Offshore Wind American Manufacturing Act of 2022
Bill: H.R.7388 | Sponsor: Rep. Pascrell, Bill, Jr. (D-NJ)
Policy area: Taxation

Summary:
Offshore Wind American Manufacturing Act of 2022
This bill establishes a new, refundable tax credit for investment in manufacturing facilities that produce offshore wind turbine components. The credit amount is equal to the sum of the offshore wind manufacturing investment credit (30% of the investment amount) and the offshore wind manufacturing production credit.

To amend the Internal Revenue Code of 1986 to provide a manufacturing 
  investment tax credit and a production tax credit for manufacturing 
       facilities that produce offshore wind turbine components.

    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 ``Offshore Wind American Manufacturing 
Act of 2022''.

SEC. 2. OFFSHORE WIND MANUFACTURING CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 36B the following new section:

``SEC. 36C. OFFSHORE WIND MANUFACTURING CREDIT.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this subtitle for any taxable year an amount 
equal to the sum of--
            ``(1) the offshore wind manufacturing investment credit, 
        and
            ``(2) the offshore wind manufacturing production credit.
    ``(b) Credit Amounts.--For purposes of this section--
            ``(1) Manufacturing investment credit.--
                    ``(A) In general.--The offshore wind manufacturing 
                investment credit for any taxable year is an amount 
                equal to 30 percent of the qualified investment for 
                such taxable year.
                    ``(B) Qualified investment.--
                            ``(i) In general.--The qualified investment 
                        for any taxable year is the basis of any 
                        advanced offshore wind manufacturing property 
                        placed in service in the United States by the 
                        taxpayer during such taxable year.
                            ``(ii) Limitation.--In the case of property 
                        which is leased by the taxpayer as described in 
                        subparagraph (C)(iii)(II), the qualified 
                        investment shall not exceed the payments made 
                        by the taxpayer under the lease, except to the 
                        extent the taxpayer incurs expenses with 
                        respect to such property which are not covered 
                        by the lease.
                    ``(C) Advanced offshore wind manufacturing 
                property.--The term `advanced offshore wind 
                manufacturing property' means property--
                            ``(i) which is used predominantly to 
                        manufacture, meaningfully assemble, or process 
                        any qualified offshore wind component,
                            ``(ii) with respect to which depreciation 
                        (or amortization in lieu of depreciation) is 
                        allowable, and
                            ``(iii) which--
                                    ``(I) is constructed, 
                                reconstructed, or erected by the 
                                taxpayer, or
                                    ``(II) which is leased or acquired 
                                by the taxpayer, if the original use of 
                                such property commences with the 
                                taxpayer.
            ``(2) Manufacturing production credit.--
                    ``(A) In general.--The offshore wind manufacturing 
                production credit is an amount equal to the applicable 
                rate with respect to any qualified offshore wind 
                component, related vessel, qualified cable, or 
                qualified steel which--
                            ``(i) is produced by the taxpayer at a 
                        qualified manufacturing facility, and
                            ``(ii) during the taxable year--
                                    ``(I) is sold by the taxpayer to--
                                            ``(aa) an unrelated person, 
                                        or
                                            ``(bb) a related person for 
                                        the use of such person in their 
                                        trade or business (with the 
                                        exception of any trade or 
                                        business related to resale of 
                                        such offshore wind component 
                                        without any subsequent 
                                        modification, assembly, or 
                                        integration into a project), or
                                    ``(II) if not sold, is placed in 
                                service or operation by the taxpayer or 
                                any other person.
