Maintaining and Enhancing Hydroelectricity and River Restoration Act of 2021
Bill: S.2306 | Sponsor: Sen. Cantwell, Maria (D-WA)
Policy area: Taxation

Summary:
Maintaining and Enhancing Hydroelectricity and River Restoration Act of 2021
This bill allows a new tax credit for maintaining and enhancing hydroelectric dams that is equal to 30% of the basis of any qualified dam safety, environmental, and grid resilience enhancement property placed in service in a taxable year. It also allows a 30% credit for qualified obsolete river obstruction removal expenditures for demolishing and removing certain nonpowered or hydroelectric dams.

To amend the Internal Revenue Code of 1986 to support upgrades at 
     existing hydroelectric dams and the removal of obsolete river 
     obstructions to improve the health of the Nation's rivers and 
   associated wildlife habitat and increase clean energy production, 
                 public safety, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Maintaining and Enhancing 
Hydroelectricity and River Restoration Act of 2021''.

SEC. 2. CREDIT FOR MAINTAINING AND ENHANCING HYDROELECTRIC DAMS.

    (a) In General.--Subpart E of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding after section 
48C the following new section:

``SEC. 48D. CREDIT FOR MAINTAINING AND ENHANCING HYDROELECTRIC DAMS.

    ``(a) In General.--For purposes of section 46, the credit for 
maintaining and enhancing hydroelectric dams for any taxable year is 30 
percent of the basis of any qualified dam safety, environmental, and 
grid resilience enhancement property placed in service during such 
taxable year.
    ``(b) Limitation.--No credit shall be allowed under subsection (a) 
with respect to any qualified dam safety, environmental, and grid 
resilience property unless the qualified dam in connection with which 
such property was placed in service meets all applicable Federal, 
State, and tribal requirements with respect to such dam on the date 
such property is placed in service.
    ``(c) Certain Progress Expenditure Rules Made Applicable.--Rules 
similar to the rules of subsections (c)(4) and (d) of section 46 (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990) shall apply for purposes of subsection (a).
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualified dam safety, environmental, and grid 
        resilience property.--The term `qualified dam safety, 
        environmental, and grid resilience enhancement property' means 
        any property--
                    ``(A) which is--
                            ``(i) dam safety property,
                            ``(ii) environmental improvement property, 
                        or
                            ``(iii) grid resilience property,
                    ``(B)(i) the construction, reconstruction, or 
                erection of which is completed by the taxpayer, or
                    ``(ii) which is acquired by the taxpayer if the 
                original use of such property commences with the 
                taxpayer, and
                    ``(C) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable.
            ``(2) Dam safety property.--The term `dam safety property' 
        means property the purpose of which is to maintain or improve 
        dam safety on a qualified dam to ensure acceptable performance 
        under all loading conditions (static, hydrologic, seismic) in 
        accordance with applicable regulatory criteria and risk 
        guidelines, including--
                    ``(A) the maintenance or upgrade of spillways or 
                other appurtuant structures,
                    ``(B) dam stability, including erosion repair and 
                enhanced seepage controls, and
                    ``(C) upgrades or replacements of floodgates or 
                natural infrastructure restoration or protection to 
                improve flood risk reduction.
            ``(3) Environmental improvement property.--The term 
        `environmental improvement property' means property the purpose 
        of which is to--
                    ``(A) add or improve safe and effective fish 
                passage, including new or upgraded turbine technology, 
                fish ladders, fishways, and all other associated 
                technology, equipment, or other fish passage technology 
                to a qualified dam,
                    ``(B) maintain or improve the quality of the water 
                retained or released by a qualified dam,
                    ``(C) promote downstream sediment transport 
                processes and habitat maintenance with respect to a 
                qualified dam, or
                    ``(D) provide for or improve recreational access to 
                the vicinity of a qualified dam, including roads, 
                trails, boat ingress and egress, flows to improve 
                recreation, and infrastructure that improves river 
                recreation opportunity.
            ``(4) Grid resilience property.--
                    ``(A) In general.--The term `grid resilience 
                property' means property--
                            ``(i) the purpose of which is to provide 
                        the ability of a hydroelectric facility at a 
                        qualified dam to contribute to electricity grid 
                        resilience and efficiency by--
                                    ``(I) adapting more quickly to 
                                changing grid conditions,
                                    ``(II) providing ancillary services 
                                (including black start capabilities, 
                                voltage support, and spinning 
                                reserves),
                                    ``(III) integrating other variable 
                                sources of electricity generation, or
                                    ``(IV) managing accumulated 
                                reservoir sediments, or
