PROPERTY USED OUTSIDE UNITED STATES

22 NOT QUALIFIED.—No credit shall be allowable under 

23 subsection (a) with respect to any property referred 

24 to in section 50(b)(1). 


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1 ‘‘(e) APPLICATION.—This section shall not apply to 

2 property manufactured or placed back into service before 

3 the date which is 6 months after the date of the enactment 

4 of this section or after December 31, 2013.’’. 

5 (b) CONFORMING AMENDMENTS.— 

6 (1) Section 38(b) is amended by striking ‘‘plus’’ 

7 at the end of paragraph (34), by striking the period 

8 at the end of paragraph (35) and inserting ‘‘, plus’’, 

9 and by adding at the end the following new para10 graph: 

11 ‘‘(36) the motor energy efficiency improvement 

12 tax credit determined under section 45R.’’. 

13 (2) Section 1016(a) is amended by striking 

14 ‘‘and’’ at the end of paragraph (36), by striking the 

15 period at the end of paragraph (37) and inserting ‘‘, 

16 and’’, and by adding at the end the following new 

17 paragraph: 

18 ‘‘(38) to the extent provided in section 

19 45R(d)(1).’’. 

20 (3) The table of sections for subpart D of part 

21 IV of subchapter A of chapter 1 is amended by add22 ing at the end the following new item: 

‘‘Sec. 45R. Motor energy efficiency improvement tax credit.’’. 

23 (c) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to property manufactured or 


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1 placed back into service after the date which is 6 months 

2 after the date of the enactment of this Act. 

3 SEC. 4. CREDIT FOR REPLACEMENT OF CFC REFRIGERANT 

4 CHILLER. 

5 (a) IN GENERAL.—Subpart D of part IV of sub6 chapter A of chapter 1, as amended by this Act, is amend7 ed by adding at the end the following new section: 

8 ‘‘SEC. 45S. CFC CHILLER REPLACEMENT CREDIT. 

9 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

10 CFC chiller replacement credit determined under this sec11 tion for the taxable year is an amount equal to— 

12 ‘‘(1) $150 multiplied by the tonnage rating of 

13 a CFC chiller replaced with a new efficient chiller 

14 that is placed in service by the taxpayer during the 

15 taxable year, plus 

16 ‘‘(2) if all chilled water distribution pumps con17 nected to the new efficient chiller include variable 

18 frequency drives, $100 multiplied by any tonnage 

19 downsizing. 

20 ‘‘(b) CFC CHILLER.—For purposes of this section, 

21 the term ‘CFC chiller’ includes property which— 

22 ‘‘(1) was installed after 1980 and before 1993, 

23 ‘‘(2) utilizes chlorofluorocarbon refrigerant, and 


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1 ‘‘(3) until replaced by a new efficient chiller, 

2 has remained in operation and utilized for cooling a 

3 commercial building. 

4 ‘‘(c) NEW EFFICIENT CHILLER.—For purposes of 

5 this section, the term ‘new efficient chiller’ includes a 

6 water-cooled chiller which is certified to meet efficiency 

7 standards effective on January 1, 2010, as defined in table 

8 6.8.1c in Addendum M to Standard 90.1–2007 of the 

9 American Society of Heating, Refrigerating, and Air Con10 ditioning Engineers. 

11 ‘‘(d) TONNAGE DOWNSIZING.—For purposes of this 

12 section, the term ‘tonnage downsizing’ means the amount 

13 by which the tonnage rating of the CFC chiller exceeds 

14 the tonnage rating of the new efficient chiller. 

15 ‘‘(e) ENERGY AUDIT.—As a condition of receiving a 

16 tax credit under this section, an energy audit shall be per17 formed on the building prior to installation of the new effi18 cient chiller, identifying cost-effective energy-saving meas19 ures, particularly measures that could contribute to chiller 

20 downsizing. The audit shall satisfy criteria that shall be 

21 issued by the Secretary of Energy. 

22 ‘‘(f) PROPERTY USED BY TAX-EXEMPT ENTITY.—In 

23 the case of a CFC chiller replaced by a new efficient chiller 

24 the use of which is described in paragraph (3) or (4) of 

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1 er to the entity shall be treated as the taxpayer that placed 

2 in service the new efficient chiller that replaced the CFC 

3 chiller, but only if such person clearly discloses to such 

4 entity in a document the amount of any credit allowable 

5 under subsection (a) and the person certifies to the Sec6 retary that the person reduced the price the entity paid 

7 for such new efficient chiller by the entire amount of such 

8 credit. 

