II 

112TH CONGRESS 

2D SESSION S. 3352 

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 

JUNE 28, 2012 

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 and Water Efficiency In7 centives Act of 2012’’. 

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. 

Sec. 6. Investment tax credit for biomass heating property. 

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 


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1 back-pressure steam turbines in place of 

2 existing pressure-reducing valves or which 

3 make use of waste heat from industrial 

4 processes such as by using organic 

5 rankine, stirling, or kalina heat engine sys6 tems, subparagraph (A) shall be applied 

7 without regard to clause (ii).’’. 

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

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

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

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

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

13 the Revenue Reconciliation Act of 1990). 

14 SEC. 3. MOTOR ENERGY EFFICIENCY IMPROVEMENT TAX 

15 CREDIT. 

16 (a) IN GENERAL.—Subpart D of part IV of sub17 chapter A of chapter 1 is amended by adding at the end 

18 the following new section: 

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

20 TAX CREDIT. 

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

22 motor energy efficiency improvement tax credit deter23 mined under this section for the taxable year is an amount 

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

25 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 and drive system into a newly designed appliance, 

4 machine, or equipment or into a redesigned appli5 ance, machine, or equipment which did not pre6 viously make use of the advanced motor and drive 

7 system, or 

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

9 year by an end user which upgrades an existing ap10 pliance, machine, or equipment with an advanced 

11 motor and drive system. 

12 For any advanced motor and drive system with a total 

13 horsepower of less than 10, such motor energy efficiency 

14 improvement tax credit is an amount which bears the 

15 same ratio to $120 as such total horsepower bears to 1 

16 horsepower. 

17 ‘‘(b) ADVANCED MOTOR AND DRIVE SYSTEM.—For 

18 purposes of this section, the term ‘advanced motor and 

19 drive system’ means a motor and any required associated 

20 electronic control which— 

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

22 and 

23 ‘‘(2) uses permanent magnet technology, elec24 tronically commutated motor technology, switched 

25 reluctance motor technology, synchronous reluctance, 


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1 or such other motor and drive systems technologies 

2 as determined by the Secretary of Energy. 

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

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

5 determined under this section for any taxpayer for 

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

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

8 under this section with respect to such taxpayer for 

9 all prior taxable years. 

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

11 this section, all persons treated as a single employer 

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

13 treated as 1 taxpayer. 

14 ‘‘(d) SPECIAL RULES.— 

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

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

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

18 the amount of such credit so allowed. 

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

20 shall be allowable under this chapter for property 

21 with respect to which a credit is allowed under this 

22 section. 

23 ‘‘(3) PROPERTY USED OUTSIDE UNITED STATES

24 NOT QUALIFIED.—No credit shall be allowable under 


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1 subsection (a) with respect to any property referred 

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

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

4 property manufactured or placed back into service before 

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

6 of this section or after December 31, 2015.’’. 

7 (b) CONFORMING AMENDMENTS.— 

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

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

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

11 and by adding at the end the following new para12 graph: 

13 ‘‘(36) the motor energy efficiency improvement 

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

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

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

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

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

19 paragraph: 

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

21 45R(d)(1).’’. 

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

23 IV of subchapter A of chapter 1 is amended by add24 ing at the end the following new item: 

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


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

2 this section shall apply to property manufactured or 

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

4 after the date of the enactment of this Act. 

5 SEC. 4. CREDIT FOR REPLACEMENT OF CFC REFRIGERANT 

6 CHILLER. 

7 (a) IN GENERAL.—Subpart D of part IV of sub8 chapter A of chapter 1, as amended by this Act, is amend9 ed by adding at the end the following new section: 

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

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

12 CFC chiller replacement credit determined under this sec13 tion for the taxable year is an amount equal to— 

14 ‘‘(1) $150 multiplied by the tonnage rating of 

15 a CFC chiller replaced with a new efficient chiller 

16 that is placed in service by the taxpayer during the 

17 taxable year, plus 

18 ‘‘(2) if all chilled water distribution pumps con19 nected to the new efficient chiller include variable 

20 frequency drives, $100 multiplied by any tonnage 

21 downsizing. 

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

23 the term ‘CFC chiller’ includes property which— 

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

25 ‘‘(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 

25 section 50(b), the person who sold such new efficient chillVerDate Mar 15 2010 01:39 Jul 04, 2012 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3352.IS S3352

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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, 2015.’’. 