                    ``(B) Applicable rate.--The applicable rate is--
                            ``(i) with respect to any qualified 
                        offshore wind component other than a 
                        substation, the total rated capacity (expressed 
                        on a per watt basis) of the completed offshore 
                        wind turbine for which the component is 
                        designed, multiplied by--
                                    ``(I) in the case of any blade or 
                                drive train, 2 cents,
                                    ``(II) in the case of any tower, 3 
                                cents,
                                    ``(III) in the case of any 
                                foundation, 4 cents, and
                                    ``(IV) in the case of any nacelle, 
                                5 cents,
                            ``(ii) with respect to any substation, 2 
                        cents per watt of total rated capacity,
                            ``(iii) with respect to any related vessel, 
                        an amount equal to 10 percent of the sale price 
                        of such vessel,
                            ``(iv) with respect to any qualified cable, 
                        an amount equal to the product of--
                                    ``(I) 30 cents multiplied by the 
                                total rated capacity (expressed on a 
                                per kilowatt basis) of such cable, 
                                multiplied by
                                    ``(II) the number of kilometers of 
                                such cable placed in service, and
                            ``(v) with respect to any qualified steel, 
                        an amount equal to 10 percent of the sale price 
                        of such steel.
                    ``(C) Qualified manufacturing facility.--The term 
                `qualified manufacturing facility' means any new or 
                existing facility--
                            ``(i) which is located in the United 
                        States, and
                            ``(ii) which manufactures or meaningfully 
                        assembles qualified offshore wind components, 
                        related vessels, qualified cables, or qualified 
                        steel.
                    ``(D) Production and sale must be in trade or 
                business.--Any qualified offshore wind component, 
                related vessel, qualified cable, or qualified steel, 
                produced and sold by the taxpayer shall be taken into 
                account under subparagraph (A)(ii)(I) only if the 
                production and sale described in subparagraph (A) is in 
                a trade or business of the taxpayer.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified offshore wind component.--
                    ``(A) In general.--The term `qualified offshore 
                wind component' means any blade, tower, nacelle, drive 
                train, foundation, or substation.
                    ``(B) Definitions.--
                            ``(i) Blade.--The term `blade' means an 
                        airfoil-shaped blade which is responsible for 
                        converting offshore wind energy to low speed 
                        rotational energy.
                            ``(ii) Tower.--The term `tower' means a 
                        tubular steel, concrete, or steel lattice which 
                        supports the structure of an offshore wind 
                        turbine, and the transition piece which 
                        connects the tower to the foundation.
                            ``(iii) Nacelle.--The term `nacelle' means 
                        the assembly of the drive train and other 
                        tower-top components of an offshore wind 
                        turbine (other than the blade) within their 
                        cover housing.
                            ``(iv) Drive train.--The term `drive train' 
                        means the component which is housed in the 
                        nacelle and converts the low-speed, high-torque 
                        rotation of the rotor to electrical energy.
                            ``(v) Foundation.--The term `foundation' 
                        means the component which secures an offshore 
                        wind tower and above-water turbine components 
                        to the sea floor, including--
                                    ``(I) fixed-bottom foundations such 
                                as monopiles, jackets, or gravity-based 
                                foundations, or
                                    ``(II) floating platforms and 
                                associated mooring systems.
                            ``(vi) Substation.--The term `substation' 
                        means a structure which is dedicated to the 
                        transmission of energy generated by offshore 
                        wind.
            ``(2) Related vessel.--The term `related vessel' means any 
        vessel which is purpose-built or retrofitted for purposes of 
        the development, transport, installation, operation, or 
        maintenance of offshore wind components and offshore wind 
        turbines.
            ``(3) Qualified cable.--The term `qualified cable' means--
                    ``(A) any export cable with a total rated capacity 
                of not less than 132 kilovolts, and
                    ``(B) any interarray cable with a total rated 
                capacity of not less than 66 kilovolts.
            ``(4) Qualified steel.--The term `qualified steel' means 
        steel which is used in the tower or foundation with respect to 
        an offshore wind turbine.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Secretary.--Any reference to the Secretary means the 
        Secretary in consultation with the Secretary of Energy, except 
        that the Secretary shall have the authority to implement 
        regulations and other guidance under this section.
