I 

111TH CONGRESS 

1ST SESSION H. R. 3462 

To amend the Internal Revenue Code of 1986 to encourage the use of 

corrosion prevention and mitigation measures in the construction and 

maintenance of business energy-related property. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 31, 2009 

Mr. BRADY of Texas (for himself, Mr. CONAWAY, Ms. SUTTON, and Mr. 

CULBERSON) introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to encourage 

the use of corrosion prevention and mitigation measures 

in the construction and maintenance of business energyrelated property. 

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 ‘‘Corrosion Prevention 

5 Act of 2009’’. 


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1 SEC. 2. CREDIT FOR CORROSION PREVENTION AND MITI2 GATION MEASURES FOR ENERGY-RELATED 

3 PROPERTY. 

4 (a) IN GENERAL.—Subpart D of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of 

6 1986 (relating to business-related credits) is amended by 

7 adding at the end the following new section: 

8 ‘‘SEC. 45R. CORROSION PREVENTION AND MITIGATION 

9 MEASURES FOR ENERGY-RELATED PROP10 ERTY. 

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

12 corrosion prevention and mitigation credit determined 

13 under this section for the taxable year is an amount equal 

14 to 50 percent of the excess of— 

15 ‘‘(1) qualified corrosion prevention and mitiga16 tion expenditures with respect to qualified energy-re17 lated property, over 

18 ‘‘(2) the amount such expenditures would have 

19 been, taking into account— 

20 ‘‘(A) amounts paid or incurred to satisfy 

21 Federal, State, or local requirements, and 

22 ‘‘(B) amounts paid for corrosion preven23 tion practices, as certified by a person certified 

24 pursuant to subsection (b)(2). 

25 ‘‘(b) QUALIFIED CORROSION PREVENTION AND MITI26 GATION EXPENDITURES.—For purposes of this section— 


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1 ‘‘(1) IN GENERAL.—The term ‘qualified corro2 sion prevention and mitigation expenditures’ means 

3 amounts paid or incurred by the taxpayer during the 

4 taxable year for engineering design, materials, and 

5 application and installation of corrosion prevention 

6 and mitigation technology. 

7 ‘‘(2) CERTIFICATION MAY BE REQUIRED.—The 

8 Secretary shall require by regulation that no amount 

9 be taken into account under paragraph (1) for any 

10 design, material, application, or installation unless 

11 such design, material, application, or installation 

12 meets such certification requirements. Such require13 ments shall provide for accreditation of certifying 

14 persons by an independent entity with expertise in 

15 corrosion prevention and mitigation technology. 

16 ‘‘(3) CORROSION PREVENTION AND MITIGATION

17 TECHNOLOGY.—Corrosion prevention and mitigation 

18 technology includes a system comprised of at least 

19 one of the following: a corrosion-protective coating 

20 or paint; chemical treatment; corrosion-resistant 

21 metals; and cathodic protection. The Secretary from 

22 time to time by regulations or other guidance may 

23 modify the list contained in the preceding sentence 

24 to reflect changes in corrosion prevention and miti25 gation technology. 


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1 ‘‘(4) QUALIFIED ENERGY-RELATED PROP2 ERTY.—The term ‘qualified energy-related property’ 

3 means property which is— 

4 ‘‘(A) comprised primarily of a metal sus5 ceptible to corrosion, 

6 ‘‘(B) used in— 

7 ‘‘(i) the exploration, production, refin8 ing, or transportation of oil, natural gas, 

9 coal, or any product thereof, or 

10 ‘‘(ii) the generation, transmission, or 

11 distribution of electricity or any other form 

12 of energy, 

13 ‘‘(C) of a character subject to the allow14 ance for depreciation, 

15 ‘‘(D) originally placed in service or owned 

16 by the taxpayer, and 

17 ‘‘(E) located in the United States. 

18 ‘‘(c) RECAPTURE OF CREDIT.— 

19 ‘‘(1) IN GENERAL.—If, as of the close of any 

20 taxable year, there is a recapture event with respect 

21 to any qualified energy-related property for which a 

22 credit was allowed under subsection (a), the tax of 

23 the taxpayer under this chapter for such taxable 

24 year shall be increased by an amount equal to the 

25 product of— 


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1 ‘‘(A) the applicable recapture percentage, 

2 and 

3 ‘‘(B) the aggregate decrease in the credits 

4 allowed under section 38 for all prior taxable 

5 years which would have resulted if the qualified 

6 corrosion prevention and mitigation expendi7 tures of the taxpayer with respect to such prop8 erty had been zero. 

9 ‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.— 

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

11 subsection, the applicable recapture percentage 

12 shall be determined from the following table: 

‘‘If the property ceases to be The recapture 

qualified energy-related property within: percentage is: 

(i) One full year after placed in service ............................................. 100

(ii) One full year after the close of the period described in clause 

(i) ................................................................................................... 80

(iii) One full year after the close of the period described in clause 

(ii) .................................................................................................. 60

(iv) One full year after the close of the period described in clause 

(iii) ................................................................................................. 40

(v) One full year after the close of the period described in clause 

(iv) .................................................................................................. 20. 

