II 

109TH CONGRESS 

2D SESSION S. 3654 

To amend the Internal Revenue Code to allow a credit against income tax, 

or, in the alternative, a special depreciation allowance, for reuse and 

recycling property, to provide for tax-exempt financing of recycling equipment, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 13, 2006 

Mr. JEFFORDS (for himself and Mr. CARPER) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code to allow a credit 

against income tax, or, in the alternative, a special depreciation allowance, for reuse and recycling property, to 

provide for tax-exempt financing of recycling equipment, 

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 ‘‘Recycling Investment 

5 Saves Energy’’ or the ‘‘RISE Act’’. 

6 SEC. 2. FINDINGS. 

7 The Senate finds the following: 


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1 (1) Recycling means business in the United 

2 States, with more than 56,000 reuse and recycling 

3 establishments that employ over 1.1 million people, 

4 generating an annual payroll of nearly $37 billion, 

5 and grossing over $236 billion in annual revenues. 

6 On a per-ton basis, sorting and processing 

7 recyclables alone sustain 10 times more jobs than 

8 landfilling or incineration. 

9 (2) By reducing the need to extract and process 

10 virgin raw materials into manufacturing feedstock, 

11 reuse and recycling helps achieve significant energy 

12 savings. For example: 

13 (A) Taken together, the amount of energy 

14 wasted from not recycling aluminum and steel 

15 cans, paper, printed materials, glass, and plas16 tic equals the annual output of 15 medium 

17 sized power plants. 

18 (B) The reuse of 500 steel drums per week 

19 yields 6 trillion Btu’s per year, which is enough 

20 energy savings to power a city the size of Colo21 rado Springs, Colorado, for 1 year. 

22 (3) Unfortunately, the United States recycling 

23 rate of many consumer commodities, including alu24 minum, glass, and plastic, are stagnant or declining, 

25 and businesses that rely on recycled feedstock are 


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1 finding it difficult to obtain the quantity and quality 

2 of recycled materials needed. Increasingly, United 

3 States manufacturing facilities that rely on recycled 

4 feedstock are closing or forced to re-tool to use vir5 gin materials. 

6 (4) The environmental impacts from reuse and 

7 recycling are significant. Increased reuse and recy8 cling would produce significant environmental bene9 fits, such as cleaner air, safer water, and reduced 

10 production costs. For example: 

11 (A) Between 2 and 5 percent of the waste 

12 stream is reusable. Reuse prevents waste cre13 ation and adverse impacts from disposal. 

14 (B) On a per-ton basis, recycling of: office 

15 paper prevents 60 pounds of air pollutants from 

16 being released, saves 7,000 gallons of water, 

17 and 3.3 cubic yards of landfill space; aluminum 

18 saves 10 cubic yards of landfill space; plastic 

19 saves 30 cubic yards of landfill space; glass pre20 vents 7.5 pounds of air pollutants from being 

21 released and saves 2 cubic yards of landfill 

22 space; and steel saves 4 cubic yards of landfill 

23 space. 


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1 (5) A national investment in the reuse and re2 cycling industries is needed to preserve and expand 

3 America’s reuse and recycling infrastructure. 

4 SEC. 3. CREDIT FOR REUSE AND RECYCLING PROPERTY. 

5 (a) IN GENERAL.—Subpart D of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code of 

7 1986 (relating to business-related credits) is amended by 

8 adding at the end the following new section: 

9 ‘‘SEC. 45N. CREDIT FOR QUALIFIED REUSE AND RECYCLING 

10 PROPERTY. 

11 ‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec12 tion 38, the qualified reuse and recycling property credit 

13 determined under this section for the taxable year is an 

14 amount equal to 15 percent of the amount paid or in15 curred during the taxable year for the cost of qualified 

16 reuse and recycling property placed in service or leased 

17 by the taxpayer. 

18 ‘‘(b) DEFINITIONS.—For purposes of this section— 

19 ‘‘(1) QUALIFIED REUSE AND RECYCLING PROP20 ERTY.— 

21 ‘‘(A) IN GENERAL.—The term ‘qualified 

22 reuse and recycling property’ means any ma23 chinery and equipment (not including buildings 

24 or real estate), along with all appurtenances 

25 thereto, including software necessary to operate 


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1 such equipment, which is used exclusively to 

2 collect, distribute, or recycle qualified reuse and 

3 recyclable materials. 

