II 

115TH CONGRESS 

1ST SESSION S. 262 

To amend the Internal Revenue Code of 1986 to extend and modify the 

section 45 credit for refined coal from steel industry fuel, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 1, 2017 

Mrs. CAPITO (for herself, Mr. BROWN, Mr. PORTMAN, Mr. CASEY, and Ms. 

STABENOW) 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 extend 

and modify the section 45 credit for refined coal from 

steel industry fuel, 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. 

4 This Act may be cited as the ‘‘Steel Industry Preser5 vation Act’’. 

6 SEC. 2. EXTENSION AND MODIFICATION OF CREDIT FOR 

7 STEEL INDUSTRY FUEL. 

8 (a) CREDIT PERIOD.— 


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1 (1) IN GENERAL.—Subclause (II) of section 

2 45(e)(8)(D)(ii) of the Internal Revenue Code of 

3 1986 is amended to read as follows: 

4 ‘‘(II) CREDIT PERIOD.—In lieu 

5 of the 10-year period referred to in 

6 clauses (i) and (ii)(II) of subpara7 graph (A), the credit period shall be 

8 the period beginning on the first date 

9 that the facility first produces steel 

10 industry fuel that is sold to an unre11 lated person after the date of the en12 actment of the Steel Industry Preser13 vation Act, and ending 10 years after 

14 such first date.’’. 

15 (2) CONFORMING AMENDMENT.—Section 

16 45(e)(8)(D) of such Code is amended by striking 

17 clause (iii) and by redesignating clause (iv) as clause 

18 (iii). 

19 (b) EXTENSION OF PLACED-IN-SERVICE DATE.— 

20 Subparagraph (A) of section 45(d)(8) of the Internal Rev21 enue Code of 1986 is amended— 

22 (1) by striking ‘‘(or any modification to a facil23 ity)’’; 

24 (2) by striking ‘‘placed in service before’’ and 

25 inserting ‘‘placed in service— 


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1 ‘‘(i) before’’; 

2 (3) by striking ‘‘and’’ at the end and inserting 

3 ‘‘or’’; and 

4 (4) by adding at the end the following new 

5 clause: 

6 ‘‘(ii) after the date of the enactment 

7 of this clause and before January 1, 2019, 

8 and’’. 

9 (c) CLARIFICATIONS.— 

10 (1) STEEL INDUSTRY FUEL.—Subclause (I) of 

11 section 45(c)(7)(C)(i) of the Internal Revenue Code 

12 of 1986 is amended by inserting ‘‘, or a blend of 

13 coal and petroleum coke, or other coke feedstock’’ 

14 after ‘‘on coal’’. 

15 (2) OWNERSHIP INTEREST.—Section 45(d)(8) 

16 of such Code is amended by adding at the end the 

17 following new flush sentence: 

18 ‘‘With respect to a facility producing steel industry 

19 fuel, no person (including a ground lessor, customer, 

20 supplier, or technology licensor) shall be treated as 

21 having an ownership interest in the facility or as 

22 otherwise entitled to the credit allowable under this 

23 section with respect to such facility if such person’s 

24 rent, license fee, or other entitlement to net pay25 ments from the owner of such facility is measured 


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1 by a fixed dollar amount or a fixed amount per ton, 

2 or otherwise determined without regard to the profit 

3 or loss of such facility.’’. 

4 (3) PRODUCTION AND SALE.—Subparagraph 

5 (D) of section 45(e)(8) of such Code, as amended by 

6 subsection (a)(2), is amended by redesignating 

7 clause (iii) as clause (iv) and by inserting after 

8 clause (ii) the following new clause: 

9 ‘‘(iii) PRODUCTION AND SALE.—The 

10 owner of a facility producing steel industry 

11 fuel shall be treated as producing and sell12 ing steel industry fuel where that owner 

13 manufactures such steel industry fuel from 

14 coal, a blend of coal and petroleum coke, 

15 or other coke feedstock to which it has 

16 title. The sale of such steel industry fuel 

17 by the owner of the facility to a person 

18 who is not the owner of the facility shall 

19 not fail to qualify as a sale to an unrelated 

20 person solely because such purchaser may 

21 also be a ground lessor, supplier, or cus22 tomer.’’. 

