PRINTER'S NO. 1991
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1370
Session of
2015
INTRODUCED BY GIBBONS, HEFFLEY, THOMAS, ROZZI, HARHAI, MILLARD,
KOTIK, GODSHALL, READSHAW, GOODMAN, COHEN, IRVIN, MURT,
OBERLANDER, DIAMOND, MAHONEY, SAINATO, D. COSTA, KORTZ,
BURNS, SANKEY, TOOHIL, TOBASH, GERGELY, FARRY, DAVIS, ELLIS,
KAUFER, RADER, BARRAR, MARSHALL, EVERETT, MULLERY, CARROLL,
MALONEY, SAYLOR AND PETRARCA, JUNE 29, 2015
REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY,
JUNE 29, 2015
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," providing for a coal refuse energy and
reclamation tax credit; and imposing duties on the Department
of Community and Economic Development, the Department of
Environmental Protection and the Department of Revenue.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
the Tax Reform Code of 1971, is amended by adding an article to
read:
ARTICLE XVII-J
COAL REFUSE ENERGY AND
RECLAMATION TAX CREDIT
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Section 1701-J. Scope of article.
This article establishes a coal refuse energy and reclamation
tax credit in recognition of the significant and tangible
benefits to the environment and savings in Commonwealth funds
provided by eligible facilities in reclaiming coal refuse piles
and previously mined lands.
Section 1702-J. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Applicable annual period." The 12-month calendar year in
which the combustion of qualified fuel and the beneficial use of
ash is measured to determine the amount of credits requested
under section 1703-J(b).
"Coal refuse." Any waste coal, rock, shale, slurry, culm,
gob, boney, slate, clay and related materials associated with or
near a coal seam that are either brought aboveground or
otherwise removed from a coal mine in the process of mining coal
or that are separated from coal during the cleaning or
preparation operations. "Coal refuse" includes underground
development wastes, coal processing wastes and excess spoil, but
does not mean overburden from surface mining activities.
"Department." The Department of Community and Economic
Development of the Commonwealth.
"Eligible facility." An electric generating facility placed
in service before the effective date of this article consisting
of one or more units placed in service before the effective date
of this definition which generate electricity located on the
same property which:
(1) combusts qualified fuel or fuel composed of at least
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75% qualified fuel by BTU energy value in the applicable
annual period;
(2) utilizes at a minimum a circulating fluidized bed
combustion unit equipped with a limestone injection system
for control of acid gasses and a fabric filter particulate
emission control system; and
(3) beneficially uses ash produced by the facility in
the applicable annual period to reclaim mining-affected sites
in accordance with 25 Pa. Code Ch. 290 (relating to
beneficial use of coal ash) in amounts equal to at least 50%
of the ash produced by the facility in the applicable annual
period.
"Pass-through entity." Any of the following:
(1) A partnership as defined in section 301(n.0).
(2) A Pennsylvania S corporation as defined in section
301(n.1).
(3) An unincorporated entity subject to section 307.21.
"Qualified fuel." Coal refuse.
"Qualified tax liability." The liability for taxes imposed
under Article III, IV, VI, VII, VIII, IX, XI or XV. The term
does not include tax withheld by an employer from an employee
under Article III.
"Qualified taxpayer." A person that owns an eligible
facility in this Commonwealth, or is a transferor, purchaser,
affiliate or assignee of a person to which a tax credit
certificate is issued under this article.
"Tax credit." The coal refuse energy and reclamation tax
credit provided under this article.
"Tax credit rate." For qualified fuel combusted at an
eligible facility in each calendar year, the rate of $4.00 per
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ton of qualified fuel used at an eligible facility.
"Ton." Two thousand pounds of qualified fuel, including
inherent moisture, ash, sulphur and other noncalorific
substances, but excluding excess moisture.
Section 1703-J. Application and approval of tax credit.
(a) Rate.--The tax credit shall be equal to the tax credit
rate times the tons of qualified fuel used to generate
electricity at an eligible facility in this Commonwealth by a
qualified taxpayer. By February 1 of each year starting in 2016,
or as soon as practical after data needed to adjust the tax
credit rate is available, the department shall determine and
publish notice of the adjusted tax credit rate for the prior
calendar year. Regardless of when the notice is published, the
revised tax credit rate will apply to the calendar year in which
qualified fuel is used to generate electricity at an eligible
facility. The tax credit rate, measured based on the amount of
qualified fuel used, serves as a surrogate measure for
environmental benefits, including water quality improvement, air
pollution abatement and land restoration, derived from eligible
facilities through the utilization of coal refuse and associated
reclamation of coal refuse piles, and the beneficial use of coal
ash for reclamation of mine-affected lands.
(b) Application.--
(1) A qualified taxpayer may apply to the department for
a tax credit under this section. The application shall be on
the form required by the department.
(2) The application must be submitted to the department
by February 1 of each year for the tax credit claimed for
qualified fuel used at an eligible facility during the prior
calendar year.
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(3) The department may require information necessary to
document that a facility qualifies as an eligible facility
and the amount of qualified fuel used to generate electricity
at the eligible facility.
(4) In the review of applications for tax credits, the
department shall consult with the Department of Environmental
Protection with respect to whether a facility qualifies as an
eligible facility and to review the eligible facility's
calculation of the amount of qualified fuel used to generate
electricity.