4 ‘‘(B) EXCLUSION.—Such term does not in5 clude rolling stock or other equipment used to 

6 transport reuse and recyclable materials. 

7 ‘‘(2) QUALIFIED REUSE AND RECYCLABLE MA8 TERIALS.— 

9 ‘‘(A) IN GENERAL.—The term ‘qualified 

10 reuse and recyclable materials’ means scrap 

11 plastic, scrap textiles, scrap rubber, scrap pack12 aging, recovered fiber, scrap ferrous and non13 ferrous metals, or electronic waste generated by 

14 an individual or business. 

15 ‘‘(B) ELECTRONIC WASTE.—For purposes 

16 of subparagraph (A), the term ‘electronic waste’ 

17 means— 

18 ‘‘(i) any cathode ray tube, flat panel 

19 screen, or similar video display device with 

20 a screen size greater than 4 inches meas21 ured diagonally, or 

22 ‘‘(ii) any central processing unit. 

23 ‘‘(3) RECYCLING OR RECYCLE.—The term ‘re24 cycling’ or ‘recycle’ means that process (including 

25 sorting) by which worn or superfluous materials are 


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1 manufactured or processed into specification grade 

2 commodities that are suitable for use as a replace3 ment or substitute for virgin materials in manufac4 turing tangible consumer and commercial products, 

5 including packaging. 

6 ‘‘(c) AMOUNT PAID OR INCURRED.—For purposes of 

7 this section— 

8 ‘‘(1) IN GENERAL.—The term ‘amount paid or 

9 incurred’ includes installation costs. 

10 ‘‘(2) LEASE PAYMENTS.—In the case of the 

11 leasing of qualified reuse and recycling property by 

12 the taxpayer, the term ‘amount paid or incurred’ 

13 means the amount of the lease payments due to be 

14 paid during the term of the lease occurring during 

15 the taxable year other than such portion of such 

16 lease payments attributable to interest, insurance, 

17 and taxes. 

18 ‘‘(3) GRANTS, ETC. EXCLUDED.—The term 

19 ‘amount paid or incurred’ shall not include any 

20 amount to the extent such amount is funded by any 

21 grant, contract, or otherwise by another person (or 

22 any governmental entity). 

23 ‘‘(d) ELECTION TO HAVE SECTION NOT APPLY.—A 

24 taxpayer may elect for any taxable year to have this secVerDate Aug 31 2005 05:26 Jul 15, 2006 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3654.IS S3654

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1 tion not apply with respect to any qualified recycling prop2 erty specified by the taxpayer. 

3 ‘‘(e) OTHER TAX DEDUCTIONS AND CREDITS AVAIL4 ABLE FOR PORTION OF COST NOT TAKEN INTO ACCOUNT

5 FOR CREDIT UNDER THIS SECTION.—No deduction or 

6 other credit under this chapter shall be allowed with re7 spect to the amount of the credit determined under this 

8 section. 

9 ‘‘(f) BASIS ADJUSTMENTS.—For purposes of this 

10 subtitle, if a credit is allowed under this section for any 

11 amount paid or incurred with respect to any property, the 

12 increase in the basis of such property which would (but 

13 for this subsection) result from such expenditure shall be 

14 reduced by the amount of the credit so allowed.’’. 

15 (b) CONFORMING AMENDMENTS.— 

16 (1) CREDIT MADE PART OF GENERAL BUSINESS

17 CREDIT.—Subsection (b) of section 38 of the Inter18 nal Revenue Code of 1986 is amended by striking 

19 ‘‘and’’ at the end of paragraph (29), by striking the 

20 period at the end of paragraph (30) and inserting ‘‘, 

21 plus’’, and by adding at the end the following new 

22 paragraph: 

23 ‘‘(31) the qualified reuse and recycling property 

24 credit determined under section 45N(a).’’. 


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1 (2) Subsection (a) of section 1016 of such Code 

2 is amended by striking ‘‘and’’ at the end of para3 graph (36), by striking the period at the end of 

4 paragraph (37) and inserting ‘‘; and’’, and by add5 ing at the end the following new paragraph: 

6 ‘‘(38) to the extent provided in section 45N(f), 

7 in the case of amounts with respect to which a credit 

8 has been allowed under section 45N.’’. 