            ``(2) Certain rules made applicable for investment 
        credit.--For purposes of the offshore wind manufacturing 
        investment credit determined under subsection (b)(1), rules 
        similar to the rules of subsections (a) and (c) of section 50 
        shall apply.
            ``(3) Coordination with general investment credit.--No 
        credit shall be allowed under section 48C with respect to any 
        facility taken into account for purposes of the credit under 
        subsection (b)(2), or any facility with respect to which any 
        qualified investment is taken into account for purposes of the 
        credit under subsection (b)(1). The credit under this section 
        shall be allowed without regard to whether any qualified 
        investment (as defined in section 48C(b)) with respect to a 
        facility has been taken into account for purposes of section 
        48C in any preceding taxable year.
            ``(4) Labor conditions with respect to offshore wind 
        manufacturing investment credit.--
                    ``(A) In general.--In the case of any advanced 
                offshore wind manufacturing property which does not 
                satisfy the requirements of subparagraphs (B) and (C), 
                as determined by the Secretary, the amount of the 
                credit determined under subsection (b)(1) shall be 6 
                percent of such amount (as determined without regard to 
                this subparagraph).
                    ``(B) Prevailing wage requirements.--
                            ``(i) In general.--The taxpayer shall 
                        ensure that any laborers and mechanics employed 
                        by contractors or subcontractors in--
                                    ``(I) the construction, 
                                reconstruction, or erection of any 
                                advanced offshore wind manufacturing 
                                property, and
                                    ``(II) for the 10-year period 
                                beginning on the date such property is 
                                originally placed in service, any 
                                alteration or repair of such property,
                        shall be paid wages at rates not less than 
                        those prevailing on work of a character similar 
                        in the locality as determined by the Secretary 
                        of Labor in accordance with subchapter IV of 
                        chapter 31 of title 40, United States Code.
                            ``(ii) Correction and penalty related to 
                        failure to satisfy wage requirements.--In the 
                        case of any taxpayer which fails to satisfy the 
                        requirements of clause (i), such taxpayer shall 
                        be deemed to have satisfied such requirement 
                        for any year if, with respect to any laborer or 
                        mechanic who was paid wages at a rate below the 
                        rate described in such clause for any period 
                        during such year, such taxpayer--
                                    ``(I) makes payment to such laborer 
                                or mechanic in an amount equal to the 
                                sum of--
                                            ``(aa) an amount equal to 
                                        the difference between the 
                                        amount of wages paid to such 
                                        laborer or mechanic during such 
                                        period and the amount of wages 
                                        required to be paid to such 
                                        laborer or mechanic pursuant to 
                                        such clause during such period, 
                                        multiplied by 3, and
                                            ``(bb) interest on the 
                                        amount determined under item 
                                        (aa) at the underpayment rate 
                                        established under section 6621 
                                        for the period described in 
                                        such item, and
                                    ``(II) makes payment to the 
                                Secretary of a penalty in an amount 
                                equal to the product of--
                                            ``(aa) $5,000, multiplied 
                                        by
                                            ``(bb) the total number of 
                                        laborers and mechanics who were 
                                        paid wages at a rate below the 
                                        rate described in clause (i) 
                                        for any period during such 
                                        year.
                    ``(C) Apprenticeship requirements.--
                            ``(i) Apprentice labor hours.--
                                    ``(I) Percentage of total labor 
                                hours.--Each contractor and 
                                subcontractor engaged in the 
                                performance of construction, 
                                reconstruction, or erection of any 
                                advanced offshore wind manufacturing 
                                property, shall, subject to subclause 
                                (III), ensure that not less than the 
                                applicable percentage of the total 
                                labor hours of such work be performed 
                                by qualified apprentices.