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)— 

24 ‘‘(A) IN GENERAL.—The applicable per25 centage is— 


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1 ‘‘(i) 10 percent in the case of a quali2 fying efficient industrial process water use 

3 project which achieves a 25 percent or 

4 greater (but less than 50 percent) reduc5 tion in water use for industrial purposes, 

6 ‘‘(ii) 20 percent in the case of a quali7 fying efficient industrial process water use 

8 project which achieves a 50 percent or 

9 greater (but less than 75 percent) reduc10 tion in water use for industrial purposes, 

11 and 

12 ‘‘(iii) 30 percent in the case of a 

13 qualifying efficient industrial process water 

14 use project which achieves a 75 percent or 

15 greater reduction in water use for indus16 trial purposes. 

17 ‘‘(B) WATER USE.—For purposes of sub18 paragraph (A)— 

19 ‘‘(i) MEASUREMENT OF REDUCTION

20 IN WATER USE.— 

21 ‘‘(I) IN GENERAL.—The taxpayer 

22 shall elect one of the methods speci23 fied in clause (ii) for measuring the 

24 reduction in water use achieved by a 


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1 qualifying efficient industrial process 

2 water use project. 

3 ‘‘(II) IRREVOCABLE ELECTION.— 

4 An election under subclause (I), once 

5 made with respect to a qualifying effi6 cient industrial process water use 

7 project, shall apply to the taxable year 

8 for which made and all subsequent 

9 taxable years, and may not be re10 voked. 

11 ‘‘(III) PROJECTED SAVINGS.— 

12 The credit under subsection (a) may 

13 be claimed on the basis of a reduction 

14 in water use which is projected, by a 

15 registered professional engineer who is 

16 not a related person (within the mean17 ing of section 144(a)(3)(A)) to the 

18 taxpayer or the installer of eligible 

19 property, to be achieved by a quali20 fying efficient industrial process water 

21 use project. Such projection, if used 

22 as a basis for determining the credit 

23 under subsection (a), shall be included 

24 with the return of tax. 


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1 ‘‘(ii) METHODS SPECIFIED.—The 

2 methods specified in this clause are— 

3 ‘‘(I) a measurement of the per4 centage reduction in water use per 

5 unit of product manufactured by the 

6 taxpayer, and 

7 ‘‘(II) a measurement of the per8 centage reduction in water use per 

9 pound of product manufactured by 

10 the taxpayer. 

11 ‘‘(b) QUALIFIED INVESTMENT.— 

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

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

14 the basis of eligible property placed in service by the 

15 taxpayer during such taxable year which is part of 

16 a qualifying efficient industrial process water use 

17 project. 

18 ‘‘(2) EXCEPTIONS.—Such term shall not in19 clude any portion of the basis related to— 

20 ‘‘(A) permitting, 

21 ‘‘(B) land acquisition, or 

22 ‘‘(C) infrastructure not directly associated 

23 with the implementation of the technology or 

24 process improvements of the qualifying efficient 

25 industrial process water use project. 


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1 ‘‘(3) CERTAIN QUALIFIED PROGRESS EXPENDI2 TURES RULES MADE APPLICABLE.—Rules similar to 

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

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

5 Revenue Reconciliation Act of 1990) shall apply for 

6 purposes of this section. 

7 ‘‘(4) SPECIAL RULE FOR SUBSIDIZED ENERGY

8 FINANCING.—Rules similar to the rules of section 

9 48(a)(4) (without regard to subparagraph (D) there10 of) shall apply for purposes of this section. 

11 ‘‘(5) LIMITATION.—The amount which is treat12 ed for all taxable years with respect to any quali13 fying efficient industrial process water use project 

14 with respect to any site shall not exceed 

15 $10,000,000. 

16 ‘‘(c) DEFINITIONS.—For purposes of this section— 

17 ‘‘(1) QUALIFYING EFFICIENT INDUSTRIAL

18 PROCESS WATER USE PROJECT.— 

19 ‘‘(A) IN GENERAL.—The term ‘qualifying 

20 efficient industrial process water use project’ 

21 means, with respect to any site, a project which 

22 retrofits or expands an existing facility to im23 plement technology or process improvements 

24 which are designed to reduce water use for sys25 tems that use any form of water in the producVerDate Mar 15 2010 01:39 Jul 04, 2012 Jkt 019200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S3352.IS S3352

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1 tion of goods in the manufacturing sector (as 

2 defined in North American Industrial Classi3 fication System codes 31, 32, and 33), includ4 ing any system that uses water for heating, 

5 cooling, or energy production for the production 

6 of goods in the trade or business of manufac7 turing. Such term shall not include a project 

8 which alters an existing facility to change the 

9 type of goods produced by such facility. 