23 (d) ELECTION TO INCREASE CREDIT IN LIEU OF

24 STEEL INDUSTRY FUEL DEDUCTIONS.—Paragraph (8) of 


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1 section 45(e) is amended by adding at the end the fol2 lowing new subparagraph: 

3 ‘‘(E) ELECTION FOR INCREASED CREDIT

4 IN LIEU OF DEDUCTIONS FOR STEEL INDUSTRY

5 FUEL.—In the case of a taxpayer who produces 

6 steel industry fuel— 

7 ‘‘(i) IN GENERAL.—At the election of 

8 the taxpayer— 

9 ‘‘(I) no deduction shall be al10 lowed with respect to expenses made 

11 in connection with the production and 

12 sale of steel industry for such taxable 

13 year which are otherwise deductible 

14 under this chapter (determined with15 out regard to this subparagraph), 

16 ‘‘(II) no expense made in connec17 tion with the production of and sale of 

18 steel industry fuel which is otherwise 

19 chargeable to capital account in such 

20 taxable year shall be so charged, and 

21 ‘‘(III) the credit determined 

22 under this section (without regard to 

23 this subparagraph) for such taxable 

24 year shall be increased by an amount 

25 equal to the product of the sum of the 


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1 amounts to which subclauses (I) and 

2 (II) apply and the maximum rate of 

3 tax applicable under section 1 or 

4 11(b)(1), as applicable to the taxpayer 

5 in such taxable year. 

6 ‘‘(ii) APPLICATION TO PARTNERSHIPS

7 AND S CORPORATIONS.—In the case of a 

8 partnership or S corporation, the election 

9 shall be made at the partnership or S cor10 poration level. 

11 ‘‘(iii) ELECTION.—An election under 

12 this subparagraph for any taxable year 

13 shall be made not later than the time for 

14 filing the return of tax for such year (in15 cluding extensions), in such manner as the 

16 Secretary may prescribe. Such an election, 

17 once made, shall be irrevocable.’’. 

18 (e) SPECIFIED CREDIT FOR PURPOSES OF ALTER19 NATIVE MINIMUM TAX EXCLUSION.—Subclause (II) of 

20 section 38(c)(4)(B)(iv) of the Internal Revenue Code of 

21 1986 is amended by inserting ‘‘(in the case of a refined 

22 coal production facility producing steel industry fuel, dur23 ing the credit period set forth in section 

24 45(e)(8)(D)(ii)(II))’’ after ‘‘service’’. 


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1 (f) APPLICATION OF CERTAIN RULES TO STEEL IN2 DUSTRY FUEL.— 

3 (1) ACTIVITY NOT ENGAGED IN FOR PROFIT.— 

4 Section 183 of the Internal Revenue Code of 1986 

5 is amended by adding at the end the following new 

6 subsection: 

7 ‘‘(f) EXCEPTION.—This section shall not apply to any 

8 deduction with respect to the production of steel industry 

9 fuel (as defined in section 45(c)(7)(C)).’’. 

10 (2) APPLICATION OF ECONOMIC SUBSTANCE

11 DOCTRINE.— 

12 (A) IN GENERAL.—Subsection (o) of sec13 tion 7701 of the Internal Revenue Code of 1986 

14 is amended by adding at the end the following 

15 new paragraph: 

16 ‘‘(6) NON-APPLICATION TO STEEL INDUSTRY

17 FUEL.—The economic substance doctrine shall not 

18 apply to any transaction to the extent such trans19 action relates to steel industry fuel (as defined in 

20 section 45(c)(7)(C)).’’. 

21 (B) CONFORMING AMENDMENT.—Para22 graph (5)(C) of section 7701(o) of such Code is 

23 amended by striking ‘‘The determination’’ and 

24 inserting ‘‘Except as provided in paragraph (6), 

25 the determination’’. 


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1 (g) EFFECTIVE DATES.— 

2 (1) IN GENERAL.—Except as provided in para3 graph (2), the amendments made by this section 

4 shall apply to fuel produced and sold after the date 

5 of the enactment of this Act, in taxable years ending 

6 after such date. 

7 (2) APPLICATION OF ECONOMIC SUBSTANCE

8 RULES.—The amendments made by subsection (f)(2) 

9 shall apply to transactions entered into after the 

10 date of the enactment of this Act. 

Æ 


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