                                    ``(II) Applicable percentage.--For 
                                purposes of subclause (I), the 
                                applicable percentage shall be 
                                determined separately with respect to 
                                each contractor and subcontractor in 
                                accordance with the following table:


------------------------------------------------------------------------
                                                                 The
 ``In the case of any advanced offshore wind manufacturing    applicable
 property the construction, reconstruction, or erection of    percentage
                       which, begins:                            is:
------------------------------------------------------------------------
Before January 1, 2023.....................................          10%
After December 31, 2022, and before January 1, 2024........          12%
After December 31, 2023....................................         15%.
------------------------------------------------------------------------

                                    ``(III) Apprentice to journeyworker 
                                ratio.--The requirements of subclause 
                                (I) shall be subject to any applicable 
                                requirements for apprentice-to-
                                journeyworker ratios of the Department 
                                of Labor or the applicable State 
                                apprenticeship agency recognized by the 
                                Office of Apprenticeship, pursuant to 
                                the Act of August 16, 1937 (commonly 
                                known as the National Apprenticeship 
                                Act) (50 Stat. 664, chapter 663; 29 
                                U.S.C. 50 et seq.).
                            ``(ii) Apprentice diversity.--Each 
                        contractor and subcontractor engaged in the 
                        performance of construction, reconstruction, or 
                        erection of any advanced offshore wind 
                        manufacturing property shall have a plan to 
                        hire, retain, and increase participation of 
                        apprentices from underrepresented groups to the 
                        greatest extent possible.
                            ``(iii) Exception.--Clause (i) shall not 
                        apply in the case of a taxpayer who 
                        demonstrates--
                                    ``(I) a lack of availability of 
                                qualified apprentices in the geographic 
                                area of the construction, alteration, 
                                or repair work, and
                                    ``(II) a good faith effort to 
                                comply with the requirements of such 
                                clause.
                            ``(iv) Penalties.--In the case of any 
                        failure to satisfy the requirements of clause 
                        (i) (except as provided in clause (iii)) with 
                        respect to any construction, reconstruction, or 
                        erection of any advanced offshore wind 
                        manufacturing property, the taxpayer shall make 
                        payment to the Secretary of an amount equal 
                        to--
                                    ``(I) $500, multiplied by
                                    ``(II) the total labor hours for 
                                which such requirements were not 
                                satisfied by any contractor of 
                                subcontractor.
                            ``(v) Definitions.--For purposes of this 
                        subparagraph--
                                    ``(I) Good faith effort.--The term 
                                `good faith effort' means that the 
                                taxpayer has requested qualified 
                                apprentices from a registered 
                                apprenticeship program, as defined in 
                                section 3131(e)(3)(B), and such request 
                                has been denied. The preceding sentence 
                                shall not apply if such denial is the 
                                result of a refusal by the contractors 
                                or subcontractors engaged in the 
                                performance of construction, 
                                reconstruction, or erection of any 
                                advanced offshore wind manufacturing 
                                property to comply with the established 
                                standards and requirements of such 
                                apprenticeship program.
                                    ``(II) Labor hours.--The term 
                                `labor hours' means the total number of 
                                hours devoted to the performance of 
                                construction, reconstruction, or 
                                erection work by employees of the 
                                contractor or subcontractor. Such term 
                                does not include any hours worked by--
                                            ``(aa) foremen,
                                            ``(bb) superintendents,
                                            ``(cc) owners, or
                                            ``(dd) persons employed in 
                                        a bona fide executive, 
                                        administrative, or professional 
                                        capacity (within the meaning of 
                                        such terms as used in part 541 
                                        of title 29, Code of Federal 
                                        Regulations).
                                    ``(III) Qualified apprentice.--The 
                                term `qualified apprentice' means an 
                                employee participating in an 
                                apprenticeship program registered with 
                                the Office of Apprenticeship of the 
                                Employment Training Administration of 
                                the Department of Labor or a State 
                                apprenticeship agency recognized by the 
                                Office of Apprenticeship pursuant to 
                                the Act of August 16, 1937 (commonly 
                                known as the National Apprenticeship 
                                Act) (50 Stat. 664, chapter 663; 29 
                                U.S.C. 50 et seq.).