                            ``(ii) which is a qualified dam described 
                        in paragraph (5)(B).
                    ``(B) Mitigation and environmental review 
                requirements.--Such term shall not include any property 
                described in subparagraph (A)(i) unless any physical or 
                operational changes instituted in connection with the 
                activities described in such subparagraph have been 
                authorized under applicable Federal, State, and tribal 
                permitting or licensing processes which include 
                appropriate mitigation conditions arising from 
                consultation and environmental review under such 
                processes.
            ``(5) Qualified dam.--The term `qualified dam' means any of 
        the following:
                    ``(A) A hydroelectric dam which is licensed by the 
                Federal Energy Regulatory Commission or legally 
                operating without such a license and was placed in 
                service before the date of the enactment of this 
                section.
                    ``(B) A hydroelectric dam which--
                            ``(i) was licensed by the Federal Energy 
                        Regulatory Commission before December 31, 2020,
                            ``(ii) is under active license from the 
                        Federal Energy Regulatory Commission on the 
                        date of enactment of this section,
                            ``(iii) meets the requirements of 
                        subclauses (I) and (III) of sections 
                        242(b)(1)(B)(ii) of the Energy Policy Act of 
                        2005 (42 U.S.C. 15881),
                            ``(iv) is placed in service on or after the 
                        date of the enactment of this section, and
                            ``(v) does not contribute to atmospheric 
                        pollution.
                    ``(C) Any dam which--
                            ``(i) was placed in service before the date 
                        of the enactment of this section,
                            ``(ii) is operated on such date of 
                        enactment for any beneficial public use except 
                        hydropower generation, and
                            ``(iii) is authorized after such date of 
                        the enactment for hydropower development by the 
                        Federal Energy Regulatory Commission, the 
                        Bureau of Reclamation, or a State, as 
                        appropriate.
                    ``(D) Any dam which was placed in service before 
                the date of the enactment of this section and which is 
                a qualified nonpowered dam (as defined in section 
                34(e)(3) of the Federal Power Act (16 U.S.C. Sec.  
                823e(e)(3)).
    ``(e) Elective Payment.--
            ``(1) In general.--In the case of a taxpayer making an 
        election (at such time and in such manner as the Secretary may 
        provide) under this subsection with respect to any portion of 
        the credit which would (without regard to this subsection) be 
        determined under this section with respect to such taxpayer, 
        such taxpayer shall be treated as making a payment against the 
        tax imposed by subtitle A for the taxable year equal to 100 
        percent of such amount.
            ``(2) Timing.--The payment described in subsection (a) 
        shall be treated as made on the later of the due date of the 
        return of tax for such taxable year or the date on which such 
        return is filed.
            ``(3) Denial of double benefit.--Solely for purposes of 
        section 38, in the case of a taxpayer making an election under 
        this subsection, the credit determined under this section shall 
        be reduced by the amount of the portion of such credit with 
        respect to which the taxpayer makes such election.
            ``(4) Application to certain tax-exempt persons.--In the 
        case of a taxpayer making an election under this subsection, 
        the credit subject to such an election shall be determined 
        notwithstanding--
                    ``(A) section 50(b)(3), and
                    ``(B) section 50(b)(4), with respect to an entity 
                described in section 50(b)(4)(A)(i).
    ``(f) Special Rule for Property Financed by Subsidized Energy 
Financing or Tax-Exempt Bonds.--For purposes of this section, rules 
similar to the rules of section 48(a)(4) (determined without regard to 
subparagraph (D) thereof) shall apply.''.
    (b) Conforming Amendments.--
            (1) Section 46 of the Internal Revenue Code of 1986 is 
        amended by striking ``and'' at the end of paragraph (5), by 
        striking the period at the end of paragraph (6) and inserting 
        ``, and'', and by adding at the end the following new 
        paragraph:
            ``(7) the credit for maintaining and enhancing 
        hydroelectric dams.''.
            (2) Section 49(a)(1)(C) of such Code is amended by striking 
        ``and'' at the end of clause (iv), by striking the period at 
        the end of clause (v) and inserting ``, and'', and by adding at 
        the end the following new clause:
                            ``(vi) the basis of any qualified property 
                        taken into account under section 48D(d).''.
            (3) Section 50(a)(2)(E) of such Code is amended by striking 
        ``or 48C(b)(2)'' and inserting ``48C(b)(2), or 48D(c)''.
            (4) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 48C the following new item:

``Sec. 48D. Credit for maintaining and enhancing hydroelectric dams.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act, under rules similar to the rules of section 48(m) of the 
Internal Revenue Code of 1986 (as in effect on the day before the date 
of the enactment of the Revenue Reconciliation Act of 1990).