10 ‘‘(B) SYSTEMS.—For purposes of subpara11 graph (A), the term ‘system’ does not include 

12 any system which does not encompass 1 or 

13 more complete processes. 

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

15 property’ means any property— 

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

17 industrial process water use project and which 

18 is necessary for the reduction in water use de19 scribed in paragraph (1), 

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

21 erection of which is completed by the taxpayer, 

22 or 

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

24 the original use of such property commences 

25 with the taxpayer, and 


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

2 amortization in lieu of depreciation) is allow3 able. 

4 ‘‘(3) WATER USE.— 

5 ‘‘(A) IN GENERAL.—The term ‘water use’ 

6 means all water taken for use at the site di7 rectly from ground and surface water sources 

8 together with any water supplied to the site by 

9 a regulated water system. 

10 ‘‘(B) REGULATED WATER SYSTEM.—The 

11 term ‘regulated water system’ means a system 

12 that supplies water that has been treated to po13 table standards. 

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

15 periods after December 31, 2016, under rules similar to 

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

17 the date of the enactment of the Revenue Reconciliation 

18 Act of 1990).’’. 

19 (c) CONFORMING AMENDMENTS.— 

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

21 ‘‘and’’ at the end of clause (iv), by striking the pe22 riod at the end of clause (v) and inserting ‘‘, and’’, 

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

24 clause: 


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

2 is part of a qualifying efficient industrial 

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

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

5 IV of subchapter A of chapter 1 is amended by in6 serting after the item relating to section 48B the fol7 lowing new item: 

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

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

9 this section shall apply to periods after January 1, 2013, 

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

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

12 before the date of the enactment of the Revenue Reconcili13 ation Act of 1990). 

14 SEC. 6. INVESTMENT TAX CREDIT FOR BIOMASS HEATING 

15 PROPERTY. 

16 (a) IN GENERAL.—Subparagraph (A) of section 

17 48(a)(3) is amended by striking ‘‘or’’ at the end of clause 

18 (vi), by inserting ‘‘or’’ at the end of clause (vii), and by 

19 inserting after clause (vii) the following new clause: 

20 ‘‘(viii) open-loop biomass (within the 

21 meaning of section 45(c)(3)) heating prop22 erty, including boilers or furnaces which 

23 operate at output efficiencies of not less 

24 than 65 percent (measured by the higher 

25 heating value of the fuel) and which proVerDate Mar 15 2010 01:39 Jul 04, 2012 Jkt 019200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\S3352.IS S3352

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1 vide thermal energy in the form of heat, 

2 hot water, or steam for space heating, air 

3 conditioning, domestic hot water, or indus4 trial process heat, but only with respect to 

5 periods ending before January 1, 2016,’’. 

6 (b) 30 PERCENT AND 15 PERCENT CREDITS.— 

7 (1) IN GENERAL.—Subparagraph (A) of section 

8 48(a)(2) is amended— 

9 (A) by redesignating clause (ii) as clause 

10 (iii), 

11 (B) by inserting after clause (i) the fol12 lowing new clause: 

13 ‘‘(ii) except as provided in clause 

14 (i)(V), 15 percent in the case of energy 

15 property described in paragraph 

16 (3)(A)(viii), and’’, and 

17 (C) by inserting ‘‘or (ii)’’ after ‘‘clause (i)’’ 

18 in clause (iii), as so redesignated. 

19 (2) INCREASED CREDIT FOR GREATER EFFI20 CIENCY.—Clause (i) of section 48(a)(2)(A) is 

21 amended by striking ‘‘and’’ at the end of subclause 

22 (III) and by inserting after subclause (IV) the fol23 lowing new subclause: 

24 ‘‘(V) energy property described in 

25 paragraph (3)(A)(viii) which operates 


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1 at an output efficiency of not less 

2 than 80 percent (measured by the 

3 higher heating value of the fuel),’’. 

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

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

6 enactment of this Act, in taxable years ending after such 

7 date, under rules similar to the rules of section 48(m) of 

8 the Internal Revenue Code of 1986 (as in effect on the 

9 day before the date of the enactment of the Revenue Rec10 onciliation Act of 1990). 

Æ 


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