9 (3) Section 6501(m) of such Code is amended 

10 by inserting ‘‘45N(d),’’ after ‘‘45C(d)(4),’’. 

11 (4) The table of sections for subpart D of part 

12 IV of subchapter A of chapter 1 of such Code is 

13 amended by inserting after the item relating to sec14 tion 45M the following new item: 

‘‘Sec. 45N. Credit for qualified reuse and recycling property.’’. 

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

16 this section shall apply to taxable years beginning after 

17 December 31, 2005. 

18 SEC. 4. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN 

19 REUSE AND RECYCLING PROPERTY. 

20 (a) IN GENERAL.—Section 168 of the Internal Rev21 enue Code of 1986 (relating to accelerated cost recovery 

22 system) is amended by adding at the end the following 

23 new subsection: 

24 ‘‘(l) SPECIAL ALLOWANCE FOR CERTAIN REUSE AND

25 RECYCLING PROPERTY.— 


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1 ‘‘(1) IN GENERAL.—In the case of any qualified 

2 reuse and recycling property— 

3 ‘‘(A) the depreciation deduction provided 

4 by section 167(a) for the taxable year in which 

5 such property is placed in service shall include 

6 an allowance equal to 50 percent of the ad7 justed basis of the qualified reuse and recycling 

8 property, and 

9 ‘‘(B) the adjusted basis of the qualified 

10 reuse and recycling property shall be reduced by 

11 the amount of such deduction before computing 

12 the amount otherwise allowable as a deprecia13 tion deduction under this chapter for such tax14 able year and any subsequent taxable year. 

15 ‘‘(2) QUALIFIED REUSE AND RECYCLING PROP16 ERTY.—For purposes of this subsection— 

17 ‘‘(A) IN GENERAL.—The term ‘qualified 

18 reuse and recycling property’ means any quali19 fied reuse and recycling property (as defined in 

20 section 45N(b)(1))— 

21 ‘‘(i) to which this section applies, 

22 ‘‘(ii) which has a useful life of at least 

23 5 years, 


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1 ‘‘(iii) the original use of which com2 mences with the taxpayer after December 

3 31, 2005, 

4 ‘‘(iv) which is— 

5 ‘‘(I) acquired by purchase (as de6 fined in section 179(d)(2)) by an eligi7 ble taxpayer after December 31, 

8 2005, but only if no written binding 

9 contract for the acquisition was in ef10 fect before December 31, 2005, or 

11 ‘‘(II) acquired by the eligible tax12 payer pursuant to a written binding 

13 contract which was entered into after 

14 December 31, 2005. 

15 ‘‘(B) EXCEPTIONS.— 

16 ‘‘(i) ALTERNATIVE DEPRECIATION

17 PROPERTY.—The term ‘qualified property’ 

18 shall not include any property to which the 

19 alternative depreciation system under sub20 section (g) applies, determined without re21 gard to paragraph (7) of subsection (g) 

22 (relating to election to have system apply). 

23 ‘‘(ii) ELECTION OUT.—If a taxpayer 

24 makes an election under this clause with 

25 respect to any class of property for any 


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1 taxable year, this subsection shall not 

2 apply to all property in such class placed 

3 in service during such taxable year. 

4 ‘‘(C) SPECIAL RULES.— 

5 ‘‘(i) SELF-CONSTRUCTED PROP6 ERTY.—In the case of an eligible taxpayer 

7 manufacturing, constructing, or producing 

8 property for the eligible taxpayer’s own 

9 use, the requirements of clause (iv) of sub10 paragraph (A) shall be treated as met if 

11 the eligible taxpayer begins manufacturing, 

12 constructing, or producing the property 

13 after December 31, 2005. 

14 ‘‘(ii) SALE-LEASEBACKS.—For pur15 poses of subparagraph (A)(iii), if prop16 erty— 

17 ‘‘(I) is originally placed in service 

18 after December 31, 2005, by a per19 son, and 

20 ‘‘(II) sold and leased back by 

21 such person within 3 months after the 

22 date such property was originally 

23 placed in service, 

24 such property shall be treated as originally 

25 placed in service not earlier than the date 


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1 on which such property is used under the 

2 leaseback referred to in subclause (II). 