SEC. 3. CREDIT FOR OBSOLETE RIVER OBSTRUCTION REMOVAL EXPENDITURES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding after section 
45T the following new section:

``SEC. 45U. CREDIT FOR OBSOLETE RIVER OBSTRUCTION REMOVAL EXPENDITURES.

    ``(a) In General.--For purposes of section 38, the credit for 
obsolete river obstruction removal expenditures for any taxable year is 
30 percent of the qualified obsolete river obstruction removal 
expenditures incurred during such taxable year.
    ``(b) Qualified Obsolete River Obstruction Removal Expenditures.--
For purposes of this section--
            ``(1) In general.--The term `qualified obsolete river 
        obstruction removal expenditures' means any expenditure to 
        demolish and remove, in whole or in part, any dam described in 
        paragraph (2) and its associated infrastructure, including all 
        associated remediation and ecosystem restoration costs, so long 
        as--
                    ``(A) the work is performed with the consent of the 
                dam owner, if available, and
                    ``(B) none of the expenses incurred are used to 
                demolish or remove a Federally-owned hydroelectric dam.
            ``(2) Dam described.--A dam is described in this paragraph 
        if such dam is--
                    ``(A) a qualified nonpowered dam (as defined in 
                section 34(e)(3) of the Federal Power Act (16 U.S.C. 
                Sec.  823e(e)(3)), or
                    ``(B) a hydroelectric dam which is not owned by the 
                Federal government.
    ``(c) Application to Tax-Exempt Entities.--
            ``(1) In general.--In the case of qualified obsolete river 
        obstruction removal expenditures incurred by an eligible 
        entity, the Secretary shall promulgate regulations to allow the 
        allocation of the credit under this section to the person 
        primarily responsible for designing the property in lieu of the 
        owner of such property, with such person to be treated as the 
        taxpayer for purposes of this section.
            ``(2) Eligible entity.--For purposes of this subsection, 
        the term `eligible entity' means--
                    ``(A) a Federal, State, or local government or a 
                political subdivision thereof,
                    ``(B) an Indian tribe (as defined in section 
                45A(c)(6)), or
                    ``(C) an organization described in section 501(c) 
                and exempt from tax under section 501(a).
    ``(d) Elective Payment.--
            ``(1) In general.--In the case of a taxpayer making an 
        election (at such time and in such manner as the Secretary may 
        provide) under this subsection with respect to any portion of 
        the credit which would (without regard to this subsection) be 
        determined under this section with respect to such taxpayer, 
        such taxpayer shall be treated as making a payment against the 
        tax imposed by subtitle A for the taxable year equal to 100 
        percent of such amount.
            ``(2) Timing.--The payment described in subsection (a) 
        shall be treated as made on the later of the due date of the 
        return of tax for such taxable year or the date on which such 
        return is filed.
            ``(3) Denial of double benefit.--Solely for purposes of 
        section 38, in the case of a taxpayer making an election under 
        this subsection, the credit determined under this section shall 
        be reduced by the amount of the portion of such credit with 
        respect to which the taxpayer makes such election.''.
    (b) Conforming Amendments.--
            (1) Section 38(b) of the Internal Revenue Code of 1986 is 
        amended by striking ``plus'' at the end of paragraph (32), by 
        striking the period at the end of paragraph (33) and inserting 
        ``, plus'', and by adding at the end the following new 
        paragraph:
            ``(34) the credit for obsolete river obstruction removal 
        expenditures under section 45U(a).''.
            (2) Section 280C of such Code is amended by adding at the 
        end the following new subsection:
    ``(i) Credit for Obsolete River Obstruction Removal Expenditures.--
No deduction shall be allowed for that portion of the expenses 
otherwise allowable as a deduction taken into account in determining 
the credit under section 45U for the taxable year which is equal to the 
amount of the credit determined for such taxable year under section 
45U(a).''.
            (3) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 45T the following new item:

``Sec. 45U. Credit for obsolete river obstruction removal 
                            expenditures.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to any obsolete river obstruction removal expenditures (as 
defined in section 45U of the Internal Revenue Code of 1986, as added 
by this section) incurred after the date of the enactment of this Act.
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