Date: 1982-03-02
Speaker: ROBERT C. BYRD (democrat)
Chamber: S

Mr. President. I am today introducing legislation to address a problem which has arisen under the energy investment tax credit provisions of the Internal Revenue Code. The problem occurs be. cause f the failure of the Internal Revenue Service to issue regulations dealing with one portion of these statutory provisions. This failure to act is having an adverse effect on one area of significant energy conservation potentialthe chloralkall sector of the American chemical industry. The provisions of the present law were enacted in the Energy Tax Act of 1978. and were modified in the Windfall Profit Tax Act of 1980. The law allows a 10percent energy investment credit. under Internal Revenue Code sections 46 (a)(2)(C) and 48(1). for what is known as specially defined energy property under code section 48(l)(5). This category of energy conservation property includes 12 specified types of investment. such as recuperators. heat exchangers. preheaters. and modifications to alumina electrolytic cells. In addition to the 12 enumerated types of investment. the Secretary of the Treasury or his delegate is authorized. under code section 48(1)(5)(M). to specify by regulations other types of specially defined energy property eligible for the credit. These provisions. including that which allows the Treasury Secretary and the IRS to specify additional qualifying property by regulations. are presently scheduled to expire at the end of this calendar year. Despite the fact that these provisions have been in effect for nearly 3V/ years and could soon expire. the IRS has not chosen to exercise its authority and act on the number of applications which have been filed for eligibility as "specially defined energy property" under code section 48(1)(5). The failure of the IRS to publish regulations has been rectified in one earlier situation. involving the alumina industry. In 1980. an amendment was added to the Crude Oil Windfall Profit Tax Act that specifically qualified energysaving modifications to alumina electrolytic cells for the energy credit. This amendment was necessitated by the absence of regulations to respond to an application concerning alumina cell modifications which had been filed with the IRS shortly after the credit was enacted in The legislaton that I am introducing today concerns a nearly identical situation involving the chloralkali industry. This industry uses electrolytic cells to produce chlorine gas and caustic sodabasic feedstocks used in turn to produce a variety of other chemical products. The chloralkall industry nationwide uses more electricity than any other industry except the aluminum industry. It consumes 2 percent of all electricity used in the United States. There is technology presently available to modify the electrolytic cells commonly used by the chlor- alkali industry. This technology would significantly reduce electricity consumption for each cell. For example. at one chloralkall plant in Louisiana. which uses electricity generated by the combustion of oil and natural gas. application of this technology would reduce energy consumption by over 460.000 barrels of fuel oil equivalent each year. In my own State of West Virginia. a chloralkall plant would use electric energy 20 percent more efficiently than at present. The chloralkali electrolytic cell modifications are. for all practical purposes. similar in function to modifications to alumina cells. which were the subject of the specific amendment to the code in 1980. Both involve costly changes to existing industrial process. es for the purpose of reducing the amount of energy consumed. These chloralkali modifications are strictly motivated by the energy. efficiency which is achieved by the change. They would not increase the productive capacity of the cells and are not periodic replacements of cell components. as the existing cell configurations can continue to be used for a number of years. As was the case for alumina cell modifications. an application was submitted to the Internal Revenue Service for qualification of chloralkali electorlytic cell modifications as " specially defined energy property" eligible for the energy investment credit. As I have noted already. the IRS has not as yet chosen to exercise its au. thority to act on this applicsion or on any of the other similar applications submitted to it. This legislation would specifically add chloralkall cell modifications to the list of those investments already specified as eligible for the energy credit as "specially defined energy property." as was done with respect to alumina cell modifications in 1980. It would be effective for a sufficient period to allow realization of the significant energy conservation potential which exists through making this category of energysaving investment. The present administration has demonstrated a marked preference for influencing energy policy through the tax system. in place of aggressive energy research. development. and demonstration programs. This legisla. tion is consistent with that approach. As a strong supporter of the energyefficiency tax credits and other code revisions enacted in 1978 and modified in 1980. I am chagrined that the administration would consider allowing these credits to expire. The energysaving potential of these credits remains significant. Much of the balanced energy policy that was carefully put in place over the past 8 years. through bipartisan efforts. has been systematically destroyed or is proposed for extinction. The Congress should not allow these credits to expire. and should improve them along the lines that I have suggested today. so that we may continue to make progress toward energy selfsufficiency. I introduce the bill. ask it be printed in the RECORD. and ask for its appropriate referral.