3 ‘‘(D) DEDUCTION ALLOWED IN COM4 PUTING MINIMUM TAX.—For purposes of deter5 mining alternative minimum taxable income 

6 under section 55, the deduction under sub7 section (a) for qualified reuse and recycling 

8 property shall be determined under this section 

9 without regard to any adjustment under section 

10 56. 

11 ‘‘(3) ELIGIBLE TAXPAYER.—For purposes of 

12 this subsection, the term ‘eligible taxpayer’ means, 

13 with respect to any qualified reuse and recycling 

14 property, any taxpayer which elects not to have sec15 tion 45N apply with respect to such property.’’. 

16 (b) EFFECTIVE DATE.—The amendment made by 

17 this section shall apply to property placed in service after 

18 December 31, 2005. 

19 SEC. 5. TAX-EXEMPT BOND FINANCING OF RECYCLING FA20 CILITIES. 

21 (a) IN GENERAL.—Section 142 of the Internal Rev22 enue Code of 1986 (defining exempt facility bond) is 

23 amended by adding at the end the following new sub24 section: 

25 ‘‘(n) SOLID WASTE DISPOSAL FACILITIES.— 


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

2 (a)(6) only, the term ‘solid waste disposal facilities’ 

3 means any facility used to perform a solid waste dis4 posal function. 

5 ‘‘(2) SOLID WASTE DISPOSAL FUNCTION.— 

6 ‘‘(A) IN GENERAL.—For purposes of this 

7 subsection only, the term ‘solid waste disposal 

8 function’ means the collection, separation, sort9 ing, storage, treatment, disassembly, handling, 

10 or processing of solid waste in any manner de11 signed to dispose of the solid waste, including 

12 processing the solid waste into a useful energy 

13 source or product. 

14 ‘‘(B) EXTENT OF FUNCTION.—For pur15 poses of this subsection only, the solid waste 

16 disposal function ends at the later of— 

17 ‘‘(i) the point of final disposal of the 

18 solid waste, 

19 ‘‘(ii) immediately after the solid waste 

20 is incinerated to produce energy, or 

21 ‘‘(iii) the point at which the solid 

22 waste has been converted into a material 

23 or product that can be sold in the same 

24 manner as comparable material or product 

25 produced from virgin material. 


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1 ‘‘(C) FUNCTIONALLY RELATED AND SUB2 ORDINATE FACILITIES.—For purposes of this 

3 subsection only, in the case of a facility used to 

4 perform both a solid waste disposal function 

5 and another function— 

6 ‘‘(i) the costs of the facility allocable 

7 to the solid waste disposal function are de8 termined using any reasonable method 

9 based upon facts and circumstances, and 

10 ‘‘(ii) if during the period that bonds 

11 issued as part of an issue described in sub12 section (a)(6) are outstanding with respect 

13 to any facility at least 65 percent of the 

14 materials processed in such facility are 

15 solid waste materials as measured by 

16 weight or volume, then all of the costs of 

17 the property used to perform such process 

18 are allocable to a solid waste disposal func19 tion. 

20 ‘‘(3) SOLID WASTE.—For purposes of this sub21 section only— 

22 ‘‘(A) IN GENERAL.—The term ‘solid waste’ 

23 means garbage, refuse, or discarded solid mate24 rials, including waste materials resulting from 


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1 industrial, commercial, agricultural, or commu2 nity activities. 

3 ‘‘(B) GARBAGE, REFUSE OR DISCARDED

4 SOLID MATERIALS.—For purposes of subpara5 graph (A), the term ‘garbage, refuse, or dis6 carded solid materials’ means materials that are 

7 useless, unused, unwanted, or discarded. 

8 ‘‘(C) EXCLUSION.—The term ‘solid waste’ 

9 does not include materials in domestic sewage, 

10 pollutants in industrial or other water re11 sources, or other liquid or gaseous waste mate12 rials.’’. 

13 (b) EFFECTIVE DATE.—The amendment made by 

14 this section shall apply to bonds issued before, on, or after 

15 the date of the enactment of this Act. 

Æ 


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