Offshore Wind American Manufacturing Act of 2022

Bill: 117-hr-7388
Sponsor: full_name: Rep. Pascrell, Bill, Jr. [D-NJ-9]
Introduced: 2022-04-04
Policy area: Taxation
Latest action: action_date: 2022-04-04
text: Referred to the House Committee on Ways and Means.

Summaries:
action_date: 2022-04-04
action_desc: Introduced in House
text: <p><strong>Offshore Wind American Manufacturing Act of 2022</strong></p> <p>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.</p>

tv_txt: I 117th CONGRESS 2d Session H. R. 7388 IN THE HOUSE OF REPRESENTATIVES April 4, 2022 Mr. Pascrell (for himself, Mr. Norcross , Mr. Scott of Virginia , Mrs. Luria , and Mr. McEachin ) 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 provide a manufacturing investment tax credit and a production tax credit for manufacturing facilities that produce offshore wind turbine components.

1. Short title This Act may be cited as the Offshore Wind American Manufacturing Act of 2022 . 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: 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: In the case of any advanced offshore wind manufacturing property the construction, reconstruction, or erection of which, begins: The applicable percentage 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.