13 ‘‘(B) RECAPTURE EVENT DEFINED.—For 

14 purposes of this subsection, the term ‘recapture 

15 event’ means— 

16 ‘‘(i) CESSATION OF USE.—The ces17 sation of use of the qualified energy-related 

18 property. 

19 ‘‘(ii) CHANGE IN OWNERSHIP.— 


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1 ‘‘(I) IN GENERAL.—Except as 

2 provided in subclause (II), the disposi3 tion of a taxpayer’s interest in the 

4 qualified energy-related property with 

5 respect to which the credit described 

6 in subsection (a) was allowable. 

7 ‘‘(II) AGREEMENT TO ASSUME

8 RECAPTURE LIABILITY.—Subclause 

9 (I) shall not apply if the person ac10 quiring the qualified energy-related 

11 property agrees in writing to assume 

12 the recapture liability of the person 

13 disposing of the qualified energy-re14 lated property. In the event of such 

15 an assumption, the person acquiring 

16 the qualified energy-related property 

17 shall be treated as the taxpayer for 

18 purposes of assessing any recapture li19 ability (computed as if there had been 

20 no change in ownership). 

21 ‘‘(III) SPECIAL RULE FOR TAX

22 EXEMPT ENTITIES.—Subclause (II) 

23 shall not apply to any tax exempt en24 tity (as defined in section 168(h)(2)). 

25 ‘‘(iii) SPECIAL RULES.— 


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1 ‘‘(I) TAX BENEFIT RULE.—The 

2 tax for the taxable year shall be in3 creased under paragraph (1) only with 

4 respect to credits allowed by reason of 

5 this section which were used to reduce 

6 tax liability. In the case of credits not 

7 so used to reduce tax liability, the 

8 carryforwards and carrybacks under 

9 section 39 shall be appropriately ad10 justed. 

11 ‘‘(II) NO CREDITS AGAINST

12 TAX.—Any increase in tax under this 

13 subsection shall not be treated as a 

14 tax imposed by this chapter for pur15 poses of determining the amount of 

16 any credit under this chapter or for 

17 purposes of section 55. 

18 ‘‘(III) NO RECAPTURE BY REA19 SON OF CASUALTY LOSS.—The in20 crease in tax under this subsection 

21 shall not apply to a cessation of oper22 ation of the property as qualified en23 ergy-related property by reason of a 

24 casualty loss to the extent such loss is 

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1 ment within a reasonable period es2 tablished by the Secretary. 

3 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—For purposes 

4 of this subtitle— 

5 ‘‘(1) BASIS ADJUSTMENTS.— 

6 ‘‘(A) IN GENERAL.—If a credit is deter7 mined under this section for any expenditure 

8 with respect to any property, the increase in the 

9 basis of such property which would (but for this 

10 subsection) result from such expenditure shall 

11 be reduced by the amount of the credit so al12 lowed. 

13 ‘‘(B) CERTAIN DISPOSITIONS.—If, during 

14 any taxable year, there is a recapture amount 

15 determined with respect to any property the 

16 basis of which was reduced under subparagraph 

17 (A), the basis of such property (immediately be18 fore the event resulting in such recapture) shall 

19 be increased by an amount equal to such recap20 ture amount. For purposes of the preceding 

21 sentence, the term ‘recapture amount’ means 

22 any increase in tax (or adjustment in 

23 carrybacks or carryovers) determined under 

24 subsection (c). 


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1 ‘‘(2) OTHER DEDUCTIONS AND CREDITS.—No 

2 deduction or credit shall be allowed under this chap3 ter for any expense taken into account under this 

4 section. 

5 ‘‘(e) REGULATIONS.—The Secretary shall prescribe 

6 such regulations as may be appropriate to carry out this 

7 section. 

8 ‘‘(f) APPLICATION OF SECTION.—This section shall 

9 apply to taxable years beginning during the 2-year period 

10 beginning on the date of the enactment of this section.’’. 

11 (b) CREDIT MADE PART OF GENERAL BUSINESS

12 CREDIT.—Subsection (b) of section 38 of such Code (re13 lating to current year business credit) is amended by strik14 ing ‘‘plus’’ at the end of paragraph (34), by striking the 

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

16 and by adding at the end thereof the following new para17 graph: 

18 ‘‘(36) the corrosion prevention and mitigation 

19 credit determined under section 45R(a).’’. 

20 (c) CLERICAL AMENDMENT.—The table of sections 

21 for subpart D of part IV of subchapter A of chapter 1 

22 of such Code is amended by inserting after the item relat23 ing to section 45Q the following new item: 

‘‘Sec. 45R. Corrosion prevention and mitigation measures for energy-related 

property.’’. 


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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

Æ 


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