9 ‘‘(g) TERMINATION.—This section shall not apply to 

10 replacements made after December 31, 2012.’’. 

11 (b) CONFORMING AMENDMENTS.— 

12 (1) Section 38(b), as amended by this Act, is 

13 amended by striking ‘‘plus’’ at the end of paragraph 

14 (35), by striking the period at the end of paragraph 

15 (36) and inserting ‘‘, plus’’, and by adding at the 

16 end the following new paragraph: 

17 ‘‘(37) the CFC chiller replacement credit deter18 mined under section 45S.’’. 

19 (2) The table of sections for subpart D of part 

20 IV of subchapter A of chapter 1, as amended by this 

21 Act, is amended by adding at the end the following 

22 new item: 

‘‘Sec. 45S. CFC chiller replacement credit.’’. 

23 (c) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to replacements made after the 

25 date of the enactment of this Act. 


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1 SEC. 5. QUALIFYING EFFICIENT INDUSTRIAL PROCESS 

2 WATER USE PROJECT CREDIT. 

3 (a) IN GENERAL.—Section 46 is amended by striking 

4 ‘‘and’’ at the end of paragraph (4), by striking the period 

5 at the end of paragraph (5), and by adding at the end 

6 the following new paragraph: 

7 ‘‘(6) the qualifying efficient industrial process 

8 water use project credit.’’. 

9 (b) AMOUNT OF CREDIT.—Subpart E of part IV of 

10 subchapter A of chapter 1 is amended by inserting after 

11 section 48C the following new section: 

12 ‘‘SEC. 48D. QUALIFYING EFFICIENT INDUSTRIAL PROCESS 

13 WATER USE PROJECT CREDIT. 

14 ‘‘(a) IN GENERAL.— 

15 ‘‘(1) ALLOWANCE OF CREDIT.—For purposes of 

16 section 46, the qualifying efficient industrial process 

17 water use project credit for any taxable year is an 

18 amount equal to the applicable percentage of the 

19 qualified investment for such taxable year with re20 spect to any qualifying efficient industrial process 

21 water use project of the taxpayer. 

22 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

23 of subsection (a), the applicable percentage is— 

24 ‘‘(A) 10 percent in the case of a qualifying 

25 efficient industrial process water use project 

26 which achieves a net energy consumption of less 


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1 than 3,000 kilowatt hours per million gallons of 

2 water, and is placed in service before January 

3 1, 2013, 

4 ‘‘(B) 20 percent in the case of a qualifying 

5 efficient industrial process water use project 

6 which achieves a net energy consumption of less 

7 than 2,000 kilowatt hours per million gallons of 

8 water, and 

9 ‘‘(C) 30 percent in the case of a qualifying 

10 efficient industrial process water use project 

11 which achieves a net energy consumption of less 

12 than 1,000 kilowatt hours per million gallons of 

13 water. 

14 ‘‘(b) QUALIFIED INVESTMENT.— 

15 ‘‘(1) IN GENERAL.—For purposes of subsection 

16 (a), the qualified investment for any taxable year is 

17 the basis of eligible property placed in service by the 

18 taxpayer during such taxable year which is part of 

19 a qualifying efficient industrial process water use 

20 project. 

21 ‘‘(2) EXCEPTIONS.—Such term shall not in22 clude any portion of the basis related to— 

23 ‘‘(A) permitting, 

24 ‘‘(B) land acquisition, or 


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1 ‘‘(C) infrastructure associated with 

2 sourcing or water discharge. 

3 ‘‘(3) CERTAIN QUALIFIED PROGRESS EXPENDI4 TURES RULES MADE APPLICABLE.—Rules similar to 

5 the rules of subsections (c)(4) and (d) of section 46 

6 (as in effect on the day before the enactment of the 

7 Revenue Reconciliation Act of 1990) shall apply for 

8 purposes of this section. 

9 ‘‘(4) SPECIAL RULE FOR SUBSIDIZED ENERGY

10 FINANCING.—Rules similar to the rules of section 

11 48(a)(4) (without regard to subparagraph (D) there12 of) shall apply for purposes of this section. 