            ``(5) Labor standard with respect to offshore wind 
        manufacturing production credit.--
                    ``(A) In general.--In the case of any qualified 
                manufacturing facility which satisfies the requirements 
                of subparagraph (B), as determined by the Secretary, 
                the amount of the credit determined under subsection 
                (b)(2) shall be increased by 10 percent of the amount 
                of such credit determined without regard to this 
                subparagraph.
                    ``(B) Labor requirements.--A qualified 
                manufacturing facility satisfies the requirements of 
                this subparagraph if all employees providing production 
                or maintenance services at such facility are 
                represented for the purposes of collective bargaining 
                under section 9 of the National Labor Relations Act (29 
                U.S.C. 159).
    ``(e) Registration.--
            ``(1) In general.--No credit shall be allowed under this 
        section unless the taxpayer registers with the Secretary, at 
        such time, in such form and manner, and subject to such terms 
        and conditions, as the Secretary may by regulations prescribe. 
        Such regulations shall include a provision that each taxpayer 
        must submit a declaration made under the penalties of perjury 
        certifying compliance with the requirements under paragraphs 
        (4) and (5) of subsection (d).
            ``(2) Registration in event of change in ownership.--Under 
        regulations prescribed by the Secretary, the taxpayer (other 
        than a corporation the stock of which is regularly traded on an 
        established securities market) shall be required to re-register 
        under this subsection if after a transaction (or series of 
        related transactions) more than 50 percent of ownership 
        interests in, or assets of, the taxpayer are held by persons 
        other than persons (or persons related thereto) who held more 
        than 50 percent of such interests or assets before the 
        transaction (or series of related transactions).
            ``(3) Denial, revocation, or suspension of registration.--
        Rules similar to the rules of section 4222(c) shall apply to 
        registration under this section.
            ``(4) Information reporting.--The Secretary may require--
                    ``(A) information reporting by any person 
                registered under this subsection, and
                    ``(B) information reporting by such other persons 
                as the Secretary deems necessary to carry out this 
                section.
    ``(f) Termination.--
            ``(1) Offshore wind manufacturing investment tax credit.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), in the case of any qualified 
                investment with respect to advanced offshore wind 
                manufacturing property which is placed in service after 
                December 31, 2028, the amount of the credit determined 
                under subsection (b)(1) (without regard to this 
                subsection) shall be reduced by--
                            ``(i) in the case of property placed in 
                        service in calendar year 2029, 30 percent,
                            ``(ii) in the case of property placed in 
                        service in calendar year 2030, 65 percent, and
                            ``(iii) in the case of property placed in 
                        service after December 31, 2030, 100 percent.
                    ``(B) 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 
                subparagraph (A).
            ``(2) Offshore wind manufacturing production tax credit.--
        No credit shall be allowed under subsection (b)(2) in the case 
        of any qualified offshore wind component, related vessel, 
        qualified cable, or qualified steel, first sold or placed in 
        service after December 31, 2030.''.
    (b) Clerical Amendment.--The table of sections for subpart C of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 36B the 
following new item:

``Sec. 36C. Offshore wind manufacturing credit.''.
    (c) Conforming Amendment.--Paragraph (2) of section 1324(b) of 
title 31, United States Code, is amended by inserting ``, 36C'' after 
``36B''.
    (d) Effective Date.--The amendments made by this section shall 
apply to--
            (1) any qualified investment (as defined in section 
        36C(b)(1)(B) of the Internal Revenue Code of 1986, as added by 
        this section) with respect to property placed in service 
        beginning after August 1, 2021, and
            (2) qualified offshore wind components, related vessels, 
        qualified cables, or qualified steel (within the meaning of 
        section 36C of such Code, as so added) first sold or placed in 
        service after August 1, 2021.
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