(c) Review and approval.--
(1) The department shall review and approve applications
meeting the requirements of this article by March 20 of each
year.
(2) Upon approval, the department shall issue a
certificate stating the amount of tax credit granted for
qualified fuel used in the prior calendar year. The calendar
year in which the qualified fuel was used as set forth in the
application shall be designated as the initial year in which
the tax credits may be used. The tax credits may be used in
any tax year beginning in the designated calendar year and
thereafter as provided in section 1704-J.
Section 1704-J. Carryover and carryback.
A tax credit cannot be carried back or used to claim refunds.
A tax credit can be carried forward up to 15 tax years following
the tax year in which the tax certificate may initially be used
by a qualified taxpayer.
Section 1705-J. Limitation on tax credits.
(a) Amount.--The total amount of tax credits issued by the
department shall not exceed $45,000,000 in any fiscal year.
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(b) Proration.--If the total amount of tax credits applied
for by all qualified taxpayers exceeds the amount allocated for
those tax credits, then the tax credit to be received by each
applicant shall be the product of the allocated amount
multiplied by the quotient of the tax credits approved for the
applicant divided by the total of all tax credits approved for
all applicants.
(c) Restriction.--Notwithstanding subsection (b), the
department shall not grant more than $10,000,000 in tax credits
to a single eligible facility in any fiscal year.
Section 1706-J. Pass-through entity.
(a) Election.--If a tax credit certificate is issued to a
pass-through entity, it may elect in writing, according to
procedures established by the department, to transfer all or a
portion of the credit to shareholders, members or partners in
proportion to the share of the entity's distributive income to
which the shareholders, members or partners are entitled, or in
any other manner designated by the pass-through entity.
(b) Limitation.--The same unused tax credit under subsection
(a) may not be claimed by:
(1) the pass-through entity; and
(2) a shareholder, member or partner of the pass-through
entity.
(c) Time.--A transferee under subsection (a) may only use a
tax credit during a tax year from which use of the credit is
authorized under sections 1703-J(c)(2) and 1705-J.
Section 1707-J. Use of credits by affiliates.
In addition to reducing or eliminating the qualified tax
liability of a qualified taxpayer, a tax credit under this
article shall be applied to reduce or eliminate the qualified
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tax liability of any related party, as that term is defined in
section 267 of the Internal Revenue Code of 1986 (Public Law 99-
514, 26 U.S.C. ยง 1 et seq.), to a qualified taxpayer. An
affiliate may only use a tax credit during a tax year for which
use of the credit is authorized under sections 1703-J(c)(2) and
1704-J.
Section 1708-J. Sale or assignment.
(a) Authorization.--Upon approval by the Department of
Revenue, a qualified taxpayer may sell or assign a tax credit,
in whole or in part.
(b) Application.--
(1) To sell or assign a tax credit, a qualified taxpayer
must file an application for the sale or assignment of the
tax credit with the Department of Revenue. The application
must be on a form required by the Department of Revenue.
(2) The Department of Revenue shall approve a sale or
assignment if the transferee or purchaser has:
(i) filed all required State tax reports and returns
for all applicable taxable years; and
(ii) paid any balance of State tax due as determined
by assessment or determination by the Department of
Revenue and not under timely appeal.
Section 1709-J. Purchasers and assignees.
(a) Time.--The purchaser or assignee under section 1708-J
may only use a tax credit during a tax year for which use of the
credit is authorized under sections 1703-J(c)(2) and 1704-J.
(b) Amount.--The amount of the tax credit that a purchaser
or assignee under section 1708-J may use against any one
qualified tax liability may not exceed 75% of any of the
qualified tax liabilities of the purchaser or assignee for the
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taxable year for which the tax credit pertains.
Section 1710-J. Administration.
(a) Audits and assessments.--The department has the
following powers:
(1) To audit a qualified taxpayer claiming a tax credit
to ascertain the validity of the amount claimed.
(2) To issue an assessment against a qualified taxpayer
for an improperly issued tax credit. The procedures,
collection, enforcement and appeals of any assessment made
under this section shall be governed by Article IV.
(b) Guidelines.--The department shall develop written
guidelines for the implementation of this article.
Section 1711-J. Annual report to General Assembly.
By October 1, 2016, and October 1 of each year thereafter,
the department shall submit a report on the tax credit provided
by this article to the chairman and minority chairman of the
Appropriations Committee of the Senate, the chairman and
minority chairman of the Finance Committee of the Senate, the
chairman and minority chairman of the Appropriations Committee
of the House of Representatives and the chairman and minority
chairman of the Finance Committee of the House of
Representatives. The report must include:
(1) the names of the qualified taxpayers utilizing the
tax credit as of the date of the report and the amount of tax
credits approved for, utilized by or sold or assigned by a
qualified taxpayer; and
(2) data concerning the benefits provided to the
Commonwealth in terms of the quantity of coal refuse utilized
by qualifying facilities and volume of coal ash generated by
qualifying facilities which is beneficially used to reclaim
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mine-affected lands.
Section 1712-J. Expiration.
This article shall expire December 31, 2026.
Section 1713-J. Applicability.
The tax credit established under this article shall be
effective for taxable years beginning on or after January 1,
2016.
Section 2. This act shall take effect immediately.
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