13 ‘‘(5) LIMITATION.—The amount which is treat14 ed for all taxable years with respect to any quali15 fying efficient industrial process water use project 

16 with respect to any site shall not exceed 

17 $10,000,000. 

18 ‘‘(c) DEFINITIONS.— 

19 ‘‘(1) QUALIFYING EFFICIENT INDUSTRIAL

20 PROCESS WATER USE PROJECT.—The term ‘quali21 fying efficient industrial process water use project’ 

22 means, with respect to any site, a project— 

23 ‘‘(A) which replaces or modifies a system 

24 for the use of water or steam in the production 

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1 turing (including any system for the use of 

2 water derived from blow-down from cooling tow3 ers and steam systems in the generation of elec4 tric power at a site also used for the production 

5 of goods in the trade or business of manufac6 turing), and 

7 ‘‘(B) which is designed to achieve— 

8 ‘‘(i) a reduction of not less than 20 

9 percent in water withdrawal and a reduc10 tion of not less than 10 percent of water 

11 discharge when compared to the existing 

12 water use at the site, or 

13 ‘‘(ii) a reduction of not less than 10 

14 percent in water withdrawal and a reduc15 tion of not less than 20 percent of water 

16 discharge when compared to the existing 

17 water use at the site. 

18 ‘‘(2) ELIGIBLE PROPERTY.—The term ‘eligible 

19 property’ means any property— 

20 ‘‘(A) which is part of a qualifying efficient 

21 industrial process water use project and which 

22 is necessary for the reduction in withdrawals or 

23 discharge described in paragraph (1)(B), 


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1 ‘‘(B)(i) the construction, reconstruction, or 

2 erection of which is completed by the taxpayer, 

3 or 

4 ‘‘(ii) which is acquired by the taxpayer if 

5 the original use of such property commences 

6 with the taxpayer, and 

7 ‘‘(C) with respect to which depreciation (or 

8 amortization in lieu of depreciation) is allow9 able. 

10 ‘‘(3) NET ENERGY CONSUMPTION.—The term 

11 ‘net energy consumption’ means the energy con12 sumed, both on-site and off-site, with respect to the 

13 water described in paragraph (1)(A). Net energy 

14 consumption shall be normalized per unit of indus15 trial output and measured under rules and proce16 dures established by the Secretary, in consultation 

17 with the Administrator of the Environmental Protec18 tion Agency. 

19 ‘‘(4) WATER DISCHARGE.—The term ‘water dis20 charge’ means all water leaving the site via per21 mitted or unpermitted surface water discharges, dis22 charges to publicly owned treatment works, and 

23 shallow- or deep-injection (whether on-site or off24 site). 


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1 ‘‘(5) WATER WITHDRAWAL.—The term ‘water 

2 withdrawal’ means all water taken for use at the site 

3 from on-site ground and surface water sources to4 gether with any water supplied to the site by a pub5 lic water system. 

6 ‘‘(d) TERMINATION.—This section shall not apply to 

7 periods after December 31, 2014, under rules similar to 

8 the rules of section 48(m) (as in effect on the day before 

9 the date of the enactment of the Revenue Reconciliation 

10 Act of 1990).’’. 

11 (c) CONFORMING AMENDMENTS.— 

12 (1) Section 49(a)(1)(C) is amended by striking 

13 ‘‘and’’ at the end of clause (iv), by striking the pe14 riod at the end of clause (v) and inserting ‘‘, and’’, 

15 and by adding after clause (v) the following new 

16 clause: 

17 ‘‘(vi) the basis of any property which 

18 is part of a qualifying efficient industrial 

19 use water project under section 48D.’’. 

20 (2) The table of sections for subpart E of part 

21 IV of subchapter A of chapter 1 is amended by in22 serting after the item relating to section 48B the fol23 lowing new item: 

‘‘Sec. 48D. Qualifying efficient industrial process water use project credit.’’. 

24 (d) EFFECTIVE DATE.—The amendments made by 

25 this section shall apply to periods after January 1, 2011, 


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1 under rules similar to the rules of section 48(m) of the 

2 Internal Revenue Code of 1986 (as in effect on the day 

3 before the date of the enactment of the Revenue Reconcili4 ation Act of 1990). 

Æ 


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